The underbanked phenomena

2019 ◽  
Vol 11 (3) ◽  
pp. 385-404 ◽  
Author(s):  
Xiaoyan Xu
Keyword(s):  
Financial Services ◽  
Shadow Banking ◽  
Short Term ◽  
Policy Makers ◽  
Content Type ◽  
Financial Decisions ◽  
The Great Recession ◽  
Banking Regulations ◽  
Alternative Financial Services ◽  
Banking Institutions

Purpose The purpose of this paper is to study the “underbanked” – those who already possess bank accounts but are patrons of alternative financial services (AFS) providers at the same time. Design/methodology/approach Linking the FDIC unbanked/underbanked surveys of nationally represented households with FDIC bank information and local MSA demographics, demographic and economic profiles of the underbanked households are examined, together with the determinants of their choice of nonbank financial services. Findings The author finds that bank fees are associated with the likelihood for households to obtain AFS, especially nonbank credit. Households’ attitudes and experience with banks are important in the choice of getting AFS. Furthermore, most underbanked households used AFS temporarily, partly reflecting rather informed and calculated financial decisions. Research limitations/implications The results from this paper provide implications for different types of AFS users. For example, the use of transactional AFS responds to the availability of online or mobile banking; meanwhile, it is also sensitive to branch closure. Users of nonbank credits are likely to be price savvy, and these products serve as valuable alternatives for short-term financing, especially during unfavorable economic situation. Social implications Better understanding of the underbanked could help banks tailor to existing clients’ needs, for instance, providing innovative short-term credit products for those with little or impaired credit history. The study also helps policy makers re-evaluate banking regulations since the Great Recession. As regulations squeezed bank profits in certain areas and forced banks to consolidate, come alongside higher bank fees, potential branch closure and loss of service, which ultimately forced banked individuals to the less regulated alternative providers. Originality/value The analysis utilizes a comprehensive set of variables, from household social-economic characteristics to local banking industry characteristics, together with households’ subjective opinions of their banking institutions. The focus on the underbanked brings attention to this underserved population and discusses areas where banks can improve. The study contributes to the understanding of AFS users, draws implications for regulation toward banking and shadow banking.

India will be pragmatic over shadow banking crisis

2018 ◽  
Keyword(s):  
Financial Services ◽  
Private Equity ◽  
Banking Sector ◽  
Prime Minister ◽  
Shadow Banking ◽  
Short Term ◽  
Content Type ◽  
Public Sector Banks ◽  
The Government ◽  
Bad Debt

Significance It last month allowed banks to lend more to NBFCs that do not finance infrastructure, with the raised limit effective to year-end. This came after the government took control of the Infrastructure Leasing & Financial Services (IL&FS) firm, which in August began to default on its short-term debt, raising concerns about liquidity in India’s shadow banking sector. Impacts Delhi is likely to merge more public sector banks, aiming to reduce their bad debt. Some domestic and foreign private equity firms could seek to purchase assets from Indian NBFCs. A recession would hinder the prospects of Prime Minister Narendra Modi winning a second term in the 2019 general election.

How positive service experiences contribute to service captivity

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Constantino Stavros ◽  
Kate Westberg ◽  
Roslyn Russell ◽  
Marcus Banks
Keyword(s):  
Financial Services ◽  
Financial Vulnerability ◽  
Socially Responsible ◽  
Content Type ◽  
Welfare Policies ◽  
Regulatory Frameworks ◽  
Alternative Financial Services ◽  
Service Experiences ◽  
Service Relationship ◽  
Practical Implications

Purpose Service captivity is described as the experience of constrained choice whereby a consumer has no power and feels unable to exit a service relationship. This study aims to explore how positive service experiences can contribute to service captivity in the alternative financial services (AFS) sector for consumers experiencing financial vulnerability. Design/methodology/approach A total of 31 interviews were undertaken with Australian consumers of payday loans and/or consumer leases. Findings The authors reveal a typology of consumers based on their financial vulnerability and their experience with AFS providers. Then they present three themes relating to how the marketing practices of these providers create a positive service experience, and, in doing so, can contribute to service captivity for consumers experiencing financial vulnerability. Research limitations/implications The benefits derived from positive service experiences, including accessible solutions, self-esteem, and a sense of control over their financial situation, contribute to the service captivity of some consumers, rendering alternative avenues less attractive. Practical implications AFS providers must ensure a socially responsible approach to their marketing practices to minimize potentially harmful outcomes for consumers. However, a systems-level approach is needed to tackle the wider issue of financial precarity. Policymakers need to address the marketplace gaps, regulatory frameworks and social welfare policies that contribute to both vulnerability and captivity. Originality/value This research extends the understanding of service captivity by demonstrating how positive service experiences can perpetuate this situation. Further, specific solutions are proposed at each level of the service system to address service captivity in the AFS sector.

