The Theory and Implementations of The Balance of Payments (BOP)
To develop country’s economic strength under the tendency of
globalization, governments always seek to achieve two macroeconomic
objectives, i.e. stable growth of internal economy and balanced
development of external economic activities. The former can be
realized by effectively adjusting Economic Growth, Unemployment and
Inflation. However, how to realize the latter? An external
macroeconomic variable is needed. In practice, the Balance of Payments
fulfills this responsibility.
(A). Balance of Payments (BOP used in following text), in principle,
is a record of the country’s transactions with the rest of the world.
It shows the country’s payment s to or deposits in other countries
(debits) and its receipts or deposits from other countries (credits)[1].
The BOP account[2] also shows the balance between these debits and
credits under various headings, which are categorized into the Current
Account, the Capital Account and the Financial Account, which compose
the main elements of balance of payments.
The Current Account largely measures flow of real resources including
exports and imports of goods and services, income receivable and
payable abroad, and current transfers from and to abroad. It is
normally divided into three subdivisions (Figure 1).
Trade in goods account (often as the trade balance)
The total value of exports of goods, subtracting the total value of
imports of goods.
Trade in services account
Imports and exports of services, such as banking and insurance,
transport services, law, accountancy, management consultancy and
tourism.
Investment incomes
Interest, profit and dividends flowing into and out of the country.
Transfers of money
Two sectors: government transfers and transfers made by other sectors.
Government transfers include contributions to international
organisations (e.g. UK to EU budget) and foreign aid. The ‘other
sectors’ section many highlights the transfer of assets by individuals
to foreign bank accounts.
The Capital Account measures external transactions in capital
transfers, and in acquisition or disposal of non-produced,
non-financial assets, which include land and subsoil assets, patents
and copyrights etc. Capital transfers are transfers of ownership of a
fixed asset or the forgiveness of a liability.
The Financial Account records transactions in financial assets and
liabilities between residents and non-residents. It shows how an
economy's external transactions are financed. Transactions in the
financial account are classified into direct investment, portfolio
investment, other investment, and reserve assets[3] (Figure 2).
Direct investment
Money flows across national boundaries for the purpose of investing
and it is thus either a credit or a debit item.
Portfolio investment
Changes in the holding of paper assets, such as company shares and
bonds.
Other investment
It comprises loans, currency, deposits, and short and long-term trade
credits, financial derivatives and other accounts receivable and
payable.
Reserve assets
This refers to the reserves of gold, special drawing rights (SDRs) and
Many researches have been conducted on the influence that the increasing exchange rate has on the trade balance deficit in developing countries. This paper contributes to the literature by investigating and testing whether the J-curve phenomenon exists in Jamaica.
One must understand that the integral core of a company rests in its accounting and financial areas. The departments’ need employees with an advanced knowledge and skill set to ensure the payment of supplies and accounting on the expenditure is correctly recorded. If the accounting desk presents inaccurate spending calculations on behalf of the company, it could result in spending more than what has actually been earned; this could lead to the company not only being unable to increase in revenue, but also experience loss. It is imperative that the management of the financial department is well informed and able to make decisions by taking into account the usage of every coin stated in the expenditures, and also to know the amount of revenue the company is making so that we can plan on better strategies to improve the revenues (Lu, Madu, Kuei & Winokur, 1994).
Money is a necessity in everyday life within the modern world and there are different ways to define money due to a variety of perceptions and views held by a wide range of people. However it is widely accepted that money is defined as a tool that serves as a medium of exchange, a unit of account which means that it is an agreed measure for recording the prices of goods and services, and a store of value. It also has to be firstly acceptable as a medium of exchange, durable, convenient for usage and finally divisible. There are different types of money which are Commodity Money, Convertible Paper Money, Fiat Money which isn’t convertible, Private Debt Money which are deposits and Composite Currencies such as the Euro.
In this report I will go on to discuss the topic of money laundering in the following order; firstly, I will begin by explaining what is money laundering?, why it is done?, and how it is done? I will then go on to explain the effects of money laundering and the institutions/organisations that are at risk from these activities. I will also be discussing the current situation in the UK regarding money laundering and whether anything can be done to prevent or restrict laundering activities, and will then go on to conclude my findings.
ATMs have been around for almost a quarter of a century, but fees, especially double fees, for using them are a more recent phenomenon.
Financing cycle. Financing activities involve such things as investments in and withdrawals from companies by owners and borrowing and repaying debts. Sage 50 allows users to record receipts separate from customer receipts which can be credited to an equity account to represent investment or to a liability account to represent the borrowing of money.
The terms debit and credit are used in recording business transactions which will indicate the increases or decreases of a specific account, be it an asset, liability, owner’s equity or capital, revenue, expenses and the owner’s drawings. Being on the left side of the equation, all assets will increase on the left side or debit side and its corresponding “partner” account like for example, the investment of an owner, will take the right side or credit side.
BP Management Services is an accounting firm which registered since 1980. Mr. Ricky Ng Seoh Pheng is the founder of this accounting firm. BP Management Service can be categorized as business management consultant. It located at 26A, Jalan Kundang 2, Taman Bukit Pasir, 83000 Batu Pahat, Johor.
Difficulties in Formulating Macroeconomic Policy Policy makers try to influence the behaviour of broad economic aggregates in order to improve the performance of the economy. The main macroeconomic objectives of policy are: a high and relatively stable level of employment; a stable general price level; a growing level of real income (economic growth); balance of payments equilibrium, and certain distributional aims. This essay will go through what these difficulties are and examine how these difficulties affect the policy maker when they attempt to formulate macroeconomic policy. It is difficult to provide a single decisive factor for policy evaluation as a change in political and/or economic circumstances may result in declared objectives being changed or reversed. Economists can give advice on the feasibility and desirability of policies designed to attain the ultimate targets, however, the ultimate responsibility lies with the policy maker.
The leading model, Monetary Model links exchange rate movements to the balance of payment, which is used for medium to long term analysis. The following assumptions cons...
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The liberalization of capital developments and deregulation, particularly of fiscal administrations, prompted a spurt in cross-border capital flows. The globalization of financial markets has triggered a rapid growth in investment portfolio ...
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1972 HBL opened the first of 11 branches in Oman. HBL constructed Habib Bank Plaza in Karachi to commemorate the bank’s 25th Anniversary.
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