Great expectations Essay Example for Free

Great expectations Essay The novel Great Expectations is centred on the child protagonist, Pip. The novel is known as a bildungsroman. A bildungsroman is a novel which traces the Spiritual, moral, psychological, or social development and growth of the main character from (usually) childhood to maturity. The novel is set in the mid-1800s, and written in the first-person from the perspective of Pip. Pip, which comes from a working class family (in those days) develops a burning desire to become a gentleman due to his love for Estella, whom he meets in the mysterious house of Miss Havisham. This then becomes a responsibility when he discovers that he has a benefactor. Pip develops because hes discontented with his own home and wants to become part of the higher class of society. The novel deals with his feelings about himself and the environment around him. He sets out on a journey, ordained by his secret benefactor, to become the gentleman he dreamt of being. However, this change of life leads him to look down on his home and relatives, especially Joe, who becomes heartbroken; and Pip is forced to reassess his priorities and feelings at the end of the novel. In the novel, Dickens brings about the truth in life in those times; that only rich people had the opportunity to be educated and go far in life. This way the reader had can feel the pain and ambition that Pip yearned to fulfil through his life and; and see how neglectful Pip becomes after he starts to accomplish his dream. The sympathy the reader would have felt towards Pip severely diminishes as the novel progresses, and it is only in the second-half of the novel Pip realises his spite towards the people he truly loves. Dickens concludes the story by giving a message of great expectation; the novel finishes by showing the reader how the society around Pip changes his views and his belief of his inner mind. Pip is first introduced in the graveyard, in chapter one. The reader learns many things about the main character from the start of the novel. Pip is an innocent young orphan and was bought up by his sister Mrs Joe. This is established by Dickens in chapter 1 I never saw my father or my mother. The reader learns that Pips parents have passed away. This brings us to feel immediate sympathy towards the miserable young boy who seems to be alone in this big world. Pip is portrayed as a fearful and a very small child as we first meet him in the grave yard as Pip pleads in terror at the spectre who grabs him. Pip yells, O! dont cut my throat, sir, evidently suggesting that he is petrified but has been brought up to treat people with manners and respects; as he calls him sir. However, the fact that Pips life was under the assailants control might have been the reason that Pip was so reverent. Pip is portrayed as a vulnerable character when we first meet him, and this is greatly reinforced by his appearance; dishevelled, skinny, and small. Pips life at home is very unfair because Mrs Joe has raised Pip up by hand bringing him up strictly by punishing him; for instance, she torments poor Pip by hitting him with the tickler (her rather affectionate title for the cane she uses to beat Pip). Pip also says Home had never been a very pleasant place to me, because of my sisters temper. This gives the impression that Pip was scared of staying at home and also that his sister treated him ungratefully. All this implies that Pip is being bullied by his sister and makes the reader have pity towards Pip because hes been rejected by his only family. It also suggests that Mrs Joe had bought Pip up single handedly with no gratitude. Joe and Pip are bonded together because Joe has acted like Pips father, and also due to the fact that Mrs Joe beats him just as she does Pip. Unlike Mrs Joe, Mr Joe has always been friendly and protective. This is suggested when Pip says Joe imparted a confidence to me. This shows that Joe is caring and will stand beside Pip through good times and bad times as a father. During chapter three a terrible feeling runs through Pip when he steals food from Mrs Joe to take to the convict. Pip feels scared because his conscience frightens him by saying A boy with somebody -elses pork pie! Stop him this suggests that Pip is feeling very guilty and he knows the difference between right and wrong, but is compelled to do the wrong thing because of fear. Although he is acting mainly due to fear; hes also very generous and shows compassion because hes saving the convicts life by feeding him. Dickens uses many techniques such as linguistic techniques in his writing to create various effects and as a way of communicating his characters emotions. An example of this can be seen in Chapter Three when Pip wakes up knowing he has to steal from Mrs Joe to provide the convict with food. Dickens describes the weather on the window with a particularly powerful simile creating memorable images in the readers mind As if some goblin had been crying there all night this descriptive image connects to Pips mood at this time. This image of the crying goblin using the window for his handkerchief reflects the fact that Pip is feeling miserable, lonely and scared about what hes being forced to do. This technique encourages the reader to feel sorry for him and anxious for him as well.

How does the USA Today Function as Civic Culture Essay Example for Free

How does the USA Today Function as Civic Culture Essay The family is the basic unit of any particular society or community. It is therefore imperative that for the society to exist the family has to be there to produce members into the community. The community or national character any particular country is basically determined by the nature of the family values. An individual is shaped in the early ages by the family. In the contemporary society there are increased diversity changes in the family a characteristic of the many changes in culture, political, economic, social, and psychological and even the environment. The content definition of has not been agreed upon because of the great changes that are so accommodating. In the previous many years the family was considered as the people who are related by blood. This definition based on the kinship ties has been revoked due to the influence of many forms of families which has stripped off the family its actual definition. For instance there can husband and wife who do not have any kinship ties and they go ahead to adopt children. Another case that has changed such a definition of the family based on kinship ties is the increasing number of intermarriage within the context of race or ethnicity. This brings out a mixture of offspring and therefore it is difficult to trace the family bonds based on kinship ties. The issue of who is next to kin is no longer important in the current families. The most common aspect in the current families is the bonding based on mutual understanding. The many changes of husband and wife have been changed by the introduction of lesbianism and gay. These try to go against the grain of opposite gender type of marriage. The concept of marriage has changed from opposite gender type of marriage to a mixture of gay, lesbianism and opposite gender marriages. These are some of the dynamisms that are facing the contemporary families. This paper shall give an indebt analysis of the family, the changes in roles and functions of the families and the general effects of such changes to the contemporary families. A close reference and examples shall be drawn from the US and Mexico, the countries that border each other geographically. The contrasting differences I n family issues shall be pointed out clearly. Family life in the United States The family relationship in the United States has undergone several transformations due to the effect of globalization. Race and ethnicity are the most significant factors in shaping the variety of values, attitudes and behaviour amongst the families in the United States. There are a number of changes in families in the United States. These changes range from political, social, economic, and psychological to spiritual. The social dislocations have given rise to new ideas and values especially there is increased individualism among the members of the community. In the US there increased diversity in the organizational structures. There are many cases of divorce and separation in the United Stated which has grabbed the family the unity and love that is supposed to be enjoyed. Most the single families that are common in the US are as a result of divorce and remarriage due to greater democratization. (Hines Morrison, 2005) Cultural diversity in the US is accounting for the many different types of families that have emerged in the recent past. The United States constitutes almost all races and ethnic groups in the world. For this reason there are diverse cultural values as a resulting of this contact. The factor that there are free intermarriages between these diverse races and ethnic groups has made the US to have diverse cultural values which transcend the native culture. The immigrants who move to the United State try to maintain their native language despite the fact that they are forced to learn the official language of the United States, which is English. The immigrants from Spanish speaking countries (Hispanic) when they move to the United States they try to maintain their languages. The culture of the people is usually transmitted through language and due to the numerous languages in the United States there exists different cultures. This means that there are very many family clusters formed through the sharing of the languages. For instance most of the Hispanic immigrants have formed family clusters in the sides of Florida. The black American speaks a variety of English as they identify themselves as belonging or originating from one family. These disparities have affected the notion of the family because these people are allowed to mix freely with people from different cultures. The concept of the family in the United States is changing even the more during the advent of the green card where people from different pasts acquire citizenship. Many people from different races and ethnic groups have found their way to the US and as such most of them are allowed to move with their families. The nuclear family still remains an ideal source of the society in the United States. The United States families are characterized by the great social stratification. In the United the families are organized according to different classes. Among these classes there are great disparities in terms of economic value. The choice of families has not taken shift from mutual understanding to materials and resources. This has affected relationships from a sociological point of view. This issue of the class is a dominant phenomenon among the families in the United States as those who are rich wants to maintain the status quo. This is done through the inheritance that is passed within the nuclear families. The nuclear families in the United States are created and broken up and then reconstituted. This has led to the decline of family values which consequently affects the family patterns. This diversity in family pattern has been identified as the cause of problems such as violence, crime and drug use in the united state. The parents are usually very busy with their duties (United States, Congress, 1992). The increasing cases of divorce and separation in the United States have a negative effect on maintaining the ideal norms of the nuclear family value. The families that are exposed to values outside the parental domain are likely to deviate from norms. The human rights in the United States are considered fundamental. There is protection of the universal human right which is a recipe to the process of democratization. This the reason why the US government invest huge amount of money in education health and other basic sectors so as to enhance the promotion of the human rights among the citizens. The Family Life in Mexico Most people have preferred to live in Mexico for a variety of reasons such as social, political, economic and even good climatic reasons. Living in Mexico requires one to learn the Spanish language so as to increase effective communication. This is because the families are socialized in the Spanish language. The Mexican people are extremely warm and friendly as they are organized in smaller communities that come from the mutually intelligible families. This means that the socialization process is high since there tow much contact between the families. The family bonds are tightly held together and for this reason there is cultural uniformity. The society per se is integrated under common cultural values through the common language shared. Piped water is relatively inexpensive, but not always potable (drinkable). Decades of under-investment, combined with an attitude of impertinence towards