The Middle East and North Africa (MENA) region is rather underbanked and heavily reliant on foreign migrant workers when compared to other regions in the world. With the rapid expansion in digitalization, online payment solutions, and mobile phone penetration, startups, particularly fintech, are playing a large role in supporting the financial inclusion of migrants and, potentially, refugees into the formal financial system. This chapter will look at the main trends in financial inclusion in the MENA region and how fintechs play a crucial role in the remittance market. It will also look at how governments, regulators, financial institutions, and investors provide policy and financial support to scale these initiatives. Fintechs largely depend on particular technologies that provide low-cost, scalable solutions, such as in the MENA region cover remittance services, as cross-border financial transactions are among the largest requirements for migrants who need to send money back to their families and countries of origin. As this is an emerging area, several case studies of fintechs in the MENA region, working on technologies such as e-remittances, digital identification solutions, blackchain and distributed ledgers, insuretech, and mobile money and payment solutions to provide financial inclusion to migrant workers will be covered.
Decentralized Finance, or DeFi, is a financial ecosystem built on blockchain technology, aiming to recreate traditional financial services without the need for central authorities like banks or intermediaries. It is a growing ecosystem of financial applications and services built on blockchain technology. Unlike traditional finance, which relies on centralized institutions like banks, DeFi leverages peer-to-peer (P2P) networks to facilitate financial transactions. Traditional financial systems often leave individuals and communities, particularly those in developing economies or marginalized groups, excluded due to limited access, high transaction costs, and stringent regulations. Decentralized Finance (DeFi) emerges as a potential solution, leveraging blockchain technology to offer an alternative financial ecosystem built on transparency, disintermediation, and accessibility. This paper investigates the potential of DeFi in fostering financial inclusion and economic empowerment. DeFi has gained traction in India, with a growing interest in blockchain-based financial services. However, regulatory uncertainties have led to some cautiousness. Indian regulators are exploring frameworks to address potential risks while encouraging innovation in the DeFi space. As the regulatory landscape evolves, the adoption and development of DeFi in India are likely to be influenced by government policies and industry collaborations
Purpose This paper presents an overview of embedded finance. It identifies the applications, use case examples, benefits and challenges of embedded finance. The paper also analyzes global interest in embedded finance and compares it with interest in related finance concepts such as open finance, open banking, decentralized finance, financial innovation, Fintech and digital finance. Design/methodology/approach Granger causality test and two-stage least square regression were used to assess interest over time in embedded finance. Findings The empirical result show that interest in embedded finance increased significantly during the COVID-19 pandemic. The United States, the United Kingdom and India witnessed the highest interest in embedded finance compared to other countries. There is bi-directional Granger causality between interest in information about embedded finance and interest in information about financial innovation. There is uni-directional Granger causality between interest in information about embedded finance and interest in information about digital finance and open finance. The findings also reveal that interest in decentralized finance and open finance are significant determinants of interest in embedded finance. On the other hand, interest in embedded finance is a significant determinant of interest in digital finance, decentralized finance, Fintech and open banking. Also, interest in embedded finance is significantly correlated with interest in digital finance, decentralized finance, open banking and Fintech. Originality/value Presently, there is little academic interest in embedded finance despite the fact that embedded finance is part of the on-going digital finance revolution. This paper fills this gap in the literature by assessing the benefits, use case, challenges of embedded finance.
Crowdfunding is starting to compete with the traditional mode of funding and has allowed startups to raise funds without too much red tape and bureaucracy. In this work, we propose a participatory platform for the social and solidarity economy, based on blockchain technology, smart contracts and a mode of financing inspired by Islamic financing. This mode of financing is based on the prohibition of interest, uncertainty and speculation and is based mainly on the principle of active partnership: "Musharaka". Donations are also considered and managed as financial assets. It is based on the direct ownership of tangible assets and investment operations through the principle of sharing profits or losses which promotes partnership and a more equitable sharing. The introduction of blockchain in crowdfunding makes this type of funding more reliable, transparent, decentralized, profitable and convenient. The crowdfunding platform is proposed for a project that consists of equitable water distribution and irrigation compatible with ecosystems in the Haouz region of Morocco.
