Alternative finance: a historical perspective

2019 ◽  
Vol 26 (2) ◽  
pp. 109-126
Author(s):  
David Chambers ◽  
Rasheed Saleuddin ◽  
Craig Mcmahon
Keyword(s):  
Financial Markets ◽  
Unmet Needs ◽  
Banking System ◽  
Fund Raising ◽  
Regulatory Regime ◽  
Historical Case ◽  
External Finance ◽  
Consumer Lending ◽  
Online Consumer ◽  
Alternative Finance

AbstractInnovations in the world of alternative finance such as online consumer lending, fund-raising platforms and cryptocurrencies are proceeding apace. In this article, we examine three historical case studies of newly emerged non-bank financial markets and discuss the possible implications for today's alternative finance markets. The first insight is that the private sector can generally be counted on to meet previously unmet needs. Moneylenders filled a gap unaddressed by the banking system of the day. Junior market IPOs provided access to funds for smaller companies that might otherwise have struggled to raise external finance. Private currencies replaced sovereign coins in transactions at various points in history. The second insight, however, is that new financial markets and instruments eventually attract the attention of regulators. Finally, these examples are a warning to industry not to take for granted that an initially laissez-faire regulatory regime precludes a stronger response at some point in the future. In all three cases, tougher regulation – in some cases even to the point of shutting down the products and markets concerned – arrived after long periods of observation and deliberation by the state.

Peter J. Montiel, Pierre-Richer Agenor, and Nadeem ul Haque. Informal Financial Markets in Developing Countries: A Macroeconomic Analysis. Published in the "Advances in Theoretical and Applied Economics" series edited by Homa Motamen-Scobie. Oxford: Blackwell. 1992. i-xi + 212 pp., including appendices. Hardbound. £40.00.

1993 ◽  
Vol 32 (3) ◽  
pp. 332-335
Author(s):  
Willem Van der Geest
Keyword(s):  
Developing Countries ◽  
Financial Markets ◽  
Foreign Exchange ◽  
Capital Mobility ◽  
Banking System ◽  
Exchange Rate Policy ◽  
Informal Markets ◽  
Financial Repression ◽  
Macroeconomic Analysis ◽  
Econometric Analyses

This volume reviews the nature and scope of informal financial markets in developing countries and elaborates on the theoretical and conceptual models which analyse 'financial repression' and other aspects of government intervention in financial markets. It also focuses on the consequences which the prevalence of informal financial markets in developing countries may have for monetary and exchange rate policy. In particular, it attempts to capture the functioning of informal, unregulated markets into macroeconomic models, working towards a general eqUilibrium model with informal financial markets. Two types of informal markets are analysed. The first are for informal lending at terms and conditions which differ greatly from those prevailing in the official banking system. The second are the 'parallel' markets for foreign exchange which tend to emerge in response to quantity restrictions on trade and administered allocation of foreign exchange to certain users at official rates, which are well below those on the parellel markets. The key question is whether these informal markets change the efficacy of monetary and credit policy-and, if they do, to what extent and in what direction? Two supporting appendices present econometric analyses of the efficiency of parallel currency markets and the degree of capital mobility in developing countries.

scholarly journals Bail Financial Sharing (BFS): A Financial Subsystem of Rastin PLS Banking

2019 ◽  
Vol 3 (1) ◽  
pp. 21-27
Author(s):  
Bijan Bidabad
Keyword(s):  
Financial Markets ◽  
Raw Materials ◽  
Electronic Devices ◽  
Banking System ◽  
Base System ◽  
The Future ◽  
Application Methods

To cover producers and consumers against future prices fluctuation risk, depositors can forward-purchase raw materials or products to be delivered at a specified time in the future through Bail Financial Sharing (BFS). Bail Financial Sharing is a subsystem of Rastin Profit and Loss Sharing (PLS) banking system, and in this regard, instructions, organization and application methods, and electronic devices and contracts are similar to the context defined in the Base System of Rastin PLS banking system. Bail Financial Sharing (BFS) enjoys from Bail Certificate innovation, which can play an important role in stabilizing and increasing efficiency of money and financial markets. Depositor (financer) receives digital Bail Certificate for this kind of participation, which is negotiable in the secondary Rastin Certificate market. Regarding the characteristics of this certificate and its clear substantial differences with futures derivative, it prevents unreal paper markets formation. The latest owner of the certificate is the owner of the commodity. Moreover, the depositor can ask the bank that the entrepreneur sells the commodity and pays the money –instead of commodity- to him at the end of the contract.

