Financial Essay Topics

Financial Services Essays
Financial Services
Introduction to Financial Services
1.0Financial Services is a growing industry, which provides for the financial needs of individual
consumers and businesses. This unit explores the needs of and products available for both the
consumers and businesses. The term financial service covers a wide range of products including
accounts for depositing money, loans, savings and investments, pension and financial advice.
Financial Services for individual consumers are available from banks, building societies and also
from organizations such as supermarkets and insurance companies, over the counter, by telephone or
over the
Internet.
Businesses have financial needs when they start up, expand and carry
on...show more content...
This report is due back on the
10 th December 2004.
1.2Financial service providers
Below are some of the financial providers
– Investment companies
– Insurance companies
– Government
I will talk briefly about each one and explain the benefits and the disadvantages of each.
Investment companies
Investment companies provide people with wide range of product types, to meet their certain needs.
People that have money to invest should know clearly what they want to do, achieve for example:
– Capital growth
– Income
– Or both
The investment company they prefer should help them meet this objective, baring in mind a number

of other factors such as the persons risk profile, the amount that can be invested and how long for.
Insurance companies
Insurance companies provide policies, designed to pay out if some particular event happens. They
offer products aimed at satisfying our needs for protection.
People may want to ensure against:
– Damage to your house through fire
– Breakage or loss of your possessions
– Death of the main family earner
Insurers charge a premium for the policies their customers take out, which is effectively the price the
customer pays for the protection he has obtained.
Some
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Financial Performance Evaluation Paper
Evaluate their effectiveness within certain financial areas with examples
In evaluating the above examples, the qualitative mixed–method of combining online customer
service surveys with observational awareness and focus group with in–depth interviews offers
insight on their effectiveness within specified financial areas.
Customer surveys and observations. These were less effective in the beginning. Management's
response to the previously decided information was to increase customer service personnel support
during early mornings, paydays, and bulk military in–processing months. This qualitative method of
using an online customer survey was effective in pin–pointing problems areas; yet, less effective in
reducing overall customers in...show more content...
In all fairness, the researchers asked the same questions to control the qualitative data results (Arssel,
2017, p. 940). The initial purpose of gaining detailed information in a private setting was effective.
The in–depth interviews were beneficial beyond intended need. Ultimately, the qualitative research
exposed missing specifications in the drafted and allowed time for revision prior to releasing the
final proposal.
Personal opinion on the future of qualitative research both within finance and in general
In my opinion, the future of qualitative research in finance and in general could merge civilian and
government processes to cross–utilize qualitative methods and tools. If overall spending habits
decrease in the next few years; then, qualitative researchers may explore new ways to streamline
processes. For this reason, collaborating with big businesses or other competitors to provide quality
financial reports or medical services may become a viable option.
Financial managers. For example, finance utilizes group teleconferencing with other bases to resolve
command level issues. In the future, a teleconference group could consist of contractors, financial
managers, project managers, and leaders from

Financial Problem Among Students
Introduction "No money no talk". Money, money and money. People always mentioned this word in
their life. Do you think money is important in our life besides food, shelter and love? If you think so,
then why we need it? Nowadays, we always heard about bank robbery, snatch thefts, loan sharks and
others through media. Why did these crimes happened? It is because they have financial problem in
their life until they involved in crimes. Financial problem also happened among students especially
when they further their study away from their hometown. Students always complaint about sort of
money.
1.2 Statement of Problem
This paper examines the reasons student have poor financial management, spending on
non–necessary things or overspend...show more content...
They can be easily influenced by their friend. Especially when they spend their money at
expensive places like Pizza Hut, McDonalds and Starbucks. Spending your money at expensive
places easily can make your money gone so fast. Besides, they like to follow their friend's trend and
lifestyle. For example, when their friends having a new mobile phones then the individual start to
feel envy and make a desire to

