Archive for October 5th, 2015

How negative interest rates mean redoing finance textbooks..

October 5, 2015

Prof JR Varma has a nice post on the topic.


The tragedy of Bellandur lake in Bangalore..

October 5, 2015

Once a city of lakes too, Bangalore is struggling to maintain its lakes. The foam at Bellandur lake caused a huge outage on social media but hardly bothered the authorities.

This story on how the lake is used for garbage filling in the night is just amazing case of complete neglect and mismanagement:


Six lessons from mobile money ventures in developing countries

October 5, 2015

HBS has a case on this. The key q is why do so many mobile money ventures fail?

In many emerging economies, the need to give people in poverty better access to financial services seems obvious. The mobile phone is a perfect vehicle, given their widespread adoption, even among the financially less well off. Designing a profitable solution for an unmet market need should be business strategy 101 for most entrepreneurs, so why have so many mobile money service offerings failed? 

It’s a question being studied by Rajiv Lal, the Stanley Roth, Sr. Professor of Retailing at Harvard Business School. “You would think mobile money should be a hands-down success all over the world,” Lal says. “But 80 to 90 percent of mobile money operations are failures.” 

His research shows that companies are starting their market analyses in the wrong places. “Mobile money does not solve the same problem for every country,” says Lal. “If you look at successful implementations, they all started with, ‘What problem can I solve?’ If you don’t identify the right problem, the rest of it will not go anywhere.”

Lal researched successful mobile money programs, and a few that flopped, to compile tips designed to help prospective operators—and perhaps entrepreneurs in other industries as well—take an educated shot at developing a winning service. He outlined his advice in a July working paper, Mobile Money Services—Design and Development for Financial Inclusion, co-written by HBS research associate Ishan Sachdev.

 What are the lessons?

  • Lesson 1: Work well with regulators
  • Lesson 2: Keep services free
  • Lesson 3: Get agents on board
  • Lesson 4: Make customer registration easy
  • Lesson 5: Earn consumer trust
  • Lesson 6: Keep products simple

Similar to standard lessons on banking as well..


Beware the Credit/GDP ratio as a measure of financial development

October 5, 2015

Thorsten Beck of Cass Business School has a piece on the topic. He paraphrases the Churchill quote on democracy:


Dispelling three myths on German economic thought..

October 5, 2015

Well atleast Germans have a school of economic thought (called Ordoliberalism) and moreover there are scholars who believe and defend the same.

Michael Burda of Humboldt University Berlin has a piece speaking about three myths regarding the school:

Many analysts believe that German economists hold a very different view of macroeconomics. This column presents a personal view why this belief is wrong. The fact that Europe still consists of sovereign nations and that most Europeans still want to keep it that way informs much of what happens inside German economists’ heads

Myth 1: Economists in Germany fundamentally reject Keynesian ideas
Myth 2: German economists feed at the trough of ‘ordoliberalism’ and worship at the altar of supply-side policies.
Myth 3: Economists in Germany obsess over moral hazard and austerity

All three myths are kind of interconnected.

Do Central Bankers really believe what they say?

October 5, 2015

Nice interview of Patrick Barron of Mises Institute. Exposes all the fancy talk done by central bankers across the world:

Our guest this week is Patrick Barron, a professor of economics and a student of global currency markets. Patrick and I dissect the Fed’s big announcement this past week not to raise interest rates, and consider whether Janet Yellen and other central bankers really believe in what they’re doing.

Is it all just to save themselves from the judgment of history, by kicking the can down the road? Have they read, or even considered, Austrian arguments on money and banking? Or are they simply so wedded to Keynesian orthodoxy that they literally don’t know what else to do? And what type of precipitating events might spell the end of US dollar imperialism?


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