Louis Armstrong and His Music Essay - 1366 Words

Louis Armstrong and His Music â€Å"The essence of jazz- making something new out of something old, making something personal out of something shared- has no finer exemplar than Armstrong.† (Hasse par. 3) During the 1920’s a young African American man, otherwise known as Louis Armstrong, helped create and represent a new twist on popular music. This music that became so famous and well loved today is also referred to as jazz. Louis Armstrong had a very successful jazz career performing and composing popular jazz hits in the 1920’s. Louis Armstrong was born on August 4, 1901 in the city of New Orleans, Louisiana. He not only grew up in poverty but also in the area nicknamed â€Å"The Battlefield.† (â€Å"Louis Armstrong† Britannica par. 1) When†¦show more content†¦Daisy Parker was a prostitute and their marriage did not last long. Violence and arguments ended the marriage in 1923. (â€Å"Louis Armstrong† par. 4) Meanwhile, Armstrong’s music career began to grow. He played in a band on a riverboat led by Fate Marable. (â€Å"Louis Armstrong† par. 5) â€Å"Armstrong, fondly known as ‘Satchmo’ (which is short for ‘satchel mouth’ referring to the size of his mouth) or ‘Pops’, had a sense of humor, natural and unassuming manner, and positive disposition that made everyone around him feel good.† (â€Å"Louis Armstrong† par. 1) New Orleans had a very diverse population. Both European and African origins made many different cultural influences. (Bergreen par. 2) Jazz was very popular in the 1920’s. People had money to spend on entertainment like dance halls and clubs. Radios and records were popular so people did not have to travel far to hear music they enjoyed. (Matthews par. 4) All sorts of new dances came about and people loved them. The Charleston, tap dance, and other swinging dances all derived from fads of African Americans. (â€Å"Harlem Renaissance† par. 9) Famous songs from Armstrong in the 20’s include â€Å"Big Butter and Egg Man†, â€Å"Hotter Than That†, â€Å"Struttin’ With Some Barbeque†, â€Å"Potato Head Blues†, and â€Å"S.O.L. Blues†. (Hasse par. 1) The summer of 1922, in search of fame and fortune, Armstrong headed to Chicago where he knew a man by the name of King Oliver. For the next two years he was an activeShow MoreRelatedLouis Armstrong s Life, His Music And Influence On Others1565 Words   |  7 Pagesdo my project on is Louis Armstrong. I chose Louis Armstrong because I wanted to do my project on a singer as well as a musician. I chose him because he was one of the few people that I knew about, also because I did some research on him and listened to his music and I thought that he was interesting to write about. My main three things that I’m going to discuss about Louis Armstrong will be his life, his music and influence on others. I’m going to describe how and where Louis Armstrong’s grew upRead MoreLouis Armstrong And Jazz Age1128 Words   |  5 Pagesof satire. Music also plays a big role in The Great Gatsby. One singer that was popular in the 1920s was Louis Armstrong he was known as the King of Jazz. Louis Armstrong was born on August 4, 1901 in New Orleans, Louisiana. Armstrong was born and raised in New Orleans he was the son of a prostitute and an absent father. Louis Armstrong grew up with his grandparents because his parents had separated and left him. His mother finally came back, but then left once more. Louis Armstrong grew up aroundRead MoreThe Most Influential Jazz Artists History And Thee Most Important Figure Essay1347 Words   |  6 Pages Louis Armstrong is to be considered one of the most influential jazz artists history and thee most important figure in jazz history. From the 1920’s all the way through the 1960’s, Armstrong had a very illustrious career. Armstrong was a composer, instrumentalist, arranger and a singer. Giving him many ways to have an everlasting legacy in music. He innovated many different styles and excelled in many different eras of jazz. Armstrong made an abundant of contributions to jazz ranging from new stylesRead MoreLouis Ar mstrong : An Era Of Fast Beat And Improvised Style1121 Words   |  5 PagesHistory). The roots of Jazz music go back as far as slavery in the 1600s. As Africans were taken from their homes and forced to come to North America, they were able to keep many of their traditions, one including music (January, Brendan, and Francois Roca). Through the years, African music styles combined with European instruments to create the most popular form of music in the twentieth century, jazz (January, Brendan, and Francois Roca). One person who made a large impact on music of the twentieth centuryRead MoreEssay on Biography of Louis Armstrong1423 Words   |  6 Pagesthem. Louis Armstrong’s life was similar to this. Armstrong strived and strived until he reached to a point in his life where he was comfortable with his fourth wife, Lucille Wilson. Armstrong is ultimately known as the creator of jazz and blues. He was awarded this title by using his talents when he was a young boy growing u p in a rough neighborhood. Armstrong’s talent was a result of his childhood and young adult life. Growing up, Armstrong was exposed to music in his surroundings. Armstrong obtainedRead MoreThe Legacy Of Louis Armstrong Essay1401 Words   |  6 PagesLouis Armstrong, one of the most influential figures in jazz music, enjoyed a career that spans across 50 years, and through different eras of jazz. Nicknamed† Satchmo†, â€Å"Pops†, and† Ambassador Satch†, Armstrong could do it all, he sang, occasionally acted, composed music, but was most famous for his cornet and trumpet playing. Although Armstrong is well known for his amazing trumpet play, he also influenced the direction that jazz music during his time was headed. Over the course of this paper IRead MoreMusic is an art that has been in this world for tens of thousands of years and has proven its900 Words   |  4 PagesMusic is an art that has been in this world for tens of thousands of years and has proven its abilities to bring people together and sometimes even make people happy. Although the jazz era ended almost a century ago, this time influenced by Louis Armstrong was a huge cultural shift that still remains in our society in which African-Americans are a vast part of our music industry amongst pop, rap, reggae, and more. Jazz was a unique form of music, there had never been anything like it before. ItRead MoreThe Music Of New Orleans Jazz1223 Words   |  5 PagesMusic is a form of art that is expressed through the creation of sound based on several cultures throughout the world. New Orleans Jazz is a genre of music originating in the 19th century that allowed people, especially of African American decent, to feel to express their love and excitement for the jubilant music. Jazz is a unique style of music that is often performed by brass band musicians using simple instruments to create a distinctive musical sound. Two distinguished musicians, Louis ArmstrongRead MoreKing Of Jazz : Louis Armstrong1617 Words   |  7 PagesJazz - Louis Armstrong At the mention jazz music, that person will first think of is likely to be a great figure with a clown image, nicknamed Satchmo. The man was Louis Armstrong. He is a husky singer, often with a trumpet in his hand. He played dramatic works of simple structure in Orleans jazz style and with the accompaniment of Dick jazz music. Each of the books on jazz music will mention his name. Louis Armstrong was to jazz music what Bach is to classical music, Presley is to rock music (BerrettRead MoreLouis Armstrong And The Harlem Renaissance950 Words   |  4 Pagesit is a genre of music that uses mainly brass, woodwind, and piano. It became popular in the 20th century during the Harlem Renaissance where many famous jazz artists arose. Louis Armstrong was one of the most well known jazz artist of his time. Louis Armstrong was a trumpeter, bandleader, singer, soloist, film star, and comedian. He was considered one of the most influential artists in jazz history. Louis Armstrong was a famous musi cian during the Harlem renaissance because of his skills with a trumpet

