...UNIVERSITY OF NAIROBI INSTITUTE OF DIPLOMACY AND INTERNATIONAL STUDIES Implications of Global International Monetary Policy Decision on Economic Systems in East Africa: A Case Study of Kenya NAME: LILLIAN WACHIRA REG NO: R50/63875/2010 Supervisor: Dr. Gerrishon Ikiara A Research Proposal submitted in partial fulfillment of the Degree of Masters of Arts in International Studies (MA IS) DECLARATION I declare that this research proposal is my original work and has not been presented for a degree in any other university. NAME: LILLIAN WACHIRA REG. NO: R50/63875/2010 Sign: ………………………………… Date: ……………………… This research proposal has been submitted for examination with my approval as university supervisor SUPERVISOR: Sign: ……………………………… Date: …………………………. DEDICATION I dedicate my project to my lovely mother Beatrice, my brothers Edwin and Eric whose prayers words of encouragement and push for tenacity ring in my ears. ACKNOWLEDGEMENT I would like to express my sincere gratitude to my supervisor Dr. Gerrsihon Ikiara for the continuous support and guidance while carrying out my project, for his patience, motivation and immense knowledge. I would also like to thank the participants in my survey, who have willingly shared their precious time during the process of interviewing. I...
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...IMF Intervention and Relevance Abstract In todays modernised global financial markets technological advancements have transformed the way investors, financial institutions, governments and central banks operate. This has brought about a crisis of confidence in the ability of any one body to provide high quality surveillance, supervision and crisis management. Countries are unwilling to borrow from the IMF due to the intrusive economic reform policy conditionalities. Cocktail mixes of tax increases, spending cuts and privatisation of public sector assets have proven difficult for local governments to serve. The funds inability to keep pace with an expanding global economy suggest redefining itself with a more modest role that is fitting for such an international monetary system may be the best approach, As opposed to expanding the funds activities. Table of contents 1. Introduction page 1 2. Objectives page 1 3. Rationale page 1 4. Literature review page 2 4.1 The Mandate page 2 4.2 Consequences of IMF Programme Implementation page 2 4.3 IMF Relevance page 6 5. Conclusion page 9 6. Reference 1. Introduction This...
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...Financial Crises: Theory and Evidence Franklin Allen University of Pennsylvania Ana Babus Cambridge University Elena Carletti European University Institute June 8, 2009 1. Introduction Financial crises have been pervasive phenomena throughout history. Bordo et al. (2001) find that their 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...
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...leading up to the crisis, high consumption and low savings rates in the U.S. contributed to significant amounts of foreign money flowing into the U.S. from fast-growing economies in Asia and oil-producing countries. This inflow of funds combined with low U.S. interest rates from 2002-2004 resulted in easy credit conditions, which fueled both housing and credit bubbles. Loans of various types (e.g., mortgage, credit card, and auto) were easy to obtain and consumers assumed an unprecedented debt load. As part of the housing and credit booms, the amount of financial agreements called mortgage-backed securities (MBS), which derive their value from mortgage payments and housing prices, greatly increased. Such financial innovation enabled institutions and investors around the world to invest in the U.S. housing market. As housing prices declined, major global financial institutions that had borrowed and invested heavily in subprime MBS reported significant losses. Defaults and losses on other loan types also increased significantly as the crisis expanded from the housing market to other parts of the economy. Total losses are estimated in the trillions of U.S. dollars globally. While the housing and credit bubbles built, a series of factors caused the financial system to become increasingly fragile. Policymakers did not recognize the increasingly important role played by financial institutions such as investment banks and hedge funds, also known as the shadow banking system. Some experts...
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...An Overview of the Malaysian Banking Sector FINA0501 ASIAN FINANCIAL INSTITUTIONS TERM PAPER LEE JUNHONG, JEREMY 2010540826 I. Introduction Malaysia has been an important player in the Asian economy since the early days of independence, and even before that, as a British protectorate. It is currently the third largest economy in Southeast Asia, and is the 28th largest economy in the world in terms of purchasing power parity according to the World Bank. Malaysia has also successfully diversified its role by focusing her economy on both the traditional sphere of primary agricultural produce as well as being a hub for light manufacturing in consumer durables and electronics. Strong economic planning and farsighted vision by both the government and central bank has been instrumental in maintaining a strong growth rate of her economy; her combined year on year growth since independence in 1957 has averaged 6.6%, which is no doubt a stellar record and one of the highest in Asia. The financial institutions and their functions have been instrumental in this success, and this paper will strive to highlight the strengths and weaknesses, as well as a general overview of the Malaysian banking sector. I. Historical background The earliest beginnings of the banking sector in Malaysia dates back to the early 19th Century under British influence and the expatriate (mainly British) merchant communities. The Straits Settlements comprising of Singapore, Malacca and Penang were administered...
