Saturday, February 22, 2020
Ethical - Case Study Example One of the adult children demanded for an answer to her motherÃ¢â¬â¢s health condition to the extent of becoming abusive to the staff. I later heard the doctor telling the child about his motherÃ¢â¬â¢s diagnostic condition. The above case study presents an ethical dilemma that the doctor in charge had to handle in a professional and ethical manner. There is need for an ethical model to be used in the analysis of this case and followed through its implementation procedures. The model essentially works to enhance the decision-making process in order to arrive at a feasible alternative approach without violating the rights of either party involved. The doctor in this case scenario was in a dilemma on whether to abide by the womanÃ¢â¬â¢s request of keeping her condition secret or to inform her children of the condition as they had become unruly. The patient was in shock and was not yet ready to share the information with the rest of the family save for her husband. As her condition continued to deteriorate, her family became more concerned and wanted to know exactly what was ailing their mother. The eldest son became more inquisitive, and abusive to the staff. In order to contain the situation, the brain mass doctor opted to inform the eldest child of his motherÃ¢â¬â¢s condition. going against her wish. In my own assessment, giving out information to the children without the consent of her patient was not a professional way of solving the ethical dilemma. The doctor violated the health policy that requires the privacy of patientsÃ¢â¬â¢ information to be sustained and only availed to the authorized practitioners for medical intervention (Chivima, 2014). According to the brain mass doctor, giving out information to the family was meant to solve the anxiety among the family members considering that they are also entitled to information about their patient. The best possible approach to
Thursday, February 6, 2020
Discipline policy in elementary schools - Essay Example It is seen to promote the art of cramming as opposed to reading and understanding the concept. Giving students tests that require them to fill in the blank spaces as opposed to those test that they are required to explain a particular concept is not advisable (Greenwood, Kratochwill & Clements, 2008). This makes the students not to be able to develop the art of making sound decision on their own. It degrades their level of thinking critically about what they have learned in class. When the students get involved in the process of decision-making, they get to learn how they will be able to make their own sound decisions with ease. This is a very important aspect in a personÃ¢â¬â¢s life since it goes a long way in helping a person in his/her own personal as well as career life. Group work enables the students to be able to discuss a given issue in unison. It enables the students to dispute an issue in an acceptable way. It enables a student in a group to appreciate the point raised by another student in the group, and not to only be in favor of the point that he/she has raised. It enables a student to be able to understand that another studentÃ¢â¬â¢s point is just as good as his or hers. Parents should support the school fraternity in instilling discipline in their childrenÃ¢â¬â¢s life. Most of the parents usually leave this task for the teachers, and this can be overwhelming for them. The parents should also take up the responsibility of disciplining their children. Therefore, the parents and the teachers should work hand-in-hand to ensure that the students are well disciplined. The teachers should take up their role diligently. They should use proper methods of disciplining students. They should not punish the students severely. They should give them punishments that are mild and proper. In case a student goes out of line, then the teacher should get the studentÃ¢â¬â¢s parents and they
Tuesday, January 28, 2020
North America Essay Canada is located in the northern side of North America and it borders Arctic Ocean and North Pacific Ocean. According to the CIA World Fact Book, Canada had an estimated population growth of approximately 33,212,696 as at July 2008. The highest population in terms of age structure was between 16-64 years with males recording a higher margin by 246,716. The population growth rate was estimated to be 0. 83% while the birth rate and death rates were 10. 29/1000 population and 7. 61/1000 population respectively. The ethnic groups living in Canada include those from the British Isles who form about 28% of the total population. Those with a French origin constitute a tune of 23% of the total population, 15% is made of American Indians, 6% are Arabs while approximately 26% are from a mixture of races or ethnic backgrounds. (CIA, 2008). CanadaÃ¢â¬â¢s capital city is Ottawa and the government is a constitutional monarchy. One of the most distinguishing features in Canada is its multicultural diversity as well as an immigration policy that is very friendly to immigrants especially those with skills that can allow them fit well in labor market. This paper will focus on CanadaÃ¢â¬â¢s multicultural diversity, immigration policy and her economy. In analyzing an economy, one addresses issues or features like the level of consumer spending, the exchange rate, the GDP, the GDP per capita, the GNP, the national debt, interest rates, level of inflation as well as the balance of payment. Sectors of an economy for instance primary like in agriculture, secondary like the manufacturing industries or even tertiary or the service sectors are also assessed. CanadaÃ¢â¬â¢s economy according to the CIA is a market economy whose industrial development has overtime replaced the rural agrarian economy. Trade plays a very significant role in as far as CanadaÃ¢â¬â¢s economy is concerned. CIA estimates that it contributes 1/3 of the total GDP. Canada is endowed with natural resources especially oil and gas as well as electrical power which places it at a better edge in terms of potential economic advancement. 2007 estimates have it that the GDP in terms of the purchasing power parity was $1. 271 trillion but on using the official exchange rates the figure rose to $1. 432 trillion. The real GDP growth rate was estimated to be 2. 7% while the per capita income was at $38000 in the same year. The service industry was the sector that contributed the highest in as far as GDP was concerned. (CIA, 2008). Agriculture contributed the least at 2. 1%. Other important economic indicators like unemployment rate stood at 6% as at 2007. The US was the greatest export partner as at 2007 and it stood at 79. 3%. CanadaÃ¢â¬â¢s exchange rate was at 1. 0724 in 2007 in terms of Canadian dollars per the US dollar. 2007 statistics also had it that CanadaÃ¢â¬â¢s external debt was $758. 