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61. Financial Inclusion Through Fintech in the Digital Economy

Author:
Eunsook Seo and Kyeongwon Yoo
Publication Date:
12-2020
Content Type:
Special Report
Institution:
Korea Institute for International Economic Policy (KIEP)
Abstract:
Since the 2008 global financial crisis, including the recent COVID 19 pandemic, low interest rates and low economic growth have continued around the world. In spite of this low interest rate trend, as the economic downturn prolongs, there is a situation of concern called the “new normal” of low interest rates and low economic growth, and low prices. In this new normal economic structure, the rapid progress of aging is increasing the necessity and desire for asset accumulation. In addition, digital finance such as Fin-tech with the evolution of the underlying technologies and the emergence of new technologies has replaced or improved many functions of existing finance in the advent of the 4th industrial revolution era. These changes are expected to bring benefits to the individual and corporate finance sectors, which have been subject to financial inclusion. On the other hand, digital finance, which is changing at such a rapid pace, may further isolate some individuals who were in the blind spot of finance, such as the elderly, and a support system for this is an issue that should be included in the policy of financial inclusion in each country. In this paper we find that Asian countries like other regions have achieved tangible results in financial inclusion while achieving financial deepening. When looking through various financial inclusion indicators such as holding accounts and loans, ATMs, and bank branches, the Asian region has achieved similar or superior performance to other regions. Compared to the income level, the growth of financial inclusion in Asia was found to be attributable to better performance in middle-income countries than in other similar regions. High-income countries in Asia are performing somewhat lower than similar peer groups in other regions, but this seems to be due to stagnation of growth. More seriously, financial inclusion in low-income countries in Asia is not appearing faster than in other income groups. In Asian countries there appears to be a wide variation in regional financial inclusion. However, Asian countries are expanding around the younger generation in the use of ICT technology that is helpful in spreading financial inclusion so if digital inclusive finance centered on Fintech is properly applied, Asian countries will become a new model for digital financial inclusion. However, since the gap in the use of Fintech in the region is large, how to fill this gap is being raised as an important policy task for each country as well as the whole region. We also tentatively examined the effects of financial inclusion and digital financial inclusion in the Asian region using the Asian country panel data collected from WDI and Global Findex data. Looking at the implications of the empirical analysis results even though it is very cautious to interpret the results of this analysis due to the lack of data of inclusive finance in Asia., first, the expansion of financial inclusion(such as ATM) in Asia seems to have some relationship with the reduction of poverty rates and income inequality which is measured with Gini coefficient. And the expansion of internet usage in Asia seems to have some relationship with the reduction of poverty rates and income inequality although we use it as the proxy variables instead of the digital financial inclusion variables. Lastly, the higher share of rural population which is used as a proxy for digital divide, which may occur due to the expansion of digital inclusive finance in Asia, has the potential to erode some of these achievements, but there is still a possibility that the expansion of inclusive finance will be effective. Despite the likelihood of success in digital inclusive finance in the future, digital divide spreads due to various gaps such as between urban and rural areas, between young and old, between low and high income, and between men and women, occurring in Asian countries and may worsen the performance of inclusive finance. Thus the governments in the region need to actively intervene to resolve these gaps. In addition, it is necessary to close the digital gaps that is occurring between countries through policy cooperation among APEC members. Considering the situation that the degree of development of Fintech in each member is expanding financial inclusion, it is necessary for Korean financial companies to set up an advancement strategy that focuses on the financially marginalized class based on the advanced system strategy of credit rating based on big data. Our analysis results will give some implications for the New Southern Policy. Personal and SME finance are very important business areas when financial companies currently enter the ASEAN region, and accurate analysis of each member' current status for Fintech or digital finance and financial inclusion should be given priority in terms of business expansion.
Topic:
Poverty, Financial Crisis, Finance, Income Inequality, COVID-19, Inclusion, and Digital Finance
Political Geography:
Asia and Global Focus

