Downsizing Essay Research Paper The downsizing of free essay sample

Scaling back Essay, Research Paper The conservation of partnerships in America today has been brought roughly by two predominant variables: advancements in building and globalization of business sectors. Innovation has constrained the American specialist to suit to their milieus or lose their occupations. This is especially valid for the uneducated, laborers with least achievements, and for the rest of the work power who are non processing machine proficient. That is non to state, in any case, that informed or prepared specialists are non fit to cutting back. It has happened to myself, individuals from my family unit and to my companions. It can affect anybody ; the solitary way that a man can show signs of improvement of the impacts of conservation, is to suit. This can be practiced through guidance, cross readiness, and plain old flexibleness. Technological modification and deregulating of ventures produce most of occupation misfortune ( and innovative movement ) in today # 8217 ; s financial framework. We will compose a custom article test on Scaling down Essay Research Paper The cutting back of or on the other hand any comparative point explicitly for you Don't WasteYour Time Recruit WRITER Just 13.90/page Globalization, on the different manus, has constrained the United States to go competitory. Worldwide rivalry is one of the head reason for cut bringing down work costs and planetary markets are puting the stage for how a state needs to act monetarily, in the event that it needs to blast in the current universe financial framework. American # 8217 ; s are fortunate. We have experienced times of scaling back for some clasp now and have been larning how to get by with the impacts as people and as a state. Different states, on the different manus, are only get bringing down to perceive the genuine impacts of cutting back because of innovative advancements and globalization. One differentiating representation is that of the occupation markets of states, for example, England and France. While the U.K. is attracting organizations to turn up divisions at that place, France is non. The deregulating of business sectors in the U.K. has given a business-accommodating clime, alluring outside organizations that are tired of the mainland # 8217 ; s difficult concern laws. States, for example, France and Germany have the European Union to ensure laborers rights, liberal advantages and high rewards. This, in add-on to the specialists # 8217 ; s position towards work markets, has added to ceaseless joblessness and slacking battle. England # 8217 ; s specialists has grasped adaptable work showcases and has embraced just the cultural section of the European Union # 8217 ; s rulebook, in this way making low joblessness and a blasting monetary framework. States like Germany and France have been procuring the best of the two universes for rather some clasp now with short work hebdomads, top notch pay and probably the best advantages and most elevated life rules around the world. Be that as it may, presently the great occasions might be gone everlastingly. There is no way feasible for the laborers to relax such a livelyhood and rival building and globalization. More liberated planetary exchange pushes states to oblige the U.S. /U.K. assault of working longer for less guaranting a gainful and competitory fringe. This is the solitary way that these states can revive their business sectors dependent on their fare driven financial frameworks. The representative must be eager to give some pay, clasp and advantages so as to acquire an all the more enduring spot. This requires change. I wear # 8217 ; t need to express that these modifications won # 8217 ; t be difficult to numerous individuals. It # 8217 ; s entirely obvious that you have less occupation security, more prominent imbalance of wages and a meritocracy that tracks actually intimately with individuals # 8217 ; s guidance degrees. The supposed achievement premium has altogether expanded. Be that as it may, the top is significant and different states will hold to oblige so as to keep up walk with Americans and the U.K. The connection between the organization and the representative today is considerably less paternalistic and less bossy. There # 8217 ; s less security, indeed, however at that place # 8217 ; s other than more specialist freedom and increasingly opportunity to help indicate your ain occupation. Taking a gander at hypothetical records they found in Japan and somewhere else, an ever increasing number of American houses have attempted to build up a superior working environment, where laborers are urged to create more extensive achievements and where the boss turns out to be more administrator and facilitator and less the foreman. The ground for this is the way organizations and representatives communicate with one another and the way both have become progressively adaptable and increasingly versatile. In choice, Europe won # 8217 ; t work out its employments with twofold digit rising costs, and Japan won # 8217 ; t have the option to coax itself out of downturn except if they can oblige as the Americans have done to go a progressively adaptable, detached market monetary framework. It doesn # 8217 ; t expect our state will neer see a downswing, yet Americans have discovered the articulation to lounge an extensive stretch of developing. Numerous states couldn't imagine anything better than to hold our 3.8 percent joblessness rate with least increasing costs. In the event that states, for example, France, Germany and Japan do non oblige as the Americans and the U.K. have done, they will doubtlessly pay a sturdy fiscal worth. Any thanks can be given to krazykraut @ snet.net

Impact of Dividend Announcement on Shareholder Value

Effect of Dividend Announcement on Shareholder Value Various examinations recommend that profit installment has no effect on investor esteem without expenses and market flaw. At whatever point organizations have surplus acquiring, they ought to put it in ventures having positive net present worth. Another methodology is that, the stock worth relies on anticipated future profit of that stock. So organizations must attempt to mirror a reasonable development while declaring profits. This investigation is to look at the effect of profit declaration on investor esteem. This examination depends on 17 profit paying organizations, recorded on Karachi Stock Exchange. The outcome shows that speculators didn't pick up from profit declaration, however lost some an incentive over a time of 30 days preceding profit declaration through 20 days after ex-profit date. Aftereffects of study is supporting the profit flippancy theory, that there is no advantage of investor in declaration of profit. Writing Review: A definitive goal of any corporate substance is to boost the investor esteem. For the achievement of this goal, Finance chiefs take three sorts of significant choices. Initial two choices are speculation and financing choices and the third one is in regards to profit installment to investors. Presently the inquiry is that whether the installment of profit expands investor esteem or not. As profit mean prize that investors effectively own in an organization, so it is balanced by decrease in stock worth (Porterfield 1959 and 1965). For the most part investors favor capital addition over money profit and the explanation is charge design. Regularly profit is charged at high rate when contrasted with the capital addition. So in the event that we disregard the supposition of assessment and different limitations, at that point profit declaration has no effect on investors esteem (Miller and Modigliani, 1961). Financial specialists esteem a dollar of expected profit more exceptionally than a dollar of expected capital increase on the grounds that the profit yield segment is less hazardous when contrasted with development part. (Gorden 1963) If a firm compensation the entire piece of its procuring as profit then it is most conceivable that there will be deficiency of assets for speculation which may cause decline in profit later on. Another related methodology is that profit declaration impact the market cost of stocks since it conveys the data of future income of firm (Bhattacharya 1979, Baryosef and Huffman 1986). Investors have no advantage in the declaration of profit. As the offers esteem tumbles from thirty days before declaration of profit to thirty days after profit declaration. Be that as it may, these misfortunes are halfway repaid by profit yield in since quite a while ago run (Hamid Uddin, 2003). In certain nations like Pakistan, organizations are positioned based on profit payout and a few principles by SECP likewise constrained the organizations to deliver profit. Considering the advantages of capital addition over money profit this is anything but a superior methodology by any means (Dr. Ahmad Kaleem Chaudhary Salahuddin). The entire writing audit depends on two belief systems. One is that the profit declaration has a positive relationship with stock costs (Gordon 1963) and the second is that the profit declaration has a negative relationship with stock costs (Bhattacharya 1979, Baryosef, Huffman 1986 and Hamid Uddin, 2003). The positive connection between stock costs and profit declaration is because of profit data impact, while the negative relationship is a result of expense impact. Presentation: At whatever point an organization produces benefit, it either goes for reinvestment or deliver profit. On the off chance that an organization is going to deliver profit, at that point it takes choice of whether to deliver money profit or to repurchase a portion of the current stocks. The inquiry is if an organization has chance of interest in a venture having positive net present worth then for what reason should organization go for profit? As per Irrelevance Theory by Merton Miller and Franco Modigliani (MM) an organizations profit arrangement has no impact on investor worth and cost of capital of that firm. The most significant thing is the winning of an organization nor the profit strategy or reinvestment plans. Accepting there are no duties and business costs. As per Porterfield (1959 and 1965) delivering money profit implies offering compensations to investors that is something they effectively own in an organization. Consequently this will balance by declining in the stock wort h. So delivering profit is anything but a decent methodology by any stretch of the imagination. As per Gorden (1963) financial specialists incline toward a dollar of present more than that of anticipated future one. That is the reason organizations ought to go for profit rather than capital increase. All the speculations with respect to installment of money profit have their own methodologies and bearings. So the issue of in the case of delivering money profit has any effect on investor esteem or not is as yet uncertain. In nations where profit pay is exceptionally available when contrasted with capital addition, financial specialists favor capital increase over money profit. There is another face of picture, in nations like Pakistan where organizations are positioned by pace of profit paid by them, organizations ordinarily like to deliver money profit. In this examination we have analyzed the impact of profit declaration on investors esteem. To do as such, we have chosen 17 profit paying organizations from eight distinct parts and utilize the philosophy of Market Adjusted Abnormal Return (MAAR) and Cumulative Abnormal Return (CAR). Technique: To examine the effect of profit declaration on investor esteem, two estimation have been utilized. (I) Market Adjusted Abnormal Return (MAAR). (ii) Cumulative Abnormal Return (CAR). MAAR shows the relative every day rate value change in the profit paying stocks contrasted with the adjustment in normal market cost. We use KSE 100 value record as intermediary of normal market cost. MAAR is determined as follows. MAARit = Rit-Rmt MAARit it is the market balanced anomalous return for security I after some time t. Rit is the time t return on secutiry I, determined as (Pit †Pit-1)/Pit-1. Where, Pit is the market shutting cost of stock I on day t. Pit is the market shutting cost of stock I on day t-1. Rmt is the time t return on the KSE-100 value record determined as (It-It-1)/It-1. Where. Iit is the market file on day t. It-1 is the market record on day t-1. The market balanced irregular return (MAAR) shows the adjustment in singular stocks an incentive because of the profit declaration. As the rate change in showcase record is deducted, the rest of us the bit of the worth change, which is explicit to that specific stock coming about because of its profit declaration. MAAR is determined over a period beginning to †30 days to +20 days comparative with the profit declaration day (O-day). The subsequent measure utilized is total irregular return (CAR), which quantifies the speculator absolute return over a period beginning from before the declaration of profit to after the profit declaration day. We utilize a multi day window period beginning from - multi day to + multi day comparative with the profit declaration day (O-day). Vehicle is registered as follows. CARit = âˆ'MAARit CARt = âˆ'CARit Where CARit is combined unusual return for security I and CARit is total anomalous return for all protections. So also MAAR it is showcase balanced irregular return for security I for window period. After that all, the t-test recommended in Brown and Warner (1990, p251-252) is applied to test the centrality of CARit and CARt. Test Description: The example incorporates 17 organizations, from eight unique divisions. Every one of these organizations are enrolled on Karachi Stock Exchange (KSE) and declared profit between January 2009 and December 2009. Five organizations are from banking part, three from oil and gas, three from concrete, two from synthetic, one from Pharmaceutical, one from auto constructing agent, one from material and again one from telecom division. Table 1 is demonstrating the names of organizations with level of profit declared by them in particular year. Experimental discoveries and investigation Market Adjusted Abnormal Return MAAR shows the adjustment in singular stocks an incentive because of the profit declaration. As the rate change in advertise record is deducted, the rest of us the segment of the worth change, which is explicit to that specific stock coming about because of its profit declaration. In this investigation, MAAR is determined over a period beginning to †30 days to +20 days comparative with the profit declaration day on zero days. Total Abnormal Return Vehicle which quantifies the financial specialist absolute return over a period beginning from before the declaration of profit to after the profit declaration day. Table 1 Test Companies Sr. No Organization Name Segment 1 Habib Bank Limited Banking 2 Associated Bank Limited Banking 3 National Bank of Pakistan Banking 4 Joined Bank Limited Banking 5 Bank AlFalah Limited Banking 6 OGDCL Oil and Gas 7 National Refinery Limited Oil and Gas 8 Pakistan State Oil Oil and Gas 9 Fortunate Cement Concrete 10 DG Cement Concrete 11 Attock Cement Concrete 12 ICI Pakistan ltd. Substance 13 Engro Chemical Ltd Substance 14 Highnoon Labortories ltd. Pharmaceutical 15 Indus Motor Company ltd. Auto Assembler 16 Nishat Mill ltd. Material 17 Pakistan Telecom Co. Telecom Table 2 Profit paid by various segments in 2009 (Dividend in %age) Division No of Companies Greatest Dividend Least Dividend Normal Dividend Banking 5 66 25 28.5 Oil and Gas 3 125 25 67 Concrete 3 40 Compound 2 65 60 62.5 Pharmaceutical 1 25 25 25 Auto Assembler 1 100 100 100 Material 1 20 20 20 Telecom 1 15 15 15 Table 3 Normal MAAR for 51 days Days comparative with Dividend Announcement Normal MAAR - 30 0.006995623 - 29 - 0.000286981 - 28 0.005946367 - 27 0.005136643 - 26 0.005144653 - 25 - 0.004782532 - 24 - 0.005356564 - 23 - 0.002944433 - 22 - 0.01411987 - 20 0.004907264 - 19 0.00128167 - 18 - 0.00011111 - 17 - 0.001020032 - 16 0.00167