paying water bills, has left Mexicos mains water system in poor condition. As a result, most people purchase bottled water, often in 20L containers. Bottled water is very expensive. Rents in Mexico can be higher than in equivalent-sized US towns or cities if the place is popular or fashionable, particularly places within easy reach of the US border. Mexico has a centralized economy: that is, most of the countrys economic activity revolves around. The Mexican pace of life is relatively slower than in the US Especially when the life in major cities is given consideration. The families in Mexico are closely tied as most of the families have time to attend to their families. There is a high degree of parental responsibility among the families. This transcends to greater heights of good values that the society enjoys. Mexico’s culture has a rich history in a consolidated family religion, people and tradition. The Mexican people are proud of their culture that they keep on passing from one generation to another. This is because there is little infusion of the foreign cultures. The family is the basic unit in Mexico and a cornerstone to the maintenance of the culture. The rate of socialization and interaction among these people is too high. It is a usual phenomenon to meet two or more families meeting for a common interest or for a special event. This part of the family function in Mexico, people in Mexico have free time to visit resort centers for the purpose of relaxation which is not a common phenomenon in the United States, where people are too busy. (Heymann, 2006) The Mexican People are too religious which is a big contrast with the United States where people feel that they are in control; of their own life. A large number of people are Christian and they are usually committed to going to church. When you walk in the Mexican homes it is easy for you to see the religious images. In America people stay a non-religious life thus an effect of religious intermingling that has made it difficult for the people to which religious practice to adopt. Thus they resign from subscribing to any of the religious practice. The social stratification is not prevalent in the Mexican family as it is in the United States; people are seeking for money the Mexican people strive for titles. The professionals in Mexico prefer to be addressed with the titles that they deserve. This is as a result of the traditional emphasis given to the tittles within the family domain. The economic living standards in Mexico are slightly lower than in the United State. There are many poor people in Mexico than in the United States. The impact of these high levels of poverty in Mexico has necessitated the immigration of most Mexican families to the United States in search of better jobs and pay of most illegal immigrants from Mexico have gotten their way into the United States through the Mexican borders. These immigrants have settled in cities such as Florida. Working in the United States gives them better pay. This aspect of brain drain is lowering the general development of the families in Mexico as most of the people move leaving behind other family members Basically the cost of living in Mexico is lower than that of the US particularly for agricultural produce. Other sectors such as transport and communication are also lower in Mexico than I n the United States. Other utilities as electricity are more expensive compared to the United State. Working families in the United States, observing how parents struggled to find a balance between caring for children and earning a decent income. When parents split and one of the parents went from Mexico to the United States and was no longer available to give the necessary care, families suffer. What significantly exacerbates the problem is when the borders are so tight that they prevent families from reuniting. This has been a common phenomenon when the immigrants are not given the opportunity by the America to even visit their families in back home in Mexico. (Poole M. et al, 1993) Globalization of the economy created increased pressure for workers to accept lower labor standards, accept lower wages, longer hours, fewer benefits, and less paid leave. Both Nations likewise feel pressure from economic globalization not to implement family-friendly policies, such as paid leave for illness or when a child is sick, or paid parental leave. And that leaves working families struggling to balance work and their care-giving duties. The globalization process has affected families in both Mexico and United States economy was transforming the relationship between work and care-giving in similar ways everywhere. Globalization has forcing both countries to at a very high pace as far as labor standards and social policies are concerned hence leaving working parents with less and less time to raise their children. Parents work has shifted markedly around the world and that goes for every region. The child rearing process has been left in the hands of maids who offer supportive care while the parents are away working till late hours of the day. Men in particular have been moving away from one place to another in search of better jobs especially in various industries. Globalization has made men and women to work day and night and this has made them move away from their homes to go work in various places. A good example is that of outsourcing where people work in shifts where some work during the day and others at night. Women, likewise, have moved into the paid labor force and away from the home. From the period between 1960 and 2000 the number of women in the labor force went from 26 to 38 percent in America. The percentage of women in the workplace has increased both in the United States and Mexico. This has adversely affected the family care services that were provided by the women while their men were working in various sectors. This is a result of civilization which been brought about by the factors such as education, religion, work, urbanization among others. These factors have changed the various roles that were supposed to be executed by the family so as to prepare an individual to be a responsible member of the society. (Cecil, 1992) What has happened is that the world has seen women get better job opportunities which has assisted then them raise income to cater for their families. The increased number of single parent families has made it possible for the women to struggle to get money for rearing their families. While this is was going on there is also massive urbanization occurring all across the world. Thats not necessarily a bad thing, as people who move from very poor rural areas to urban areas often get better jobs, and become less dependent on, for instance, a good rain to feed their families. (Rowntree, Lewis, Price Wyckoff, 2006). References Hines D. A. , Morrison K. (2005) Family Violence in the United States: Defining, Understanding, and Combating. Sage Publisher. Heymann J. (2006) Forgotten Families: Ending the Growing Crisis Confronting Children and Working Parents in the Global Economy. Oxford University Press Poole M. et al (1993) Family: Changing Families, Changing Times. Allen Unwin publisher. Robinson, Cecil. (1992). No short journeys: The interplay of cultures in the history and Literature of the borderlands. Tucson: University of Arizona Press. Rowntree L. , Lewis M. , Price M. and Wyckoff W. (2006). Diversity amid Globalization: World Regions, Environment, Development. United States, Congress. House America’s (1992) Families: Conditions, Trends, Hopes, and Fears: Family policy. United States, Congress, House publisher.

Effects of Basel II Accord on Qatar’s Banking Sector

Effects of Basel II Accord on Qatar’s Banking Sector Chapter 1: Introduction International banking is increasingly vital for every country in order to create an image for itself in the international finance market. Alongside, the increase in globalisation and the upsurge in outsourcing by multinational companies in the west have created a lot of opportunities for growth in the Middle East and Far Eastern countries. This apparently requires a strong internationally stable financial organization to conduct transactions across the globe without any errors (i.e.) 100% accuracy.   This includes reliability and stability of the bank under extreme situations (like emergency for example), which is highly important to conduct international transactions. Also the potential to meet financial demands during crisis situations is a vital criterion that is considered while presenting themselves in the international market. In addition to the globalisation, outsourcing and export/import growth, there is also a tremendous growth in cross-border finance among the countries in the Middle East and Far East. Along with all these factors the developing nations in the Middle East face a mandatory requirement of a sable international banking system in order to attract foreign investment. The increase in cross border finance activity among the middle eastern countries is also a critical element to be considered for establishing a stable international bank within the nation in order to represent the country in the international finance market. The countries in the Middle East are actively participating in cross-border finance since the dawn of the 21st century. Being a producer of Oil which is a vital ingredient at all levels of life right from day-to-day driving up to power generation for the nation in order to run industries and serve domestic purposes, makes it critical for the nations in the Middle East to have a strong international banking system to conduct transactions across the globe accurately and effectively. Qatar is a growing nation in the Middle East with primary operations in oil and gas export as well increasing its potential in areas of development in technology focusing on IT and communication. The nation has efficient international operations and con ducts financial transactions between western nations as well as with eastern nations. Since the take over of the government by H.H. Sheikh Hamad Bin Khalifa in 1995, the country is making tremendous progress in deploying its hydrocarbon resources in order to penetrate in the international market and present itself as a financially stable nation in the international market. Further to the increase in the international operations by the countries in the Middle East and the Far East, the Bank for International Settlements developed a framework to co-ordinate the international financial operations as well as create a portfolio for the capital measurement and capital standards which every nation involving in international banking operations is expected to adopt in order to stabilise and put in order the international transactions between countries. The Basel II accord produced by Basel Committee on Banking Supervision aims at achieving International Convergence of Capital Measurement and Capital Standards. The arrangement aims to set a minimum standard to be met by its participating nations in order to achieve capital adequacy by the participating nations in the international market. This report aims at analysing the effects of Basel II accord on Qatar’s banking sector. The objectives of this report are stated below: To analyse the Basel II accord and it’s framework for measuring capital adequacy in the nations participating in the international banking transaction. To investigate the banking sector of Qatar and the effect of Basel II accord on its international operations and capital adequacy. To analyse the effect of Basel II accord on the nation’s two major banks having international operations in Qatar namely, Qatar Industrial Development Bank (QIDB) and Commercial Bank of Qatar (CBQ) and to analyse the impact of Basel II Accord on the Banking Sector of Qatar. Report Outline: The report comprises of the following chapters. Chapter 1: Introduction This chapter introduces the reader to the objectives of the report and presents a broad picture of the report to the reader. Chapter 2: Overview of Basel II Accord This chapter presents with an overview of the Basel II accord. The three pillars of Basel II accord namely Minimum Capital Requirements, Supervisory Review Process and Market Discipline are analysed in detail to provide the reader with a detailed understanding of the consent of Basel Committee on Banking Supervision. Chapter 3: Implications and Critical Analysis of Basel II Accord The literature review on the Basel II Accord in chapter 2 is followed by the critical analysis and its implications on nations (business and political) are presented to the reader before proceeding to present the overview of the Qatar Banking sector.    