Slavery And The Civil War - 1527 Words

Slavery is a lawful or monetary framework in which standards of property law are connected to people permitting them to be named property, to be possessed, purchased and sold as needs be, and they can t pull back singularly from the course of action. While a man is a slave, the proprietor is qualified for the efficiency of the slave s work, with no compensation. The rights and security of the slave might be controlled by laws and traditions in a specific time and put, and a man may turn into a slave from the season of their catch, buy or birth. A civil war is a war between sorted out gatherings inside the same state or nation, or, less normally, between two nations made from an earlier joined state. The point of one side might be to take control of the nation or an area, to accomplish freedom for a district or to change government arrangements. Slavery and the civil war has been a discussion for many years. People wonder the real cause of the civil war. Verifiably, reading material has taught that inconsistency amongst northern and southern economies brought on the Civil War. The mechanical unrest in the North, amid the initial couple of many years of the nineteenth century, realized a machine age economy that depended on pay workers, not slaves In the meantime, the hotter Southern states kept on depending on slaves for their cultivating economy and cotton generation. Southerners made colossal benefits from cotton and slaves and battled a war to look after them.Show MoreRelatedSlavery And The Civil War958 Words   |  4 Pagesblood in slavery so that many parts of America could become prosperous and recognized in the world†, this is quote from Josephine Baker, one of America’s early prominent black performers. Slavery, which will be discussed in greater detail, affected Africans kidnapped from their homeland and brought to the Americas to be sold and forced to work in horrible, vile, disgusting conditions. Slavery was also a great economic boosts for the United States due to cotton, however, overtime slavery began toRead MoreSlavery And The Civil War1706 Words   |  7 Pagesitself. The United States were no longer united, mainly over the issue of slavery. In fact, many historians believe that, â€Å"From the nation’s founding, the issue of slavery threatened to tear the United States apart.† (â€Å"The Civil War† 1). The issue of slavery was always kept at bay through the utilization of various compromises; however a permanent solution was never sought after by the government. The peoples’ perspective of slavery differed by region. In the South, the economy was extremely reliant onRead MoreSlavery And The Civil War1641 Words   |  7 PagesThe American civil war was in no doubt the most crucial event in history. No other war compares or even comes close to the casualties suffered. It helped conserve and maintain the Union, drastically changed the relationship betwee n the federal and states government, and led to slavery’s abolition. This war has also stirred up many conflicts until this day about the conflicts and causes. Among the countless and even undiscovered questions comes the most common as being why the Southern states wereRead MoreSlavery and the Civil War1281 Words   |  5 PagesEscaped slaves from the South helped the north to win the Civil War by increasing the number of soldiers fighting in the war for the north and by spying on the south for the north. With the help of escaped slaves fighting the South, the north outnumbered the south in battles, which eventually led to the North’s victory in the Civil War. Escaped slaves form the south also helped the north by spying on the south and reporting to Union officials who reported the information to the Union army. TheRead MoreThe Civil War And The Slavery986 Words   |  4 PagesThe Civil War contributed to the enslaved period being terminated. The union allowed s laves to fight for them and this imposed on the slave masters throughout the south. During this period the slaves were very rebellious and violent towards their masters. They beat them, tortured them, and some even killed some of the slave masters. They all truly deserved it after the treatment that had been rendered towards the African Americans when they first arrived from the West Indies to the United StatesRead MoreSlavery And The Civil War1447 Words   |  6 PagesSlavery and The Civil War When most people think of Abraham Lincoln, They remember him as the one President, or the one single entity , who freed the slaves. Most are not aware that before slavery the young nation was going though growing pains there were years of political strife and social upheaval that culminated in to Civil war that actually resulted in the Emancipation of Slaves. Slavery was pivotal to the compromises and conflicts of national politics in the decades leadingRead MoreSlavery And The Civil War1084 Words   |  5 PagesSlavery Slavery was one of the biggest controversies in American history. The beliefs about slavery mostly varied from the North to the South but also varied from state to state and sometimes even among family members. All of these different views caused conflicts to arise in America and slavery soon became a huge contributing factor to the Civil War. The core beliefs of anti-slavery societies differed from those of the slavery societies. Abolitionists believed that slavery was a moral and nationalRead MoreThe Civil War Of Slavery1699 Words   |  7 PagesIn the 1800s the Institution of Slavery became very dominant in the United States, but mainly in the South. Due to the climate and their type of economy, their agriculture productions required a great amount of labor that was performed by the slaves. In the south, â€Å"slavery was key to the way of life†1 the majority of the south relied on the slaves to do all of the hard work for them and maximize the profit of their owners. The northern states however had a different type of economy and did not requireRead MoreThe Slavery Of The Civil War1701 Words   |  7 PagesIn pre-Civil War America, it was a common occurrence to witness Black families torn apart, sold off as property, and treated in hateful, vile manors in the name of a higher God. Many slave owners retained t he firm belief that due to slavery being beneficial to them and the lack of clear-cut condemnation in scripture, it was a divine institution beneficial to both the slave and slave owner themselves. As a result, these ideals led to further enslavement and abuse, exploiting Blacks so that the slaveRead MoreSlavery And The Civil War Essay1963 Words   |  8 PagesSociety relates slavery to the civil war and most would argue that slavery ended in 1865. With this standpoint, we often brush off or neglect to further investigate slavery in its most modern forms. Over the course of history, there are hardly any situations where a social problem was solved. Starvation still exists, as does poverty, racism, war, segregation, injustice within government systems, and yes, even slavery. Human trafficking is modern day slavery and it exists everywhere with two different