Blog Archive MBA Career News Conducting High-Impact Networking Meetings

Blog Archive MBA Career News Conducting High-Impact Networking Meetings In this new blog series, our mbaMission Career Coaches offer invaluable advice and industry-related news to help you actively manage your career. Topics include building your network, learning from mistakes and setbacks, perfecting your written communication, and mastering even the toughest interviews. To schedule a free half-hour consultation with one of our mbaMission Career Coaches, click here. Once you have secured a networking meeting, prepare to make the most of the opportunity. Ready yourself for the meeting with the same level of seriousness and dedication as you would for a formal interview. Conduct industry, company, and contact research so you can generate ideas for potential questions and can customize how you talk about yourself. Adapt and practice your pitch (your story/what you want to be remembered for). Prepare at least five or six tailored questions to ask during the meeting. During the conversation, focus on your goals. We suggest a three-part agenda: Opening  â€"  Establish a common bond, explain the purpose of your meeting, and deliver your pitch. Discussion  â€"  Ask your prepared questions, and gather advice/insights. Do not ask for a job; communicate your knowledge of/passion for the industry and the company. Closing  â€"  Adhere to time limits. Be appreciative and offer to help them with their career in the future. Ask for referrals/recommendations based on what you have heard. We offer a few final networking reminders: Make your meeting more of a conversation than an interview of your contact. Listen carefully to the contact’s answers, and ask thoughtful follow-up questions that show you are engaged in the conversation. Send personalized thank you notes. Track your networking conversations, including the person with whom you spoke, the date on which you spoke, what you spoke about/what you learned, next steps/action items, and your perceptions of the conversation. Set a plan for keeping in touch with your contact; you want to transform the conversation from a transaction into a relationship. Think about meaningful reasons to reach out to him/her in the future and ways you can help the contact. Have you been admitted to business school? If so, do you want to get a head start on defining your career goals? Do you need help preparing for job interviews or learning how to effectively network with your target employers? Or maybe you want to be a top performer in your current role but are unsure how to maximize your potential. Let an mbaMission Career Coach help via a free 30-minute consultation! Share ThisTweet Career Advice MBA Career News

Raintree Cosmetic Company Case - 1044 Words

BUS A311 Case # 1 9/19/2012 Raintree Cosmetic Company Case Analytical Model Steps 1. Facts: * Raintree must maintain a current ratio of at least .9 in order to maintain the terms of the debt agreement in place with the bank. If Raintree fails to do so, the cost of borrowing from the bank will likely increase. * Raintree company controller, Jackson Phillips, estimates that the 2013 year-end assets and liabilities will be $2,100,000 and $2,400,000 respectively. This scenario would put Raintree’s current ratio at .875, .025 lower than the required benchmark according to the terms of the financing covenant with the bank. * Jackson Phillips recommends purchasing an additional $600,000 worth of inventory on†¦show more content†¦Alternative (B): Positive Consequence: Raintree financial statements reflect accurate level of financial health via actual information. Jackson Phillips maintains his professional integrity and the company may choose to commend him for his accuracy and integrity regarding financial documents. Negative Consequence: Jackson Phillips may become a sort of scapegoat for the lower than expected current ratio. This may cause Phillips to loose his job or become ostracized in some manner by his fellow executives and lower level workers as well as executive bonuses and programs such as profit sharing are affected. Alternative (C): Positive Consequence: The bank may agree to leave the existing financing terms intact despite the lower than expected current ratio level of .875. Raintree financial statements remain accurate and Phillips keeps his job and maintains his integrity in the eyes of his executive superiors and lower level co-workers. Negative Consequence: The bank rejects Jackson Phillip’s attempt to negotiate and seeks to raise interest rates on Raintree’s financing lines. Jackson Phillips loses credibility in the view of his executives and lower level co-workers, possibly resulting in the termination of Jackson Phillips. 7. Decision: Jackson Phillips should choose alternative c. Phillips would sacrifice his personal honesty and integrity in seeking to purchase excess inventory to inflate the currentShow MoreRelatedEssay on Animal Testing Should Be Banned3083 Words   |  13 Pagesbecause doing the experiments on humans would be viewed as unethical and inhumane, but should not the treatment of animals be seen as unethical and inhumane too? The experiments that use animals to test everything from cosmetics to scientific advancements often offer no help to the companies. Animals used to test the effect of certain ingredients do not have the same biology as humans, so the testing often harms or kills thousands of animals and humans a year because of faulty testing (Greek â€Å"Animal Experimentation

Darwins Legacy Essay - 1295 Words

Charles Darwin was born in Shrewsbury on February 12, 1809. His father and grandfather, being admired and respected doctors, Charles grew up in a well-educated and freethinking family. At the age of eight, his mother died, leaving Charles and his five siblings with their stern and often overbearing father. A short time later, he was sent to boarding school in Shrewsbury to study Greek and Latin. Outside of class Charles collected beetles and conducted his own chemistry experiments, earning him the nickname â€Å"Gas† around school. Growing bored and indifferent towards his language studies, Charles’ motivation began to slip. His father, seeing his son’s mediocre academic scores, pulled him out of school and hired him as an assistant in his†¦show more content†¦Jumping at the chance, Charles set sail on the Beagle with a phrenologist named FitzRoy, to complete a survey of South America’s coast. During his travels, Charles read a work called â €Å"The Principles of Geology† by British geologist Charles Lyell. In the book, Lyell challenged the religious ideas of earth’s formation and proposed uniformitarianism instead. Lyell believed that land was formed through the physical process of sedimentation, erupting volcanoes, and erosion (Berra 14). This theory struck a chord with Charles and a short while later he would begin to develop his own theories that went against the religious grain. In September of 1832, just south of Buenos Aires, Charles noticed bones embedded within the stones of a rocky cliff and went to work on extracting them. He had discovered a fossilized jawbone and tooth of a Megatherium, or Giant Sloth (Berra 18). The discovery of this fossil started his interest in extinction and often fueled arguments between himself and FitzRoy, a religious man, who said that extinction was quite simply the â€Å"door of the Ark being made too small† (Berra 19). Two years later, Charles would di scover marine deposits that contained pieces of Petrified Forest. He concluded that the area must have once been under the sea and throughout time, uplifted some 7000 feet. His curiosity about the earth’s formation, evolution, and extinction was once again heightened. Throughout his studies and journeys around the world,Show MoreRelatedCharles Darwin: Naturalist and Leader in Science1414 Words   |  6 Pagesto assess Charles Darwin’s influence as a non-positional leader. I will also show a historical analysis, including my reasons for choosing Darwin as my subject, his background, the success and failures of his influence, as well as his legacy. Finally, I will submit my vision of non-positional leadership and mechanisms for leaders to explore their non-positional roles. Charles Darwin’s influence uses some of Gardner’s â€Å"levers† or factors that are at work in the case of Darwin’s scientific theoriesRead MoreCharles Darwin And Darwin s Theory Of Natural Selection1489 Words   |  6 Pagesprovided a significant incentive. Though Darwin’s thesis is not immaculate by any standards he lived a successful life beyond this critical discovery and his legacy exists within his descendants (xii). In spite of being subject to perennial criticism it is essential to scrutinize not only the impact created by Darwin but his life in its complete grandeur. The childhood of Charles Darwin conceals many motives that resulted in his future prosperity. Charles Darwin’s life originated on February 12, 1809Read MoreThe Theory Of Christianity And Christianity1321 Words   |  6 Pagesperspective. 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After Darwin’s graduation a good friend of his named John Henslow was intrigued with Darwin’s desire to travel the world and interests to study life so much that he decided to recommend him to a recentRead MoreDarwin And Darwin s Theory Of Evolution1201 Words   |  5 Pageschanges with genetics so that different structure have offspring’s looks like each other. 3 dissimilar change gives other numbers of offspring’s. Darwin formerly continued to detail on the mechanism of evaluation by implying that in the global conflict Darwin’s theory of evolution varies in that position on three freely documented for life, the environment â€Å"chooses† Those beings who are outstanding for the attempt, and these human being in return, replicate higher than those who are limited capable, henceRead MoreCharles Darwin : Father Of Evolution1582 Words   |  7 Pagesevolution, Charles Darwin changed the course of scientific thinking and his ideas led to research on DNA. 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Pavlov shortly changed his minded after reading about Darwin’s Theory by Charles Darwin. Darwin’s theory is the theory of evolution and it suggest that living things change with time. Darwin is cited to be one of the most significant psychologists who have made a huge impact in the world of psychology and among the world todayRead More The Octopus - Review Essay993 Words   |  4 Pagesnovel and the reality of its characters held the readers’ attention. It is so powerful a book that people had to care about the wheat growers, almost against their wishes. The impact did not end in the early twentieth century, but continues its legacy into the new millenium.The Octopus, depicts the conflict between farmers and the railroad over land and power in California. The conflict between these two is revealed through the perspectives of several different groups, each viewing it their own

The Existence of Different Types of Cultures - 1092 Words

Every society has a culture, in fact, every human being is cultured. In our daily usage of the word culture, we often just refer it as a custom or tradition of certain group of people, or else the higher desirable quality we can acquire after paying a hard effort such as playing piano. However the definition of culture is not as simple as that but it refers to countless aspects of life which include every simple elements at whole (Linton, 1945). In general, the social scientists often refer to the Tylors definition of culture when defining culture: Culture... is that complex whole which includes knowledge, belief, arts, morals, law, custom, and any other capabilities and habits acquired by man as a member of society (Tylor, 1958, p.†¦show more content†¦Hence, cultural diffusion could be seen being employed by borrowing or replacing the recognised shared customs. Yet, it is created spontaneously within the dominant culture in other words (Williams, 1990). The third type of t he culture is counterculture. Literately, it is a culture where the values, practice and lifestyle are against the social norms or those establish mainstream culture. Obvious difference was noted as compared to dominant and subculture, counterculture has more freedom and portrayed as rebellious. According to Yinger (1982), power, reciprocity and culture are the base of the social order that leads to the derivation of counterculture from the dominant normative culture. Clark (2003) too, emphasized that it is the deviation from norms. Counterculture more readily to occur under circumstances that narrowing the sense of belonging to a cognate group, a society, an identity group, or a nation. Those who practice counterculture set up their own standard and manner which harden when it is defy by the outsiders of the group ( Calvert Calvert, 1992). â€Å"A countercultural movement is both behavioral and symbolic† (Yinger, 1982, p. 23). 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Freud and Hobbes theories were somewhat in agreement with each other because they both felt that human nature was based more on the cares of self whether than the cares of others. Plato theory about human behavior is different from Freud’s and Hobbes’s because Plato thought that human behavior involves three elements which was reason, appetite and aggression (Velasquez, 2010). Aristotle believed that human nature was the product of prearranged reasons. Plato

