Informal Banking Research Articles

Women, Microcredit and Family Planning Practices: A Case Study from Rural Ghana

This paper examines the influence of informal banking club participation on family planning practices in rural Ghana. Research from Asia suggests that family planning practices are improved by club participation. This study examines this thesis in an African context, using rural Ghana as a case study. A sample of 204 women (19 years and older) was drawn from Abokobi village, Ghana. Multivariate analyses of direct, mediating and moderating effects of women’s demographic background characteristics, membership status and length, and women’s empowerment status as predictors of family planning practices are assessed. Findings suggest that club membership and membership length is not associated with family planning practices; however, age, education level, number of children and empowerment status are.

Regulating and Combating Underground Banking

In combating and regulating underground banking, a choice can be made of roughly two models, the risk model and the assimilation model. The risk model comes down to a complete prohibition of underground banking combined with an active investigation and prosecution policy. In the assimilation model, underground banking is recognised as a form of financial services but at the same time, all rules that generally apply to financial services are declared applicable to underground bankers. An effort is made simultaneously to lower the threshold of the formal banking system. The international recommendations and legislation—in particular of the Financial Action Task Force and the European Union—take the assimilation model as their starting point, albeit that no or hardly any attention is paid to the role of the formal banking system. With that, relatively little account is taken as yet in the international community of the historic and socio-economic backgrounds of informal banking systems, their embedment in different cultures and the advantages of the services offered.

INFORMAL CENTRAL BANK INDEPENDENCE: AN ANALYSIS FOR THREE EUROPEAN COUNTRIES

Changes in formal and informal central bank ndependence (CBI) in France, Italy and the United Kingdom in the period from the mid-1970s to the 1990s are examined; the major changes occurred in the 1990s, after the disinflations of the 1980s. Broad trends in the informal independence of central banks (CBs), defined as the ability to pursue price stability regardless of the government’s preferences, are identified on the basis of a monetary policy narrative and an analysis of a set of qualitative determinants of informal independence. The most important determinants are the social/political acceptance that monetary policy is the sphere of the CB, the existence of anti-inflationary commitments in the form of intermediate targets for monetary policy, the degree of social consensus on the means and ends of macroeconomic policy, and the relative technical expertise of the CB. These broad trends help to explain some of the inflation experience of the 1980s and 1990s, which cannot be understood in terms of changes to formal CBI.

Informal Central Bank Independence: An Analysis for Three European Countries

Changes in formal and informal central bank independence (CBI) in France, Italy and the UK in the period from the mid-1970s to the 1990s are examined; the major changes occurred in the 1990s, after the disinflations of the 1980s. Broad trends in the informal independence of central banks, defined as the ability to pursue price stability regardless of the overnment's preferences, are identified on the basis of a monetary policy narrative and an analysis of a set of qualitative determinants of informal independence. The most important determinants are the social/political acceptance that monetary policy is the sphere of the central bank, the existence of anti-inflationary commitments in the form of intermediate targets for monetary policy, the degree of social consensus on the means and ends of macroeconomic policy, and the relative technical expertise of the central bank. These broad trends help to explain some of the inflation experience of the 1980s and 1990s which cannot be understood in terms of changes to formal CBI.

Historical Traces of Hundi, Sociocultural Understanding, and Criminal Abuses of Hawala

This article presents a descriptive and exploratory analysis of informal money transfer systems like Hundi and Hawala starting with a historical account of Hundi, its decline, and re-emergence as a Hawala-like system in South Asia and the Middle East. Hawala is a consequence of a number of factors, such as poor banking infrastructure, global migration, economic crimes, and political corruption. It gained global notoriety after it was suspected that the September 11, 2001, attacks on the United States were carried out with the money that was transferred from the Middle East through Hawala. The article highlights legal, illegal, and criminal abuses of Hawala. By understanding the larger sociocultural, economic, and historical framework, the model of Hawala can be applied to other forms of informal banking that could eventually help in regulating these systems without alienating immigrant and refugee populations. The article makes use of both primary and secondary data.

