Modern Financial Institutions Research Articles

Indian Post Payment Bank: Financial inclusion revolution in India

The Indian financial system has seen several significant changes since 1991. The banking industry is one of the few that has thrived sinceliberalization, and its success is unquestionably tied to the considerable financial reforms adopted by RBI and the significanttechnological improvements that have occurred over the years. In 2014, the Reserve Bank of India (RBI) broadened the variety of banksoperating inside the Indian financial sector. Payment banks and tiny banks are two names for these modern financial institutions. Themajor objective in creating these banks is to increase financial inclusion in underserved rural communities by increasing access tobanking goods and services. The unbanked and underbanked populations may be able to get access to financial services via paymentbanks, a new kind of financial institution. Expanding the availability of financial services is a top priority for them. In this paper, wediscuss the payment banking infrastructure and the benefits that are expected to accrue from it. The Post Payment Banks of Indianfinancial system will be a great first step in providing access to banking services for underserved populations, especially those who aretransient or from low-income families. Is the Indian Post Payment Bank the second phase of financial inclusion following the PradhanMantri Jan Dhan Yojana?This research aims to fill in some of the gaps in our understanding of payment banks by providing a high-leveloverview of their functioning processes and demonstrating how the idea of payment banks accomplishes two goals at once. All of theinformation in this study comes from secondary sources. As a starting step toward its financial inclusion strategy, it is increasing its digitalpayment infrastructure. The second positive effect is that it promotes a more tech-savvy mindset in the Indian banking industry. Theseresults show promise for increasing financial inclusion and access throughout India, especially in rural areas and with a focus on lowincomepeople and small businesses.Key words: Payment Banks, Financial system, Financial Inclusion, Post Payment Banks,

Does financial institutions assure financial support in a digital economy for energy transition? Empirical evidences from Markov chain and DEA technique.

Enhancing the energy transition of the Chinese economy toward digitalization gained high importance in realizing SDG-7 and SDG-17. For this, the role of modern financial institutions in China and their efficient financial support is highly needed. While the rise of the digital economy is a promising new trend, its potential impact on financial institutions and financial support is unproven. For this, this research intended to study how financial institutions assure financial support for China's energy transition toward digitalization. To attain this purpose, DEA analysis and Markov chain techniques are applied to the Chinese data from 2011 to 2021. The results estimated that the transition of the Chinese economy toward digitalization significantly depends upon the digital services of financial institutions and extended digital financial support. The extent of the digital energy transition in China can enhance economic sustainability. The role of Chinese financial institutions accounted for 29.86% of the total effect in transiting China's digital economy. In comparison, the part of digital financial services is found to be significant, with a score of 19.77%. The Markov chain estimates revealed that the digitalization of financial institutions is 86.1%, and financial support is 28.6% important for the digital energy transition of China. The Markov chain result caused a digital energy transition of 28.2% in China from 2011 to 2021. The findings highlighted that China still warrants more prudent and active efforts for financial and economic digitalization, for which the primary research also presents multiple policy recommendations.

Support Vector Machine for Credit System: The Effect of Parameter Optimization and Training Sample

The credit assessment system is an essential part of modern financial institutions, and most of them have adopted different models to perform the task according to their specific needs. Support Vector Machine has been widespread and proved an efficient classifier, especially for relatively small datasets in recent years. When using SVM, data processing, choosing an appropriate kernel function, and tuning parameters can largely affect its performance. The most popular kernel function of SVM is the Radial basis function (RBF), and its main parameters are the regularization parameter, C, and the kernel coefficient, . Our study based on the South German credit dataset demonstrates that parameter optimization and an appropriate ratio of the size of the training dataset to the size of the testing dataset could significantly improve the performance of SVM.

METHODOLOGICAL ASPECTS RECARDING THE PROFESSIONAL SKILLS ASSESSMENT OF STAFF IN INSTITUTIONS PROVIDING FINANCIAL PRODUCTS AND SERVICES

The financial sector of the economy of the Republic of Moldova, established as a result of building the market economy, has complained to many modern financial institutions, which triggered, on the one hand, the profound transformation of the legacy inherited from the state economy, and, on the other hand, the founding of new entities. Obviously, this process has resulted in a shortage of qualified personnel in the field of finance, which, along the way, thanks to the expansion of financial education, has been covered. However, even after three decades, there are deficiencies in the training of staff. One of the fundamental problems in the training and professional development of specialists in the field of currency and credit is the modelling of professional skills, issue that is investigated in this paper. The obtained results can serve as support for the argumentation of the recommendations on the modernization of financial education, the selection and adaptation of the content of the lecture units and non-auditorial teaching activities, but also of the professional training programs and the procedures for assessing professional competences to the contemporary requirements of functioning of financial institutions.

