A Little About Me

Livelihood of the people often sung to go with the movement of workers such as the kalusan (Ivatan), soliranin (Tagalog rowing song) or the mambayu, a Kalinga rice-pounding song; the verbal jousts/games like the duplo popular during wakes. Other folk songs are the drinking songs sung during carousals like the tagay (Cebuano and Waray); dirges and lamentations extolling the deeds of the dead like the kanogon (Cebuano) or the Annako (Bontoc).A type of narrative song or kissa among the Tausug of Mindanao, the parang sabil, uses for its subject matter the exploits of historical and legendary heroes. It tells of a Muslim hero who seeks death at the hands of non-Muslims. The folk narratives, i. e. epics and folk tales are varied, exotic and magical. They explain how the world was created, how certain animals possess certain characteristics, why some places have waterfalls, volcanoes, mountains, flora or fauna and, in the case of legends, an explanation of the origins of things.Fables are a bout animals and these teach moral lessons. Our country's epics are considered ethno-epics because unlike, say, Germany's Niebelunginlied, our epics are not national for they are â€Å"histories† of varied groups that consider themselves â€Å"nations. † The epics come in various names: Guman (Subanon); Darangen (Maranao); Hudhud (Ifugao); and Ulahingan (Manobo). These epics revolve around supernatural events or heroic deeds and they embody or validate the beliefs and customs and ideals of a community.These are sung or chanted to the accompaniment of indigenous musical instruments and dancing performed during harvests, weddings or funerals by chanters. The chanters who were taught by their ancestors are considered â€Å"treasures† and/or repositories of wisdom in their communities. Examples of these epics are the Lam-ang (Ilocano); Hinilawod (Sulod); Kudaman (Palawan); Darangen (Maranao); Ulahingan (Livunganen-Arumanen Manobo); Mangovayt Buhong na Langit (The Ma iden of the Buhong Sky from Tuwaang–Manobo); Ag Tobig neg Keboklagan (Subanon); and Tudbulol (T'boli).

