Role of Monetary Policy in Financial Crisis

Role of Monetary Policy in Financial Crisis 1. Introduction To begin with, it is noted that over the last year or so, financial institutions in the major economies have reported losses on a large scale. Some of these have become insolvent, or have had to be taken over or rescued by their governments. The 2008 Global Financial Crisis Credit Crisis has affected millions of Americans specifically and others around the World in general terms. Associated with all of that has been a massive swing in the appetite of the World financial markets for risk, and in their capacity to accept risk. Thus, the result has been a shift from an easily available credit to tight credit. This crisis which began in industrialized countries has shifted dramatically spread to emerging market and developing economies. Many wealthy investors or so have pulled their capital from countries, even those with small levels of perceived risk, and hence causing values of stocks and domestic currencies to plunge. Moreover, the crisis has now moved from containing the contagion to coping with the global recession and changing regulations to prevent a reoccurrence of such a problem. Some security and foreign policy effects of the crisis also are beginning to appear. In addition, policy proposals to change specific regulations as well as the structure of regulation and supervision at both domestically and internationally levels have been coming forth through the legislative process. As one can bear in mind, In June 2009, the Obamas administration announced its plan for regulatory reform of the U.S. financial system. For example, in Congress, numerous bills have been introduced that deal with issues such as establishing a commission or selecting a committee to investigate causes of the financial crisis, provide oversight and greater accountability of the Federal Reserve and Treasury lending activity, acting towards the problems in the housing and mortgage markets, provide funding for the International Monetary Fund, address problems with consumer credit cards and establish a systemic risk monitor. Therefore, the transmission of the crisis from the U.S. and Europe to the rest of the world came through a number of channels. The financial institutions in most emerging market economies had not been involved in practices that are seen in the institutions that populate the financial centers in the major industrial countries. To that extent, financial institutions in the emerging economies either shied away from the more exotic instruments, including such things as credit default swaps and collateralized debt obligations, or were prevented by regulation from holding or trading such instruments. Banking had to come of the most à ¢Ã¢â€š ¬Ã…“boringà ¢Ã¢â€š ¬?, old fashioned ever! (The New York Times has reported on last September 2009 about the moves to replace the bust securitized mortgage market with a similar scheme dealing in life insurance policies, products that are as distasteful as they are foolhardy). The question is, can anything be done to ensure more responsible financial practice? If we are suppose to talk about the US economy, we would notice that President Barak Obama marked the anniversary of Lehman collapse with a plea to bankers to not get complacent, telling them to get their house in order, or else face further regulation. We can indicate that over the past year, the financial male storm has battered the global information and communication technology industry, affecting profits and pushing down the industry in a manner reminiscent of the 2001 à ¢Ã¢â€š ¬Ã¢â‚¬Å" 2002 dotcom busts. It is gradually finding its feet again, but it isnt out of the woods yet. The global financial tumult has forced a number of companies to reanalyze their cost benefit analysis, ensure efficiency and improve productivity. Companies in sectors such as telecom and finance have already realized the need of IT outsourcing as a solution in the changed market dynamics. Therefore, this research paper provides a review of how the financial crisis has affected many regions of the world, proposals for a regulatory change, indication about the role of Monetary Policy the level of Political Economics that have been intervening in the Financial Crisis. It also identifies some basic challenges facing the globe suggests possible solutions for the Banking Field to overcome the crisis. 2. Literature Review The financial crisis was triggered by the bursting of a credit-fuelled bubble. Regulation and regulators did not cause this fatal bubble, but they did indirectly help it to grow by fostering the illusion of financial security. Many developing country economies are yet growing strongly, though the forecasts have been downgraded in the space of few a few months. What does the turmoil mean for such developing countries? And for how much longer can growth persist? What are the channels through which the crisis could spread to and how are the effects being felt and in what cases? What is the role for development policy and what do policy-makers need to know? Brooke Masters (2009) claimed: So far, most countries are avoiding a regulatory race to the bottom à ¢Ã¢â€š ¬Ã¢â‚¬Å" if anything, they are going the other way. The UK, for example, is pressing ahead with its own liquidity rules, while the Netherlands has pushed through curbs on bankers bonuses. Even Singapore, which has long been favored by financiers for its à ¢Ã¢â€š ¬Ã…“light-touchà ¢Ã¢â€š ¬? regulatory regime, considering tightening up its rules. However, Joshua Aizenman (2009) indicated that costly regulation can mitigate the probability of the crisis. We identify conditions where the regulation level supported by the majority is positive after the reform, but below the socially optimal level. A big portion of the financial crisis has had to do with under regulation and regulator duplicity with malefactors. If we look at the banking rules, we shall discover that allowing investment and commercial banks to merge, without a specification of a tighter capital rules, and hence, these new mega banks became overleveraged without examining their loans or the instruments that derived from the bad loans these banks made in the first place. In his writings about Liberalism Ludwig von Mises (1927) indicated that government intervention in markets would lead inevitably to unintended consequences that resulted in further government intervention. It is difficult to correct a problem when the cause of the problem is misunderstood. The presidential and vice-presidential candidates in the United States have all said that à ¢Ã¢â€š ¬Ã…“Wall Street greedà ¢Ã¢â€š ¬? has led to the financial mess we are in. On the very face of it, this does not seem likely. Even if greed leads to problems, is it possible that greed has suddenly become much greater than before? To raise an interest rate at some a time is a mistake and is likely to make a bad situation even worse. In many respects, central banks, including the Federal Reserve, have drawn heavily on important threads of monetary policy research in responding to the financial crisis. Lang Wang (2005) had explained with a binding capital requirement, the effects on bank lending supply depend on the size, the capital level, the balance sheet liquidity of banks and the capital distribution and market structure in the banking sector. In a similar context, Thorbecke (1997) finds that expansive monetary policy tends to increase ex-post stock returns. He reported that small firms tend to be affected more severely by the change in monetary policy stance. In addition, Paul Krugman (1999) indicated But when a financial disaster struck Asia, the policies those countries followed in response were almost exactly the reverse of what the United States does in the fact of a slump. Currently the traditional monetary policy of the Federal Reserve is to focus on targeting the federal funds rate, now that this rate has approached the zero-bound; it has shifted to focus on other ways to lower the cost of credit in the marketplace. Federal Reserve programs have intended to offset disruptions to interbank lending short-term credit financing. Since the credit crunch is caused by conservative lending policies during periods of financial duress and reduced profitability, one may finds that monetary policy is somehow ineffective in alleviating the credit crunch. Instead loan regulation can erase it. George Macesich (1992) argued that the poor performance of monetary policy can be attributed historically to the ease with which money has so often been made a political issue. He stated that For Monetary Policy to be credible, and thus successful, the hands of the Monetary Policy- makers are better tied than left free. Sun Ruijun and Bao Erwen (2008) have reported The in-depth development of economic globalization has made economic ties and interdependence between countries even closer, boosting the sustained growth of world economy, and benefiting many countries. The global financial crisis is more than just an economic event: It puts pressure on the geopolitical system and is driving states to change their behavior. Taking a snap shot on the GCC states, one can clearly define how largely it has been insulated from the global credit crunch because they are the proud owners of some of the worlds largest oil deposits. Much of this has been caused by massive infrastructure and development projects such as Qatars liquefied natural gas facilities, Dubais fanciful real estate explosion and Bahrains attempts to convert itself into a financial Mecca. The economic system has an effect on the political outcomes. Well-functioning financial institutions, in turn, can increase the political support for anti-corruption measures. Kira Boerner Christa Hainz (2006) argued When banks possess a perfect screening technology that allows them to deny credit to those debtors who use the money for financing an entry fee, the corrupt officials will still borrow from their relatives. However, compared to the case without financial institutions, the interest of corrupt officials and relatives in corruption decreases: Both parties have the opportunity to save at a bank. In similar terms, Torsten Persson (2000) had explained Economic policy is the equilibrium outcome of a well defined no cooperative game under preemptive assumptions about economic political behavior. At all levels, the present financial crisis requires a co-ordinate response on a global scale. The real risk to the world economy is the temptation to revert to protectionism by each individual country in order to solve their own domestic problems. 