...TOPIC: THE IMPACT OF WORKING CAPITAL MANAGEMENT POLICIES ON THE PROFITABILITY OF FINANCIAL INSTITUTIONS: A STUDY OF SOME SELECTED FINANCIAL INSTITUTIONS IN GHANA 1.0 INTRODUCTION 1.1 Background: Financial institutions exist to perform the main function of collecting excess monies in the system and advancing them in a form of loan. Hence the bulk of the working capital resource is loan advances and cash received from customers. Again, the influx and/or springing up of financial institutions in Ghana of late has created stiff competition. This situation is likely to make most firms relax their policies on working capital especially on loan advances to customers so as to maintain or increase their market share. This could lead to huge unpaid balances which may put the finances of the companies in danger given the fact that the depositors will one day come for their monies. These can have a telling effect on the cash flow position of the firm which indeed raises an issue of profitability and survival. The management of these core assets is vital to their survival. It is for these reasons that the researcher wants to identify the various working capital strategies used by these financial institutions in dealing with such situations and the consequences of such policies on the profitability of these firms. 1.2 Problem Statement: As the main provider of financial needs, the main debacle of financial institutions is not with the several services and products...
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...1. A bank has a negative repricing gap using a 6 month maturity bucket. Which one of the following statements is most correct if MMDAs are rate sensitive liabilities? (Points : 1) If all interest rates are projected to increase, to limit a profit decline when this occurs, the bank could encourage its retail deposit customers to switch from 2 year CDs at current rates to 3 month CDs. If all interest rates are projected to decrease, to limit a profit decline when this occurs, the bank could encourage its retail deposit customers to switch from MMDAs to 2 year CDs at current rates. If all interest rates are projected to decrease, to limit a profit decline when this occurs, the bank could encourage its retail deposit customers to switch from MMDAs to 2 year CDs at current rates. If all interest rates are projected to increase, to limit a profit decline when this occurs, the bank could encourage its retail deposit customers to switch from 2 year CDs at current rates to MMDAs. If all interest rates are projected to increase, to limit a profit decline when this occurs, the bank could encourage its retail deposit customers to switch from MMDAs to 2 year CDs at current rates. 2. A bank has a positive repricing gap using a six month maturity bucket. Which one of the following statements is most correct? (Points : 1) If all interest rates are projected to increase, to limit a profit decline when this occurs, the bank could encourage...
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...Financial Regulatory Reform ECO 238 12/07/2009 “Over the past two years, we have faced the most severe financial crisis since the Great Depression. The financial system failed to perform its function as a reducer and distributor of risk. Instead, it magnified risks, precipitating an economic contraction that has hurt families and businesses around the world.” (Geithner & Summers) While the current crisis had many causes, it is clear that the government could have done more to prevent many of the problems from growing out of control and threatening the stability of our financial system. Gaps and weaknesses in the management and regulation of financial firms presented challenges to our government’s ability to monitor, prevent, or address risks as they built up in the system, which caused the enormous bailouts or the massive financial collapses of financial institutions. The previous approaches to bank holding company regulation focused on protecting the subsidiary bank, not on the comprehensive regulation of the whole firm. In June, the President, proposed a new financial regulatory plan for the financial system. The new reform, as mentioned by the President, would protect consumers, impose new restraints on financial institutions and guard against the dismal practices that caused the market crisis. The new reform would generally be adopted by regulators since it mostly affects them. Timothy Geithner who is the secretary of the Treasury and Lawrence Summers who is...
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...administration | S.W.I.F.T | Financial Institutions Management | Instructor: Prof. Eli Elyasiani | Ammar Gharra, Ronen Tzuri, ID | 14/07/2012 | Sprint 2012 | In these paper we discuss the orginis and the development of the Society of the Worldwide Interbank Financial Telecommunication which we call it SWIFT, the foundation, the infrastructure that its support, the alternative systems, and the role of Swift in war on terror and in sanctions on the Iranian Regime cause of it suspicious Nuclear program Introduction What is Swift: The growth in the global trade, the development of capital market beside the banks system, adding to this the globalization process and the wide raise of the international institutions lead the banks all over the world to develop an efficient interbank infrastructure which allow them to made international payments more accurate and with less error and definitely secure. Figure 1: Example of a payment Instruction trnaslated into a SWIFT message The Swift is not a bank and even isn't a settlement institution, according to their website, Swift is a non-profit organization that connect all of its members together to exchange financial information securely and reliably. Swift enables the bank to lowering costs, reducing operational risk and eliminates inefficiencies from their operations. Swift doesn't hold any funds, and doesn't operate or manage any account for its customers, it's even doesn't store any financial information, it provides...