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...of Business and Finance, Ahlia University P.O. Box 10878, 1st Floor Gosi Complex Exhibitions Road, Manama, Kingdom of Bahrain Akram Jalal Management Information System Department College of Business and Finance, Ahlia University P.O. Box 10878, 1st Floor Gosi Complex Exhibitions Road, Manama, Kingdom of Bahrain Tel: 973-3838-3411 E-mail: ajalal@ahliauniversity.edu.bh Received: February 25, 2011 Accepted: March 22, 2011 doi:10.5539/ijbm.v6n8p216 Abstract Recently, Knowledge Management System acquires high attention in all sectors, since it is a valuable instrument in improving performance. In this study, an explanatory research on evaluating knowledge management systems will be conducted for the Central Bank of Bahrain (CBB) based on a survey of decision makers working in the Central Bank of Bahrain (CBB). It is our intention to evaluate the impact of implementing the knowledge management system on decision making by evaluating the impact of the knowledge key factors which are the information technology infrastructure, human resource, knowledge sharing and the culture of the organization. The study investigates the relationship between knowledge management and decision making. It reveals that the knowledge management factors are crucial indicators which need to be effectively implemented to make success decisions. Keywords: Knowledge management system, Decision making process, Business performance 1. Introduction Businesses have witnessed a fast motivation of the governments toward...
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...compare the two models of government business relations operating in the banking sectors of Sweden and the United States (US). The main argument presented, is that the Swedish model provides a more effective outcome for both the citizens and businesses by offering greater economic stability within the internal economy and also the banking sector. This argument is supported by examples that demonstrate how the Swedish model enabled quick and effective implementation and has provided the Swedish banking sector stability since its inception in1992. Sweden has a socialist democratic system with a capitalist economy, a socialist embedded welfare system and a deregulated financial market which has benefited from constant economic growth (Central Intelligence Agency, 2010). Sweden’s growth continued till the 1990’s when it experienced the ‘1990 Bank Crisis’ similar to the American subprime mortgage crisis (Phillips, 2009). The United States has a liberal democracy with a market orientated economy which is one of the most powerful economies in the world with a GDP of $14.29 trillion (Central Intelligence Agency, 2010). However unlike Sweden the United states economy does suffer from insufficient economic infrastructure and medical and welfare systems (Central Intelligence Agency, 2010). Both Sweden and the US have central banks, the Riksbank and the Federal Reserve Bank respectively. Riksbank’s primary role is monetary policy and responsibility for stability within the economy and...
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...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 by deregulatory measures, which lead to overly...
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...Executive Summary Introduction Eurozone debt crisis, which is also known as European Sovereign debt crisis is an on-going financial crisis that the countries within the Eurozone such as Ireland, Italy, Portugal, Greece and Spain varying a certain degree that faces struggles to repay or refinance their government debt without the assistance of third parties. This has caused much worries faced by the European Unions and hence to the above crisis, thus causing a great impact beyond the borders to the world as a whole. We will look into various roles undertaken by the European Commission (EC), the European Central Bank (ECB) and the International Monetary Fund (IMF) in helping to solve the euro zone Debt Crisis. European Central Bank (ECB) The ECB is one of the seven institutions of the European Union which was listed in the Treaty on European Union where it administers the monetary policy of the 17 EU members’ states where euro zone is consider one of the largest currency areas in the world. Founded in 1998, the central bank is one of the most important in the world with more than 500 billion euros in its reserves. Currently, the bank is based in Frankfurt, Germany and led by Jean-Claude Trichet. The primary function of ECB is basically to implement monetary policy for Euro zone, responsible for the care of foreign reserves of the European System of Central Banks, and to promote and conduct smooth operating of the financial markets and foreign exchange functions. In addition...
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...| Research Paper Prospectus | Economics Capstone | 02/12/2012 | Since the U.S. banking crisis of 2007, more than 280 banks in the United States have failed and presently continue to do so. With the closures of these banks, jobs were lost; and the economy has suffered greatly. The banking crisis of 2007 has been considered the largest since the Great Depression. Many researchers, policymakers, economists, and other individuals blame the subprime mortgage market and its collapse for triggering the U.S crisis; many also wonder how such a relatively small market as subprime could cause so much trouble around in the U.S, especially financial institutions that did not get involved with subprime lending or with investment in subprime securities. This paper analyzes financial and economic circumstances associated with the United States financial turmoil that has led to the banking crisis. Section 1 analyzes the collapse of the subprime mortgage market in the United States and outlines factors associated with it. Section 2 outlines the economic factors that led to the banking crisis in 2007. Section 3 summarizes suggestions of research about how to remedy the current crisis and possibly avoid crises in the future. Section 4 will discuss the conclusion of the research. The first signs of the subprime mortgage market collapse in the United States were very high and unusual even for subprime market delinquency and foreclosure rates for mortgages originated in 2006 and 2007. Reinhart...