3. Research Methodology In choosing the correct research method to be used in this research paper, the survey research method by Questionnaires will be the basic research design. Each respondent will be supplied with a questionnaire titled How banks can overcome the Global Financial Crisis? The questionnaire is estimated to take no longer than 6 minutes for each reached individual regardless of the age. A survey of 68 individuals located in many counties throughout the country will provide the database for this study. The sample was selected on a probability basis from as much decision maker playing role individuals as possible in Bahrain. The questionnaire took place in Bahrain the response from the respondents took almost one week. Questionnaires were distributed randomly depending on many aspects such as: age, gender, employment condition most important of all, the level of knowledge regarding the topic under study. This research paper sampling volume totaled 68, out of which, males represented 38 and the rest 30 were for females. The original sample was 70, in which the researchers found that 2 individuals were students below the age of 18 and were unemployed. That made a quiet confusing decision to remove the two from the total sample, since at that age and being unemployed is not a truly decision maker respondent. 4. Challenges As the world look beyond the economic crisis, what are the most urgent challenges that are needed to be addressed? Gaining a proper perspective on the crisis itself is a first challenge. In recent decades, it has been demonstrated that a market which operates responsibly offers a more secure life and a best hope to people who seek a better standards of living wherever in the world they may live. This is absolutely fundamental. While it is true that the direct causes of the crisis the combustible mixture of excess leverage in both consumer and financial markets, the bank failures, the credit collapse have led to some painful consequences, it would be folly to conclude that the foundations of market economics have been irreparably damaged. A second challenge facing the Global is how to deal intelligently with the huge fiscal challenges ahead. The response of central banks and governments to the economic crisis may very well have averted a global catastrophe. However, massive fiscal obligations have been assumed by governments and this might take many years to unwind. What is needed is for countries to create and develop smart à ¢Ã¢â€š ¬Ã…“exità ¢Ã¢â€š ¬? strategies. Furthermore, as the private sector returns to some growth, this requires a determined pullback in government expenditure. Not an easy task: as we all know, the politics of unwinding government programs can be daunting. Here political courage and good public policy go hand in hand. The third challenge needs an urgent attention. It is acknowledged that the global economy is out of balance and that this is one of the reasons for the financial crisis. Massive reliance on external demand carries with it real consequences as does the excessive reliance on foreign investors to finance consumption and deficits for long periods of time. As one could realize, such imbalances can cause serious and long-lasting economic damage. There is also the challenge, or opportunity, of what to do with a countrys immense foreign exchange reserves. A Chinese think tank has come up with an exciting idea: that the reserves could be put to good use through the development of a Marshall Plan for Africa, Asia and Latin America. Such a development fund, or loan facility, would increase living standards in the targeted countries. The fifth challenge is enormously complex challenge that deserves attention. Sometimes we feel that we have loaded so many expectations onto the climate change agenda that it cannot help but fail. You would think that tackling this issue will give us infinite new sources of cleaner energy, and allow for the transfer of substantial amounts of financial and technological support to emerging economies. On the global side, No existing architecture is found to be proficient in preventing global crises from erupting. Since financial crises occur even in relatively tightly regulated economies, the likelihood that a supranational influence could prevent an international crisis from occurring is questionable. The financial crisis has been characterized as a à ¢Ã¢â€š ¬Ã…“wake-up callà ¢Ã¢â€š ¬? for investors who had put their faith confidence in. For example, credit ratings placed on securities by credit rating agencies operating under what some have referred to as à ¢Ã¢â€š ¬Ã…“wicked incentives and conflicts of interest.à ¢Ã¢â€š ¬? Moving forward to a sixth challenge, the Council on Foreign Relations explained the problem in a report on systemic regulation, as follows: One regulatory organization in each country should be responsible for overseeing the health and stability of the overall financial system. The role of the systemic regulator should include gathering, analyzing, and reporting information about significant interactions between and risks among financial institutions; designing and implementing systemically sensitive regulations, including capital requirements; and coordinating with the fiscal authorities and other government agencies in managing systemic crises. We argue that the central bank should be charged with this important new responsibility. Centers of financial activity such as New York, London, and Tokyo, race with each other and multinational firms can determine where to carry out particular financial transactions. This is to be addresses as one of the considerations in policy making. A seventh challenge is that a large financial institution that may be defined as large to fail represents the heavy arm that the world economy depends greatly on. If an institution is considered to be à ¢Ã¢â€š ¬Ã…“unsuccessful too big to fail,à ¢Ã¢â€š ¬? its bankruptcy would cause a major risk collapse to the system as a whole. Yet, if there is an implicit promise of governmental support in case of failure, the government may create a moral hazard, which is the motivation for an entity to be engaged in somewhat risky behavior, knowing that the government will rescue it if it fails. A further challenge is that the nature and size of accumulating financial and systemic risks have not been well identified by the existing micro regulation. It even didnt impose appropriate remedial actions. Even though some analysts and institutions were sounding alarms before the crisis erupted, there were hardly any regulatory tools available to handle with the increase of risk in the system as a whole or the risks being forced by other firms either in the same or different sectors. It seemed to be an insufficient response to some of these risks either by the authorities responsible for the mistake of individual financial institutions or specific market segments. A last fundamental challenge deals with the nature of regulation and supervision. Banking regulation tends to be specific and detailed and places requirements and limits on bank behavior. Federal securities regulation, however, is based primarily on disclosure. Registration with the Securities and Exchange Commission is required, but that registration does not imply that an investment is safe or secured, only that the risks have been fully disclosed! 5. Analysis Discussion When the U.S financial System falls down, it may bring major parts of the rest of the world down with it. The global financial crisis has opened the World eye on an important point: that the United States is still a major center of the financial world. Hence, Regional financial crises (such as the Asian financial crisis, Japans banking crisis or even the current Dubais Credit Crisis) can occur without seriously infecting the rest of the global financial system as does the United States economy. The reason behind, is that the United States is the main guarantor of the international financial system, the provider of dollars widely used as currency reserves and as an international intermediate for exchange, besides being a contributor to much of the financial capital that around the world seeking higher yields. The rest of the world may not appreciate it, but a financial crisis in the United States often takes on a global hue. To analyze the questionnaire, the researchers have used the SPSS program and the regression analysis in order to define some relationships that best help identify the problem under study. The descriptive statistical analyses questionnaire will be used, including calculations of sampling error, and statistical adjustments for unequal selection probabilities. Cross-classification analyses with demo-graphic, ANOVA, linear regression and T-Test is much more applied in order to explain some judgments. Since the researchers think that the gender is one of the independent variables that could test many hypothesis, three hypothesis were applied based on the dependant variable: First Hypothesis: There is no relationship between gender and understanding what is going on in the current financial news. Second Hypothesis: There is no relationship between gender and being informed about the à ¢Ã¢â€š ¬Ã…“Global Financial Crisisà ¢Ã¢â€š ¬?. Third Hypothesis: There is no relationship between gender and the decision that thinks of governments around the world should take in the financial sector towards their economies. The table below, represents the Statistical Data Analysis of the designed questionnaire: Table 1: SPSS Statistics for all questionnaire questions One-Sample Test    Question No.    