...Spanish financial crises 1. Spain’s Debt Problem The financial crises of Spain can be described as the sovereign debt problem, which is a large and continuous budget deficit feeding into its accumulated debt. From figure 1 we can see that fiscal consolidation hadn’t successfully made a recovery (see figure 1). Schwartz (2013) quoted that the net increase in debt in 2013 is expected to be €48 billion (HK$480 billion) and the gross issue of public debt €207.2 billion (HK$2085 billion). These are large sums compared with Spain’s GDP of €1.05 trillion (HK$10.69 trillion) 1. Figure 1 Source: Banco de España, General government liabilities. Excessive Deficit Procedure (EDP) debt, 11.6. Debt according to the excessive deficit procedure (EDP) and financial assets held by general government; http://www.bde.es/webbde/es/estadis/infoest/a1106e.pdf ------------------------------------------------- 1. Pedro Schwartz (2013), The Welfare State as an Underlying Cause of Spain’s Debt Crisis, Cato Journal, Vol. 33, No. 2 Actually before financial crises, Spain had experienced a long period of high economics growth. At the end of 2007, the fiscal position of Spain performed excellent. According to Eurostat, it was better than in the other three largest euro area member states Spain had a consolidated total government budget surplus of 1.9 percent of GDP, the third highest after Finland (5.2 percent) and Luxembourg (3.7 percent). But in fact it produced...
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...Current financial crisis Economic growth involves metamorphosis of the financial system. Forms of banks and bank money change. These changes, if not addressed, leave the banking system vulnerable to crisis. There is no greater challenge in economics than to understand and prevent financial crises. The financial crisis of 2007-2008 provides the opportunity to reassess our understanding of crises. All financial crises are at root bank runs, because bank debt—of all forms—is vulnerable to sudden exit by bank debt holders. The current crisis raises issues for crisis theory. And, empirically, studying crises is challenging because of small samples and incomplete data. *Written as a contribution for Trade, Globalization and Development: Essays in Honor of Kalyan Sanyal, edited by Sugata Marjit and Rajat Acharya (Springer Verlag; forthcoming). Some of this essay draws from material in my book Misunderstanding Financial Crises (Oxford University Press; forthcoming November 2012). I worked at AIG Financial Products as a consultant from 1996-2008. I thank Doug Diamond, Bengt Holmström, Arvind Krishnamurthy, and Guillermo Ordoňez for comments.1 1. Introduction Economic development does not result in the elimination of financial crises. The recent financial crisis of 2007-2009 in the United States and Europe shows that market economies, however much they grow and change, are still susceptible to collapse or near-collapse from financial crisis. This is a staggering thought...
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...| Green Bank Report: Finding the best green banking deals and rates * Home * Eco-Friendly Banking * iPhone * Green Bank Deals * Credit Cards * Savings Rates * Checking Accounts * CD Rates What is the Meaning of Green Banking? Posted by Clark Schultz on Friday, September 10, 2010 · Leave a Comment Defining green banking is relatively easy. It means promoting environmental-friendly practices and reducing your carbon footprint from your banking activities. This comes in many forms. Using online banking instead of branch banking. Paying bills online instead of mailing them. Opening up CDs and money market accounts at online banks, instead of large multi-branch banks. Or finding the local bank in your area that is taking the biggest steps to support local green initiatives. Any combination of the above personal banking practices can help the environment. So this leads to the question, which banks are green. In general, online banks and smaller community banks have better track record than larger banks. For instance, take a look at the banks that British Petroleum has been reported to seek lines of credit from this past summer after the oil spill. Goldman Sachs (GS) Citigroup (C) JP Morgan (JPM) Bank of America (BAC) These banks have at least one thing in common. That is, they are all large billion-dollar asset banks. They are also in the group of banks that received TARP money in the government bank bailout program. In would seem common...
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...FATWA ON BANKING AND THE USE OF INTEREST RECEIVED ON BANK DEPOSITS BY UMAR IBRAHIM VADILLO October 2006 FATWA Fatwa on Banking | The Use of Interest Received on Bank Deposits Table of Contents 1. Introduction ........................................................................3 2. The Issue .............................................................................7 3. Understanding Riba ...........................................................10 3.1 A world shaped by Riba.................................................... 10 3.2 What is Riba? ................................................................. 11 4. The Misunderstanding of Riba............................................20 4.1. Religious reformism and capitalism ................................... 20 4.2 The Islamic Reformers ..................................................... 23 4.3 The followers of Reda ...................................................... 27 4.4 The misunderstanding of Riba an-nasiah today.................... 28 4.5 Equating Riba to interest in a loan ..................................... 33 4.6 Islamic Banking .............................................................. 34 4.6.1 Islamic Banks are banks ............................................. 34 4.6.2 Murabaha: what it is and what it is not ......................... 38 4.6.3 How the Islamic Bank’s version of the contract of Murabaha came into being ..............................................................
