ABSTRACT. The non-banking financial institutions take an extremely important place inside the financial market and therefore play an apprecialble role in the economy. Taking into account the specific nature of the operations that these operators are authorized to develop, it is necessary for their activity to be subject to an efficient internal control and also to be well-structured. To assure the organization and functionning of an efficient control inside all the non-banking financial institutions, the authority for reglementation and supervision the specific market, namely the National Bank of Romania has adopted a compulsory regulation for these operators, with reference to the inner control. The organization and development of inner control inside the non-banking institutions is a responsability of their board councils, which can assure themselves-by means of an efficient inner control - that the activities developped inside the respective institutions are according to the legal regulations and internal procedures and at the same time the accomplished operations make efficiency and profitableness.
Asserting the importance of financial intermediaries, Schumpeter (1911) argued that the services provided by them are crucial for economic development. This study encouraged the researchers to empirically investigate the relationship between financial development and economic growth. Patrick (1966) determined certain pattern while examining this relationship. These were the “demand following” and “supply leading” patterns. In the demand following view, the growth in the economy creates demand for financial services that in turn leads financial development. As per the supply leading view, the growth in the financial sector leads to the mobilization of small savings towards big investors that ultimately stimulates economic growth. This raised the question of causality between these two broad sectors in different economies of the world. Addressing this question, Jung (1986) examined the relationship using the data of 56 countries. The study found that the less developed countries (LDCs) have a more prevailing supply leading relationship. He thus emphasized the role of financial intermediary institutions towards economic development in LDCs. Analyzing the same relationship for 10 developing countries Christopoulos and Tsionas (2004), find causal relationship from financial development to economic growth in the long run. However the reverse causality (i.e., from economic growth to financial development) is not found. Jeanneney et al. (2006) find that the financial development in China is responsible for the total factor productivity growth. Examining 29 Chinese provinces for the period of 1993-2001, the study further tries to identify the channel through which financial development leads growth. The results show that, it is improvement in the technical efficiency in the financial sector that supports growth. There is a wealth of literature that supports the supply leading view (e.g. King and Levine, 1993; Sylla, 2003; Rousseau and Wachtel, 1998; Levine et al., 2000; Beck and Levine, 2004; Sandberg, 1978; Levine, 1999; Levine and Zervos, 1998; Demirguc-Kunt and Levine, 1996) and asserts that the creation of financial institutions intentionally or any development in them increases the supply of financial services and therefore causes economic growth.
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The call money rate arises as an interaction of demand for and supply of bank reserves. As a result, factors influencing demand and supply conditions of bank reserves influence the call money rate. These factors are: periodic change in reserve requirement, Bangladesh Bank's intervention through open market operations, commercial banks cash' requirements to meet their daily payment obligations and other factors like seasonal effects or signs of economic boom (or downturn) etc. The market facilitates efficient distribution of reserves throughout the banking system. While both banks and non-banking financial institutions can now participate in the call money market in Bangladesh, the latter institutions can borrow only up to 15 percent of their net assets. 2 The Bangladesh Bank regulation requires that banks and non-bank financial institutions
Global losses so far reached billions of dollars, not including the unknown part of the financial statements (Bail out, the agreement of the value of the stock decline, union agreements, purchase of banks and financial institutions) began to ripple effect in Europe; Belgium, England, Germany and France were forced to recapitalize banks as in case of Fortis, Northern Rock and the other was very evident that a major action with drastic intervention by the state would be inevitable. Finally after debate in the House of Representatives on October 3 was approved Bailout Law (the law of salvation) plan for salvation history of the financial system and greater intervention in the American economy since the Depression of 1930s. This plan allows the U.S. Treasury to buy problem assets in the amount of $700 billion to help restart credit in banks and financial institutions.
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The growth acceleration of Sharia economic institutions today will not be achieved as long as Muslims still see Islam as a way of worship religion not a way of life in the context of transacting in economics and business. Accelerating the growth of financial institutions especially Sharia banking, shows a very positive dynamics. This happens as part of Islamic economic development instruments, although Islamic banking finance institutions are faced with various challenges and obstacles in their application. The growth of Sharia banking in various countries including Indonesia has experienced, ups and downs according to the country's financial condition. As a country that was once hit by the monetary crisis in 1998, Indonesia's economy suffered a severe downturn which leads to the central government's policy of liquidating conventional banking-based financial institutions in the form of mergers and some of them closed. The monetary crisis prompted Indonesia to require the presence of donor countries such as International Monetery Fund (IMF), World Bank and other donor agencies. However, the presence of donor agencies brings its own problems to the donor recipient country. Cambodia, for example, the presence of donor agencies such as the World Bank and the IMF has become a separate issue in poverty reduction, as dollarization has affected people’s live . The global economic crisis that undermines many conventional financial institutions, has absolutely no effect on Sharia financial institutions such as banking and other non-bank financial institutions. The Sharia financial institution, remains firmly established as its business activities are oriented towards the real economy sector . After the global economic and financial crisis Sharia-based financial institutions developed into an adaptive system . By carrying the economic system that relies on religious teachings and social morality, Sharia banking has actually demonstrated its performance as an alternative to conventional financial systems and proves itself capable of supporting economic resilience and stability, especially when Indonesia is hit by the monetary crisis.