Test Value = 0 Test Value = 0 N t df Sig. (2-tailed) Mean Difference 95% Confidence Interval of the Difference t df Sig. (2-tailed) Mean Difference 95% Confidence Interval of the Difference    Lower Upper Lower Upper Question_1 68 23.758 67 0 1.441 1.32 1.56 23.758 67 0 1.441 1.32 1.56 Question_2 68 17.636 67 0 4.206 3.73 4.68 17.636 67 0 4.206 3.73 4.68 Question_3 68 21.715 67 0 1.706 1.55 1.86 21.715 67 0 1.706 1.55 1.86 Question_4 68 22.401 67 0 3.868 3.52 4.21 22.401 67 0 3.868 3.52 4.21 Question_5 68 13.683 67 0 2.074 1.77 2.38 13.683 67 0 2.074 1.77 2.38 Question_6 68 8.596 67 0 2.029 1.56 2.5 8.596 67 0 2.029 1.56 2.5 Question_7 68 10.618 67 0 3.5 2.84 4.16 10.618 67 0 3.5 2.84 4.16 Question_8 68 17.868 67 0 2.191 1.95 2.44 17.868 67 0 2.191 1.95 2.44 Question_9 68 23.953 67 0 2.676 2.45 2.9 23.953 67 0 2.676 2.45 2.9 Question_10 68 15.557 67 0 5.059 4.41 5.71 15.557 67 0 5.059 4.41 5.71 Question_11_1 68 14.691 67 0 3.529 3.05 4.01 14.691 67 0 3.529 3.05 4.01 Question_11_2 68 18.302 67 0 4.809 4.28 5.33 18.302 67 0 4.809 4.28 5.33 Question_11_3 68 21.056 67 0 5.029 4.55 5.51 21.056 67 0 5.029 4.55 5.51 Question_11_4 68 17.835 67 0 4.426 3.93 4.92 17.835 67 0 4.426 3.93 4.92 Question_11_5 68 20.978 67 0 4.897 4.43 5.36 20.978 67 0 4.897 4.43 5.36 Question_12 68 16.241 67 0 2.735 2.4 3.07 16.241 67 0 2.735 2.4 3.07 Question_13 68 14.707 67 0 2.676 2.31 3.04 14.707 67 0 2.676 2.31 3.04 Question_14 68 26.329 67 0 2.765 2.56 2.97 26.329 67 0 2.765 2.56 2.97 Anova Model Sum of Squares df Mean Square F Sig. 1 Regression 4.074 1 4.074 4.173 .045a Residual 64.440 66 .976       Total 68.515 67          a. Predictors: (Constant), Question_1          b. Dependent Variable: Question_8          Coefficientsa Model Unstandardized Coefficients Standardized Coefficients t Sig. B Std. Error Beta 1 (Constant) 1.481 .368    4.025 .000 Question_1 .493 .241 .244 2.043 .045 a. Dependent Variable: Question_8          Table 2: Anova statistics coefficients relationship Q1 Q8 à ¢Ã¢â€š ¬Ã¢â‚¬Å" Hypothesis. From the Questionnaire, we have selected the relationship among the following questions. However, Gender will always be constant. Question (1): Please indicate your gender: Male Female Question (8): In general, how knowledgeable do you consider yourself to be when it comes to understanding what is going on in the current financial news? I know enough to be able to explain whats happening in the financial industry to other people. I understand enough to make sense of the detail behind the financial news stories. I just follow the headlines but my understanding of financial news is fairly vague. I dont really understand whats going on in the financial news. Question_8: On the One-Sample Test it is showed that the Significance is = 0.00 which is less than 0.05, so we reject any initial premise that the average Question_8 is not equal to 0. Since the answer to this question fell where the value of t = 17.868, positive, meaning that people have a significant understanding and knowledge about the current financial news. About 35.3 % of the answers to question 8 went in to that both, males females find themselves having enough understanding to make sense of the detail behind the financial news stories. On lower confidence levels, 29.4% find themselves confident enough to answer bitterly regarding the financial crisis. Question (9): How informed are you about the à ¢Ã¢â€š ¬Ã…“Global Financial Crisisà ¢Ã¢â€š ¬? that is said to be impacting the U.S. economy the rest of the Globe? Very informedà ¢Ã¢â€š ¬Ã¢â‚¬ I have actively sought additional information on this story. Somewhat informedà ¢Ã¢â€š ¬Ã¢â‚¬ I know a bit about it, but wouldnt be able to hold my own in a conversation about it. Informedà ¢Ã¢â€š ¬Ã¢â‚¬ Ive read/seen stories about it when Ive come across them in the news. Not informed at allà ¢Ã¢â€š ¬Ã¢â‚¬ I dont know anything about this story. Question_9: The mean for this particular sample is 2.68, which is statistically significantly different from the test value of Zero.  34 out of 68 sample volume representing almost 50% who have been really informed to have read/seen stories about the global financial crisis when coming across it in the news. The researchers find that the relationship between gender and being informed about the à ¢Ã¢â€š ¬Ã…“Global Financial Crisisà ¢Ã¢â€š ¬? is positive with (.493) and based on the t-value of (2.043) and p-value of (0.045), this relationship is statistically significant.   Hence, there is a statistically significant positive linear relationship between people gender being informed and know ledged enough about the crisis. Question (13): What role, if any, do you think that governments around the world should take in the financial sector towards their economies? Hands onà ¢Ã¢â€š ¬Ã¢â‚¬ the government should intervene whenever the financial sector is at risk. Intermediaryà ¢Ã¢â€š ¬Ã¢â‚¬ the government should act as an intermediary between concerned parties. Laissez Faireà ¢Ã¢â€š ¬Ã¢â‚¬ the government should not interfere with economic affairs beyond the minimum. Completely hands offà ¢Ã¢â€š ¬Ã¢â‚¬ the government should let Wall Street solve its problems on its own. Case by caseà ¢Ã¢â€š ¬Ã¢â‚¬ the government should take a case-by-case approach. ANOVAb Model Sum of Squares df Mean Square F Sig. 1 Regression 14.714 1 14.714 7.132 .010a Residual 136.168 66 2.063       Total 150.882 67          a. Predictors: (Constant), Question_1          b. Dependent Variable: Question_13          Coefficientsa Model Unstandardized Coefficients Standardized Coefficients t Sig. B Std. Error Beta 1 (Constant) 1.326 .535    2.480 .016 Question_1 .937 .351 .312 2.671 .010 a. Dependent Variable: Question_13          Table 3: Anova statistics coefficients relationship Q1 Q13 à ¢Ã¢â€š ¬Ã¢â‚¬Å" Hypothesis. The relationship between gender and the choice to think of the role that governments around the world should take in the financial sector towards their economies is positive (.937). Based on the t-value (2.671) and p-value (0.010), it is to be clarified that this relationship is statistically significant.   Hence, there is a statistically significant positive linear relationship. Most of the questionnaires answer to question 13 went to choose that the role of government can be best suggested as to: Hands onà ¢Ã¢â€š ¬Ã¢â‚¬ the government should intervene whenever the financial sector is at risk. Question (4) Which of the following best describes the highest level of education you have attained? Some high school High school graduate Some college College graduate Some post graduate studies Post graduate degree Question (13): What role, if any, do you think that governments around the world should take in the financial sector towards their economies? 1 Hands onà ¢Ã¢â€š ¬Ã¢â‚¬ The government should intervene whenever the financial sector is at risk.    3 1 7 1 8 2 Intermediaryà ¢Ã¢â€š ¬Ã¢â‚¬ The government should act as an intermediary between concerned parties.    2 7 3 1 2 3 Laissez Faireà ¢Ã¢â€š ¬Ã¢â‚¬ The government should not interfere with economic affairs beyond the minimum.    3 7 4 -   1 4 Completely hands offà ¢Ã¢â€š ¬Ã¢â‚¬ The government should let Wall Street solve its problems on its own.    1    2    -   5 Case by caseà ¢Ã¢â€š ¬Ã¢â‚¬ The government should take a case-by-case approach. 1 2 3 4    5 Table 4: Cross Checking Analysis between Q4 Q13. To provide a better understanding of a cross classification, the table below indicates that, most of people holding a college degree, agreed with the choice that governments should intervene whenever the financial sector is at risk and in need for its support. Therefore, we see that the Global Financial Crisis can be broken down into major phases. Although each phase has a policy focus, it seemed that until t Role of Monetary Policy in Financial Crisis Role of Monetary Policy in Financial Crisis 1. Introduction To begin with, it is noted that over the last year or so, financial institutions in the major economies have reported losses on a large scale. Some of these have become insolvent, or have had to be taken over or rescued by their governments. The 2008 Global Financial Crisis Credit Crisis has affected millions of Americans specifically and others around the World in general terms. Associated with all of that has been a massive swing in the appetite of the World financial markets for risk, and in their capacity to accept risk. Thus, the result has been a shift from an easily available credit to tight credit. This crisis which began in industrialized countries has shifted dramatically spread to emerging market and developing economies. Many wealthy investors or so have pulled their capital from countries, even those with small levels of perceived risk, and hence causing values of stocks and domestic currencies to plunge. Moreover, the crisis has now moved from containing the contagion to coping with the global recession and changing regulations to prevent a reoccurrence of such a problem. Some security and foreign policy effects of the crisis also are beginning to appear. In