Human Resources and Organizational Behavior for Health Care Leadership in Health Care Management Essay

There are individuals that need a solid head so as to flourish in their activity. There are additionally individuals that don’t need a solid head since they have the drive to be effective however may require a push once in a while. With regards to an association and its elements, administrators be magnetic due to managing such huge numbers of various characters in the gathering. Being a magnetic pioneer requires fearlessness and trust in his/her subordinates. Indicating trust in immense as it ingrains trust in that worker and discloses to them they don’t need to investigate their shoulders. They can carry out their responsibilities openly which can prompt more creation in the association. Clashes are a characteristic piece of human association and it’s inescapable. Some portion of being a decent pioneer is having successful peace promotion abilities. At the point when clashes emerge, directors must realize how to oversee them with the goal that more serious issues don’t develop. There are such a large number of parts of being a director and driving. Representatives in the association rely upon great authority and if that need isn't met, it can prompt work environment disfunction. Watchwords: Charismatic, Conflict, Leadership, Dynamics, Management At the point when the administration work is discussed, initiative regularly rings a bell. It takes a solid disapproved, sorted out, and decided individual to carry out this responsibility. Over observing various representatives can now and again not be the simplest activity. Pioneers must be happy to acknowledge and satisfy needs that seek the improvement of patient social insurance. Not every person can lead a gathering of individuals in an association. It takes the kind of individual that has relationship building abilities just as the information on his/her business to lead viably. Driving Creatively Generally when social insurance pioneers have an inquiry they adopt a discerning strategy until the correct answer has made it up the levels of leadership. This methodology can be powerful sometimes however in social insurance thing are continually evolving. A normal chief loves to keep away from botches which all missteps are not avoidable. Somebody who is innovative loves to gain from botches as it can give them more plans to look over. Today, the social insurance condition is significantly increasingly intricate as change and market powers change the manner in which human services is conveyed and overseen. Conviction frameworks, qualities and perspectives are moving. Innovative reasoning and coordinated, versatile authority will be required to make medical clinics, wellbeing frameworks and systems practical as the social insurance conveyance scene changes (http://www. ccl. organization/administration/landing/medicinal services/file. aspx). As a pioneer in human services, administrators must demonstrate their representatives that they are eager to be imaginative and released their inner self as gathering cooperation turns into the standard. By demonstrating this, the representatives will be all the more ready to cooperate to benefit the association and the patients. The Center for Creative Leadership (CCL) has built up a model that wellbeing frameworks can use to adjust and flourish in dubious occasions by making heading, arrangement and duty. There are six basic authoritative abilities that are an essential for progress: Collaborative Patient Care Teams-The group will reach out to incorporate clinicians outside the emergency clinic condition which will put an a lot more prominent accentuation on higher-request joint effort aptitudes. Asset Stewardship-Requires singular proprietorship and responsibility for the choices that will eventually permit the framework to flourish and deal with its assets reasonably. Ability Transformation-Leaders should employ and create gifted people who can see the following rush of conceivable arrangements and developments and lead transformational change. Limit Spanning-Leaders draw on systems and connections as they work systemwide to meet the crucial human services. Limit with regards to Complexity, Innovation and Change-Effective pioneers move populaces from old set up procedures to new models of adequacy and comprehend the basic enthusiastic effect of progress and how it fluctuates by person. Worker Engagement and Well-being-Employees are generally profitable and focused on their association when they are locked in inwardly, intellectually and genuinely. (http://www. ccl. organization/authority/landing/human services/record. aspx). These authoritative strategies are the basic keys for administrators to not just lead their work environment to the method of things to come yet additionally assisting with driving different associations. The cooperation perspective is key as it will expect everybody to be firm and comprehension. Force and Influence Power is a characterized as having conduct or destiny authority over the conduct of another. It exists just when there is an inconsistent connection between two individuals and where one of the two is needy upon the other (Borkowski, 2011). Force can be a snare for certain supervisors which can prompt manhandling it. At the point when workers see and experience this event they pull away and lose regard for that administrator. This can be the defeat of an association as it can make workers lose inspiration, responsibility, and inventiveness. There are five bases of social force: reward power, coercive force, real force, referent force, and master power. An individual isn't constrained to only one wellspring of intensity. Prize force is the capacity to give rewards, something that holds an incentive to another person. Coercive force is the capacity to rebuff either by directing a discipline or by retaining something that an individual needs or needs. Real force is given to a person based on a given job or position. Referent force originates from P’s full of feeling respect for, or distinguishing proof with, O. The more prominent the fascination, the more noteworthy the distinguishing proof. Master power exists when P grants capacity to O based on P’s impression of O’s information inside a given territory (Borkowski, 2011). In class conversation the general agreement was administrators that had the trust and regard of their representatives, had the most force. A director is a specialist of the information he/she has over a subordinate. At the point when chiefs utilize that master power in the correct manner, which is to show his/her subordinates, they will feel that the administrator is needing them to extend their insight for their prosperity just as the association. This thusly keeps on building trust and profound regard for the chief. As a teacher, this is displayed for us by our organization. Our director and chief have both been educators in the study hall however have since moved into the jobs that they have now so they are the specialists with regards to a portion of the issues that surface. They go to endless gatherings of changes that may happen either with our area or state so then they can educate us. When we have a decent handle of what is going to occur we would then be able to advise our understudies. The master power that our organization had has been passed to the school personnel so then we can pass that information to the understudies. Dynamic Dynamic is an ordinary piece of our lives whether we understand what kind of choice we make or not. Now and again we settle on choices normally and some of the time naturally. The truth of the matter is, we need to settle on the correct choice however that isn't continually going to be the situation since we can never observe what the result of that choice will be and we need to live with that. As in any choice model we use, there are advantages and disadvantages of each. In the sane dynamic model it carries rationale and request to dynamic. This methodology additionally can help guarantee control and consistency. Here are the arrangement of steps used to normally build up an answer: Identifying an issue or opportunity, gathering data, dissecting the circumstance, creating choices, assessing choices, choosing a favored other option, and following up on the choice. A quality of this model is that it gives structure and control to the dynamic procedure. A shortcoming of this model is the time that is expected to experience this procedure (http://www. the-cheerful director. com/articles/discerning dynamic model/). Another dynamic model that is utilized frequently is instinct. Instinct can settle on you a substantially more viable chief, particularly when you manage non-standard circumstances or in practical dynamic. Anyway there are directs that need toward be considered for example, when you have to utilize instinct, would it be able to be powerful, and how this choice model positions versus levelheaded investigation (http://www. time-the board control. com/instinct dynamic. html). In class conversation, colleagues utilized a couple of various models most prominently the two referenced previously. There were a not many that utilized both or weighed vigorously on only one. I was one that utilized both sane and natural. There are times in instructing when I utilize the balanced way to deal with settle on a choice concerning practice. For instance, on the off chance that I have to set up groups that are equivalent in ability instead of beginning five and seat, I need to consider who matches up better with who, or what drills will be the most valuable and beneficial on a given day. My natural methodology is utilized during game circumstances. For instance, when to use breaks, when to substitute players, what play to run, or when to switch resistances. In any case, choices ometimes don’t work out the manner in which you imagine yet you figure out how to live with it and proceed onward. Struggle Conflict Management Another part of being an innovator in the board is strife and peace making. A few circumstances are simpler to deal with than others however a chief that has viable peace promotion abilities can diffuse a terrible circumstance before it deteriorates. Relational clash is a characteristic result of human collaboration that includes at least two people who accept that their mentalities, practices, or favored objectives are in resistance (Borkowski, 2011). This kind of contention is presumably one the most widely recognized in the working environment basically in light of the fact that there are close to home attributes and issues, interactional challenges and perspe

Japan and China after Second World War Essay Example | Topics and Well Written Essays - 500 words

Japan and China after Second World War - Essay Example Decades after the war, Japan stays battling with their recuperation. US, with its self-personal stake, had helped it built up its Self-Defense Force. With its constant exertion to restore, Japan's economy thrived coming about to a speedy ascent of the expectations for everyday comforts, changes in the public eye and the adjustment of the decision position of the Liberal Democratic Party, yet in addition in extreme contamination. It's connection with the Soviet Union just as China had standardized. However, at that point, its economy was again stunned with the oil emergency on 1973 that had driven it to grew long haul techniques for entering existing markets by moving into high innovation industry (Smith). China, when it was just about the course of movement, had suffered obliteration having slaughter and disrespect as their greatest physical issue under Japanese trespassers. With the United States supporting them towards the war, giving their fight necessities from preparing to material help, they figured out how to overcome their assailant. Notwithstanding the success, still the war had caused the nation's weariness. As it attempts to recuperate, further destruction had progressively followed.

