The Role of Islamic Financial Product Innovation in Reduction of Financial Exclusion in Ethiopia

The aim of the chapter is to explain the strategic role of Islamic finance, which can be considered as financial product innovation, in combating financial exclusion in Ethiopia. It intends to assess the extent and the nature of religious-driven financial exclusion of Ethiopian Muslims and the level of their participation in the existing interest free window banking system introduced to the sector recently. In order to collect data for the research, mixed approaches such as questionnaires and semi-structured interviews are used. The questionnaire was distributed to 321 respondents in Addis Ababa in 2017 while the semi-structured interview was conducted with selected high-ranking bank officers. At the end of the analyses there are findings which show the extent of financial exclusion of Ethiopian Muslims due to the absence of alternative financial systems.

Developing Smart Contracts for Financial Payments as Innovation

Innovation in smart contract systems helps to create decentralized payment systems. These developing concepts will be a new perspective to solve transparency issues. Smart contracts can prove all transactions and flow of funds and money between parties. Business deals and financial payment methods are expected to be a hybrid approach in both traditional and smart contracts in the future. Empirical analysis of smart agreements among their emerged platforms, different applications, and design views will enlighten future needs of trade payment methods. This chapter investigates the concept of smart contracts and critical issues for developing on financial payments environment. This research also aims to examine possible advantages of the application of smart contracts as innovation, legal, and technical aspects of the emerging business environment. The analysis will compare new mechanisms securing a block-chain applied to financial payments. This chapter also reviews the mechanisms of smart contracts and block-chain and focus on predicted future areas on the financial system.

Three Horsemen of the Markets

The purpose of this chapter is to examine the impact of technologic improvement and financial development on competitive power in the 28 member countries of the European Union using panel geographically weighted regression analysis for the period of 2004-2016. The findings of the analysis, which show that increasing technological development accelerates the competitive power, support the Schumpeterian hypothesis, revealing that the impact of technology on competitiveness could accelerate with the contribution of the financial sector. In addition, findings reflecting the fact that the foreign trade which has been strengthened via technical development increases the competitive power show that the level of globalization has a contribution to this process, also. It has been observed that securing the property rights and applying the effective patent regimes leads to competitive advantage, and the economic integration process of the European continent has strengthened the competitive force.

Strategic and Innovative Actions of the Government During the Financial Crisis

Financial crises cause significant economic and social problems for the countries. Many companies stop their operations and a lot of people lose their jobs. Especially after the globalization, there is an increase in the number of financial crises. Because of this aspect, governments try to implement necessary actions to prevent the crisis. In this scope, government intervention to the market during the crisis period is a much-debated concept. The aim of this chapter is to identify the success of government intervention in the market in crisis period. For this purpose, three different financial crises are analyzed, which are 1929 Economic Depression, 2001 Turkish Economic Crisis, and 2008 Global Mortgage Crisis. As a result, it is identified that when government intervene into the market in crisis period, the countries can much easily overcome the crisis. Therefore, it is recommended that strategic and innovative actions should be taken by the government in case of economic crisis, such as increasing liquidity level and implementing new regulations.

Strategic Decision Making and Risk Management in the EU

Innovative managerial thinking in global business economics necessitates the follow-up of the developments in the international regulatory framework of risk management for strategic decision making. The risk management framework which evolved from Basel I to Basel III (or with the December 2017 finalizations, the way the market calls it “Basel IV”) in the world economies and Capital Requirements Directive (CRD) V and Capital Requirements Regulation (CRR) II in the European Union have been game changers. Global managers need to take strategic decisions in this new international risk management setting in order to succeed in the competitive global business environment. For effective capital management, risk function and finance function should come together. For effective implementation, this mix should be supported by establishing partnership among the risk, finance, and strategy groups.

Facing Disruptive Innovation

Technological change is creating strategic and managerial challenges. This holds true in the case of disruptive innovations, which are reshaping industry boundaries, exposing organizations to new competitive logics and threats. Companies face the need of new strategies and innovative thinking capabilities. This chapter provides a systematic literature review on the role of disruptions by identifying the changes they have brought in the markets and the new challenges for managers, especially within the domain of strategic management, since disruptive innovations may modify strategic and innovative thinking. The final analysis has been conducted on 19 journal articles published between 1995 and 2018. The results show the strong interplay existing between strategy and innovation management, but they also highlight the relationship between innovative thinking, learning, human capital, and capabilities' acquisition. Furthermore, they encourage further research in the light of the multiple trajectories offered by innovation and disruptions for diverse companies and industries.

Innovative Methods in Financial Risk Management

The regulations that emerged from the global financial crisis of 2008 and fines that were imposed afterwards triggered a wave of changes in how risk is managed. Innovative methods for risk management became more important as the standards for compliance and management tightened. Institutions also invested in strengthening their risk cultures and involved their boards more closely in key risk decisions. This chapter discusses major risk factors for financial institutions and the innovative solutions that they introduced to manage risk better. Innovative solutions in risk management are not limited to advances in technology such as machine learning and data mining, but also include new regulations, better monitoring, and stricter auditing. Financial institutions improved boards' oversight of risk, created new committees for risk assessment and monitoring. and developed new methodologies for risk management.

ESG and Financial Performance

Non-financial information such as environmental, social, governance (ESG) issues is becoming as much important as financial data. This study investigated the empirical relationship between Thomson Reuters Environmental Social Governance (ESG) Combined Score and performance of S&P 500 firms with eleven years of data from between 2006 and 2016. The study confirmed unidirectional positive and significant relation between ESG Combined Score and ROA, suggesting that improvements in ESG score have positive impact on operating performance of the firm. Although simultaneous equation estimations by means of instrumental variables (IV) employing two-stage least squares (2SLS) and three-stage least squares (3SLS) confirmed the significant positive relation between ESG Combined Score and operational profitability (ROA); contrarily, Tobin's Q seemed to affect ESG score rather than the ESG score inducing Tobin's Q. Higher Tobin's Q seems to lead to a lower ESG score. In other words, firms with higher growth potential as denoted by a higher Tobin's Q, are found to be less sensitive to ESG issues.

The Relationship Between Financial Development, Innovation and Economic Growth

Along with the globalization process, the relationship between the existence of an advanced financial system, financial development and economic growth has become one of the most debated issues. The financial system, development and development indicators, which play an important role in the overall success levels of the economy, are among the topics to be considered due to this importance. In this study, financial development, economic growth, and theoretical approaches are discussed. Moreover, the fact that the subject is empirically presenting evidence requires examination of this situation with studies in the literature. The presence of the findings obtained empirically, in particular Turkey's economy has made it necessary to include a large empirical literature. The generally accepted financial development indicators, which provide comparability in terms of countries, are examined in terms of financial markets and financial institutions in terms of depth, access, stability and efficiency during the period 2005-2015.

Thriving at Work as a Psychological Mechanism to Enhance Employee Capability of Innovative Voice

The aim of this chapter is to shed light on the mechanism under the relationship between innovative voice and its predictors of person-job fit and supervisor support. Thriving at work, a personal experience, is proposed as a mediator between predictors and outcome variable. To test the hypothesis, data was collected from 467 white-collar employees from several industries employing both convenience and snowball sampling methods. According to the results of structural equation modelling and bootstrapping method for mediation tests, the findings are as follows: Thriving at work fully mediates the relationship between demand-ability fit, but it only partially mediates the effect of supervisor support. Further, multigroup analysis showed that both pathways were mediated by thriving at work for both gender groups. This study showed that thriving at work fuels employees' innovativeness which is nurtured by relationship quality, task focus, exploration, and other key resources.