Introduction to Management

Question: Discuss about the Introduction to Management Downsizing issues. Answer: Introduction From the given market analysis, it has been found that executives of a global company have completed their annual review. Two major issues had been analyzed from this report. They are such as decline in sales and increase of operational costs. The CEO does not want to haste into any decisions at this point. Hence, he had approached the management team to analyze the condition and address areas that might be changed. He had asked to come up with recommendations to modify each department and overall operation. The HR manager of the company, David Oliver had identified that the company will need to either downsize or restructure. Hence, a report has to be developed to analyze the impact of these two options on employee engagement and their motivation. In addition best strategies have been recommended for the company to move it forward. Strategies to improve condition of the company From this case study, there are two major strategies can be found to improve the business performance of the organization. They are such as downsizing and restructure. These two strategies have different impact on the employee motivation. They are mentioned below: Downsizing Manson (2014) stated that downsizing can serve as a way for a company to maintain profitability. However, it often causes negative impact on workplace as well. Neves (2014) stated that employees who leave an organization are not only affected. The remaining employees also feel negatively after downsizing takes place. They feel insecure about their job, which can reduce their productivity and creativity as well. Majority of the remaining employees prefer to move to different company (Van Dick et al. 2016). Hence, it can reduce competitiveness of an organization as well. Restructure On the other hand restructuring also has some issues related with employee motivation. Kohl et al. (2013) stated that restructuring of an origination includes closure, mergers, privatization or change of ownership at the time and after the process. It can also lead to issues such as change management (Ruigrok and Van Tulder 2013). There are employees within an organization, who do not support restructuring due the fear of losing promotions, power and benefits they presently receive from the company. Recommending one strategy to help the company to move forward After analyzing the impact of both these strategies on employee morale and motivation, it has been decided that restructuring process can be used. As downsizing can affect the employee morale more severely compare to restructuring, it cannot be used. There are some recommendations have been given below, in which the restructuring can be done within the company. They are discussed below: Strategy to improve sales performance The management of the company has to analyze the issues and concerns of the consumers. The company has to conduct survey and interviews to find out the personal requirements of the clientele. The company has to consider customers as the most valuable asset. They have to adopt customer centric marketing approach to increase customer engagement with the organization. Balassa (2014) stated that 45% of the companies in U.S. have implemented customer centric marketing approach and increased their sales performance. The management team has to use different software and tools to automate all the new methods. It includes different software such as Marketo, Pardot, Eloqua and Aprimo. Strategy to cut down the operating cost of the organization There are various software programs and online systems exist in the market that can reduce the operating cost. These software can provide benefit from services and programs that reduce operating cost efficiently. In addition, the company can shift addition jobs like packing and moving to another business or consultants. They can enjoy the benefit of outsourcing for advertisement and marketing. It will help to save lot of time and money of the organization to develop advertisement Maroofi et al. (2017). The company also needs to replace its traditional/ inefficient equipment with power saving equipment. Employees must try to reduce the usage of paper and use electronic medium as much as possible. In addition, it had been found that many vendors provide discounts to companies that make their payment early. It can help the company to reduce the operating cost approximately by 2-3%. Strategy develop effective change management It has been found that most of the employees within an organization resist to any kind of change within the workplace (Kavadis and Castaer 2015). They have the fear of losing their jobs, position, power. It can become a major issue for the organization while implementing the restructure. Hence, it becomes a major responsibility of the management department to make employees understand that rationale behind this change. They have to make employees assure that their jobs are not at stake and all the changes initiated within the organization is beneficial for both the company and its employees. Responding quickly to all the issues faced by employees and developing effective communication system can help the management to resolve these issues. Solving issues of employees for this restricting process It is the responsibility of the human resource management team to identify the issues faced by workers during the restructuring process. It will help the company to develop the support service to deal with all these issues. They can provide training to employees to improve their technical capabilities. In addition, stress management procedure can also be applied in order to make employees relaxed. Developing effective communication system about the change method Once the plan for restructure is completed, management team needs to understand how this restructuring can affect different stakeholders. At the next stage, the management team needs to develop effective and transparent communication system to communicate with employees about the restructuring process. They have to conduct frequent meetings to make employees understand the significant of the restructuring. Making employees aware can help the management team to implement change within the working environment. In addition, this communication process has to be continuous throughout the year. Conclusion Finally, it can be mentioned that after analyzing the condition of the company it has been found that the company has issues related with sales and operating cost. It has also been analyzed that there are two ways in which the organizational performance of the company can be improved. They are such as downsizing and restructuring. It is required to mention in this context that downsizing is not appropriate in this scenario, as it can have negative impact on employee morale. Hence, it has been recommended to the organization to implement the restructuring method. References Balassa, B., 2014. Development Strategies'.International Economics and Development: Essays in Honor of Ral Prebisch, p.159. Kavadis, N. and Castaer, X., 2015. Who Drives Corporate Restructuring? Co?Existing Owners in French Firms.Corporate Governance: An International Review,23(5), pp.417-433. Kohl, A., Rief, W. and Glombiewski, J.A., 2013. Acceptance, cognitive restructuring, and distraction as coping strategies for acute pain.The journal of pain,14(3), pp.305-315. Manson, B.J., 2014.Downsizing issues: the impact on employee morale and productivity. Routledge. Maroofi, F., Ardalan, A.G. and Tabarzadi, J., 2017. The Effect of Sales Strategies in the Financial Performance of Insurance Companies.International Journal of Asian Social Science,7(2), pp.150-160. Neves, P., 2014. Taking it out on survivors: Submissive employees, downsizing, and abusive supervision.Journal of occupational and organizational psychology,87(3), pp.507-534. Ruigrok, W. and Van Tulder, R., 2013.The logic of international restructuring: The management of dependencies in rival industrial complexes. Routledge. Van Dick, R., Drzensky, F. and Heinz, M., 2016. Goodbye or identify: Detrimental effects of downsizing on identification and survivor performance.Frontiers in psychology,7(4), 90-100. Introduction to Management Question: Write report on "an external consultant completing a report on the situation". Answer: Introduction The culture of the company determines a lot about the productivity of the industry. So the culture of the company should be given great importance by the management in order provides a healthier environment for the employees to work. Human resource management plays the major role in keeping the situation in control between the employee and the organization. How the Management works and standards which they maintain in the organization forms the basis for the survival of the company in this fast paced competitive market. Human resource should follow the structure of their working in such a manner, as they have to secure the working environment in the following ways for the employee: 1) Working conditions for all the employee has to be impartial, 2) The employee should never feel being biased, 3) The system should be transparent in its working and recognition. HRM should always keep the safety measure prime to be considered. The employee should feel safe and protected at the work place. The health of the employee should also be considered as one of the prime concern issues by the organization, as the healthy employee yields more productive as compared to the diseased. The company should follow equality at the time of recruitment and also at the time of appraisal. The system should not be biased on the basis of gender, race, religion or nationality. By (Hogan et al in 1994) it was stated that in traditional management systems, leader was having the complete control upon the organization not only this he was the person responsible for planning and supervising the functioning of an organization. Now the scenario has changed. During the conventional period, it was more of the one man control, commanding, dictating and looking after and taking decisions for the organization (Townsend, 2005). Now the working of industries has changed, it has become more about the service delegation industry; the leader has to look after more by motivating and galvanizing its team members, so that employees have a more positive attitude towards their work and toward organization. The organization should now focus more towards the construction of employees emotional intelligence. As for any company to prosper, its employee should be emotionally strong and they should feel comfortable working in the environment. Emotional intelligence has started gaining more importance as now company has started thinking in broad aspect (Wood Bandura, 1989). The manger or the person who is leading the team for a particular task, his work has become more arduous and complex has now his duty is not limited to just delegate the job, rather he has to manage and has to supervise them critically. Each and every member of the team is observed exclusively for their accomplishment and growth by the leader. He should be a keen observer to anticipate the need of the junior when an employee can be delegated to less or more demanding task. Research According to Cooper in todays evolving world where every field is evolving to some new heights leadership qualities have also taken the new role they have to keenly observe the subordinate in order to perceive their emotional intelligence and their capabilities associated with it. With this changing scenario where emotional intelligence is taking all together new turn in the organizations there have been various researches which are conducted on relationship of emotional intelligence and leadership quality (Villalonga, 2000). Haygroup has concluded that in one of the research it was claimed that for top leaders 85 percent of phenomenal performance which is because of their emotional intelligence. These researches should not be given much importance. Sosik has stated that for the current situation of the organization the variable which is becoming more popular these days is the competency of the leaders, which compose the base of emotional understanding. Emotional intelligence has become one of the very important aspects to be understood in order to understand the capabilities of the employee as to understand how efficiently each one can tackle the situation emotionally (Harris, 1999). According to Yammarino, the leader should have the capability to keenly supervise emotions of the subordinate according to individual concerns. For individual concern specific attention is required by the leader in the performance and growth of the subordinates (Yamin, et al., 2015). According to Muller et al. by the various testimonies it can be concluded that cohesion is now shifted more of work performance instead of social cohesion. Effective work teams is group cohesiveness What is team cohesion: It is the intensity with which the members of the team know each other, how they interact within the group, at what level each group integrate among themselves. Team cohesion has proven to be positive in team bonding and for the group achievement and satisfaction (Martin Dowson, 2009 ). During conventional period cohesion was seen like the false concept for the organization. Festinger explained team cohesion as the force which keeps the team member together in the group. These forces which were seems to be responsible for keeping the team members together were either attractive or of the repulsive nature of the either the group or of the members (Chenhall, 2002). Cohesion is basically seen operational as an attraction within the group and it is assessed by taking feedback from the group members as how much the group members like one another, do they wish to stay in the group about their being comfortable in the group. With the change in industry scenario, the cohesion has also changed its view with time to time. According to Zaccaro, all that cohesion is not just interpersonal attraction, but it also focuses on commitment to the particular task by the member, how much the employee is dedicated towards their assigned job. According to various testimonies it can be co ncluded that cohesion is now shifted more towards work performance instead of socially cohesive. For the organizational working culture, task cohesion should be differentiated from the interpersonal, social, mutual cohesion for the practical significance. Also the major thing to be understood for the team cohesiveness is that instead of focusing about the group members liking for each other it should be more of target behavior towards the task assigned to each member for the particular project (Deegan, 2002). Analysis Whenever there is the delegation of the role or duty from one person to another, it should be complete not just formal. A detailed handover is mandatory by the person for the constant efficient functioning of the organization. A detailed handover includes even the minute details about the persons behavior, the type of environment one feels comfortable where he is able to give his maximum so these minute details matters a lot (Sanchez Mahoney, 2014). Otherwise within no time its employees start feeling suffocated as when they feel neglected by the new authority in person and it will result in the downfall of the company very soon (Casimir Waldman, 2007). Conclusion A company should always look for the employees need, even when the work is appointed to other staff at higher or at any level, detailed information should be transferred in order to have a smooth functioning as earlier. Team cohesion should always have to be given consideration for proper functioning of the project. Recommendations For any situation, firstly it should be studied in detail. From the time when the problem has started occurring, how it was before, what all changed from the earlier time. Each and every aspect should be studied carefully to handle the situation before reaching to the conclusion. For any situation which have changed, and the problem starts rising, the new staff should not be blamed all together as he/she might not be aware of the new functioning situation. Neither the employees who have started behaving weird all of a sudden should be blamed on the report of the new officials; rather the situation should be studied thoroughly to yield the conclusion. Cohesion among the team members is very necessary for the efficient working of the team. In a current case study where Jenny has taken up the role of Dharma was unable to satisfy her role completely of team building because of which problems have started occurring. Here if we put direct blame on Jenny the problem will not solve, rather t he situation should be handled carefully. Here in this situation we have earlier member also who was informed of the damage in the team, which is really a good sign. Now she has to come up in between the Jenny and other team members as well the volunteer to recreate the confidence among them as it was earlier between her and its team member. Also Jenny should be trained that she should never insult the team member in the public. Also, she should understand that negative feedback should be given in person and in a polite tone, so that the person should not feel offended. These all points will help in rebuilding the healthy team. Bibliography Casimir, G. Waldman, D. A., 2007. A Cross Cultural Comparison of the Importance of Leadership Traits for Effective Low-level and High-level Leaders. International Journal of Cross Cultural Management, April, Volume 1, pp. 47-60. Chenhall, R. H., 2002. Management control systems design within its organizational context: findings from contingency-based research and directions for the future. Accounting, Organizations and Society, October, 28(2-3), p. 127168. Deegan, C., 2002. Introduction: The legitimising effect of social and environmental disclosures a theoretical foundation. Accounting, Auditing Accountability Journal, 15(3), pp. 282 - 311. Harris, J. K., 1999. Efficient consumer response (ECR): a survey of the Australian grocery industry. Efficient consumer response (ECR), 4(1), pp. 35 - 42. Martin, A. J. Dowson, M., 2009 . Interpersonal Relationships, Motivation, Engagement, and Achievement: Yields for Theory, Current Issues, and Educational Practice. REVIEW OF EDUCATIONAL RESEARCH, March, 79(1), pp. 327-365. Sanchez, R. Mahoney, J. T., 2014. Modularity, flexibility, and knowledge management in product and organization design. Modularity, flexibility, and knowledge management in product and organization design, 20 May. Townsend, K., 2005. Electronic surveillance and cohesive teams: room for resistance in an Australian call centre?: Blackwell Publishing Ltd . Villalonga, B., 2000. Privatization and efficiency: differentiating ownership effects from political, organizational, and dynamic effects. Privatization and efficiency, May, 42(1), p. 4374. Wood, R. Bandura, A., 1989. Social Cognitive Theory of Organizational Management. Social Cognitive Theory of Organizational Management, 01 July, pp. 361-384. Yamin, S., Gunasekaran, A. T. Mavondo, F., 2015. Innovation index and its implications on organisational performance: a study of Australian manufacturing companies. Innovation index and its implications on organisational performance, 17(5).

