Issue #1 (Volume 11 2016)

Almost everyone agrees that present day banking systems and payment authorization techniques are far from perfect. This qualitative and conceptual paper attempts to redefine some roles of the central bank in financial systems and economic stability and proposes a new and innovative banking system authorization process. This new process will help to curb most financial irregularities and banking failures by offering central banks a draconian interventionist technique in retail banking that could shape the future structural development of the financial system and the economy and curtail crises. Identity is key to banking. It should, therefore, be of utmost importance that a good banking system be identity based. Hence, one should use a biometric authentication system for access control and operational management by a re-organization of the modus operandi in bank processing systems

This paper explores monetary policy decision-making within an insurance model with expected utility-maximizing policy-makers. The authors consider that policy-makers are different in terms of their backgrounds, experience and skills and they may disagree on the appropriate policy response. In a monetary policy committee, they share information and decide on interest rates by means of an agreed voting rule. The authors show that, in the presence of risk and search costs, it would be optimal for policy-makers to fully insure against the expected loss from a potential policy error. Whether a monetary policy committee sufficiently hedges against this risk will depend on several factors such as the skills of policy-makers, the distribution of members’ beliefs, and the committee’s (statutory) voting rule, but also on other factors not captured by the model

Africa has become increasingly attractive to foreign investors, but the establishment of operations in emerging markets poses challenges for multinationals. One such challenge is implementing of corporate social responsibility (CSR) effectively across all subsidiaries. This study aims to determine whether there are differences in CSR expectations and praxis between a multinational bank and its subsidiary operating in South Africa. Through qualitative research methods, a case study research design approach was utilized to study CSR activities in the parent company and CSR activities in its South African subsidiary. Data collected from ten interviews are analyzed using open, axial and selective coding procedures. The study concludes that there are nuanced gaps in CSR expectations, and between the parent company and its South African subsidiary. Global CSR strategies may be applied consistently across subsidiaries, but they do not necessarily address core issues faced in emerging economies, placing doubts upon the practicality of these efforts

Mobile banking in South Africa recently has undergone rapid growth, and research on it is on the increase. This paper seeks to improve authors’ understanding of the current state of knowledge of mobile banking in South Africa by providing a systematic review of the existing literature on the phenomenon. The literature review shows that research to date has centred on small academic models with a high level of practitioner involvement, consequently, narrowing research issues of greater concern. Thus, issues of assessing mobile banking needs, factors imparting continuance usage, and the measurement of impact have been comparatively neglected. A future direction for research and practice within the mainstream of mobile banking and financial services is suggested to remedy this imbalance and to contribute to mobile banking applications in South Africa

Since, in the NAFTA era, the Mexican economy is much more advanced in the manufacturing sector than those of other Latin American countries, Mexico competes directly with China for U.S. imports. This study empirically investigates the behavior of the Mexican peso/Chinese yuan, Mexican peso/U.S. dollar, and Chinese yuan/U.S. dollar real exchange rates to determine whether the exchange rate policies serve as contributing factors to the subpar performance of the Mexican economy. The empirical findings suggest that the Mexican, Chinese, and U.S. real exchange rates, over the sample period, prove consistent with predations of the purchasing power parity theory; therefore, exchange rate policies may not be a contributing factor to the poor performance of the Mexican economy

Community banks in American urban areas are found to have a significant effect on the local distribution of income. Banking activity is seen to both decrease inequality by increasing the median level of income and simultaneously increase inequality by increasing the size of either tail of the income distribution. The net effect of banks providing liquidity to the American local economy and increasing access to the banking infrastructure is to decrease income inequality in these communities

The authors examine the impact of the relationship between two types of financial innovation and bank performance. The research attempts to test hypotheses that are not yet validated by previous studies focusing on the financial services industry, thus, giving the study an exploratory look. The authors try, specifically, to determine the interaction effect of both types of financial innovation on bank performance and, then, try to enrich innovation theory with new hypotheses on product and process innovation. The results show that Tunisian banks have begun, probably, to see the importance or the need for the simultaneous adoption of two types of financial innovation since 1995 to improve their poor performance. The authors also find that the interaction effect of product and process innovation reduces profitability. However, efficiency is achieved in terms of market share and value. The authors conclude that financial innovation is a value creation instrument for Tunisian banks

On October 1, 2016, the Chinese RMB (yuan) will be included in the SDRs of the International Monetary Fund (IMF). Reserve currencies are select currencies that have special drawing rights (SDRs). This article examines some of the aspects of this impending change of including the Chinese RMB as a select currency. The U.S. dollar is expected to continue to dominate as a select currency, after October 1, 2016, for the foreseeable future. This article has been written so as to provide general economists with some understanding of special drawing rights (SDR) of the International Monetary Fund (IMF) and how the addition of the Chinese RMB will fit in, as of October 1, 2016

The firm’s credit rating is an important communication tool and previous research has shown that many companies consider it important in capital structure decisions. This study examines the determinants of capital structure in MENA banks. In addition, it investigates the determinants of credit rating. Further, the impact of credit rating and capital structure on banks’ performance is examined. Therefore, this study is an attempt to answer the following questions: 1) what are the main determinants of capital structure? 2) how does credit rating affect capital structure? 3) what are the main determinants of credit rating? and 4) what is the effect of capital structure and credit rating on bank performance? The sample covers 169 banks and is divided into two sub-samples: rated (79) and non-rated banks (90). The results indicate that credit rating directly affects the capital structure decisions as rated banks use more debts than non-rated banks. Banks’ performance is positively associated with credit rating and negatively with the capital structure. This study has an implication on investors in their decisions to invest in the banking industry. It also helpful for policy makers to understand how bank’s capital structure behaves so they could take it into consideration when issuing new regulations such as Basel