What Kind of a Financial System do Canadians Want? Implications of Globalization and Current Canadian Policies for the Future of the Canadian Financial System (Working Paper 2)

This paper examines the longer term outlook for the Canadian financial services industry and its governance. Attention is paid to what would happen to the Canadian financial system and its governance, federal and provincial, if current trends in the international and Canadian financial services environment and in Canadian regulatory policies continued into the future.

Financial Inclusion of The Small and Marginal Farmers by the Banking Sector in Kerala

Financial inclusion for inclusive growth is central to the developmental philosophy of most of the nations over the past decade. It has been a priority for policy makers and regulators in financial sector development for improving access and usage of financial services to achieve comprehensive financial inclusion. The initiatives taken towards financial inclusion can promote a more effective and efficient process to achieve significant improvements in financial inclusion are to establish and achieve shared and sustainable development and growth. Realising this, an increasing number of countries are committing to promote financial inclusion, encouraged by the growing body of country level experiences (World Bank, 2012). Financial inclusion basically means, broad based growth through participation as well as sharing the benefits from the growth process along with the under privileged and marginal segments of the economy. Evidence suggests that it has substantial benefits for equitable and sustainable growth. Inclusive growth ensures that while economy grows rapidly, all segments of society are involved in this growth process, ensuring equal opportunities, devoid of any regional or sectoral disparitiesIt is widely acknowledged that the objective ofinclusive growth is accomplished through the process of financial inclusion. Financial inclusion envisages bringing everyone, irrespective of financial status, into the banking fold for the individual progress and development and thereby achieving comprehensive growth with equity

Legal Framework for Cross-Regional Networks: The Case of Services and Migration

Paper prepared by Marion Panizzon and Charlotte Sieber-Gasser for the International Conference on the Political Economy of Liberalising Trade in Services, Hebrew University of Jerusalem, 14-15 June 2010 Recent literature has shed light on the economic potential of cross-border networks. These networks, consisting of expatriates and their acquaintances from abroad and at home, provide the basis for the creation of cross-border value added chains and therewith the means for turning brain drain into brain circulation. Both aspects are potentially valuable for economic growth in the developing world. Unilateral co-development policies operating through co-funding of expatriate business ventures, but also bilateral agreements liberalising circular migration for a limited set of per-sons testify to the increasing awareness of governments about the potential, which expatriate networks hold for economic growth in developing countries. Whereas such punctual efforts are valuable, viewed from a long term perspective, these top-down, government mandated Diaspora stimulation programs, will not replace, this paper argues, the market-driven liberalisation of infrastructure and other services in developing countries. Nor will they carry, in the case of circular labour migration, the political momentum to liberalise labour market admission for those non-nationals, who will eventually emerge as the future transnational entrepreneurs. It will take a combination of mode 4 and infrastructure services openings-cum regulation for countries at both sides of the spectrum to provide the basis and precondition for transnational business and entrepreneurial networks to emerge and translate into cross-border, value added production chains. Two key issues are of particular relevance in this context: (i) the services sector, especially in infrastructure, tends to suffer from inefficiencies, particularly in developing countries, and (ii) labour migration, a highly complex issue, still faces disproportionately rigid barriers despite well-documented global welfare gains. Both are hindrances for emerging markets to fully take advantage of the potential of these cross-border networks. Adapting the legal framework for enhancing the regulatory and institutional frameworks for services trade, especially in infrastructure services sectors (ISS) and labour migration could provide the incentives necessary for brain circulation and strengthen cross-border value added chains by lowering transaction costs. This paper analyses the shortfalls of the global legal framework – the shallow status quo of GATS commitments in ISS and mode 4 particular – in relation to stimulating brain circulation and the creation of cross-border value added chains in emerging markets. It highlights the necessity of adapting the legal framework, both on the global and the regional level, to stimulate broader and wider market access in the four key ISS sectors (telecommunications, transport, professional and financial services) in developing countries, as domestic supply capacity, global competitiveness and economic diversification in ISS sectors are necessary for mobilising expatriate re-turns, both physical and virtual. The paper argues that industrialised, labour receiving countries need to offer mode 4 market access to wider categories of persons, especially to students, graduate trainees and young professionals from abroad. Further-more, free trade in semi-finished products and mode 4 market access are crucial for the creation of cross-border value added chains across the developing world. Finally, the paper discusses on the basis of a case study on Jordan why the key features of trade agreements, which promote circular migration and the creation of cross-border value added chains, consist of trade liberalisation in services and liberal migration policies.