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...| About IMF The International Monetary Fund (IMF) works to bring up International Monetary Cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth and to reduce the poverty around the world. IMF was created in 1945 and it’s an organization of 187 countries. Why IMF was created and how it works? The IMF, also known as the “Fund,” was conceived at a United Nations conference convened in Bretton Woods, New Hampshire, United States, in July 1944. The 44 governments represented at that conference sought to build a framework for economic cooperation that would avoid a repetition of the vicious circle of competitive devaluations that had contributed to the Great Depression of the 1930s. Work of IMF The primary mission of the IMF is to provide financial assistance to countries those countries who experience financial and economic difficulties and to sought those difficulties they are given financial help by using funds deposited with the IMF from the institution’s 187 member countries. Member of IMF states with balance of payments problems, which often arise from these difficulties, may request loans from IMF to help fill gaps between what countries earn and/or are able to borrow from other official lenders and what countries must spend to operate, including covering the cost of importing basic goods and services. In return, countries are required to launch certain reforms which have often been dubbed...
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...today's viewpoint Financial Crisis It’s commonly believed that the financial crisis happened during 2008~2009 is one of the most serious financial events in human history. A collapse of the US sub-prime mortgage market and the result of the housing boom in other industrialized economies have had a ripple-effect around the world. Furthermore, the other failures in the global financial system have surfaced. Some financial products and instruments have become so complex and twisted, that as things start to unravel, trust in the whole system started to fail. All of this comes at a price From 2006 to 2009, our economic world have been changed. Comparing the activities of 2006 and 2009. first, real GDP was essentially unchanged, making 2006-2009 the worst three-year period science 1946-1948. in spite of an essentially zero increase in production for the 2006-2009 period, personal consumption grew by almost 2 percent. however, private investment fell by more than 30 percent. on the other hand, the banks charged off $27 billion in bad bet for 2006, but this exploded to $191 billion in 2009. personal and business bankruptcies field in federal courts accelerated dramatically over the 2006-2009 period, with personal bankruptcies increasing by 136 percent, while business bankrupts increased by 209 percent. Since the outbreak of the financial crisis, the American banking system and the whole financial industry's problems have been exposed: many United States financial institutions went...
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...Abdul-Jabbar Qasem Ali Al-badaani Research Scholar of Com and Magt Sci, SRTM University, Nanded. Amaf3600@gmail.com&7709670130 ------------------------------------------------- ------------------------------------------------- ABSTRACT Banking activities involve many risks calculated and otherwise. Banks have to take appropriate measures and require management of their capital and credit and implementation procedures in keeping with the best international practices, to mitigate potential losses and avoid projected pitfalls. In view of the recent financial crisis, due to wrong management or improper implementation as well as the collapse of large economies has had a cascading effect all round the world in the form of collapses of famous institutions and banks, and thus arose a decision to have a better financial control in the form of Basel I to be later followed by Basel II and Basel III. Thus a new culture in financial controls and risk management has arisen to safeguard the banking industry in particular and the economies in general. Basel III has been introduced to impose more restrictions on banks to reduce their ability of speculation in the financial markets. However, as was proved by the recent crisis, the Islamic banks were spared from its problems, and therefore do not need such extra controls in this matter unless market instruments are transformed to include...
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...CHINA’S PERCEIVED ONGOING BANKING CRISIS By Group B Giang Nguyen 1385858 Kiet Nguyen 1402739 Tu Nguyen 1390178 Ngoc Lo 1329692 Dung Dao 1390184 Hiep Ngo 1385862 Thanh Nguyen 1385991 Anh Nguyen 1390169 Khoi Pham1385967 An assignment for ECO 3353 - Spring term, Dr. Dominic Minadeo Troy University April 30, 2014 Abstract In 2013, China, the second largest economy in the world, has experienced a banking crisis that had severely consequences on China itself and several other countries. This resulted from a rapidly rise of short-term lending from the shadow banking system, which has been considered an unofficial lending market that operates outside the scope of regulations and has recently been plunged into crisis. This paper synthesizes the overall indexes and information about the ongoing banking crisis in China, which includes: recent China economic analysis, how the crisis impacts on domestic and global economy, comparing China’s banking system to several countries in the world and the forecast for China in the near future. How the crisis took off In today’s globalized world, no country is immune from the financial crisis, even the second largest economy of the world. An increase in risky and complicated financial practices in China can possibly drive the economy to a terrible crisis. The financial crisis resulted from a rapidly rise...
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...Introduction Following the recent global economic downturn, it is clear that the response of central banks and governments is likely to shape the future of our financial markets for many years to come. Their responses in regulating fields such as credit rating agencies, derivative markets and hedge funds will be crucial in relation to economic recovery. Over the course of our essay, we will also discuss areas such as international trade, geo-political issues and the role of monetary authorities in the future as the global economy aims to bounce back from the worst downturn since 1929. We will begin our assessment by first taking a look at the future regulation of financial markets. Regulation of Financial Markets Credit Rating Agencies Credit Rating Agencies (CRA) are responsible for assigning a credit rating to financial instruments such as bonds, companies, governments, etc. By current regulation any financial instrument must receive a credit rating from at least two CRAs. The problem with this is that there are only three companies which control roughly 85% of the market. These companies are Standard & Poors, Moodys and Fitch. The need for regulation in this market is now coming under increasing pressure. These companies first came under scrutiny after the collapse of Enron because the company still had a top AAA rating one week prior to filing for bankruptcy but subsequently the credit rating agencies were overshadowed by the failures of auditors and thus were...
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