...ANNALS of the ORADEA UNIVERSITY. Fascicle of Management and Technological Engineering, Volume X (XX), 2011, NR2 FINANCIAL CRISIS EFFECTS ON ROMANIAN BANKING SYSTEM Anca Maria Roşu Academy of Economic Studies of Bucharest, Institute of Doctoral Studies, anca.rosu@yahoo.com Keywords: financial crisis, effects, marketing strategy, banking services, Romania Abstract: The financial turmoil has prompted a reality check of the banking system. This paper builds on an overview of the global financial crisis effect in Romania, emphasis the reaction of the banks in the economic crisis context and how their behavior changed and extends with measures undertaken for mitigating the effect of the crisis to enable a better understanding of the changes and trends of bank marketing strategies during crises. The purpose of the paper is to give suggestions on possible policy responses to the changing consumer buying behavior and to address the effects of the crisis on banking sector strategies. 1 Introduction The National Bureau of Economic Research defines a crisis as a major reduction in economic activity for several months, reflected in the decrease of GDP, decline of individual’s income, reduction of the level of employment, decline of industrial production and consumption. The majority of banking crises follow a common pattern of causes and consequences [Klomp, 2010]. Banking crises are initiated...
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...Derivative triggered the financial terror Jiho Jang Warren Buffett already said the derivatives “financial weapons of mass destruction.” It’s not surprising. The derivative products have triggered the most destructive financial crisis since the stock market crash in our history. The causes of financial crisis in the late 2000s are still controversial. Some assert that it is just the financial system, and regulation failure and the other insist that resulted from the financial engineering failures. The explosive growth in derivative contracts occurred after 1999 when the Glass-Steagall Act was repealed, which allowed banks to operate as brokerage. Glass-Steagall, adopted in 1933, separated brokerages and banks to ensure banks would no longer be involved in risky transactions. And credit rating agencies were slow to downgrade the credit rating of the securities. Because the rating agencies did not disclose the downgrades in time, many investors were misled to think that securities were still safe to invest in, and it accelerated the market crisis uncontrollably. The initial intention of derivatives was to defend against risk and protect against the losses and downside. However, derivatives were the most important tools to trigger the financial market collapse. Those tools usually used to take on more risk to maximize profits and returns rather than to defend against risk and to protect against the losses. All kinds of financial products are transferred to the...
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...Hedge fund is “an investing group usually in the form of a limited partnership that employs speculative techniques in the hope of obtaining large capital gains.” In other words, hedge fund uses its intricate financial technologies with the small amount of money to make the greatest profits as possible by investing and selling securities at the appropriate moment. Its foundation lies on the purpose to seek the absolute financial profits regardless of the economy situation. It can be seen as a zero-sum game since it either makes or lose huge amount of money in the market. In 1949, Alfred Winslow Jones, a Harvard graduate U.S. diplomat, first founded hedge fund, raising $100,000 from investors. Having made more and more profits from investing,...
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...The Crisis Communication Plan Xin WEN Tencent Crisis Communication Team * Some Background to the Plan Founded in November, 1998, Tencent has grown into one of China's largest and most used Internet service portal. Since its establishment over the last decade, Tencent has maintained steady growth under its user-oriented operating strategies. On June 16, 2004, Tencent Holdings Limited (SEHK 700) went public on the main board of the Hong Kong Stock Exchange. Tencent’s leading Internet platforms in China – QQ (QQ Instant Messenger), WeChat, QQ.com, QQ Games, Qzone, 3g.QQ.com, SoSo, PaiPai and Tenpay – have brought together China's largest Internet community, to meet the various needs of Internet users including communication, information, entertainment, e-commerce and others. As of Dec 31, 2012, the active QQ users accounts for QQ IM amounted to 798.2 million while its peak concurrent users reached 176.4 million. The development of Tencent has profoundly influenced the ways hundreds of millions of Internet users communicate with one another as well as their lifestyles. It also brings possibilities of a wider range of applications to the China’s Internet industry. In 2007, Tencent invested more than RMB100 million in setting up the Tencent Research Institute, China's first Internet research institute, with campuses in Beijing, Shanghai, and Shenzhen. The institute focuses on the self-development...
