Since the start of the global economic crisis in 2008, financial education has been under increased scrutiny from those dissecting what went wrong. Who, after all, had trained the perpetrators of the crisis? Were the “masters of the universe” ever taught about ethics? And if not, why not?
Training in Islamic finance, which was already gaining in popularity pre-crisis, has grown from strength to strength, as it has developed a reputation as a haven of common sense and relative security in uncertain times.
At least two of the causes of the crisis – gharar (risk) and gambling – are banned by sharia (Islamic law).
“Several of the ethical lapses which occurred in the financial sector are prohibited in Islam,” says Omneya Abdelsalam, the director of the El Shaarani Research Centre for Islamic Business and Finance and the director of the MSc in Islamic Finance at Aston Business School. “[The crisis] highlighted the resilience of Islamic banks.”
She says that religious beliefs, not limited to Islam, can help leaders be more responsible in business.
“The belief in God, and that absolute ownership of everything is solely His, brings with it an acute level of responsibility and accountability based on the notion of stewardship, which is equally placed on each individual, given that all mankind is believed to be equal before God.
“Such beliefs have a direct and powerful impact on the way business is conducted.”
This “notion of stewardship” or khalifa, common to all Abrahamic faiths but particularly central to Islam, overlaps considerably with corporate social responsibility and transparency, two areas that have enjoyed a post-crisis boom.
Dr Abdelsalam says khalifa manifests itself in Islamic businesses “through fulfilling social responsibility of the business to the best of its capabilities, including fair treatment of employees, care for the environment and customers, and fulfilling the obligation towards shareholders and other stakeholders, through wise use of financial resources”.
At Aston, the Masters in Islamic finance encourages students to think about ethics in every module, be it accounting, contract law, or conventional finance modules.
Cedomir Nestorovic, a professor of Islamic business and management at the Singapore campus of Essec, a French business school, agrees that Islamic finance courses need to address these issues.
He says: “A course about Islamic finance should not be teaching financial techniques alone. There must be a part dealing with religious and ethical issues, explaining the rationale behind the industry.”
Prof Nestorovic adds that elements such as marketing and management must also become more integral parts of Islamic courses, so that they increase their breadth.
One criticism aimed at Islamic finance instruments and banks, or Islamic finance divisions within conventional banks, is they do not embrace the spirit of sharia, but try to find ways round it, in an emulation of conventional finance.
“There is a trend to consider Islamic finance as a ‘cosmetic’ industry where products and services are conventional ones with an Islamic veneer, the only purpose to obtain clearance from thesharia board,” says Prof Nestorovic.
The danger is that Islamic finance, in trying to become more popular, loses its firm roots in religion and ethics.
Some Islamic scholars, adds Prof Nestorovic, “consider that Islam finance does not exist because riba (interest, banned under sharia) is embedded in contracts, even if it is not labelled as such”.
“There is also a certain disagreement between Islamic countries about the definition of a tangible asset and some accounting principles.
“All in all, there is a gap between what is taught and realities for a certain number of observers,” says Prof Nestorovic.
Changes come in response to criticism - Financial Times
The crisis of 2008 and 2009 both posed a problem and created an opportunity for business schools and financial training companies.
On the one hand, the top US MBA programmes were castigated because they educated some of the most powerful people in the banking industry, blamed for the crisis. On the other, the financial meltdown highlighted the need for a better understanding of the way markets operate and, by extension, the need for more training.
Against this background, the demand for training has risen in recent years.
At the CFA Institute, a US-based professional body that runs the influential Chartered Financial Analyst qualification, 220,000 would-be analysts will sit examinations this year, up 5 per cent on last year.
The biggest growth is in previously undeveloped markets, such as India and China, says Tom Robinson, managing director of education for the CFA Institute.
Scott Rostan, chief executive of Training the Street, a company that provides financial education for Wall Street employees and business school students, sees demand closer to home too. “At the start of the financial crisis, enrolment dropped off, but in 2010 we saw a noticeable return.”
However, both report that the numbers in the US have slowed this year. “Hiring numbers are flat compared with 2011,” says Mr Rostan. “But I will say that optimism is better than six to nine months ago.” Mr Robinson also reports minimal growth in the US, but says Europe is still buoyant. “One of the things that surprised me is that in the UK the number of candidates is up by 18 per cent.”
While Mr Rostan believes it is the opportunity for personal development and education that attracts students to Training the Street, Mr Robinson thinks the portable nature of the CFA is important, especially in Asia.
