Use Of Financial Products Research Articles

Efectos de la inclusión financiera en el desarrollo humano del departamento del Huila-Colombia

La inclusión financiera se ha convertido en un instrumento dentro de las políticas públicas que ejercen los países en busca de garantizar el acceso a servicios financieros. En Colombia se ha desarrollado el programa “Banca de las Oportunidades” con este propósito. Sin embargo, el programa no analiza el alcance de estos procesos en el bienestar de la población. En este artículo se analizan los efectos de la inclusión financiera en el desarrollo del departamento del Huila. En este sentido, se implementó una metodología mixta, mediante el método DEXPLIS; en la fase cuantitativa se estimó y analizó un modelo estadístico multivariado, a fin de determinar si existe relación entre inclusión financiera y desarrollo; en la fase cualitativa se aplicaron entrevistas a funcionarios de la Gobernación del Huila. Las técnicas de recolección de información fueron revisión de literatura, bases estadísticas y guía de entrevista. Dentro de los resultados obtenidos se determinó que existe una relación positiva entre el Índice de Desarrollo Humano (IDH) y los indicadores de inclusión financiera. Adicionalmente, se identificó que los indicadores de acceso y de uso repercuten en las dimensiones de salud, educación e ingreso siempre y cuando se garantice el uso de los productos y los servicios financieros.

The Use of Financial Products in Liquidity Risk Management by SMEs

Abstract Risk, which is inherent to any business activity, is an issue that should be considered as early as at its conceptual stage and the very idea of its creation. The awareness of its existence and effective risk management is one of the factors which decide whether an organization will prosper or not. Control over possible risks can be exercised in several ways, one of which is outsourcing of risk to other market participants, such as financial institutions. This option is not a widespread solution in the Polish market, which may be due to low awareness among managers in the field of both risk identification and diversification. In the era of entrepreneurial economy, SMEs, which account for 99.8% of the European population and generate about 50% of GDP, having a significant impact on international trade, should become the primary addressees of training and education initiatives to inform them about risks and possibilities of their mitigation. The purpose of the article is to indicate financial services, mainly factoring, offered by money market institutions as an opportunity to improve current financial liquidity of enterprises, and to demonstrate the importance of education in adequate understanding and promotion of those solutions.

A new perspective for the use of financial derivatives to hedge foreign exchange rate: L-BFGS perspective to assess the strikes and principals of plain vanilla options

The international relationships between nations and economic agents have evolved so rapidly that the services and products are being traded almost instantly. Nevertheless, a great amount of these services and products are quoted in different currencies; thus, it is necessary the use of financial products to trade these products and services without incurring in unnecessary risks. The use of financial derivatives in the financial market has been increasing over the last decade. Moreover, foreign exchange derivatives have become an essential tool for companies to hedge their exposure in a foreign exchange currency. Nonetheless, there has not been enough research about methodologies that emphasize in the mixing of strategies. In this document, we develop a methodology to hedge effectively. Hence, we propose the Limited-memory bfgs in order to find the optimal percentage of the position of the derivative based on simulations created by a garch model. In this paper, we show an example with an exporting Colombian company based on Colombia, which has an exposure in us American Dollars. In this example, we find that the methodology proposed has a lower Value at Risk than a strategy using derivatives operating in isolation.

Financial geography III: The financialization of the city

This report discusses the financialization of urban governance and the built environment as an explicit state strategy, focusing on municipal finance and the use of financial products by the local state and (semi-)public sector. A number of lessons can be drawn regarding the temporality and spatiality of financializing ‘the urban’. Firstly, the financial crisis that started in 2007 has not resulted in a definancialization of the city. Secondly, despite a number of common trends, the literature also highlights the diversity of experiences. Yet it would be too easy to conclude that the financialization of the land, housing and real estate is exclusively a Global North phenomenon, as it extends into the Global South. Finally, the literature notes an emerging gentrification-touristification-financialization nexus. The role of the state in all of this is variegated and often ambiguous.

A Mixed-Mode and Incentive Experiment Using Administrative Data

Abstract This research note compares sequential and concurrent web-mail mixed-mode approaches and incentives for a survey on US consumers’ use of financial products, especially when their finances are tight. The sample (n = 2,000) was drawn from credit bureau data. We examine the effects on response rates, survey costs, and possible nonresponse bias in an experiment varying two factors in a 2x2 design: (1) using concurrent or sequential web and then mail survey modes, and (2) different incentive amounts given to initial survey nonrespondents ($5 versus $10). The sequential (web-first) design had a significantly lower response rate (3.9 percent) at week five—before the paper questionnaire was mailed—than the concurrent group (11.0 percent). This difference was nearly fully eliminated by the end of the field period. The higher incentive brought in slightly more respondents in the concurrent arm and slightly fewer respondents in the sequential arm, but neither difference is statistically significant. Compared with the sample frame, respondents in both groups were generally older and had many of the characteristics that come from being older: higher credit scores, more open credit cards, lower credit card utilization, greater likelihood of having a mortgage, and lower likelihood of being delinquent on credit card payments. Given the lower initial response rate and the need for more follow-up mailing, the sequential mixed-mode approach resulted in a higher cost per complete survey.