addition, policy proposals to change specific regulations as well as the structure of regulation and supervision at both domestically and internationally levels have been coming forth through the legislative process. As one can bear in mind, In June 2009, the Obamas administration announced its plan for regulatory reform of the U.S. financial system. For example, in Congress, numerous bills have been introduced that deal with issues such as establishing a commission or selecting a committee to investigate causes of the financial crisis, provide oversight and greater accountability of the Federal Reserve and Treasury lending activity, acting towards the problems in the housing and mortgage markets, provide funding for the International Monetary Fund, address problems with consumer credit cards and establish a systemic risk monitor. Therefore, the transmission of the crisis from the U.S. and Europe to the rest of the world came through a number of channels. The financial institutions in most emerging market economies had not been involved in practices that are seen in the institutions that populate the financial centers in the major industrial countries. To that extent, financial institutions in the emerging economies either shied away from the more exotic instruments, including such things as credit default swaps and collateralized debt obligations, or were prevented by regulation from holding or trading such instruments. Banking had to come of the most à ¢Ã¢â€š ¬Ã…“boringà ¢Ã¢â€š ¬?, old fashioned ever! (The New York Times has reported on last September 2009 about the moves to replace the bust securitized mortgage market with a similar scheme dealing in life insurance policies, products that are as distasteful as they are foolhardy). The question is, can anything be done to ensure more responsible financial practice? If we are suppose to talk about the US economy, we would notice that President Barak Obama marked the anniversary of Lehman collapse with a plea to bankers to not get complacent, telling them to get their house in order, or else face further regulation. We can indicate that over the past year, the financial male storm has battered the global information and communication technology industry, affecting profits and pushing down the industry in a manner reminiscent of the 2001 à ¢Ã¢â€š ¬Ã¢â‚¬Å" 2002 dotcom busts. It is gradually finding its feet again, but it isnt out of the woods yet. The global financial tumult has forced a number of companies to reanalyze their cost benefit analysis, ensure efficiency and improve productivity. Companies in sectors such as telecom and finance have already realized the need of IT outsourcing as a solution in the changed market dynamics. Therefore, this research paper provides a review of how the financial crisis has affected many regions of the world, proposals for a regulatory change, indication about the role of Monetary Policy the level of Political Economics that have been intervening in the Financial Crisis. It also identifies some basic challenges facing the globe suggests possible solutions for the Banking Field to overcome the crisis. 2. Literature Review The financial crisis was triggered by the bursting of a credit-fuelled bubble. Regulation and regulators did not cause this fatal bubble, but they did indirectly help it to grow by fostering the illusion of financial security. Many developing country economies are yet growing strongly, though the forecasts have been downgraded in the space of few a few months. What does the turmoil mean for such developing countries? And for how much longer can growth persist? What are the channels through which the crisis could spread to and how are the effects being felt and in what cases? What is the role for development policy and what do policy-makers need to know? Brooke Masters (2009) claimed: So far, most countries are avoiding a regulatory race to the bottom à ¢Ã¢â€š ¬Ã¢â‚¬Å" if anything, they are going the other way. The UK, for example, is pressing ahead with its own liquidity rules, while the Netherlands has pushed through curbs on bankers bonuses. Even Singapore, which has long been favored by financiers for its à ¢Ã¢â€š ¬Ã…“light-touchà ¢Ã¢â€š ¬? regulatory regime, considering tightening up its rules. However, Joshua Aizenman (2009) indicated that costly regulation can mitigate the probability of the crisis. We identify conditions where the regulation level supported by the majority is positive after the reform, but below the socially optimal level. A big portion of the financial crisis has had to do with under regulation and regulator duplicity with malefactors. If we look at the banking rules, we shall discover that allowing investment and commercial banks to merge, without a specification of a tighter capital rules, and hence, these new mega banks became overleveraged without examining their loans or the instruments that derived from the bad loans these banks made in the first place. In his writings about Liberalism Ludwig von Mises (1927) indicated that government intervention in markets would lead inevitably to unintended consequences that resulted in further government intervention. It is difficult to correct a problem when the cause of the problem is misunderstood. The presidential and vice-presidential candidates in the United States have all said that à ¢Ã¢â€š ¬Ã…“Wall Street greedà ¢Ã¢â€š ¬? has led to the financial mess we are in. On the very face of it, this does not seem likely. Even if greed leads to problems, is it possible that greed has suddenly become much greater than before? To raise an interest rate at some a time is a mistake and is likely to make a bad situation even worse. In many respects, central banks, including the Federal Reserve, have drawn heavily on important threads of monetary policy research in responding to the financial crisis. Lang Wang (2005) had explained with a binding capital requirement, the effects on bank lending supply depend on the size, the capital level, the balance sheet liquidity of banks and the capital distribution and market structure in the banking sector. In a similar context, Thorbecke (1997) finds that expansive monetary policy tends to increase ex-post stock returns. He reported that small firms tend to be affected more severely by the change in monetary policy stance. In addition, Paul Krugman (1999) indicated But when a financial disaster struck Asia, the policies those countries followed in response were almost exactly the reverse of what the United States does in the fact of a slump. Currently the traditional monetary policy of the Federal Reserve is to focus on targeting the federal funds rate, now that this rate has approached the zero-bound; it has shifted to focus on other ways to lower the cost of credit in the marketplace. Federal Reserve programs have intended to offset disruptions to interbank lending short-term credit financing. Since the credit crunch is caused by conservative lending policies during periods of financial duress and reduced profitability, one may finds that monetary policy is somehow ineffective in alleviating the credit crunch. Instead loan regulation can erase it. George Macesich (1992) argued that the poor performance of monetary policy can be attributed historically to the ease with which money has so often been made a political issue. He stated that For Monetary Policy to be credible, and thus successful, the hands of the Monetary Policy- makers are better tied than left free. Sun Ruijun and Bao Erwen (2008) have reported The in-depth development of economic globalization has made economic ties and interdependence between countries even closer, boosting the sustained growth of world economy, and benefiting many countries. The global financial crisis is more than just an economic event: It puts pressure on the geopolitical system and is driving states to change their behavior. Taking a snap shot on the GCC states, one can clearly define how largely it has been insulated from the global credit crunch because they are the proud owners of some of the worlds largest oil deposits. Much of this has been caused by massive infrastructure and development projects such as Qatars liquefied natural gas facilities, Dubais fanciful real estate explosion and Bahrains attempts to convert itself into a financial Mecca. The economic system has an effect on the political outcomes. Well-functioning financial institutions, in turn, can increase the political support for anti-corruption measures. Kira Boerner Christa Hainz (2006) argued When banks possess a perfect screening technology that allows them to deny credit to those debtors who use the money for financing an entry fee, the corrupt officials will still borrow from their relatives. However, compared to the case without financial institutions, the interest of corrupt officials and relatives in corruption decreases: Both parties have the opportunity to save at a bank. In similar terms, Torsten Persson (2000) had explained Economic policy is the equilibrium outcome of a well defined no cooperative game under preemptive assumptions about economic political behavior. At all levels, the present financial crisis requires a co-ordinate response on a global scale. The real risk to the world economy is the temptation to revert to protectionism by each individual country in order to solve their own domestic problems. 