“In China and India, there is a thirst for credentials. People want letters after their name, but also realise that financial instruments are complicated.”
The CFA now updates its curriculum every year to take account of the changing environment, says Mr Robinson.
At business school the biggest curriculum changes have been in ethics courses, which most schools have made compulsory.
Back in 2009, in reaction to the crisis, thousands of MBA graduates across the world, led by a group at Harvard Business School, swore to comply with ethical business standards and signed an MBA oath. In the first three years of the MBA Oath, 6,000 MBAs signed the pledge. But enthusiasm has waned and in the past year only about 1,000 more have joined.
Enthusiasm for ethics courses is also under scrutiny.
Ismail Erturk, senior lecturer in banking at Manchester Business School, in the UK, says: “Business schools have put in more courses on ethics and social responsibility instead of being critical of the financial theories of how markets function. We have seen the rise of behavioural finance, but I don’t think this goes far enough.”
Mr Ertuk believes the answer is to introduce other social sciences such as sociology, anthropology and politics into the mix.
When a small group of bankers work in a group together, all sorts of issues come into play that have little relation to efficient markets theory, he says.
“Sociologists have better tools than economists for understanding these small groups in banks. Other factors intervene, such as the power they want to hold on to, and the higher bonuses they are going to get.”
For those who do opt for a degree qualification at a business school, the traditional route in the US has been through the finance track of a two-year MBA programme.
In Europe, the preferred option has been a specialised Masters in Finance degree, a title that can cover a wide range of topics and styles.
At Essec, a French business school, for example, which teaches its Master's degree in Financial Techniques in both France and Singapore, the emphasis is on the technical, says Michel Baroni, academic director of the programme.
“I think there is a real need for technical financial training. I think we are the most technical programme in Singapore.” Most students come from an engineering background. “Our reputation for training engineers in France is spreading to Asia.”
At the University of Oxford, the approach is different. There, the MSc in Financial Economics is taught jointly by the Saïd Business School and the economics department and it is, says John Thanassoulis, the degree director, “like a technical MBA”.
The emphasis on the economics context is strong, which means, says Prof Thanassoulis, that graduates are equipped to understand what is happening when the market changes. “They can contextualise from day one.”
The programme emphasises the responsibility of finance as well as the technicalities, he says. “I think courses like this are incredibly important to teach about finance and the responsibility of those in finance. When things go wrong, it affects real people. When banks fail, it is real people who are impacted and real businesses that lay off people.”
The economic context also forms the backdrop at the Hong Kong University of Science and Technology, (HKUST), which jointly teaches an executive Master of Science in Global Finance degree for experienced professionals with New York University’s Stern School of Business.
Mark Seasholes, a finance professor at HKUST, says many of those enrolled on the programme want to figure out the bigger picture. “Many companies want more than just the maths. We want to teach students how to deal with the problems that are coming up in five years.”
With the increase in certified courses and portable qualifications such as degrees, one of the problems might be banks’ own learning and development portfolios, says Jon Terry, global financial services HR practice leader at PwC, a consultancy.
A PwC survey of graduates working in financial services in more than 75 countries showed a significant mismatch between what graduates expect and what employers offer.
The survey of “millennials” (those born between 1980 and 2000), showed that personal development was a significant issue, with the requirement for rapid advancement, constant feedback and interesting tasks, regardless of where the respondents worked.
“There are some very consistent messages here. I was surprised,” says Mr Terry.
If financial services companies do not want to lose their best and brightest recruits when the job market picks up, they need to change the culture now, he warns, to address both the commercial needs of the business and the individual development needs of the employee.
“They have to do this explicitly and implicitly. Everyone has different aspirations and different needs.”
Forex: GBP/JPY threatens to break range - FXStreet.com
RPT-FOREX-Euro briefly jumps broadly after Greek vote results - Reuters UK
(Repeats with "FOREX-" tag in headline)
WELLINGTON, June 18 (Reuters) - The euro briefly rose after Greek election results showed parties committed to its debt bailout plan were on course to secure a slim parliamentary majority, keeping the debt-indebted country in the euro zone.
The euro rose to around $1.2730, according to Reuters data in early Australasian trading on Monday, its highest since May 22.
But it pulled back to around $1.2690 by 1948 GMT, as investors were uncertain about what shape a coalition government may take.
