...Role of Financial Institutions in the financial development and economic development Financial intermediaries perform an important role in the development process, particularly through their role in allocating resources to their most productive uses. More efficient financial markets help economic agents hedge, trade, pool risk, raising investment and economic growth. Financial institutions provide consumers and commercial clients with a wide range of services and different types of banking products. The importance of financial institutions to the wider economy is apparent during market booms and recessions. During economic upturns, financial institutions provide the financing that drives economic growth, and during recessions, banks curtail lending. This can exacerbate a country's financial problems and draw attention to the fact that economies are heavily reliant upon the financial sector. The importance of financial institutions and passed legislation made it easier for more people to obtain products and services from these entities. In many countries, banks are encouraged or even compelled to lend money to home buyers and small businesses. Readily available loans encourage consumer spending, and this spending leads to economic growth. There is now a clear realization that sustainable development will not and cannot be achieved by governments acting alone. In this context, the expertise of the private sector plays an important role. Role of Financial Institutions in the...
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...DEVELOPMENT OF FINANCIAL MARKET IN BANGLADESH 1. INTRODUCTION The financial system in South Asia is dominated by the banking system in terms of assets, or finance of private households and domestic companies; major financial institutions are banks. This is why financial instrument of the financial market of Bangladesh are bank dominated. But a developed and diversified financial system with a sound debt and equity market enhances risk pooling and risk sharing opportunities for investors and borrowers. This also provides a safety cushion for banks as it helps move a crisis outside the banking system making it easier for the government to stand back. Bond financing reduces macroeconomic vulnerability to shocks and systemic risk through diversification of credit and investment risks. A mature bond market helps develop the derivatives market thereby facilitating hedging mechanisms and enabling greater diversification of risks by participants. Also, the wide variety of instruments available in a developed debt market results in gains to savers and borrowers. Besides, the coexistence of a developed domestic bond market and banking system helps each to act as a backstop for the other. In Bangladesh, an efficient bond market can play a critical role in supplementing the banking system to meet the requirements of the corporate sector for long-term capital investment and asset creation. It can provide a stable source of finance when the equity market is volatile. The bond market in...
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...Development of Financial Reporting in the 21st Century Globalisation of Financial Reporting (IFRS and IAS) In the 15 years since the start of the 21st century there has been many dramatic changes in the financial world. These dramatic changes included the collapse of some of the world's largest corporations , many of whom were making fraudulent financial reports at the time of their demise (such as Enron Corporation and WorldCom) , the downfall of one of the worlds “Big Five” accounting firms ; Arthur Anderson (which was directly related to the Enron scandal) and an economic collapse that resulted in many national economies suffering hugely. However despite these dramatic changes, nothing has been more significant than the rapid acceptance of International Financial Reporting Standards (IRFS) across the globe. This means that companies from all over the world are beginning to adhere to a single set of global accounting standards. This wide acceptance of IFRS has stemmed from globalisation. Globalisation is the process by which companies begin to trade on an international scale and spread their influence globally (e.g NIKE & McDonalds) , often having numerous headquarters across the world. What is IFRS? International Financial Reporting Standards are designed to be used as a universal language for conducting business across the world, their goal is for company accounts to be coherent across all international borders. The concept of...
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...summery This literature review discusses objectives of financial development and economic growth as well as existing relationship of this concept. Financial development is strongly connected with economic situation, but we do not know for sure if this always implies economic growth. There are many factors which influence relationship between financial development and economic growth and its effects such as financial liberalization, government ownership of the banks, monetary policy and rate of inflation, institutional and regulatory framework of financial markets in particular countries. Many researchers are trying to give the right questions and explanations on this field but still there are unresolved issues and implications which give open space for future investigations. Table of Contents 1. Introduction………………………………………………………….2 2. Literature Review……………………………………………………2 2.1. Relationship between Financial Development and Economic Growth………2 2.2. Empirical methodologies……………………………………………………..5 2.3. Effects of Merger and Acquisitions in Bank Industry on relationship between financial development and economic growth…………………………………7 3. Conclusion…………………………………………………………....8 4. Reference List………………………………………………………..9 1. Introduction Financial system is a basis of current economic trends and there is no possibility...
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...Table of Contents 1 Introduction 1 2 Literature review 1 1.2. Theoretical review of financial development and economic growth nexus 1 1.3 Review of the empirical literature 4 1.3.1 Time series 5 1.3.2 Cross-country studies 6 1.3.3 Panel data studies 7 3 Conclusions 8 4 References 9 1 Introduction “Finance is powerful. The financial system can be an engine of economic prosperity – or a destructive cause of economic decline and misery.” Levine, R. (2011) p.85 Obviously, financial system and economy are related. But what is the nature of this relationship? The objective of this paper is to critically evaluate the existing theoretical and empirical literature on the finance-growth nexus. What is the role of the financial sector in economic growth? Does finance cause growth or simply follows it? There is no wide agreement about this task among recognised economists. Even Nobel Prize winners disagree in regard to the role of finance in economic development. Levine (2003) states that the role of finance as a major determinant of economic growth is over-stressed. Moreover Levine (2003) argued that where enterprise leads finance follows. Quite the opposite, important acknowledgment should be taken into account and it follows as “[the idea] that financial markets contribute to economic growth is a proposition too obvious for serious discussion.” Levine (2003) p.1 Similar to that, he also declared that the finance growth...
