The MibTel Index tracks stocks on the Borsa Italiana, Italy’s main stock exchange, located in Milan. Privatized in 1997 and purchased by the London Stock Exchange 10 years later, the Borsa is responsible for Italy’s stock market, derivatives market, and fixed-income market. One hundred thirty brokers, both domestic and foreign, operate on the market through its purely electronic trading system. Bonds, stocks, options, and warrants not admitted to the exchange are traded on the Mercato Ristretto (restricted market).

There are several indices tracking stocks on the Borsa Italiana. The MibTel tracks all Italian stocks and a selection of foreign ones. The MIB30, no longer as relevant as it once was, tracks the performance of 30 top stocks from the MibTel. Increasingly important is the S&P/ MIB, a capitalization-weighted index of 40 companies chosen both for their size and to represent 10 specific economic sectors. Since 2004, this has been considered the benchmark index for the Italian market.

The 40 companies as of summer 2008 are A2A, a utility company formed in 2007 by the merger between AEM and ASM Brescia; Alleanza, a Milanese insurance company; Assicurazioni Generali, Italy’s largest insurance company (with a controlling stake in Alleanza), dating back to the Austro-Hungarian Empire; Atlantia, a holding company; Autogrill, a multinational retail and catering company; Banca Monte dei Paschi di Siena, the oldest bank doing business today—it was founded in 1472, 20 years before Columbus sailed to the Americas, and is known internationally for its sponsorship of Italian basketball; Banca Popolare di Milano, a cooperative bank; Banco Popolare, a cooperative bank; Bulgari, a jeweler and luxury goods retailer; Buzzi Unicem, a producer of cement and concrete; Enel, the third-largest power company in the world; Eni, an oil and gas company; FASTWEB, a broadband communications company; Fiat, best known as an automobile manufacturer, but also a financial group; Finmeccanica, a high-tech conglomerate working in defense, aerospace, energy, and other fields; Fondiaria-Sai, a financial services company; Geox, a shoe and clothing manufacturer; Gruppo Editoriale L’Espresso, publishers of a weekly Italian newspaper; Impregilo, a construction and civil engineering company; Intesa Sanpaolo, a banking group; Italcementi, a cement and concrete company; Lottomatica, a company responsible for lotteries and gambling; Luxottica, the world’s biggest eyewear manufacturer, owners of the Ray-Ban and Oakley brands of sunglasses.

Others included in the index are Mediaset, Italy’s major television network; Mediobanca, an investment bank; Mediolanum, a financial services company; Mondadori, Italy’s biggest publishing company; Parmalat, a dairy and food producer, best known for their shelf-stable milk; Pirelli, a multinational company focused principally on tire manufacturing; Prysmian, a producer of cables for energy and telecommunications; Saipem, an oil and gas contractor; Seat Pagine Gialle, a publisher of phone directories; Snam Rete Gas, a gas company; STMicroelectronics NV, a semiconductor manufacturer; Telecom Italia, a telecommunications company; Tenaris, a manufacturer of pipes, especially for the oil and gas industries; Terna, a Roman company that owns and operates 98 percent of the Italian power grid; UBI Banca, a cooperative bank; Unicredito, a pan-European bank based in Milan; Unipol, the third-largest insurance provider in Italy.

Bibliography:

Borsa Italiana, www.borsaitaliana.it (cited March 2009).

Microfinance

The development of the microfinance sector is based on the assumption that the poor possess the capacity to accomplish income-generating economic activities but are limited by lack of access to and inadequate provision of savings, credit, and insurance facilities. The micro financial services capture the various financial needs of the poor, and currently microfinance is a major component of poverty reduction and economic regeneration strategies around the world. As a concept, microfinance pays close attention to the incentives that drive efficient performance in the context of small transactions and large numbers of clients. Most of the institutions in microfinance are based on group-based lending approaches and thus reduce the administrative costs of gathering information, contract design, and enforcement of credit transactions, including loan recovery. Recently, the microfinance sector has come more into the domain of commercial organizations and the idea of sustainable microfinance has become an integral part of the development of financial markets in many countries.

Microfinance activities usually involve (1) small loans, (2) informal appraisal of borrowers and investments, (3) collateral substitutes such as group savings or compulsory savings, (4) access to repeat and larger loans, based on repayment performance, (5) streamlined loan disbursements and monitoring, and (6) secure savings products.

According to the Consultative Group to Assist the Poor (CGAP), the key principles of microfinance are (1) the poor need a variety of financial services, not just loans; (2) a powerful instrument against poverty; (3) the need to build financial systems that serve the poor; (4) financial sustainability; (5) the need to build permanent local financial institutions; (6) requires more than microcredit; (7) interest rate ceilings can damage poor people’s access to financial services; (8) the role of government as an enabler of financial services; (9) donor subsidies should complement private sector capital; (10) the lack of institutional and human capacity; and (11) the importance of financial and outreach transparency. These principles are generic and provide a broad foundation to the core idea of enhancing access to finance.

The CGAP principles suggest the need for a wide range of financial services that are suitable, flexible, and reasonably priced. The financial diaries prepared by poor households in urban and rural areas in Bangladesh and in India reveal that the respondents patch together a wide array of informal arrangements with semiformal and formal services. These diaries reveal that poor people want reliable, convenient, and flexible ways to store and retrieve cash and to turn their capacity to save into spending power, in the short, medium, and long term on a continuing basis.