62. Is the economy doomed to a long recession?

Author:
Andrzej Halesiak and Andrzej Rzońca
Publication Date:
09-2020
Content Type:
Special Report
Institution:
Center for Social and Economic Research - CASE
Abstract:
Forecasting during a strong shock is burdened with exceptionally high uncertainty. This gives rise to the temptation to formulate alarmist forecasts. Experiences from earlier pandemics, particularly those from the 20th century, for which we have the most data, don’t provide a basis for this. The mildest of them weakened growth by less than 1 percentage point, and the worst, the Spanish Flu, by 6 percentage points. Still, even the Spanish Flu never caused losses on the order of 20% of GDP – not even where it turned out to be a humanitarian disaster, costing the lives of 3-5% of the population. History suggests that if pandemics lead to such deep losses at all, it’s only in particular quarters and not over a whole year, as economic activity rebounds. The strength of that rebound is largely determined by economic policy. The purpose of this work is to describe possible scenarios for a rebound in Polish economic growth after the epidemic. A separate issue, no less important, is what world will emerge from the current crisis. In the face of the 2008 financial crisis, White House Chief of Staff Rahm Emanuel said: “You never want a serious crisis to go to waste. And what I mean by that is an opportunity to do things that you think you could not do before.” Such changes can make the economy and society function better than before the crisis. Unfortunately, the opportunities created by the global financial crisis were squandered. Today’s task is more difficult; the scale of various problems has expanded even more. Without deep structural and institutional changes, the world will be facing enduring social and economic problems, accompanied by long-term stagnation.
Topic:
Financial Crisis, Economy, Economic Growth, Crisis Management, Fiscal Policy, and Trade
Political Geography:
Global Focus

63. Lebanon: Government Recovery Plan Asks Too Much of Ordinary Lebanese, and Not Enough from Elites

Author:
Sami Halabi
Publication Date:
06-2020
Content Type:
Working Paper
Institution:
Arab Reform Initiative (ARI)
Abstract:
Facing an economy in free-fall, the Lebanese government has finally adopted a financial recovery plan that it has sent to the IMF and international donors. This paper argues that the plan fails to introduce strong accountability measures to address rampant corruption and mismanagement and does not tackle widespread inequality which could be done through a better distribution of losses and the introduction of more progressive taxation. Despite the government’s stated promise to “protect the poorest segments of the population from the dire consequences of the crisis”, the paper expects the plan to inevitably harm Lebanon’s poorest as well as its middle class.
Topic:
Economics, Financial Crisis, Governance, and Recovery
Political Geography:
Middle East and Lebanon

64. Salvaging Lebanon: Expert Opinions on a Way out of the Crisis

Author:
Ismael Sheikh Hassan
Publication Date:
09-2020
Content Type:
Working Paper
Institution:
Arab Reform Initiative (ARI)
Abstract:
Lebanon is facing an unprecedented crisis with financial and economic collapse, lack of political trust, institutional deadlock, health crisis, and environmental degradation, to name a few. To face these challenges, the government should undertake a reform plan that addresses key priority areas to restore trust and salvage the country. We’ve asked experts to give their views about what they see as essential reforms in each area.
Topic:
Economics, Financial Crisis, and Reform
Political Geography:
Middle East and Lebanon

65. Nizar Saghieh – No society disappears through bankruptcy: Its vitality alone can ensure accountability

Author:
Nizar Saghieh and Jamil Mouawad
Publication Date:
11-2020
Content Type:
Working Paper
Institution:
Arab Reform Initiative (ARI)
Abstract:
This interview with lawyer and Executive Director of “The Legal Agenda” Nizar Saghieh addresses the most important dimensions of accountability following the economic and financial crisis that Lebanon is suffering. It expands the notions of justice, lack of trust in the judiciary, and widespread corruption while attempting to create hope by emphasizing the vitality of a civil society brought once more to the fore by the “17 October Uprising.” Rather than a mere uprising against power, this is now known as the revolution that revived and rebuilt society.
Topic:
Civil Society, Financial Crisis, Social Movement, Protests, and Accountability
Political Geography:
Middle East and Lebanon