Chapter 4: Overview of Qatar and its Banking Sector This chapter presents the reader with an overview of Qatar as a nation and its business operations in the International market. Alongside, the chapter analyses the country’s growth in the banking sector and its internationally active banks. Chapter 5: Case Study This chapter conducts a case study analysis on Qatar’s two internationally active banks namely Qatar Industrial Development Bank (QIDB) and Commercial Bank of Qatar (CBQ). The effect of Basel II accord on the banks along with an overview of the bank is presented to the reader. The data used to present the case study is primarily obtained from secondary sources like journals, reports and white papers. This is apparently due the fact that the analysis is conducted on a foreign nation as well as the data available from the secondary sources are also reliable as they are published by legitimate organizations and popular journals.   Chapter 6: Results and Discussions The results of the case study analysis and discussions are carried out in this chapter. This chapter aims to present a clearer picture to the reader on the effects of the Basel II accord on the banks analysed. Chapter 7:   Conclusion and Recommendations The conclusions derived from the case results and discussions on the case study and the overall conclusion on the effect of Basel I accord on the Qatar Banking Sector is presented in this chapter. Alongside, this chapter presents a few constructive recommendations based on the results and discussion on the case study. Chapter 2: Overview of Basel II Accord This chapter begins with an overview of the Bank for International Settlements followed by a detailed analysis of the Basel II accord. The Basel II committee is also analysed alongside in order to provide a deeper insight to the readers. 2.1 Bank for International Settlements Overview and it’s Operations The Bank for International Settlements (Bank for International Settlements) is an international organization looking after international monetary and financial co-operation across the globe. This organization acts as the bank for all the central banks of countries participating in the international finance and banking. The Bank for International Settlements profile states that the bank achieves the aforementioned statement through acting as A forum to promote discussion and facilitate decision-making processes among central banks and within the international financial and supervisory community. A centre for economic and monetary research A prime counter party for central banks in their financial transactions and Agent or trustee in connection with international financial operations. Established in 17th Many 1930, it is the oldest financial organization at the international level. The Bank for International Settlements has three major decision making bodies within the bank to achieve its mission. They are The general meeting of member central banks This meeting is held before the end of four months of the end of the banks annual financial year. The meeting addresses all the issues related to business and the member central banks gather to approve the annual financial statement released by the bank. The Board of Directors The board of directors comprise the central bank governors elected from various participating countries. They monitor the overall operation of the bank and take responsibility for actions to be taken and address issues related to disputes and other major international financial cross border problems. The Management Committee The management committee is the first line representative of the Bank for International Settlements and addresses the day-to-day activities of the bank. This committee primarily manages the monetary and financial co-operation services. The services include Meetings: Apart from the Annual general meeting the Bank for International Settlements organizes meetings on a bimonthly basis. This meeting brings the member central banks together with the aim of monitoring the global economic and financial development and discusses issues on its policies in relation to the monetary and financial stability. Committees and Secretariats Bank for International Settlements has several committees to monitor specific problems and issues in the international finance and cross border loans. Alongside, several other committees and organizations focusing on international financial systems have their secretariats in the Bank for International Settlements and work closely with the bank in order to enhance the overall international banking and cross border finance. Basel committee of the Bank for International Settlements is the committee that laid the specifications for capital measurement and capital standard of the central banks participating in the international banking. Research and Statistics: In order to support its meetings and the activities of the organization’s Basel based committees the Bank for International Settlements carries out regular research on economic, monetary, financial and legal areas of the international banking and cross border finance. Investment services for central banks: Bank for International Settlements also provides security, liquidity and return for its central bank members. The three primary points with respect to this identified by the organization are To provide security, the Bank has built up a sizeable equity capital and ample reserves. It pursues an investment strategy focused on combining diversification benefits with intensive credit and market risk analysis. To ensure liquidity, the Bank stands ready to repurchase its tradable instruments at little cost to its customers and thus respond quickly and flexibly to their needs. The BIS offers an attractive and competitive return on the funds deposited by central banks and international organisations The Bank for International Settlements focuses on serving the financial needs of central banks of the member countries. Alongside, it also acts as a banker managing the funds for numerous international financial institutions. 2.2: Basel committee Overview The Basel committee was established the member central banks of the Bank for International Settlements in order to create a standard for the international banking and capital framework for crass border finance and lending. The committee was initially set up in 1970 and meets regularly four times a year to discuss the progress in international banking and address issues related to business in this context. The member nations of the committee include Belgium, Canada, France, Germany, Italy, Japan, Luxembourg, the Netherlands, Spain, Sweden, Switzerland, United Kingdom and United States. The country’s central bank and financial institutions that are not active in banking commercially but monitor the financial operations of the nation both at national and international levels represent the nations. The committee does no possess any authority over its member nations banking systems and the decisions of the committee are never intended to have a legal force on its member nations. The Central bank governors of the Group ten countries endorse the committee’s major initiatives. Also the committee reports to the group ten countries central bank governors. The committee first proposed he capital measurement system in 1988 commonly referred to as ‘Basel Capital Accord’. The committee aims in supervising the international banking operations of the nations across the globe. The decisions of the committee endorsed by the group ten countries address various financial issues in the international market outside the groups as well. The major aim of the committee is the ‘close the gaps in international supervisory coverage’ and to ensure that no foreign banking systems escapes the supervision in order to establish a harmony among the member nations of the Bank for International Settlements as well as in the international market. The committee has promoted supervisory standards in the past few years. Some of its major milestones include the following 1997: Cover Principles for effective banking supervision 1999: Core Principles methodology The committee also presented the Basel II accord with revision on international capital framework. This aims to standardise the capital framework of every bank participating in the international banking as well as sets slabs for minimum capital holdings to be met by the banks in order to qualify for international operations. The committee has numerous subgroups to perform specific tasks of the committee in order to achieve the overall motto of the committee. They are listed below Accord Implementation Group Accounting Task Force Capital Group Capital Task Force Core Principles Liaison Group (with 16 non-G10 countries) Cross-Border Banking Group Electronic Banking Group Joint Forum (with IAIS and IOSCO) Joint IOSCO BCBS Working Group on Trading Book Research Task Force Risk Management Group Securitisation Group Transparency Group The next section provides a detailed analysis of the Basel II accord and its various implications on international banking is discussed in chapter 3. 2.3 The Basel II Accord The Basel II accord was released in June 2004 further to the release of the Basel Accord in 2003. The Basel II is a revised edition of the initial Basel capital accord. It is a framework designed to derive the capital holdings of internationally active banks to meet the international standards and sets a minimum level of capital holding which is a primary criteria for the banks. The Basel II framework is aimed to be applied on a consolidated basis over internationally active banks in order to preserve the integrity of capital in the banks with subsidiaries. Also the framework eliminates the double gearing through this approach. The Basel II accord’s framework is also applied on a fully consolidated basis on any parent holding company which acts as a parent entity within a banking group in order to capture the risk on a consolidated basis without missing any element that contributes considerably to the risk of the overall banking system. Alongside, the framework is also applicable to all internationally active banks at every tier of the banking group. Apart from the aforementioned statements one of the principal objectives of the Basel II Accord is to protect the interest of the depositors essentially to ensure that capital recognised capital adequacy measures is readily available for the depositors. Apparently, these measures are aimed to establish a common platform for international banking and cross border finance across the globe. The scope of application extends to the following segments of the international banking and finance entities. Banking, securities and other financial subsidiaries Significant minority investments in banking securities Insurance entities Significant investment in commercial entities. Deduction of investment pursuant to this part The aforementioned entities are obtained from the Basel Committee report on International Convergence of Capital Measurement and Capital Standards, published in June 2004. The Basel II accord overview is based on this report. The illustration in the fig 1 gives a clear picture of the overall scope of application of the Basel II accord. The Basel II accord is split into three pillars. The first Pillar: Minimum Capital Requirements This is the very important pillar of the Basel II Accord. This pillar has very clear definitions of the Accord’s application on the credit risks and operational risk along with the Trading Book issues that are vital for international banking establishment. The layout in fig 2 reproduced from the Basel II report provides the inner picture of the First Pillar. The following subsections provide a detailed analysis on the elements shown in fig 2. 2.4: The First Pillar The First pillar lays down the minimum capital requirements that every internationally active bank should incorporate.   It is split into the following subsection. 2.4.1:   Calculation of Minimum capital requirements The minimum capital requirement is calculated as a measure of the capital ration. The capital ratio in turn is calculated using the regulatory capital and risk-weighted assets. The requirement of this criterion is that the capital ration must be a minimum of 8% or more in order to be eligible for the international activities. Also, in case of a two tier system the capital in tier 2 must not be greater than the tier 1 capital (i.e.) the tier 2 capital can be a maximum of 100% of the tier 1 capital. The capital is accounted from the following sources    Regulatory capital: The minimum accounting capital requirements for the financial institution encompasses the regulatory capital. The Basel II accord has withdrawn the provision to include general provisions in tire 2 capital, which was in effect in the 1988 Accord under the Internal Ratings-Based (IRB) approach.   