Download - Case review Dr Meena Acharya
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Article By: Dr. Meena Acharya
Development of the Financial System and Its
Impact on Poverty Alleviation in Nepal
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Title:Development of the Financial System and Its Impact on Poverty Alleviation in NepalAuthor:Dr. Meena AcharyaPublished in:Economic Review: Occasional Paper (Vol 15. pp 134-164)Date:2003
About
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Presented By:Mr. Nitesh KhatiwadaMs. Soni SahaniMr. Sunam ShresthaMr. Roshan PantaPresented in:Seminar in Financial System in NepalMasters of Business ManagementNepal Commerce CampusDate:26 April, 2016
Review
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Introduction
1. Rapid growth in the financial sector of the Nepalese Economy
2. Lack of forward and backward linkages3. Main focus towards poverty alleviation4. Unable to penetrate in the rural areas; main focus in
the urban sectors
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Purpose of the Study
1. To know about the functioning of the Nepalese Financial Sectors
2. To relate the development of the financial sectors and its impact on poverty alleviation
3. To identify the impact of targeted credit program for Poverty Alleviation
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Uniqueness
1. Concerned to analyze the impact of interest rate and income in savings and time deposits
2. Analyzes various data to explain the inability of the financial system to make impact on poverty alleviation
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Hypothesis
1. Real income has significant impact on saving2. Interest rate has significant impact on saving3. Interest rate is determinant of time deposit4. Interest rate has significant impact on deposit
collection
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Objectives
To study the development of financial system and its relationship with povertyTo identify the impact of financial development in rural credit market1. To find the reason of the dominance of informal sector
in rural and urban financial system
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The Model
Use of regression equation to determine the overall saving rate
The dependent and independent variables are as under
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Variables
Independent Dependent
Real Gross Domestic Saving
Real Interest Rate
Real Domestic Saving
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Variables
Independent Dependent
Real Gross Domestic Saving
Real Interest Rate
Real Time Deposit
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Data Sources and Sample
1. Secondary data published by Nepal Rastra Bank
2. Articles of Acharya and Khatiwada (2003) and Directory of Institutions under study.
3. The data from 1960 -2000 has been evaluated
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1. Development of Nepalese Financial Sectors Emerging Financial
Structure Financial Deepening
Findings
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2. Development of the financial sectors and its impact on poverty alleviation Savings Facilitation Lending Portfolio Rural Banking
Findings
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Findings
3. Impact of targeted credit program for Poverty Alleviation Priority Sector Lending
and Financial Products Dualistic Financial
System Establishment of Micro
Credit Institutions and Co-operatives
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Conclusion
1. Failure of financial development to inspire wider level development of real sector• No backward and forward linkages
• Nexus between political elite and international financial capital market
• Casino Economy
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Conclusion
2. Limited impact of interest rate and monetary policy on the price level• Open small economy
• Pegged Exchange Rate
• Domestic prices a function of Indian market• Money and monetary policy become dependent
variables
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Conclusion
3. Inefficiencies of non-government sector• Concentrated in urban areas
• 80% depend on informal sector
• Contribution of cooperative
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Conclusion
4. Impact on Poverty• Not visible
• Financial sector focused in trade, export and middle class
• Urban poor detached; lack of resources and knowledge
• Bottom 20% - immediate employment program
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1. Lack of proper availability of information
2. Availability of complete information on financial sector employment
3. Cooperatives are emerging as the major source of funding for rural credit
Comments and Limitations
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4. Data on financial sector are not amendable to analysis of urban funds flow and linkages
5. Data on the monetary and financial sectors though gathered regularly are amendable to only macro-level monetary analysis
Comments and Limitations
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Thank You