Grizzly Bears Essays (4378 words) - Bears, Predation, Apex Predators

Grizzly Bears Grizzly bears in British Columbia represent many things to different people. To a large percentage of the population, they represent all that is still wild about our province, a link to the past before humans came and logged much of the forests, put roads over the mountains, and dammed the rivers. This view of grizzly bears as somewhat of a flagship species is reflected in the naming by environmental groups of the large wilderness area of the Central Coast as the Great Bear Rainforest. Certainly there are many other species that inhabit the coastal rainforests from the Upper Squamish Valley north to the Alaska Panhandle, such as blacktail deer, Pacific salmon, and grey wolves, but it is the grizzly bear that is the symbol that is attached to this area by people the world over. It is the presence of healthy grizzly bear populations that displays a preservation and care for our forests to the world, and it is for this reason that there are strong pressures on those who manage grizzly b ear populations in B.C. to protect them from future declines in population and range. This is a very complex task, as grizzly bears have very strict habitat requirements, and pressure from all sorts of encroaching developments require care to be taken in the planning process. Today in British Columbia grizzly bears do still exist in viable wild populations throughout much of their historic range. Prior to European settlement in British Columbia ca. 1793, grizzly bears ranged throughout the entire mainland of B.C., save for areas of icefield. While much of their historical habitat has been extensively altered, grizzly bears still occupy the coastal areas of mainland B.C. from just north of Powell River all the way to the Alaska Panhandle. The entire northern half of the province contains large tracts of suitable habitat, as do the Rocky, Purcell, and Selkirk Mountains. The central interior plateau area of the province from Quesnel north to Prince George still contains depressed numbe rs of bears, while the Southern Interior and South Coast/Lower Mainland no longer has grizzly bear populations (British Columbia Ministry of Environment, Lands, and Parks ,1995). The institution charged with managing grizzly bears in British Columbia is the Wildlife Branch of the Ministry of Environment, Land, and Parks. The Wildlife Branch has an official mandate relating to its management of grizzly bears, which was published in the British Columbia Grizzly Bear Conservation Strategy in June of 1995. The mandate that is given is ....to ensure the continued existence of grizzly bears and their habitats for future generations. (British Columbia Ministry of Environment, Lands, and Parks,1995). This is a very wide ranging mandate, and when coupled with the first of the four goals stated under the mandate, To maintain in perpetuity the diversity and abundance of grizzly bears and the ecosystems on which they depend throughout British Columbia. (British Columbia Ministry of Environment, Lands, and Parks,1995), it is apparent that this is a goal easier said than done. The Wildlife Branch of MELP participates in both the direct management of bear populations (ie. hunting) and in indirect management processes such as land use planning that affects grizzly bear habitats. In direct management processes the Wildlife Branch has more power than in other processes that involve more user groups. Hunting pressures represent the largest direct issue that the Wildlife Branch deals with, and it is with hunting regulations that the Wildlife Branch wields the most power. In 1996, grizzly bear hunting in British Columbia moved to a limited entry basis known as LEH permits, or limited entry hunting permits. This process allows the Wildlife Branch to control how many permits are issued on an annual basis, in theory allowing the total kill to be monitored. This option is available only to residents of British Columbia, while non residents must hire a licensed guide outfitter who has also been issued a permit. According to the Grizzly Bear Harvest Management Policy, released in 1999, harvests are determined as follows: allowable harvest = (max allowable total human caused mortality)-(estimate of unknown human caused mortality)-(estimated known non-hunting human caused mortalities that are predicted to occur based on past experience). The maximum total human caused mortality can

In favor of the border wall Professor Ramos Blog

In favor of the border wall The border between Mexico and the United States was never secure, literally and figuratively, it consisted of an old, beet up, chain link fence. The fence did not really do the job it was put there to do, which was to clearly define the boundaries between Mexico and the United States. The fence was a laughing stalk, flimsy and full of holes, clearly letting everyone who sized it up know we really didn’t care that much to protect our boundaries. Building a better, more efficient wall, which speaks to our credibility, has been addressed, thanks to President Trump. This is a great idea. I will provide evidence to support that this idea is great in my report. I will also provide reasons behind the walls opposition and tear them down. Having a fortified boundary will help to eliminate the number of drugs that come into the country. Presently, Mexico accounts for perhaps more than half of U.S. imports of Marijuana and Heroin, also moving large amounts of cocaine (Reuter, Ronfeldt v). Mexico has been a platform for many types of smuggling in the United States for a long time, including stolen automobiles and migrant workers. These operations have been highly organized and developed rapidly during the 70’s. Through corruption in Mexico’s political system many powerful smugglers have been able to establish positions of protection for themselves (Reuter, Ronfeldt v). Destined for the U.S. market, Mexican production of heroin and marijuana rose rapidly throughout the late nineteen eighties. For at least fifty years, the U.S. has been pressing the Mexican government for more stringent drug control, their refusal to allow U.S. agencies to closely monitor the functioning of drug control has exacerbated tensio n between the two countries. The U.S. government can do very little, if, as some officials and analysts believe, corruption has impeded more effect drug control. The roots of corruption go deep in Mexico and cannot be substantially reduced by U.S. pressures. It has been argued that most of the drugs that enter the country from Mexico come through ports of entry, this is true, however, most is not all, and drugs are still entering by crossing the borders. The border wall will tremendously slow down drug imports to the U.S. Restrictions against illegal immigrants, combined with anti-immigrant hostility in the United States has created an economy of generally undesirable jobs (143). This illegal economy now involves prostitution and trafficking. Prostitutes supplied by Mexican traffickers have customers who are men from immigrant communities as well as non-Latino U.S. men. Woman and girls in prostitution are purchased everyday by thousands of male tourists who enter Mexico from the United States. Seeking jobs in the United States, woman and youth must rely on labor traffickers who then lure them into sex trafficking with false promises of jobs, sometimes kidnapping them and selling them. In 2003, an investigation was done on the trafficking of Mexican girls to brothels near San Diego. Hundreds of girls from ages twelve to eighteen from rural Mexico were either tricked or kidnapped into the U.S. border by traffickers or pimps, over a ten-year period. More than fifty brothels and outdoor farm labor sexual exploitation camps in San Diego County are controlled by criminal networks (150). Trafficked girls are sold to military personnel, U.S. tourists, and migrant farm workers. Caves made of reeds served as brothels at the edge of a field, was discovered in one particular case. Many of the girls even had children whose lives were threatened as leverage not to escape. Everyday hundreds of farm workers sexually assaulted these girls in prostitution after being transported to these sexual slavery camps. The wall along with the cameras and Law Enforcement officials at the border will provide more protection both for the U.S. but also for Hispanic woman and girls. A young woman who, known only as Maria, escaped from human traffickers and witnessed babies and children being â€Å"sold to order† to US citizens, did an interview with channel four news. Maria had experiences inside one of the gangs and had â€Å"significant information† and possessed a â€Å"remarkable memory† of things that went on inside. Maria told of Mexican and US gangs working together to supply a demand in the US. Maria was 16 when she was lured into the gang. Maria said the gang sold young women to the US as sex slaves after being held in a house on the Mexican border. Maria had been promised a job and given presents by gang members but was instead drugged, raped, and sold to men. Maria said these men also dealt in children and remembered one occasion when the gang was contacted by a woman in New York who needed a nine-year-old boy and a seven-year-old girl in three days. The gangs would prowl the streets of poor areas looking for children and steal th em. The US state department estimates more than 20,000 young woman and children are trafficked across the border each year. (thegaurdian.com) The border wall will provide more protection to victims of human and sex trafficking. Illegal aliens frequently enter the country in search of work opportunities. Many employers welcome them in exchange for paying them lower wages then they would have to pay U.S. workers. This employment is illegal under the immigration control and reform act (IRCA). Employers ignore this law completely and knowingly hire illegal workers. Others hire illegal workers not knowing they’ve used fake documents because they have failed to properly vet the employees. There is no requirement to verify documents presented by workers therefore this failure to properly vet is made easy and E-verify, an electronic system to verify documents, is voluntary on a nationwide basis, therefore employers do not have to comply. Defenders of illegal aliens, religious organizations, business lobbyists, and ethnic advocacy groups assert that illegal aliens only take jobs Americans will not do, â€Å"This is patently false because they are working in jobs in which U.S. workers are also employed- weath er in construction, agriculture harvesting, or service professions†. (www.fairus.org) When it is prevalent in a sector of the economy to hire illegal alien workers employers rely on illegal workers who will work for less in order to protect their bottom line. The wall will also help bring back more jobs for law abiding citizens. One reason for not wanting the wall is that â€Å"†¦.it does not reflect the reality of how the large majority of persons now become undocumented† (125). In many cases studies have shown the majority of immigrants did not illegally cross a border, they were admitted on non-immigrant visas, and then violated the terms of their visas or overstayed their admission period. One study in 2014 found that two thirds or sixty six percent of those who arrived were overstays. This does bring new information to light; however, it also points out that if sixty six percent were overstays then forty four percent did actually enter illegally. That number is still significant. This report represents information about the undocumented population’s mode of arrival in 2014. This trend has changed since 2005 when most arrivals were EWI’s (entries without inspection). This article questions the ability of a wall to address these issues. However, a wall will assert authority and d emand respected boundaries. When you break the law, you should be punished. Legal action against law violations should not be singled out for only U.S. citizens, therefore it should not even be possible to enter illegally. I do not think it is right to come into someone’s home and start off by breaking the law. As for the argument of the wall being racist. Inanimate objects cannot be racist. All countries have the right to secured borders. A country without secured borders is not a country. Furthermore, we can’t ignore the security of the country because it makes some people uncomfortable. So, in short, the wall will protect us from illegal drug smuggling, protect woman and young girls from being sold into sex trafficking, provide more jobs to tax paying, Law abiding citizens. The wall is a great idea. Martin, Nick. â€Å"Mexican woman tells of ordeal with cross-border child traffickers.† The Guardian. 2019 Guardian news and media limited or its affiliated companies. All rights reserved 11 Jan 2010. Web. 7 August 2019    https://www.theguardian.com/world/2010/jan/11/mexican-woman-border-child-traffic Reuter, Peter, and David Ronfeldt. â€Å"Quest for Integrity: The Mexican-US-drug issue in the 1980’s† Journal for Interamerican studies and world affairs 34.3 (1992): 89-154. http://apps.dtic.mil/dtic/tr/fulltext/u2/a260682.pdf Ugarte, Marisa B., Laura Zarate, and Melissa Farley. â€Å"Prostitution and trafficking of woman and children from Mexico to the United States†. Journal of trauma Practice 2.3-4 (2004): 147-165  Ã‚   prostitutionresearch.com/Mexico-U.S.%20Trafficking.pdf Warren, Robert, and Donald Kerwin. â€Å"The 2000 mile wall in search of a purpose: since 2007 visa overstays have outnumbered undocumented border crossers by half a million†. Journal on migration and human security 5.1 (2017): 124-136. https://journals.sagepub/doi/pdf/10.1177/233150241700500107 â€Å"40 years fair† faifus.org. Federation for American immigration reform all right reserved, 2019 June, web, 4 August 2019 https://www.fairus.org/issue/workforce-economy/illegal-aliens-taking-us-jobs

Business environment Essay Example | Topics and Well Written Essays - 1500 words - 2

Business environment - Essay Example (HOLDEN, MATTHEWS & THOMPSON. 1995) In UK there are many businesses which export and import product internationally. There are big names in UK like Unilever, Barclays, HSBC, Tesco, Marks and Spencer etc who are involved in trading internationally. To emphasize on Marks and Spencer it is been one of the oldest British retailer selling clothes and luxury food products. It operates in 40 countries of the world and is a well known brand world wide. Due to its vast operations world wide M&S is a global competitor for many international clothing brands. This global coverage through international trade has led to expansion in manufacturing activities of M&S worldwide which have made it profitable by outsourcing its manufacturing activities easily in cheaper countries which have made it possible for the company to compete in international market on low cost and maintain its margins. Due to its international trade, M&S has also altered their products in accordance with the demand of internati onal market which have make the company deal with many types of commodities serving many markets worldwide. (COADE. 1997; BRUCE, MOORE & BIRTWISTLE. 2004) On the other hand Tesco is one of the largest retail chains in Britain which has grown steadily over time and has internationalized its operations throughout the world. The international trade pursued by Tesco has also benefited it in the similar ways; Tesco being a very strong player in the local market is able to use its brand successfully around the world and has gained next level recognition throughout the world. Due to internationalization its operations has expanded in many countries of the world like Malaysia, Czech Republic, Poland, USA etc. where it has achieved economies of scales resulting in lower operating costs and a better ability to compete internationally with lower prices. On the other hand international trading is extremely beneficial to Tesco’s financials that has become very significant in the group res ults of Tesco. Overseas trading accounts for 60% of Tesco’s total results and its makes up 20% of current trading profits, while most of the operations worldwide are either profitable or on breakeven and in many countries it is a market leader. Another advantage the international retailing of Tesco is that due to its operations in many markets, it overcomes or reduces its risks of failure. For e.g. Tesco has recently started operating in US and its still a loss making region. However this loss is compensated by the profits generated by the others regions which make Tesco a profitable group. International trade not only can result in cost saving but it also leads to international recognition, higher revenues and profits, dispersed risk which are all beneficial for the business as well as the UK economy. (FERNIE. 2005; SETH, & RANDALL. 2000) b) Analyse the impact of two global factors on two or more UK business organisations. Organisation operating worldwide and trading interna tionally faces much more difficulties as locally operated businesses. Due to the globalization Barclays faces different environmental conditions in geographic regions. Banking sector works closely with the laws and regulations. Like political factors legal factors mostly depend on local legislation and regulation. Risk management policies of Barclays will be in accordance to legislation. Legislative compliance should be incorporated in the over all strategy,

Biochemistry - Cystic Fibrosis Essay Example | Topics and Well Written Essays - 250 words

Biochemistry - Cystic Fibrosis - Essay Example In some cases, the CFTR protein is prevented entirely to take place at all and in some cases, CFTR protein does produce and get its way into the cell membrane but cannot operate properly. One way of treatment method is to supply a different class of chloride channel to compensate for the loss of the CFTR chloride channel. Gene therapy could be a better solution in future in which a normal copy of the CFTR gene to the cells is delivered. In this way, direct synthesis of the normal CFTR protein will be possible to treat the biochemical abnormality leading to cystic fibrosis. Introducing healthy gene will take over all functions of the CFTR protein that are necessary including those which are yet not known. And the best way of gene therapy is to exploit the ability of viruses bringing their DNA to enter into cells. Adenoviruses are suitable for this purpose due to their natural tendency to infect human

