Institutional framework in developing economies

PurposeThe purpose of this paper is to examine the impact of individual components of financial literacy in promoting financial inclusion of poor households in rural Uganda.Design/methodology/approachThe study was cross-sectional combined with correlation and regression analyses. Data were collected from 400 poor households drawn from four regions in rural Uganda. Hierarchical regression analysis was used to test for the contribution of individual components of financial literacy on financial inclusion of poor households in rural Uganda. In addition, confirmatory factor analysis was used to establish existence of convergent validity between the items used to measure the different constructs under study. Furthermore, analysis of variance was also adopted to test for variation in perceptions of poor households on being financially included.FindingsThe results generated from the study revealed that only attitude as a component of financial literacy significantly and positively predicts financial inclusion of poor households in rural Uganda. Contrary to previous thinking and empirical studies, behavior, knowledge, and skills are not significant predictors of financial inclusion of poor households in rural Uganda. Overall, the combined effect of the different components of financial literacy explains about 11.2 percent of the variance in financial inclusion of poor households in rural Uganda.Research limitations/implicationsThe study was not without limitations. The study adopted only cross-sectional study design, thus, leaving out longitudinal study. Therefore, future studies employing longitudinal research design worth undertaking. Furthermore, the sample although large enough focused only on poor households located in rural Uganda, therefore, ignoring peri-urban and urban areas in Uganda. Besides, the study used only quantitative data, thus, qualitative study using key informant interviews may be considered for further research.Practical implicationsThe paper indicates that policy makers, advocates of financial inclusion and researchers, should reconsider investigating individual contribution of the different components of financial literacy in promoting financial inclusion of poor households in rural Uganda. For researchers, it is important to re-analyze the individual components of financial literacy of behavior, knowledge, skills, and attitude in influencing financial inclusion of poor households in rural Uganda.Originality/valueThis paper combines both functional components (behavior and attitude) and non-functional measures (knowledge and skills) of financial literacy to explain financial inclusion of poor households in rural Uganda. Most financial literacy studies have mainly adopted only non-functional measures of knowledge and skills. Besides, these studies ignore the individual contribution of functional components and non-functional measures of financial literacy in explaining financial inclusion of poor households. Thus, this study is the first to examine the impact of individual components of financial literacy in explaining financial inclusion of poor households in rural Uganda.

PurposeThe purpose of this paper is to establish the mediating role of collective action in the relationship between financial intermediation and financial inclusion of the poor in rural Uganda.Design/methodology/approachThe paper uses structural equation modeling (SEM) through bootstrap approach constructed using analysis of moment structures to test for the mediating role of collective action in the relationship between financial intermediation and financial inclusion of the poor in rural Uganda. Besides, the paper adopts Baron and Kenny’s (1986) approach to establish whether conditions for mediation by collective action exist.FindingsThe results revealed that collective action significantly mediates the relationship between financial intermediation and financial inclusion of the poor in rural Uganda. The findings further indicated that the mediated model had better model fit indices than the non-mediated model under SEM bootstrap. Furthermore, the results showed that both collective action and financial intermediation have significant and direct impacts on financial inclusion of the poor in rural Uganda. Therefore, the findings suggest that the presence of collective action boost financial intermediation for improved financial inclusion of the poor in rural Uganda.Research limitations/implicationsThe study used quantitative data collected through cross-sectional research design. Further studies through the use of interviews could be adopted in future. Methodologically, the study adopted use of SEM bootstrap approach to establish the mediating effect of collective action. However, it ignored the Sobel’s test and MedGraph methods. Future studies could adopt the use of alternative methods of Sobel’s test and MedGraph. Additionally, the study focused only on semi-formal financial institutions. Hence, further studies may consider the use of data collected from formal and informal institutions.Practical implicationsPolicy makers and managers of financial institutions should consider the role of collective action in promoting economic development, especially in developing countries. They should create structures and design financial services and products that promote collective action among the poor in rural Uganda.Originality/valueAlthough several scholars have articulated financial inclusion based on both the supply and demand side factors, this is the first study to test the mediating role of collective action in the relationship between financial intermediation and financial inclusion of the poor in rural Uganda using SEM bootstrap approach. Theoretically, the study combines the role of collective action with financial intermediation to promote financial inclusion. Financial intermediation theory ignores the role played by collective action in the intermediation process between the surplus and deficit units.

