Mutual Credit Research Articles

Banking Crisis of the 1880s in the Russian Empire: New Quantitative Data and Estimates

The study deals with the most significant crisis in the history of Russian banking, which occurred when 49 municipal banks and 13 mutual credit societies went bankrupt from 1882–1889. Historians have explained the causes of the crisis in various ways; however, these explanations are not fully verifiable due to lack of consolidated quantitative data on operations for municipal banks and mutual credit societies. Therefore, a new quantitative data set on these credit institutions was composed for this study. Comparison of the dynamics of joint-stock commercial banks, municipal banks, and mutual credit societies for 1875–1895 revealed that the decline in municipal banks was particularly sharp and deep, and it did not correlate with the dynamics of other banking institutions. This paper proves that the municipal banks crisis was caused by the accumulation of bad loans, poor financial stability, and the lack of proper control by municipal councils and the Ministry of Finance. Overcoming of these problems launched a new phase of banking regulation and supervision in the Russian Empire, which has been underestimated in historiography. The “pushing out” of municipal banks from risky operations was necessary to protect the financial interests of the municipal self-government associated with these banks. However, the crisis also had a pronounced regional perspective because most of the bankruptcies occurred in the Central Black Earth Region, and therefore the crisis was caused by a contraction in agricultural exports due to falling prices, combined with local crop failures in the first half of the 1880s.

Comportamento da banca cooperativa em Portugal: a resiliência do Crédito Agrícola no período de 2007 a 2018

O sistema financeiro é um pilar fundamental no funcionamento eficiente do crédito à economia. A crise financeira teve impacto em todo o sistema financeiro, tornando claro a necessidade de a banca em geral ter necessariamente de passar por um processo de mudança de estratégia, nomeadamente na concessão moderada de crédito. Através de uma análise comparativa da banca cooperativa com a restante banca comercial, para o período de 2007 a 2018, conclui-se que, em Portugal, a banca de matriz cooperativa – representada pelo Sistema Integrado de Crédito Agrícola Mútuo – foi mais resiliente perante a crise económica e da dívida soberana, devido ao seu conservadorismo no rácio de transformação, o que lhe permitiu resultados positivos e não degradação dos seus rácios de capital. Através da aplicação das metodologias HEAT! e z-score, evidencia-se que, no período mais agudo da crise, os indicadores do Crédito Agrícola divergem, favoravelmente, da restante banca comercial, colocando o Crédito Agrícola como uma das instituições bancárias com menor risco de insolvência. Portanto, a liquidez e a orientação de longo prazo, características da banca cooperativa, são essenciais para a sua estabilidade e contribuem para a solidez financeira de todo o sistema.

Abuses in Mutual Credit Societies in the Context of the Law Enforcement Practice of Pre-Revolutionary Russia

Abuses in Mutual Credit Societies in the Context of the Law Enforcement Practice of Pre-Revolutionary Russia

Research and Practice of Credits Mutual Recognition for Courses Taken Across Schools in the Context of the Complete Credit System

The emergence of complete credit system, cross-school courses, mutual recognition of credits, mutual selection of courses, mutual employment of teachers and other new types of education methods has promoted the reform and development of Chinese education system, and also reorganized the classroom time structure of Chinese college students, reformed the traditional teaching model and promoted the establishment of the Golden Course. In the way of flipping the classroom, students can make full use of the basic theoretical knowledge of online curriculum resources. Teachers actively guide students to achieve student-led classrooms. At the same time, it strengthens the development and management of online courses, and promotes the sharing of high-quality educational resources and the fairness of education. Meanwhile, it comprehensively improves the quality of education and teaching, reforms traditional education and teaching models. Through reforming the traditional learning process, the new model focuses on research and discussion, strengthens interactive links, and clarifies evaluation standards to profoundly achieves teaching objectives. Under the model of mutual credit recognition, every student in the class is able to participate actively. Students get chances to attend prestige teachers’ classes and experience the unique teaching styles through the online platform, thus maximizing the sharing of teaching resources so that every student has received fair education. In the context of the complete credit system, students are fully respected according to their personality and individuality to gain their individualized education, allowing more flexibility and selectivity in their courses, creating an environment where they can be taught according to their abilities and individuals

MUTUAL CREDIT SOCIETIES OF NADDNIEPER UKRAINE IN THE CREDIT SYSTEM OF THE RUSSIAN EMPIRE (SECOND HALF OF 19th — EARLY 20th CENTURY)