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...VANCITY Vancity’s Competitive Advantages Satisfied and Committed Workforce – Vancity has emphasized on the fact that a committed workforce can lead to financial success in the industry as well as efficient productivity. Vancity provides various staff benefits such as business casual dressing, flexible working hours, hosting various social events to keep up the morale at the workplace and various employee benefit services. Unique Approach – Vancity was the first Canadian financial institution to provide mortgages to women, and marketed via traditional methods to the gay and lesbian community. Apart from that Vancity was the first North American firm to acquire R1 rating from Dominion Bond Rating Service and also provided their own socially responsible mutual funds. Decision Making – The CEO of Vancity, Tamara Vrooman, admitted that they use a locally based decision making for the success of their firm and that was what differentiates them from the big financial institutions. Stakeholder’s Satisfaction As Vancity is a member owned credit union, its shareholders are primarily its employees, members and the communities that are linked to the credit union. Members: Founded in 1946, Vancity started with $22 in total assets and started lending money to the bank-rejects with a purpose to help the people and communities associated with them to prosper. With the introducing the direct marketing strategy to the gay and lesbian community, providing mortgage services to women, Vancity...
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...The Prairieland Bank was a medium-sized, Midwestern financial institution. The management had a good reputation for backing successful deals, but the CEO (and significant shareholder) had recently moved to San Francisco to be close to the big-bank center of activity. He commuted into the Prairieland head office for two or three days each week to oversee major deals. Lately the banks profitability had decreased, and the management had begun to renegotiate many loans on which payments had fallen behind. By doing so, the bank was able to disclose to them as current, rather than nonperforming, as the unpaid interest was simply added to the principal to arrive at the new principal amount. Discussions were also under way on changing some accounting policies to make them less conservative. Ben Hunt, the audit partner on the Prairieland Bank account, was becoming concerned about the risk asso- ciated with giving an opinion on the fairness of the financial statements. During the early days of the audit, it became evident that the provision for doubtful loans was far too low, and he made an appointment to discuss the problem with the CEO and his vice presi- dent of finance. At the interview, Ben was told that the executives knew the provision was too low, but they didnt want to increase it because that would decrease their reported profits. Instead, they had approached a company that provided insurance to protect leased equipment, such as earth movers, against damage during the lease, and...
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...Proposed Accounting Standards Update Financial Instruments: Credit Losses ( Subtopic 825-15) Issued December 20th 2012 ACCT 6003: Financial Accounting Theory Professor Bill Dawson Completed by: Rich Allen, Jordan Keuken, Karen Vander Vloet, Lillian Cuevas Rosales June 28th, 2013 Executive Summary The recent global economic crisis of 2008 created a glaring need for changes in accounting standards in US GAAP. One of the many issues that contributed to the recession was accounting policies for the recognition of credit losses. Banks and large financial institutions usually recognized credit losses through an “expected credit losses” approach that included an initial recognition threshold. Credit losses would be recognized on financial statements once they were “probable to occur”. The recognition of a loss was based on a multitude of information. The difficulty with the existing method is that market events and many other variables make it very difficult to predict when credit losses are probable. This accounting policy lead to gross understatements of expected credit losses in the recent crisis and contributed to crashes in the stock market. The exposure draft for Financial Instruments - Credit Losses (Subtopic 825-15) aims to broaden the amount of information when calculating an allowance for expected credit losses. The financial instruments that are in question are loans, debt securities, trade receivables, lease receivables, loan commitments and any...
