...The Development of Modern Finance "A Short History of Value" David Roubaud & Jean-Charles Bagneris 10/2011 The Main Steps of the Theory Building • Portfolio Selection (Markowitz, 1952) • CAPM (Sharpe, 1963) • Financing and Dividend Decisions Neutrality (Modigliani et Miller, 1958, 1961,1963) • Efficient Markets (Fama, 1965, 1970) • Options Pricing Theory (Black & Scholes, 1973, Myers, 1977) • Agency Theory (Jensen, Meckling, 1976) • Efficient Markets II (Fama, 1991) • Behavioural Finance (Kahneman & Tversky, 1979, Shiller, 1981, 2000) Portfolio Selection • Investors are rationals and risk averse • Diversification lowers specific risk • Any portfolio is a combination of the market portfolio and the riskless asset The CAPM Capital Asset Pricing Model • Systematic risk of an asset is measured by its beta coefficient • The model calibrates the risk-return relationship • Simple, elegant and linear model => big success • Low explaining power (strong assumptions) • Alternative models are difficult to use 1 The Development of Modern Finance 2 Financial Markets Efficiency "At any given point in time, assets prices on financial markets account for all available information." • Strong assumptions on: – markets organization – investors behaviour • One consequence of EMH is Random Walk Hypothesis • Assumptions are not always true: 3 forms of efficiency (strong, semi-strong, weak) The irrelevance of financing and dividends decisions In a world without taxes and with perfect financial markets...
Words: 678 - Pages: 3
...Executive Summary Thailand is a newly industrialized and export dependent country. Although it is developing country its economic growth rate is sustaining over the long period of time. It is middle income country in the south-east Asia. In 1988 the GDP growth rate was 12%.Then there was economic boom in the country. The purpose of paper is to assess is to find out the economic condition of Thailand and its economic performance regarding different policies. The economic growth of Thailand is better than any other developing country. Over the ten years between 1987 and 1996, the average annual GDP growth rate was 9.4 percent; the growth rate of real exports was 14.5 per cent, while inflation was contained at 4.7 per cent. The high level of investment and the rapid growth had been supported by large inflows of foreign capital: in the period 1987–96, annual capital inflows were on average equal to 8.7 per cent of GDP. But there are some financial shocks in the economy. They are Asian financial crisis:1997-1998, Global financial crisis and flood of 2011and political instability of Thailand. These crises were recovered successfully. On 11 August 1997, the IMF unveiled a rescue package for Thailand with more than $17 billion, subject to conditions such as passing laws relating to bankruptcy (reorganizing and restructuring) procedures and establishing strong regulation frameworks for banks and other financial institutions. The IMF approved on 20 August 1997, another bailout package of...
Words: 5177 - Pages: 21
...mentioned earlier in this report about the adverse consequences of increasing import tendencies in Bangladesh, there we consider some of the solution steps regarding this problem. Bangladesh Govt. has initiated some programs like imposing non-tariff barriers on import of some items. The product that can be produce in Bangladesh efficiently should have this type of barriers. Bangladesh is primarily an agrarian economy. Agriculture is the single largest producing sector of economy since it comprises about 30% of the country's GDP and employing around 60% of the total labour force. The performance of this sector has an overwhelming impact on major macroeconomic objectives like employment generation, poverty alleviation, human resources development and food security. Where there is plenty of chances for producing an agricultural food remarkably in Bangladesh, importing the same food product from a neighbor country for meeting up domestic need would discourage our farmers to produce that product. Ultimately it could result in destroying our agriculture sector. At the same time, considering the importance of the private sector, an all-out support is being provided to initiatives taken in this sector. As a result, a new kind of dynamism is under way in both public and private sectors. In this backdrop, it is essential to examine various aspects of industrialization and its impacts on overall economic activities. Given the present environment of global competition, the private...