Should the tax laws be reformed to encourage saving(pro and con) Essay

Should the duty laws be transformed to support saving(pro and con) - Essay Example At the point when comparative exercises are exposed to various assessment medicines, family units and organizations react to the duty code as opposed to the basic financial essentials. Monetary proficiency is expanded by widening of the expense base and bringing down of the assessment rates. The expenses of twists brought about by high duty rates will be diminished. These are roughly corresponding to the square of the expense rate. Likewise, a less complex assessment code would lessen the significant assets which are by and by dedicated to conforming to current duty laws; and the opened up assets could be utilized for progressively gainful purposes. Another significant standard is that some consistency in the expense code would encourage better forward-looking monetary dynamic by family units and organizations. (Greenspan, Allan: Chairman 2005) The assessment code incorporates numerous motivators proposed to build investment funds to back retirement, medicinal services, advanced education, etc. These investment funds impetuses, which absolved some salary from charge, have moved the present assessment framework toward an utilization base. Scientists have brought up issues about how a lot assuming any, net new reserve funds they animate. (21st Century Challenges†¦p.73). In the event that planning an expense framework without any preparation, one dependent on utilization as opposed to pay, would be better for advancing monetary development. A consumtion charge is probably going to empower sparing and capital arrangement. The retail deals charge, esteem included expenses, the individual utilization charge and the level duty are a wide range of utilization charges. They shift in their assortment focuses and structure. In future it will turn out to be progressively significant for the country to support assets accessible, th rough more prominent national sparing and upgraded motivating forces for cooperation in the work power. The assessment framework can possibly contribute critically to those objectives, thus at any rate charge change ought not ruin the accomplishment of those goals. Significantly, basic, intensive duty change incorporate troublesome decisions

Explain How to Plan free essay sample

Characterize the key ideas and standards of evaluation Assessment is the method of finding and archiving that learning has occurred. It likewise empowers you as the assessor to recognize if the student has accomplished the necessary capabilities, aptitude and information required at the given purpose of appraisal towards their capability. Appraisal should be a customary procedure incorporated with the preparation program. The beginning stage of evaluation is the pre-course data. It must be clarified when appraisal is occurring and what structure the evaluation will be in. Rules for progress should likewise be given. Clarify the duties of the assessor Attending meeting, shows, grant functions, introduction occasions; Carrying out appraisals as per associations necessities; Checking the credibility of any whiteness declarations; Completing and keeping up sheltered and secure records; Countersigning different assessor’s decisions; Dealing with any interests settled on against your evaluation choices; Following hierarchical and administrative body methods; Recognizing and managing and boundaries to reasonable evaluation; Implementing interior and outside verifier’s activity focuses; Liaising with others engaged with the appraisal procedure; Making decisions dependent on the evaluation rules; Maintaining word related capabilities; Negotiation and concurring appraisal types and strategies; Making best utilization of various appraisal types and techniques; Providing measurements to directors; Reviewing learner’s progress; Standardizing rehearses with different assessors; Supporting students with unique necessities; Working towards applicable capability; Recognize the guidelines and necessities applicable to the appraisal in your own zone of training The Health and Safety (First-Aid) Regulation 1981 Provide satisfactory emergency treatment hardware, offices and individuals. Wellbeing and Safety at Work (MHSW) Regulations 1999 Assess the dangers on any individual who might be influenced by their exercises. The Safeguarding Vulnerable Groups Act 2006 Duty to enlist and experience checking process if working with powerless gatherings Equality Act 2010 Non-separation old enough, incapacity, sex, race, religion/conviction and sexual direction. Q2 †Understand various sorts of appraisal record Compare the qualities and restrictions of a scope of evaluation techniques concerning the requirements of individual students ASSIGNMENT †Several exercises or errands, down to earth or hypothetical, to survey different parts of a capability over some undefined time frame. Qualities Challenges a students potential Consolidate learning Several parts of a capability can be surveyed Some task are set with clear standards by granting association Limitations Ensuring all parts of the prospectus are secured Can be tedious to get ready and evaluate Must be exclusively evaluated with composed input Assessor might be one-sided when stamping CASE STUDY/SCENARIOS †Hypothetical circumstance, a depiction of a genuine occasion or inadequate occasion, empowering students to investigate the circumstance. Qualities Can make subjects progressively reasonable improving inspiration and intrigue Can be directed separately or in a gathering Builds on current information and experience Limitations If surveyed in a gathering jobs should be exclusively doled out an individual commitment evaluated Time ought to be took into account a question Must have clear results Can be tedious to get ready and survey Agendas †A rundown of models that should be met to affirm that capability or accomplishment. Qualities Can frame some portion of a continuous record of accomplishment or profile Assessment can occur when the student is prepared Ensures all measures are met and records are kept Limitations Learners may lose their duplicate and not recall what they’ve realized ESSAYS †A conventional bit of composed content that has been created by the student for a particular point Strengths Useful for scholastic subjects Can check your students language and proficiency aptitudes at explicit levels Limitations Not appropriate for low level students Checking can be tedious Plagiarism can be an issue Doesn’t ordinarily have right or wrong answer so can be hard to review Learners need great composing abilities EXAMINATIONS †A proper test that ought to be directed in specific conditions. Qualities Can be Open Book, empowering students to have books and notes with them Some students like the test of a conventional assessment and adapt well Limitations Invigilation required Security courses of action when should be set up for papers Learners may have been instructed absolutely to breeze through the assessment Learners might be on edge Schoolwork †Activities does between meetings like addressing inquiries on that day’s figuring out how to affirm information. Qualities Learners can finish at once and pace that suits them Maintains an enthusiasm between meetings Encourages students to extend themselves Consolidates adapting so far Limitations Clear time limits must be set Learners probably won't do it, or get another person to do it for them Must be perused/checked and singular criticism given OBSERVATIONS †Watching students play out an aptitude. Qualities Enables aptitudes to be found in real life Students can commit errors empowering them to acknowledge what they’ve been fouling up Can survey a few parts of a capability simultaneously Limitations Timing must be masterminded No changeless record Questions despite everything should be approached to affirm understanding Assessor probably won't be objective with choice Q3 †Understand how to design evaluation Summarize key elements to consider when arranging appraisal Subjects can be either non-licensed (no conventional endorsement) or certify (testament gave) in which case conveyance and evaluations are observed by granting association to guarantee rules are followed. Subsequently before surveying:- You should be completely mindful of the program and the capability that you are surveying You should affirm important arrangements, necessities and capabilities of the specific subject You should know when the students are fit to be surveyed Evaluate the advantages of utilizing an all encompassing way to deal with appraisal Explain how to design a comprehensive way to deal with appraisal Explain how to limit hazards through the arranging procedure.

How to Use Graduate School Sample Essays to Help You With Your Writing

How to Use Graduate School Sample Essays to Help You With Your WritingGraduate school sample essays can really help you with the flow of your Master's program. If you're going to use these as a way to show off your writing, then you'll be glad you did.The last thing graduate school students want to do is write a paper without knowing what the intent was. It is really impossible to know for sure that your essay is going to be accepted when you first get to school. That's why having the intentions written down for you is really helpful.Most graduate school samples are by no means going to be perfect. That's because you are the one who has to actually write the piece. But if you already have a set of intentions written down, it is much easier to direct your thoughts and ideas into the right direction.There are even some sample essays that are published on the internet and these are considered excellent tools. A lot of people take advantage of this resource when they are in grad school. They write their own essay about something that really interests them.Another great way to take advantage of the sample essays in graduate school is by considering what you really want to do with your life after school. You can then put your thoughts and ideas into the sample essay.Some people even combine different topics that they want to write about into one. This will help them direct their thoughts as to how to write the whole thing.Once you've worked with your own ideas, you'll also want to look at some other sample essays that are written by other people. This way you'll be able to take what they write and make it your own.As you can see, there are many ways that graduate school sample essays can help you. In fact, it is a really easy way to take full advantage of what is given to you by a professor.

