This form of policy gives the bank an opportunity to avail massive liquidity. This policy is very effective in addressing frozen liquidities that are experienced across the globe especially in the United States of America where money transfer between banks has been witnessed during a financial crisis. This is a step to mitigate the effects liquidity shortage could have as far as solvency problems is concerned. Liquidity policy response is also beneficial in many ways. It does not only offer solutions to short term money problems in market rates. It also helps to ease pressures at the markets as far as funding is concerned. This is a step towards ensuring that funds are supplied for long term benefits as well. Further, central banks help by enlarging the eligibility base as far collateral lending is concerned. In exceptional cases, central banks increase their lending bases to non depository financial institutions and banks as well (Stein, 2011, p. 4). Finally, central bank uses the liquidity response policy to establish felicities for lending to enhance the market repose between banks. Liquidity response policies to the economic crisis have been seen to be essential in nurturing good communications among different countries of the world. In addition, central banks have also assisted many institutions within a country as far as emergency assistance concerning money is concerned. Swapping of money among banks has been also witnessed in Europe in 2011 in response to an economic crisis within the European Union. Monetary policy response also helps to determine the levels of interests’ rates. Subsequently; good interest’s rates create stable prices in an economy. For example in 2011, European countries adjusted the interest’s rate of their currency to avoid financial crisis. This way, the frameworks under which markets operate become favourable (Monetary policy report, 2011, p. 2). In addition, the decisions are transmitted to financial markets, as well as the actual economy, which increases the efficiency of the economy. Central banks have responsibilities to adjust the policies related to money to prevent the risk of economic instability. This way, the monetary policies are very important in dealing with problems related to inflation as the macroeconomic environments are usually kept in stable conditions. Ultimately; the possibilities of the financial crisis are greatly reduced. Fiscal policies are also handy in addressing economic policies. This is usually seen by the initiatives a particular government puts into place so as to deal well with the financial crisis within a nation. Fiscal policies are suitable in propagating a real economy from an economic crisis (Miriam, 2011, p.3). This form of policy involves a lot of interventions by the government in addressing the challenges an individual institution faces as far as the financial crisis is concerned. Other initiatives are also taken by governments so as to boost domestic economies. Improving housing markets; for example, is very useful in boosting the local economies. In addition, supporting the growth of domestic industries rather than the individual ones is also a step towards increasing the growth of domestic economies in Australia as at 2012. Finally; monetary policies reforms as a way of dealing with the financial crisis are one of the options that are necessary. Such reforms can restore confidence within markets resulting into a financial
In conclusion, the economy of the world is slowly recovering from a deep financial crisis but with a wide range of uncertainties. Policies regarded the macro economy should be co ordinate so that sustained growth that is balanced is achieved (Monetary policy report, 2011. P.5). this will encourage more investment among investors…
The purpose of writing this paper is to study the concept of market efficiency in terms of efficient market hypothesis (EMH). It also includes three basic forms of market efficiencies as put forward by Eugene Fama. In this paper, focus is given to the evidences in favor or against the theory that movement of share prices is truly dependent on the information available regarding stock and market.
The globalization made world markets more integrated and provided more opportunities in overseas investments. Based on the instruments dealt in the market, financial market divides into money market and capital market. To maximize the profit, buyers are usually ready to take risk.
The total sum of funds represented by the financial markets can be classified under different segments, based on the characteristics of financial claims being traded and the imperatives of different participants.
One of its main suggestions is that managers can help in heightening the shareholders’ wealth by ensuring that they give a right timing to issues related to security. Most studies that have tested the market timing theory have found out that particular factors tend to affect security decisions for instance, interest rates and past stock prices.
Their effective functioning is crucial owing to the support they provide to the economic growth of a particular region. In order to safeguard the significance of these financial institutions, regulating authorities have incepted the frameworks of Basel accord comprising of Basel I, II and three (Hai, Minhaj, & Ahmed n.d.).
Money market mutual funds aim at limiting losses incurred because of market, liquidity, and credit risks. They preserve the principal in the investment and bring in modest dividends. Though there is fluctuation in the interest rates, the Net Asset Value of the funds remains at a $1 per share constant.
In the end, the author presents the trade off between short term and long term finances for working capitals.
In Croatia, banks form the primary source of financing for local businesses that are centrally regulated by the Croatian National Bank. Croatia possesses a short term liquidity market called Zagreb Money Market in which the banks and non-banks engage their liquidity surpluses to finance reliable entities to help them in their short term finance needs.
The reason that only a few walk on the road of entrepreneurship is because they know that their risk will pay off handsomely for them. For, their feasibility study and business acumen gives them that added instinct that they will come out of the business at the end of the day winning.
The value also represents the total number of variations of the model used. For instance, the coefficient of determination for the econometric model in quest is 0.958026537. This shows that there is 95.8% of variation of outcome of the econometric model. The
8 pages (2000 words)Essay
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