They also serve who only stand and wait

Purpose Waiting for service by customers is an important problem for many financial service marketers. Two new approaches are proposed. First, customer evaluation of the service is increased with an ambient scent. Second a cognitive variable is identified which different iates customers by the way they value time so that they can be segmented. Methodology Pretests included focus groups which highlighted financial services and a pilot test were foll owed by a main sample of 607 subjects. Structural equation modelling and multivariate analysis of covariance were used for analysis. Findings A cognitive variable, the need for time management can be used, together with demographic and customer net worth data, to segment a customer base. Two environmental interventions, music and scent, can increase customer satisfaction among customers kept waiting in a line. Research implications Two original approaches to a rapidly growing service marketing problem are identified. Practical implications Service contact points can reduce incidence of "queue rage" and enhance customer satisfaction by either or both of two simple modifications to the service environment or a preventive strategy of offering targeted customers an alternative. Originality A new method of segmentation and a new environmental intervention are proposed .

A tri-dimensional approach for auditing brand loyalty

Over the past twenty years brand loyalty has been an important topic for both marketing practitioners and academics. While practitioners have produced proprietary brand loyalty audit models, there has been little academic research to make transparent the methodology that underpins these audits and to enable practitioners to understand, develop and conduct their own audits. In this paper, we propose a framework for a brand loyalty audit that uses a tri-dimensional approach to brand loyalty, which includes behavioural loyalty and the two components of attitudinal loyalty: emotional and cognitive loyalty. In allowing for different levels and intensity of brand loyalty, this tri-dimensional approach is important from a managerial perspective. It means that loyalty strategies that arise from a brand audit can be made more effective by targeting the market segments that demonstrate the most appropriate combination of brand loyalty components. We propose a matrix with three dimensions (emotional, cognitive and behavioural loyalty) and two levels (high and low loyalty) to facilitate a brand loyalty audit. To demonstrate this matrix, we use the example of financial services, in particular a rewards-based credit card.

Empirical evaluation of a service analysis and design methodology

Service-orientation has gained widespread acceptance and is increasingly being employed as a paradigm for structuring both business and IT architectures. An earlier study of extant service analysis and design methodologies discovered a need for holistic approaches that equally account for both business and software services, which motivated the design of a new, consolidated service analysis and design methodology. A challenge in design-oriented research is to evaluate the utility of the newly created artefacts (here: the methodology), as they are often intended to become part of complex socio-technical systems. Therefore, after presenting a brief overview of the consolidated methodology, the paper discusses possible approaches for the “evaluate” phase of this design-science research process and presents the results of an empirical evaluation conducted in an Action Research study at one of Australia’s largest financial services providers.

Interest rate caps : protection or paternalism

In a context where over-indebtedness and financial exclusion have been recognised as problems in Australia, it is undesirable that those who can least afford it, pay a high cost for short-term consumer credit. Evidence points to an increase in consumer debt in Australia and consequential over-indebtedness which has been shown to lead to a wide range of social problems.2 There is also evidence of financial exclusion, where consumers suffer a lack of access to mainstream financial services, and in Australia this is particularly the case with regard to access to safe and affordable credit.3 Financial exclusion can only exacerbate over-indebtedness, given that financially excluded, predominantly low income consumers , have been shown to turn to high cost credit to meet their short term credit needs. This is a problem that has been explored most recently in the Victorian Consumer Credit Review...