Essay about Financial Statements
Financial Statements basically show the historical performance or record of the company at some
previous point of time. By the time when financial statements are made public, changes are many
economical areas such as market conditions, currency exchange rate and inflations can change the
values of assets and liabilities. In this case there often exist discrepancies between book value of
assets and their market values.
In above case there might be companies that are healthy and many go through period of financial
distress. In particular is the threat of not being able to meet debt obligations.
The first Indication of financial distress is when firm does not have enough liquid assets (short–term
assets) to cover (pay for) current...show more content...
Since The Altman's model widely used among the investors, though it is not an intuitive model, once
a firm is predicted having a financial distress next year, it has been treated as it has been financial
distress currently (whtaker, 1999).
This work aims at studying the effect of financial distress on operating cash flows of corporations.
The interest in the area of financial distress has increased due to considerable number of corporate
failures around the globe in recent years especially since the early 1990s. Notable failures include
Global Crossing, Enron, Adelphia, Worldcom, HH Insurance, One Tel, and Ansert Airlines in 2001,
and most recently FIN Corp in 2007.
Financial distress is defined as a low cash flow state of a firm in which it incurs losses without being
insolvent or financial distress is a term in Corporate Finance used to indicate a condition when
promises to creditors of a company are broken or honored with difficulty. Financial distress is
different from insolvency. Financially distressed companies have lower profitability, higher
leverage, lower past excess returns and larger size compared to active companies.
The failure or bankruptcy of financially distressed firms results in significant direct and indirect costs
to many stakeholders; including shareholders, managers, employees, lenders and clients. For
instance Shareholders lost nearly $11 billion

Financial Statements
CHAPTER–I
FINANCIAL STATEMENTS
LEARNING OBJECTIVES
After studying this chapter, you will be able to:
Explain the meaning of financial statements of a company;
Describe the form and content of balance sheet of a company;
Prepare the Balance Sheet of a company as per Schedule VI Part I of the Companies Act 1956.
Know the major headings under which the various assets and liabilities can be shown.
Explain the meaning, objectives and limitations of analysis using accounting ratios
Calculate various ratios to assess the solvency, liquidity, efficiency and profitability of the firm.
Interpret the various ratios for inter and intra–firm comparison. define Cash Flow Statement
know its objectives
...show more content...
Employees and Trade Unions
Employees are interested in better emoluments, bonus and continuance of business and whether the
dues like provident fund, ESI et., have been deposited with the authorities.
They would therefore, like to know its financial performance and profitability and operating
sustainability.
Government and its agencies
Financial statements are used by government and its agencies to formulate policies to regulate the
activities of business, to formulate taxation policies, to compile national income accounts.
Taxation authorities such as income tax department use the financial statements for determination of
income tax; sales tax department is interested in sales while the excise department is interested in
production.
Stock exchange
Stock exchange uses the financial statements to analyze and thereafter, inform its members about the
performance, financial health, etc. of the company, to see whether financial statements prepared are
in conformity with the specified laws and rules and to see whether they safeguard the interest of
various concerned agencies.
Other Regulatory authorities (such as, Company Law Board, SEBI, Stock Exchanges, Tax
Authorities etc.) would like that the financial statements prepared are in conformity with the
specified laws and rules, and are to safeguard the interest of various concerned

Student Financial Planning Essay
Financial planning for a student is vital to successful completion of a college degree and ongoing
success after college. The objective of this assignment is to evaluate four ways someone in my
position could save money and budget. By planning finances carefully a student can avoid a pause
in learning due to financial trouble and set themselves up for success after college. In the list
provided below I will provide four tips I will use to navigate my way around the possible financial
peril that presents itself to each student.
1.Track it. According to Lucy Lazarony of Bankrate.com, tracking spending for a minimum of two
to four weeks can help a student figure out where their money is going. I agree. She presents the
question, "Are four...show more content...
In 10 Budgeting Tips for Students, Tamara Robinson writes, "The number one mistake students
make in college is acquiring too many credit cards" (Mademan.com, 2010). While "charging it" can
provide instant gratification or relief in time of need, many students go overboard while in college.
This proves to be detrimental in the long–term. Let's be honest, interest adds up quickly and I don't
know of any credit card that defers it until after graduation like federal student loans.
It's just a bad idea in my opinion to use credit cards in any situation that a student can avoid.
Ultimately this debt can add up and force a student to divert their academic concentration to focus on
paying off the debt.
3.Manage student loans. "Don't over borrow, and if you end up borrowing more money than you
need, save it in a high interest savings account" says RC in his or her list of 25 Smart Budget and
Money Saving Tips for College Students (Think Your Way to Wealth, 2008). I am not exactly sure
why anyone would want to over borrow with student loans because unsubsidized and direct student
loans do not defer interest until after graduation and the interest rates are higher than any savings or
money market accounts I've ever seen. One exception is to make this money available in case of
emergency or financial hardship, but I see it as unwise.
In my experience I think each student should calculate how much money they'll have available to
them to put towards their student loan debt