Globalization - Free Essay Example

In this developing society, globalization is being talked about more frequently. But what is globalization? And what is its impact on the individual corporation? In fact, globalization is not a new word. The earliest forms of globalization were based on business, the international exchange of tangible goods. Take silk as an example, since 110BC, there was some merchantmen engaged in international business between China and Middle Asia, and even to the Mediterranean Sea. Their route was called the Silk Road, which is very famous and is considered to be a sign of early international business and globalization. The early globalization was based on trading, therefore previous theories were also focused on this issue. One of them is Adam Smiths absolute advantage. He believe that replacing the restrictive mercantile system with free international exchange would led to reduction in levels of poverty and would stimulate social and moral improvement in all participating countries. Smith reasoned that countries should specialize in production of goods for which they could achieve a low unit cost of production and import them if it is cheaper to do so than to produce them domestically. However, Smith had not considered the situation where two countries might both benefit from trade exchange with e ach other even where one holds absolute advantage over the other in the production of all goods. Based on this, David Ricardo presented his new theory (David Ricardo , 1817)-theory of comparative advantage. And that has become one of the most important concepts in international trade theory. In his theory, the choice of which commodity each country should specialize in is not determined by a simple comparison of the cost of production between countries, as defined by the cost of labour. This comparative advantage is considered as the one of the most common theories in the world because it includes an important factor of production-labour, which is one of the most important factors in international business environment. The theory of comparative advantage is more flexible and more adapt to the modern complex global environment, as well. However, international business is only a part of modern globalization. And in the new age, as there are different focus on the issue, there is not a n universal definition of globalization(Jan Aart Scholte 2002 ). Someone define globalization as a concept, refers to both the compression of the world and the intensification of consciousness of the world as a whole. (Robertson,1992). However, this concept does not include maybe the greatest connotation of globalization- its impact on economy. Economy globalization, stands for the globalization of business, investment, finance and production, in other words, it is the best collocate of the production element in the whole world. It is rooted of the great evolution of productivity and international labour distribution, which forcing the more span of ethnic and country boundary. There are two main views on the globalization. Deglobalization, on the one hand, is one kind of the aspects that has been resistance to globalization. In the contemporary world the use of the term globalism as a negative comment on what has with equal pejorativeness been described in ideological terms as one-w orldism or cosmopolitanism is not uncommon in political and other campaigns, and of course there is a quite long genealogy of such terms. Their view mainly based on some negative effects of globalization, such as globalization would accelerate the gap unbalance of the world economy, expend the gap between rich and poor countries; it would cause the pollution of the environment in developing countries; globalization must shock local   culture as well as local economy. But we have to be very conscious of the fact that negative gestures, gestures of opposition, are typically expressed in contemporary terms and in reference to contemporary circumstances. People who hold this view often come from developing countries, which means they may experience more negative effects rather than positive ones. However, we should view the issue completely, from both side of the globalization. Globalization is here to stay, one cannot back away from that fact, but todays new order can be tapped for the advancement of the entire world economy through peaceful economic efforts. Lawrence R. Klein (2005)   Nobel Laureate 1980 Globalization, firstly, is a better way to distribute the capital, technical, product, market, resource and labour all over the world. Secondly, globalization offers great opportunity for developing countries to benefit themselves through their advantages. Thirdly, globalization would accelerate the foundation and development of grand world culture. Moreover, globalization has significant positive effects on the coordinate of international politics as well as international conflicts. In itself globalization is neither good nor bad. Its economic impact can be both welfare-enhancing and dislocating. (Dilip K. Das: 2008) Factors that influenced globalization: The most important one is economy. As mentioned before, the earliest aspect of globalization is based on multination good exchange. Different countries have different advantages, they can exchange their own advantages with each other, benefit the both sides, by the measure of international trading. This concept had been rooted in almost all the businessmen and had great effect on their activities. In this day and age, multinational corporations cannot be limited in one region or area, because they need more resources, which are not only high quantity, but also high quality and low cost. In order to meet this demand, they have to go abroad, seeking for new, better material. Meanwhile, the domestic market often being saturation, or have less profit than before, so they have to explore new markets. And foreign country would be their new cake, no matter whether the companies want to do so. And these multinational corporations have effectively promoted the development of globalization. A BMW car, for example, maybe have its engine made in German, and the tires made in UK, final assemble in Greece, and sold to American. It is because different country has different advantage, so that big company synthesis these advantages all together and make its profit max, and cost minimum, as well. In this way the globalization is more common and necessary in present society. Politics is also one of the factors that impacts globalization. Recent decades have witnessed major growth of planetary-scale regulation through transgovernmental networks and accompanying global administrative law (Raustiala, 2002; Slaughter, 2004; Kingsbury and Krisch, 2006). Kinds of international trade agreements and organizations have great effects on international trade. Take WTO as an example, there are ten benefits which are being listed officially, as a positive effect of their trading system  Ãƒâ€šÃ‚   (10 benefits of the WTO trading system https://www.wto.org/english/thewto_e/whatis_e/ 10ben_e/10b00_e.htm), that are: 1. The system helps promote peace; 2. Disputes are handled constructively; 3. Rules make life easier for all; 4. Freer trade cuts the costs of living; 5. It provides more choice of products and qualities; 6. Trade raises incomes; 7. Trade stimulates economic growth; 8. The basic principles make life more   Ãƒâ€šÃ‚  Ãƒâ€šÃ‚  Ãƒâ€šÃ‚  Ãƒâ€šÃ‚  Ãƒâ€šÃ‚   efficient; 9. Governments are shielded from lobbying; 10. The system encourages good government. Despite there are many advantages of global politics, which impact on international business, we cannot ignore the negative effects of politics. Almost every country has some kind of domestic protective politics. These are meant to prevent domestic industries from being beaten by foreign companies. one simply explain is raising the tariff of import good until it is more expensive than domestic one, often by the measures of high tariff or set some limitation of quantity of import good. Yet for all of th is institutional innovation and expansion, global governance today still falls far short of needs. However, much more and much better transplanetary regulation is needed to ensure that globalisation impacts positively on core attributes of a good society such as cultural vibrancy, democracy, distributive justice, ecological integrity, material well-being and peace.( Jan Aart Scholte : 2007) Technical also plays an important role on the globalization. For example, the invention of airplane, had greatly improved the globalization. People can easily go anywhere on the earth by airplane. With the help of airplane, there are more and more communications between different countries. However, modern technical has some negative effect on poor countries. That is, developed countries hold their core technical, secretly, and benefit from it. While developing ones only have to become the factory of richer ones. Then although developing countries benefit from the production, the gap between t wo groups has became even larger. Globalization effects on the factors: Globalization has greatly accelerated the global economy as a whole. As mentioned before, globalization is based on the international business, and, globalization itself has its own aspect on the economy. When it comes to individual companies, as a result of the global changes of labour, capital, and other produce elements, globalization is both an opportunity and a threat, in the swot analysis. On the one hand, globalization provides a broader chance-from resource to sale- to local companies, which means companies can achieve profit maximum and cost minimum. However, on the other hand, globalization will introduce more competitors to the local companies. And some of the competitor may be a great threaten to local ones. international corporations are happy to see this because it is more convenience for them.