Furthermore the accord has lain down that the banks using the Internal Ratings Based approach to their other assets mu st compare the amount of total eligible provision with the total expected losses amount to the bank. This eventually increases the capital holding of the bank in order to meet the criteria. Risk Weighted Assets: The Basel II Accord calculates the total risk-weighted assets by multiplying the capital requirement for market risk and operational risk by the reciprocal of the minimum capital ratio of 8% and adding the resulting value to the sum of risk weighted assets for credit risk. Even though this is subject to review the approach lays enormous burden on the bank to increase its minimum capital holdings. Apparently the Basel II Accord is aiming to establish that the internationally active banks must have enough capital to meet its short comings without depending on loans and cross border finance to address its immediate requirements and short comings. The idea though being novel is very intense for the banks to maintain the required minimum capital. Transitional Arrangements: The Accord has also stated that the banks following the Internal Ratings-Based approach or the Advanced Measurements Approach (AMA) that there will be a capital floor after the implementation of the Basel II framework. The adjustment factors used in both the internal ratings-based approach and the advanced measurements approach for calculating the capital floor as per the definition of the Basel II framework is shown in fig 3 below. 2.4.2: Credit Risk-The Standardised Approach Under this method the Basel committee provides the internationally active banks a choice for calculating their capital requirements for credit risk. The first approach is the standardised method of measuring the credit risk through support from external credit assessments. This method is approved by the Basel committee while the other method is yet to explicitly approved by the committee. Under the alternate method of calculating the credit risk, the bank supervisor can allow banks to use their internal rating systems for calculating the credit risk. Under both the methodologies one should not oversee the fact that the Basel committee is very keen in assessing the credit risk on the capital holdings of the internationally active banks. Even though this is appreciated, the rules are very stringent making it very difficult for the banks for adopt easily. 2.4.3 Credit Risk- Internal Ratings Based Approach The Basel II committee has given supervisory approval for banks to use the Internal Ratings-Based approach to determine their capital requirement for a given exposure subject to certain minimum conditions and disclosure requirements. The risk components considered include Measures of the probability of default (PD), Loss given default (LGD), The exposure at default (EAD), Effective maturity (M) The Basel II accord states that â€Å"The Internal Ratings Based Approach is based on the measure of unexpected loses (UL) and Expected Loses (EL). Under the Internal Ratings Based Approach, the committee expects the bank to categories their exposures in order to identify the different underlying risk characteristics. The categories include corporate, sovereign, bank, retail and equity. These are identified as the corporate asset classes and the approach further expects the bank to identify the subclasses associated with the asset classes in order to measure the credit risk associated with the exposure. The detailed analysis of every corporate class and its associated subclasses is beyond the scope of this report. In essence the Internal Ratings Based Approach gives the bank more liberty to calculate its credit-risk on the minimum capital requirement for a given exposure. But the producers laid by the Basel II Accord is very tedious to adopt and implement for every corporate class exposure and identifying the subclasses associated. 2.4.4: Credit Risk- Securitisation Framework The Basel Committee in its revised accord, has made it mandatory for the banks to apply the Securitisation Framework for determining regulatory capital requirements on exposure arising from traditional and synthetic Securitisation or similar structures that contain features common to both.   The Basel II accord also states that the capital treatment of the Securitisation exposure must be determined on the basis of the economic substance rather than the legal form of the structure. It is apparent that the securities can be structured in many different ways and the committee has approved the use of either the traditional Securitisation or the synthetic Securitisation framework. Also the Basel II accord expects the supervisor to look at the economic substance of transaction in order to determine whether it should be subject to Securitisation framework or not. This gives the discretionary power to the supervisor to decide on a specific transaction whether to include it in the framework or to eliminate it from the framework towards determining the regulatory capital framework. The traditional Securitisation and the synthetic Securitisation framework are discussed below. Traditional Securitisation: The Basel II Accord defines the traditional framework as â€Å"a structure where the cash flow from an underlying pool of exposures is used to service at least two different stratified risk positions or tranches reflecting different degrees of credit risk†. The advantage with this approach is that the payment to the investors is based on the performance of the specified underlying exposures rather than a derivation from an obligation of the entity originating those exposures. Synthetic Securitisation â€Å"A synthetic Securitisation is a structure with at least two different stratified risk positions or tranches that reflect different degrees of credit risk where credit risk of an underlying pool of exposures is transferred, in whole or in part, through the use of funded (e.g. credit-linked notes) or un-funded (e.g. credit default swaps) credit derivatives or guarantees that serve to hedge the credit risk of the portfolio†. This approach leaves the return to the investors in the hands of the performance of the underlying pool. Apparently, the risk associated is higher since the performance can be affected by numerous causes. From the above-mentioned approaches the Basel II accord’s stand for evaluating the capital and minimum capital requirements are evident. 2.4.5: Operational Risk The operational risk is defined by the Basel Committee as the risk associated with the loss resulting from inadequate or failed internal processes, people, systems or external events. This includes the legal risk with the exclusion of strategic and reputational risk. The Basel II Accord has approved three methods for calculating the operational risk and risk sensitivity with the implications on minimum capital requirements. They are: (i) The Basic indicator approach, (ii) the Standardised Approach and (iii) Advanced Measurement Approach. Basic Indicator Approach: In this case the banks should hold capital for the operational risk equal to the average over the past three years of a fixed percentage. This is expressed as a formula below KBIA = [ÃŽ £ (GI1†¦n x ÃŽ ±)]/n Where KBIA = the capital charge under the Basic Indicator Approach GI = annual gross income, where positive, over the previous three years n = number of the previous three years for which gross income is positive ÃŽ ± = 15%, which is set by the Committee, relating the industry wide level of required capital to the industry wide level of the indicator. This formula is obtained from the Basel II accord for the purpose of reader understanding. Standardised Approach: The standardised approach divides the bank’s activities into eight-business lines namely corporate finance, trading sales, retail banking, commercial banking, payment settlement, agency services, asset management, and retail brokerage. The likelihood of operational risk exposure is calculated from the gross income associated with each business line that serves as an indicator for the scale of business operations by the bank in that specific area of business or business line. This approach is very clumsy since the gross income associated with the business line varies due to numerous reasons both internal and external. Advanced Measurement Approach: The Advanced Measurement Approach equates the regulatory capital requirement with the risk measure generated by the bank’s internal operational risk measurement system using quantitative and qualitative criteria. The banks can use this method only after the approval by the Committee. The Basel II Accord sets the approach for the banks based on their international activity and significant operational risk exposures. Also, when a bank agrees to use a more sophisticated method, it cannot revert back to the easier method without approval from the supervisor. This eventually increases the burden on the banks to choose a sophisticated method. 2.4.6: Trading Book Issues The final segment of the first pillar is the trading book. Basel Committee defines the trading book as a container of both the financial instruments and commodities held either with trading intent or in order to hedge other elements of the trading book. The trading book forms a vital element for the bank since it is the record of the bank’s financial instruments as well as commodities. The Basel II Accord identifies four key principles for the supervisory process. They are listed below. The basic requirements for the eligibility to trading book capital treatment put forth by the Basel II Accord are as follows Clearly documented trading strategy for the position/instrument or portfolios, approved by senior management (which would include expected holding horizon). Clearly defined policies and procedures for the active management of the position Clearly defined policy and procedures to monitor the positions against the bank’s trading strategy including the monitoring of turnover and stale positions in the bank’s trading book 2.3: The Second Pillar- Supervisory Review Process Basel committee was initially set up for the supervising the internationally active banks and produce a common platform for the smooth transactions and cross border finance. The Basel II Accord has established Supervisory Process as one of the three pillars in order to emphasise its stand on supervisory process. The importance of supervisory process is described below. 2.3.1: Importance of Supervisory Process The supervisory review process of the Basel II Accord aims not only to ensure that banks have adequate capital to support all the risks in their business but also intends to encourage the banks to develop and use better risk management techniques in monitoring and managing risks. Alongside, the supervisory process by developing internal capital assessment process and setting capital targets that are commensurate with the bank’s risk profile recognises the importance for bank management in order to improve the atmosphere in the international banking and cross border finance. The Supervisory process evaluates the relationship between the amount of capital held by the bank against the risk, strength and effectiveness of the bank’s risk management eventually guiding the bank and supervising its activities in order to improve the performance of the banks in the international business market and cross border finance. 2.3.2 Four Key Principles of the supervisory review The four key principles identified by the Basel II Accord on the supervisory process is listed below. These principles emphasise on the committee’s focus on supervision and its aim to maintain harmony in the international banking and cross border finance. Principle 1: Banks should have a process for assessing their overall capital adequacy in relation to their risk profile and a strategy for maintaining their capital levels. Principle 2: Supervisors should review and evaluate banks’ internal capital adequacy assessments and strategies, as well as their ability to monitor and ensure their compliance with regulatory capital ratios. Supervisors should take appropriate supervisory action if they are not satisfied with the result of this process. Principle 3: Supervisors should expect banks to operate above the minimum regulatory capital ratios and should have the ability to require banks to hold capital in excess of the minimum. Principle 4: Supervisors should seek to intervene at an early stage to prevent capital from falling below the minimum levels required to support the risk characteristics of a particular bank and should require rapid remedial action if capital is not maintained or restored. 2.3.3: Issues to be addressed There are two specific issues to be addressed by the Supervisory-Review Process. They are Interest Rate Risk in the Banking book: Since it is clear that the Basel Committee’s primary focus is on identifying and preventing risk in the international b Effects of Basel II Accord on Qatar’s Banking Sector Effects of Basel II Accord on Qatar’s Banking Sector Chapter 1: Introduction International banking is increasingly vital for every country in order to create an image for itself in the international finance market. Alongside, the increase in globalisation and the upsurge in outsourcing by multinational companies in the west have created a lot of opportunities for growth in the Middle East and Far Eastern countries. This apparently requires a strong internationally stable financial organization to conduct transactions across the globe without any errors (i.e.) 100% accuracy.   