Premised on Meta analysis of financial intermediation theory by Gurley and Shaw (1960), Leland and Pyle (1977), Diamond and Dybvig (1983), Allen and Santomero (1996), Scholtens and van Wensveen (2000), the main purpose of this study is to test for the predictive power of each of the dimensions of financial intermediation of market penetration and quality of financial services on financial inclusion of the poor by microfinance banks in rural sub-Saharan Africa grounded on the financial intermediation theory. This study adopted a cross-sectional research design and data were collected from 400 poor households located in rural Uganda. The data were analyzed using ordinary least square hierarchical regression (OLS) in SPSS (statistical packages for social sciences) to generate the explanatory power of each of the dimensions of financial intermediation on financial inclusion based on coefficient of determination (R²). In addition, results from analysis of variances (ANOVA) were also generated to establish the differences in the perceptions of the poor towards being financially included through financial intermediation. The results revealed that market penetration and quality of financial services as dimensions of financial intermediation significantly explains 22 percent of the variation in financial inclusion of the poor in rural Uganda. Additionally, when individual effects were considered, both market penetration and quality of financial services had significant and positive effects on financial inclusion of the poor in rural Uganda. Accordingly, our study contributes and recommends specific policies toward the role of financial intermediaries in financial deepening, especially in rural sub-Saharan Africa where there are limited presence of traditional banking structures to serve the unbanked rural poor households.

PurposeThe purpose of this paper is to report the findings on the mediating effect of social network in the relationship between institutional framework and financial inclusion in rural Uganda.Design/methodology/approachThe study employs a cross-sectional research design to collect data used to test for mediation under this study. Structural equation model (SEM) through use of bootstrap in the Analysis of Moment Structures (AMOS) was adopted to establish the existence and type of mediation by social network in the relationship between institutional framework and financial inclusion.FindingsSocial network had a partial mediating effect in the relationship between institutional framework and financial inclusion. In addition, institutional framework through its regulative, normative and cultural-cognitive pillars also exhibited a significant direct effect on financial inclusion. Besides, social network had a positive and significant effect on financial inclusion. This suggest that there exist both a direct effect of institutional framework on financial inclusion and an indirect effect of institutional framework through social network on financial inclusion.Research limitations/implicationsWhile the sample for this study was big enough, it limited itself to only poor households in rural Uganda. Besides, the current study adopted cross-sectional design, thus, leaving out longitudinal design to investigate the characteristics in the sample over time.Practical implicationsThe study makes significant empirical contribution and implications to financial inclusion policy makers on evidence of the critical role played by social network in indirectly enhancing the relationship between institutional framework and financial inclusion of the poor who are vulnerable to exclusion by main stream financial services’ providers.Originality/valueThe study recommends that social network, which acts as a conduit through which useful information flow and can be shared, plays a critical role in mediating the relationship between institutional framework and financial inclusion in rural Uganda. Therefore, the study contributes to existing body of literature by highlighting the mediating influence of social network in the relationship between institutional framework and financial inclusion, especially in rural Uganda.

PurposeDrawing from the fact that institutions act as incentives and disincentives to human behaviour in financial markets, the purpose of this study is to examine the moderating role of institutional pillars in the relationship between financial intermediation and financial inclusion of the poor in rural Uganda.Design/methodology/approachThe study used cross-sectional research design and data were collected from the poor residing in rural Uganda. Statistical package for social sciences was used to analyse the data. Descriptive statistics, correlations and regression analyses were generated. Besides, ModGraph excel programme was adopted to graphically explain the moderating role of institutional pillars in the relationship between financial intermediation and financial inclusion of the poor in rural Uganda.FindingsThe results revealed that institutional pillars of regulative (formal rules), normative (informal norms) and cultural cognitive (cognition) significantly moderate the relationship between financial intermediation and financial inclusion of the poor. Furthermore, the results also indicated that financial intermediation and institutional pillars have significant effects on financial inclusion of the poor in rural Uganda.Research limitations/implicationsThe study focuses on only cross-sectional design, thus, leaving out longitudinal study. Future research using longitudinal data that explore behaviours of the poor over time could be useful. In addition, only quantitative data were used to measure variables under study and use of qualitative data were ignored. Thus, further studies using qualitative data are feasible.Practical implicationsPolicymakers and advocates of financial inclusion in a developing country such as Uganda should adopt institutional pillars (regulative, normative and cultural-cognitive) in promoting financial intermediation in rural areas. The institutional pillars working in combination set the “rule of the game” or “humanly devise constraints” that guide economic exchange by promoting and limiting certain actions of actors in underdeveloped financial market as stipulated by North (1990) and Scott (1995).Originality/valueTo the best of the authors’ knowledge, this is the first attempt to examine the moderating role of institutional pillars under the theory of institutions in the relationship between financial intermediation and financial inclusion of the poor in a developing country setting. Indeed, institutions guide contract enforceability and information sharing in human interaction to lower transaction cost in the financial markets. This is missing in literature and theory of financial intermediation in promoting financial inclusion, especially in rural Uganda.