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...A financial market is a market in which people and companies can trade financial assets such as stocks, bonds, currencies, commodities and so on. The basic three items sold in a financial market are: stocks, bonds and exchange currencies. Some of the biggest financial markets around the world are Hong Kong, United States and the United Kingdom. Economically, the GCC countries which consist of six countries: UAE, Oman, Saudi Arabia, Kuwait, Bahrain and Qatar; have been mainly dependent on oil and petroleum trading. Although finance in the GCC has grown to be a vibrant industry, but the GCC financial markets remain small and behind their potential globally. Since the beginning of the last decade, the GCC tried changing the strategy and going more into the financial markets. In the past five years, this strategy went to partially fall apart. The global financial crisis affected the finance business dramatically and the Gulf region did not handle it that well. Although the global view to the GCC financing has not been positive, but the GCC has been working and trying with all their efforts to develop their market and move forward. Saudi Arabia Stock Exchange, Tadawul ( TASI ), came along in the mid 1930's but remained informal until the early 1980's when the government formed a regulated market for trading with the required systems and techniques. It lists 159 publicly traded companies ( as of September 2, 2012). There are 15 sectors in the Saudi market which are: Banks &...
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...The purpose and nature of the budgeting process A budget is a financial document used to project future income and expenses. For manufacturing, budget show the predict finance about the number and the estimate cost of all items which related in production such as: overhead cost, material, labor, revenue, expenses, assets, liabilities, etc. From these predictions, it can help company picturing out the future cost and profit. The budgeting process may be carried out by individuals or by companies to estimate whether the company can continue to operate with its projected income and expenses. Purpose and advantages Budgets play an important role in the manufacturing and production process because companies will allocate each production cost to products. Spending too much money on specific activities will raise individual product costs, requiring companies to charge consumers for inefficient operations[1]. There are seven main purpose of budget. Firstly, budget can ensure the achievement of organizational objectives and push organizational planning. The reason is that a performance budget is a strategic tool that enables a company to win the competitive game. Moreover, a budget is basically a money plan, outlining company financial goals. Having a budget, company can well establish and regulate funds, set and achieve company financial objectives, and make advance decisions as to how company want company finances to function well for company. The main...
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...1.0 Pengenalan Sistem kewangan merupakan satu sistem yang mengandungi institusi perbankan, pasaran kewangan, pengantara kewangan lain seperti dana persaraan dan syarikat insurans. Sebuah badan kawal besar, iaitu bank pusat yang menyelia dan mengawasi operasi pengantara kewangan ini. Ia merupakan satu sektor dalam ekonomi yang menggunakan sumber-sumber produktif untuk memudahkan pembentukan modal melalui peruntukan daripada pelbagai alat-alat kewangan, iaitu memenuhi pelbagai keperluan antara pemberi pinjaman dan peminjam. Maka, sistem kewangan memainkan peranan yang penting dalam mengerahkan(mobilizing), pengantara untuk simpanan(intermediating saving), dan memastikan sumber-sumber ini adalah diperuntukkan dengan cekap kepada sektor-sektor yang produktif. Selain itu, Wang yang dominan dalam sesebuah ekonomi sekarang ialah wang kredit, wang yang tercipta ekoran aktiviti sektor perbankan mengambil deposit dan mengeluarkan pinjaman. Perkembangan ini serta peningkatan pesat inovasi kewangan dalam ekonomi berasaskan kredit boleh mempengaruhi pertumbuhan ekonomi di sesebuah negara. Ini yang menjadikan peranan sektor kewangan terhadap pertumbuhan ekonomi sering menimbulkan perdebatan di kalangan ahli-ahli ekonomi. Misalnya Miller (1998) yang menyatakan bahawa sektor kewangan telah dilebih-nyatakan(over-stressed) terhadap pertumbuhan ekonomi. Manakala, ahli ekonomi lain seperti Schumpeter (1911) dan Mikinnon (1973) yang menggunakan pelbagai kaedah ekonometrik telah memberikan kesimpulan...
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...Development of a qualitative reasoning model for financial forecasting Paper type Research paper Introduction Qualitative reasoning systems employ model-based reasoning using qualitative values. Model-based reasoning systems are specific types of knowledge-based systems in which the underlying causal model of the system is represented. This makes the systems less brittle than heuristic systems, which fail to provide solutions outside their narrow domain of expertise (Jackson, 1990; Iwasaki and Simon, 1990). Furthermore, qualitative reasoning systems provide a mechanism for handling uncertainty by using qualitative values. Until now, qualitative reasoning has been used mostly for physical systems (AIME, 2003; Williams et al., 2003). This has provided us with insights into the modeling principles and techniques of qualitative reasoning. However, there have been very limited applications of qualitative reasoning in business and finance (Brajnik and Lines, 1998; Apte and Hong, 1986, Hart et al., 1986). Yet, with its ability to deal with qualitative information, handling uncertainty and backtracking, qualitative reasoning can be extremely useful in business and finance domains. The purpose of this paper is to illustrate how qualitative reasoning models can be developed in a financial domain, the applicability of these models and the problems and issues related to the development of qualitative reasoning models in finance. Characteristics of qualitative reasoning models ...
