There is something interesting and frightening in the current situation worldwide – economies try to adjust to the new conditions, when more and more people working remotely, businesses trying to survive through the lack of on-site clients…still, there are opportunities for those who can find them, as every crisis gives both threats and opportunities.
There are two of those for the financial institutions – niche products and emerging markets (or both).
There is an enormous difference between an established market and an emerging one, as it is possible that even though no one heard of derivatives somewhere, there could be better online services, as they were building modern infrastructure from scratch based on modern technologies; in turn, there can be a situation when some products which are obvious for the US or EU markets are non-existent, thus giving a “blue ocean” opportunity. Also, one should not forget about the rates – in the newborn (ok, maybe teenager) economy fluctuations of the local currency are high, there are sharp rises and incredible downfalls, which again gives both opportunity and threat, for example – giving loans in local currency can give you higher rate and incredible returns if you can forecast your liquidity properly, or can destroy your business should you take deposits in foreign currency and give loans in local – that can bomb a gap in the liquidity and can potentially lead to the end of the business should there be a downturn in the local economy.
Usually, there are open niches there, as they were not covered by local institutions, and should you be able to find those you can basically become a market maker, leading to profitable years – till you will see the competitors coming…but they won’t be able to get what pioneers could.
Another obstacle is a lack of information, as it is quite easy to find statistics and information about the developed markets, easy to make forecasts and researches, while for the developing ones both lack of information and local languages can prevent companies from going in.
Going in Columbia, for example, it would be better to know Spanish, which is ok as there are many Spanish-speaking persons, yet going to Russia or Turkey might seem almost impossible when you try to dig in those regulations and researches, mostly written in a heavy official language, taking thousands and thousands of pages. There are certainly some summaries provided by IMF, yet they are usually not enough.
What most of the financial institutions might be interested in while entering those markets is credit risk, which is risk of giving money to someone and getting past due debt, so we will try to give several good examples of local literature here for those who might be looking, as it is also pretty hard to find (excluding English and Spanish speaking countries):
1. Bangladesh (Credit Risk Management System in Bangladesh: A case Study) – by Rakib Hasan Chowdhury
https://www.amazon.com/Credit-Risk-Management-System-Bangladesh/dp/3659944106
2. Russia (Credit risk management in a Russian banking system) – by Artem Kovalev
https://www.amazon.com/Credit-management-Russian-banking-system/dp/3659585165
3. Indonesia (Risk Analyses on Islamic Banks in Indonesia) – by Dimas Bagus Wiranatakusuma, Imamuddin Yuliadi and Ikhwan Victhori
https://www.intechopen.com/online-first/risk-analyses-on-islamic-banks-in-indonesia
4. Malaysia (Credit Risk and Financing Structure of Malaysian Islamic Banks) – by Aisyah Abdul-Rahman and Shahida Shahimi
https://www.researchgate.net/publication/265572455_Credit_Risk_and_Financing_Structure_of_Malaysian_Islamic_Banks
5. Romania (Credit Risk in the Romanian banking system: Empirical Evidence from an ARDL Model) – by Eftychia Nikolaidou and Sofoklis D. Vogiazas
https://www.researchgate.net/publication/259005559_Credit_Risk_in_the_Romanian_banking_system_Empirical_Evidence_from_an_ARDL_Model
Unfortunately, those are rare finds, and it is really good that there is an opportunity to have a look at those markets at least through several books or publications. I hope that with the world opening up and becoming more international, it will be possible to go and read each and every book translated immediately (probably by A.I.) instead of spending hours on the interning digging for the gold.
As of now – that what we have, that is our reality. Which, again, gives you opportunities if you know where to look and where to go.