Anti-money laundering – the need for intelligence

2017 ◽  
Vol 24 (3) ◽  
pp. 472-479 ◽  
Author(s):  
Richard John Lowe
Keyword(s):  
Money Laundering ◽  
Organized Crime ◽  
Financial Services ◽  
National Level ◽  
Financial Sector ◽  
International Standards ◽  
Policy Makers ◽  
Content Type ◽  
The Military ◽  
The Impact

Purpose The purpose of this paper is to highlight the need for predictive intelligence to support anti-money laundering programs in the financial sector. Design/methodology/approach The methodology adopted herein consists of a literature review on the use of intelligence in anti-money laundering, the sources of intelligence and information used in the financial sector, supported by experience gained from investigating and prosecuting money laundering cases, and the assistance provided to financial services companies. Findings Banks and other regulated services are required to meet international standards to deny services to criminals and terrorists, identify suspicious activity and report to the authorities. Regulated businesses have large operations which check customers against sources that confirm their identity or against lists of proscribed or suspected offenders at an individual or national level. Their controls tend to look backwards when other organisations that rely on intelligence, such as the military, value predictive, forward-looking intelligence. The penalties that banks and others face for failure in their controls are increasingly severe, as looking backwards and not forwards reduces the extent to which the controls meet their purpose of reducing the impact of organized crime and terrorism. Originality/value This paper serves as a useful guide to alert and educate anti-money laundering professionals, law enforcement and policy makers of the importance of predictive intelligence in countering organized crime and terrorism. It also considers whether lessons in intelligence handling from other areas can inform a debate on how intelligence can be developed to counter money laundering.

scholarly journals Taiwan's budgetary responses to COVID-19: the use of special budgets

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Wei-Jie Liao ◽  
Nai-Ling Kuo ◽  
Shih-Hsien Chuang
Keyword(s):  
Lessons Learned ◽  
Fiscal Sustainability ◽  
Short Term ◽  
Content Type ◽  
The Great Recession ◽  
News Reports ◽  
Economic Stimulus ◽  
Fiscal Implications ◽  
Taiwanese Government

PurposeThe authors examine the Taiwanese government's budgetary responses to COVID-19, with a focus on the special budgets created for containing the virus, undertaking bailouts and providing economic stimulus. The authors assess the short-term and long-term fiscal implications of the budgetary measures and discuss how Taiwan's experiences could provide lessons for other countries for future emergencies.Design/methodology/approachThe authors collect data from Taiwan's official documents and news reports and compare the special budgets proposed by the Taiwanese government during the Great Recession and the COVID-19 pandemic. The authors discuss lessons learned from the 2008–09 special budget and possible concerns of the 2020 special budgets. In the conclusions, the authors discuss potential long-term implications for Taiwan's budgetary system as well as possible lessons for other countries based on Taiwan's experiencesFindingsThe authors found that the 2008–09 special budgets focused only on economic stimulus, whereas the 2020 special budgets covered COVID-19 treatments, bailouts and economic stimulus. In 2020, the Taiwanese government devised targeted bailout plans for industries and individuals most affected by the pandemic and created the Triple Stimulus Vouchers to boost the economy. Since the special budgets were largely funded through borrowing, the authors pointed out concerns for fiscal sustainability and intergenerational equity.Originality/valueCOVID-19 has changed how the world functions massively. This work adds to the literature on COVID-19 by providing Taiwan's budgetary responses to the pandemic. This work also identifies ways for Taiwan to improve the existing budgetary system and discusses lessons for other countries.

scholarly journals How entrepreneurs think: financial decisions for the long or short term

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Jonas Debrulle ◽  
Johan Maes ◽  
Elliroma Gardiner
Keyword(s):  
Intrinsic Motivation ◽  
Business Performance ◽  
Extrinsic Motivation ◽  
Structured Interviews ◽  
Short Term ◽  
Return On Assets ◽  
Content Type ◽  
Financial Decisions ◽  
Start Up ◽  
New Business