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...initiatives like the Baker Plan, the Brady Plan, and the HIPC Initiative to ease the burdens 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...
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...National Institutional Analysis Report National Institutional Analysis Report (NIAR) is a report that looks at a country and the steps it has made toward making the business environment as friendly as possible for potential and emerging business people to invest in it. This research paper is going to look at two countries and focuses on the best selection that has steps that leads to improving the business environment, and it will also identify an underdeveloped economy and try to look at the business environment through the institutions that the government has put in place, as a way of encouraging investors. The country of choice for this case is Rwanda, due to the steps it has made to make investments in business to be friendlier. The country was not so long ago faced with a major challenge, where it was rocked with one of the biggest crisis reported in the recent times, in form of genocide. The country has made major steps in ensuring that the business community is given the best investment environment, which has seen the country being listed among the friendliest country to start a business in the region. This research paper will look at Rwanda in comparison to advanced economies in the region such as South Africa. This research paper is therefore going to look at some areas which have made Rwanda make the gains that it has made in terms of improving the business environment. These areas include • Motivations behind the move the country has...
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...Discuss who is responsible for producing global leaders. A leader is an individual that has made decision to succeed. This individual is not afraid to try new things and to master them. Leaders are creative and they excel at anything that they put their hands to do. Leaders help others by becoming trailblazers to create a path of success for his/her families, friends, or colleagues to follow. Leaders are not selfish individuals; they rise with the intentions to conquer the day. Leaders plan for the future not complaining about minor things that they can’t change, yet they remain unstoppable towards their goals. Leaders are able to humbly take criticisms and direction and to quickly correct those things that may have been challenged. Leaders are always seeking ways to improve every aspect of their lives. They are business woman and business men that are serious about creating new opportunities. Leaders influence others to become great and to have an assisting hand in helping others to become successful. A leader is admired by many; and attracts followers because of their confidence. Global leaders are created at home first. They are shaped and molded by their parents who never give them an option to give up or settle. These parents are not satisfied with just enough, or hear the words “I Can’t”. These children are future leaders, will bloom into adolescent and then adults; remembering the instructions. After this foundation has been established...
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...O N S C O N F E R E N C E O N T R A D E A N D D E V E L O P M E N T WORLD INVESTMENT REPORT 2013 GLOBAL VALUE CHAINS: INVESTMENT AND TRADE FOR DEVELOPMENT New York and Geneva, 2013 ii World Investment Report 2013: Global Value Chains: Investment and Trade for Development NOTE The Division on Investment and Enterprise of UNCTAD is a global centre of excellence, dealing with issues related to investment and enterprise development in the United Nations System. It builds on four decades of experience and international expertise in research and policy analysis, intergovernmental consensusbuilding, and provides technical assistance to over 150 countries. The terms country/economy as used in this Report also refer, as appropriate, to territories or areas; the designations employed and the presentation of the material do not imply the expression of any opinion whatsoever on the part of the Secretariat of the United Nations concerning the legal status of any country, territory, city or area or of its authorities, or concerning the delimitation of its frontiers or boundaries. In addition, the designations of country groups are intended solely for statistical or analytical convenience and do not necessarily express a judgment about the stage of development reached by a particular country or area in the development process. The major country groupings used in this Report follow the classification of the United Nations Statistical Office. These are: Developed countries:...
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...O N S C O N F E R E N C E O N T R A D E A N D D E V E L O P M E N T WORLD INVESTMENT REPORT 2013 GLOBAL VALUE CHAINS: INVESTMENT AND TRADE FOR DEVELOPMENT New York and Geneva, 2013 ii World Investment Report 2013: Global Value Chains: Investment and Trade for Development NOTE The Division on Investment and Enterprise of UNCTAD is a global centre of excellence, dealing with issues related to investment and enterprise development in the United Nations System. It builds on four decades of experience and international expertise in research and policy analysis, intergovernmental consensusbuilding, and provides technical assistance to over 150 countries. The terms country/economy as used in this Report also refer, as appropriate, to territories or areas; the designations employed and the presentation of the material do not imply the expression of any opinion whatsoever on the part of the Secretariat of the United Nations concerning the legal status of any country, territory, city or area or of its authorities, or concerning the delimitation of its frontiers or boundaries. In addition, the designations of country groups are intended solely for statistical or analytical convenience and do not necessarily express a judgment about the stage of development reached by a particular country or area in the development process. The major country groupings used in this Report follow the classification of the United Nations Statistical Office. These are: Developed countries:...
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...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...
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