Financial Literacy in the Context of the Lifelong Education

Introduction. The current stage of economic development in the formation of the information society confirms the relevance of the problem of improving people’s literacy in the use of financial products, financial services and various technologies for effective financial management. The purpose of the article is to study the main factors determining the need to improve financial literacy in the region, the main forms of financial literacy training, as well as the experience of higher education institutions to carry out activities aimed at improving financial literacy. Materials and Methods. This research was carried out with the help of general scientific and special techniques and methods: the method of observation and study of accumulated experience, the conceptual and socio-philosophical analysis, the system analysis, the comparative analysis, the structural-functional analysis. An empirical sociological survey was conducted to obtain objective data on the level of financial competence of the population of the region and to assess the relevance of activities among pupils, young people, pedagogical staff of educational institutions and other segments of the population. As tools for collecting information for analytical studies questionnaires based on Internet resources and interactive survey were used. The methods of statistical analysis consisted of grouping, constructing series of dynamics, determining absolute and relative statistical. As research materials were used normative and policy documents, which are the legal basis for the implementation of the concept of continuing education and ensuring financial literacy of the population in the international context. Results.The article substantiates the importance of measures aimed at improving the financial literacy of the population of the Republic of Mordovia. Financial literacy is a necessity in the information society, in which financial decision-making and effective financial management is carried out using information and communication technologies. The authors of the article prove the role of higher education institutions in improving financial literacy of the population in accordance with the life-long learning education concept. Higher education institutions ensure access to financial literacy for various social groups through many forms of formal and non-formal education. Discussion and Conclusions. The conclusions and recommendations of the study can be used in the activities of the National Research Mordovia State University in conducting training and consulting activities aimed at improving financial literacy of the population of the region (master classes, training seminars, video lessons, round tables, etc.). The authors’ proposals can be applied in the development of financial literacy strategy in the Republic of Mordovia.

Zainteresowanie oraz opłacalność oszczędzania na emeryturę w III filarze

Interest and profitability of saving for retirement in the Third PillarThe problem presented in the research paper is the issue of retirement savings efficiency in the Third Pillar of social insurance in Poland. The object of accomplished analysis, which constitutes grounds for inference was “the number of accounts in the Third Pillar and the value of accumulated funds”, which allowed defining “interest and attractiveness of the use of financial products offered by the Third Pillar” and “profitability of saving in the Third Pillar”. The results of the research, which determine present interest in saving in the Third Pillar confirm that additional forms of pension security have not reached the desired by the government level of development. Market growth will not occur unless there are financial incentives. Common concerns rouse the role of the state in the Third Pillar, and especially the possibility of taking over accumulated savings by government, as was done with savings accumulated in the Second Pillar OFE. In this situation, choosing a product of the Third Pillar is aless meaningful issue. It is more important to regularly save money in order to be able to gain from the so called ‘compound interest’, also choosing the right investment strategy and attitude towards risk.

Inclusión financiera y ahorro en México: un análisis logístico binario y de redes neuronales artificiales

The issue of financial inclusion as a necessary condition for economic development has been dealt extensively in recent years. Related studies focus on different mechanisms through which a wider use of financial products can accelerate economic growth by channeling and expanding savings and, subsequently, by generating investments, increase the possibilities of choosing intertemporal consumption throughout the life cycle of the population such that individuals can access educational resources, health, housing, etc., as well as providing the possibility of mitigating risks. Employing microdata from the Global Financial Inclusion Survey of the World Bank, this study analyzes the impact that greater access to financial services has on savings formation in Mexico. The methodology includes Binary Logistic analysis and Artificial Neural Networks. The results show that, contrary to the general view, the greater penetration of financial services has served as an inhibitor of savings, mainly due to the high differential between the active and passive interest rates, as well as to a biased bank orientation to grant credits for consumption rather than for real investments, and additionally to some socioeconomic factors like income levels and education.

Financial products used by South African households at different life stages

South African households don’t save enough to ensure financial freedom after retirement. This article poses the following question: do life stages have a significant impact on the financial products used by households? The question is asked in order to identify possible interventions that could increase financial freedom. This study found that life stages have a significant impact on South African households’ selection of financial products. The use of financial products for each of the levels of the financial product usage hierarchy increases as the age of the household head increases and when the size of the family increases, the only exception being single-parent families. The study indicated that financial literacy programmes should focus on young couples and young families, as there is a notable increase in their financial product usage. The study also found a very low usage of wealth management products by South African households and suggests that policymakers consider the introduction of an incentive to increase household’s usage of these products.