6 billion; the public debt was 64. 2% of the countryÃ¢â¬â¢s GDP while the current account balance stood at $12. 67 billion. (CIA, 2008). Factors that trigger immigration include globalization of markets, technological advancement especially in the communication sectors, affordable transport, safer and stable environments in terms of political, social as well as economic conditions. Canada embraces the talents and expertise that the immigrants bring to her which stirs her economic growth and advancement. The improved standards of living can be attributed to immigration. (Citizenship and Immigration Canada, 2008). Immigrants also place Canada at a better edge socially as her intervention is sought when addressing issues related to the protection of the disadvantaged for instance the refugees. (Dolin B and Young M, 2004) History has it that the immigrant friendly policies were encouraged by the government officials with the aim of increasing the countries population and consequently standing a better position economic wise. (Westhues A, 2006). The reduced population growth could be blamed on the decline in womenÃ¢â¬â¢s fertility rates as they joined the labor force. Another reason behind the immigration policies was that with the increased standards of living, the life expectancy rates had risen sharply and the aged, a dependent population was increasing. The aged increases or rather raise a countryÃ¢â¬â¢s dependency ratio and they are not economically productive. Immigrants are encouraged to provide a skilled work force to boost the economic growth. Others were encouraged and allowed to live in Canada due to family reunions. Unlike the US which applies harsh policies on immigrants within its jurisdiction Canada embraces or rather welcomes immigrants and statistics have it that to a tune of 13. 4 immigrants have been welcomed in a span of a decade. In 2001, it was estimated that approximately 18. 4% of the total population were not born in Canada. (Citizenship and Immigration Canada, 2008). The immigrants only work to enrich culture in Canada. It is estimated that Canada attracts a tune of 200 000 immigrants annually from across the globe. All institutions in Canada for instance the legal institutions are expected to treat all the citizens equally. According to the Ministry of Public Works and Government services, Canada treats all her citizens equally. It embraces multiculturalism. This way her citizens are proud of their origin without fear or shame as no race or ethnic group is considered as being superior to the other. Canadians are encouraged to live in harmony with each other regardless their racial background or origin. This arrangement allows all Canadians to have an equal stand in as far as the running of social, political as well as economic issues is concerned. The Canadian multiculturalism history dates back to the year 1971 when the multiculturalism act was officiated. (Minister of Public Works and Government Services, 2007). Since then, Canada has witnessed the positive effects like reduced conflicts or violence, reduced discrimination while encouraging harmony and unity among her citizens. Since assimilation is not a problem for most immigrants, it enables them to easily fit in Canada while retaining or rather maintaining their identities. An all inclusive and accommodative approach would boost a countryÃ¢â¬â¢s democracy and consequently pave way for development in all aspects. Diversity is embraced with the mentality that it will boost a better Canada both socially as well as economically. It is argued that diversity precipitates innovation, teamwork and creativity which are important factors to consider for growth to be realized. However Canada is still faced by some challenges that affect its economic growth and development. The issue of inequality is too significant to be ignored. The Aboriginal people continue to lag behind in as far as health, poverty, education, unemployment as well as suicide rates are concerned. (Minister of Public Works and Government Services, 2007). The immigration policy in Canada faces much criticism from those who argue that it leads to the increased taxes on the incumbent citizenÃ¢â¬â¢s side. Statistics have it that recent immigrants will generally register lower wages as opposed to other citizens. This precipitates the need to put them on welfare schemes. The impact of immigrants on the local citizenÃ¢â¬â¢s wages is significant and cannot be ignored. Critics propose a reform in the selection of immigrants who are to live in Canada so that the burden in form of taxes is done away with. In his article Ã¢â¬ËImmigration and the Welfare State in Canada: Growing Conflicts, Constructive SolutionsÃ¢â¬â¢ Herbert Grubel pointed out that in 2000 the government spent a tune of $1. 4 billion while the figure rose to approximately $18. 3 billion in 2003 in form of immigrants welfare. A reform can ensure that immigrants are given temporary visas until they access the jobs they are skilled in instead of first gaining citizenship before they can secure jobs. Impose high taxes on incumbent citizens would reduce their disposable incomes and consequently reducing their purchasing power. Most refuges who make Canada their home or shelter are without the skills to make them competent in the job market and thus the need for government intervention in form of welfare. (Grubel H, 2005). In her articleÃ¢â¬â¢ The potential impacts of immigration on productivity in CanadaÃ¢â¬â¢ Alice Nakamura noted that the new immigrants are a potential threat to the countryÃ¢â¬â¢s productivity levels. These fears arose due to the fact that newer immigrants registered reduced wages probably as an indication that they were less attractive to their employees. This could be blamed on the quality of their work. (Nakamura A, 2003). Concerns raised here were that by lowering the productivity levels the standards of living were also likely to dwindle. This paper has by and large explained the economic characteristics of Canada and it suffices to say that she has been doing well like other developed countries. The high standards of living are a clear indication of a successful economy. However the issues of inequalities need to be addressed such that no race lags behind in terms of economic welfare as well as the accessibility of social amenities. It is clear that the multiculturalism in Canada ensures freedom in participation of various sectors like in politics. The immigration policy is also to the countryÃ¢â¬â¢s advantage but it is vital that effective measures are carried out such that the incumbent citizens are not taxed heavily to finance immigrantÃ¢â¬â¢s welfare. References: Alice Nakamura. 2003. The potential impacts of immigration on productivity in Canada. Anne Westhues. 2006. Canadian Social Policy: Issues and Perspectives. Wilfrid Laurier University Press, Benjamin Dolin and Margaret Young. 2004. CanadaÃ¢â¬â¢s immigration program. Retrieved on 23rd October 2008 from http://www. parl. gc. ca/information/library/PRBpubs/bp190-e. htm CIA. 2008. The world Fact Book. Canada. Retrieved on 23rd October 2008 from https://www. cia. gov/library/publications/the-world-factbook/geos/ca. html Citizenship and Immigration Canada. 2008. Annual Report to Parliament on Immigration, 2005. Canadian Immigration: Building CanadaÃ¢â¬â¢s Future. A Vision for Building CanadaÃ¢â¬â¢s Future. Retrieved on 23rd October 2008 from http://www. cic. gc. ca/English/resources/publications/annual-report2005/section1. asp