The Role of Social Partnership

THE ROLE OF SOCIAL PARTNERSHIP Rory O’Donnell From Studies, Volume 90, Number 357 1. Introduction Social partnership has been a conspicuous feature of Irish economic, social and political life in the past decade and a half. This paper assesses its role in Ireland’s economic transformation and considers what role it might have in the years to come. Section 2 outlines the analytical foundations of Irish partnership and Section 3 shows how these are reflected in the five partners hip programmes since 1987.Section 4 summarises the self-understanding of partnership as a system of bargaining, inclusion and deliberation. The impact of partnership on economic performance is discussed in section 5. The paper close with consideration of the pressures on partnership and its possible future. 2. The Analytical Foundations of Irish Social Partnership In 1990, the National Economic and Social Council (NESC) set out a framework which has informed its subsequent work, and which underlie s the social partners’ understanding of the process.It argued that there are three requirements for a consistent policy framework in a small, open, European democracy: (I) Macroeconomic: the economy must have a macroeconomic policy approach which guarantees low inflation and steady growth of aggregate demand; (ii) Distributional: there must be an evolution of incomes which ensures competitiveness, which handles distributional issues without disrupting the economy and which is fair; (iii) Structural: there must be a set of policies which facilitate and promote structural change in order to maintain competitiveness in an ever changing external environment.The Council argued that, in the Irish case, the first of these requirements is best met by adherence to the European Exchange Rate Mechanism (ERM) and transition to EMU. It argued that the second of these requirements is best met by a negotiated determination of incomes. To be really effective, such a negotiated approach must encompass not only the evolution of pay, but also taxation, the public finances, monetary policy, the main areas of public provision and social welfare.In pursuit of the third requirement, the Council advocated a programme of structural reform in taxation, social welfare, housing, industrial policy, manpower policy and the management of public enterprises. It argued that such reforms are best achieved with the consent and participation of those who work in the agencies and institutions concerned. The international orientation of Irish social partnership was further underlined in the 1996 NESC report Strategy into the 21st Century.While globalisation has undermined many elements of national economic policy, there remain areas where national policy remains crucial. In a small, open, European democracy like Ireland: (I) Most of the policies which affect national prosperity are supply-side policies; (ii) Given rapid economic change, national policies must produce flexibility; (iii) Succ essful national supply-side policies, directed towards innovation and competitiveness, depend on the high level social cohesion and co-operation that the state can both call upon and develop.This suggests that once a consensus on macroeconomic policy is in place, the main focus of policy should be on the supply-side measures that influence competitive advantage and social inclusion, and on institutional arrangements that allow discovery and implementation of such measures (NESC, 1996). 3. Five Social Partnership Agreements, 1987 to 2001 The content and process of social partnership has evolved significantly since 1987 (O’Donnell and O’Reardon, 1997, 2000).All five programmes included agreement between employers, unions and government on the rate of wage increase in both the private and public sectors for a three-year period. The exchange of moderate wage increases for tax reductions has remained an important feature of partnership. Beyond pay and tax, the partnership p rogrammes have contained agreement on an ever-increasing range of economic and social policies. A consistent theme has been the macroeconomic parameters of fiscal correction, the Maastricht criteria and transition to EMU. Another has been employment creation and the problem of long-term unemployment.The 1990 agreement led to the creation of local partnership companies—involving the social partners, the community and voluntary sector and state agencies—to design and implement a more co-ordinated, multi-dimensional, approach to social exclusion (Sabel, 1996; Walsh et al, 1998). While partnership began by addressing a critical central issue, looming insolvency an economic collapse, it has since focused more and more on a range of complex supply-side matters. An important feature of Irish social partnership has been the widening of the process beyond the traditional social partners.The National Economic and Social Forum (NESF) was established and membership of existing del iberative bodies (such as NESC) was widened to include representatives of the community and voluntary sector. The programmes negotiated in 1996 and 2000 involved representatives of the unemployed, women’s groups and others addressing social exclusion. Those agreements also included measures to promote partnership at enterprise level and agreement on action to modernise the public service. Using the consistent policy framework outlined in Section 2, we can identify a significant dual evolution of Irish social partnership.Over the five programmes since 1987, the emphasis has shifted from macroeconomic matters to structural and supply side policies, and the range of supply-side issues has widened to address key constraints on Irish growth, such as childcare and life-long learning. This change in the substance or content partnership has involved a parallel change in method. While macroeconomic strategy can be agreed in high-level negotiation, complex cross-cutting policies on soc ial exclusion, training, business development or childcare cannot be devised and implemented in high-level national deliberation or negotiation.Consequently, to address the growing list of supply-side issues there has been an expanding array of working groups, task-forces, ‘frameworks’ and ‘forums’—involving representatives of the various social partners. In a few areas of policy—such as long-term unemployment, rural and urban re-generation and business development—new institutional arrangements have been created involve actors on the ground. + 4. Beyond Bargaining: Deliberation and Problem Solving Shared analysis of economic and social problems and policies has been a key aspect of the partnership process.Indeed, that analysis has focused on the partnership system itself (NESC, 1996; NESF, 1997). This revealed that a distinction can be made between two conceptions, or dimensions, of partnership: 1. Functional interdependence, bargainin g and deal making. 2. Solidarity, inclusiveness and participation. Effective partnership involves both of these, but cannot be based entirely on either. To fall entirely into the first could be to validate the claim that the process simply reflects the power of the traditional social partners.To adopt a naive inclusivist view would risk reducing the process to a purely consultative one, in which all interests and groups merely voiced their views and demands. There is a third dimension of partnership, which transcends these two. ‘Bargaining’ or ‘negotiation’ describes a process in which each party comes with definite preferences and seeks to maximise its gains. But partnership involves the players in a process of deliberation that has the potential to shape and reshape their understanding, identity and preferences.This idea is implicit in NESC’s description of the process as ‘dependent on a shared understanding’, and ‘characterised by a problem-solving approach designed to produce consensus’. This third dimension has to be added to the hard-headed notion of bargaining (and to the idea of solidarity) to adequately capture the process. The key to the process would seem to be the adoption of ‘a problem-solving approach’. As one experienced social partner put it, ‘The society expects us to be problem-solving’. A notable feature of effective partnership experiments is that the partners do not debate their ultimate social visions.This problem-solving approach is a central aspect of the partnership process, and is critical to its effectiveness. This suggests that rather than being the pre-condition for partnership, consensus and shared understanding are more like an outcome. It is a remarkable, if not easily understood, fact that deliberation which is problem-solving and practical produces consensus, even where there are underlying conflicts of interest, and even where there was no sh ared understanding at the outset. It is also a fact that using that approach to produce a consensus in one area, facilitates use of the same approach in other areas.The key may lie in understanding what kind of consensus is produced when problem-solving deliberation is used. It is generally a provisional consensus to proceed with practical action, as if a certain analytical perspective was correct, while holding open the possibility of a review of goals, means and underlying analysis. The word compromise is inadequate to describe this type of agreement, since compromise so often fudges the issues that need to be addressed. A similar account of the elements and process of concertation has independently emerged in recent work on the ‘Dutch miracle’ (Visser and Hemerijck, 1997; Visser, 1998).Visser and Hemerijck draw attention to new combinations of centralisation and decentralisation, and emphasise the combination of interest-group dialogue and expert input which create a common definition of problems. This yielded a ‘problem-solving style of joint decision-making’, in which participants are ‘obliged to explain, give reasons and take responsibility for their decisions and strategies to each other, to their rank and file, and to the general public’ (Visser, 1998, p. 12). The institutions of concertation work where they facilitate shift from a ‘bargaining style’ to a ‘problem-solving style’.Visser considers that ‘the most interesting property of social cencertation lies in the possibility that interest groups redefine the content of their self-interested strategies in a â€Å"public-regarding† way’ (Visser, 1998, p. 13). 5. The Impact of Partnership on Economic Performance The period of social partnership has been one of unprecedented economic success in Ireland. The country not only escaped from the deep economic, social and political crisis of the 1980s, but may have significant ly addressed its long-term developmental problems of emigration, unemployment, trade deficits and weak indigenous business development.Under partnership, growth resumed, inflation continued to decline, the budget deficit fell sharply, employment began to recover, but unemployment initially stayed stubbornly high. The European recession of the early 1990s and the ERM crisis of 1992-93 interrupted Ireland’s recovery somewhat. Strong growth after 1993 produced a dramatic increase in employment, huge budget surpluses and, eventually, a big reduction in unemployment. The combination of economic growth, tax reductions, reduced interest rates and wage increases yielded a substantial increase in real take home pay.Between 1987 and 1999, the cumulative increase in real take home pay for a person on average manufacturing earnings was over 35 per cent. The performance of the Irish economy since the mid-1990s, was exceptionally strong, particularly in employment creation. Indeed, between 1994 and 1999, Ireland achieved a 28 per cent increase in employment, while the EU as a whole produced a 3 per cent increase. What role has partnership had in Ireland’s remarkable economic performance since 1987?The partnership approach would seem to have had a significant impact on the Irish economy, though three channels: wage bargaining, coherent and consistent macroeconomic policy and change in supply-side factors. Consider first the impact of the partnership approach to wage bargaining. One of the most striking features of Irish economic performance in the period of partnership has been the enhanced profitability of business. Lane demonstrates that the rate of return on capital almost doubled, rising from 8. 6 percent in 1987 to 15. 