Sunday, May 31, 2020

Application of Salam - Free Essay Example

Application of Baià ¢Ã¢â€š ¬Ã¢â€ž ¢ Salam In Baià ¢Ã¢â€š ¬Ã¢â€ž ¢ Salam is a type of product that the bank or financial institution will give the liquidated cash or capital in advance to the needy to produce their commodities and later the commodities will be deliver to them. While in Baià ¢Ã¢â€š ¬Ã¢â€ž ¢ Salam itself it can be divided into three difference type of contracts. They are parallel Salam, Hybrid Salam and also Salam financing working capital. Firstly, the parallel Salam is a common salam that use by the bank and the customer. In a parallel Salam, the bank itself will be entering into two different contracts with two different parties. In this two different contracts, the bank acted as different role. In the first contract the bank will acted as a buyer while entering the second the bankà ¢Ã¢â€š ¬Ã¢â€ž ¢s role had change from buyer to a seller. As we can know from the name of this contract, parallel salam, which also means that both contract that ente red by the bank or financial institution cannot be tied together with each other. In other words, both contracts must not have any relations and must be independent from each other. All the rights and obligations that had been imposed or set in each contracts will stand alone and independent. Those regulations performance shall not be look as a whole or put together as both contracts must be independent. Therefore, both contracts must not contingent with each other. The flows of this type of contract will be start when the bank acted as a buyer and entered a contract with the another party who acted as a seller by selling his or her commodities to the bank. The bank will first give liquidated cash and capital that need by the seller before he can produce his commodities. The payment will be done in advance and also in full and the delivers of commodities will be done later. Next, after received the commodities from the seller, the bank will change his role to a seller and entered another contract with the customer or buyer who will buy the commodities from the bank. The payment will be given in a purchase price along with the profit margin. The bank will gain from the profit margin that paid by the customer. For example, Islamic Bank had entered a Salam contract with Farmer A to purchase 2000 sack of rice which will be delivered 6 months from the dated the agreement entered. The bank will give RM 500 000 to Farmer A to plant crops until harvest, packaging in advance. Later, Farmer A will deliver the 2000 sack of rice to the bank on the agreed date. Meanwhile, the bank had entered another salam contract with Customer B to sell the 2000 sack of rice in the purchase price RM 500 000 plus the profit margin RM 500 000. As both contract should not have any relation, the delivery of 2000 sack of rice to the Customer B have nothing relations to the delivery 2000 sack of rice from Farmer A to the Bank. So, even when the time to deliver the 2000 sack of rice by the farmer A to the Bank had reached but the Farmer A had not deliver or cannot produce that amount of commodities to the Bank, the bank cannot rid from the liability of failing to deliver the rice. The duty to deliver the 2000 sack of rice to Customer B is bound on the Bank. The bank must take any other way to deliver the rice to customer B for example buy the rice from the ready market. In the same situation, if the Farmer A had gave the Bank the commodities which is defect or had not reached the specifications agreed between the bank and the Customer B, is the duty or obligation of the bank to produce or find another way to deliver the agreed specification commodities to the customer. In parallel salam, it also must have a third party. This means that the seller of the first contract cannot be the purchaser in the second contract. It is not allow as in salam that cannot be a buy-back contract. This type of contract is also not allow or is prohibits in Syariah law. Even the pu rchaser on second agreement is a separate legal entity but is the owner of this entity is belong fully to the seller in first contract is also not allow. For example, Bank A gives cash in advance to Farmer A in return for commodities later. The bank enter an agreement to sell the commodities to Farmer A or a company owned fully by Farmer A. This will be a Buy-back Contract which is not allowed or permissible in shariah law. Second type of contract in Salam will be the hybrid salam. This type of contract also involve third party but slightly different form the parallel salam. In this contract, first the bank will enter a contract with the seller to give capital or cash in advance and exchange the commodities later. The different is here, the bank will not enter another contract with the third party which is the purchaser. The bank will be appoint the seller in the first contract to find a customer to purchase the commodities. In this sense, the seller had been appointed as an a gent to buy the product. The commodities will be delivered straight by the seller to the purchaser and not pass through the bank. The payment by the purchaser will be pay to the bank straightly in the purchase price plus the profit margin. While for the seller that acted also as an agent will be give a commission by the bank. For example, Bank A had entered an agreement with the Producer B. The bank will give money in advance for the producer to produce his commodities while after the commodities had been produced, the bank will not find any other customer to buy the commodities. This will be the duty for the Producer B to find third party which is the Customer C to purchase his commodities as the bank had appointed Producer B as an agent. After the commodities had produced, Producer B will deliver the commodities to Customer C rather than delivered to the Bank A. The payment will be made by the Customer C toward the Bank A in a price of the purchase price that the Bank A purchas ed from the seller plus the profit margin. While the Producer B as a n agent will be given some commission from the Bank A. Therefore, the another different from parallel will be the duty to deliver the goods in a specific date, specific number and also the specific specifications that agreed previously by the customer. Lastly will be the Salam Financing Working Capital, which is much more similar to the Hybrid Salam Financing. In this type of contract, the bank at first will also entered agreement with the seller by giving capital in advance in exchange of goods. At the same time, the seller also will be appointed by the bank as an agent to find a purchaser. Until here the flow is same as the Hybrid Salam Financing. The only different between this two types of contracts will be the purchaser. In hybrid salam financing, the purchaser will be only a single person or a single legal entity. While in Salam Financing Working Capital, the purchaser must be a group of purchaser which me ans must be more than one person. The contract entered between the seller and the group of purchaser will be a normal sale and purchase agreement. The agent will also be give the commission by the bank when successfully found a group of purchaser and delivered the correct commodities to them. These are the three types of contracts that involved in Baià ¢Ã¢â€š ¬Ã¢â€ž ¢ Salam. These three types of contracts each have their own advantages and disadvantages. The customer can choose between these three contracts which is most fits with him or her requirements.