This includes reliability and stability of the bank under extreme situations (like emergency for example), which is highly important to conduct international transactions. Also the potential to meet financial demands during crisis situations is a vital criterion that is considered while presenting themselves in the international market. In addition to the globalisation, outsourcing and export/import growth, there is also a tremendous growth in cross-border finance among the countries in the Middle East and Far East. Along with all these factors the developing nations in the Middle East face a mandatory requirement of a sable international banking system in order to attract foreign investment. The increase in cross border finance activity among the middle eastern countries is also a critical element to be considered for establishing a stable international bank within the nation in order to represent the country in the international finance market. The countries in the Middle East are actively participating in cross-border finance since the dawn of the 21st century. Being a producer of Oil which is a vital ingredient at all levels of life right from day-to-day driving up to power generation for the nation in order to run industries and serve domestic purposes, makes it critical for the nations in the Middle East to have a strong international banking system to conduct transactions across the globe accurately and effectively. Qatar is a growing nation in the Middle East with primary operations in oil and gas export as well increasing its potential in areas of development in technology focusing on IT and communication. The nation has efficient international operations and con ducts financial transactions between western nations as well as with eastern nations. Since the take over of the government by H.H. Sheikh Hamad Bin Khalifa in 1995, the country is making tremendous progress in deploying its hydrocarbon resources in order to penetrate in the international market and present itself as a financially stable nation in the international market. Further to the increase in the international operations by the countries in the Middle East and the Far East, the Bank for International Settlements developed a framework to co-ordinate the international financial operations as well as create a portfolio for the capital measurement and capital standards which every nation involving in international banking operations is expected to adopt in order to stabilise and put in order the international transactions between countries. The Basel II accord produced by Basel Committee on Banking Supervision aims at achieving International Convergence of Capital Measurement and Capital Standards. The arrangement aims to set a minimum standard to be met by its participating nations in order to achieve capital adequacy by the participating nations in the international market. This report aims at analysing the effects of Basel II accord on Qatar’s banking sector. The objectives of this report are stated below: To analyse the Basel II accord and it’s framework for measuring capital adequacy in the nations participating in the international banking transaction. To investigate the banking sector of Qatar and the effect of Basel II accord on its international operations and capital adequacy. To analyse the effect of Basel II accord on the nation’s two major banks having international operations in Qatar namely, Qatar Industrial Development Bank (QIDB) and Commercial Bank of Qatar (CBQ) and to analyse the impact of Basel II Accord on the Banking Sector of Qatar. Report Outline: The report comprises of the following chapters. Chapter 1: Introduction This chapter introduces the reader to the objectives of the report and presents a broad picture of the report to the reader. Chapter 2: Overview of Basel II Accord This chapter presents with an overview of the Basel II accord. The three pillars of Basel II accord namely Minimum Capital Requirements, Supervisory Review Process and Market Discipline are analysed in detail to provide the reader with a detailed understanding of the consent of Basel Committee on Banking Supervision. Chapter 3: Implications and Critical Analysis of Basel II Accord The literature review on the Basel II Accord in chapter 2 is followed by the critical analysis and its implications on nations (business and political) are presented to the reader before proceeding to present the overview of the Qatar Banking sector.    Chapter 4: Overview of Qatar and its Banking Sector This chapter presents the reader with an overview of Qatar as a nation and its business operations in the International market. Alongside, the chapter analyses the country’s growth in the banking sector and its internationally active banks. Chapter 5: Case Study This chapter conducts a case study analysis on Qatar’s two internationally active banks namely Qatar Industrial Development Bank (QIDB) and Commercial Bank of Qatar (CBQ). The effect of Basel II accord on the banks along with an overview of the bank is presented to the reader. The data used to present the case study is primarily obtained from secondary sources like journals, reports and white papers. This is apparently due the fact that the analysis is conducted on a foreign nation as well as the data available from the secondary sources are also reliable as they are published by legitimate organizations and popular journals.   Chapter 6: Results and Discussions The results of the case study analysis and discussions are carried out in this chapter. This chapter aims to present a clearer picture to the reader on the effects of the Basel II accord on the banks analysed. Chapter 7:   Conclusion and Recommendations The conclusions derived from the case results and discussions on the case study and the overall conclusion on the effect of Basel I accord on the Qatar Banking Sector is presented in this chapter. Alongside, this chapter presents a few constructive recommendations based on the results and discussion on the case study. Chapter 2: Overview of Basel II Accord This chapter begins with an overview of the Bank for International Settlements followed by a detailed analysis of the Basel II accord. The Basel II committee is also analysed alongside in order to provide a deeper insight to the readers. 2.1 Bank for International Settlements Overview and it’s Operations The Bank for International Settlements (Bank for International Settlements) is an international organization looking after international monetary and financial co-operation across the globe. This organization acts as the bank for all the central banks of countries participating in the international finance and banking. The Bank for International Settlements profile states that the bank achieves the aforementioned statement through acting as A forum to promote discussion and facilitate decision-making processes among central banks and within the international financial and supervisory community. A centre for economic and monetary research A prime counter party for central banks in their financial transactions and Agent or trustee in connection with international financial operations. Established in 17th Many 1930, it is the oldest financial organization at the international level. The Bank for International Settlements has three major decision making bodies within the bank to achieve its mission. They are The general meeting of member central banks This meeting is held before the end of four months of the end of the banks annual financial year. The meeting addresses all the issues related to business and the member central banks gather to approve the annual financial statement released by the bank. The Board of Directors The board of directors comprise the central bank governors elected from various participating countries. They monitor the overall operation of the bank and take responsibility for actions to be taken and address issues related to disputes and other major international financial cross border problems. The Management Committee The management committee is the first line representative of the Bank for International Settlements and addresses the day-to-day activities of the bank. This committee primarily manages the monetary and financial co-operation services. The services include Meetings: Apart from the Annual general meeting the Bank for International Settlements organizes meetings on a bimonthly basis. This meeting brings the member central banks together with the aim of monitoring the global economic and financial development and discusses issues on its policies in relation to the monetary and financial stability. Committees and Secretariats Bank for International Settlements has several committees to monitor specific problems and issues in the international finance and cross border loans. Alongside, several other committees and organizations focusing on international financial systems have their secretariats in the Bank for International Settlements and work closely with the bank in order to enhance the overall international banking and cross border finance. Basel committee of the Bank for International Settlements is the committee that laid the specifications for capital measurement and capital standard of the central banks participating in the international banking. Research and Statistics: In order to support its meetings and the activities of the organization’s Basel based committees the Bank for International Settlements carries out regular research on economic, monetary, financial and legal areas of the international banking and cross border finance. Investment services for central banks: Bank for International Settlements also provides security, liquidity and return for its central bank members. The three primary points with respect to this identified by the organization are To provide security, the Bank has built up a sizeable equity capital and ample reserves. It pursues an investment strategy focused on combining diversification benefits with intensive credit and market risk analysis. To ensure liquidity, the Bank stands ready to repurchase its tradable instruments at little cost to its customers and thus respond quickly and flexibly to their needs. The BIS offers an attractive and competitive return on the funds deposited by central banks and international organisations The Bank for International Settlements focuses on serving the financial needs of central banks of the member countries. Alongside, it also acts as a banker managing the funds for numerous international financial institutions. 2.2: Basel committee Overview The Basel committee was established the member central banks of the Bank for International Settlements in order to create a standard for the international banking and capital framework for crass border finance and lending. The committee was initially set up in 1970 and meets regularly four times a year to discuss the progress in international banking and address issues related to business in this context. The member nations of the committee include Belgium, Canada, France, Germany, Italy, Japan, Luxembourg, the Netherlands, Spain, Sweden, Switzerland, United Kingdom and United States. The country’s central bank and financial institutions that are not active in banking commercially but monitor the financial operations of the nation both at national and international levels represent the nations. The committee does no possess any authority over its member nations banking systems and the decisions of the committee are never intended to have a legal force on its member nations. The Central bank governors of the Group ten countries endorse the committee’s major initiatives. Also the committee reports to the group ten countries central bank governors. The committee first proposed he capital measurement system in 1988 commonly referred to as ‘Basel Capital Accord’. The committee aims in supervising the international banking operations of the nations across the globe. The decisions of the committee endorsed by the group ten countries address various financial issues in the international market outside the groups as well. The major aim of the committee is the ‘close the gaps in international supervisory coverage’ and to ensure that no foreign banking systems escapes the supervision in order to establish a harmony among the member nations of the Bank for International Settlements as well as in the international market. The committee has promoted supervisory standards in the past few years. Some of its major milestones include the following 1997: Cover Principles for effective banking supervision 1999: Core Principles methodology The committee also presented the Basel II accord with revision on international capital framework. This aims to standardise the capital framework of every bank participating in the international banking as well as sets slabs for minimum capital holdings to be met by the banks in order to qualify for international operations. The committee has numerous subgroups to perform specific tasks of the committee in order to achieve the overall motto of the committee. They are listed below Accord Implementation Group Accounting Task Force Capital Group Capital Task Force Core Principles Liaison Group (with 16 non-G10 countries) Cross-Border Banking Group Electronic Banking Group Joint Forum (with IAIS and IOSCO) Joint IOSCO BCBS Working Group on Trading Book Research Task Force Risk Management Group Securitisation Group Transparency Group The next section provides a detailed analysis of the Basel II accord and its various implications on international banking is discussed in chapter 3. 