4 per cent in 1996.The sharp rise in profitability coincides with ‘the formation of a new consensus among the social partners, as formalised in the negotiation of a sequence of national agreements’, suggesting that ‘the in comes policy that lies at the heart of a new consensus is an important factor in explaining the income shift from labour to capital’ (Lane 1999, p. 228). The resulting environment of wage moderation and high profitability is almost certainly a key factor in Ireland’s employment creation, attraction of inward investment and the unprecedented commercial success of indigenous companies (see also Honohan, 1999; McHale, 2000).FitzGerald’s econometric study of the Irish labour market leads him to suggest that the ‘impact of the partnership approach to wage formation has been less significant than many have assumed’, since ‘the partnership approach served more to validate the results which market forces had made inevitable’ (1999. p. 160 and p. 162). The main impact of partnership lay in improved industrial relations, which significantly enhanced economic performance, and the fact that ‘the partnership approach has also contributed to a more coherent approach to economic policy making’ (FitzGerald, 2000, p. 42).This brings us to the second channel through which partnership influenced the economy. In macroeconomic terms, partnership was an important element in Ireland’s transition form a high-inflation, volatile and conflictual economy to a low-inflation, stable, economy. In particular, a shared understanding on the position of the Irish economy took the exchange rate, and therefore inflation, outside day-to-day party political competition and industrial relations conflict. This can be contrasted with an approach in which short-termism ruled in economic policy, business decisions and wage setting.Through much of the post war period, that led the UK to short bursts of economic growth, followed by recessions imposed in order to reduce inflation. Ireland’s experiment since 1987, partly inoculated it from the unsuccessful combination of macro policy and income determination pursued in Britain for ma ny years. Ireland finally escaped the most negative effects of Britain’s political business cycle. As a result, it achieved low and predictable inflation combined with strong growth of output and employment.It has also preserved a higher level of social solidarity, which seems an essential pre-requisite to sustaining redistributive policies and addressing issues of structural change and reform in a non-conflictual way. Ray MacSharry, Minister of Finance during the critical period of fiscal correction, considers that ‘social partnership could well be regarded as the crowning achievement of the Celtic Tiger economy’ (MacSharry and White, 2000, p. 144). The third channel of influence on the economy is a supply-side mechanism.This arose because there would seem to be a close connection between settling major macroeconomic and distributional issues, on the one hand, and constructive engagement with supply-side problems, on the other. Closing-off macroeconomic alternat ives freed management, union, community and government energies for discussion of real issues that impact on competitiveness and social inclusion—corporate strategy, technical change, training, working practices, the commercialisation of state-owned enterprises, taxation, local re-generation, active labour market policy—and forced (almost) all to engage in realistic discussion of change.During the period of Partnership 2000, the Irish economy has been in virtuous circle. Wage restraint has enhanced competitiveness, which has been converted into employment growth. This in turn has generated additional tax revenues which have been used to reduce direct taxes and hence underpin wage moderation. Indeed, the success of the 1990s has been so great that the constraints on Irish growth now consist of infrastructural bottlenecks and labour shortages, something I discuss in Section 6. It would clearly be inaccurate to attribute all the success of the Irish economy to social part nership.Partnership enhanced competitiveness, assisted fiscal correction, produced consensus and stability in economic policy, and increased flexibility in both public policy and enterprises. This created the context within which Ireland’s long-term developmental strategy finally achieved its potential. That strategy involved heavy investment in education, particularly in information technology, attraction of inward investment and full participation in European integration (O’Donnell, 2000). The ‘Celtic Tiger’ of the 1990s resulted from the interaction of partnership with a set of supply-side characteristics that nhanced international competitiveness and encouraged fast economic growth. These included a young, well-educated, English-speaking workforce, improved infrastructure (funded by both the EU and the Irish state), an inflow of leading US enterprises (attracted by both Irish conditions and the deepening European market), a new population of Irish ente rprises (free of the debilitating weaknesses of the past and open to new organisational patterns), and de-regulation of the service sectors (driven by the completion of the Euroean internal market).The completion of the European internal market internal was a most important factor in the recovery and re-orientation of the Irish economy. One possible limit of consensus is the difficulty of undertaking radical action which disrupts entrenched interests in protected parts of both the public and private sector. While social partnership stabilised the economy, European integration produced a steady pressure to make public utilities and services more efficient, consumer-oriented and independent of state subsidy or protection+.Thus, Ireland benefited from an unusual, but benign, combination of institutionalised co-ordinated of the key economic actors and pressure for market conformity (O’Donnell, 2000). While the evolution of Irish economic policy in the past fourteen years has been marked by a high level of consensus—between the social partners and across the political spectrum—the more liberal and orthodox economists have stood outside the consensus.Their opposition, negligible in policy terms but influential in academia and the media, is both to the substance of the prevailing consensus and to the idea and value of consensus itself. Some have objected to the politicisation of industrial relations because they believe it adds to the bargaining power of trade unionism. Others have argued that the social partners are ‘insiders’, whose pay and conditions have been protected at the expense of ‘outsiders who would work for less’, and that social partnership has had the effect of ‘raising the level of unemployment and emigration’ (Walsh and Leddin, 1992).In a recent historical review of Irish development, Haughton says ‘It was fortunate that the wage agreements have coincided with rapid economic growth, be cause the agreements create considerable rigidity in the labour market’ (Haughton, 1998, p. 37). An aspect of the strategy that has particularly provoked orthodox and neo-liberal economists is EMU. Opposition to the negotiated approach to economic and social management is combined, in almost all cases, with a strong attachment to sterling rather than the euro (e. g Neary and Thom, 1997). 6.The Future of Social Partnership Given pressure on the wage agreement of the Programme for Prosperity and Fairness (PPF), many are asking ‘can partnership survive? It seems more useful to consider what is now required in the three elements of the consistent policy framework—macroeconomic, distribution and structural change—and to ask what role partnership has in facilitating the necessary policies. Adopting that approach, it is clear that structural issues are urgent and the distributional settlement in place since 1987 is under pressure.The future of partnership revolve s around these two. The urgency of structural and supply-side issues was recognised in the PPF. Rapid growth has led to bottlenecks in housing, labour supply, childcare, health, transport, telecommunications, electricity generation and waste management. While the primary goal of partnership had been fiscal correction and employment creation, public policy must now aim to increase living standards, enhance the quality of life, achieve infrastructural investment and lay the economic and social foundations for long-term prosperity.Both short term sustainability and long-term prosperity and social cohesion, require a radical improvement in the level, quality and range of services. Does partnership have a role in achieving these structural and supply-side changes? The key to answering this question lies in recognising that many of these require fundamental change in public administration and the organisation of working life. This suggests a first role for social partnership: it can help to create a new national consensus for organisational change and continuous improvement.The experience of the past shows that the partners’ strategic overview—if persuasive, oriented to the wider good and genuinely problem-solving—can been a critical element in achieving major change in Irish policy. Without a strong consensus on organisational change, pay issues (which do require attention) are likely to crowd out issues of service and organisational capability. In a consensus-oriented system, it is necessary to mobilise consensus to overcome veto points that systems of consultation can create.But the solution of many of these structural and supply-side problems cannot be found in high-level deliberation and bargaining alone. While government is critical, it cannot on its own design and provide the necessary services. We require examination of the content, delivery, monitoring and evaluation of public policy and services. This recasting of public policy must in clude reconsideration of the roles of central departments, agencies, professionals, branch offices and citizens in setting goals, delivering services and monitoring performance (O’Donnell and Teague, 2000).This suggests a second role for social partnership: government, its agencies and the social partners can jointly work out how certain supply-side services can best be provided. But it also demands that the evolution in the method of partnership—from high-level negotiation to multi-level problem solving—be taken much further, to include organisations on the ground and citizens in problem solving and policy design. It is clear that the distributional element of the partnership framework is also under considerable stress and requires re-examination and probably revision.Indeed, it looks likely that all three elements of the distributional settlement require reconsideration: wage bargaining, public sector pay determination and social inclusion and the social wage. The pressure on these arrangements is largely a reflection of the dramatic change in the size and structure of the economy, the new approaches adopted within firms and changing patterns of social and family life. Some argue that in the face these pressures we should abandon the partnership approach and leave the distributional issues to be determined in a completely decentralised way.This ignores a number of co-ordination problems which can hamper economic performance and lead to unfair outcomes. Fully decentralised pay determination, combined with no consensus on tax and public expenditure, can lead to over-shooting and inconsistent claims on the output of the economy. This would cause a loss of competitiveness and employment and leave the weakest most vulnerable. With or without a single national wage norm, Ireland must find an approach to distribution which avoids these problems.While partnership began in an attempt to rescue the Irish economy, society and politics from the deep crisis of the 1980s, its development through the 1990s suggests that it should be seen as a part of the dramatic opening, Europeanisation, commercialisation and democratisation of Irish society. Since the destination of the society is unknown, so partnership must take new forms, provided it can continue to anticipate and help solve the problems that change throws up. REFERENCES FitzGerald, J. 1999) ‘Wage Formation and the Labour Market’, in F. Barry ed. Understanding Ireland’s Economic Growth, Macmillan, London. Haughton, J. (1998) ‘The dynamics of economic change’, in W. Crotty and D. Schmitt, Ireland and the Politics of Change, Longman, London. Honohan, P. (1999) ‘Fiscal and Monetary Policy Adjustment’, in F. Barry ed. Understanding Ireland’s Economic Growth, Macmillan, London. Lane, P. (1998) ‘Profits and wages in Ireland, 1987-1996’, Journal of the Social and Statistical Society, Vol XXVII, Part V. MacSharry, R. and White, P. 2000) The making of the Celtic Tiger: the Inside Story of Ireland’s Boom Economy. Cork: Mercier Press. McHale, J. (2000) ‘Options for Inflation Control in the Irish Economy’, Quarterly Economic Commentary, September 2000. Neary, J. P. and Thom, R. (1997) ‘Punts, Pounds and Euros: in Search of an optimum Currency Area’, mimeo, University College Dublin. NESC, (1990) A Strategy for the Nineties: Economic Stability and Structural Change, Dublin: National Economic and Social Council, NESC, (1996) ‘Strategy into the 21st Century, Dublin, National Economic and Social CouncilNESF, (1997) A Framework for Partnership: Enriching Strategic Consensus through Participation, Dublin: National Economic and Social Forum. O’Donnell, R. (1998) ‘Ireland’s Economic Transformation: Industrial Policy, European Integration and Social Partnership’, University of Pittsburgh, Working Paper No. 2. O’Donnell, R. (2000) Ã¢â‚¬Ë œThe New Ireland in the New Europe’, in R. O’Donnell ed. Europe—the Irish Experience. Dublin: Institute of European Affairs. O’Donnell, R. and C. O’Reardon, (1997) ‘Ireland’s Experiment in Social partnership 1987-96’, in Giusseppe Fajertag and Phillipe Pochet (eds. Social Pacts in Europe, Brussels: European Trade Union Institute, 1997 O’Donnell, R. and C. O’Reardon, (2000) ‘Social partnership in Ireland’s Economic Transformation’, in Giusseppe Fajertag and Phillipe Pochet (eds. ) Social Pacts in Europe—New Dynamics, Brussels: European Trade Union Institute. O’Donnell, R. and Teague, P. (2000) Partnership at Work in Ireland: An Evaluation of Progress Under Partnership 2000. Dublin: The Stationery Office. Sabel, C. F. (1996) Ireland: Local Development and Social Innovation, Paris: OECD, 1996Visser, J. (1998) ‘Concertation—the Art of Making Social Pacts’ paper pres ented at Notre Europe/ETUI seminar on ‘National Social Pacts’, Brussels, June 10th, 1998. Visser. , J. and A. Hemerijck (1997) ‘A Dutch Miracle: Job Growth, Welfare Reform and Corporatism in the Netherlands’ Amsterdam: Amsterdam University Press Walsh B. and Leddin A. (1992) The Macroeconomy of Ireland, Dublin: Gill and Macmillan. Walsh, J. , Craig, S. and McCafferty, D. (1998) Local Partnerships for Social Inclusion? , Dublin: Oak Tree Press.

