Emerging Markets

Debt and credit ratings: G20 and emerging economies compared


blogEntryTopper Thanks to Oanda.com and their infographics series, we can put the relationship between the size of sovereign debt and national economy into a global perspective. Read More...

Operational Efficiency of Leading Islamic Financial Institutions


blogEntryTopper This is a chart that shows the operational efficiency of leading Islamic financial institutions in the world (please note that Flash based contents may not be displayed properly on mobile devices.) Read More...

M-PESA: a case for the unbanked and underbanked in Africa

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Safaricom's M-Pesa has been a well known success story throughout Sub-Saharan Africa, which is an innovative money transfer feature offered by the Kenya's largest mobile network provider. This is an exemplary case, as it is a story about an innovative financial product providing essential financial services to customer segments in the country with litter or no access to banking services through the mobile phone network. Since the service launch in 2007, M-Pesa has improved financial inclusion as it facilitates seamless individual and business transactions through the SMS based mobile payments. The service allows users to transfer money to other users (and non-users), and it enables money transfer between the service and a bank account. From 2011, international money transfer through the service became possible thanks to the strategic partnership between Safaricom and Western Union. As of March 2013, M-Pesa has more than 17 million customers in Kenya (nearly 40% of total population) and it started providing savings and micro-lending products. Will such a new non-bank financial services provider be a game-changer that would make banks' traditional business model obsolete?

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A Growing Challenge for Islamic Banking Industry

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Islamic banking has recently attracted significant attention from the public as it has grown much faster than the conventional banking sector. Many global companies, including McDonald's and Tesco, financed some of their operations through Islamic finance. Moreover, UK Prime Minister David Cameron recently announced that Britain wants to position itself as an Islamic finance hub. One of the reasons behind this strong growth has been that the usefulness of the Islamic capital markets has been increasingly recognised during and after the financial crisis. Islamic financial institutions, whose transactions must be supported by tangible assets, have managed to weather the financial crisis rather well than their conventional counterparts in the developed world that suffered from their exposures to more opaque securities. However, there is a growing frustration in the industry: not enough product development and innovation are taking place.
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On the internationalization of the Renminbi

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The issue of internationalisation of the Renminbi, broadly defined as the process of allowing the Chinese currency as a currency for international payments, settlements, investments, reserves, has been extensively debated and discussed among academics, politicians, regulators and journalists. Many of them are excited about the possibility of the Renminbi soon becoming the globally accepted means of financial transactions as there is a need for more currencies to be involved in the international monetary system as it will strengthen the system as a whole. However, some people apparently have been sceptical about that. They think that the internationalisation of the Renminbi will be unlikely to happen because the currency still do not have critical features to be a global reserve currency such as free convertibility, market oriented interest rate mechanism and freely accessible capital markets and they doubted that the Chinese government would ease grip on the capital markets and monetary system.
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On banking innovation in the emerging markets

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Many western financial services providers have enjoyed their market leading positions as trend setters and standard bearers. However, it does not necessarily mean that customers in these places have the most innovative products and services available in the market. In many occasions, customers in the emerging markets, especially in those with rapidly developing ICT infrastructure such as China, Turkey, Malaysia and South Korea, have been able to use more innovative financial products and services than those living in countries like UK and France. Take the case of mobile banking, it was only recently that major UK banks have started providing mobile banking apps that enable customers to make payments and funds transfer as well as the basic services like checking balances and viewing recent transactions while customers in emerging market can use various financial services such as money remittance and paying utility bills through their mobile phones from the late 2000s. How come the customers in developed countries, where all the technologies and innovations are available and all the necessary resources to implement them, have to bear with not using faster and more convenient mobile banking services for such a long time?
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Banking in Africa: on the back of the rising consumer class

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Africa's rising consumer class is beginning to establish firm ground for long-term growth. Given the growing labour force and urbanisation are expected to boost household income, the growth prospect for Africa looks brighter. What can banks do to benefit from this trend? A combination of positive trends has been supporting the growth potential in Africa: the recent commodity boom has attracted a significant volume of investment funded by numerous resource-thirsty developed and emerging economies to the continent; the governments in many countries have managed to stabilise the political and economic conditions, which enabled many of them to enjoy increased access to international capital. This trend is forecasted to be maintained thanks to Africa's social and demographic pattern, in particular growing labour force and urbanisation. It is therefore widely recognised that Africa's rising consumer class is beginning to establish firm ground for long-term growth. In these circumstances, what can banks with operating interests in Africa do to benefit from the emerging opportunities?
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