Drug Abuse And Its Effects On Youth And Teenagers

HEALTHCARE LEADERSHIP ENGL1033 REPORT ASSIGNMENT DRUG ABUSE AND ITS EFFECTS ON YOUTH AND TEENAGERS NAME: ALVIN ALEX MATHEW COLLEGE ID: C0652356 INSTRUCTOR NAME: SHAWNA SHELDON SUBMITTED ON: 06/01/2015 DRUG ABUSE AND ITS EFFECTS ON YOUTH AND TEENAGERS Drug abuse has long been and still is a topical issue worldwide. There are so many reasons why individuals get addicted get to be reliant on drugs. A few individuals begin taking them out of immaculate interest, others to enhance their athletic execution or lessen stretch and dispose of wretchedness. It doesn t make a difference why individuals begin, the fundamental thing here is to get help at the perfect time and not to demolish their life and wellbeing. There is no age group of individuals more influenced by alcohol and drugs than youngsters. In a few ways, it feels like it is an issue all over the world: for you, your family and your companions. To be simple, try as you might, you can t get away from the issues of alcohol and drugs. This research gives an overview of drug abuse and its effects on youth and its impact on the quality of their life, and conveys the need for clearer and better information for parents in order to prepare their children for a better future. PREVALENCE Youth frequently explore a variety of avenues of activities and substances. Lamentably, such experimentation can prompt substance misuse and addiction. Statistics demonstrate that drug abuse is a developing issue among youth. In additionShow MoreRelatedTeenage Drug Use Of Drugs1560 Words   |  7 PagesSociology 100 Professor Victoria Hoverman Teenage Drug Use In today’s society, one of the common problems among teenagers is the use of drugs. Teen age is probably one of the most challenging periods in life. It is a stage of self identity crisis that leads to great confusion amongst the teens. Belonging and being accepted in a group is very important in the minds of the teens; where many regard the act as cool. During these years of growth, teenagers encounter their share of positive and negative experiencesRead MoreThe Negatives Effects of Marijuana on Teenager880 Words   |  4 PagesThe Negatives Effects of Marijuana on Teenager What is Marijuana? The marijuana affects the brain development on teenager. Also affect the function at school, work, and social life of the teenagers. The marijuana increases the risk of mental health issues. The sadistic show that the used of marijuana increase every years. Marijuana affects the teenager and also their families. According to National Institute of Drug Abuse, Marijuana is a greenish-gray mixture of the dried, shredded leaves, stemsRead MoreThe Effects Of Drug Abuse Among Youth1346 Words   |  6 PagesThere is a growing trend of drug abuse among youth which can’t be ignored in today’s society. It has been reported that â€Å"the greater numbers of young people were reporting weekly consumption of alcohol and young drinkers were consuming larger amounts per drinking occasion† (Coleman Cater, 2003). Teenagers who persistently use drug out of control often experience serious problems. Those problems are related to physical health, mental health, academic difficulties, social relationships, and so onRead MoreDrug Abuse1279 Words   |  6 PagesThe use of and abuse of illegal and prescription drugs are a health, social, and law enforcement problem that is affecting Americans across the country. Drug abuse is destroying the lives of many teens and adults and is also destroyi ng families in the United States. The use of drugs is a major problem in the United States among all Americans, but drug addiction is the main cause for America s troubled teens today. Exactly what is a drug? A drug is any chemical that produces a therapeutic or non-therapeuticRead MoreThe Problem Of Drug Abuse1006 Words   |  5 Pagestranslates into terrible trends†¦ terrible trends like drug abuse. According to Pew Research Center, marijuana is the â€Å"most commonly used drug at all grade levels†. With that exact problem in mind, T.A.D.A. was formed. Teens Against Drug Abuse was established in the year 2014 to prevent and act against teenage drug abuse. Drug abuse is a life-threatening habit that, if it does not end a life at any early age, can physically or emotionally cripple a teenager for the rest of their lives. When analyzing theRead MoreThe Effects Of Drug Abuse On Adolescents957 Words   |  4 PagesThe majority of all of us will go through the teenage stage and being a teenager is extremely complex and a difficult phase. Teenagers experience physiological, social, emotional and psychological changes. All of these changes are going to be shaped uniquely by the teenager’s unique genetic composition, brain development, environment, cultural background and the community influences around them. During brain development teenagers are likely to seek out new experiences that can lead to risky behaviorRead MoreThe Anxiety With A Referral From A General Practitioner1638 Words   |  7 Pageswith a referral from a General practitioner to a psychologist whom can then confirm the diagnosis and treat the disorder. The main contributing factors are the demands of being a single working parent with teenagers, fear of losing her job, police involvement, child services involvement, illicit drugs which is causing a pressure cooker situation. Anxiety and stress are a natural response to dealing with these situations causing nervousness, anxiousness, hopelessness and constant feeling of apprehensionRead MoreTeenage Drug And Alcohol Abuse978 Words   |  4 PagesTeenage drug and alcohol abuse is becoming a major problem in the United States. Abuse of illicit substances eventually leads to an addiction. Drug and alcohol addiction is a disease, and it is contagious. It does not spread through germs; it spreads through families, schools, and communities. There are two youth prevention programs that try to exceed at decreasing the drug and alcohol abuse in teenagers. They are the D.A.R.E. program and the Serenity House based out of Texas. The D.A.R.E. programRead MoreThe Epidemic of Teenagers Using Drugs1687 Words   |  7 PagesThe Epidemic of Teenagers Abusing Drugs Krystyn Romualdo COM/156 November 18, 2012 Jackie Hudspeth Jr The Epidemic of Teenagers Abusing Drugs To have known so many people that have struggled with drug addiction in their teenage years it has become very apparent what a vital time in one’s life it is to know the dangers of abusing drugs as a teenager. Even though not all teens abuse drugs, it is an epidemic in the United States because more teens are turning to drugs to escape or use outRead MoreYouth Crime And Domestic Violence Essay1599 Words   |  7 Pages Youth Crime and Domestic Violence Name: Institution: Youth Crime and Domestic Violence Introduction Youth Crime has increased in New Zealand and although the prosecution has decreased the issue has attracted the attention of the members of the public. According to data from the Ministry of Justice (2015) the numbers of children between the ages of ten to thirteen and young people between the ages of fourteen and sixteen who are charged in court is lowest in over two decades. Nonetheless

