Business and conflict
'Financial Peacebuilding' - impacts of the Nepalese conflict on the financial sector and its potential for peacebuilding
How can the financial sector in Nepal contribute towards peacebuilding?
Authors:
U. Joras
Publisher:
International Relations and Security Network , 2008
This working paper looks at options of how the local financial sector may contribute to post-conflict peacebuilding, taking the specific example of Nepal. It differentiates between private commercial banks, governmental commercial banks and microfinance institutions and explores how these institutions were affected by the violent conflict in Nepal, how they responded to challenges, and discusses options as well as limitations for financial sector engagement in peacebuidling.
The study discusses the general literature on the subject, positioning the main research question within the overall debate on corporate engagement in conflict management and the debate on financial institutions and CSR. A detailed case study of Nepal is then presented, including the country’s economic structure, financial sector landscape and conflict situation. The limits of financial sector contribution to peacebuilding in Nepal are also considered. Findings and recommendations include:
- the violent conflict in Nepal had mixed effects on the different financial sector actors in the
country - while the conflict did not lead to a break down of the financial system in Nepal, it led to
partial distress and aggravated some of the main deficiencies of the national financial
sector - the private financial banks in Nepal may be able to play an important role in peacebuilding, among others because they were not as severely affected by the conflict as other economic actors
- external encouragement and awareness-raising is required for the financial sector to see its interlinkages with conflict and peacebuilding and to increase their understanding of the economic long- and short-term benefits of peace for their own operations
- the government and international community should support the commercial financial sector in developing and offering new products and services, which have a direct or indirect contribution to peacebuilding.