Saturday, May 16, 2020

The Book Spiritual Mothering The Titus 2 Model For...

Introduction Today there are many Christians that do not know how to develop and strengthen their faith. Their faith can be shaky because most times when hard circumstances and trials come their way then they lose faith that God will bring them through. The way to help people strengthen their faith is mentor them. Mentoring is a way to spend time consistently with someone to keep them accountable in their walk with the Lord and understanding what time with the Lord looks like. The book Spiritual Mothering: The Titus 2 Model for Mentoring Women is a book that helps Biblical women know their role in mentoring other women. It helps women to understand the model that they should use in mentoring other women. This book focuses†¦show more content†¦After describing the reference point of spiritual mothering Susan Hunt then describes the fact that it is a life purpose. The author describes a Biblical woman’s life purpose as glorifying God. A Biblical woman should be living their life to glorify God in everything that they do, which includes when they mentor other women. In order for a Biblical woman to follow the mandate of mentoring based on Titus 2:3-5, she must be obedient to God throughout her life. That does not mean it will be easy, but obedience to God is essential for any older woman who is trying to mentor other women. It is essential because there would be no reason for women to mentor others if they are not following God and being obedient to what He has called them to do. After describing the life purpose, Susan Hunt then goes to tackle the importance of sound doctrine. Sound doctrine refers to teaching that is in ling with Scripture and God’s commands. After covering the mandate, the author moves next to the model. The Model The very first aspect of spiritual mothering that Susan Hunt addresses is that of nurturing and building the relationship. She writes that, â€Å"Spiritual mothering is impossible apart from a relationship.† Building a relationship with someone that an older woman is mentoring will not always be easy because it requires work. The work of building the relationship is necessary though

