This paper examines the extent to which microfinance has contributed to poverty reduction in Ghana by supporting their clients with both financial and non-financial services to build up their asset base. The study found that participation in the programme has enabled established clients to own savings deposits and subscribe to a client welfare scheme to pay off debts in times of illness or death. They were also found to be in a better position to contribute towards the education of their children, payment of health care for members of their households and the purchase of household durables. The study further noted that clients who remained in microfinance programmes for long periods of time suffered from diminishing marginal returns. There should be some form of up-scaling to accommodate these clients or they should be able to join other financial service providers in the formal sector in order to benefit fully from a participation in microfinance programmes.

Keywords: microfinance, asset building, poverty reduction, financial sustainability, Sub-Saharan Africa, Ghana

This paper aims to analyze the degree of concentration of loans allocated to agricultural and livestock activities in Brazil for the period 2000-2007 and to assess the distribution pattern of credit among the states, analyzing the extent to which the volume of distributed credit is proportional to the states share of production and harvest areas, regarding agriculture, and the participation of each state in the total Brazilian livestock. The results suggest that rural credit still remains concentrated in states of the Southern and Southeastern regions, although there has been a credit decentralization during the current decade in favor of agricultural frontier in parts of Central and North regions of Brazil.

JEL classification: E51, G21, L11
Keywords: rural credit, concentration, distribution, Theil index.

The majority of people in Sub-Saharan Africa does not have a basic bank account and are financially excluded from mainstream financial services. This paper examines factors that drive geographic exclusion of banking services to rural communities and households’ demand for a basic bank account in Ghana. Using rural community based and household survey datasets, the study finds that banks’ decisions to place a branch in a community are positively influenced by elements as the market size, the level of infrastructure such as energy and communication facilities in the area, market activeness but are negatively influenced by the general level of insecurity associated, for example, with crime, conflict, natural disasters. Conversely, households’ demand for a bank account appears to be strongly driven by both market and non-market factors such as price, illiteracy, ethno-religion, dependency ratio, employment and wealth status as well as proximity to a bank.

JEL classification: D14, D91, G21, C35
Keywords: Financial Exclusion, Banks’ Location Decision, Bank Deposit Account, Ghana/Sub-Saharan Africa

This paper examines the impact of financial repression policies from 1970 to 2002, and the results of the financial liberalization polices between the years 2003-2007 on the financial development of Iraq. By using the Autoregressive Distributed Lag (ARDL) model, the paper argues that neither the financial repression policies nor the financial liberalization polices promoted the financial development of Iraq. This fact suggests that Iraq’s policy-makers have to launch multi-pronged measures, such as promoting private sector enterprises, reducing informal activities in the economy, stabilizing macroeconomic variables (reduction of fiscal deficit and inflation rate), and, most importantly, restore political and social security, in order to ensure the economic prosperity of the country.

The aim of the article is to clarify the role of foreign banks in some Asian emerging countries and to estimate the consequences on economic and financial development. As a measure, we use local claims, and loans activities, of foreign banks’ subsidiaries and branches on the host emerging countries, since 1994. First, we are interested in the foreign banks’ strategies (local or cross-border activities) and in the major creditors that are, on the recent period, US and UK banks. Then, we highlight that foreign banks, in stress period, develop the local activities of their subsidiaries, particularly in local currency, that are benefic for the local banking market. When local claims are important, foreign claims are less volatile, so economic development is improving, and local banking system is more efficient, particularly in Malaysia. The results are quite the same as in the literature on Latin American and Eastern European emerging countries. Nevertheless, the 2007-08 crisis, that affects roughly foreign banks, may weaken subsidiaries and destabilize the local banking system, so the economic development of emerging countries.

This paper investigates the application of global solvency supervisory principles and the European Solvency II regulatory framework to Takaful schemes, given their growth potential in both Western and Islamic countries.

Due to their particular nature, concerns have been raised as to the suitability of international standards for sound and proper supervision.

On the one hand, growing numbers of potential customers are already present in many Western countries, but only in a few of these countries are these products available, and even then in limited numbers, due at least in part to regulatory and supervisory constraints. In many emerging countries, on the other hand, these schemes represent a significant portion of insurance business, despite low levels of insurance penetration and a limited diffusion of specific regulation and supervision, driving attention to risks for customers arising from extreme events.

This contribution focuses on major supervisory complexities surrounding the introduction of Takaful in European countries, with regard to the forthcoming Solvency II framework.

Its three-pillared approach encompasses financial, governance and risk management requirements, as well as transparency and enhanced disclosure: in all these areas, several issues arise when considering Takaful schemes (e.g. size of market risks, definition of eligible capital, potential conflicts of interest, segregation of funds and accountability). Some concerns are shared by mutual and cooperative insurers, whereas others are more specific: the application of the proportionality principle is still under development, and its reconciliation might prove a difficult task.

The objective of this study is to highlight these main areas of concern, with particular regard to the issues of solvency and prudential supervision: this might be useful to emerging economies and their improving solvency regulation as well, should risk-based supervision be increasingly adopted as a world-wide standard.

Dans les institutions de microfinance, qui contribuent indéniablement à la financiarisation des populations exclues du secteur bancaire, la problématique de la gestion des risques opérationnels reste très peu explorée. A partir de ce constat, cette recherche se donne pour objectif d’identifier les pratiques de gestion des risques opérationnels dans les institutions de microfinance selon une approche exploratoire. L’étude de trois cas d’institutions de microfinance a permis de mettre en évidence deux principales conclusions : le dispositif de gestion des risques opérationnels est organisé autour de la régulation des comportements. De plus, les différences observées dans les pratiques de gestion des risques opérationnels sont attribuables au degré d’intégration des IMF à travers les réseaux.

Mots clés : Risques opérationnels, déviance, architecture organisationnelle, régulation financière, institutions de microfinance

JEL classification: G21, G33, G34

There is extensive experience in microfinance provision in Africa, but relatively few empirical studies on the social and economic benefits to clients. This paper draws on original surveys of 281 rural households in Southern Nigeria, some of which are served by two microfinance programs but have not received any loans. The statistical tests show that households with access to programs do have more substantial social and economic benefits than those without access. The evaluation holds important lessons for studies on other programs in many African countries.

JEL classification: G2, G21, N27
Keywords: Microfinance, project impact, Lift Above Poverty Organization, Nigerian Agricultural Cooperative and Rural Development Bank, Nigeria

The paper analyzes the influence of the stock market on aggregate consumption in Malaysia using a battery of time series approaches – the ARDL cointegration test, an error-correction modeling and a vector autoregression (VAR). In the analysis, real consumption is specified to depend linearly on real income and real stock market wealth as measured by real market capitalization. The ARDL cointegration test indicates the presence of a long-run relationship between consumption and its determinants, real income and real stock market wealth. At the same time, we also note positive short-run coefficient of current changes in real stock market wealth in the dynamic equation of real consumption. Finally, the variance decompositions and impulse-response functions simulated from the estimated VAR indicate a causal pattern that runs from real stock market wealth to real activities (consumption and income). Accordingly, based on these findings, the stock market wealth effect is unequivocally supported in Malaysia.