Financial intermediation

We empirically investigate the determinants of lenders concentration providing bank loans to European borrowers. We analyze the influence of loan and borrower characteristics but also legal enforcement variables that are expected to influence the financial and strategic ...

This document analyzes ways to improve rural mobilization, by providing means of transportation, and affordable services for rural populations in developing countries, who by and large, lack access to transport infrastructure, and services, aggravating socioeconomic development, and poverty conditions. Several factors hamper the development of transport mobilization, and influence promotion efforts, despite budgets supporting transports improvements. In addition, markets do not provide transport services to regions where the demand is weak, i.e., the poorest segments, and less mobile communities are left behind. An integrated approach is deemed necessary, if investments are to provide sound economic and social improvements. Expansion of road networks is certainly important, though not at the expense of secondary roads, and rural roads, while the importance of private, and commercial transportation means (be it motorized or not) should neither be disregarded. Rather, favorable polici...

The symbiotic relationship between adequate funds to real sector and speed of economic growth is not in contention. Consequently, the successive Nigerian governments have made several policy attempts in the last three decades at ensuring that funds are channeled to savings deficits. These efforts notwithstanding, the economy at a glance, seems not to have made remarkable progress. What is more, there is dearth of empirical studies specifically targeted at assessing the specific contribution of financial intermediation to economic growth in Nigeria. It is this gap that this study sought to fill.  To realize the goal of this study, we adopted Private Investment (PRIVET) as the regressand and Financial Savings as a ratio of Real Gross Domestic Product (FS/RGDP), Credit Extended to Private Sector by deposit money banks (CEPS), Prime Lending Rate (PLR) & Real Gross Domestic Product (RGDP) as the regressors. The study employed econometric method to construct a multiple regression model to...

This paper aims to carry out a theoretical and methodological analysis on the access to and use of financial
services, recognizing that it is a vital issue especially for the productive sector of a country. It begins by
reviewing the concept of banking, and then through a descriptive analysis to present the most relevant aspects
of access to financial services in Brazil, Colombia, Peru and finally Ecuador. Based on these results, reference
points are made for the evaluation of Ecuador, where there is a rapid expansion of the banking sector to
previously unknown areas.

The paper studies the pattern of financial performance for listed companies originating from different industries - financial intermediation, beverage and food industry, energy, pharmaceuticals and chemicals - in four Central and Eastern European countries - Czech Republic, Hungary, Poland and Romania over a four year period (2003-2006). The financial performance is addressed by taking into account companies' return on assets (ROA) and return on equity (ROE). The research methodology consists of hierarchical and k-means clustering amalgamation techniques, in order to distinguish between naturally occurring similar groups that are statistically significant in terms of industry and/or national influences. Our analysis encompasses a dynamic approach, as it refers to changes in clusters' structure in time and searches for possible explanations of corporate financial performance in this region.

The main objective of the study was to examine the relevance of the Asset Management Corporation of Nigeria to the non-performing loans of deposit money banks. The concept of banking essentially revolves around management of money, credit, and investment. Therefore key functions of banks are anchored on exchange, account, business, savings, checking, loans, credit, finance, deposit, withdrawal, etc. Nevertheless, in exercising its financial intermediation role, the banks engage in lending its depositors' money to investors. These loans, if not well checked and monitored, often time leads to non-performing loans. Non-performing loans are largely responsible for the crisis in the banking sector. It has been discovered that the non-performing loans of banks account for distress of many banks in the country. To underscore the importance attached to cleaning the banks' books from bad debts and making them able to extend credit to the private sector, the Central Bank of Nigeria and other relevant agencies facilitated the setting up of the Asset Management Corporation of Nigeria to take care of the bad debts in the banking sector. It is also working assiduously toward returning the bailed out banks from negative shareholders funds to zero, to make them attractive for merger and acquisition. For the purpose of this study, the researcher employed relevant data obtained from the branches of commercial banks and Central Bank of Nigeria in Uyo with the use of a well-structured questionnaire. Research questions were raised for the purpose of the study. One hundred and thirty questionnaires were administered to both the management and staff Central Bank of Nigeria and the commercial banks operating in Calabar and Uyo. One hundred and twenty nine of the questionnaire issued were collected and used for the purpose of the study. The responses obtained from the questionnaire were critically analyzed using the simple percentage statistical method. Findings from the study revealed that the non-performing loans of banks affect its liquidity and subsequently, bank failure. The study also revealed that the Asset Management of Corporation is relevant to the non-performing loans of deposit money banks as it has so far recorded considerable success in resolving the non-performing loans of banks.