Wednesday, May 6, 2020

Do Social Deal Sites Really Work - 2112 Words

Case Study EXPERIENCE HBr.orG A theme park operator considers whether the boost in ticket sales is worth the trouble. by Marco Bertini, Luc Wathieu, Betsy Page Sigman, and Michael I. Norton The Experts Gideon Lask is the founder of BuyaPowa, a uK-based social commerce business. Do Social Deal Sites Really Work? t he sales reps from DailyDilly had just finished their rollicking video presentation, and the laughter in the meeting room was starting to subside. Ruth Davison, the marketing director of Flanagan Theme Parks, was still smiling when she finally spoke. â€Å"I’m thoroughly impressed,† she said. â€Å"This would give us the marketing capabilities we’ve always wanted.† Will Eastman, Flanagan’s operations director, was†¦show more content†¦Allie knew she could make Flanagan better. She had already helped an international hotel chain turn around its service reputation and improve guest satisfaction—she was becoming her firm’s go-to person for that kind of thing. Allie 140 Harvard Business Review May 2012 Buckle In was painstakingly attentive to detail and preternaturally decisive, which is exactly what Roddy wanted. â€Å"Rule with an iron fist,† he’d told her. Ruth pulled onto the highway. â€Å"I noticed you weren’t laughing during the video this morning,† she said. â€Å"Didn’t you think that senior citizen group on our zip line was funny?† â€Å"The video glossed over the pitfalls of daily deals,† Allie replied, knowing she sounded humorless. â€Å"There are ample case studies showing that people who buy from sites like DailyDilly are the worst kind of customers: ones with no loyalty. They’re like a flash mob of coupon clippers. They overburden merchants, create shortages, annoy the staff, and erode the experience for other customers.† She paused. â€Å"Where are we going, by the way?† Just then Ruth exited at the sign for Coral Wonderland, another Flanagan park. She pulled up to a service entrance, showed her ID, and pa rked next to a high wall that separated this area from the one that customers see. â€Å"Did you notice the river in this park on your tour?† she asked, lowering her window. Allie nodded. â€Å"Well, there’s a little canal down there,† Ruth said, pointing to a glimmer of water under a mass of pipes andShow MoreRelatedOther Crowdfunding Sites1365 Words   |  5 Pagescrowdfunding sites available in the market today. depending on the need and the industry, there is a crowdfunding site that would fit for you. Crowdfunding Sites Indiegogo This site has a broad approach when it comes to fundraising or crowdfunding. Indiegogo caters to just about anything, from music to charities, personal financing needs and hobbies. 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Tuesday, May 5, 2020