3. Research Methodology In choosing the correct research method to be used in this research paper, the survey research method by Questionnaires will be the basic research design. Each respondent will be supplied with a questionnaire titled How banks can overcome the Global Financial Crisis? The questionnaire is estimated to take no longer than 6 minutes for each reached individual regardless of the age. A survey of 68 individuals located in many counties throughout the country will provide the database for this study. The sample was selected on a probability basis from as much decision maker playing role individuals as possible in Bahrain. The questionnaire took place in Bahrain the response from the respondents took almost one week. Questionnaires were distributed randomly depending on many aspects such as: age, gender, employment condition most important of all, the level of knowledge regarding the topic under study. This research paper sampling volume totaled 68, out of which, males represented 38 and the rest 30 were for females. The original sample was 70, in which the researchers found that 2 individuals were students below the age of 18 and were unemployed. That made a quiet confusing decision to remove the two from the total sample, since at that age and being unemployed is not a truly decision maker respondent. 4. Challenges As the world look beyond the economic crisis, what are the most urgent challenges that are needed to be addressed? Gaining a proper perspective on the crisis itself is a first challenge. In recent decades, it has been demonstrated that a market which operates responsibly offers a more secure life and a best hope to people who seek a better standards of living wherever in the world they may live. This is absolutely fundamental. While it is true that the direct causes of the crisis the combustible mixture of excess leverage in both consumer and financial markets, the bank failures, the credit collapse have led to some painful consequences, it would be folly to conclude that the foundations of market economics have been irreparably damaged. A second challenge facing the Global is how to deal intelligently with the huge fiscal challenges ahead. The response of central banks and governments to the economic crisis may very well have averted a global catastrophe. However, massive fiscal obligations have been assumed by governments and this might take many years to unwind. What is needed is for countries to create and develop smart à ¢Ã¢â€š ¬Ã…“exità ¢Ã¢â€š ¬? strategies. Furthermore, as the private sector returns to some growth, this requires a determined pullback in government expenditure. Not an easy task: as we all know, the politics of unwinding government programs can be daunting. Here political courage and good public policy go hand in hand. The third challenge needs an urgent attention. It is acknowledged that the global economy is out of balance and that this is one of the reasons for the financial crisis. Massive reliance on external demand carries with it real consequences as does the excessive reliance on foreign investors to finance consumption and deficits for long periods of time. As one could realize, such imbalances can cause serious and long-lasting economic damage. There is also the challenge, or opportunity, of what to do with a countrys immense foreign exchange reserves. A Chinese think tank has come up with an exciting idea: that the reserves could be put to good use through the development of a Marshall Plan for Africa, Asia and Latin America. Such a development fund, or loan facility, would increase living standards in the targeted countries. The fifth challenge is enormously complex challenge that deserves attention. Sometimes we feel that we have loaded so many expectations onto the climate change agenda that it cannot help but fail. You would think that tackling this issue will give us infinite new sources of cleaner energy, and allow for the transfer of substantial amounts of financial and technological support to emerging economies. On the global side, No existing architecture is found to be proficient in preventing global crises from erupting. Since financial crises occur even in relatively tightly regulated economies, the likelihood that a supranational influence could prevent an international crisis from occurring is questionable. The financial crisis has been characterized as a à ¢Ã¢â€š ¬Ã…“wake-up callà ¢Ã¢â€š ¬? for investors who had put their faith confidence in. For example, credit ratings placed on securities by credit rating agencies operating under what some have referred to as à ¢Ã¢â€š ¬Ã…“wicked incentives and conflicts of interest.à ¢Ã¢â€š ¬? Moving forward to a sixth challenge, the Council on Foreign Relations explained the problem in a report on systemic regulation, as follows: One regulatory organization in each country should be responsible for overseeing the health and stability of the overall financial system. The role of the systemic regulator should include gathering, analyzing, and reporting information about significant interactions between and risks among financial institutions; designing and implementing systemically sensitive regulations, including capital requirements; and coordinating with the fiscal authorities and other government agencies in managing systemic crises. We argue that the central bank should be charged with this important new responsibility. Centers of financial activity such as New York, London, and Tokyo, race with each other and multinational firms can determine where to carry out particular financial transactions. This is to be addresses as one of the considerations in policy making. A seventh challenge is that a large financial institution that may be defined as large to fail represents the heavy arm that the world economy depends greatly on. If an institution is considered to be à ¢Ã¢â€š ¬Ã…“unsuccessful too big to fail,à ¢Ã¢â€š ¬? its bankruptcy would cause a major risk collapse to the system as a whole. Yet, if there is an implicit promise of governmental support in case of failure, the government may create a moral hazard, which is the motivation for an entity to be engaged in somewhat risky behavior, knowing that the government will rescue it if it fails. A further challenge is that the nature and size of accumulating financial and systemic risks have not been well identified by the existing micro regulation. It even didnt impose appropriate remedial actions. Even though some analysts and institutions were sounding alarms before the crisis erupted, there were hardly any regulatory tools available to handle with the increase of risk in the system as a whole or the risks being forced by other firms either in the same or different sectors. It seemed to be an insufficient response to some of these risks either by the authorities responsible for the mistake of individual financial institutions or specific market segments. A last fundamental challenge deals with the nature of regulation and supervision. Banking regulation tends to be specific and detailed and places requirements and limits on bank behavior. Federal securities regulation, however, is based primarily on disclosure. Registration with the Securities and Exchange Commission is required, but that registration does not imply that an investment is safe or secured, only that the risks have been fully disclosed! 5. Analysis Discussion When the U.S financial System falls down, it may bring major parts of the rest of the world down with it. The global financial crisis has opened the World eye on an important point: that the United States is still a major center of the financial world. Hence, Regional financial crises (such as the Asian financial crisis, Japans banking crisis or even the current Dubais Credit Crisis) can occur without seriously infecting the rest of the global financial system as does the United States economy. The reason behind, is that the United States is the main guarantor of the international financial system, the provider of dollars widely used as currency reserves and as an international intermediate for exchange, besides being a contributor to much of the financial capital that around the world seeking higher yields. The rest of the world may not appreciate it, but a financial crisis in the United States often takes on a global hue. To analyze the questionnaire, the researchers have used the SPSS program and the regression analysis in order to define some relationships that best help identify the problem under study. The descriptive statistical analyses questionnaire will be used, including calculations of sampling error, and statistical adjustments for unequal selection probabilities. Cross-classification analyses with demo-graphic, ANOVA, linear regression and T-Test is much more applied in order to explain some judgments. Since the researchers think that the gender is one of the independent variables that could test many hypothesis, three hypothesis were applied based on the dependant variable: First Hypothesis: There is no relationship between gender and understanding what is going on in the current financial news. Second Hypothesis: There is no relationship between gender and being informed about the à ¢Ã¢â€š ¬Ã…“Global Financial Crisisà ¢Ã¢â€š ¬?. Third Hypothesis: There is no relationship between gender and the decision that thinks of governments around the world should take in the financial sector towards their economies. The table below, represents the Statistical Data Analysis of the designed questionnaire: Table 1: SPSS Statistics for all questionnaire questions One-Sample Test    Question No.    