Abstract. The problem of attracting financial resources for the growth of small and medium-sized businesses was and remains relevant at all stages of the market economy development, which actualizes market research in the historical context. The article provides a historical retrospective to the problem of the mutual credit societies (MCS) creation and activity in 9 Ukrainian governorates, that were part of the Russian Empire in the second half of the 19th — early 20th centuries. The present paper makes attempt to examine the mechanisms and structure of lending, which was carried out by MCS in general. The objective is to establish the state of MCS’ development in the Ukrainian governorates. The paper also identifies the role of MCS in the lending system that had developed in the second half of the 19th — early 20th centuries in the Russian Empire. It was used several scientific methods which includes an interdisciplinary approach and are characteristic of research in the economic history field. Various historical sources like published statistical data and archival documents and materials were used. The study has found that the establishment and activity of MCS were focused on providing short-term loans to small and medium-sized businesses, that has been operating in governmental and provincial uyezd towns and cities where the banking system was poorly developed. It was carried out the analysis of development dynamic of quantitative and qualitative indicators of MCS activity. It was determined that the MCS share in the credit system of the Russian Empire constituted 5% in 1914. The study has found that rate of the MCS creating practice was influenced by many factors, which were mainly associated with unsuccessful financial reforms, belated legal regulation and weak episodic state support. The change in the structure of the credit-deposit and other operations provided by MCS has been processed. The range of banking services provided by MCS to their members and other clients was investigated. It has been proved the value of the historical experience of MCS crediting and the possibilities of its use to provide financial support for the development of domestic business are outlined. Keywords: Russian Empire, credit, crediting, loan, bank, mutual credit societies (MCS), banking system. JEL Classification B17, N24 Formulas: 0; fig.: 8; tabl.: 1; bibl.: 35.

Credible Peer-to-Peer Trading with Double-Layer Energy Blockchain Network in Distributed Electricity Markets

Blockchain-based peer-to-peer (P2P) energy trading is one of the most viable solutions to incentivize prosumers in distributed electricity markets. However, P2P energy trading through an open-end blockchain network is not conducive to mutual credit and the privacy protection of stakeholders. Therefore, improving the credibility of P2P energy trading is an urgent problem for distributed electricity markets. In this paper, a novel double-layer energy blockchain network is proposed that stores private trading data separately from publicly available information. This blockchain network is based on optimized cross-chain interoperability technology and fully considers the special attributes of energy trading. Firstly, an optimized ring mapping encryption algorithm is designed to resist malicious nodes. Secondly, a consensus verification subgroup is built according to contract performance, consensus participation and trading enthusiasm. This subgroup verifies the consensus information through the credit-threshold digital signature. Thirdly, an energy trading model is embedded in the blockchain network, featuring dynamic bidding and credit incentives. Finally, the Erenhot distributed electricity market in China is utilized for example analysis, which demonstrates the proposed method could improve the credibility of P2P trading and realize effective supervision.

Иркутское общество взаимного кредита в 1874–1920 гг.

The publication discusses the opening of a mutual credit society in Irkutsk. The legal basis for the activity of a credit institution is given. The policy of the Ministry of Finance of the Russian Empire in relation to this type of organization is described. The general results of the activity are presented. The article describes the process of nationalization of the company at the time of the Liquidation and Technical Commission for the Liquidation of Former Private Banks, established at the Irkutsk Gubfinotdele in March 1920.

Liquidity-Saving through Obligation-Clearing and Mutual Credit: An Effective Monetary Innovation for SMEs in Times of Crisis

During financial crises, liquidity tends to become scarce, a problem that disproportionately affects small companies. This paper shows that obligation-clearing is a very effective liquidity-saving method for providing relief in the trade credit market and, therefore, on the supply-side or productive part of the economy. The paper also demonstrates that when used in conjunction with a complementary currency system such as mutual credit as a liquidity source the effectiveness of obligation-clearing can be doubled. Real data from the Sardex mutual credit system show a reduction of net internal debt of the obligation network of approximately 25% when obligation-clearing is used by itself and of 50% when it is used together with mutual credit. These instruments are also relevant from the point of view of risk mitigation for lenders, based in part on the information on individual companies that the mutual credit circuit manager can provide to banks (upon the circuit member’s request) and in part on the relief that liquidity-saving provides especially to NPL companies. The paper concludes by outlining recommendations for how even greater savings could be achieved by including the tax authority as another node in the obligation network.

Negotiating Debt

Originally set up in 1998 in China, the Puhan Rural Community was the first peasant-initiated, cross-village organization established after the collapse of the top-down people's communes and the implementation of the household responsibility system. Puhan learned a lesson about the exploitation of usurious microfinance and decided that it was capable of establishing a system of mutual aid credit by itself, changing the cultural emphasis on money. Its story of struggling with rural financial organizations opens up a debate on the trap of marketization and monetization, the root causes of loans and debts, the negotiating power of collectives, the production mode of ecological agriculture, and the redefinition of the commonwealth.

