IGLP Visa Grants
The Institute for Global Law and Policy at Harvard Law School is pleased to announce a series of competitive research grants as part of its ongoing research project on liquidity in the global economy, financial services regulation in emerging markets and financial inclusion. The research initiative is supported by the generosity of IGLP’s sponsor VISA, Inc.
On May 1, 2013 the first awards were granted for summer and fall on the following themes:
- Public Policy and financial inclusion. Award eligible research may consider: the range of institutional and political choices available for the provision of financial services to the unbanked; the most appropriate regulatory environment and explicit public policies to encourage equitable and effective financial inclusion, the relationship between financial inclusion and social mobility, equality and economic development. We are particularly interested in comparative assessment of alternative regulatory and business strategies for micro-finances, mobile-based banking, informal banking and women-focused delivery models, with reference to their economic, political and ethical implications.
- Regulation and the structure of financial services in emerging markets. Award eligible research may consider alternative paths to economic development encouraged by alternative regulatory and institutional environments, including such issues as the relationship between formal and informal banking models, “national champions” and state-sponsored enterprises, and the impact of various regulatory models on small and medium sized enterprises, gender equality and poverty reduction.
Grant recipients include graduate students, post-doctoral scholars and junior faculty. Awards were given to proposals that aim to generate written work suitable for submission for publication.
Award recipients who complete their papers prior to October 15, 2013 will be eligible for consideration to present their work at a special IGLP/VISA workshop to be held in early 2014, with travel funded by IGLP and VISA, Inc., and are eligible to submit their completed work for possible publication as an IGLP working paper.
We are pleased to announce the following IGLP-Visa Grants for the summer and fall of 2013:
What Can Banks Do? The Provision of Non-Financial Services for Small and Medium Sized Enterprises in Emerging Markets
Ermal Frasheri, Harvard Law School
This project will examine how banks provide non-financial services as a component of their development strategies in emerging markets. It is estimated that there are 365 to 445 million formal and informal micro, small, and medium sized enterprises in the developing world, containing a subset of 25 to 35 million formal SMEs. One of the novel ways of reaching out to SMEs has been for banks to take a leadership role in providing non-financial services in an effort to help business owners and managers develop business skills and effective management practices. Such services usually include: the development of practical business skills, account management, information dissemination through personal contact and business centers, training activities for improving existing skills and learning new ones, and consulting services that offer expertise and insight. I will examine how the framework under which banks and bankers are operating in this new capacity is related to socio-economic factors. In this context, legal regimes which enable banks and specialized financial institutions to reach strata that have previously been unable to access mainstream banking services transfer tremendous power to the bankers, effectively transforming them into the main power brokers of local communities. The regulated transformation of the role of banks in emerging markets from their intermediary function of accumulating savings and providing capital into a more grassroots institution where economic, social and political power converge merits further scrutiny.
The Regulation of Mobile Money: Narrow Banking Licences for Telecommunication Companies?
Jonathan Greenacre, University of New South Wales
‘Mobile money’ involves customers paying cash to banks and telecommunication companies (‘e-money issuers’) in exchange for electronic money (‘e-money’). Customers use this e-money to trade with other customers. They can convert e-money back into regular money through ‘agents’ of the e-money issuer, which tend to be post offices, shops, and other retail outlets.
This paper explores whether, and if so how telecommunication companies providing mobile money can be regulated through ‘narrow banking’ licenses. Such licenses are common in ‘advanced’ financial systems as a means of restricting banks’ activities to providing basic financial services, such as savings and loans, and prohibiting participation in the more speculative products that contributed to the global financial crisis, such as proprietary trading. This paper looks at this topic through a comparative regulatory analysis of three countries that have applied aspects of narrow banking licences to telecommunication companies: Ghana, Kenya, and Tanzania.
The paper contains four parts. The first outlines the main literature on how narrow banking licenses might apply to telecommunication companies. The second focuses on regulatory considerations and policy objectives behind narrow banking licences. The third examines which, if any of these considerations and objectives are relevant to mobile money, as evidenced by the main literature and regulatory practices in Ghana, Kenya and Tanzania. The fourth concludes on the applicability of narrow banking licences to mobile money.