Purpose The purpose of this paper is to suggest that different start-up motivations make entrepreneurs pursue different kinds of new business performance, which in this study are expressed in financial terms (i.e. return on assets). The authors posit that so-called extrinsic motivation urges entrepreneurs to be more short-term oriented, while their intrinsic motivation encourages a longer-term business vision. Additionally, this paper explores how intrinsic and extrinsic entrepreneurship motivations combine and produce financial dilemmas for entrepreneurs. Design/methodology/approach The analyses are based on 300 entrepreneurs across diverse industries in Belgium. Data was collected for this study through structured interviews with entrepreneurs combined with a company questionnaire. Financial data was obtained through a government database. Findings Results confirm that extrinsic entrepreneurship motivation boosts new business short-term financial performance, whereas intrinsic motivation contributes to the firm’s longer-term financial returns. This paper also shows that a mix of intrinsic and extrinsic motivations directs entrepreneurs toward different profitability levels during the organization’s survival and early-establishment phase. Originality/value Research on entrepreneurship has not yet corroborated that motivations can be personally conflicting, thereby saddling the entrepreneur with dilemmas that may manifest into different levels of business performance.

scholarly journals Is bank‐debt maturity contingent on the financial system?

2014 ◽  
Vol 27 (2) ◽  
pp. 183-208 ◽  
Author(s):  
Paolo Saona ◽  
Eleuterio Vallelado
Keyword(s):  
Institutional Environment ◽  
Debt Maturity ◽  
Governance Mechanism ◽  
Bank Debt ◽  
Short Term ◽  
Content Type ◽  
Financial Decisions ◽  
Corporate Governance Mechanism ◽  
The Empirical Analysis ◽  
Unbalanced Panel Data

Purpose The purpose of this paper is to determine whether bank debt‐maturity decisions are conditioned by growth opportunities, the firms’ ownership structure, or the institutional environment. Design/methodology/approach The empirical analysis is undertaken using an unbalanced panel data of Chilean and Spanish firms. Findings The results indicate that when banks are not allowed to become stockholders, managers use bank debt‐maturity as a corporate governance mechanism. When banks can participate in the ownership of the firms that they finance, short‐term bank debt can serve as a substitute for a governance mechanism. Originality/value The main contribution of this paper is the analysis of how differences in financial development among countries modify financial decisions by firms.

Firm, industry, and country level determinants of capital structure: evidence from Pakistan

2016 ◽  
Vol 5 (3) ◽  
pp. 362-384 ◽  
Author(s):  
Tanveer Ahsan ◽  
Man Wang ◽  
Muhammad Azeem Qureshi
Keyword(s):  
Corporate Governance ◽  
Capital Structure ◽  
Economic Conditions ◽  
Governance Mechanism ◽  
Short Term ◽  
Policy Makers ◽  
Content Type ◽  
Financial Firms ◽  
Country Level ◽  
Corporate Governance Mechanism

Purpose The purpose of this paper is to find out firm, industry, and country level determinants of capital structure of Pakistani listed non-financial firms. Design/methodology/approach The authors use a fixed effects panel data model over a 39 years (1972-2010) unbalanced panel data of Pakistani non-financial listed firms to determine the factors that influence capital structure of these firms. Findings The authors find that Pakistani firms prefer retained earnings to finance their business projects, and debt is easily available for experienced firms. Moreover, socio-economic collusive networks, poor corporate governance mechanism along with weak legal system provide these firms an opportunity to pass on their risk to the creditors (banks). Research limitations/implications The data set does not contain factors characterizing inter-industry heterogeneity, therefore, the authors use mean industry leverage and mean industry profitability to explore if any relationship exists between leverage of firms, and their respective industry leverage/profitability. Practical implications Pakistani non-financial firms are highly leveraged increasing their probability to face financial distress in erratic economic conditions. As such, the policy makers need to develop capital markets of Pakistan to enable a resilient corporate capital structure. Further, erratic economic conditions of Pakistan create uncertain business environment yielding short-term opportunities and to finance them Pakistani firms use short-term debt as a main financing source. The policy makers need to improve corporate governance mechanism and strengthen legal system that will go a long way to develop Pakistani capital market on sound and sustainable footing. Originality/value This is the first study that uses an extended number of variables and discovers financial behavior of firms in a bank-based economy having limited financing options, and facing erratic economic conditions.

