Functions of the Central Bank of England - Coursework Example

Functions of the Central Bank with Special Reference to the Bank of England Introduction Financial services are the services provided by the Finance industry. The definition of the term financial services might look very small but the explanation of the term, if written on paper, would make a theory. The research paper would explain a few aspects of financial services to enumerate the role played by it in an economy. Finance industry itself comprises of a large number of organizations such as banks, insurance companies, credit card companies, stock brokerages, consumer finance companies, investment funds and a few government sponsored enterprises. The organizations deal with the management, investment, transfer and lending of money. It is true that every company handles money but the financial institutions actually make money for their businesses. The financial institutions enable the companies (also people) to manage their assets in an efficient manner that generate income and options for them to operate. The role of financial services is not only essential for the companies but it is also important for economic growth and development. They are the largest in the world in terms of earnings comprising of a vast range of businesses. But the financial institutions are also not free from criticism. At times they are also faced with obstacles. During the course of this research work, the flaws and rewards of financial services will become apparently clear (Suttons & Jenkins, “The Role of the Financial Services in Expanding Economic Opportunity”). There is strong co-relation between economic growth and financial institutions. It is due to the presence of some channels that finance markets effect and are affected by the economic growth. The channels include the facilitation of hedging, trading, pooling of risk and diversifying; the efficient allocation of resources and the facilitation of the exchange of services and goods. One simple way to explain the relationship is by measuring the financial depth; one can predict the future economic growth of a country. Another important aspect of the research paper includes the role that banks play in the financial system. The lenders, primarily government, households and firms can supply fund to the ultimate borrowers, mainly government, firms and households in two ways; either through financial markets which mainly consists of bond markets, money markets and equity markets or through banks and other financial intermediaries. But the importance on banks and their roles vary in different economies. The research paper has tried to put some light on the challenges that are faced by the financial institutions that sometime leads to precarious crisis all over the world. Normally the financial institutions try to avoid two types of risk such as the credit risk, when a big borrower defaults on debt and another is the market risk in which a certain collapse destroys all the benefits of investment. In recent times, a third risk has left the banks and financial institutions with sleepless nights. This is the operational risk, when an institution collapses due to an internal system failure. Serious discussions are going on over the issue to manage operational risk (Allen & Carletti, “The Roles of Banks in Financial Systems”). The other part of the research paper deals with the concept of capital market structure of a company that holds good for its operational efficiency. It also deals with the controversy over the matter of choosing the right objective of a company i.e. profit maximization or wealth maximization. Functions of the Central Bank with Special Reference to the Bank of England The Central banks try to guard their credibility by following lower inflationary policies. It is generally acknowledged that central banks need money in order to support their monetary policies and review the low inflationary measures. Although the current day-to-day operations of the central banks has been questioned and criticized, their structural role within the economic system has generally been accepted. As this section of the research paper mainly deals with the functions of the Bank of England; therefore the first area of discussion is set for its functions. Money Supply The main role of the Bank of England is to ensure that enough cash is present in their economy in order to check high inflation. It is the duty of the Bank of England to issue bank notes in the economy during the time of excessive necessity. Lender of the Last Resort Like one of the functions of any other Central Banks, Bank of England also plays the role as the lender of the last resort. On performing this function, the bank has to lend money to the commercial banks when they suffer from cash shortage. This is perhaps the most essential role of the Central Bank because it helps in maintaining liquidity and confidence in the banking system. This role was visualized in 2007 when Northern Rock could not raise enough funds on the money markets and were enforced to borrow from Bank of England where government acted as the guarantor. Setting Interest Rates This function of the bank indeed acts as a power booster to the Central bank’s primary role of lower inflationary measures. The bank predicts the future inflation and accordingly sets the interest rate to achieve their basic target of lower inflationary rate and hence preserve the value of money of the common people (Economicshelp, “Bank of England”). Discount Windows The discount window is an instrument of monetary policy (usually controlled by the central bank) which facilitates the commercial banks to borrow from the central bank against collateral. This facility is enjoyed by the commercial banks on a short term basis and they only apply this