The Devil’s Laugh at Corporate Governance: The Case of Punjab and Maharashtra Co-operative Bank (PMC Bank) India

The trust of depositors in the Indian banking system was shaken in September 2019 when the five-page confession letter written by Joy K Thomas, Managing Director and Chief Executive Officer of Punjab and Maharashtra Co-operative Bank (PMC Bank), one of the ten largest co-operative banks in India revealed gross financial irregularities, collusion and fraud in banking operations of PMC Bank from 2008 onwards. The Reserve Bank of India (RBI) came into swift action and placed curbs on routine banking activities and restricted the withdrawal of money to a limited amount. Succumbing to the shock, depositors protested at several places and even, eleven depositors lost their lives. With a huge exposure of 73% of the overall loan portfolio to a single borrower, Housing and Development Infrastructure Ltd (HDIL) & group companies, that too facing insolvency proceedings, the recovery of full money was almost impossible. The malice at PMC Bank is the classic case of crony capitalism, collusion and fraud, and failure of corporate governance. The case draws important lessons for reforming co-operative banking sector and strengthening banking supervision in the country.

FROM COLONIAL CAPITALISM TO CRONY CAPITALISM. HISTORICAL AND INSTITUTIONAL DETERMINANTS OF THE SOCIO-ECONOMIC MODEL FROM THE MALAYSIAN PERSPECTIVE

During the period of colonialism the implementation of colonial capitalism resulted in the integration of Southeast Asia into the global economy, which directly influenced the local socio-economic system. The changes occurring in the region since the 19th century, which is the period discussed in this article, can be analyzed from many points of view. The following paper focuses on the territory of present-day Malaysia, an exceptionally heterogeneous country, and it analyses the results of this transformation and the influence it had on the current socio-economic system. Colonialism has undeniably contributed to the economic growth of the Malay Peninsula while excluding parts of the population and destroying local institutions and existing models of the socio-economic system. Despite this apparent quantitative growth, oligarchic institutions were created, impeding the area's actual qualitative socio-economic development. The decolonization process did not change it sufficiently. The first aim of the article is to indicate the direct historical relationship between colonial capitalism, violently implemented by colonial empires in the conquered territories, and the crony capitalism formed after the decolonization period. Secondly, the author tries to identify oligarchic institutions and the outcomes of their influence. These institutions were created in the historical process within colonial capitalism and are still present today. They fundamentally influence the politics and society of contemporary Malaysia, thus inhibiting qualitative socio-economic transformation. Thirdly, the author, using a variety of indicators and indexes measuring, for example, corruption, the democratization process, or social development, seeks to demonstrate the power of crony capitalism and its institutions and their impact on impeding socio-economic development.

“Good-looking step” in “bad direction” – RBI Internal Working Group proposal

Learning outcomes After discussing this case, the authors expect that the students will have the following learnings: critically analyse the latest Reserve Bank of India (RBI) banking proposal, which was proposed by the Internal Working Group (IWG) in November 2020. Understand concepts such as connected lending, crony capitalism and financial crisis. Have a basic idea about the Banking Regulations Act, 1949 and regulatory framework in the Indian banking sector. Case overview/synopsis This case is an analysis of the recent RBI proposal on banking regulations in India. The authors have referred secondary data in terms of published papers by stalwarts and experts in the banking and economics field. This case analyses the pros and cons of the IWG proposal to RBI governing body. The case also touches upon interesting banking and macroeconomics concepts. What makes this case interesting is that RBI is open to receive comments from all the stakeholders till January 2021. Complexity academic level Applicable to undergraduate and postgraduate students studying banking and finance specialisation in commerce and business management streams. Supplementary materials Teaching notes are available for educators only. Subject code CSS 1: Accounting and Finance.

The Origin of Crony Capitalism in Modern Mexico and its Current Impact on Foreign Direct Investment

This paper analyses to what extent crony capitalism (CC) affects international business activities. By using the case of Canadian companies investing in mining in Mexico, I explain in which ways CC impacts foreign direct investment. My argument is that CC does not imply negative consequences for international business activities if other variables are controlled at the domestic level. CC could even generate positive incentives to foreign investors, deepening corruption problems internally. This type of corruption does not elevate the risk perceived by foreign investors if the process of doing business in Mexico is under the control of domestic power groups.

Symposium on Middle East and North African (MENA) conflict. Part 1: An introduction

Since their independence, countries across the Middle East and North Africa (MENA) have witnessed subsequent waves of social and political conflicts. Armed and non-armed conflicts have almost become a defining feature of a region that has been struggling to find its own identity and a system that best represents its diverse communities and guarantees stability. Calibrated post-war power-sharing formulas of governance have produced authoritarianism, clientelism, elitism and a political post-war economy, where corruption, nepotism, injustice, and crony capitalism are rampant.

Synthesis and Policy Implications

Within a stable macroeconomic framework, there is a need to change how the economy works for all of its citizens. Economics justifies the need to crack down on crony capitalism and rent-seeking, and break up monopolies and oligopolies. This would reduce income and wealth concentration at the top and increase growth by fostering stronger competition and equal access to economic opportunities. These policies are likely to reduce within-country inequality and between-country inequality as well, since they would have their most dramatic impact in poor countries. At a global level, the policy toolbox also includes foreign aid policies designed to attack between-country inequality. International trade policies have been and will continue to be key to give poor countries opportunities to develop faster, linking up with the obvious need for effective domestic and international agricultural and industrial policies in a context of increasing concern with socially and environmentally sustainable development.

Climate literacy in the political forum using Canada as a case study

<p>Evidence-based policy is still lacking in decision-making in Canada and around the world. As much of the world now faces concurrent crises among which are climate change, a global pandemic, and rising wealth inequality, the relationship between politicians and scientists is more important than ever. Climate literacy among office-holders, public servants, and regulators is critical for ushering in change and much needed transformation. Using Canada as a case study, this presentation from an engineer-turned-politician will discuss (1) the progress that has been made in climate literacy, with particular attention to its evolution in the political forum and the role of politicians, (2) a discussion of Canada’s national and the global response to climate change and its link with the COVID-19 pandemic, (3) the climate literacy in the public sphere and the obstacles to its health including undue corporate influence and disinformation. Politicians have an ethical duty to uphold the interests of their constituents, a duty that extends to the environment and to future generations; best-available science rather than the allures of crony-capitalism must win out the tug-of-war to realize that duty.</p>

Review of Russia’s Crony Capitalism: The Path from Market Economy to Kleptocracy by Anders Åslund

Anders Åslund provides a comprehensive description of the main political and economic events of Vladimir Putin’s 20 years at the helm of the country. In politics, Åslund shows how Putin skillfully maneuvered to destroy democracy in Russia. I argue that the “cultural backlash” by older generations played perhaps an even more important role. I also show that the young generations hold rather liberal values, thus providing hope for the future. In economics, Åslund focuses on large state corporations, assets of Putin’s cronies, and macroeconomic policies, with only general statements about the country’s institutional weakness. I complement Åslund’s analysis by a more detailed examination of the impact of institutions and briefly survey fiscal federalism and informal economic activities—issues without which the workings of the Russian economy are hard to understand. (JEL D72, H77, O52, P26, P35)