Abstract Individuals in low-income countries often contribute significantly to financing local public goods through informal taxation. However, there is limited understanding of how informal revenue generation relates to formal tax and governing institutions. We explore the relationship between informal revenue generation, public finance, and the state in the Gedo region in south-central Somalia, relying on original data from surveys with 2,300 households and 117 community leaders. Our evidence shows that informal revenue generation by non-armed actors in Gedo is prevalent, with informal payments deeply embedded within clan-based and Islamic institutions and rooted in a long history of decentralized political authority and self-reliance in the region. We argue that in such a context, rather than explaining how or why things ‘work’ outside of the state, it may be more relevant and valuable to consider decentralized non-state public authority as the default referent, with a need only to explain the puzzle of pockets of state effectiveness. Governance largely operates outside the state, with citizens playing a pivotal role in directly financing local governance institutions and public goods provision. These findings have important implications for our understanding of statehood and public finance in contexts of weak formal institutions.
In this paper, we sought to assess the factors explaining the repayment of loans by borrowers in SFDs in Togo using a Logit model. A regression analysis of data collected on a sample of 157 loan files shows that older borrowers and those more distant from the institution have a higher credit repayment score, while gender and the amount of credit received by the borrower negatively influence the credit repayment rate. Even if the credit repayment score does not depend on the activity that the borrower has undertaken or wants to undertake, it would be desirable for the SFDs to finance more commercial activities because they favor a rapid turnover of capital.
India is significantly diverse in culture and how it promotes business transactions. Though we are very acquainted with cash, cards, and online mode of payment, the Indian rural economy still believes in the barter system. At this juncture, India is evolving as a tech power house, and its economy is thriving to embrace cryptocurrency as a medium of exchange. After the Indian finance minister declared the same last February that India is working towards building its legal tender called Central Bank-backed Digital Currency (CBDC), this paper is making an impact in explaining our strengths, weakness, market readiness, and necessity to adopt a digital rupee when India's economy is highly regarded as a cashoriented economy. Is our country ready to accept the new technological shift in smart banking in the form of a digital rupee? The paper highlights the socioeconomic and technical challenges our planners need to understand before changing the Central banks' monetary policies. The deployment of fifth-generation (5G) cellular network technology has sparked renewed interest in the potential of blockchain to automate different cellular network use cases. 5G is projected to open up new market prospects for small and large businesses. The article highlights the unique instrument of the digital rupee to enhance peer-to-peer transactions with the evolution of 5G mobile technology.
Financial inclusion is seen as a dynamic tool for achieving multifaceted microeconomic stability, (and) sustainable economic growth, job creation, poverty reduction, and income equality for both developed and developing nations. The needy segments of the population must be provided with financial services to accomplish this inclusion. Still, the traditional financial market is unavailable due to its lack of collateral and shallow income. Thus, they go to local moneylenders, also known as "loan sharks," who charge exorbitant interest rates. Introduction to microfinance came as a new and refreshing light to these needy segments of the population as it provides small valued loans (micro-credit) to support their micro-scale businesses and engage in productive activities. As emerging technology started to be incorporated into every aspect of society, thus microfinance also needed to be incorporated into the technology. An application is required to protect data integrity and smoothly influence the microfinance sector. As the databases are vulnerable to data manipulation, this can affect the transaction history of the loan. Blockchain technology can be used to solve this problem, as data in the Blockchain is stored immutably. So, we designed a microfinance application that uses blockchain technology with decentralised KYC architecture to reduce multiple KYC verification and easy access to micro-credit.
This chapter examines some emerging technologies including distributed ledger technology, cryptocurrency, central bank digital currencies (CBDCs), data analytics, robo-advising, application programme interface, peer-to-peer lending, artificial intelligence and digital identity. The chapter opens with a description of the background of the state of the financial technology (fintech) industry in Nigeria. Thereafter, the selected technology is discussed with a focus on the Nigerian context. The aim is to establish whether these technologies offer solutions that ease the burden of financial exclusion. In reviewing each of these trends, the description, benefits, potential for financial inclusion as well as any likely detriment to consumers is highlighted.
