Money and banking(Information asymmetries and information cost) Essay

Money and banking(Information asymmetries and information cost) - Essay Example ndividual or organization spends in order to ascertain that a particular activity or investment is prudent and viable to invest in due to the provisions of profitability (North, 2007, p. 06). It is necessary for companies to do enough research before engaging or entering into a business activity. This will help reduce the risks involved in starting a new business venture. Information asymmetry refers to situations where relevant information is partially conveyed to the relevant parties in line with the business on a particular product. For instance, when considering decision makers on a specified product, it is adept to enlighten all the participants in the marketing chain (both sellers and buyers), equal information in regard to a product (Eyler, 2009, p. 18). The financial crisis experienced between 2007- 2009 necessitated exploration of the ‘RCR’ regulatory capital requirements weaknesses by the financial firms to take undercapitalized risks between $dollars 2- 3 trillion in a way that compromised the US economy resulting into consolidation of the mortgage market by residential and commercial real estates. However, other explorers like commercial credits also suffered from the same (Das, 2006, p. 39). The first case was that the banks devolved funds to their risk loan portfolios through a process referred to as off- balance- sheet vehicles referred to as structured investment conduits and vehicles. However, this provided facts on remarkable asset based growth in commercial papers prior to the crisis period (Das, 2006, p. 42). The second case involved the buying of underpriced protection obtained from IAG explain this and monocline insurers due to the perception that banks would pocket the difference between the monocline and the spread of the AAA instruments of securitization tranches; since both the IAG and AAA had enough capital to back the insurance as well as insufficiency in systemic crisis. This led to effective recourse back to the institutions of

Sanlu Group Essay Example for Free

Sanlu Group Essay The entire world was recently disturbed by the extensive scandal involving imported and contaminated milk coming from China. One company, the Sanlu Group, is believed to be at the center of this milk scare, and it is even speculated that the company had knowledge of the scandal before it was reported (Indiatimes, 2008). Sampling of imported milk from the top three Chinese milk companies are already being conducted worldwide, and it is estimated that ten percent of such milk samples are tainted with melamine, a toxic chemical. Several countries already had varying numbers of children affected or dead, resulting from the contamination of the products (Reuters Foundation, 2008). The said toxic chemical is said to be rich in nitrogen, and it makes the protein level appear higher for milk that has been watered down. Some of the observed harmful effects of melamine on humans, particularly children, are kidney stones and worse, death (Reuters Foundation, 2008). This scandal not only has deleterious effects for the business of China. Worse, it has caused death and severe health consequences to children in various countries across the world. The disorder resulting from the deaths and other injuries has now spread such that most, if not all, countries are conducting tests to determine whether their milk has melamine content. Furthermore, there has been a loss of confidence and a growing doubt in the minds of people on the food products coming from China, and this definitely causes riot in the health community, including the experts and the end consumers. References Indiatimes. (2008). Tainted-milk scam: China apologizes to Taiwan. Retrieved September 25, 2008, from http://timesofindia.indiatimes.com/World/Tainted-milk_scam_China_apologizes_to_Taiwan/rssarticleshow/3523852.cms Reuters Foundation. (2008). FACTBOX:Chinas milk scam highlights risks, raises questions. Retrieved September 25, 2008, from http://www.alertnet.org/thenews/newsdesk/PEK72695.htm

Symbols, Symbolism, and Allusions in The Stranger (The Outsider) :: Camus Stranger Essays

Symbolism and Allusions in The Stranger " That's all for today, Monsieur Antichrist." " Specking very quickly and passionately, he told me that he believed in God, that it was his conviction that no man was so guilty that God would not forgive him, but in order for that to happened a man must repent and in so doing become like a child whose heart is open and ready to embrace all". A. The people in this short quote is Monsieur as the judge is talking to him. The judge don't think Monsieur believe in Jesus because Monsieur is always talking about how he does not care about anything and he rather just be in jail where he belongs. B. The quote that I think the author is trying to carry out through the story is the second quote I wrote down, because the author is saying that you need to repent and ask for forgiveness to God. Monsieur lawyer keeps telling him about Jesus and telling Monsieur that he needs to forget about the wrong things that he did in life and repent to God, but Monsieur being big headed is not going to listen because he think what he did is wrong and he should pay the price for what he did. C. The allusion that Albert Camus is trying to get at, is that people believed in antichrist and Albert is trying to say that if you do something wrong in life you can always repent and ask God for forgiveness. V. Representative Passage on Tone and Author's Philosophy " After a short time silence, he stood up and told me that he wanted to help me, that I interested him, and that, with God's help, he would do something for me." A. I think this passage tell us about the author prospective because he is telling us that if you ask for help and if you want the help it will happened. So what I am trying to say is that I if you are not a Christian and you have a friend that believe in Jesus and if you don't believe in Jesus you have to listen to your friend to understand what is going on so you can accept Jesus.

A League of Their Own

The movie also makes It easier to understand the different ethical systems by relating each system to a character portrayed In It. During the duration of World War II, the players of major league baseball were drafted. As a result, the ML used females to fill the teams to keep the American pastime alive. This essay will analyze some of the main characters of A League of Their Own from an ethical stand point. The main character, Dotted Hanson, played by Agene Davis, is the catcher of theRockford Peaches. Dotted Hanson best relates to utilitarianism. Throughout the movie, Dotted was constantly striving to do the right thing, not necessarily thinking about the outcome, but just wanted to be an all-around good person. For example, she wanted to show off as much as possible to reporters and the media in order to keep the women's league around much longer after the war ended so many of the players could keep their jobs. The other mall character, Jimmy Dugan, played by actor Tom Hanks, was the manager of the Rockford Peaches.Although he was portrayed early on as rude and arrogant, he eventually had a change of heart. With that In mind, Jimmy Dugan can be mostly associated with the ethics of virtue because this system is not based on one's actions, but the moral character of that person. We can see that deep down, he is a very caring person. However, sometimes his actions do not display the truth of his personal moral character. Next is Doris Murphy, who is played by Rosier O'Donnell. This character best portrays ethical formalism because f the constant intent to do good deeds.For the most part, she would conduct herself in a positive way to everyone. For example, when her teammate, Mae, was upset because of the proposal of shutting down the female league, Doris stood up for her friend and defended her, not for appraise, but because she knew it should be done. Doris' teammate, Mae Mortal was played by Madonna. Mae best describes natural law because of her moral princip les. When the possibility off league shut-down came about, Mae stayed firm In her beliefs of not wanting to go ace to her former life of dancing provocatively.Natural law can apply to anyone who continually keep their principles upheld. The recruiter of the players, Ernie Caption, was played by Jon Loving. Although a smaller role, he is portrayed as an arrogant and self-centered, thinking mainly of himself. For this reason, he best illustrates the egoism system. When Kit and Dotted were willing to stay behind for Marl, Ernie made it clear he was there specifically to finish his job, whether that would be with or without the girls.Air Loneliness, played by David Stratum, is one character who really tries to keep the league going for everyone involved. In this case, this character can relate to the ethics of care. Although Air is not motherly Like some may associate this system with, he Is still caring enough and emotionally Invested In the girls to fight to keep the league alive. Eac h of these roles helped explain a different system of ethics. Overall, A League of Their Own was enjoyable to watch and interesting to see how each character A League of their Own Through the movie â€Å"A League of their Own,† one can see how the more sexist views of the culture of this time in America permeated throughout this account of the Girls Professional Baseball League which existed from 1943 until 1954.â€Å"A League of their Own† is a snapshot of what was once the â€Å"All-American Girls Professional Baseball League† that was formed when many young men were active in World War II. Philip Wrigley, chewing gum mogul and MLB owner feared the major leagues would disband so he created the girls professional baseball league.One of the obvious cultural views during the time this movie depicts is that of feminizing the baseball players to make them more acceptable to that culture at the time. Although they wore shorts under their baseball skirts, the fact that they were to wear skirts that were very short for this time while playing the athletic sport of baseball is just one of the clues to how the â€Å"All-American Girls Baseball Le ague† was to be as much about show as it was about talent.In one part of â€Å"A League of their Own,† the scout Ernie Capadino intends on passing up the player Marla Hooch who is unattractive yet proves to be a great switch-hitting slugger. Capadino was told to find girls who play ball well and are equally as attractive.Another argument supporting the existent and greater acceptance of sexism represented when putting this â€Å"All-American girls team† togehter was that the female professional baseball players were at least in the beginning of this venture considered more seriously as princesses rather than as serious baseball players in this era, as we hear the announcer comment, â€Å"After the first month of league play, the shine still isn’t off these â€Å"diamond† gals.Alice â€Å"Skeeter† Gaspers says legging out a triple is no reason to let your nose get shiny—Betty Grable has nothing on these gals. Helen Haley has not only b een a member of several championship amateur teams, she is also an accomplished coffee maker† (Marshall, 1992).Even the radio program that is played during the tryouts at Harvey Field makes fun of the idea of a woman’s baseball team. During the radio program, the girls baseball team is referred to as the â€Å"masculinization of women.†The female baseball players have mandatory etiquette classes they must attend to portray a â€Å"lady-like† image. Even some of the names given to these female baseball teams at this time rings of   what we would today consider sexist in its lowest such as â€Å"Rockford Peaches,† â€Å"Racine Belles,† â€Å"Milwaukee Chicks,† â€Å"Fort Wayne Daisies† and â€Å"Muskegon Lassies.†Of course then you hear the announcer say things like: â€Å"Then there’s pretty Dottie Henon, who plays like Gehrig, and looks like Garbo. Uh-uh, fellas, keep your mitts to yourself; she’s married . And there’s her kid sister Kit, who’s as single as they come.Enough concentrated oomph for a whole carload of Hollywood starlets† (Marshall, 1992), today’s announcer need protect their heads if they were to utter such remarks.I think most of us would be thankful that announcers today couldn’t get away with trivializing the talents of those female baseball players, only to make the main focus their various levels of attractiveness and unattractiveness. This we know has never been something acceptable to do to professional male baseball players.Viewing the female as the care taker of the alcoholic baseball manager some can interpret as another female stereotype revealed in the movie and more accurate to the depiction of its acceptability during this time period. The character Dottie Hinson provides a maternal, care-taking role many times for baseball manager Jimmy Dugan, the often drunk manager of her team.Another part of the movie that would be con sidered very inappropriate real life behavior today versus the time incorporated in this film would be when the drunken Dugan relieves himself in the clubhouse. His female baseball players he is supposed to be managing are standing near awaiting instructions to play the game as he completes his task. Today, that would make the evening news along with being connected to legal repercussions.Today, unlike then, one has learned to be a lot more careful of how things one says can be monitored and reported. Even the humorous little prayer where Dugan says:â€Å"Uh, Lord, hallowed be Thy name. May our feet be swift; may our bats be mighty; may our balls†¦ be plentiful. Lord, I'd just like to thank you for that waitress in South Bend. You know who she is — she kept calling your name. And God, these are good girls, and they work hard. Just help them see it all the way through. Okay, that's it† (Marshall, 1992).Whether one sees it as a positive or negative or a little of bo th, one would just have to watch more carefully things they say like that today than one did then.When Jimmy Dugan was attempting to convince Dottie Hinson to stay with the team, he yells at her, â€Å"If you want to go back to Oregon and make a hundred babies, great† (Marshall, 1992). This again, wouldn’t be something any professional could spout out to another, including a female player he manages, without the strong possibility of suffering professional or legal repercussions in today’s society at least in America.While I’m at this point in the movie, the fact that Dottie feels she must make a choice between her marriage and that of playing professional baseball or any professional sport is another noticeable difference. There are many great professional and non-professional married female athletes today. One could just watch the 2008 Olympics and observe the obvious signs of that.

