Financial capital democratisation: recipes for growth and disaster

Abstract

The broadening of access to financial capital otherwise known as financial capital democratisation (FCD), has been receiving increasingly more attention, especially from those who are concerned about poverty, community development and development of entire nations. This concept has also its roots in ethical and religious based economic systems. In this paper we review various FCD systems. Our main conclusions are that the current crisis is due to severe adverse selection and moral hazard problems, that a new theory calling for acquisition of financial capital with the future earnings of capital sounds promising, the impact of the CRA in the USA is mostly negative, first-time home buyer grants as well as ESOPs and stock options in the work place have achieved some success and that micro financing is good for individual small-scale entrepreneurs but not sufficient for the alleviation of poverty in a developing nation. The paper also explores Islamic financing concepts and analyses its roots in FCD application, given wider interest generated for such financing techniques during the recent market upheavals when Islamic financial institutions seemed less affected by the crisis.

Does excessive degrees of financial depth push hyper-inflation?

“…In response to this, recent researchers have suggested that excessive financial growth may lead to macroeconomic instability, particularly the strength of inflationary pressures (Calza et al, 2006;Bayoumi and Melander, 2008;Ramady and Kantarelis, 2009). As more FIN of private credit and liquid liabilities (LL) circulates in the economy, more goods can be purchased and aggregate demand increases which pushes prices upwards (Lipsey, 1999).…”

“…As more FIN of private credit and liquid liabilities (LL) circulates in the economy, more goods can be purchased and aggregate demand increases which pushes prices upwards (Lipsey, 1999). Arguably, Ramady and Kantarelis (2009) suggested that the rapid expansion of FIN, particularly consumer credit, is fuelling inflation as domestic banks, flooded with governmentdriven money, supply expansion and expanded loan books. Likewise, Bayoumi and Melander (2008) highlighted that excess liquidity reduces the effectiveness of monetary policy transmission, especially affecting the demand side, to reach the targeted inflation.…”

Design and development of products and services at the Base of the Pyramid: a review of issues and solutions

“…This short-term approach of the poor can be attributed to their lack of assets (Sherraden, 1991). Furthermore, the poor have limited access to financial services (Ramady and Kantarelis, 2009).…”

Socio-Economic Correlates of Information Security Threats and Controls in Global Financial Services Industry

“…The reasons they espoused include: a) over-reliance on information systems (IS) use in their operations; b) potential for large losses emanating from breaches in their operations; and c) the need to maintain a good public image and assure the confidentiality and integrity of their data and IS assets. In addition, GFSI are sub-jected to strict regulatory oversight (Ramady & Kantarelis, 2009;Delimatsis, 2013;Fernandes, 2013). Indeed, the DTTL (2012, p.2) concluded that " [w]ith increasing business demands and evolving regulatory frameworks, information security is a top priority for financial services industry organizations.…”