Financial Management Essay examples
Financial Management Introduction ============ Every organization, irrespective of its size or
ownership pattern, has to manage its finances. The overall objectives of an organization cannot be
achieved in the absence of financial management. Many organizations fail in their objectives because
of financial mismanagement and this failure rate is quite high among the small business enterprises.
Hence, financial management is vital for all types of organizations, profit making as well as
non–profit making. In case of non–profit making organizations also the effectiveness and
performance depends on their financial resources management. Financial Management
====================...show more content...
3. Managerial Accounting deals with procuring of data for the organisation's management i.e. to
serve the internal users with necessary accounting information to carry out the management tasks of
planning, organising, actualising and controlling. " Management Accounting is the presentation of
accounting Information in such a way as to assist management in creation of policy and in the day to
day operations of an undertaking". 4. Financial Management deals with the process adopted by an
organisation for taking financial decisions through analysing and interpretation of financial data for
meeting the organisations objectives. Hence, the tasks involved in Financial Management include:
Г Analysing financial needs Г Forecasting financial needs Г Managing working capital Г
Planning capital structures Г Organising financial operations Г Monitoring and controlling
finances etc. In fact raising funds and allocating funds for business are the two prime financial
management tasks. Financial Planning Financial planning is an appraisal of those financial aspects
that may or are likely too occur in future but need immediate decision making. It involves setting
financial objectives in terms of profits, sales or acquistion of assets along with financial foorecasting
for the organisation. This includes estimation in the areas of: Г

Financial Difficulties
Finance is a huge part of our life that everybody hope to be in good financial state. However, today,
more than ever before, people are struggling with financial problems. According to a research
conducted by AC Nielsen and ANZ in 2005, people often display six ways of thinking considered
"unhealthy" that putting people under financial pressure including 'living for today', 'financial
disengagement', 'aspirational', 'emotional enhancement', 'ownership of credit', and 'credit as
supplementary income".
Firstly, the prominent idea is "living for today". It means that people just think and spend for their
present lives, and do not pay much attention for their future. This way of thinking has a close
connection with the " youthfulness" or the...show more content...
There are some who have a good job with middle–high salary, they don't think they need to worry as
they can afford to pay their debts soon. They never thought of being in emergency such as they
might lose their job or in case they get divorced. I myself experienced a hard time at my first year at
my university living far away from my family. Lacking financial management skill, I just spent and
bought everything I like without thinking about, managing, and tracking my expenses. As a result, I
went out of money soon and cannot afford to necessary things after that.
3. 'aspirational': – spending to "keep up with the Johnes' meaning a person is easily want to have the
things that others have. He/she is likely to be influenced by others or environment.
For eg: A Single Mother, Sally, lived in Rural for a long time, after that she move to the town near
her daughter's school. She start to wanting and needing more material things to fulfill her large
house. Then she gradually buy more items.
Consequences: they might buy the things that they do not really need.
The 'aspirational' way of thinking is where people had a particular aspiration that strongly influenced
their expenditure. The unhealthy spectrum of this way of thinking was where this dominated, to an
extent that it translated into over–spending and/or over–commitment. Common colloquialisms that
people used to describe this way of thinking included 'keeping up

Business Studies Essay Relating to Finance
Financial Management is a critical aspect of any business in order to achieve a sustainable and
efficient cash flow. It is essential in maintaining the link between a business's future financial goals
(profit maximization) and the resources that it has in order to achieve its objectives. Businesses
demand certain common goals that increase a bussiness's all around achievement, Some of which
involve; growth amongst assests, An increase in efficiency in all areas of the business whether it be
management or not. And the ability to meet short term and long term debts. Finacial management
undertakes the responsibility to implement and acheive these goals for the business using a range of
strategies shaped to meet the needs of the business and...show more content...
By spreading expenses over the whole year there is a more equal cash outflow each month rather
than one huge outflow during one month. An example of this is the offer from insurance companies
to be able to pay insurance premiums monthly instead of annually because of the excessively high
costs.
Another strategy commonly used is 'Discounts for the early payments', This is where a business
may offer discounts to account customers for the early payment of their accounts to speed up cash
inflow. This discount may be a little as 2–5%, but shows effective in terms of cash inflow as it gives
incentive for the customers, Giving both the customer and business a gain in the financial situation.
Other incentives for early payment could include small gifts and discounts on future orders that the
customers may have. The business then may shorten the credit terms it allows for account
customers. Thus Reducing the number of days that a customer can take to pay its invoice, this will
speed up cash inflow into the business as it recieves cash from its sales much sooner.
Factoring, a short–term source of borrowing for a business. IT enables a business to raise the funds
immediately by selling accounts receivable at a discount to a firm that specialises in collecting
accounts recievable (a finance or even factoring buiness). Factoring is an important source of
short–term finance because the business will recieve up to 90% of the totaly amount of