Official vote projections from Greece's interior ministry showed the pro-bailout New Democracy taking 29.5 percent of the vote, with SYRIZA in second place with 27.1 percent. The Socialist PASOK followed in third place with 12.3 percent.
"It's positive so far for the market, and risk currencies are opening higher," said Imre Speizer, a senior market strategist at Westpac.
"New Democracy has taken first place ... but we don't know what the coalition's going to look like, so we still do have some uncertainties remaining and any gains should be limited."
Against the yen, the euro rose to 100.45 yen, before edging back to around 100.00 yen.
The dollar rose to around 78.90 yen, compared with 78.65 yen in late trading in New York on Friday,
Currencies considered to be high risk, including the Australian and New Zealand dollars , rose to their highest in more than a month, before trimming gains.
Most other asset markets were yet to open for trading, after shares, commodities and bond markets had climbed on Friday.
Australian share price index futures indicated a higher open to the S&P/ASX 200 index. (Reporting by Naomi Tajitsu; Editing by Maureen Bavdek)
Finance expert Martin Lewis secures TV deal - Daily Record
PRESS DIGEST: Financial Times - June 18 - Reuters UK
LONDON, June 17 |
LONDON, June 17 (Reuters) -
AXA RAISES $7 BLN FUND FOR BUYOUT DEALS
The investment arm of French insurance group AXA has raised $7.1 billion from outside investors to buy stakes in buyout funds from investors looking to cash out.
here#axzz1y4ilXVyK
EX-RBS HEAD URGES END TO FREE ACCOUNTS
Brian Hartzer, the outgoing head of retail at RBS, said in an interview that the current model of free bank accounts in Britain needs to be reformed.
here#axzz1y4ilXVyK
GROWTH DEMAND SPLITS BANK COMMITTEE
British finance minister George Osborne's demand that the Bank of England's Financial Policy Committee should support government growth policy has divided the committee.
POLICY 'PARALYSIS' HITS GLOBAL RECOVERY
Confidence in the ability of policy makers to provide conditions for growth has been dented, stalling the global recovery, according to the FT/Brookings Institution Tiger Index.
here#axzz1y4ilXVyK
SNP SET TO DROP OPPOSITION TO NATO
The Scottish National Party is set to announce at its October conference that it will reverse 30 years of opposition to NATO membership for Scotland.
here#axzz1y4ilXVyK
(Reporting by Rosalba O'Brien; Editing by Joseph Radford)
Exclusive: Secret EU summit document shows 'roadmap' to banking union - Daily Telegraph
Translated from the Brussels jargon, the PEC – president of the European Council – report will be Herman Van Rompuy’s preliminary text of the future of “Economic and Monetary Union”. This will be circulated in sealed envelopes next week.
The separate text will set out a “roadmap” to a banking union, polling debt via some kind of eurobonds and political union via EU treaty change over the next 10 years.
Also important and controversial is will the “other financial stability measures” paper, including financial transition tax proposal and moves towards a banking union that can be taken by the EU before the end of the year.
Britain faces major fight over an FTT, or some other banking levy, at a meeting of EU finance ministers on Friday ahead of the summit next week.
The UK – which has no veto under current proposals on deepening EU banking regulation – also faces the ECB becoming Europe’s main banking regulator and the creation of national bank resolution funds that can be asked to contribute to European bank bailouts on a “compulsory” basis.
Greece election: pro-bailout party to attempt coalition - BBC News
Antonis Samaras: ''This is a victory for all Europe''
The leader of Greece's pro-bailout New Democracy party, set to win most seats in a general election, says he wants to form a government as soon as possible.
Antonis Samaras said Greeks had voted to stay in the euro, and called for a "national salvation government".
The leader of the anti-bailout Syriza party, Alexis Tsipras, which came a close second, agreed Mr Samaras should be first to try to form a coalition.
Germany said it viewed the result as a decision to "forge ahead" with reform.
With 80% of votes counted, interior ministry projections put New Democracy on 29.9% of the vote (130 seats), Syriza on 26.7% (71) and the socialist Pasok on 12.4% (33).
New Democracy leader Mr Samaras said: "The Greek people voted today to stay on the European course and remain in the eurozone.
"There will be no more adventures. Greece's place in Europe will not be put in doubt."
"The sacrifices of the Greek people will bring the country back to prosperity," he promised.
Analysis
And so this second election in two months, seen as the most important in Greece's modern history, is going to go right down to the wire.
The top two parties - with very different visions of how to deal with the Eurozone crisis - are neck and neck. For New Democracy supporters, who were hoping for a clear win, it will be a nervous few hours.