Role of Computer in Daily Life Free Essays

Financial Crises and Bank Liquidity Creation Allen N. Berger †  and Christa H. S. We will write a custom essay sample on Role of Computer in Daily Life or any similar topic only for you Order Now Bouwman †¡ October 2008 Financial crises and bank liquidity creation are often connected. We examine this connection from two perspectives. First, we examine the aggregate liquidity creation of banks before, during, and after five major financial crises in the U. S. from 1984:Q1 to 2008:Q1. We uncover numerous interesting patterns, such as a significant build-up or drop-off of â€Å"abnormal† liquidity creation before each crisis, where â€Å"abnormal† is defined relative to a time trend and seasonal factors. Banking and market-related crises differ in that banking crises were preceded by abnormal positive liquidity creation, while market-related crises were generally preceded by abnormal negative liquidity creation. Bank liquidity creation has both decreased and increased during crises, likely both exacerbating and ameliorating the effects of crises. Off-balance sheet guarantees such as loan commitments moved more than on-balance sheet assets such as mortgages and business lending during banking crises. Second, we examine the effect of pre-crisis bank capital ratios on the competitive positions and profitability of individual banks during and after each crisis. The evidence suggests that high capital served large banks well around banking crises – they improved their liquidity creation market share and profitability during these crises and were able to hold on to their improved performance afterwards. In addition, high-capital listed banks enjoyed significantly higher abnormal stock returns than low-capital listed banks during banking crises. These benefits did not hold or held to a lesser degree around marketrelated crises and in normal times. In contrast, high capital ratios appear to have helped small banks improve their liquidity creation market share during banking crises, market-related crises, and normal times alike, and the gains in market share were sustained afterwards. Their profitability improved during two crises and subsequent to virtually every crisis. Similar results were observed during normal times for small banks. †  University of South Carolina, Wharton Financial Institutions Center, and CentER – Tilburg University. Contact details: Moore School of Business, University of South Carolina, 1705 College Street, Columbia, SC 29208. Tel: 803-576-8440. Fax: 803-777-6876. E-mail: aberger@moore. sc. edu. †¡ Case Western Reserve University, and Wharton Financial Institutions Center. Contact details: Weatherhead School of Management, Case Western Reserve University, 10900 Euclid Avenue, 362 PBL, Cleveland, OH 44106. Tel. : 216-368-3688. Fax: 216-368-6249. E-mail: christa. bouwman@case. edu. Keywords: Financial Crises, Liquidity Creation, and Banking. JEL Classification: G28, and G21. The authors thank Asani Sarkar, Bob DeYoung, Peter Ritchken, Greg Udell, and participants at presentations at the Summer Research Conference 2008 in Finance at the ISB in Hyderabad, the International Monetary Fund, the University of Kansas’ Southwind Finance Conference, and Erasmus University for useful comments. Financial Crises and Bank Liquidity Creation 1. Introduction Over the past quarter century, the U. S. has experienced a number of financial crises. At the heart of these crises are often issues surrounding liquidity provision by the banking sector and financial markets (e. . , Acharya, Shin, and Yorulmazer 2007). For example, in the current subprime lending crisis, liquidity seems to have dried up as banks seem less willing to lend to individuals, firms, other banks, and capital market participants, and loan securitization appears to be significantly depressed. This behavior of banks is summarized by the Economist: â€Å"Although bankers are always stingier in a down turn, [†¦] lots of banks said they had also cut back lending because of a slide in their current or expected capital and liquidity. 1 The practical importance of liquidity during crises is buttressed by financial intermediation theory, which indicates that the creation of liquidity is an important reason why banks exist. 2 Early contributions argue that banks create liquidity by financing relatively illiquid assets such as business loans with relatively liquid liabilities such as transactions deposits (e. g. , Bryant 1980, Diamond and Dybvig 1983). More recent contributions suggest that banks also create liquidity off the balance sheet through loan commitments and similar claims to liquid funds (e. g. Holmstrom and Tirole 1998, Kashyap, Rajan, and Stein 2002). 3 The creation of liquidity makes banks fragile and susceptible to runs (e. g. , Diamond and Dybvig 1983, Chari and Jagannathan 1988), and such runs can lead to crises via contagion effects. Bank liquidity creation can al so have real effects, in particular if a financial crisis ruptures the creation of liquidity (e. g. , Dell’Ariccia, Detragiache, and Rajan 2008). 4 Exploring the relationship between financial crises and bank liquidity creation can thus yield potentially interesting economic insights and may have important policy implications. The goals of this paper are twofold. The first is to examine the aggregate liquidity creation of 1 â€Å"The credit crisis: Financial engine failure† – The Economist, February 7, 2008. According to the theory, another central role of banks in the economy is to transform credit risk (e. g. , Diamond 1984, Ramakrishnan and Thakor 1984, Boyd and Prescott 1986). Recently, Coval and Thakor (2005) theorize that banks may also arise in response to the behavior of irrational agents in financial markets. 3 James (1981) and Boot, Thakor, and Udell (1991) endogenize the loan commitment contract due to informational frictions. The loan commitment contract is subsequently used in Holmstrom and Tirole (1998) and Kashyap, Rajan, and Stein (2002) to show how banks can provide liquidity to borrowers. 4 Acharya and Pedersen (2005) show that liquidity risk also affects the expected returns on stocks. 2 1 banks around five financial crises in the U. S. over the past quarter century. 5 The crises include two banking crises (the credit crunch of the early 1990s and the subprime lending crisis of 2007 – ? and three crises that can be viewed as primarily market-related (the 1987 stock market crash, the Russian debt crisis plus the Long-Term Capital Management meltdown in 1998, and the bursting of the dot. com bubble plus the September 11 terrorist attack of the early 2000s). This examination is intended to shed light on whether there are any connections between financial crises and aggregate l iquidity creation, and whether these vary based on the nature of the crisis (i. e. , banking versus market-related crisis). A good nderstanding of the behavior of bank liquidity creation around financial crises is also important to shed light on whether banks create â€Å"too little† or â€Å"too much† liquidity, and whether bank behavior exacerbates or ameliorates the effects of crises. We document the empirical regularities related to these issues, so as to raise additional interesting questions for further empirical and theoretical examinations. The second goal is to study the effect of pre-crisis equity capital ratios on the competitive positions and profitability of individual banks around each crisis. Since bank capital affects liquidity creation (e. g. , Diamond and Rajan 2000, 2001, Berger and Bouwman forthcoming), it is likely that banks with different capital ratios behave differently during crises in terms of their liquidity creation responses. Specifically, we ask: are high-capital banks able to gain market share in terms of liquidity creation at the expense of low-capital banks during a crisis, and does such enhanced market share translate into higher profitability? If so, are the high-capital banks able to sustain their improved competitive positions after the financial crisis is over? The recent acquisitions of Countrywide, Bear Stearns, and Washington Mutual provide interesting case studies in this regard. All three firms ran low on capital and had to be bailed out by banks with stronger capital positions. Bank of America (Countrywide’s acquirer) and J. P. Morgan Chase (acquirer of Bear-Stearns and Washington Mutual’s banking operations) had capital ratios high enough to enable them to buy their rivals at a small fraction of what they were worth a year before, thereby gaining a potential competitive advantage. 6 The recent experience of IndyMac Bank provides 5 Studies on the behavior of banks around financial crises have typically focused on commercial and real estate lending (e. g. , Berger and Udell 1994, Hancock, Laing, and Wilcox 1995, Dell’Ariccia, Igan, and Laeven 2008). We focus on the more comprehensive notion of bank liquidity creation. 6 On Sunday, March 16, 2008, J. P. Morgan Chase agreed to pay $2 a share to buy all of Bear Stearns, less than onetenth of the firm’s share price on Friday and a small fraction of the $170 share price a year before. On March 24, 2008, it increased its bid to $10, and completed the transaction on May 30, 2008. On January 11, Bank of America announced it would pay $4 billion for Countrywide, after Countrywide’s market capitalization had plummeted 85% during the preceding 12 months. The transaction was completed on July 1, 2008. After a $16. 4 billion ten-day bank 2 another interesting example. The FDIC seized IndyMac Bank after it suffered substantive losses and depositors had started to run on the bank. The FDIC intends to sell the bank, preferably as a single entity but if that does not work, the bank will be sold off in pieces. Given the way the regulatory approval process for bank acquisitions works, it is likely that the acquirer(s) will have a strong capital base. 7 A financial crisis is a natural event to examine how capital affects the competitive positions of banks. During â€Å"normal† times, capital has many effects on the bank, some of which counteract each other, making it difficult to learn much. For example, capital helps the bank cope more effectively with risk,8 but it also reduces the value of the deposit insurance put option (Merton 1977). During a crisis, risks become elevated and the risk-absorption capacity of capital becomes paramount. Banks with high capital, which are better buffered against the shocks of the crisis, may thus gain a potential advantage. To examine the behavior of bank liquidity creation around financial crises, we calculate the amount of liquidity created by the banking sector using Berger and Bouwman’s (forthcoming) preferred liquidity creation measure. This measure takes into account the fact that banks create liquidity both on and off the balance sheet and is constructed using a three-step procedure. In the first step, all bank assets, liabilities, equity, and off-balance sheet activities are classified as liquid, semi-liquid, or illiquid. This is done based on the ease, cost, and time for customers to obtain liquid funds from the bank, and the ease, cost, and time for banks to dispose of their obligations in order to meet these liquidity demands. This classification process uses information on both product category and maturity for all activities other than loans; due to data limitations, loans are classified based solely on category (â€Å"cat†). Thus, residential mortgages are classified as more liquid than business loans regardless of maturity because it is generally easier to securitize and sell such mortgages than business loans. In the second step, weights are assigned to these activities. The weights are consistent with the theory in that maximum liquidity is created when illiquid assets (e. g. , business loans) are transformed into liquid liabilities (e. g. , transactions deposits) and maximum liquidity is destroyed when liquid assets (e. g. , treasuries) are transformed into illiquid liabilities â€Å"walk†, Washington Mutual was placed into the receivership of the FDIC on September 25, 2008. J. P. Morgan Chase purchased the banking business for $1. 9 billion and re-opened the bank the next day. On September 26, 2008, the holding company and its remaining subsidiary filed for bankruptcy. Washington Mutual, the sixth-largest bank in the U. S. before its collapse, is the largest bank failure in the U. S. financial history. 7 After peaking at $50. 11 on May 8, 2006, IndyMac’s shares lost 87% of their value in 2007 and another 95% in 2008. Its share price closed at $0. 28 on July 11, 2008, the day before it was seized by the FDIC. 8 There are numerous papers that argue that capital enhances the risk-absorption capacity of banks (e. g. , Bhattacharya and Thakor 1993, Repullo 2004, Von Thadden 2004). (e. g. , subordinated debt) or equity. In the third step, a â€Å"cat fat† liquidity creation measure is constructed, where â€Å"fat† refers to the inclusion of off-balance sheet activities. Although Berger and Bouwman construct four different liquidity creation measures, they indicate that â€Å"cat fat† is the preferred measure. They argue that to assess the amount of liquidity creation, the ability to securitize or sell a particular loan category is more important than the maturity of those loans, and the inclusion of off-balance sheet activities is critical. We apply the â€Å"cat fat† liquidity creation measure to quarterly data on virtually all U. S. commercial and credit card banks from 1984:Q1 to 2008:Q1. Our measurement of aggregate liquidity creation by banks allows us to examine the behavior of liquidity created prior to, during, and after each crisis. The popular press has provided anecdotal accounts of liquidity drying up during some financial crises as well as excessive liquidity provision at other times that led to credit expansion bubbles (e. g. , the subprime lending crisis). We attempt to give empirical content to these notions of â€Å"too little† and â€Å"too much† liquidity created by banks. Liquidity creation has quadrupled in real terms over the sample period and appears to have seasonal components (as documented below). Since no theories exist that explain the intertemporal behavior of liquidity creation, we take an essentially empirical approach to the problem and focus on how far liquidity creation lies above or below a time trend and seasonal factors. 10 That is, we focus on â€Å"abnormal† liquidity creation. The use of this measure rests on the supposition that some â€Å"normal† amount of liquidity creation exists, acknowledging that at any point in time, liquidity creation may be â€Å"too much† or â€Å"too little† in dollar terms. Our main results regarding the behavior of liquidity creation around financial crises are as follows. First, prior to financial crises, there seems to have been a significant build-up or drop-off of â€Å"abnormal† liquidity creation. Second, banking and market-related crises differ in two respects. The banking crises (the credit crunch of 1990-1992 and the current subprime lending crisis) were preceded by abnormal positive liquidity creation by banks, whereas the market-related crises were generally preceded by abnormal negative liquidity creation. In addition, the banking crises themselves seemed to change the trajectory of aggregate liquidity creation, while the market-related crises did not appear to do so. Third, 9 Their alternative measures include â€Å"cat nonfat,† â€Å"mat fat,† and â€Å"mat nonfat. † The â€Å"nonfat† measures exclude offbalance sheet activities, and the â€Å"mat† measures classify loans by maturity rather than by product category. 