Monday, January 20, 2020
He makes me feel like I am like none-other, but not in a respectable manner. I remember his eyes, lifeless and dark. His smile had a revengeful look upon it, his canine teeth set in his mouth as if her were a vampire. His heart was cold and full of hate. I remember some of the memories as if they were yesterday. His words would cut me through me faster and deeper then any scalpel could. He smelled of cigarettes and coffee on a daily basis, but tried to always cover the smell with the horrendous Brut cologne. It seems clichÃ © but all I remember is all the bad, none of the good. I remember the late night fights. All I did was sit in the corner of my plain room. Staring at my plain room that only consisted of a dresser that stood up to my chest, and a twin size squeaky bed. My covers were pink and right above and to the left of the bed, in the corner of the ceiling draped a net filled with my stuffed animals. I would sit and think, trying to drown out the screaming. The words of hate were thrown like daggers from dad to mom. I remember hearing the thundering of mom going down the stairs, but it was not by her own will. I remember hearing the screams of Ã¢â¬Å"I hate youÃ¢â¬ being yelled at dad, and the yelling of Ã¢â¬Å"You cheated, and you were caught, just admit to it damn it!Ã¢â¬ I remember when we moved for the second time, the fighting progressively got worse. My mom gave my dad chances to come clean, and to be sorry, but the day where he would say Ã¢â¬Å"I am sorryÃ¢â¬ never came. My dad left July 4th, 2005 while I was away in New York and it wasnÃ¢â¬â¢t until I arrived that my parents told my brother and I that they were going to get a divorce. We were in my dinning room, my chair faced the bookshelf walls, to which I would spend all of dinner time staring at the picture of my grandfatherÃ¢â¬â¢s picture. We ate meatloaf and mashed potatoes, and corn and green beans. The meatloaf hat tomato paste drooping on top, with sliced onions backed into the paste, the potatoes had sour cream in them to make them smooth. The corn lightly dusted with black pepper setting in a buttery sauce, while the green beans were simple and out of the can.
Sunday, January 12, 2020
In the article Ã¢â¬Å"Understanding American Worldview,Ã¢â¬ the author J. LaVelle Ingram explains the cross cultural differences between Americans and immigrants. It also informs immigrants the atypical worldview of the American country they are adopting. Hence, these set of worldviews are categorized in five dimensions. In America, the first identified dimensions of worldview is that time focuses on the future instead of the past. Living for-the-moment and living according to the past are both perceived as inappropriate by American standards. Americans live in the future and find it crucial save money for their retirement or for their childrenÃ¢â¬â¢s education. On the other hand, some immigrants are more present oriented so they will spend money on only the most essential things they need at that moment. The concept that humans should be able to master nature is another aspect of the worldview. This worldview suggests that we should be able to defeat diseases at all costs, thus American families will take any surgical procedures necessary in order to cure their family member from a disease. However, some immigrants view this idea much more differently. They will consider the disease a reflection of some imbalance in living so changing their way of life would be more effective or that such disease is part of their destiny. We Americans would have trouble understanding such decisions. In the American perspective, the third identified dimension of worldview is that human nature is said to be good or mixed. The author declares that personal freedom is core value as it suggests that the society as a whole will function if you count on the individuals to live up to their best selves. The fewer constraints enforced on people the better. Some cultures, on the other had view human nature as pessimistic and selfish thus, it is considered bad. In this case, in order for people to stay on the right pathÃ they need to be monitored closely to avoid negative impulses. Another identified dimension from IngramÃ¢â¬â¢s article refers to the individualÃ¢â¬â¢s wishes, needs and aspirations being more important regardless of their groups or family and if needed, it is appropriate for an individual to move away to become independent. In America, since the social relations sense is individuality, college students are able to decide on their own majors, young women have the freedom to live in their own apartment, and young men who have jobs are not obligated to give money to the family. However, in several other cultures such behaviors are considered disrespectful. A personal example would be ever since I was young, everyone in my family wanted me to pursue a career in the medical field. Once I started community college, I took a few courses pertaining Pharmacy Technology and Medical Assistant but I realized these careers did not meet my interests. It was difficult telling my family what truly interested me and they were disappointed for a while, but in the end they were supportive. In some cultures we may seem heartless or selfish for not following what our group or families instilled us, but we are simply taking care of ourselves according to the American worldview. The fifth identified dimension of worldview is that what one does or accomplishes, is more important than the way they conduct themselves. A personÃ¢â¬â¢s job is highly important in determining oneÃ¢â¬â¢s relative value in the society. Athletes and celebrities conduct themselves the way they want to because they are rich but nonetheless, they will be judged based on what they do rather than their character because of the values, ideas, and beliefs different culture hold. This article was very interesting and informative. I was able have a better grasp of the American worldview. Immigrants do not have to assimilate or reject American worldviews to live in America but instead a more effective solution is to recognize these cross cultural differences and consciously negotiate them.