Criminal Addiction- America’s Social Crisis Essay

The United States boasts some of the finest medical knowledge in the world; is known for it’s charitable help to third world countries and yet there’s an epidemic that it chooses to ignore and even vilify. Drug addiction, to both illegal and legal drugs, is on the rampage. In 2001, 16. 6 million cases of drug addiction were reported- that’s 7. 3% of the population. Our emergency rooms are overflowing with drug related emergencies and our jails are packed with criminals charged with drug related crimes. The American medical society can be partially blamed for our national addictions. From heroin and cocaine in the early 1900’s, to tranquilizers and diet pills in the 60’s and 70’s to today’s highly addictive pain killers, doctor’s have pushed pills at us , toting them as miracle cures, and the like. Americans are a society that is always looking for new ideas and new ways to solve problems, and these instant solutions always seem like a good thing- and usually aren’t (King, 2006). Unfortunately, doctor’s are less inclined to treat those they addict- they would rather ignore the problem or chalk it up to a weak will, than face the fact that without their overzealous marketing, the majority of these people would never have become addicts. Those doctors that wish to help their patients are met with little choice – if the patient has no insurance, there are very few treatment centers. It’s the middle and lower class addicts that suffer the most- due to lack of money, influence and insurance. One the other side of addiction- namely street drugs, we again see the want for a miracle cure. Many kids experiment out of curiosity, but the majority that become heavy drug users usually start using drugs as an escape and because they see their parents do drugs too. They also see drugs as a way of making quick money and to escape the poverty they live in (Addiction, 2002). Unfortunately for either type of user, there is no escape. Drugs often lead to death- whether suicide, accidental overdose, fighting between dealers, or the various diseases that can come from chronic drug use. At least one spell of incarceration is guaranteed for the street drug user- usually for dealing or violence related to dealing. Conversely, prescription drug addicts usually end up in incarceration for various crimes to support their habits- crimes that are usually more sophisticated such as theft and forgery. Either way, however, these addicts end up in jail- in a system that is only there to make sure they serve a sentence- rather than help them to overcome the problem (Addiction, 2002). A movement to change drug addiction from a crime to a public health problem is beginning in America. This approach has already been tried in the Netherlands with results showing a marked reduction in the number of heroin addicts over a two-year period. There, drug traffickers are prosecuted, and drug addicts that commit other crimes such as theft are punished for those crimes, but are not charged with possession. Instead rehabilitation is ordered and received. (Bertran, Sharpe, Andreas, 1996) In 2007, the Second Chance Act was put before Congress. This bill will allow funds to be allotted to State governments to set up alcohol and substance abuse programs for inmates. It also authorizes the creation of drug treatment and rehabilitation centers as alternatives to incarceration for non-violent offenders. While this is still in the legislative process, it is a step toward changing the futures of many Americans. Conclusion It’s time for Americans to step back and take a long look at their attitudes about drug addiction. It’s obvious from our jails and morgues that our current policies and ideas are not working. References King, Rufus (2006) The Drug Hang Up, America’s Fifty-Year Folly retrieved from http://www. druglibrary. org/special/king/dhu/dhu5. htm â€Å"Drug Addiction is an Illness, not a Crime† (2002) retrieved from http://www. drug -addiction. com/addiction_is_illness. htm Bertran, Eva; Sharpe, Kenneth; Andreas, Peter (1996 )Drug War Politics: The Price of Denial University of California Press retrieved from http://books. google. com /books? id=baWsThZgBaQC&printsec on January 31 2009.

Dental Law †Dental Practice Act

Dental Law – Dental Practice Act Free Online Research Papers Dental Law Dental Practice Act The dental board is also responsible for creating and enforcing the state Dental Practice Act, which contains the laws governing the business and professional aspects of dentistry in the state. The DPA determines the contractual relationship the dentist has with patients as well as how the practice must be run. The laws and provisions of the DPA are different in each state but there are some similarities with regard to the conduct of the dentist. 1 According to the Americans with disabilities Act, a dentist can’t refuse to treat any patient on the basis of race, creed, color, or disability. This includes persons with HIV and AIDS. As you may know, AIDS (acquired immunodeficiency syndrome) is caused by HIV (human immunodeficiency virus). HIV suppresses or destroys the T-cells of the body’s immune system (the system that fights off disease). Because of this, AIDS patients lack the ability to fight off any disease will which they might come in contact. They frequently get opportunistic diseases, infections that usually are controlled by the body’s immune system but can’t be because it’s not working properly. Dentists who feel they can’t treat certain individuals should give them a referral to a place where they can expect treatment. 2 The dentist is responsible for the actions, legal or illegal, of himself or herself and the office auxiliaries. A patient can sue the dental treatment but can also sue the employee individually. Included in this responsibility is the direct and indirect supervision if dental auxiliaries. By direct supervision, we mean that the dentist is physically present in the office, authorizes the procedure, is there while it’s done, and checks the results before the patient leaves. By indirect, or general, supervision, we mean that the dentist delegates a procedure or type of treatment to a trained auxiliary and needn’t be physically present while it’s done. We’ll discuss later in this section how this may affect you. 3 The dentist must charge reasonable fees for treatment. Care, once begun, should be completed in a reasonable time. The dentist should notify a patient in writing if care could no longer be provided. The care a dentist must provide to a patient includes Licensure (because of all the knowledge that’s needed to become licensed) Reasonable skill and judgment in the performance of each type of procedure undertaken Use of standard materials, drugs, and techniques that are accepted by the profession. The Law and the Dental Assistant Laws affecting the use of auxiliaries have been changing in recent years. These changes are made in the DPA. In some states, the DPA has been changed to allow hygienists to work under general super vision. Assistants who’ve had special, extended training in dental procedures can work under general supervision and provide certain treatments directly in the mouth. However, in other states, dental assistants and hygienists still must work under direct supervision. If you perform duties that aren’t allowed by the DPA in your state, you’re committing an illegal act. As the laws change, continue your education. Keep up-to-date! Then the dentist will feel confident in giving you more responsibility in patient care and dental procedure. Research Papers on Dental Law - Dental Practice ActArguments for Physician-Assisted Suicide (PAS)Moral and Ethical Issues in Hiring New EmployeesThe Effects of Illegal ImmigrationThe Fifth HorsemanUnreasonable Searches and SeizuresComparison: Letter from Birmingham and CritoTwilight of the UAW19 Century Society: A Deeply Divided EraThe Relationship Between Delinquency and Drug UseThe Project Managment Office System

Research design Quantitative, qualitative, and mixed methods approaches

Research design Quantitative, qualitative, and mixed methods approaches Case Study Case study is a research method that is usually employed when the researcher might be interested in conducting an explorative study but not prescriptive study. In the research method, the researcher could be free to explore and tackle issues as they arise. This means that the method is flexible, which means that the researcher could address broad questions before tackling narrower questions.Advertising We will write a custom proposal sample on Research design: Quantitative, qualitative, and mixed methods approaches specifically for you for only $16.05 $11/page Learn More The method is focuses on the context of the study implying that it employs the technique of thick description. This strategy helps in bridging the gap between the theoretical study and actual practice, which allows canvassers to offer a comparison of data (Seglin 2003, p. 8). However, the method is believed to be weak because it is too subjective. This means that the results neith er could be evaluated nor could be implemented since they are the views of the researcher. Furthermore, the method is too expensive since the researcher would have to stay with the researched in order to study their behaviour. This study cannot employ the case study method because of the ethical issues. Since this is an academic research, reliability, sensitivity and issues related to biasness are to be considered seriously before proceeding to collect data (Kothari 2004, p. 71). Interview Interviewing is considered one of the effective ways of collecting data in any research design. However, a number of issues restrict the use of the method. Interview guides enables sampling because the researcher can control it easily. The researcher would easily choose who to interview based on a certain criteria. Moreover, the method is effective since it permits face-to-face interaction. Face-to-face interaction allows the researcher to extract important information from the researched that cou ld otherwise not be extracted from them. Through interviewing, the researcher would be in a position to collect critical information that would not otherwise be captured by a questionnaire. In this proposal, interview method would be employed together with the surveying method. Additionally, the researcher might choose to use visual instruments in case interviewing would be employed.Advertising Looking for proposal on education? Let's see if we can help you! Get your first paper with 15% OFF Learn More This would give valid results as compared to using survey method alone. Since the researcher would be available, he or she would ask additional questions hence acquiring additional information that would not have been captured using the questionnaire. In fact, the researcher may engage the researched in an in-depth discussion hence collecting information that is more important. This would be achieved through probing or seeking clarifications in case the researc her would not understand the answers clearly. No question would be left unanswered since the researcher would ensure that the respondent answers all questions. In other words, the researcher would create enough time for the respondent to address all questions (Blumberg Schindler 2008, p. 71). In research, there is no method lacking some weaknesses. Just like all other methods, interviewing has a number of weaknesses. The method is believed to be very expensive in terms of time and resources. The researcher would be required to travel to various places in search of respondents. The method is consumes more time as compared to survey method since much time is taken to interview one respondent. Moreover, geographical features affect the method because it is impossible to reach people in some provinces, especially during rainy seasons. Finally, the method is accused of biasness because the interviewer would ask a question in a way that suggests a particular answer (Hakim 2000, p. 28). S urvey Method This method would be employed in this study because it is an effective way to access a large population. In this regard, a questionnaire would be sent to various employees in various companies. Employees would be requested to give their views as regards to the position of the Chinese small firms. The technique saves time. The Proposal This proposal would take a deductive approach, which would call for the researcher to work from a known hypothesis that convergence or divergence of Chinese small companies would affect positively the economy of the country in terms of performance in the global financial system. Thus, the study would take a top down approach as compared to the inductive approach that would take an up down strategy. To realize the use of deductive approach, quantitative tools of data collection and analysis such as questionnaires and interviews would be used. Quantitative tools would be preferred as opposed to qualitative tools because they would enable the researcher to come up with facts, such as a hypothesis that convergence or divergence of Chinese small companies would affect the economy positively in terms of performance globally.Advertising We will write a custom proposal sample on Research design: Quantitative, qualitative, and mixed methods approaches specifically for you for only $16.05 $11/page Learn More This would enable the researcher to test and confirm the hypothesis (Taylor 2007, p. 19). This would not be like qualitative tools that first come up with an abstract idea that is followed by creation of theories and concepts about the idea. Lastly, data in quantitative research is believed to be hard and reliable as opposed to qualitative research where data would just be rich and deep. Due to this, the study would take a positivism kind of philosophy. A positivism approach would make the researcher understand more the impact of convergence or divergence of Chinese small companies on the performa nce of the economy of China globally (Crotty 2003, p. 9). Quantitative Research This research is occasionally referred to as factual knowledge and would employ conventional arithmetical and statistical representations to compute categorical results. Physical scientists usually exploit it, though social studies, education and finance have been identified to utilize this variety of study. Quantitative researches would make use of an average design, with a little insignificant inter-subject distinction of engendering a premise to be confirmed or refuted. This hypothesis should be verifiable by mathematical and arithmetical techniques and would be the foundation around which the entire research would be calculated. The design would permit randomization of any targeted clusters as well as to organize groups to be incorporated in the research if possible. A well-designed quantitative design would influence only one variable at ago, or else statistical examination turns out to be burdensom e and open to queries. In an ideal world, quantitative study would be built in a way that permits others to replicate the research and get comparable outcomes. Quantitative design is believed to be an exceptional approach to confirm results and establish or invalidate a hypothesis. The design would be selected in this research since its configuration has not changed for many years, which means it is normal across numerous technical disciplines and subjects (Parsimonious). Subsequent to statistical investigation of the outcomes, an all-inclusive response would be arrived at and the outcome would be legally conferred and published. Quantitative research furthermore would sieve peripheral aspects if suitably planned and the outcomes achieved would be perceived to be authentic and equitable. Quantitative researches are useful for testing the results obtained by a series of qualitative tests, leading to an ultimate responseAdvertising Looking for proposal on education? Let's see if we can help you! Get your first paper with 15% OFF Learn More Ethical Implications Ethics is considered an important aspect of any research. Ethics would mean proper or professional research, which would be conducted in the best traditions of the discipline. The research would need to observe researcher-respondent relations, which deals with the welfare of the respondent. Honesty, sincerity, justice and responsibility should guide researcher-researcher relationships meaning there should be no criticism. It should not be based on polemic, personal biases or collective interests. Professional ethics means accuracy in data collection, data processing and application of relevant research methods. In this study, issues related to ethics would be addressed by giving relevant notice to the researched. The study population should also be amicably informed in order to get prepared for the study. To brief respondents is usually important because it could perhaps enhance reliability of the study. It would also be ethical to inform people before proceedin g to reseacrh on them. The findings should always be made public to the researched, as one way of ensuring morality in the study. Furthermore, the researcher should always observe research ethics by keeping away from criticism (Creswell 2003, p 40). Research Design There would be two key methods used to gather information in this proposal. The first one would be through a questionaire, which would be administered online to employees in various companies within the Chinese financial system. The questionaire would seek to capture various attutudes of employees regarding convergence or divergence of Chinese small companies. The questionnaire would have four Parts. The first part would seek to capture the biodata information of respondents. The second part would deal with the demography and gender of the respondents. This would be to ascertain the prevalence of views in varoius categories in order to ensure that if any differences would come about, then they would be captured in their d emographic space. The third part would deal with academic credentials and work experience of employees. The motivation for this section would come from the understanding that different sections of population would respond differently to change, based on age and academic credentials. The fourth part would delve on the specific issues relating to the convergence or divergence of Chinese small companies, starting from the understanding of the concept to the possible effects it would have on the economy. The questionaire would also employ a mix of open ended and closed ended questions to capture different aspects of issues studied. Open ended questions would be used because they give respondents more time to figure out their opinions, which would make them volunteer more information related to feelings, outlooks and comprehension of the subject. This would allow the researcher to understand the position of respondents as regards to their feelings towards convergence or divergence of Chi nese small companies (Wittner 2003, p. 12). Open ended questions would minimize some errors that could have been created in the course of research. Respondents would rarely forget answers if given an opportunity to respond freely. Furthermore, respondents could not ignore some questions because they must go through all of them. Open ended questions would generate data that could be used in data analysis by other researchers. In other words, they would allow secondary data analysis. On the other hand, closed-ended questions would be analyzed easily. That is why they would be used in this study. Each response could be coded for statistical interpretation. Nonetheless, closed-ended questions would be compatible with computer analysis package. The technique would be more specific meaning that its answers would be consistent in all conditions. This aspect would be impossible with open-ended questions because each respondent would be allowed to use his or her own words. Finally, closed-en ded questions would take less time to administer unlike open-ended questions, which would be detailed hence time consuming (Saunders, Lewis Thornhill 2009, p. 11). Rationale The questionnaire would be sent to respondents through the internet that is, the researcher would mail the questions to respective respondents. The researcher arrived at this decision after considering time and reseources. The method is costless and less time consuming. Furthmore, the method would allow respondents to reflect on the questions and answer them accurately. Employing research assistants would be problematic because of the complexity of the study. Many people would be reluctant to give their views freely. The method is ineffective because answers would not be independent. The respondent could not have filled the questions personally. Moreover, the method would be affected by the respondent’s level of literacy. One big disadvantage of the technique is that there would be no interaction between the researcher and the researched. This would mean that respondent’s reactions would not be captured. Reactions are important because they give more information regarding the feelings of respondents. Therefore, it was justifiable for the researcher to employ interviews to reinforce the survey method. Generally, the survey technique is considered more applicable where the researcher is interested in numbers, not deep feelings of the respondent. In this study, the researcher would be interested in identifying the number of employees who feel convergence or divergence of Chinese small companies would be the suitable method of acquiring global economic advantage (Xenos Moy 2007, p 34). List of References Blumberg, C Schindler, D 2008, Business Research Methods, New York, McGraw-Hill. Creswell, J 2003, Research design: Quantitative, qualitative, and mixed methods approaches, Sage, Thousand Oaks. Crotty, M 2003, The Foundations of Social Research: meaning and perspective in the research process, Sage, London. Hakim, C 2000, Research Design: Sucessful Designs for Social and Economic Research, Routledge, New York. Kothari, R 2004, Research methodology: methods and techniques, New Age International, New Delhi. Saunders, M, Lewis, P Thornhill, A 2009, Research Methods for Business Students, Prentice Hall, Harlow. Seglin, J. 2003, The Right Thing: Conscious, Profit and Personal Responsibility in Today’s Business, Spiro Press, New York. Taylor, S 2007, Business Statistics, Palgrave Basingstoke. Wittner, P 2003, The European Generics Outlook: A Country-by-Country Analysis of Developing Market Opportunities and Revenue Defense Strategies, Datamonitor, London. Xenos, M Moy, P 2007, Direct and differential effects of the internet on political and civic engagement, Journal of communication, Vol. 57, no. 1, p 34.