Dietary Food Supplements Essay Research Paper There free essay sample

Dietary Food Supplements Essay, Research Paper There are so many dietetic nutrient addendums out on the market today. Most of them do side effects that cause these merchandises to corrode on the shelves. Others really work, it merely depends on the individual. Some of these addendums claim to be a fat absorber that you take before you eat which makes you absorb less fat in your organic structure. Others claim to do you non hungry which is non healthy at all. You can non last without nutrient. You should believe of your organic structure as a auto, without fuel it can non travel. If you buy one of the many fittingness magazines including: ? Fitness? , ? Shape? or? Oxygen? many of the pages contain weightloss addendums. One addendum is? Xenical. ? When you combine this pill with a good repast, it may assist you loose weight. A good repast is consisted of broiled poulet and veggies, a nutritionally balanced repast. We will write a custom essay sample on Dietary Food Supplements Essay Research Paper There or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page This is an effectual merchandise if you are 30 or more lbs overweight. Well, if you are that fleshy and you begin to eat a good repast, so of class you will free the weight without Xenical. You besides have the weightloss addendum that helps you build muscle as you work out. There are pills, shingles, bars, they come in all different types. ? ProV60? is a pulverization that you mix with a liquid. It is a high protein, low saccharide nutrient addendum. It fundamentally robs your organic structure of the saccharides that you need to work. Another merchandise is? Thyrolean. ? This merchandise is made to do you free lbs beyond a certain threshold. The set point theory provinces that your organic structure is genetically made to burden a certain weight and your organic structure will battle to keep that weight, you can non alter this weight. In other words this merchandise is messing with your genetic sciences. If you are traveling to seek one of these dietetic merchandises, I would foremost confer with your physician. There are so many side effects and so many of these merchandises are non good for your organic structure. The best manner to state I by trail and mistake, but you may mess your system up. Some of these dietetic merchandises contain things that you should non be seting into your organic structure, or they contain non plenty of the foods that you need. One of the best things that you can make to free weight is to exert several times a hebdomad and eat healthier.