measure in order to tackle crisis due to internal and external disruptions. The interest rate charged to the commercial banks on such loans is called the repo rate or the base rate. Repo Rate It is the discount rate which a central bank uses to repurchase government securities from the commercial banks that depends on the amount of supply of money it has to maintain in the monetary system of the country. In order to increase the money supply temporarily, the repo rate is decreased by the Central Bank and vice-versa. The Bank of England performs the task to set the base rate with a view to try and meet the government’s inflation target of 2%. The bank assembles every month to set the interest rate to meet up to their targets. It forecasts the inflation and accordingly sets the base rate. The current base rate of the Bank of England has been held at 0.5% as collected from the official website of the bank (Economicshelp, “Bank of England Interest Rates”). Reverse Repo Rate The reverse repo rate is exactly the opposite of the repo rate. It is the rate at which the central banks borrow from the commercial banks. The central bank uses the tool of borrowing money from commercial banks when it feels that there is excess of money in the banking system. If reverse repo rate is increased, it signifies that Central bank will have a loan of money from the bank and offer them a profitable rate. Statutory Reserves Statutory reserves mean the state regulated reserve requirements. These are the amount of assets in liquid form that companies must keep in order to remain solvent and protected against investment loss. The statutory reserves are required by the State regulators because regulators have to affirm that an insurance firm remains solvent and that it can pay future claims. The central banks create money and maintain the supply of money by another tool called the reserve requirement. But it is not the case always. In Britain, the Bank of England sells as many notes and coins to the commercial banks as they like. The process is such that it debits the accounts that these banks operate with, by the appropriate amount. Thus, the total money holding of the banks is not just the notes and coins that they have in their branches but it also includes the money they have in their accounts with the BoE. It is also true that if at any time the bank feels that there is excess money in circulation and is causing inflation, it can force the commercial banks to lower their lending and deposit extra funds into their accounts (Douthwaite, “How the Bank of England Controls the Money Supply”). Buying and Selling of Government Securities The government securities are those instruments that are used by the federal government to take loan. UK Government: Gilt Gilt is a legal responsibility of UK Government in sterling which is issued by the HM treasury. Gilts are traded on the Stock Exchange of London. The Bank of England had previously been responsible for issuing gilts on behalf of HM Treasury. The Gilt market has improved since it came to be issued by the Debt Management Office (DMO). During 2009-10 there was a great volume of Gilt issuance. The Gilt sales outturn was 227.6 billion sterling pounds. A further source of gilt sales proceeds was introduced in 2009-10 with the launch of the Post Auction Option Facility (PAOF) from June 2009. There was lot of improvements that DMO brought towards the Gilt market like it introduced the electronic bidding system at the auctions during 2007. These types of improvements had added value towards the operations of the gilt market. The primary objective is to build up a liquid and competent gilt market (UK Debt Management office, “UK Government Securities: a Guide to ‘Gilts’”). Role of Banking in Business The banking sector plays very important role in an economy. It is the sector which brings the circulation of money in an economy. People who have money but not the expertise of doing business and those who have the business skills but does not possess money opt for the banking option. The main roles played by the banking sector in business have been enumerated below: Accepting Deposits Accepting deposits is the primary function of banks in an economy. The role of banking is to accept the deposits from one part of the economy and lend to others and in this way the circulation of money comes into being. Banks motivate the people to deposit money in their banks by providing high rate of interest on deposits. Normally people choose the option of depositing money in banks when they have surplus money in their hands and want to earn a little with that surplus. e-money on the Internet The worldwide development of technology and its acceptance in the recent years have helped to enlarge the system of e-banking. This system provides easy transaction of money between different parts of the world. Due to its easy access and convenience, most of the cross border retail payments are done through e-banking. This helps the multinational business houses to a large extent and makes trading easier. Above all e-banking assists in reducing the cost of doing business globally. Principles for Insurance System in Banking The financial crisis has resulted in the application of the principle of insurance system in banking activities. The system of insurance is followed in order to protect depositors and contribute to the financial system stability. A precise insurance system helps to limit the scope of discretionary decisions. The insurance system becomes more effective in a healthy banking system. Investment Management The banks and bank consultants, in recent years, are selling credit risk management systems which include investment decisions. This service provided by the banks helps the investors to reduce their risk of investing in a large portfolio. Banks