Captured legislators and their twenty billion dollar annual superannuation cost legacy

By December 2010 total superannuation assets had reached $1.3 trillion, covering 94% of all Australians. This substantial growth was not a natural evolution. Rather it can be directly traced to three decades of bipartisan reform strategies based on a claimed public interest ideology. This article investigates the concerns raised by Superannuation Select Committees, consumer and union organisations, independent researchers and actuarial experts that, in contrast to the public interest rhetoric, the regulatory reforms have primarily achieved major private interest gains for powerful lobbyists. The findings of this analysis indicate that the democratic power of Australian governments to set economic policy agendas has been progressively eclipsed by the power of the financial services industry's producer groups. Rather than producing a best practice governance structure, fund members remain trapped in a post-reform cost paradox: no right of exit regardless of the deepening cost burden imposed. In an industry set to control a projected nominal figure of $6.7 trillion in superannuation assets by 2035, these findings suggest that the real change necessary to improve the deepening cost burden faced by fund members within a life-long, mandatory superannuation investment is now beyond any government's reach.

Regulating the cost of small loans : overdue or overkill?

Small-amount short-term lending began in 1994 in response to the initial exemption of such loans from consumer credit regulation. Growing demand for such loans now produces industry turnover of approximately $800 million each year. Regulators recognised early the need for consumer protection due to the vulnerability of borrowers and the emergence of various predatory practices. This led to reforms designed to regulate these loans, prevent particular misconduct and provide remedies against injustice. Some were enacted as part of the National Consumer Credit Protection Act 2009 (Cth), which also imposed licensing and responsible lending requirements on lenders and increased consumer access to remedies. The Government has now introduced the Consumer Credit and Corporations Amendment (Enhancements) Bill 2011 which limits the price that can be charged for credit and restricts access to small loans. This article examines the extensive reforms which have taken place in this sector, and compares these regulatory approaches with the “bright line approach” of the Enhancements Bill. The article argues that the repercussions of this step will require careful monitoring to ensure that further harm is not suffered by those least able to bear it, and that the government will also need to facilitate other, more sustainable, solutions to the problem that small loans are currently used to solve. After we wrote this article, the Report of the Parliamentary Joint Committee on Corporations and Financial Services and the Report of the Senate Economics Legislation Committee on the Enhancements Bill were released. These are referred to in a postscript.

The inherent international tax regime and its constraints on Australia's sovereignty

On 1 November 2011 the Minister for Financial Services and Superannuation, the Honourable Bill Shorten MP, announced that Australia would be undertaking a reform of the ‘transfer pricing rules in the income tax law and Australia’s future tax treaties to bring them into line with international best practice, improving the integrity and efficiency of the tax system.’ Mr Shorten stated that the reason for the reform was that ‘recent court decisions suggest our existing transfer pricing rules may be interpreted in a way that is out-of-kilter with international norms.’ Further, he stated that ‘the Government has asked the Treasury to review how the transfer pricing rules can be improved, including but not limited to how to be more in line with international best practice.’ He urged all interested parties to participate in this consultation process. On 16 March 2012, an Exposure Draft and accompanying Explanatory Memorandum outlining the proposed amendments to implement the first stage of the transfer pricing reforms were released. Within the proposed changes is the explicit embedding of the use of the OECD’s Model Tax Convention on Income and on Capital and Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations to help determine the arm’s length price. Does this mean that Australia engages in an international tax regime?

Australia's adoption of an international tax regime : to engage or not to engage?

On 1 November 2011 the Minister for Financial Services and Superannuation, the Honourable Bill Shorten MP, announced that Australia would be undertaking a reform of the ‘transfer pricing rules in the income tax law and Australia's future tax treaties to bring them into line with international best practice, improving the integrity and efficiency of the tax system.’ Mr Shorten stated that the reason for the reform was that ‘recent court decisions suggest our existing transfer pricing rules may be interpreted in a way that is out-of-kilter with international norms.’ Further, he stated that ‘the Government has asked the Treasury to review how the transfer pricing rules can be improved, including but not limited to how to be more in line with international best practice.’ He urged all interested parties to participate in this consultation process.