0 As alternative approaches, we use the dollar amount of liquidity creation per capita and liquidity creation divided by GDP and obtain similar results (see Section 4. 2). 4 liquidity creation has both decreased during crises (e. g. , the 1990-1992 credit crunch) and increased during cri ses (e. g. , the 1998 Russian debt crisis / LTCM bailout). Thus, liquidity creation likely both exacerbated and ameliorated the effects of crises. Fourth, off-balance sheet illiquid guarantees (primarily loan commitments) moved more than semi-liquid assets (primarily mortgages) and illiquid assets (primarily business loans) during banking crises. Fifth, the current subprime lending crisis was preceded by an unusually high positive abnormal amount of aggregate liquidity creation, possibly caused by lax lending standards that led banks to extend increasing amounts of credit and off-balance sheet guarantees. This suggests a possible dark side of bank liquidity creation. While financial fragility may be needed to induce banks to create liquidity (e. g. , Diamond and Rajan 2000, 2001), our analysis raises the intriguing possibility that the causality may also be reversed in the sense that too much liquidity creation may lead to financial fragility. We then turn to the second goal of the paper – examining whether banks’ pre-crisis capital ratios affect their competitive positions and profitability around financial crises. To examine the effect on a bank’s competitive position, we regress the change in its market share of liquidity creation – measured as the average market share of aggregate liquidity creation during the crisis (or over the eight quarters after the crisis) minus the average market share over the eight quarters before the crisis, expressed as a proportion of the bank’s average pre-crisis market share – on its average pre-crisis capital ratio and a set of control variables. 1 Since the analyses in the first half of the paper reveal a great deal of heterogeneity in crises, we run these regressions on a per-crisis basis, rather than pooling the data across crises. The control variables include bank size, bank risk, bank holding company membership, local market competition,12 and proxies for the economic circumstances in the local markets in which the bank operates. Moreover, we examine large and small banks as two separate groups since the results in Berger and Bouwman (forthcoming) indicate that the effect of capital on liquidity creation differs across large and small banks. 13 11 Defining market share this way is a departure from previous research (e. g. , Laeven and Levine 2007), in which market share relates to the bank’s weighted-average local market share of total deposits. 12 While our focus is on the change in banks’ competitive positions measured in terms of their aggregate liquidity creation market shares, we control for â€Å"local market competition† measured as the bank-level Herfindahl index based on local market deposit market shares. 13 Berger and Bouwman use three size categories: large, medium, and small banks. We combine the large and medium bank categories into one â€Å"large bank† category. 5 One potential concern is that differences in bank capital ratios may simply reflect differences in bank risk. Banks that hold higher capital ratios because their investment portfolios are riskier may not improve their competitive positions around financial crises. Our empirical design takes this into account. The inclusion of bank risk as a control variable is critical and ensures that the measured effect of capital on a bank’s market share is net of the effect of risk. We find evidence that high-capital large banks improved their market share of liquidity creation during the two banking crises, but not during the market-related crises. After the credit crunch of the early 1990s, high-capital large banks held on to their improved competitive positions. Since the current subprime lending crisis was not over at the end of the sample period, we cannot yet tell whether highcapital large banks will also hold on to their improved competitive positions after this crisis. In contrast to the large banks, high-capital small banks seemed to enhance their competitive positions during all crises and held on to their improved competitive positions after the crises as well. Next, we focus on the effect of pre-crisis bank capital on the profitability of the bank around each crisis. We run regressions that are similar to the ones described above with the change in return on equity (ROE) as the dependent variable. We find that high-capital large banks improved their ROE in those cases in which they enhanced their liquidity creation market share – the two banking crises – and were able to hold on to their improved profitability after the credit crunch. profitability after the market-related crises. They also increased their In contrast, for high-capital small banks, profitability improved during two crises, and subsequent to virtually every crisis. As an additional analysis, we examine whether the improved competitive positions and profitability of high-capital banks translated into better stock return performance. To perform this analysis, we focus on listed banks and bank holding companies (BHCs). If multiple banks are part of the same listed BHC, their financial statements are added together to create pro-forma financial statements of the BHC. The results confirm the earlier change in performance findings of large banks: listed banks with high capital ratios enjoyed significantly larger abnormal returns than banks with low capital ratios during banking crises, but not during market-related crises. Our results are based on a five-factor asset pricing model that includes the three Fama-French (1993) factors, momentum, and a proxy for the slope of the yield curve. 6 We also check whether high capital provided similar advantages outside crisis periods, i. e. , during â€Å"normal† times. We find that large banks with high capital ratios did not enjoy either market share or profitability gains over the other large banks, whereas for small banks, results are similar to the smallbank findings discussed above. Moreover, outside banking crises, high capital was not associated with high stock returns. Combined, the results suggest that high capital ratios serve large banks well, particularly around banking crises. In contrast, high capital ratios appear to help small banks around banking crises, marketrelated crises, and normal times alike. The remainder of this paper is organized as follows. Section 2 discusses the related literature. Section 3 explains the liquidity creation measures and our sample based on data of U. S. banks from 1984:Q1 to 2008:Q1. Section 4 describes the behavior of aggregate bank liquidity creation around five financial crises and draws some general conclusions. Section 5 discusses the tests of the effects of precrisis capital ratios on banks’ competitive positions and profitability around financial crises and â€Å"normal† times. This section also examines the stock returns of high- and low-capital listed banking organizations during each crisis and during normal† times. Section 6 concludes. 2. Related literature This paper is related to two literatures. The first is the literature on financial crises. 14 One strand in this literature has focused on financial crises and fragility. Some papers have analyzed contagion. Contributions in this area suggest that a small liquidity shock in one area may have a contagious effect through out the economy (e. g. , Allen and Gale 1998, 2000). Other papers have focused on the determinants of financial crises and the policy implications (e. g. Bordo, Eichengreen, Klingebiel, and Martinez-Peria 2001, Demirguc-Kunt, Detragiache, and Gupta 2006, Lorenzoni 2008, Claessens, Klingebiel, and Laeven forthcoming). A second strand examines the effect of financial crises on the real sector (e. g. , Friedman and Schwarz 1963, Bernanke 1983, Bernanke and Gertler 1989, Dell’Ariccia, Detragiache, and Rajan 2008, Shin forthcoming). These papers find that financial crises increase the cost of financing and reduce credit, which adversely affects corporate investment and may lead to reduced 14 Allen and Gale (2007) provide a detailed overview of the causes and consequences of financial crises. 7 growth and recessions. That is, financial crises have independent real effects (see Dell’Ariccia, Detragiache, and Rajan 2008). In contrast to these papers, we examine how the amount of liquidity created by the banking sector behaved around financial crises in the U. S. , and explore systematic patterns in the data. The second literature to which this paper is related focuses on the strategic use of leverage in product-market competition for non-financial firms (e. g. , Brander and Lewis 1986, Campello 2006, Lyandres 2006). This literature suggests that financial leverage can affect competitive dynamics. While this literature has not focused on banks, we analyze the effects of crises on the competitive positioning and profitability of banks based on their pre-crisis capital ratios. Our hypothesis is that in the case of banks, the competitive implications of capital are likely to be most pronounced during a crisis when a bank’s capitalization has a major influence on its ability to survive the crisis, particularly in light of regulatory discretion in closing banks or otherwise resolving problem institutions. Liquidity creation may be a channel through which this competitive advantage is gained or lost. 15 3. Description of the liquidity creation measure and sample We calculate the dollar amount of liquidity created by the banking sector using Berger and Bouwman’s (forthcoming) preferred â€Å"cat fat† liquidity creation measure. In this section, we explain briefly what this acronym stands for and how we construct this measure. 16 We then describe our sample. All financial values are expressed in real 2007:Q4 dollars using the implicit GDP price deflator. 3. 1. Liquidity creation measure To construct a measure of liquidity creation, we follow Berger and Bouwman’s three-step procedure (see Table 1). Below, we briefly discuss these three steps. In Step 1, we classify all bank activities (assets, liabilities, equity, and off-balance sheet activities) as liquid, semi-liquid, or illiquid. For assets, we do this based on the ease, cost, and time for banks to dispose of their obligations in order to meet these liquidity demands. For liabilities and equity, we do this 15 Allen and Gale (2004) analyze how competition affects financial stability. We reverse the causality and examine the effect of financial crises on competition. 6 For a more detailed discussion, see Berger and Bouwman (forthcoming). 8 based on the ease, cost, and time for customers to obtain liquid funds from the bank. We follow a similar approach for off-balance sheet activities, classifying them based on functionally similar on-balance sheet activities. For all activities other than loans, this classi fication process uses information on both product category and maturity. Due to data restrictions, we classify loans entirely by category (â€Å"cat†). 17 In Step 2, we assign weights to all the bank activities classified in Step 1. The weights are consistent with liquidity creation theory, which argues that banks create liquidity on the balance sheet when they transform illiquid assets into liquid liabilities. We therefore apply positive weights to illiquid assets and liquid liabilities. Following similar logic, we apply negative weights to liquid assets and illiquid liabilities and equity, since banks destroy liquidity when they use illiquid liabilities to finance liquid assets. We use weights of ? and -? , because only half of the total amount of liquidity created is attributable to the source or use of funds alone. For example, when $1 of liquid liabilities is used to finance $1 in illiquid assets, liquidity creation equals ? * $1 + ? * $1 = $1. In this case, maximum liquidity is created. However, when $1 of liquid liabilities is used to finance $1 in liquid assets, liquidity creation equals ? * $1 + -? * $1 = $0. In this case, no liquidity is created as the bank holds items of approximately the same liquidity as those it gives to the nonbank public. Maximum liquidity is destroyed when $1 of illiquid liabilities or equity is used to finance $1 of liquid assets. In this case, liquidity creation equals -? $1 + -? * $1 = -$1. An intermediate weight of 0 is applied to semi-liquid assets and liabilities. Weights for off-balance sheet activities are assigned using the same principles. In Step 3, we combine the activities as classified in Step 1 and as weighted in Step 2 to construct Berger and Bouwman’s preferred â€Å"cat fat† liquidity creation measure. This measure classifies loans b y category (â€Å"cat†), while all activities other than loans are classified using information on product category and maturity, and includes off-balance sheet activities (â€Å"fat†). Berger and Bouwman construct four liquidity creation measures by alternatively classifying loans by category or maturity, and by alternatively including or excluding off-balance sheet activities. However, they argue that â€Å"cat fat† is the preferred measure since for liquidity creation, banks’ ability to securitize or sell loans is more important than loan maturity, and banks do create liquidity both on the balance sheet and off the balance sheet. 17 Alternatively, we could classify loans by maturity (â€Å"mat†). However, Berger and Bouwman argue that it is preferable to classify them by category since for loans, the ability to securitize or sell is more important than their maturity. 9 To obtain the dollar amount of liquidity creation at a particular bank, we multiply the weights of ? , -? , or 0, respectively, times the dollar amounts of the corresponding bank activities and add the weighted dollar amounts. 3. 2. Sample description We include virtually all commercial and credit card banks in the U. S. in our study. 18 For each bank, we obtain quarterly Call Report data from 1984:Q1 to 2008:Q1. We keep a bank if it: 1) has commercial real estate or commercial and industrial loans outstanding; 2) has deposits; 3) has an equity capital ratio of at least 1%; 4) has gross total assets or GTA (total assets plus allowance for loan and lease losses and the allocated transfer risk reserve) exceeding $25 million. We end up with data on 18,134 distinct banks, yielding 907,159 bank-quarter observations over our sample period. For each bank, we calculate the dollar amount of liquidity creation using the process described in Section 3. 1. The amount of liquidity creation and all other financial values are put into real 2007:Q4 dollars using the implicit GDP price deflator. When we explore aggregate bank liquidity creation around financial crises, we focus on the real dollar amount of liquidity creation by the banking sector. To obtain this, we aggregate the liquidity created by all banks in each quarter and end up with a sample that contains 97 inflation-adjusted, quarterly liquidity creation amounts. In contrast, when we examine how capital affects the competitive positions of banks, we focus on the amount of liquidity created by individual banks around each crisis. Given documented differences between large and small banks in terms of portfolio composition (e. g. , Kashyap, Rajan, and Stein 2002, Berger, Miller, Petersen, Rajan, and Stein 2005) and the effect of capital on liquidity creation (Berger and Bouwman forthcoming), we split the sample into large banks (between 330 and 477 observations, depending on the crisis) and small banks (between 5556 and 6343 observations, depending on the crisis), and run all change in market share and profitability regressions separately for these two sets of banks. Large banks have gross total assets (GTA) exceeding $1 billion at the end of the quarter before a crisis 18 Berger and Bouwman (forthcoming) include only commercial banks. We also include credit card banks to avoid an artificial $0. 