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1 – 10 of over 43000The development of banking in Africa followed the demand of exchange networks from traditional indigenous economies to colonial exchange with the European world. The establishment…
Abstract
The development of banking in Africa followed the demand of exchange networks from traditional indigenous economies to colonial exchange with the European world. The establishment of European banking institutions reflected the needs of the capitalist economy introduced by colonialism. The banking management of late nineteenth century and early twentieth century European banks adhered to the interests of shareholders. This chapter shows the emergence of well-managed banks in Africa, but after decolonization the political economy of African independence resulted in state capturing of financial institutions in most African countries. The South African banking system developed in close adherence to the British model. State-owned post-independence banks in Africa failed to deliver the development envisaged. The chapter shows the adverse impact of global economic developments on Africa, resulting in high debt levels. Structural adjustment of African economies and new market-oriented policies allowed the development of locally owned private banking institutions. The high-cost structure of the formal banking system from the dominant South African banks incentivised the mobile money innovation, an arena where African entrepreneurs lead global markets. Financial inclusion remains low in Africa.
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Sophia T. Anong and Aditi Routh
This study examines the relationship between prepaid debit card use and the intention to open a bank account within twelve months. The Transtheoretical Model (TTM) of Behavior…
Abstract
Purpose
This study examines the relationship between prepaid debit card use and the intention to open a bank account within twelve months. The Transtheoretical Model (TTM) of Behavior Change helped to conceptualize one's stage in the process of changing from unbanked status if desired. The Theory of Planned Behavior (TPB) provided a framework to examine factors that influence banking intention. Prepaid debit card use is considered a social norm as it is a popular alternative to banking, and these accounts have increasingly mimicked bank account features in recent years.
Design/methodology/approach
Three in-depth focus group interviews with low-income respondents were first conducted in 2012, which revealed a prolific use of prepaid debit cards. Most participants had previous banking history, and despite negative experiences, some requested information about banking terms and “free” banking. These themes and previous studies informed a TPB-based biprobit model, which was estimated using data of an unbanked sample from 2013, 2015 and 2017 waves of the US Survey of Unbanked and Underbanked Households.
Findings
Though there was banking interest in the focus groups, no significant empirical association was found between recent prepaid debit card use and banking intention. Going deeper with another sample, we found that current cardholders were equally likely to have become recently banked or to be long-term unbanked but less likely to be long-term banked. Also, factors such as a more recent relationship with banks, use of other alternative financial services for transactions and credit, smartphone ownership, and trust increase banking intention.
Research limitations/implications
The main limitation of the study is the cross-section quantitative data. Future research may track banking status over time, particularly as financial technology (fintech) evolves with alternatives that may influence banks and customers to adapt.
Practical implications
To compete with “leapfrog” fintech banking alternatives, bank managers should consider utilizing customer segmentation to target “at-risk” customers and former customers with products and terms tailored to meet their banking needs. Banks can also tailor digital products to capture markets in banking desserts through mobile phones.
Originality/value
This mixed-methods study is unique in that it builds on insights from earlier in-depth interviews with real unbanked groups to examine a trend in prepaid debit card use and the impact on banking interest.
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Sulaiman Abdullah Saif Al Nasser, Datin and Joriah Muhammed
The purpose of this paper is to review the history of Islamic banking in Malaysia from 1963 until 2010.
Abstract
Purpose
The purpose of this paper is to review the history of Islamic banking in Malaysia from 1963 until 2010.
Design/methodology/approach
To review the history of Islamic banking in Malaysia, data have been gathered from different articles, books and reports about the Islamic banking system in Malaysia.
Findings
The paper found that Malaysia as an Islamic country has an outstanding infrastructure to support the establishment of an Islamic banking hub in the Islamic region.
Originality/value
The paper shows that Malaysia was of the first countries to take a systematic planning approach to develop the Islamic finance system in the region. Islamic banking systems in Malaysia are growing rapidly and progressively, in spite of some other countries wishing to be ahead of Malaysia, such as Singapore and the UK.
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John A. James and David F. Weiman
The increased use of checks in nonlocal payments at the end of the nineteenth century presented problems for their clearing and collection. Checks were required to be paid in full…
Abstract
The increased use of checks in nonlocal payments at the end of the nineteenth century presented problems for their clearing and collection. Checks were required to be paid in full (at par) only when presented directly to the drawn-upon bank at its counter. Consequently, many, primarily rural or small-town, banks began to charge remittance fees on checks not presented for collection in person. Such fees and the alleged circuitous routing of checks in the process of collection to avoid them were widely criticized defects of the pre-Federal Reserve payments system. As the new Federal Reserve established its own system for check clearing and collection, it also took as an implicit mandate the promotion of universal par clearing and collection. The result was a bitter struggle with non-par banks, the numbers of which initially shrunk dramatically but then rebounded. A 1923 Supreme Court decision ended the Fed’s active (or coercive) pursuit of universal par clearing, and non-par banking persisted thereafter for decades. Not until the Monetary Control Act of 1980 was universal par clearing and true monetary union, in which standard means of payment are accepted at par everywhere, achieved.
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Andrew Cardow, David Tripe and William Wilson
This paper aims to argue that in the short history of New Zealand banking, political experimentation, based at first upon socialist ideology of the 1940s led to the…
Abstract
Purpose
This paper aims to argue that in the short history of New Zealand banking, political experimentation, based at first upon socialist ideology of the 1940s led to the nationalisation of The Bank of New Zealand (BNZ), followed by a period of neo‐liberalism in the 1980s and early 1990s in which the bank was privatised. It further argues that the establishment of Kiwibank Ltd in New Zealand at the dawn of the twenty‐first century was a return to the political ideology of the 1940s.