The Imperfect Tense in Spanish

The Imperfect Tense in Spanish The imperfect tense in Spanish is the tense that expresses action in the past that has not been completed, that occurred habitually or frequently, or that took place over an indefinite period of time. It contrasts with the preterite tense, which expresses​ an action that took place at a definite time or has been completed. English does not have an imperfect tense per se, although it has other ways of expressing the concept of the Spanish imperfect, such as by context or by saying that something used to happen or was happening. The preterite and imperfect tenses are often referred to as the two simple past tenses of Spanish. The imperfect tense can also be contrasted with the perfect tenses of Spanish, which refer to completed action. (Although the usage is no longer common, the English perfect is sometimes a synonym of complete.) Spanish has past perfect, present perfect and future perfect tenses. By itself, the term imperfect tense usually refers to its indicative form. Spanish also has two forms of the subjunctive imperfect, which are nearly always interchangeable. The imperfect is known as the pretà ©rito imperfecto in Spanish. Forming the Imperfect Tense The indicative imperfect is conjugated  in the following pattern for regular -ar, -er and -ir verbs: Hablar: yo hablaba, tà º hablabas, usted/à ©l/ella hablaba, nosotros/nosotras hablbamos, vosotros/vosotras hablabais, ustedes/ellos/ellas hablaban.Beber: yo bebà ­a, tà º bebà ­as, usted/à ©l/ella bebà ­a, nosotros/nosotras bebà ­amos, vosotros/vosotras bebà ­ais, ustedes/ellos/ellas bebà ­an.Vivir: yo vivà ­a, tà º vivà ­as, usted/à ©l/ella vivà ­a, nosotros/nosotras vivà ­amos, vosotros/vosotras vivà ­ais, ustedes/ellos/ellas vivà ­an. The subjunctive form in more common use is conjugated as follows: Hablar: yo hablara, tà º hablaras, usted/à ©l/ella hablara, nosotros/nosotras hablramos, vosotros/vosotras hablarais, ustedes/ellos/ellas hablaran.Beber: yo bebiera, tà º bebieras, usted/à ©l/ella bebiera, nosotros/nosotras bebià ©ramos, vosotros/vosotras bebierais, ustedes/ellos/ellas bebieran.Vivir: yo viviera, tà º vivieras, usted/à ©l/ella viviera, nosotros/nosotras vivieramos, vosotros/vosotras vivierais, ustedes/ellos/ellas vivieran. Uses for the Imperfect Tense One of the most common uses of the present tenses is to tell of past actions that did not have a clear beginning or end. These may involve situations or repeated actions that occurred over an indefinite period of time. A simple example is Asistà ­amos a la escuela or We attended the school. Use of the imperfect tense indicates that it is unimportant when the attendance began and ended- in fact, asistà ­amos could be used even if the speaker is still a student at the school as long as the students attended in the past. Note that there is a subtle meaning of difference from the preterite equivalent, Asistimos a la escuela, which also could be translated as We attended the school. The preterite suggests the speaker no longer attended the school, or that the reference is to a specific time. Similarly, the imperfect is used in specifying the background of another event. For example, Nos conocimos cuando asistà ­amos a la escuela, or We met each other when we were attending the school. Conocimos is in the preterite from because it refers to an incident that occurred at a specific time, but the background portion of the sentence uses the imperfect. Translation of the imperfect to English depends on the context. The most frequent translations for asistà ­amos include we attended, we used to attend, we were attending, and we would attend. Sample Sentences Using the Imperfect Tense Spanish imperfect verbs (in boldface) with possible English translations are shown below. Él cantaba. (He used to sing. The English translation shows how the activity occurred over an indefinite, extended period of time.)Ella escribà ­a la carta. (She was writing the letter. Note that in this and the above example, out of context the verb doesnt indicate when or even whether the action came to an end.)Yo conocà ­a a Eva. (I knew Eva. Conocer can mean to know or to meet. The use of the imperfect here shows that the activity took place over an indefinite period of time, so knew makes sense here.)Una mujer murià ³ en el hospital mientras estaba bajo custodia. (A woman died in the hospital while she was in custody. This sentence shows the use of the imperfect for background.)Cuando era estudiante, jugaba todo el tiempo. (When he was a student, he would play all the time.)Dudo que mi madre comprara alguna vez esa revista. (I doubt that my mother ever bought that magazine. The imperfect is used here because the possible event wouldnt have happened at a particular time.)U n gran buffet estaba a la disposicià ³n de ellos para que comieran todo lo que quisieran. (A huge buffet was at their disposal so they could eat whatever they wanted. Note how the context requires different ways of translating the subjunctive.) Key Takeaways The imperfect tense is one of the two Spanish simple past tenses, the other being the preterite.The imperfect tense is used when the beginning and end of the action are unknown, unspecified, and/or unimportant.One common use of the imperfect is in describing events that serve as background for another event.

Math and students Coursework Example | Topics and Well Written Essays - 250 words

Math and students - Coursework Example the traditional algorithms and the student made algorithms .The student made algorithm may be in a position to solve the problem competently delivering the answer. In the handling of problems of algorithm, mathematical validity is a preserve of testing efficiency. The search for validity leads to granting of certain rules of solving math algorithms. The student generated algorithm is different from the traditional algorithm when the answers are similar to those derived from traditional algorithm but the formula and procedure vary from the traditional algorithm. For the algorithms generated by the students to be effective and understandable and be able to offer solutions to the math problem they should be minimal of errors from the beginning .Therefore the teacher should be in a position to monitor the work of the students with the algorithms from the beginning of the exercise to the end of the generation of the algorithm. The should be in a position to explain the algorithm and how it is operating (Tracey,

Demonstrate how your knowledge of contemporary families informs real Essay

Demonstrate how your knowledge of contemporary families informs real life experiences or issue - Essay Example John spent a good portion of his time managing the family business. Lastly, the house girl and the garden boy with the core activities of ensuring the entire house and the home compound business are at all times up to date. They are therefore regarded as the in-house and compound managers respectively. All my family members leave in peace and big harmony with one another. A family should ensure that children within the family are satisfactorily brought to meet the best social requirements, into the norms and values of the society. This is highly necessary due to the fact that children are born with believes that whatever is happening is because of them. To remove the egocentric mind in the children, the family has an obligation of teaching children how to socialize with other people and respect the societal rules (Williams, Stacey & Carl, 2005). My family is doing this through offering protection from the complicated society at all times. It also recognizes the importance of we being socially up right and thus ensuring that we attend peer meetings and plays in order for us to learn that other people exist and deserve fair treatment as we do. This act has been of great deal in developing and improving our social standards and understanding towards others. Grownups within my family also voluntarily take a teaching role by teaching us the right social behaviors and the importance of having the right norms in the society (Russon, 2003). The family should also provide economic support for other family members. This takes many forms ranging from provision of food, medical requirements and financial assistance and offering economic advices to each other during the hard economic times. It is through such economic support that family alleviates the suffering of its members resulting in a general reduction in human suffering during hard economic situations (Williams, Stacey & Carl, 2005). My family does

