Archive for September 11th, 2012

The first sovereign debt crisis in the EU…Faroe Islands

September 11, 2012

A superb case study on the same by Jon Danielsson and Hermann Oskarsson.


A Tale of Politically-Failing Eurozone..Case of Supra-national governance..

September 11, 2012

A nice short paper by Assaf RazinSteven Rosefielde.

He says the problem in Eurozone is because of its design. The design is flawed as it follows a special form of governance called “supra-nationality”.


Pakistan’s microfinance regulatory in the world!!

September 11, 2012

I was surprised to read this speech from Pakistan’s Central Bank chief Yaseen Anwar.

He says SBP (State Bank of Pakistan, the central bank) has been active in the microfin space:

in order to further build the linkages of the banking sector to promote access to finance for the poor and marginalized segments of the population, the State Bank has been promoting financial inclusion through innovative approaches. SBP has been actively supporting microfinance in Pakistan to make major breakthroughs in reaching out to millions of underserved people who require a wide variety of financial services. Presently, nine MFBs are operating in Pakistan. The success of microfinance in Pakistan is widely acknowledged by the international community. Our microfinance regulatory framework has been rankedglobally at the top in 2010 and 2011 by the independent “the Economic Intelligence Unit” of UK’s “The Economist” Magazine.

More details here. Pakistan ranks 5th in overall doing microfin business rankings with Peru at the top. Its regulatory framework tops the list along with Cambodia. India’s regulatory framework ranks 14th but overall doing business is 8th.


Moreover, a unique opportunity for the financial sector in Pakistan are the branchless banking regulations that have catalyzed a number of branchless banking deployments with dual advantages: First, there is enormous scope for expanding outreach, especially to hard-to-reach rural areas. Second, alternative delivery channels promise significant cost reduction to institutions. Due to these benefits, the expansion in the retail network of microfinance has arisen overwhelmingly from agents and mobile phone channels. 

In a little over 2 years, the branchless banking deployments with 26,954 active agents offering low-cost services all over the country, including in the hitherto neglected areas, have surpassed the 10,000+ branch network of banks. As a result of these low-cost, efficient financial services being offered at convenient locations the quarterly volume of transactions has reached to 28 million totaling Rs.115 billion. The average size of these transactions is Rs.4,000 which shows that technology is reaching out to the previously unbanked, marginalized segments of the society. The years ahead are expected to see continued expansion in the market – new players, innovative distribution channels, market segmentation, price reductions etc. Moreover, a number of initiatives have been taken to promote access to finance in the SMEs, agriculture, and housing sectors that largely focus on creating an enabling environment by addressing regulatory barriers, market failures and industry bottlenecks, as well as to ensuring consumer protection. 

Despite having in place internationally acclaimed regulations, innovative delivery channels, industry-wide market development initiatives, the growth in financial access leaves much to be desired. This partly explains why Pakistan has one of the lowest financial penetration levels in the world with 56% of the adult population totally excluded, and another
32% informally served. 

Some +ves in a country which is just full of -ves on both politics and economics..

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