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...FATWA ON BANKING AND THE USE OF INTEREST RECEIVED ON BANK DEPOSITS BY UMAR IBRAHIM VADILLO October 2006 FATWA Fatwa on Banking | The Use of Interest Received on Bank Deposits Table of Contents 1. Introduction ........................................................................3 2. The Issue .............................................................................7 3. Understanding Riba ...........................................................10 3.1 A world shaped by Riba.................................................... 10 3.2 What is Riba? ................................................................. 11 4. The Misunderstanding of Riba............................................20 4.1. Religious reformism and capitalism ................................... 20 4.2 The Islamic Reformers ..................................................... 23 4.3 The followers of Reda ...................................................... 27 4.4 The misunderstanding of Riba an-nasiah today.................... 28 4.5 Equating Riba to interest in a loan ..................................... 33 4.6 Islamic Banking .............................................................. 34 4.6.1 Islamic Banks are banks ............................................. 34 4.6.2 Murabaha: what it is and what it is not ......................... 38 4.6.3 How the Islamic Bank’s version of the contract of Murabaha came into being ..............................................................
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...bank Money Market and a Dual Banking System : The Malaysian Experience Bacha, Obiyathulla I. INCEIF the Global University in Islamic Finance 2008 Online at http://mpra.ub.uni-muenchen.de/12699/ MPRA Paper No. 12699, posted 13. January 2009 / 09:41 The Islamic Inter bank Money Market and a Dual Banking System: The Malaysian Experience. (1st Draft : June 2007) (1st Revision : September,2007) (This revision: March, 2008) Obiyathulla Ismath Bacha Dept. of Business Administration College of Economics and Management Sciences International Islamic University, Malaysia obiya@iiu.edu.my ………………………………………………………………………………………….. The author gratefully acknowledges Rahmatina Kasri for her research assistance, as well as that of participants of the 2nd International Islamic Financial Markets Conference, Bahrain, for the useful comments Abstract This paper examines the operation of an Islamic Inter-bank Money Market (IIMM), within a dual banking system. The paper argues that even though an Islamic money market operates in an interest-free environment and trades Shariah-compliant instruments, many of the risks associated with conventional money markets, including interest-rate risks are relevant. The empirical evidence, based on Malaysian data, points to Islamic money market profit rates/yields that are highly correlated and move in tandem with conventional money market rates. Given the dynamics of fund flows and cross-linkages, an IIMM operating within a dual banking system...
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...silver for safekeeping. Coins were brought to the temples not only as offerings but also for the payment of taxes. Since the temple was a place of worship and was always guarded, it was also considered a safe and secure place for storing items of value. The temples also lent money to the locals for trading purposes and exchanged foreign coins for local coins. During the medieval period, modern banking first began in Italy and then in Holland where banks facilitated the growing trade between Europe and far East. (Wikipedia: History of Banking). In areas where formal banking systems had not yet been established, goldsmiths were performing the necessary money lending and exchange transactions (Black, reading 4-3, p.2). The number of goldsmith-bankers in London has been estimated at 32 in 1670, 44 in 1677, and 42 in 1700(Goldsmith-Banking: Mutual Acceptance and Interbank Clearing in Restoration London. Quinn, Stephen). Edward Backwell was one of the many goldsmith bankers who had established a network of money lending business in London. Along with selling and trading precious metal jewellery and articles, he accepted deposits of gold from merchants for safekeeping; paid interest on the deposits; lent money on interest to the Government and the overseas trading companies; and exchanged foreign coinage (Black, reading 4-3, p.2). At the start of the seventeenth century, trade and commerce started to grow rapidly in England. London was the center of trade with India, North America...