The ideas of sustainability in microfinance allow the continued operation of the microfinancial services without subsidies and help from the donor. Financial sustainability helps to reduce transaction costs, which leads to client-based products and services. The idea of the poor as a heterogeneous group of vulnerable households with complex livelihoods demonstrates the need for client-based microfinancial services. In some cases nonfinancial services are essential for the effective use of financial services, and many microfinance institutions integrate both services in their operations. According to CGAP, microfinance combines banking with social goals, and capacity needs to be built at all levels, from financial institutions through the regulatory/supervisory bodies and information systems, to government entities and donor agencies.

New Institutions

There is an increasing level of interest from formal sector financial institutions in microfinance activities. For instance, Bank Rakyat Indonesia’s (BRI) experience shows that with attractive savings and credit products, appropriate staff incentives, and an effective system of internal regulation and supervision, the microfinance operation can be highly profitable. The flexibility in saving services, an important part of Unit Desa Scheme of BRI, offers convenient banking hours, a friendly atmosphere, unconstrained withdrawals, and a range of incentives such as bonuses and raffles.

In India, the Self Help Group (SHG) program, a distinctive microfinance program, is based on the existing banking network in delivering financial services. The formal financial sector institutions extend loans to highly performing SHGs in certain multiples of the accumulated savings of each SHG. The Reserve Bank of India (RBI) has instructed all commercial banks to participate and extend financing to SHGs, extending this to cooperative banks and regional rural banks. However, by the early 21st century, microfinance institutions have become a vast global industry involving large numbers of governments, banks, aid agencies, nongovernmental organizations (NGOs), cooperatives, and consultancy firms and directly employing hundreds of thousands of branch-level staff. The presence of more players in microfinance has raised certain concerns about the quality and sustainability of the services for several reasons.

The higher number of players attracts competition and brings high levels of professionalism to the industry. But there are concerns about more players targeting the same market, which questions the absorptive capacity limits on the part of both lenders and of borrowers. Irrespective of the successful citations of microfinance, there is a view that microfinance has failed to see the slippery slope toward consumerism. This type of concern goes back to the ages of the previous debates on whether microfinance is a successful tool to address poverty alleviation. It is beyond doubt that microfinance raises the prospects for low-income households, and some poor people, to achieve their goals—in business, consumption, education, health, and other areas—and is not a magic bullet that automatically lifts poor people out of poverty through microenterprise. The time has come for microfinance institutions as well to take up the challenge to develop diversified financial services while maintaining financial sustainability.

Bibliography:

Arun and D. Hulme, eds., Microfinance: A Reader (Routledge, 2008);
Arun, D. Hulme, I. Matin, and S. Rutherford, “‘Finance for the Poor: The Way Forward?” in Finance and Development: Surveys of Theory, Evidence and Policy, C. J. Green, C. H. Kirkpatrick, and V. Murinde, eds. (Edward Elgar, 2005);
Arun and P. Mosley, “SHGs in India: A Magic Bullet for Poor Rural Women,” Paper presented to the ESRC Seminar Series on Finance and Development, University of Manchester (October 30, 2003);
Consultative Group to Assist the Poor (CGAP), “Key Principles of Microfinance,” cgap.org (cited March 2009);
Alex Counts and Alex Counts, Small Loans, Big Dreams: How Nobel Prize Winner Muhammad Yunus and Microfinance Are Changing the World (John Wiley & Sons, 2008);
Dichter, “Can Microcredit Make an Already Slippery Slope More Slippery? Some Lessons
From the Social Meaning of Debt,” in What’s Wrong With Microfinance?, T. Dichter and M. Harper, (Practical Action Publishing, 2007);
Hulme and T. Arun, “The Future of Microfinance,” in Microfinance: A Reader, T. Arun and D. Hulme, eds. (Routledge, 2008);
G. Karmakar, Microfinance in India (Sage, 2008);
Daniel Lazar and P. Palanichamy, Micro Finance and Poverty Eradication: Indian and Global Experiences (Pondicherry University, 2008);
Ledgerwood, Microfinance Handbook: An Institutional and Financial Perspective (World Bank, 2000);
Morduch, “The Microfinance Promise,” Journal of Economic Literature (v.37/4, 1999);
Morduch and S. Rutherford, Microfinance: Analytical Issues for India,” Paper Submitted to the World Bank, South Asia Region (2003);
Stuart Rutherford, The Pledge: ASA, Peasant Politics, and Microfinance in the Development of Bangladesh (Oxford University Press, 2009);
D. Seibel, “The Microbanking Division of Bank Rakyat Indonesia: A Flagship of Rural Microfinance in Asia,” in Small Customers, Big Market, M. Harper and S. S. Arora, eds. (ITDG Publishing, 2005);
Rajdeep Sengupta and Craig P. Auchubon, “The Microfinance Revolution: An Overview,” Federal Reserve Bank of St. Louis Review (v.90/1, 2008).

This example MibTel Index (Milan) Essay is published for educational and informational purposes only. If you need a custom essay or research paper on this topic please use our writing services. EssayEmpire.com offers reliable custom essay writing services that can help you to receive high grades and impress your professors with the quality of each essay or research paper you hand in.