19 trillion drop in bank liquidity creation in the fourth quarter of 2006 when Citibank N. A. moved its credit-card lines to Citibank South Dakota N. A. , a credit card bank. 10 and small banks have GTA up to $1 billion at the end of that quarter. 19,20 4. The behavior of aggregate bank liquidity creation around financial crises This section focuses on the first goal of the paper – examining the aggregate liquidity creation of banks across five financial crises in the U. S. over the past quarter century. The crises include the 1987 stock market crash, the credit crunch of the early 1990s, the Russian debt crisis plus Long-Term Capital Management (LTCM) bailout of 1998, the bursting of the dot. com bubble and the Sept. 11 terrorist attacks of the early 2000s, and the current subprime lending crisis. We first provide summary statistics and explain our empirical approach. We then discuss alternative measures of abnormal liquidity creation. Next, we describe the behavior of bank liquidity creation before, during, and after each crisis. Finally, we draw some general conclusions from these results. 4. 1. Summary statistics and empirical approach Figure 1 Panel A shows the dollar amount of liquidity created by the banking sector, calculated using the â€Å"cat fat† liquidity creation measure over our sample period. As shown, liquidity creation has increased substantially over time: it has more than quadrupled from $1. 369 trillion in 1984:Q1 to $5. 06 trillion in 2008:Q1 (in real 2007:Q4 dollars). We want to examine whether liquidity creation by the banking sector is â€Å"high,† â€Å"low,† or at a â€Å"normal† level around financial crises. Since no theories exist that explain the intertemporal behavior of liquidity creation or generate numerical estimates of â€Å"normal† liquidity creation, we need a reasonable empi rical approach. At first blush, it may seem that we could simply calculate the average amount of bank liquidity creation over the entire sample period and view amounts above this sample average as â€Å"high† and amounts below the average as â€Å"low. However, Figure 1 Panel A clearly shows that this approach would cause us to classify the entire second half of the sample period (1996:Q1 – 2008:Q1) as â€Å"high† and the entire first half of the sample period (1984:Q1 – 1995:Q4) as â€Å"low. † We therefore do not 19 As noted before, we combine Berger and Bouwman’s large and medium bank categories into one â€Å"large bank† category. Recall that all financial values are expressed in real 2007:Q4 dollars. 20 GTA equals total assets plus the allowance for loan and lease losses and the allocated transfer risk reserve. Total assets on Call Reports deduct these two reserves, which are held to cover potential credit losses. We add these reserves back to measure the full value of the loans financed and the liquidity created by the bank on the asset side. 11 use this approach. The approach we take is aimed at calculating the â€Å"abnormal† amount of liquidity created by the banking sector based on a time trend. It focuses on whether liquidity creation lies above or below this time trend, and also deseasonalizes the data to ensure that we do not base our conclusions on mere seasonal effects. We detrend and deseasonalize the data by regressing the dollar amount of liquidity creation on a time index and three quarterly dummies. The residuals from this regression measure the â€Å"abnormal† dollar amount of liquidity creation in a particular quarter. That is, they measure how far (deseasonalized) liquidity creation lies above or below the trend line. If abnormal liquidity creation is greater than (smaller than) $0, the dollar amount of liquidity created by the banking sector lies above (below) the time trend. If abnormal liquidity creation is high (low) relative to the time trend and seasonal factors, we will interpret this as liquidity creation being â€Å"too high† (â€Å"too low†). Figure 1 Panel B shows abnormal liquidity creation over time. The amount of liquidity created by the banking sector was high (yet declining) in the mid-1980s, low in the mid-1990s, and high (and mostly rising) in the most recent years. 4. 2. Alternative measures of abnormal liquidity creation We considered several alternative approaches to measuring abnormal liquidity creation. One possibility is to scale the dollar amount of liquidity creation by total population. The idea behind this approach is that a â€Å"normal† amount of liquidity creation may exist in per capita terms. The average amount of liquidity creation per capita over our sample period could potentially serve as the â€Å"normal† amount and deviations from this average would be viewed as abnormal. To calculate per capita liquidity creation we obtain annual U. S. population estimates from the U. S. Census Bureau. Figure 2 Panel A shows per capita liquidity creation over time. The picture reveals that per capita liquidity creation more than tripled from $5. 8K in 1984:Q1 to $18. 8K in 2008:Q1. Interestingly, the picture looks very similar to the one shown in Panel A, perhaps because the annual U. S. population growth rate is low. For reasons similar to those in our earlier analysis, we calculate abnormal per capita liquidity creation by detrending and deseasonalizing the data like we did in the previous section. Figure 2 Panel B shows abnormal per capita liquidity creation over time. 12 Another possibility is to scale the dollar amount of liquidity creation by GDP. Since liquidity creation by banks may causally affect GDP, this approach seems less appropriate. Nonetheless, we show the results for completeness. Figure 2 Panel C shows the dollar amount of liquidity creation divided by GDP. The picture reveals that bank liquidity creation has increased from 19. 9% of GDP in 1984:Q1 to 40. 4% of GDP in 2008:Q1. While liquidity creation more than quadrupled over the sample period, GDP doubled. Importantly, the picture looks similar to the one shown in Panel A. Again, for reasons similar to those in our earlier analysis, we detrend and deseasonalize the data to obtain abnormal liquidity creation divided by GDP. Figure 2 Panel D shows abnormal liquidity creation divided by GDP over time. Since these alternative approaches yield results that are similar to those shown in Section 4. 1, we focus our discussions on the abnormal amount of liquidity creation (rather than the abnormal amount of per capita liquidity creation or the abnormal amount of liquidity creation divided by GDP) around financial crises. 4. 3. Abnormal bank liquidity creation before, during, and after five financial crises We now examine how abnormal bank liquidity creation behaved efore, during, and after five financial crises. In all cases, the pre-crisis and post-crisis periods are defined to be eight quarters long. 21 The one exception is that we do not examine abnormal bank liquidity creation after the current subprime lending crisis, since this crisis was still ongoing at the end of the sample period. Figure 3 Panels A – E show the graphs of the abnormal amount of liquidity creation for the five crises. This subsec tion is a fact-finding effort and largely descriptive. In Section 4. , we will combine the evidence gathered here and interpret it to draw some general conclusions. Financial crisis #1: Stock market crash (1987:Q4) On Monday, October 19, 1987, the stock market crashed, with the SP500 index falling about 20%. During the years before the crash, the level of the stock market had increased dramatically, causing some 21 As a result of our choice of two-year pre-crisis and post-crisis periods, the post-Russian debt crisis period overlaps with the bursting of the dot. com bubble, and the pre-dot. com bubble period overlaps with the Russian debt crisis. For these two crises, we redo our analyses using six-quarter pre-crisis and post-crisis periods and obtain results that are qualitatively similar to the ones documented here. 13 concern that the market had become overvalued. 22 A few days before the crash, two events occurred that may have helped precipitate the crash: 1) legislation was enacted to eliminate certain tax benefits associated with financing mergers; and 2) information was released that the trade deficit was above expectations. Both events seemed to have added to the selling pressure and a record trading volume on Oct. 9, in part caused by program trading, overwhelmed many systems. Figure 3 Panel A shows abnormal bank liquidity creation before, during, and after the stock market crash. Although this financial crisis seems to have originated in the stock market rather than the banking system, it is clear from the graph that abnormal liquidity creation by banks was high ($0. 5 trillion above the time trend) two years befor e the crisis. It had already dropped substantially before the crisis and continued to drop until well after the crisis, but was still above the time trend even a year after the crisis. Financial crisis #2: Credit crunch (1990:Q1 – 1992:Q4) During the first three years of the 1990s, bank commercial and industrial lending declined in real terms, particularly for small banks and for small loans (see Berger, Kashyap, and Scalise 1995, Table 8, for details). The ascribed causes of the credit crunch include a fall in bank capital from the loan loss experiences of the late 1980s (e. g. , Peek and Rosengren 1995), the increases in bank leverage requirements and implementation of Basel I risk-based capital standards during this time period (e. g. Berger and Udell 1994, Hancock, Laing, and Wilcox 1995, Thakor 1996), an increase in supervisory toughness evidenced in worse examination ratings for a given bank condition (e. g. , Berger, Kyle, and Scalise 2001), and reduced loan demand because of macroeconomic and regional recessions (e. g. , Bernanke and Lown 1991). To some extent, the research supports virtually all of these hypotheses. Figure 3 Panel B shows how abnorm al liquidity creation behaved before, during, and after the credit crunch. The graph shows that liquidity creation was above the time trend before the crisis, but declining. After a temporary increase, it dropped markedly during the crisis by roughly $0. 6 trillion, and the decline even extended a bit beyond the crunch period. After having reached a noticeably low level in the post-crunch period, liquidity creation slowly started to bottom out. This evidence suggests that the 22 E. g. , â€Å"Raging bull, stock market’s surge is puzzling investors: When will it end? † on page 1 of the Wall Street Journal, Jan. 19, 1987. 14 banking sector created (slightly) positive abnormal liquidity before the crisis, but created significantly negative abnormal liquidity during and fter the crisis, representing behavior by banks that may have further fueled the crisis. Financial crisis #3: Russian debt crisis / LTCM bailout (1998:Q3 – 1998:Q4) Since its inception in March 1994, hedge fund Long-Term Capital Management (â€Å"LTCM†) followed an arbitrage strategy that was avowedly â€Å"market neutral,† designed to make money regardless of whether prices were rising or falling. When Russia defaulted on its sovereign debt on August 17, 1998, investors fled from other government paper to the safe haven of U. S. treasuries. This flight to liquidity caused an unexpected widening of spreads on supposedly low-risk portfolios. By the end of August 1998, LTCM’s capital had dropped to $2. 3 billion, less than 50% of its December 1997 value, with assets standing at $126 billion. In the first three weeks of September, LTCM’s capital dropped further to $600 million without shrinking the portfolio. Banks began to doubt its ability to meet margin calls. To prevent a potential systemic meltdown triggered by the collapse of the world’s largest hedge fund, the Federal Reserve Bank of New York organized a $3. billion bail-out by LTCM’s major creditors on September 23, 1998. In 1998:Q4, many large banks had to take substantial write-offs as a result of losses on their investments. Figure 3 Panel C shows abnormal liquidity creation around the Russian debt crisis and LTCM bailout. The pattern shown in the graph is very different from the ones we have seen so far. Liquidity creation was abnorma lly negative before the crisis, but increasing. Liquidity creation increased further during the crisis, countercyclical behavior by banks that may have alleviated the crisis, and continued to grow after the crisis. This suggests that liquidity creation may have been too low entering the crisis and returned to normal levels a few quarters after the end of the crisis. Financial crisis #4: Bursting of the dot. com bubble and Sept. 11 terrorist attack (2000:Q2 – 2002:Q3) The dot. com bubble was a speculative stock price bubble that was built up during the mid to late 1990s. During this period, many internet-based companies, commonly referred to as â€Å"dot. coms,† were founded. Rapidly increasing stock prices and widely available venture capital created an environment in which 15 any of these companies seemed to focus largely on increasing market share. At the height of the boom, it seemed possible for dot. com’s to go public and raise substantial amounts of money even if they had never earned any profits, and in some cases had not even earned any revenues. On March 10, 2000, the Nasdaq composite index peaked at more than double its value just a year before. After the bursting of the bubble, many dot. com’s ran out of capital and were acquired or filed for bankruptcy (examples of the latter include WorldCom and Pets. com). The U. S. economy started to slow down and business nvestments began falling. The September 11, 2001 terrorist attacks may have exacerbated the stock market downturn by adversely affecting investor sentiment. By 2002:Q3, the Nasdaq index had fallen by 78%, wiping out $5 trillion in market value of mostly technology firms. Figure 3 Panel D shows how abnormal liquidity creation behaved before, during, and after the bursting of the dot. com bubble and the Sept. 11 terrorist attacks. The graph shows that before the crisis period, liquidity creation moved from displaying a negative abnormal value to displaying a positive abnormal value at the time the bubble burst. During the crisis, liquidity creation declined somewhat and hovered around the time trend by the time the crisis was over. After the crisis, liquidity creation slowly started to pick up again. Financial crisis #5: Subprime lending crisis (2007:Q3 – ? ) The subprime lending crisis has been characterized by turmoil in financial markets as banks have experienced difficulty in selling loans in the syndicated loan market and in securitizing loans. Banks also seem to be reluctant to provide credit: they appear to have cut back their lending to firms and individuals, and have also been reticent to lend to each other. Risk premia have increased as evidenced by a higher premium over treasuries for mortgages and other bank products. Some banks have experienced massive losses in capital. For example, Citicorp had to raise about $40 billion in equity to cover subprime lending and other losses. Massive losses at Countrywide resulted in a takeover by Bank of America. Bear Stearns suffered a fatal loss in confidence and was sold at a fire-sale price to J. P. Morgan Chase with the Federal Reserve guaranteeing $29 billion in potential losses. Washington Mutual, the sixth-largest bank, became the biggest bank failure in the U. S. financial history. J. P. Morgan Chase purchased the banking business while the rest of the organization filed for bankruptcy. The Federal Reserve intervened in some 16 unprecedented ways in the market, extending its safety-net privileges to investment banks. In addition to lowering the discount rate sharply, it also began holding mortgage-backed securities and lending directly to investment banks. Subsequently, IndyMac Bank was seized by the FDIC after it suffered substantive losses and depositors had started to run on the bank. This failure is expected to cost the FDIC $4 billion – $8 billion. The FDIC intends to sell the bank. Congress also recently passed legislation to provide Freddie Mac and Fannie Mae with unlimited credit lines and possible equity injections to prop up these troubled organizations, which are considered too big to fail. Figure 3 Panel E shows abnormal liquidity creation before and during the first part of the subprime lending crisis. The graph suggests that liquidity creation displayed a high positive abnormal value that was increasing before the crisis hit, with abnormal liquidity creation around $0. 