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...Research Proposal: Finance; (Financial Engineering, Financial Mathematics & Risk Management) By:Syed Asad Raza Naqvi Index Introduction and Background………………………………………………………………………….3 Interested areas for research and further study (Research Proposal)……………….3 Further explanation of the intended research topics………………………………………..4 Securitization…………………………………………………………………………………………………..4 Credit Derivatives…………………………………………………………………………………………….6 Hybrid Products……………………………………………………………………………………………….7 Re-Securitization……………………………………………………………………………………………..8 Contribution of these products towards Financial Crisis…………………………………..8 Improper Risk Management role in Financial Crisis………………………………………….9 Risks………………………………………………………………………………………………………………..10 Market Risk……………………………………………………………………………………………………..11 Credit Risk……………………………………………………………………………………………………….11 Liquidity Risk……………………………………………………………………………………………………11 Interest Rates and the Financial Crisis………………………………………………………………12 Relation between low interest rate and financial crisis…………………………………….12 Role of Rating Agencies……………………………………………………………………………………14 Structure Finance Products and Rating Agencies……………………………………………..14 Regulations Then and Now………………………………………………………………………………15 BASEL II……………………………………………………………………………………………………………16 Enhancements of Basel II…………………………………………………………………………………18 The Resecuritisation Exposure Using IRB Approach………………………………………….18 The Resecuritisation Exposure Using Standardized Approach…………………………...
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...Prior to the Subprime Crisis, accounting standards allowed certain subprime-related debt to be kept off the balance sheets of financial institutions. If standards required subprime debt exposure to be included on balance sheets, it would have allowed a more transparent view into the financial health of a given institution. If such exposure were made public during the Housing Bubble, it may have had a sobering effect, turning the trend that dominated Wall Street away from a carefree hunger for risk, back toward the conservative contentment of risk-aversion. It is possible that this could have slowed the pace of the U.S. Subprime Crisis from turning into a global financial crisis, but it remains to be seen if more stringent accounting could have prevented the Subprime Crisis from occurring. Obviously, a host of destructive factors propelled the calamity: easy credit, lax lending standards, historically low interest rates, a belief in the permanence of ascending home values, and the cult-like following that Wall Street formed around a mathematical formula known as the Gaussian Copula function, which was used to assess risk on tranches within collaterized debt obligations. (The Wired magazine article is worth a read: http://www.wired.com/techbiz/it/magazine/17-03/wp_quant?currentPage=all ) The sheer existence of mortgage backed securities has been blamed for the crisis, the question of what to do with them remains. Are accusers looking to the suspects for answers? Liberal accounting...
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...Waller (2010) suggests globalisation has been a characteristic of human affairs for two and a half thousand years, and probably much longer (p. 1). Globalisation is a wide concept that affects cultural, social, technological and economic relationships (Sjøholt & Vatne, 2012). A prime example of globalisation being affected by these relationships is the 2007/2008 Global Financial Crisis. During the Global Financial Crisis, Australia demonstrated resilience as their economy growth continued uninterrupted (Merricks, 2012, p. 37). According to Adonis (2013), the Global Financial Crisis is the greatest example of ways in which globalization can spread toxically and rapidly, and the fragility that comes with globalisation. Furthermore, Boyd (2011)...
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...INTRODUCTION The international airline industry provides service to virtually every corner of the globe, and has been an integral part of the creation of a global economy. The airline industry itself is a major economic force, both in terms of its own operations and its impacts on related industries such as aircraft manufacturing and tourism, to name but two. This sector had its share of heightened challenges during the global financial crisis of 2000-2005 and 2008-09. The airline industry lost billions of dollars and some airlines struggled to remain in business. Today, the global airline industry consists of over 2000 airlines operating more than 23,000 aircraft, providing service to over 3700 airports. In 2006, the world’s airlines flew almost 28 million scheduled flight departures and carried over 2 billion passengers [1]. The growth of world air travel has averaged approximately 5% per year over the past 30 years, with substantial yearly variations due both to changing economic conditions and differences in economic growth in different regions of the world. Historically, the annual growth in air travel has been about twice the annual growth in GDP. Even with relatively conservative expectations of economic growth over the next 10-15 years, a continued 4-5% annual growth in global air travel will lead to a doubling of total air travel during this period. The economic importance of the airline industry and, in turn, its repercussions for aircraft manufacturers, makes...