Objective: Recently, there has been an increase in the use of cryptocurrency, decentralised finance (DeFi) applications and DeFi services in several countries. These innovations facilitate the delivery of financial services using smart contracts. DeFi encompasses all financial services that are built on public blockchains, based on open protocols and removes intermediaries from the financial intermediation process. There is significant cryptocurrency activity in Africa while DeFi developments are relatively new and unpopular in the African continent. This chapter introduces DeFi in Africa. It presents some statistics and data on DeFi in Africa. Thereafter, the potential benefits, challenges and regulatory issues associated with DeFi in Africa are presented.Method: This study used literature reviews and external data sources to show the benefits and advantages of DeFi .Findings: The findings show that there is low interest in DeFi in Africa. Some benefits of DeFi to African countries include increased liquidity for many small- and medium-scale enterprises (SMEs), new opportunities to raise additional capital to fund capital-intensive activities, usher in an era of smart contracts that are negotiated bilaterally without needing an intermediary, encourage peer-to-peer trade between economic agents in several African countries, enhance the efficiency of the Pan-African Payment Settlement System and encourage more trade between individuals and corporations under the African Continental Free Trade Agreement, among others.Originality: This is the first chapter to examine DeFi in Africa.
Abstract Decentralized finance, including cryptocurrency and other blockchain-based applications, promises participants benefits such as financial freedom, security, privacy, and wealth accumulation. More recently, it has also offered the promise of participation, lowering financial barriers, and empowerment—especially to women, the poor, and those residing in the Global South. I argue that the rise of decentralized finance as an alternative development platform is explicitly gendered and calls for feminist analysis. I discuss how cryptocurrency-based approaches to development rest on foundations that are gendered, interacting with hierarchies of race/ethnicity and class. I also explore how they are part of a lineage of neoliberalism, leveraging neoliberal beliefs about entrepreneurialism, financial inclusion, and gender roles. The discussion further introduces the concept of neolibertarianism as an extension of neoliberal logics that advocates for bypassing states entirely in favor of private actors. The current analysis compares this new model of decentralized finance to similarly problematic development trends and assesses how it has—as of yet—failed to deliver on the promises of participation, lowering financial barriers, and empowerment. This analysis concludes with a call to action for feminist and critical scholars, encouraging further work on the topic.
Peter Wänke, M. Kabir Hassan, Md. Abul Kalam Azad, Md. Azizur Rahman · 5 authors
Abstract The literature gap in microfinance paradox of double bottom line (financial performance vs. outreach) has always been an interesting area of research. This paper proposes a theoretical model most suitable for Islamic Microfinance Institutions (MFIs) which enables Islamic MFIs’ to operate together with the existing financial models compliant with Islamic Shariah Law. This model is based on a distributed verification/decision-making process that might be realized (but not necessary) through blockchain. Among the available distributed verification techniques, blockchain technology is an attractive emerging computing paradigm due to its decentralized, immutable, shared, and secure data structure characteristics. This model proposes three significant propositions. First, sharing information through blockchain will allow a transparent network in MFI operations, which will raise confidence for donors resulting in a causal effect of a relatively lower profit rate to be charged by the MFIs. Second, the consensus mechanism will enable risk-sharing, a character of Islamic finance; thus, the MFIs will operate without any collateral for low-risk firms. Third, the double bottom line of MFIs' long-lasting paradox would be solved. As for practical implication of this proposed model, the causal impact of lower cost investment by the lenders would increase social welfare because of no collateral and no initial wealth requirement. The proposed model proposes a credit rationing approach where profit can be negative. No collateral will be used when calculating the creditworthiness of a borrower.