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...Overview: This course is structured around the theme of risk management in banking. You will examine how banking institutions generate earnings and the nature of risks assumed in their operations. The focus of the subject matter is risk management. Topics to be covered: Why are financial intermediaries special? the role of depository institutions; financial crisis; risk of financial intermediation including interest rate risk, credit risk, off-balance sheet risk, liquidity risk; management of risks including liquid asset management and liability management, deposit insurance and other liability guarantees, capital adequacy, product and geographic diversification, and loan sales. The objective of this course is to provide the student with the conceptual framework necessary to analyze and comprehend the current problems confronting managers of commercial banks and other depository institutions. The course materials do not dwell on the development of financial theories. It is assumed that the student comprehends the basic theoretical concepts of corporate finance, monetary theory, and financial accounting. Each class session will be structured to include lecture and discussion. This class is fundamentally a RISK MANAGEMENT class that applies primarily to financial institutions and banks in particular. Risk management is the process by which managers identify, assess, monitor, and control risks associated with a financial...
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...SWOTT Analysis Introduction The number one question that pops into people's minds when deciding on where they are going to open up a checking account is what is the difference between a credit union and bank. Many people are unaware of the true differences that stand between banks and credit unions and generally go with the bank logo they see the most due to convenience. The difference is simple, banks are for profit financial institutions, and credit unions are not-for-profit financial institutions. Majority of credit unions are able to offer lower rates on all products and services offered due to being member owned, not stockholder owned. Most customers receiving a service in a bank considers them just a number and not an actual customer because it based on making money not creating a lasting impression. "Arizona Federal was established on October 23, 1936 when a small group of City of Phoenix employees pooled their resources to form Phoenix City Employees Federal Credit Union. They started with fewer than 50 members and an average account balance of $5. The credit union has since expanded to manage over $1.3 billion in assets from 200,000 member accounts in 15 branch locations" ( Arizona Federal, 2010 ). |Strengths |Weaknesses | |Great Member Service |Employee Retention ...
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...integrated…………………………………………………………………...5 4. Products of Bancassurance……………………………………………………………..5 5.4 Finance and repayments …………………………………………………………5 5.5 Credit insurance…………………………………………………………………..6 5.6 Simple standardized package products………………………………………….6 5. SWOT analysis………………………………………………………………………...6 6.7 Strengths ………………………………………………………………………….6 6.8 Weaknesses……………………………………………………………………….6 6.9 Opportunities……………………………………………………………………...7 6.10 Threats…………………………………………………………………………….8 6. Conclusion…………………………………………………………………………….8 1.History and Definition: Nowadays many financial institutions are trying to find new ways of earning additional money. One of the new and most profitable financial areas is Bancassurance. It is obvious that bancassurance was introduced by two strong financial organization bank and insurance companies. According to Marjorie Chevalier et al (2005) first companies which operated in this sphere were Spanish. It happened in 1970s when “ACM (Assurances du Crédit Mutuel) Vie et IARD (life and general insurance)” officially made cooperation between each other and started avoid intermediaries to make loan protection insurance and insure own consumers (Chevalier et al, 2005). It was first step to the new market. However, Bancassurance was firstly introduced in France in 1980s (Morgan, 1994). It was initially collaborated to provide insurance products by bank divisions. (Fiordelisi and Ricci, 2012)...
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...AFFINITY PLUS (A): 1. Evaluate Affinity’s MOE framework. In your view, is this system likely to be effective in delivering value to customers? If so, how? If not, why? Member, Organization, Employee MOE is a decision making filter used by A.P. in handling members’ loans when they get into financial trouble. This new approach has moved the strategy of the Credit Union from collecting payments (until 2002, performance was measured according to financials) to building relationships based on trust with the members. The stakeholders team at Affinity Plus has pushed the concept of members-first deeply throughout the organization, empowering employees to put member-owners’ interests ahead of either the organization’s interests or their own interests: what is best for customer is best for all. The system is very effective in delivering value to customers. CU is embarking on creating solutions for its members who are delinquent and financially troubled, instead of focusing on collecting payments by calling early or even sometimes aggressively. From the standpoint of CU, those members are solely in ill-health financially at the time of borrowing and their situation will recuperate in due course once they find a solution to help its member. At the end, customer will benefit from settling his delinquency by the help of his trusted CU. 2. In your view, is MOE likely to be effective in creating value for Affinity Plus? If so, what are the specific ways in which you expect MOE to...