Migration and illegal finance

Deals with the relationship between migratory flows and financial flows from the viewpoint of economic analysis. Points out the differences between migrants and host populations as this relates to the demand for banking and financial services, for instance the importance to migrants of remittances to their home countries. Analyses the similarities and differences between money laundering and money dirtying (ie financing terrorism) and between formal and informal banking systems and the need for concealment. Focuses on the Italian case, exploring whether there is a relationship between the existence of migration and the risk of terrorist financing. Concludes that empirical aggregate analysis cannot support the existence of a link between intensification of migration flow and the risk of financing Islamic terrorism.

Outreach, Impact, and Sustainability of Informal Banking: A Case Study of the Ouelessebougou-Utah Alliance Microenterprise Program in Mali

This paper presents a case study of a rural credit program sponsored by the Ouelessebougou-Utah Alliance (OUA) in Mali, West Africa. Ethnographic methods are employed to determine the outreach, impact, and sustainability of the program. Findings indicate that program specifications increasingly limit participation to an established and primarily male clientele. Both male and female borrowers reported higher earnings and greater contribution to household expenses; however, access to credit for women is not associated with improved status. The prospect for administrative and financial sustainability of the program is undermined by a weak and ineffective educational component.

Credit, capital and community: informal banking in immigrant communities in the United States, 18801924 The author wishes to acknowledge Professor Shelly Tenenbaum, Clark University, for generously sharing her own research, insight and sources on this topic, and anonymous referees for their comments on an earlier draft of this article.

This article examines immigrant banking in the United States as a pervasive, cross-ethnic development from its heyday during the 1880s and 1890s through its gradual decline, beginning around 1907, until the mid-1920s. Unlike traditional bankers, immigrant bankers usually operated out of other commercial enterprises, such as groceries, bakeries, saloons, booksellers, boarding houses, and pedlars' carts. Located within the economic and social fabric of immigrant neighbourhoods, these ethnic entrepreneurs were crucial financial intermediaries for new immigrants, most notably eastern and southern European immigrants, and they eventually became important investors and property holders in developing urban ethnic enclaves within American cities. As they flourished, however, operators of mainstream banks looked to expand their own business into immigrant communities. By increasing their own services and exploiting growing fears of immigrants and loan sharks, opponents of immigrant bankers passed laws that spelled the end to this important form of popular banking in the early twentieth century.

Financing Of Small And Medium-Size Enterprises In Cameroon

The study was conducted to determine the problems Small and Medium Size Enterprises (SMES) face in obtaining credits which could be a constraint to their creation and growth. Available data from the banking sector shows that as much as 78.7% of all commercial bank loans go to SMEs and large companies. This includes 86.2% of all medium term, 18.9% of all long term and 3.6% of all short term loans. SMEs and large companies pay back their loans better than the other classes of borrowers. Today the average loan repayment by all groups of bank clientele stands at 52.5% which is below World Bank standards. Even the SME loan repayment rate of 62.9% is still low by World Bank standards. From a survey conducted in the city of Douala in 1992, it was found out that the problem of SME financing in Cameroon today is not so much that of inadequacy of funds. Rather it is poor management of resources, the absence of collateral, and the absence of legality, which prevents many SMEs from obtaining loans from formal financing institutions. There is a lot of liquidity in informal financing houses but their lending is limited to members. The government must assist in creating and promoting a reliable environment informal banking institutions which will attract these funds from informal sources so as to make them available to a wider population of borrowers. To further improve on the financing environment of SMEs in Cameroon we may want to switch, from the so called hardware support approach to the software approach which facilitates access to money market information, research findings; which encourages linkages with large firms, within or out of the country; and finally, encourages the development of an entrepreneurial class. African Journal of Finance and Management Vol.9(2) 2001: 8-18

Allocative efficiency and financial deregulation

This paper examines the effects of financial liberalization on allocative efficiency. This has been done in a two-sector model with the sectors earning different rates of return to capital and operating in an environment which includes both formal and informal banking sectors. The allocative efficiency is assumed to be affected if deregulation leads to a reallocation of a given amount of investments between the two sectors. It is shown that deregulation does not always guarantee an improvement in overall productivity and thus in growth. The outcome depends on how the two sectors react toward the formal and informal banking sectors as lenders and as borrowers which ultimately affects the portfolio behavior of the two sectors and consequently allocational efficiency.