help investors to design an optimal investment portfolio for themselves. Banks have appointed specialists for these jobs and this is the reason why some people still prefer to invest in banking policies despite the presence of huge amount of sophisticated investment financial institutions. Mortgages Banks perform the function of loan mortgaging in order to provide more flexibility to the borrowers. A mortgage loan is a loan secured by a real property. A buyer of home or a builder can obtain loan either to purchase or secure against the property from bank. But the features of the mortgage can vary considerably based on the characteristics of the borrower. Critical Analysis of the Existence of Banking in Business (Advantages and Disadvantages) The presence of banking system is extremely important for businesses. The banking system helps to reduce transactional cost in a way that frequent conversion of currencies by buying and selling are not required for trading. Due to the banking system, price transparency can be maintained in economies doing business. The exchange rate fluctuation gets eliminated due to the banking system (Thinkquest, “Advantages & Disadvantages”). The modern banks are utilizing the technologies to its fullest rate and this has brought flexibility in doing business. Recently, the fact of adoption of internet banking has been critically evaluated. This is the area where though it brings huge flexibility but at the same time it also increases costs. Internet banking acts not only as a distribution channel for the banking sector but it also adds value to its existence. Like any other substance in the world, there is a bad side of banking also. The excessive use of internet banking paves the path for the ill manipulations of the internal matters by hackers. The security system needs to be modified if this disadvantage is to be removed. Normally the banks face two problems in this perspective: firstly, a non-authorized person can enter the banks internal accounts. Secondly, one person can enter another person’s account. Banks failure or the absence of banking system in an economy, directly affects the performance of an economy more than the failures of any other firm. It would be viable to say that banks failure adversely results to the failure of the shareholder’s, the investors, the business firms and thus the entire economy. A practical example to be mentioned in this regard is the failure of the Lehman Brothers. The absence of a banking system in an economy would have been the same as that of the failure of a bank (Kaufman, “Bank Failures, Systemic Risk, and Bank Regulation”). Role of Investment Banking The easiest way to define investment banking would be to mention two of its primary functions: the provision of financial advice and that of capital rising. Investment banking advice normally relate to the corporate bodies rather than product or organizational matters. The majority of them are on the factor of merger and acquisition. Their role on this aspect is to apply their knowledge of the industry sector and investment market, coordinate the work of other advisors involved. They also provide their services in the formation of a funding structure of an organization. In the field of capital rising, the investment bankers have to advise the company the wants to grow in taking their investor selection decision and also on the size and form of the investment amount. They also advise in selecting the way of raising fund capital (Abor, “The Role of Investment Banking in Raising Capital in Ghana”). Corporate Governance Overview Corporate governance is a set of policies, customs, rules and laws that affect the way a company is controlled and directed. It also includes the relations among the stakeholders and the corporate governance of an organization largely affects the goals and objectives of it. There has been high attention in the corporate governance issues in the modern world due to the collapse of large number of US firms. The objectives of an organization are collectively fulfilled by the board of directors with the help of other stakeholders. The growing concern towards the corporate governance can be visualized by the momentum for this new kind of responsibilities of the board can be found in a number of industry specific initiatives like the OECD principles of Corporate Governance and the United Nations Global Compact. Despite all those initiatives globally, the bad side of the coin have been phenomenally affecting the economies of the world. An active example to such failures is that of the Lehman Brothers in US and Barings Bank in UK (International Finance Corporation, “Corporate Citizenship and Sustainable Businesses”). Failure of Corporate Governance The corporate governance is an internal issue of an organization but avoidance of it brings vulnerable effects that are completely external to the organizations. The collapse of the above mentioned banks are all due to the failure of their corporate governance. The banks lend as much as twenty times the value of their share capital and these moves make their continued solvency sensitive to defaults on those banks. The banks which run by obtaining funds from the money markets can suffer from contagions that result from herding by the market operators. The managements of boards and financial institutions have faced challenging conditions due to the failure of the corporate governance. However, the failures of banks over the years have led to certain different corrective measures. The measures comprise of schemes for insuring the depositors for loss, the government promotion of the takeover of the failing banks by stronger one, and many more. Solutions to the Failure of Corporate Governance This section of the research paper demonstrates the management of the corporate