Financial Accounting Essay
Financial accounting is one kind of accounting different from the management accounting in the
accounting system. As management accounting is for "internal" whereas financial accounting is for
"external". The following is a detailed explanation and analysis of the major objective and role of
financial accounting. The purpose of financial accounting is to measure the performance of the
entity and therefore provides the financial information to different stakeholders. Stakeholders will
have their decision – making according to the financial report issued. James, Arthur and
Robert(1978) have stated that: "Most decisions are made on the basis of summary–type reports
rather than firsthand information."
A comprehensively summarized...show more content...
Moreover, if the current ratio is too low, it shows that the corporation may have financial difficulty.
Moreover, there are also some of the other external users. Their need to receive financial information
is not immediate, but also important. As the regulatory body, government is responsible for
monitoring different companies so as to maintain the financial stability. More than that, the listed
companies which issue their shock publicly usually need to report their activities to the government.
The community can distinguish whether the company's finance is steady through financial report and
therefore the community's feelings can directly influence the image of the company. The employee
can use information to know the possibility of bankruptcy of their company to decide whether they
should leave the company to prevent the wages. Suppliers may pay attention to the cash flow of the
buyers so that they can decide whether provide the trade credit to it. In fact, financial accounting
provides a great deal of assistance in efficient resources allocation. It can be explain in "external"
and "internal". "External" means social resources allocation. The effective use of social resources is
from entrepreneur and market, but not the government. Companies can use financial statement to
induct capital to a correct direction because users will use financial information for the best
investment to maximize their benefits. It helps to avoid the loss of resources in the

Financial Equity Essay
In their 2009 study, "How Do Firms Finance Their Investments? The Importance of Equity Issuance
and Contracting Costs.", Vladimir A. Gatchev and his colleagues were set on trying to determine
how companies respond to changes in profits and investments and how various factors impacted
financing decision. The focus was not in testing a theory but getting "a deeper understanding how
investment and cash flow shocks affect a firm's financing decision." (Gatchev, Spindt, & Tarhan,
2009) The study was designed to determine which financing decisions were affected based on the
information gathered for consideration. Specifically, the purpose was to determine what the
causation or determining factors were when equity was being considered as a...show more content...
The test results were also well document throughout the study. It found that deficits due to
investment were financed with long– term and short– term in addition to equity. Market timing
cannot totally explain equity issuance as profit deficits were often financed with equity. The study
found that companies use equity to fund internal investments such as advertising and Research and
Development. Another finding, which is supported by a 2005 study (Fama, 2005), is that small,
high–growth, and less–profitable companies tend to use equity for financing than large companies,
more profitable companies and low–growth companies. The study also indicated that companies
respond to profits deficits with the use of equity, they replenish cash balances and reduce debt in
response to positive profits. Finally, the results showed that high asymmetric information companies
use more short–term debt than long–term debt to finance fixed asset investments. Further, companies
with high potential debt agency costs used more equity and less long–term debt for fixed asset
investment financing. The study results