66. The U.S. Fight against Coronavirus

Author:
Marek Wąsiński and Mateusz Piotrowski
Publication Date:
03-2020
Content Type:
Special Report
Institution:
The Polish Institute of International Affairs
Abstract:
The coronavirus outbreak is spreading throughout the United States. After its initial underestimation of the threat, the Trump administration has acted to fight against the pandemic, including the introduction of a national emergency. The effectiveness of these actions will be an important factor in whether Trump is re-elected. The limits on social life despite the enormous financial support from the government and the Federal Reserve have dramatically slowed the economy, heading into a recession. Public debt will increase much more rapidly, which may force budget cuts in the coming years.
Topic:
Economics, Government, Health, Financial Crisis, Health Care Policy, Crisis Management, Donald Trump, and Coronavirus
Political Geography:
North America and United States of America

67. Financing the United Nations Secretariat: Resolving the UN’s Liquidity Crisis

Author:
Wasim Mir
Publication Date:
03-2020
Content Type:
Policy Brief
Institution:
International Peace Institute (IPI)
Abstract:
The UN is currently facing its most challenging financial situation in nearly two decades. Despite taking emergency measures to reduce spending, the UN Secretariat’s severe liquidity problems have been getting progressively worse, to the point where they are starting to affect the UN’s ability to carry out its mandates. The main cause of this crisis is the late payment and nonpayment of member-state contributions. This issue brief breaks down the reasons why certain member states have not been paying in full or on time, which include the withholding of payments to express concerns about specific UN activities and domestic financial difficulties. It then considers the proposals the secretary-general has put forward to address the crisis: replenishing the existing reserves, incentivizing member states to make timelier payments by invoking Article 19 of the UN Charter sooner, and limiting the General Assembly’s use of creative measures to reduce spending. Since these proposals currently have little backing from member states, the paper also suggests looking at alternative approaches, including allowing the UN Secretariat to borrow commercially or pool cash balances. As the domestic dynamics that lead to late payment and nonpayment will not change quickly, the paper urges member states not to ignore the issue and hope that it will resolve itself. They need to urgently consider what measures could help mitigate the crisis as soon as possible.
Topic:
United Nations, Financial Crisis, and Finance
Political Geography:
Global Focus

68. Causal Mechanism and Explanation in Social Science

Author:
Renate Mayntz
Publication Date:
04-2020
Content Type:
Working Paper
Institution:
Max Planck Institute for the Study of Societies
Abstract:
In the social sciences, the development of a specific social event or structure is often ex- plained by a statistical correlation between an independent variable and a variable assumed to be dependent upon it. This mode of explanation is contested by a methodology of causal reconstruction that operates with the concept of mechanisms. A mechanism is a process in which a set of linked steps leads from initial conditions to an outcome or effect. Mechanisms are general concepts, subjecting individual cases to a general category. Except for the litera- ture dealing specifically with the concept, the term “mechanism” is often used without defi- nition of its substantive content; there is no agreement with respect to the unique or plural character of the initial conditions, nor to the structure of the causal path leading to a specific outcome. Nevertheless, mechanisms have played a crucial role in detailed causal analysis of complex historical events, such as the financial crisis of 2008 and German unification of 1989.
Topic:
Cold War, Nationalism, Financial Crisis, and Unification
Political Geography:
Europe, Germany, West Germany, Central Europe, and East Germany

