Financial globalization could be described as a process in which global financial activities get increasingly integrated with the risk creation mechanism. This description emphasizes three points. First, financial globalization is not only a process in which financial activities transcend national borders, but also a process in which risks spread across the markets. Second, financial globalization is initiated by many micro-economic entities to seek profits and is driven by the integration of global financial markets. Third, it is a gradually deepening process with distinct phases....
Chapter 1 introduces the concept of capital budgeting, and sets out the structure of the book.
The important points are:
Capital budgeting is the most significant financial activity of the firm.
Capital budgeting determines the core activities of the firm over a long term future.
Capital budgeting decisions must be made carefully and rationally.
Measuring the institutional foundations of financial markets is essential for understanding
its determinants, and help design better policies
• Indices of the rule of law, creditor rights and information, business transparency, and the
quality of infrastructure are associated with deeper and more efficient financial markets
• In banking and securities markets, characteristics related to private monitoring and enforcement
drive development more than public enforcement measures
The process of financial reporting, financial statement analysis, and valuation is intended
to help investors and analysts to deeply understand a firm’s profitability and risk and to use
that information to forecast future profitability and risk and ultimately value the firm,
enabling intelligent investment decisions. This process lies at the heart of the role of
accounting, financial reporting, capital markets, investments, portfolio management, and
corporate management in the world economy.
The process of financial reporting, financial statement analysis, and valuation is intended to help investors and analysts to deeply understand a firm’s profitability and risk and to use that information to forecast future profitability and risk and ultimately value the firm, enabling intelligent investment decisions. This process lies at the heart of the role of accounting, financial reporting, capital markets, investments, portfolio management, and corporate management in the world economy.
The empirical relationship between capital controls and the financial development of credit and equity markets is examined. We extend the literature on this subject along a number of dimensions.Specifically, we
(1) investigate a substantially broader set of proxy measures of financial development;
(2) create and utilize a new index based on the IMF measures of exchange restrictions that incorporates a measure of the intensity of capital controls; and (3) extend the previous literature by systematically examining the implications of institutional (legal) factors.
An understanding of the principles of bookkeeping
and accounting is essential for anyone
who is interested in a successful career in business.
The purpose of bookkeeping and accounting
is to provide information concerning the financial
affairs of a business. This information
is needed by owners, managers, creditors, and
An individual who earns a living by recording the financial activities
of a business is known as a bookkeeper, while the process of classifying and summarizing business transactions and interpreting their effects is
accomplished by the accountant.
This book developed from my teaching and consulting experiences
going back three decades. Working with Fortune 500
clients, I have been constantly amazed that finance is almost an
afterthought in the everyday world of business—except, of
course, for such financial services companies as banks and securities
This paper studies the responses of residential property and equity prices,
inflation and economic activity to monetary policy shocks in 17 countries,
using data spanning 1986-2006. We estimate VARs for individual economies
and panel VARs in which we distinguish between groups of countries on the
basis of the characteristics of their financial systems. The results suggest that
using monetary policy to offset asset price movements in order to guard
against financial instability may have large effects on economic activity.
Chapter 17 Commercial Bank Operations: describe the market structure of commercial banks, describe the most common sources of funds for commercial banks, explain the most common uses of funds for commercial banks, describe typical off-balance sheet activities for commercial banks.
During the last decade, hedge funds have become one of the most important institutional
investors in global financial markets. Although their activities have been viewed critically by
regulators, politicians, and the public, this negative perspective is often based more on myth
than on thorough economic analysis and empirical facts. Most people lack the necessary
information and understanding of the role that hedge funds play in financial markets. Blaming
them for the financial crisis or other market turbulences is often based on specific conjectures
and not on rigorous research.
Levine explains what the financial system does and how it affects, and is affected by, economic growth. Theory suggests that financial instruments, markets, and institutions arise to mitigate the effects of information and transaction costs. A growing literature shows that differences in how well financial systems reduce information and transaction costs influence savings rates, investment decisions, technological innovation, and long-run growth rates. A less developed theoretical literature shows how changes in economic activity can influence financial systems.
The purpose of this paper is to develop a framework to explain and describe the daily cash flow
management processes of families. From data gathered through semi-structured interviews, themes
are developed and linked into a daily cash flow management framework. The proposed model
suggests that families have a process for managing money. The process focuses on short-term
viability through safety, control, comfort, and routine aspects. Cash flow activities are motivated
by the near future, feelings and values, experience, and situational knowledge.
Chapter 6 - Understanding cash flow statements. This chapter compare cash flows from operating, investing, and financing activities and classify cash flow items as relating to one of those three categories given a description of the items, describe how non-cash investing and financing activities are reported, contrast cash flow statements prepared under International Financial Reporting Standards (IFRS) and U.S. generally accepted accounting principles (U.S. GAAP),…
Chapter 13 - Statement of cash flows. After studying this chapter, you should be able to: Classify cash flow statement items as part of net cash flows from operating, investing, and financing activities; report and interpret cash flows from operating activities using the indirect method; analyze and interpret the quality of income ratio;...
Chapter 2 - The banking sector. After studying this chapter you will be able to: Evaluate the functions and activities of commercial banks, identify the main sources and uses of funds and reasons for changes, analyse the importance of changes in the role of banks on the financial system,…
Chapter 1 - A framework for financial accounting. After completing this chapter, students will be able to: Describe the two primary functions of financial accounting, understand the business activities that financial accounting measures, determine how financial accounting information is communicated through financial statements, describe the role that financial accounting plays in the decision-making process.
Thus, our total wealth is made up of two parts: our human capital and our
financial capital. Recognizing this simple dichotomy dramatically broadens how we
analyze financial activities. We desire to create a diversified overall portfolio at the
appropriate level of risk. Because human capital is usually relatively low risk
(compared with common stocks), we generally want to have a substantial amount
of equities in our financial portfolio early in our careers because financial wealth
makes up so little of our total wealth (human capital plus financial capital).
As we have witnessed during this crisis, financial stress can spread easily and quickly
across national boundaries. Yet, regulation is still set largely in a national context.
Without consistent supervision and regulation, financial institutions will tend to move
their activities to jurisdictions with looser standards, creating a race to the bottom and
intensifying systemic risk for the entire global financial system.