governance failure that is helping to fight the current situation of the financial crisis. The risk management is an important tool to deal with the problems of corporate governance failure. This can be viewed as a framework which has the following dimensions: Internal Environment The internal environment of an organization has to be strong and effective. It includes full participation by the directors along with all involved in the operations. It also sets the basis for how the risks are examined. Objective Setting In order to adhere to the situations, the objectives that are being dealt with have to be reviewed regularly by the corporate governance authority. The objectives must be set before the management can smell the coming disparities. Event Identification The events arriving in the external environment of an organization must be analyzed properly to distinguish between risks and opportunities. Risk Assessment After identification of the risks, they need to be assessed carefully based on the situation with the intention that corrective measures can be taken. Control Activities The stakeholders of an organization should set new procedures and policies to deal with the situation of crisis. The set of rules and procedures would be the new corporate governance set. Information and Communication The risks assessed should be made known within the organization on time with the view that every person concerned can deal with their respective responsibilities. Monitoring A continuous monitoring schedule has to be implemented to deal with the crisis period. The organizations can formulate a monitoring group including directors and responsible employees for the purpose (Kirkpatrick, “The Corporate Governance Lessons from the Financial Crisis”). Comparison Name of Bank Country 2004 2010 Citigroup US $ 3.7 B $ 3.9 B Goldman Sachs US $ 3.6 B $ 4.6 B Morgan Stanley US $ 3.3 B $ 4.3 B JP Morgan chase US $ 3.0 B $ 5.0 B Merrill lynch US $ 2.7 B $ 4.0 B JPMorgan Chase & Co. was in the fourth position in world’s ranking by Bloomberg and in 2010 ranking based on the 2009 data; it is the top most bank in the world. The ranking are done on the basis of fees from equity and debt sales. Goldman Sachs and Morgan Stanley’s positions have not changed from 2004 as it stands to be the world’s 2nd and 3rd best banks respectively. Goldman Sachs was 2nd in total fees in 2010 and 1st in M&A. Merrill Lynch have gained one position and reached the 4th position from 5th during the period 2004-2010. The performance of Citigroup Inc. has not been good as it came down to the 5th position from the 1st position. The reason is the recession period. It had been largely affected by the present financial crisis (Bloomberg, “JPMorgan Tops Goldman in Investment Banking as Fees Swell 13 %”). Practical Difficulties for the Calculation of Weighted Average Cost of Capital (WACC) A firm obtains capital from various sources but due to the risk differences and the contractual agreements between the firm and investors, the cost of capital of each source differs. The cost of capital of each source is called component costs of capital. Theoretically it has a very specific formula given in the required figures for its calculation. But the problem arises when it comes to the practical implementation of the method. Considering that a firm has only debt and equity in its capital structure, the explanation towards its difficulties will be made. The general formula for calculating WACC is WACC = kd * D/(D+E) + ke * E/(D+E) Where kd and ke is the cost of debt and equity respectively. D is the amount of debt and amount of equity. Given the above formula, it seems that WACC is easier to calculate. This section of the research paper will deal with the errors that are frequently encountered when implemented practically. As the objective of discussion is to figure out the difficulties in its practical implication, it would be fruitful to straightway discuss them instead of discussing the methodology. WACC is calculated based on expected return that a firm will provide. But this assumption is very static in reality because the firm which always seeks to grow may not have the similar optimal capital structure where new funds have to be obtained. This means that at certain point of time, the new debt equity ratio will not be optimal because funds cannot be acquired in the same proportion all the time. The second difficulty is the assumption that capital is raised only through two types of sources: debt and equity. In reality, a number of different funds are actually used which adds minor complexity to the calculation of WACC. The most important thing is that the cost of each sources change by time and it is very difficult to presume their costs in evaluating the projects. The changes are not external to the projects only that can be predicted but the changes come from project opportunities and strategies too. The WACC is a calculation of the after-tax cost of capital. Taking the example of present economic conditions where governments of different economies are applying various tax plans; it becomes difficult to calculate the cost of sources of funds. The WACC for a firm is calculated based on the credibility of the firm but considering the present scenario in the economies, it is difficult to assume high credit rating for a firm. A firm that is performing well at present in terms of its credibility may not perform well in the future. WACC is hard to use in practicality. Capitals come from different sources in different amounts with different costs. The problem is that it becomes tough to determine those sources in advance when not handling any of the internal matters of the project (Professional Educational Organization International, “Minimum Average Cost of Capital”). Explanation of the Derivation of Cost of Equity The following variables are given in the example: Jefferson Nelson Proportion of debt 1/3 0 Proportion of equity= 2/3 1 Cost of equity (ke) = ? 