IS THERE ANY IMPACT OF ELECTRONIC MONEY TO INCREASE KNOWLEDGE OF FINANCIAL LITERACY?: IN THE PANDEMIC SITUATION OF COVID-19 IN PONTIANAK CITY

This study aims to determine the impact of the use of electronic money on financial literacy, during the COVID-19 pandemic in Pontianak. This study has a sample of 137 respondents selected through simple random sampling technique. This study uses a simple linear regression method, with SPSS 23 software analysis tools. The benefits of electronic money not only function as payment by the transfer method, but many other functions can be used, such as buying mutual funds, paying installments or credit, paying electricity, water, and telephone. Electronic money can now also be used as savings for foreign currencies such as the Japanese Yen, American Dollars, and British Pounds. With an electronic money, we can also change it in the form of savings deposits, without having to queue in the bank. The results of the study concluded that electronic money has a positive and significant effect on financial literacy, in the pandemic situation of COVID- 19 in Pontianak City.

Verkhneudinsky Branch of the Russian-Asian Bank in Credit and Financial Market of Western Transbaikalia in 1911-1914

The analysis of the activities of the Verkhneudinsky branch of the Russian-Asian Bank (until 1910 - Russian-Chinese) on the credit and financial market of Western Transbaikalia in 1911-1914 is presented, its influence on the development of trade and industry of the region is determined. Based on the reporting and office records stored in the State Archive of the Republic of Buryatia and the Russian State Historical Archive, the dynamics of the active and passive operations of the banking branch in the context of the all-Russian industrial expansion in 1909-1913 was analyzed. It was established that the Verkhneudinsky branch of the bank espouse cautious financial policy, issuing loans to its customers at inflated interest rates. It is proved that, despite the favorable situation in the country's economy during the indicated period, the credit and financial institution in Verkhneudinsk has largely lost its dominant position in the banking services market of Western Transbaikalia. According to the authors, this circumstance was the result of a sharp increase in competition in connection with the emergence in the fairly small financial and credit market of the region of two new banking institutions - the Verkhneudinsky and Kyakhtinsky mutual credit societies.

The Verkhneudinsk Mutual Credit Society: Background and Beginning Stage in Cross-Border Conditions (1911–1913)

The Verkhneudinsk Mutual Credit Society: Background and Beginning Stage in Cross-Border Conditions (1911–1913)

The Social Life of Sardex and Liberex: Kin or Acquaintances? A Comparison Between Two Mutual Credit Circuits in Italy

We offer the first informed comparison of two regional mutual credit systems – Sardex and Liberex – aimed at sustaining the local economy. Building on previous research on Sardex, we develop an equivalent qualitative research investigating both organizers and members of the local circuit in Emilia Romagna. Within a theoretical framework that considers money as a social institution, socially and politically constructed, we first give an overview of the plurality of existing money pointing out a heated debate over the nature of money itself. Then, we move to evaluate whether the same monetary architecture – adopted by the two mutual credit systems – concretely comes with a similar social life. We confirm how social life of money is strictly intertwined with its monetary architecture by design, and discover how deeply it is also rooted in the institutional and relational contexts where it concretely operates. Money differs not only by nature and design, but also by context.

The Flexible Institutionalization Process of Puma Currency in Seville, Spain

Grassroots groups depend on dynamic and fluid interactions with high trust to retain their identity. At the same time, a stable structure and division of labour with rules and hierarchies is necessary to sustain their organisation and social influence. The study explores this organisational dilemma by drawing on the category of flexible institutionalisation. It enquires how actors experience this balancing act between spontaneous solidarity and hierarchical structures in the life of the collective. The study focuses on the PUMA complementary currency in Seville, which was the brainchild of a neighbourhood association, a degrowth group and the local community. Puma functioned as a mutual credit system with a passbook and later as a digital wallet. The research presents primary data collected in 2014, 2017 and 2019 and concludes that the institutionalisation of social innovations is purposefully incomplete and regulates spaces of spontaneity and caring to preserve solidarity and identity.