Financial Investment Essay
What type of financial investments would you invest in if you were given 10,000 dollars, what
made you choose these investments, as well as; how did your choices affect your decision as to
tracking these financial investments through the usage of financial strategies and trends. While
finding the right pecuniary investment to finance in is never an easy decision, one must first do
their research as to what type of financial resources are available on the market to invest in; then
apply those financial decisions and strategies to their financial market plan. Let's begin with what a
financial market does, "financial markets perform a vital function: they transfer funds from savers
(individuals and organizations willing to defer using some...show more content...
160–161). Once these options are reviewed then one can make that optimal decision as to what
type of investment would be the best options to choose from. Next, is bonds which is a financial
instrument, that is issued by a corporation or government entity and is required to be paid back;
known as an IOU. These will mature overtime and gain face value, and usually come in all types
and varieties to choose from; some taking as long as 100 years to reach it maturity date. Lately, is
mutual funds and EFT's, these are securities that are held in different sectors and eliminate any form
of risk compared to other investment; known as the closed–end fund or the open–ended fund. So,
what is a "close–end fund, is a fixed amount of dividends in a portfolio of assets; where shares of a
closed–end funds can be traded among investors much like stocks" (Kelly & Williams, 2017, pg.
163).
For instance, like with this case study, if you were given 10,000 dollars to invest what financial
investments would you choose; for me my decision would be as follows: First, I'd choose to invest
in General Motors stock which currently cost on average about $6.25 a share, and the current
quarterly dividend is rounding up to just over 0.37; or about $1.50 yearly. "Thus, growing in profits
with ending results in today's stock market reaching at the end of day at $45.50 –0.46 – 1.01 %, and
after hours at $45.50 0.35 0.78% with an ending volume at 71,447, accordingly, up since the

Finance, Economics, And Finance Essay
Statement of Purpose
As a child, I often accompanied my uncle to the stock market. Looking at the share index numbers
on the large overhead screen, I was fascinated with this world. As I grew up, I gradually came to
appreciate the importance of financial sector in the modern world. In the university, I was fortunate
to have been exposed to many interesting and challenging fields. Though I ultimately chose to major
in Accounting, I also studied business, management, economics, and finance. These courses
impressed upon me the importance of the financial sector in the economy. Finance professionals
have the unique responsibility of managing assets and analyzing risks to ensure the future success of
a company or organization. It is difficult to overstate the importance of this role, as the financial
crisis of 2009 showed. It is due to my understanding of the importance of finance and investment,
coupled with my longstanding interest for this subject, that I have decided to pursue postgraduate
studies in finance at your prestigious university. Earning a master's degree in finance would ideally
complement my undergraduate degree in accounting. My background in accounting provides me
with fundamental knowledge of many finance–related theories and concepts, as well as familiarity
with statistics and data analysis. I learned the basic tenets of finance in courses such as Economics,
Management, Accounting and Corporate Finance. Through case studies and lectures, I broadened my

Financial Management Answer Essay
National Institute of Business Management
Chennai – 020
FIRST SEMESTER EMBA/ MBA
Subject : Financial Management
Attend any 4 questions. Each question carries 25 marks
(Each answer should be of minimum 2 pages / of 300 words)
1. What are the significant factors of Financial Statements? Discuss the various tools of financial
Analysis. (Answered)
2. What is a Fund Flow Statement? Discuss the uses and preparation of Fund Flow Statements.
(Answered)
3. What is financial Forecasting? Explain. (Answered)
4. Examine the various tools of Financial Analysis. (Answered)
5. What is Zero Base Budgeting? Explain.
6. Describe the various aspects of Zero Based Budgeting with its merits and demerits.
25 x 4=100 marks
ANSWER SHEET
1. What are the...show more content...
For periodic reporting purposes, accrual performance numbers nearly always differ from cash flow
numbers. This creates a demand for periodic reporting on both income and cash flows. The
statement of cash flows details the cash inflows and outflows related to a company's operating,
investing, and financing activities over a period of time.
Statement of Shareholders' Equity. The statement of shareholders' equity reports changes in the
component accounts comprising equity. The statement is useful in identifying the reasons for
changes in owners' claims on the assets of the company. In addition, accepted practice excludes
certain gains and losses from net income which, instead, are directly reported in the statement of
shareholders' equity.
Financial analysis tools include the following:
a.Comparative financial statements i. Year–to–year change analysis ii. Index–number trend analysis
b.Common–size financial statements
c. Ratio analysis
d. Cash flow analysis
Comparative analysis focuses on exceptions and variations and helps the analyst to formulate

judgments about data that may be interpreted in various ways. In short, the usefulness of
comparative analysis is the notion that a number is more meaningfully interpreted when it is
evaluated relative to a comparable quantity. A comparison, to be meaningful and fair, must be made
between data, which are prepared on a similar basis. If data are not directly