In a number of European countries microfinance evolved from informal beginnings during the eighteenth and nineteenth centuries as a type of banking of the poor, juxtaposed to the commercial and private banking sector. Almost from the onset, microfinance meant financial intermediation between microsavings and microcredit, and was powered by intermediation. Legal recognition, regulation and mandatory supervision evolved in due course and led to a process of mainstreaming during the twentieth century when microfinance became part of the formal banking sector. In Germany, the former microfinance institutions now account for around 50% of banking assets; outreach is to around 90% of the population. Microfinance in Asia presumably has a much longer history, though little seems to be known about the early history of the hui in China, the chit funds in India, the arisan in Indonesia or the paluwagan in the Philippines, to name but a few. Financial institutions of indigenous origin, most of ...

Economic growth is a goal that every country strives to achieve. Even developed countries need to grow and increase their Gross Domestic product. Financial markets are the engine that drives this vehicle to economic growth. This paper discusses the role of financial institution in economic growth in Malawi. As a small landlocked country, Malawi needs a strong financial system to help its stunting economy to grow. The paper looks at the seven roles of financial markets which are were (1) Resource Mobilisation, (2)credit creation, (3) provision of wealth (4) solution to liquidity problems, (5) payments function (6) risk and protection and (7) policy formulation. These roles have great impacts on investment, government spending, the RBM policies which focus on expansionary and contractionary policies and how financial markets help the institution to make such decisions. The paper also discusses the financial institutions that help to run the financial markets in Malawi. These institutions are the Reserve Bank of Malawi, the Malawi stock exchange, depository institutions, foreign exchange bureaus, finance companies, investment companies, contractual saving intermediaries and securities firms.

Depuis les années quatre-vingt-dix, l'ensemble des établissements bancaires marocains doivent respecter un arsenal de ratios prudentiels, principalement le ratio de solvabilité. Le respect de ces mesures prudentielles, à aspect réglementaire, s'inscrit dans une logique de recherche d'une stabilité du système financier, essentiellement le système bancaire, et ce en réduisant les risques financiers et opérationnels encourus par les entités bancaires. En parallèle, les autorités de régulation ont exigé des banques un travail de gestion globale de bilan, la mise en place d'un système de contrôle de gestion, afin de gérer le risque opérationnel et un effort en termes d'engagements en fonction des risques encourus. Dans ce sens, les organisations bancaires doivent procéder à une gestion opérationnelle des risques en fonction d'une approche prudentielle, imposée par les législateurs. Ainsi, l'approche prudentielle, à caractère macro-économique, se présente comme un déterminant de l'approche opérationnelle, à caractère micro-économique. Cette approche opérationnelle prend la forme d'une stratégie que chaque entité bancaire doit élaborer pour gérer les différents risques bancaires. Cette étude cherche à analyser le problème de la gestion des risques entre l'approche prudentielle et l'approche opérationnelle.

The study examines the link between the intermediation activities of banks and the growth of the Nigerian economy. This was motivated by the economic growth functions assigned banks by the regulatory and monetary authorities and the presence of opposing strands of literature and empirical studies suggesting that banks do not cause economic growth. The study, therefore, investigates this relationship using 1980-2008 data obtained from the Central Bank of Nigeria. Descriptive research methodology was used in conjunction with inferential statistics of correlation and regression analysis. To ensure that regression results were not spurious, diagnostic analyses to test for stationarity was carried out on the variables using Augmented
Dickey-Fuller (ADF) unit root test. Furthermore, to ascertain the presence of long-term relationships among the variables, Johansen cointegrating test with the Trace and Eigenvalue statistics were adopted. To correct for the short-run disequilibrium among variables, the Error Correction Mechanism (ECM) was used. Finally, in order to determine whether a causal relationship exists between financial intermediation by banks and economic growth and
the direction of such a relationship, the Granger Causality test was used. The results reveal that financial intermediation by banks is a poor predictor of economic growth in Nigeria and that no causal relationship exists between them. It was therefore suggested that since the poor predictive power of financial intermediation proxies implied the presence of more influential factors like infrastructure, electric power, road network, portable water and education that government should pay more attention to the development of  these. Attention should also be paid to lowering lending rate and stabilizing inflation as these were identified to have adverse consequences on the
economic growth.