0 trillion entering the crisis, decreasing substantially after the crisis hit. A striking fact about this crisis compared to the other crises is the relatively high build-up of positive abnormal liquidity creation prior to the crisis. 4. 4. Behavior of some liquidity creation components around the two banking crises It is of particular interest to examine the behavior of some selected components of liquidity creation around the banking crises. As discuss ed above (Section 4. 3), numerous papers have focused on the credit crunch, examining lending behavior. These studies generally find that mortgage and business lending started to decline significantly during the crisis. Here we contrast the credit crunch experience with the current subprime lending crisis, and expand the components of liquidity creation that are examined. Rather than focusing on mortgages and business loans, we examine the two liquidity creation components that include these items – semi-liquid assets (primarily mortgages) and illiquid assets (primarily business loans). In addition, we analyze two other components of liquidity creation. We examine the behavior of liquid assets to address whether a decrease (increase) in semi-liquid assets and / or illiquid assets tended to be accompanied by an increase (decrease) in liquid assets. We also analyze the behavior of illiquid off-balance sheet guarantees (primarily loan commitments) to address whether illiquid assets and illiquid off-balance sheet guarantees move in tandem around banking crises and whether changes in one are more pronounced than the other. Figure 4 Panels A and B show the abnormal amount of four liquidity creation components around 17 he credit crunch and the subprime lending crisis, respectively. For ease of comparison, the components are not weighted by weights of +? (illiquid assets and illiquid off-balance sheet guarantees), 0 (semiliquid assets), and –? (liquid assets). The abnormal amounts are obtained by detrending and deseasonalizing each liquidity creation component. Figure 4 Panel A shows that abnormal semi-liquid assets decreased slight ly during the credit crunch, while abnormal illiquid assets and especially abnormal illiquid guarantees dropped significantly and turned negative. This picture suggests that these components fell increasingly below the trendline. The dramatic drop in abnormal illiquid assets and abnormal illiquid off-balance sheet guarantees (which carry positive weights) helps explain the significant decrease in abnormal liquidity creation during the credit crunch shown in Figure 3 Panel B. Figure 4 Panel B shows that these four components of abnormal liquidity creation were above the trendline before and during the subprime lending crisis. Illiquid assets and especially off-balance sheet guarantees move further and further above the trendline before the crisis, which helps explain the dramatic buildup in abnormal liquidity creation before the subprime lending crisis shown in Figure 3 Panel E. All four components of abnormal liquidity creation continued to increase at the beginning of the crisis. After the first quarter of the crisis, illiquid off-balance sheet guarantees showed a significant decrease, which helps explain the decrease in abnormal liquidity creation in Figure 3 Panel E. On the balance sheet, during the final quarter of the sample period (the third quarter of the crisis), abnormal semi-liquid and illiquid assets declined, while abnormal liquid assets increased. 4. 5. General conclusions from the results What do we learn from the various graphs in the previous analyses that indicate intertemporal patterns of liquidity creation and selected liquidity creation components around five financial crises? First, across all the financial crises, there seems to have been a significant build-up or drop-off of abnormal liquidity creation before the crisis. This is consistent with the notion that crises may be preceded by either â€Å"too much† or â€Å"too little† liquidity creation, although at this stage we offer this as tentative food for thought rather than as a conclusion. Second, there seem to be two main differences between banking crises and market-related crises. 18 The banking crises, namely the credit crunch and the subprime lending crisis, were both preceded by positive abnormal liquidity creation by banks, while two out of the three market-related crises were preceded by negative abnormal liquidity creation. In addition, during the two banking crises, the crises themselves seem to have exerted a noticeable influence on the pattern of aggregate liquidity creation by banks. Just prior to the credit crunch, abnormal liquidity creation was positive and had started to trend upward, but reversed course and plunged quite substantially to become negative during and after the crisis. Just prior to the subprime lending crisis, aggregate liquidity creation was again abnormally positive and trending up, but began to decline during the crisis, although it remains abnormally high by historical standards. The other crises, which are less directly related to banks, did not seem to exhibit such noticeable impact. Third, liquidity creation has both decreased during crises (e. g. , the 1990-1992 credit crunch) and increased during crises (e. g. , the 1998 Russian debt crisis / LTCM bailout). Thus, liquidity creation likely both exacerbated and ameliorated the effects of crises. Fourth, off-balance sheet illiquid guarantees (primarily loan commitments) moved more than semi-liquid assets (primarily mortgages) and illiquid assets (primarily business loans) during banking crises. Fifth, while liquidity creation is generally thought of as a financial intermediation service with positive economic value at the level of the individual bank and individual borrower (see Diamond and Rajan 2000, 2001), our analysis hints at the existence of a â€Å"dark side† to liquidity creation. Specifically, it may be more than coincidence that the subprime lending crisis was preceded by a very high level of positive abnormal aggregate liquidity creation by banks relative to historical levels. The notion that this may have contributed to the subprime lending crisis is consistent with the findings that banks adopted lax credit standards (see Dell’Ariccia, Igan, and Laeven 2008, Keys, Mukherjee, Seru, and Vig 2008), which in turn could have led to an increase in credit availability and off-balance sheet guarantees. Thus, while Diamond and Rajan (2000, 2001) argue that financial fragility is needed to create liquidity, our analysis offers the intriguing possibility that the causality may be reversed as well: too much liquidity creation may lead to financial fragility. 9 5. The effect of capital on banks’ competitive positions and profitability around financial crises This section focuses on the second goal of the paper – examining how bank capital affects banks’ competitive positions and profitability around financial crises. We first explain our methodology and provide summary statistics. We then present and discuss the empirical results. In an ad ditional check, we examine whether the stock return performance of high- and low-capital listed banks is consistent with the competitive position and profitability results for large banks. In another check, we generate some â€Å"fake† crises to analyze whether our findings hold during â€Å"normal† times as well. 5. 1. Empirical approach To examine whether banks with high capital ratios improve their competitive positions and profitability during financial crises, and if so, whether they are able to hold on to this improved performance after these crises, we focus on the behavior of individual banks rather than that of the banking sector as a whole. Because our analysis of aggregate liquidity creation by banks shows substantial differences across crises, we do not pool the data from all the crises but instead analyze each crisis separately. Our findings below that the coefficients of interest differ substantially across crises tend to justify this separate treatment of the different crises. We use the following regression specification for each of the five crises: ? PERFi,j = ? + ? 1 * EQRATi,j + B * Zi,j (1) where ? PERFi,j is the change in bank i’s performance around crisis j, EQRATi,j is the bank’s average capital ratio before the crisis, and Zi,j includes a set of control variables averaged over the pre-crisis period. All of these variables are discussed in Section 5. 2. Since we use a cross-sectional regression model, bank and year fixed effects are not included. In all regressions, t-statistics are based on robust standard errors. Given documented differences between large and small banks in terms of portfolio composition (e. g. Kashyap, Rajan, and Stein 2002, Berger, Miller, Petersen, Rajan, and Stein 2005) and the effect of capital on liquidity creation (Berger and Bouwman forthcoming), we split the sample into large and small banks, and run all regressions separately for these two sets of banks. Large banks have gross total assets (GTA) exceeding $1 billion at the end of the quarter preceding the crisis and small banks have GTA up to 20 $1 billion at the end of that quarter . 5. 2. Variable descriptions and summary statistics We use two measures of a bank’s performance: competitive position and profitability. The bank’s competitive position is measured as the bank’s market share of overall liquidity creation, i. e. , the dollar amount of liquidity created by the bank divided by the dollar amount of liquidity created by the industry. Our focus on the share of liquidity creation is a departure from the traditional focus on a bank’s market share of deposits. Liquidity creation is a more comprehensive measure of banking activities since it does not just consider one funding item but instead is based on all the bank’s on-balance sheet and off-balance sheet activities. To establish whether banks improve their competitive positions during the crisis, we define the change in liquidity creation market share, ? LCSHARE, as the bank’s average market share during the crisis minus its average market share over the eight quarters before the crisis, normalized by its average pre-crisis market share. To examine whether these banks hold on to their improved performance after the crisis, we also measure each bank’s average market share over the eight quarters after the crisis minus its average market share over the eight quarters before the crisis, again normalized by its average market share before the crisis. The second performance measure is the bank’s profitability, measured as the return on equity (ROE), i. e. , net income divided by stockholders equity. 23 To examine whether a bank improves its profitability during a crisis, we focus on the change in profitability, ? ROE, measured as the bank’s average ROE during the crisis minus the bank’s average ROE over the eight quarters before the crisis. 24 To analyze whether the bank is able to hold on to improved profitability, we focus on the bank’s average ROE over the eight quarters after the crisis minus its average ROE over the eight quarters before the crisis. To mitigate the influence of outliers, ? LCSHARE and ? ROE are winsorized at the 3% level. Furthermore, to ensure that average values are calculated based on a sufficient number of quarters, we 23 We use ROE, the bank’s net income divided by equity, rather than return on assets (ROA), net income divided by assets, since banks may have substantial off-balance sheet portfolios. Banks must allocate capital against every offbalance sheet activity they engage in. Hence, net income and equity both reflect the bank’s on-balance sheet and off-balance sheet activities. In contrast, ROA divides net income earned based on on-balance sheet and off-balance sheet activities merely by the size of the on-balance sheet activities. 24 We do not divide by the bank’s ROE before the crisis since ROE itself is already a scaled variable. 21 require that at least half of a bank’s pre-crisis / crisis / post-crisis observations are available for both performance measures around a crisis. Since the subprime lending crisis was still ongoing at the end of the sample period, we require that at least half of a bank’s pre-subprime crisis observations and all three quarters of its subprime crisis observations are available. The key exogenous variable is EQRAT, the bank’s capital ratio averaged over the eight quarters before the crisis. EQRAT is the ratio of equity capital to gross total assets, GTA. 25 The control variables include: bank size, bank risk, bank holding company membership, local market competition, and proxies for the economic environment. Bank size is controlled for by including lnGTA, the log of GTA, in all regressions. In addition, we run regressions separately for large and small banks. We include the z-score to control for bank risk. 26 The z-score indicates the bank’s distance from default (e. g. Boyd, Graham, and Hewitt 1993), with higher values indicating that a bank is less likely to default. It is measured as a bank’s return on assets plus the equity capital/GTA ratio divided by the standard deviation of the return on assets over the eight quarters before the crisis. To control for bank holding company status, we include D-BHC, a dummy variable that equals 1 if the bank was part of a bank holding company. Bank holding company membership may affect a bank’s competitive position because the holding company is required to act as a source of strength to all the banks it owns, and may also inject equity voluntarily when needed. In addition, other banks in the holding company provide cross-guarantees. Furthermore, Houston, James, and Marcus (1997) find that bank loan growth depends on BHC membership. We control for local market competition by including HERF, the bank-level HerfindahlHirschman index of deposit concentration for the markets in which the bank is p How to cite Role of Computer in Daily Life, Essay examples