Saturday, January 4, 2020
Rousseau and the Death Penalty Jean-Jacques Rousseau, born in 1712, was a philosopher who studied music. During his lifetime he wrote a multitude of books, one particular piece of writing being The Social Contract and The First and Second Discourses, which we read and discussed in class. In this book we got to take a look at some of RousseauÃ¢â¬â¢s famous political writings. In his writings, Rousseau addresses many controversial topics about society, which caused him to make enemies and he eventually had to flee. One topic in particular that Rousseau discussed was in his book The Social Contract where he wrote about the idea of the death penalty and how he supports it. The death penalty is controversial and should not be allowed due to the fact that our government is killing a person who was convicted for doing a similar crime. The Social Contract was written in 1762 and addresses the legitimacy of political authority. One specific topic that Rousseau writes about to discuss political authority is the power of the sovereign in book II of The Social Contract. Rousseau describes the sovereign as the law or authority. In The Social Contract, Rousseau describes the sovereign as the voice of all the citizens and the sovereign cannot be disobeyed or divided. Rousseau goes on to talk more about the sovereign and how it runs, but the most interesting topic that he discussed is in Chapter 5 entitled Ã¢â¬Å"The Right Of Life And Death.Ã¢â¬ In Chapter 5, Rousseau discusses the right ofShow MoreRelatedThe French Revolution Was Inspired By The Ideas From The Enlightenment928 Words Ã |Ã 4 PagesRevolutionists saw that Enlightenment participants, such as Rousseau, Voltaire, Robspierre ,and Beccaria, along with works such as Declaration of the Rights of Man and multiple posters, took a step towards new reforms and follow in their path and ideas. 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Friday, December 27, 2019
Sample details Pages: 16 Words: 4733 Downloads: 5 Date added: 2017/06/26 Category Statistics Essay Did you like this example? The entire world is now in the grip of financial crisis which is most severe since the Great Depression 1930s. It has taken about $3 trillion of bailout and liquidity injecting by number of countries to lessen the intensity of the crisis. Hence, there is a need to restructure the financial world that would help in minimizing the frequency and severeness of such crises in future (Chapra, 2009). It could not be possible to build a new system without determining the primary causes for this financial crisis. The most important cause of all financial crises has been imprudent and excess lending by banks over many years, which has also been acknowledged by many financial institutes. DonÃ¢â¬â¢t waste time! Our writers will create an original "Current Global Financial Crisis And Islamic Financial System" essay for you Create order This raises the question that what make it possible for banks to involve in such devastating practice which is not only unstable the financial system but also not in their own long-term best interest. There are three main elements which make it possible. First of all inadequate market discipline in the financial system resulting from the absence of profit-and-loss sharing (PLS). The second is the huge expansion in the size of derivatives, especially credit default swaps (CDSs) and the third is assurance to big banks from the central bank that it will definitely come to their rescue and will not allow them to fail. Therefore, bank and financial institute have not undertaken a careful measure against risk, which has led the whole financial system in the excessive volume of credit, excessive leverage and to a volatile rise in asset prices and speculative investment. One of the foremost objectives of Islam is to realize greater justice in human Society. According to the Quran (57:25) Ã ¢Ã¢â ¬Ã âa society where there is no justice will ultimately head towards decline and destructionÃ ¢Ã¢â ¬?. The financial system may be capable to promote justice if it meets at least two conditions. Firstly, the finance should also share the risk and not only shift the whole burden of losses to the entrepreneur and secondly an equitable share of finance resources should become available to the poor people of community to help eliminate poverty, consequently, expand employments opportunities and hence reduce inequalities of wealth. (Chapra, 2009). To meet the first condition, Islam requires both the financer and entrepreneur to share equally in profit and loss. This will help in introducing greater discipline into the financial system and motivate financial institutions to evaluate the risks prudently and monitor the use of funds by the borrowers. This assessment of risks by the financiers and as well as by the entrepreneur should help in putting greater discipline and reducing excessive lending. Islamic finance should ideally help raise significantly the share of equity and PLS in businesses; even mainstream economist supports the greater reliance on equity financing. Rogoff (1999) states that Ã ¢Ã¢â ¬ÃÅ"in an ideal world equity lending and direct investment would play a much bigger roleÃ ¢Ã¢â ¬Ã¢â ¢. On the debt side, Islamic financials system doesnÃ ¢Ã¢â ¬Ã¢â ¢t permit the creation of debt through direct lending and direct borrowing but it allow the creation of debt through the sales / lease of real assets which means Islamic debt modes of financing (murabaha, ijara, salam, istisna and sukuk), but, it has, nevertheless, put down number of conditions. The asset sold or leased must be real Ã ¢Ã¢â ¬Ã¢â¬Å" this will eliminate a huge number of derivatives transactions which involving gambling by third parties who are mostly concerned to claim for compensation for losses which not actually been suffered by them but by principal party The goods being sold or leased must be owned / possessed by seller/lessor- this condition ascertain that the seller (lessor) also take a part in risk to get a share in the return The sale / leased transaction must be real trade transaction Ã ¢Ã¢â ¬Ã¢â¬Å" this ensure that the creditor take extra measures to evaluate the credit risk but also prevent unneeded explosion in the value and volume of transactions. The risk associated with sales / leased must be borne by lender / seller himself as debt canÃ ¢Ã¢â ¬Ã¢â ¢t be sold- this prevent the debt from growing above the size of the real economy and also discharge significant volume of financial resources for real sector, hence expanding employment and production of goods and services. History is full with evidence of instability