What is a Hero1 Essay Example For Students

What is a Hero1 Essay What is a hero? A hero is a person noted or admired for nobility, courage, or outstanding achievements. In the two stories I read the two main characters, although much different from each other in rank, had many things in common. In the story Field of Rice- Buck, the character Wang San represents the traditional, ancestral values of life especially when it comes to knowledge of the land and growing rice. He believes rice should be grown close to the soil, and that this has proven successful in China for thousands of years. He risks getting himself and his villagers shot by voicing his opinion on how to plant rice to the communist authorities, represented by Comrade Li. We will write a custom essay on What is a Hero1 specifically for you for only $16.38 $13.9/page Order now Comrade Li wanted the villagers to cut deep into the soil with machines just like the Americans. However, Wang Sang disagreed he said it may be successful in America but it wouldnt work on Chinas ancient soil. Comrade Li is guided by the principles of Chairman Mao. He believes in communism and that everyone shares equally when it comes to food, clothing, and land. He accepted the new thinking that rice should be planted more deeply into the soil. He also believes on coming down hard on any villager who disobeys. Hes completely brainwashed by the communist system to the extent that he denounces his own father who refused to become a communist, he saw this as his duty even though his father was shot. Wang San sees this duty as a dangerous matter. He sees the dangers of having to choose family traditions and feelings over duty, but he does so anyways. He risks going to see Comrade Li on two occasions: One to try to make him change his mind and later to console him when the rice crop fails. Comrade Li realizes that hes been defeated and that he was wrong about the rice. He later turns a gun on himself as a result. Wang San to me is considered heroic because he does instinctively leap forward preventing Li from killing himself. Also because he was outspoken about his beliefs regardless of any consequences. In the story Blood of the Martyrs-Benet, Professor Malzius admires the scientific ability of his students, but he wishes to remain aloof when it comes to their personal lives, and their political concerns, out of the classroom. However, his students tell him things because they like his truthfulness; he hears of their political concerns even though he doesnt want to. He is lulled into a false sense of security because he assumes the new political regime would have no interest in him, for he is not a political person, only a biochemist. Therefore he assumes hell be left alone, however he is wrong. Bonnard, Malzius friend, is different; he did leave the new regime when it came into power. Also unlike Malzius hes politically active and vocal, he signs, protest, attends rallies and writes anti-government statements from a secure, distant land. It is ironic that he, and not Malzius, is free. Professor Malzius is imprisoned on insufficient evidence. He is maltreated and apparently held without trial for supposedly being a conspirator with his students in an underground, political movement. He was treated fairly badly. His glasses had been cracked as a result of numerous beatings. They are completely broken by the time hes led to his execution. Hes had teeth missing and his knees has broken and poorly set. He feels he has a low blood count and hes probably correct. The dictator sees his state as one that will lead the world because he believes his people are superior to all other nations. The idea of republics and democracies must be squashed; everyone must submit to the will of the state. These are the ideas that the dictator wants Malzius to put across to people. This is what will gain Malzius his freedom from prison. .u2cf1bf09c1a0fe5abc2df1dcb0ffebc7 , .u2cf1bf09c1a0fe5abc2df1dcb0ffebc7 .postImageUrl , .u2cf1bf09c1a0fe5abc2df1dcb0ffebc7 .centered-text-area { min-height: 80px; position: relative; } .u2cf1bf09c1a0fe5abc2df1dcb0ffebc7 , .u2cf1bf09c1a0fe5abc2df1dcb0ffebc7:hover , .u2cf1bf09c1a0fe5abc2df1dcb0ffebc7:visited , .u2cf1bf09c1a0fe5abc2df1dcb0ffebc7:active { border:0!important; } .u2cf1bf09c1a0fe5abc2df1dcb0ffebc7 .clearfix:after { content: ""; display: table; clear: both; } .u2cf1bf09c1a0fe5abc2df1dcb0ffebc7 { display: block; transition: background-color 250ms; webkit-transition: background-color 250ms; width: 100%; opacity: 1; transition: opacity 250ms; webkit-transition: opacity 250ms; background-color: #95A5A6; } .u2cf1bf09c1a0fe5abc2df1dcb0ffebc7:active , .u2cf1bf09c1a0fe5abc2df1dcb0ffebc7:hover { opacity: 1; transition: opacity 250ms; webkit-transition: opacity 250ms; background-color: #2C3E50; } .u2cf1bf09c1a0fe5abc2df1dcb0ffebc7 .centered-text-area { width: 100%; position: relative ; } .u2cf1bf09c1a0fe5abc2df1dcb0ffebc7 .ctaText { border-bottom: 0 solid #fff; color: #2980B9; font-size: 16px; font-weight: bold; margin: 0; padding: 0; text-decoration: underline; } .u2cf1bf09c1a0fe5abc2df1dcb0ffebc7 .postTitle { color: #FFFFFF; font-size: 16px; font-weight: 600; margin: 0; padding: 0; width: 100%; } .u2cf1bf09c1a0fe5abc2df1dcb0ffebc7 .ctaButton { background-color: #7F8C8D!important; color: #2980B9; border: none; border-radius: 3px; box-shadow: none; font-size: 14px; font-weight: bold; line-height: 26px; moz-border-radius: 3px; text-align: center; text-decoration: none; text-shadow: none; width: 80px; min-height: 80px; background: url(https://artscolumbia.org/wp-content/plugins/intelly-related-posts/assets/images/simple-arrow.png)no-repeat; position: absolute; right: 0; top: 0; } .u2cf1bf09c1a0fe5abc2df1dcb0ffebc7:hover .ctaButton { background-color: #34495E!important; } .u2cf1bf09c1a0fe5abc2df1dcb0ffebc7 .centered-text { display: table; height: 80px; padding-left : 18px; top: 0; } .u2cf1bf09c1a0fe5abc2df1dcb0ffebc7 .u2cf1bf09c1a0fe5abc2df1dcb0ffebc7-content { display: table-cell; margin: 0; padding: 0; padding-right: 108px; position: relative; vertical-align: middle; width: 100%; } .u2cf1bf09c1a0fe5abc2df1dcb0ffebc7:after { content: ""; display: block; clear: both; } READ: Juvenile delinquency may be regarded as an extreme EssayEven though Malzius feels one political regime is just as good as another, and he could salute any dictator if need be, he does draw the line. Malzius has too much integrity as a scientist to spread lies. Scientists are engaged in the pursuit of truth, and to do anything less would be to shortchange students and others. Therefore, he chooses incorruptibility over freedom. He throws ink at the dictator rather than sign the documents that would have set him free. He dies with the hope that truth will ultimately win out, as long as there are people willing to speak out for it. Professor Malzius as well as Wang San are considered heroes. They may not have had incredible strength but their pursuit of truth and standing up to what they believe shows their incredible characteristics. Bibliography:

Women Empowerment in Rmg Sector Essays

Women Empowerment in Rmg Sector Essays Women Empowerment in Rmg Sector Essay Women Empowerment in Rmg Sector Essay INTRODUCTION Bangladesh has a population around 160 million (July 2008 est. ). About 45% of them are still living below the poverty line. Bangladesh’s Human development index (HDI) is 139 (out of 177), ranking as the lowest in the Asian country list. GDP per capita (PPP US$) is 1,770, which make the countries HDI rank almost the same as the GDP rank. In Bangladesh Garment exports began in the late 1970s. But the scale was for a number of years modest up until the government’s 1982 New Industrial Policy to liberalize manufacturing, promote private participation, foreign investment and exports. During the last 10 years RMG has become one of the most important sectors of Bangladesh both from the domestic perspective and foreign earnings. Now RMG contributes about 76% of the foreign exports. Again it is also mentionable that about 80% of the workers in the RMG sector are female. Thus it is not contributing in earnings foreign currencies but also create employment opportunities for the women, which in turn contribute in the socio-economic development of Bangladesh. So it is very much essential to assess the current status of the women workers in RMG sector to take appropriate strategy to facilitates them by ensuring their rights so that this sector become more convenient for them. This will encourage the women and provide them the opportunity to contribute in development of Bangladesh. OVERVIEW OF RMG SECTOR IN BANGLADESH Bangladesh had no sign of the ready-made garment industry until late 1970s to early 1980s when foreign investors started their businesses in Bangladesh. The emergence of an export-oriented RMG industry in Bangladesh can be traced to a confluence of policy trends at global and national levels. The opportunity came to us as a result of quota system imposed on some developed countries. The idea of readymade garments came to our country in 1978 from South Korean company Daewoo. Daewoo trained some 130 officials of Desh Garments and had a 5-year contract with the same. But within one year 115 officials left Dash Garments and established their own business in the name of Reaz Garments, Paris Garments, Jewel Garments and Baishakhi Garments. In 1978 Reaz Garments expanded its operations into export market by selling 10,000 pieces of mens shirts worth French Franc 13 million to a Paris-based firm. It was the first direct exporter of garments from Bangladesh. Thus the RMG (Ready Made Garments) was introduced in Bangladesh, which has now become the biggest industry of the nation. Because Bangladesh initially had no quotas assigned to it and the cost of labor was extremely low, the RMG industry grew at a very high speed and now it contributes approximately 76% of the GDP of Bangladesh. The RMG sector of Bangladesh has helped the economic growth enormously. When the investors first came in, the government allowed 100% ownership for foreigners. The industry started with one factory in 1970; the number increased to eight factories in 1977. There were about 587 factories in 1984, 2650 in 1998 and 3300 in 2004. (Fritsch). After two decades of phenomenal growth the sector is destined to make a transition under phasing out of Multi Fiber Agreement (MFA) in 2005 through implementation of the Agreement on Textile Clothing (ATC). Only 30% of all the money that the country earns from garment factories stays in the country. The other 70% is used up in buying fabric and other raw materials that are not available in Bangladesh. Most garment factories are situated in Dhaka, Chittagong, Savar, Narayangong and Tongi. The major markets for Bangladesh have always been the United States, Canada and Europe and a few Caribbean countries, but recently Bangladesh has start exporting to other countries such as Australia and Japan on a smaller scale. Bangladesh exports 63 items (for example shirts, pants, etc. to other. Relatively strong GDP growth was almost doubled in value from 5. 6 per cent of GDP in the late 1980s to 12 percent in 2000. Here the RMG sector has played a leading role. Its share of the country’s foreign exchange earnings has grown steadily from 4 per cent in the early 1980s to 41 percent at the beginning of the 1990s to 77 percent in 2001–2002. Within RMG the share of knitwear increased even more dramatically from a negligible proportion in 1989–90 to 25 percent of total exports in 2002–2003, accounting for one-third of total RMG exports. Between 1978 and 1999 the RMG sector earned US$26 billion for the country, of which the value-added component was US$7. 6 billion or 29 per cent. In addition, a host of ancillary industries producing accessories have also emerged and grown alongside the garment industry. One estimate suggests that 80 per cent of garment accessories were locally produced, valued at $0. 5 billion a year (Bhattacharya and Rahman, 2000). Despite this spectacular performance, however, there is considerable pessimism about the future of the industry, particularly given plans to phase.