Education and Knowledge in the Use of Financial Products and Services in Bachelor’s Degree Students

Education and Knowledge in the Use of Financial Products and Services in Bachelor’s Degree Students

The Impact of the Fintech Phenomenon – Radical Change Occurs in the Financial Sector?

As a result of technological progress, the spread of the Internet and digitalisation, several sectors of the economy have undergone a major transformation. This study focuses on the changes in the financial sector. It presents the new players that emerge, i.e. the increasing prominence of the so-called fintech solutions, which is supported by the demand from consumers and the supply side as well, and it also describes the new solutions and introduce some successful examples of fintech services in payment and lending. Although the new players and solutions have introduced several innovations to the market, often making the use of financial products and services easier, more efficient or providing a more widespread access to them, they entail many potential dangers. We believe that fintech firms are not yet likely to trigger radical changes in financial intermediation.

Segmentation of Georgian Population According to Financial Capabilities and Money Management Style

The purpose of the article is based on the latest literary sources and rich factual materials, based on the peculiarities of the financial behavior of the Georgian population, implementation of its segmentation according to the financial capabilities and money management style. As a result of the survey, 6 segments of the Georgian population are presented according to their financial capabilities, which are united under the following 3 relevant socio-economic statuses: Financially adapted socio-economic status (28.3% of the population); financially more or less adapted socio-economic status (35.9%); financially poor economic status (32.4%). During the study process, 23 regulations related to money management were used, which made it possible in depth study of the money management ways spread in the population. Based on the analysis of the answers received on the above mentioned 23 provisions, it is separated 6 segments according to money management style in Georgia: Financially Responsible (34% of the population), Having financial Fears (22%), Having business thinking (12%), Loaded with debt (16%), Spender 11%), and Shopaholic (5%). The important aspects of financial behavior are discussed in the article, such as the knowledge of basic financial concepts and the ability to use in real life, personal and management of household finances, set financial goals and make concrete steps to achieve them, saving and budgeting, preparedness for financial surprise and pension age, borrow and debt management, awareness and use of financial products.

Financial Inclusion and Welfare in South Africa: Is there a Gender Gap?

Arguments on whether there is a gender gap in access to finance remain inconclusive. The welfare benefits of access to finance have also not been confirmed. This paper investigates whether there is a statistically significant difference between the welfare of financially included men and women, and of financially included women and their excluded counterparts. Using a pooled dataset on financial access in South Africa, we find that women mainly use formal transactional products and informal financial mechanisms, while men mainly use formal credit, insurance, and savings products. Despite this pattern in the use of financial products, a quantile regression analysis shows that there is no statistically significant difference between the welfare of financially included men and women. There is a significant difference, however, between the welfare of financially included women and their excluded female counterparts. Women using non-formal credit and insurance products exhibit higher welfare in the lower end of the welfare distribution. An Oaxaca-Blinder type decomposition shows that welfare differences are mainly accounted for by race, education, income, and, marginally, marital status. Estimates of the average treatment effect suggest a causal relationship between financial inclusion and higher welfare. The mechanism is through the accumulation of durable items following use of formal financial services.

Veterinary School Applicants: Financial Literacy and Behaviors

Each year the Association of American Veterinary Medical Colleges (AAVMC) conducts a survey after the close of the Veterinary Medical College Application Service (VMCAS) application. The survey provides a glimpse into applicant behavior surrounding the veterinary school application process. Additional survey questions probe into applicant financial behaviors, use of financial products and services, and pet ownership. This article examines the 2013 survey data from applicants who successfully completed the application, with a focus on applicant financial literacy and behaviors. Data from the study revealed a disconnect between applicants' perception of their ability to deal with day-to-day finances and their actual financial behaviors, particularly for first-generation college student applicants and applicants who are racially/ethnically underrepresented in veterinary medicine (URVM). Many applicants were not able to accurately report the average veterinary school graduate's student debt level, which suggests the potential need for better education about the costs associated with attending veterinary school.

Credit card risk behavior on college campuses: evidence from Brazil

College students frequently show they have little skill when it comes to using a credit card in a responsible manner. This article deals with this issue in an emerging market and in a pioneering manner. University students (n = 769) in Sao Paulo, Brazil's main financial center, replied to a questionnaire about their credit card use habits. Using Logit models, associations were discovered between personal characteristics and credit card use habits that involve financially risky behavior. The main results were: (a) a larger number of credit cards increases the probability of risky behavior; (b) students who alleged they knew what interest rates the card administrators were charging were less inclined to engage in risky behavior. The results are of interest to the financial industry, to university managers and to policy makers. This article points to the advisability, indeed necessity, of providing students with information about the use of financial products (notably credit cards) bearing in mind the high interest rates which their users are charged. The findings regarding student behavior in the use of credit cards in emerging economies are both significant and relevant. Furthermore, financial literature, while recognizing the importance of the topic, has not significantly examined the phenomenon in emerging economies.