INCOMPATIBLE BUSINESS BEHAVIOR TOWARD ISLAMIC ETHICS: A STUDY ON THE PRACTICES OF RIBA AND BANK INTEREST

Various kinds of interpretations of usury and interest in modern financial institutions (banks), both from jurists and Muslim economists, seem to occur because the 'illat usury put forward by the jurists is seen as inaccurate in the development of Islamic legal thought. Gharar which is translated as speculation is equated with gambling because of the uncertainty for the parties (seller and buyer). This research uses a literature study, which is carried out by collecting, studying and reviewing books, scientific magazines and related documents such as theses and scientific journals. Many modern societies carry out such practices, such as buying and selling agricultural products that are still on the land with a wholesale system. When viewed from the ethical side of Islamic transactions, both usury, interest and gharar violate the ethics of transactions. Ethical considerations prohibiting usury, interest and gharar, due to unfairness, exploitation and unproductiveness. While the system of economic ethics emphasizes products, fairness and honesty in trade, and fair competition. In this case, good ethics will give good business, good ethics: good business. Ethics that is in the spotlight in this study, especially ethics in the operations and transactions of Islamic financial institutions. Then the sharia financial institutions in question include sharia banking, sharia pawnshops, sharia insurance, and sharia capital markets, all of which are some forms of representation of sharia macro financial institutions that are certain. have a significant impact on the nation's economic development. So that behavior that is not in accordance with Islamic ethics, such as related to usury and bank interest, must be avoided for Muslims.

A Novel Financial Risk Identification Algorithm for Online Fintech Platform

The issues we study are risk identification, credit granting, pre-loan and post-loan lending risks in consumer lending and trust loans. How to effectively evaluate and identify the potential default risk of borrowers and calculate the probability of default of borrowers before granting loans is a fundamental part of credit risk management in modern financial institutions. This paper focuses on the statistical analysis of historical loan data from banks and other financial institutions with the help of the idea of non-equilibrium data classification, and the use of the random forest algorithm to establish a loan default prediction model. Then a fixed threshold screening in the form of a black and white list is used. The limitation of the current method is that it cannot meet the lending needs of large-scale transaction classes and cannot be judged quickly. When the number of decision trees in a random forest is large, the space and time required for training are large. In addition, it is insensitive to data and has low accuracy. The experiments found that the machine learning-based financial lending risk prediction method can solve the problem better, and the experimental results phenotyped that the neural network and random forest algorithm outperformed the decision tree and logistic regression classification algorithm in prediction performance. In addition, by using the random forest algorithm to rank the importance of features, the features that have a greater impact on whether the final default can be obtained, so that the lending risk judgment in the financial sector can be more effective.

MODERN FINANCIAL INSTITUTIONS AND MARKETS, THEIR REGULATION IN CRISIS CONDITIONS: INTERNATIONAL EXPERIENCE AND RUSSIAN PRACTICE(Review of the Speeches of the Participants of the Thematic Conference "Banks and Financial Markets" of the Fourth Russian Economic Congress)

MODERN FINANCIAL INSTITUTIONS AND MARKETS, THEIR REGULATION IN CRISIS CONDITIONS: INTERNATIONAL EXPERIENCE AND RUSSIAN PRACTICE(Review of the Speeches of the Participants of the Thematic Conference "Banks and Financial Markets" of the Fourth Russian Economic Congress)

Identification and Prediction Methods of Financial Anti-fraud

Nowadays, evaluating and identifying the potential fraud risk of borrowers effectively and calculating the fraud probability of them are the basis and significant steps of credit risk management in modern financial institutions before issuing loans. This paper mainly studies the statical analysis of the historical loan data of financial institutions based on the idea of unbalanced data classification and establishes the prediction model of loan fraud through random forest, decision tree and regression algorithm. The prediction performance of random forest algorithm is better than the other two mentioned methods. Additionally, it may obtain the feature that have a remarkable impact on the final fraud by ranking the importance of those features, which leads to a more effective judgment on the credit risk in the financial field.

