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The effects of benchmarks on international capital flows: The problems of passive investing

Sergio Schmukler's picture

The categorisation of countries into relevant international benchmark indices affects the allocation of capital across borders. The reallocation of countries from one index to another affects not only capital flows into and out of that country, but also the countries it shares indices with. This column explains the channels through which international equity and bond market indices affect asset allocations, capital flows, and asset prices across countries. An understanding of these channels is important in preventing a widening share of capital flows being impacted by benchmark effects.

Why investors support a price on carbon

Global Investor Coalition on Climate Change's picture
Во время недавнего посещения  города Чартак в Наманганской области Узбекистана я была поражена, увидев красоты этих мест. Здесь, в прямом и переносном смысле, у меня открылось второе дыхание. Этот небольшой город в Ферганской долине, расположенный на высоте 650 метров над уровнем моря среди зеленых  лугов и скалистых гор, богат чистейшим воздухом и кристальной минеральной водой.

Устойчивый туризм может стать важным экономическим решением для многих горных общин Узбекистана, способствуя трудоустройству местной молодежи. Эта идея приобретает большее значение, учитывая, что три четверти населения страны, находящихся за чертой бедности, проживают именно в сельской местности. 


 

Can Socially Responsible Investing bridge the Gap between Islamic and Conventional Financial Markets?

Michael Bennett's picture

Islamic finance is growing in countries like Malaysia (Credit: Asian Development Bank, Flickr Creative Commons)

Over the last three decades, the concepts of Islamic finance have captured the attention of researchers. One of the core principles of Islamic finance is the prohibition of interest and debt-based financing. Instead, economic agents are encouraged to engage in financial instruments of risk-sharing rather than risk transfer.  Although the principles of Islamic finance go back several centuries, its practice in modern financial markets became recognized only in the 1980s, and began to represent a meaningful share of global financial activity only around the beginning of this century. The growth of this market has been driven by the high demand for Islamic financial products, as well as the increasing liquidity in Gulf region due to high oil revenues.  Table 1 shows the growth trend in Islamic finance for the banking sectors by different regions, with estimates of total Islamic banking assets reaching $1.8 trillion by the end of 2013. Figure 1 shows how the growth of the Islamic financial sector in 2006–10 period surpassed the growth of conventional financial sector in all segments of the market, ranging from commercial banking, investment banking, and fund management to insurance in several Muslim-majority countries.

Angel Investors as Startup Enablers in the Developing World

Oltac Unsal's picture

A normative definition that I use as a recovering angel investor myself is that an angel investor actively helps a seed stage startup succeed with both mentorship and capital in exchange for those intangible benefits of mentorship and a return on investment.  In World Bank parlance, then, they automatically provide both investments and technical assistance with no agency costs; a great recipe for solving multiple problems (funding capacity, entrepreneurial capability and access to early stage finance) in a cost effective way. Knowing that 318,480 of them invested $22.5 billion on 66,230 ventures in the US and achieved 27% annual returns forms the basis of our hypothesis that angel investing could work well in the developing world.

Investing in infrastructure is still the best bet to spur growth, jobs

Jordan Z. Schwartz's picture

The scientific evidence is overwhelming. As Robert Beaglehole and colleagues at the World Health Organization (WHO) pointed out years ago, tobacco is the only consumer product that eventually kills half of its regular users if they follow its manufacturers’ recommendations. 

Photo Credit: By AdamCohn, FlickrGiven this dire reality, it is clear that Africa is now at a crossroads. On one hand, the countries in this region have become an attractive and under-tapped market as tougher regulations, high taxes, and greater consumer awareness of the dangers of smoking in developed countries are “closing the door” to tobacco imports and leading to significant drops in consumption. And on the other hand, cigarettes are becoming increasingly affordable as incomes rise in several African countries due to the rapid economic growth of recent years. Indeed, African countries are experiencing the highest increase in the rate of tobacco use amongst developing countries--the number of smokers in sub-Saharan Africa is projected to increase 148 percent by 2030, to 208 million smokers or one-fifth of the total population.