Africa and America free essay sample

In this essay I am going to be telling you about the slave trade on Africa and America. Before the slave trade started Africa was a one of the richest countries and it was a very friendly country with very friendly people who helped you in a lot of things. The African slaves trade started in 1619 when the Africans started trading with the Europeans with things such as Horses, gold, cloth, copper and other things like that. When the Europeans took over Africa in 1 885 the country became really poor as there were no workers and here was no as much food because the farmers were being traded as slaves. Ships were being carried into Africa then putting slaves into tight pack or loose pack where they would sit there for 3-6 months with hardly any food and they would be sitting with other people they didnt know, they would have to sit still for that amount of time and they couldnt move. We will write a custom essay sample on Africa and America or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page They would also have to sleep and go to the toilet there not many slaves would live. When the Europeans first began to settle in the Americans they used indentured Barbour to work farms and mines.But they were few indented servants due to the wars in Europe in the 17th and 1 8th centuries. Also they only worked for seven years before these problems and their contracts. Slaves were captured from their homes in Africa, shipped to America under extremely poor conditions, and then sold to the highest bidder, put to work, and forced to live with the new conditions of America. There was no mercy for the slaves and their families as they were captured from their homes and forced onto slave ships. Most of the Africans who were captured lived in small villages in West Africa. A typical Village takeover would occur early in the morning. An enemy tribe would raid the village, and then burn the huts to the ground. Most of the people who were taken by surprise were killed or captured; few escaped. The captured Africans were now on their way to the slave ships. Bound together two by two with heavy wooden yokes fastened around their necks, a long line of black men and women plodded down a well-worn path through the dense forest.Most of the men were burdened with huge elephants tusks. Others, and many of the women too, bore baskets or bales of food. Little boys and girls trudged along beside. Parents, eyes wide in fear and wonder. After they were marched often hundreds of miles, it was time for them to be shipped off to sea, so that they could be sold as cheap labor to help harvest the new world. But before they were shipped off, they had to pass through a slave-trading station. What Were the Effects of the Slave Trade on Africa and America?

Johann Sebastian Bach free essay sample

Coming In at number one Is Johann Sebastian Bach. Bach was a genius keyboardist (mastering the organ and harpsichord) and brilliant composer. Bach brought baroque music to its culmination, writing music for nearly every type of musical form. Popular Works: Air on a G String, Double Violin Concerto, Brandenburg Concerto No. 3, B Minor Mass, and The unaccompanied Cello Suites Ads Beethoven Obstreperousnesss. Commerce variety of composer busts. Great selections and quality. Find A Foreign Husbandman,. lnternatlonalcupld. Commodious Men Seek Filipino Ladles For Dating Marriage. Join Free. Listen to Free Musicals. Jingo. CompuServe the Songs You Love. Create Your Personalized Station! 2. George Frederic Handel Born in the same year as Johann Sebastian Bach in a town fifty miles away, George Frederic Handel, who later became a British citizen, lead a much different life than Bach. Handel, too, composed for every musical genre of his time, even creating the English oratorio. We will write a custom essay sample on Johann Sebastian Bach or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page Popular Works: The Messiah, Music for the Royal Fireworks, and Water Music 3. Antonio Valid Vivaldi wrote over 500 concertos and is believed to have invented reiteration form (a theme returning throughout the piece).However, much of Vivaldi music lay undiscovered until the early sasss; this newly discovered music earned Vivaldi the title The Viennese Counterpart to Bach and Handel. Popular Works: The Four Seasons, Gloria, and Con All Rustics in G 4. George Philipp Telegram A good friend of both Bach and Handel, George Phillip Telegram was also a distinguished musician and composer of his time. Telltales Incorporation of unusual Instrumentation In his concertos Is one of the things that that made him unique. Popular Works: Viola Concerto in G, Trio Sonata in C minor, and the Paris Quartets 5. Archangel Cornell Archangel Cornell was an Italian teacher, violinist, and composer. Coracles mastery of the tone of the newly invented violin earned him great reviews throughout Europe. He Is coined to have been the first person to create basic violin technique. Popular Works: Concerto Grossly, Christmas Concerto, and Sonata De camera In D minor 6. Henry Purcell Within a lifetime of only thirty-five years, Purcell achieved musical greatness by being considered one of Englands greatest composers and the most original composer of his time. Purcell was extremely talented in word-setting and composed very successful works for stage.Popular Works: Dido Names, The Fairy Queen, and Sound the Trumpet 7. Domenici Scarlatti Domenici Scarlatti, son of Alexandra Scarlatti (another well-known baroque composer), wrote 555 known harpsichord sonatas, of which, over half was written in the last six years of his life. Scarlatti made use of Italian, Portuguese, and Spanish dance rhythms throughout many of his works. Popular Works: Criticizes per Agrochemical (sonatas for harpsichord) A French composer, Jean-Philippe Ramees music was known for its bold melodic lines and harmonies.Aside from harpsichord, Ramees greatest contribution to music was in Taradie lyrical opera. His wide use of moods and musical colors were beyond those of his counterparts. Popular Works: Hippest et Archie and Castor et Pollex, Trait, and Less Indies gallants Ads Hit Pop Songs Misidentification. Com/lamentations Indigos imp Songs Music Live Online For Free. Play now! Golf Swing Tips? Quarrelsomenesss. Commit Golf Ball Straight Every Time. Free Golf Swing Video Lessons Here! 9. Johann Poachable Ionian Poachable taught Johann Christopher Bach O.S. Bachs older brother) music. J. C. Bach said that J. S. Bach greatly admired Bachelors music. Bachelors music is considered by many to be stylistically related to J. S. Bachs. Popular Works: Poachable Canon, Channel in F minor, and Toccata in C minor for organ 10. Giovanni Battista Samaritan Giovanni Battista Samaritan is one of the earliest composers of the symphony (sixty- eight of them have survived). Many believe his symphonic works and thematic development are the precursors to Haydn and Mozart. Popular Works: Sonata No. 3, Recorder Sonata in A minor Johann Sebastian Bach free essay sample Among the influential composers of baroque music, there have been few who have contributed so much in talent, creativity, and style as Johann Sebastian Bach. Bach was a German organist and composer of the baroque era. Bach was born on March 21, 1685 In Sciences, Turning and died July 28,1750. Bach revealed his feelings and his insights in his pieces. Bachs mastery of all the major forms of baroque music (except opera) resulted not only from his genius talent, but also from his life long quest for knowledge. In some parts of Germany, the name, Bach came a synonym with the word, musician. Extremely talented In the art of baroque composition, Bach placed his heart, soul, and Ingenuity In his music as It Is clearly illustrated in his childhood, throughout his career, and of course through his musical works. Bachs connection to music Is already evident through his childhood. Bach was born Into a musical family in Sciences. We will write a custom essay sample on Johann Sebastian Bach or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page His father, before dying, taught him the basic skills of strings and an organist at a church taught him how to play the organ. When both of his parents died, he continued to devote his early life to music. His brother Ionian Christopher continued to teach him how to play the organ.Furthermore, he won a scholarship and became part of the school choir of poor boys In Lundeberg. Already seen was his sheer genius and talent that he possessed for music. Clearly, his childhood played a big factor of building a solid foundation for his music. Bachs heart in music does not end with his childhood but all through his career. As a master of several Instruments, he became a violist In a court orchestra when he was only 18. Later, he became the organist of several churches In Reinstated. Throughout these churches he had developed a reputation of having a brilliant musical talent.Also, because of his perfectionist tendencies and high expectations of other musicians, he fought many times which Is yet another example of his compassion for music. Furthermore, he had even walked over 200 miles because a great vocalist known as Buxtehude influenced him. As an organist and a choirmaster, Bach continued to devote his life to composing music for churches. He would work under dim light creating these masterpieces. After conducting and composing for he court orchestra at Cotton for seven years, Bach accepted the Job of being a music director for the SST.Thomas church in Leipzig. His compassion for music went on even further after he became blind. He was still creatively active until the very end. Even Just before his death, he dictated his last musical composition to his son in law. His career was surely a massive Indication of his talent and the heart and soul he put into his music. The effort of his devotion to music seen in his life and career hopefully will never be forgotten but also that one should take notice the sheer genius this composer splayed In his musical works. Bachs expressive genius In working counterpoint was a clear Indication of him understanding and using every resource of musical language in the baroque era. He would weave several musical lines of melodies to 1 OFF skill. Plus, through several of his pieces his religion influences him greatly. He even chose to put different cultures in his pieces. He would combine patterns of French dancers, Italian melodies, and German counterpoint all in one when he wished. As Nell because of the influence of a great vocalist, Buxtehude, he incorporated vocal parts in his pieces at one point in his life.However, later in his works he displayed arioso instruments and he used each instruments unique properties of construction and tone quality to perfect his compositions. This was a great characteristic of the baroque. He also wrote music with themes such a representing sea or Christians following the teaching of Jesus. Bach was even able to convey and exploit the media, styles, and genres of pieces in his day, which remarkably allowed him to change the instrument off piece to make it simpler. For instance, he could take a violin concerto and change it to a solo piece such as the harpsichord.At the name time, he was the supreme master of fugue and solo violinist repertoires. Bachs complex thinking made him create beautiful and perfect solos and compositions for orchestra or choral ensemble. Surely, through Bachs hundreds of works, not only shown is his sheer genius but again shown is his true love, heart, soul, and compassion for music. Johann Sebastian Bach was a genius who accomplished a lot throughout his life. Bach was the creator and innovator of the styles of Baroque. He came from a family that produced seven generations of musicians. He may be the greatest master of all classical music.Throughout all of his life, there may not be another composer who had a deeper compassion for music then Bach. Bachs heart, soul and ingenuity Nerve all displayed through his hundreds of music works, from his childhood, and throughout his career. He gave a new meaning for true compassion. He found beauty and perfected all his pieces. Others nor any miles of distance of walking did not stop him from keeping the flame in his heart for music. Therefore, to any students ho are serious in music, one should attain a true Bach-like compassion and dedication if to create the many sheer geniuses the Bach did in a short period of time.