Banking on the Confucian Clan: Why China Developed Financial Markets So Late

2021 ◽  
Author(s):  
Zhiwu Chen ◽  
Chicheng Ma ◽  
Andrew J Sinclair
Keyword(s):  
Financial Markets ◽  
Financial Development ◽  
Regional Variation ◽  
External Finance ◽  
The Past ◽  
Past Millennium

Abstract Over the past millennium, China has relied on the Confucian clan to achieve interpersonal cooperation, focusing on kinship and neglecting the development of impersonal institutions needed for external finance. In this paper, we test the hypothesis that the Confucian clan and financial markets are competing substitutes. Using the large cross-regional variation in the adoption of modern banks, we find that regions with historically stronger Confucian clans established significantly fewer modern banks in the four decades following the founding of China's first modern bank in 1897. Our evidence also shows that the clan continues to limit China's financial development today.

Financial Deregulation

2021 ◽  
Keyword(s):  
Twentieth Century ◽  
Financial Markets ◽  
Financial Regulation ◽  
Developed Countries ◽  
Regulatory Regime ◽  
Financial Repression ◽  
Bretton Woods ◽  
Archival Material ◽  
Financial Deregulation ◽  
Depth Analysis

A wave of liberalization swept the end of the twentieth century. From the 1970s and 1980s onwards, most developed countries have passed various measures to liberalize and ‘modernize’ the financial markets. Each country had its agenda, but most of them have experienced, to a different extent, a change in regulatory regime. This change, often labelled deregulation and associated with the advent of neoliberalism, was sharply contrasting with the previous era, the Bretton Woods system, which has sometimes been portrayed as an era of ‘financial repression’. On the other hand, a quick glance at financial regulation today, at the amount of paper it produces, at its complexity, at the number of people involved, and at the resources invested in it, is enough to say that, somehow, there is more regulation today than ever before. In the new system, financial regulation has taken unprecedented importance. As more archival material is becoming available, a better understanding of the fundamental changes in the regulatory environment towards the end of the twentieth century is now possible. What kind of change exactly was deregulation? Did competition between financial regulators lead to a ‘race to the bottom’ in regulation? Is deregulation responsible for the recurring financial crises which seem to have characterized the international financial system since the 1980s? The movement towards a more liberal regulatory regime was neither linear nor simple. This book—a collection of chapters studying deregulation in various countries and contexts—examines the national and international pathways of deregulation by providing an in-depth analysis of a short but crucial period in a few major countries.

Fintech Ecosystem and Banking

2021 ◽  
pp. 299-320
Author(s):  
Yakup Söylemez
Keyword(s):  
Financial Markets ◽  
Banking System ◽  
Financing System ◽  
Digital Innovation ◽  
General Evaluation ◽  
The Relationship ◽  
Made In

In this study, Fintech platforms are compared to the traditional banking system. This comparison is based on the banking activities offered by Fintech platforms and the results of these activities. In the study, firstly, a general evaluation is made in the comparison of the Fintech platforms to the banking system and then the situation in Turkey is analyzed. It is clear that Fintech platforms have developed financial markets. Moreover, banks have the potential to adapt to the digital innovation advantage of Fintech platforms. In this study, the banking system and Fintech platforms are considered as competing institutions as well as supporting and transforming each other. Services within the scope of banking activities change as a result of digital innovations. As a result, it is clear that the financing system enters into a revolutionary process. This study contributes to the literature in terms of the analysis of the relationship between banking and Fintech, which is based on Turkish Fintech Ecosystem.

scholarly journals Money, Banking, and Financial Markets

2019 ◽  
Vol 87 (5) ◽  
pp. 2049-2086 ◽  
Author(s):  
David Andolfatto ◽  
Aleksander Berentsen ◽  
Fernando M Martin
Keyword(s):  
Central Bank ◽  
Financial Markets ◽  
Dynamic Model ◽  
Banking System ◽  
Free Banking ◽  
Lender Of Last Resort ◽  
Fractional Reserve ◽  
Deposit Contracts ◽  
Liquidity Insurance ◽  
Meaningful Role

Abstract The fact that money, banking, and financial markets interact in important ways seems self-evident. The theoretical nature of this interaction, however, has not been fully explored. To this end, we integrate the Diamond (1997, Journal of Political Economy105, 928–956) model of banking and financial markets with the Lagos and Wright (2005, Journal of Political Economy113, 463–484) dynamic model of monetary exchange—a union that bears a framework in which fractional reserve banks emerge in equilibrium, where bank assets are funded with liabilities made demandable in government money, where the terms of bank deposit contracts are affected by the liquidity insurance available in financial markets, where banks are subject to runs, and where a central bank has a meaningful role to play, both in terms of inflation policy and as a lender of last resort. Among other things, the model provides a rationale for nominal deposit contracts combined with a central bank lender-of-last-resort facility to promote efficient liquidity insurance and a panic-free banking system.