Impact of Financial Education and Transparency on Borrowing Decisions: The Case of Consumer Credit

Existing studies are not conclusive in favor of a strong relationship between the financial literacy and the ability to take better borrowing decisions. Results are quite heterogeneous and often point out the relevance of other factors, such as socio-demographic features or practical experience gained with daily use of financial products. The impact of (the amount and quality of) information available at the time of consumer choice is still unexplored. The objective of this paper is to fill in this literature gap and explore a large set of possible drivers of borrowing decisions in the consumer finance framework, with a specific focus on the transparency of price conditions. We interviewed a sample of 299 consumers. They were asked to select the best option between five series of credit alternatives. In order to explore the role of transparency, each series of loans was presented with three different sets of information, with an increasing level of detail. The ability to select the best alternative was measured calculating a score based on the Net Present Value criterion, and analysed as the dependent variable of a regression model with demographic, socioeconomic and financial characteristics as predictors.Our findings show that the amount and quality of available information strongly influence the choice. At the same time, an high level of education do not seem to play a significant role. Financial maturity results to positive influence the ability to select the best alternative and employed people perform better than non-working respondents.

Financial Literacy and the Financial Crisis

The ability of consumers to make informed financial decisions improves their chances of having sound personal finance. This paper uses a panel dataset from Russia, where consumer loans grew at an astounding rate -- from about US$10 billion in 2003 to over US$170 billion in 2008 -- to examine the importance of financial literacy and its relationship with behavior. The survey asked questions on financial literacy, consumer borrowing (formal and informal), and spending behavior. The paper studies the consequences of greater financial literacy on the use of financial products and financial planning. Even though consumer borrowing rose rapidly in Russia, only 41 percent of the survey respondents understood how interest compounding worked and only 46 percent could answer a simple question about inflation. Financial literacy is positively related to participation in financial markets and negatively related to the use of informal sources of borrowing. Individuals with higher rates of financial literacy are significantly more likely to report having more unspent income at the end of the month and higher spending capacity. The relationship between financial literacy and the availability of unspent income is more evident during the financial crisis, suggesting that better financial literacy may better equip individuals to deal with macroeconomic shocks.

The Impact of Recent Court Decisions on the Tax Treatment of Prepaid Variable Forward Contracts

ABSTRACT For several years, certain wealthy taxpayers have taken advantage of a growing arsenal of Wall Street techniques to delay or entirely avoid taxes on their investment gains. The tax law has been struggling to keep up, as the sophistication and spread of the use of financial products to produce as many benefits of a stock sale, while still delaying taxes on the proceeds, has increased. One such instrument that was sold for years to sophisticated investors, but is only now getting its day in court, is a Prepaid Variable Forward Contract (PVFC). Debate among tax professionals hinged on whether PVFCs would be taxable at execution, either as an outright sale or as a constructive sale, under Internal Revenue Code Sections 1001 and 1259, respectively, or at the final settlement of the underlying contracts, consistent with Revenue Ruling 2003-7. A brief review of how PVFCs work is followed by authoritative positions on their tax treatment; these are followed by a discussion of recent court decisions and their implications for tax planning, followed by a conclusion.

The impact of commodity price risk management on the profits of a company

It is well recognized that for the producing companies hedging the commodity price using financial products like forwards or futures has become an important part of the company's production process. But apart from the direct impacts of hedging on the production and hedging costs the use of financial products affects the financing of the company: hedging the volatile commodity prices leads to a reduction of the risk premium the company has to pay for its debt capital, since hedging contributes to more confidence of the investors in the redemption of the debt. In this paper we therefore analyze this dependency of hedging and financing and derive optimal hedging extents for companies in different market situations based on a long-term model. By hedging the commodity price, companies can realize a surplus in profits. Thereby, the optimal hedging extent for a monopolist is often up to 100%, whereas for companies in a polypolistic market the optimum is always less than 100%. These results are illustrated by examples for a producing company.

The Poor in the Financial Market: Changes in the Use of Financial Products, Institutions, and Services from 1995 to 1998

The poor are in a disadvantaged position in the financial market. In this article, a review is given of public policy initiatives that are implemented to help the poor as well as an examination of how the poor are served in the financial market, using data from the 1995 and 1998 Survey of Consumer Finances provided by the Federal Reserve Board. Specifically, poor households' use of depository and credit products, the financial institutions that provide these products to the poor, and the way in which the poor conduct their financial business (e.g., visit to branch offices, ATMs, etc.) are compared to that of non-poor households. Marketing and public policy implications are drawn from the findings.