69. Responding to the Coronavirus Crisis: Selected Ideas and Learnings for Asia’s Finance Management Leaders

Author:
David Hoffman
Publication Date:
01-2020
Content Type:
Special Report
Institution:
The Conference Board
Abstract:
Measures to contain the Novel Coronavirus (COVID-19) outbreak – including factory shutdowns, town-level lockdowns and quarantines, and transport bans affecting regional, national and international movement of goods and people – are resulting in a steep decline in household consumption. In parallel, ongoing disruptions of production, distribution, and retail have brought key industrial sectors to near standstill, set off ripple effects throughout regional supply chains, and created intense cash flow shortages from beginning to end of value chains. As of March 1, 2020, there has yet to emerge a definitive path to containment and remission of the crisis. Financial pressures on firms are increasing. The challenges wrought by the crisis for Finance managers are complex and cascading: cash flows are strained by stalled supply chains and channel operations, increasing uncertainty requires wider scenario forecasting, and access to capital has tightened. If virus containment and remission cannot be achieved in the short-term, financial markets are vulnerable to both private sector bankruptcies and household mortgage defaults. The specter of financial crisis looms large. The following assemblage of insights and learnings from our internal experts and member network will hopefully provide some helpful guideposts. The catalog below[1] essentially resolves down to three executive actions to address the challenges ahead:
Topic:
Financial Crisis, Business, Coronavirus, Industry, and COVID-19
Political Geography:
Asia

70. Sovereign debt restructuring: The centrality of the IMF's role

Author:
Sean Hagan
Publication Date:
07-2020
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics (PIIE)
Abstract:
Over the past 40 years, the International Monetary Fund (IMF) has played a central role in the sovereign debt restructuring process. If the COVID-19 pandemic leads to a significant wave of sovereign debt distress, this role will be closely scrutinized. The paper analyzes how IMF policies have evolved to shape the incentives of sovereigns and their creditors at each stage of the sovereign debt restructuring process. It also identifies a number of issues that the IMF will likely have to address as a result of the pandemic, including (1) assessment of debt sustainability in a macroeconomic environment of considerable uncertainty, (2) treatment of official bilateral creditors, and (3) potential benefits—and challenges—of introducing additional incentives to maximize creditor participation in any debt restructuring.
Topic:
Debt, Emerging Markets, Government, International Monetary Fund, Financial Crisis, Macroeconomics, and COVID-19
Political Geography:
Global Focus

71. When more delivers less: Comparing the US and French COVID-19 crisis responses

Author:
Jérémie Cohen-Setton and Jean Pisani-Ferry
Publication Date:
06-2020
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics (PIIE)
Abstract:
The US package of measures to help households hit by the economic shock from the COVID-19 crisis, including the Paycheck Protection Program, is almost twice as large in proportion of GDP as the French package, but it has proven less effective in curbing unemployment because of poor design and implementation. In contrast, the increase in the unemployment rate in France has been five times less than the increase in the United States. Cohen-Setton and Pisani-Ferry dive beneath the unreliable headline numbers to assess the effectiveness of government support provided to households in March–May 2020 in the two countries. They conclude that the French approach (mirrored in some other European countries) delivered a bigger bang for the buck. But the fact that the US approach has fallen short should not diminish the significance of the policy shift signaled by the enactment of measures to maintain household income.
Topic:
Education, Financial Crisis, European Union, and COVID-19
Political Geography:
Europe, France, North America, and United States of America

72. A possible IMF Pandemic Support Facility for emerging-market countries

Author:
Matthew Fisher and Adnan Mazarei
Publication Date:
07-2020
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics (PIIE)
Abstract:
As the International Monetary Fund (IMF) adapts its strategy to meet the challenges of the COVID-19 crisis, it should develop a new temporary lending instrument to assist emerging-market countries facing pandemic-related fiscal and balance of payments difficulties. A dedicated IMF Pandemic Support Facility would help meet the exceptional financing needs of emerging-market countries at a time of high uncertainty while providing more lenient repayment periods and also allow the Fund to be more flexible in its operations with minimum disruptions to its existing facilities.
Topic:
Emerging Markets, International Monetary Fund, Financial Crisis, and COVID-19
Political Geography:
Global Focus