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...System Evaluation Paper Ariana Garcia CIS/207 August 05, 2014 Anderson Smith System Evaluation Paper Banking has developed and continues to develop as the years go by. Traditionally a customer would walk into a branch if there were any type of transaction to be made. On paydays, a customer would walk into their bank and deposit their check, or cash them. If a customer wanted to send money to their family in Canada or another state they would submit a form to send funds to them, it would then take a few business days for the recipient to have the money in hand. In 1983, the basic and original functions of online banking began via telephone and a television, they were introduced by The Bank of Scotland, and were called “Homelink” (Yodlee, 2012). In October of 1994 the online banking website was developed in the United States by Stanford Credit Union (Yodlee, 2012), and has since then continued to expand with other bank institutions worldwide. Online banking has developed many tools to satisfy their customers by allowing convenience from their home with online websites, or even the palm of their hands with a phone application. There is little need for anyone to leave their home to send or receive money, deposit a check, pay a bill, view a statement, or make transfers between accounts. There are many other useful tools available for online banking and many innovations yet to come. Online banking has helped bank institutions keep customers satisfied by providing...
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...mathJames Cano Chapter 14 Section 1 * Money: anything customarily used as a medium of exchange, a unit of accounting, and a store of value * Medium of exchange: use of money for exchange for goods or services * Barter: exchange of goods and services for other goods and services * Until of accounting: use of money as a yardstick for comparing the values of goods and services in relation to one another * Store of value: use of money to store purchasing power for later use * Commodity money: a medium of exchange such as cattle or gems that has value as a commodity or good aside from its value as money * Representative money: money that is backed by an item of value, such as gold or silver * Fiat money: money that has value because a government fiat, or order, has established it as acceptable for payment debts * Legal tender: money that by law must be accepted for payment of public and private debts 3. No I would not refuse to get paid in cash or check because money is money and they all have monetary value. 4. Inflation affects money as a store of value because if more money would be printed, the money that is already circulated would not be of much value since there are so many going around. 5. Money should be durable. It should withstand wear and tear and last multiple years, depending if it is paper or coin. It should also be portable and easy to carry, even if carrying large amounts. It should also be divisible meaning...
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...International Journal of Islamic Financial Services Vol. 1 No.1 ISLAMIC INSTRUMENTS FOR MANAGING LIQUIDITY Yahia Abdul-Rahman This paper provides a practitioners perspective on the overwhelming need for prudent management of liquidity and development of Islamic money market instruments. Islamic banking and financing is gaining momentum world-wide. Many of the international RIBA banks are now focusing on LARIBA banking and financing to gain a significant market share of the funds and the deals which insist on LARIBA dealings. Many estimate the LARIBA funds looking for halal investing and banking to be from $ 50 billion to $80 billion. Most of these funds are now handled in Europe; mainly in the London financial markets. In 1996, Citibank has started "Citibank Islamic" in Bahrain and is now providing limited Islamic financing windows out of its international operations in New York & San Francisco. Islamic banks world-wide have not yet come up with the competitive financial instruments and products which allow them to provide valid avenues to the LARIBA owner of funds and which compete in quality and security with instruments offered by other RIBA banks and investment companies in the world. Yahia Abdul-Rahman 1. The Problem of Liquidity Management Liquidity is the ease by which an asset can be exchanged for another with little or no loss of value; usually cash. Liquid assets are those held in cash or are invested in instruments which can be converted rapidly into cash...
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...frequency in recent decades has been double that of the Bretton Woods Period (1945-1971) and the Gold Standard Era (1880-1993), comparable only to the Great Depression. Nevertheless, the financial crisis that started in the summer of 2007 came as a great surprise to most people. What initially was seen as difficulties in the US subprime mortgage market, rapidly escalated and spilled over to financial markets all over the world. The crisis has changed the financial landscape worldwide and its costs are yet to be evaluated. The purpose of this paper is to concisely survey the literature on financial crises. Despite its severity and its ample effects, the current crisis is similar to past crises in many dimensions. In a recent series of papers, Reinhart and Rogoff (2008a, 2008b, 2009) document the effects of banking crises using an extensive data set of high and middle-to-low income countries. They find that systemic banking crises are typically preceded by credit booms and asset price bubbles. This is consistent with Herring and Wachter (2003) who show that many financial crises are the result of bubbles in real estate markets. In addition, Reinhart and Rogoff find that crises result, on average, in a 35% real drop in housing prices spread over a period of 6 years. Equity prices fall 55% over 3 ½ years. Output falls by 9% over two years, while unemployment rises 7% over a period of 4 years. Central government debt rises 86% compared to its pre-crisis level. While ...
