Economic and Financial Integration in South Asia

Many countries in the South Asia region are global players in many aspects due to the nature of emerging markets as well as being democratic countries irrespective of the fact that many people in the region are troubled by higher level of poverty. Many years of regulation in the South Asian region has hampered economic growth and reduced the level of efficiencies in almost all economic activities. However, implementation of market deregulations since the early 1980s in many sectors has benefited the majority of countries in the region in a number of ways. Among others, one of the most significant benefits is the integration of markets in the financial as well as other economic sectors generating better economic achievements. In this study, we examine the process of economic and financial market integration as well as cost/benefit of such a process. We find significant benefits of economic and financial market integration to the region.

Islamic Finance in India

In order to provide financial services effectively to almost 1.21 billion people, India has adopted a comprehensive financial system governed under a number of financial regulations. These regulations, through regular amendments, are kept updated and inclusive of modern financial concepts that emerge in national and international markets. Islamic finance is one of such modern concepts emerged at global level. Growing with an annual growth rate of 15-20 percent the Islamic finance industry is holding total assets, value estimated to be more than USD 1.6 trillion. Hence, the authors, in this paper tried to study the feasibility of providing Islamic financial services in India, especially in the areas of Retail banking, Microfinance, Venture Capital financing. The objective of this paper is to identify the major regulatory challenges facing Islamic finance and to propose the possible solutions so as to make this emerging industry an internal part of the Indian financial system.

Financial Sector in Afghanistan

In the following chapter, the authors have proposed to throw light on the scheme of financial sector prevalent in Afghanistan. The purpose of this chapter is to give the readers a brief insight on the financial background, policies and regulations in existence in Afghanistan. Adding upon, the authors have made an attempt to suggest a few recommendations to bring the Afghanistan's economy at par with the economy of other developing nations of the world. The authors received substantial amount of assistance from the top-managerial officials of Bakhtar Bank of Afghanistan and from a scholar named Abdul Samad Katawazy. The authors would like to thank AREU, AISA and ACCI for providing access to their published surveys and reports. This particular chapter as a whole focuses on ten basic factors which have the ability to make or break Afghanistan's financial structure and therefore aims to provide an insight into the same.

Financial Market Reforms in Nepal and Its Presence in South Asia

Financial market is the backbone of the economy, hence is crucial for the economic growth and development of any country. The financial sector also entails the seeds of financial crisis that can spill over across the rest of economy. Though the interaction between various economic sectors is crucial, it requires timely assessment of risks and redressed. This chapter attempts to capture the sequencing and implementation of financial market reforms in Nepal and briefly examine its consequences. The evidence confirms that reforms do not only mean the institutional and policy reforms but also manifests in terms of increase in the number of financial institutions, expansion in the outreach of financial services and products in terms of quality and quantity as well as improvement in the soundness of macroeconomic indicators. Finally, it argues for the continuation of reforms and consolidation in the financial markets to make the system resilient in changing contexts.

Financial Market in Nepal

The Nepalese financial sector is attributed of banking sector and non-banking sector. There is exponential growth in the number of financial institutions in Nepal in the last decade. The existing legal framework and institutional setup in Nepal is not conducive to the overall financial sector and private sector development and thus there is an urgent need for reformation in these sectors. The major impediments to private sector involvement in infrastructure development projects include the political and administrative instability; lack of consistent planning; lack of effective institutional support in designing and development of private sector infrastructure projects. Talking about the capital market and capital gains In Nepal, capital gains on securities transactions are taxed as ordinary income to corporations and individual investors while in most of the emerging markets capital gains on investments in stocks and bonds are not taxed, which need to be reformed as per the international practices.

Regulatory Reforms in Indian Financial Market

In India, Financial sector reforms are at the centre stage of the economic liberalization that was initiated in mid 1991. financial institutions and regulatory structures have been developing gradually & in this process SEBI, the capital market regulator & insurance watchdog IRDA has played a very significant role. On the other hand reserve Bank of Indian has built a strong regulatory environment which can be considered as backbone of Indian financial Industry. This chapter has discussed about the regulatory reforms initiated from 1990s till date in the evolution of Indian financial industry & harmonization of Indian laws to make it a investor friendly state for International Investors & safe platform for stock market trading for householders.

Financial Market Regulatory Structure in South Asia

South Asian region is comprising of countries Sri Lanka, Bangladesh, Afghanistan, Nepal, Bhutan, India, Pakistan & Maldives. The different countries are with different values, market standards & different investors. But one thing is very clear that the south Asian countries are having diversified markets. The presence of different types of the investors make it imperative to study the markets very closely. Without the complete study of the markets it is impossible to advice the investment at all. This chapter is dedication to the brief overview of financial market regulatory structure in all major south Asian countries in SAARC region.

Financial Sector Reforms in South Asian Countries

Several far-reaching reforms to the financial sector were introduced by South Asian countries in early 1980. The nature and progress of these reforms vary from country to country. These reforms covered a number of areas such as promoting competition in the financial sector, developing payment and settlement systems, and strengthening regulations. So far, these reforms have not only helped South Asian countries to significantly raise domestic savings, attract foreign capital, and raise economic growth rates but also provided greater economic integration of South Asia. This chapter performs a close re-scrutiny of the reforms implemented in South Asian countries. Suggestion for further reforms for building efficient, competitive, and resilient financial sector is also provided.

Why Credit Ratings Serve a Greater Role in Emerging Economies than Industrial Nations

The agency problem attributed to dispersed ownership is also principally regarded as being that of the control over powerful management. Whilst there are conflicting views in respect of the degree of agency problems which arise under dispersed and concentrated ownership structures, it appears that additional or greater agency problems will eventually necessitate the need for greater monitoring. In recommending the external auditor's expertise as appropriate for addressing agency problems, this chapter draws attention to the audit committee's roles, presenting them both as vital and complementary corporate governance tools.

Insider Trading

This chapter studies the international market malpractice of insider trading where officials holding a fiduciary duty towards the company, violate the same to utilise company specific and price sensitive information to trade in company securities before such information is announced to the public investors. Information asymmetry, gross violation of ethical standards and abuse of fairness and market integrity are the underlining terms of this offence. The chapter studies four SAARC nations of India, Pakistan, Sri Lanka and Nepal to project their working against insider trading. While countries introduce law and yet fail to enforce it, SAARC countries are encouraged through this chapter to maintain strong ground against this malady. The author projects recommendations and observations to prompt periodic statutory review.