73. Lebanon's monetary meltdown tests the limits of central banking

Author:
Patrick Honohan and Adnan Mazarei
Publication Date:
09-2020
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics (PIIE)
Abstract:
Lebanon has spent the last 20 years juggling an excessive level of debt and current account deficits. Apparent financial wizardry by the central bank (Banque du Liban) helped keep the exchange rate fixed, inflation low, and debt service flowing until 2020. But these efforts merely postponed the inevitable, at a high cost. Repeated shocks to the Lebanese economy and governance weaknesses pushed the financial contraption over the cliff before the COVID-19 outbreak. The explosion that ripped through the Port of Beirut in early August added to the disarray. The Lebanese pound has crashed, the government has defaulted on some of its debt, and restrictions have been placed on deposit withdrawals and access to foreign exchange. Lebanon faces an uncertain future of uneven suffering. It will need foreign assistance, but such assistance will not extend to covering the losses of the banking system. How the losses are distributed will set the scene for Lebanon’s future development. Policymakers should aim for fairness, predictability, and stability without overindebtedness.
Topic:
Monetary Policy, Financial Crisis, Central Bank, and Banking
Political Geography:
Middle East and Lebanon

74. Sovereign debt relief in the global pandemic: Lessons from the 1980s

Author:
Edwin M. Truman
Publication Date:
10-2020
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics (PIIE)
Abstract:
The coronavirus pandemic and an unprecedented global recession have triggered fears of a debt crisis requiring massive intervention by international financial institutions as well as debt restructuring by private and official creditors. Truman draws two lessons for the current crisis, based on his ring-side experience during the debt crises of the 1980s. First, the initiation of debt relief will require a broad consensus among four groups: the borrowing countries, their foreign creditors, the authorities of the countries in which those creditors are located, and international institutions. Reaching consensus takes time. Second, implementation of the consensus framework will be case by case, because of differences in the political and economic circumstances of each country, which will militate against simple replication for different countries and against implementation all at the same time. Any framework will not be self-implementing. While the call for rapid action is understandable, applying a one-size-fits-all approach will not be possible.
Topic:
Debt, Emerging Markets, History, International Monetary Fund, Financial Crisis, World Bank, and COVID-19
Political Geography:
Global Focus

75. The Impact of COVID-19 on India’s Economy and International Standing

Author:
Patryk Kugiel
Publication Date:
07-2020
Content Type:
Special Report
Institution:
The Polish Institute of International Affairs
Abstract:
Despite the government’s restrictive preventive measures, India has emerged as one of the countries most affected by COVID-19, and it has yet to reach the peak of infections. The pandemic has ignited the most serious economic crisis in the country’s history, worsened India’s investment attractiveness, and constrained resources that would otherwise help it pursue a greater international role. The economic crisis also undermines the country’s international image, boosted by the quick and decisive response to the pandemic in its initial phase. At the same time, the economic problems and the continued fight against the pandemic will encourage the authorities to deepen cooperation with the EU in public health, the economy, and security.
Topic:
Economics, Financial Crisis, Economy, and COVID-19
Political Geography:
South Asia and India

76. External Actors, Good Governance and Health Care Delivery in Africa

Author:
Benjamin Uchenna Anaemene
Publication Date:
01-2020
Content Type:
Journal Article
Journal:
AUSTRAL: Brazilian Journal of Strategy International Relations
Institution:
Postgraduate Program in International Strategic Studies, Universidade Federal do Rio Grande do Sul
Abstract:
The structural adjustment programme imposed by the World Bank and IMF in the face of the serious economic crisis that confronted African states in the 1980s resulted in severe cuts in state spending on social services including health. State failure in the provision of social services led to the externalisation of responsibility for health and the proliferation of actors working in the field of health across the continent. Despite the positive and negative consequences of this development on Africa, the debate about the role of external actors in health care delivery in Africa has dwelt extensively on the degree they should participate neglecting the emphasis on how they participate, under what conditions and with what consequences. Using qualitative data techniques, this article examines the involvement of external actors in health care delivery in Africa illustrating the nature, pattern, dimensions, and dynamics of such engagements in the context of popular concerns with good governance. It found that governance challenges constitute a serious obstacle to better health outcome in Africa. It posits that African states can only maximise their gains from external assistance for health if they take leadership in coordinating health activities in their countries within the context of a comprehensive national health plan.
Topic:
Financial Crisis, Governance, World Bank, and Health Care Policy
Political Geography:
Africa