Monitoring of Russian banking system in terms of digital transformation

The main characteristics of modern financial and credit institutions are flexibility, ability to adapt to changes in conditions of risk and uncertainty. The process of adaptation may have low efficiency without intensive monitoring of financial and credit institutions’ operation in direction of improving their technological basis. The article is devoted to some aspects of monitoring directions of financial and credit institutions’ transformational development. The social environment acts as a final consumer of banking services and determines the features of the transformation process in the Russian Federation. The research results can be used in generalized form in managerial and financial environment to improve effectiveness of the infrastructure development based on informational and technology platforms. The main contribution of the research is to identify changes in the mechanism of relationship of managed and managerial systems, identification of modern communication tools, reasoning of emergence and development of social and economic directions of financial and credit institutions’ transformational development.

Beyond the three lines of defense: The five lines of defense model for financial institutions

he purpose of this study is to provide an updated version of the widely accepted three lines of defense model (3LoD) to better apply for regulated financial institutions. The author proposes the five lines of defense model (5LoD) which consists of the existing three lines along with external audit and regulators (comprising the fourth and fifth line of defense respectively). In spite of the fact that the bodies forming the two additional lines of defense constitute the external lines of defense, there should be active in supervising and monitoring control issues within the organization, in strong cooperation with the internal lines. This calls for closer interaction among the internal auditors, external auditors and regulators in the design and implementation of an efficient and effective internal control system, aiming to strengthen the existing framework regarding the governance of modern financial institutions, which operate in a highly demanding regulated environment.

Financial Credit Default Forecast Based on Big Data Analysis

How to effectively evaluate and identify the potential default risk of borrowers and calculate the default probability of borrowers before issuing loans is the basis and important link of the credit risk management of modern financial institutions. This paper mainly studies the statistical analysis of historical loan data of banks and other financial institutions with the help of the idea of non-balanced data classification, and uses machine learning algorithms (not statistical algorithms) such as random forest, logical regression and decision tree to establish loan default prediction model. The experimental results show that neural network and random forest algorithm outperform decision tree and logistic regression classification algorithm in prediction performance. In addition, by using the random forest algorithm to rank the importance of features, the features that have a greater impact on the final default can be obtained, so as to make a more effective judgment on the loan risk in the financial field.

Финансовая безопасность как один из элементов в системе национальной безопасности России

We consider the legal characteristics of financial security. We point out that financial security is one of the components of Russia’s national security. We list internal and external factors that hinder the realization of national interests, including in terms of ensuring financial security. We take into account the provisions of the new National Security Strategy of the Russian Federation, which has recently come into force. In addition, the work shows the correlation between financial security and information security in terms of the dependence of modern financial institutions and instruments on the information and telecommunications component. Purpose of the study: conducting an etymological, doctrinal and legal analysis of such categories as security, information, financial security, as well as formulating the author’s definitions of the studied concepts. The methodological basis of work is based on such methods as the linguistic method, comparison method, method of complex analysis, as well as a number of special methods of scientific cognition: historical, linguistic, comparative legal, formal legal. At the end of research, we conclude that financial security occupies an important place in the overall system of national security, and provides benchmarks for achieving it.

The First Modern Financial Crises: The South Sea and Mississippi Bubbles in Historical Perspective

The twin South Sea and Mississippi bubbles of 1720 inaugurated the new age of modern finance. Both of the then recently launched British and French stock markets experienced manic run‐ups and crashes that shook their societies to their cores. While the historical consensus attributes these market bubbles to, in the words of John Kenneth Galbraith, “insanity born of optimism and self‐serving illusion,” the authors present a more nuanced view. Whatever their role in the bubbles, human folly and greed in this account are not allowed to obscure the powerful influences of institutions, interests, ideologies, and government policies both in giving rise to the crises, and in responding to them.The authors draw on past work and recent analysis to answer questions like the following: Were the market manias of 1719‐20 in fact irrational “bubbles?” If not just fear and greed, what triggered the crashes in 1720? Did political and financial leaders respond appropriately? And how did the resolutions of these crises affect the future financial and economic development of the two nations?In viewing the twin crises of 1720 from a broad historical perspective, the authors' aim is to discover and articulate a more general rule about the role of modern financial crises in “bending the arc” of history. Although powerful states and financial authorities have the potential to accelerate valuable innovations that end up increasing national productivity and wealth, such entanglements of politics and commerce are also liable to catastrophic outcomes, both in laying the grounds for crises and then in responding to them with misguided regulation.The effectiveness and long‐run consequences of such state interventions in commerce are shown to depend on the strength and soundness of a nation's political and social institutions. In unstable and inefficient regimes, which are likely to experience misguided interventions in the first place, the social ramifications can be profoundly destructive. The flawed but effective British reaction to its 1720 crisis—and to the series of banking crises that followed in the 19th century—worked to mollify and win over public opinion, and thus contribute to Britain's continued embrace of financial institutions. By contrast, the outrage of the French populace at the corruption led to the abandonment of modern financial institutions and practices for nearly a century, and to a vilification of banks and bankers that persists to this day, all with major consequences for French productivity and wealth.

