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Financial Sector

​The Things We Do: Is the Culture of Banking Dishonest?

Roxanne Bauer's picture

Despite its relevance to the broader economy of states, there exists little empirical information on the culture of the banking industry. Identifying the effects of business culture poses several challenges because comparing employees in one sector to those in another can be misleading. Some professions may naturally attract different kinds of people, making it tricky to separate cultural factors from individual ones. Moreover, the financial industry is broad and comprised of many different kinds of businesses and institutions, with some more focused on the consumer and others more focused on fiscal details.

Attempting to shed light on the subject, academics from the University of Zurich designed an experiment inspired by the economic theory of identity.  Identity economics states that economic choices are not only based on personal taste but also on what an individual considers to be appropriate.  Whether a choice is appropriate or not depends on a person’s social identity– their sexual orientation, race, religion, occupation, or where they live.

In the experiment, 128 employees from an international bank, with an average of 11.6 years of experience in the financial sector, were split into two groups. About half of the participants worked in a core business unit, like private banking, asset management, trading, or investment management.  The other half worked in support units like human resources or administration. They were randomly assigned to a treatment or control group.

Media (R)evolutions: The Cloud and the Connectivity Revolution

Roxanne Bauer's picture
New developments and curiosities from a changing global media landscape: People, Spaces, Deliberation brings trends and events to your attention that illustrate that tomorrow's media environment will look very different from today's and will have little resemblance to yesterday's.

For many people, "the cloud" is a nebulous term, but it simply refers to software and services that operate on the Internet instead of directly on a computer. Dropbox, Netflix, Flickr, Google Drive, and Microsoft Office 365 (a/k/a Outlook) are all cloud services-- they do not need to be installed on a computer.

According to a report by Gartner, one third of digital data will be in the cloud by 2016. Cloud computing is an attractive option for many entrepreneurs, businesses, and governments in developing countries that seek to service large populations but which require an alternative to heavy ICT infrastructure. Moreover, as mobile apps and PC software are increasingly tied to the cloud, its adoption is likely to increase.  

Media (R)evolutions: Emerging Markets to Lead Sales of Technology Devices in 2015

Roxanne Bauer's picture
New developments and curiosities from a changing global media landscape: People, Spaces, Deliberation brings trends and events to your attention that illustrate that tomorrow's media environment will look very different from today's, and will have little resemblance to yesterday's.

2015 forecasts for sales of technology devices indicate global stability as the market remains at around one trillion USD, where it has hovered for the last three years. However, the forecasts also predict shifts at the country level as the top ten largest growth markets will increase by over $10 billion. Emerging markets, in which both volume and pricing contribute to positive sales, will dominate this growth. 

India will experience the highest growth rate, primarily driven by smartphones sales, followed by China. China's technology device market represents an interesting case study because it is predicted to grow by just $1.8 billion in 2015-- a mere 1% increase over the estimated 2014 total-- but that is still large enough for second place. 
 
Emerging Markets to Lead Tech Sector Growth in 2015
Infographic: Emerging Markets to Lead Tech Sector Growth in 2015 | Statista
You will find more statistics at Statista

Media (R)evolutions: Mobile Attracts ICT Start-ups and Entrepreneurship

Roxanne Bauer's picture

New developments and curiosities from a changing global media landscape: People, Spaces, Deliberation brings trends and events to your attention that illustrate that tomorrow's media environment will look very different from today's, and will have little resemblance to yesterday's.

The increasing penetration of mobile services and mobile internet is opening up opportunities for innovation, especially in emerging markets. This can be seen in the health sector, financial services, and many other fields, where ICT start-ups and small and medium enterprise (SMEs) are working with mobile services to create business and jobs. The World Bank reports that "9 out of 10 jobs in developing economies" come from the private sector, and that "The main thrust of that comes from micro-, small-, and medium-sized enterprises, especially in technology sectors—a recent study argues that 3 jobs are created in a community for every new high-tech job." 

The following graph shows the distribution of ICT start-ups and SMEs in relation to the number of mobile subscribers. In developed countries, technology firms and internet providers have been at the forefront of innovation, but in emerging markets mobile operators are increasingly leading the way.
 

 

Quote of the Week: Raghuram Rajan

Sina Odugbemi's picture

Central bankers have had enormous responsibilities thrust on them to compensate, essentially, for the failings of the political system. And my worry is we don’t have sufficient tools to do that, but we’re not willing to say it. And, as a result, we push as hard as we can on the existing tools, and they may create more risk in the system.” 

- Raghuram Rajan, Governor of the Reserve Bank of India since 4 September 2013. Prior to his post at the Reserve Bank of India, Rajan was chief economic adviser to India's Ministry of Finance in 2012 and chief economist at the International Monetary Fund from 2003 to 2007.
 

The Things We Do: Saving for Change

Roxanne Bauer's picture

At the basis of communication and public policy are assumptions about human beings- their rationality or irrationality, their foibles, wants and preferences. A lot depends on whether these assumptions are correct. In this feature, we bring you fascinating examples of human behavior from across the globe.

Saving money is hard.  However, it is also considered to be necessary for making large purchases like a house or car, opening up a business, or planning for retirement. Saving can be particularly difficult for the poor who live day-by-day and do not have much disposable income.  In wealthier countries, financial institutions offer a variety of products to help their clients set aside savings, but in poorer countries, there are fewer savings options. Many poor people end up hiding cash, investing in assets such as livestock or land, or engaging in informal savings arrangements

Yet, for those who have even a little money to stow away, the benefits can be enormous. Massachusetts Institute of Technology (MIT) economists Abhijit Banerjee and Esther Duflo have found that even those who live on less than $1 per day have the ability save and often spend money on nonessential items such as alcohol, tobacco, and televisions.  Moreover, when poor people increase their earnings, they spend only two-thirds of their increased income on food.  These findings suggest that poor people do have funds to save.