Lerner and Tufano (2011) in their study on consequences of ICT strategies contend that existing empirical evidence and conceptual frameworks can tell more about ICT strategies, but there are substantial unanswered questions in the areas of organization performance impact of ICT strategies, impact of ICT strategies on financial institutions and a lot of ICT strategies research is mainly on case studies. Rafael and Francisco (2007) studied the impact of various regional banking sector developments and ICT innovations during 1996- 2007 in Spain. The study found out that product and service delivery innovations contribute positively to regional Gross Domestic Product (GDP), investment and gross savings growth. These sentiments are shared by Hendrickson and Nichols (2011), while studying the performance of small banks in the United State with regards to interstate branching and found out that banks perform better when they adopt ICT strategies across their several branches. Based on these studies and the varying gaps in literature, there is need to conduct similar studies in Africa and more so in Kenya where ICT strategies have been on the rise in the past decade.
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Looking at the need for Energy Efficiency and Cleaner Technology, SIDBI has tied up with International Financial Institutions like World Bank, Japan International Cooperation Agency (JICA), KfW ....etc to provide loans at concessional rates of Interest for Cleaner Production and Energy Saving Projects. Get in touch with us and understand how we can help you reduce costs, enhance profits and be at the leading edge technologically.
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The practice of Islamic banking has become a fast growing and widespread phenomenon, not only in the Muslim countries, but also in the Non-Muslim countries too, such as UK, USA, Canada and Singapore. The transformation from a conventional form of banking to a banking system based on interest-free banks has generated a great deal of interest to call for Human Capital Development in the field to ensure sustainability, good performance and good competitive market in the Islamic financial industry. Even though Sudan is the pioneer in taking the initiative of Islamizing its financial industry since 1980s, yet we realized that other countries are taking the leading international and regional hub of Islamic finance such as Malaysia in the Asian region and UK in European countries, and recently Canada is also calling to become one of the hub of Islamic finance in the far west. Africa is also highly expected to host many Islamic financial institutions in the near future as there is a great demand for the Islamic financial products. This urged the authors to shed some light on the role of Sudan Academy for Banking and Financial Sciences and its vision to become a hub for Human Capital Development and in promoting Islamic Finance not only in the African region but also in the Arab countries too.
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Cost is defined by Drury (2004) as the measure of the economic sacrifice made to achieve organizations’ goals. Microfinance Institutions (MFI) incur costs not only in sourcing funds and disbursement of these funds to microfinance clients but also in promotion and monitoring of microfinance client groups and development of processes for improving efficiencies of service delivery. Generally, the costs experienced by the MFIs differ widely depending upon the loan products offered, total number of clients, loan size, cost of borrowing, nature of the organization, geographical location for the branch office, size of staff compliment at each branch, perio- dicity of collection, mode of collection for instance at doorstep or common place, individual or group and method of transaction (Branker, Shackles & Pearce, 2011). Studies done by Armendariz et al., (2010) show great economic importance on transaction costs as a financial determinant of the MFIs performance. Transac- tion costs refer to the cost of carrying out a transaction by means of an exchange on the open markets which are associated to the division of work as stated. Transaction costs indicate the financial and economic costs in- curred by organizations both at macro and micro level of the organization. In spite of many governments and international financial institutions trying to address recurring problems of high transaction costs found in cur- rent empirical studies, transaction costs cannot be directly measured, but rather proxies such as opportunism, uncertainty, asset specificity, transaction frequency, and so on are used instead (Aemiro & Mekonnen 2012).
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The Article first presents a brief history or survey of the some of the earlier problems that associate with China’s banking and financial institutions. The Article then addresses specific problems, in the context of the rules, procedures, and practices of the banking and finance sector, which widely range from non- performing loans, to China’s money market and interbank lending business. These problems also directly associate with the liberalization of the banking and finance sector of the economy, and the requirements of both the WTO rules and China’s WTO Protocol on accession. The Article also briefly explores the US sub-prime mortgage crisis and its contagion effect throughout the world, including the Asian region. In the context of China and the subprime crisis, the Article summarizes some of the problems that associate with China banking and financial institutions, by focusing on the policy implications of the history of banking and finance in China, and what this means in terms of both WTO compliance and greater liberalization of banking and financial institutions, especially pursuant to the WTO GATS, as service industries. All of this, eventually, allows for the presentation of certain conclusions concerning China banking and finance in the new era of a global subprime crisis.