Abstract As blockchain and DLTs technology makes its presence felt strongly in many industries like finance and banking,<br> this study investigates the business case for the application to social impact bonds (SIBs). Technological innovation in<br> general, and distributed ledger technology (DLT) in particular, could become a game changer in the development of new<br> social impact bonds sector. This paper discusses the potential impact of DLT on SIBs market and the potential scenarios of<br> DLT adoption. Alongside presenting strengths, weaknesses, opportunities, and threats analysis (SWOT), the study exhibits<br> the requirements for and steps toward a SIBs structure facilitated by blockchain technology.
S. Saranya, Sai Phanindra Muvvala, Vitul Chauhan, Raja Satwik
From decades of years, almost all governments across the world are collecting taxes from the earnings and nobody have any idea where all these amounts are going to. Most of us want to donate those amounts for some purpose like charity/donations/sponsorships. At the same time, everyone doesn’t know whom/which organization to trust and handover the tax returns. To avoid all these insecurities and doubts, the crowdfunding portal/community/non-profit organization/peer-to-peer automatic helping program was introduced where anybody can donate/sponsor those money to people/startup who needs/deserves it. For secure funding transactions this CF application uses blockchain technology. Each and every transaction will only happen through Ethereum. Here in this portal, users/employees across the world form as a crowd to help each other and to show some humanity. It’s a fully transparent and trustworthy and open source platform which focuses not only on cause but also how to make it easier for the people to fund in simplest and smoothest way possible.
Agriculture acts as the fixed sector for all economics over a millennium which constitutes a critical indeed major part of the developing country’s GDP and extends as a massive part of rural household monetary income. As the majority of farmers mainly depend on the government schemes for financial support where agriculture banking plays a significant role in the modernization of agricultural activities, but the majority of the farmers/peas-ants are excluded from such banking systems and do not have access rights. It is explored with the farmers’ concern that the traditional rural financial paradigm was supported by public authorities that desire to facilitate access to the financial service. However, such banking systems were costly and unsustainable due to poor repayment. They ultimately did not have a great effect on agriculture production and, in turn, led to the shutting down of state-owned banks and finally gave rise to the concept of microfinance. Over time, technological advancement from the plow to fertilizers and biotechnology has revolutionized the industry. Blockchain is the advancement of new technology aspiring to upgrade agricultural activities related to farmers’ financing. This chapter adopts distributed ledger technology (DLT) that allows the recorded data in the system to fan-out amongst the farmers, consumers, and all the actors involved in the system. Blockchain-based micro-financial assistance makes the transactional data more transparent and immutable task. It reduces the intervention of the middleman in the 462 transaction who expects some percentage of commission from farmers for selling their food grains in the market. The work extends to allow the farmers to establish a digital identity and supports them to access various monetary offers. The system makes a significant difference in helping to reduce the rate of interest and also ensures efficient repayment of loans by making it more accessible through smart contracts (SCs). Every farmer/consumer can keep track of the transactions carried out by them in selling/buying the products through the platform. Further, update the data collected from these transactions to the credit history of the farmers that give them the aid of availing the credits. The system makes a significant difference in helping to reduce the rate of interest and also ensures efficient repayment of loans by making it more accessible through SCs.
Klemens Katterbauer, Hassan Syed, Laurent Cleenewerck de Kiev
The digital economy has undergone significant transformations with blockchain becoming a household name in the fintech environment. Besides powering cryptocurrencies, blockchain technology enables power transactions in a variety of forms and enables decentralization which may reduce transaction costs. Islamic microfinance has become important with many new institutions arising in order to satisfy the demand for microfinance services while ensuring that these services comply with the Shariah Law. Cost of transactions and low degree of digitalization are the major obstacles with current solutions. We present an innovative blockchain artificial intelligence framework for the optimization of Islamic microfinance service provisioning as well as providing financial and transaction services in order to ease transactions and make them more secure and readily available. The framework was evaluated on a large dataset from the Central African Republic, and we could demonstrate strong performance of the AI-blockchain framework. The framework provides a viable solution for Islamic microfinancing to enhance transactions services and overcome some of the existing challenges with Islamic finance.