Autobiography Essay Example | Topics and Well Written Essays - 1750 words

Autobiography - Essay Example one brother and one sister. I am the eldest of all my siblings. Starting from the days of my childhood I always had a keen interest in education and that is the reason I decided to pursue some degree to achieve a successful career. Born in Mongolia we never were modern enough to know about a lot of things in the modern world and that is why I had to face several difficulties when I moved from Mongolia. My childhood was a pleasant journey for me as I gained a lot of knowledge during my childhood. After reaching an age of twenty one me and my parents moved over to the United States but had to face several problems because of the new culture that we found here. Now after living here for five years I have become used to this culture and consider myself an important part of USA. My childhood was filled with good memories about my parents and siblings as we used to live together happily as a family. My siblings were always nice to me and had my support in whatever problem that they faced i n their life. As I was the eldest of my siblings I had to take some responsibilities whenever it came to my siblings. I was very possessive about my sister and brother when they were young and solved a lot of problems that they were going through in their childhood. Once my brother was being bullied by his classmates and someone told me about it. I ran to the scene and a fight broke out between the bullies and my friends after which they never even talked to my brother. My sister has always been a powerful figure in life and has solved her problems by herself. She has been quite competitive in her class and is the best amongst us in studies. I started studying when I was at the age of six years. I joined Mongolian Russian joint school to complete my high school. During my school life I had to go through a lot of ups and downs. I was interested in sports and joined the school team of basketball. While I contributed to the sports of my school I also worked hard for my studies and was good in the subjects of Mathematics, Physics and Chemistry. I was involved in other activities while I was studying for my high school. After I entered high school I started modelling and went to the competitions of modelling. Although I could not win I learned quite a few things and had exposure in the new arena of modelling. Ever since I entered high school I learned about the concept of diversity. In my class I had many students who belonged to different countries and spoke different languages. Seeing these people I developed a keen interest in their languages and decided to increase my knowledge in the subject of diversity. Ever since my high school I have been interested in learning about new cultures and have gained much about the concept of diversity. Multilingual classrooms proved to be somewhat helpful for me in gaining different concepts. As I developed a keen interest in learning about new culture I also visited several places in Russia and China. Seeing the people over t here at first I got a bit confused as the people living in China and Russia followed different traditions. After viewing their traditions and culture I researched on them and found quite interesting things about them. Visiting China and Russia increased my knowledge about their history which I previously was unknown about. All these points have counted for me so that I can understand life in a better way. I completed my high school at the age of 16 and struggled ahead to complete my educational career. Life in itself is an experience for every

Managing customer and suppliers Assignment Example | Topics and Well Written Essays - 1500 words

Managing customer and suppliers - Assignment Example Place____________________________________________________________7 8. Item ____________________________________________________________7 9. Conclusion _______________________________________________________9 10. References ______________________________________________________10 Impact of the theory of six rights on the construction of the Aquatics Centre for Balfour Beatty Introduction The theory of the six rights clearly states the importance of supplying customer satisfaction by following six basic standards including timely delivery, quality and quantity assurance and price, place and item standardization. All suppliers, manufacturers and service providers try to follow these basic guidelines for success. Background The planning for the 2012 London Olympics have led to great amends and development in the London area and the transformation of the heart of East London by the development of the Olympics village. The total budget of 5254 million pounds was initially allocated for the Olympic Development Association (Sean Dodd, 2010)and Balfour Beatty, the large British infrastructure provider, won the contract for building the 17500 seater Aquatics centre. The company is an imminent infrastructure provider whose key aim is to continue reliable and responsible growth in shareholder value. (Beatty, 2008). Some of the most high profile projects of the company included Arsenal Emirates Stadium and the Terminal 5 of the Heathrow airport. For the aquatics centre, the key requirements of the Olympics had to be fulfilled within a certain time limit and a budget and the strict observation of both of them was essential. The project was to include different training and warming pools, adjustable spectator areas, changing areas and a cafe. Other requirements included the building to be sustainable with as little impact on the environment as well. This is besides the fact that the development and the functioning are expected to be extremely safe and family friendly. Thus di fferent user rights for satisfaction of the Olympians and spectators in particular and the public in general have to be fulfilled. Balfour Beatty has to ensure that these basic rights are not compromised on any occasion during construction and the following functioning. Following of these six rights is not only a stringent requirement of the contract providers but is also essential for the efficiency and increased productivity of Balfour Beatty. Time The time frame of the project is extremely crucial as it is no ordinary airport or building but an event centre being developed for a certain event. Thus it has to be ensured that the project is fully completed well before 2012 and the proposed deadline is 2011. (Balfour Beatty wins 2012 Aquatic centre, 2008). The time limit posed also tests Balfour Beatty's commitment to its projects as it measures its efficiency. The deadline of projection completion in 2011 also prevents any extra costs as late deliveries and late processing always s piral the cost of construction. Timely supply chain management, which is Balfour Beatty's trademark also reduces the cost by increasing the lead time while ordering and the just in time inventory assures that storage costs are further decreased. Thus the project time line if followed suitably will allow the project to be completed well within the proposed budget generating good revenues for the company. The most recent development showed that the Aquatics centre will be completed in 7 months which is almost a year ahead of the schedule.

Philosophy Articles Assignment Example | Topics and Well Written Essays - 1250 words

Philosophy Articles - Assignment Example People have for many times viewed the establishment of acts that govern critical aspects as the air pollution as the way forward, this, she has indicatively shown not be true by pointing out different perspectives. In the article indication of the words of Robert Crandall of the brooking institution; said, the pollution reduction in the 1960’s was more effective before there was serious federal policy. This then shows that the reduction of pollution has not been as from the effects of the government issues (Shaw, 2005).Another issue that Jane has brought in light is the misconceptions of the love canal. There was a major contamination problem that ensued from the chemical leakage to the people’s yard in the year 1978. The blame was made to the chemical industry that was responsible for the chemical content that was buried under these developments. The misconception here that Jane sheds light on is that the blame from this was supposed to be on the school that ignored th e constant warnings from the Hooker chemical company. Another instance in the article is the aspect of the ‘Tennessee Tree massacre’, in this, Jane illustrate the fact that people blamed the clear cut of tree as an environmental hazard. The misconception of this aspect is that people tend to not have the motive that this activity is purposed for. By clearing parts of the trees, there is the intention to plant more trees that tend to grow at a faster rate and will then cover the lost parts of the trees. The process of clear cuts has been used by the Silviculture by both private and government based industry. In both, the intention has always been to replace the trees with fast growing pines. With Jane Shaw having made these points in her article, the arguments can be said to be true since in her indication of the fact that the establishment of Air pollution Act do not have a significant impact in the pollution reduction. This is true since there is more use of gas energy compared to coal which its usage became more and usage of such energy as coal was reduced. The other points including the Tennessee tree massacre scenario is true since the danger was imminent and the company had issued warnings of the damage that could have been felt and could have been avoided. 2. Many people believe that there are some things that only government can provide. One example is public schools but Sheldon Richman, in his article ‘can the free market provide public education?’ argues that in fact, better and less expense education could be supplied by private enterprise. Explain his argument. Do you agree? Why? Sheldon Richman tends to demonstrate that the private enterprise is capable of providing better and less expensive education. Richman states that there are the private and nonprofit organizations that provide all manner of education. These ranges from the comprehensive schools that has traditional academy subjects to the specialized schools that of fer subjects such as martial arts, fine arts and many other subjects. Richman argues that the public education is taxed and the government uses the unfairness of having resources compared to the free market to its advantage to the ‘unfair competitio

Managing customer and suppliers Assignment Example | Topics and Well Written Essays - 1500 words

Managing customer and suppliers - Assignment Example Place____________________________________________________________7 8. Item ____________________________________________________________7 9. Conclusion _______________________________________________________9 10. References ______________________________________________________10 Impact of the theory of six rights on the construction of the Aquatics Centre for Balfour Beatty Introduction The theory of the six rights clearly states the importance of supplying customer satisfaction by following six basic standards including timely delivery, quality and quantity assurance and price, place and item standardization. All suppliers, manufacturers and service providers try to follow these basic guidelines for success. Background The planning for the 2012 London Olympics have led to great amends and development in the London area and the transformation of the heart of East London by the development of the Olympics village. The total budget of 5254 million pounds was initially allocated for the Olympic Development Association (Sean Dodd, 2010)and Balfour Beatty, the large British infrastructure provider, won the contract for building the 17500 seater Aquatics centre. The company is an imminent infrastructure provider whose key aim is to continue reliable and responsible growth in shareholder value. (Beatty, 2008). Some of the most high profile projects of the company included Arsenal Emirates Stadium and the Terminal 5 of the Heathrow airport. For the aquatics centre, the key requirements of the Olympics had to be fulfilled within a certain time limit and a budget and the strict observation of both of them was essential. The project was to include different training and warming pools, adjustable spectator areas, changing areas and a cafe. Other requirements included the building to be sustainable with as little impact on the environment as well. This is besides the fact that the development and the functioning are expected to be extremely safe and family friendly. Thus di fferent user rights for satisfaction of the Olympians and spectators in particular and the public in general have to be fulfilled. Balfour Beatty has to ensure that these basic rights are not compromised on any occasion during construction and the following functioning. Following of these six rights is not only a stringent requirement of the contract providers but is also essential for the efficiency and increased productivity of Balfour Beatty. Time The time frame of the project is extremely crucial as it is no ordinary airport or building but an event centre being developed for a certain event. Thus it has to be ensured that the project is fully completed well before 2012 and the proposed deadline is 2011. (Balfour Beatty wins 2012 Aquatic centre, 2008). The time limit posed also tests Balfour Beatty's commitment to its projects as it measures its efficiency. The deadline of projection completion in 2011 also prevents any extra costs as late deliveries and late processing always s piral the cost of construction. Timely supply chain management, which is Balfour Beatty's trademark also reduces the cost by increasing the lead time while ordering and the just in time inventory assures that storage costs are further decreased. Thus the project time line if followed suitably will allow the project to be completed well within the proposed budget generating good revenues for the company. The most recent development showed that the Aquatics centre will be completed in 7 months which is almost a year ahead of the schedule.

The Capital Asset Pricing Method (CAPM) Essay Example | Topics and Well Written Essays - 1750 words - 10

The Capital Asset Pricing Method (CAPM) - Essay Example The present research has identified that the CAPM model does not wholly explain the returns on investment portfolios. A number of assumptions have to be identified for CAPM equilibrium to be achieved. The assumptions include the fact that investors must have the same expectations and also apply similar input list, they also have to maximize their estimated utility of wealth, the investors have to plan for a homogenous holding period, no transaction costs or taxes are incurred, the rate of borrowing equals the rate of lending and that there exists an environment where there is availability of numerous investors each having an endowment of wealth that is small in comparison to the whole endowment. When the model was developed, a variety of empirical tests were conducted on the model by using proxies and a number showed that the model was unsuitable and inaccurate when predicting the prices of assets and in many situations did not hold. However, it was later asserted that the model was theoretically probable but was very hard, by using empirical tests to prove because stock indexes coupled with other market measures were not adequate proxies for the variables of the CAPM model. The Capital Asset Pricing Method makes use of a variety of assumptions regarding the behavior of the investor and market in order to provide a group of equilibrium conditions which enable people to estimate the expected return of an asset I compare to its non-diversifiable risk. The model makes use of systematic risk measure in order to facilitate a comparison between the assets in consideration and other assets in the market. Theoretically, using the systematic measure of risk it enables managers to calculate their needed rate of return while also assisting investors to better their portfolios.

Japanese animation - Hayao Miyazaki Essay Example for Free

Japanese animation Hayao Miyazaki Essay Japanese animations have been my favorite of all times. It has always been pleasing to my eyes. The word people call for Japanese animation is Anime. I never thought we watched an Anime in Animation 101 class. So on 8th October, we watched Hayao Miyazaki’s masterpiece film called Spirited Away in behind the scenes. The synopsis of the film is that a young girl, Chichiro, stumbles into the land of the spirits (the place with Japanese’s folklores), where her parents are transformed into pigs, and to save them, she herself must get a job in the bathhouse owned by the witch Yubaba. By watching the whole process, Miyazaki combines the film with characters from Japanese’s legends or myth; it led to fabulous and affecting fictional narratives from the characters. It seems that Miyazaki has made a world that has all the potency of any actual myth and the same capacity for evoking a real sense of curiosity with entirely on its own. I think it’s because his drawing on motifs and various details present in Japanese’s legend and folklore. Miyazaki has created fascinating characters. Chihiro seems very realistically portrayed girl and is one the great characters of narrative art. The process of creating her takes a lot of hard work. He has to get an insight into the minds of children and the ways children act and react. Also, He has to find the best suitable voice for the character. The inhabitants and guests of the bathhouse are nicely done as well. For example, the spider-like man to frog-like man are displayed a unique personality that adds, even if it’s small, to the film’s attraction. All these elements are so able to mesmerize the audiences that Spirited Away is often affecting. The film brings a sense of awe and deep world that is hidden beyond the human world. From the exaggerated expressions of other characters to Chihiro’ maturing face, the film shows more emotion in a single frame. Miyazaki has balanced all the various details and elements so that each complements the others and contributes to the film’s effect. Looking at Spirited Away at basic level, I see it as an adventure about a girl. Then if I look at it in depth, it’s about growing up. Chihiro’s growth from a scared girl crying for her parents that turned into pigs to a mature girl. This film has a similarity with Alice in Worderland where a little girl stumbles into a world that she never knew before. But the difference is that Spirited Away moved from children’s genre to adult’s genre. The film is more dark and deep. Miyazaki has created a real work of art for every generation to come and interested in animation. This film is a good example of the best animation in history. It is attractive, awesome, and awe inspiring film to anyone. It is an Anime film that uses vital elements to deliver its message and made the film success with excellent and fluid animation. Spirited Away is one the best animated films I’ve seen.