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The validity of a research refers to whether a researcher is scrutinizing the research question he or she is supposed to be studying. It is compromised if the outline and conduct of the research are such that he or she involuntarily studied more than or less than the stated research questions he is studying. Reliability on the other hand refers to whether the researcher is going obtain data, which he or she can depend on to carry out his research activities. There are some factors that could harm the validity and reliability of a research and they are favoritisms of the researcher, restrictions and complications of the individual intellect and lastly limitations in the access of data (Jill, 1988). To the address the above mentioned limitations or factors, the data’s obtained for the purpose of this research were gotten from the Bloomberg financial system which provides access of data of numerous financial institutions in world and are very reliable and valid.
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The importance of cashless transaction was raised by Senthe (2012) in lieu of rural communities who are often excluded from financial institutions. They create their own currency storage mechanisms of saving such as storing cash in pots. Subsequently they discover that currencies are subjected to depreciation. Possibility of letting cash to be physically destroyed by vermin, such as rats or insects, is also great. In order to overcome these issues, direct transfer of funds to sahabat in AIM will ensure that cash is transferred safely. Additionally, Abd Ghani (2013) asserted that AIM has strived to promote cashless and paperless transactions between them and sahabat through the introduction of the M-Ringgit. This can be achieved by creating a platform in order to simplify sahabat’s daily systems to become more effective and systematic. An officer from the research and development unit emphasised that the risk of carrying cash could be mitigated by using cashless and paperless transactions as follows:
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While Table 1 presents findings on FE and GMM regressions, Table 2 discloses results on QR. Both models entail 3 specifications: the non-interactive specification and two interactive specifications. One of the interactive specifications corresponds to banking efficiency, while the other is related to financial activity. The non-interactive specification elucidates direct effects of remittances on industrialisation, whereas interactive specifications explain indirect impacts. In the same vein, Table2 presents three specifications, one corresponding to non-interactive regressions for direct effects (see Panel A) and the other two related to interactive regressions for indirect impacts (Panels B and C). From the FE regressions in Table 1, there is a negative marginal effect from the interaction between domestic credit and remittances. In the same table, four principal information criteria are employed to assess the validity of the GMM model with forward orthogonal deviations 5 .In addition to the information criteria, two points are important to note. (i) The second-order Arellano and Bond autocorrelation test (AR(2)) is more relevant as an information criterion than the corresponding first-order test because some studies have exclusively reported a higher order with no disclosure of the first order (e.g. see Narayan et al., 2011; Asongu & Nwachukwu, 2016c). (ii) The Sargan test is not robust but not weakened by instruments whereas the Hansen test is robust but weakened by instruments. A logical way of addressing the conflict is to adopt the Hansen test and avoid the proliferation of instruments. Instrument proliferation is subsequently avoided by ensuring that the number of instruments in each specification is lower than the corresponding number of cross sections.Not all control variables are included in the GMM specification in order to avoid instrument proliferation that could substantially bias estimated coefficients. Based on the information criteria, a positive marginal effect is apparent from the interaction between remittances and banking system efficiency.
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optimistic attitude being that there is a risk of loss concerned in any trading activity. Warde (2000) defines Islamic finance as follows: “Islamic financial institutions are those that are based, in their objectives and op erations, on Quran‟s principles . Islamic banks have had to develop financial products which are not in conflict with the Shariah, because of Riba prohibition. This has resulted in traditional deposit and lending products, which are made available by what can be called “conventional” banks, being restyled so as to satisfy the Shariah. The obligation has been achieved by creating a number of special financial products (Ali & Ali, 1994). All the products the depositors and lenders are operating in a partnership and shared associated risk. Both receive a rate of return based on the profit and performance not only on the interest which is pre-determined rate. For better understanding one need to be aware of the monetary theory of Islamic economics, which clearly describes why the system of profit and loss is more efficient and justifiable.
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The analysis of systemic risk and financial contagion is a relatively new and developing topic. Usually different statistical and mathematical methods are applied, but researchers agree on one thing: we require adequate and timely methods to monitor financial system in order to react on mounting fragility in the system. Also we believe that in the modern world, to which very intertwined financial system is inherent, such analysis should become mainstream. But in this case we are to develop simple and intuitively understandable instruments. It is obvious that systems of simultaneous GARCH equations are not easy understood by the public. Therefore we will also try to develop such an instrument and make it accessible via the Internet.
