How are things 鈥渄atafied?鈥� This blog post aims to answer this question by offering a critical reflection on a wide range of recent initiatives that attempt to 鈥渄atafy鈥� remittances, i.e. leverage migrants鈥� and recipients鈥� money as a means to facilitate access to digital financial products and services for individuals and households, with a specific focus on Ghana. A handful of scholars have started to critically assess the political economy of the 鈥渇inancialisation of remittances鈥�, calling into question an agenda that is animated not by the needs of migrant men and women but rather the political and financial concerns of a broad coalition of global and national actors relating to the socio-spatial expansion of markets (Datta, ; Cross, 聽; Kunz, ; Hudson, ; Zapata, ). Here, I want to focus on the yet neglected aspect of the construction of these remittance markets, rather than treating financialization as 鈥渁n explanation in and of itself鈥� (Fields, :119).
Category: Financialization
To be Poor in Times of the Current Financial Architecture
Late developers are nowadays confronted with the problem of having to earn foreign currency to finance structural transformation under extremely unfavourable conditions. The dependency on forex is rooted in the international financial architecture and represents a major pitfall for countries trying to catch up. However, this structural impediment to transformation is not paid much attention to by the dominant development economics.Read More »
Demonetisation in India: From Financial Inclusion to Digital Financialisation
On 8th November, 2016, the Indian government announced that it was banning the use of 500 and 1000-rupees currency notes from midnight, effectively scrapping 86% of India鈥檚 currency notes by value. The Indian public would have to change the outlawed currency notes for new ones at bank counters by the end of the year.
In the following months and years, the move, which came to be known as demonetisation, caused immense suffering to the Indian public and damage to the Indian economy. So, why was it carried out? In an upcoming paper, Daniela Gabor and I seek to demystify demonetisation by locating it within wider changes in the Indian economy鈥攃hanges that started in the financial inclusion space but are now reverberating across the entire financial sector. We refer to this process of change as digital financialisation.Read More »
BLOG SERIES: Inclusive or Exclusive Global Development? Scrutinizing Financial Inclusion
鈥淔inancial inclusion is a key enabler to reducing poverty and boosting prosperity.鈥�
–
鈥淸Policies of financial inclusion] serve to legitimize, normalize, and consolidate the claims of powerful, transnational capital interests that benefit from finance-led capitalism.鈥�
– 聽.
Financial inclusion has been high on the agenda for policy-makers over the past decade, including the G20, international financial institutions, national governments and philanthropic foundations. According to Bateman and Chang (), it鈥檚 the international development community鈥檚 most generously funded poverty reduction policy. But what lies behind the buzzword? How can the two quotes above portray such starkly opposing views?Read More »
Inclusive Finance, Shadow Banking and the Need for Financial Citizenship
Why are poor people offered financial inclusion products? One answer to this question is that the poor have This explanation sees poverty as the driver of demand for inclusive finance, but engages only superficially with the question of why mainstream financial institutions are unable to accommodate the poor.
The alternative explanation, which I examine in my research, is that the demand for inclusive finance is driven by practices known as 鈥榝inancial infrastructure withdrawal鈥�: this is the very same process behind the rise of predatory lending in the Anglosphere () and reveals that financial systems have inbuilt tendencies to be exclusionary (Dymski and Veitch, 1992). Given these tendencies, scholars of financial exclusion in advanced capitalist countries, have argued for a concept of financial citizenship which notes that like countries, financial systems have an inside and an outside (Leyshon and Thrift, 1995). Those who can access finance only in the form of, for instance, and not through mainstream banking institutions are relegated to the outside and are hence not financial citizens. The processes that underlie this relegation include the tendency of mainstream banks to cross-sell products within groups, privileging 鈥榖lue-chip鈥� clients by offering them subsidies in exchange for brand-loyalty. Less wealthy clients, as a result, inevitably pay more for the same products and services than their more affluent counterparts.
The World Bank Pushes Shadow Banking in the Name of Development
Last month, central bankers and politicians around the world remembered the global financial crisis and the lessons learnt in its wake. The consensus goes at follows: we have done a great deal to reform banks and protect tax payers from their aggressive risk taking but we haven鈥檛 done enough on shadow banking. At this point, the consensus fragments. Central banks claim that they need more power to deal with systemic risks stemming from the shadows, whereas politicians worry about the moral hazards involved in future rescues of shadow banks like Lehman.
We are all the more concerned that the same authorities have been actively promoting shadow banking in the Global South. Under headings such as聽Billions to Trillions聽and the World Bank鈥檚 new聽Maximizing Finance for Development (MFD)聽agenda,听the new strategy for achieving the Sustainable Development Goals is to use shadow banking to create 鈥榠nvestable鈥� opportunities in infrastructure, water, health or education and thus attract the trillions in global institutional investment.Read More »
Unanswered Questions on Financialisation in Developing Economies
The discussions of the processes behind the growing importance of finance, financial transactions and financial motives, as well as the sustainability of the financial systems, have been located in the critical political economy debate of financialisation and neoliberalism (; ; ; ; ; ; ).
The analysis of financialisation in developing and emerging economies (DEEs) is relatively novel (). It is rooted in earlier discussions about the risks of financial globalisation and liberalisation (; ; ; ; ; ; ; ), including the Latin American Structuralist literature on the hegemonic role of the US dollar and its financial and monetary implications for DEEs (; ; ; ; ); the debate on capital account liberalisation and capital market integration (; ; ; ); and the Minsky-inspired currency and boom bust dynamics of financial crisis in developing economies (; ; ; ; ).Read More »
The Financialization Response to Economic Disequilibria: European and Latin American Experiences
Book review of N. Levy-Orlik & E Ortiz (2016), The Financialization Response to Economic Disequilibria: European and Latin American Experiences, Edward Elgar Publishing: Cheltenham UK
Levy and Ortiz鈥檚 is a timely book. It critiques mainstream economic theory and its limitations in explaining how economic conditions change or the transition from one state of equilibrium to another. Its analyses rely on Keynes, Kalecki, Kaldor, Minsky, Prebish, Furtado, and Marxists such as Luxemburg, Marini and Lapavitsas. Macroeconomic teachers interested in a heterodox approach may benefit from Levy and Ortiz鈥檚 book as complementary material with experiences showing the dysfunctionality of the global economy from the specific prism of financial disequilibria.
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