2 Essays - Geography Of Asia, East Asia, Forms Of Government

2 Essays - Geography Of Asia, East Asia, Forms Of Government Escape From North Korea: Hyeonseo Lee At Ted2013 Student's name Institution affiliation Instructor's name Course Date of submission Introduction In the world today many challenges are significantly affecting people. Increased civil war and famine are some of the factors that have led to many people seeking asylum in neighboring countries. Some of these challenges have significantly affected people lives, others have lost their lives, either by execution, police brutality, terrorist attacks or hunger. In the case of Ms. Lee, she is separated from the rest of the family at the age of fourteen. She goes through trying moments in her life; this vividly portrays the sufferings of many people around the world though there is no one to address them. Ms. Lee describes how she faced life having to go through various crises. As a young girl, she remained focus and determine. In her early life at the age of 7, Ms. Lee experienced public prosecution in her motherland. She never knew what was happening in the outside world. She was forced to think that her mother North Korea was the best place on the planet even though there were many challenges that they were going through in their motherland. She was almost caught by the Chinese aut horities for illegal migration , (Reddy, 2010) . Ms. Lee was forced to be separated from the rest of the family at a tender age even though she thought she would reunite with them she spends more than 14 years seeking asylum in China. She explains how dead bodies we re floating in the in the river; this was from people who tried to cross this river to seek refuge in China. During the 1990s famine that had struck North Korea, Ms. Lee saw how people were suffering mercilessly; she says pe ople were eating grass and tree barks to survive. After sending money to her relatives, they were intercepted by the North Korean authority. This was so demoralizing, but she remained strong, but it never made her lose hope in her life, even though matter the challenges she faced her many problems. Throughout her life she went through hard times, she had to bribe authorities in the jail to get her family members freedom. She was subjected to brutal tests by the Chinese police because someone had accused her of being a North Korean. She remained determined though scared she spoke Chinese proving without no reasonable doubt that she was a Chinese . Her family was thrown to jail after a long journey seeking to seek asylum. After realizing her family suffering, she used all thy money she had to buy their freedom into Laos. Even after thinking that she had won the battle after using all money she had to bribe border guards at Laos, her family was arrested and jailed for illegal border crossing. At this time in her life, she had lost hope; she had no one to run to for her rescue. Experience in North Korea was so devastating that some of the illegal migrants were prosecuted and executed. In Ms. Lee struggle in an asylum for her freedom, she experiences some unexpected moment, even though she never gave up. Also, she used all the money she had to rescue her family members from jail; things were almost going against her because she had nearly lost hope. After At this time she met a stranger who turned out to be her savior, after narrating her frustrations, she was helped to get her parents from jail. Also, she was almost caught while trying to cross her family to Laos even though she laid to the authorities that they all damp. Ms. Lee thought no one cared about the sufferings of North Koreans, although she was not exposed to the outside world. In her school time, she was forced to believe that her country was the best on the planet. She never knew what the outside world had , ( Fowler, 2012 ) . This could have led her making a negative response because she never believed that someone could miss something to eat. After coming into eye contact with the mother of the emaciated child and getting g report from

So and Therefore Are Clumsy Companions

So and Therefore Are Clumsy Companions â€Å"So† and â€Å"Therefore† Are Clumsy Companions â€Å"So† and â€Å"Therefore† Are Clumsy Companions By Maeve Maddox A reader has noticed the juxtaposition of so and therefore and wonders if this can be correct. I have come across people using So, therefore .   I wonder what they mean by that ?! Sure enough, this peculiar construction is widespread on the web: I Fish So Therefore I Am White Rabbit Gallery Its the weekend, so therefore you should all be free to come into the gallery for one of our great tours at 1 pm and 2 pm today and tomorrow! I havent experienced it so therefore it must not exist or matter or be valid Both so and therefore can be used as more than one part of speech. The so entry in the OED has forty numbered definitions plus a draft addition. Careful writers will weigh the so therefore combination carefully to avoid redundancy. If the so is a connecting word and the therefore a plain adverb, the use can be argued: The climate is changing; so, therefore, must we. If the words are being used as a two-word conjunction, warning signals should sound. Therefore is more formal than so: Formal: I missed the train; therefore I missed the party. Informal: I missed the train, so I missed the party. Another point to be made about the conjunctions so and therefore is that they’re â€Å"final† conjunctions. In formal writing they don’t belong at the beginning of a sentence. Here’s how the Chicago Manual of Style explains their use: Final (or illative) coordinating conjunctions denote inferences or consequences. The second clause gives a reason for the first clause’s statement, or it shows what has been or ought to be done in view of the first clause’s expression. The conjunctions include consequently, for, hence, so, thus, therefore, as a consequence, as a result, so that, and so then {he had betrayed the king; therefore he was banished} {it’s time to leave, so let’s go}. CMOS 5.186 The careless combining of so therefore may be one of those runaway errors that can’t be caught. It has already found its way into the English Standard Version (2001) of the Bible: So therefore, any one of you who does not renounce all that he has cannot be my disciple. Luke 14:33 Want to improve your English in five minutes a day? Get a subscription and start receiving our writing tips and exercises daily! Keep learning! Browse the Grammar category, check our popular posts, or choose a related post below:7 Classes and Types of PhrasesWhenever vs. When Ever55 "House" Idioms

Chinese Yuan vs. US Dollar Essay Example | Topics and Well Written Essays - 2000 words

Chinese Yuan vs. US Dollar - Essay Example The use of the two currencies in trade began in 1985 on a bilateral arrangement between the two countries. In 2008, the volume of imports from China hit the $337.8 billion mark. The China government has increased the use of the Yuan in foreign trade over the years leading dynamism in its exchange rates with other world currencies. According to economists, the China government is suspected to devalue the currency in order to increase the competitiveness of their local industries. In addition, the Chinese Yuan is less flexible with respect to the exchange rate against the US dollar and other world currencies. An effort to increase the flexibility of the Chinese Yuan by the government has resulted to the use of the currency internationally. The objective is increasing the use of the currency and achieving its use as a reserve currency in the long term (Derosa 2011). The last five financial years indicate a relatively stable exchange rate between the Chinese Yuan (CNY) and the US dollar (USD). The table below indicates the official exchange rates posted in the two countries’ markets. The record shows how much one US dollar is equivalent to the Chinese Yuan Year USD Chinese Yuan 2009 1 6.8314 2010 1 6.7703 2011 1 6.4615 2012 1 6.3123 2013 1 6.1910 Since 2009 to date, the value of the Chinese Yuan has been increasing. ... changes in the exchange rate can be attributed to the control efforts of the Chinese Yuan flexibility in the exchange market by the Chinese government (Exchange-Rates.org 2013). From 2005 to 2008, the Chinese government allowed the appreciation of the dollar to 21%. However, the global economic crisis prompted China to stop the appreciation and regulate the exchange rate flexibility. From 2008 to 2010, the exchange indicated minimal changes since the rate was maintained at about 6.83 Yuan (Exchange-Rates.org 2013). Amid the then economic conditions, the Chinese government continued with their reforms in the exchange rate thus increasing the currency’s flexibility again. This led to an appreciation of the exchange rate leading to a loss of value by the Yuan against the dollar. The controlled flexibility of the Yuan leads to a slowed appreciation of the dollar against the Yuan. The slight change in the exchange rate of these currencies is caused by the fixed exchange rate regime maintained by China with regard to their currency. The depreciation of the US dollar over the years also contributes to the decrease in the exchange rate between the CNY and the USD. The USD has lost value against the Yuan and other major currencies across the world especially during the global financial crisis. The Chinese Yuan/US dollar exchange rate in 2012 portrayed several movements that ranged between an increase and a decrease in value of the Yuan against the dollar and the loss of value of the dollar against the Yuan. The table below shows the values of the exchange rates between the Yuan and the dollar. The values are on quarterly basis with the USD as the base currency (Wang 2009). Month (2012) USD Yuan January 1 6.6233 April 1 6.3077 August 1 6.3604 December 1 6.2223