Words: 828 - Pages: 4
...of the study 9 chapter two: Literature Review 10 2.1 Micro-Finance 10 2.2 Microfinance and microcredit 10 2.3 The History of Microfinance 11 2.4 Providers and models of microfinance interventions 11 2.5 Microfinance and its impact in development 14 2.6 The impact of microfinance on poverty 16 2.7 Current debates on the impact of microfinance in development 18 2.8 Empowering Women 23 2.9 Impacts beyond the household 26 2.10 The use of the Sustainable Livelihoods Framework in impact measurement 27 2.11 Current debates about MFIs and their role in development 29 Chapter Three: A Glimpse of The Microfinance Sector in Bangladesh 33 3.1 Micro-Finance’s History and Development 33 3.2 Evolution of MFIs financing sources 34 Chapter four: Data Analysis and Interpretation 37 4.1 Hypothesis & Model 37 4.2 Respondents Information (Frequencies & Cross-Tabs) 38 4.3 Results of the Regression Analysis for Hypothesis One 43 4.4 Results of the Regression Analysis for Hypothesis Two 45 Chapter five: Findings And Conclusions 47 5.1 Findings 47 5.2 Scope for Further Research 48 5.3 Conclusion 48 References 50 Appendix - A 52 Appendix - B 55 List of Figures Figure 1:Conceptual Model of the Study 37 Figure 2: Loan reserve of NGO-MFIs in the Micro-finance sector based on the size of the firms 55 Figure 3: Savings of NGO-MFIs in the Micro-finance sector based on the size of the firms 56 List of Tables Table 1:...
Words: 15459 - Pages: 62
...practice sustainability finance institutions and initiatives demonstrates some or all of the following characteristics: COMMON THEMES Embedding CSR: Many companies report on their governance and management systems and processes to embed CSR or sustainability throughout the company, including: • Boardapproved mission and values statements that incorporate sustainability. Some FIs take the view that CSR will contribute to longterm shareholder value; others commit their organization to using financial services to contribute to sustainable development; and the sole purpose of a third group is to aid sustainability through finance. • Establishment of CSR board committees and governance frameworks. • Shift to thinking about CSR as a business strategy or opportunity. Many companies describe a process of moving away from a compliance and risk minimization orientation to identification of new business opportunities and win-win solutions that benefit the company and the environment/society. • Designation of senior management responsibility for CSR, appointment of CSR staff, establishment of CSR units and cross-department CSR teams and working groups. • CSR staff training and development of CSR awareness in leaders. • Incorporating CSR into performance contracts, job descriptions and incentive pay. • Secondment, including long-term secondment programs, and volunteering are used for employee personal and professional development and managed as an HR...
Words: 298 - Pages: 2
...nations, as more developing countries find their own way to catch up on growth, resisting world recessionary tendencies (O’Neill 2001 2011). The investor’s world of emerging markets has thus expanded beyond the BRICs, even as questions are raised about the sustainability of growth in the BRICs themselves, with their structural and political challenges and their vulnerability to the uncertainties of global monetary developments. (http://mobile.opendocs.ids.ac.uk/opendocs/handle/123456789/3599#.VemUOn2MgQ0) The grouping was originally known as "BRIC" before the inclusion of South Africa in 2010. The BRICS members are all developing or newly industrialised countries, but they are distinguished by their large, fast-growing economies and significant influence on regional and global affairs; all five are G-20 members. Since 2010, the BRICS nations have met annually at formal summits. Russia currently holds the chair of the BRICS group, and hosted the group's seventh summit in July 2015. (https://en.wikipedia.org/wiki/BRIC) Summary The BRICS New Development Bank (NDB) was created in mid-2014 by the governments of Brazil, Russia, India, China and South...
Words: 6829 - Pages: 28
...their missions. The World Bank Group is composed of five agencies: • the International Bank for Reconstruction and Development (IBRD) • the International Development Association (IDA) • the International Finance Corporation (IFC) • the Multilateral Investment Guarantee Agency (MIGA) • The International Center for Settlement of Investment Disputes (ICSID). In general, the World Bank Groups’ mission is to help with long-term growth in developing countries by providing funding for infrastructure, education, health and other necessary building blocks to establish a productive economy. The IBRD is the initial institution of the World Bank when it was establish after World War II to assist in the reconstruction of Europe and Asia. Today it has the stated goal to improve poverty in “middle-income countries’ and creditworthy poorer nations through sustainable development. They accomplish this through financial assistance (loans) as well as provide analysis and advice. The International Development Association (IDA) provides interest-free loans and grants to the world’s poorest countries. Similar to the IBRD the IDA promote economic growth by financing infrastructure, agriculture, health, education and similar activities, except the IDA services those countries which fall below the scope of the IBRD. The International Finance Corporation (IFC) supports development in the private sector by providing loans, offering management advice and by managing private investor’s funds which...