Mutualism as market practice: An examination of market performativity in the context of anarchism and its implications for post-capitalist politics

This article interrogates the performative effects of mutualist ideas in the context of market-making. Mutualism is a variety of anarchism associated with the work of Pierre-Joseph Proudhon, who argued for the centrality of market exchanges and mutual credit as a means for emancipating workers from capitalist exploitation. The discussion is informed by an ethnographic inquiry within a Local Exchange Trading System in Spain – the Moneda Social Puma – which illustrates how actors put mutualist ideas to work. This research makes three contributions: first, it frames a view of market multiplicity and plasticity that broadens the current scope of market studies beyond a managerialist focus. Second, it reveals how actors mobilise anarchist theories to shape – rather than escape – markets. Third, this work elucidates how actors negotiate and stabilise conflicting forms of valuation as mutualist ideas are implemented. In particular, we draw attention to a set of infrastructural practices and mutual credit arrangements whereby the market is cooperatively managed as a common. We conclude by reflecting on the implications of our work for extant debates concerning post-capitalist politics, markets and anarchism.

Теорія кредиту у науковій спадщині М. Бунге: практичний аспект

The article analyzes scientific and practical activities of M. Bunge in the sphere of credit relations. «Theory of Credit» (1852) – one of the first fundamental scientific works of M. Bunge, where he reveals the essence of the loan, its main features and the economic purpose. Credit is a way of exchange where the value of a good or service that will be paid in the future is the object of exchange. The transfer of value is based on the confidence that a reward will be received in the future. Credit is viewed in terms of morality and economic guarantees. In 1868, M. Bunge founded Kyiv Mutual Credit Association and was its chairman until 1871. The Association became one of the most efficient credit institutions in Kyiv and existed until 1918. Private credit was considered by M. Bunge as basis of the development of market economy. The association had to solve the problem of the lack of cheap financing for small businesses. Mortgage loan for urban real estate was used widely. The article analyzes The Statute of the Kyiv Mutual Credit Association and made conclusions about the peculiar features of activity, loan conditions and development of economic operations of the Association. In addition, special attention was paid to the role of the Association in reforming certain provisions of the Statute for all mutual credit associations in the Russian Empire. The Kyiv Mutual Credit Association was one of the first in the Russian Empire who used the Institution of Authorized Representatives instead of a General Meeting for operational activity and control.

Cyclic motifs in the Sardex monetary network.

From decentralized banking systems to digital community currencies, the way humans perceive and use money is changing1-3, thus creating novel opportunities for solving important economic and social problems. Here, we study Sardex, a fast-growing community currency in Sardinia (involving 1,477 businesses arrayed in a network with 48,170 transactions) using network analysis to shed light on its operation. Based on our experience with its day-to-day operations, we propose performance metrics tailored for Sardex but also to similar economic systems, introduce criteria for identifying prominent economic actors and investigate the interplay between network structure and economic robustness. Leveraging new methods for quantifying network 'cyclic density' and 'k-cycle centrality,' we show that geodesic transaction cycles, where money flows in a circle through the network, are prevalent and that certain nodes have a pivotal role in them. We analyse the transactions within cycles and find that the economic turnover of the involved firms is higher, and that excessive currency and debt accumulations are lower. We also measure a similar, but secondary, effect for nodes and edges that serve as intermediaries to many transactions. These metrics are strong indicators of the success of such mutual credit systems at individual and collective levels.

ПЕРЕДУМОВИ ТА ПЕРСПЕКТИВИ РОЗВИТКУ БАНКІВ ВАРТОСТІ


 
 
 The state of the modern financial market is not homogeneous. Various organizations act on it, such as world, investment, public, retail, social, church, green, folk and development banks; official and unofficial banking organizations; shadow financial system. Mutual assistance banks, rural banks, credit unions, savings and loan funds are institutions formed on the basis of mutual assistance among people. There are also banks operating in the «western» financial tradition and those operating under the laws of Sharia. Value banks are social, ethical, green and public banks without a definite management model that function in the form of joint stock companies, unions and private enterprises. In the article, the ways of formation, organizational structures, historical and religious preconditions of creation and modern tendencies of development of value banks are viewed.
 
 

Self-Funded Social Impact Investment: An Interdisciplinary Analysis of the Sardex Mutual Credit System

ABSTRACTSardex is a B2B electronic complementary currency and mutual credit system. It allows private funding to be endogenously generated within a geographically limited socio-economic context, rather than injected from exogenous sources, leading to a greater level of positive social impact. Sardex promotes stable and constructive integration of market activity with democratic institutions and socio-cultural values, and is hence identified with sustainable development. This paper presents a case study based on 29 semi-structured in-depth interviews of Sardex members. By drawing on monetary theory, sociology and anthropology, the paper argues that Sardex implements a form of self-funded social impact investment.

Russian Societies of the Mutual Credit in the years of Economic Recovery (1909–1913)

Russian Societies of the Mutual Credit in the years of Economic Recovery (1909–1913)