Cost Of Financial Services Research Articles

Research on the Impact of The Development of Digital Financial Inclusion on Multidimensional Poverty

Based on the provincial panel data of China from 2011 to 2020, this paper empirically analyzes the impact of digital inclusive finance on multidimensional poverty. The research result shows that in the short term, due to the existence of the digital divide effect, the development of digital inclusive finance has deepened the degree of multidimensional poverty; In the long run, digital inclusive finance has played a significant dividend effect, and has promoted the process of multi-dimensional poverty alleviation by reducing the supply cost of financial institutions and the use cost of financial services. The paper provides a useful reference for promoting the development of digital finance, consolidating and expanding the achievements of poverty alleviation and alleviating multidimensional poverty.

A Legal Analysis of the Use of Innovative Technology in the Promotion of Financial Inclusion for Low-Income Earners in South Africa

The promotion of financial inclusion is important for the combating of financial exclusion in many countries, including South Africa. Nonetheless, most low-income earners living in rural areas and informal settlements are still struggling to gain access to basic financial products and financial services in South Africa. This status quo has been caused by a number of factors such as the absence of an adequate financial inclusion policy, the geographical remoteness of financial institutions to most low-income earners, rigid identity documentary requirements, a lack of access to reliable and affordable Internet connection by low-income earners living in informal settlements and rural areas, a lack of financial illiteracy, the high costs of financial services, unemployment and poverty, over-indebtedness, and cultural and psychological hindrances to low-income earners in South Africa. Consequently, these factors have somewhat limited the access to financial services offered by financial institutions to low-income earners living in rural areas and informal settlements. In many countries, including South Africa, the financial sector is relying on innovative technology, especially in banking institutions, to aid in the offering of financial services to their customers. It is against this background that this article discusses selected legal and related challenges affecting the regulation and use of innovative technology to promote financial inclusion for low-income earners in South Africa. The article further discusses possible measures that could be adopted by the government, financial institutions and other relevant regulatory bodies to promote the use of innovative technology to combat the financial exclusion of low-income earners in South Africa.

Financial inclusion and entrepreneurship willingness of youth: Evidence from Mali

AbstractThis study examines the determinants of youth financial inclusion and its impacts on their willingness to become entrepreneurs in Mali. The World Bank's Global Findex database is used to perform Logit estimations and propensity score matching. We find that the financial inclusion of youth seems to be more determined by the attainment of a high level of education, employment status, living in a wealthy family, and having at least one family member with a bank account. Three factors appear as barriers to better financial inclusion of youth: the cost of financial services, the lack of money, and the perception that financial services, savings in particular, are not a necessity. The study also shows that savings and loans have a statistically significant impact on the willingness to engage in entrepreneurial activity, even in the agricultural sector. Particularly for young people, providing them with loan services seems to have more impact than other financial services on the desire to undertake agri‐entrepreneurial activity. The study recommends the strengthening of public policies aimed at expanding credit to youth because of its high impact on their willingness to engage in entrepreneurship in general and in agri‐preneurship in particular in Mali.

Keeping Financial System Clean: Suppressing Terrorist Infiltration of Money or Value Transfer Services in East Africa

This article is about understanding the vulnerability of money or value transfer services (MVTS) to terrorist infiltration in East Africa. The author also analyzes the penetration of money transfer services (MVTS) by criminals and their concealment of income as a result of criminal acts. It also examines some of the causal factors of terrorism in the East African region (EA) and describes some effective and comprehensive law enforcement measures aimed at improving the effectiveness and efficiency of the fight against terrorism in the region. The article describes how civil conflicts in the EA region have led to a lack of banking services, which in turn has made EA vulnerable to terrorist financing, further amplified by conflicts in the region that have led to internal and external displacement of migrant communities, societies, and families that rely heavily on transferring funds to dependents. The author examines the consequences of the endless civil war in Somalia by Al-Shabab and how it has led to spread of terrorism and related terrorist financing to neighboring countries. Most of those countries do not have strong anti-money laundering / terrorist financing (AML/CFT) systems. Financial services such as mobile money, Forex bureaus, and other are exposed to high levels of terrorist financing risk in the EA economy. The author goes on to explain how a weak AML / CFT system has led to difficulties or loss of access to International currency markets, and the pressure on relevant banking relationships has in turn undermined and affected the long-term growth prospects and financial accessibility of countries. This led to an increase in the cost of financial services, which negatively affected the banking ratings. Further the author considers the threat to internal and financial stability from criminal activity – in particular, the significant level of tax crimes (value-added fraud and tax evasion) that affect the flow of government revenue, thereby impeding institutional development. This article also highlights how EA member States, through the FATF regional anti-money laundering authority in Eastern and Southern Africa (ESAAMLG), should improve guidelines, strategies and capabilities, such as risk assessment, which is the basis of the MVTS provider’s risk-based approach. They should help money transfer providers understand how and to what extent their services are vulnerable to ML / TF.

