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KCA UNIVERSITY
SCHOOL OF BUSINESS
CFM 309 CAT DL
QUESTION ONE
i. Define the term innovative financial inclusion
Innovative financial inclusion means improving accdss to financial services for poor
people through the safe amd sound spread of new approaches
ii. You are newly recruited financial officer in the ministry of finance of your country. Your
key responsibility will be to enhance financial inclusion in your country. In the light of
the above statement, evaluate nine principles that you would follow for successful
financial inclusion
Leadership
Cultivate a broad based government commitment to financial inclusion to help alleviate
poverty
Diversity
Implement policy approaches that promote competition and provide market based
incentives for delivery of sustainable financial access and usage of broad range of
affordable services like savings credit payments transfer and insurance as well as
diversity of service providers
Innovation
Promote technological and institutional innovation as a means to expand financial
systems access and usage including by addressing infrastructure weakness
Protection
Encourage a comprehensive approach to consumer’s protection that recognizes the roles
of government providers and consumers
Empowerment
Develop financial literacy and financial capability
Cooperation
Create an institutional environment with clear lines of accountability and coordination
within government and also encourage [partnerships and direct consultation across
government business and other stake holders
Knowledge
Utilize improved data to make evidence based policy measure progress and consideration
incremental test and learn approach acceptable to both regulator and service provider
Proportionality
Build a policy and regulatory framework that is proportional to the risk and benefits
involved in such innovative product and services and is based on an understanding of the
gaps and barriers in existing regulations
Framework
Consider the following on the regulatory framework; international standards, national
circumstances and support for competitive landscape
QUESTION TWO
Four reasons why a firm would prefer to raise capital outside its local capital market
To capitalize in lower foreign interest rates
The foreign capital may depreciate compared to local market
Most of foreign capital markets may not be highly regulated or the government may relax the
regulations
The firm may take advantage of favourable economic conditions
To reap the benefits of international diversification
i. Summarise four theories advanced to explain financial crisis (8 marks
World systems theories
Coordination games
Minskys theory
Marxist theory
ii. Argue the case for financial liberalization in an economy (4 marks)
Financial liberalization is when restrictiofn on financial; markets and financial institution are
eliminated or when financial innovation are introduced to the market
The case for financial liberalization include
Increased savings and financial intermediation
Improvements in the efficiency of using savings
Increases the rate of economic growth in developing countries
iii. Outline five challenges of financial liberalization (4 marks)

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C financial institutions 309 dl cat

  • 1. KCA UNIVERSITY SCHOOL OF BUSINESS CFM 309 CAT DL QUESTION ONE i. Define the term innovative financial inclusion Innovative financial inclusion means improving accdss to financial services for poor people through the safe amd sound spread of new approaches ii. You are newly recruited financial officer in the ministry of finance of your country. Your key responsibility will be to enhance financial inclusion in your country. In the light of the above statement, evaluate nine principles that you would follow for successful financial inclusion Leadership Cultivate a broad based government commitment to financial inclusion to help alleviate poverty Diversity Implement policy approaches that promote competition and provide market based incentives for delivery of sustainable financial access and usage of broad range of affordable services like savings credit payments transfer and insurance as well as diversity of service providers Innovation Promote technological and institutional innovation as a means to expand financial systems access and usage including by addressing infrastructure weakness Protection Encourage a comprehensive approach to consumer’s protection that recognizes the roles of government providers and consumers Empowerment Develop financial literacy and financial capability Cooperation
  • 2. Create an institutional environment with clear lines of accountability and coordination within government and also encourage [partnerships and direct consultation across government business and other stake holders Knowledge Utilize improved data to make evidence based policy measure progress and consideration incremental test and learn approach acceptable to both regulator and service provider Proportionality Build a policy and regulatory framework that is proportional to the risk and benefits involved in such innovative product and services and is based on an understanding of the gaps and barriers in existing regulations Framework Consider the following on the regulatory framework; international standards, national circumstances and support for competitive landscape QUESTION TWO Four reasons why a firm would prefer to raise capital outside its local capital market To capitalize in lower foreign interest rates The foreign capital may depreciate compared to local market Most of foreign capital markets may not be highly regulated or the government may relax the regulations The firm may take advantage of favourable economic conditions To reap the benefits of international diversification i. Summarise four theories advanced to explain financial crisis (8 marks World systems theories Coordination games Minskys theory Marxist theory
  • 3. ii. Argue the case for financial liberalization in an economy (4 marks) Financial liberalization is when restrictiofn on financial; markets and financial institution are eliminated or when financial innovation are introduced to the market The case for financial liberalization include Increased savings and financial intermediation Improvements in the efficiency of using savings Increases the rate of economic growth in developing countries iii. Outline five challenges of financial liberalization (4 marks)