Interview a parent on their child Essay Example | Topics and Well Written Essays - 1750 words

Interview a parent on their child - Essay Example He is therefore rated as an average student. He is good in sketching and drawing; does not like to attend social events or family reunions with extended family members; he rarely goes out except to school; and he is basically reported to possess good manners, though rarely takes the initiative to help in household chores. He is reported not to be easily angered, nor hot tempered; he rarely fights with his siblings, or with anyone else, for that matter. His mother disclosed that â€Å"as the youngest child, the only challenging event remembered of him was when he broke his left arm from a motorcycle accident – where he rode as a back rider, when his eldest brother took the motorcycle for a spin†. As he apparently learned from that incident, he never attempted to undertake risky activities or endeavors. Overall, the child is described to be secure and happy in his home environment. As stressed, â€Å"the most important function of parents is to give their children a happ y home — not because it will make them more likely to succeed but because everyone has a right to a happy home life† (Kingsbury, 2009, par. 8). Since the atmosphere is most congenial and happy at home, the child apparently prefers staying home than developing social interactions. Parent’s Responses to Child’s Characteristics and Management of Conflicts The parent, a 50 year old female, is physically, mentally, and emotionally stable to address to the child’s unique needs and characteristics. She reportedly graduated with a master’s degree in business and worked before as a manager of a regional bank. Having met several challenges and difficulties due to the health condition of her husband, who allegedly had diabetes with chronic renal problems, she had to resign from her job and find employment working as a freelance writer through online writing cites. One asked how being a single mother affects her ability to manage conflicts; to which she replied that knowing that she is alone, she had to apply effective parenting style that is deemed most effective to the personalities of her children. Doing so would enable them to address and manage the challenges and conflict well. When her son broke his left arm in the abovementioned motorcycle accident, she reported that both she and her husband immediately brought him to the hospital and had him x-rayed. The left arm had to be placed in a cast which allegedly lasted for three months. She noted that she had been a hands-on mother who addressed the different needs of her children; including academic guidance, financial support, emotional and physical assistance, as well as psychological and spiritual through frequent and regular open communication and observance of religious practice. As explicitly the parent stated: â€Å"I love all my children and I make sure that I provide them with unconditional love and holistic support, as needed. Since their father’s death in 201 0, it had been so challenging to support all of them and assuming the roles of provider, mother, housekeeper, writer, guidance counselor, and of course, a confidante, as they would require.† The situation exhibited by the parent-child relationship corroborated Luxton’s (2011 assertion that â€Å"because child rearing involves ensuring the physical, emotional and social development of a child from the total dependency of infancy to the relative

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Kwon's Investigation to the Artists - Essay Example Traditionally, the word â€Å"art† had a limited meaning but with the passage of time, it has broadened its meanings and forms. Public art has faced many controversies from the critics all over the world. But feminist art has emerged in the history as a strong and the most controversial medium through which the efforts and achievements of the feminist artists have sought a medium to reflect the experiences and various colors of a woman’s life. This has changed the idea of contemporary art. The history of feminist art has its roots deeply ingrained in the history of art and therefore, the changes brought by the feminist artists have contributed greatly in changing the history of art. In other words, we can say that feminist artists have intervened in the history of art. The feminist art movement started with the idea that everyday experiences in a woman’s life should be represented through art, where they have been either neglected or underestimated by various fac tors such as the society, culture, politics etc. The emergence of feminist artists took place even before the rise of the feminist art movement in early 1971. ... In addition later in year 1971, women artists were excluded from the exhibition and art galleries by Corcoran Biennial in Washington D.C. which provoked an organized protest from New York Women in Art against the gallery owners for their discriminatory actions. Later in the same year, Judi Chicago founded Feminist art program at Cal State Frenso. Judi Chicago was one of the most recognizable activists in the Movement. She has played a key role in creating awareness among the feminine artists for their roles, rights and contributions in the artwork. In 1972, Judi Chicago came up with another masterpiece entitled as â€Å"WomanHouse† along with Miriam Schapiro at California Institute of Arts. WomanHouse drew the attention of crowds as well as gained the national publicity for the active work from the activists of the Feminist Art Movement (Harper; 1985). This was a collaborative effort by the students to display their artwork; expressing their feelings for being discriminated an d condemned by various performances. It is imperative to understand the term â€Å"feminist art.† This has raised a debate between the art historians and theorists around the globe. It is still difficult for them to understand and extract the exact meaning of feminist art as a movement, a milestone in art history or is it a diversified shift in artwork. Many critics have compared this form of art as an unreal and challenging way of performing art and making it to be seen by the audience. Feminist art has raised many questions that are closely associated with Postmodernism. Feminist art gave a new meaning and dimension to its form. However, Postmodernism has denied the inflexible nature

The Impact of the Informal Economy on Mozambique Research Paper

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Real world business issues - Assignment Example It is vital for business manager to anticipate and identify them so that they can be exploited as new opportunities of growth. Thus, business managers are important linkages that integrate external opportunities and organizational growth by identifying themes and concerns for the benefit of the organizations. The paper would be discussing four major themes that have emerged as critical external factors which considerably influence the productive outcome of the firms and help it to maintain market leverage. The characteristics of emerging external and unstructured issues are essential paradigms that need to be identified and evaluated for evolving effective strategies so that issues can be resolved early and turn impending failure into stepping-stones of success. The tangible and intangible elements of external environment often create hassles that adversely impact organizational growth. They become major contributor for its deteriorating performance. Slater and Narver (1995) believe that firms which constantly make efforts to acquire, process, and circulate information across the organization about markets, products, technologies, and business processes etc., tend to succeed in anticipating changes and meeting them with creative and flexible approach. Consequently, managerial leadership of business managers become key enabling element that helps firms to maintain its leverage in the market against all odds. The following four themes are critical factors that influence organizational p erformance. Globalization has emerged as one of the most important external issues that has long term cascading impact on the organizational processes and performance. Globalization can be broadly defined as ‘the diffusion of goods, services, capital, technology, and people (workers) across national borders’ (Sirgy et al., 2004: 253). Technology has been major

Progressive Education on American Schooling Essay

Progressive Education on American Schooling - Essay Example e from an agrarian culture to a streamlined public opinion, the Progressives called for a mixed bag of changes that would in a far-reaching way modify the course of the United States. The domain of instruction was one of the first that would definitely change. The load of obligation in raising ones kids was starting to be passed from folks to schools; and in the eyes of the Progressives, open educating was not sufficiently raising Americas childhood for an up to date, fair future. In addition, progressive thinkers saw the need for the school to prepare an individual for future in a better manner via practical learning rather than theoretical learning which did not produce independent students (Bernstein, 1971). For educators, schools were neglecting to plan kids for societal life in a popular government (not a republic). Schools must do away with a controlled class timetable dependent upon the "3 Rs" energetic about a "work-study-play" strategy for taking in. Dewey accepted that training is a social process that instruction is "a methodology of living, and not readiness for future living," and that through training public opinion can shape its reasons, economy, and the course it needs to move. In society, education was seen as tool that prepared the students for future employment and societal roles once they finished studying (Dewey, 1899). The American schools at that time did not consider students welfare after school because of the curriculum it had. Teachers need to teach scientific method of solving problems. For teachers, basing training in experience methods captivating learners on the whole in request and exploration utilizing the logical system (or as he now and again alluded to it, the "technique for sagacity. The conditions found in present experience ought to be utilized as wellsprings of issues are a trademark which separates instruction dependent upon experience from customary training. Development relies on the vicinity of trouble to be overcome by