Impact of Internal Factors on Islamic Banking

Impact of Internal Factors on Islamic Banking Introduction to the Subject Background of the Subject General Objective The purpose of this study is to examine how the internal factors of the Islamic Banking affected their performance before, during and after the financial crisis in the GCC in comparison to the conventional banking in the same area. Research Questions This study aims to answer the following questions: How did the financial crisis affect the profitability of Islamic Banks in comparison to Conventional Banks? What are the internal factors (bank specific characteristics) that influence the profitability of Islamic banking for every year from 2006 à ¢Ã¢â€š ¬Ã¢â‚¬Å" 2009? Did these factors have the same impact on the profitability of Islamic Banking before, during and after the financial crisis? Did these internal factors influence the profitability of Islamic Banking in the same manner as of the Conventional Banking? Need for the Study Significance of the Study Assumptions of the Study Limitations of the Study Although we cannot neglect the importance of the external factors on the profitability of Islamic Banking, they were not included in this study. To understand the reason behind this decision, we need to go through the different types of external factors and how they are classified: Macroeconomic Factors Country Regulation Rules Bank Regulation Rules These factors were not included for the following reasons: Since we are examining the performance of 92 banks (27 Islamic Banks and 65 Conventional Banks) in 6 countries, the number of countries used in the study is not significant enough to study the impact of GDP and inflation accurately on Bank profitability especially when examining each year separately Country Regulation Rules as per the IMF Database, although it differs slightly for the selected countries, did not change over the period from 2006 to 2009. This means that for each bank, these factors remained constant. Data about Bank Regulation Rules could not be obtained for GCC banks Delimitation of the Study This study was delaminated to the Islamic and Conventional Banks in the GCC whose data could be obtained in the Bankscope database. Chapter 2: Literature Review Overview of Islamic Banking Islamic Baking has established as an alternative to conventional interest-based banking. The first stirring of the Islamic Banking movement began in 1963 by Dr. Ahmed Alnajar in a small town in Egypt, called Mit Ghamar. Dr. Alnajar completed his education in Germany and found that it had many saving banks operating on interest. He took the idea from a savings bank in Germany and created his own small Islamic bank that was interest free. After Dr. Alnajarà ¢Ã¢â€š ¬Ã¢â€ž ¢s small bank proved successful, the establishment of other Islamic banks followed. In 1971, the Nasser Social Bank was founded in Egypt with the objective of lending out money as a charity on the basis of a profit and loss sharing system and helping people in need. And in 1975, the idea of Islamic banking spread to other Islamic regions such Dubai Islamic bank in United Arab Emirates and The Islamic Development (IDB) Bank in Jeddah, Saudi Arabia (Wilson, 1990). Even though Islamic Banking has only been around for thirty years and is still in an evolving stage, Islamic Banking is the fastest growing segment of the credit markets in the Muslim countries. In 2009, Assets held by Islamic Banking banks rose by 28.6 percent to $822bn from $639bn in 2008, according to The Bankerà ¢Ã¢â€š ¬Ã¢â€ž ¢s à ¢Ã¢â€š ¬Ã…“Top 500 Islamic Financial Institutionsà ¢Ã¢â€š ¬? survey while conventional banks posted annual asset growth of just 6.8 percent. Furthermore, GCC states accounted for $353.2bn or 42.9 percent of the global aggregate, while Iran remained the largest single market for Shariah-compliant assets, accounting for 35.6 percent of the total. Source: Asian Banker Research, 2009 Finally, Islamic banking operations are not limited to Islamic countries but are spreading throughout the world. One reason is the growing trend toward transcending national boundaries, and unifying Muslims into a political and economic entity that could have a significant impact on the pattern of world trade (Abdel-Magid, 1981). Islamic Banking Rules and Principles Islamic banking rules are according to the Islamic Shariah derived from the Quran and prophet Mohamedà ¢Ã¢â€š ¬Ã¢â€ž ¢s sayings. The three main practices that are clearly prohibited in the Quran and the prophetà ¢Ã¢â€š ¬Ã¢â€ž ¢s sayings are, Riba (Interest), Gharar (Uncertainty), and Maysir (Betting). Prohibition of Riba or any predetermined or fixed rate in financial institutions is the most important factor in the Islamic principles pertaining to banking. As stated in the Quran à ¢Ã¢â€š ¬Ã…“Allah forbids ribaà ¢Ã¢â€š ¬?. Riba means an increase and under Shariah the term refers to the premium that must be paid by the borrower to the lender along with the principle amount as a condition for the loan (Omar and Abdel, 1996). Gharar occurs when the purchaser does not know what has been bought and the seller does not know what has been sold. In other words, trading should be clear by stating in a contract the existing actual object(s) to be sold, with a price and time to eliminate confusion and uncertainty between the buyers and the sellers. Maisir is considered in Islam as one form of injustice in the appropriation of othersà ¢Ã¢â€š ¬Ã¢â€ž ¢ wealth. The act of gambling, sometimes referred to betting on the occurrence of a future event, is prohibited and no reward accrues for the employment of spending of wealth that an individual may gain through means of gambling. Under this prohibition, any contract entered into, should be free from uncertainty, risk and speculation. Contracting parties should have perfect knowledge of the counter values intended to be exchanged as a result of their transactions. Therefore, and according to Ahmed and Hassan (2007), the principles of Islamic banking and finance enshrined from al-Qurà ¢Ã¢â€š ¬Ã¢â€ž ¢an and Prophet Mohamedà ¢Ã¢â€š ¬Ã‹Å"s Sayings can be summed up as follows: Any predetermined payment over and above the actual amount of principal is prohibited. The lender must share in the profits or losses arising out of the enterprise for which the money was lent. Making money from money is not acceptable in Islam. Gharar (deception) and Maisir (gambling) are also prohibited. Investments should only support practices or products that are not forbidden or even discouraged by Islam. Islamic Banking Products Islamic Banking products have to be done according to Islamic rules and principles, based on profit and loss sharing as well as avoiding interest. According to BNM statistics 2007, Al Bai Bithaman Ajil financing is the most common in Islamic Banking. There are a lot of Islamic Banking products; however there are some famous Islamic products that will be discussed in this section. Al Bai Bithaman Ajil /BBA This involves the credit sale of goods on a deferred payment basis. In BAA, the Islamic bank will purchase certain assets on a deferred payment basis and then sell the goods back to the customer at an agreed price including some margin or profit. The customer will make payment by installments over an agreed period. A fixed rate BBA is a powerful hedging tool against interest rates (Rosly, 1999). Murabahah Murabahah is a contract of sale. The Islamic Bank acts as a middle man and purchases the goods requested by the customer. The bank will later sell the goods to the customer in a sale and purchase agreement, whereby the lender re-sales to the borrower at a higher price agreed on by both parties. These are more for short term financing Mudharabah According to Kettel (2006), Mudharabah is a basic principle of profit and loss, where instead of lending money at a fixed rate return, the banker forms a partnership with the borrower, thereby sharing in a ventureà ¢Ã¢â€š ¬Ã¢â€ž ¢s profit and loss. Mudharabah is an agreement between the lender and entrepreneur, whereby the lender agrees to finance the project on a profit sharing basis according to a predetermined ratio agreed by both parties concerned. If there are any losses the lender will bear all the losses. Musharakah Musharakah means partnership whereby the Islamic institution provides the capital needed by the customer with the understanding that they both share the profit and loss according to a formula agreed before the business transaction is transacted. In Musharakah all partners are entitled to participate in the management of the investment but it is not compulsory. Musharakah can help in providing financing for large investments in modern economic activities Al Ijarah Ijarah means meaning to give something on a rental basis. In Ijarah, the bank acquires ownership based on the promise and leases back to the client for a given period. The customer pays the rental but the ownership still remains with the bank or lender. As the ownership remains with the lessor (bank), it continues to give the service for which it was rented. Under this contract, the lessor has the right to re-negotiate the quantum of the lease payment at every agreed interval to ensure rental remains in line with the market rates (Hume, 2004). Wadiah Wadiah is a trust contract and the bank provides gift (hibah) and various types of benefits to the customer. This is exactly like a normal conventional savings account. Istisna Istisna allows one party buys the goods and the other party undertakes to manufacture them according to agreed specifications. Normally, Istisna is used to finance construction and manufacturing projects. Salam Salam is defined as the forward purchase of specified goods with full forward payment. This contract is normally used for financing agricultural production. According to Hassan (2004), Salam based future contracts for agricultural commodities, supported by Islamic Banks, can help to overcome the agricultural financial problems Table 2.1 lists the products of conventional banking and their correspondent products in Islamic Banking. Deposit Services Current Deposit Wadiah Wad Dhamana / Qard Hasan Savings Deposit Wadiah Wad Dhamana / Mudaraba General Investment deposit Mudaraba Special Investment deposit Mudaraba Retail / Consumer Banking Housing Property Finance BBA / Ijara wa Iktina /Diminishing Musharaka Hire Purchase Ijara Thumma Al-Bai Share Financing BBA / Mudaraba / Musharaka Working Capital Financing Murabahah/ Bai Al-Einah/ Tawarruq Credit Card Bai Al-Einah/ Tawarruq Charge Card Qard Hasan Corporate Banking/ Trade Finance Project Financing Mudaraba / Musharaka / BBA / Istisna / Ijara Letter of Credit Musharaka/ Wakala/ Murabaha Venture Capital Diminishing Mudaraba/ Musharaka Financing Syndication Musharaka + Murabaha/ Istisna / Ijara Revolving Financing Bai Al-Einah Short-term Cash Advance Bai Al-Einah/ Tawarruq Working Capital Finance Murabaha/ Salam/ Istijrar Letter of Credit Murabaha Letter of Guarantee Kafala + Ujr Leasing Ijara Export/ Import Finance Musharaka/ Salam/ Murabaha Work-in-Progress, Construction Finance Istisna Bill Discounting Bai al-Dayn Underwriting, Advisory Services Ujr Treasury / Money Market Investment Products Sell buy-back agreements Bai al-Einah Islamic Bonds Mudaraba / Mushraka + BBA / Istisna / Ijara Government Investment Issues Qard Hasan/ Salam/ Mudaraba Other Products Services Stock-Broking Services Murabaha/ Wakala/ Joala Funds Transfer (Domestic Foreign) Wakala/ Joala Safe-Keeping Collection (Negotiable Instruments) Wakala/ Joala Factoring Wakala/ Joala/ Bai al-Dayn Administration of Property, Estates and Wills Wakala Hiring of Strong Boxes Amana/ Wakala Demand Draft, Travellerà ¢Ã¢â€š ¬Ã¢â€ž ¢s Cheques Ujr/ Joala ATM Service, Standing Instruction, Telebanking Ujr Source: Obaidullah, 2005 Financial Crisis and the Islamic Banking Previous Literature The study of bank profitability is an important tool to evaluate bank operation by examining the different factors affecting bank profitability and using these factors for management planning and strategic analysis. In the last four decades, many studies have been conducted to study both bank profitability and the determinants of bank profitability either for particular country or for a panel of countries. These studies normally divide these factors into internal factors and external factors. Internal factors represent the bank-specific characteristics such as bank size, liquidity structure; liabilitiesà ¢Ã¢â€š ¬Ã‚ ¦etc while external factors can be macroeconomic factors such as inflation and GDP growth or Country-specific regulations rules and practices. In the area of banking profitability, many studies have been conducted to investigate the profitability of conventional banks while only few were conducted in the field of Islamic banking. In this chapter, we will review these studies for conventional banking first and then will focus on studies in the Islamic banking field. Then we will cover the conceptual framework of this research. Conventional Banking Different studies have been conducted in the field of conventional banking profitability. Short (1979), Bourke (1989), Molyneux and Thornton (1992), Goddard, Molyneux, and Wilson (2004), Peters et al. (2004) are some of the researchers in the field. Short (1979) is one of the early scholars who studied the relationship between banking profit rates and concentration for sixty banks in Canada, Western Europe and Japan during the 1970à ¢Ã¢â€š ¬Ã¢â€ž ¢s and he included independent variables including government ownership and concentration by using H index to quantify concentration. Results showed that the government ownership impact on profitability varied throughout the countries studied but expressed an overall negative relationship. He also found evidence that indicated higher concentration rates lead to higher profit rates (Short, 1979). Bourke (1989) also compared concentration to bank profitability but included other determinants. Bourke (1989) covered ninety banks in Australia, Europe, and North America between 1972 and 198 and examined different internal and external factors: internal factors such as staff expenses, capital ratio, liquidity ratio, and loans to deposit ratio; external factors such as regulation, size of economies of scale, competition, concentration, growth in market, interest rate, government ownership, and market power. His results show that increase in government ownership leads to lower profitability in banking. He also found that concentration, interest rates, and money supply are positively related to profitability along with capital and reserves of total assets as well as cash and bank deposits of total assets. Bourke adds that well capitalized banks enjoy cheaper access to sources of funds as they are less risky than less capitalized banks (Bourke, 1989). Later, Molyneux and Thornton (1992) studied the determinants of European banks profitability. The paper examined eighteen counties in Europe between 1986 and 1989. This paper replicated Bourkeà ¢Ã¢â€š ¬Ã¢â€ž ¢s (1989) work by using internal and external determinants of bank profitability. However, Molyneux and Thornton (1992) results showed that government ownership expresses a positive coefficient with return on capital (profitability) which contradicts with Bourkeà ¢Ã¢â€š ¬Ã¢â€ž ¢s findings. Other