of the conventional financial system. Many prominent economists have argued that this system is inherently unstable and tends to severe financial crisis. They have regarded the interest rate the main cause of huge fluctuations in commodity and asset prices, a source of financial instability, cumulative inflation, and detrimental to long-term economic growth. They have also called for a separation of deposit and investment banking. (Mirakhor, 2009). The main objective of this study is three-fold; firstly understand the global financial crisis and what determinants have caused it; secondly understand Islamic finance in context of global financial crisis and some of its major differences with conventional financial system and thirdly built up a model to assess the compare the financial stability of Islamic and conventional financial system. LITERATURE REVIEW To analyze the determinants which have caused current global financial crisis: a) The TED Spread: Global Finances ThermometerÃâÃ TED spread is the difference between the LIBOR (The London Interbank Offered Rate at which banks lend to each other) and short-term U.S. government debt (T-bills). It indicates a perceived credit risk in the economy. As T-bills are regarded as risk-free an LIBOR are riskier than T-bills, so LIBOR always exceed the T-Bills. The TED spread, often used as a measure of the general credit risk of an economy is used to decide which date to divide the time series. The original TEDÃ ¢Ã¢â ¬?spread was the difference between US Treasure bills and Eurodollar contracts represented by Libor (Brown and Smith, 2005). Marquardt (2008) says that Ã ¢Ã¢â ¬Ã âTED Spread measures market stress by revealing the willingness (or reluctance) of banks to lend money to one anotherÃ ¢Ã¢â ¬?. Ã ¢Ã¢â ¬Ã âA jump in the spread shows how panicky banks are, in that they are charging each other a bigger interest-rate premium thanÃâÃ moneyÃâÃ lent to the U.S. government, (CNN Money, 2008). Realized and Expected Writedowns or Loss Provisions for Banks By Region (in billions of U.S. dollars) Source: IMF Global Financial Stability Report Oct 2009. TED speed has always been under 1%, however, it rocketed in 2007 to about 2.5% and in late 2008 moved to highest level of 4.5%. Mid of 2007, newspapers reported Northern Rock, UK Bank, collapsed because liquidity had disappeared and banks were reluctant to lend money to another bank because of the high risk of market after the rise in the TED spread to unprecedented level in the history, then an historical phrase Ã ¢Ã¢â ¬ÃÅ"credit crunchÃ ¢Ã¢â ¬Ã¢â ¢ emerged; an environment, where even a creditworthy borrower are unable to find funds. Consequently, the central banks had to supply a massive amount of money to the interbank market, but the limited impact of TED spread chart, that in September2008, Lehman Brothers collapsed and filed bankruptcy protection with massive reduction in assets ever. b) US sub-prime mortgage There is no consensus on the exact definition of subprime mortgages. The term subprime is often used to describe certain characteristics of the borrower. For example, a FICO score (a standard industry model to evaluate creditworthiness of a borrower) less than 620 is a common definition of a subprime borrower. Another definition is that a subprime mortgage does not usually need any down-payments and that little documentation is required. However, a broad definition is that a subprime loan entails a high risk of default (Demyanyk et al (2008)). The housing mortgage market in the U.S. has been well functioning over the past two centuries, enabling millions of people to fulfil the dream of home ownership. During this time there has been several periods of disruption in these markets, but none of them as severe as the episode, sometimes referred to as the Ã ¢Ã¢â ¬Ã âsubprime mortgage market meltdownÃ ¢Ã¢â ¬? that begun around the summer of 2007, with falling real-estate prices and increasing defaults. Today, economists fear that more than 2 million or more Americans might lose their homes to foreclosure in 2009 (Barth et al (2008)). The banking industry is facing huge losses as a result of the sub-prime crisis. Already banks have announced $60bn worth of losses as many of the mortgage bonds backed by sub-prime mortgages have fallen in value. The losses could be much greater, as many banks have concealed their holdings of sub-prime mortgages in exotic, off-balance sheet instruments such as structured investment vehicles or SIVs. Although the banks say they do not own these SIVs, and therefore are not liable for their losses, they may be forced to cover any bad debts that they accrue. (BBC News, 2007) Many years of strongly rising house prices caused lenders to relax their lending criteria. Loan-to-value ratios rose and low starter-interest rates were introduced (typically for the first two years of the mortgage) to be recouped by higher interest rates for the remaining 28 years of the typical 30 year US mortgage. In many cases the borrowers knew that they could not afford the monthly payments after the initial two-year low interest period expired; they were relying on rising house prices to enable a profit on sale or refinancing The mortgage default rates on these sub-prime mortgages were much higher than predicted by the lendersÃ ¢Ã¢â ¬Ã¢â ¢ credit models. These models were based upon the historical behaviour of prime borrowers, not sub-prime borrowers who behaved differently. (Amin, 2009) c) Securitisation Securitization is often stated to be part of the originate-to-distribute model, where institutions that originate assets (in this example, mortgages) move them away from their balance sheet by distributing them to purchasers of ABSs (asset-backed securities). The advantages for institutions conducting in securitization is mainly that they are able to free up capital and liquidity by moving the assets away from the balance sheet. Furthermore, securitization is a way of providing liquidity and funding to mortgages Ã ¢Ã¢â ¬Ã¢â¬Å" by investing in an ABS, a Japanese asset manager (for example) might finance the real-estate mortgages of U.S. home owners (Criado and Rixtel (2008)). US mortgage market had moved away from a Ã ¢Ã¢â ¬ÃÅ"lend and collectÃ ¢Ã¢â ¬Ã¢â ¢ model (the bank lends on a mortgage and collect it back over 30 years) to an Ã ¢Ã¢â ¬ÃÅ"originate to distributeÃ ¢Ã¢â ¬Ã¢â ¢ model (the bank makes a mortgage loan in order to sell it on.) Originating loans and selling them on means that banks make profits from lending as much as possible, provided that the loans can be sold on; once the loan has been sold the bank is relatively indifferent to its