Analysis of Risk Management in Banking Activity

Analysis of Risk Management in Banking Activity The Case of Mauritian Banks Financial deregulation, globalization and liberalization have heightened considerable banking risks. Moreover, banks necessitate effective risk management strategies to promote banking welfare, protect outside agencies transacting with banks and to ensure stable banking operations. Risk managers need to focus on the diversity of risks and secure the interests of the overall banking sector. Risk Management is nowadays segregated where there is inconsistency in reporting, insufficient evaluation and low quality of management and becomes ineffective due to lack of pertinent information and improper analysis of the risk factors (Prabir Sen, 2009). Nonetheless, banks are unable to keep equilibrium in the situations of risks with huge losses and slight possibility of occurrence and risks of minimal losses with propensity of occurrence.   According to Talmimi and Hussein, Mazroezi and Mohammed (2007), risk management enables profits maximization and entails restrictions in risky activities. Risks can be averted by ordinary banking procedures, can be shifted to other institutions and can be managed actively in banks (Oldfield and Santemero, 1997). 1.1 Objectives of the Study The core objectives of the study are: To probe into the methodologies and aspects of the risk identification, assessment, monitoring, management and mitigation in Mauritian banks. To ascertain the effects of risk management on Mauritian banks. To determine to which extent risk management strategies like Basel II, derivatives, stress testing and Asset and Liability Management are applicable in Mauritian banks. To analyze the factors which improve Risk Management Practices in Mauritian banks and the perspectives about Banking Risk Management. To explore the reasons for managing risks in Mauritian banks. 1.2 Statement of the Problem There is an increasing awareness that the gradual intensification of banking risks impacts adversely on banking transactions which raises the concerns for risk management. The basis concern of this study is whether the Mauritian banks are using diverse risk management tactics and whether they are able to cope with the present and prospective challenges of risks and risk management requirements. 1.3 Significance and Contribution of the Study Bank managers can be conversant with divergent risk management techniques, their implications, effects and their relevance in banks through the practical aspects of risk management application. Bank managers can analyze the mechanisms resulting in the increasing level of risk exposures. Business administrators and management practitioners can use this study as guide to design efficient measures to mitigate risks in the process of developing marketing tactics. 1.4 Structure of the Project Chapter 2 elaborates on the literature review related to the risk management. Chapter 3 uncovers the general overview of Mauritian Banking Sector. Chapter 4 focuses on the detailed research methodology that has been used. Chapter 5 discusses the analysis and interpretation of the Mauritian banking risk management information. Chapter 6 probes on the recommendations to improve Risk Management practices in Mauritian banks. Chapter 7 concludes the whole findings of the project. PART 1- THEORETICAL ASPECTS 2.1 Introduction The advent of technology, globalization and the competition has encouraged banks in risk taking activities exposing banks to risks. Regulatory and supervisory institutions have emphasized the need for banks to enhance their risk management practices. Risks arise from the probabilities of the occurrence of losses and usually emerge from the internal and external banking transactions. 2.2 Banking Failures determinants The past decades have encountered numerous bank turbulences where high costs have been incurred on both local and overseas level (Gaytà ¡n and Johnson 2002, p.1), hindering the credit facilities, minimizing investment and consumption and generating bankruptcy cases (Demirguc-Kunt and Detragiache, 1998a, p.81). According to them, the expensive monetary policy was used to force the sound banks to sustain the failures of insolvent banks which dissuade risk management. Fluctuations in interest rates post abolition of Brettons Woods System, higher banking competition, the non existence of intermediation margins, unskillful lending and investment tactics (Hellwig 1995, p.724-726 ) , the diminishing role of the oligopoly rents as stated by Gehrig (1995 cited Hellwig 1995, p.726 ), the lower level of capital reserves in banks, companies high reliance on banks for external finance mentioned by Rajan and Zingales (1998 cited Randall S. Kroszner 2007),systemic shocks caused by credit risks, the inability to diversify loans, trade deterioration and decrease in asset prices caused bank failures argued by Gorton (1988 cited Demirguc-Kunt and Detragiache1998b, p.85). Moreover, regime changes like financial repression, liberalization and severe macroeconomic conditions encourage the entry of inexperienced players and preference for the acquisition of useless loans stated by Honohan (1997 cited Gaytan and Johnson 2002, p.4) have generated banking turbulences.   Non-performing loans increase where the asset returns are less than the returns to be paid on liabilities. Banks borrow in international currency and lend in local currency where the latter depreciates if the foreign exchange currency risk is shifted to local borrowers if they loaned in foreign currency. Banks buy insurance protection which encourages risk taking activities in the absence of prudential supervision and regulation. Bank managers engage in fraudulent actions by taking a portion of money for their personal use (Demirguc-Kunt and Detragiache 1998c, p.85-87). Diamond and Dybrig (1983 cited Demirguc and Detragiache 1988d, p.86) argued that banks portfolio assets can worsen and depositors believe that other depositors are removing their money. Obstfeld and Rogoff (1995 cited Demirguc and Detragiache 1988e, p.87) mentioned that an anticipated devaluation could occasion bank runs in local banks and these deposits are shifted overseas and render the domestic banks without l iquidity. 2.3 Banking risks alsamakis et al (1996 cited Young 2001, p.57) argued that risks can be classified as pure risks and speculative risks. Pure risks which embody market risks, credit risks, interest rate risks, liquidity risks, country risk and settlement risk are associated with the probability of occurrence of loss or no loss and can be curtailed by risk management strategies. However, speculative risks comprising of operational risks, technology risk, reputational risk, compliance risk, legal risk and insurance risks involve an opportunity for gain or loss which can be hedged. 2.3.1 Credit Risks These major risks occur in banks when the borrower defaults on his obligation to reimburse the principal amount and the interest charged of the loan. Credit risks consist of three types of risks like (Arunkumar and Kotreshwar 2005, p.9): Transaction risk emerges from the fluctuations in the credit type and capital depending on how the bank underwrites individual loan transactions. Intrinsic Risk is risk prevailing in some institutions and on granting credit to some firms. Concentration risk is the average of transaction and intrinsic risk within the portfolio and encourages granting of loans to one borrower or one firm. 2.3.2 Interest rate risks Koch (1995 cited Beets and Styger 2001, p.9) defined interest rate risk as the future changes in a banks net interest income and market value of equity due to changes in the market interest rates. Kropas (1998 cited Martirosianien) enumerated three types of interest rate risks like: Reappraisal risk stems from the diverse periods of assets and liabilities Profitableness curve risk entailselements affecting the reappraisal risk. Basic point risk concernsflawed association between the receivable and payable interest rate. Option risk is where the benefits of options can adversely affect the banks equity. 2.3.3 Liquidity risks Liquidity risks occur when the banks are unable to meet the demands of the depositors because of lack of funds and the illiquid assets resulting eventually in bank insolvency. Credit, strategic, interest rate and reputation risks build up liquidity risks (Gaulia and Maserinskieno 2006, p.49). 2 types of liquidity risks are (ADB Report 2008, p.9): Funding liquidity risk is the potentiality to obtain money via the sale of bank property and by borrowing. Trading Liquidity risk arises from making a constant entry in market activities and dealings. 2.3.4 Market risks These risks arise when the value of the financial products changes negatively and consist of currency risk, interest rate risk, equity or debt security price risk (Gaulia and Maserinskieno 2006, p.49). 2.3.5 Operational Risks Basel Committee (2004) which imposes a capital charge defined operational risks as the risk of direct or indirect losses resulting from inadequate or failed internal processes, people, and systems, or from external events. This definition includes legal risk, but excludes strategic and reputational risk. 2.3.6 Reputational Risks These risks emerge when the number of clients decreases as they hold negative perspectives about the quality of services offered by the banks. 2.3.7 Strategic risks Strategic risks arise when bad decisions and projects are undertaken to develop a special system in banks due to the lack of resources, technological tools and the expert staff. 2.3.8 Foreign Exchange Risks These risks come when the prices of the currency fluctuate when engaging in foreign activities. There are 3 types of foreign exchange currency risks. (Deloitte Treasury and Capital Markets 2006) Transaction risk entails the future of original cash flows like imports and exports. Translation risk is concerned with the disparities between foreign exchange encountered when again transforming a foreign exchange value into the functional currency of the company concerned. Translation risks are usually converted into transaction risks on a late basis as earnings are repatriated or assets and liabilities are realized. Economic risk arises when indirectly exposed to buying and selling of goods from someone who buys goods overseas. 2.3.9 Systemic risks The bank cannot collect money from an organization it is dealing owing to the political, economic and social conditions prevailing in the country where the organization is situated. Country risk includes political, economic risk and transfer risk (National Bank of Serbia). 2.3.10 Legal Risks Legal Risks are losses incurred when the bank is sanctioned by a court for the non-compliance with the lawful rules and regulations and on not fulfilling its obligations towards the other parties (National Bank of Serbia). 2.3.11 Financial Fraud There is mismanagement of money and fraudulent actions from the members of the banks who embezzle some deposited money and when there is lack of security controls. 2.4 Bank risk management methods Greenspan (2004 cited in Lam 2007, p.3) said that It would be a mistake to conclude..that the only way to succeed in banking is through ever-greater size and diversity. Indeed, better risk management may be the only truly necessary element of success in banking. 2.4.1 Risk Management in Banking Sector Flaker (2006, p.4-8) proposes three methods: 2.4.1.1 Risk Identification The board must set the risk profile of the bank and identify the risk-return tradeoff. The bank should understand and identify types of risks exposures, their sources and their effects on the overall banking stability. 2.4.1.2 Risk management and reduction Risk management and minimization embody the following: (1) Allow loans after considering their financial status of the borrowers. (2) Comparison of the expected risks with the actual ones to diminish the loan losses in a bigger portfolio. (3) Loan losses will decrease due to diverse borrowers in the lending transactions. (4) Actual risks can be compensated through the opposite movement of other risks in particular financial activities. (5) Insurance negotiations can be used to protect against diverse risks. 2.4.1.3 Risk Management System This flexible system encompasses the combined structure of identification, evaluation and risk mitigation techniques. The Board must set up a strong risk culture and an effective governance structure where the risk management system aligns with the existing structure of the bank. Risk management procedures are possible when retaining higher level of capital to cushion the risks. Furthermore, the risk management functions comprises of: (1) Delegation of responsibilities to each banking segment (2) Auditing system to deal with the internal control processes and proper execution of risk controls (Nikolis, 2009). (3) Ongoing reviews, reporting, updating and the control of risk management system must be executed to ensure that they tailor with the banking aims (4) Training courses gaining know-how about the design of the risk management system and risk models must be offered to avert banking failures. (5) Establish rules and regulations and take necessary actions to those who contravene with them regarding risk management practices. (6) Participation of the banks, regulatory and supervisory bodies where information is disseminated externally and internally in the banks (Kroszner, 2007). 2.4.2 Asset and Liability Management Asset and Liability Management entails the design of organizational and governance models which define the risk approaches subject to the banking operations (ADB 2008, p.10). 2.4.2.1 ALM operations are as follows (ADB 2008, p.10-12): ALM ensures a risk and return management process where the combination of expertise and risk appetite is needed. ALM unit manages bank risks either through a passive or aggressive approach thus increasing its value. ALM unit investigates upon the static and dynamic mismatch; sensitivity of net interest income; and, market value under multiple scenarios -including under high stress. The net interest income evaluates the sophisticated banks operating results. It does not project the effects of risk compared to the economic value which can identify banking risks but is inaccessible to most banks. 5. Funds Transfer Pricing eradicates the interest rate risks by securing a spread in loan and deposits by allocating a transfer rate that mirror the repricing and cash flows of the balance sheet. Liquidity risks can be managed like diversification of financing sources, correlate the liquidity risks with other risks and use stress testing analysis. 