China sweat factories pollution Essay Example | Topics and Well Written Essays - 2000 words

China sweat factories pollution - Essay Example The thesis statement of this paper is: Sweatshops in China are unethical because they are causing severe pollution and are destroying the environments surrounding the country. A sweatshop is basically a factory in the clothing industry, in which working conditions are poor and which violates the labor laws as defined by the legislature of the country. Poor working conditions may include unfair wages, child labor, lack of incentives given to the workers, perverse working hours, issues such as sexual or gender harassment, or any other kind of high degree exploitation of workers. Sweatshops even do not provide living wage to the workers, which is required to cover the basic needs of food, clothing and shelter. Workers work more than 60 hours per week. The workplace environment of sweatshops is a great stressor for workers. Harassment, intimidation, verbal abuse, and forceful work are important aspects of sweatshops. For example, workers are made to work with dangerous chemicals bare-handed. Developing or under-developed countries have the highest rate of child labor coming out of sweatshops that tend to produce a variety of products, such as clothing, shoes, toys, car gadgets, rugs, carpets, and eatables like chocolate and coffee. Sweatshops in China tend to pollute the air. There are a myriad of reasons behind this. Sweatshops discharge waste materials and toxic chemicals into the air and water. For instance, tons of dyes are discharged into water that causes various diseases. There are a number of sweatshops in China that are responsible for adverse environmental practices that are dangerous to health of workers working in the supplier plants. For example, Foxconn and Lian Jian Technology are some of the Chinese suppliers that work for Apple. These factories regularly violate China’s Law on the Prevention and Control of Occupational Diseases, according to which factories found indulged in

Childhood events about helping others Essay Example | Topics and Well Written Essays - 1250 words

Childhood events about helping others - Essay Example ly happy., the good feeling that a person can have from doing good things, the good deed that you do, and these thing can be passed on from generation to generation, teaching your children the good thing that they can do for other and how they can benefit form it also in return the good feeling they have. This essay is about parent who tech their children good thing to do in their life. What I learned from all this now is I teach my children to do the same thing I did "give, love and share" At that time, this may not have been understood, but as we grew, we found out how important these actions were and willingly, gave our belongings to others. Every year before Christmas, it was customary for my parents to ask us to give some of our toys, clothes, and anything that we wanted to give away to the homeless and poor children who did not have the lives that other children were privileged to. They taught us to love people no matter how poor, rich, greedy, big, and/or small they were. Sharing and giving was a great event in our family. We learned what giving meant, when we shared and gave away those items that we might have cared for or simply had no use for, but others could care for and/or treasure. There is a saying that what is junk for someone, is a treasure for someone else. More importantly, was to give away some of the items we dearly wanted to keep, since this meant more than those we did not want to stay with. This was a more meaningful action, according to our parents. It meant that we were not giving away the leftovers. I grew to learn and understand the importance of living with people of different walks of life, appreciate the similarities and differences, and learn to help humankind. I learned that although some people may lack material things, they are as important as those that are fortunate to have more. My parents taught us about brotherhood and sisterhood, to be able to live in peace within the community, and to cherish and appreciate that which we

The Music Industry Essay Example for Free

The Music Industry Essay In this essay I will be discussing the four main areas of the music industry; I hope to gain knowledge about them and how they connect to one another so I can better myself overall as a musician. Record Labels: Record Labels are brands that are responsible for marketing the music recordings and music videos of bands/artists; there are two types of record labels, major and independent. There are only 3 major record labels left which are Universal Music Group, Warner Music Group and Sony Music Group, a record label is classed major when it has more than 5% market share. Major Record Labels There are many pros to signing to a major record label and the most obvious and perhaps most important one is that these big companies have a lot of money, this means they will be spending more money promoting your record, which means a higher chance of sales and popularity. Having more cash available also means they will invest a lot in touring, recording and music videos which will all benefit your career in a band or as a solo artist. Although the pros of signing a major record deal sounds incredibly rewarding, there is a few downsides which may cause a band/artist to be put off. Firstly, signing to a major record company won’t always last as long as the artist wants it to; if your major label is paying a lot of money to promote you they will not keep you signed if you are not selling records to return the output of money back into their pockets. A lot of the time they will sign a lot of acts just to see what ones are popular and will make money, resulting in the unpopular acts being dropped. Furthermore, things like artist unfriendly deals which leave the artist earning a lot less money than the label and not having full creative control of material are all disadvantages which could leave an artist or band seeking a better deal from in an independent label. 1 Independent Record Labels An independent record label is a label not associated with the big three major labels, a lot of artists start their career on independent labels. One pro of an independent label is that they love your music; this means they will be working harder with you, this also means you will have close working  relationships with the label due to smaller staff and a smaller roster which means you can contact your label easier and ask them questions. Also independent labels have artist friendly deals, you will have more creative control and independent labels are unlikely to contract you to multi album deals. Independent labels also have a few cons and the main one being money, which was the main pro of a major label. With less money available this will mean you won’t have large recording budgets, huge promotion deals and things like tour support, you will have to support yourself financially which is why a lot of artists would prefer a major record deal. Along with a shortage of money, other cons of indie labels include size which means less purchasing power and also disorganisation. 2 Overall I believe the best type of record label depends on preference, if an artist is seeking fame and fortune a major label deal would be best for them as more money would be available to them and they would be promoted and better known. If an artist felt strongly about the music they wrote and wanted to have full creative control an independent label would be best for them. How do I get signed? If you want to get signed to a record label you can start by sending in your demo to the AR department and then things can advance from there if they like what they hear. Record labels have separate department that help find and sign artists which is AR, they help find artists by listening to demos, going to gigs and watching recordings of bands to find talent, they would contact the artist and tell them how they would develop them as an artist. Furthermore, they find the right songs for the artist, make sure they work with the right producer and find the right studio; AR are also the department that handles contract negotiations. As an AR person you must understand what music is current and what can become popular, this is an important job and you must have a good ear as this person bridges the gap between record labels and artists and can be the person responsible for signing the next big thing. If you want to get signed to a record label you can start by sending in your demo to th e AR department and then things can advance from there if they like what they hear. i What can record labels offer you? Recording studios are also another thing that comes with a signing a record  deal, perks of a recording studio includes top of the range equipment and rooms with excellent acoustics to give your band a better sound when recording, you will also have a well-trained sound engineer to mix and produce your song, however these can be expensive and leave you with less money for things like touring. I believe recording your music in a studio will also give it a better sound which means it will also be more likely to sell. Record labels will also help you distribute your material, Retail is selling your music by physical sales or through the internet, you can sell songs and albums for digital download over the internet on multiple platforms such as iTunes or amazon, once a song is bought a percentage goes to the retailer and the rest to the artist and label. Selling your music on CD is distributed slightly different, labels will discuss with the retailer how many copies they want to order and once an amount has been agreed the cd’s will be shipped then sold. Overall I believe selling your music for digital purchase is better as internet sales are becoming very popular as people can download songs straight to their phones, also you make less of a loss if your songs don’t sell on iTunes or amazon etc. as you haven’t had to pay for CD printing.ii Music Publishing: A music publisher or music publishing company is in charge of making sure songwriters and composers receive their royalty payments when their compositions are used commercially.3 They will also help distribute and promote music that is created, license songs to record companies and copyright songs and compositions, their job is to promote and protect songs and compositions. Finding songwriters and composers in a music publishing company is also handled by AR, songwriters and composers can be found on YouTube, Twitter, Facebook and other social media sites; furthermore there are traditional methods like going to gigs to find songwriters and composers. 4 Promotion One of the most important jobs to a music publisher is promoting songs, this means getting the songs to be used in ways that earn money. They can talk to music supervisors to get songs played in films, TV shows and advertisements which can bring in a lot of money due to synchronisation rights and royalties. 