Lehman Collapse Capital Markets

Question: Discuss about theLehman Collapse for Capital Markets. Answer: Introduction: Brief Description Lehman Brother collapse in 2008 was considered as one of the most tragic events of failure among financial institutions. Before, it collapse the company was considered to be the fourth largest investment bank in America (Iminds, 2010). Began in 1844 by Henry Lehman, Lehman Brother was a small grocery and dry goods store, after two decades they traded cotton, and later Henry Lehman moved to New York to establish a New York Cotton exchange firm. After, the occurrence of this events Lehman went on with this road of success to be able to establish the fourth largest America investment bank. The main areas of business for Lehman before the collapse include; typical investment banking as well as participation in equities, capital markets, investment management and fixed incomes (Iminds, 2010). Their investment banking process could provide financial services such as mergers, underwritings, acquisitions and security issuing. They had also invested globally in fixed incomes, capital markets investment management parts. But, the main revenues of the firm came from fees derived from size of transaction or services being provided by the firm to their customers (Lee, 2009). Despite all these the firm had survived all traumatic events ranging from world wars to the great depression, but the collapse of U.S. housing market brought the company on its knees. Causes of Failure The following are reasons why Lehman Brother bank collapsed: Poor Assets and Risk Management Here, the old saying of not putting all eggs in one basket tends to have a significance. It is evident that when the housing sector market was at peak Lehman borrowed in excessive and mostly invested all its proceeds in to the mortgage market. But for security reasons subprime loans had granted mortgage to houses that Lehman had already bought. Greed and recklessness became the order of the day as they tried to be leaders in the market for the subprime mortgage backed securities. As of 2006 to mid 2007, they had pursued an aggressive strategy where they thought of expanding into commercial real estate, private equities and leverage lending through their capital (Haas Horen, 2012). Hence, their concentration in mortgage made them vulnerable and sensitive leading to the down fall. Management Problems Lehman brother similar to the great city of New York never slept. Whenever the trading bells rang at the NYS Exchange at four that is in the afternoon, the equity guys just packed up because there was nothing else to be done. Bank debts and high yield debts went till seven. In often instances the traders had a normal looking balance sheet that werent drastic; this is because losses were never loved by Lehman management (Dillian, 2011). Hence, the failure by the firm to acknowledge losses might be reasons as to why the business failed. Fraud As of 2007 the American housing market began to crumble due to the increased numbers of default. Hence, this meant losses for Lehman and hence they were forced to write down billion of dollars as bad debts, which greatly deteriorated their financial position. Hence, they were unable manage their financial leverage and took too much risk (Mcdonald, 2015). For the purpose of hiding their poor financial status they ought to develop the Repo 105 transaction to show that they are still maintaining a positive grading based on the rating but that wasnt the case. Such an act of fraud was also a reason to their downfall. Above are reasons as to why Lehman Brothers collapsed but it is also important to at least try and shows the early signs of their collapse, in this case we will outline the activities that I believe are reasons as to why they collapsed. Activities engaged in that showed early signs of collapse Before the collapse, Lehman Brother risk management team had identified several specific inherent risks in the business that lead to the collapse: Operational risk- this tends to be loss that originates from inadequate or failure by the Lehman internal process, including the responsible people and systems and also the external events that they engaged. Credit risk-the firm also run the risk of loaned counterparty being unable to honour the contractual obligation to the Lehman Brothers. As a result, in the future it escalated the possibility of collapse (Benos et al, 2012). Reputational risk-this tends to be the risk of losing the confidence from customers, public and the government as a result of the unfortunate decisions on the clients selection and conduction of the business. In some way these had an influence in their collapse as they faked their records to remain attractive. Market risk-this tends to be a representation of the potential unfavourable change in the value portfolio of the financial instruments as a result of the changes in the market rates, volatilities and prices. Liquidity risk- this was the risk factor where Lehman was unable to fulfil payment obligations, they also borrowed funds in the markets at certain good regular prices for the purpose of funding actual commitment and liquidating their assets. This initiative came as an early sign of their downfall (Tibman, 2009). Exceeding the Risk Limits In 2007 the firm raised a wide risk limit close to $2.3 billion to $ 3.3 billion, justifying it by the modifying of ways that calculate risk they can support. As of September 2007 it was increased to $3.5 billion and $4 billion in 2008. If risk limit were calculated under same assumptions, it would have been $2.5billion. In making analysis of Lehman Brothers mode of risk management, it tends to conclude that Lehman management in countless times had exceeded risk limits, ultimately exceeding risk policies by margins of close to 70% as on the commercial estate, and by 100% on the leverage loans (Paulson, 2010). An explanation to this is the dangerous behaviour in the compensation system. For attraction and sharpening the minds in the industry, they should reward the most revenue generating employee who makes big monetary bonuses. But, the bonus incentives were asymmetric. Implication of Lehman Fall to the International Banking Industry It tends to be perceived that Lehman bankruptcy has some effects on the depreciation in price of the real estate commercial. For instance, when