results were similar to Bourkeà ¢Ã¢â€š ¬Ã¢â€ž ¢s, showing that concentration, interest rate, and money supply were positively related to bank profitability (Molyneux and Thornton, 1992). In one of the recent papers on bank profitability on European banks, Goddard, Molyneux, and Wilson (2004) shows similar findings to the paper by Molyneux and Thornton (1992). It investigates the determinants of profitability in six European countries and it covered 665 banks between 1992 and 1998. The study used cross-sectional and dynamic panel models. The variables used in the regression analysis were ROE, the logarithmic of total assets, Off Balance Sheet (OBS) dividends, Capital to Asset Ratio (CAR). The results from both models were similar: evidence reveals that there is a positive relationship between size (total assets) and profitability. Meanwhile, OBS appears to have a positive relationship with profitability for UK but neutral or negative for other European countries. Moreover, results also state that CAR has a positive relationship with profitability. Furthermore, the paper touched on ownership type by indicating that there is high competition in banking due to the fact t hat there is foreign bank involvement in domestic banks, and that profitability is not linked to ownership (Goddard, Molyneux, and Wilson, 2004). Peters et al. (2004) studied the characteristics of banks in post-war Lebanon for the years 1993 to 2000 and compared the results to a group of banks from five other countries in the Middle East including UAE, KSA, Kuwait, Bahrain and Oman for the years 1995 through 1999. They used Return on Equity (ROE) measure profitability and leverage and they employed regression models that relate bank profitability ratios to various explanatory variables. This study tests the relationships between bank profitability and size, asset portfolio composition, off-balance sheet items, ownership by a foreign bank, and the ratio of employment to assets. The results show a strong association between economic growth and bank profitability, whether measured by ROE or ROA. They found that Lebanese banks are profitable, but not as profitable as a control group of banks from five other countries located in the Middle East. Islamic Banking In the area of Islamic Banking, Bashir (2000) assessed the performance of Islamic banks in eight Middle Eastern countries. He analyzed important bank characteristics that affect the performance of Islamic banks by controlling economic and financial structure measures. The paper studied fourteen Islamic banks from Bahrain, Egypt, Jordan, Kuwait, Qatar, Sudan, Turkey, and United Arab Emirates between 1993 and 1998. To examining profitability, the paper used Non Interest Margin (NIM), Before Tax Profit (BTP), Return on Assets (ROA), and Return on Equity (ROE) as performance indicators. There were also internal and external variables: internal variables were bank size, leverage, loans, short-term funding, overhead, and ownership; external variables included macroeconomic environment, regulation, and financial market. In general, results from the study confirm previous findings and show that Islamic banks profitability is positively related to equity and loans. Consequently, if loans and equity are high, Islamic banks should be more profitable. If leverage is high and loan to assets is also large, Islamic banks will be more profitable. The results also indicate that favorable macro-economic conditions help profitability (Bashir, 2000). Hassoune (2002) examined Islamic bank profitability in an interest rate cycle. In his paper, compared ROE and ROA Volatility for both Islamic and conventional banks in three GCC region, Kuwait, Saudi Arabia, and Qatar. He states that since Islamic banking is based on profit and loss sharing, managements have to generate sufficient returns for investors given that they are not willing accept no returns (Hassoune, 2002). Bashir and Hassan (2004) studied the determinants of Islamic banking profitability covers 43 Islamic Banks between 1994 and 2001 in 21 countries. Their figures show Islamic banks to have a better capital asset ratio compared to commercial banks which means that Islamic banks are well capitalized. Also, their paper used internal and external banks characteristics to determine profitability as well as economic measures, financial structure variables, and country variables. They used, Net-non Interest Margin (NIM), which is non interest income to the bank such as, bank fees, service charges and foreign exchange to identify profitability. Other profitability indicators adopted were Before Tax Profit divided by total assets (BTP/TA), Return on Assets (ROA), and Return on Equity (ROE). Results obtained by Bashir and Hassan (2004), were similar to the Bashir (2000) results, which found a positive relationship between capital and profitability but a negative relationship between loans and profitability. Bashir and Hassan also found total assets to have a negative relationship with profitability which amazingly means that smaller banks are more profitable. In addition, during an economic boom, banks profitability seems to improve because there are fewer nonperforming loans. Inflation, on the other hand, does not have any effect on Islamic bank profitability. Finally, results also indicate that overhead expenses for Islamic banks have a positive relation with profitability which means if expenses increase, profitability also increases (Bashir and Hassan, 2004). Alkassim (2005) examined the determinants of profitability in the banking sector of the GCC countries and found that asset have a negative impact on profitability of conventional banks but have a positive impact on profitability of Islamic banks. They also observed that positive impact on profitability for conventional but have a negative impact for Islamic banking. Liu and Hung (2006) examined the relationship between service quality and long-term profitability of Taiwanà ¢Ã¢â€š ¬Ã¢â€ž ¢s banks and found a positive link between branch number and long-term profitability and also proved that average salaries are detrimental to banksà ¢Ã¢â€š ¬Ã¢â€ž ¢ profit. Masood, Aktan and Chaudhary (2009) studied the co-integration and causal relationship between Return on Equity and Return on Assets for 12 banks in KSA for the period between 1999- 2007. For their research, the used time series model of ADF unit-root test, Johansen co-integration test, Granger causality test and graphical comparison model. They found that there are stable long run relationships between the two variables and that it is only a one-direction cause-effect relationship between ROE and ROA. The results show that ROE is a granger cause to ROA but ROA is not a granger cause to ROE that is ROE can affect ROA input but ROA does not affect the ROE in the Saudi Arabian Banking sector. Conceptual Framework Theoretical framework is a basic conceptual structure organized around a theory. It defines the kinds of variables that are going to be used in the analysis. In this research, the theoretical framework consists of seven independent variables that represent four aspects of the Bank Characteristics. Theses aspects are the Bank Size (Total Assets), Capital Structure (Equity and Tangible Equity), Liquidity (Loans and Liquid Assets) and Liabilities (Deposits and Overheads). Bank profitability is the dependent variable and two measures of bank profitability are used in this study, namely return on average equity (ROAE) and return on average assets (ROAA). Financial Crisis Internal Factors (Bank-Specific) Islamic Banking Profitability H1: Bank Size H2, H3: Capital Structure H4, H5: Liquidities H6, H7: Liabilities Return on Average Assets (ROAA) Return on Average Equity (ROAE) In this section we develop the hypothesis to be examined in this research paper. Development of Hypotheses This paper attempts to test seven hypotheses. A hypothesis is a claim or assumption about the value of a population parameter. It consists either of a suggested explanation for a phenomenon or of a reasoned proposal suggesting a possible correlation between multiple phenomena. According to Becker (1995), hypothesis testing is the process of judging which of two contradictory statements is correct. Hypothesis 1: Profitability has a positive and significant relationship with the total assets (ASSETS). Total Assets of a company represents its valuables including both tangible assets such as equipments and properties along with its intangible assets such as goodwill and patent. For banks, total assets include loans which are the basis for bank operations either through interest or interest-free practices. Total assets is used as a tool to measure the bank size; banks with higher total assets indicate bigger banks. Molyneux and el (2004) included total assets in their study and found a positive significant relationship between total assets and profitability. Therefore, total assets are expected to have positive relation with profitability which means that bigger banks are expected to be more profitable. Total assets are converted logarithmic to be more consistent with the other ratios Hypothesis 2: Profitability has a positive and significant relationship with equity to asset ratio (EQUITY). Total equity over total assets measures bankà ¢Ã¢â€š ¬Ã¢â€ž ¢s capital structure and adequate. It indicated bank ability to withstand losses and handle risk exposure with shareholders. Hassan and Bashir (2004) examined the relationship between EQUITY and bank profitability and found positive relationship. Therefore, EQUITY is included in this study and it is expected to have a positive relation with performance because well capitalized banks are less risky and more profitable (Bourke, 1989) Hypothesis 3: Profitability has a positive and significant relationship with Tangible Equity to total liabilities ratio (TNGEQTY). Tangible Equity represents the subset of shareholderà ¢Ã¢â€š ¬Ã¢â€ž ¢s equity that is not common shares and not intangible asset. Tangible Equity became very popular after the financial crisis as a measure of bank viability since it indicates of how much ownership equity owners of common stock would receive in the event of a companyà ¢Ã¢â€š ¬Ã¢â€ž ¢s liquidation. Beltratti and Stulz (2009) examined tangible equity to liabilities in their study to examine why some banks perform better during the financial crisis and found positive and insignificant relationship between TNEQTY and bank profitability. Therefore, TNEQTY is included in this study and it is expected to have positive relationship since banks with better capital structure in since of more equity à ¢Ã¢â€š ¬Ã¢â‚¬Å" seems to perform better. Hypothesis 4: Profitability has a positive and significant relationship with the loans to assets ratio (LOANS). Total loans over total assets a liquidity ratio used that indicates how much of bank assets are tied to loans. For banks, the higher LOANS ratio means less liquidity. Demirguc-Kunt and Huizinga, (1997) found positive relationship between LOANS and bank profitability. LOANS is included in this study and anticipated to have positive relationship with profitability. Furthermore, conventional banks rely on interest-based loans while Islamic banks rely on profit and loss sharing interest-free lending. Therefore, this ratio is also used to compare the performance of interest-based loans and interest-free lending. Hypothesis 5: Profitability has a positive and significant relationship with the liquid assets to total assets ratio (LIQUID). Liquid assets include currency, deposit accounts, and negotiable instruments that can be converted easily into cash. Liquid assets to total assets ratio is a liquidity ratio that measure how easily the banksà ¢Ã¢â€š ¬Ã¢â€ž ¢ assets can be converted into cash. Beltratti and Stulz (2009) found that LIQUID has positive and significant relation with profitability as banks with more liquid assets tend to perform better. Therefore, LIQUID is included in this study and expected to have positive relationship with profitability. Hypothesis 6: Profitability has a reverse and significant relationship with the deposits to assets ratio (DEPOSITS). Deposits to total ratio is another liquidity indicator but is considered a liability since they measure the impact of liabilities on profitability. Bashir and Hassan (2004) examined deposits in their study and found a negative relationship with profitability. Therefore, we expect that DEPOSITS to have negative relationship with profitability. Hypothesis 7: Profitability has a positive and significant relationship with the overhead to assets ratio (OVERHEAD). Overhead costs represent all bank expenses excluding interest expenses as they are considered as operations expenses. Overhead over total assets is a liability ratio that measures the operation efficiency of the bank. Alkassim (2005) included OVERHEAD in his research and found positive relationship to profitability. Therefore, OVERHEAD is included in this study and expected to have positive relationship to profitability. Chapter 3: Methods Data Sample From 2006 to 2008 2009 Country Islamic Banks Conventional Banks Islamic Banks Conventional Banks Bahrain 12 14 5 5 Saudi Arabia 2 9 1 7 Qatar 3 5 2 4 Kuwait 4 14 1 3 Oman 0 6 0 3 UAE 6 17 0 7 Total 27 65 9 29 The data used in this analysis were extracted from Bankscope data for all Islamic and Conventional Banks in the GCC for the period from 2006 to 2009. Using Bankscope has many advantages: it has information for over 30,000 banks, plus the accounting information is presented in a standardized format. Therefore, the accounting information of Islamic Banking is adjusted to be comparable with accounting information of conventional banks. The data used for this study are from a pooled time-series cross-sectional data. The data are taken from various countries. Sample period for this study is from 2002 to 2007. Cross-sectional data provide information on variables for a given period of time. While time series data give information about variables over a number of periods of time. The data for internal variables are obtained from BankScope database which is compiled by International Bank Credit Analysis Limited (IBCA). Using BankScope has two advantages. Firstly, it has information for 11,000 banks, accounting for about 90% of total assets in each country. Secondly, the accounting information at the bank level is presented in standardized formats, after adjustments for differences in accounting and reporting standards. The data for external variables are obtained from World Economic Outlook 2008 database, published by International Monetary Fund (IMF). A total of 60 Islamic banks from 18 countries were chosen in this study. The selected banks are those which are classified as Islamic bank in BankScope database. The Islamic banks have available data for at least one year between 2002 and 2007. This yielded an unbalanced panel data consisting of 260 observations. However, after eliminating cases with missing data, only 155 observations of balanced panel data are left. Variable Definition Independent Variable: Profitability Measures There are many ratios that have been used by researchers to measure bank profitability but the two most often used ratios are the return on assets (ROA) and the return on equity (ROE) (Iqbal et al., 2005). Return on Assets