2.3 The Basel II Accord The Basel II accord was released in June 2004 further to the release of the Basel Accord in 2003. The Basel II is a revised edition of the initial Basel capital accord. It is a framework designed to derive the capital holdings of internationally active banks to meet the international standards and sets a minimum level of capital holding which is a primary criteria for the banks. The Basel II framework is aimed to be applied on a consolidated basis over internationally active banks in order to preserve the integrity of capital in the banks with subsidiaries. Also the framework eliminates the double gearing through this approach. The Basel II accord’s framework is also applied on a fully consolidated basis on any parent holding company which acts as a parent entity within a banking group in order to capture the risk on a consolidated basis without missing any element that contributes considerably to the risk of the overall banking system. Alongside, the framework is also applicable to all internationally active banks at every tier of the banking group. Apart from the aforementioned statements one of the principal objectives of the Basel II Accord is to protect the interest of the depositors essentially to ensure that capital recognised capital adequacy measures is readily available for the depositors. Apparently, these measures are aimed to establish a common platform for international banking and cross border finance across the globe. The scope of application extends to the following segments of the international banking and finance entities. Banking, securities and other financial subsidiaries Significant minority investments in banking securities Insurance entities Significant investment in commercial entities. Deduction of investment pursuant to this part The aforementioned entities are obtained from the Basel Committee report on International Convergence of Capital Measurement and Capital Standards, published in June 2004. The Basel II accord overview is based on this report. The illustration in the fig 1 gives a clear picture of the overall scope of application of the Basel II accord. The Basel II accord is split into three pillars. The first Pillar: Minimum Capital Requirements This is the very important pillar of the Basel II Accord. This pillar has very clear definitions of the Accord’s application on the credit risks and operational risk along with the Trading Book issues that are vital for international banking establishment. The layout in fig 2 reproduced from the Basel II report provides the inner picture of the First Pillar. The following subsections provide a detailed analysis on the elements shown in fig 2. 2.4: The First Pillar The First pillar lays down the minimum capital requirements that every internationally active bank should incorporate.   It is split into the following subsection. 2.4.1:   Calculation of Minimum capital requirements The minimum capital requirement is calculated as a measure of the capital ration. The capital ratio in turn is calculated using the regulatory capital and risk-weighted assets. The requirement of this criterion is that the capital ration must be a minimum of 8% or more in order to be eligible for the international activities. Also, in case of a two tier system the capital in tier 2 must not be greater than the tier 1 capital (i.e.) the tier 2 capital can be a maximum of 100% of the tier 1 capital. The capital is accounted from the following sources    Regulatory capital: The minimum accounting capital requirements for the financial institution encompasses the regulatory capital. The Basel II accord has withdrawn the provision to include general provisions in tire 2 capital, which was in effect in the 1988 Accord under the Internal Ratings-Based (IRB) approach.   Furthermore the accord has lain down that the banks using the Internal Ratings Based approach to their other assets mu st compare the amount of total eligible provision with the total expected losses amount to the bank. This eventually increases the capital holding of the bank in order to meet the criteria. Risk Weighted Assets: The Basel II Accord calculates the total risk-weighted assets by multiplying the capital requirement for market risk and operational risk by the reciprocal of the minimum capital ratio of 8% and adding the resulting value to the sum of risk weighted assets for credit risk. Even though this is subject to review the approach lays enormous burden on the bank to increase its minimum capital holdings. Apparently the Basel II Accord is aiming to establish that the internationally active banks must have enough capital to meet its short comings without depending on loans and cross border finance to address its immediate requirements and short comings. The idea though being novel is very intense for the banks to maintain the required minimum capital. Transitional Arrangements: The Accord has also stated that the banks following the Internal Ratings-Based approach or the Advanced Measurements Approach (AMA) that there will be a capital floor after the implementation of the Basel II framework. The adjustment factors used in both the internal ratings-based approach and the advanced measurements approach for calculating the capital floor as per the definition of the Basel II framework is shown in fig 3 below. 2.4.2: Credit Risk-The Standardised Approach Under this method the Basel committee provides the internationally active banks a choice for calculating their capital requirements for credit risk. The first approach is the standardised method of measuring the credit risk through support from external credit assessments. This method is approved by the Basel committee while the other method is yet to explicitly approved by the committee. Under the alternate method of calculating the credit risk, the bank supervisor can allow banks to use their internal rating systems for calculating the credit risk. Under both the methodologies one should not oversee the fact that the Basel committee is very keen in assessing the credit risk on the capital holdings of the internationally active banks. Even though this is appreciated, the rules are very stringent making it very difficult for the banks for adopt easily. 2.4.3 Credit Risk- Internal Ratings Based Approach The Basel II committee has given supervisory approval for banks to use the Internal Ratings-Based approach to determine their capital requirement for a given exposure subject to certain minimum conditions and disclosure requirements. The risk components considered include Measures of the probability of default (PD), Loss given default (LGD), The exposure at default (EAD), Effective maturity (M) The Basel II accord states that â€Å"The Internal Ratings Based Approach is based on the measure of unexpected loses (UL) and Expected Loses (EL). Under the Internal Ratings Based Approach, the committee expects the bank to categories their exposures in order to identify the different underlying risk characteristics. The categories include corporate, sovereign, bank, retail and equity. These are identified as the corporate asset classes and the approach further expects the bank to identify the subclasses associated with the asset classes in order to measure the credit risk associated with the exposure. The detailed analysis of every corporate class and its associated subclasses is beyond the scope of this report. In essence the Internal Ratings Based Approach gives the bank more liberty to calculate its credit-risk on the minimum capital requirement for a given exposure. But the producers laid by the Basel II Accord is very tedious to adopt and implement for every corporate class exposure and identifying the subclasses associated. 2.4.4: Credit Risk- Securitisation Framework The Basel Committee in its revised accord, has made it mandatory for the banks to apply the Securitisation Framework for determining regulatory capital requirements on exposure arising from traditional and synthetic Securitisation or similar structures that contain features common to both.   The Basel II accord also states that the capital treatment of the Securitisation exposure must be determined on the basis of the economic substance rather than the legal form of the structure. It is apparent that the securities can be structured in many different ways and the committee has approved the use of either the traditional Securitisation or the synthetic Securitisation framework. Also the Basel II accord expects the supervisor to look at the economic substance of transaction in order to determine whether it should be subject to Securitisation framework or not. This gives the discretionary power to the supervisor to decide on a specific transaction whether to include it in the framework or to eliminate it from the framework towards determining the regulatory capital framework. The traditional Securitisation and the synthetic Securitisation framework are discussed below. Traditional Securitisation: The Basel II Accord defines the traditional framework as â€Å"a structure where the cash flow from an underlying pool of exposures is used to service at least two different stratified risk positions or tranches reflecting different degrees of credit risk†. The advantage with this approach is that the payment to the investors is based on the performance of the specified underlying exposures rather than a derivation from an obligation of the entity originating those exposures. Synthetic Securitisation â€Å"A synthetic Securitisation is a structure with at least two different stratified risk positions or tranches that reflect different degrees of credit risk where credit risk of an underlying pool of exposures is transferred, in whole or in part, through the use of funded (e.g. credit-linked notes) or un-funded (e.g. credit default swaps) credit derivatives or guarantees that serve to hedge the credit risk of the portfolio†. This approach leaves the return to the investors in the hands of the performance of the underlying pool. Apparently, the risk associated is higher since the performance can be affected by numerous causes. From the above-mentioned approaches the Basel II accord’s stand for evaluating the capital and minimum capital requirements are evident. 2.4.5: Operational Risk The operational risk is defined by the Basel Committee as the risk associated with the loss resulting from inadequate or failed internal processes, people, systems or external events. This includes the legal risk with the exclusion of strategic and reputational risk. The Basel II Accord has approved three methods for calculating the operational risk and risk sensitivity with the implications on minimum capital requirements. They are: (i) The Basic indicator approach, (ii) the Standardised Approach and (iii) Advanced Measurement Approach. Basic Indicator Approach: In this case the banks should hold capital for the operational risk equal to the average over the past three years of a fixed percentage. This is expressed as a formula below KBIA = [ÃŽ £ (GI1†¦n x ÃŽ ±)]/n Where KBIA = the capital charge under the Basic Indicator Approach GI = annual gross income, where positive, over the previous three years n = number of the previous three years for which gross income is positive ÃŽ ± = 15%, which is set by the Committee, relating the industry wide level of required capital to the industry wide level of the indicator. This formula is obtained from the Basel II accord for the purpose of reader understanding. Standardised Approach: The standardised approach divides the bank’s activities into eight-business lines namely corporate finance, trading sales, retail banking, commercial banking, payment settlement, agency services, asset management, and retail brokerage. The likelihood of operational risk exposure is calculated from the gross income associated with each business line that serves as an indicator for the scale of business operations by the bank in that specific area of business or business line. This approach is very clumsy since the gross income associated with the business line varies due to numerous reasons both internal and external. Advanced Measurement Approach: The Advanced Measurement Approach equates the regulatory capital requirement with the risk measure generated by the bank’s internal operational risk measurement system using quantitative and qualitative criteria. The banks can use this method only after the approval by the Committee. The Basel II Accord sets the approach for the banks based on their international activity and significant operational risk exposures. Also, when a bank agrees to use a more sophisticated method, it cannot revert back to the easier method without approval from the supervisor. This eventually increases the burden on the banks to choose a sophisticated method. 