10 Personal Things Not to Say in an Interview

10 Personal Things Not to Say in an Interview We know we’re supposed to make a personal connection with our interviewer, wherever possible, but it is so easy to go overboard and, well, overshare. It’s also easy to get nervous and babble- next thing you know you’ve gone and told a totally unnecessary story that won’t make you seem friendly and approachable, but a little bit too much. Avoid making an inadvertent wrong impression by making sure to withhold details about the following 10 personal matters.1. Money ProblemsNo matter how broke you are, this is not fodder for the interview. Even if you pulled yourself out of a big black hole, financially speaking, this is a story to tell over drinks once you’ve worked somewhere for years, not during the interview.2. Relationship ProblemsYour interviewer may be really nice and empathetic, but your divorce, your spouse’s needs and wants, your childcare disasters, your troubled ex†¦ none of this will help you get the job. These details can act ually hurt. You never want to present yourself as that colleague who can never shut up about their personal life. Keep your interview, at least, drama free.3. Legal ProblemsWhatever you do, don’t bring up any brushes with the law or lawsuits. No matter whether you are at fault, it won’t help your interviewer to look kindly upon you. Leave your legal woes for your lawyer’s office.4. Health ProblemsYour illnesses and injuries are not good topics for an interview. You don’t have to bring them up- even if you took time off to deal with them. If you can get away with not disclosing that information, do. Let your interviewer make more positive assumptions about why you took that year off from an old job. Then you won’t seem like a liability to hire.5. Family PlansIt’s always best to leave out that you’re trying to have a baby and you anticipate taking maternity leave soon- or cutting back on hours just after you’ve been hired. It is illegal to discriminate on the basis of pregnancy- even the intent to become pregnant. But don’t give any hiring managers who don’t know the law the chance to talk themselves out of offering you the job.6. Burned BridgesSo you had a less than savory departure from your last job. Keep it to yourself. Stay classy, keep the high road, and move on. Say you were just ready for something new. This will signal to the interviewer that you aren’t a risk of bad-mouthing their company, should you end up leaving this job in unsavory circumstances too.7. ReligionUnless you’re applying for a job in a religious institution, you can keep your faith to yourself. (You don’t have to answer this question, by the way, even if asked directly.)8. PoliticsWhen in doubt, just steer clear. Unless, of course, you’re applying to work at a political firm or company. Otherwise, keep mum. Political conversations among coworkers can be contentious enough.9. Extracurricular sIt’s always great to mention particularly interesting hobbies or volunteer work. But make sure you don’t play them up too much, and risk your interviewer getting the impression that you won’t have time to do your real job for all the time and effort you put into your outside, unpaid one.10. ComplaintsParticularly when it comes to former jobs or bosses. Keep a positive spin on everything you say. Friends are the people you rant too when you need to get some frustration off your chest. Your interviewer wants to see the very best of you.Keeping calm and very well prepared can prevent you from babbling and running into any of the above traps. When in doubt, practice until perfect. And take a good deep breath before going in. Stay calm and keep it professional and you’ll do fine.

History of art - 'What was the appeal of classical mytholoy for Essay

History of art - 'What was the appeal of classical mytholoy for artists and patrons' - Essay Example This is the reason of their ‘survival’ until today and of their ‘validity’ with the meaning of the absence of any opposition to their content. Although mythology has been used mostly as source of knowledge and creation, there have been times (and still exist) when the past is used in order to help the achievement of certain ‘aims’ of the present. A view held in the theory is that ‘historians, literary critics and art historians who write about past cultures, often use these cultures for present purposes’ in order to achieve specific purposes (Landauer, C., 1994). Mythology, especially that of Greece and the ‘Roman Empire’ has been a very important resource for a numerous of artists who tried to ‘present’ the stories included in the myths in a variety of works of art, mostly in paintings, sculpture and ornaments. Among the artists that have been influenced from the myths of the ancient Greece are Picasso and Botticceli. The paintings of the first of them, Picasso, contained an extended reference to the myth of Minotaures1. We could refer to the ‘Minotaures and the dead horse in front of the cave’, the ‘war of the Minotaures’ and the ‘Minotaures killed by a sword’. On the other hand, Botticceli tended to refer to the gods of the Greek Mythology. His most famous painting of such kind is the ‘Birth of Aphrodite’ which can be found in Florence and also the ‘Aphrodite and Mars’ in the National Gallery of London. Although the above mentioned painters are known for their preference to the myths and the legends of the ancient cultures (especially those of Rome and Greece), there are also a numerous others who tend to refer to the facts and mostly the myths of these periods of time as for the theme of their works of art. The common element between all the artists that use elements of the Greek and the Roman Mythology is that they approach the subject of the reference from different

Analysis of the Origin of the marriage rituals, traditions, practices Research Paper

