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The Role of Fintech in Promoting Financial Inclusion in Developing Countries: THE CASE OF MEXICO
(2019)
Financial inclusion is globally on the rise since 2011; however, still, nearly 1.7 billion adults worldwide do not have a bank account at a formal institution (Demirguc- Kunt et al, 2018). Supply, demand and societal factors may lead to barriers to financial inclusion, and accelerate voluntarily and involuntarily exclusions in the developing countries (World Bank, 2008; Beck and De La Torre, 2006; Beck el at, 2008). With the mobile phone technology and advancements in the innovations, the number of participants has increased with the entrance of new challenger i.e. Fintech startups, in the financial services market. The literature reveals that Fintech has a great
potential to broaden access to financial services through lowering costs, reducing information asymmetries, enabling more transparency, increasing competitiveness, etc. This thesis analyzes the role of Fintech in promoting financial inclusion with the case of Mexico, approaching the lack of financial inclusion issue from the perspective of the household. To approach this issue, one of the objectives of this thesis is to investigate the barriers refraining households from accessing and using financial services.
In Mexico, more than half of the adult population do not have a bank account at a formal institution including mobile money account (Demirguc-Kunt et al, 2018). The G20’s financial inclusion indicators revealed that account ownership as well as saving and borrowing at financial institutions has decreased since 2014. The main barriers are the difficulties to use financial services, financial illiteracy and insufficient financial infrastructure leads to barriers to
financial inclusion in Mexico. Ideally, Fintech has a great potential to reduce the barriers to financial inclusion and promote access to and use of financial services for the people who are excluded by traditional financial institutions due to prohibitive prices, lack of documentation, etc. However, Fintech alone is not sufficient to transmit its full potential benefits. Even though Fintech ecosystem is growing rapidly in Mexico, and seen as a potential solution for lack of financial inclusion issue in Mexico, this study reveals that Fintech ecosystem couldn’t achieve its potential in Mexico so far.
This Master’s thesis examines the impact of heterogeneity on the assessment of systemic risk in the context of the German banking sector. Precisely, it is questioned whether currently employed, official systemic risk indicators are able to account for the German banking sector’s heterogeneity and to signal systemic risk reliably regardless of different bank types’ individual characteristics. For the assessment, a two-step procedure is employed. First, currently employed, official risk indicators are applied to bank-type-specific data for six different bank types from 1990 until 2018 and benchmarked against crises that occurred during the assessment period. Second, the implications of sectoral characteristics on systemic risk are assessed. The findings suggest that indicators are indeed able to account for the German banking sector’s heterogeneity, issuing different signals for various bank types. Moreover, the indicators allow for the identification of individual bank types’ behavior and their role in the accumulation of systemic risk. Yet, they are only partially able to signal crises correctly and behave more like thermometers than barometers of risk. Lastly, structural features of the German banking sector amplify the risk of individual institutions and thus their contribution to systemic risk at large.
This thesis investigates the impacts of large-scale asset purchases (LSAPs), which are an unconventional monetary policy (UMP) used by the Fed in the response to the 2008 global financial crisis and recession, on gender and racial wealth inequality in the US. After demonstrating that monetary policies have gendered and racial impacts and that none of these studies have yet considered UMPs, the thesis will then explain theoretically what the transmission channels of LSAPs to the wealth distribution are. Empirical studies show that LSAPs created a wealth effect, through increasing the price of some asset owned by households, primarily stocks prices, and to a lesser
extent house prices. Current literature on the impact of LSAPs in the US is still in dissension over whether it increased net wealth inequality or not. However, there is ample evidence from the current gender and racial economic literature that the wealth distribution in the US is significantly unequal, and a hole in the literature on the impact of LSAPs on the highly gendered and racial US wealth distribution. The thesis then begins to fill in some of these gaps in the literature by investigating what has happened to the financial and non-financial wealth of households disaggregated by gender and race in the period of the LSAPs, and whether the LSAPs did contribute to or reinforce these wealth inequalities. Due to limitations in the data collection the thesis is not able to conclude that there was a net negative gender wealth inequality effect. Nevertheless, there is strong empirical evidence that the LSAPs did increase racial wealth
inequality, due to white households disproportionately owning stocks and having higher rates on homeownership.