Saeed Hameed Aldulaimi, Marwan M. Abdeldayem, Ahmed Kh. Muttar, Fuaad Hameed Aldulaimi · 5 authors
The digital financial products applied and become legal and regulatory frameworks and some are trying to gain legal status to gain more comprehensive access to business and finance. Financial technology is invading all banking and financial aspects. Islamic Fin-Tech (i-Fin-Tech) is becoming a new trend in the recent industry studied due to the importance of Islamic finance and banking sector. This study aims to Introduce the Islamic fin-tech products that are offered to a market in the Kingdom of Bahrain. This review studies decentralized digital financial products in payment and financing, in addition to trading and investment, and reveals decentralized digital financial products in asset management and insurance. This study uses the qualitative research method, especially by reviewing the published research on previous studies that clarified the essential Islamic financial products used in banks. In addition, this study relies on secondary data, especially reports published by Islamic banks, which show the distinctive products they offer to customers, performing a systematic literature review, the guidelines are significant in encouraging researchers, which are characterized as simulating the technical development of Islamic finance in the era of digital technology. The results showed that Islamic banks are still seeking to benefit from modern technologies by adapting their financing instruments by industry and financial engineering to create products Islamic financial services are up to the challenges of the digital world. This study recommends focusing on information technologies and development and the trend towards digital preparation.
Abstract Blockchain technology originally finding applications in Fintech and supply chain management is rapidly expanding applications to other industries as well as the public sector. “Blockchain has been compared to the invention of the internet and its comprehensive impact on almost every industry.” R. Beck and B. Markey-Towler (2017) A recent study by PWC (2020) found that, “Blockchain technology has the potential to boost global gross domestic product by $1.76 trillion USD over this decade.” It has been argued that the digital revolution has favored more developed nations and that has helped create a “digital divide” with less developed nations. Business and governmental infrastructure in developing nations have lagged that of more developed nations. Some of these challenges faced by developing nations include the registration of property ownership, financial systems, modern efficient supply chains often accompanied by a lack of trust and the ability to verify and audit organizational processes rapidly and economically. Blockchain technology has the promise to address many of the critical needs of developing countries internally and in external trade relationships to help enable them to be more competitive. This paper will review the literature and examine the impact of Blockchain technology on how its adoption may ameliorate many of these critical challenges for developing nations helping to improve governance and economic benefits that are shared more equitably. Potential for both positive and negative impacts with be discussed along with policy implications for public policy makers and private enterprises.
Decentralization is a key governance reform which many developing countries have embarked on. Local governments are expected to use their informational advantage to improve the delivery of public goods. This result implied by Tiebout’s (1956) model requires fully informed citizens who “vote with their feet.” The model’s application to developing countries has been limited, since local decisions may not be responsive to local demands. Practitioners are shifting to innovations that minimize institutional constraints so that decentralized programs can lead to improved outcomes. Examples of such innovative ways include decentralized agricultural extension programs, which embrace farmers’ empowerment, local government, and private sector participation. Few impact evaluation studies on agricultural extension have combined qualitative and quantitative methods. This dissertation contributes to the literature by applying these methods and survey data to study the impact of a decentralized extension program in Uganda, known as the National Agricultural Advisory Services (NAADS) on the value of farm production per acre. The program is non-randomly assigned to local governments and farmers self-select in or out within participating sub-counties. Using a sample of 305 participating and non-participating farmers and local government assessment indicators as instruments, we cannot reject the null that the NAADS program has had an impact. The 2SLS results show no program impact; however, the OLS results show that the program had a positive impact on the value of farm production per acre of about 20 percent. Qualitative results show that NAADS farmers: participate in local decision making processes through farmers’ institutions; have increased knowledge on farming; and practice enterprise diversification. The quantitative finding must be treated with caution; for example, the study did not account for spillover effects. The NAADS program faces challenges inherent in Uganda’s decentralized structure; particularly the low financial and human capacity, and the weak monitoring at the local level. The policy implications include: the need to strengthen farmers’ institutions; development of a marketing strategy; clear policy guidelines for local government support to NAADS; improved coordination of NAADS activities among line ministries; need for additional resources for NAADS activities; and improved capacity of service providers.