Biocidal Hand Products Essay Example | Topics and Well Written Essays - 3000 words

Biocidal Hand Products - Essay Example The number of hospitals using waterless alcohol hand sanitizer has doubled since 2001. These findings apply to nurses washing hands during routine patient-care activities on the general patient floor as well as to pre-op surgical preparation and post-op hand washing in the hospital operating recovery room. Hand hygiene is widely acknowledged as the single most important activity for reducing the spread of disease. (Boyce J M, Pittet D 2002) Hand washing is a simple habit that requires minimal training and no special equipment and is one of the best ways to avoid getting sick. Despite the proven health, benefits of hand washing many people do not practice this habit as often. Infectious diseases commonly spread through hand-to-hand contact as the common cold, flu and several gastrointestinal disorders such as infectious diarrhoea. (A A P, 2003) Inadequate hand hygiene also contributes to food-related illnesses such as Salmonella and E.Coli infection. Hand washing is considered the most effective way of reducing cross infection and the number one way to prevent disease. (Boyce J M, 2001).Earlier people washed their hands with water, sand, animal products, sanitary wipes, bar, liquid, flake and foam soaps.The waterless hand sanitizer gels and sprays is the most recent development in hand washing products. Alcohol-based hand sanitizers that do not require water are an excellent alternative to hand washing particularly when soap and water are not available. (Kelliher S, Vallande N, 2000) They are actually more effective than soap and water in killing bacteria and viruses that cause disease. There is decreased skin irritation and dryness. (Kampf G, et al 2005) The active ingredient in these sanitizers is alcohol. 1.1 There are two different products for hand hygiene: 1.1.1 Antiseptic wash lotions: rinse-off products 1.1.2 Alcohol based liquids: leave-on products used for hand disinfection. The European requirement for medicated soaps in bacterial suspension testing, require a reduction of at least 3 log 10 steps against the test bacteria. Alcoholic hand disinfectants are required to reduce the count of test bacteria by a minimum of 5 log 10 steps within the same application time. The safety margin for the user is 100-fold higher with alcohol-based rub-in products. 1.2 Alcoholic hand wash gels are transparent, uniform, easily deformed dispersed systems consisting of at least two components. One is a fluid acting as a dispersing agent and the other a structure-giving component, a solid colloidal material. This stabilizes the fluid part by forming a three dimensional network. There are many types of gels: 1.2.1 Hydro gels: consist of fluid and water. 1.2.2 Alcohol gels: consist of fluid and alcohol. 1.2.3 Lipogels: fluid and liquid fats e.g. Paraffin. 1.2.4 Surfactant gels: fluid and water or surfactant mixture. Hydro gels and Alcohol gels have a distinct cooling effect mainly due to the evaporation of the water or alcohol. The structure-giving component is organic or inorganic, hydrophilic or lipophilic, synthetic or natural. Polyacrylic acid that has a marked penetration effect is used in alcohol gels. 1.3 Antiseptics and disinfectants are extensively used in hospitals and other health care settings for a variety of topical and hard-surface applications. A wide variety of active chemical agents called

Emotional Quotient And Spiritual Intelligence In The Workplace Essay Example for Free

Emotional Quotient And Spiritual Intelligence In The Workplace Essay As the world progresses and advances towards globalization, the global economy is demanding for the existence of well-managed companies and organizations. Responding to this demand, organizations are trying to find more effective formula that will enhance or improve their outputs. Two of the latest discoveries that attract companies and organizations are the concepts of emotional and spiritual development of their human resources. More and more companies are integrating the said formula in their programs and action plans as they recognize the need of these concepts that were long been neglected. In this paper, we will analyze the arguments of two chosen articles which focus on Emotional Intelligence (Must Have EQ by Anthony Landale) and Spiritual Intelligence (The Practical Application of Spiritual Intelligence in the Workplace by Mike George). Anthony Landale, in his article entitled â€Å"Must Have EQ†, argued that Emotional Intelligence or EQ (Emotional Quotient) the key for an organization to meet the challenge of getting people work together more effectively (Landale, Andrew Feb/March 2007, page 24). In line with this, the author presented his stand in four clear points. First, he argued that EQ is vital in keeping the organization or team members intact. Second, he argued that each team member must be able to learn how to manage our emotions by constantly checking our own individual behaviors. Landale made it clear that behaviors are innate in humans and that every person has his own set of good and bad behaviors. Relative to this, a person who has high emotional intelligence is able to manage even the undesirable behaviors by expressing them in the right place, time and manner. Third, Landale argued that EQ development requires empathy, which is putting oneself in the place of others. This means that one is required to constantly deal with others at work, learn to adjust as needed and be able to adapt with the situation. Lastly, the author stressed that communication is vital in the development of emotional intelligence and of keeping the organization healthy. To be able to do this, every member must maintain an open and honest communication. It was also stressed that a two-way communication line is required which means that feedback to and from management must be kept working. Emotional intelligence is therefore measured according to the person’s skill of managing his or her emotions and behaviors because EQ is actually â€Å"Self-Management. † In partnership with EQ, a company must also train its human resources to develop Spiritual Intelligence (SQ). The author centered his arguments on the practical applications of SQ especially in the workplace because SQ development focuses on the three deepest motivations of humans: creativity, meaning and purpose (George, Mike 2006, page 3). The author argued that since Spiritual Intelligence directly work with these three human motivations, SQ development will definitely make a company a vibrant workplace. If a person’s SQ is well-developed, he will be able to have a clear sense of his identity and a definite purpose. Spiritual intelligence enables a person to live with integrity by setting a good example. Because SQ gives the individual the power the flexibility to adapt to the environment, a person with high SQ is able to be cool and focused even in a stressful situation. By developing one’s self-awareness, a person with high SQ also will have the power to find the cause of his emotions, its meanings and be able to manage them. This in turn will develop one’s empathy. Spiritual intelligence focuses on the development on a person’s ability to fight the ego in order for him to adapt to changes. Finally, development of spiritual intelligence enables a person to recognize the non-material reality of his being that is humans have non-material needs which when recognized alleviates life’s insecurity. If cognitive intelligence is about thinking and emotional intelligence is about feeling, then spiritual intelligence is about being† (McMullen, Brian 2003). In line with the arguments of Landale and George, this statement is parallel with their point of view that EQ has something to do with self-management while SQ deals with self-awareness of the non-material reality of the being. In the modern world, people are inclined to boosting their cognitive intelligence (IQ) as this may seem the measuring device for one’s success in life. But the real working world does not acknowledge the importance of IQ alone, rather the development of all four basic intelligences that define the successful individual. â€Å"IQ appears to be related to minimum standards to enter a given a profession† (Wiggleswoth, Cindy ). In line with Landale’s claim that EQ is of managing emotions, a study of store managers in retail chain proved that efficient management of emotions especially with stress is important for success (Cherniss, Cary 2000). However Cherniss stressed that this is just one aspect of the complex scope of emotional intelligence. He said that â€Å"emotional intelligence has as much to do with knowing when and how to express emotion as it do with controlling it. † This statement corroborates Landale’s idea that EQ is of acknowledging and identifying the emotions and learning how to express them in a proper behavior (Landale, Andrew 2007, page 24). The importance of this aspect of EQ was proven worthwhile in modern organizations as with the experiment done in the US navy wherein researchers found that â€Å"the most effective leaders in the US Navy were warmer, more outgoing, emotionally expressive, dramatic, and sociable† (Barsade, S. t. al 1998). Another aspect of emotional intelligence is empathy which is proven by researchers that it contributes to occupational success (Cherniss, Cary 2000). This is the aspect that overlaps with the concept of spiritual development which also acknowledges the importance of empathy in recognizing the cause of the emotions and be able to utilize them in adapting to changes. â€Å"EQ is the development of the capacity for self-control and the ability to respond with sensitivity and empathy† (Oxford Leadership Academy). This is also important if a manager or someone in the organization would like to positively influence the work behaviors of other members. A practical application of this as cited in one article is that one’s effectiveness can influence others depending on one’s ability to connect with them particularly of understanding the feelings of others (Goleman, Daniel 1999). To effectively influence others we also need to be able to manage our own emotions. Connected to EQ development is the spiritual intelligence which centers on developing the skills of the person in managing the inner self or the non-material reality of one’s being as claimed by George. One author defined spiritual intelligence as â€Å"the ability to behave with Compassion and Wisdom while maintaining inner and outer peace (equanimity) regardless of the circumstances† (Wigglesworth, Cindy). Since compassion encompasses the ability to understand the feelings of others, as what empathy suggests, the concepts of EQ and SQ therefore work together towards the complete success of a person and the organization where he belongs. The practical point of this is that when someone is emotionally and spiritually intelligent, he will be able to make the most out of his skills, emotions, behaviors and traits in managing himself and in turn will give him the power to positively connect with others. That optimism is brought about by the fact that the person, with empathy and compassion, understands the emotions of others which give him the ability to stay calm and focused no matter what the situation brings. Relative to George’s argument that spiritual intelligence in necessary for a person to live a life with integrity and in line with the clear purpose, one author has the same perspective. According to 1Wigglesworth, spiritual intelligence development encompasses self and universal awareness including the ego and social mastery. In the management world, spiritually intelligent manager is a â€Å"wise and effective change agent† who makes compassionate and wise decisions. Wigglesworth further said that SQ enables managers to have the calming and healing presence in the midst of stressful workplace. In contrast with George who did not acknowledge the importance of communication in the development of SQ, Landale stressed that EQ development requires a manager to â€Å"prioritize the giving and receiving of feedbacks† (Landale, Anthony 2007). Connecting with other members of the organization builds and cultivates relationships and that can only be possible when open communication is active in the organization. Putting the essentials of emotional and spiritual intelligence, we clearly draw out the idea that the development of these basic intelligences focus on relationships which is especially important in building an effective, efficient working environment. The human resources of the organization are its most valuable assets so it is vital that that training and development should include the wholeness of their being. Companies of the modern economy is already recognizing the fact the business is not all about making money, rather it encompasses the building of organization members with multiple intelligence. An organization with personnel, especially leaders, who have well developed cognitive, emotional and spiritual intelligence, is a happy and enthusiastic working environment. Developing the emotional and spiritual intelligence is the answer to the intangible needs of the organization: healthy working relationships.