5 Publishers will have a network of contacts that they can  promote to and then negotiate a license with. They can also make deals with musicians that want to use songs their clients have written/composes. It is very important that a music publisher or music publishing company promotes well because getting your music heard and recognised can be the forefront to your success. Copyright management Copyright means protecting material and allowing composers to be paid for their work, if something is copyrighted it means the creators of the material are in charge of it and can decide who uses their work and what circumstances it is used in. In a song the musical work and lyrics are both protected, to copyright something it has to be original and not copied; it must be recorded on paper or on CD. It is important a music publisher copyrights their songwriters/composers material otherwise it can be copied by other people and they will not be able to prosecute in court without copyright. 6 Performing rights Performing rights are the right to perform songs in a public place; it is part of copyright law and means the composer/songwriter and publisher will be paid, the royalties would be split 50/50. Performance rights mean a group who are not copyright holders are performing a piece of music publicly, performances are considered public if they are in a public place such as a nightclub, restaurant or at a concert. This is another reason why it is important for a music publishing company to copyright their client’s music, so they can claim royalties and money can be made from their material. Live performance: Live performance includes things like gigs and festivals, I will be discussing some of the roles that make a live performance and how they work. Promoting a Live Performance The main thing that completes a live performance is people, without people turning up to your live performance you will fail to create an atmosphere and most importantly not make any money back from the high costs of renting a venue hiring staff etc. So to get people to come along to your event/performance you need to promote. Promoting techniques you can use  include printing off posters and posting them everywhere you can, ask small shops if you can put them in the windows or even stick them to lampposts. However you need a good eye catching poster otherwise it will go unnoticed. Other ways to promote include promoting your event on social networking like Facebook and Twitter, you can create an event and invite as many people as you like; people are likely to see this as a lot of people have their phones on them all the time and will receive a notification when invited7. Online and physical ways of promoting can both be effective when done right, but if you want a large amount of people to notice your event and consider coming you need to do both online and physical promotion. Setting up a live performance To set up for a live performance you need to start by gathering some equipment. It is advisable you go and take a look at the venue a few weeks before the show day so you can see what equipment needs to be brought along, things to look out for include seeing if the venue has a PA, if not you may want to hire or invest in one; if you are hosting the event at your own venue it is worth buying your own PA to save money in the long term. Other things include staging space, make sure there is ample floor space for the performers to stand and you may want to bring a stage/drum riser if there aren’t any there already. Lighting can also be important in bringing atmosphere to a performance. Finally, you will at least a handful of staff on the night such as security, stagehands and a sound engineer. 8When hosting an event you may want to choose for more expensive equipment whilst saving money on staff, good equipment will improve sound and experience meaning people will want to come aga in; but you can get away with hiring people for not much at all as people are happy to get into a free show and help. Health and safety Health and safety precautions at a live performance are incredibly important, start by making sure there is a person in charge of first aid as this is also the law; people are likely to get hurt in a crowd of people by tripping up or bumping into people. Secondly, when sorting and setting up electrical equipment you need to make sure wires are not across the stage in the air as this could cause a trip hazard for performers and also make sure there are no trip hazards in the crowd standing space also. Another precaution to take is making sure staging is secured properly; if heavy staging equipment is not put together correctly accidents could happen causing big injuries which could mean you not being able to host events again. A final thing to take into consideration is noise level, when hosting a live event you are granted a license with rules of decibel level and if you exceed this level you would not be granted another license so another live performance would not be possible. I believe taking all of these health and safety precautions is fundamental to looking after everyone at a venue and will mean things can run smoothly without any inconvenience. 9 Tour and event management An event manger means you will be in charge of a number of jobs, firstly you’ll need to find your venue that is suitable to your event; and then you need to book your acts. After you have sorted this you need to check health and safety is okay and then make sure the night runs smoothly. An event manager is an important role in making sure a live performance goes to plan, the audience may not notice the hard work of an event manager but if it wasn’t for them there would be no show. A tour manager is slightly different; they are in charge of booking venues as well as hotels and what crews are in charge of health and safety, security etc. I believe that tour and event management plays a huge part to live performance and makes things tick, without tour and event managers everything would be unorganised and would not go smoothly. Front of house and Backstage Starting with front of house, this includes a wide range of jobs such as door staff; these can be security or people that accept tickets. People at food stalls or bars are also included, these people are important as they can keep the audience refreshed with drinks and food. Front of house staff can be important as they are what the audience see so they need to be calm and relaxed so things run according to plan and not to distress anyone at the venue. Backstage staff covers a few more roles, they include the sound engineer who controls the levels and quality of the band’s sound to put on a good sounding performance for the crowd, secondly there are instrument technicians for drums, bass, guitar so if any instruments fail in any way they are there to fix it or provide a new instrument e.g. backup  guitar/bass. Other roles include a lighting technician to give the performance visual effect and also a pyro-technician who is in charge of any fireworks or fire during the performance. Backstage managers will make sure acts are ready to go on stage at the correct time; roadies are in charge of moving and packing equipment away for the end of the set or for the next act. Backstage staffs are just as important as the acts themselves, this job needs to be done effectively and communication is key otherwise things could fall apart very quickly. Performance rights When hosting a live performance you need to make sure you are licensed to play music, you must have the correct copyright licenses, having these is a legal requirement. PRS collects royalties for songwriters, publishers and composers and PPL collects royalties for performers and musicians. You also need public liability insurance, and if any DJ’s are performing they will need a ProDub licence; this is needed for when a DJ is transferring music from a vinyl, CD etc. to a digital format. If they do not have this license you may face fines or legal prosecution. Artist management Business and Tour managers Business managers are in charge of all the money to do with the artist, they are usually accountants that have experience with musicians, day to day managers can also take care of finances but they usually have a lot more things to do so it is helpful to have a business manager for this. A tour manager takes care of booking venues, hotels, flights and things like selecting a tour bus etc. Tour managers are important because they get the artist/band from one place to another and make sure things run smoothly, a good tour manager needs to be organised so the band makes it on time to gigs, interviews and recordings. Having managers can be very helpful to an artist; however they will need to be paid so it’s important to decide what mangers you definitely need. 10 Artist and managers rights In the music industry artist and managers rights must be abided by, otherwise you could be brought to court; artist rights include being paid their royalties due to copyright, these are usually songs played on the radio/television etc. Manager’s rights are slightly different they include  being paid fairly and that all contract terms are kept to, if they aren’t it means the manager can terminate the contract at any time. I believe it is very important managers and artists rights are abided by because you may end up in court if contract terms are breached. Sponsorship Sponsorship does not always mean getting free stuff from the company that is sponsoring you, it means when two businesses come together to benefit from the association of one another. Sponsorship deals can be gained by the artist’s manager, it can mean money is offered to an artist and in the return the artist will wear, promote the brand. This is a very good way for an artist to earn income; it also makes artists/bands noticed. Endorsement is slightly different as it means artists can use the companies gear, this is good as it opens the company to a lot of fans and allows the artist to use top of the range equipment. I think sponsorship deals are good as they benefit both parties and can allow a lot of income to the artist and company. Merchandise Merchandise can include clothing, CDs and stickers. The merchandise should include a creative logo that goes with the name of the band, stickers are useful as they can be stuck anywhere and promote your band. Merchandise can be sold after shows and also online which is useful if people cannot get to them at a show, selling merchandise is a great way to make money as people will pay high prices to own a t shirt with their favourite bands name and logo on it. It’s also a good promotion technique, if people are walking the streets with your band name on their t shirt soon your bands name will become familiar to people and they will tempted to listen to your music. However, you need to make sure your designs are effective and not offensive because bad merchandise may put people off of your music. Merchandising is a very popular and important way of earning money and getting your band noticed, I believe it is a very good way to help an artist/band’s success. In this essay I have talked about and explained the four areas of the music industry, I have gained knowledge which will benefit my career as a musician, with this knowledge I now have an understanding about various careers in the music industry also.