But why is it so difficult for people of all income levels to save?

Quote of the Week: Zhang Lei

Sina Odugbemi's picture

"You need to have the ability to delay gratification. You have to focus and you have to have a clear mind.”

- Zhang Lei, Chairman and CEO of Hillhouse Capital Management, one of the largest equities investment firms in Asia, speaking on his longterm investment strategy.  Hillhouse, based in Beijing, typically invests in consumer, internet and media, medical treatment and healthcare, advanced manufacturing and commodity related sectors and manages $10 billion for leading endowments, sovereign funds, pensions and family offices.  Zhang also serves as a board member for several Asian companies, including Jingdong (formerly 360Buy), Blue Moon, Qunar and MNC/Global Mediacom. 
 

Weekly Wire: The Global Forum

Roxanne Bauer's picture
These are some of the views and reports relevant to our readers that caught our attention this week.
 

Without Stronger Transparency, More Financial Crises Loom
Committee to Protect Journalists
The social forces that can encourage euphoria among investors and then suddenly flip them into mass panic are not unlike those that generate crowd disasters such as the stampedes that have killed more than 2,500 pilgrims at Mecca since 1990. In such moments of herd-like behavior, the common element is a profound lack of information. If neither the individuals in an enthusiastic crowd nor those charged with policing it have a grasp on how it is behaving as a whole, the mob can grow too big for its surroundings. Equally, if those people are ill-informed about the extent of the risks they face when they discover something is wrong, they will assume the worst and rush for the exits, increasing the danger to all. This describes numerous crowd disasters. It also illustrates the financial crisis of 2008.

2014 Global Peace Index
Vision of Humanity
We are living in the most peaceful century in human history; however the 2014 Global Peace Index shows that the last seven years has shown a notable deterioration in levels of peace. The Global Peace Index measures peace in 162 countries according to 22 indicators that gauge the absence of violence or the fear of violence. This is the 8th year the index has been produced.

Weekly Wire: The Global Forum

Roxanne Bauer's picture
These are some of the views and reports relevant to our readers that caught our attention this week.
 

Please Do Not Teach This Woman to Fish
Foreign Policy
Is there anyone out there who doesn't think small business is the lifeblood of any economy? From Washington to Warsaw, politicians and pundits just can't speak highly enough of plucky entrepreneurs. Even in poor countries, entrepreneurship is one of the most important forces underpinning economic growth, but the best way to raise living standards and reduce poverty is not necessarily to make everyone an entrepreneur. So why do so many costly development programs apparently ignore this fact? Once upon a time, people who wanted to fight poverty believed in direct approaches that solved identifiable problems one by one. If you wanted to make farmers more productive, you gave them fertilizer. If you wanted to boost manufacturing, you set up factories. To help both of these sectors grow and export goods, you built roads and ports. These kinds of investments quelled hunger and raised incomes in many countries. But recently, an indirect approach arose with promises of still greater benefits.

Where Next for Aid? The Post-2015 Opportunity
ODI/UNDP
This joint ODI-UNDP paper looks at whether development aid will remain important in the post-2015 era, and asks how the old aid model should change in response to a dramatically new world and new sustainable development challenges. The paper suggests that the label “international public finance for sustainable development” – or IPF4SD – is a more accurate description of the types of interventions that need to be funded in the post-2015 era. This finance will also be needed over the long-term. The authors suggest ways in which these funds could reliably be raised over the long-term, as well as how the architecture which mediates IPF4SD could be improved.

Weekly Wire: The Global Forum

Roxanne Bauer's picture

These are some of the views and reports relevant to our readers that caught our attention this week.


The Internet of Things Will Thrive by 2025
Pew Research
This current report is an analysis of opinions about the likely expansion of the Internet of Things (sometimes called the Cloud of Things), a catchall phrase for the array of devices, appliances, vehicles, wearable material, and sensor-laden parts of the environment that connect to each other and feed data back and forth. It covers the over 1,600 responses that were offered specifically about our question about where the Internet of Things would stand by the year 2025. The report is the next in a series of eight Pew Research and Elon University analyses to be issued this year in which experts will share their expectations about the future of such things as privacy, cybersecurity, and net neutrality. It includes some of the best and most provocative of the predictions survey respondents made when specifically asked to share their views about the evolution of embedded and wearable computing and the Internet of Things.

Thinking in a Foreign Language Could Sway Your Moral Judgments
Wired
Would you kill one person to save five? This cruel dilemma pits the principle of thou-shalt-not-kill against simple math: Five is greater than one. But presumably it’s a dilemma each person solves the same way each time, unaffected by superficial things like the language in which it’s presented. After all, we like to think we abide by a consistent moral code. Yet psychologists say that’s not always the case. In a series of experiments, they found that people confronted with this one-for-five dilemma were far more likely to make a utilitarian choice when contemplating it in a foreign language. “We tend to think about our ethical decisions as reflecting something fundamental about who we are,” said psychologist Boaz Keysar of the University of Chicago, co-author of the new study, published April 23 in Public Library of Science ONE. “You wouldn’t think they would depend on such a seemingly irrelevant thing as whether you’re using your native language. But it can matter.”

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