Njangi: Pillar of Development in the Anglophone Regions of Cameroon

This study aimed at examining the role played by njangi groups in the socio-economic development of the people in the two Anglophone regions of Cameroon. Qualitative and quantitative data was obtained from secondary and primary sources. Primary data was mainly obtained from 281 income earners sampled from six towns and six villages. The analysed data showed that majority of income earners in the two Anglophone regions of Cameroon did not have saving accounts in modern financial institutions as people mostly depended on financial njangi groups for saving. Many farmers belonged to farming njangi groups as the njangi groups ensured high quantity and high quality work in the farms. Low disposable incomes made it difficult for many people to acquire some essential household commodity and this led to the creation of commodity njangi groups that either collected specific commodity from members and gave to one member per session or collected fixed amounts of money from members and bought commodity that was given to one member per session. The advantages of njangi groups notwithstanding; failure in making financial, labour and commodity contributions by members; mismanagement of financial resources of njangi groups; and promotion of robbery were some of the weaknesses of njangi groups in the Anglophone regions of Cameroon. Despite these weaknesses, njangi groups were indispensable in the socio-economic development of the people in the Anglophone regions of Cameroon.

Тенденції розвитку небанківських фінансових установ на ринку фінансових послуг України

У сучасних умовах розвитку економіки ступінь розвитку фінансового ринку характеризується великою кількістю та різноманітністю фінансових посередників та асортиментом фінансових послуг, які вони надають учасникам ринку. Небанківські фінансові установи є професійними учасниками ринку фінансових послуг, які забезпечують спільне інвестування, управління активами, посередництво у купівлі-продажу фінансових інструментів, гарантійні операції тощо. Сучасні тенденції розвитку фінансових систем розвинених країн світу свідчать про дедалі вагомішу роль у мобілізації фінансових ресурсів саме фінансових посередників, типи і види яких визначаються рівнем розвитку фінансових відносин. Важливе місце серед фінансових посередників належить небанківським фінансовим установам, кожен вид яких відіграє свою роль, має свої функції та призначення. Наявне розмаїття небанківських фінансових установ в Україні вимагає застосування, з одного боку, специфічних підходів до їх державного регулювання, з іншого, універсальних заходів відродження і розвитку ринку фінансових послуг. Вирішення зазначеної проблеми передбачає аналіз та тенденції розвитку небанківських фінансових установ, який стане основою побудови системи порівняних показників оцінки ефективності їх діяльності, результати якої стануть інформаційною базою для прийняття ефективних рішень з метою реалізації стратегії реформування державного регулювання ринків небанківських фінансових послуг та забезпечення ефективного управління ними на рівні держави. У роботі оцінено діяльність основних небанківських фінансово-кредитних установ. Проаналізовано основні показники діяльності небанківських фінансових установ у розрізі основних сегментів сучасного ринку фінансових послуг. Визначено проблеми, які гальмують розвиток ринку страхових послуг, ринку недержавного пенсійного забезпечення та ринку ломбардного кредитування. Зроблено висновок про необхідність негайного вирішення системних проблем на ринку фінансових послуг для забезпечення його ефективного та стабільного функціонування в майбутньому.

Client evaluation decision models in the credit scoring tasks

Abstract One of the important decision-making problems of modern financial institutions is credit scoring, which involves assessing credit risk. Decision-making models based on classifiers and feature selection methods that reduce the complexity of a decision problem by limiting the number of conditional attributes find use in such problems. The article examines the effectiveness of various combinations of classifiers and feature selection methods in the problem of credit risk assessment. The results of the conducted research indicate that for the considered set of data on cash loans granted, the Correlation-based Feature Selection method is the best method among the considered ones, and the Random Forest is the most effective classifier.