Pakistan Commercial Banks Risk Management

Pakistan Commercial Banks Risk Management ABSTRACT The agreement on international banking regulations dealing with how the banks handle the risk, the Basel Accord mainly focuses on the credit risk; according the Basel accord the bank assets divided into five main categories according to how they are risky. The five main categories are as (1) is assets without risk means 0% risk weighted, second one is 10% risk weighted, 3rd is 20% weighted, 4th is 50% weighted and last one is 100% weighted. When the banks perform international transactions they are required according the Basel Accord to hold assets minimum 8% aggregated risk according the Basel 1. The Basel 1 was written in 1988 by the Basel committee on banking supervision. All Banks of G-10 countries have try to implement this accord since the early 1990s. Now a days it is considered largely outdated and Basel committee working on Basel 1 to changing process in the shape of Basel II. This is also called Basel I accord. The document Basel I Capital Accord mainly designs to evaluate the capital in relation with the credit risk, and also the risk that can be a cause of losses in which the risk will occur if the party fail or unable to fulfill the obligations. It is mainly focus on the risk increasing modeling research process that is improvement toward the risk increasing research mode; however, it is over simplified calculations, and also classifications that have been simultaneously called for its disappearance, but the improvement in the shape of the Basel II Capital Accord and also other further agreements that are the sign for the continuously refinement for the risk and capital in the banking sector. Nevertheless, the document Basel I accords, will remain the first international instrument that evaluate the importance of risk with the relationship to capital, and also will remain as a milestone in the banking sector like finance and banking history. This study is mainly related to the risk management practices being followed by the commercial Banks in Pakistan. The questionnaire is used as a main tool to collect primary data and check the extent to which the risk management practices are being carried upon by the commercial banks in Pakistan. The six important aspects of risk management process are categorized as one dependent and five explanatory variables. This study aims to investigate the awareness about risk management practices within the banking sector of Pakistan. This study is comprised of data collected through both, primary as well as secondary sources. The purpose of using primary source data is to check the extent to which different risk management practices have been followed by the commercial banks in Pakistan. Primary data is collected through the use of a questionnaire. The questionnaire comprises a number of statements under one macro statement. It includes Risk Management Practices (RMP) as the dependent varia ble, and different aspects of risk management as the independent or explanatory variables. Whereas, the objective to use secondary data is to link the risk weighted Capital Adequacy Ratio to the different financial indicators of the commercial banks that are used to measure their soundness. CHAPTER 2 LITERATURE REVIEW Risk management practices by the Commercial Banks Within the last few years, a number of studies have provided the discipline into the practice of risk management within the corporate and banking sector. An insight of related studies is as follows: Amran, et al. (2009), this article mention the possible availability of risk exposà © in the annual reports of the Malaysian companies. The study was aimed to empirically test the characteristics of the sampled companies. And also the level of risk faced by Malaysian companies with the disclosure made was also assessed and compared. The findings of the research revealed that the strategic risk came on the top, followed by the operations and empowerment risks being disclosed by the selected companies. The regression analysis proved significantly that size of the companies did matter. The stakeholder theory explains well this finding by stating that As company grows bigger, it will have a large pool of stakeholders, who would be interested in knowing the affairs of the company. The extent of risk disclosure was also found to be influenced by the nature of industry. As explored within this study, infrastructure and technology industries influenced the companies to have more risk inform ation disclosed. Hassan, A. (2009), made a study Risk Management Practices of Islamic Banks of Brunei Darussalam to assess the degree to which the Islamic banks in Brunei Darussalam implemented risk management practices and carried them out thoroughly by using different techniques to deal with various kinds of risks. The results of the study showed that, like the conventional banking system, Islamic banking was also subjected to a variety of risks due to the unique range of offered products in addition to conventional products. The results showed that there was a remarkable understanding of risk and risk management by the staff working in the Islamic Banks of Brunei Darussalam, which showed their ability to pave their way towards successful risk management. The major risks that were faced by Brunei banks that was the Foreign exchange risk as well as credit risk and also operating risk. For the analysis regression model was used to explain the results which shown that the Risk Identification, or Risk Assessment and Analysis were also the most uncontrollable variables and the Islamic banks in Brunei needed to give more attention to those variables to make their Risk Management Practices more effective by understanding the true application of Basel-II Accord to improve the efficiency of Islamic Bank’s risk management systems. Al-Tamimi (2008) studied the relationship among the readiness of implementing Basel II Accord and resources needed for its implementation in UAE banks. Results of the research revealed that the banks in UAE were aware of the benefits, impact and challenges associated in the implementation of Basel II Accord. However, the research did not confirm any positive relationship between UAE banks readiness for the implementation of Basel II and impact of the implementation. The relationship between readiness and anticipated cost of implementation was also not confirmed. No significant difference was found in the level of Basel II Accord’s preparation between the UAE national and foreign banks. It was concluded that there was a significant difference in the level of the UAE banks Basel II based on employees education level. The results supported the importance of education level needed for the implementation of Basel II Accord. Al-Tamimi and Al- Mazrooei (2007) provide the comprehensive study relating of Bank’s Risk Management of UAE National and Foreign Banks. The outcome of this research is to find out that there are three most important types of risks facing the UAE commercial banks that were foreign exchange risk, 2nd one followed by credit risk and 3rd one is operating risk. And the result also found that the bank of UAE were also efficiently handle the risk; but the variables like as the risk identification, risk assessment and also analysis proved that the banks are more efficient in risk management process. Finally, the outcome of the result showed that there was a huge difference if we compare the UAE National banks and foreign Banks in the practicing the risk assessment and risk analysis as well as risk monitoring and risk controlling process. Koziol and Lawrenz (2008) provided a study in which they assessed the risk of bank failures. They said that assessing the risk related to bank failures is the paramount concern of bank regulations. They argued that in order to assess the default risk of a bank, it is important considering its financing decisions as an endogenous dynamic process. The research study provided a continuous-time model, where banks chose the deposit volume in order to trade off the benefits of earning deposit premiums against the costs that would occur at future capital structure adjustments. Major findings suggested that the dynamic endogenous financing decision introduced an important self-regulation mechanism. Basel Core Principles and Bank Risk: Does Compliance Matter? The recent financial crisis has sparked widespread calls for reforms of regulation and supervision. The initial reaction to the crisis was one of disbelief: how could such extensive financial distress emerge in countries where the supervision of financial risk had been thought to be the best in the world? Indeed, the regulatory standards and protocols of the advanced countries at the center of the financial storm were being emulated worldwide through the progressive adoption of the international Basel capital standards and the Basel Core Principles for Effective Bank Supervision (BCPs). The crisis exposed significant weaknesses in the financial system regulatory and supervisory framework worldwide, and has spawned a growing debate about the role these weaknesses may have played in causing and propagating the crisis. As a result, reform of regulation and supervision is a top priority for policymakers, and many countries are working to upgrade their frameworks. But what should the reforms focus on? What constitutes good regulation and supervision? Which elements are most important for ensuring bank soundness? What should be the scope of regulation? To date, the best practices in supervision and regulation have been embodied by the BCPs. These principles were issued in 1997 by the Basel Committee on Bank Supervision, comprising representatives from bank supervisory agencies from advanced countries. Since then, most countries in the world have stated their intent to adopt and comply with the BCPs, making them a global standard for bank regulators. Importantly, since 1999, the IMF and the World Bank have conducted evaluations of countries’ compliance with these principles, mainly within their joint Financial Sector Assessment program (FSAP). The assessments are conducted according to a standardized methodology developed by the Basel Committee and therefore provide a unique source of information about the quality of supervision and regulation around the world. Hence the international community has made significant investments in developing these principles, encouraging their wide-spread adoption, and assessing progress with their compliance. In light of the recent crisis and the resulting skepticism about the effectiveness of existing approaches to regulation and supervision, it is natural to ask if compliance with the global standard of good regulation is associated with bank soundness. Specifically, they test whether better compliance with BCPs is associated with safer banks. They also look at whether compliance with different elements of the BCP framework is more closely associated with bank soundness to identify if there are specific areas which would help prioritize reform efforts to improve supervision. The paper extends their previous work (Demirgà ¼Ãƒ §-Kunt, Detragiache and Tressel, 2008: henceforth DDT), in which they showed that banks receive more favorable financial strength ratings from Moody’s in countries with better compliance with BCPs related to information provision, while compliance with other principles does not affect ratings significantly. The policy message from this study was that countries should give priority to strengthening regulation and regulation in the area of information provision (both to the market and to supervisors) relative to other areas covered by the core principles. Using rating information to proxy bank risk significantly limited the sample size in that study, making it necessary to exclude many smaller banks and many banks from lower income countries. Furthermore, after the recent crisis, the credibility of credit ratings as indicators of bank risk has also diminished, questioning the merit of using these ratings in the analysis. In this paper, they explore whether BCP compliance affects bank soundness, but instead of using ratings they capture bank soundness using the Z-score, which is the number of standard deviations by which bank returns have to fall to wipe out