Analysis of the Origin of the marriage rituals, traditions, practices of Jewish weddings in Orthodox communities - Research Paper Example Marriage is a social institution in which two individuals are united in holy matrimony. The institution of marriage, as we see it today, has grown over many centuries. Traditionally viewed as the union of a man and a woman, this concept has become more complex today owing to the increased sophistication and civilisation of modern societies. Thoroughly immersed in customs, traditions, religion and civil regulations, many of the conventional rites have perished over time to yield place for new ones. The rituals, traditions and practices of marriage differ greatly across diverse cultures, religions, countries, ethnic communities and social strata. Majority of the traditional marriage ceremonies comprise an exchange of nuptial vows by the couple, offering of gifts and a public announcement of the marriage by an authority figure. Some other commonly incorporated elements in a wedding ceremony are traditional music, recital of poetry, chanting of prayers or readings from religious texts. A ll of these marriage customs have their roots firmly embedded in the beliefs and customs of the society in which they are conceived. In Judaism, marriage is regarded as the ultimate state of mankind and a man without a wife or a woman without a husband are regarded as incomplete. As Isaac Klein quotes from Leviticus 34a in his book "A man who does not marry is not a complete person." (Klein, 1979, p. 381) It is also believed that "Any man who has no wife lives without joy, without blessing, and without goodness." (Garland, 2003, p.276) In Jewish literature, the term that denotes marriage is â€Å"kiddushin†, which in English means "sanctification".

Qing Dynasty Essay Example for Free

Qing Dynasty Essay The last dynasty in China, the Qing dynasty, ruled from 1644 to 1911, and there is argument to say that their failures, especially those towards the end of their rule, created the underlying tension and ideologies behind the Communist victory in China and the consequential establishment of the People’s Republic of China (PRC). These failures can be subdivided into military failures, weaknesses of the leadership, financial disarray, political troubles, and the Qing dynasty’s failure to implement lasting, effective reforms. It can easily be argued that the Qing dynasty didn’t recognise the importance of the military until it was too late and they suffered for neglecting it. The dismissal of a key general, Yuan Shikai in 1908 can be seen as a turning point for the military in this period. The dismissal wasn’t for valid reasons, but purely a chance for Regent Prince Chun to assert his authority. However, this had disastrous consequences the Qing dynasty, as they had lost their only loyal general, leaving them without military protection, an issue which had already been exacerbated by the Boxer Rising in 1900-1901. The Qing dynasty then made a further mistake in putting too much trust in him when he (reluctantly) returned. This resulted in Yuan Shikai using his unarguable military strength to gain political power. In all, this left the Qing dynasty with little, if any military strength. Their army wasn’t loyal, nor was it organised and there was much internal strife. Therefore the Chinese people were left yearning for a government that was strong enough to command military as well as political power, planting the ideas of revolution in their heads. The Qing dynasty also had a lot of problems with leadership. During the â€Å"100 Days† period of attempted reform, obvious internal power struggles arose which further weakened the dynasty. Here there was the struggle between the reactionaries of the government, those that wanted China to remain traditional and to uphold the ideas of Confucian living, and progressives who were in support of bringing in reform and change to modify China . With hindsight, it can be argued that, perhaps if the progressives had won the debate over reform, there might not have even been a need for a revolution. However, at the time it is important to note that the ideas of Confucian living and social harmony were a core part of Chinese society, and because most of the Chinese public had not known any different, something as radical as what the progressives were suggesting was seen as alien and threatening.  The reactionaries outweighed the progressives in court, and led by Dowager Empress Cixi, they forced themselves into power. For a while, although Cixi was in no way a perfect leader, at least there was a constant leader who was reliable. However in 1908, upon the death of Emperor Guangxu and Dowager Empress Cixi, Pu Yi came to be emperor. However emperor Pu Yi was only a very small child at the time, so Prince Chun acted as regent. He lacked authority, and so 3 further years of inconsistent leadership followed. The Chinese public started looking for someone who was confident to lead them into a revolution and give them what they need in way of reform, opening up and opportunity for a n ew leader to step in. From the end of the Opium Wars, the Qing government had been plunged into a state of bankruptcy, leaving them without enough money to impose an industrial modernisation programme that China so desperately needed. This was made worse by the crippling penalties imposed after the Boxer Rising in 1900-01. The effect of this is most obviously highlighted with the railways crisis from 18958-1911. During this time the railway boom in China meant a great opportunity for provinces to thrive, bringing in trade and new jobs. However, the Qing government chose to nationalise the railway, and to be able to afford to do so, that meant that they had to raise taxes and rely on foreign loans. Naturally, the Chinese people in these provinces weren’t happy with the fact that not only have the government taken away a huge possibility for local investment, but were then imposing taxes on the very people who were missing out. This led to open opposition of the government for the first time in China, as well as a damaged sense of pride because they were relying on foreign investment. The Qing dynasty was widely regarded among the Chinese as old-fashioned and redundant. First of all, this was down to the simple fact that they originated from Manchuria, which wasn’t even part of China, meaning that they were out of touch with the growing popularity of nationalism. Also, their authoritarian tradition made them incapable of responding to the demands of the revolutionaries, who were inspired by Japanese and Western models of democracy. This is because, among the people, there was fear of the punishments associated with â€Å"disrupting the social harmony† (defying the government). Combined with the government’s fear of change, it can be argued that this is why it took until 1949 for China to have a revolution, compared to America or France. Finally, and most importantly, was the Qing dynasty’s  blatant disregard for the crucial need for reforms. The closest that they got to reform was during the â€Å"100 Days† in 1905, when reforms based on western models were proposed but completely ignored in courts and so therefore didn’t go through. Part of this was to do with Dowager Empress Cixi leading a strong opposition against the reform. However, she later went on to introduce some reform, for example she brought an end to tests in Confucianism for government positions and she created provincial assemblies. Many historians have argued, however, that this was just an attempt to win over the revolutionaries who were turning against the idea of an â€Å"establishment† all together. Generally, by the time of the formal abdication of the Qing dynasty in 1912, the revolutionaries within China were ready for change. They were fed up with having a corrupt, inconsistent central government that weren’t in touch with the modern concepts behind revolutionary thoughts. This lay the foundations for the Chinese revolution and the eventual establishment of the PRC in 1949.