Critically assess the relevance of classical management approaches and Essay

Critically assess the relevance of classical management approaches and the human relations approach to understanding present day - Essay Example Centuries ago, the theorists and management experts realized the need of developing some principles and theories to guide the managers in performing their tasks (Kotter and Cohen, 2002, p195). There have been several important management approaches developed and proposed by the theorist from time to time. These theories are based upon different approaches of managing people and work. The classical management and human relation approaches proposed by Fayol, Taylor and Mayo have been regarded as some major management approaches that have also proved their successful implications and practicability to the working organizations. These approaches remained in practice for several decades and also criticise on several grounds due to the weaknesses identified (Beissinger, 1988, p83). The essay aims to examine the relevance of classical management theory and human relation approach to understand the present day organization with the help of relevant literature. The essay examines the key prop ositions of these theories and discusses weaknesses and implications to the work organization. These approaches are also analysed to find their practicability in the modern world. It is unveiled that present day organizations need dynamic management theories and approaches that could be attained through developing set of management practice principles and these theories could not alone work to guide managers towards efficient management of the organizations. Classical Management Approach The classical approach towards management has been regarded as one of the earliest thought of management. It evolved during the industrial revolution era during the problems related with the management of factory system started appearing very commonly and the managers felt the need of system that could provide them guidelines for the solution of their problems. The managers at that time did not had exact ideas about the training of their employees neither they were adequately able to deal with them. As a result there was considerable increase in the labour dissatisfaction and the need to find the solution became even more critical and important (Kotter and Cohen, 2002, p195). In this situation, the classical management theory was developed to provide the best way for forming and managing the tasks. The classical approach was basically made up of two branches including classical scientific and classical administrative approaches. The classical management approach recognizes the defining role of management within an organization. It asserts that the management has the most important role in running any business or factory (Taylor, 1903, p143). There were some early theorists that played role in the development of the classical management theory. For instance, French industrialist Fayol identifies the need of critical responsibility of management in early 1900s. Frederic Taylor – the father of scientific management believes that organizations are required to study the task s in order to develop precise and appropriate procedures for conducting the tasks. He proves that this study will increase the productivity of the plant and then he also developed incentive system to meet the new standards. Later the purely scientific examination of the working environment and organizations conducted by F.W. Taylor and Fayol identified six major functions of an industrial undertaking. These functions include technical, commercial, financial, security, accounting and managerial

International Corporate Reporting Issues Essay Example | Topics and Well Written Essays - 2000 words

International Corporate Reporting Issues - Essay Example The Objective of Financial Reporting The major elements of the financial statements are the Asset, Liabilities, Equity, Income and Expenses. The financial statements are prepared on the accrual basis of accounting and ‘going concern’ concept both being the fundamental principles for recognition, measurement and reporting. The objective of financial reporting could be achieved only if the decision-usefulness aspect maintaining the principle of stewardship is fulfilled in financial reporting. The information provided should be useful to the existing investors and the other stakeholders and relevant in decision making. Qualitative aspects should enhance the financial statements’ usefulness in predicting the future while confirming the fair and true view of the current status of the company and the statements are required to be understandable and comparable. A - Decision Usefulness Stewardship information is historical in nature and they are subjected to various types of analysis to assess the performance during a particular year for taking decisions. The comparison of the information over a period of time reveals the trends in the operations and the business. But, in most of the cases these could not be extrapolated to assess the future of the company as they are dependent on various internal and external environmental factors. The other statements and the reports like Chairman’s Report or Directors’ Report to the shareholders would be useful in assessing the future performance. Information regarding Stewardship objective The data available from the Income Statement and the Balance Sheets are useful for working out various financial ratios for the purpose of analysis with reference to various parameters such as efficiency in performance, profitability, leverage, interest cover or return on capital employed. For example we can work out operating margin from the Consolidated Income Statement as below: 2011 2010 2009 Sales 13,232 12, 958 12,283 Operating Profit 2,595 2,574 2,418 Operating Margin 19.61% 19.86% 19.68% The comparison for the past three years suggests that though there is increase in sales during 2011 by 2.11% in 2011 and 5.5% in 2010 over the previous years it is not reflecting in gross margin. This is mainly because there has been slowdown in the economy during this period and there has been increase in excise duties, marketing and other operating expenses. Similarly, we work out the current ratio from the balance sheet. 2011 2010 Current Assets 7161 6952 Current Liabilities 4915 3944 Ratio 1.46 1.76 Though the current ratio is better than the generally accepted level of 1, the ratio has come down during 2011. This is mainly because of the increase in overdraft from 587 in 2010 to 1447 in 2011. Stewardship oriented cash flow statement would indicate the movement of cash in the operations of the business. The details given in the Annual Report serves the decision useful objective in the areas such as efficiency in working capital management or plough back of profits accrued for long term capital investments. Elliott and Elliott (p. 16) state â€Å"Cash flow accounting provides objective, consistent and prudent financial information about businesses transactions. It is

MORAL PERMISSIBILITY OF SOME ABORTIONS Research Paper

MORAL PERMISSIBILITY OF SOME ABORTIONS - Research Paper Example My research framework assesses the model on the criteria of possible dissimilarities and their relationship through analysis of literature ‘A Defense of Abortion’ from Thomson. The purpose of this document is to support the pro-life arguments for protecting the life of child rather than pro-choice arguments for moral permissibility of abortion based on Thomson’s analogies. Thomson applies series of analogies to prove pro-abortion arguments considering violinist scenario as base for all the relationship. The core arguments of Thomson include three fundamental premises. The first premise emphasizes the moral permissibility of abortion to protect the life of women. The second premise argues for morality of abortion even if fetus is given the status of fully evolved person. Her third premise finds the activist supporting the pro-life arguments are based on false premises. The derivation of third premise brings the conclusion that nullifies the validity of every argument against abortion. She observes that there are no other cases like pregnancy. This is why she creates the violinist analogy to provide a similar kind of case even though she agrees that any such comparison is bizarre. I will analyze the reflection of Thomson’s point of view at the various stages to develop my arguments. I will also do meta-analysis of analogies applied by Thomson in which she defends the case of abortion through counter-example instead of making positive points by providing supportive examples. The following section digs into the arguments of Thomson to challenge the assumptions in the examples for abortion debate. The philosopher Judith Jarvis Thomson advocates the argument for rights of women in ‘A Defense of Abortion’. I have selected MIT philosopher’s landmark paper for discussion on the morality of abortion. I aim to understand Thomson’s strategy based on the core structure of her arguments to apply the conclusion for broader aspect of moral

John Booth and Frederick Weyerhaeuser Essay Example for Free

John Booth and Frederick Weyerhaeuser Essay American lumber industry in the 19th century. They are very contrasting characters that appear to have nothing in common. They are from different parts of the world; Booth is Canadian and Weyerhaeuser is German. They did not share the same faith or educational background. Booth was Presbyterian and went to a local county school. Weyerhaeuser was Protestant and went to a Lutheran school till the age of fourteen. One might look at them and presume that they were different from each other as night and day. However, when looking at such influential characters, it is unimaginable not to notice their striking similarities. They were brought up on farms and their families did not own much wealth. They were both exposed to work at a young age and possessed a knack for business. There may be a common misconception that one must be well-educated or come from a wealthy family or have a defined list of qualities to be a successful entrepreneur. Contrary to that belief business activity transcends social class, faith, educational and family background, and the success of an entrepreneur depends on sheer passion and drive. Business leaders are susceptible to the volatility of the business market and make decisions based on their managerial style and personality. In this essay, I will compare the business careers of John R. Booth and Frederick Weyerhaeuser, and illustrate how they became the ‘Kings of the Lumber Industry’. With little or no capital in his hands, John R. Booth ventured out of his hometown. John Booth went to the state of Vermont and found a job as a carpenter at the Central Vermont Railway where he would help build bridges. He also dabbled in construction work of a paper mill and a saw mill near Hull. He got his first taste of business at this saw mill since the owner, Andrew Leamy, appointed him as the manager. After Booth left this job he went on to start his own business and thus became an entrepreneur. Booth’s first business venture was a small machine shop that he bought but it was tragically burned down after 8 months. He next bought a mill and installed two shingle machines but the landlord wanted to raise the rent by the end of the year and Booth refused to continue his business there. He then came to Ottawa in 1854 with his wife where he discovered an unused mill in Chaudiere Island and started his business again. In 1859 he received a contract to supply timber and lumber for the Parliament buildings. This contract was a success and a climatic point in Booth’s life; it provided him with the financial support he needed to widen his business. After his partnership with Albert W. Soper, an American lumberman, he bought more mills. He began to get a reputation of being a reliable businessman and this helped him get further capital. In 1867 he was able to buy pineries on the Madawaska River with the financial back-up from the Bank of British North America. In 1879 Booth came to the aid of the Canada Atlantic Railway. This move eased his lumber business in several ways, the major advantage being shipping . Thus the man who once had a capital of $9 in his pocket had now become a multi-millionaire. J. R. Booth was reputable for many things during his time. One among them is his managerial style. He was a very hands-on boss and an autocratic leader. Booth kept away from political matters that were not pertinent to the industrial side of the economy. There are nuances to Booth’s character that are not readily perceived when looking upon his rugged personality. He was an autocratic leader but he cared for his workers; he paid them their full wages even though there was a strike in July 1910. He had a sort of humility to his personality. He did not consider himself superior and would prefer to supervise the workers rather than stay in the office. He was not fond of public attention and refused to attend his granddaughter’s wedding to Prince Erik, the Danish prince. Despite J. R. Booth’s discreet personality he still received the highest regard in the society. The former prime minister, Arthur Meighen, had said that Booth’s â€Å"quiet generosity, and his sincerity made him an outstanding gentleman among his fellows†. In contrast to John R. Booth, we now look at the work and personality of Frederick Weyerhaeuser respectively. Weyerhaeuser had been 18 when he moved to America from Germany in 1852. He settled in Erie County, Pennsylvania after he landed in America with his mother and sister. He got his first job at a brewery and then later at a farm. He moved to the Rocky Island where he got the job of night fireman at a sawmill. He got his first breakthrough here when he was appointed the position of manager when the owners opened a new lumber yard. In 1860, Weyerhaeuser formed a partnership with his wife’s brother-in-law, Frank C. A. Denkmann. Weyerhaeuser acquired a sawmill situated on land along the Mississippi River. Weyerhaeuser and his partner took on sixteen other partners to form the Mississippi River Logging Company and by 1870 he was elected president of this company. Weyerhaeuser saw the prospect of lumber companies in the West and opened the Weyerhaeuser Timber Company which had its headquarters in Tacoma, Washington. Weyerhaeuser had more of a participative managerial style and his business prospered through his many partnerships with his fellow businessmen. He was head of the Weyerhaeuser Syndicate, which had a hundred fellow wealthy businessmen dealing in timber. Weyerhaeuser had a keen sense of business and acquired businesses which he thought had potential. He gained the trust of his fellow partners and along with that the financial support that he needed. However, Weyerhaeuser made bold business purchases which were not always supported. He bought vast amounts of land from the Northern Pacific Railway. This was seen as a risky investment at a time when the market was unpredictable and dwindling. This risky move became a success, surprisingly, and it is estimated that by the time Weyerhaeuser passed away he had $30,000,000 in his possession. Weyerhaeuser prided himself on being one of the few honest businessmen there was. He taught his sons the same values he held. Weyerhaeuser had lost his father at a young age and always took after his family members from a young age. From this grew a seed of a paternalistic leader who preferred to work with others instead of ruling over them. His work was his only focus in life and he did not stray into politics or desire public attention. Influential pioneers like John Rudolphus Booth and Frederic Weyerhaeuser amassed their wealth around the same point in history. They had a different manner of approaching their work and with people at work. Both were not born to luxury but a life of hardship. Perhaps that has made all the difference in their ambition and perseverance in business endeavours. They are exemplary of the lifetime achievement that hard work can culminate to. A strong work ethic and clear vision defy the rules of boundaries set by poverty or family background. At a time when the wealthy were at the top of the social ladder and owned most of the businesses and financial assets, two aspirational men who had grown up on farms defied all the preconceptions of society. They had the perfect outlet: business. Business cannot be shaped by a single factor. It has the power to make a pauper out of a rich man, and a rich man a pauper. One very mportant lesson can be learnt in the study of the â€Å"Lumber Kings†: One can become a king by one’s actions as much as by one’s lineage.