bank equity (Boyd and Runkle, 1993). Because they can construct Z-scores using just accounting information, and because assessment data for additional countries have also become available, they can extend the sample size considerably relative to our earlier study, to over 3,000 banks from 86 countries (compared to 200 banks from 37 countries analyzed in DDT). This is not just a simple increase in sample size: the sample of rated banks was not a representative sample, because rated banks tend to be larger, more internationally active, and more likely to adhere to international accounting standards. From a policy point of view, they would like to investigate the effect of BCP compliance on all types of banks operating in different country circumstan ces, rather than a select subgroup. In this study, the richer sample allows us to explore whether the relationship between BCPs and bank soundness varies across different types of banks. All in all, they do not find support for the hypothesis that better compliance with BCPs results in sounder banks as measured by Z-scores. This result holds after controlling for the macroeconomic environment, institutional quality, and bank characteristics. They also fail to find a significant relationship when they consider different samples, such a sample of rated banks only, a sample including only commercial banks, and samples including only the largest financial institutions. In an additional test, they calculate aggregate Z-scores at the country level to try to capture the stability of the system as a while rather than that of individual banks, but also this measure of soundness is not significantly related to overall BCP compliance. When they explore the relationship between soundness and compliance with specific groups of principles, which refer to separate areas of prudential supervision and regulation, they continue to find no evidence that good compliance is related to im proved soundness. If anything, they find that stronger compliance with principles related to the power of supervisors to license banks and regulate market structure are associated with riskier banks. While these results cast doubts on whether international efforts to improve financial regulation and supervision should continue to place a strong emphasis on BCPs, a number of caveats are in order. First, insignificant results may simply indicate that accounting-based measures, such as Zscores, do not adequately capture bank soundness, especially for small banks and in low income countries, where accounting standards tend to be poor. They may also reflect low quality in the assessment of BCP compliance, especially in countries where laws and regulations on the books may carry little weight. It might be also argued that assessments are not comparable across countries, despite the best efforts of expert supervisors and internal reviewing teams at the IMF and the World Bank to ensure a uniform methodology and uniform standards. If their negative results arise because compliance assessments do not reflect reality or are not comparable across countries, then at a minimum they should lead us to question the value of these assessments in ensuring that supervision measures up to global standards. Review of related literature of this paper is as follows: Defining good regulatory and supervisory practices is a difficult and complicated task. Barth, Caprio, and Levine (2001, 2004, and 2006) were the first to compile and analyze an extensive database on banking sector laws and regulations using various surveys of regulators around the world, and to study the relationship between alternative regulatory strategies and outcomes. This research finds that regulatory approaches that facilitate private sector monitoring of banks (such as disclosure of reliable, comprehensive and timely information) and strengthen incentives for greater market monitoring (for example by limiting deposit insurance) improve bank performance and stability. In contrast, boosting official supervisory oversight and disciplinary powers and tightening capital standards does not lead to banking sector development, nor does it improve bank efficiency, reduce corruption in lending, or lower banking system fragility. They interpret their findings as a challenge to the Basel Committee’s influential approach to bank regulation which heavily emphasizes ca pital and official supervision. An important limitation of this type of survey is that it mainly captures rules and regulations that are on the books rather than actual implementation. IMF and the World Bank financial sector assessments have often found implementation to be lacking, particularly in low income countries, so that cross-country comparisons of what is on the books may hide substantial variation in the quality of supervision and regulation. BCP assessments have the advantage of taking into account implementation. Of course, assessing how rules and regulations are implemented and enforced in practice is not an exact science, and individual assessments may be influenced by factors such as the assessors’ experience and the regulatory culture they are most familiar with. Nevertheless, although it is difficult to eliminate subjectivity completely, assessments are based on a standardized methodology and are carried out by experienced international assessors with broad c ountry experience. Cihak and Tieman (2008) analyze the quality of financial sector regulation and supervision using both Barth, Caprio and Levine’s survey data and BCP assessments. They find that regulation and supervision in high-income countries is generally of higher quality than in lower income countries. They also note that the correlation between survey data and BCP data tend to be low, always less than 50 percent and in many cases in the 20-30 percent range, suggesting that taking into account implementation may indeed make an important difference. A number of papers also use BCP assessments to study bank regulation and performance. Sundararajan, Marston, and Basu (2001) use a sample of 25 countries to examine the relationship between an overall index of BCP compliance and two indicators of bank soundness: nonperforming loans (NPLs) and loan spreads. They find BCP compliance not to be a significant determinant of these measures of soundness. Podpiera (2004) extends the set of countries and finds that better BCP compliance lowers NPLs. Das et al. (2005) relates bank soundness to a broader concept of regulatory governance, which encompasses compliance with the BCPs as well as compliance with standards and codes for monetary and financial policies. Better regulatory governance is found to be associated with sounder banks, particularly in countries with better institutions. In this paper, as already discussed they rely on the Z-score to measure bank soundness. While the Z-score has its limitations, they believe it is an improvement over measures used in previous studies, namely NPLs, loan spreads, interest margins, and capital adequacy. Because different countries have different reporting rules, NPLs are notoriously difficult to compare across countries. On the other hand, loan spreads or interest margins and capitalization are affected by a variety of forces other than fragility, such as market structure, differences in risk-free interest rates and operating costs, and varying capital regulation. Thus, cross-country comparability is a serious issue. In contrast with ratings, Z-scores do not rely on the subjective judgment of rating agencies’ analysts. Results from the baseline regression, relating bank soundness measured by the Z-score to the degree of compliance with the BCPs. In the sample including all countries, the Zscore is higher, indicating a sounder bank, for banks with lower operating costs in countries with higher GDP per capita. Also, non-commercial banks tend to have higher Z-scores, while the other control variables are not significant. The coefficient of the BCP compliance index is positive but not significant. If they exclude Japanese banks, which account for over 20 percent of the sample, the fit of the model improves markedly (the R-squared increases from 10 percent to 19 percent) and the coefficients of many regressors change substantially.12 This suggests that the variables explaining the Z-score of Japanese banks may be somewhat different than for the rest of the sample, perhaps because of the lingering effects of Japan’s prolonged banking crisis on bank balance sheets. For example, in the sample excluding Japan inflation and the rule of law index are significant (with the expected coefficients), while GDP per capita is not (though the coefficient remains positive). Also, banks with a higher ratio of net loans to assets have higher Z-scores, perhaps because Basel regulation mandating minimum levels of risk-adjustment capital forces these banks to hold more equity. Also, in the sample excluding Japan larger banks have lower Z-scores, likely because they tend to hold less capital than smaller banks. Despite these differences, the coefficient of the BCP compliance index remains insignificantly different from zero also in the sample without Japanese banks. The same is true when they add to the regression additional macro controls, such as exchange rate appreciation, private credit, or the sovereign rating. In the regressions, they explore how the relationship between BCP compliance and bank soundness changes if they alter the sample composition to include various categories of financial institutions to explore whether BCP compliance may affect soundness for alternative types of banks. All these results refer to the sample excluding Japan, so that th e overrepresentation of Japanese banks does not distort the results. The first exercise is to examine the widest sample possible, i.e. one that includes investment banks/securities houses, medium and long-term credit banks, nonbank credit institutions, and specialized government credit institutions. These are institutions that in most countries are unlikely to fall under the perimeter of bank regulation and supervision, so they have excluded them from the baseline sample. When they include them, the sample size grows by 25 percent, but the main regression results are unchanged. In particular, bank soundness is not significantly affected by compliance with the BCPs. If they restrict the sample to commercial banks only, thereby losing about 300 banks compared to the baseline sample, once again they find that regression results remain very close to the baseline. When they focus only on banks rated by Moody’s, as in our earlier work, the sample shrinks considerably (to just over 300 banks), and the coefficient of the BCP compliance index becomes positive and significant, albeit only at the 10 percent confidence level. Thus, BCP compliance seems to have some positive effect on the soundness of this specific group of banks. To explore this issue further, they ask whether this result is driven by the fact that rated banks are larger banks. To do so, they consider two alternative samples: the first includes the largest 10 percent of banks within each country and the second includes the largest 20 percent of banks in the entire sample. In both cases, the BCP compliance index has an insignificant coefficient, as in the baseline sample. The BCP compliance index is the weighted sum of compliance scores for several individual chapters of the Core Principles. Could it be that, even though overall compliance does not seem to matter for bank soundness, some aspects of the Core Principles might be relevant? In fact, it may be possible that the overall index is not significant because of offsetting effects of its different components. In fact, in our previous study of Moody’s ratings, they found that, although overall compliance did not seem to matter, higher financial strength ratings were associated with better compliance with principles related to information provision to supervisors. They address this question by re-running the baseline regressions breaking down the compliance index into seven components, based on the standard grouping of principles used by the Basel Committee. An important caveat is that compliance scores are fairly strongly correlated, which may make it difficult to disentangle the effect of one set of principles from the