2.4.3 Stress testing Practices Stress testing is another risk management strategy where Stress testing is a generic term used to describe various techniques and procedures employed by financial institutions to estimate their potential vulnerability to exceptional but plausible event (Kalfaoglou 2007, p.1). It uses statistical data analysis to risk management techniques, interpret and control the unfavorable outcomes. JP Morgan Chase has integrated stress testing equipment to manage and analyze the sources of possible banking risks, implement tests on the value of its portfolio, analyze its risk profile and contemplate the effects while applying diverse scenarios. An effective risk management scheme, stress testing project and bank staff expertise are requisite to tackle the statistical and economical fundamentals of stress testing with a data measurement tool. Board of directors should monitor the inputs of stress testing system (Seminar on Stress Testing Best Practices Risk Management Implications for Egyptian Banks 2007, p.2-3). Furthermore, the 2 types of stress testing strategies in banks like: (1) Simple Sensitivity Test deals with the rapid fluctuations of the portfolio value due to a risk factor on a short term basis. (2) Scenario analysis is used by large complex banks and is associated with a realistic and econometrics approach towards shifts in portfolio value due to changes in many risk factors. 2.4.4 Basel II Basel II published in June 2004, promotes banking supervision and emphasizes the specified capital requirements to cushion against potential losses. Basel II uses qualitative and quantitative requirements to monitor risk management strategies, to ensure compliance with regulations and reinforce corporate governance structure. The risk based supervision has enabled the supervisors to concentrate on the origins of banking risks. 2.4.4.1 Pillars of Basel II Pillar 1 entails capital needed for credit risk, market risk and operational risk. Moreover, banks under this regime must have a capital adequacy of 8 %. The methods for the computation of the capital charge to measure operational and credit risks (Ma, 2003)are: Basic Indicator Approach The size and capital requirements of the operational risk are estimated as a fixed proportion of the banks net interest income and non-interest income, measured as the average over the last three years. The Standardized Approach –The activities of the banks are allocated risk ratios weights related proportionally to the quantity distributed to every category. The aggregate capital requirements are the addition of all the requirements for the categories. Advanced Measurement Approach Computation of credit and market risks and the capital requirements are founded on the banks internal system for the measurement and management of operational risk for large banks An Internal Rating Based System The BIS stated that capital requirements must be founded on a qualitative and quantitative analysis of credit risk and must be used for diverse bank units. Founded IRB approach indicates that large banks should calculate probability default related to a borrowers grade to demonstrate the capital requirement level. However, under advanced IRB approach, these banks with an internal capital allocation can furnish the loss given default and exposure at defaults which are processed. Pillar 2 A supervisor must ensure that the bank has the adequate capital requirements to deal with risks. Banks estimate the internal capital adequacy by adopting quantitative and qualitative techniques. On-site investigation and ongoing reviews probe in capital adequacy. Pillar 3- Market discipline framework provides with detailed information about the banks risk profile to evaluate and report capital adequacy where risk exposures can be analyzed through quantitative and qualitative approach regularly. The risk based capital ratios and qualitative information about the internal procedures are needed for capital adequacy purposes. 2.4.5 Derivatives olatility of financial market, the liberalization and deregulation in the 1980s and 1970s has founded derivative markets (Hehn no date a, p.100). Derivatives are financial tools (like futures, commodities futures, options, swaps, forwards) whose returns, values and performance are derived from the returns, values and performance of the underlying assets. Hedging is covering against potential risk through an opposite position in the derivative markets. Bank International Settlements (2004 cited Bernadette A. Minton et al 2008, p.2) noticed that the quantity for derivatives has leveled from $698 billion in 2001 to $ 57,894 billion in 2007. Proper derivatives trading can insure against market risks and interest rate risks without retaining additional capital requirements in the balance sheet (Kaudman no date a, p.85). The determinants of derivatives use are banking size, balance sheet constituents, aggregate risk exposures, profitability, performance and risk taking incentives. Jason and Taylor (1994 cited in Hundman b, p.86) argued that speculation used with derivatives to make profitable returns can engenders more interest rate risks. Moreover, Tsetsekos and Varangis (1997 cited Roopnarine and Watson 2005a, p.9) argued that financial derivatives promote increase in resource allocation and increase the productivity of investments projects. Jorion (1995 cited Roopnarine and Watson 2005b, p.9) argued that in price discovery, market participants are offered information on balance prices that mirror the present demand on the supplies which enable effective decision making and reveal the position of the cash prices. Besides, liquid funds are increased and transaction costs are reduced and the futures market reflects the large transactions at prevailing prices (Roopnarine and Watson 2005c, p.10).   However, derivatives have generated enormous failures in Barings Collapse, Merill Lynch and Procter Gambler (Hehn b, p.101). Bank staff must be trained and educated about derivatives use. Derivatives trading can be constrained with the liquidity problems and legal uncertainties that emerged from the market price movement which is argued by Bhaumik (1998 cited Roopnarine and Watson 2005d, p.11). Pricing of assets becomes difficult if there is insufficient information about the derivatives use. Principal agent problem is aggravated (Roopnarine and Watson 2005e, p.12). The derivatives market must be regulated properly to avert fraudulent actions and insolvency. Partnoy and Skeel (2006 cited Minton et al. 2008a, p.2) claimed that derivatives intensify systemic risks as banks do not control the lending activities. Hunter and Marshall (1999 cited Roopnarine and Watson 2005f, p.28) argued that derivative markets attract investors whose private information are assimilated in the observable p rices and diminish the bid ask spread. The underlying cash prices reduce the transaction costs and the demand for money thereby affecting the operations of the monetary policy. Bedendo and Bruno (2009a, p.2-4) argued that credit transfer tools like securitization, credit derivatives and loan sales reduce regulatory capital requirements, motivate lending and enhance the banking liquidity positions. Moreover, they remedy the issues of information asymmetries as stated by Greenbaum and Thakor (1987 cited in Bedendo and Bruno 2009b, p.2). Duffee and Zhou (2001 cited Minton et al. 2008b, p.11) mentioned that credit derivatives are used if the loan sales or securitization techniques become expensive due to moral hazard problem and can shift default risk where information advantage is insignificant and retain some portion of risks where information advantage is huge. Banks use credit transfer tools as they have little access to inter-bank funding, huge funding expenses, low capital and want loan transfer (Bedendo and Bruno 2009c, p.8-9). CRT tools encourage banks to use originate-to-distribute models via aggressive lending occasions (Bedendo and Bruno 2009d, p.10) . Pricing of CRT tools is preferred by large banks having higher skills. Some loans sales have loan characteristics like small size, asymmetric issues and standardization convenient for securitization (Bedendo and Bruno 2009e, p.11). PART 2- EMPIRICAL REVIEW There is a growing literature that examines the relationship of banking risks with other many economic and financial variables. Moreover, this section describes the diversity of banking literature where different types of risk management strategies were tested and criticized. Even the links between different types of risks were experimented using banking information and models derived from other authors empirical work. Peek and Rosengren (1996) found that the large users of derivatives for speculation purposes are the troubled organizations using derivative information of 25 active banks in the United States from 1990 to 1994 in the US dummy regression model.   Banks are unable to track the risky aspects of these derivatives and guide their risk profile because of insufficient derivative information which could jeopardize the overall banking system. The onsite targeted examinations can enable banks to window dress their derivatives. Regulatory rules and formal transactions must be imposed on the banks taking unfavorable speculation and to constrain the moral hazard problem related to the derivative transactions. The use of speculative derivatives constitutes a stringent criminal penalty for breaching the established rules and regulations. Cebenoyan and Strahan (2001) used data of the sale and purchase of bank loans and those loans sold or purchased without recourse from all domestic commercial banks in the US from 1987 to 1993 in a regression model. They found that banks that engage in loan sales market to manage credit risks retained minimum level of capital which can be modified. Moreover, these banks retained more risky loans since they managed credit risks and were exposed to an unsafe position despite they endured lower level of risks compared to the other banks who manage risks without the loan sales market. Banks that employed the risk management techniques are more inclined to engage in risk taking activities. In fact, banks that manage credit risks lend to more risky loans depicting that complex risk management practices enhanced the bank credit position rather than minimizing the risks. Gatev et al (2006) investigated upon the presence of liquidity risk from both sides of bank balance sheets using some aspects of the Kashyap, Rajan and Stein (2002) model (that liquidity risks originating from the two fundamental businesses of banking promotes a diversification benefit) to analyze the link between deposit taking and commitment lending for large, publicly traded banks using regression analysis. Pooling deposits and commitment lending insure against banking liquidity risks and deposits activities insure against liquidity risk from idle loan activities. Bank stock-return volatility increases with idle loan transactions which is insignificant for banks with huge amount of depository dealings. The deposit-lending risk management becomes more reinforced when there is low level of liquidity and when troubled market participants deposit money in banks. Shao and Yeager (2007) used information of large publicly traded U.S BHCs from 1997 to 2005 using regression models to find the link between credit derivatives and their risk, return and lending issues. Banks buy credit derivatives to hedge against risks, to increase their equity and to compensate for the risky loan losses. However, they sell credit derivatives exposing themselves to risks to gain a premium charge. Moreover, the credit derivatives users enjoyed minimal returns and increase risks which are compensated. Their findings implied that on a general basis, the impact of credit derivatives on risk relies on the risk management strategies. Holod and Kitsul (2008) used panel data of stock returns from 53 U.S BHCs from 1986 to 2007. They found that after 1996, poor capitalized banks engaged in active trading transactions are more exposed to systemic risks compared to well capitalized banks. Banks cannot always have enough capital to cushion the market risks and must sell their illiquid assets or invest in the financial markets to compensate for the lack of capital to adhere to the market-based capital requirements. Capital requirements in Basel II do not help to reduce banking risks totally but contribute towards increasing systematic risks. Topi (2008) used a model of Allen and Gale (2004) where banks offer deposit contracts to ex ante identical, risk averse depositors who face heterogenous liquidity shocks for Bank of Finland which shows that the liquidity can impact on the banks motivations to minimize the default losses. The bank runs encourage the banks to avert the credit losses after the sub-prime mortgage crisis. However, the bank runs without a signal of the credit risks will reduce the banks willingness to curb the incidence of credit losses. The central bank can mitigate the propensity of liquidity stress for solvent banks rather than insolvent banks. In addition, this research provides an area for further research where the policy interventions and financial market innovations can be integrated in the model to identify the impact on banks motivations. Achou and Tenguh (2008) used regression model for Qatar Central Bank by executing a time-series analysis of financial data from 2001-2005 to examine the correlation between profitability and loan losses. They showed that effective credit risk management improves the financial result of the bank with the aim to secure the banking property and to work in the welfare of the market participants. Besides, their study revealed that credit risk management infrastructures are used to minimize the credit losses. Banks with efficient credit risk management system have insignificant loan default ratios, good revenues, minimal non-performing loans and are able to tackle credit losses. Minton et al. (2008) investigated the use of credit derivatives using U.S BHCs (assets overtakes $ 1 billion) and non-missing data on credit derivatives use from 1999 to 2005. Few companies use credit derivatives for dealer activities rather than for hedging against default losses. Credit derivatives use is constrained because the liquidity of credit derivatives market is favorable for investment grade companies since they can use derivatives to insure against the default losses. Therefore, the illiquidity of credit derivatives market affects the non-investment grade companies as they need confidential information for loans where higher cost of hedging will dissuade banks to hedge. Nevertheless, the bank borrowers get loans at a cheap price and banks are more on a competitive stance with the capital markets to provide loan facilities if the credit derivatives can help bank to retain capital. Credit derivatives can only promote the financial health of banks if they generate lesser ban king risks. The sub-prime crisis prior to 2007 has shown that the dealer activities via the credit derivatives contain many risks and in 2008 generated systemic risks. This study provides an avenue to assess the risks posed by credit derivatives when engaging in dealers transactions dealers. Bedendo and Bruno (2009) differentiated between the application of loan sales, securitization and credit derivatives for a sample of US large domestic commercial banks (total assets greater than one billion USD) for June 2002-2008   They found that the most CRT users employ conservative tools and large international banking corporations utilize credit derivatives. They detected that highly capitalized banks with less risky portfolios purchase credit derivative protection to hedge against capital inadequacy.   