Test Value = 0 Test Value = 0 N t df Sig. (2-tailed) Mean Difference 95% Confidence Interval of the Difference t df Sig. (2-tailed) Mean Difference 95% Confidence Interval of the Difference    Lower Upper Lower Upper Question_1 68 23.758 67 0 1.441 1.32 1.56 23.758 67 0 1.441 1.32 1.56 Question_2 68 17.636 67 0 4.206 3.73 4.68 17.636 67 0 4.206 3.73 4.68 Question_3 68 21.715 67 0 1.706 1.55 1.86 21.715 67 0 1.706 1.55 1.86 Question_4 68 22.401 67 0 3.868 3.52 4.21 22.401 67 0 3.868 3.52 4.21 Question_5 68 13.683 67 0 2.074 1.77 2.38 13.683 67 0 2.074 1.77 2.38 Question_6 68 8.596 67 0 2.029 1.56 2.5 8.596 67 0 2.029 1.56 2.5 Question_7 68 10.618 67 0 3.5 2.84 4.16 10.618 67 0 3.5 2.84 4.16 Question_8 68 17.868 67 0 2.191 1.95 2.44 17.868 67 0 2.191 1.95 2.44 Question_9 68 23.953 67 0 2.676 2.45 2.9 23.953 67 0 2.676 2.45 2.9 Question_10 68 15.557 67 0 5.059 4.41 5.71 15.557 67 0 5.059 4.41 5.71 Question_11_1 68 14.691 67 0 3.529 3.05 4.01 14.691 67 0 3.529 3.05 4.01 Question_11_2 68 18.302 67 0 4.809 4.28 5.33 18.302 67 0 4.809 4.28 5.33 Question_11_3 68 21.056 67 0 5.029 4.55 5.51 21.056 67 0 5.029 4.55 5.51 Question_11_4 68 17.835 67 0 4.426 3.93 4.92 17.835 67 0 4.426 3.93 4.92 Question_11_5 68 20.978 67 0 4.897 4.43 5.36 20.978 67 0 4.897 4.43 5.36 Question_12 68 16.241 67 0 2.735 2.4 3.07 16.241 67 0 2.735 2.4 3.07 Question_13 68 14.707 67 0 2.676 2.31 3.04 14.707 67 0 2.676 2.31 3.04 Question_14 68 26.329 67 0 2.765 2.56 2.97 26.329 67 0 2.765 2.56 2.97 Anova Model Sum of Squares df Mean Square F Sig. 1 Regression 4.074 1 4.074 4.173 .045a Residual 64.440 66 .976       Total 68.515 67          a. Predictors: (Constant), Question_1          b. Dependent Variable: Question_8          Coefficientsa Model Unstandardized Coefficients Standardized Coefficients t Sig. B Std. Error Beta 1 (Constant) 1.481 .368    4.025 .000 Question_1 .493 .241 .244 2.043 .045 a. Dependent Variable: Question_8          Table 2: Anova statistics coefficients relationship Q1 Q8 à ¢Ã¢â€š ¬Ã¢â‚¬Å" Hypothesis. From the Questionnaire, we have selected the relationship among the following questions. However, Gender will always be constant. Question (1): Please indicate your gender: Male Female Question (8): In general, how knowledgeable do you consider yourself to be when it comes to understanding what is going on in the current financial news? I know enough to be able to explain whats happening in the financial industry to other people. I understand enough to make sense of the detail behind the financial news stories. I just follow the headlines but my understanding of financial news is fairly vague. I dont really understand whats going on in the financial news. Question_8: On the One-Sample Test it is showed that the Significance is = 0.00 which is less than 0.05, so we reject any initial premise that the average Question_8 is not equal to 0. Since the answer to this question fell where the value of t = 17.868, positive, meaning that people have a significant understanding and knowledge about the current financial news. About 35.3 % of the answers to question 8 went in to that both, males females find themselves having enough understanding to make sense of the detail behind the financial news stories. On lower confidence levels, 29.4% find themselves confident enough to answer bitterly regarding the financial crisis. Question (9): How informed are you about the à ¢Ã¢â€š ¬Ã…“Global Financial Crisisà ¢Ã¢â€š ¬? that is said to be impacting the U.S. economy the rest of the Globe? Very informedà ¢Ã¢â€š ¬Ã¢â‚¬ I have actively sought additional information on this story. Somewhat informedà ¢Ã¢â€š ¬Ã¢â‚¬ I know a bit about it, but wouldnt be able to hold my own in a conversation about it. Informedà ¢Ã¢â€š ¬Ã¢â‚¬ Ive read/seen stories about it when Ive come across them in the news. Not informed at allà ¢Ã¢â€š ¬Ã¢â‚¬ I dont know anything about this story. Question_9: The mean for this particular sample is 2.68, which is statistically significantly different from the test value of Zero.  34 out of 68 sample volume representing almost 50% who have been really informed to have read/seen stories about the global financial crisis when coming across it in the news. The researchers find that the relationship between gender and being informed about the à ¢Ã¢â€š ¬Ã…“Global Financial Crisisà ¢Ã¢â€š ¬? is positive with (.493) and based on the t-value of (2.043) and p-value of (0.045), this relationship is statistically significant.   Hence, there is a statistically significant positive linear relationship between people gender being informed and know ledged enough about the crisis. Question (13): What role, if any, do you think that governments around the world should take in the financial sector towards their economies? Hands onà ¢Ã¢â€š ¬Ã¢â‚¬ the government should intervene whenever the financial sector is at risk. Intermediaryà ¢Ã¢â€š ¬Ã¢â‚¬ the government should act as an intermediary between concerned parties. Laissez Faireà ¢Ã¢â€š ¬Ã¢â‚¬ the government should not interfere with economic affairs beyond the minimum. Completely hands offà ¢Ã¢â€š ¬Ã¢â‚¬ the government should let Wall Street solve its problems on its own. Case by caseà ¢Ã¢â€š ¬Ã¢â‚¬ the government should take a case-by-case approach. ANOVAb Model Sum of Squares df Mean Square F Sig. 1 Regression 14.714 1 14.714 7.132 .010a Residual 136.168 66 2.063       Total 150.882 67          a. Predictors: (Constant), Question_1          b. Dependent Variable: Question_13          Coefficientsa Model Unstandardized Coefficients Standardized Coefficients t Sig. B Std. Error Beta 1 (Constant) 1.326 .535    2.480 .016 Question_1 .937 .351 .312 2.671 .010 a. Dependent Variable: Question_13          Table 3: Anova statistics coefficients relationship Q1 Q13 à ¢Ã¢â€š ¬Ã¢â‚¬Å" Hypothesis. The relationship between gender and the choice to think of the role that governments around the world should take in the financial sector towards their economies is positive (.937). Based on the t-value (2.671) and p-value (0.010), it is to be clarified that this relationship is statistically significant.   Hence, there is a statistically significant positive linear relationship. Most of the questionnaires answer to question 13 went to choose that the role of government can be best suggested as to: Hands onà ¢Ã¢â€š ¬Ã¢â‚¬ the government should intervene whenever the financial sector is at risk. Question (4) Which of the following best describes the highest level of education you have attained? Some high school High school graduate Some college College graduate Some post graduate studies Post graduate degree Question (13): What role, if any, do you think that governments around the world should take in the financial sector towards their economies? 1 Hands onà ¢Ã¢â€š ¬Ã¢â‚¬ The government should intervene whenever the financial sector is at risk.    3 1 7 1 8 2 Intermediaryà ¢Ã¢â€š ¬Ã¢â‚¬ The government should act as an intermediary between concerned parties.    2 7 3 1 2 3 Laissez Faireà ¢Ã¢â€š ¬Ã¢â‚¬ The government should not interfere with economic affairs beyond the minimum.    3 7 4 -   1 4 Completely hands offà ¢Ã¢â€š ¬Ã¢â‚¬ The government should let Wall Street solve its problems on its own.    1    2    -   5 Case by caseà ¢Ã¢â€š ¬Ã¢â‚¬ The government should take a case-by-case approach. 1 2 3 4    5 Table 4: Cross Checking Analysis between Q4 Q13. To provide a better understanding of a cross classification, the table below indicates that, most of people holding a college degree, agreed with the choice that governments should intervene whenever the financial sector is at risk and in need for its support. Therefore, we see that the Global Financial Crisis can be broken down into major phases. Although each phase has a policy focus, it seemed that until t

Knowledge acquisition Essay

Jegrins Insurance Company is one of the largest insurance companies. Jegrins Company is a group of six other companies that deal with life insurance, property insurance, insurance exchange, property insurance and management. Jerkins Insurance Company is one of the largest casualty or property insurers and has so many policies. It deals with life insurance, asset management and casualty and property Insurance. Insurance companies have to maintain a competitive advantage in order to ensure growth. Jergins is one of those insurance companies that need to maintain a competitive advantage. The company has a very stable financial condition, works towards superior targets hence attains the aim of providing superior services. The employees of Jegrins Insurance Company are a very committed group who work towards the success of the company and ensure that the company grows. Jegrins Company has policy holders too that always set specific targets to be met by the company. They either set long term targets or short term targets depending on what they want to accomplish, agents of the company work hard in order not only to meet these targets but also to exceed them as a challenge to their policy holders. This company uses all these to ensure growth in the market as well as maintaining a competitive advantage. The company uses the capitalization’s risk adjustment as one of the ways of ensuring growth. It has a unique solid operating performance system as well, that it makes use of and views this as very important in the growth of the company. Another design in place for the Jegrins Insurance Company is the availability of the regional market that is well established. The advantage of the regional market, the employees attitude towards working hard, the adjustment of risk capitalization and the policies of the company that have to be met, place the company in a very high class among other insurance companies and enables it maintain a competitive advantage apart from just company growth. There are other factors that contribute to the growth hence high rating of the Jegrins Insurance Company. These are factors such as improvements on technology which has enabled the company growth on performance and service offering, low operating costs, a solid income investment, an increased sophistication on pricing and a well organized and well mannered underwriting. Jegrins Company cannot only depend on the already mentioned factors to be successful and to maintain a competitive advantage. It has to look for knowledge and how to manage it for the benefit of the