PurposeThe purpose of this paper is to establish the mediating role of social capital in the relationship between financial intermediation and financial inclusion in rural Uganda.Design/methodology/approachThe current study used cross-sectional research design and a semi-structured questionnaire was used to collect data for this study. The study applied structural equation modeling through bootstrap approach in AMOS to establish the mediating role of social capital in the relationship between financial intermediation and financial inclusion.FindingsThe results indicated that social capital significantly mediates the relationship between financial intermediation and financial inclusion in rural Uganda. Therefore, it can be deduced that social capital among the poor play an important role in promoting financial intermediation for improved financial inclusion in rural Uganda.Research limitations/implicationsAlthough the sample was large, it may not be generalized to other segments of the population. Data were collected from only poor households located in rural Uganda. Besides, the study was cross-sectional, thus, limiting efforts in investigating certain characteristics of the sample over time. Perhaps future studies could adopt the use of longitudinal research design.Practical implicationsFinancial institutions such as banks should rely on social capital as a substitute for physical collateral in order to promote financial inclusion, especially among the poor in rural Uganda.Originality/valueThis study provides empirical evidence on phenomenon not studied in rural areas in Sub-Saharan Africa where the poor use social capital embedded in customs and norms for doing business. The results highlight the importance of social capital in mediating the relationship between financial intermediation and financial inclusion of the poor in rural Uganda.

PurposeWith reference to the global financial crisis and lessons learned, advocacy for distributing suitable financial products by financial intermediaries remain key if consumers, especially the illiterate in underdeveloped financial markets, are to be absorbed into the formal financial system. Financial intermediaries such as microfinance banks should provide suitable financial products, with full disclosure of information and customer protection relating to distribution of all financial products within the financial market to prevent financial vulnerability. The main purpose of this study is to establish the mediating role of financial product suitability in the relationship between access to microfinance products and survival of women micro-agribusinesses in rural Uganda.Design/methodology/approachSmartPLS with bootstrap based on 5,000 samples was used to test for the mediating role of financial product suitability in the relationship between access to microfinance products and survival of women micro-agribusinesses in rural Uganda.FindingsThe results revealed that financial product suitability improves access to microfinance products by 29 percentage points to promote survival of women micro-agribusinesses in rural Uganda. In reality, delivering suitable financial products that suit the economic condition of poor women micro-agribusiness borrowers, can allow them to use these products to generate income to meet timely repayment obligations and business demands.Research limitations/implicationsThe current study selected samples from only women micro-agribusinesses operating in rural Uganda, with a specific focus on the northern region. Thus, studies involving samples selected from other rural developing countries may be necessary in future. Additionally, while the findings are significant, the data were collected from only women microenterprises who are clients of microfinance banks. Future studies focusing on women microenterprises who are clients of other financial institutions may offer insightful comparative data.Practical implicationsThe findings from this study offer strategies for managers of microfinance banks to invent and design financial products that suit the economic status and condition of different microcredit clients, especially the women micro-agribusinesses. This can help them to solve the problem of defaults in loan repayment and delinquency common while lending to the rural poor. In fact, microfinance banks should adopt a customized loan pricing model that can promote the operational sustainability and commercial viability of women micro-agribusinesses in the current situation of mission adrift.Originality/valueThe current study uses the suitability rule and economic theory to elucidate the importance of microfinance product suitability to increase microfinance inclusion of women micro-agribusinesses in rural areas in developing countries. The novelty in this paper is in combining the suitability rule and economic theory with microfinance theory to promote access to microcredit by the women micro-agribusinesses in rural Uganda under the situation of mission adrift. This is limited in the existing microfinance literature and theory, especially in developing countries like Uganda.