Introduction To Financial Management Essay
Define the terms finance and financial management, and identify the major sub–areas of finance.
Finance is the study of applying specific value to things individuals own to include services used
and decisions determined [Finance by Cornett, M. M., Adair, T. A., & Nofsinger J. (2014). M:
Finance (2nd ed.)]. In simple words, finance is how much value is attributable to goods and services
and the basis of such attribution.
Financial management may be defined as the management of the finances of a business or an
organization in order to achieve the financial objectives. It includes creation, effective utilization of
funds to ensure the smooth functioning of the business. It encompasses planning, administration and
controlling.
The various...show more content...
The advantages are as follows:
More than one owner is there in business and hence the risk is shared
Each partner will contribute capital and hence more capital will be available
This is also relatively easier to start compared to a corporation
The income from this type of ownership is taxed once as personal income
The disadvantages of a partnership is as follows:
The profits are shared between the partners. Hence, when compared to a sole proprietorship there is
lesser profits
Generally, the liability of the partners is unlimited (except in the case of a limited liability)
It is difficult to transfer ownership
A corporation is a separate legal entity whose transactions and conduct of the business is separate
from its owners. Corporations can borrow money, sue and be sued in its own name. The advantages
of a corporation are as follows:
The liability is limited to the amount paid on stock by the investor
The corporation has an unlimited life
There is separation of ownership and management as the corporation is a separate legal entity
Transfer of ownership is easy
As a corporation, it is easier to raise capital from equity and debt market
The disadvantages are:
The agency problem arises as there is separation of management and

Essay on My Personal Financial Plan
My Personal Financial Plan
I. Current
A. Description
Currently I am a full time student, and senior, at majoring in Accounting and Finance. I do not have
a part time job and do not plan to work until I graduate. I currently have taken out student loans to
support myself through the rest of my college education. My parents pay for insurance payments for
my car, cover my phone bill, and provide me with medical insurance. I pay for all the rest of my
expenses, including rent, food, gas, and all other daily expenses. I currently have no investments
and no substantial assets with a value of over $1000. I graduate in May and have signed a contract
with KPMG to start work as an auditor in August after I complete the CPA. I...show more content...
To accomplish my second goal I plan on putting a cap on my level of living expenses that
increases at a smaller multiple then my income each year. I want to give another half percent of my
income each year. I will budget out my salary for discretionary and non–discretionary spending and
stick to the budget by limiting use of credit cards and attempting to pay cash for most items I
purchase. This will help me control my cash outflow.
E. SWOT Analysis
Strengths
Most of my assets at this point are in cash so I have a lot of liquidity to pay off debt or other
expenses. I am a very goal oriented person so when I set goals to follow to financial success I take
them very seriously. My job at KPMG is a strong job with high future potential earnings as well as
learning opportunities. One of the best things about auditing is that I will be able to find a job
making a lot more after I work a few years at KPMG. My knowledge over investments and how to
invest is very good which will help me to continue to make money in the market. When looking at
risk management, my health is very good, which means I should hopefully not have very high
healthcare costs. KPMG provides a good insurance policy that covers any of my insurance needs
and reduces my risk. KPMG also has a very good medical reimbursement policy and a high quality
of other programs for their employees.
Weaknesses I do not have

Financial system The term financial system stands for a set of complex and closely connected or
interlined institutions, agents, transactions, liabilities, and claims in the economy. It is related with
money, credit and finance– three terms thought to be related with each other but somewhat
different from each other. It provides a mechanism through which savings can be converted into
investments and it mobilises the surplus funds and utilizes them efficiently and effectively for
productive purposes. It is characterized by the integrated and organised regulated firms that help
in meeting short term and long term financial needs of all the sectors. Therefore it is said that
financial system plays a significant role in economic growth of the country. The financial system
serves as a link between the savers and investors. It helps in utilizing the different savings of
scattered savers in a very effective and efficient manner. It provides mechanism for exchange of
the goods and services. It assists in selection of projects which should be financed and also keeps a
check the performance of such projects. It helps in changing the saving into investments that help
earn some returns. It also provides the market with a mechanism for the transfer of resources across
geographic boundaries and a mechanism for managing and controlling risks involved in saving and
credit. It comprises a set of sub– systems called financial instruments and services, financial
institutions, and financial