company. The company therefore tried to change or implement ways of getting knowledge which it realized was a very important factor in maintaining competitive advantage. The company realized that by gaining knowledge from outside about other companies or competitors, it would be better placed, and apart from that, internal knowledge was noticed as essential for the general growth of the company. The company manager therefore decided to implement knowledge strategies to use for the companies benefit and be well informed about competitive advantage issues. The knowledge strategy of a company is the approach the company gives to the knowledge capabilities and knowledge resources to the company’s strategy in order to achieve what the company targets are. A knowledge strategy enables the company to increase its knowledge in a specified area be it internal or external knowledge of a company. Companies choose from the knowledge sources which are either internal or external or can choose to use both. Jegrins Company decided on a knowledge strategy that uses both the internal knowledge sources and the external knowledge sources. Jegrins company internal knowledge sources are those that the employees have in their minds, that is, in their behaviors, the duties and procedures they conduct everyday, the company equipments and the software of the company that they handle. Jegrins internal knowledge sources also lay in the various documents that the company has, the databases and the on line repositories. The external knowledge sources that Jegrins decided to use are such as consultants, from brokers of knowledge, universities, publications, personal relations and from professional associations. Jegrins company manager found out that internal knowledge source could be used to prevent imitation by other companies and to maintain the required level of knowledge requirement for executing the company’s strategy and maintaining its current position. The manager then decided to go to an extent of looking for external knowledge sources to avoid being beaten by competitors since competitors too have knowledge levels. The company has to ensure the gap between the competitors level of knowledge is closed down to ensure it is not down and cannot be out done at any time. Jegrins also creates new knowledge to keep in pace and to maintain a competitive advantage position. This extra knowledge, the manager feels is very important since the company will be better placed that the other companies. The company exploits knowledge to keep pace by looking for more information that is relevant. Jegrins insurance Company Internal knowledge management and knowledge acquisition: Without a knowledge strategy, the success of a company can be jeopardized. The company has since implemented a strategy of knowledge acquisition. This strategy has various processes that the company follows. The knowledge of the company since it was initiated was made available to the company employees for them to get to know more about the company. In knowledge management, employees are very important. Jegrins encourages its employees to get the information about the company and perform there duties on the basis of knowledge that they have gained. Internal knowledge is based on the employee knowledge, about their experiences, the soft ware in the company and other company documents. Since the company already had these, it was easy for the manager to go through this step of knowledge acquisition because the employees already had knowledge about the company, the software and had experiences in vast areas of the company. On the basis that this is a large company that provides services to other members and has so many policies, Jegrins has a lot to be termed as internal knowledge. It is therefore an important task to take a long term plan to ensure knowledge acquisition is not stopped after a short time but is continued over a long period of time. Jegrins made this decision just based on the nature of the business or company that does not go for days then close down. The manager decided on long term plans to avoid failure during operations in the future. Apart from the company knowledge that was readily available, the manager still implemented ways to encourage the employees to share the experiences they had and other organizational issues as a way to improve the company’s operational system. By this he encouraged learning through experience hence acquiring more useful knowledge to what his targets of the company are knowledge. External sources of knowledge: Jegrins acquires knowledge too from the external environment as has been stated. It gets information from consultants about the company’s operation steps whenever the manager feels there is a point where consultation is required. The company has evolved to an extent of looking at the other company’s successful methods and learning about them for the benefit of the company and to bridge the gap between the competitor and the company itself. When the company manager does this, he realizes that the other companies do not have more knowledge than the company does, and therefore are at almost the same level of knowledge and not left out yet the company still ranks above the competitors. This he realizes is important in maintaining a competitive advantage since knowledge about other companies is available to him and he knows the steps to make to avoid problems or going down the competitive advantage. The manager also involves the company in looking for information about the environment to which the company operates apart from the competitors’ information. The market is very important to the management of the company since the basis of the company being set up is to provide services to a specified market. Jegrins manager encourages research on the market for the advantage of the company. This though has been the company norm even before the manager decided on taking to knowledge strategy since it offered a lot of information about the steps to be followed for the success of the company. The manager realized that there was need for a strategy or method to be used to acquire just more information relevant for development. This kind of information gaining was meant for the purpose of just keeping in pace with others or being ahead of them which would be to the advantage of the company. The company therefore looked for external sources of information from universities, publications about the successful insurance companies, and other related information professional sources. Jegrins Information distribution: The manager of Jegrins Insurance Company adopted a system in the company that stored valuable information in an order that could be easily retrieved for reference. He also adopted the system of allowing information to be shared among the employees depending on the ranks and area of work so that when an employee does not accept an issue, he/she can explain it to others, discussed and a conclusion made. All these steps the manager considers as a good knowledge management strategy that has shown great success to the company after implementation. After knowledge acquisition, distribution, interpretation and general storage, the company’s knowledge management can be discussed. The manager so far has used this strategy to manage the company knowledge and is able to realize some bit by bit improvements from the previous level in which the company was before. The company though was at a high level, the manager had intentions of improvement and not just sticking to one level forever that may fall down in one time. The manager decided therefore to implement the knowledge management strategy to improve company performance and maintain competitive advantage. In all the knowledge management procedures, the manager had to take time to make sure that strategic knowledge creation is correctly done. He had to make the short term decisions in some cases and long term decision in others to make sure that there is a balance. This is because in some cases like the maintenance of the competitive advantage by the company, the manager had to decide on long term strategy since the future of the company has to be considered. After implementing a knowledge management strategy, the company has come to realize that knowledge is the key issue in the basis of competition. The company is always aware of any competitor steps that are relevant for the company in order not to be beaten by the competitor. Additional knowledge places the company at a higher class since more improvements have been made based on the acquired knowledge. Internal knowledge proved to be very advantageous to the company since it made the employees share the ideas out of the strategy that the manager created that allowed them to share ideas on the companies operations and make corrections and improvements where it was necessary. The result of these steps by the manager was tremendous, easy maintenance of the competitive advantage, noticeable growth, and increased class when compared to other companies and just being informed in terms of knowledge. It was success for Jegrins. Jegrins manager feels that knowledge strategies that suit respective companies are one of the ways to maintain competitive advantage in insurance companies since knowledge is the basis of competition and improvement. According to Jegrins’ manager, when the company has knowledge from the external environment, there are very high chances of improvement and maintaining a competitive advantage. Internal knowledge also contributes to the improvement and competitive advantage too since the main subject here is the employees and the employees have a big role to play in the company. They are the one who run it through their routine duties and experiences.