The Brazilian National Bank For Economic And Social Development: An Experimentalist Financial Institution For Development Finance Policies
The 2008 crisis symbolizes the collapse of the global economic order designed on neoclassical principles. The failure has provided an opportunity to contest convictions on a variety of capitalist institutions. In this time of economic uncertainty, development banks have reemerged as powerful financial institutions in shaping the global economy. They affect billions of lives in developed and underdeveloped countries, accounting, on average, for 25% of total assets in banking systems around the world. The Brazilian National Bank for Economic and Social Development (“BNDES”) is a good laboratory to examine how development banking expertise affects liquidity structure as well as provides alternative paths to rethink financial services.
My research project seeks to demonstrate that BNDES is an experimentalist institution for development finance, which continuously reimagines its legal arrangements in order to realize its developmental mandate. On the one hand, BNDES is understood not as a monolithic firm, but as a legal institution where contradictory financial theories and public policies are managed into a coherent operational strategy. On the other hand, BNDES cannot be subject or merely apply a recipe of pre-determined legal arrangements designed on private profit-maximizing concepts. In fact, BNDES has to translate theories and policies into alternative financial services, aiming at promoting economic development. Thus, I believe that the BNDES Project has the potential to contribute substantially to the Project on Global Financial Regulation and Financial Inclusion by demonstrating how development banking expertise frames legal institutions and creates a domain to propose alternative paths for development finance.
Mobile Payment Systems in Developing Countries: Policy Implications and Potential
Economists and legal scholars working in the Chartalist tradition argue that the ability of a state to generate demand for a particular currency denominated in a particular unit of account has historically derived from its coercive power to impose taxes, fees or fines and determine the acceptable means of settlement for said liabilities. The connection between the power to tax and the origins of the modern payment system have been explored extensively in the context of developed nations with strongly established governing institutions and a rule of law. There remains, however, a dearth of scholarship on the implications of Chartalist principles for developing nations seeking to generate sustainable payment and banking services.
My project aims to address in small part this deficit by examining the viability of using public telecommunications infrastructure to introduce and manage a national currency and modern payment system in developing countries where robust fiscal authorities do not exist. Premised on the idea that conditional access to wireless communication provides an incentive for voluntary compliance with taxation requests, such a system might improve the ability of states with presently weak central authority to more effectively control the value of their currency and the implementation of financial regulation.
Using a single developing country as a case study, this project will review the various political, legal and technological issues presented by such a system, as well as the broader implications for current debates on financial inclusion, economic development, technology and free speech.
Decoding the Commercialization of Microfinance Institutions: Regulating Financial Inclusion?
I plan to conduct fieldwork in Sri Lanka to examine the underlying regulatory and policy interventions within the financial inclusion paradigm. My current project seeks to understand the relationship between financial inclusion initiatives and the fiscal conduits through an examination of legal mechanisms. By applying qualitative methods and local level analysis of banking practices, this project aims to explore new approaches to global financial governance. Through the examination of financial inclusion agents, such as commercialized microfinance institutions, my inquiry will be situated within the international financial regulatory framework to uncover the interconnected legal orderings. This proposed field research will be conducted as part of my dissertation, and will further serve as a basis for a paper contribution for IGLP. The paper envisages a discussion on the linkages between the practices and behaviors of state and non-state actors with respect to the governance of microfinance deployment in a global pluralistic setting involving layers of complex arrangements.
Alternative Institutional Strategies and Impact on Financial Inclusion: Political Economy of Microfinance in South Asia and Latin America
Various studies in the past use isolated contexts to examine the differential evolution and the resulting impact of microfinance in societies. The research proposes to bring these contexts together and explore their interaction and inter-dependence. This is done by way of a three-pronged analysis. First, the project will examine the contribution of dominant political and economic paradigms in the adoption of alternative institutional, regulatory and ideological strategies for microfinance. In order to investigate this, the research proposes to undertake a historical and comparative analysis of growth trajectories of microfinance in South Asia and Latin America. The research will pertain to the development of different ideologies and institutional forms in microfinance as a result of the neoliberal development paradigms pre-dominant in Latin America and state-directed development policies in Asia. Second, the research will explore the economic, political and ethical implications of adopting the aforesaid different strategies, including, inter alia, creation of new social identities and structures, economic subjectivity and disciplining of the poor and instances of state capture including the Na Pago movement in Nicaragua and the microfinance crisis in Andhra Pradesh. Finally, the research proposes to build on the lessons from a cumulative understanding of the contexts mentioned above, to understand how the regulatory and institutional landscape of microfinance needs to be cognizant of various political, economic and cultural contexts for the poor. This can help inform the structural reforms that are best suited to ensure equitable and effective financial inclusion and offer a re-examination of the goals of microfinance.