Impact of Internal Factors on Islamic Banking Impact of Internal Factors on Islamic Banking Introduction to the Subject Background of the Subject General Objective The purpose of this study is to examine how the internal factors of the Islamic Banking affected their performance before, during and after the financial crisis in the GCC in comparison to the conventional banking in the same area. Research Questions This study aims to answer the following questions: How did the financial crisis affect the profitability of Islamic Banks in comparison to Conventional Banks? What are the internal factors (bank specific characteristics) that influence the profitability of Islamic banking for every year from 2006 à ¢Ã¢â€š ¬Ã¢â‚¬Å" 2009? Did these factors have the same impact on the profitability of Islamic Banking before, during and after the financial crisis? Did these internal factors influence the profitability of Islamic Banking in the same manner as of the Conventional Banking? Need for the Study Significance of the Study Assumptions of the Study Limitations of the Study Although we cannot neglect the importance of the external factors on the profitability of Islamic Banking, they were not included in this study. To understand the reason behind this decision, we need to go through the different types of external factors and how they are classified: Macroeconomic Factors Country Regulation Rules Bank Regulation Rules These factors were not included for the following reasons: Since we are examining the performance of 92 banks (27 Islamic Banks and 65 Conventional Banks) in 6 countries, the number of countries used in the study is not significant enough to study the impact of GDP and inflation accurately on Bank profitability especially when examining each year separately Country Regulation Rules as per the IMF Database, although it differs slightly for the selected countries, did not change over the period from 2006 to 2009. This means that for each bank, these factors remained constant. Data about Bank Regulation Rules could not be obtained for GCC banks Delimitation of the Study This study was delaminated to the Islamic and Conventional Banks in the GCC whose data could be obtained in the Bankscope database. Chapter 2: Literature Review Overview of Islamic Banking Islamic Baking has established as an alternative to conventional interest-based banking. The first stirring of the Islamic Banking movement began in 1963 by Dr. Ahmed Alnajar in a small town in Egypt, called Mit Ghamar. Dr. Alnajar completed his education in Germany and found that it had many saving banks operating on interest. He took the idea from a savings bank in Germany and created his own small Islamic bank that was interest free. After Dr. Alnajarà ¢Ã¢â€š ¬Ã¢â€ž ¢s small bank proved successful, the establishment of other Islamic banks followed. In 1971, the Nasser Social Bank was founded in Egypt with the objective of lending out money as a charity on the basis of a profit and loss sharing system and helping people in need. And in 1975, the idea of Islamic banking spread to other Islamic regions such Dubai Islamic bank in United Arab Emirates and The Islamic Development (IDB) Bank in Jeddah, Saudi Arabia (Wilson, 1990). Even though Islamic Banking has only been around for thirty years and is still in an evolving stage, Islamic Banking is the fastest growing segment of the credit markets in the Muslim countries. In 2009, Assets held by Islamic Banking banks rose by 28.6 percent to $822bn from $639bn in 2008, according to The Bankerà ¢Ã¢â€š ¬Ã¢â€ž ¢s à ¢Ã¢â€š ¬Ã…“Top 500 Islamic Financial Institutionsà ¢Ã¢â€š ¬? survey while conventional banks posted annual asset growth of just 6.8 percent. Furthermore, GCC states accounted for $353.2bn or 42.9 percent of the global aggregate, while Iran remained the largest single market for Shariah-compliant assets, accounting for 35.6 percent of the total. Source: Asian Banker Research, 2009 Finally, Islamic banking operations are not limited to Islamic countries but are spreading throughout the world. One reason is the growing trend toward transcending national boundaries, and unifying Muslims into a political and economic entity that could have a significant impact on the pattern of world trade (Abdel-Magid, 1981). Islamic Banking Rules and Principles Islamic banking rules are according to the Islamic Shariah derived from the Quran and prophet Mohamedà ¢Ã¢â€š ¬Ã¢â€ž ¢s sayings. The three main practices that are clearly prohibited in the Quran and the prophetà ¢Ã¢â€š ¬Ã¢â€ž ¢s sayings are, Riba (Interest), Gharar (Uncertainty), and Maysir (Betting). Prohibition of Riba or any predetermined or fixed rate in financial institutions is the most important factor in the Islamic principles pertaining to banking. As stated in the Quran à ¢Ã¢â€š ¬Ã…“Allah forbids ribaà ¢Ã¢â€š ¬?. Riba means an increase and under Shariah the term refers to the premium that must be paid by the borrower to the lender along with the principle amount as a condition for the loan (Omar and Abdel, 1996). Gharar occurs when the purchaser does not know what has been bought and the seller does not know what has been sold. In other words, trading should be clear by stating in a contract the existing actual object(s) to be sold, with a price and time to eliminate confusion and uncertainty between the buyers and the sellers. Maisir is considered in Islam as one form of injustice in the appropriation of othersà ¢Ã¢â€š ¬Ã¢â€ž ¢ wealth. The act of gambling, sometimes referred to betting on the occurrence of a future event, is prohibited and no reward accrues for the employment of spending of wealth that an individual may gain through means of gambling. Under this prohibition, any contract entered into, should be free from uncertainty, risk and speculation. Contracting parties should have perfect knowledge of the counter values intended to be exchanged as a result of their transactions. Therefore, and according to Ahmed and Hassan (2007), the principles of Islamic banking and finance enshrined from al-Qurà ¢Ã¢â€š ¬Ã¢â€ž ¢an and Prophet Mohamedà ¢Ã¢â€š ¬Ã‹Å"s Sayings can be summed up as follows: Any predetermined payment over and above the actual amount of principal is prohibited. The lender must share in the profits or losses arising out of the enterprise for which the money was lent. Making money from money is not acceptable in Islam. Gharar (deception) and Maisir (gambling) are also prohibited. Investments should only support practices or products that are not forbidden or even discouraged by Islam. Islamic Banking Products Islamic Banking products have to be done according to Islamic rules and principles, based on profit and loss sharing as well as avoiding interest. According to BNM statistics 2007, Al Bai Bithaman Ajil financing is the most common in Islamic Banking. There are a lot of Islamic Banking products; however there are some famous Islamic products that will be discussed in this section. Al Bai Bithaman Ajil /BBA This involves the credit sale of goods on a deferred payment basis. In BAA, the Islamic bank will purchase certain assets on a deferred payment basis and then sell the goods back to the customer at an agreed price including some margin or profit. The customer will make payment by installments over an agreed period. A fixed rate BBA is a powerful hedging tool against interest rates (Rosly, 1999). Murabahah Murabahah is a contract of sale. The Islamic Bank acts as a middle man and purchases the goods requested by the customer. The bank will later sell the goods to the customer in a sale and purchase agreement, whereby the lender re-sales to the borrower at a higher price agreed on by both parties. These are more for short term financing Mudharabah According to Kettel (2006), Mudharabah is a basic principle of profit and loss, where instead of lending money at a fixed rate return, the banker forms a partnership with the borrower, thereby sharing in a ventureà ¢Ã¢â€š ¬Ã¢â€ž ¢s profit and loss. Mudharabah is an agreement between the lender and entrepreneur, whereby the lender agrees to finance the project on a profit sharing basis according to a predetermined ratio agreed by both parties concerned. If there are any losses the lender will bear all the losses. Musharakah Musharakah means partnership whereby the Islamic institution provides the capital needed by the customer with the understanding that they both share the profit and loss according to a formula agreed before the business transaction is transacted. In Musharakah all partners are entitled to participate in the management of the investment but it is not compulsory. Musharakah can help in providing financing for large investments in modern economic activities Al Ijarah Ijarah means meaning to give something on a rental basis. In Ijarah, the bank acquires ownership based on the promise and leases back to the client for a given period. The customer pays the rental but the ownership still remains with the bank or lender. As the ownership remains with the lessor (bank), it continues to give the service for which it was rented. Under this contract, the lessor has the right to re-negotiate the quantum of the lease payment at every agreed interval to ensure rental remains in line with the market rates (Hume, 2004). Wadiah Wadiah is a trust contract and the bank provides gift (hibah) and various types of benefits to the customer. This is exactly like a normal conventional savings account. Istisna Istisna allows one party buys the goods and the other party undertakes to manufacture them according to agreed specifications. Normally, Istisna is used to finance construction and manufacturing projects. Salam Salam is defined as the forward purchase of specified goods with full forward payment. This contract is normally used for financing agricultural production. According to Hassan (2004), Salam based future contracts for agricultural commodities, supported by Islamic Banks, can help to overcome the agricultural financial problems Table 2.1 lists the products of conventional banking and their correspondent products in Islamic Banking. Deposit Services Current Deposit Wadiah Wad Dhamana / Qard Hasan Savings Deposit Wadiah Wad Dhamana / Mudaraba General Investment deposit Mudaraba Special Investment deposit Mudaraba Retail / Consumer Banking Housing Property Finance BBA / Ijara wa Iktina /Diminishing Musharaka Hire Purchase Ijara Thumma Al-Bai Share Financing BBA / Mudaraba / Musharaka Working Capital Financing Murabahah/ Bai Al-Einah/ Tawarruq Credit Card Bai Al-Einah/ Tawarruq Charge Card Qard Hasan Corporate Banking/ Trade Finance Project Financing Mudaraba / Musharaka / BBA / Istisna / Ijara Letter of Credit Musharaka/ Wakala/ Murabaha Venture Capital Diminishing Mudaraba/ Musharaka Financing Syndication Musharaka + Murabaha/ Istisna / Ijara Revolving Financing Bai Al-Einah Short-term Cash Advance Bai Al-Einah/ Tawarruq Working Capital Finance Murabaha/ Salam/ Istijrar Letter of Credit Murabaha Letter of Guarantee Kafala + Ujr Leasing Ijara Export/ Import Finance Musharaka/ Salam/ Murabaha Work-in-Progress, Construction Finance Istisna Bill Discounting Bai al-Dayn Underwriting, Advisory Services Ujr Treasury / Money Market Investment Products Sell buy-back agreements Bai al-Einah Islamic Bonds Mudaraba / Mushraka + BBA / Istisna / Ijara Government Investment Issues Qard Hasan/ Salam/ Mudaraba Other Products Services Stock-Broking Services Murabaha/ Wakala/ Joala Funds Transfer (Domestic Foreign) Wakala/ Joala Safe-Keeping Collection (Negotiable Instruments) Wakala/ Joala Factoring Wakala/ Joala/ Bai al-Dayn Administration of Property, Estates and Wills Wakala Hiring of Strong Boxes Amana/ Wakala Demand Draft, Travellerà ¢Ã¢â€š ¬Ã¢â€ž ¢s Cheques Ujr/ Joala ATM Service, Standing Instruction, Telebanking Ujr Source: Obaidullah, 2005 Financial Crisis and the Islamic Banking Previous Literature The study of bank profitability is an important tool to evaluate bank operation by examining the different factors affecting bank profitability and using these factors for management planning and strategic analysis. In the last four decades, many studies have been conducted to study both bank profitability and the determinants of bank profitability either for particular country or for a panel of countries. These studies normally divide these factors into internal factors and external factors. Internal factors represent the bank-specific characteristics such as bank size, liquidity structure; liabilitiesà ¢Ã¢â€š ¬Ã‚ ¦etc while external factors can be macroeconomic factors such as inflation and GDP growth or Country-specific regulations rules and practices. In the area of banking profitability, many studies have been conducted to investigate the profitability of conventional banks while only few were conducted in the field of Islamic banking. In this chapter, we will review these studies for conventional banking first and then will focus on studies in the Islamic banking field. Then we will cover the conceptual framework of this research. Conventional Banking Different studies have been conducted in the field of conventional banking profitability. Short (1979), Bourke (1989), Molyneux and Thornton (1992), Goddard, Molyneux, and Wilson (2004), Peters et al. (2004) are some of the researchers in the field. Short (1979) is one of the early scholars who studied the relationship between banking profit rates and concentration for sixty banks in Canada, Western Europe and Japan during the 1970à ¢Ã¢â€š ¬Ã¢â€ž ¢s and he included independent variables including government ownership and concentration by using H index to quantify concentration. Results showed that the government ownership impact on profitability varied throughout the countries studied but expressed an overall negative relationship. He also found evidence that indicated higher concentration rates lead to higher profit rates (Short, 1979). Bourke (1989) also compared concentration to bank profitability but included other determinants. Bourke (1989) covered ninety banks in Australia, Europe, and North America between 1972 and 198 and examined different internal and external factors: internal factors such as staff expenses, capital ratio, liquidity ratio, and loans to deposit ratio; external factors such as regulation, size of economies of scale, competition, concentration, growth in market, interest rate, government ownership, and market power. His results show that increase in government ownership leads to lower profitability in banking. He also found that concentration, interest rates, and money supply are positively related to profitability along with capital and reserves of total assets as well as cash and bank deposits of total assets. Bourke adds that well capitalized banks enjoy cheaper access to sources of funds as they are less risky than less capitalized banks (Bourke, 1989). Later, Molyneux and Thornton (1992) studied the determinants of European banks profitability. The paper examined eighteen counties in Europe between 1986 and 1989. This paper replicated Bourkeà ¢Ã¢â€š ¬Ã¢â€ž ¢s (1989) work by using internal and external determinants of bank profitability. However, Molyneux and Thornton (1992) results showed that government ownership expresses a positive coefficient with return on capital (profitability) which contradicts with Bourkeà ¢Ã¢â€š ¬Ã¢â€ž ¢s findings. Other