Qualitative and quantitative analysis of six sigma in service organizations

The concept of Six Sigma was initiated in the 1980s by Motorola. Since then it has been implemented in several manufacturing and service organizations. Till now Six Sigma implementation is mostly limited to healthcare and financial services in private sector. Its implementation is now gradually picking up in services such as call center, education, construction and related engineering etc. in private as well as public sector. Through a literature review, a questionnaire survey, and multiple case study approach the paper develops a conceptual framework to facilitate widening the scope of Six Sigma implementation in service organizations. Using grounded theory methodology, this study develops theory for Six Sigma implementation in service organizations. The study involves a questionnaire survey and case studies to understand and build a conceptual framework. The survey was conducted in service organizations in Singapore and exploratory in nature. The case studies involved three service organizations which implemented Six Sigma. The objective is to explore and understand the issues highlighted by the survey and the literature. The findings confirm the inclusion of critical success factors, critical-to-quality characteristics, and set of tools and techniques as observed from the literature. In case of key performance indicator, there are different interpretations about it in literature and also by industry practitioners. Some literature explain key performance indicator as performance metrics whereas some feel it as key process input or output variables, which is similar to interpretations by practitioners of Six Sigma. The response of not relevant and unknown to us as reasons for not implementing Six Sigma shows the need for understanding specific requirements of service organizations. Though much theoretical description is available about Six Sigma, but there has been limited rigorous academic research on it. This gap is far more pronounced about Six Sigma implementation in service organizations, where the theory is not mature enough. Identifying this need, the study contributes by going through theory building exercise and developing a conceptual framework to understand the issues involving its implementation in service organizations.

Are target date funds the easy bake option?

Target date funds provide a simple, automated approach to retirement savings in defined contribution plans. The passing of the Pension Protection Act of 2006 has seen an increase in the popularity of these funds in the United States, becoming the default option for many plans. However, recent research findings have challenged the easy bake or ‘set-and-forget’ nature of target date funds. This study explores some of the critical design features of target date funds (which shifts an individual’s asset allocation from growth to defensive assets following a pre-set glidepath) against a simple balanced (or target risk) fund design. Using both time-weighted and dollar-weighted returns, our results suggest that there is more to achieving successful retirement outcomes than the investor simply selecting a proposed year of retirement. Our findings can perhaps be summarized by Einstein’s famous epithet, that in the murky world of retirement product design, everything should be made as simple as possible, but not simpler.

Learning processes in creative service teams : towards a dynamic systems theory

The fastest-growing segment of jobs in the creative sector are in those firms that provide creative services to other sectors (Hearn, Goldsmith, Bridgstock, Rodgers 2014, this volume; Cunningham 2014, this volume). There are also a large number of Creative Services (Architecture and Design, Advertising and Marketing, Software and Digital Content occupations) workers embedded in organizations in other industry sectors (Cunningham and Higgs 2009). Ben Goldsmith (2014, this volume) shows, for example, that the Financial Services sector is the largest employer of digital creative talent in Australia. But why should this be? We argue it is because ‘knowledge-based intangibles are increasingly the source of value creation and hence of sustainable competitive advantage (Mudambi 2008, 186). This value creation occurs primarily at the research and development (R and D) and the marketing ends of the supply chain. Both of these areas require strong creative capabilities in order to design for, and to persuade, consumers. It is no surprise that Jess Rodgers (2014, this volume), in a study of Australia’s Manufacturing sector, found designers and advertising and marketing occupations to be the most numerous creative occupations. Greg Hearn and Ruth Bridgstock (2013, forthcoming) suggest ‘the creative heart of the creative economy […] is the social and organisational routines that manage the generation of cultural novelty, both tacit and codified, internal and external, and [cultural novelty’s] combination with other knowledges […] produce and capture value’. 2 Moreover, the main “social and organisational routine” is usually a team (for example, Grabher 2002; 2004).