Short Story: Twitter Age
Solutions for Social and Economic Development
Wonder why macroeconomics textbooks do not include the effect of leakages in government transfers, leakages in government revenues, and the overall black economy as such on national income, inflation, employment and interest rates. Has there been sound research in these areas and have these variables been explicitly modeled?
Approval (A) | Documentation (D) | Dissemination (D) | Observance (O) | |
Has the board approved the policies covering these codes of conduct principles? | Have the guidelines that follow from these policies been documented in the appropriate manuals? | Have the guidelines been disseminated across the organization through training and making available guidelines and manuals at the branches? | Are the guidelines observed in practice as found through interactions with a sample of clients? | |
Client origination | Client origination | Client origination | Client origination | |
Loan pricing | Loan pricing | Loan pricing | Loan pricing | |
Loan appraisal | Loan appraisal | Loan appraisal | Loan appraisal | |
Client data security | Client data security | Client data security | Client data security | |
Staff conduct | Staff conduct | Staff conduct | Staff conduct | |
Client relationship and feedback | Client relationship and feedback | Client relationship and feedback | Client relationship and feedback |
Labels: Ethics, Governance, Microfinance
Here is an interesting report by NCEUS task force on the estimation of contribution of micro enterprises to the GDP. NCEUS stands for National Commission for Enterprises in the Unorganized Sector. NCEUS has been set up to review the
Fortune lies at the bottom of pyramid. This is being told to us repeatedly by reports, books, media etc. Yet, why there is so much lackadaisical attitude by the authorities towards the bottom? There are reports which says that MSME sector was not that much affected during the crisis as is the common perception (see this)
Comparative performance measure index for micro and small scale (MSEs) items and non- small scale (Non-MSEs) items is constructed to evaluate the performance of the industry groups during the period 2001-09, with a particular focus on the slowdown period of 2007-09. Econometric analysis is then performed to explain the causal factors behind variations in the MSE production index. The paper finds evidence that the cyclical slowdown in the industry that set in during 2007-08Q1, retarded the pace of growth in MSEs as well as Non-MSEs. However, MSEs have recorded relatively better performance than Non-MSEs during the slowdown period at least in the ten items under review. Econometric analysis shows that both domestic and external demand bears a statistically significant influence on MSE output. However, the impact of domestic demand is comparatively stronger. Interestingly, credit to MSEs has been found to be very significant, although the sign of the coefficient (negative in this case) is contrary to theoretical expectations.
The Karnataka numbers point to what one might have suspected anyway — that the bulk of the credit has been cornered by medium-scale units.
Labels: Policy talk
RBI has relased its report on Currency and Finance yesterday. Over the years, this particular title has covered a wide variety of issues and what amazes me is its coverage. The elegant writing style and depth of analysis makes it a good reference source for researchers.
Every crisis provides us powerful lessons. What we carry forward from this crisis is the need for some new regulatory and supervisory institutions with emphasis on a system-wide approach,some new objectives for the central banks, importance of communication, transparency and coordination in central bank functioning, a new design of the international financial architecture and renewed faith in some of the safeguards adopted by the emerging market economies. This crisis has raised questions about the adequacy and efficacy of the current international financial architecture to prevent and manage global crises. In fact, the speed and intensity with which the US subprime crisis exploded into a global financial crisis and then into a global economic crisis has led to a whole new debate on dominant tenets of macroeconomics and has challenged established views on self correcting market mechanisms and the role of public policy. The depth and breadth of the crisis tested the limits of conventional and unconventional policy options available to policymakers around the world.
Labels: Reading Stuff

At one level, it is possible to argue that nobody in the entire chain did anything legally wrong. But that is too simplistic an argument. We do not govern our behaviour simply by what is allowed by law or regulation. Our code of conduct should be held to a stricter test. Was the behaviour of actors across the chain of the financial sector fair, ethical and moral or was it swayed by the opportunity of making quick profit afforded by information asymmetries? Were sub-prime borrowers adequately warned that there is a good chance that asset prices would fall? Did investment advisers tell their clients of the risk they were taking in buying MBAs and CDOs? Did credit rating agencies not compromise their standards and cut corners? In sum, were professionals in the financial sector legally right, but only legally right and morally wrong?

Whenever you are in doubt, or when the self becomes too much with you, apply the following test. Recall the face of the poorest and the weakest man [woman] whom you may have seen, and ask yourself, if the step you contemplate is going to be of any use to him [her]. Will he [she] gain anything by it? Will it restore him [her] to a control over his [her] own life and destiny? In other words, will it lead to swaraj [freedom] for the hungry and spiritually starving millions? Then you will find your doubts and your self melt away.
Labels: Ethics and Economics

Labels: Economic Reform, India, Policy talk
Markets function when profitable private sector enterprises are transparent in revealing who really owns them and benefits from the profits. Be it the recent disclosure regarding how promoters of large MFIs in India have benefited from the high RoE churned by these institutions, that has created an adverse impression that affects the sector as a whole, or the muck surrounding the Indian Premier League. The positive is that the ownership patterns are out in the open. If the law allows for opaque functioning of any enterprise, it will invariably lead to corrupt practices with the complicity of corrupt lawmen. The scale will be enormous in case these happen to be for-profit enterprises operating at a significant scale. Conversely if enterprises function in a transparent manner and disclose their ownership structures, innovations will ensure that goods and services that earlier classified as public/merit/club goods will also be adequately provided for by the market.
A recent UN study has found that cell phones are more common in India than toilets. Private sector has ensured the availability of cell phones at prices that are attractive to the masses in India. Had it been for the public sector telephony would still have been the privilege of the elite. Sanitation (toilets) in India has been treated as a merit or a public good - something that the private sector cannot provide for.