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...The financial crisis of 2008 rocked the global economy. As one major investment bank went bankrupt, other American financial services institutions were in poor health due to their own banking practices. However, these practices occurred due to the failure of government regulators. Ronald Reagan’s plan to stimulate the American economy in the wake of the 1980s recession led to sweeping deregulation in the financial services sector (Komai) (Inside). This deregulation and the failure to properly enforce regulatory powers by those in the Federal Reserve and Treasury Department led to increasingly risky behavior by banks (Inside) (Das) (Rajan). The repeal of The Glass-Steagall Act in the late 90s meant that the banks engaging in these risky operations were larger than ever before and were using depositors’ money in order to trade for the benefit of the firm rather than its clients (Roubini) (Rajan) (Sorkin) and it is that risky behavior that ultimately led to the near collapse of the world’s economy. Although banking leadership must be held responsible for the practices that many institutions in the financial services sector engaged in (Sorkin), the failure to adequately regulate the banking industry gave banks the opportunities to engage in the behavior that caused the crisis (Inside) (Rajan) (Taylor). In the years since the crisis, and as the global economy continues in its efforts to recover, many have called for strict reform of Wall Street regulations (Acharya). Legislative...
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...LIBOR & LIBORGATE Recently there was a news that Barclays would pay $453 million to U.S. and British authorities to settle allegations that it had manipulated LIBOR , a benchmark interest rate that affects some $350 trillion worth of financial transactions. The scandal has since spread to implicate major banks and government regulators around the world, and could be one of the most expensive to hit the financial industry since the 2008 financial crisis. Now the questions which arises in our mind are What is LIBOR exactly?, How it is calculated?, How did Barclays manipulate LIBOR etc. LIBOR IN BRIEF LIBOR is an acronym for the London Interbank Offered Rate, a benchmark interest rate that is published daily. Libor is published under the auspices of the British Bankers’ Association (“BBA”),a trade association with over 200 member banks that addresses issues involving the United Kingdom banking and financial services industries. The BBA defines LIBOR as: The rate at which an individual Contributor Panel bank could borrow funds, were it to do so by asking for and then accepting inter-bank offers in reasonable market size, just prior to 11:00 [a.m.] London time. We can also define LIBOR as an indicative average interest rate at which a selection of banks (the panel banks) are prepared to lend one another unsecured funds on the London money market. Investors around the world use the LIBOR to calculate the interest rate on myriad forms of debt, from home...
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...P. Kapur Adviser, RITES and A. K. M. Sharma General Manager, Marketing & Client Services, RITES. Prologue RITES Journal 22.1 July 2009 Indian Infrastructure : Role of RITES Introduction Much of the industrialized world is currently in the grip of recession due to the ongoing global financial crises (GFC) – allegedly triggered by the subprime mortgage crisis of USA in 2007. According to some analysts the recession is the worst since the great depression of 1930s. The world output and trade is forecast to shrink in 2009 – the first such contraction since the end of World War II. The recession is inflicting job losses and wealth loss on an unprecedented scale. In an era of globalization, the GFC has impacted the economies of practically all countries in varying degrees and India is no exception. After a long spell of growth, the Indian economy is experiencing a downturn. Industrial growth is faltering, the current account deficit is widening, foreign exchange reserves are depleting and the Rupee is depreciating. There is gloom in the job market and stock markets have registered a sharp downward spiral. RITES - the Infrastructure People. The Company has come a long way from its inception in 1974 and, apart from India, has operated in 62 countries. The Authors, who have a wide experience in international consultancy, have forcefully brought out the present spread of its consultancy areas and as also its road map for the future. RITES’ contribution in the ...