results were similar to Bourkeà ¢Ã¢â€š ¬Ã¢â€ž ¢s, showing that concentration, interest rate, and money supply were positively related to bank profitability (Molyneux and Thornton, 1992). In one of the recent papers on bank profitability on European banks, Goddard, Molyneux, and Wilson (2004) shows similar findings to the paper by Molyneux and Thornton (1992). It investigates the determinants of profitability in six European countries and it covered 665 banks between 1992 and 1998. The study used cross-sectional and dynamic panel models. The variables used in the regression analysis were ROE, the logarithmic of total assets, Off Balance Sheet (OBS) dividends, Capital to Asset Ratio (CAR). The results from both models were similar: evidence reveals that there is a positive relationship between size (total assets) and profitability. Meanwhile, OBS appears to have a positive relationship with profitability for UK but neutral or negative for other European countries. Moreover, results also state that CAR has a positive relationship with profitability. Furthermore, the paper touched on ownership type by indicating that there is high competition in banking due to the fact t hat there is foreign bank involvement in domestic banks, and that profitability is not linked to ownership (Goddard, Molyneux, and Wilson, 2004). Peters et al. (2004) studied the characteristics of banks in post-war Lebanon for the years 1993 to 2000 and compared the results to a group of banks from five other countries in the Middle East including UAE, KSA, Kuwait, Bahrain and Oman for the years 1995 through 1999. They used Return on Equity (ROE) measure profitability and leverage and they employed regression models that relate bank profitability ratios to various explanatory variables. This study tests the relationships between bank profitability and size, asset portfolio composition, off-balance sheet items, ownership by a foreign bank, and the ratio of employment to assets. The results show a strong association between economic growth and bank profitability, whether measured by ROE or ROA. They found that Lebanese banks are profitable, but not as profitable as a control group of banks from five other countries located in the Middle East. Islamic Banking In the area of Islamic Banking, Bashir (2000) assessed the performance of Islamic banks in eight Middle Eastern countries. He analyzed important bank characteristics that affect the performance of Islamic banks by controlling economic and financial structure measures. The paper studied fourteen Islamic banks from Bahrain, Egypt, Jordan, Kuwait, Qatar, Sudan, Turkey, and United Arab Emirates between 1993 and 1998. To examining profitability, the paper used Non Interest Margin (NIM), Before Tax Profit (BTP), Return on Assets (ROA), and Return on Equity (ROE) as performance indicators. There were also internal and external variables: internal variables were bank size, leverage, loans, short-term funding, overhead, and ownership; external variables included macroeconomic environment, regulation, and financial market. In general, results from the study confirm previous findings and show that Islamic banks profitability is positively related to equity and loans. Consequently, if loans and equity are high, Islamic banks should be more profitable. If leverage is high and loan to assets is also large, Islamic banks will be more profitable. The results also indicate that favorable macro-economic conditions help profitability (Bashir, 2000). Hassoune (2002) examined Islamic bank profitability in an interest rate cycle. In his paper, compared ROE and ROA Volatility for both Islamic and conventional banks in three GCC region, Kuwait, Saudi Arabia, and Qatar. He states that since Islamic banking is based on profit and loss sharing, managements have to generate sufficient returns for investors given that they are not willing accept no returns (Hassoune, 2002). Bashir and Hassan (2004) studied the determinants of Islamic banking profitability covers 43 Islamic Banks between 1994 and 2001 in 21 countries. Their figures show Islamic banks to have a better capital asset ratio compared to commercial banks which means that Islamic banks are well capitalized. Also, their paper used internal and external banks characteristics to determine profitability as well as economic measures, financial structure variables, and country variables. They used, Net-non Interest Margin (NIM), which is non interest income to the bank such as, bank fees, service charges and foreign exchange to identify profitability. Other profitability indicators adopted were Before Tax Profit divided by total assets (BTP/TA), Return on Assets (ROA), and Return on Equity (ROE). Results obtained by Bashir and Hassan (2004), were similar to the Bashir (2000) results, which found a positive relationship between capital and profitability but a negative relationship between loans and profitability. Bashir and Hassan also found total assets to have a negative relationship with profitability which amazingly means that smaller banks are more profitable. In addition, during an economic boom, banks profitability seems to improve because there are fewer nonperforming loans. Inflation, on the other hand, does not have any effect on Islamic bank profitability. Finally, results also indicate that overhead expenses for Islamic banks have a positive relation with profitability which means if expenses increase, profitability also increases (Bashir and Hassan, 2004). Alkassim (2005) examined the determinants of profitability in the banking sector of the GCC countries and found that asset have a negative impact on profitability of conventional banks but have a positive impact on profitability of Islamic banks. They also observed that positive impact on profitability for conventional but have a negative impact for Islamic banking. Liu and Hung (2006) examined the relationship between service quality and long-term profitability of Taiwanà ¢Ã¢â€š ¬Ã¢â€ž ¢s banks and found a positive link between branch number and long-term profitability and also proved that average salaries are detrimental to banksà ¢Ã¢â€š ¬Ã¢â€ž ¢ profit. Masood, Aktan and Chaudhary (2009) studied the co-integration and causal relationship between Return on Equity and Return on Assets for 12 banks in KSA for the period between 1999- 2007. For their research, the used time series model of ADF unit-root test, Johansen co-integration test, Granger causality test and graphical comparison model. They found that there are stable long run relationships between the two variables and that it is only a one-direction cause-effect relationship between ROE and ROA. The results show that ROE is a granger cause to ROA but ROA is not a granger cause to ROE that is ROE can affect ROA input but ROA does not affect the ROE in the Saudi Arabian Banking sector. Conceptual Framework Theoretical framework is a basic conceptual structure organized around a theory. It defines the kinds of variables that are going to be used in the analysis. In this research, the theoretical framework consists of seven independent variables that represent four aspects of the Bank Characteristics. Theses aspects are the Bank Size (Total Assets), Capital Structure (Equity and Tangible Equity), Liquidity (Loans and Liquid Assets) and Liabilities (Deposits and Overheads). Bank profitability is the dependent variable and two measures of bank profitability are used in this study, namely return on average equity (ROAE) and return on average assets (ROAA). Financial Crisis Internal Factors (Bank-Specific) Islamic Banking Profitability H1: Bank Size H2, H3: Capital Structure H4, H5: Liquidities H6, H7: Liabilities Return on Average Assets (ROAA) Return on Average Equity (ROAE) In this section we develop the hypothesis to be examined in this research paper. Development of Hypotheses This paper attempts to test seven hypotheses. A hypothesis is a claim or assumption about the value of a population parameter. It consists either of a suggested explanation for a phenomenon or of a reasoned proposal suggesting a possible correlation between multiple phenomena. According to Becker (1995), hypothesis testing is the process of judging which of two contradictory statements is correct. Hypothesis 1: Profitability has a positive and significant relationship with the total assets (ASSETS). Total Assets of a company represents its valuables including both tangible assets such as equipments and properties along with its intangible assets such as goodwill and patent. For banks, total assets include loans which are the basis for bank operations either through interest or interest-free practices. Total assets is used as a tool to measure the bank size; banks with higher total assets indicate bigger banks. Molyneux and el (2004) included total assets in their study and found a positive significant relationship between total assets and profitability. Therefore, total assets are expected to have positive relation with profitability which means that bigger banks are expected to be more profitable. Total assets are converted logarithmic to be more consistent with the other ratios Hypothesis 2: Profitability has a positive and significant relationship with equity to asset ratio (EQUITY). Total equity over total assets measures bankà ¢Ã¢â€š ¬Ã¢â€ž ¢s capital structure and adequate. It indicated bank ability to withstand losses and handle risk exposure with shareholders. Hassan and Bashir (2004) examined the relationship between EQUITY and bank profitability and found positive relationship. Therefore, EQUITY is included in this study and it is expected to have a positive relation with performance because well capitalized banks are less risky and more profitable (Bourke, 1989) Hypothesis 3: Profitability has a positive and significant relationship with Tangible Equity to total liabilities ratio (TNGEQTY). Tangible Equity represents the subset of shareholderà ¢Ã¢â€š ¬Ã¢â€ž ¢s equity that is not common shares and not intangible asset. Tangible Equity became very popular after the financial crisis as a measure of bank viability since it indicates of how much ownership equity owners of common stock would receive in the event of a companyà ¢Ã¢â€š ¬Ã¢â€ž ¢s liquidation. Beltratti and Stulz (2009) examined tangible equity to liabilities in their study to examine why some banks perform better during the financial crisis and found positive and insignificant relationship between TNEQTY and bank profitability. Therefore, TNEQTY is included in this study and it is expected to have positive relationship since banks with better capital structure in since of more equity à ¢Ã¢â€š ¬Ã¢â‚¬Å" seems to perform better. Hypothesis 4: Profitability has a positive and significant relationship with the loans to assets ratio (LOANS). Total loans over total assets a liquidity ratio used that indicates how much of bank assets are tied to loans. For banks, the higher LOANS ratio means less liquidity. Demirguc-Kunt and Huizinga, (1997) found positive relationship between LOANS and bank profitability. LOANS is included in this study and anticipated to have positive relationship with profitability. Furthermore, conventional banks rely on interest-based loans while Islamic banks rely on profit and loss sharing interest-free lending. Therefore, this ratio is also used to compare the performance of interest-based loans and interest-free lending. Hypothesis 5: Profitability has a positive and significant relationship with the liquid assets to total assets ratio (LIQUID). Liquid assets include currency, deposit accounts, and negotiable instruments that can be converted easily into cash. Liquid assets to total assets ratio is a liquidity ratio that measure how easily the banksà ¢Ã¢â€š ¬Ã¢â€ž ¢ assets can be converted into cash. Beltratti and Stulz (2009) found that LIQUID has positive and significant relation with profitability as banks with more liquid assets tend to perform better. Therefore, LIQUID is included in this study and expected to have positive relationship with profitability. Hypothesis 6: Profitability has a reverse and significant relationship with the deposits to assets ratio (DEPOSITS). Deposits to total ratio is another liquidity indicator but is considered a liability since they measure the impact of liabilities on profitability. Bashir and Hassan (2004) examined deposits in their study and found a negative relationship with profitability. Therefore, we expect that DEPOSITS to have negative relationship with profitability. Hypothesis 7: Profitability has a positive and significant relationship with the overhead to assets ratio (OVERHEAD). Overhead costs represent all bank expenses excluding interest expenses as they are considered as operations expenses. Overhead over total assets is a liability ratio that measures the operation efficiency of the bank. Alkassim (2005) included OVERHEAD in his research and found positive relationship to profitability. Therefore, OVERHEAD is included in this study and expected to have positive relationship to profitability. Chapter 3: Methods Data Sample From 2006 to 2008 2009 Country Islamic Banks Conventional Banks Islamic Banks Conventional Banks Bahrain 12 14 5 5 Saudi Arabia 2 9 1 7 Qatar 3 5 2 4 Kuwait 4 14 1 3 Oman 0 6 0 3 UAE 6 17 0 7 Total 27 65 9 29 The data used in this analysis were extracted from Bankscope data for all Islamic and Conventional Banks in the GCC for the period from 2006 to 2009. Using Bankscope has many advantages: it has information for over 30,000 banks, plus the accounting information is presented in a standardized format. Therefore, the accounting information of Islamic Banking is adjusted to be comparable with accounting information of conventional banks. The data used for this study are from a pooled time-series cross-sectional data. The data are taken from various countries. Sample period for this study is from 2002 to 2007. Cross-sectional data provide information on variables for a given period of time. While time series data give information about variables over a number of periods of time. The data for internal variables are obtained from BankScope database which is compiled by International Bank Credit Analysis Limited (IBCA). Using BankScope has two advantages. Firstly, it has information for 11,000 banks, accounting for about 90% of total assets in each country. Secondly, the accounting information at the bank level is presented in standardized formats, after adjustments for differences in accounting and reporting standards. The data for external variables are obtained from World Economic Outlook 2008 database, published by International Monetary Fund (IMF). A total of 60 Islamic banks from 18 countries were chosen in this study. The selected banks are those which are classified as Islamic bank in BankScope database. The Islamic banks have available data for at least one year between 2002 and 2007. This yielded an unbalanced panel data consisting of 260 observations. However, after eliminating cases with missing data, only 155 observations of balanced panel data are left. Variable Definition Independent Variable: Profitability Measures There are many ratios that have been used by researchers to measure bank profitability but the two most often used ratios are the return on assets (ROA) and the return on equity (ROE) (Iqbal et al., 2005). Return on Assets