Financial Instability Essay
Financial Instability
The soaring volume of international finance and increased interdependence in recent decades has
increased concerns about volatility and threats of a financial crisis. This has led many to investigate
and analyze the origins, transmission, effects and policies aimed to impede financial instability. This
paper argues that financial liberalization and speculation are the most reflective explanations for
instability in financial markets and that financial instability is likely to be transmitted globally with
far reaching implications on real sector performance. I conclude the paper with the argument that a
global transaction tax would be the most effective policy to curb financial instability and that...show
more content...
As investors foresee this happening they will likely pull out before the perceived depreciation.
"Efforts to get out would accelerate the loss of reserves, provoking an earlier collapse, speculators
would therefore try to get out still earlier, and so on" (Krugman,
1991:93). This "herding" or "bandwagon" effect naturally cause wild swings in exchange rates and
volatility in markets. Another argument for the evolution of financial market instability is closely
related to hegemonic stability theory. This political explanation predicts a circumstance (i.e. a
decline of a hegemon's status) in which a loss of confidence in a particular countries currency may
lead to capital flight away from that currency. This flight in turn not only depreciates the currency
of the former hegemon but more importantly undermines its role as the international financial
anchor and is said to ultimately lead to instability. The trigger point phenomena may also be used
as an instrument to explain financial instability. Similar to the speculative cycles described above,
this refers to a situation where a group of investors commits to buy or sell a currency when that
currency reaches a certain price level. If that particular currency were to rise or fall to that specified
level, whether by real or speculative reasons, the precommited investors buy or sell that currency or
assets.

Financial Investments And Financial Assets Essay
The act of deploying funds with the intention and expectation that they will earn a positive return
for the owner is called investment. Funds may be invested in either real assets or financial assets.
Real investment occours when resources are used for purchasing fixed and current assets in a
production process or for a trading purpose. For example, the establishment of a factory or the
purchase of raw materials and machinery for production purposes. The purchase of a legal right
to receive income in the form of capital gains or dividends would be indicative of financial
investments. For example, deposits of money in a bank account, the purchase of Mudaraba
Savings Bonds or stock in a company. Eventually, the savings of investors in financial assets are
invested by the respective company into real assets in the form of the expansion of plant and
equipment. When money is deposited with an Islamic Bank, the bank, in turn, makes investments
in different forms approved by the Islamic Shariah with the intent to earn a profit. Not only a
bank, but also an individual or organization can use Islamic modes of investment to earn profits
for wealth maximization. 3.2 INVESTMENT OF EXIM BANK YearInvestment (Tk. in millions)
201399,309.51 201470799.45 The total amount of investment of the bank stood at TK 99,309.51
million as on December 31, 2014 as against TK 70,799.45 million as on December 31, 2013
showing an increase of TK. 28,510.06 million with the growth rate of 40.27%.

Financial Globalization Essay
Executive Summary
During the past two decades, financial markets around the world have become increasingly
interrelated. Financial globalization has brought considerable benefits to national economies and to
investors, but it has also changed the structure of markets, creating new risks and challenges for
market participants and policymakers. The international marketplace continues to present
opportunities for companies. But change is constant and prudent so companies must work to
minimize their risks while maximizing their opportunities. The International marketplace can offer
considerable financial returns to companies conducting business but there are risks that have to be
considered such as trade, foreign exchange, cash management,...show more content...
This happens with the increased flow of goods (trade), foreign direct investment, money (finance),
and/or people (migration). While globalization is not new, the speed, depth, and scope of the
changes on the globalization are novel by technology. Also new to the mix is the enormous power of
International Financial Institutions (IFIs) and global trade groups such as the World Trade
Organization (WTO) to set the rules of the global economy. (Holmes 2005)
Financial institutions play a vital role in the global economy. They are generally referred to as IFIs,
a generic term given to all financial institutions operating on an international level. IFIs range from
development entities such as the WorldBank and the European Bank for Reconstruction and
Development (EBRD), to monetary authorities such as the International Monetary Fund (IMF).
These organizations provide loans to governments for large–scale projects, as well as for
restructuring and balance of payments (on condition that they make specific changes IFIs believe
will boost economic growth). (Holmes 2005)
2. International Financial Institutions
While each organization came into existence under different circumstances, each is vital to
economic growth around the world and to the global economy. For example, the World Bank,

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