Words: 347 - Pages: 2
...Little is known about HDFC Bank and the people behind it. It is a highly successful and profitable new generation bank in the private sector. It came alongside ICICI Bank and at several points in time, the market capitalization of HDFC Bank has been higher than that of ICICI Bank and SBI. Since inception Aditya Puri has been the MD of HDFC Bank and has been steering the bank, through times, good and bad, successfully. The bank has been growing 30% year-on-year for the last 15 years and has one of the lowest NPAs in the business. In spite of the absence of home loans ( as it is the preserve of its promoter HDFC Ltd) , the bank has a strong retail business. HDFC Bank and Aditya Puri have got legions of awards for this success. Mr. Aditya Puri has been Managing Director of HDFC Bank Ltd. since September 1994. Mr. Puri served as Chief Executive Officer of Citibank Malaysia from 1992 to 1994. He has over 30 years of experience in both domestic and international banking. He serves as a Deputy Chairman of Indian Banks' Association. He serves as a Director of HDFC Bank Ltd. He was awarded the Asian Banker Leadership Achievement Award 2006 for India. Mr. Puri holds a Bachelor of Commerce degree from Punjab University and is an Associate Member of the Institute of Chartered his Accountants of India. His management mantra has been inspired by a cartoon he saw in one foreign newspaper. One half of the cartoon showed the boss neck-deep in work while others outside were having a whale of...
Words: 2179 - Pages: 9
...agreed on three principles. First, there was agreement on the limitations of the private enterprise & thus mixed public-private economy was regarded as desirable. This implied nationalizing a wide range of strategic industries. Secondly, need for a coordinated macroeconomic policy was recognized because market alone failed to ensure macroeconomic stability that is that is needed for sustained growth of business. Finally, reliance entirely on market For the welfare of the people was a questionable proposition. In the three and a half decades between 1960 & 1995, government western economies assumed new role & expanded existing ones. By the mid-1990s the range of tasks performed by the government & its agencies included not only maintaince & development of infrastructure & utilities but also much more support for education, health care & social security. As a result, in the 35 year period from 1960 onwards the central government expenditure rose from less than 20% of GDP to over 30%. Between 1977 & 1991 the process of relaxing control started. However obth open & hidden subsidies went on increasing. In this period fiscal deficit become unsustainable and the country was in deep economic crisis in 1990-91, In response to...
Words: 1280 - Pages: 6
...Essay preview AS and A Level Sociological Differentiation & Stratification "Compare and contrast modernisation theory and dependency theory as explanations of development and under-development" The two theories, modernisation and dependency both give valid and just explanations for development and underdevelopment. There is a notable likeness in them both but there are also many differences and neither escape criticisms. Modernisation theory was before dependency theory and was developed in the 1950/60s; the theory is based on 4 main assumptions. Western societies are the most advanced in terms of technological, social and political terms, countries go through a series of stages on their route to becoming advanced, this path is a 'natural' form of development and there must be something preventing them from doing this and finally, these underdeveloped nations can advance without an changes taking place in the finance and trading patterns of the capitalist world. The modernisation theory is politically conservative as it sees nations being undeveloped because they lack the qualities that developed nations have, this is compared with the dependency theory who see this underdevelopment due to the exploitation of advanced nations. W.W. Rostow is one of the most notable modernisation theorists; he argued that there are a number of stages that a traditional society has to pass through to become a modern society. His work is combined with the four key elements above and his...
Words: 398 - Pages: 2
...the Caribbean. These issues include; poverty, migration and culture and identity. To begin, (Ritzer, 2011) stated that, “globalization is the spread of worldwide practices, relations, consciousness, and organization of social life.” This implies that globalization is the driving force within society, which allow for the sharing of common goals and values for both social life, financial and political aspects as well. This helps move society from an obsolete to technological way of thinking. (UNDP, 1997) posits that “globalization encapsulates both a description and a prescription. The description is the widening and deepening of international flows of trade, finance and information in a single, integrated global market. The prescription is to liberalize national and global markets in the belief that free flows of trade, finance and information will produce the best outcome for growth and human welfare.” Thus, the abovementioned statement by UNDP indicates that to improve lives, economic and technological variables should intermingle at an international level. Therefore, it is important to note that globalization has both intended and unintended consequences. Moreover, some of...