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...Compliance Lab#5 Define a process for Gathering Information pertaining to a GLBA Compliance 1. GLBA repealed parts of an act. Name the act and explain why it was significant for financial institutions and insurance companies. Parts of the glass Steagall act of 1933 GLBA allows financial institutions such as banks to act as insurance companies. GLBA covers both financial institutions and insurance companies since both can perform financial services for its customers. This reform requires banks and insurance companies to comply with both the privacy and safeguard rules of GLBA. 2. What is another name for obtaining information under false pretenses and what does it have to do with GLBA? What is an example of the safeguard pertinent to this requirement? Pre-texting or social engineering. GLBA specifically mentions this in title 15 US code chapter 94 sub chapter 2, section 6821. GLBA encourages companies to implement safeguards around pre-texting and social engineering. Security awareness training and periodic reminders of awareness to pre-texting and social engineering is a best practice performed within the user domain. 3. How does GLBA impact information system security and the need for information systems security practitioners and professionals? The safeguards rule within GLBA requires financial institutions and insurance companies to develop security plan detailing how they will protect their customers nonpublic personal information. The safeguards rule impacts the security plan...
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...are many credit unions to choose from. We can begin with creating a brand that is unique; one that is associated with education, customer service, excellence, and empowerment. Annotated Bibliography Lucas, P. J. (2000). Where Do CUs Really Lag? Service To Women. Credit Union Journal, 4(50), 4. This article explains how credit unions are behind the curve in understanding of the power of marketing to women. Studies listed show that women are more likely than men to use the services of their financial institution than a brokering firm. Credit Unions can use the information provided in this article which explains that women are educated, equally compensated, and more willing than men to change to a financial institution that provides the services they are seeking. Studies show that call inquiries into credit unions are more from women than men. This study and others are from Female Demographics. There is another study to support the findings in this article by Raddon Financial Group. The information provided was helpful in understanding why marketing to women would be beneficial. Freeman, L. (2005). Why It Should Be Women & Kids First At Credit Unions. Credit Union Journal, 9(14), 11. This article was in the credit union journal which is a well-respected journal in the credit union industry. The articles written in this journal are trusted by many in the industry. The article explains the importance of creating a brand that...
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...Manufactured Homes Inc. start in 1975 to its rapid growth through the 80’s allowed it to be one of the largest retail of manufactured homes by 1987. With impressive revenue sale in 1988 of $210 million, at first glance this may seem like a sound investment but through analysis and valuation we have prepared a summary of the company’s strategy, risk factors, and industry conditions. Although, Manufactured Homes on paper seems like a great candidate for your firms portfolio, after reviewing our analysis you may have a change of heart. The manufactured home industry is fragmented, there is approximately 10,000 manufactured home retailers throughout the nation which are smaller “mom and pop” operations. This market is under a transition of consolidation, larger retailers like Manufactured Homes are acquiring the smaller firms lacking buying volume and inadequate capitalization. The larger companies like Manufactured homes were able to acquire companies because they could sell their products at a lower cost. As a whole the manufactured home industry is expected to grow on a year to year basis. This was caused by the continuous increases in average prices of conventional housing, causing low income families to seek alternatives. Families turned to manufactured homes which have much more to offer than an apartment with the advantage of equal to lower monthly payments. In addition the south eastern U.S was the country’s fastest growing market for mobile home which Manufactured...
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...BHARATIYA MAHILA BANK (BMB) India's first women's bank, Bharatiya Mahila Bank was inaugurated in Mumbai by Prime Minister Dr. Manmohan Singh on the birth anniversary of Shrimati Indira Gandhi. One of the key objectives of the bank is to focus on the banking needs of women and promote economic empowerment. It is being looked upon as the beginning of a unique new institution that will provide financial services predominantly to women and women self-help groups to the small businesswomen and from the working woman to the high networth individual. Even though the bank is making its debut in metros and urban centre, it will enter rural areas before March 2014 and will focus on centres where working women population is significant. In Budget 2013-14, the Finance Minister had announced setting up of all-women bank with an initial capital of Rs 1,000 crore. Only 26 percent of women in India admit to having a bank account. Since fewer women than men have bank accounts, fewer women are able to get loans. Per capita credit in the case of women is 80 percent lower than in the case of men. Hence the need for a bank that predominantly serves women. Bank credit is expected to grow at a compounded annual growth rate of 16.5 percent during the twenty year period from 2010 to 2030. That will mean a twenty-fold increase from the level of credit in 2010. The deposit base is expected to grow at a compounded annual growth rate of 14.6 percent that is 14 times the level of deposits in 2010. Assuming...
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