16% Cost of debt (kd) = 10% - The cost of equity of Jefferson Plc is supposed to be found out. As in the question it is mentioned that both the firm are identical, hence the assumption can be made that WACC of them will also be same. WACC of Nelson plc will be 16% (since it is a totally equity financed firm) Thus it can be written as WACC of Jefferson and Nelson=16% Now, for finding ke of Jefferson Plc, the following formula of WACC (Jefferson) will be considered: WACC = (ke * proportion of equity) + (kd * proportion of debt) 16%= (ke * 2/3) + (10% * 1/3) i.e., 0.16-0.03= 2/3*ke i.e., ke= 0.13*3/2 i.e., ke=0.195 Thus cost of equity of Jefferson plc is 19% (rounded-off) In the above explanation, tax rate has not been considered, since it has been assumed under Modigliani-Miller (no tax approach). Explanation of Net Income Theory (Existence of an Optimal Capital Structure) The net income (NI) theory provides the implication of increasing market value of firm and decreasing overall cost of capital. The NI approach assumes that cost of debt Kd and cost of equity Ke are constant. Debt is a cheaper source of fund because the interests payable on debt instrument are deductible for tax. Therefore when a firm includes debt in its capital structure the overall cost of capital generally decreases. The NI approach concludes that a firm has maximum value and minimum WACC when it is 100 percent debt-financed. In the above figure, Ke, Kd and WACC are plotted on the vertical axis and degree of leverage, that is, proportion of debt, is plotted on the horizontal axis. As mentioned before Ke and Kd are constant. As gradually, debt is replaced for equity in the capital structure, being less expensive, it causes WACC to decrease. It ultimately approaches its minimum value where the optimum capital structure is obtained. After arriving at the optimal gearing point, that is, minimum WACC, there is a sudden upward gearing in WACC as a result of some external force such as increasing investor’s interest (Accounting Education, “Theories of Capital Structure”). Capital Structure Analysis of L&T Limited L&T Debt-Equity Ratio and Interest coverage Year D/E Ratio Interest Coverage 1990 2.46 1.81 1991 1.53 1.82 1992 0.70 2.63 1993 0.20 5.19 1994 0.34 5.21 1995 0.32 5.87 1996 0.40 5.51 1997 0.65 4.38 1998 0.84 4.96 1999 0.92 3.02 2000 1.05 1.98 2001 1.09 1.70 2002 1.07 2.15 2003 0.92 3.85 (Pandey, I. M. “Financial Management”). Explanation of the Data L&T’s interest coverage ratio was optimum when the maximum percentage of debt has been applied in its capital structure in the year 1990. On the other hand, the interest coverage ratio is very high when minimum debt-equity ratio was applied in the year 1993. Thus, from the above data it can be mentioned that optimal capital structure of a company is achieved when maximum amount of debt is included in the capital structure of a company (Pandey, I. M. “Financial Management”). Justification of the Surrogate Objective of Maximization of the Company’s Share Price The maximization of profits is generally regarded as the ultimate financial goal of a firm but it is not as important as the goal of maximizing the shareholder’s value. This value is measured by the market price of the company’s ordinary share which states the firm’s financial and investment decisions. The objective of a firm should be to maximize the share price in the long run. At one point it can be mentioned that increasing total profits is not as essential as increasing the earnings per share. At the other point, it can be said that even maximizing the earnings per share is also not an appropriate objective. Present Value Factor An investment project which will yield $100, 00,000 returns after 10 years, will be valued more or less than a project that will yield $50,000 in each year for the next 5 year, as it depends on the time value perception of the firm. The time value of money to the firm and to the investors plays a major role in taking the decision. If the objective of the firm is maximizing the shareholders value, then the time value factor is neglected in the objective. But the maximization of the present worth of future dividends can be equated to the current ex-dividend share price. Thus, it is more viable to consider the objective as maximizing the company’s share price. Shareholder’s Wealth The objective of shareholders wealth maximization takes into accounts both the timing and risk factor of the expected profit. From the shareholder’s point of view, the wealth created by a company through its actions is reflected in the market value of the company’s share because market price ultimately reflects the current market position of the firm. Moreover, shareholders long run wealth is created by the dividends they obtain in the short run and the capital gains they receive in the long run. The capital gains are received by the value of the company’s share and the value is represented by their market price which in turn affects the shareholder’s perception about the quality of the firm’s financial decision. Therefore it is justified to surrogate the objective of share price maximization to shareholder’s wealth maximization (Van Horne, “The Objective of the Firm”). Capital Gain The shareholders or investors before buying shares calculate the capital gains to measure the future value of the firm. This capital gain is calculated by subtracting the cost price from the selling price of a share. Thus, it is optimistic to maximize the market price of share in order to maximize the shareholder’s wealth or influence the investor’s decision. Application of Gordon’s Model in the Implication of Company’s Objective