( Edelberg, Paul B:2005) For example, they can offshore their manufaction department to Africa or Asia, where the cost is lower, and keep the design department and core technica l in their nation land, for a high productivity and the keep their advantages. On the issue of the country, globalization is an undoubtedly trend which every country must experience and adapt to. (Lawrence R. Klein, 2005, Nobel Laureate 1980) As same as aspects on individual companies, globalization has both positive effects and negative on the countries economy. Globalization and international production distribution gave a great opportunity to third world countries, which means developing countries can benefit themselves by make good use of their advantages, such as low cost labour and a more free policy. It is what we all can see that a lot of regions developed fast in the past 30 years, for example east Asia, including Chinese Taiwan, Korea and other regions, all their achievements can be contributed to the spread of globalization. Meanwhile, developed countries had also benefit from the process of globalization. Companies from developed countries have more advantages compare d with companies from poor ones on average and therefore globalization provide the strengthen companies a platform to lead or even dominate the global market. And that means the country as a whole can benefit more than before. On the controversy, people who antiglobalization have their reasons. Their mainly sustainably reason is that globalization which would import foreign capital that would have greatly influence on ethnic capital and local industry as well as local environment pollution(Bond, Patrick: 2005). Also globalization can raise the risk of the change of the economy in globalization because the feeble changing economy is much more tightly linked with the global and can easily being shocked by the fluctuation of the global market. What is more, globalization threatens the dominion of economy of the country, and expends the gap between developing countries and developed countries. Not only are developing countries suffering from globalization but also the developed count ries. The offshore of factory has made a lot of people lost their job in developed countries, and the cost of labour keeping a high lever therefore local products have less competition advantage. And this would cause a lot of local companies closed during the great influence of low-price and high- quality import goods. Globalization is also promoting the technical development. It is what we can all see that the human genome (the full collection of genes in a human being) is being accomplished by the scientists all over the world. It is hard to image to finish the job without the information and experience exchange inter-countries. Thanks to Globalization, there is now a platform for scientist all over the world to get useful information, publish their new founding, and get feedback, from all over the world. Moreover, the influence of globalization on the politics is increasingly represented. Regulations of international organizations are more and more influence on the local po licy. An agreement of global emission control regulations would lead a great change in the regulation for local automobile factory, for example. In the global village (Marshall McLuhan,1960), the boundary of the countries is becoming weaker while the interact among countries is more weight than ever before. Part 2 NIKE, the worlds biggest sports and leisure products company, which can be defined as a multinational corporations (HoodYoung 1979) , had experienced a globalization way. Phil Knight, the foundation of NIKE, who had finished is MBA at Stanford University. During his study, he had a lesson which changed his life. After the lesson, Phil wrote an essay with the title Can Japanese sport shoe challenge Germany sport shoes just like Japanese camera challenge Germany cameras? After that essay, Phil found his way. And after his graduation, he went to Japan to seek opportunity. At one exhibition, Phil met the producer of tiger sport shoe, and Phil claimed he was an American who from blue riband in US. And he was wonder in the Japanese sport shoe. At the same time, the tiger company was just looking for their agent in US. Therefore tiger gave the dealership of tiger in US to the young man. After that, Phil went back to US immediately with the dealership and met Bill Bowerman, his former c oach in university, and they established the genuine blue riband company, which is the former company of NIKE. Tiger is very popular in USA market and the new company benefit a lot from this. Meanwhile, blue riband accumulated cash during that period. After that, tiger company covet the great profit in USA market and required to buy 51% stocks of blue riband, otherwise they would stop supplying shoes to USA market. blue riband refused the requirement and finder their new partner with their own design. In the end of that year, Phil named his company NIKE, which comes from the Greek legend. The first time the name and the swoosh appear together is 1972. In 1980s Moscow Olympics, the first player who wears NIKE won the gold medal, at the same year, NIKE established its first branch in Netherlands. In the next Olympics, 58 players who NIKE sponsored won 65 medals and Carl Lewis won 4 gold. In 1997, NIKE established two customer service in Seoul and Tokyo. In 1998 NIKE made a 10-year-agr eement with Brazilian national football team, preparing for the 1998 world cup and made the special boot for Ronaldo, which is a silver one and became famous during that world cup. In 2000 Sydney Olympics more than 2000 athletics in 25 items wearing NIKE. In 2002 world cup NIKE sponsored 8 teams including the champion Brazil and the best shooter Ronaldo, with 11 goals. With the unstoppable effort, NIKE had occupied 33% of the world market in1979 and even 50%in 1981, which is far ahead Adidas. Since 1970s, NIKE has established a new model-virtual production. NIKE does not have one factory, while he makes use of his trademark, design and development, through special permit to have a mass production in the regions where the cost of labour is cheap. The company itself devotes all the resources into demanding research, product design as well as marketing. The method of this special production is now being copied all over the world. With the unstoppable effort, NIKE had occupied 33% of the world market in1979 and even 50% in 1981, which is far ahead Adidas. To be more precise, we should consider the expending of NIKEs global production. Year 1964 Phil Knight and Bill Bowerman devoted 500dollars to import Tiger to USA. Year 1978   The company changed its name to NIKE formally. 1970s NIKE was mainly produced by two Japanese companies-Nippon Rubber and Nihon Koyo. Late 1970s  Because of the high cost of Japanese production, NIKE was trying to produce in USA and seeking for other producer and supplier. Early 1980s  Korea and Chinese Taiwan had became the main manufacture place. In1982 86% of NIKE shoes were made in the two regions. Late 1990s  Indonesia, China, and Vietnam became the main manufacture place. Year 2001 NIKE is manufactured in 51 countries, in more than 700 authorised factories, and by more than 500,000 workers, including: 74 factories and 175,960 workers in China; 30 factories and 104,514 workers in Indonesia;   62 factories and 47,962 workers in Thailand; 12 factories and 43,414 workers in Vietnam. (Richard M. Locke. 2002) The case of NIKE is adequately indicated the importance of global working distribution. For the multinational corporations like NIKE, international distribution and agency authorised manufacture can effectively reducing the cost of production as well as making their operation more flexible. And for the companies in developing countries, devote in such a distribution system can get approach to international market, therefore benefit them. Also we can see how FDI influence NIKEs development in the past 20 years. Nike Company get its first profit from international business, and first mainly rely on Japanese company to product. After that, Nike was seeking for better environment for product all over the world, including USA, China, and other countries. Now Nike production is mainly based on the authorised factories in east south Asia. The development of globalization gives companies like Nike a great opportunity to achieve the goal of cost minimum and profit maximum. In the economy globalization, countries all over the world can develop their preponderant industries and through the exchanging in international market, to get economical profit. And finally promoting the development of the countries and benefit the citizens. And not only companies in developed countries can expand rapidly but also the companies in developing countries. It concludes that, going by the available evidence, globalization on balance is a welfare-enhancing force. ( Dilip K. Das. 2008) References: David Ricardo: 1817, essay on the external corn trade Jan Aart Scholte : 2002, What Is Globalization? The Definitional Issue Again, CSGR Working Paper No. 109/02 Roland Robertson:1992, Globalization awrence R. Klein: 2005, Nobel Laureate 1980 Dilip K. Das: 2008, Winners of Globalization, CSGR Working Paper, 2 Raustiala, K. (2002) The Architecture of International Cooperation: Transgovernmental Networks and the Future of International Law, Virginia Journal of International Law, vol. 43, no. 1 (Fall), pp. 1-92 Slaughter, A.-M. (2004) A New World Order. Princeton: Princeton University Press. Kingsbury, B.W. and N. Krisch (eds) (2006) Symposium on Global Governance and Global Administrative Law in the International Legal Order, European Journal of International Law, vol. 17, pp. 1-278. 10 benefits of the WTO trading system https://www.wto.org/english/thewto_e/whatis_e/10ben_e/10b00_e.htm Jan Aart Scholte : 2007, Civil Society and the Legitimation of Global Governance, CSGR Working Paper, Edelberg, Paul B:2005, globalization is good for American, Fairfield county business journal, 7/4/2005, vol44, issue27, 30-30, Bond, Patrick: 2005, globalisation/commodification or deglobalization/decommodification in urban South Africa , Policy Studies, Vol.26, Issue 3/4, 337-358 Marshall McLuhan: 1960 , Explorations in Communication Richard M. Locke: 2002, The Promise and Perils of Globalization: The case of NIKE. Dilip K. Das: 2008, Winners of Globalization, CSGR Working Paper, 2.