2.4.6: Trading Book Issues The final segment of the first pillar is the trading book. Basel Committee defines the trading book as a container of both the financial instruments and commodities held either with trading intent or in order to hedge other elements of the trading book. The trading book forms a vital element for the bank since it is the record of the bank’s financial instruments as well as commodities. The Basel II Accord identifies four key principles for the supervisory process. They are listed below. The basic requirements for the eligibility to trading book capital treatment put forth by the Basel II Accord are as follows Clearly documented trading strategy for the position/instrument or portfolios, approved by senior management (which would include expected holding horizon). Clearly defined policies and procedures for the active management of the position Clearly defined policy and procedures to monitor the positions against the bank’s trading strategy including the monitoring of turnover and stale positions in the bank’s trading book 2.3: The Second Pillar- Supervisory Review Process Basel committee was initially set up for the supervising the internationally active banks and produce a common platform for the smooth transactions and cross border finance. The Basel II Accord has established Supervisory Process as one of the three pillars in order to emphasise its stand on supervisory process. The importance of supervisory process is described below. 2.3.1: Importance of Supervisory Process The supervisory review process of the Basel II Accord aims not only to ensure that banks have adequate capital to support all the risks in their business but also intends to encourage the banks to develop and use better risk management techniques in monitoring and managing risks. Alongside, the supervisory process by developing internal capital assessment process and setting capital targets that are commensurate with the bank’s risk profile recognises the importance for bank management in order to improve the atmosphere in the international banking and cross border finance. The Supervisory process evaluates the relationship between the amount of capital held by the bank against the risk, strength and effectiveness of the bank’s risk management eventually guiding the bank and supervising its activities in order to improve the performance of the banks in the international business market and cross border finance. 2.3.2 Four Key Principles of the supervisory review The four key principles identified by the Basel II Accord on the supervisory process is listed below. These principles emphasise on the committee’s focus on supervision and its aim to maintain harmony in the international banking and cross border finance. Principle 1: Banks should have a process for assessing their overall capital adequacy in relation to their risk profile and a strategy for maintaining their capital levels. Principle 2: Supervisors should review and evaluate banks’ internal capital adequacy assessments and strategies, as well as their ability to monitor and ensure their compliance with regulatory capital ratios. Supervisors should take appropriate supervisory action if they are not satisfied with the result of this process. Principle 3: Supervisors should expect banks to operate above the minimum regulatory capital ratios and should have the ability to require banks to hold capital in excess of the minimum. Principle 4: Supervisors should seek to intervene at an early stage to prevent capital from falling below the minimum levels required to support the risk characteristics of a particular bank and should require rapid remedial action if capital is not maintained or restored. 2.3.3: Issues to be addressed There are two specific issues to be addressed by the Supervisory-Review Process. They are Interest Rate Risk in the Banking book: Since it is clear that the Basel Committee’s primary focus is on identifying and preventing risk in the international b

Letter :: essays research papers

Legislator Donald Trotta Dear Donald Trotta   Ã‚  Ã‚  Ã‚  Ã‚  My name is Jeffrey Magloire and I am a current matriculating student at Sullivan County Community College I have a couple of issues that I wanted to bring forward to your attention. As you may or may not know Sullivan County Community College has just constructed a new dormitory for incoming students. This Dormitory has opened up doors to many students that could not handle the commute to and from school. Although the dormitory has been an advantage to students traveling; the students have been living in poor condition for the last five weeks. The first problem occurred the day we walked in. The students were put into rooms where the paint smell was still resident and was the cause of two asthma attacks. We still have not received camera’s which would have been no problem if they had more than two security guards for each shift in our 350 capacity student dorm. I have read the contract that was handed to me and the dormitory has violated many promises made on that contract. The first violation has made many students drop out of school and go home and miss one semester of school. The Dormitory Corporation promised us daily maintenance on all of our bathrooms but the maintenance workers come only three times a week which has raised hazardous fumes coming from the bathroom and also the bathroom utensils are not available to students frequently which has deferred the students from having proper hygiene. The roof fire alarm has not been turned off due to the shortness of security officers and the alarm goes off every night due to loitering. They also promised that we will have telephone service which has not been honored and most of students have no way of contacting their friends and family. The School has one phone line and that one phone line is occupied by resident assistant, resident managers, security and is also the phone that security uses to contact the fire department in case of emergency.

The Philosophical and Scientific Methods of René Descartes :: Biography Biographies

The Philosophical and Scientific Methods of Renà © Descartes Renà © Descartes (1596 – 1650) is one of the most widely known philosophers in history and he is frequently discussed as an inventor of the modern scientific method. Rene Descartes was born on March 31, 1596, in La Haye of Touraine. He came from a wealthy family, and thus did not have any real financial worries. At age ten, his father sent him to the College Henri IV at La Fleche. This was a newly established Jesuit school, which was considered one of the best in Europe in terms of academic quality. Although Descartes appreciated what he was taught in mathematics, he was nonetheless discontent with the scholastic teaching he received from that school (Cress, 1993). Scholasticism was a teaching based on the doctrines of Aristotle and the Christian church. Followers of scholasticism often looked upon Aristotle’s work and the teachings of the church as authoritative figures. Indeed, much of their activity consisted in carefully scrutinizing the classical works of Aristotle in an attempt to resolve any contradictions between his works and the doctrines of the church. One of the reasons why Descartes was dissatisfied with Aristotelian-Scholasticism was because of the circular arguments it offered in explaining natural phenomena. For example, Aristotle’s argument that it is in the nature of earthly matter to fall down towards the Earth was to Descartes not an explanation, but rather only a description of what was happening. Furthermore, Descartes argues that terms used in scholasticism such as â€Å"heaviness† and â€Å"gravity† were not clearly understood. Thus, Descartes then proposed to do away with the foundations of scholasticism and start again from the beginning (Cottingham, 1986). Descartes’ dissatisfaction with scholasticism and his interest in beginning with new foundations of knowledge reflect the historical-scientific context of his time. Prior to the seventeenth century, medieval ideas had predominated. These ideas included the necessity to resurrect ancient knowledge, and to discourage innovations. By the seventeenth century, the idea that modern men could be wiser than the ancients was stimulated by the likes of Rene Descartes and Francis Bacon. However, Bacon and Descartes led two distinct schools of thought in regard to how one should pursue the acquisition of knowledge. While Descartes favored a more rational and theoretical approach, Bacon favored an empirical and practical approach.

Drinking and Driving Essay -- Drunk Driving Alcohol DUI Influence Essa

Drunk driving is considered a serious crime in every state. It is wrong, irresponsible and wastes many lives. People who abuse alcohol hurt everyone around them, endanger public safety, and create carnage on the nation's highways. There is nothing positive that can come out of drunk driving, so why do people do it? It is society's job to punish these menaces and try to take control of this out of control issue. America doesn't want to watch idly as hundreds of people are killed each day. We want to take a stand and let the world know that we may be the 'land of the free and the brave' but there is nothing brave or free about driving drunk. What should be done about this problem is debatable and certainly open to discussion, but the first step is lowering the BAC (blood alcohol concentration) level from .10 to .08. Many states have already done this and I commend them on this decision, but the government needs to mandate this to all the states. Some people oppose this decision and sa y that it is based on 'emotion, personal vendettas, and irrational, sound public policy, nor backed up by statistical data.'( DWI Dilema, Internet source) However, I disagree. We need to send the message that it is not acceptable, nor is it constitutional to drive under any influence of alcohol, weather it be .08 or .20.   Ã‚  Ã‚  Ã‚  Ã‚  ?Drunken driving was once treated much as car accidents?a regrettable but unavoidable part of life on the roads. But a vocal grass-roots movement led my MADD (Mothers Against Drunk Driving) persuaded much of the country, over two decades, to view it as a type of criminal negligence. Public patience with drunk drivers quickly grew thin as well-publicized death tolls mounted. ( Mishra, Internet source)   Ã‚  Ã‚  Ã‚  Ã‚  What exactly is drunk driving? This is a question that has yet to be answered. ?To determine the concentration of alcohol in the body at any given time, it is necessary to establish the blood alcohol concentration (BAC), which measures the percentage of alcohol in the blood. When a person consumes more alcohol than his or her body can immediately eliminate, alcohol accumulates in the bloodstream and the BAC rises.?(Henderson, 23) In Connecticut the BAC level is .08, this means that the blood alcohol level needed to be arrested for drunken driving has to be .08 or higher. ?One can also be convicted of drunk driving without the results of a blood alcoho... ...st charge of failure to appear carries the potential penalty of 1 year in jail and/or a $2,000 fine.   Ã‚  Ã‚  Ã‚  Ã‚  America is not putting a deaf ear to the war on drunk driving. It is far from over, but every step we take to get it under control, is a step toward drying it up. Lowering the BAC level is just the first step, we still have a long journey ahead of us. Connecticut has taken a stand and been one of the twelve states to lower their legal BAC level to .08. I truly agree with this decision, and hope that other states will follow our lead. ?Strict criminal prosecution of alcohol-impaired drivers is the most effective deterrent in reducing the menace of alcohol-impaired driving.?(Henderson, 108) This battle isn?t just between people who are old enough to drive as well as drink. Teenagers, much like my self, are taking action against drunk driving. In Hamden High School we have a very active club called S.A.D.D.(Students against Drunk Driving) This club makes young people aware of the dangers of driving even after drinking small amounts of alcohol. This is an issue that i s not to be taken lightly, and it certainly isn?t. I just hope that one day, this issue will be non-existent.