Design/methodology/approach
The paper discusses the nationalisation and subsequent privatisation of the BNZ and draws a parallel between the perceived banking environment as it existed in New Zealand in the twentieth century and as it existed at the establishment of Kiwibank. By way of context setting it also discusses the political environment as it relates to the nationalisation of the Bank of England.
Findings
The paper finds that in New Zealand, political experimentation, not commercial pragmatism, was the underlying motivating factor for the state's involvement in banking.
Originality/value
The paper contributes to the pool of knowledge regarding the political motivations behind nationalisation and state ownership of banking assets. The article is of interest to economic and political historians as well as those who study New Zealand political party history. Future policy makers could do well to reflect upon the motivations for state ownership of banking assets by asking if their decisions are driven by ideology or economics.
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This paper aims to give a short overview on bank/customer relationship experience in the Latvian banking system and the impact of developing technology in banking. Without usage…
Abstract
Purpose
This paper aims to give a short overview on bank/customer relationship experience in the Latvian banking system and the impact of developing technology in banking. Without usage of technology commercial banks cannot provide customers with effective services, but short banking history increases the danger of such a reduced loyalty towards the services supplier.
Design/methodology/approach
Literature studies, quantitative surveys combined with in‐depth interviews with bank customers and employees, and experts representing ITC sector.
Findings
Satisfaction with services provided is not the only factor influencing customer loyalty level. Customers experiencing a short banking history can be loyal to the service provider due to the lack of financial literacy. A great impact on loyalty level is made by other factors, such as: image, prestige, word of mouth, etc.
Research limitations/implications
The sample used for research did not include all 23 commercial banks of Latvia. Further research should be developed to compare customer loyalty levels in the more technologically developed and less technologically developed banks, and additional loyalty‐influencing determinants could be included.
Originality/value
An analysis of ITC development in banking side‐effects provides useful information not only for transitional countries but also for developing countries.
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Michael Chak‐sham Wong and Yat‐fai Lam
The purpose of this paper is to discuss issues relating to stress testing methods for credit risks in banks. Also, it suggests a solution to bank supervisors on evaluating stress…
Abstract
Purpose
The purpose of this paper is to discuss issues relating to stress testing methods for credit risks in banks. Also, it suggests a solution to bank supervisors on evaluating stress test results.
Design/methodology/approach
Discussion is based on cases analysis on a stress period of the Hong Kong banking sector.
Findings
The paper finds that econometric modeling does not work well modeling stress scenarios. The stressed probability of default (PD) provided by Basel II would be much higher than stressed PD observed in the history.
Practical implications
Bank supervisors should develop cost‐effective methods to monitor the stress test results reported by banks.
Originality/value
The paper addresses the issues of stress testing and provides a practical solution for bank supervisors to monitor stress test results reported by banks.
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Reference materials in the area of money and banking have ordinarily been lumped under the category of general reference books in economics and business. This is understandable…
Abstract
Reference materials in the area of money and banking have ordinarily been lumped under the category of general reference books in economics and business. This is understandable because most of the required data can be obtained from books dealing with the latter. There are, however, numerous government and private sources which deal exclusively with banking and monetary statistics. This, coupled with their highly specialized character, justifies a separate treatment. We may being by examining a few directories, among which, Moody's Bank and Finance Manual is one of the better known and most widely used. Its coverage extends to banks, insurance and real estate companies, real estate investment trusts and miscellaneous financial enterprises. The section on banks gives the latest available accounts of nearly 3000 banks, with the history of the institution from the date of the charter, absorptions, capital history, dividend payments and price ranges. More than 3000 smaller banks are listed with essential details. The manual includes information on the chartered banks of Canada, the principal banks of England, Europe, Africa, Asia, Australia and South America. The insurance section covers all phases of insurance business, like underwriting and investment, assets and liabilities, gains and losses, and types of business written. Federal credit regulatory agencies such as the Federal Reserve System, Federal Deposit Insurance Corporation, Federal National Mortgage Association, Federal Home Loan Bank Board and others are treated in considerable detail. As with the other Moody's manuals, the center section contains composite banking and monetary data such as a ten‐year range of banking stocks and bonds and lists of 300 largest banks, 100 largest mutual savings banks, 100 largest life insurance companies and 100 largest savings and loan associations. Also included are stock averages and distribution of assets and investments of insurance companies.
Cryptocurrency arose, and grew in popularity, following the financial crisis of 2008 built upon a promise of decentralizing money and payments. An examination of the history of…
Abstract
Cryptocurrency arose, and grew in popularity, following the financial crisis of 2008 built upon a promise of decentralizing money and payments. An examination of the history of money and banking in the United States demonstrates that stable money benefits from strict controls and commitments by a centralized government through chartering restrictions and a broad safety net, rather than decentralization. In addition, financial crises happen when the government allows money creation to occur outside of official channels. The US central bank is then forced into a policy of supporting a range of money-like assets in order to maintain a grip on monetary policy and some semblance of financial stability.
In addition, this chapter argues that cryptocurrency as a form of shadow money shares many of the problematic attributes of both the privately issued bank notes that created instability during the “free banking” era and the “shadow banking” activities that contributed to the 2008 crisis. In this sense, rather than being a novel and disruptive idea, cryptocurrency replicates many of the systemically destabilizing aspects of privately issued money and money-like instruments.
This chapter proposes that, rather than allowing a new, digital “free banking” era to emerge, there are better alternatives. Specifically, it argues that the Federal Reserve (Fed) should use its tools to improve public payment systems, enact robust utility-like regulations for private digital currencies and limit the likelihood of bubbles using prudential measures.
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