The implication of Gordon’s model states that the increment of the market value of share depends upon the retention and payout ratio, when the rate of return and discount rate are known. The firms take the decision of retention and payout considering the rates. The decision leads to the ultimate increase in the market value of share. Thus if the objective is to maximize the share price, the other goals will automatically be taken care of. Maximization of Company’s Share Price vs. Maximization of Sales Sales maximization goal is a part of the profit maximization that states that a firm either has to produce huge outputs or reduce the inputs. There are a few drawbacks of maximizing sales and this is the reason why maximization of a company’s share price is generally preferred than the maximization of sales: Effects on Cash Flow Cash flows are a function of profit. Revenue generation may not ultimately produce good results for the company as it may decrease the amounts of cash flows every year. The reason for such kind of effect is that increasing sales means incurring costs in terms of selling and distribution expenses. Unless the sales are realized, it is going to harm the cash flows. Moreover sales do not act as a guide to future cash flows because sales depend upon the present market scenario. Bad Debts In order to increase sales, the company has to increase the amount of credit facilities provided to its customers. This approach towards the increment of sales may lead to the chances of bad debts or receivables depending on the credibility of the customers. Pricing The market is not perfectly competitive and it is not easy to set the price. In the modern competitive market maximizing the sales or profit cannot be a logical objective of the company. In this situation, just for increasing sales, it is very dangerous to set a price which is different from the competitors. Share Price Maximization Share price is such a measure that allows evaluating the present as well as the future perspectives of earning potential in a firm. Sales are subjective in nature; and it depends upon the market trend which may rise or fall in the future. It does not reflect the company’s position because the sales may be high but not the profit. Even if the profit is high, the shareholder’s wealth may be not. Thus, it is better to choose an idea which is not only objective in nature but also determines the company’s position. The airline industry has faced downfall due to its lowering of price level from that of the normal price level for increasing the number of seats being occupied. The industry is still facing crisis in the economy. Similar kind of scenario was seen in case of the Emirates Airlines and it also resulted in the downfall of net revenue. The increment in sales led to the cutting down of expenses. Hence, sales maximization cannot be termed as the ultimate objective of the companies in the modern economy. Conclusion The research paper has analyzed different dimensions of financial services. Apart from the roles and functions of the financial institutions, the other financial aspects of the modern economy have been dealt with. The functions that the investment banks performed and also the roles of banking in modern business have been analyzed. Challenges of the corporate governance in the modern economy have also been reflected. The roles that are played by the central banks of a country in taking monetary control decisions have been displayed with special reference to the Bank of England, the Central Bank of United Kingdom. The other aspects of the research paper have described the aspect of cost of capital in financial management. The existence of an optimal capital structure has been enumerated. The difficulties and controversies related to the choosing of an appropriate financial objective are also described in the research paper. The paper has also been able to describe the effect of various financial services on the business organization. References Abor, Joshua. “The Role of Investment Banking in Raising Capital in Ghana”. November 09, 2010. Abstract, No Date. Accounting Education. “Theories of Capital Structure”. November 09, 2010. Excel Yourself In The Field Of Accounting, 2010. Allen, Franklin & Carletti, Elena. “The Roles of Banks in Financial Systems”. November 09, 2010. Introduction, 2008. Bloomberg. “JPMorgan Tops Goldman in Investment Banking as Fees Swell 13%”. November 09, 2010. Anywhere, 2010. Douthwaite, Richard. “How The Bank Of England Controls The Money Supply”. November 09, 2010. The Ecology Of Money. No Date. Economicshelp. “Bank of England”. November 09, 2010. Helping To Simplify Economics, No Date. Economicshelp. “Bank of England Interest Rates”. November 09, 2010. Helping To Simplify Economics, No Date. International finance Corporation. “Corporate Citizenship and Sustainable Businesses”. November 09, 2010. Corporate Governance, 2009. Kaufman, George G. “Bank Failures, Systemic Risk, and Bank Regulation”. November 09, 2010. The Cato journal, 1995. Kirkpatrick, Grant. “The Corporate Governance Lessons from the Financial Crisis”. November 09, 2010. OECD, 2009. Professional Educational Organization International. “Minimum Average Cost of Capital”. November 09, 2010. Minimum Cost, 2001. Pandey, I. M. Financial Management Vikas Publishing Pvt. Ltd., 2004. Sutton, Christopher N. & Jenkins, Beth. “The Role of the Financial Services in Expanding Economic Opportunity”. November 09, 2010. Acknowledgement, 2007. Thinkquest. “Advantages & Disadvantages”. November 09, 2010. Advantages, No Date. UK Debt Management Office. “UK Government Securities: a Guide to ‘Gilts’”. November 09, 2010. United Kingdom, 2010. Van Horne, James C. “The Objective of the Firm”. November 09, 2010. Profit Maximization vs. Wealth Maximization, 1974. Read More