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Taking The Credit – New Report on Financial Services Liberalisation

By Michael Cebon | March 21, 2009

The World Development Movement in the UK have just released an excellent report into the impact of financial services liberalisation (which usually occurs through free trade agreements) for the world’s poor.

The report says that

Liberalisation of overseas markets has been pushed aggressively by the industry’s lobbyists via free trade deals, firstly at the World Trade Organisation and more recently at the bilateral level.

It highlights two major impacts:

Firstly, the entry and presence of foreign banks is associated with the ‘cherry-picking’ of richer customers (both individuals and large businesses) and a decline in services and credit for poorer customers and smaller businesses. Rural communities are especially affected; foreign banks rarely have a meaningful presence outside large urban areas.

Secondly, the entry and presence of foreign banks produces a discernible and negative shift of credit away from productive activities (investment in agriculture, industrial production or local services) which can boost local development, and towards personal consumption, via credit cards and credit for items such as cars and mortgages.

You can dowload the full (52 page) report here or get a 2-page briefing here.

Topics: Bilateral FTAs, European Trade Policy, Global Economics, Globalisation & Development, US Trade Policy, WTO | 1 Comment »

One Response to “Taking The Credit – New Report on Financial Services Liberalisation”

  1. S Barringer Says:
    March 29th, 2009 at 12:12 am

    When are these cretans going to give up on the theories of free-trade and globaization? It’s wrecking the world. Haven’t they noticed? Or, is that the point?