Bond Markets Essay Example Pdf - Free Essay Example

Sample details Pages: 21 Words: 6433 Downloads: 6 Date added: 2017/06/26 Category Finance Essay Type Argumentative essay Tags: Study Essay Did you like this example? Bond markets are one of the important sources of financing an enterprise, corporate and a business entity. Bond market is also called as debt,  credit, or  fixed income market. Bond market is a financial market with different participants buying and selling debt securities which are in the form of bonds. Don’t waste time! Our writers will create an original "Bond Markets Essay Example Pdf" essay for you Create order The size of the worldwide bond market is estimated at $82.2 trillion as of 2009 and the size of the outstanding U.S. bond market debt was $31.2 trillion according to BIS. Majority of the bond markets in the U.S. take place between  brokers and dealers along with the large institutions in a decentralized, over the counter market. However, only a small number of bonds and primarily corporate are listed on exchanges. In this study I am going to discuss about the bond markets and their importance to both developed and developing countries in building strong economy and what are conditions that are required for the development of strong bond markets. The study is equally discussed with the developing countries like India which has a very weak bond market and the countries like Hong Kong and United Kingdom which has a developed bond markets. We will also consider the feasibility and suitability of Bond markets being developed in India and what considerations need to be made. We will also take other factors in to consideration e.g. how the development of Bond Markets will help in financing a firm and how corporate governance can maintain effective regulation of the bond markets and keep an economy growing and stimulated. One of the important aspects of this research work is to find out the conditions that are essential for the development of bond markets and the factors that influence these conditions. Different research papers relating to bond markets are studied in order to find out the different conditions that are mentioned in their research papers. Data relating to different countries are collected, tabulated and presented in the forms of graphs in order to make the analysis part more easy and accuracy. Most of the bond markets refer government bond market due to its size, lack of credit risk, liquidity and sensitivity to interest rates. Interest rates are one of the important determinants of bond market since it is inversely related to the bond markets. Bonds A bond is a debt instrument that is issued for a specific period for the purpose of generating capital by borrowing. Different corporations, states and governments issues bonds along with the promise to repay the principal with the coupons on maturity date. Bond markets play the role of bridge between the issuers and investors. Classification of Bond Markets On the basis of the nature of market, nature of issuer and the issuance, bond market can be categorized into different classes. Primary and Secondary Bond Markets It is the market place where the new securities are placed for the first time by the issuer and the buyer directly purchases it from the issuance party. Up to 1970s, bonds were issued and investors hold them until they mature. Investors enjoyed the risk free returns because of the expected nature of free cash flows connected with bonds made them more striking. In late 1970s a new type of market came into being called secondary market. Investors got the chance to take advantage of difference in prices. It is also known as resale market where bonds that already issued by different companies exchanged among the investors and the issuance companies are not involved in it. Government Bond Markets According to many studies, governments are the largest issuer of bonds worldwide. Government bonds, also known as sovereign debts, play an important role in enhancing the liquidity of a bond market. These are the backbones of healthy domestic debt markets. Bond Market Instruments A large range of bonds are available in the open markets. Some types of bonds neither openly traded nor privately placed that are issued according to the terms of buyer. Some most popular bond markets are: Straight bonds Such types of bonds are also called debentures having the fixed income with specific interest payments on specific dates over specific period of time. The issuer is bound to pay predefined interest on bond at regular intervals and cash back the bond at its face value at its maturity time. Perpetual bonds The bonds having no maturity date and on which interest is paid forever are known as perpetual bonds. These bonds cannot be redeemed. Callable bonds Big and municipal corporations issues such kind of bonds and has the right to call back or buy back a part or all under specific conditions before maturity date. The main purpose of call is decline in interest rate. Zero-coupon bonds A bond having zero coupons but sell at lower price than the face value. Strips These securities have no coupon, sell on discount price and mature at face value. Floating rate notes These are bonds having variable coupons and interest is paid after 3 months, 6 months or annually by calculating it with market reference like LIBOR. Convertible bonds These are the bonds that can be changed into other securities like companys common stock. Junk bonds Hence the risk of default is more than compensated by high yields. These are also known as risky bonds because the interest rate on such bonds is very high and are used for speculative purpose. Catastrophe bonds These are insurance linked bonds having the purpose of generating money in any disaster like earthquake etc. These are not directly related to stock market and issuer have right not to pay interest and some time the principal amount as well. Some main concepts necessary for the study Literature Review Herring R,J. and Chatusripitak,N (Jan 2008) had made a study on bond markets and why there are underdeveloped when they are compared with bank and equity sector, they also investigated why there is an absence of a bond market in some countries. They also mentioned some appropriate policies for bond markets considering Thailand research example. At the beginning of there work a brief explanation about characteristics of financial intermediary was discussed as they form markets place for surplus agents deficit agents along with the reduced information cost transaction cost, reduced risk and the participants involved. They also made an empirical study on funds flow analysis and created a matrix between households, private sector firms, government, international sector for analysis and the results obtained from that shows the importance of multiple investments options for people and firm holding real asset. As per their study households have direct financial claim, and increased savi ngs by households as investments in real assets turns more productive and making economy stronger and better. The second and most important aspects of their study is regarding the importance of bond markets for an emerging markets to form an efficient and effective financial markets. The authors have described that there are different policy implications for different participants (equity market, banking industry, savers, and investors) in an economy. Absence of bond market will hinder the economy completely, as there is 1) High cost involved in banking debt financing 2) Since, it is not market determined interest rates, inefficiency in derivatives market 3) Investors or savers have no alternate options or access for better returns 4) Too much dependency on banking alone can make economy vulnerable to crisis 5) some firms issue bonds in international markets(in denominations of Dollars or Euros in order to finance domestic investments by which firms are exposed to hig her foreign exchange risk and they cannot hedge due to absence of effective and efficient bond market. The authors also suggested few measures to improve bond market which highlights about corporate governance 1) Issuing government bond-as it can be used as benchmark for other domestic bonds 2) Improve and frame judiciary and legal rights, so that it is Fair-play and efficient to encourage small and medium investors. 3) Overall financial infrastructure must be developed for emerging countries. And the entire statements and actions suggested and reviewed were well support by empirical analysis on Thailand (emerging market) as evidence for the need and development of bond market. Mihaljek,D , Scatigna,M and Villar,A(2002) in their study on trends in the bond market in emerging countries and their study aimed in analysing size and growth of debt market in relations with their development due to macroeconomic aspects and also including the important microeconomic factors and institutional characteristics which leads to development of bond markets. This literature is well support with our main context of relating the 3 roles as mentioned earlier. And from their work, Financing Firms it is found that bond markets has grown double in size(especially Asia) from mid 1990s to early 2000 which is a clear proof of increase in the size which represents the demand for bond markets very much in action for financing the firms. From empirical analysis it can be noted they found that emerging markets are really growing rapidly, however smaller in size when compared with industrial countries in both domestic and international as well as private and public sector. Adding to the above, bond issuance activity can also be compared; it shows massive increase in percentage of emerging countries however their volume of contribution is still less when compared with industrial countries. These bond markets have always acted, as catalyst innovation and introduction of new financial services. Implementation of corporate governance these things in-turn lead to implementation of rules and regulations, corporate governance over fair play. Evidence of United States is included as importance on formation of laws and constitutions for overall development bond market overall financial market of economy and showed positive results. Corporate governance becomes very important, as these bonds are very complicate with their features, well framed legal judiciary systems is significant to mechanise payments and settlements procedure, maintain fair-trade policy, lay principles for effective and efficient functioning, international trade procedures and so on. A sound secondary market is essential for bond market to