Pay Structures and Internal Alignment Essay

Martin Straight Compressors employ 4600 people worldwide. MCS’s Chatham location is a small Canadian company that focuses on manufacturing compressors for heavy industries. Chatham employees approximately 70 salaried and 50 hourly employees. Beginning in 1999, Martin Straight Compressors Chatham had begun facing numerous compensation issues and conflicts. Some of the issues included: Having 7 authorized but unfilled middle-level management positions Manager-employee relationships broken Documentation not up-to-date with objectives, processes, progress, performance plans Hourly staff don’t respect the owners Increased workload with no compensation Loss of commitment, motivation, and job security among employees New management brought it while problems are still effecting the day-to-day functions of the organization Merit process isn’t liked Restrictions on merit raises by head office Union involvement Flawed gain-share plan Merit raises go to salaried, non-union staff Merit raises for one employee depend on other employees Executive incentive plan uses different formulas for different employees This consultation report will begin with identifying the two main problems MSC faces and how to resolve them. Next we will apply the Equity Theory and investigate why certain employees are unhappy about the current compensation system. We will look at the company’s standpoint from a competitor’s point of view, and what methods to use to ensure fast, accurate, and acceptable results to ensure MSC continues to grow and be profitable. The 2 Main Problems After analyzing the process and theories used by Martin Straight Compressors, two main issues become precedent: 1. MSC doesn’t have a fair or efficient compensation method. The processes and ideologies used in making decisions in regards to pay are flawed. There is a gap between pay levels due to different formulas that are used for different employees. Merit increases given to employees depend on other staff members within the organization. When companies adopt processes that are unfair, employees lose motivation. As well, inefficient practices puts production at a standstill and costs the organization a great deal of time and money. 2. Employees are not a part of the decision making process. They become uninterested in the events going on within the organization because dedication and commitment are lost. These employees may not fully understand the whole picture, like restrictions coming from head office. When employees feel they are not an important part of the organizations decision-making, they become alienated and their involvement decreases. They become unwilling to develop solutions to problems. Resolution of Problems Encourage employee involvement as much as possible. It is important for employees to have a passion for the work that they do and the organization they belong to. Encourage feedback by holding monthly meetings where everyone is invited to express any questions or concerns they have. Develop a team of cross-functional representatives that meet on a regular basis to discuss issues that are important to the staff. If the high-level managers empower employees to be involvement and provide feedback, the organization will be â€Å"more likely to achieve commitment, trust, and acceptance† (Milkovich, Newman, Gerhart, Cole & Yap , 2013) of a revised compensation structure. Developing a new compensation method is costly and timely. However it is essential to the functioning of an organization. MSC needs to begin with reviewing the compensation budget (Heathfield, 2001). This way management understands how much they are allowed to spend without putting the organization in debt. Analyzing the current job structure should be done on a regular basis to ensure the organization is able to adapt to internal churn, internal succession planning, and external market factors. When looking at a job structure, a few things should be in mind: reliability, validity, acceptability, currency, and usefulness (Milkovich, Newman, Gerhart, Cole & Yap , 2013). This will help the final structure satisfy both the employees and the employer. Equity Theory The Equity Theory explains that employees compare their job and pay to other positions within their internal environment, as well as jobs in their external environment. The more knowledgeable the employee is about their responsibilities, there position and pay, and the organizations structure, the more satisfied they will be. Martin Straight Compressors needs to establish this equity theory throughout the company because right now there is no equality felt among employees. My advice to MSC is to develop a Team Site where important information can be displayed for internal eyes only. Display organization charts to show the levels of progress within the company – and the corresponding pay levels – so employees feel motivated to move up the chain of command. Establishing these reporting relationships would benefit MSC because a positive communication flow would evolve. Keeping Employees Onside Martin Straight Compressors needs to focus on building employee-management relationships. Currently there is a lot of conflict occurring in the workplace and, according to employees, this has resulted form management breaking promises to their employees. This results in a loss of mutual respect. Below are 3 ways to mend professional relationships: Keep everyone informed and involved Develop 2-way communication Instill a sense of decentralization Change is a scary reality for employees because it makes them feel vulnerable and they lose their feeling of job security. While MSC slowly makes changes to their compensation system, the above 3 points will ensure employees adapt with the company. If employees continue to voluntarily resign, MSC will lose a great deal of knowledge and assets, which will make the change even more difficult. It’s important to keep valued employees so they are able to pass on their knowledge to new employees along the way. Competitive Advantage Martin Straight Compressors currently does not have a competitive advantage within the marketplace. Although salaries and wages are at par with external competitors, other factors hinder MSC: employees are expected to increase their responsibilities and workload due to the number of unfilled positions, without getting extrinsic compensation for it. Also, merit raises are mostly given to salaried, non-union staff. This discourages front-line workers because there is no incentive. Performance evaluations should be taken place on an annual basis to ensure employees are aware of their objectives and areas for improvement. A major problem I see with MSC is that employees either get merit raises, or they don’t. Every company should want their employees to succeed, so, in turn, the organization succeeds. I advise MSC to instill a mentoring/coaching program to guide their employees to achieve the best they can. By telling, teaching, and showing employees how to perform functions and tasks, the employee will become empowered. It will become easier to link performance and pay because benchmarks will be set and every employee will know what is expected of them, and how to achieve those expectations. Becoming Internally Aligned In 1999, performance management records did not identify key objectives for employees. Merit raises focused solely on the results from the employee, department, and company. Rather, MSC should be looking at the individuals’ skills and competencies, and how they are applying them to accomplish their tasks. Ensuring every employee understands what is expected of them is extremely important; it ensures that they are proactive within the company so they’re not just going through the daily motions. Annual performance evaluations and proper documentation is essential to becoming internally aligned because it ensures everyone is on the same page and employees know what is expected from them. It also allows the company to look back on the trend of the employees to see if improvements are being made, and if they aren’t, why. Recommendation Evidently, MSC is in need of a change. My recommendation is to have a short-term goal and a long-term goal. 1. Job Evaluation: Ranking Method (used during first 3 years) This will provide fast and accurate results. Using the paired comparison method would allow MSC to use a matrix to â€Å"compare two jobs in each cell and indicating which is of great value, then ranking jobs on the basis of the total number of times each is ranked as being of greater value (pg 87)†. The reason this is the first step is because MSC is in need of a quick fix to ensure no more positions are left voluntarily and that production continues. This method will serve as a â€Å"band-aid† until further down the road a permanent solution can be decided upon. 2. Job Evaluation: Point Method (developed by the end of third year) This method requires a lot of time and costs because it goes into the breadth and depth of each job. This is what MSC’s end goal should be. The point method provides accurate and acceptable results just like the ranking method but it takes a lot more time to investigate. The point method should be set as a long-term goal and would be beneficial for MSC to invest in. Once all positions are individually broken down to determine their compensable factors, they can be scaled and then weighted so points can be assigned and a plan can be made. This will become the foundation for MSC’s compensation structure for years to come; only reviews and evaluations would be needed after this to ensure employees are satisfied and methods are efficient. References (APA Format) Gondzio, J. , & Grothey, A. (2009, May). Exploiting structure in parallelimplementation of interior point methods for optimization. Retrievedrom http://link. springer. com/article/10. 1007/s10287-008-0090-3. Retrieved on October 6, 2013. Heathfield, S. (2001, June 05). Compensation strategies and structure. Retrieved from http://humanresources. about. com/od/compensationstructure/compensation-structure. htm. Retrieved on October 6, 2013. Milkovich, G. , Newman, J. , Gerhart, B. , Cole, N. , & Yap , M. (2013). Compensation. (4th ed. , p. 01). McGraw-Hill Ryerson Limited. Retrievedon October 6, 2013.