DIAGNOSTICS BY FINANCIAL REGULATORS OF FINANCIAL INSTITUTIONS PREPAREDNESS TO THE IMPLEMENTATION OF ECONOMIC SECURITY MANAGEMENT

DIAGNOSTICS BY FINANCIAL REGULATORS OF FINANCIAL INSTITUTIONS PREPAREDNESS TO THE IMPLEMENTATION OF ECONOMIC SECURITY MANAGEMENT

Fiduciary Principles in Banking Law

When are banks fiduciaries of their customers and clients? This question is of more than theoretical interest given the organizational structure of modern financial institutions and the broad-ranging functions they perform. In this chapter of the Oxford Handbook of Fiduciary Law, I canvass fiduciary principles in banking law. I consider when fiduciary duties exist and what they require, the range of remedies available for breach, and the various techniques banks use to exclude or modify fiduciary duties. One puzzling feature of the legal landscape is that clients bring actions less often than banks’ size and conduct might suggest, which contributes to legal uncertainty. Fiduciary law nevertheless constrains banks’ activities: courts have cast banks as fiduciaries in all of the major commercial and investment banking functions, including making loans and accepting deposits, advising on merger and acquisition (M&A) transactions, and underwriting securities offerings, although banks face greater risk in some areas than others. Banks have responded by disclaiming fiduciary duties and using information barriers/Chinese walls, and yet recent judicial decisions refuse to accept these measures as automatically effective for avoiding fiduciary liability. Courts insist that they, rather than the parties themselves, determine whether fiduciary duties exist and what they require. The law thus diverges from some theoretical accounts of fiduciary doctrine, posing challenges for banks and new questions for scholars.

Information function of civil budget

PurposeThe formation of an information society in Russia requires new approaches in the implementation of citizen’s rights to access information. At a modern time, when the resources of internet are available to almost everyone, the modern financial and legal institutions adapt or are obliged to adapt to the modern model of the information society. Not so long ago, just at the beginning of the twenty-first century, new information and legal concept – Civil budget – was introduced. The authors tried to show concrete examples of what it is, what it is, its structure and principles. The authors believe that the realization of the idea of a Civic budget in the Russian Federation will increase the accessibility of information for citizens about the financial performance and financial state and municipalities will allow the State itself, through its Government and the Parliament, to form the budget, based not only on macroeconomic goals and objectives of the country, and objectives of each, even the most small territorial unit in accordance with the needs of living of its citizens.Design/methodology/approachThe problem is not new and, in one way or another, exists in all States, but many countries have undertaken very effective reforms and have made improvements in the situation. For example, in Brazil, in the city of Port Alegre, a budget initiative was launched in 1990. Then, it was “replicated” in 400 prefectures throughout the country. The procedure begins with the assembly of residents of the district, where citizens discuss and outline budget priorities, and ends with the approval of the city budget by delegates directly elected at district assemblies. The success achieved in Porto Alegre was further spread: in 1996-2000, budgeting options were implemented in 100 municipal districts, including São Paulo. In 2000-2004, it is estimated to be implemented in another 250 municipalities.FindingsThe access of the population to budget information is a positive factor not only from the point of view of budgetary law but also in the legal field of information law. Such an opportunity is a direct implementation of principles of the industry such as the principle of publicity and the principle of priority of individual rights. State bodies that form and execute the state budget are, initially, already subjects of the information law, but the above-mentioned activities for monitoring, collecting and providing information within the framework of the Civil budget concept lead them to a new qualitative level of rights and obligations within the framework of information relations, which is unquestionably a positive factor for the activities of these bodies.Originality/valueThe authors believe that the realization of the idea of a Civic budget in the Russian Federation will increase the accessibility of information for citizens about the financial performance and financial state, and municipalities will allow the State itself, through its Government and the Parliament, to form the budget, based not only on macroeconomic goals and objectives of the country, and objectives of each, even the most small territorial unit in accordance with the needs of living of its citizens.

The Application of Queuing Analysis in modeling Optimal Service level

Queues are common scenario faced in the modern day Banks and other financial Institutions. Queuing theory is the mathematical study of waiting lines; this can also be applicable queues in the banking system. This study examine the queuing system at Guarantee Trust Bank (GTB) putting into consideration the waiting time spend by Customers, Service time spend by a Customer and the average cost a customer loses while in queue and the service cost of each server in order to optimize the system. The First Come First Serve (FCFS) Multi-Server queuing model was used to model the queuing process. The waiting time was assumed to follow a Poisson distribution while the service rate follows an Exponential distribution. This study adopted a case study approach by randomly administering questionnaires, interviews and observation of the participants. The data were collected at the GTB cash deposit unit for four days period. The data collected were analysed using TORA optimization window based software as well as standard queuing formula. The results of the analysis showed that the average queue length, waiting time of customer with a minimum Total Cost that utilize the system is by using five Servers against the present server level of Three Servers which incur a high total cost to both the Customers and the system.