work efficiently and effectively, the authors have mentioned measures like proper legal and judiciary system, intervention of central bank, develop fund management industry ,develop efficient clearing and central depository system , all these aspects wi ll automatically develop secondary market which is the most difficult part of bond market in emerging countries as there is proper trade policies the bond prices do not signal exact information to investors and market participants about the bond prices. Hawkins,J(2001) states in his work paper that, financial system in most emerging economies is based on banks and these banks are influenced by the development of bond market. John Hawkins raises questions about whether the bond markets are taking the business away from the banks. On the other hand he also feels that firms are helping banks by issuing corporate bond to central banks. Banks also play a vital role in developing a private sector bond market as they are also involved as issuers, holders, dealers, advisers, underwriters, guarantors, trustees, custodians and registrars in this market. In fact banks are obtaining more profits by performing the above mentioned activities and less from lending. For this reason, it is import ant to have healthy banks to have a sound bond market. And a bond market can improve banking activities. John Hawkins also addresses some of the questions in his work paper which are as follows: Do bond markets substitute for bank lending? For answering this question he uses the explanation given by Greenspan (2000). He says that bond markets can act like a spare tyre, it can substitute bank lending for corporate during the times when banks balance sheets are weak and banks are rationing credit. This was the case in the early 1990s in the United States, and there were some signs of it in Hong Kong in the late 1990s, but John Hawkins finally concludes that bond markets cannot replace the entire banking sectors as it affects the economy of the country. Do bond markets take good lending business away from banks? He says that highly rated companies issue more bonds than the lower-rated companies. In general people prefer to buy the bonds of only blue chip companies which are rated very high and they do not believe in the low rated companies .in fact it is low rated companies requires funds than the high rated companies which has many ways to obtain funds. Finally he concluded that bond markets do not affect banks in turn it develops economy of the country by supporting the banking activities whenever the banks are in crises. Turner, P(2002) writes in his work paper, bond markets in emerging economics: an overview of policy issues that bond markets are developing because of their benefits to the central banks. In general the government bond market helps to fund budget deficits in a non-inflationary way and thereby protects the effectiveness of monetary policy. They also act as an agent for the government in various aspects of the management of government debt. They oversee clearance and settlement systems, and they are responsible for the stability of the financial system. MR. Philip mainly explains about the corporate bond market and the ro le of banks in his work paper. He says that apart from the few Asian countries, there is no much more development of corporate bonds in emerging markets. In his own view Korea has a well developed bond market in the Asian region. According to him banks need to be fully involved in bond underwriting and in the sale of capital market products to households. Another concern about the increased bond issuance may just take profitable business away from the banks. He concludes that bond markets are going to support the banks in difficult times and also helps in the development of the economy of the country. Patil.R.H(2008) in his work paper Broad basing and Deepening the Bond Market in India states that India has a well-knit structure of national and state level development which is regulated by the Reserve Bank of India and Government of India supports and regulates the infrastructure which manages all aspects of governance . The main objective of all the structure and the regul atory measures is to provide much needed long-term finance to the industry which the older existing commercial banks were not keen to provide due to the fear of asset-liability mismatch (R.H Patil) which has negative implications on financing a firms investment. Since deposits with the banks were mainly short/medium term, extending term loans was considered by the banks to be relatively risky (R.H Patil). The interest rates charged by the commercial banks were appropriately aligned in such a way that the project loans were relatively lower than the actual loans (R.H Patil) extended by banks for such purposes as working capital for industrial and other units. Similarly, the rates that the corporate entities could offer on their bonds were fixed By the Finance Ministry which used to regulate the capital markets until the independent capital market regulator Securities Exchange Board of India (SEBI) was set up almost a decade ago (R.H Patil). The Finance Ministry, however, use d to informally consult RBI before it fixed the interest rates on corporate bonds suggesting regulatory influence. Financial sector policies were revamped and deregulation was introduced after 1991 and DFIs no longer had the comfort of the protective policy climate in which they operated. They no longer have access to concessional sources of finance like government guaranteed bonds or budgetary support (R.H Patil) and they now they have competition from commercial banks which keeps competition high and lending rates low helping keep an economy stimulated. Batten,J(2000) in his work paper Expanding Long-Term Financing through Bond Market Development: A Post Crisis Policy Task states that, The Asian financial crisis suggests many policy tasks not only to its worst hit Economies but also to other developing countries (Jonathan Batten) and highlighting some governance issues. One of these tasks is the need to diversify the source of long-term industrial financing for firm, which hist orically is concentrated in the form of short-term bank borrowing and the potential for maturity transformation. This form of financing behaviour historically has entailed currency mismatches, financial inflexibility and vulnerability to external shocks (Jonathan Batten) which highlights some further governance issues. While there is a large ongoing requirement for infrastructure investment in the post-crisis period, there is evidence of a rebalancing of the asset portfolios of financial Intermediaries away from Asia. Specifically, international bank financing peaked in 1996 at US$248 billion and was reduced to US$161 billion by June 1999 which shows how well managed and regulated the worlds strongest economy was. In this post-crisis environment the challenge is to direct the high levels of regional savings to meet this refinancing need. We argue that the appropriate mechanism to redirect these savings is through the development of viable domestic and international bond market s (Jonathan Batten). The financial systems of crisis economies display different characteristics and respond differently to the reduced liquidity that arose following the crisis e.g. in the Republic of Korea which has the largest domestic bond market, and Malaysia has the largest market for bank loans and equities. All crisis economies increased levels of international bonds post-crisis though Korea was the most successful, increasing outstanding from US$23.4 billion in 1996 to US48.5 billion in 1999. This suggests that there is a degree of substitutability between international bank borrowing and international bond issues, though the degree of substitutability varies between different classes of issuers. For example Korea was able to replace the reduced levels of bank lending with international bond issues, though the other crisis economies were not able to do so. This highlights the need to develop more viable domestic bond markets as well as improving the access to internation al bond markets. Background of Indian bond market A capital market is said to be well-developed only if it has a proper composition of both the equity market and the bond market. Risks involved in the banking systems and the limited public finances have created a huge scope for bond markets in India. Both macroeconomic and microeconomic levels can be developed by the corporate bond markets and hence the development of these corporate bond markets will develop the Indian economy. Traditionally developing country banks use Plain vanilla bank lending to raise corporate debt. Even though India has a developed regulatory framework and a financial system, the bond markets in India comprises of only 0.4% of GDP when it is compared to Korea which has 21.1% of GDP. The Indian Bond Market is the third largest bond market in Asia after Japan and South Korea. The government continue to be the largest borrower in India when compared to South Korea which has a private sector as main borrower. There is a satisfactory level of savings in the I ndian Economy at around 23% and according to the RBI (Reserve Bank of India) an average of 78% of the financial savings of household sector were invested in fixed income assets. The debt instruments have supported Indian market for very long period and the most popular financial services are Bank Deposits, insurance, provident funds, income orientated mutual funds and postal saving schemes. Even after having the successful debt instruments the Bond markets in India is not strong may be because of the absence secondary market for debt instruments. Liquidity of Bonds is one of the major issues leading to a classic chicken and egg problem. Aims and objectives The aims of the study are: To assess the conditions those are required for the development of bond market. To measure the performance of the Indian bond market and compare it with developed bond markets. Objectives: Objectives are the building blocks for achieving aims. The objectives of the study are: To study the financial market participants in India and their role in developing the bond market. To compare the development of stock market and its impact on the bond market. To assess the government role in controlling bond markets, since majority of the bonds are issued by government in India. To measure the performance of other developed countries in order to ascertain the growth of Indian bond market. Methodology In this research work a lot of information relating to the interest rates, GDP, inflation rates of