there was liquidatin of $4.3 billion in the mortgage security, it created a sell of in commercial mortgage that was to backed by securities (CMBS) market (Robinson et al, 2009). Some auditors perceive that the collapse of Lehman led to rise of top primary reserve fund. It was the only time since 1994 that the money market fund experienced a drop which was below $1 per share level. Hence, the collapse of Lehman wiped out over $46 billion in the market value. Collapsing of the firm acted as a catalysts to the purchasing of Merrill Lynch by the American bank as an emergency so as to deal with the issue. Loss of Lehman created a loss of close to $48 billion of the receivables in the derivatives that could be otherwise relaxed (Dziedzic, 2010), and a total of $75 billion was destroyed (Dziedzic, 2010.) Could the Collapse have Been Prevented? Iminds (2010) perceives that Lehman collapse could have been easily avoided only if they were proactive initiatives held by the executives to make sure there is effective control of the risk management in their operations. Nuerberger officials had send Lehman Brother executive team some memos suggesting they forgo the multi-million dollar bonus as it created a strong message to investors and employees as the management accountability was decreasing. Hence, Iminds (2010) argues that the collapse of the financial institution could have been avoided only if there was adoption of effective risk management practice in the derivative trading. As of Lehman case they had invested more on the risky derivatives. It is perceived that the main motive of the derivatives was to assist the actors found in the real economy insurer against any risk, but in some cases the derivates trading had crossed the price stabilization and the risk management speculation. Therefore, if regulators of derivatives had effectively considered this Lehman Brother wouldnt have collapsed. Conclusion It is evident that the failures of Lehman Brother mostly originate from their internal operations, thus a lot of questions have been asked as to whether the interaction of Lehman brother and government agencies had regulations and monitoring of Lehman leading to the fall. Thus, a lot of analyst tend to believe that Lehman bankruptcy had some set off in panic that created a threat to U.S financial system and also the entire global financial system (Mcdonald Robinson, 2009). Hence, after the fall of Lehman a lot of concerns have risen as to what created the failure of the onetime leading investment bank. it is perceived that the questions are currently hard to answer because little knowledge is known of what happened in Lehman. Creating the need of coming up with effective strategies that could avoid an instance where there is collapse of a financial institution (Mcdonald Robinson, 2009). Recommendations It tends to be believed that the bonus system had some encouragement to the management to increase their risk. In most cases, the operational errors and excluding assets in stress test created limitations and over-leverage in the balance sheet which greatly fuelled the bonus aspect (Dziedzic, 2010). Any banking system that has no bonus system tends to be unthinkable for many, as it is a way of decreasing future bonus in relation to risk taking in the building of risk aversion parameters as found in the bonus criteria. For instance, no bonus is to be rewarded if the test shows large risks even if the profits appear big, though it needs stress testing so as to be executed independently. It is perceived that a lot of market risk could be avoided only if Lehman hadnt focused on investing heavily on the correlated assets. Here, the credit crunch hit large because of subprime crisis as it affected both the commercial real estates and leverage loan assets (Hass Horen, 2012). Thus, the ties between the assets was struck quickly by losses created in the fronts. Thus, the consequences greatly hit the chain making it less fatal if the bank was operating more diversely and no focusing mostly on the portfolio. They also made themselves vulnerable to the liquidity risks. Since, they depended on the short term funding for long term investment, which was a fatal mistake as credit market dried up and there was no illiquid assets. As of 2008, there was no government agency that had sufficient authority to compel Lehman operation in the best that made them avoid the viability of loss (McDonald, 2015). Hence, the need of a solution regime where analogous establishment of the failing banks took place, so as to avoid options in the future between baling out a fail, and systematic critical firm or allowing the disorderly bankruptcy. Hence, development of such a regime was expected by the global banking industry to protect the economy as well as maintaining that there is an improvement in the marketing discipline through maintenance of failing firm shareholders and creditors losses and replacement of the management. It is perceived if they had done adequate stress testing and simulations, they would not have changed their focus from brokerage and financial services. The high leverage ratio affected the other risks adversely making downfall fast and unstoppable References Jacoby, J., Karzis, M., Kroft, S., Valukas, A. 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(2012).Bank behaviour and risks in CHAPS following the collapse of Lehman Brothers. London, Bank of England. Mcdonald, L. (2009).The incredible inside story of the collapse of Lehman Brothers. London, Ebury Press. Tibman, J. (2009).The murder of Lehman Brothers: an insider's look at the global meltdown. New York, Brick Tower Press. Paulson, H. M. (2010).On the brink: inside the race to stop the collapse of the global financial system. New York, Business Plus. Mcdonald, L. G., Robinson, P., Davies, E. (2009).A colossal failure of common sense the inside story of the collapse of Lehman Brothers. [New York, N.Y.], Random House Audio. Mcdonald, L. G., Robinson, P. (2009).A colossal failure of common sense: the inside story of the collapse of Lehman Brothers. New York, Crown Business. Mcdonald, L. G., Robinson, P. (2009).AÃÅ'†¢omoÃÅ' £ÃƒÅ'‚ng Lehman Brothers : a colossal failure of common sense MyÃÅ'Æ’ ; The inside story of the collapse of Lehman Brothers. Chauffour, J.-P., Malouche, M. (2011).Trade finance during the great trade collapse. Washington, D.C., World Bank..