others. They replicate the regression for different samples of banks to investigate the robustness of the results. There is only one component of the compliance index that has a fairly robust relationship with bank Z-scores, and that is compliance with Chapter 2 of the BCP, i.e. principles having to do with supervisors’ powers to regulate bank licensing and structure. Interestingly, this component of the index is negatively correlated with bank soundness, so that banks in countries were regulators have better defined powers to give out licenses and regulate bank activities tend to be riskier. This result holds in all th e samples except those including only the largest banks. This finding supports the contention that supervisory systems that tend to empower supervisors do not work well (Barth, Caprio, and Levine, 2001, 2004, 2006). So far, they have considered individual bank risk. In principle, bank supervision and regulation should be primarily concerned with systemic risk, rather than individual bank risk, although in practice it is not always easy to make this distinction. Could it be that BCP compliance, while not relevant to individual bank soundness, is important to ensure the stability of system as a whole? To address this question, it would be ideal to test whether BCP compliance reduces the probability of a financial crisis. However, since crises are rare events, this type of test requires a panel of data; since they have BCP compliance assessments only at a point in time, they are restricted to cross-sectional data. Nonetheless, to explore this question they compute a rough measure of systemic soundness as the aggregate equivalent of the individual bank Z-score. More specifically, they aggregate profits and equity of all the banks in the country (for which they have data), they compute the standard d eviation of aggregate profits, and then they compute an aggregate Z-score. This measure tells us by how many standard deviations banking system profits must fall to exhaust all the capital in the banking system. They then regress this measure on the BCP compliance score and a number of macroeconomic control variables. Their measure of systemic soundness is correlated with the macro variables as one might expect: higher growth, low inflation, low inflation volatility, appreciation of the currency, favorable sovereign ratings are all significantly associated with higher values of the aggregate Z-score. Once again, though, the BCP compliance index does not seem to be a significant determinant of banking system soundness. Though it is positive, the coefficient of the BCP index is small and not statistically significant in any specification. Remarks While the causes and consequences of the recent financial crisis will continue to be debated for years to come, there is emerging consensus that the crisis has revealed significant weaknesses in the regulatory and supervisory system. Resulting calls for reform have led to numerous proposals and policymakers in many countries are hard at work to upgrade their regulatory frameworks. This paper seeks to inform the on-going reform process by providing an analysis of how existing regulations and their application are associated with bank soundness. Specifically, they study whether compliance with Basel Core Principles for effective banking supervision (BCPs) is associated with lower bank risk, as measured Z-scores. They find no evidence of a robust statistical relationship linking better compliance with BCPs and improved bank soundness. The analysis of aggregate Z-scores to capture systemic stability issues yields similarly insignificant results. If anything, they find that compliance wit h a specific group of principles, those giving supervisors powers to regulate bank licensing and structure is associated with riskier banks, potentially suggesting that such powers may be misused in practice. While our results may reflect the difficulty of capturing bank risk using accounting measures, or the inability of assessors to carry out evaluations that are comparable across countries, nevertheless they raise questions about the relevance of the Basel Core Principles, the current emphasis on these principles as key to effective supervision, and the wisdom of carrying out costly periodic compliance reviews of BCP implementation in the IMF/World Bank Financial Sector Assessment Programs. Pakistan Commercial Banks Risk Management Pakistan Commercial Banks Risk Management ABSTRACT The agreement on international banking regulations dealing with how the banks handle the risk, the Basel Accord mainly focuses on the credit risk; according the Basel accord the bank assets divided into five main categories according to how they are risky. The five main categories are as (1) is assets without risk means 0% risk weighted, second one is 10% risk weighted, 3rd is 20% weighted, 4th is 50% weighted and last one is 100% weighted. When the banks perform international transactions they are required according the Basel Accord to hold assets minimum 8% aggregated risk according the Basel 1. The Basel 1 was written in 1988 by the Basel committee on banking supervision. All Banks of G-10 countries have try to implement this accord since the early 1990s. Now a days it is considered largely outdated and Basel committee working on Basel 1 to changing process in the shape of Basel II. This is also called Basel I accord. The document Basel I Capital Accord mainly designs to evaluate the capital in relation with the credit risk, and also the risk that can be a cause of losses in which the risk will occur if the party fail or unable to fulfill the obligations. It is mainly focus on the risk increasing modeling research process that is improvement toward the risk increasing research mode; however, it is over simplified calculations, and also classifications that have been simultaneously called for its disappearance, but the improvement in the shape of the Basel II Capital Accord and also other further agreements that are the sign for the continuously refinement for the risk and capital in the banking sector. Nevertheless, the document Basel I accords, will remain the first international instrument that evaluate the importance of risk with the relationship to capital, and also will remain as a milestone in the banking sector like finance and banking history. This study is mainly related to the risk management practices being followed by the commercial Banks in Pakistan. The questionnaire is used as a main tool to collect primary data and check the extent to which the risk management practices are being carried upon by the commercial banks in Pakistan. The six important aspects of risk management process are categorized as one dependent and five explanatory variables. This study aims to investigate the awareness about risk management practices within the banking sector of Pakistan. This study is comprised of data collected through both, primary as well as secondary sources. The purpose of using primary source data is to check the extent to which different risk management practices have been followed by the commercial banks in Pakistan. Primary data is collected through the use of a questionnaire. The questionnaire comprises a number of statements under one macro statement. It includes Risk Management Practices (RMP) as the dependent varia ble, and different aspects of risk management as the independent or explanatory variables. Whereas, the objective to use secondary data is to link the risk weighted Capital Adequacy Ratio to the different financial indicators of the commercial banks that are used to measure their soundness. CHAPTER 2 LITERATURE REVIEW Risk management practices by the Commercial Banks Within the last few years, a number of studies have provided the discipline into the practice of risk management within the corporate and banking sector. An insight of related studies is as follows: Amran, et al. (2009), this article mention the possible availability of risk exposà © in the annual reports of the Malaysian companies. The study was aimed to empirically test the characteristics of the sampled companies. And also the level of risk faced by Malaysian companies with the disclosure made was also assessed and compared. The findings of the research revealed that the strategic risk came on the top, followed by the operations and empowerment risks being disclosed by the selected companies. The regression analysis proved significantly that size of the companies did matter. The stakeholder theory explains well this finding by stating that As company grows bigger, it will have a large pool of stakeholders, who would be interested in knowing the affairs of the company. The extent of risk disclosure was also found to be influenced by the nature of industry. As explored within this study, infrastructure and technology industries influenced the companies to have more risk inform ation disclosed. Hassan, A. (2009), made a study Risk Management Practices of Islamic Banks of Brunei Darussalam to assess the degree to which the Islamic banks in Brunei Darussalam implemented risk management practices and carried them out thoroughly by using different techniques to deal with various kinds of risks. The results of the study showed that, like the conventional banking system, Islamic banking was also subjected to a variety of risks due to the unique range of offered products in addition to conventional products. The results showed that there was a remarkable understanding of risk and risk management by the staff working in the Islamic Banks of Brunei Darussalam, which showed their ability to pave their way towards successful risk management. The major risks that were faced by Brunei banks that was the Foreign exchange risk as well as credit risk and also operating risk. For the analysis regression model was used to explain the results which shown that the Risk Identification, or Risk Assessment and Analysis were also the most uncontrollable variables and the Islamic banks in Brunei needed to give more attention to those variables to make their Risk Management Practices more effective by understanding the true application of Basel-II Accord to improve the efficiency of Islamic Bank’s risk management systems. Al-Tamimi (2008) studied the relationship among the readiness of implementing Basel II Accord and resources needed for its implementation in UAE banks. Results of the research revealed that the banks in UAE were aware of the benefits, impact and challenges associated in the implementation of Basel II Accord. However, the research did not confirm any positive relationship between UAE banks readiness for the implementation of Basel II and impact of the implementation. The relationship between readiness and anticipated cost of implementation was also not confirmed. No significant difference was found in the level of Basel II Accord’s preparation between the UAE national and foreign banks. It was concluded that there was a significant difference in the level of the UAE banks Basel II based on employees education level. The results supported the importance of education level needed for the implementation of Basel II Accord. Al-Tamimi and Al- Mazrooei (2007) provide the comprehensive study relating of Bank’s Risk Management of UAE National and Foreign Banks. The outcome of this research is to find out that there are three most important types of risks facing the UAE commercial banks that were foreign exchange risk, 2nd one followed by credit risk and 3rd one is operating risk. And the result also found that the bank of UAE were also efficiently handle the risk; but the variables like as the risk identification, risk assessment and also analysis proved that the banks are more efficient in risk management process. Finally, the outcome of the result showed that there was a huge difference if we compare the UAE National banks and foreign Banks in the practicing the risk assessment and risk analysis as well as risk monitoring and risk controlling process. Koziol and Lawrenz (2008) provided a study in which they assessed the risk of bank failures. They said that assessing the risk related to bank failures is the paramount concern of bank regulations. They argued that in order to assess the default risk of a bank, it is important considering its financing decisions as an endogenous dynamic process. The