different countries are collected and analysed by using graphs to measure the performance of bond markets. Bond measuring techniques like bond curve is also used to calculate the return on which an investor will receive by holding a bond to maturity. Limitations Majority of the data collected is from the secondary sources. Research work is based mainly on qualitative than of quantitative. Bond measuring techniques are limitedly used. No quantitative tests are conducted for measuring performance of bond markets. Empirical study and discussion From the above table, we see that when the volume of transaction in Indian stock market is reaching higher peak every day. On contrary the bond market was sliding down in volume of transaction from 19911.57 crore (10m Indian Rupees) in August 2003 to a mere Rs 605.23 crore in July 2006 and corporate bond market is just 3% of sliding volume. The major obstacle for active bond market is policy structure of the debt market. This was a feature of all the emerging countries that debt market developed slowly than stock market in overall capital formation of the country. It is evident that US has 50% of worlds total bond market , followed by Japan having 15% and UK has long standing bond markets which concentrates more of bond market activities are very alien to these emerging countries. To note, South Korea is the only emerging economy with a reasonably well developed bond market Figures are turnover on the wholesale debt market segment of NSE. Source: NSE Figures are bond issua nces with one year or more maturity in the primary market in the first quarter of 2006-07. Source: Prime Database However from the other research papers and articles, it states that limitations and systemic risk awareness of the bank lending in emerging countries have led to development of bond market. Evidence from the issuance activities of bond in India which has doubled itself in recent past. These bond markets have helped India in various long term economic development activities both at micro and macro economic levels. Though bond markets are in existence from 1947, it was only from last 30 years state owned enterprises started to issue PSU bonds for financing or as instrument to raise funds for investment purpose. However due to lack of liquid and undeveloped secondary bond markets these bonds and bond investments have been unpopular among large population. Brief overview of growth of bond markets The Growth of the Government Bond Market in Emerging Markets Source: International Organization of Securities Commissions May 2002 Corporate Bond Markets Corporate bonds are issued by both private and public entities in order to release funding to benefit their business. Corporate Bonds are most popular amongst investors as they have attractive yields, greater guarantees on return and risks which increases their marketability and dependability. Corporate Bonds also have the added advantage they are being offered by dependable and reputable institutions. Investors in this market include individuals, financial institutions, different types of funds as well as Insurance Companies and Banks. Corporate Bonds are the perfect source of finance to fund long term aspirations of a business. This offers the borrowers flexible and relatively cheap lending to benefit the company in the long term. Corporate bonds are issued from surplus agents to deficit agents via Investment Banks who place suitable lenders and borrowers together after taking the necessary precautions and analysis. Figure 2 shows how and what rate corporate bonds are issue d in emerging Markets. Growth of the Corporate Bond market in Emerging markets Source: International Organization of Securities Commissions, May 2002 There still appears to be a unified mechanism even though Bond Markets are very mature. There are three different types of Bond which are named according to their issuance namely Domestic, Foreign and Eurobond markets Foreign Bond Markets In this case foreign borrowers approach a domestic market in the related currency and the bonds have different names which show which market they were issued to. Bonds issued in US dollars by a borrower located outside US are usually known as Yankee bonds, bonds issued in ponds sterling by a non UK lender are referred to as Bulldog bonds and similarly, bonds issued in Japanese yen by a non Japanese issuer are referred to as Samurai bonds. Eurobond Markets These bonds are issued by a consortium of reputable financial institutions and are not related to the currency of issue are known as Eurobonds. Eurobonds relate back to the 1960s when Eurodollar Bonds (USD Bonds issued by non American entities). The first Eurobonds were issued around 1957 and they are currently being denominated in to almost all currencies. This suggests that they have become more sophisticated over time. Table 2 shows how Eurobond markets have evolved over time and their presence globally, these Bonds are popular as they help meet capital requirements and they also operate outside most levels of governance and are exempt from taxes etc. So, Eurobonds are Bearer Bonds, the bearer has complete rights over the bond and this allows financial institutions to take advantage of lower borrowing costs which undercut those bonds available in domestic markets. Table 1: History of Foreign Bond Market (1990-2001: Nominal Value Outstanding in Billions of US Dollars) Country 2001 2000 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990 United States 486.8 495.4 422.4 420 394.9 347.7 291.9 242.3 230.1 147.2 130.4 115.4 Japan 61 72.6 82.1 87.8 93.1 106 89.5 81.2 66.2 52.1 49.5 43.2 Euroland 0            Germany    0 0 0 0 0 0 0 0 0 Italy    n/a 5 3.3 1.8 1.4 1.2 1.8 2.8 2.6 France    5.7 4.8 6.5 6 6.2 4.9 5.7 6 5.5 United Kingdom 145.1 122.3 90.2 65.5 31.6 16.8 10.8 9.4 7.3 3.5 1.3 0.8 Canada 0.4 0.4 0.3 0.3 0.3 0.4 0.4 0.6 0.6 0.6 0.8 0.8 Netherlands   n/a 1.3 3 3.8 4.3 4.5 6.7 8.4 9.9 Belgium    45.5 32.6 36.1 35.1 27.1 21.8 20.4 19.4 17.1 Spain    20.3 19.6 15.4 12.4 10.5 9.4 8.7 8.6 5.6 Sweden 3.9 4.2 4.4 4.9 5.9 6.7 5.6 n/a n/a n/a n/a n/a Australia 9.9 6.6 5.6 2.3 1.7 1.8 1.4 1.7 1.5 1.5 n/a n/a Austria    2 1.8 1.8 2.6 2.4 2.5 2.4 1.9 1.4 Switzerland 110.4 113.4 107 112.5 95.7 95.5 103.1 85.9 76.3 74.7 82 82.1 Finland    0 0 0 0.1 0.2 0.3 0.6 0.9 0.4 Norway 0.5 0.2 0.3 0.4 0.4 0.5 0.9 0.8 0.3 0.4 0.6 0.4 Total 817.5 815.1 712.3 767.2 688.7 641.5 565.4 474 426.9 326.3 312.6 285.2 Note: In Euroland, foreign bonds are included in the Eurobond totals. A breakdown of these bond types is not made available. It is assumed that the majority of these bonds were issued in the traditional Eurobond format. Source: Merrill Lynch, Size and Structure of the World Bond Market 2002-April 2002. Table 2: History of the Eurobond Market (1990-2001: Nominal Value Outstanding in Billions of US Dollars) Country 2001 2000 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990 United States 2840.4 2380.3 1976.6 1438.5 1216.2 932.6 679.5 617.5 576.9 570 548.2 524.7 Euroland 649.8 674.5 594.9 849.7         Japan 450.9 508.1 415.2 381.1 358.6 368.1 362.7 303.8 197.6 149.9 143.8 116.1 Germany     329 305.6 280.6 220.3 176.2 148 129.3 113.4 Italy     107.6 90.7 63.4 52.8 35.1 23.9 23.9 14 France     171.8 165.7 146.4 129.6 91.2 63.2 44.4 27.4 United Kingdom 490 455.7 342.6 326.5 263.8 222.4 173.4 156.4 138.5 114.8 129.4 110.9 Canada 47.1 51.8 56.4 52.2 66 75.2 82.2 80.9 79 61.8 60.4 46.6 Netherlands    88.5 87.1 72.4 59 39.8 21.8 16.9 15.2 Belgium     5.8 5 2.8 0.7 0.4 0.4 0.4 0.4 Spain     6 7.4 6.1 3.3 3.7 1.3 0.8 0.4 Sweden 3.8 4.8 4.6 5.1 4.3 5.1 5.1 4.6 3.3 3.1 3.2 2 Denmark 8.9 9.5 11.5 12.2 11 8.3 5.7 2.8 2.8 3.3 4.2 5 Australia 29.4 30.3 38.7 32.6 39 46.5 38.5 31.9 22.8 19.4 23.2 25.2 Austria     2.7 3.2 4.2 4.1 4 4.6 5.1 4.1 Switzerland 19.5 29.4 25.1 21.3 13.3 11 9.8 5.7 3.6 1.6 2 2 Finland     2.5 2.8 2 1.7 1.4 1.9 2.3 1.9 Norway 4.6 3.8 3.3 1.6 1 0.8 0.2 0.1 0.1 0.3 0.5 0.5 Portugal     11.1 8.7 5.4 2.3 1.6 n/a n/a n/a Ireland     1.8 2 1.5 0.6 0.6 0.2 0.2 0.2 New Zealand 5.9 7.1 10.5 10.4 8.8 4.4 0.9 0.9 0.9 1.2 1.9 2.3 Total 4550.3 4155.3 3479.4 3131.2 2708.8 2352.6 1942.8 1679 1379.5 1190.7 1140.1 1012.3 Annual Growth %  9.5 19.4 11.1 15.6 15.1 21.1 15.7 21.7 15.9 4.4 12.6 Source: Merrill Lynch, Size and Structure of the World Bond Market 2002-April 2002. Factors Influencing Bond Markets The fluctuations in bond markets are caused by several economic factors, the most significant factor being a change in interest rates. Interest rates have an inverse relation with the bond price: as interest rates rise, the bond price falls and vice versa. Changes in interest rates could be due to changes in demand and supply of credit, fiscal and monetary policies, exchange rates, market psychology and inflation expectations. Inflation is considered to be yet another major factor affecting bond markets. Bond investors always have an aversion towards inflation. They fear inflation, as it lowers the value of bonds by reducing the future purchasing power of fixed interest payments they receive. Hence, any economic development that is likely to result in inflation causes panic in the bond markets. International bond markets are exposed to exchange-rate risk. Cash flows associated with foreign bonds are dependent on the exchange rate at the time the payments are received. Hence, fluctuations in the exchange rates cause changes in the value of bonds. India is expected to be a leading world economy (along with China) in the 21st century. Indias share of the worlds gross domestic product (GDP) is expected to rise from 6% in 2005 to 11% by 2025, making it the third largest economy in the world behind the US and China. Few identified difficulties of underdeveloped India bond market Highly regulated: the Indian bonds markets are still in control of government, administrative fiat and regulatory authorities which control and determine all the interest rates, even the interest rates in corporate bonds are determined by the government. The interest rates set are not very encouraging therefore bonds do not attract many investors. Apart from that the level of stamp duty levied by governments on secondary transactions of bonds are very high which hinders the growth and development further. Restricting policies: Indian banks are very much act on the guidelines, principles issued by the central bank and government. The policies implemented are very de motivate banks to involve in other activities. For example priority sector lending policy which mandates the banks to account 30% of their lending to these sectors, even though they are less productive like transport, agriculture are