About Science and Wisdom
Fiorella, Antonio, Business Credit
To what extent is scientific thinking to be applied to the business world with all its variations and local customs?
If you asked a British citizen how he feels about decimal money after nearly 30 years from its implementation in the United Kingdom, and why they gave up the old pound sterling, shilling and penny measurements, he would say it was simply the logical thing to do. However, if you asked when the United Kingdom and the United States are going to introduce the process of changing their current measures of length and capacity, square and cubic measures, into decimal values, things are not so obvious. There are many reasons why changes cannot be put in place or simply will not work. There would be a bunch of natural strains and secular ties which, all together, form the cultural resistance of the market.
The next generation, depending on their place of birth, residence, where they grow up and pay taxes, will bear the burden of the paraphernalia of written and unwritten national laws and regulations next to alphabet, language, religion and, last but not least, the burden of state deficits.
Part of the world - most Europeans, Middle Easterners and Asians - write dates as day/month/year. North Americans write month/day/year. The date 7/3/97 on a check can represent a gap of four months, depending upon from which side of the ocean it is issued, mailed and cashed. With partners and banks taking advantage of any presumed discrepancy, the business community appears to be in disarray.
National barriers seem to be leaking when boycotts on arms and weapons are imposed; ideas are sweeping across the continents; yet, while the market is widely open with its grabbing hand, it becomes as tight as a fist when it must return what it has promised to give back. Business is a gamble where all players abide by their own rules, but it is also a far-reaching bridge among all varieties of population.
It is not usual to meet a customer who pays well beyond the agreed terms, feeling it is his right to claim, that after all, you have lost no money with him after so many years. To him it is irrelevant that he has paid 90 or 180 days beyond the maturity date. In other words, it's as though it were an irrelevant fact that financial institutions have accumulated large fortunes, grown wealthy and become more powerful, simply on timely transactions, such as the borrowing and lending of money.
It can be offensive to ask for interest in the Middle Eastern world, a blasphemous demand that only non-Muslims would dare utter shamelessly. So, to avoid going against Islamic principles, the Muslims have developed a number of sophisticated financial instruments ranging from the concept of risk sharing to murabaha. Murabaha is a trade financing technique used for buying on behalf of the importer's purchase price, which requires the local company to repay the borrowed amount plus an agreed amount at a later stage. The banking institutions have created the capital compensations through their involvement in local enterprises to cope with the issue of prohibition of interest or compensation on borrowed money.
Credit, at the crossroad of a winding path and a motorway, deals with these topics. Market behaviors go along the winding path with cultural ties. The motorway's traffic is jammed with financial analysts, macro-economic gurus producing at high speed, economic targets and corporate goals requiring more challenging performances year after year. …