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...Ford Motor Company not only survived the financial crisis of 2008/2009, which had pushed General Motors and Chrysler into bankruptcy, but also emerged as a robustly competitive member of the world’s leading auto producers. However, Ford’s ability to sustain its strong financial performance depends critically on the state of the world’s automobile industry (Grant). Synopsis of the Case: The automobile industry soared in early 1920’s and became primary industry which drove US economy during that time and Ford had built the largest factory in the world which corroborates the growth and state of auto industry and since then it is having huge impact on US economy. Relevant Factual Information about the Problem The downfall of auto industry in 2008/2009 suffered losses to such an extent that General Motors and Chrysler, two of the Big Three players, filed for bankruptcies. Financial crisis was not the only reason, high supply and less demand was one of the prominent reason for the financial crisis. This decline in industry revenues and profits in 2008 promised a major industry restructuring. (Grant) Explanation of Relevant Concepts. A SWOT analysis on the Ford gives more insight and effective solution to sustain the financial performance and have an edge over competition. Strengths: Ford has strong position in US market and it is the second largest auto-maker in US. It was described as the “most important industrial company in the history of the United States” by Forbes...
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...case : is Sony turning around? The company founded in 1955 by Masaru ibuka and Akio morito in the name of Tokyo telecommunication Engineering. Later in 1990’s the company was in losses this lead to restructuring to slash the cost and reorganize the structure and diversify the various electronics business profiles. In Sony they introduced a “company within a company” system. Thus Sony’s operations were divided into a number of mini companies like playstation, walkman, Sony mobiles, Bravia tv etc…… They have appointed Nobuyuki Idei as the COO and group president of the company in 1995 Record sale of US $45 billion Majority of money coming from play station He restructured 3 networks and 2 business units. The Sony company decentralized and each of the companies has its own Research and development. Ide started value creation management has a way to manage sony’s operation and maximize share holder value. Profit margins of Sony declined. Sony walkman and Trinitron CRT Television lagged behind its competitors. Sony saw a decline in music business It also saw a decline of revenue in hardware sales and saw increase in sales of game software sales. Convergent process within the electronic and entertainment and financial divisions. Internal rivals and Sony’s policy: Conflict between Japanese and US divisions. Lack of clear vision. Pride and silo mentality. Lack of Coordination. Insider system and hierarchical cu Stringer was appointed as the new CEO STRINGER: ...
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...to celebrate the opening of our new International Engineering Consultant office in the city of Dubai. First of all, let me on behalf of all the members of International Engineering Consultant, extend our warm welcome and grateful thanks to all of you for your attendance at this special event. It is to you whom we pay special thanks today for your continued support and trust. The successes of International Engineering Consultant Would not have been possible without you. When we first started this firm about 8 years ago we had high hopes for the Future, within a span of 2 years International Engineering Consultant successfully delivered around 200 projects in UAE. In spite of the financial crisis that hit in the period of 2009-2010 International Engineering Consultants withheld its position and name within its market place.We managed our resources and sustained strongly during this economic meltdown. Since then International Engineering Consultant has gone from a small office of 3 staffs to 50 staffs delivering over 1400 projects till date. After years of continuous hard work we developed a reputation for being one of the top 3 consultants in the Sharjah municipality listings. International Engineering Consultant is now a successful, full-service architectural firm, with unparalleled strengths in the practices of engineering and consultation. As times evolves and business grows International Engineering Consultant has decided to expand its wings across...
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... chapter1 When Egypt fell under the rule of a Greek dynasty, the Ptolemies (332‐30 BC), the numerous scattered government granaries were transformed into a network of grain banks Greek and Roman link The Greeks coined money and developed a system of credit. The Roman Empire had a highly developed banking system, and its bankers accepted deposits of money, made loans, and purchased mortgages History of International Banking Collapsing Roman Empire in AD 476 was a major set back and banking declined in Europe. Italians are the first to have organised international banking due to the increase of trade in the 13th‐ century. The moneychangers of the Italian states developed facilities for exchanging local and foreign currency. As trade is growing, merchants demanded other services, such as lending money, and gradually bank services were expanded. Banking in the modern sense of the word can be traced to medieval and early Renaissance Italy, to the rich cities in the north such as Florence, Venice and Genoa. First reported international banks were established in Genoa, Milan, Venice and Florence in 12th Century According to the Encarta encyclopaedia the first bank to offer most of the basic banking functions known today was the Bank of Barcelona in Spain. This was founded by merchants in 1401. This bank held deposits, exchanged currency, and carried out lending operations. It also is believed to have introduced the bank check. Three other early banks, each managed by...
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