collectability. d) Collateralized Debt Obligations CDOs are ABSs that are constructed by pooling and securitizing in particular higher risk assets such as risky loans or tranches of other ABSs (Criado and Rixtel (2008)). There are different types of classifications for CDOs and one of the most common is cash flow CDOs, a term relating to the scenario where the trust (special purpose vehicle or special purpose entity) involved in the securitization owns the underlying debt posted as collateral in the CDO. A synthetic CDO refers to the scenario where the trust does not own the underlying debt, and instead invests in CDSs (credit default swaps) to synthetically track their performance. The hybrid CDO combines cash flow CDOs and synthetic CDOs. There is also the CDO squared (CDO2) which is a CDO that has securitized the tranches of another CDO. ABS CDOs and CDOs squared thus consist of a Ã ¢Ã¢â ¬Ã âdouble layered securitizationÃ ¢Ã¢â ¬? (Criado and Rixtel (2008)). Here CDO securities created by Bank 1 and Bank 2 selling their customer loans are purchased by Special Purpose Entity (SPE) 3 which pays for them by issuing CDO securities to investors. As these are CDOs based on other CDOs, they are called CDO2. The challenge with such complex structures is that it becomes almost impossible to accurately project likely defaults on the original customer loans to the likely defaults on the securities issued by SPE 3. In many cases, complex CDO structures involved some sub-prime mortgages being blended with prime mortgages to boost the yield of the overall package of assets. Accordingly, once defaults started happening in the relatively small sub-prime market, that led to a collapse in the market value of a much larger amount of CDOs. The creation of collateralized debt obligations (CDOs) by mixing prime and subprime debt made it possible for mortgage originators to pass the entire risk of default of even subprime debt to the ultimate purchasers who would have normally been reluctant to bear such a risk. Mortgage originators had, therefore, less incentive to undertake careful underwriting.ÃâÃ Estimates of Global Bank Writedowns by Domicile, 2007-10 (in billions of U.S dollars) Source: IMF Global Financial Stability Report Oct 2009. e) Credit Derivatives The credit default swap originally thought as a way for bondholders to protect against a bond default can also be used for speculation on the creditworthiness of a company. One key difference between a regular insurance policy and a CDS contract is that the buyer of credit protection does not have to own the underlying instrument. Like most derivative instruments credit default swaps can be used for hedging, speculation and arbitrage. Under a credit default swap contract (CDS) the seller is paid a regular amount each year by the buyer of the CDS. If a credit event occurs in relation to the underlying asset which is referenced by the CDS, the seller pays the buyer for the fall in value of the reference asset. However, the buyer does not need to own the reference asset; in that case the CDS buyer is simply speculating that the reference asset will fall into default. When there is excessive and imprudent lending and lenders are not confident of repayment, there is an excessive resort to derivatives like CDSs to seek protection against default. The buyer of the swap (creditor) pays a premium to the seller (a hedge fund) for the compensation he will receive in case the debtor defaults. If this protection had been confined to the actual creditor, there may not have been any problem. What happened, however, was that hedge funds sold the swaps not to just the actual lending bank but also to a large number of others who were willing to bet on the default of the debtor. These swap holders, in turn, resold the swaps to others. The whole process continued several times.ÃâÃ While a genuine insurance contract indemnifies only the actually insured party, in the case of CDSs there were several swap holders who had to be compensated. This accentuated the risk and made it difficult for the hedge funds and banks to honour their commitments. The notional amount of all outstanding derivatives (including CDSs of $54.6 trillion) is currently estimated by the BIS to be over $600 trillion, more than ten times the size of the world economy. No wonder George Soros described derivatives as Ã ¢Ã¢â ¬ÃÅ"hydrogen bombsÃ ¢Ã¢â ¬Ã¢â ¢, and Warren Buffett called them Ã ¢Ã¢â ¬ÃÅ"financial weapons of mass destructionÃ ¢Ã¢â ¬Ã¢â ¢. The well known American economist Joseph Stiglitz has summarised the role of credit default swaps in the crises: With this complicated intertwining of bets of great magnitude, no one could be sure of the financial position of anyone elseÃ ¢Ã¢â ¬?or even of ones own position. Not surprisingly, the credit markets froze. (Stiglitz, 2009) f) General over-leveragingÃâÃ The economies of the UK and US had not suffered a serious recession for many years. In these benign business conditions, companies had gradually increased their gearing, as interest on debt is tax deductible whereas dividends on share capital are not tax deductible. The high gearing was particularly striking in companies owned by private equity firms, which were typically very highly leveraged. If economic conditions worsened, such firms would risk insolvency. To assess the difference between Islamic and conventional finance in context of global financial crisis: Islamic finance is defined as a financial system based on Islamic law known as ShariÃ ¢Ã¢â ¬Ã¢â ¢ah Islamic finance is limited to financial relationships involving entrepreneurial investment, subject to the moral prohibition of following (i) interest earnings or usury (riba) and money lending, (ii) haram (sinful activity), such as direct or indirect association with lines of business involving alcohol, pork products, firearms, tobacco, and adult entertainment, (iii) speculation, betting, and gambling (maysir), including the speculative trade or exchange of money for debt without an underlying asset transfer, (iv) the trading of the same object between buyer and seller (bayÃ ¢Ã¢â ¬Ã¢â ¢ al-inah), as well as (v) preventable uncertainty (gharar), such as all financial derivative instruments, forward contracts, and futures agreements. As opposed to conventional finance, where interest represents the contractible cost for funds tied to the amount of principal over a pre-specified lending period, the central tenet of the Islamic financial system is the prohibition of riba, whose literal meaning Ã ¢Ã¢â ¬Ã âan excessÃ ¢Ã¢â ¬? is interpreted as any unjustifiable increase of capital whether through loans or sales. The