PurposePremised on the argument that cognition structures the way how individuals think and make decisions, the purpose of this paper is to test the interaction effect of cognition in the relationship between financial literacy and financial inclusion of the poor in rural Uganda.Design/methodology/approachThe study used cross-sectional research design and quantitative data were collected and analyzed using Statistical Package for Social Sciences. Baron and Kenny guidelines were adopted to test for existence of moderating effect of cognition in the relationship between financial literacy and financial inclusion of the poor in rural Uganda. Furthermore, ModGraph excel software was used to establish the magnitude of moderating effect of cognition in the relationship between financial literacy and financial inclusion of the poor in rural Uganda.FindingsThe results revealed that cognition significantly moderate the relationship between financial literacy and financial inclusion of the poor in rural Uganda. In addition, both cognition and financial literacy also have direct effects on financial inclusion of the poor in rural Uganda.Research limitations/implicationsThe study adopted cross-sectional research design and data were collected by use of only questionnaires. Future studies through longitudinal research design may be employed. Besides, further studies using interviews may be adopted. Furthermore, this study collected data from only tier 3 financial institutions, thus, ignoring the other financial institutions. Future studies could focus on financial institutions under the other tiers.Practical implicationsThe findings from the study enlightens policy-makers, managers of financial institutions, and financial inclusion advocates on the importance of cognition in enhancing financial literacy among the poor, especially in rural Uganda. Cognition combined with financial literacy helps the poor to make wise financial decisions and choices toward consuming financial services and products provided by formal financial institutions. This leads to increased scope of financial inclusion of the poor in rural Uganda. Therefore, advocates of financial literacy should assess community cultural cognition and utilize them to design and fashion effective financial literacy interventions that can promote financial inclusion.Originality/valueThe study uses Baron and Kenny and ModGraph excel software to test for the interaction effect of cognition in the relationship between financial literacy and financial inclusion of the poor in rural Uganda. While several studies exist worldwide on financial inclusion, this study is the first to test the interaction effect of cognition in the relationship between financial literacy and financial inclusion of the poor in rural areas in a developing country context.

In a free-enterprise economy such as that of the United States it is the vital function of the money and capital markets to allocate the limited supply of savings among the virtually limitless investment opportunities available.Surplus funds are accumulated by some individuals, business firms, public agencies, and other savers; these funds are borrowed by other individuals, business firms, public agencies, and other borrowers for investment in new homes, production facilities, schools and highways, and the like.Financial institutions such as commercial banks, savings and loan associations, and insurance companies serve as intermediaries between savers and borrowers.These financial intermediaries compete for the funds accumulated by savers through both the price and the quality of service they offer.Borrowers compete for funds by means of the interest rate they pay and the degree of security of the loan or investment they provide.It is the economic function of the financial intermediaries to scrutinize each loan or investment opportunity to insure that the funds channeled through them are directed into the investment applications which afford the least risk of loss with the highest prospect of a profitable return on the savers' money invested.In this way the money and capital markets provide a mechanism by which the scarce supply of savings may be channeled into the most productive uses and hence by which economic growth and progress may be maximized.Financial intermediaries perform other functions which facilitate the flow of savings into investment.By accepting the relatively small accumulations of money from individual savers and making the funds available to meet the relatively large investment needs of borrowers, they provide a diversification of risk which would not be possible if the investment by savers were direct.Since funds deposited in a bank or savings and loan association are backed by all the loans and investments of the bank or association and suitably protected by capital or reserves, failure of a single loan or investment need not result in loss to the individual saver.Further, specializing in the appraisal of loan and investment applications, financial institutions are able to develop a degree of expertise to which most individuals simply cannot aspire.Finally, the pooling of large numbers of small savings accounts affords economies of scale which reduce the borrowers' cost of acquiring funds while at the same time providing profit opportunities to the financial institution.The optimum allocation of capital afforded by the market and the advantages provided by financial intermediaries can be achieved only if financial institutions are