The Respective Theories Of Motivation Psychology Essay

The Respective Theories Of Motivation Psychology Essay The term motivation derived from the Latin word movere, meaning to move. Motivation represents those psychological processes that cause the arousal, direction, and persistence of voluntary actions that are goal oriented (Mitchell, 1982). Motivation as defined by Robbins (1993) is the willingness to exert high levels of effort toward organizational goals, conditioned by the efforts ability to satisfy some individual need. A need in this context is an internal state that makes certain outcomes appears attractive. An unsatisfied need creates tension that stimulates drives within the individual. These drives then generate a search behavior to find particular goals that, if attained, will satisfy the need and lead to the reduction of tension (Robbins, 1993). Luthans (1998) sees it as the process that arouses, energizes, directs, and sustains behavior and performance, while Pinder (1998) defines work motivation as the set of internal and external forces that initiate work-related behavior, and determine its form, direction, intensity and duration. According to Nelson and Quick (2003), motivation is the process of arousing and sustaining goal-directed behavior. The most practical definition proposed by social scientist that, motivation is a psychological processes thatorigin the stimulation, direction, and persistence of behaviour (Luthans, 2005). 2.3 Employees Motivation Theories There are many theories of motivation. The researcher identified the most relevant theories and explained the respective theories of motivation and how motivation gives an valuable impact on job satisfaction. 2.3.1 Maslows Need Hierarchy Theory Maslows Hierarchy of needs is one of the motivation theories that used all over the world. Maslow theory is a basic to start examining the different motivation theories. The first idea of Maslow is people always tend to want something and what they want depends on what they already have. According to Mullins (2007) states that Maslow proposed that there are five different levels of needs people have to seek for satisfaction of their basic needs. The first level of this theory is Physiological Needs. These needs include the most basic of all human needs like water, shelter, food, warmth, rest and clothing. When people dont feel hunger, thirst or cold, their needs go to a next level. The second lowest level is Safety Needs. Need to feel secure and protected in his/her family as well as in a society of day-to-day life is a part in this level. Next, the third level is Belonging and Love Need. After feeling secure, people need for love, affection, sense of belongingness in ones relationship with other persons. The fourth level is Esteem Needs. It is the need to be unique with self-respect and to enjoy esteem from other individuals. People want to evaluate themselves highly and based on their achievement receive appreciation from other people. Lack of these needs may cause inferiority, helplessness and weakness. Highest level of Maslows hierarchy of needs is Self-Actualization. The development of this need is based on the satisfac tion at the other four lower levels. It refers to the need of self-fulfillment and to the tendency to become actualized in what a person is potential. The core of this theory lies in the fact that when one need is fulfilled, its strength diminishes and the strength of the next level increases (Latham, 2007). Figure 2.3.1 Maslows Hierarchy of Needs maslows-hierarchy-of-needs1 2.3.2 Equity Theory Equity theory recognizes that individuals are concerned not only with the absolute amount of rewards they receive for their efforts, but also with the relationship of this amount to what others receive. Based on ones inputs, such as effort, experience, education, and competence, one can compare outcomes such as salary levels, increases, recognition and other factors. When people perceive an imbalance in their outcome-input ratio relative to others, tension is created. This tension provides the basis for motivation, as people strive for what they perceive as equity and fairness (Robbins, 1993). One of the prominent theories with respect to equity theory was developed through the work of J.S. Adams. Adams theory is perhaps the most rigorously developed statement of how individuals evaluate social exchange relationships (Steers, 1983). The major components of exchange relationships in this theory are inputs and outcomes. In a situation where a person exchanges her or his services for pa y, inputs may include previous work experience, education, effort on the job, and training. Outcomes are those factors that result from the exchange. The most important outcome is likely to be pay with outcomes such as supervisory treatment, job assignments, fringe benefits, and status symbols taken into consideration also. Equity theory rests upon three main assumptions (Carrell, 1978). First, the theory holds that people develop beliefs about what constitutes a fair and equitable return for their contributions to their jobs. Second, the theory assumes that people tend to compare what they perceive to be the exchange they have with their employers. The other assumption is that when people believe that their own treatment is not equitable, relative to the exchange they perceive others to be making, they will be motivated to take actions they deem appropriate. This concept of equity is most often interpreted in work organizations as a positive association between an employees effort or performance on the job and the pay she or he receives. Adams (1965) suggested that individual expectations about equity or fair correlation between inputs and outputs are learned during the process of socialization and through the comparison with inputs and outcomes of others. Pinder (1984) stated that feelings of inequita ble treatment tend to occur when people believe they are not receiving fair returns for their efforts and other contributions. The challenge therefore for organizations is to develop reward systems that are perceived to be fair and equitable and distributing the reward in accordance with employee beliefs about their own value to the organization. The consequences of employees perceiving they are not being treated fairly create a variety of options for the employees (Champagne, 1989). These options include the employees reducing their input through directly restricting their work output, attempting to increase their output by seeking salary increases or seeking a more enjoyable assignment. Other possibilities are to decrease the outcomes of a comparison other until the ratio of that persons outcomes to inputs is relatively equal or increasing the others inputs. In addition to the above mentioned, the employee could simply withdraw from the situation entirely, that is, quit the job and seek employment elsewhere. 2.3.3 Expectancy theory The concept of expectancy was originally formulated by Vroom and it stands for the probability that action or effort will lead to an outcome. The concept of expectancy was defined in more detail by Vroom as follows: Where an individual chooses between alternatives which involve uncertain outcomes, it seems clear that his behavior is affected not only by his preferences among these outcomes but also by the degree to which he believes these outcomes to be possible. Expectancy is defined as momentary belief concerning the likelihood that a particular act will be followed by a particular outcome. Expectancies may be described in terms of their strength. Maximal strength is indicated by subjective certainty that the act will be followed byoutcome, while minimal strength is indicated by the subjective certainty that the actwill not be followed by the outcome (Vroom, 1964). Fundamental to all the popular theories of motivation is the notion that employees are motivated to perform better when offered something they want, something they believe will be satisfying. However, offering the employees something they believe will be satisfying is necessary, but not enough. They must believe that it is possible to achieve what they want. Employees are not motivated to perform better when managers focus on the offering and ignore the believing. Employees confidence that they will get what they want involves three separate and distinct beliefs. The first belief is that they can perform well enough to get what is offered. The second is thatthey will get it if they perform well. The third belief is that what is offered will be satisfying. Each of these three beliefs deals with what employees think will happen if they put effort to perform. The first belief deals with the relationship between effort and performance, the second with the relationship between performance and outcomes, and the third with the relationship between outcomes and satisfaction. All these beliefs are interrelated because an employee effort leads to some level of performance, the performance leads to outcomes, and the outcomes lead to some amount of satisfaction or dissatisfaction. In conclusion, the expectancy theory of motivation requires the fulfillment of the following conditions: employees are motivated to perform only when they believe that effort will lead to performance, performance will lead to outcomes, and the outcomes will lead to satisfaction (Green, 1992). Effort-to-performance expectancy is the starting point in the implementation of the expectancy theory. It is a persons perception of the probability that effort will lead to successful performance. If we believe our effort will lead to higher performance, this expectancy is very strong, then we are certain that the outcome will occur. If we believe our performance will be the same no matter how much effort we make, our expectancy is very low, meaning that there is no probability that the outcome will occur. A person who thinks there is a moderate relationship between effort and subsequent performance has an adequate expectancy, and thus put maximum effort in the performance. The next stage in the expectancy theory is performance-to-outcome expectancy, which is a persons perception of the probability that performance will lead to certain other outcomes. If a person thinks a high performer is certain to get a pay raise, this expectancy is high. On the other hand, a person who believes raises are entirely independent of the performance has a low expectancy. Thus, if a person thinks performance has some bearing on the prospects for a pay raise, his or herexpectancy is adequate. In a work setting, several performance-to-outcome expectancies are relevant because several outcomes might logically result from performance. Each outcome, then, has its own expectancy. The final stage in the expectancy linkage is named outcomes and valences. An outcome is anything that might potentially result from performance. High level performance conceivably might produce such outcomes as a pay raise, a promotion, recognition from the boss, fatigue, stress, or less time to rest, among others. The valence of an outcome is the relative attractiveness or unattractiveness of that outcome to the person. Pay raises, promotion, and recognition might all have positive valences, whereas fatigue, stress, and less time to rest might all have negative valences. The stress of outcome valences varies from person to person. Work-related stress may be a significant negative factor for one person but only a slight annoyance for someone desperately in need of money, a slight positive valence for someone interested mostly in getting promotion or, for someone in an unfavorable tax position, even a negative valence. The basic expectancy framework suggests that three conditions must be met before motivated behavior occurs (Griffin, 2007). Behavioral scientists generally agree that the expectancy theory of motivation represents the most comprehensive, valid and useful approach to understanding motivation. However, it does not end with only understanding, it is also important to be able to motivate people to perform. In this regard, the Expectancy theory generally has been considered quite difficult to apply. This is no longer true, as there are many application models that have been developed over the years and which are quite simple and straightforward (Green, 1992). 2.3.4 Herzberg Motivation/Hygiene theory Herzbergs motivation/hygiene theory is also known as the two-factor theory. Herzberg started the study job satisfaction in the 1950s in Pittsburg. The basis of Herzbergs work is in the Maslows Hierarchy of Needs. He started with the idea that what causes the job satisfaction are the opposite of those things that cause job dissatisfaction. However, after studying thousands of books he couldnt draw any guidelines. He conducted a survey where he asked participants to identify those things that made them feel positive with their job and those that made them feel negative. As a result Herzberg found out that what makes people happy is what they do or the way theyre utilized and what makes people unhappy is the way theyre treated. Things that make people satisfied at work are different from those that cause dissatisfaction so those two feelings cant be opposite. Based on these findings, Herzberg created his theory of motivators and hygiene factors. Both factors can motivate workers but they work for different reasons. Hygiene factors tend to cause only short-term satisfaction to the workers while motivators most probably cause longer-term job satisfaction. Motivatorsor satisfiers are those factors that cause feelings of satisfaction at work. These factors motivate by changing the nature of the work. They challenge a person to develop their talents and fulfill their potential. For example adding responsibility to work and providing learning opportunities to a person to work at a higher level can lead to a positive performance growth in every task a person is expected to do if the possible poor results are related to boredom of the task they are supposed to accomplish. Motivators are those that come from intrinsic feelings. In addition to responsibility and learning opportunities also recognition, achievement, advancement and growth are motivation factors.These factors dont dissatisfy if they are not present but by giving value to these, satisfaction level of the employees is most probably going to grow (Bogardus, 2007). When hygiene factors are maintained, dissatisfaction can be avoided. When opposite, dissatisfaction is most probably to occur and motivation cant take place. 2.4 Employees Job Satisfaction Many definitions of the concept of job satisfaction have been formulated over time. According to Locke (1969), job satisfaction is a state of emotional gladness, results from the achievement of the goals that one get through performing his part of contribution inside an organization. Employee job satisfaction is influenced by the internal organization environment, which includes organizational climate, leadership types and personnel relationships (Taber and Seashore, 1975). Locke and Lathan (1990) give a comprehensive definition of job satisfaction as pleasurable or positive emotional state resulting from the appraisal of ones job or job experience. Job satisfaction is a result of employees perception of how well their job provides those things that are viewed as important. Work satisfaction results from the perception that ones job fulfills, or allows the fulfillment of ones important job values. Phrased differently, work is gratifying if it complements ones personal desires and needs. Definition by McCormick and Ilgen (1980) looks similar. They also regarded job satisfaction as a persons attitude towards his or her job, and added that an attitude is an emotional response to the job, which may vary along a continuum from positive to negative. In addition, Megginson, Mosley and Pietri (1982) stated that people experience job satisfaction when they feel good about their jobs, and that this feeling often relates to their doing their jobs well, or their becoming more proficient in their professions, or their being recognized for good performance. According to Wiener (1982) states that job satisfaction is an attitude towards work-related conditions, facets, or aspects of the job. Arnold and Feldman (1986) described job satisfaction as the amount of overall affect that individuals have toward their job. High job satisfaction therefore means that an individual likes his or her work in general, appreciates it and feels positive about in. According to Mitchell and Lasan (1987), it is generally recognized in the organizational behaviour field that job satisfaction is the most important and frequently studied attitude. Job satisfaction is so important in that its absence often leads to lethargy and reduced organizational commitment (Moser, 1997). Lack of job satisfaction is a predictor of quitting a job (Alexander, Litchtenstein and Hellmann, 1997; Jamal, 1997). Sometimes workers may quit from public to the private sector and vice versa. At the othertimes the movement is from one profession to another that is considered a greener pasture. Job satisfaction has been defined as à ¢Ã¢â€š ¬Ã‚ ¦ an attitude that individual has about their job, it results from their perception of their job and the degree to which there is good fit between the individual and the organization (Ivancevich et al., 1997). Job satisfaction is an important motivator to employees performance. While Luthan (1998) posited that there are three important dimensions to job satisfaction: Job satisfaction is an emotional response to a job situation. It can only be inferred. Job satisfaction is often determined by how well outcome meet or exceed expectations. For instance, if organization participants feel that they are working much harder than others in the department but are receiving fewer rewards they will probably have a negative attitudes towards the work, the boss and or coworkers. On the other hand, if they feel they are being treated very well and are being paid equitably, they are likely to have positive attitudes towards the job. Job satisfaction represents several related attitudes which are most important characteristics of a job about which people have effective response. These to Luthans are: the work itself, pay, promotion opportunities, supervision and coworkers. Schneider and Snyder (1975) regard job satisfaction as a personal evaluation of conditions present in the job, or outcomes that arise as a result of having a job. It appears then that job satisfaction encapsulates a persons perception and evaluation of his job, and that this perception is influenced by the persons unique disposition. People will therefore evaluate their jobs against those aspects that are important to them (Sempane et al., 2002). Since job satisfaction involves employees emotions and feelings, it has a major impact on their personal, social and work lives (Sempane et al., 2002) and for this reason may also influence their behaviour as employees, e.g. absenteeism (Locke, 1976; Visser, Breed and Van Breda, 1997). According to Feinstein (2000) states thatjob satisfaction is more of a response to a specific job or various aspects of the job. Job satisfaction is an important element from organizational perspective, as it leads to higher organizational commitment of employees and high commitment leads to overall organizational success and development (Feinstein, 2000) additionally growth, effectiveness and efficiency of the organization and low employees intentions to leave the organization (Mosadeghard, 2008). Obstinately, dissatisfied individuals leave the organization and inflate the motivation of those staying there (Feinstein, 2000) and as a result workers loose performance and efficiency and might sabotage the work and leave the job (Sonmezer andEryaman, 2008). According to Ramayah, Jantan and Tadisina (2001), job satisfaction explains how employees are buoyant to come to work and how they get enforced to perform their jobs. Other researchers narrate job satisfaction as being the outcome of the workers appraisal of extent to which the work environment fulfillment the individuals needs (Dawis and Lofquist 1984). Various researchers have contributed their research findings from organizational set ups, in order to increase employee job satisfaction and have given various suggestions to boost up the satisfaction. Feinstein (2000) says in order to increase individuals satisfaction level employees should be given advancement opportunities. Similarly changes in organizational variables, such as pay scales, employee input in policy development, and work environment could then be made in an effort to increase organizational commitment and overall outcome. Elton Mayo found that interaction within the group is the biggest satisfier. Safety, relation to work and success are followed by intergroup relations (Bektas, 2003). Mosadeghard (2000) gave job satisfaction dimensions like nature of the job, management and supervision, task requirement, co-workers, job security, and recognition and promotion had more effect on employees organizational commitment in organizational set up. According to Oshagbemi (2003), job satisfaction is an important attribute which organizations desire of their employees. The job satisfaction by employees can contribute to the success of an organization because employees can give full commitment and motivation to perform their job. Pensions and profit-sharing plans are positively associated with job satisfaction (Bender and Heywood, 2006). According to Stephen (2005), one would be wrong to consider one single measure of job satisfaction and there may be number of reasons that need to be considered. He further found that actual work was the biggest satisfier and working conditions were the least satisfier; job security was also big determinant of job satisfaction. (Penn et al., 1988) found that opportunity for professional development is the biggest determinant to differentiate satisfied and non-satisfied employees. An employee will be satisfied if he has reached the ideals in his profession; he will develop positive feelings towards his profession (Sirin, 2009). Absence of work life balance, lack advancement opportunities, work environment, lack of encouragement, and lack of recognition may lead to stress, which ultimately causes dissatisfaction, burnout and finally increased turnover rate within organization (Ahmadi andAlireza, 2007). Job satisfaction is inversely related to burnout, intentions to leave the organization (Penn et al., 1988). According to OLeary, Wharton and Quinlan (2009), job satisfaction is also generally conceived as an attitudinal variable that reflects the degree to which people like their jobs, and positively related to employee health and performance. Toper (2008) stated that, If a person believes that the values are realized within the job, this person possesses a positive attitude towards the job and acquire job satisfaction. In the other words, employees will be motivates to perform their job with good attitudes, so that employees will be automatically satisfied with the job. Topper (2008) proposed that Maslows need theory has connection with job satisfaction. An employee will be satisfied with his/her job when he or she achieves the levels of needs, e.g. physiological, security, social, self-esteem and self-actualization. Mosadeghard (2008) gave job satisfaction dimensions like nature of the job, management and supervision, task requirement, co-workers, job security, and recognition and promotion as having more effect on employees organizational commitment in organizational set up. OLeary, Wharthon and Quinlan (2008), job satisfaction is also generally conceived as an attitudinal variable that reflects the degree to which people like their jobs, and positively related to employee health and job performance. With referring to the concept of Herzbergs motivation theories and supported by other researchers, it shows that motivational factors (achievement, advancement, work itself, recognition and growth) are key foundation that influences and has significant impact on employees job satisfaction.Thus, it is proposed that; There is a significant relationship between achievement and job satisfaction. There is a significant relationship between advancement and job satisfaction. There is a significant relationship between work itself and job satisfaction. There is a significant relationship between recognition and job satisfaction. There is a significant relationship between growth and job satisfaction. 2.5 Research Model This study has integrated different views and thought from past research to study the concept of motivation and factors affecting on employee job satisfaction. Thus, this study focuses on Herzbergs motivation theories. The motivational factors in this theory are achievement, advancement, work itself, recognition and growththat give an impact on employee job satisfaction. Based on that, the research model developed for this study can be seen in Figure 2.5.1. Figure 2.5.1: Research Model of the study Achievement Advancement Job Satisfaction Work Itself Recognition Growth Independent Variable Dependent Variable 2.6 Summary This chapter reviewed literatures on the independent variables of the present study, which are motivational factors (achievement, advancement, work itself, recognition and growth). Meanwhile, our dependent variable that is job satisfaction was discussed. Research methodology of the present study will be discussed in the following chapter.