Istraživačka analiza finansijske inkluzije u Čadu

This paper aims to explore the state of financial inclusion in Chad. Adopting a Multiple Correspondence Analysis (MCA) on a sample of 1000 individuals from the Global Findex (2017), the study measured the inclusiveness of financial systems in Chad through a Financial Inclusion Index (FII). Furthermore, it assessed the distribution of the FII using the factor decomposition of the Gini coefficient. The findings showed that the average FII was low, 24.89%, and it varied between 7.43% and 60.35%. Financial institution account, deposit, withdrawal, and debit card ownership were the most influential indicators of financial inclusion in Chad. Moreover, the paper revealed that, despite its low level, financial inclusion was not smoothly distributed among the Chadian population (Gini coefficient of 0.196). The analysis of the financial inclusion inequality profile showed that there was a persistent financial inclusion gender gap in Chad, exacerbated by discriminations in education and income. Thus, policy interventions should target the provision of formal accounts, a reduction of costs of financial services (withdrawal and debit cards), and promoting formal savings by developing adequate savings products, to foster financial inclusion in Chad. Furthermore, these policies should be gender-responsive while considering its interaction with education and income.

Blockchain: Inclusive Technology? (Blockchain: Tecnologia Inclusiva?)

Blockchain has the potential to improve the access, quality and cost of financial services, but technical challenges remain: both operational and related to governance.

Recent Trends in Correspondent Banking Relationships

Correspondent banking relationships (CBRs), which facilitate global trade and economic activity, have been under pressure in several countries. So far, cross-border payments have remained stable and economic activity has been largely unaffected, despite a recent slight decrease in the number of CBRs. However, in a limited number of countries, financial fragilities have been accentuated as their cross-border flows are concentrated through fewer CBRs or maintained through alternative arrangements. These fragilities could undermine affected countries’ long-run growth and financial inclusion prospects by increasing costs of financial services and negatively affecting bank ratings.

A Study on Innovation Resistance Model of Internet Primary Banks

Banks recorded minus returns due to the subprime mortgage crisis in 2008 and regulations on financial instruments. To overcome this, the financial industry has replaced its system, which originally has been done by human, to computer system while joining hands with the IT industry. As time goes by, consumers tend to go online instead of visiting banks as the costs of financial services have been reduced and their speed gets fast. The purpose of this study is to find out what forms psychological resistance regarding internet banks and empirically verify what actually influences the intent to use internet banks. Thus, this study tries to reveal factors that form psychological resistance inhibiting the proliferation of internet banks through study models comprised of the variables suggested in the Innovation Resistance Model by Ram.

Removing Red Tapee Regulation in an Uncertain Environment

The following report is the result of collaborative research between UTS and the Centre of Policy Studies, funded by the Centre for International Finance and Regulation (CIFR) in order to assist the Murray Financial System Inquiry (FSI).Initial discussions with both CIFR and the FSI defined the scope of enquiry so that we report on any general guiding principles for the removal of low quality regulation (‘red tape’) rather than on a set of specific cost-benefit analyses for the removal of specific regulations.The main benefit of removing regulation is the freeing up of resources. The main cost of removing regulation is the increased chance of financial recession. The effects of removing regulation on the character of any recession – for example its depth or duration – are not quantified, since we have eschewed specific measure cost-benefit analyses. This implies we understate the costs of removing regulation. We model a reduction in red tape as a 1% productivity increase in the financial sector and then conduct two sets of simulations to show the macroeconomic effects. The first set is under ABS conventions in which financial services are sold to households and as an input into current production. In the second set we adjust the ABS conventions to recognize the role of financial services in investment. In both sets of simulations a 1% improvement in productivity in financial services translates into a 0.05% productivity increase for the economy. Reducing the cost of financial services stimulates employment in the short run, especially under ABS conventions. It stimulates investment throughout the simulation period, especially under our adjusted convention. The long run effect on GDP of a 1% improvement in productivity in financial services is around 0.070% under our adjusted conventions, and around 0.06% under the ABS conventions, giving an average of 0.065%. Therefore, for a given recession that costs 10% of GDP, a reduction of regulation costs equivalent to a 1% financial services productivity improvement is unjustifiable if it increases the chance of recession by 0.000065 or more.In welfare terms (measured by private consumption) the effect of a 1% improvement in productivity in financial services is approx. twice that of the GDP effect, between 0.14 and 0.12%. Wherever regulation performs a ‘quality control’ service for the financial system, removing it may increase the chance of a recession in a nonlinear way. The relevant feature of quality control is that it uses the surprising power of statistical independence to generate very small probabilities of failure by the multiplication of probabilities. We argue below that if regulation is independent and optimal, it is very costly to remove, and if the regulation is independent but its optimality is unknown, it is risky to remove. We recognize that regulatory measures may not be independent of each other. Framing the policy choice about low quality regulation (‘red tape’) solely in terms of ‘disband or leave in place’ sets aside an important third alternative: to make regulation more independent. Making regulation more independent may involve having different agents – not necessarily different organizations – examine the same issues and monitor the same behaviours independentlyThis may create a false impression of ‘inefficiency’ but fashioning information-rich regulation of the financial sector is rather different to straightforward cost minimization. Part I simulates a positive productivity shock. Part II examines the possibility that the probability of a recession may increase non-linearly with linear reductions in regulation costs.