The need for rural financial development in developing countries has been suggested in recent literature since a large proportion of rural households lack access to sustainable financial services. To this end, financial liberalization (elimination of the repressive policies) is recommended.This thesis is concerned with the rural financial development in an economically less-developed region of Indonesia, Lombok-NTB province, after financial liberalisation (particularly during 1988-1998). Unlike previous studies on rural financial development in Indonesia, which were heavily reliant on information from successful rural/micro financial institutions, this study comprehensively sought and analysed information from both sides of the market, the supply and demand. More specifically, the study examined the impacts of financial liberalization on the extent and efficiency of the rural financial system at the provincial level (Objective 1), the performance of the rural financial institutions (RFI) at the sub-district level (Objective 2), and the households' demand for and access to financial services from various sources (Objective 3) and the factors associated with them (Objective 4).In the analyses, the study used quantitative and qualitative data collected from primary and secondary sources, involving two surveys (involving 25 RFIs and 180 households of Lombok), several case studies, and published and unpublished financial and socio-economic statistics from relevant institutions at the provincial level. The data analyses included descriptive statistics, associations, mean differences and correlation, depending on the data measurements and the objectives of the analyses.The study found the following. In many respects, the financial liberalization brought a substantial improvement in the rural financial market of a less developed economy of Indonesia, NTB province where Lombok is a part. The liberalisation of interest rate shifted the economics of the rural (micro) financial services from unprofitable business to economically promising business while the liberalisation of rural financial institution entry opened the way for the establishment of new rural financial institutions. As a result, five types of RFIs, one upgrade and four new, were brought into the rural financial market during the liberalisation process. All these RFIs were for profit entities. The level of financial intermediation by bank RFIs was generally improved, as their Loan to Deposit Ratio (LDR) moved toward 100 per cent. The bank interest rate was consistently higher than the inflation rate, providing a basis for cost-effective financial intermediation. Although, the relative size of the rural bank group (measured as its share in bank assets, credits, and savings) experienced a sharp decline a few years after the 1988 bank entry liberalisation, the decline was not due to the non-performance of the new rural banks, but due to the conversion of a large private rural bank into a commercial bank in 1991.Other than the financial policy, market environments such as population, economic condition, and infrastructure also affected the performance of the RFIs. Further, the performance of the individual RFIs varied by type, office network, asset size, service policies and mechanisms.The structure of the household demand for financial services revealed that the formal financial system was superior to the informal one in terms of the total saving amounts, number of savers and credit amounts but inferior with respect to the number of borrowers. Further, some indications of mismatches between the financial services available to and demanded by the households were found in terms of the amounts, time, requirements and repayment systems. Small borrowers and farmers remained under-served by the formal financial institutions. The households' demand for and access to formal financial services were not only determined by their socio-economic characteristics but also by the features of availed financial services, such as, the interest rate, transaction costs, financial institution type, banking confidence, income, occupation and land assets.The study has two general conclusions. First, financial services to rural households in less developed economies could be profitable, given the opportunity to charge market rate. Second, the rural financial development appeared to be jointly determined by factors internal and external to the three principal actors — financial institutions, households and government — in the rural financial development process and the functioning of the rural financial market. The study has several implications to the field of rural (micro) finance and rural financial development policies and practice.

List of Tables List of Figures Acknowledgements Foreword J.P.Roth Notes on the Contributors INTRODUCTORY ESSAY Financial Intermediation in the Age of Global Capital G.L.Perlin PART ONE: THE NEW FINANCE ERA: CHALLENGES AND OPPORTUNITIES Banking in the 21st Century: The View from Deutsche Bank R.E.Breuer The Internet and the Commercial Banking Industry: Strategic Implications from a U.S. Perspective W.C.Hunter Three Imperatives to Foster as a Financial Institution in the Euro-era J.Huyghebaert Integrating Risk Management and Capital Management P.Shimpi IT and the Pressure to Innovate and Restructure L.H.Thunell PART TWO: FINANCIAL MARKETS: FUTURE DEVELOPMENTS Global Finance Beyond 2000: SWX Swiss Exchange's Challenge A.Hunziker-Ebneter Online Trading Changes the Capital Markets M.Leclerc ABB as a Major User of Financial Markets J.Roxendal The Transformation of Stock Exchanges in Europe D.P.Tirez & T.Verhoest Hong Kong Financial Centre A.Tsui PART THREE: REGULATORY/SUPERVISORY AUTHORITIES: STRENGTHENING FINANCIAL INTERMEDIATION The Basic Capital Requirements: A First Step Towards Regulation A.Crockett New Tools and Risks in Financial Intermediation in Emerging Markets: Should Regulators and Raters Adopt New Methods? The Case of Asia P.F.Delhaise The Role of the Financial Stability Institute of the Bank for International Settlements J.G.Heimann Switzerland and the Challenges of Globalization B.Hentsch Does the World Need a New Financial Architecture? L.Muhlemann A View from an Emerging Economy A.M.Negm Japan's Financial System M.Wakatsuki PART FOUR: ACADEMICS' AND RESEARCHERS' VANTAGE POINTS Rethinking the African Financial Markets' Architecture in the Era of Globalization K.Adjaoute Banking Regulation: Administrative Rules Versus Market Based Instruments R.Bichsel Credit Risk: The New Frontier in Risk Management D.Cossin Banking: Is Bigger Really Better? J.P.Danthine Turbulence, Crisis and Risk Management S.Neftci On the Quest of the Optimal Portfolio N.Tuchschmid CONCLUDING ESSAY Whither Financial Intermediation? Managerial and Regulatory Issues: Z.Mikdashi Index