Words: 3813 - Pages: 16
...Course Authors Name Institutional Affiliation Chapter 4 The chapter looks at the main factors that led to the concern off international health. It explores the main backgrounds of modern international health from the time of the Eurasian plague for three hundred years. It examines events like the rise of the slave trade and imperialism and the health consequences that came with these events. It then turns and examines the Industrial Revolution in the 19th century and the upsurge of the sanitary reform movement. These events led to the presence and development of new international health institutions. Plague outbreaks led to the beginnings of the earliest health regulations. The increase of rival leaders fighting for power and increase of travel and trade led to the outbreaks of widespread diseases. The Middle Ages were characterized by two great plague outbreaks. The Plague of Justinian affected populations moving from Asia to Ireland. The second great plague was the great Black Death in the 14th century. The plague is said to be the most critical epidemic in mankind’s history. The plague shook the whole political, economic, social and ecclesiastical structure of Europe and it led to a death of 25 million people throughout India, China and Mediterranean. The plague was suspected to have been caused by the numerous human contacts. This led to the earliest efforts of international disease control. In the faith that the plague was introduced by the movement of trade ships, Venice...
Words: 1568 - Pages: 7
...Table of contents | Page no | Introduction | 3 | Impact of Microfinance on poverty | 3 | Collateral Effect of Micro-finance on child-labour | 4 | Social responsibility challenges that micro-financiers should meet | 6 | Discussion of microfinance using the principle agent framework | 6 | Conclusion | 7 | References | 9 | Introduction Social innovation refers to novel services and activities directed towards addressing social needs and diffused through organizations whose main purposes are social rather than making profit (Majumdar, Guha, & Marakkath, 2015). On the other hand, business innovation involves organization’s process of introducing ideas, workflows, or products. Unlike social innovation, business innovations are motivated by profit and diffuse through firms motivated by profit maximization. However, some for-profit businesses innovate by developing new ideas to address social needs in the community or workplace. Nonetheless, both social and business innovations exhibit novelty. That is, they promote new ways of doing things thus making them necessary for human development. Majumdar, Guha, and Marakkath (2015) affirm that innovations promote human development by satisfying the basic human needs and empowering the community through new ideas. Innovation involves all spheres of society and human life including human needs and capacity development. This paper focuses on microfinance which is a business innovation. The paper discusses the impact of microfinance on...
Words: 1641 - Pages: 7
...of those countries, many still experience unsustainable debt. The debt burdens of developing and middle-income countries increased from $500 billion in 1980 to $1 trillion by 1985. By 2000, their debt was about $2 trillion. The debts of HIPC countries increased from $60 billion in 1980 to $190 billion by 1990. Even with relief programs like the HIPC Initiative, 8 countries under the Initiative experienced worsening debt indicators even after reaching their completion points. The consequences of developing countries’ inability to exit from debt payments go beyond the financial level. In addition to economies being hurt, the peoples of developing countries will also feel the affects. The United Nations established the Millennium Development Goals in 2000 that pledged to halve income poverty between 1990 and 2015, but countries like those in Sub-Saharan Africa will most likely not meet this goal. The problems delaying debt relief result from numerous actors. Creditors need to provide additional financing and fulfil their commitments to debtor countries. The Bretton Woods institutions need to speedily and effectively implement the enhanced HIPC. Some heavily indebted countries still have to take policy measures to become eligible for the HIPC Initiative and reach the decision point. All parties are responsible and must make greater efforts to reduce the debt burdens in order to...
Words: 6791 - Pages: 28
...The study by (Deepti Tripathi, 2014) helps to Analyze the Financial Position and Performance of the Axis and Kotak Mahindra Bank in India based on their financial characteristics based on the CAMEL model and t-test which measures the performance of bank from each of the important parameter like capital adequacy, asset quality, management efficiency, earning quality, liquidity and Sensitivity. Bhayani (2006) analyzed the performance of new private sector banks through the help of the CAMEL model. Four leading private sector banks – Industrial Credit & Investment Corporation of India, Housing Development Finance Corporation, Unit Trust of India and Industrial Development Bank of India - had been taken as a sample. Sanjay J. Bhayani (2006) in his study, “Performance of the New Indian Private Banks: A Comparative study”. The study covered 4 leading private sector banks- ICICI, HDFC Bank, UTI and IDBI. The result showed that the aggregate performance of IDBI Bank is the best among all the banks. (Bhayani, 2006) Dr.K.Srinivas and L.Saroja (2013) conducted a study to compare the financial performance of HDFC Bank and ICICI Bank. From the study it is clear that there is no significance difference between the ICICI and HDFC bank’s financial performance but we conclude that the ICICI bank performance is slightly less compared with HDFC. (K. Srinivasl, 2013) There are number of indicators for evaluating financial performance of banks on the basis of the financial measures. Usually...
Words: 579 - Pages: 3
