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Bank, Stock Exchange & Insurance Triangle |
To
achieve sustainable economic growth, an efficient financial market is
considered an important prerequisite.
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The main factor which can
relieve loaners and debtors as well as depositors and investors from
uncertainty is creative presence of bank, stock exchange and insurance
triangle. To achieve sustainable economic growth, an efficient financial
market is considered an important prerequisite. However, what is the real role
of a financial system in any economy? Undoubtedly, its first and foremost role
is to mobilize “resources” for “use” in productive investments in the society.
An efficient money and capital market will channel scarce resources of any
society toward most productive activities. This will push economic growth, or
as put by economists, the limits of production curve of the society, toward
maximum welfare of people. This form of mobilizing people’s deposits under the
best conditions will enable corporations to produce and supply more goods and
services and, therefore, create more jobs.
Today, development of
financial markets is among basic duties of governments. They can, and should,
formulate suitable policies and pass appropriate regulations in order to
create necessary competition for a financial market. They should help
companies in employing debtor tools (like bonds) and stock instruments. They
are duty-bound to provide depositors with suitable supports by reducing risks
and develop insurance industry in order to prevent social resources from being
wasted and prevent stagnation of financial markets.
Efficient financial markets
will encourage people’s participation in all the affairs of the society by
expanding their properties. The more stocks are purchased by people, they will
have a more strong urge to take part in economy in order to get the most out
of their even small capitals. This is one of the main consequences of a
broad-based economic growth for societies.
Here, I will briefly point to an aspect of banks activities. Although the
number of banks is important, but the main structure of banking industry comes
into being through their relationship with other banks, especially the central
bank, and the banking system should have useful inputs and outputs for people.
If the financial system of a country is supposed to work in an integrated
manner or, at least, with minimum disruption, there is no way but to rely on
competitive institutions. If these exhibitions, conferences and three-day
educational workshops were able to guide domestic markets toward design,
acceptance and implementation of efficient developmental policies and find
ways to increase productivity of markets, they would have achieved their
goals. If scholarly discussions were able to guide primary interest rates of
money markets toward efficient mobilization of private investment under
present and future inflationary conditions in the country and lead to more
efficient compilation of a money package by the Central Bank of Iran with the
goal of optimized allocation of credits, they could be considered successful.
If such discussions focused on quality and quantity of banking, stock exchange
and insurance and profit making by active institutions in those markets, then
they should also pay due attention to liberalization of financial markets in
view of the experiences of other oil-producing developing countries and
discuss its impact on the whole national economy.
Can
we be hopeful that discussions in these few days would produce a remedy and
pave the way for increasing demand for credits? Does Iran’s financial market
works according to a well-formulated strategy? How the mission of such a
market should be analyzed according to upcoming conditions? How many boards
have been dispatched overseas by the Central Bank of Iran to negotiate with
foreign banks? What contribution will those banks make to competitiveness in
banking industry and reduction of the cost price of goods and services?
Managerial skills in banks, stock exchanges and insurance firms are major
requisites for an efficient financial market; how they can be achieved? The
list of expectations from the current conference is quite long because people
expect that the triangle of banks, stock exchanges, and insurance firms to
provide them with more welfare like what has happened in most developing
countries. The triangle should also help economic growth and public interests
while reducing financial burden of the government by mobilizing private
deposits for productive and low-risk projects (with the help of insurance
firms). |