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The „modus operandi‟ of MFIs within the financial industry shows their innovativeness in meeting the demand created in the institutional space owing to the market failure. The study areas had unique distinctions and these MFIs approached each geographical area differently and had different strategies. For instance in the Greater Accra region they had clients who were mostly market women trading in different wares as well as fishermen. They relied heavily on lending to carry out their businesses. Unlike those in the hinterland who were predominantly farmers. Their concern was more of agricultural inputs that would ensure higher crop yields and sustain their livestock. The prevailing conditions where many owners of micro-enterprises in these settings get denied by commercial banks of accessing funding to support their business owing to lack of credit history (Basu et al.,2004) which is a weakness in the traditional institutions becomes an opportunity for the MFIs. It shows the innovativeness of the MFIs in meeting the demand created in the institutional space. This study of institutional entrepreneurship and its analysis is tied around the institutional change process and these processes simplified into three main areas from emergence, implementation and diffusion of new institutions and practices (Battilana et al.,2014; Hinings et al.,2004).
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Crisis situation is a major challenge for any company. A problem has developed into a crisis and the company will have to use all their resources to preserve their reputation and to prevent material losses and bankruptcy. In times of crisis it is very important to act wisely and with it openly and honestly cooperate with the media, to seek support from the staff and to call for an understanding of society as a whole. But crises can be of any kind, not only natural or man- made disasters. Especially for financial and credit institutions and mainly the banking system, the public trust and its preservation and validation are vital. This is the purpose of this paper to show the immediate, direct contact between the probability to generate a crisis as a result of broken confidence in the organization and ways to respond to the upcoming crisis by using comprehensive and proactive tools for communication with government and legal institutions, customers and the society as a whole.
development is regarded basic to the sound business management. It advocates for a precautionary approach towards environmental management and suggests integrating environmental considerations into the regular business operations, asset management, and other business decisions of the banks11. IFC‟s environmental unit was established in 1991 for reviewing each project for environmental assessment. Similarly, the US Export-Import Bank regularly reviews while financing exports on the ground whether they are environmentally sound. It will be noteworthy to mention that Netherland-based ABN-Amro bank has developed certain Reputational Risk Management (RRM) policies to identify, asses and mange non financial present within it business engagements. Similarly, some of the big international banks like ABN Amro, Deutsche, Standard Chartered, HSBC Bank etc. look at environment issues discussed under Kyoto Protocol. Going further, the Dutch Government has made a formal request to banks in achieving sustainable development. The dialogue between banks and government was established in 1999 to initiate policies for environmental improvements through the development of new financial products and services.
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Consistent with Ezeoha and Cattaneo (2012), the impact of financial sector development on FDI is summarised into the allocative channel, economic efficiency and the liquidity easing theoretical rationales. Proponents of the allocative channel rationale including Kaur et al. (2013), among others, argue that well developed financial markets are better able to increase foreign capital productivity through allocating financial resources to projects with a high rate of return. The economic efficiency rationale proposes that well developed financial markets have got the better capacity to ease information flow and reducing transaction costs thereby positively influencing FDI (Claessen and Laeven, 2003; Bartels et al., 2009; Ezeoha and Cattaneo, 2012). The liquidity easing rationale argues that well developed financial markets boost liquidity, allow faster trading of financial instruments and settlement by multinational enterprises and thereby increasing the activities of foreign firms in the host country (Levine, 1997a). Empirical studies which focused on threshold levels of financial sector development that significantly influence FDI inflows are extremely very scarce. Using cross-country regression analysis, Omran and Bolbol (2003) investigated the minimum threshold levels of banking sector development indicators that significantly influence FDI inflows in Arab countries. Their study used domestic credit from commercial banks to the private sector as a ratio of GDP and commercial banks assets as a ratio of commercial banks and central bank assets as proxies of banking sector development.
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Also the EFSF/ESM could serve as a fiscal backstop. If all of the resources available in the ESM were to be allocated to that pur- pose, the European Financial Sta- bility Facility/ESM would sufficiently large to cover the median direct fiscal cost of a bank- ing crisis of about 4 percent of GDP (see Box 1). However, the option has disadvantages. First, many banking crises cost significantly more. Second, in current condi- tions the EFSF/ESM cannot provide the ex-ante guarantees (or blanket guarantees) that may need to be given to prevent a generalised panic. The big advantage of the EFSF/ESM option, however, would be that the institution is already being established, that it has resources and that burden-sharing agreements are in place. Moreover, it has strong governance mecha- nisms that make it able to take swift decisions in emergencies. Under current arrangements the EFSF/ESM option would fall short of providing the guarantee that may become necessary in excep- tionally adverse cases. It has, how- ever, the big advantage of being operational and is therefore our preferred short-term option. Contingent European taxation