research study provided a continuous-time model, where banks chose the deposit volume in order to trade off the benefits of earning deposit premiums against the costs that would occur at future capital structure adjustments. Major findings suggested that the dynamic endogenous financing decision introduced an important self-regulation mechanism. Basel Core Principles and Bank Risk: Does Compliance Matter? The recent financial crisis has sparked widespread calls for reforms of regulation and supervision. The initial reaction to the crisis was one of disbelief: how could such extensive financial distress emerge in countries where the supervision of financial risk had been thought to be the best in the world? Indeed, the regulatory standards and protocols of the advanced countries at the center of the financial storm were being emulated worldwide through the progressive adoption of the international Basel capital standards and the Basel Core Principles for Effective Bank Supervision (BCPs). The crisis exposed significant weaknesses in the financial system regulatory and supervisory framework worldwide, and has spawned a growing debate about the role these weaknesses may have played in causing and propagating the crisis. As a result, reform of regulation and supervision is a top priority for policymakers, and many countries are working to upgrade their frameworks. But what should the reforms focus on? What constitutes good regulation and supervision? Which elements are most important for ensuring bank soundness? What should be the scope of regulation? To date, the best practices in supervision and regulation have been embodied by the BCPs. These principles were issued in 1997 by the Basel Committee on Bank Supervision, comprising representatives from bank supervisory agencies from advanced countries. Since then, most countries in the world have stated their intent to adopt and comply with the BCPs, making them a global standard for bank regulators. Importantly, since 1999, the IMF and the World Bank have conducted evaluations of countries’ compliance with these principles, mainly within their joint Financial Sector Assessment program (FSAP). The assessments are conducted according to a standardized methodology developed by the Basel Committee and therefore provide a unique source of information about the quality of supervision and regulation around the world. Hence the international community has made significant investments in developing these principles, encouraging their wide-spread adoption, and assessing progress with their compliance. In light of the recent crisis and the resulting skepticism about the effectiveness of existing approaches to regulation and supervision, it is natural to ask if compliance with the global standard of good regulation is associated with bank soundness. Specifically, they test whether better compliance with BCPs is associated with safer banks. They also look at whether compliance with different elements of the BCP framework is more closely associated with bank soundness to identify if there are specific areas which would help prioritize reform efforts to improve supervision. The paper extends their previous work (Demirgà ¼Ãƒ §-Kunt, Detragiache and Tressel, 2008: henceforth DDT), in which they showed that banks receive more favorable financial strength ratings from Moody’s in countries with better compliance with BCPs related to information provision, while compliance with other principles does not affect ratings significantly. The policy message from this study was that countries should give priority to strengthening regulation and regulation in the area of information provision (both to the market and to supervisors) relative to other areas covered by the core principles. Using rating information to proxy bank risk significantly limited the sample size in that study, making it necessary to exclude many smaller banks and many banks from lower income countries. Furthermore, after the recent crisis, the credibility of credit ratings as indicators of bank risk has also diminished, questioning the merit of using these ratings in the analysis. In this paper, they explore whether BCP compliance affects bank soundness, but instead of using ratings they capture bank soundness using the Z-score, which is the number of standard deviations by which bank returns have to fall to wipe out bank equity (Boyd and Runkle, 1993). Because they can construct Z-scores using just accounting information, and because assessment data for additional countries have also become available, they can extend the sample size considerably relative to our earlier study, to over 3,000 banks from 86 countries (compared to 200 banks from 37 countries analyzed in DDT). This is not just a simple increase in sample size: the sample of rated banks was not a representative sample, because rated banks tend to be larger, more internationally active, and more likely to adhere to international accounting standards. From a policy point of view, they would like to investigate the effect of BCP compliance on all types of banks operating in different country circumstan ces, rather than a select subgroup. In this study, the richer sample allows us to explore whether the relationship between BCPs and bank soundness varies across different types of banks. All in all, they do not find support for the hypothesis that better compliance with BCPs results in sounder banks as measured by Z-scores. This result holds after controlling for the macroeconomic environment, institutional quality, and bank characteristics. They also fail to find a significant relationship when they consider different samples, such a sample of rated banks only, a sample including only commercial banks, and samples including only the largest financial institutions. In an additional test, they calculate aggregate Z-scores at the country level to try to capture the stability of the system as a while rather than that of individual banks, but also this measure of soundness is not significantly related to overall BCP compliance. When they explore the relationship between soundness and compliance with specific groups of principles, which refer to separate areas of prudential supervision and regulation, they continue to find no evidence that good compliance is related to im proved soundness. If anything, they find that stronger compliance with principles related to the power of supervisors to license banks and regulate market structure are associated with riskier banks. While these results cast doubts on whether international efforts to improve financial regulation and supervision should continue to place a strong emphasis on BCPs, a number of caveats are in order. First, insignificant results may simply indicate that accounting-based measures, such as Zscores, do not adequately capture bank soundness, especially for small banks and in low income countries, where accounting standards tend to be poor. They may also reflect low quality in the assessment of BCP compliance, especially in countries where laws and regulations on the books may carry little weight. It might be also argued that assessments are not comparable across countries, despite the best efforts of expert supervisors and internal reviewing teams at the IMF and the World Bank to ensure a uniform methodology and uniform standards. If their negative results arise because compliance assessments do not reflect reality or are not comparable across countries, then at a minimum they should lead us to question the value of these assessments in ensuring that supervision measures up to global standards. Review of related literature of this paper is as follows: Defining good regulatory and supervisory practices is a difficult and complicated task. Barth, Caprio, and Levine (2001, 2004, and 2006) were the first to compile and analyze an extensive database on banking sector laws and regulations using various surveys of regulators around the world, and to study the relationship between alternative regulatory strategies and outcomes. This research finds that regulatory approaches that facilitate private sector monitoring of banks (such as disclosure of reliable, comprehensive and timely information) and strengthen incentives for greater market monitoring (for example by limiting deposit insurance) improve bank performance and stability. In contrast, boosting official supervisory oversight and disciplinary powers and tightening capital standards does not lead to banking sector development, nor does it improve bank efficiency, reduce corruption in lending, or lower banking system fragility. They interpret their findings as a challenge to the Basel Committee’s influential approach to bank regulation which heavily emphasizes ca pital and official supervision. An important limitation of this type of survey is that it mainly captures rules and regulations that are on the books rather than actual implementation. IMF and the World Bank financial sector assessments have often found implementation to be lacking, particularly in low income countries, so that cross-country comparisons of what is on the books may hide substantial variation in the quality of supervision and regulation. BCP assessments have the advantage of taking into account implementation. Of course, assessing how rules and regulations are implemented and enforced in practice is not an exact science, and individual assessments may be influenced by factors such as the assessors’ experience and the regulatory culture they are most familiar with. Nevertheless, although it is difficult to eliminate subjectivity completely, assessments are based on a standardized methodology and are carried out by experienced international assessors with broad c ountry experience. Cihak and Tieman (2008) analyze the quality of financial sector regulation and supervision using both Barth, Caprio and Levine’s survey data and BCP assessments. They find that regulation and supervision in high-income countries is generally of higher quality than in lower income countries. They also note that the correlation between survey data and BCP data tend to be low, always less than 50 percent and in many cases in the 20-30 percent range, suggesting that taking into account implementation may indeed make an important difference. A number of papers also use BCP assessments to study bank regulation and performance. Sundararajan, Marston, and Basu (2001) use a sample of 25 countries to examine the relationship between an overall index of BCP compliance and two indicators of bank soundness: nonperforming loans (NPLs) and loan spreads. They find BCP compliance not to be a significant determinant of these measures of soundness. Podpiera (2004) extends the set of countries and finds that better BCP compliance lowers NPLs. Das et al. (2005) relates bank soundness to a broader concept of regulatory governance, which encompasses compliance with the BCPs as well as compliance with standards and codes for monetary and financial policies. Better regulatory governance is found to be associated with sounder banks, particularly in countries with better institutions. In this paper, as already discussed they rely on the Z-score to measure bank soundness. While the Z-score has its limitations, they believe it is an improvement over measures used in previous studies, namely NPLs, loan spreads, interest margins, and capital adequacy. Because different countries have different reporting rules, NPLs are notoriously difficult to compare across countries. On the other hand, loan spreads or interest margins and capitalization are affected by a variety of forces other than fragility, such as market structure, differences in risk-free interest rates and operating costs, and varying capital regulation. Thus, cross-country comparability is a serious issue. In contrast with ratings, Z-scores do not rely on the subjective judgment of rating agencies’ analysts. Results from the baseline regression, relating bank soundness measured by the Z-score to the degree of compliance with the BCPs. In the sample including all countries, the Zscore is higher, indicating a sounder bank, for banks with lower operating costs in countries with higher GDP per capita. Also, non-commercial banks tend to have higher Z-scores, while the other control variables are not significant. The coefficient of the BCP compliance