Led by the seminal papers of McKinnon (1973) and Shaw (1973), a significant number of studies have pointed out that financial liberalization can exert a positive effect on growth rates as interest rate levels rise towards their competitive market equilibrium, while resources are efficiently allocated. Accordingly, eliminating controls on interest rates and allowing them to increase could stimulate a higher level of savings. Moreover, with the assumption of a strong response of savings to the rate of interest, higher interest rates are expected to increase financial intermediation (the level of financial asset channelled by the financial system).1 Strictly under these strong assumptions, it is likely that financial liberalization produces higher savings which ultimately fosters economic development through changes in quality (by allowing efficient allocation of resources) and quantity of investment (Reinhart & Tokatlidis, 2003).

We provide an empirical support for theories of lender specialization using the recently developed market for Debtor-in-Possession (DIP) financing. The legal environment in which DIP financing operates represents a natural laboratory for testing determinants of lending specialization (e.g. lender choice). We find that the choice of lender is not driven by credit risk, but by information considerations and that this lending specialization has loan pricing effects. In short, banks (non-bank lenders) lend to more (less) transparent firms and at lower (higher) loan spreads. Our results are consistent with the interpretation that banks provide important and useful services.

What are the relative advantages and disadvantages of bank-based financial systems (as in Germany and Japan) and market-based financial systems (as in England and the United States). Does financial structure matter? In bank-based systems banks play a leading role in mobilizing savings, allocating capital, overseeing the investment decisions of corporate managers, and providing risk management vehicles. In market-based systems securities

This paper analyses the role of a costly financial system in the transmission of monetary policy. The new-keynesian model for a small open economy is extended with a simple financial system based on Hamann and Oviedo (2006). The presence of the financial intermediation naturally allows the introduction of standard policy instruments: the repo interest rate and the compulsory reserve requirements. The model is calibrated to match key steady-state ratios of Colombia and is used to evaluate the alternative policy instruments. Monetary policy conducted through the repo interest rate has the standard effects predicted by the new-keynesian framework. But changes in the compulsory reserve requirement rate may generate, under different scenarios, totally different reactions on economic activity, and little quantitative effects on inflation rates and aggregate demand. Therefore this last policy instrument appears to be uneffective and unreliable.

In the first part of this paperer, we emphasize the adaptability and continuity of the lender-of-last-resort doctrine beyond the diversity of financial structures from the 19th century to the present day. The second part deals with the global credit crisis and the analysis of the central banks’ innovative practices during the 2007-2008 financial crisis. We highlight that the lender of

This paper focuses on the corporate governance arrangements of institutions offering Islamic financial services (IIFS) aimed at protecting stakeholders'financial interests. Many IIFS corporate governance issues are common with those of their conventional counterparts. Others are distinctive. In particular they offer unrestricted investment accounts that share risks with shareholders but without a voting right. This paper first reviews internal and external arrangements put in place by IIFS to protect stakeholders'financial interests. It discusses shortcomings notably in terms of potential conflict of interest between shareholders and holders of unrestricted investment accounts. It then suggests a corporate governance framework that combines internal and external arrangements to provide safeguards to unrestricted investment account holders without overburdening IIFS'financial performance. The paper uses a review of 13 IIFS and regulatory information from countries where I...

This article focuses on the rise of FinTech over the past ten years, particularly with respect to the role of technology-based platforms in the provision of credit. In this specific context, P2P lending has acquired an increasing importance, with a larger share of loans having been originated through P2P platforms instead of traditional banking channels. This trend has been welcomed by policy-makers as a move towards alternative market-based finance, which should contribute to better risk diversification by moving risks away from systemic financial institutions. At the same time, this shift presents a number of regulatory questions that have remained largely unexplored. This is so because the nature and role of P2P platforms has remained loosely defined, which means that it has been difficult to identify relevant regulatory challenges emerging from these channels of finance.
This research tackles two inter-related questions. First, it addresses the conceptual redefinition of financial intermediation. This allows understanding the function of P2P platforms, and whether they have supplemented the intermediation role traditionally conducted by banks. Second, it explores the risks that arise in connection with P2P lending channels. This second enquiry highlights outstanding policy and regulatory issues that have remained unexplored or downplayed in current debates.