Moreover, banks with riskier loan portfoli Analysis of Risk Management in Banking Activity Analysis of Risk Management in Banking Activity The Case of Mauritian Banks Financial deregulation, globalization and liberalization have heightened considerable banking risks. Moreover, banks necessitate effective risk management strategies to promote banking welfare, protect outside agencies transacting with banks and to ensure stable banking operations. Risk managers need to focus on the diversity of risks and secure the interests of the overall banking sector. Risk Management is nowadays segregated where there is inconsistency in reporting, insufficient evaluation and low quality of management and becomes ineffective due to lack of pertinent information and improper analysis of the risk factors (Prabir Sen, 2009). Nonetheless, banks are unable to keep equilibrium in the situations of risks with huge losses and slight possibility of occurrence and risks of minimal losses with propensity of occurrence.   According to Talmimi and Hussein, Mazroezi and Mohammed (2007), risk management enables profits maximization and entails restrictions in risky activities. Risks can be averted by ordinary banking procedures, can be shifted to other institutions and can be managed actively in banks (Oldfield and Santemero, 1997). 1.1 Objectives of the Study The core objectives of the study are: To probe into the methodologies and aspects of the risk identification, assessment, monitoring, management and mitigation in Mauritian banks. To ascertain the effects of risk management on Mauritian banks. To determine to which extent risk management strategies like Basel II, derivatives, stress testing and Asset and Liability Management are applicable in Mauritian banks. To analyze the factors which improve Risk Management Practices in Mauritian banks and the perspectives about Banking Risk Management. To explore the reasons for managing risks in Mauritian banks. 1.2 Statement of the Problem There is an increasing awareness that the gradual intensification of banking risks impacts adversely on banking transactions which raises the concerns for risk management. The basis concern of this study is whether the Mauritian banks are using diverse risk management tactics and whether they are able to cope with the present and prospective challenges of risks and risk management requirements. 1.3 Significance and Contribution of the Study Bank managers can be conversant with divergent risk management techniques, their implications, effects and their relevance in banks through the practical aspects of risk management application. Bank managers can analyze the mechanisms resulting in the increasing level of risk exposures. Business administrators and management practitioners can use this study as guide to design efficient measures to mitigate risks in the process of developing marketing tactics. 1.4 Structure of the Project Chapter 2 elaborates on the literature review related to the risk management. Chapter 3 uncovers the general overview of Mauritian Banking Sector. Chapter 4 focuses on the detailed research methodology that has been used. Chapter 5 discusses the analysis and interpretation of the Mauritian banking risk management information. Chapter 6 probes on the recommendations to improve Risk Management practices in Mauritian banks. Chapter 7 concludes the whole findings of the project. PART 1- THEORETICAL ASPECTS 2.1 Introduction The advent of technology, globalization and the competition has encouraged banks in risk taking activities exposing banks to risks. Regulatory and supervisory institutions have emphasized the need for banks to enhance their risk management practices. Risks arise from the probabilities of the occurrence of losses and usually emerge from the internal and external banking transactions. 2.2 Banking Failures determinants The past decades have encountered numerous bank turbulences where high costs have been incurred on both local and overseas level (Gaytà ¡n and Johnson 2002, p.1), hindering the credit facilities, minimizing investment and consumption and generating bankruptcy cases (Demirguc-Kunt and Detragiache, 1998a, p.81). According to them, the expensive monetary policy was used to force the sound banks to sustain the failures of insolvent banks which dissuade risk management. Fluctuations in interest rates post abolition of Brettons Woods System, higher banking competition, the non existence of intermediation margins, unskillful lending and investment tactics (Hellwig 1995, p.724-726 ) , the diminishing role of the oligopoly rents as stated by Gehrig (1995 cited Hellwig 1995, p.726 ), the lower level of capital reserves in banks, companies high reliance on banks for external finance mentioned by Rajan and Zingales (1998 cited Randall S. Kroszner 2007),systemic shocks caused by credit risks, the inability to diversify loans, trade deterioration and decrease in asset prices caused bank failures argued by Gorton (1988 cited Demirguc-Kunt and Detragiache1998b, p.85). Moreover, regime changes like financial repression, liberalization and severe macroeconomic conditions encourage the entry of inexperienced players and preference for the acquisition of useless loans stated by Honohan (1997 cited Gaytan and Johnson 2002, p.4) have generated banking turbulences.   Non-performing loans increase where the asset returns are less than the returns to be paid on liabilities. Banks borrow in international currency and lend in local currency where the latter depreciates if the foreign exchange currency risk is shifted to local borrowers if they loaned in foreign currency. Banks buy insurance protection which encourages risk taking activities in the absence of prudential supervision and regulation. Bank managers engage in fraudulent actions by taking a portion of money for their personal use (Demirguc-Kunt and Detragiache 1998c, p.85-87). Diamond and Dybrig (1983 cited Demirguc and Detragiache 1988d, p.86) argued that banks portfolio assets can worsen and depositors believe that other depositors are removing their money. Obstfeld and Rogoff (1995 cited Demirguc and Detragiache 1988e, p.87) mentioned that an anticipated devaluation could occasion bank runs in local banks and these deposits are shifted overseas and render the domestic banks without l iquidity. 2.3 Banking risks alsamakis et al (1996 cited Young 2001, p.57) argued that risks can be classified as pure risks and speculative risks. Pure risks which embody market risks, credit risks, interest rate risks, liquidity risks, country risk and settlement risk are associated with the probability of occurrence of loss or no loss and can be curtailed by risk management strategies. However, speculative risks comprising of operational risks, technology risk, reputational risk, compliance risk, legal risk and insurance risks involve an opportunity for gain or loss which can be hedged. 2.3.1 Credit Risks These major risks occur in banks when the borrower defaults on his obligation to reimburse the principal amount and the interest charged of the loan. Credit risks consist of three types of risks like (Arunkumar and Kotreshwar 2005, p.9): Transaction risk emerges from the fluctuations in the credit type and capital depending on how the bank underwrites individual loan transactions. Intrinsic Risk is risk prevailing in some institutions and on granting credit to some firms. Concentration risk is the average of transaction and intrinsic risk within the portfolio and encourages granting of loans to one borrower or one firm. 2.3.2 Interest rate risks Koch (1995 cited Beets and Styger 2001, p.9) defined interest rate risk as the future changes in a banks net interest income and market value of equity due to changes in the market interest rates. Kropas (1998 cited Martirosianien) enumerated three types of interest rate risks like: Reappraisal risk stems from the diverse periods of assets and liabilities Profitableness curve risk entailselements affecting the reappraisal risk. Basic point risk concernsflawed association between the receivable and payable interest rate. Option risk is where the benefits of options can adversely affect the banks equity. 2.3.3 Liquidity risks Liquidity risks occur when the banks are unable to meet the demands of the depositors because of lack of funds and the illiquid assets resulting eventually in bank insolvency. Credit, strategic, interest rate and reputation risks build up liquidity risks (Gaulia and Maserinskieno 2006, p.49). 2 types of liquidity risks are (ADB Report 2008, p.9): Funding liquidity risk is the potentiality to obtain money via the sale of bank property and by borrowing. Trading Liquidity risk arises from making a constant entry in market activities and dealings. 2.3.4 Market risks These risks arise when the value of the financial products changes negatively and consist of currency risk, interest rate risk, equity or debt security price risk (Gaulia and Maserinskieno 2006, p.49). 2.3.5 Operational Risks Basel Committee (2004) which imposes a capital charge defined operational risks as the risk of direct or indirect losses resulting from inadequate or failed internal processes, people, and systems, or from external events. This definition includes legal risk, but excludes strategic and reputational risk. 2.3.6 Reputational Risks These risks emerge when the number of clients decreases as they hold negative perspectives about the quality of services offered by the banks. 2.3.7 Strategic risks Strategic risks arise when bad decisions and projects are undertaken to develop a special system in banks due to the lack of resources, technological tools and the expert staff. 2.3.8 Foreign Exchange Risks These risks come when the prices of the currency fluctuate when engaging in foreign activities. There are 3 types of foreign exchange currency risks. (Deloitte Treasury and Capital Markets 2006) Transaction risk entails the future of original cash flows like imports and exports. Translation risk is concerned with the disparities between foreign exchange encountered when again transforming a foreign exchange value into the functional currency of the company concerned. Translation risks are usually converted into transaction risks on a late basis as earnings are repatriated or assets and liabilities are realized. Economic risk arises when indirectly exposed to buying and selling of goods from someone who buys goods overseas. 2.3.9 Systemic risks The bank cannot collect money from an organization it is dealing owing to the political, economic and social conditions prevailing in the country where the organization is situated. Country risk includes political, economic risk and transfer risk (National Bank of Serbia). 2.3.10 Legal Risks Legal Risks are losses incurred when the bank is sanctioned by a court for the non-compliance with the lawful rules and regulations and on not fulfilling its obligations towards the other parties (National Bank of Serbia). 2.3.11 Financial Fraud There is mismanagement of money and fraudulent actions from the members of the banks who embezzle some deposited money and when there is lack of security controls. 2.4 Bank risk management methods Greenspan (2004 cited in Lam 2007, p.3) said that It would be a mistake to conclude..that the only way to succeed in banking is through ever-greater size and diversity. Indeed, better risk management may be the only truly necessary element of success in banking. 2.4.1 Risk Management in Banking Sector Flaker (2006, p.4-8) proposes three methods: 2.4.1.1 Risk Identification The board must set the risk profile of the bank and identify the risk-return tradeoff. The bank should understand and identify types of risks exposures, their sources and their effects on the overall banking stability. 2.4.1.2 Risk management and reduction Risk management and minimization embody the following: (1) Allow loans after considering their financial status of the borrowers. (2) Comparison of the expected risks with the actual ones to diminish the loan losses in a bigger portfolio. (3) Loan losses will decrease due to diverse borrowers in the lending transactions. (4) Actual risks can be compensated through the opposite movement of other risks in particular financial activities. (5) Insurance negotiations can be used to protect against diverse risks. 2.4.1.3 Risk Management System This flexible system encompasses the combined structure of identification, evaluation and risk mitigation techniques. The Board must set up a strong risk culture and an effective governance structure where the risk management system aligns with the existing structure of the bank. Risk management procedures are possible when retaining higher level of capital to cushion the risks. Furthermore, the risk management functions comprises of: (1) Delegation of responsibilities to each banking segment (2) Auditing system to deal with the internal control processes and proper execution of risk controls (Nikolis, 2009). (3) Ongoing reviews, reporting, updating and the control of risk management system must be executed to ensure that they tailor with the banking aims (4) Training courses gaining know-how about the design of the risk management system and risk models must be offered to avert banking failures. (5) Establish rules and regulations and take necessary actions to those who contravene with them regarding risk management practices. (6) Participation of the banks, regulatory and supervisory bodies where information is disseminated externally and internally in the banks (Kroszner, 2007). 2.4.2 Asset and Liability Management Asset and Liability Management entails the design of organizational and governance models which define the risk approaches subject to the banking operations (ADB 2008, p.10). 2.4.2.1 ALM operations are as follows (ADB 2008, p.10-12): ALM ensures a risk and return management process where the combination of expertise and risk appetite is needed. ALM unit manages bank risks either through a passive or aggressive approach thus increasing its value. ALM unit investigates upon the static and dynamic mismatch; sensitivity of net interest income; and, market value under multiple scenarios -including under high stress. The net interest income evaluates the sophisticated banks operating results. It does not project the effects of risk compared to the economic value which can identify banking risks but is inaccessible to most banks. 5. Funds Transfer Pricing eradicates the interest rate risks by securing a spread in loan and deposits by allocating a transfer rate that mirror the repricing and cash flows of the balance sheet. Liquidity risks can be managed like diversification of financing sources, correlate the liquidity risks with other risks and use stress testing analysis. 