Financial risk management in the financial institutions Dissertation

Financial risk management in the financial institutions - Dissertation Example Therefore, it is because of this trend there has been need for the risk management practices in the financial institutions. It has also forced the regulatory authorities and the bankers to improve the internal systems such as pricing, risk evaluation and control (Saita, 1999). It has been found that the traditional banking business of making loans and accepting deposits have declined in the United States in the recent years. People are switching from directly held assets to the pension funds and the mutual funds. In light of this issue, the banks are attempting to uphold their position relative to the GDP. They are putting emphasis on switching from their traditional business to fee-producing activities. It has been found that the household investors in the US and the UK bear more risk from their investment in comparison to the investors of Japan, Germany and France. However, according to few researchers it has been argued that intermediaries from Japan, Germany and France may be abl e to manage the risk by holding liquid reserves and intertemporal smoothing. On the other hand, the countries such as the US and the UK are not able to manage their risk because of the competition that they face from the financial markets. With the decline in the financial innovation and traditional banking business that is normally undertaken by the banks in the US, it can be described as a response to the competition that they face from the markets and the decline in the intertemporal smoothing (Allen & Santomero, 2001). Question Two The design in the new security, advances in the theory of finance along with the improvements in the computer and telecommunication technology have resulted in revolutionary changes in the overall structure of the financial markets and the institutions. Hedging versus equity has a role to play in managing the risk (Merton, 2000). The corporate hedging can help in reducing the volatility of the firm value. In this perspective, it is important to unders tand what the term corporate hedging denotes. It generally makes use of the off-balance-sheet instrument such as forwards, swaps, futures and options. For instance, if in case the value of the American manufacturing firm facing competition in the US markets from its foreign manufacturers are inversely linked to the value of the Dollars, then the manufacturing company can hedge the exposure by employing the off-balance sheet instruments. The exchange rate changes or volatility can be hedged in various ways. It can be done by selling the foreign exchange futures on the foreign currency, entering into the currency swaps, buying a put option or by writing a call option on the foreign currency. Therefore, it can be said that by utilising this tools the firm can hedge the risk. On the other hand, the firm can hedge by making use of the on-balance-sheet strategy (Nance & Et. Al., 1993). Credit options can also be used by the bond investors to hedge against the decline in the price of the b ond. The decline may be caused because of the downgrade in the company’s debt. Credit options are a second type of credit derivatives that can be used to hedge the risk of adverse changes brought about in the credit quality. The debt issuers can also make use of the credit-linked note which is a type of the credit derivative in order to hedge against credit risk. Therefore, it is evident that the conventional methods of managing the risk such as bank loan, assets securitisation and diversification can provide only a

Archaic age in Greek Society Essay Example | Topics and Well Written Essays - 1250 words

Archaic age in Greek Society - Essay Example The literacy has been spread slowly, which has been lost in dark ages. As a result, the democracy blossomed by the end of archaic age, though there is instability in the society. The most important fact that needs attention regarding the activities of archaic age is regarding the change in the way Greeks constructed their world. The reconstruction includes laws and customs as well as themselves. The above mentioned reconstruction in archaic age has made Greeks unique and different from the people of other parts of Europe. Though there is frustration in the society during this period, it has witnessed gradual changes in all walks of life of Greek society (Carol Dougherty, Leslie Kurke, 2007).1 In the period between Hesiod and Persian, which is known as archaic age, women did develop themselves literally and challenged men in poetry and writing. N.S. Gill (2009) quotes about Sappho who defeated the great Pindar in verse competition five times and these marks the era of advance of women when compared to that of dark ages, when there is no such situation. Artemisia of Halicarnassus was taken as threat by Greeks and they offered a bounty on her head and this gives the instance of prominence, the women got in archaic age, which is in contrast with that of women in dark ages. The contrast is that the women in dark ages do not have that much prominence and used to be treated as things of physical beauty like Helen of Troy. However, Gill claims the evidence regarding women is from Athens and states that in case of middle class and lower classes of society, the women is treated as a liability. The same thing though may be true in case of dark ages, only the evidence regarding wome n as pleasure thing were popular. Though the women are treated as liability, there existed some sort of opportunities and to own property in Sparta and to participate in trade activities. Another important aspect that's a reason to treat a woman as liability in family is the burden of paying dowry and this context is not well observed previously. As it is a convention in archaic age for women to marry a man of older age than her, the lower status when compared to men is clear. However, Priestesses and Prostitutes used to wield power in some contexts (N.S.Gill, (2009).2 Comparison of Situation in Dark Age to Archaic Age Hence, it is clear that the political situation in the society is reason for any development. In contrast to above mentioned activities of women in archaic age, the Dark Age witnessed local conflicts, economic disruptions and movements of peoples between 1200 BC to 1000 BC. As a result Mycenaean civilisation in Greece has been destroyed and thus cities were weakened as well as the kingdoms based on them. The situation is not that much worse in archaic age as it witnessed the rise of women and it is possible with reasonable tranquillity and peace for an extended period of time. Another important contrast between Dark Age and archaic age is that, not many records are available regarding the situation of dark ages, but in case of archaic age,