Sanjaya Kuruppu, D.M.R. Dissanayake, Charl de Villiers
Purpose The purpose of this paper is to explore how blockchain and triple-entry accounting technologies may improve non-governmental organisation (NGO) accountability by amplifying the social and economic outcomes of aid. It also provides a critique of these technologies from an accountability perspective. Design/methodology/approach An in-depth case study of a large NGO, relying on semi-structured interviews, document analysis and non-participant observation, provides an understanding of current issues in existing NGO accountability and reporting systems. A novel case-conceptual critical analysis is then used to explore how blockchain and triple-entry accounting systems may potentially address some of the challenges identified with NGO accountability. Findings An empirical case study outlines the current processes which discharge accountability to a range of stakeholders, emphasising how “upward” accountability is privileged over other forms. This provides a foundation to illustrate how new technology can improve upward accountability to donors by enabling more efficient, accurate and auditable record-keeping and reporting, creating space for an NGO to focus on horizontal accountability to partner organisations and downward accountability to beneficiaries. Greater accountability exposes NGOs to diverse views from partner organisations and beneficiaries, potentially enhancing opportunities for learning and growth, i.e. greater impact. However, blockchain and triple-entry accounting can also create “over-accounting” and further entrench the power of upward stakeholders, such as donors, if not implemented carefully. Research limitations/implications A novel case-conceptual critical analysis furnishes new insights into how existing NGO accountability systems can be improved with technology. Despite the growing excitement about the possibilities of blockchain and triple-entry accounting systems, this paper offers a critical reflection on the limitations of these technologies and suggests avenues for future research. Practical implications Examples of how blockchain and triple-entry accounting systems can be integrated into NGO systems are presented. This research also raises the importance of creating a strong nexus between humans and technology, which ensures that “socialising” forms of accountability that empower vulnerable stakeholders, are embedded into international aid. Originality/value This research provides insight into present challenges with NGO accountability, using empirical evidence, furnishing potential solutions using novel blockchain and triple-entry accounting systems. Greater accountability to partner organisations and beneficiaries is important, as it potentially enables NGOs to learn how to be more impactful. Therefore, this paper introduces rich, contextually embedded perspectives on how NGO managers can exploit such technologies to enhance accountability and impact.
Cynthia Weiyi Cai, Mauricio Marrone, Martina K. Linnenluecke
This paper offers a systematic review of academic and practitioner-oriented literature on FinTech to determine the literature's existing scope and examine the intersection with work in the Information Systems (IS) field. Findings from our review show that the practitioner-oriented literature foreshadowed the rise of FinTech by extensively reporting on algorithm-based and electronic trading (2009 onwards), followed by reporting on FinTech start-ups and funding successes (2014 onwards). The practitioner literature subsequently reported on alternative finance models, the introduction of cryptocurrencies, and risks and regulatory issues. Academic literature on FinTech began to rise from 2014 onwards, focusing initially on the development of FinTech in the aftermath of the 2007-2008 global financial crisis. Research attention subsequently shifted to FinTech innovations (alternative finance, cryptocurrency and blockchain, machine-based methods for financial analysis and forecasting, including artificial intelligence), as well as risk and regulatory issues. IS work on FinTech started to emerge from 2015 onwards, initially focusing on mobile payment systems and peer-to-peer lending. However, the body of work at the intersection of FinTech and IS is still small. Our review sheds light on several opportunities for future research, including financial inclusion, the impacts arising from COVID-19, and the emergence of new business models, such as Banking as a Service (BaaS).
Financial technology (FinTech) and its related products are considered a major disruptive innovation in financial services, substantially elevating financial solutions and new business models. This book moves beyond the theoretical areas of FinTech to comprehensively explore the recent FinTech initiative scenarios with respect to processes, strategies, challenges, lessons learned, and outcomes within economic development as well as trade and investment. Covering a range of topics such as decentralized finance and global electronic commerce, it is ideal for industry professionals, business owners, consultants, practitioners, instructors, researchers, academicians, and students.