sectors Indian government recommends on. Limited Investor base; Indian bond mark et have limited investor base. Generally corporate bonds are held by government, provident funds, insurance companies, banks and many other financial institutions. These institutions hold till maturity, due to which the supply of funds become limited and inadequate in market. Therefore if the bond market has to improve, the general attitude of these institutions must change, involve themselves in trading to reduce risk, improve profits so and so forth. Ease on foreign investors will again improve the bond market. Inadequate transparency: since the prices are not determined by the market forces, this discourages investors to trade and very low trading activities do not provide the economy with better flexibility and liquidity to market overall. Unreliable Information signals: Indian bond market is not well supported with information and technology systems by which it faces many difficulties and delay in flow of information. Due to the delay in complete system the participants a re not aware of full information to understand their positions at end of the day which is not motivating for well timed decision making. Countries like US, Japan use various means to spread the relevant news and information like financial reports, profit statements, industrial meetings, and rating agencies and so on for enhance and smooth the flow of information through out the market. From the study few Recommendations for an active corporate bond market Infrastructure Financing Infrastructure financing in India offer a chance for developing the commercial bond markets but not depend on the growth of this market. Financing through different banks are not possible for the projects as they are for long periods. Banks cannot give 30 years loan facility as they can accept loans only for 5-10 years; this will leads towards asset liability mismatch. However, if the liquid market provide exit path, then it would be feasible for banks to purchase 30 year bonds. In contrast insurance firm or pension fund can buy long term bonds as they get the facility to sell which the secondary market can provide Securitization The need for a market for securitised products is another related issue for infrastructure financing. In India, three major areas Mortgage Backed Securities (MBS), Infrastructure Sector and other Asset backed securities (ABS) are important. For financing long term projects, individuals should get entrance in debt market like Special economic zones (SEZ). Expanding in domestic demand, export growth and growth in industrial investments will ultimately boost up the requirement of bond financing. Mismatch of currencies and over dependence of ASIAN corporations on short term foreign funds were the big causes of Asian Financial Crisis. It caused the fast outflow of capital from Asian countries and confidence in these countries began lighten. If the domestic markets dominated in their own currencies and more developed in Asia, then the Asian crisis would never strong enough as it destroyed the Asian markets. One of the ways to avoid risk is development of local currency market, whi ch will ultimately help to reduce potential currency and maturity mismatches in financial system. The development of an active debt market is required for  capital account convertibility which is also recommended by Tarapore committee. Apart from its fundamental role of achieving allocation efficiency, a well-developed government bond market strengthens the monetary policy implementation framework by equipping a central bank with market-based indirect instruments. A vibrant corporate debt market allows a corporation to access a set of standardized rates and fees instead of making individual negotiations with financial institutions. However corporations have difficulty issuing high value bonds in India, thus resulting in the incremental credit rate increasing from Rs 2.5 lakh (100k) crore (10m) in 2004-05 to Rs 3.7 lakh crore in 2005-06. Banks may find that their appetite for lending is taken up by large issuing corporations. If the Bond market becomes stagnant and bond, securities, loans etc cannot be issued by smaller institutions. Larger corporations develop a preference for acquiring finance via the Bonds and securities markets etc and Banks will have to react to this and concentrate more of their resources on developing the SME sector. The emergence of the  Pension fund industry In any country, Pension fund industry have some connections with the capital market, Same is the case is in India; they also invested in government securities. Investor base needs to be broadened: Though FIIs is allowed to invest up to $1.5 billion in corporate bonds, this amount is not enough to invest in this market. So, FIIs should allow investing more in this market. Widening the issuer base Banks should be allowed to issue bonds of maturity over 5 years based on their asset liability as they are allowed to issue bonds over 5 years only for financing infrastructure sector. Development of derivatives market Corporate, banks and other financial intuitions can reallocate the risk with the help of derivatives. Exchange traded derivatives perform different role to play in debt market and have to be standardised products because of their nature. If we discuss the OTC, they can be changed according to the situations. Hence both derivatives play vital role in the development of the market. Governments Investors should be provided by the repo market that will help them to manage short- term capital requirements. Market making By supporting corporate debt market, market making should be encouraged and it can be done with the help of primary dealers to do this job. Listing norms to be eased For already listed entities, there listing norms should be simpler; they should be allowed an abridged version of disclosure. However, companies which are not listed and which are opting for the private placement mode should be subjected to stringent disclosure norms. The practice of suspension of trading/delisting of securities in case of non-compliance with listing norms by an issuer needs to be replaced by heavy penalties on the promoters and directors of the erring company. Developing a trade reporting system A data base system is needed that publicize and store all the information related to trade in corporate bonds. So that all the transaction should be done through this system. Trading, clearing and settlement mechanism: A healthy trading policy would go a long way in facilitating efficient price discovery in corporate bonds as it created in depth and vibrancy to market along with the development of corporate bond markets by minimising the counterparty and settlement risk. In India, we have the opportunity to build up first- rate credit rating institutions. Specialized debt funds for infrastructure financing For infrastructure financing, specialised debt funds should be created with the same tax providing facility as provided by the venture capital fund that is registered SEBI. Developing a market for debt securitization: Indian government should make efforts to settle the uncertainty in taxation issues; this will help in developing a market for debt securitization. Cost of Issuance Majority of the issuers choose private placement due to the high cost of issuance. So the stamp duty should be trim down. Standardization In order to reduce transaction cost, standardized trading and settlement processes should enhance liquidity that also helps in improving market liquidity. These are some factors that are missing in Indian micro structure. Bond measurement techniques Bond yield: The return on which an investor will receive by holding a bond to maturity. So if you want to know how much your bond investment will earn, you should know how to calculate yield. The investor can decided on his earnings by calculating the yield. Below are the useful calculations that are required for the investors: Calculating Current Yield: If investor purchased a bond with a par value of $100 for $95.92 and that bond paid a coupon rate of 5%, by using the above formula we can calculate its current yield: If bond is at discount or premium By taking same data from the first example, and considering maturity period of 30 months and a coupon payment of $5 we can calculate current yield as shown below: Since the bond is at discounted price the adjusted current yield is 6.84% which is higher than the current yield 5.21% and their by investor gets more earnings Coupon payment for a zero-coupon bond  n = years left until maturity When zero-coupon bond is considered having the future value of $1,000 that matures in two years and currently available at $925, one can calculate its current yield with the following formula:  Calculating Yield to Maturity {YTM} YTM is the interest rates by which the present values of all the future cash flows are equal to the bonds price.  Its value is derived by the following equation. OR Example 1: You purchased a bond having par value of $100 which has current yield of 5.21% as is priced at $95.92. It pays semi annual coupon of 5% and matures in 30 months. The above problem is solved as shown below: 1. Determine the Cash Flows:   coupon payment obtained for every six months are $2.50 (0.025*100). In total, for five payments, calculate cash flows along with the future value of $100. 2. Plug the Known Amounts into the YTM Formula:  Note: semi-annual interest rates are calculated as the bond pays the coupon semi-annually. 3. Guess and Check:  Now we have to calculate I or the interest rate by considering bond price and the yield rather than picking the random numbers. When the value of the bond is at par, the interest rate is equal to the coupon rate. If the value is above par (at a premium), the coupon rate is said to be greater than the interest rate. In our example, the bond is at discount so the annual interest rate must be greater than the coupon rate of 5%. Now by using the different interest rates which are greater than 5%, we obtain the different bond prices as shown in the table. Since our bond price is $95.52 that lies between 6% and 7% we have to form a new table of more interest rates that lies between 6% and 7%. When the interest rate is 6.8% the bond price matches $95.92.Hence the semi annual interest rate is 3.40 % By using these calculations investors can decide on their earnings based on their investment capacity, holding period, and the interest they want to earn. Since the bond markets are more secured because of the involvement of government, the returns are guaranteed and low when compared to the stock market.