Samuel Munzele Maimbo

Remittances : development impact and future prospects

Remittances explores policy options for enhancing the poverty alleviation impact of remittance money in recipient countries, and addressees concerns about increasing migration and inequality. It looks at new technologies that allow remittance service providers to reduce direct transaction costs and open new channels, enhancing convenience for remitters and improving levels of transparency and accountability for regulators and policy makers. Importantly, it also establishes a baseline for further research and collaborative effort, showing the areas where the international financial institutions, particularly the World Bank, can add value to enhance the positive impact of remittance flows and minimize less welcome effects.

Financing Africa: Through the Crisis and Beyond

Financing Africa: through the crisis and beyond is a call to arms for a new approach to Africas financial sector development. First, policy makers should focus on increasing competition within and outside the banking sector to foster innovation. This implies a more open regulatory mindset, possibly reversing the usual timeline of legislation-regulation-innovation for new players and products. It also implies expanding traditional infrastructure, such as credit registries and payment systems beyond banks. Second, the focus should be on services rather than existing institutions and markets. Expanding provision of payment, savings and other financial services to the unbanked might mean looking beyond existing institutions, products, and delivery channels, such as banks, traditional checking accounts, and brick-and-mortar branches. All financial sector policy is local. To reap the benefits of globalization, regional integration, and technology, policy makers have to recognize the politics of financial deepening and build constituencies for financial sector reform. While the challenges of expanding access, lengthening contracts, and safeguarding the financial system are similar, the ways of addressing them will depend on the circumstances and context of each country. With its cautiously optimistic tone, this book creates an opportunity for Africas policy makers, private sector, civil society, and development partners to harness the progress of the past as a way to address the challenges of the future and enable the financial sector to play its rightful role in Africas transformation.

The money exchange dealers of Kabul : a study of the Hawala system in Afghanistan

Money convenient, and inexpensive means of transferring funds into Afghanistan and among its provinces. They offer a diverse range of financial and non-financial business services at the local, regional, and international level. More recently, they have been instrumental in providing financial services for the delivery of emergency relief and humanitarian and developmental aid into Afghanistan for the majority of international and domestic NGOs, donor organizations, and development aid agencies. This study was undertaken to: (1) determine the current practice of hawala in Afghanistan; (2) verify the assertions regarding the convenience, speed, and cost-effectiveness of hawala transactions in comparison with formal financial institutions such as the central bank and the remaining state banks; (3) evaluate the use of money exchange dealers to remit development funds to regions that are not served by formal financial institutions; (4) identify the operational characteristics that make the hawala system vulnerable to financial abuse; and (5) consider the appropriate regulatory and supervisory options for informal funds transfer systems in Afghanistan.

The Implications of the Evolving Microfinance Agenda for Regulatory and Supervisory Policy

The growth in microfinance institutions (MFIs) has been accompanied by a widening of the range of financial services provided to the poor, to include voluntary savings facilities. This entails prudential risk to clients and poses the policy question of the most appropriate form of regulatory framework for MFIs. This article examines the implications for regulatory policy of the recent trend towards MFI provision of microfinancial services encompassing savings, credit and insurance, by evaluating what we know of the existing regulatory approaches, the main concerns with these approaches, and the merits of recent regulatory proposals for MFIs.

Financial Sector Policy in Practice: Benchmarking Financial Sector Strategies Around the World

ABSTRACT Policy makers use financial sector strategies to formulate a holistic policy for the national financial system. This article examines and rates financial sector strategies around the world on how well they formulate development targets, arrangements for systemic risk management, and implementing plans. The strategies are also rated on whether they consider policy trade-offs between financial development and systemic risk management. The rated strategies are then benchmarked against a range of country characteristics. The analysis finds that the scope and quality of national strategies for the financial sector are systematically influenced by several country characteristics. Interestingly, policy trade-offs, particularly between financial development and systemic risk management, are not adequately considered in the strategies.

Can Prompt Corrective Action Rules Work in the Developing World

Abstract A major weakness of bank regulation is “regulatory forbearance,” which is partly attributable to the scope for discretionary intervention by bank regulators. Therefore, bank regulation might be improved by subjecting intervention policy to a set of rules, such as the “Prompt Corrective Action” (PCA) rules in the US. The introduction of PCA rules is under consideration in a number of developing countries (DCs), stimulated by costly bank failures. This paper examines the potential benefits and feasibility of incorporating PCA rules into banking regulation in DCs. The paper concludes that PCA rules can improve bank regulation in DCs if introduced as part of a comprehensive set of prudential reforms which strengthens the operational independence of the bank regulators, improves their on-site examination capacities, strengthens accounting standards and raises public and political understanding of the need for strong and impartial bank regulation.

Financial Sector Development in Zambia: Implications for Domestic Resource Mobilization

Many Sub-Saharan African (SSA) countries introduced financial-sector reforms to improve the performance of the financial sector in general, and financial savings levels in particular, in the 1980s and 1990s. Yet, despite these reforms, for many countries, the expected increase in financial savings levels was short-lived. Compared to East Asian economies, SSA countries such as Zambia continue to register very low levels of savings mobilization, which is of great concern for policy-makers working on the country’s poverty reduction strategy. Along these lines, this chapter examines the linkages between the financial reforms of the early 1990s and savings mobilization efforts in Zambia. It considers the characteristics of banks and non-bank financial institutions (NBFIs), in particular, micro finance institutions (MFIs), and identifies problems associated with the relatively poor performance of savings in recent years.

Financial Regulation in Developing Countries: Policy and Recent Experience

In this valuable new book, a distinguished group of authors takes stock of the existing state of knowledge in the field of finance and the development process. Each chapter offers a comprehensive survey and synthesis of current issues. These include such critical subjects as savings, financial markets and the macroeconomy, stock market development, financial regulation, foreign investment and aid, financing livelihoods, microfinance, rural financial markets, small and medium enterprises, corporate finance and banking.

The design, development and implementation of bank licensing policies and procedures in Zambia (1980-2000)

Abstract This study reviews the design, development and implementation of licensing policies in the years preceding the 1995-1997/98 bank failures in Zambia (1980-1994), and the licensing reforms that were followed thereafter (1995-2000). It documents important weaknesses in licensing practices that hindered regulatory effectiveness: inadequate minimum capital standards, insufficient ownership/management quality assessments, inadequate consideration of the convenience and needs of the financial sector and political interference in the licensing process. In addressing these and other weaknesses, however, the paper calls for research on prudential entry requirements to go beyond identifying desirable minimum requirements to establishing practical tools and techniques for regulators, especially for evaluating the quality of prospective bank owners and managers. It nevertheless cautions against adopting an overly cautious licensing policy, especially towards domestic banks as they provide valuable services to domestic economies.