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...Islamic Money Market Definition Most of the firms, company and individuals are seeking for the pure markets, which eliminate interest and other prohibited products. In consequence to this, Malaysia especially Central Bank of Malaysia has made an effort of making the Islamic Money Market as one of the vital market as compared to conventional money market. The underlying philosophy of the Islamic Money Market is to further strengthen the institutional structure of Islamic banking operations. Achieve through channeling surplus liquid resources for investment, and to meet short term liquidity needs. Market for trading short term Islamic Instruments that are liquid but also offer a return on the investment. Market also provides a pricing mechanism or platform form trading these instruments by communicating information to all participants. All instruments are “asset based” and therefore shariah compliant. The Islamic Money Market refers to the market where the activities are carried out in ways that do not conflict with the conscience of Muslims and the religion of Islam. Instruments in the Islamic money market shall be adhered to principles established by the Shari'ah or the Islamic law as revealed in the Qur'an and Sunnah. In Islam, it is required that all products involve in the sale and buying (including the instruments in the financial markets) shall be from the ethical sectors or in other words, the profits gained shall not be in or from the prohibited activities. These...
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...1. Open-market operation: 9 1.2. Discount, rediscount tool: 10 1.3. Required reserve: 11 1.4. Frame of interest rate 12 1.5. Selective credit control: 13 1.6. Imposing credit limit: 13 1.7. Supply fiat money: 13 2. How State Bank in Vietnam applied these tools in its activities ? 14 2.1. 2008 Monetary policies 14 2.2. Monetary policies in 2009 15 2.3. 2010 monetary policies 16 3. Comparison between State Bank of Vietnam and Federal Reserve (FED) 17 Conclusion 21 Reference 22 Introduction The State Bank of Vietnam is the central bank in Vietnam, which is a state agency management of currency in Vietnam. This is the agency responsible for issuing currency, managing monetary policy and advise the relevant currency for the government such as issuing currency, exchange rate policy, interest rate policy, management of foreign exchange reserves, the draft bill on banking and credit institutions, to consider the establishment of banks and credit institutions, management of state-owned commercial banks. Established in 1951 under the name National Bank and renamed in 1960, the State Bank of Vietnam has gradually grown and developed, contributing important role in building and strengthening, perfecting currency, credit and banking system in Vietnam, actively serving the construction and defense. In addition to its national financial responsibilities, the State Bank also assumed some of the duties of a commercial bank. The State Bank of Vietnam defines...
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...Sangeeta Bishop March 8, 2010 Abstract This paper will illustrate the affects of The Fed, the creation of money and the monetary policy. The monetary policy has a direct impact upon aggregate demand, gross domestic product, unemployment, inflation, and interest rates. Monetary Policy and Its’ Effect on Macroeconomic Factors In earlier times traders used gold for transactions, and realized that it was inconvenient so they began to make deposits with goldsmiths. The goldsmiths provided the depositor a receipt for the value of their deposit of gold and people began to use the receipts as payments. The goldsmiths backed their receipts fully with the gold that they held in their vaults. These receipts were used as the first kind of paper money. Today, gold is no longer used as bank reserves. This was the beginning of the fractional reserve system of banking, in which reserves in bank vaults are a fraction of the total money supply. The creation of checkable deposit money by banks, limited by the amount of currency reserves that the banks feel obligated to maintain, or are required by law, to keep. Banks that operate on the basis of fractional reserves are vulnerable to panics or runs (McConnell & Brue 2004). However, a bank panic is highly unlikely if the banker's reserve and lending policies are prudent. The reason that the banking industries are highly regulated is to...
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...Mobile Banking “Banking in Your Hand” 11/24/2013 Department of Management Information Systems University of Dhaka Dhaka 1000, Bangladesh An Assignment on “Mobile Banking” Prepared by: ID: 05-036 ID: 05-048 ID: 05-053 ID: 05-054 ID: 05-067 Md. Khalilur Rahman Ashik Ahmed Md. Taijul Islam Jowel Sarker Md. Nurul Amin Prepared for: Mr. Ariful Islam Apu Lecturer Department of Management Information Systems University of Dhaka Page 2 of 26 Executive Summary Importance of banking system in a country is increasing day by day. It is quite impossible for any country to develop in industrial and commercial sector without sound banking system in modern economic era. Mobile Banking is one of the significant functions of the bank. It plays a vital role in overall economy of the country. Bank collects information from numerous sources relating to cost and revenue from Customer Management. Globalization of national economies has given a boost to international trade. The seller and the buyer in an international trading transaction must agree for a product or its quality, price etc. enter into a sales contract, spelling out precisely shipping and delivery details, terms of payment, required documentation and other related issues including dispute settlement procedure and legal framework available. The major objectives of my report is to describe the Mobile banking system of our country, measurement the employee behavior and performance, determine the wide range of services, and evaluate...
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