Impact of Financial Inclusion on Banks Profitability: An Empirical Study of Banking Sector of Karachi, Pakistan.

The main purpose of this research paper is to examine the impact of financial inclusion on banks profitability in Karachi. Financial inclusion is the usage and accessibility of the affordable financial services and products via M- banking, POS, E- banking, ATMs etc. to the deprived, low income and disadvantage sector of the population. Furthermore this study analyzes the relationship amongst the variables of the hypothesis. The foremost reason for targeting the banks of Karachi is that, it is the largest metropolis of Pakistan and generates 65% of the national revenue. The data was collected from the sample size of 149 respondents. The SPSS software was used to statistically analyze the data, moreover descriptive statistics, correlation statistics and regression statistics were utilized to test the research hypotheses. The main variables are financial inclusion and bank’s profitability while the sub variables are usage of financial services, access of financial services, cost of financial services and revenue generation. The significance of this study that creates it distinctive is that it discusses exclusively the topic of the impact of financial inclusion on banks profitability, whereas many other studies consider the topic generally. The findings and results of the research indicate that there is an insignificant relation amongst the variables.

RURAL COMMUNITIES: ADJUSTING TO A FUTURE WITHOUT BANK BRANCHES

This paper reports on a study carried out on the changing nature of financial service delivery in six rural communities in New South Wales and Queensland. All of these towns were revisited to examine changes that had taken place since a previous study undertaken two years earlier when these towns had lost their last bank branch (Beal and Ralston, 1998). The remainder of this paper is in five parts. First, it reviews the background to the major issue concerning the Hawker Inquiry, the closure of bank branches in rural communities, and second, briefly discusses some alternative face-to-face delivery methods. Third, the paper reports on the findings of the survey, including the use of different service providers for savings and investment, transaction services and loans, and the impact of service provision on cash withdrawal and on the shopping habits of residents. This section also reports on respondents' overall satisfaction with the convenience, range and cost of financial services. Fourth, policy implications of the changing nature of financial services provision are discussed and the final section concludes.

From Worldwide Capital Mobility to International Financial Integration: A Review Essay

To be useful to economists, the definition of worldwide financial integration must refer to its welfare-relevant functions or consequences. What ultimately matters is its contribution to the equalization of current and intertemporal trading opportunities, represented by the cost of financial services, at maximum efficiency levels. Analyzing imperfect financial integration implies identifying the obstacles that prevent such equalization, with a lack of perfect capital mobility being only one of the possible impediments. Focusing on how to achieve international equalization, at least cost, of a broad range of financial services is a necessary change for a literature that has tended to rely on single stock, flow, or price correlations to gauge the degree of financial integration, without viewing it as a continuing microeconomic task with many facets.

FINANCE AS AN INDUSTRY: A SIMPLE MODEL OF GROWTH*

THE PURPOSE of the dissertation is to integrate financial intermediation into a theoretical model of real economic output and growth. The methodology involves construction of a model in which capital accumulation is based upon an interest-elastic demand for the capital stock. This model is shown to be capable of adjusting to an equilibrium capital intensity and saving share. To this growth model is added a financial intermediary sector to form a two-sector model of an economy. The production sector uses real inputs of capital and labor to produce a homogeneous good which is then allocated to consumption and real capital accumulation. The financial intermediary sector uses real inputs of capital and labor to produce financial intermediary services. Financial intermediary output is described by a production function for the financial intermediary in which real capital and labor inputs are related to the units of real capital placed by the financial intermediary with production sector firms. That is, for each unit of real capital used to produce the homogeneous good, the financial intermediary expends real resources of capital and labor to gather capital from surplus households in order to place this capital with deficit production units. It is assumed that at the firm level the financial production functions exhibit the usual decreasing average product after some point, which leads to increasing average unit costs. At the aggregate sector level the financial production function exhibits constant returns to scale and constant unit costs, as expansion is carried out by the introduction of new and similarly efficient financial intermediaries. The financial intermediary thus employs real capital and labor in profit-maximizing quantities and pays these factors the competitive factor returns. The intermediary pays deposit rates to attract deposit capital which it then lends to production sector units and earns a loan rate equal to the marginal product of capital. The financial intermediary earns unit revenues equal to the difference between the loan rate and deposit rate. This quantity, called the unit cost of finance, is a per period rate per unit of capital. Total revenues of the intermediary are then composed of these per unit charges. When competition prevails in the financial intermediary market for deposit capital the intermediary is forced to pay a high enough deposit rate so that the intermediary merely covers its real factor input costs. The intermediary thus is capable of adjustments in deposit rates and factor inputs; and in a competitive equilibrium situation it produces financial services at minimum average costs. The deposit rate in a competitive equilibrium is then equal to the production sector marginal product of capital (loan rate) less the minimum average unit cost of financial services. The solution for the variables of the system are determined by a simultaneous solution of the sectoral production functions, the capital demand function (saving function), and capital and labor allocation equations (perfect substitutability). The model is solved for the sectoral capital intensities, the distribution of labor and capital between sectors, the real rates in the system (deposit rate and marginal product of capital), as well as aggregate and per capita income, investment and consumption.