The paper examined the mediating role of social networks in the relationship between financial intermediation and financial inclusion of poor households in rural Uganda. The paper used SPSS (statis...

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Conventional gardening leads to major negative effects such as soil degradation, water pollution, biodiversity loss, and health risks for the population. Face to those challenges, organic vegetable farming certified by the Participatory Guarantee System (Bio-PGS) is emerging as a sustainable alternative. This study explores its socio-economic and environmental impacts in urban, peri-urban, and rural areas of the Kadiogo province of Burkina Faso. Data was collected by survey from 20 key informants and 102 Bio-PGS producers. Descriptive analysis and statistical tests (Chi-Square and Fisher) has been applied. In peri-urban, rural, and urban areas, women represent 100%, 76.47%, and 96.83% of producers, respectively. Yields declining, high cost of chemical inputs, and distribution network encourage producers to adopt market gardening of certified bio participatory guarantee system. For biopesticides chili pepper, garlic, and papaya leaf mixture was the most commonly used in urban (60%), rural (12%) and peri urban (19%) areas. As for bio-fertilizers compost (63%) were mostly used in urban areas, Bokassi and compost (17%) in rural areas and Bokassi (21%) in peri-urban areas. Resource-saving practices were reported by 100% of producers in peri-urban areas, 94.12% in rural areas and 46.03% in urban areas. There was a significant difference at the 1% level between peri-urban and urban areas (p < 0.0001) and between rural and urban areas (p = 0.0014). Intercropping was practiced by all farmers in peri-urban areas, 30.77% in rural areas and 63.41% in urban areas. There was a significant difference between the proportions in peri-urban and rural areas (p < 0.0001) and between peri-urban and urban areas (p = 0.0015). Repellant plants were used by 22.77% of producers in peri-urban areas, 100% in rural areas and 78.05% in urban areas. There was a significant difference at the 1% level between the proportions in peri-urban and rural areas (p = 0.0003) and between peri-urban and urban areas (p = 0.0116). Individual producers (98.89%), producers with market access (66.67%), of producers who are members of an association (100%) and Amaranthus producers (96.47%) had an income between 0 and 500,000 CFA francs, with a significant difference compared to those with an income above 500,000 CFA francs. For maximizing Bio-PGS potential, additional efforts are needed, particularly in terms of institutional support and consumer awareness. Key words: Bio-PGS certification, Burkina Faso, Incomes, Vegetable farming, Sustainability

THIS DISSERTATION IS a comprehensive analysis of the functional activities of financial institutions in supplying loanable funds for consumer instalment credit in a given market. The approaches used were (1) to examine a given market with respect to the volume and velocity of short-term consumer instalment credit supplied by commercial banks, financial intermediaries, and trade sources; (2) to analyze the changes in the relative market positions of suppliers of this credit; (3) to evaluate the effectiveness of specific and general monetary controls in this market; and (4) to evaluate the state laws pertaining to commercial banks and financial intermediaries with respect to their influence over these agencies. The results of this study indicated the extent to which monetary policy and controls over financial intermediaries were inadequate in controlling the supply of loanable funds for this market. This was evident from the aggregate volumes and velocity of loanable funds resulting from competitive practices, which, in turn, affected the shifting of loan funds among the suppliers of funds and in the different sectors of the market. During this 10-year period the annual average rate of change in the volume of these credit funds exceeded the annual average rate of change in both disposable personal income and taxable retail sales. The annual average rate of change in disposable personal income was 8.5 per cent, while the average annual rate of change in consumer instalment credit was 22.6 per cent and taxable retail sales 18.7 per cent. The annual year-end volume of loanable funds supplied by the commercial banks not only fluctuated more than the loan volume of the financial intermediaries but also declined as a proportion of the total aggregate volume of credit. In 1950 the commercial banks supplied 68.5 per cent of the total volume of loanable funds supplied by financial and non-financial intermediaries. By 1959 the