During the last two decades Small and medium size enterprises have played an increasingly important role for economies worldwide and continues to be an important tool for economies especially for the growth of developing countries. The main challenge faced is the level of credit risk. The goal for a bank is to maximize the risk - adjusted rate of return; hence managing credit risk is essential for long term profitability and lending. Loans (credits) are the most common credit risk that banks need to manage (Basel Committee on Banking Supervision, 2000). In this paper, credit risk will refer to the risk banks become exposed to when they lend money to companies, in our case small and medium size firms 1.3.
1.1 Financial Planning What is Financial Planning? According to Pearson, financial planning is the need to identify shortages and surpluses. Thus the sentence very much explains all. A shortage occurs when there is excess demand and a surplus occurs when there is excess supply. Thus, is very important for Anna Lian to understand the importance of financial planning as in the future, it would allow owners to exert more control and it’s the best way to monitor assets in the business.
CHAPTER ONE INTRODUCTION 1.1 Background of the Study Commercial banks are the most important savings, mobilization and financial resource allocation institutions. Consequently, these roles make them an important phenomenon in economic growth and development. In performing this role, it must be realized that banks have the potential, scope and prospects for mobilizing financial resources and allocating them to productive investments (Olokoyo , 2011). The importance of efficient financial system is mostly felt in developing countries since their financial markets are underdeveloped and not strong thus banks plays a crucial role of integrating the whole economic sector of a country by serving as a vital source of finance for the enterprises (Ntow–Gyamfi
INTRODUCTION Finance is a very important area in economics which deals with managing and distribution of resources within certain economic conditions over a certain period of time. The study of Finance is very important because individuals, governments, economies and business entities require it to function in their spheres of influence. These entities determine the appropriate risk level and time value of money required to maximise the use of the available resources; and for that purpose financial institutions like banks are created to deal with such issues. Some factors in the economy or financial policies could lead a phenomenon which banks sometimes face known as disintermediation. Disintermediation is a situation whereby funds which should ordinarily be invested in banks are directed into some other investment instruments such as assets backed securities and convertibles, which will be issued by the final user of the funds, in the process passing the banks as an intermediary.
Ilie recognized financial managers face many challenges related to changes in the role of a companies finance operation. Miller, Yeager, Hildreth, and Rabin (2005) authors of... ... middle of paper ... ... structure, a financial manager must find ways to make their company stand out from others to remain profitable. Efficiency Efficient operations, especially, financial operations are important to manage as a company evaluates its competition and pricing. If product demand is not properly manage a firm could risk overproducing or under producing products. This would result in excessive or deleted stock and in either situation, additional cost.
At first, this might sound like a great thought! But banks (and financial institutions) have become cornerstones of our economy for several reasons. They transfer risk, provide liquidity, facilitate both major and minor transactions and provide financial information for both individuals and businesses. Running a bank is just as difficult as analyzing it for investment purposes. A bank's management must look at the following criteria before it decides how many loans to extend, to whom the loans can be given, what rates to set, and so on: * Capital Adequacy and the Role of Capital * Asset and Liability Management - There is a happy medium between banks overextending themselves (lending too much) and lending enough to make a profit.
Introduction The main aim of this report is to identify the key roles played by bank capital in the banking business. This report briefly outlines the main functions of bank capital and takes a brief look at the benefits of bank capital to the bank and the banking industry. It is hoped that from reading this paper a general understanding of the roles of bank capital in the banking business can be gained. Bank Capital A bank's capital also known as equity is the margin by which creditors are covered if the bank's assets were liquidated. A bank must hold enough capital to protect lenders and depositors from losses and also allow the bank to meet its customer requirements.
securities and bonds) are bound by public information from the likes of analyst reports, bond rating agencies or independent audits. This results in an asymmetry of information. Bank loan announcements, seen as the bank’s ‘seal of approval’, should therefore elicit a favourable reaction by the market. This favourable reaction was measurable and therefore gave extra weight to the claimed positive causal relationship. During a financial crisis the alleged effects of this positive relationship between bank loan announcement... ... middle of paper ... ...t variable is the presence of a financial crisis and the dependant variable is market response following a bank loan announcement.
Discuss the empirical evidence on growth-finance nexus. INTRODUCTION A strong financial system should be able to encourage the allocation of financial resources to a great extent in other to have good productivity and the creation of market efficiency. This indicates that the services of financial intermediaries should be of vital important for the improvement of productivity and economy innovation. Thus the relationship between the economic growth and financial development has been a wide issue of empirical research. This give rise to the question of whether financial development causes economic growth or reverse is the case.
Conclusion In conclusion, Central bank and Government represent an extremely important position in our country to stabilizing the economic. Central bank is a government banker and it use monetary policy and money supply to stabilize the short run economic. However government represent a much more important role in stabilize the short run and long run economic growth by using Fiscal policy to support people daily life and try to improve the living standard. I used to think interest rate is control by central bank but after the entire research interest rate is controlled by government and announced by central bank. In our economic government is the most important to stabilizing the economic compare to central bank.