The Nature And Role Of The Financial System Finance Essay

The Nature And Role Of The Financial System Finance Essay Financial system is a mechanism where economic exchange activities can be done. The economic activities can be done through the interaction between financial institutions and the financial market. The purposes of this interaction are to mobilize fund and providing payment facilities for the financing of commercial activities. With the emergence of Islamic finance, the dual financial systems being introduce. In dual financial system the conventional financial systems operating side by side with the Islamic financial systems. The Islamic Financial system consists of the role of four essential mechanisms: The Islamic banking institutions, Takaful, Islamic Capital Market and Islamic Money market. The structure of this financial system may consist of specialized and non-specialized financial institutions, of organized and unorganized financial markets, of financial instruments and services which facilitate transfer of funds. It also comprises of procedures and practices adopted in the Islamic financial markets. The operation and mechanism of the financial system is scrutinized by Bank Negara Malaysia advisory board and Securities Commission Syariah Advisory Board to ensure compliance of Islamic rules and regulations. The Islamic financial institutions which are govern and control under Bank Negara Malaysia are the organizations that mobilize the depositors savings, and provide financing, acting as creditor or in the form of capital venture or financing in the form of profit and loss sharing (PLS). They also provide various financial services to the community, particularly business organizations. The activities will be dealing in financial assets such as deposits, loans, securities or dealing in real assets such as machinery, equipment, stocks of goods and real estate. The activities of different financial institutions may be either specialized or their function may be overlap. They may be classified base on the basis of their primary activity or the degree of their specialization with relation to savers or borrowers with whom they customarily deal or scope of activity or the type of ownership are some of the criteria which are often used to classify a large number and variety of financial institu tions which exist in the economy. Financial institutions are divided into banking and non-banking institutions. The banking institutions traditionally participate in the economys payments mechanism, i.e., they provide transactions services, their deposit liabilities constitute a major part of the national money supply, and they can, as a whole, create deposits or credit, which is money and Banks, subject to legal reserve requirements, can advance credit by creating claims against themselves. Financial institutions are also classified as intermediaries and non-intermediaries. As the term indicates, intermediaries intermediate between savers and investors; they lend money as well as mobilize savings; their liabilities are towards the ultimate savers, while their assets are from the investors or borrowers. Non-intermediary institutions do the loan business but their resources are not directly obtained from the savers. All banking institutions are intermediaries. Many non-banking institutions also act as intermediaries) and when they do so they are known as Non-Banking Financial Intermediaries. The Evolution of Financial Intermediaries in Malaysia In this section, our task is to survey the landscape and identify the institutional players. By describing what financial intermediaries look like today, it is also revealing to see how financial intermediaries have evolved over the last century. Institutional Players The banking system in Malaysia, which is the major component of the financial sector, consists of Bank Negara Malaysia, commercial banks, Islamic banks, International Islamic banks, Investment bank, other non bank institutions and money brokers. Which are all regulated and supervised by Bank Negara Malaysia.  Ã‚  Ã‚  The other non-bank institutions are supervised by other government agencies. These institutions can be divided into four major groups, consisting of the development finance institutions, the saving institutions, the provident and pension funds, and a group of other financial intermediaries, comprising of building societies, unit trusts and property trusts, leasing companies, factoring companies, credit token companies, venture capital companies, special investment agencies and several financial institutions such as the National Mortgage Corporation (Cagamas) and Credit Guarantee Corporation. The traditional banking system role has been to make long-term loans and fund them by issuing short-term deposits.  [1]  But banking systems are prohibited from engaging in securities market activities such as securities underwriting or the sale of trust funds. Therefore, the current design of non-bank financial institution are allowed to deal in the securities market a part of providing services which are similar to the banking system. The contribution of each non-bank financial institutions: insurance companies and pension funds; they receive investment funds from their customers, both of these institutions place their money in a variety of money-earning investments. Leasing companies; they purchase equipment/asset and then lease to businesses for a set number of years. Factoring companies; provide specialized forms of credit to businesses by making loans and purchasing accounts receivable at a discount, usually assumes responsibility for collecting the debt, specialize in bill processing and collections and to take advantage of economies of scale. Market makers; as an agent that offer to buy or sell security (trading in securities),  [2]  storage the securities and insured the securities against loss, provide margin credit,  [3]  cash management account services.  [4]   Trust funds; pool the funds of many small investors and purchase large quantities of securities, offer a wide variety of funds designed to appeal to most investment strategies, allow the small investors to obtain the benefits of lower transaction costs in purchasing securities and reduce the risk by diversifying the portfolio. The National Mortgage Corporation; is to promote the secondary mortgage market in Malaysia, with the issuance of secondary mortgage securities, Cagamas Berhad performs the function of an intermediary to bring together the primary lenders of housing loans and investors of long-term funds. Evolution The evolution of financial intermediation in Malaysia is reflected in Table 1. Table 1 shows the major financial intermediaries by assets and also by percentage share (in parentheses) from 1960 to 2000. To the extent that we can view the pace of financial intermediation as a horse race, there seem to be a clear winners and losers. For example, in terms of relative importance the winners are unit trust, Cagamas Berhad, leasing companies, factoring companies and venture capital companies. Commercial banks and finance companies are losers. These findings raise some interesting questions. First, what caused the change in the mix of financial intermediaries? In this section, we will examine this evolutionary process via three factors. Deregulation of Interest Rate Interest rate deregulation that affects loan pricing takes its earliest form.  [5]  Canada, in 1960, was the first to deregulate its interest rate. Other countries deregulated in the 1980s or thereafter.  [6]  This deregulation allows more freedom and activity to the banks and other institutions to issue new depository products as well as diversified short and long term credit instruments.  [7]  Leightner and Lovell (1998) state that some relaxation to the banks portfolio were part of the liberalization that enables bank to diversify investment to private as well as the foreign equity.  [8]  This made possible with the establishment of the foreign exchange market and the expansion of the underwriting activities of the financial intermediaries. Liberalization in Japan and Germany for instance, brings new paradigm to the roles of the banking institutions. The bank in Germany and Japan is no longer to be a creditor, but can also be the equity holder and in the board of d irectors and management. Liberalization of the banking industry, for example in Malaysia and some other countries, take banking institution into a new dimension that is the establishment of Islamic banking.  [9]  The increasing demand on the interest free banking offer by the Islamic financial institutions leads many conventional banks to offer Islamic counter or rather known as dual banking. This development happens to Muslim and non-Muslim countries. The results show that the individuals prefer to diversify their investment other than deposits. In particular, they invest in securities such as stocks, bonds and unit trusts. Therefore, new investment in unit trust for the small saver altered permanently the financial landscape. The Institutionalization of Financial Markets Institutionalization refers to the fact that more and more funds in Malaysia have been flowing indirectly into the financial markets through financial intermediaries, particularly pension funds, trust funds and insurance companies rather than directly from savers. As a result, these institutional players have become much more important in the financial markets relative to individual investors. What caused institutionalization? Quite simply, it was driven by the growth of these financial intermediaries, particularly pension and unit trust.  [10]  Pension fund growth was encouraged by government policy. Tax laws, for instance, encourage employers to help their employees by substituting pension benefits for wages. This is good for employees because they do not pay taxes on their pension benefits until they are received after retirement. Unit trusts gained considerably from these changes in pension plan laws. Defined contribution plans were allowed to include unit trust on the menu of assets for which plan members could choose. In addition, the increasing attractiveness of specialized funds such as bond funds and index funds has also fueled unit trust fund growth. The Transformation of Traditional Banking The fact that banks are exposed to the non-performing loans that stood at 9.1% for the periods of 1997 to 1999 and it seems to us that banking is a declining industry. However, first, the so-called decline of commercial banking is limited to a decline in the relative importance of commercial banking. As shown in Table 1, the decline of commercial banks assets as a fraction of total intermediated assets from 43.4% in 1980 to 41.3% in 2001. Table 1 also shows that banking industry assets actually increased between 1960 and 2000. In other words, bank assets have actually increased just not as fast as the assets of other financial intermediaries. Second, many of the new innovative activities in which banks engage are not reflected on bank balance sheets as assets even though they add significantly to bank revenue.  [11]  These include, for example, trading in interest rate and currency swaps, selling derivative instruments and issuing credit guarantees. Third, banks have a strong comparative advantage in lending to individuals and small businesses.  [12]  Finally, banks have joined forces with a number of other types of financial intermediaries.  [13]  For example, banks have combined with unit trust funds, merchant banks, insurance companies and finance companies. Bank acquisitions of non-bank financial intermediaries are part of broader consolidation of the entire financial services industry. Diagram 1: Structure of Regulatory Framework Minister of Land and Co-operative Development Licensing of : Brokers Representatives Trading Adviser Representatives Fund Managers Representatives Minister of Finance Minister of Domestic Trade Consumer Affairs Securities Commission Act 1993 Securities Industry Act 1983 Registrar of Companies Securities Commission Future Industry Act 1993 Companies Act 1965 Cooperative Act 1993 Kuala Lumpur Stock exchange (KLSE) BNM Islamic Banking Act 1983 Licensing of Dealers Representatives Investment Adviser Representatives Fund Managers Representatives Securities Clearing Automated Network Sdn Bhd (SCANS) Malaysian Central Depository Sdn Bhd (MCD) Kuala Lumpur Commodity Exchange (KLCE) Malaysian Futures Clearing Corporation Sdn Bhd (MFCC) Kuala Lumpur Options Financial Futures Exchange (KLOFFE) Malaysian Monetary Exchange (MME) Malaysian Derivative Clearing House Sdn Bhd (MDCH) Table 1: Malaysia: Assets of the Financial System, 1960-2000 As at end of (RM million) 1960 1970 1980 1990 2000 Banking System 2,356 (66.3) 7,455 (64.1) 54,346 (73.3) 223,500 (69.8) 829,900 (66.8) Central Bank 1,114 (31.4) 2,422 (20.8) 12,994 (17.5) 37,500 (11.7) 148,900 (12.0) Commercial Banks 1,232 (34.7) 4,460 (38.4) 32,186 (43.4) 130,600 (40.8) 513,600 (41.3) Finance Companies 10 (0.3) 531 (4.6) 5,635 (7.6) 39,400 (12.3) 109,400 (8.8) Merchant Banks 2,229 (3.0) 11,100 (3.5) 36,900 (3.0) Discount Houses 42 (0.4) 1,292 (1.7) 4,900 (1.5) 21,100 (1.7) Non-Bank Financial Intermediries 1,197 (33.7) 4,167 (35.9) 19,807 (26.7) 96,900 (30.2) 413,100 (33.2) Provident and Pension Funds 733 (20.6) 2,717 (23.4) 11,370 (15.3) 51,800 (16.2) 217,600 (17.5) Life and General Insurance Funds 103 (2.9) 439 (3.8) 2,476 (3.3) 10,300 (3.2) 52,200 (4.2) Development Financial Institutions 113 (1.0) 2,193 (3.0) 6,000 (1.9) 25,100 (2.0) Savings Institutions 267 (7.5) 645 (5.5) 2,463 (3.3) 10,000 (3.1) 32,300 (2.6) Other Intermediaries 93 (2.6) 233 (2.0) 1,305 (1.8) 19,800 (6.2) 85,900 (6.9) Total 3,553 11,622 74,153 320,400 1243,000 Source: Bank Negara Malaysia, Annual Reports (various issues) Financial Markets Financial markets are the centers or an arrangement that provide facilities for buying and selling of financial claims and services the corporations, financial institutions, individuals and governments trade in financial products in these markets either directly or through brokers and dealers on organized exchanges or off-exchanges. The participants on the demand and supply sides of these markets