2.4.3 Stress testing Practices Stress testing is another risk management strategy where Stress testing is a generic term used to describe various techniques and procedures employed by financial institutions to estimate their potential vulnerability to exceptional but plausible event (Kalfaoglou 2007, p.1). It uses statistical data analysis to risk management techniques, interpret and control the unfavorable outcomes. JP Morgan Chase has integrated stress testing equipment to manage and analyze the sources of possible banking risks, implement tests on the value of its portfolio, analyze its risk profile and contemplate the effects while applying diverse scenarios. An effective risk management scheme, stress testing project and bank staff expertise are requisite to tackle the statistical and economical fundamentals of stress testing with a data measurement tool. Board of directors should monitor the inputs of stress testing system (Seminar on Stress Testing Best Practices Risk Management Implications for Egyptian Banks 2007, p.2-3). Furthermore, the 2 types of stress testing strategies in banks like: (1) Simple Sensitivity Test deals with the rapid fluctuations of the portfolio value due to a risk factor on a short term basis. (2) Scenario analysis is used by large complex banks and is associated with a realistic and econometrics approach towards shifts in portfolio value due to changes in many risk factors. 2.4.4 Basel II Basel II published in June 2004, promotes banking supervision and emphasizes the specified capital requirements to cushion against potential losses. Basel II uses qualitative and quantitative requirements to monitor risk management strategies, to ensure compliance with regulations and reinforce corporate governance structure. The risk based supervision has enabled the supervisors to concentrate on the origins of banking risks. 2.4.4.1 Pillars of Basel II Pillar 1 entails capital needed for credit risk, market risk and operational risk. Moreover, banks under this regime must have a capital adequacy of 8 %. The methods for the computation of the capital charge to measure operational and credit risks (Ma, 2003)are: Basic Indicator Approach The size and capital requirements of the operational risk are estimated as a fixed proportion of the banks net interest income and non-interest income, measured as the average over the last three years. The Standardized Approach –The activities of the banks are allocated risk ratios weights related proportionally to the quantity distributed to every category. The aggregate capital requirements are the addition of all the requirements for the categories. Advanced Measurement Approach Computation of credit and market risks and the capital requirements are founded on the banks internal system for the measurement and management of operational risk for large banks An Internal Rating Based System The BIS stated that capital requirements must be founded on a qualitative and quantitative analysis of credit risk and must be used for diverse bank units. Founded IRB approach indicates that large banks should calculate probability default related to a borrowers grade to demonstrate the capital requirement level. However, under advanced IRB approach, these banks with an internal capital allocation can furnish the loss given default and exposure at defaults which are processed. Pillar 2 A supervisor must ensure that the bank has the adequate capital requirements to deal with risks. Banks estimate the internal capital adequacy by adopting quantitative and qualitative techniques. On-site investigation and ongoing reviews probe in capital adequacy. Pillar 3- Market discipline framework provides with detailed information about the banks risk profile to evaluate and report capital adequacy where risk exposures can be analyzed through quantitative and qualitative approach regularly. The risk based capital ratios and qualitative information about the internal procedures are needed for capital adequacy purposes. 2.4.5 Derivatives olatility of financial market, the liberalization and deregulation in the 1980s and 1970s has founded derivative markets (Hehn no date a, p.100). Derivatives are financial tools (like futures, commodities futures, options, swaps, forwards) whose returns, values and performance are derived from the returns, values and performance of the underlying assets. Hedging is covering against potential risk through an opposite position in the derivative markets. Bank International Settlements (2004 cited Bernadette A. Minton et al 2008, p.2) noticed that the quantity for derivatives has leveled from $698 billion in 2001 to $ 57,894 billion in 2007. Proper derivatives trading can insure against market risks and interest rate risks without retaining additional capital requirements in the balance sheet (Kaudman no date a, p.85). The determinants of derivatives use are banking size, balance sheet constituents, aggregate risk exposures, profitability, performance and risk taking incentives. Jason and Taylor (1994 cited in Hundman b, p.86) argued that speculation used with derivatives to make profitable returns can engenders more interest rate risks. Moreover, Tsetsekos and Varangis (1997 cited Roopnarine and Watson 2005a, p.9) argued that financial derivatives promote increase in resource allocation and increase the productivity of investments projects. Jorion (1995 cited Roopnarine and Watson 2005b, p.9) argued that in price discovery, market participants are offered information on balance prices that mirror the present demand on the supplies which enable effective decision making and reveal the position of the cash prices. Besides, liquid funds are increased and transaction costs are reduced and the futures market reflects the large transactions at prevailing prices (Roopnarine and Watson 2005c, p.10).   However, derivatives have generated enormous failures in Barings Collapse, Merill Lynch and Procter Gambler (Hehn b, p.101). Bank staff must be trained and educated about derivatives use. Derivatives trading can be constrained with the liquidity problems and legal uncertainties that emerged from the market price movement which is argued by Bhaumik (1998 cited Roopnarine and Watson 2005d, p.11). Pricing of assets becomes difficult if there is insufficient information about the derivatives use. Principal agent problem is aggravated (Roopnarine and Watson 2005e, p.12). The derivatives market must be regulated properly to avert fraudulent actions and insolvency. Partnoy and Skeel (2006 cited Minton et al. 2008a, p.2) claimed that derivatives intensify systemic risks as banks do not control the lending activities. Hunter and Marshall (1999 cited Roopnarine and Watson 2005f, p.28) argued that derivative markets attract investors whose private information are assimilated in the observable p rices and diminish the bid ask spread. The underlying cash prices reduce the transaction costs and the demand for money thereby affecting the operations of the monetary policy. Bedendo and Bruno (2009a, p.2-4) argued that credit transfer tools like securitization, credit derivatives and loan sales reduce regulatory capital requirements, motivate lending and enhance the banking liquidity positions. Moreover, they remedy the issues of information asymmetries as stated by Greenbaum and Thakor (1987 cited in Bedendo and Bruno 2009b, p.2). Duffee and Zhou (2001 cited Minton et al. 2008b, p.11) mentioned that credit derivatives are used if the loan sales or securitization techniques become expensive due to moral hazard problem and can shift default risk where information advantage is insignificant and retain some portion of risks where information advantage is huge. Banks use credit transfer tools as they have little access to inter-bank funding, huge funding expenses, low capital and want loan transfer (Bedendo and Bruno 2009c, p.8-9). CRT tools encourage banks to use originate-to-distribute models via aggressive lending occasions (Bedendo and Bruno 2009d, p.10) . Pricing of CRT tools is preferred by large banks having higher skills. Some loans sales have loan characteristics like small size, asymmetric issues and standardization convenient for securitization (Bedendo and Bruno 2009e, p.11). PART 2- EMPIRICAL REVIEW There is a growing literature that examines the relationship of banking risks with other many economic and financial variables. Moreover, this section describes the diversity of banking literature where different types of risk management strategies were tested and criticized. Even the links between different types of risks were experimented using banking information and models derived from other authors empirical work. Peek and Rosengren (1996) found that the large users of derivatives for speculation purposes are the troubled organizations using derivative information of 25 active banks in the United States from 1990 to 1994 in the US dummy regression model.   Banks are unable to track the risky aspects of these derivatives and guide their risk profile because of insufficient derivative information which could jeopardize the overall banking system. The onsite targeted examinations can enable banks to window dress their derivatives. Regulatory rules and formal transactions must be imposed on the banks taking unfavorable speculation and to constrain the moral hazard problem related to the derivative transactions. The use of speculative derivatives constitutes a stringent criminal penalty for breaching the established rules and regulations. Cebenoyan and Strahan (2001) used data of the sale and purchase of bank loans and those loans sold or purchased without recourse from all domestic commercial banks in the US from 1987 to 1993 in a regression model. They found that banks that engage in loan sales market to manage credit risks retained minimum level of capital which can be modified. Moreover, these banks retained more risky loans since they managed credit risks and were exposed to an unsafe position despite they endured lower level of risks compared to the other banks who manage risks without the loan sales market. Banks that employed the risk management techniques are more inclined to engage in risk taking activities. In fact, banks that manage credit risks lend to more risky loans depicting that complex risk management practices enhanced the bank credit position rather than minimizing the risks. Gatev et al (2006) investigated upon the presence of liquidity risk from both sides of bank balance sheets using some aspects of the Kashyap, Rajan and Stein (2002) model (that liquidity risks originating from the two fundamental businesses of banking promotes a diversification benefit) to analyze the link between deposit taking and commitment lending for large, publicly traded banks using regression analysis. Pooling deposits and commitment lending insure against banking liquidity risks and deposits activities insure against liquidity risk from idle loan activities. Bank stock-return volatility increases with idle loan transactions which is insignificant for banks with huge amount of depository dealings. The deposit-lending risk management becomes more reinforced when there is low level of liquidity and when troubled market participants deposit money in banks. Shao and Yeager (2007) used information of large publicly traded U.S BHCs from 1997 to 2005 using regression models to find the link between credit derivatives and their risk, return and lending issues. Banks buy credit derivatives to hedge against risks, to increase their equity and to compensate for the risky loan losses. However, they sell credit derivatives exposing themselves to risks to gain a premium charge. Moreover, the credit derivatives users enjoyed minimal returns and increase risks which are compensated. Their findings implied that on a general basis, the impact of credit derivatives on risk relies on the risk management strategies. Holod and Kitsul (2008) used panel data of stock returns from 53 U.S BHCs from 1986 to 2007. They found that after 1996, poor capitalized banks engaged in active trading transactions are more exposed to systemic risks compared to well capitalized banks. Banks cannot always have enough capital to cushion the market risks and must sell their illiquid assets or invest in the financial markets to compensate for the lack of capital to adhere to the market-based capital requirements. Capital requirements in Basel II do not help to reduce banking risks totally but contribute towards increasing systematic risks. Topi (2008) used a model of Allen and Gale (2004) where banks offer deposit contracts to ex ante identical, risk averse depositors who face heterogenous liquidity shocks for Bank of Finland which shows that the liquidity can impact on the banks motivations to minimize the default losses. The bank runs encourage the banks to avert the credit losses after the sub-prime mortgage crisis. However, the bank runs without a signal of the credit risks will reduce the banks willingness to curb the incidence of credit losses. The central bank can mitigate the propensity of liquidity stress for solvent banks rather than insolvent banks. In addition, this research provides an area for further research where the policy interventions and financial market innovations can be integrated in the model to identify the impact on banks motivations. Achou and Tenguh (2008) used regression model for Qatar Central Bank by executing a time-series analysis of financial data from 2001-2005 to examine the correlation between profitability and loan losses. They showed that effective credit risk management improves the financial result of the bank with the aim to secure the banking property and to work in the welfare of the market participants. Besides, their study revealed that credit risk management infrastructures are used to minimize the credit losses. Banks with efficient credit risk management system have insignificant loan default ratios, good revenues, minimal non-performing loans and are able to tackle credit losses. Minton et al. (2008) investigated the use of credit derivatives using U.S BHCs (assets overtakes $ 1 billion) and non-missing data on credit derivatives use from 1999 to 2005. Few companies use credit derivatives for dealer activities rather than for hedging against default losses. Credit derivatives use is constrained because the liquidity of credit derivatives market is favorable for investment grade companies since they can use derivatives to insure against the default losses. Therefore, the illiquidity of credit derivatives market affects the non-investment grade companies as they need confidential information for loans where higher cost of hedging will dissuade banks to hedge. Nevertheless, the bank borrowers get loans at a cheap price and banks are more on a competitive stance with the capital markets to provide loan facilities if the credit derivatives can help bank to retain capital. Credit derivatives can only promote the financial health of banks if they generate lesser ban king risks. The sub-prime crisis prior to 2007 has shown that the dealer activities via the credit derivatives contain many risks and in 2008 generated systemic risks. This study provides an avenue to assess the risks posed by credit derivatives when engaging in dealers transactions dealers. Bedendo and Bruno (2009) differentiated between the application of loan sales, securitization and credit derivatives for a sample of US large domestic commercial banks (total assets greater than one billion USD) for June 2002-2008   They found that the most CRT users employ conservative tools and large international banking corporations utilize credit derivatives. They detected that highly capitalized banks with less risky portfolios purchase credit derivative protection to hedge against capital inadequacy.   Moreover, banks with riskier loan portfoli