scholarly journals Measuring financial well-being in Europe using a fuzzy set approach

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Antonella D'Agostino ◽  
Monica Rosciano ◽  
Maria Grazia Starita
Keyword(s):  
Financial Services ◽  
Well Being ◽  
European Countries ◽  
Policy Makers ◽  
Content Type ◽  
Cultural Elements ◽  
Tailored Approach ◽  
Different Dimensions ◽  
Practical Implications

PurposeThis paper aims to apply a multidimensional approach to assessing the financial well-being of European countries.Design/methodology/approachFinancial well-being is a very complex phenomenon to measure because it is composed of different dimensions. Therefore, this paper uses a multidimensional and fuzzy methodology to assess financial well-being in Europe. The financial well-being fuzzy indicator was calculated using European Quality of Life Survey data.FindingsFinancial well-being is heterogeneous across European countries. This evidence is confirmed both at the level of overall financial well-being and at the level of sub-indices. The degree of financial well-being is not directly related to wealth as traditionally measured (i.e. GDP), but shows some correspondence with socio-economic characteristics of the population and with governance and cultural elements of a country.Practical implicationsUnderstanding financial well-being could help financial institutions to transition from a one-size-fits-all approach to a more tailored approach when they provide financial services and could help policy makers to consider financial well-being when they decide how and where to allocate public spending.Originality/valueTo the best of authors’ knowledge, this study is the first to employ a fuzzy methodology for the analysis of financial well-being in Europe.

Nontraditional lenders and access to local agricultural credit markets by beginning and female farmers

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Denis Nadolnyak ◽  
Valentina Hartarska
Keyword(s):  
Financial Services ◽  
Credit Markets ◽  
Substitution Effect ◽  
Credit System ◽  
Agricultural Credit ◽  
Content Type ◽  
Access To Credit ◽  
Alternative Financial Services ◽  
Female Farmers ◽  
Branch Density

PurposeThe purpose of this study is to evaluate if access to local branch infrastructure of the farm credit system institutions (FCS), banks and credit unions (BCU), and alternative financial services (AFS) providers is related to the use of credit from non-traditional lenders (NTLs). The focus is on beginning and women operators who are typically credit constrained and thus more likely to suffer from closures of bank branches and consolidation of traditional agricultural lenders.Design/methodology/approachInformed by Detragiache et al. (2000), the authors specify farmers’ use of loans as a function of their access to credit (measured by the branch density of each lender type) along with operator’s and operation’s controls. The measures of loans by NTLs (number, use, share and lender type) require the use of Poisson, Probit, Tobit and Multinomial Logit techniques. This study utilizes individual producer data from the 2018 Agricultural Resource Management Survey and 2018 county-level branch density data for FCS, BCU and AFS providers.FindingsAccess to credit from FCS is helpful to BFRs only, while access to AFS is associated with the use of loans from NTLs by women but not by BFRs. As expected, access to BCU credit matters for the use of loans from NTLs, with a complementary effect for BFRs but a substitution effect for women’s use of such loans.Originality/valueThere are no studies on local agricultural credit markets in the US that evaluate the implications from changes in access to credit on credit-constrained borrowers and their use of NTLs’ credit.

scholarly journals Measuring and profiling financial literacy in South Africa

2018 ◽  
Vol 21 (1) ◽  
Author(s):  
Elizabeth L. Nanziri ◽  
Murray Leibbrandt
Keyword(s):  
South Africa ◽  
Financial Literacy ◽  
Financial Services ◽  
Financial Education ◽  
Multivariate Regression Analysis ◽  
Policy Makers ◽  
Financial Decisions ◽  
South Africans ◽  
Financial Behaviour ◽  
Using Data

Background: Microeconomic theories of financial behaviour tend to assume that consumers possess financial skills necessary to undertake related financial decisions. Aim and setting: We investigated this assumption by exploring the distribution of financial literacy among South Africans. Method: In the absence of a standard measure, a financial literacy index was constructed for the country using data collected on attitudes (towards), access to and use of financial services over the period 2005–2009. In a multivariate regression analysis, we used the index to examine the extent to which differences in financial literacy correlate with demographic and economic characteristics. Results: The index revealed substantial variation in financial literacy by age, education, province and race. Overall, demographic characteristics contributed up to 10% of the financial literacy differences among individuals in South Africa. Conclusion: These results can be used to guide policy makers where to place more emphasis in terms of financial education for South Africans.

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