general consensus among Islamic scholars is that riba covers not only usury but also the charging of interest and any positive, fixed, predetermined rate of return that are guaranteed regardless of the performance of an investment (Iqbal and Tsubota, 2006; Iqbal and Mirakhor, 2006; Iqbal and Llewellyn, 2000). Since only interest-free forms of finance are considered permissible in Islamic finance, financial relationships between financiers and borrowers are governed by shared business risk (and returns) from investment in lawful activities (halal). Islamic law does not object to payment for the use of an asset, and the earning of profits or returns from assets are indeed encouraged as long as both lender and borrower share the investment risk together. Profits must not be guaranteed ex ante, and can only accrue if the investment itself yields income. Any financial transaction under Islamic law assigns to investors clearly identifiable rights and obligations for which they are entitled to receive commensurate return. Hence, Islamic finance literally Ã ¢Ã¢â ¬Ã âoutlawsÃ ¢Ã¢â ¬? capital-based investment gains without entrepreneurial risk. In light of these moral impediments to Ã ¢Ã¢â ¬Ã âpassiveÃ ¢Ã¢â ¬? investment and secured interest as form of compensation, shariah-complian t lending in Islamic finance requires the replication of interest-bearing, conventional finance via more complex structural arrangements of contingent claims (Mirakhor and Iqbal, 1988). The permissibility of risky capital investment without explicit interest earning has spawned several finance techniques under Islamic law. We distinguish among three basic forms of Islamic financing methods for both investment and trade finance: synthetic loans (debt-based) through a sale-repurchase agreement or back-to-back sale of borrower- or third party-held assets. lease contracts (asset-based) through a sale-lease-back agreement (operating lease) or the lease of third-party acquired assets with purchase obligation components (financing lease), and profit-sharing contracts (equity-based) of future assets. As opposed to equity-based contracts, both debt- and asset-based contracts are initiated by a temporary transfer of existing assets from the borrower to the lender or the acquisition of third-party assets by the lender on behalf of the borrower. Islamic Ã ¢Ã¢â ¬Ã âloansÃ ¢Ã¢â ¬? create borrower indebtedness from the purchase and resale contract of an (existing or future) asset in lieu of interest payments. The most prominent form of such a Ã ¢Ã¢â ¬Ã âdebt-basedÃ ¢Ã¢â ¬? structural arrangement is the murabaha (or murabahah) (Ã ¢Ã¢â ¬Ã âcost-plus saleÃ ¢Ã¢â ¬?) contract. Interest payments are implicit in an installment sale with instantaneous (or deferred) title transfer for the promised payment of an agreed sales price in the future. The purchase price of the underlying asset effectively limits the degree of debt creation. A murabaha contract either involves (i) the sale-repurchase agreement of a borrower-held asset (Ã ¢Ã¢â ¬Ã ânegative short saleÃ ¢Ã¢â ¬?) or (ii) the lenderÃ ¢Ã¢â ¬Ã¢â ¢s purchase of a tangible asset from a third party on behalf of the borrower (Ã ¢Ã¢â ¬Ã âback-to-back saleÃ ¢Ã¢â ¬?). The resale price is based on original cost (i.e., purchase price) plus a pre-spe cified profit markup imposed by the lender, so that the borrowerÃ ¢Ã¢â ¬Ã¢â ¢s repurchase of the asset amounts to a Ã ¢Ã¢â ¬Ã âloss-generating contract.Ã ¢Ã¢â ¬? Different installment rates and repayment and asset-delivery schedules create variations to the standard murabaha cost-plus sale. The most prominent examples are salam (deferred delivery sale), bai bithaman ajil (BBA) (deferred payment sale), istina (or istisna, istisnaÃ ¢Ã¢â ¬Ã¢â ¢a) (purchase order), quard al-hasan (benevolent loan), and musawama (negotiable sale). As opposed to the concurrent purchase and delivery of an asset in murabaha, asset purchases under a salam or a bai bithaman ajil contract allow deferred delivery or payment of existing assets. Salam closely synthesizes a conventional futures contract and is sometimes also considered an independent asset class outside the asset spectrum of murabaha (Batchvarov and Gakwaya, 2006). An istina contract provides pre-delivery (project) finance for future assets, such as long-term projects, which the borrower promises to complete over the term of the lending agreement according to contractual specifications. A quard al-hasa n signifies an interest-free loan contract that is usually collateralized. Finally, a muswama contract represents a negotiable sale, where the profit margin is hidden from the buyer. Analogous to conventional operating and finance leases, al-ijarah leasing notes (Ã ¢Ã¢â ¬Ã âasset-basedÃ ¢Ã¢â ¬?) provide credit in return for rental payments over the term of the temporary use of an (existing) asset, conditional on the future (re-)purchase of the assets by the borrower. The lease cash flow is the primary component of debt service. The lessor (i.e., financier) acquires the asset either from the borrower (operating lease or Ã ¢Ã¢â ¬Ã âsale-leasebackÃ ¢Ã¢â ¬?/Ã ¢Ã¢â ¬Ã âlease-buybackÃ ¢Ã¢â ¬?) or a third party at the request of the borrower (financing lease or Ã ¢Ã¢â ¬Ã âlease-purchaseÃ ¢Ã¢â ¬?) and leases it to the borrower (or a third party) for an agreed sum of rental payable in installments according to an agreed schedule. The legal title of the asset remains with the financier for the duration of the transaction. The financier bears all the costs associated with the ownership of the asset, whereas the costs from the use of the asset have to be defrayed by the lessee. If the ijarah transaction is a financing lease (ijarah wa iqtina), such as an Islamic mortgage, the repayment through lease payments might also include a portion of the agreed resale price (in the form of a call option premium), which allows borrowers to gradually acquire total equity ownership for a predetermined sales price.15 If the lessee does not exercise the call option at maturity, the lender disposes of it in order to realize the salvage value (put option).16 In an operating lease with a repurchase obligation, the asset is returned to the borrower for the original sale price or the negotiated market price17 unless otherwise agreed.18 In this case, the lenderÃ ¢Ã¢â ¬Ã¢â ¢s put option represents a repurchase obligation19 by the borrower (at the current value of outstanding payments), which is triggered upon certain conditions, such as delinquent payments or outright default. In Islamic profit-sharing contracts (equity-based), lenders (i.e.,, investors) and borrowers (i.e.,, entrepreneurs) agree to share