China's Sovereign Wealth Funds: Problem or Panacea?

China’s impressive economic growth has led to the accumulation of massive financial assets. The emergence of sovereign wealth funds (SWFs), as a governmental investment device for its excessive foreign reserves, symbolizes a major rebalancing of economic power. With its investment portfolios drastically diversified for well-established financial institutions as well as some strategic sectors, a seminal debate seems centered on whether China’s SWFs are in furtherance of purely commercial or geopolitically strategic purposes. Under the sophisticated hard laws associated with international initiatives, it is unlikely that the SWFs-related investment would distort the global financial system, and genuinely threaten national security, which assumption may only exist at a hypothetical level. The potential protectionism would inevitably retard the world economy’s recovery, were it not to be proportionately addressed. A most significant necessity appears to be to strike a proportionate balance between sustaining the credibility of open investment environment and efficiently minimizing implications of SWFs political arenas.

The rebirth of dependence– offering an alternative understanding of the financial crisis

Purpose – This article aims to contribute to the re-evaluation of the global market system using a Marxist inspired theory of development, dependency.

Design/methodology/approach – This article draws on dependency theory as an alternative means of understanding global relationships. Building on existing literature, it modifies dependency to encapsulate technological developments and trends in the global market.

Findings – Re-evaluating the global market and the relationships that underpin it, through an alternative theory, highlights the fragility of markets and associated relationships. Increasingly, nation states are becoming irrelevant. This presents a problem as the main actors in the global market today are “above” inter-state relations, yet the organs that regulate their behaviour still are grounded in inter-state rhetoric. The relationship between development and underdevelopment remains.

Research limitations/implications – The financial crisis has propagated a wealth of interest in the relationships between states, between multi-national corporations (MNCs) and between MNCs and state. Using this broad theory of modified dependency, it can be applied to a range of different relationships. In the wake of financial crisis, there is the opportunity to raise awareness of these ingrained issues and initiate discussions at national, regional and international levels to alleviate some of the conditions of dependence.

Practical implications – Regardless of the work of national governments and NGOs to instigate development in lesser-developed regions through policy and regulations, unless there is a conscientious commitment from MNCs operating in that region to contribute to development, the result will be the development of underdevelopment and the underdevelopment of development. CSR can help alleviate the conditions of the dependence on capital generated by MNCs, but this is not a solution to an ingrained problem, capitalism.

Originality/value – This article introduces a modified theory of dependency for the first time. It applies the theory to the financial crisis and to the continent of Africa. It considers the role that CSR can play in alleviating the conditions of dependence.

Financial literacy and over-indebtedness in low-income households

Financial literacy can explain a significant proportion of wealth inequality. Among the key components of financial literacy are numeracy and money management skills. Our study examines the relative importance of these components in the determination of consumer debt and household net worth among credit union members in socially disadvantaged areas. The main finding from our analysis is that money management skills are important determinants of financial outcomes but that numeracy has almost no role to play. This result adds to a recent US-based behavioural finance literature on the role of attention and planning in consumer finance. Findings are found to be robust when the sample is reduced to only those who have a clear role in household financial decision-making and also when controlling for potential endogeneity. Our findings have policy implications in the UK and elsewhere as credit unions across the world are important players in national financial literacy strategies.

Is childhood type 1 diabetes a wealth-related disease? An ecological analysis of European incidence rates

Aims/Hypothesis: To describe the epidemiology of childhood-onset Type 1 (insulin-dependent) diabetes in Europe, the EURODIAB collaborative group has established prospective, geographically-defined registers of children diagnosed under 15 years. A total of 16,362 cases were registered by 44 centres during the period 1989-1994. The registers cover a population of approximately 28 million children with most European countries represented. Methods In most centres a primary and a secondary source of ascertainment were used so that the completeness of registration could be assessed by the capture-recapture method. Ecological correlation and regression analyses were used to study the relationship between incidence and various environmental, health and economic indicators. Findings: The standardised average annual incidence rate during the period 1989-94 ranged from 3.2 cases per 100,000 per annum in the Former Yugoslavian Republic of Macedonia to 40.2 cases per 100,000 per annum in Finland. Indicators of national prosperity such as infant mortality (r= -0.64) and gross domestic product (r= 0.58) were most strongly and significantly correlated with incidence rate, and previously-reported associations with coffee consumption (r= 0.51), milk consumption (r= 0.58) and latitude (r= 0.40) were also observed. Conclusion/Interpretation: The wide variation in childhood type 1 diabetes incidence rates within Europe could be partially explained by indicators of national prosperity. These indicators could reflect differences in environmental risk factors such as nutrition or lifestyle that are important in determining a country's incidence rate.

The Financial Accountability of Irish Credit Unions: an initial empirical study

Credit unions are member-owned, voluntary, self-help, democratic, not-for-profit institutions that provide financial services to their members. They have both economic and social goals. Over this last decade they have achieved remarkable growth levels and currently there are 600 such organisations in Ireland, with approximately 50 per cent of the adult population of Ireland belonging to a credit union. Accounting for credit unions is a much-neglected area and relatively little is known about the sector's accountability. This paper presents the results of an initial empirical study of the financial accountability of Irish credit unions. A series of interviews and a basic content analysis of 178 recent financial statements were used to identify the views of key stakeholders with respect to the discharge of financial accountability by credit unions and the current quality of financial reporting. Overall, the research points to a sector where financial accountability through the medium of the annual report is weak and possible adverse consequences of this are explored. On the basis of the interviews it is suggested that if changes in financial accountability are to be achieved then some more proactive engagement of parties external to the management of individual credit unions is needed.