The Sports Ethics Of Sports - 975 Words

Milan Hosta argues the ethicality of sports lying within the true meaning behind the game being played. Whether the ethics lies with the players of the game, the money it brings, or the sole concept of the sport, ethics is still a major question in this situation. Are sports more than just a game, when we look further into it? Milan explains that rules of sports are based up of moral principles to differ right from wrong in a game. Sports are more than just game. They justify people’s character and morality of each situation and take more than just a passion to play a game. The major argument in this article is trying to justify just what sport ethics entails. For example, in boxing the rules entail to hit the other player but only in certain areas. Ethically and morally most would think this is wrong, however due to it being a sport people are more pron]e to think of it as a sport without ethics involved. Another example would be steroids. Most sports if not all are competit ion based and therefore the player or players have to win the game not only for them but also for their fans. Sports are supposed to be based off skills that are set around with boundaries, but with the intense society pressuring players to win and the affirmations and rewards received, it’s hard to play an ethical game. However, it also comes down to the ethos of the player. How the player justifies integrity and fairness amongst their teammates and their opponents. By all means, it is easier saidShow MoreRelatedEthics And Ethics Of Sports1260 Words   |  6 Pages2016 Ethical Issues in Healthcare Sports can be beneficial to children and adults. Participating in sports provides the opportunity to exercise and to have fun while doing it. Playing sports improves one’s overall physical fitness, strengthens social responsibility, contributes to academic success, and builds character values. According to Morgan Rush, during the 2010 and 2011 academic year, the U.S. Department of Health and Human Services reported that sports participation records in the UnitedRead MoreImportance Of Ethics In Sports1693 Words   |  7 PagesEthics in sport requires four essential virtues which are fairness, integrity, responsibility, and respect. Also, to understand the role of ethics while playing a sport and competition, it is important to make a distinction between gamesmanship and sportsmanship. Its some coaches that operate with the mindset of having a â€Å"gamesmanship† mind which means that theyre built on the principle that winning is everything. Coaches and athletes are e ncouraged to bend the rules wherever possible to gainRead More Ethics in Sports Essay1942 Words   |  8 PagesEthics in Sports My name is john doe and I am the sports and recreation advisor for Stevenage. I am writing to every head of PE to express my feelings and opinions towards ethics and values in schools. My personal view of values in sport is that it comes down to the player’s beliefs in the sport and the standard he or she sets. For example whether a team member puts in 100% effort in the sport they are playing. I define ethics in sport as the moral rules, principles and values, perhapsRead More Sports Ethics Essay2663 Words   |  11 PagesSports Ethics Vince Lombardi, most likely the best coach to ever lead a team to victory or multiple ones on a football field. His ethics sometimes questionable, but never misunderstood, were always meant to lead and encourage his team to be nothing but the best, and the best was achieved in 1967. After nine incredible winning seasons with the Green Bay Packers, Lombardi decided to retire as head coach. The Packers had dominated professional football under his direction, collecting six divisionRead MoreThe Ethics Of Sports Apparel1798 Words   |  8 PagesUniversity of Maryland football player, Under Armour is an innovative company in the sports apparel industry. Under Armour’s founder Kevin Plank came up with a ground-breaking idea that changed the way that sports apparel is looked at today. Plank wanted to originate an apparel that would help athletes like him keep cool and dry when they engaged in vigorous activities during high temperature condition, so he created sports apparel using synthetic materials as an alternative to natural fibers such as cottonRead MoreEssay about Sports Ethics2738 Words   |  11 PagesVince Lombardi, most likely the best coach to ever lead a team to victory or multiple ones on a football field. His ethics sometimes questionable, but never misunderstood, were always meant to lead and encourage his team to be nothing but the best, and the best was achieved in 1967. After nine incredible winning seasons with the Green Bay Packers, Lombardi decided to retire as head coach. The Packers had dominated professional football under his direction, collecting six division titles, five NFLRead MoreThe Ethics of Sport Hunting Essay2288 Words   |  10 PagesAldo Leopold pioneered â€Å"land ethics† in the first half of the 20th century. Inspired by Leopold, his fellow professor at the University of Wisconsin, Van Rensselaer Potter, coined the term â€Å"bioethics† in the second half of the 20th century (1970). Both terms have a po werful social and personal component. Both terms connote an integration of values and the environment. So, too, do â€Å"hunt ethics,† an integration of values and an action based upon biology and the ‘land.’ The hunter has affection andRead MoreThe Ethics Of The Sports Apparel Industry3201 Words   |  13 Pagesathletic market world, being the number one is what many athletes strive for—that is what sets the standards for many sport clothing companies, to deliver products that allow athletes increase their performance while striving to take the number â€Å"one† spot. Under Armour works to deliver products that do that and more. Under Armour is currently one of the leading companies in the sports apparel industry whose mission is to â€Å"Make all athletes better through passion, design, and the relentless pursuit ofRead MoreThe Ethics Of The Byu Idaho Sport Organization773 Words   |  4 Pagesorganizational theory and the management of sport organizations along with organizational goals and effectiveness. Through the writings of Slack and Parent in Understanding Sport Organizations, the aforementioned topics were well versed in delivering information to be prepared for this reflection. Describe one of the â€Å"Ways to Look at Sport Organizations† (Chapter 1) using the athletic department described in the case study (or you can select another sport organization for which you are more familiar)Read MoreSports And Its Impact On Sports946 Words   |  4 PagesSports have advanced very fast similarly to technology. They have been impacting not only the athlete’s lives, but the coaches and spectators also. Milan Hosta has gone on to explain many different topics within the article â€Å"Ethics and Sport: Whose Ethics, Which Ethos- A Prolegomenon†. Milan Hosta unclearly gives knowledge to his audience on the ethics in sports, in which it makes the article seem very scattered and unorganized. He begins by giving the reader some background on past ethics in sports