any gains of profitable projects based on the degree of funding or ownership of the asset by each party. In a trustee-type mudharaba (or mudarabah) financing contract, the financier (rab ul maal) provides all capital to fund an investment, which is exclusively managed by the entrepreneur (mudarib) in accordance with agreed business objectives. The borrower shares equity ownership with the financier (i.e. a call option on the reference assets) and might promise to buy-out the investor after completion of the project. At the end of the financing period, the entrepreneur repays the original amount of borrowed funds only if the investment was sufficiently profitable. Profits are distributed according to a pre-agreed rate between the two parties. Investors are not entitled to a guaranteed payment and bear all losses unless they have occurred due to misconduct, negligence, or violation of the conditions mutually agreed by both financier and entrepreneur. The equity participation and loss sharing in a musharakah contract is similar to a joint venture, where both lender/investor and borrower (or asset manager/agent) jointly contribute funds to an existing or future project, either in form of capital or in kind, and ownership is shared according to each partyÃ ¢Ã¢â ¬Ã¢â ¢s financial contribution. Although profit sharing is similar to a mudharaba contract, losses are generally borne according to equity participation. Overall, the different basic types of Islamic finance combine two or more contingent claims to replicate the risk-return trade-off of conventional lending contracts or equity investment without contractual guarantees of investment return or secured payments in reference to an interest rate as time-dependent cost of funds. Such arrangements may become complicated in practice, once they are combined to meet specific investor requirements under Islamic law (El-Qorchi, 2005). Although both Islamic and conventional finance are in substance equivalent to conventional finance and yield the same lender and investor pay-offs at the inception of the transaction, they differ in legal form and might require a different valuation due to dissimilar transaction structures (and associated legal enforceability of investor claims) and/or security design (Jobst, 2006d). Most importantly, Islamic finance substitutes a temporary use of assets by the lender for a permanent transfer of funds to the borrowe r as a source of indebtedness in conventional lending. Retained asset ownership by the lender under this arrangement constitutes entrepreneurial investment. The financier receives returns from the direct participation in asset performance in the form of state-contingent payments according to an agreed schedule and amount. RESEARCH METHODOLOGY: Z-score for Emerging Markets The z-score measures the degree of vulnerability of a particular business or an industry segment by categorising firms into two distinct clusters, namely strong and vulnerable firms, based on the historical default experience. The construction of the z-score used by the Bank is referenced on the model developed by Altman for emerging markets and employs the multiple discriminant analysis as an underlying statistical tool to derive a linear combination of financial ratios that best discriminate between the two categories. The multiple discriminant analysis improves on the traditional approach of individual or sequential analysis of financial ratios by reducing the reliance on rules of thumb and subjective judgment in determining the threshold levels and relative importance of the ratios. Selected key financial ratios are subsequently consolidated into a composite score to provide a snapshot of a firmÃ ¢Ã¢â ¬Ã¢â ¢s financial health. The discriminant function for the z-score for em erging markets based on the study conducted by Altman is given by the following equation: Z = Based on the z-score, both strong and vulnerable firms can be identified, whereby a higher z-score indicates a lower likelihood of the firm encountering financial distress. Working Capital/Total Assets (WC/TA) The working capital/total assets ratio is a measure of the net liquid assets of the firm relative to the total capitalization. Working capital is defined as the difference between current assets and current liabilities. Liquidity and size characteristics are explicitly considered. This ratio was the least important contributor to discrimination between the two groups. In all cases, tangible assets, not including intangibles, are used. Retained Earnings/Total Assets (RE/TA) Retained earnings (RE) is the total amount of reinvested earnings and/or losses of a firm over its entire life. The account is also referred to as earned surplus. This is a measure of cumulative profitability over the life of the company. The age of a firm is implicitly considered in this ratio. It is likely that a bias would be created by a substantial reorganization or stock dividend, and appropriate readjustments should, in the event of this happening, be made to the accounts. In addition, the RE/TA ratio measures the leverage of a firm. Those firms with high RE relative to TA have financed their assets through retention of profits and have not utilized as much debt. This ratio highlights the use of either internally generated funds for growth (low-risk capital) or OPM (other peopleÃ ¢Ã¢â ¬Ã¢â ¢s money)Ã ¢Ã¢â ¬Ã¢â¬ higher-risk capital. This variable has shown a marked deterioration in the average values of non-distressed firms in the past 20 years and, in subsequent model updates, we utilized a transformation structure in order to make its negative impact less dramatic on current Z-Scores. Earnings before Interest and Taxes/Total Assets (EBIT/TA) This is a measure of the productivity of the firmÃ ¢Ã¢â ¬Ã¢â ¢s assets, independent of any tax or leverage factors. Since a firmÃ ¢Ã¢â ¬Ã¢â ¢s ultimate existence is based on the earning power of its assets, this ratio appears to be particularly appropriate for studies dealing with credit risk. We have found that this profitability measure, despite its reliance on earnings, which are subject to manipulation, consistently is at least as predictive as cash flow measures. Market Value of Equity/Book Value of Total Liabilities (MVE/TL) Equity is measured by the combined market value of all shares of stock, preferred and common, while liabilities include both current and long-term obligations. The measure shows how much the firmÃ ¢Ã¢â ¬Ã¢â ¢s assets can decline in value (measured by market value of equity plus debt) before the liabilities exceed the assets and the firm becomes insolvent. (Altman and Hotchkis (2006))