77. International Financial Regulation: Why It Still Falls Short

Author:
William White
Publication Date:
07-2020
Content Type:
Working Paper
Institution:
Institute for New Economic Thinking (INET)
Abstract:
While recent reforms are welcome in many ways, there are still significant reasons to doubt that the post-crisis tightening of international financial regulation guarantees future financial and economic stability. The most important reason is that the reforms have focused too narrowly on ensuring that an unstable financial sector will not aggravate downturns by restricting the supply of credit. More attention needs to be paid to ensuring that an overly exuberant financial system does not weaken other parts of the economy by encouraging a rapid buildup of debt during upturns. Some combination of time-varying monetary and regulatory policies (a macrofinancial stability framework) will be required to do this. In addition, many of the individual regulatory measures taken to date, both macroprudential and microprudential, have shortcomings. Their coherence as a package has also been questioned.
Topic:
Political Economy, Financial Crisis, Reform, Banks, and Subsidies
Political Geography:
Global Focus

78. Financial Transactions Taxes: Inaccessible and Expensive

Author:
Diego Zuluaga
Publication Date:
10-2020
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
Financial transactions taxes (FTTs) have become increasingly popular since the 2008 financial crisis. During the 2020 Democratic presidential primary race, FTTs featured prominently on the platforms of both moderate Michael Bloomberg and socialist Bernie Sanders. The likely nominee, Joe Biden, has also expressed support for an FTT, albeit without offering any details in his election platform.
Topic:
Financial Crisis, Finance, Domestic Politics, Tax Systems, and Transactions
Political Geography:
North America and United States of America

79. Explaining Turkey’s Current Economic Crisis

Author:
Erinc Yeldan
Publication Date:
02-2020
Content Type:
Working Paper
Institution:
Political Economy Research Institute (PERI), University of Massachusetts Amherst
Abstract:
Turkey entered a new phase of recession-cum-real economy crisis starting in the last quarter of 2018. In contrast to the previous crisis episodes of 1994, 2001 or 2009, when the economy had abruptly shrunk with a spectacular collapse of asset values and a severe contraction of output, the 2018- crisis is characterized by a prolonged recession with persistent low (negative) rates of growth, dwindling investment performance, debt repayment problems, secularly rising open unemployment, a spiraling currency depreciation and high inflation. Popular explanations from the mainstream tradition attribute this dismal performance to a lack of “structural reforms” and/or exogenous factors. Per contra, our analysis shows that the underlying sources of the crisis are to be found not in the conjunctural cycles of reform fatigue, but rather in the post-2001 neoliberal speculative-led growth model with excessive reliance on hot money flows and foreign debt accumulation. We argue that following the post-2001 orthodox reforms, a foreign-capital-inflow-dependent, debt-led, and construction-centered economic growth model dominated the economy and caused a long buildup of imbalances and increased fragilities.
Topic:
Emerging Markets, Financial Crisis, Financialisation, and Economic Crisis
Political Geography:
Turkey and Middle East

80. This Time Was Different: The Global Safe Asset Shortage and Shadow Banking in Socio-Historical Perspective

Author:
Photis Lysandrou and Anastasia Nesvetailova
Publication Date:
01-2020
Content Type:
Working Paper
Institution:
City Political Economy Research Centre (CITYPERC), University of London
Abstract:
Safe assets and shadow banking are two closely linked phenomena in contemporary finance. The link is loan securitisation: at a time of a global safe asset shortage, it falls on the shadow banking system to help make good that shortage by manufacturing extra quantities of asset backed securities. When these quantities cannot keep up with volume of safe asset demand, the shadow banking system comes under pressure to manufacture the type of complex structured securities that can potentially cause a financial crisis. That potentiality became reality with the great financial crisis of 2007-8. If a further financial crisis of this scale is to be averted, the regulation of the shadow banking system should be informed by an understanding of the contemporary socioeconomic circumstances that continue to cause a global safe asset shortage. This paper attempts to contribute to such an understanding.
Topic:
Financial Crisis, Banking, Securitization, and Safe Asset
Political Geography:
Global Focus