This thesis aims at analysing the potential benefits and obstacles of an Employer-of-Last-resort(ELR) policy in the case of Germany. Three main conclusions can be drawn from the analysis. First, as a bottom-up approach an ELR policy can tackle the issue of unemployment on the macroeconomic, socioeconomic and individual level in a unique way and promotes social inclusion of the unemployed. An ELR addresses non-pecuniary costs of unemployment and has the potential to tackle further socioeconomic problems. Second, this work points out that an ELR’s impact on inflation depends on excess production capacities of economic sectors as well as wage bargaining structures. In this regard, trade unions, government and employer representatives must
cooperate comprehensively in order to adapt to a potential raise of workers’ class consciousness. Third, the institutional setup of the European union does not allow for the application of functional
finance and the necessary fiscal spending for financing an ELR. Hence, Germany would need to abolish or redefine the debt break strategy, e.g. in accordance to the so-called Golden Rule, in order to implement a comprehensive ELR policy.
This paper aims to introduce a new topic for the economic policies associated with financial instability, both theoretically and through data analysis, discussing the roots of instability and the policy recommendations in the literature of Minsky and examining the role of National Development Banks (NDBs) in the economy. The purpose of the work is to acknowledge NDBs as Thwarting Institutions in a Minskyian sense. These special financial institutions have two sides of effects in the economy, one side related to their financial nature, through their capacity to provide finance to key sectors of the economy, and the other related to the real effects the financing of development projects implicate. Due to these influences, National Development Banks can be considered strong pillars to strengthen the economy, providing additional mechanisms for economic policies for stabilisation and recovery purposes, which is the definition of Thwarting Institution. The study case of the Brazilian National Bank for Economic and Social Development (BNDES) provided a detailed data analysis of the general performance of the bank between 2000-2018, its importance for the economy and especially the countercyclical role of the bank after the 2008s’ financial crisis. The last section will provide the analysis of financial stability in Brazil, showing important variables both from the financial and real side of the economy, in accordance with the Minskyian theory.
The Unhealthy Trade: The Expansion of the Food Industry in Latin America, case study of Mexico
(2019)
The text analyses the global and local inequalities that emerge because of the global food industry. More specifically, it analyzes how the consumption of food has changed affecting the health of the most vulnerable groups of people. In that sense, first, I analyze how the global food industry has expanded generating a health problem of obesity and Non-Communicable Diseases (NCDs), especially in the Global South. The result is that global inequalities are wider between Global North and South. This is reflected in higher rates of obesity and NCDs in peripherical countries, while Global North companies have more profits. Second, I analyze how this expansion is impacting local inequalities in Mexico. There, socioeconomic dynamics shape the way that ultra-processed food and drinks are consumed generating differentiated impacts by gender, class, and age. Women, poor people, and children are the most affected. In the end, the expansion of the global food industry has been contributing to reinforce previous inequalities at global and local levels
The objective of this master’s thesis paper is to investigate the middle class in China in a comprehensive way and examine the main defying elements of Chinese middle class. In addition to this, this master’s thesis attempts to dive deep and find the overlapping points between middle class and economic growth by talking about the middle class development issues. Historical analysis of middle class
development is also touched in this paper to understand what factors were behind its growth until these days.
In an overall view of my thesis work which is academically backed by previous researches and scholarly papers it is found that economic growth, achievements related to higher education and fair redistribution policies lead to reduced income inequality are the major elements that contribute to the growth of middle class. It is even more significant than social policies which explains class mobility. Based on the findings of my analysis of China, per capita income growth of Chinese people was the major element that expanded Chinese middle class by almost 75% through creating more open business market, and the rest of the factor was done due to inequality changes occurred in China. The growth was mainly occurred via creation of formal jobs which were fairer in payment and increased qualifications of labor force. There was also radical decrease in inequality of labor earnings which is the major factor for reducing income inequality among households. This can be explained by the fact that minimum wages kept rising throughout the 90’s which in turn modified the patterns of middle class consumption.