index is positive but not significant. If they exclude Japanese banks, which account for over 20 percent of the sample, the fit of the model improves markedly (the R-squared increases from 10 percent to 19 percent) and the coefficients of many regressors change substantially.12 This suggests that the variables explaining the Z-score of Japanese banks may be somewhat different than for the rest of the sample, perhaps because of the lingering effects of Japan’s prolonged banking crisis on bank balance sheets. For example, in the sample excluding Japan inflation and the rule of law index are significant (with the expected coefficients), while GDP per capita is not (though the coefficient remains positive). Also, banks with a higher ratio of net loans to assets have higher Z-scores, perhaps because Basel regulation mandating minimum levels of risk-adjustment capital forces these banks to hold more equity. Also, in the sample excluding Japan larger banks have lower Z-scores, likely because they tend to hold less capital than smaller banks. Despite these differences, the coefficient of the BCP compliance index remains insignificantly different from zero also in the sample without Japanese banks. The same is true when they add to the regression additional macro controls, such as exchange rate appreciation, private credit, or the sovereign rating. In the regressions, they explore how the relationship between BCP compliance and bank soundness changes if they alter the sample composition to include various categories of financial institutions to explore whether BCP compliance may affect soundness for alternative types of banks. All these results refer to the sample excluding Japan, so that th e overrepresentation of Japanese banks does not distort the results. The first exercise is to examine the widest sample possible, i.e. one that includes investment banks/securities houses, medium and long-term credit banks, nonbank credit institutions, and specialized government credit institutions. These are institutions that in most countries are unlikely to fall under the perimeter of bank regulation and supervision, so they have excluded them from the baseline sample. When they include them, the sample size grows by 25 percent, but the main regression results are unchanged. In particular, bank soundness is not significantly affected by compliance with the BCPs. If they restrict the sample to commercial banks only, thereby losing about 300 banks compared to the baseline sample, once again they find that regression results remain very close to the baseline. When they focus only on banks rated by Moody’s, as in our earlier work, the sample shrinks considerably (to just over 300 banks), and the coefficient of the BCP compliance index becomes positive and significant, albeit only at the 10 percent confidence level. Thus, BCP compliance seems to have some positive effect on the soundness of this specific group of banks. To explore this issue further, they ask whether this result is driven by the fact that rated banks are larger banks. To do so, they consider two alternative samples: the first includes the largest 10 percent of banks within each country and the second includes the largest 20 percent of banks in the entire sample. In both cases, the BCP compliance index has an insignificant coefficient, as in the baseline sample. The BCP compliance index is the weighted sum of compliance scores for several individual chapters of the Core Principles. Could it be that, even though overall compliance does not seem to matter for bank soundness, some aspects of the Core Principles might be relevant? In fact, it may be possible that the overall index is not significant because of offsetting effects of its different components. In fact, in our previous study of Moody’s ratings, they found that, although overall compliance did not seem to matter, higher financial strength ratings were associated with better compliance with principles related to information provision to supervisors. They address this question by re-running the baseline regressions breaking down the compliance index into seven components, based on the standard grouping of principles used by the Basel Committee. An important caveat is that compliance scores are fairly strongly correlated, which may make it difficult to disentangle the effect of one set of principles from the others. They replicate the regression for different samples of banks to investigate the robustness of the results. There is only one component of the compliance index that has a fairly robust relationship with bank Z-scores, and that is compliance with Chapter 2 of the BCP, i.e. principles having to do with supervisors’ powers to regulate bank licensing and structure. Interestingly, this component of the index is negatively correlated with bank soundness, so that banks in countries were regulators have better defined powers to give out licenses and regulate bank activities tend to be riskier. This result holds in all th e samples except those including only the largest banks. This finding supports the contention that supervisory systems that tend to empower supervisors do not work well (Barth, Caprio, and Levine, 2001, 2004, 2006). So far, they have considered individual bank risk. In principle, bank supervision and regulation should be primarily concerned with systemic risk, rather than individual bank risk, although in practice it is not always easy to make this distinction. Could it be that BCP compliance, while not relevant to individual bank soundness, is important to ensure the stability of system as a whole? To address this question, it would be ideal to test whether BCP compliance reduces the probability of a financial crisis. However, since crises are rare events, this type of test requires a panel of data; since they have BCP compliance assessments only at a point in time, they are restricted to cross-sectional data. Nonetheless, to explore this question they compute a rough measure of systemic soundness as the aggregate equivalent of the individual bank Z-score. More specifically, they aggregate profits and equity of all the banks in the country (for which they have data), they compute the standard d eviation of aggregate profits, and then they compute an aggregate Z-score. This measure tells us by how many standard deviations banking system profits must fall to exhaust all the capital in the banking system. They then regress this measure on the BCP compliance score and a number of macroeconomic control variables. Their measure of systemic soundness is correlated with the macro variables as one might expect: higher growth, low inflation, low inflation volatility, appreciation of the currency, favorable sovereign ratings are all significantly associated with higher values of the aggregate Z-score. Once again, though, the BCP compliance index does not seem to be a significant determinant of banking system soundness. Though it is positive, the coefficient of the BCP index is small and not statistically significant in any specification. Remarks While the causes and consequences of the recent financial crisis will continue to be debated for years to come, there is emerging consensus that the crisis has revealed significant weaknesses in the regulatory and supervisory system. Resulting calls for reform have led to numerous proposals and policymakers in many countries are hard at work to upgrade their regulatory frameworks. This paper seeks to inform the on-going reform process by providing an analysis of how existing regulations and their application are associated with bank soundness. Specifically, they study whether compliance with Basel Core Principles for effective banking supervision (BCPs) is associated with lower bank risk, as measured Z-scores. They find no evidence of a robust statistical relationship linking better compliance with BCPs and improved bank soundness. The analysis of aggregate Z-scores to capture systemic stability issues yields similarly insignificant results. If anything, they find that compliance wit h a specific group of principles, those giving supervisors powers to regulate bank licensing and structure is associated with riskier banks, potentially suggesting that such powers may be misused in practice. While our results may reflect the difficulty of capturing bank risk using accounting measures, or the inability of assessors to carry out evaluations that are comparable across countries, nevertheless they raise questions about the relevance of the Basel Core Principles, the current emphasis on these principles as key to effective supervision, and the wisdom of carrying out costly periodic compliance reviews of BCP implementation in the IMF/World Bank Financial Sector Assessment Programs.

Airline Industry and Contestability Project What is a contestable marke

Airline Industry and Contestability Project What is a contestable market? In a contestable market, there are one or a number of firms which profit maximise. In other words the number of firms is irrelevant. The key assumption to make here is that barriers to entry to the industry are relatively low, as is the cost to exit the industry. The existence of potential entrants into the industry will tend to keep profits to their normal level even in the short run, because existing firms will want to deter new entrants from coming into the market. Contestable markets are both productively and allocatively efficient and are likely to be efficient in the short run as well. The theory regarding the type of profit made in a contestable market is this. Abnormal profit can only be made in the short run, only normal profit will be made in the long run. The reason being is that when firm try to profit maximises in the short run then this will attract new entrants into the market to take some of this profit away from the existing firm. As more competition is attracted then the new prices will force the prices and the profit down. This is the reason why it is only possible to make normal profit in the long run. The threat of potential entrants into the industry means that existing firms will behave competitively, even if the firm is a monopoly. The key assumption of a contestable market is that it gives the firms the ability to enter and exit the market. It is natural to assume that a monopoly is going to have high barriers to entry, but theory suggests that there is a large dependence on the cost to exit the industry rather than enter it. The cost of exiting and Industry is often termed as sunk costs. These are the costs that a firm can't recover when they decide to exit the industry. An example of a sunk cost would be money spent on advertising, because you cannot recover the money you spent on advertising. If sunk costs are low or virtually nothing then it is correct to assume that a firm is operating in a contestable market. The lower the sunk cost the greater the contestability of the market. The ease at which a firm can enter and exit a market will leave it vulnerable to 'Hit and Run' competition. If there is abnormal profit in an industry then newcomers will enter the market, take their share of the excess profit and exit the... ...ity of service. In a less contestable market firms are under less pressure to produce a service of the highest quality. Recent mergers involving Easyjet and Ryanair have meant that the industry is being dominated by two big firms. This is an example of a Contestable market, because there is less competition and these larger firms will benefit from economies of scale such as brand loyalty and these firms will have more slots for taking off or landing, which reduces the amount of competitors that can enter. The reason why it may be contestable is that in the industry there are lots of profits to be made. An increase in Ryanair profits would attract "hit and run" competition. Another reason is that Ryanair was able to purchase a Boeing 747 at a significant discount. This means that there will be low sunk costs as these planes could be sold off if you decide to exit the industry. To conclude it can be said that the low cost airline industry is seen as contestable, because of the east to set up, excess profits, but recent news show that it is more becoming less and less contestable with mergers and few firms producing at low cost and really dominating the industry.