are financial institutions, agents, brokers, dealers, borrowers, lenders, savers, and others who are interlinked by the laws, contracts, covenants and communication networks. Financial markets are sometimes classified as primary (direct) and secondary (indirect) markets. The primary markets deal in the new financial claims or new securities and, therefore, they are also known as new issue markets. On the other hand, secondary markets deal in securities already issued or existing or outstanding. The primary markets mobilize savings and supply fresh or additional capital to business units. Alt hough secondary markets do not contribute directly to the supply of additional capital, they do so indirectly by rendering securities issued on the primary markets liquid. Stock markets have both primary and secondary market segments. Very often financial markets are classified as money markets and capital markets, although there is no essential difference between the two as both perform the same function of transferring resources to the producers. This conventional distinction is based on the differences in the period of maturity of financial assets issued in these markets. While money markets deal in the short-term claims (with a period of maturity of one year or less), capital markets do so in the long-term (maturity period above one year) claims. Contrary to popular usage, the capital market is not only co-extensive with the stock market; but it is also much wider than the stock market. Similarly, it is not always possible to include a given participant in either of the two (money and capital) markets alone. Commercial banks, for example, belong to both. While treasury bills market, call money market, and commercial bills market are examples of money market, stock market and government bonds market are example s of capital market. Keeping in view different purposes, financial markets have also been classified into the following categories: (a) organized and unorganized, (b) formal and informal, (c) official and parallel, and (d) domestic and foreign. There is no precise connotation with which the words unorganized and informal are used in this context. They are quite often used interchangeably. The financial transactions which take place outside the well-established exchanges or without systematic and orderly structure or arrangements constitute the unorganized markets. They generally refer to the markets in villages or rural areas, but they exist in urban areas also. Interbank money markets and most foreign exchange markets do not have organized exchanges. But they are not unorganized markets in the same way the rural markets are. The informal markets are said to usually involve families and small groups of individuals lending and borrowing from each other. This description cannot be str ictly applied to the foreign exchange markets, but they are also mostly informal markets. The nature, meaning, and scope of activities of these types of markets will be discussed later in the book. As mentioned earlier, financial systems deal in financial services and claims or financial assets or securities or financial instruments. These services and claims are many and varied in character. This is so because of the diversity of motives behind borrowing and lending. The stage of development of the financial system can often be judged from the diversity of financial instruments that exist in the system. It is not possible here to discuss individually the nature of various financial claims that exist in the financial system. The financial assets represent a claim to the payment of a sum of money sometime in the future (repayment of principal) and/or a periodic (regular or not so regular) payment in the form of interest or dividend. With regard to bank deposit or government bond or industrial debenture, the holder receives both the regular periodic payments and the repayment of the principal at a fixed date. Whereas with regard to ordinary share or perpetual bond, only periodic payments are received (which are regular in the case of perpetual bond but may be irregular in the case of ordinary share). Financial securities are classified as primary (direct) and secondary (indirect) securities. The primary securities are issued by the ultimate investors directly to the ultimate savers as ordinary shares and debentures, while the secondary securities are issued by the financial intermediaries to the ultimate savers as bank deposits, units, insurance policies, and so on. For the purpose of certain types of anal ysis, it is also useful to talk about ownership securities (viz., shares) and debt securities (viz., debentures, deposits). Financial instruments differ from each other in respect of their investment characteristics which, of course, are interdependent and interrelated. Among the investment characteristics of financial assets or financial products, the following are important: (i)liquidity, (ii) marketability, (iii) reversibility, (iv) transferability, (v) transactions costs, (vi) risk of default or the degree of capital and income uncertainty, and a wide array of other risks, (vii) maturity period, (viii) tax status, (ix) options such as call-back or buy-back option, (x) volatility of prices, and (xi) the rate of return-nominal, effective, and real. DEFINITION AND SCOPE OF A CAPITAL MARKET (THE ECONOMIC FUNCTIONS OF FINANCIAL INSTITUTIONS) The previous section gave a brief overview of the major types of financial institu ­tions. To understand why financial institutions exist and the economic services that they provide, it is important to understand the different ways in which funds are transferred within an economy between businesses, government, and households (economic entities) that need to borrow funds (borrowers) and those that have sur ­plus funds to lend (investors). In a very simple economy without financial institutions, transactions between, different borrowers and lenders are difficult to arrange. Borrowers and savers incur significant search and information costs trying to find each other. Transactions be ­tween borrowers and savers may also be limited, because few financial contracts in ­volve only two parties. Similarly, risks are great, since individual entities have little or no knowledge of each other and little ability to monitor each others actions. Also, the transactions costs may be so high that small entities may be unwilling to supply funds. Investors also have little ability to diversify their risk, due to the high cost of many financial contracts. Supplier of funds: surplus (savings) units Lenders: Housesolders, companies, governments, rest of the worlds Demand of funds: deficit unit Borrowers: Housesolders, companies, governments, rest of the worlds Financial Markets Financial institutions help to reduce transactions, search, monitoring, and infor ­mation costs. They provide risk management services and allow investors to diversify their risk and hold portfolios of financial assets by creating ways of indirect financing. Financial institutions also play important roles in an efficient payment system be ­tween entities and in managing pure risk (insurance). The upper panel of Figure 1 shows the role of financial institutions as intermedi ­aries between borrowers and lenders. The term primary securities refers to direct financial claims against individuals, governments, and non-financial firms. A simple economy without any financial insti ­tutions would accommodate only direct financial claims or financial contracts. In ef ­fect, a borrower gives an investor a financial contract or direct financial claim or se ­curity that promises a stake in the borrowers company (i.e., shares of stock) or future payments returning the amount invested plus interest (i.e., a bond, or some other sort of IOU). These are examples of direct or primary securities. As an economy develops, markets emerge for trading direct securities. Some function as auction markets, where trading is carried out in one physical location, as occurs on the New York Stock Exchange; others function as over-the-counter mar ­kets, where trading is carried out by distant contacts, perhaps over the phone and computer, as on the National Association of Security Dealers Automated Quotation (NASDA Q) system. Loans made directly with borrowers are another example of a primary or direct security, where a direct contract is made between a borrower and a bank or other individual lender. Table 1.2 provides examples of primary securities in the first column. The financial assets owned by banks, insurance companies, and mu ­tual funds, such as loans, bonds, and common stock, are all direct securities, where the lenders give funds to the borrowers, and the lenders receive financial contracts guaranteeing repayment of funds plus interest or shares of ownership in the bor ­rower companies. Investors lend funds in return for a direct or primary security. Secondary securities, in contrast, are financial liabilities of financial institu ­tions-that is, claim against financial institutions. In Table 1.2, financial institu ­tions liabilities-deposits, policyholder reserve obligations, and mutual fund shares-are secondary securities or claims against financial institutions. In effect, fi ­nancial institutions created secondary securities that offer advantages over primary securities or direct financial claims. EXAMPLES OF PRIMARY AND SECONDARY SECURITIES Primary Securities Secondary Securities Commercial loans Savings deposits Mortgage loans Transaction deposits Consumer loans Certificates of deposit Government bonds Insurance policyholders reserves Corporate bonds Mutual fund shares Corporate common stock Pension fund reserves Table 1.2 shows this type of indirect financing. Unfortunately, like most fields, finance sometimes uses confusing terminology. Readers should carefully avoid confusing the use of the words primary and secondary in this dis ­cussion with their use in other contexts. For example, students who have previously stud ­ied corporate finance or investments may have encountered the terms primary and sec ­ondary markets; primary markets are those for originally issued securities, and secondary markets handle resale of securities. In the context of this chapter, primary and secondary distinguish between issuers of securities and not between changes in securities ownership. PRIMARY AND SECONDARY MARKET In a market economy the existence of financial markets can greatly ease the process of exchanging loanable funds for financial claims. A firm that wants to borrow money can go to the market in the knowledge that those with funds to lend will be there. The process is made easier still if specialist traders are known to be actively participating in the markets, buying and selling financial claims on their own account, thereby smoothing over days on which trading is thin or when there is an excess of potential borrowers or lenders. Further economies are achieved if agents or brokers can be employed to enter the market representing the customer to buy and sell securities. The existence of the market serves borrowers and lenders alike by reducing the search costs which each has to incur to get in touch with the other, and also maintains confidence in market prices. Markets do not always have a physical location. A market for loanable funds might consist of nothing more than a list of know n dealers who can be contacted by letter or telephone. The International Stock Exchange is the centre of the securities market. It has both a physical trading site which is used for a very small number of securities, and a highly developed system of trading which takes place in a number of locations via computer linkages. The discount market is another traditional financial market, but one which operates without a physical site at all. This market operates by representatives of the discount houses maintaining close daily contact with the leading banks, either by telephone or personal visits, to determine where trading opportunities are. Two types of financial markets exist for real and financial assets, and it is important to distinguish between them. A primary market for financial assets deals in new issues of all types of loanable funds. Transactions in primary markets result either in the creation or in the extinction of financial claims. The creation of a new loan causes the transfer of cash from a lender to a borrower in exchange for a financial claim on the latter. The claim is extinguished when the cash, usually interest and principal, has been repaid to the lender. A secondary market is a market in old issues. Transactions in secondary markets do not create or extinguish financial claims. Cash does not pass between borrowers and lenders, but existing issues simply change hands. The borrower remains unaffect ed by the transaction while the lender transfers the right of repayment to another. The main economic function of the secondary markets is to support the operations of the associated primary markets for new issues by providing liquidity to lenders. In the absence of a developed secondary market an individual saver might be very unwilling to lend out money for long periods of time, except at rates of high interest too high to be attractive to borrowers. If the chances of making a sale when necessary are unacceptably low, no lender would commit funds. Therefore an active secondary market is essential for an active primary one. However, there is no guarantee that the lender will receive back in sale proceeds the full amount at the time they are sold, since markets fluctuate all the time, and prices are not constant. Secondary markets also contribute to the efficiency of the primary market by providing pricing information. In the share market, for example, the current prices of traded securities significantly reduce the problem of setting a price on new issues with similar risk profiles, and information from the secondary market will also influence the attitude of potential participants in primary markets. Figure 3.2 illustrates the connections between primary and secondary markets. Not all primary markets have secondary markets associated with them and some securities are issued for which there are no secondary markets