scholarly journals Relationship between ethical and Islamic banking systems and its business management implications

2009 ◽  
Vol 40 (1) ◽  
pp. 43-49 ◽  
Author(s):  
T. A. Saidi
Keyword(s):  
Financial Markets ◽  
Business Management ◽  
Banking System ◽  
Business Strategies ◽  
Islamic Banking ◽  
Management Implications ◽  
Banking Systems ◽  
Actual Nature ◽  
Proper Name ◽  
The Relationship

Islamic banking has become the fastest growing sector in the financial markets of the world in the past three decades, and this growth trajectory has coincided with the world’s renewed interest in the ideas of ethical banking. This raises the question regarding the actual nature of the relationship between ethical and Islamic banking systems, and the analysis in the current paper intends to provide answers to this question. The analysis has shown that the practices of Islamic banking system fit into ethical banking framework to a greater extent. It concludes that Islamic banking forms part of the broad ethical banking brand, and thus its rapid growth at the time when the ethical banking movement gathers new momentum could not be a matter of sheer coincidence.The paper also examines three business management implications of its findings. One implication is that proper name selection is an important aspect of successful branding and marketing of products or services; and the second is that we are in the age of committed consumption whereby principles, ethics and image are issues of importance in people’s choice of brands. The third implication is that market niching business strategies could bring success if properly designed and executed.

scholarly journals Reforming LIBOR and Other Financial Market Benchmarks

2015 ◽  
Vol 29 (2) ◽  
pp. 191-212 ◽  
Author(s):  
Darrell Duffie ◽  
Jeremy C. Stein
Keyword(s):  
Financial Markets ◽  
Interest Rates ◽  
Banking System ◽  
Economic Role ◽  
News Reports ◽  
Legal Risks ◽  
The Difference ◽  
The Interest Rate ◽  
Orderly Transition

LIBOR is the London Interbank Offered Rate: a measure of the interest rate at which large banks can borrow from one another on an unsecured basis. LIBOR is often used as a benchmark rate— meaning that the interest rates that consumers and businesses pay on trillions of dollars in loans adjust up and down contractually based on movements in LIBOR. Investors also rely on the difference between LIBOR and various risk-free interest rates as a gauge of stress in the banking system. Benchmarks such as LIBOR therefore play a central role in modern financial markets. Thus, news reports in 2008 revealing widespread manipulation of LIBOR threatened the integrity of this benchmark and lowered trust in financial markets. We begin with a discussion of the economic role of benchmarks in reducing market frictions. We explain how manipulation occurs in practice, and illustrate how benchmark definitions and fixing methods can mitigate manipulation. We then turn to an overall policy approach for reducing the susceptibility of LIBOR to manipulation before focusing on the practical problem of how to make an orderly transition to alternative reference rates without raising undue legal risks.

THE DEVELOPMENT OF THE BANKING SYSTEM IN POLAND DETERMINED BY THE PROCESSES OF ADJUSTMENT TO THE NORMATIVE AND TECHNOLOGICAL STANDARDS OF THE EUROPEAN UNION AND CONTEMPORARY PROCESSES OF ECONOMIC AND INFORMATIONAL GLOBALIZATION

2018 ◽  
Vol 4 (2) ◽  
pp. 339-367
Author(s):  
Jan Grzegorek ◽  
Dariusz Prokopowicz ◽  
Adrian Chojan ◽  
Mirosław Matosek
Keyword(s):  
Financial Markets ◽  
Capital Flows ◽  
Banking Sector ◽  
Stock Exchange ◽  
International Monetary System ◽  
Banking System ◽  
Economic Transformation ◽  
The European Union ◽  
Market Institutions ◽  
Main Determinants

The current processes of economic and information globalization are mainly related to the successively progressing integration of financial markets, the development of ICT and Internet technologies. The liberalization of capital flows, progressing since the 1970s, was determined by many economic and political factors, including the modification of the international monetary system. The main determinants of economic and information globalization include such processes as liberalization of capital flows, deregulation of international financial markets and progress in the field of ICT. These processes constituted favorable conditions for the reconstruction of the market financial system, including the banking sector in Poland in the 1990s. Since the beginning of the systemic and economic transformation that has been taking place in Poland since 1989, the banking system and capital market institutions have been rebuilt. It referred to the Warsaw Stock Exchange market institutions, taking into account the opening of the economy to foreign capital. Foreign financial corporations taking over domestic banking entities in Poland have introduced their modern transactional and teleinformation technologies and new standards for entering into financial transactions. These processes were the main determinants of economic and information globalization that has been made in Poland since the 1990s.

Sign in / Sign up

Export Citation Format

Share Document