Metis Struggle for Self Identification Essay -- Canadian History Stru

Metis' Struggle for Self Identification   Ã‚  Ã‚  Ã‚  Ã‚   One of the most contentious issues in Canada’s history is that of the Metis. Some people feel this unique group of people does not deserve any sort of recognition, whereas others believe their unique history and culture is something to be recognized and cherished. The history of the Metis people is filled with struggle; not only struggles against other powers, but also a struggle for self-identification. Despite strong opposition, the Metis people of Canada have matured as a political force and have taken great strides towards being recognized as a unique people.   Ã‚  Ã‚  Ã‚  Ã‚  The word Metis is a French word that means: â€Å"mixed race†. Today it is often used for anyone who has European – Indian heritage, but when the colonies of Canada were being formed Metis had a specific meaning. The roots for this hybrid race came from French – Indian ancestry. It did not matter how much of each you had in you, as long as there was some of each. At the time, the Metis seemed to be superior in comparison to the individual Indian or Frenchman, because they appeared to possess certain marks of superiority over both parent types or strains . This meant they had all of the good characteristics from each group and left the bad ones behind.   Ã‚  Ã‚  Ã‚  Ã‚  The history of the Metis started with the European colonization of North America. With the arrival of the West European powers, fraternization and trade began between the European settlers and the many First Nations peoples throughout Canada. The French were the first foreign power to realize the potential benefits of allying with the First Nations peoples. Consequently, the French explorer, Samuel de Champlain, proposed a union of the French and First Nations . Champlain’s, and therefore France’s, goal was to create a mixed-blood race to populate the continent and form a new, thriving colony for France . The offspring of these unions did not live the life Champlain envisioned; instead they often lived exclusively with one group or another. It was not until the years when fur trading became a lucrative, thriving business that children of mixed descent began to realize their own unique place in the world.   Ã‚  Ã‚  Ã‚  Ã‚  When these times arose, these children were the envy of most because they were not only bilingual and bicultural , but they also knew the lifestyles of both the white man and the Indian. The... ...n hundreds of years ago. The injustices of the past have left their mark, but just as in the past, the spirit of the people will enable them to prevail against difficult odds until they finally receive their due. Bibliography 1)  Ã‚  Ã‚  Ã‚  Ã‚  Adams, Howard. Prison Of Grass, (Saskatoon: Fifth house Publishers, 1975) 2)  Ã‚  Ã‚  Ã‚  Ã‚  Corrigan, Samuel. The Struggle For Recognition, (Winnipeg: Pemican Publications, 412 McGregor St., Winnipeg, Manitoba, Canada, 1991) 3)  Ã‚  Ã‚  Ã‚  Ã‚  Daniels, Harry W. We Are The New Nation, (Ottawa: Native Council Of Canada, Ontario, K1P 5L6, 1979) 4)  Ã‚  Ã‚  Ã‚  Ã‚  Eccles, W.J. Essays On New France, (Oxford: Oxford University Press, 1987) 5)  Ã‚  Ã‚  Ã‚  Ã‚  Lussier, Antoine S. The Other Natives, (Winnipeg: Manitoba Metis Federation Press, 300-275 Portage Ave, Winnipeg, Manitoba, R3B 2B3, 1975) 6)  Ã‚  Ã‚  Ã‚  Ã‚  MacEWAN, Grant. Metis Makers Of History, Saskatoon: Western Prarie Books, Saskatchewan, 1981) 7)  Ã‚  Ã‚  Ã‚  Ã‚  Maguet, Elizabeth. Hold High Your Heads, (Winnipeg: Pemican Publications, 412 McGregor St., Winnipeg, Manitoba, Canada, 1992) 8)  Ã‚  Ã‚  Ã‚  Ã‚  Sealey Bruce D. The Metis: Canada’s Forgotten People, (Winnipeg: Manitoba Metis Federation Press, 300-275 Portage Ave, Winnipeg, Manitoba, R3B 2B3, 1975)

Defining Human Resource Management: Function and Roles Essay

Human resource management conducts several operations, and plays a vital role in organizations. Many employees look to human resource management for assistance and representation. A company’s ability to manage people effectively can build a more successful organization, and also helps maintain a more vibrant workforce, which in turn aids companies in keeping a competitive edge in many of today’s industries. The following information defines human resource management, touches on personal experience, and examines the functions and roles human resource management plays in an organization. Human Resource Management Human resource management helps organizations to obtain and develop employees. People comprise any organizations most valuable asset, and sufficiently motivating and maintaining a well-trained workforce allows organizations to perform at optimal levels. Human resource management acts a subset of management, and coincides with the planning, organizing, leading, and controlling functions thereof (DeCenzo & Robbins, 2007). From a personal viewpoint, human resource management involves several activities. At previous larger employers, hiring, training, payroll, and conflict resolution were some of these duties, while others included company party planning, employee benefit disbursement, and annual progress reports. Today, human resource management at a current employer has significantly less duties, as the small property maintenance company employs a much smaller workforce of fewer than 15 employees. However, at all places of personal employment the human resource departments had multiple responsibilities related with not only managing people, but also providing various support functions to the organization. Primary Functions of Human Resource Management According to DeCenzo and Robbins (2007), two primary responsibilities include, â€Å"assisting the organization in it strategic direction and representing and advocating for the organization’s employees (DeCenzo & Robbins, 2007, p. 34). As previously discussed, human resource management can involve several organizational activities, but the main focus constitutes supporting both the company and company associates. The four primary human resource management activities that provide organizational support include staffing, employee development, motivation, and maintenance (DeCenzo & Robbins, 2007). Staffing an organization often requires screening several candidates to seek out the best fit for a particular position. Once hired, human resource departments must provide adequate training and orientation to help not only new employees, but also further develop and enhance existing company staff. Building a quality workforce for an organization takes time and effort from human resource management teams, largely because as stated by DeCenzo and Robbins (2007), â€Å"People, not buildings, make a company successful,† (DeCenzo & Robbins, 2007, p. 32). Additionally, the human resource department finds efficient ways to motivate workers such as benefit packages, performance bonuses, and other influential compensation. This function is highly important, as it helps build and maintain morale. Motivating people can prove to be a difficult task, and as explained by DeCenzo and Robbins (2007), â€Å"Human behavior is complex, and trying to figure out what motivates various employees has long been a concern of behavioral scientists† (DeCenzo & Robbins, 2007, p. 40). Finally, the human resource team must maintain effective communications, employee loyalty, and assist in providing a continuously safe and healthy work environment (DeCenzo & Robbins, 2007). The Strategic Planning Role of Human Resource Management Strategic planning for organizations begins with setting achievable objectives, and the role of human resource management requires finding economically feasible strategies to meet preset organizational goals. According to DeCenzo and Robbins (2007), â€Å"This means working with line management in analyzing organizational designs, the culture, and performance systems, and recommending and implementing changes where necessary† (DeCenzo & Robbins, 2007, p. 34). Additionally, this often involves figuring out ways to reduce costs in personnel, while finding more affordable ways to offer motivational benefits to employees. Human resource management displays added value to an organization by effectively validating the company’s human resource management investments (DeCenzo & Robbins, 2007). Despite the size of an organization, a quality emphasis on human resource management builds potential for successful production efforts. Organizations cannot function without people, and the proper selection and development of employees often benefits from a quality human resource management team. DeCenzo and Robbins (2007) stated, â€Å"Human resource management is a function of every manager’s job, not just those who work in human resources† (DeCenzo & Robbins, 2007, p. 34). Many people tend to think of hiring or payroll when the term â€Å"HR† comes up, when in fact, several important organizational duties and responsibilities come with these positions. References DeCenzo, D., & Robbins, S. (2007). Fundamentals of human resource management (9th Ed.), Hoboken, NJ: John Wiley & Sons, retrieved from the University of Phoenix Electronic Library.