Their leader Antonis Samaras had portrayed this election as a choice between staying in the euro or going back to the drachma.
But that's not how Syriza and its supporters see it - they believe it's about promoting a different kind of economic policy to help Greece out of a spiral of recession and unemployment.
Syriza supporters gathered at Propilea in front of Athens University began to chant slogans when the first exit poll numbers were revealed.
For now, the politicians are watching and waiting and probably biting their nails. Whoever wins, however narrowly, gets an extra 50 seats in parliament. It could be the decisive difference.
But the winner still needs to put together a coalition government which is strong enough to last - and that may not be so easy.
He also said Greece would "honour its obligations".
The BBC's Mark Lowen in Athens says that suggests Mr Samaras wants to press ahead with spending cuts demanded by the country's international creditors.
European leaders have warned that if a new Greek government rejected the bailout, the country could be forced to abandon the single currency.
While the radical-left Syriza and other smaller parties have opposed the bailout, New Democracy and Pasok said they would keep it in a renegotiated form.
Germany's Finance Minister, Wolfgang Schaeuble, said he viewed the election result as a decision by the Greek people "to forge ahead with the implementation of far-reaching economic and fiscal reforms in the country".
Eurozone finance ministers said in a statement that such reform was "Greece's best guarantee to overcome the current economic and social challenges and for a more prosperous future [for] Greece in the euro area".
They said they expected representatives of the European Commission, the European Central Bank and the International Monetary Fund - the so-called Troika - to return to Athens as soon as there was a Greek government in place.
Germany Foreign Minister Guido Westerwelle suggested Athens might be given more time to comply with its obligations.
"There cannot be substantial changes to the agreements, but I can well imagine talking again about timelines," he said.
Mr Tsipras, the Syriza leader, congratulated Mr Samaras on his apparent victory, and said he had the right to try to form a government.
But he appeared to rule out joining such a coalition, saying Syriza would "not sacrifice our position" of opposition to the austerity programme.
Difficult talksIf the projections from the interior ministry are proved correct, New Democracy should be able to build a majority coalition with the socialist Pasok, benefiting from a rule which gives the leading party 50 extra seats in the 300-seat chamber.
However, coalition talks may not be easy. After a first, inconclusive election six weeks ago, each of the main parties tried but failed to form a coalition government.
The leader of Pasok, Evangelos Venizelos, proposed a broad four-party coalition including New Democracy, Pasok, the Democratic Left and Syriza.
"No decision can be taken without this national unity," he said.
Analysts suggested Mr Venizelos had doubts over the viability of a coalition with a narrow majority.
When his party was in power it suffered numerous defections and rebellions as it tried to impose unpopular austerity measures.
Our correspondent, Mark Lowen, says that with such a strong showing by Syriza, Greece could be in for an autumn of discontent by opponents of the bailout deal.
Four other anti-bailout parties look set to take between 60 and 70 seats. They include the far-right Golden Dawn, which looked set to secure about 7% of the vote.
Sunday's vote is being watched around the world, amid fears that a Greek exit from the euro could spread contagion to other eurozone members and deepen the turmoil in the global economy.
Tough austerity measures were attached to the two international bailouts awarded to Greece, an initial package worth 110bn euros (£89bn; $138bn) in 2010, then a follow-up last year worth 130bn euros.
Polls suggest most Greeks want to be rid of the bailout and its onerous conditions, but want to stay in the euro.
Various European leaders have warned they cannot do both.
Greek bailout: Where the parties stand |
|||
|---|---|---|---|
| Party | Stance on bailout | Share of vote May | |
| Pro-bailout parties | |||
|
New Democracy |
Keep bailout but more time for restructuring and EU help to stimulate growth |
19% |
|
Socialist (Pasok) |
Keep bailout but subject it to a "structured and courageous revision"; implement fiscal adjustment over three years, not two |
13% |
Anti-bailout parties |
|||
|
Syriza |
Cancel bailout, nationalise banks and freeze privatisations, but stay inside eurozone |
17% |
|
Independent Greeks |
Reject bailout but remain in eurozone |
11% |
|
Democratic Left |
Gradually disengage from bailout but stay in eurozone |
6% |
|
Communist (KKE) |
Unilaterally cancel debt, leave the EU and restore Greece's own currency |
9% |
|
Golden Dawn |
Tear up the bailout but not necessarily abandon the euro |
7% |
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