Free Awakening Essays: The Pigeon House :: Chopin Awakening Essays

The Pigeon House in The Awakening "In a little four-room house around the corner. It looks so cozy, so inviting and restful."(79) With this description Chopin introduces the reader to Edna’s new residence, which is affectionately known as the pigeon house. The pigeon house provides Edna with the comfort and security that her old house lacked. The tranquility that the pigeon house grants to Edna allows her to experience a freedom that she has never felt before. The first taste of this newfound freedom is the satisfaction that Edna feels in being able to provide for herself with her own money. The fact that she no longer has to rely on her husband’s money breaks the last tie that she had with him: "I know I shall like it, like the feeling of freedom and independence."(80) In her mind now, her marriage is dead, and Mr. Pontellier has no control over her. Financial freedom is not the only thing the pigeon house gives to Edna; it also allows her both physical and spiritual freedom. When Edna kisses Arobin in her husband’s house, she feels "reproach looking at her from the external things around her which he had provided for her external existence."(84) Yet, her first night at the pigeon house she spends with Arobin, and this time feels no reproach or regret. As for the spiritual ramifications provided by her new home, Chopin writes, "There was a feeling of descending in the social scale, with the corresponding sense of having rise n in the spiritual.., she began to look with her own eyes... no longer was she content to feed upon opinion."(94) The pigeon house provides a way for Edna to escape from the society that she hates. She has the freedom to make the decisions in her life now; and she decides that she is going to live life by her own rules, not the rules that society has laid out for her. When she is within her home, she is free from the pressures of being the "mother women" which society forces her to be. The pigeon house nourishes this newfound freedom, allowing it to grow and gain strength. Without the environment provided by the pigeon house, it is doubtful as to whether Edna would have ever "awakened" from the stupefied state that society was forcing her to live in.

Dc Comics (2012-2013)

Report on DC COMICS for Business Studies Introduction DC comics incorporated is a leading pioneer and one of the most successful enterprise in the American comic books and many related media industries (comic books, movies, games and etcetera) . Founded by Malcolm Wheeler Nicholson in 1934, it was originally known as ‘National Allied Publication' the initials ‘DC' was taken from the popular series ‘Detective Comics' which subsequently became part of the company's name.DC comics is the publishing unit for DC Entertainment a Warner Bros company which itself is owned by Time Warner, producing materials incorporating renown DC characters such as Superman an alien who was sent from the lost planet Krypton, raised on Earth and instilled with a sense of justice from the Superman franchise (Action comics) and Batman a rogue Vigilante by night and by day millionaire, playboy, philanthropist Bruce Wayne from the Dark Knight franchise (debuting in Detective comics). DC comics mission and visionDC's mission is to intergrades its comic business, brand and characters into Warner Bros Entertainment and all its content and distribution business. DC comic envisions to expand and develop the DC brand to every type of media. DC comics annual reports (2009-2012) DC comics future plans DC plans to launch a wave of new DC movies in response to Marvels shared movie gamble (Avengers). Starting with the reboot of Superman (Man of Steel 2013), along with other upcoming silver screen movies featuring other DC uperheroes like Wonder woman, the Flash and others (DC haven yet to decide whether it will reboot the batman franchise or continue Christopher Nolan's Dark Knight and to bring back Ryan Reynold's role as Green Lantern (2011). Although DC hasn't revealed how the movies will be incorporated, whether it be following in the Dark Knight's lead (a single franchise) or become a shared movie plan is still yet unknown.

The Theory of Financial Intermediation:

THE THEORY OF FINANCIAL INTERMEDIATION: AN ESSAY ON WHAT IT DOES (NOT) EXPLAIN by Bert Scholtens and Dick van Wensveen SUERF – The European Money and Finance Forum Vienna 2003 CIP The Theory of Financial Intermediation: An Essay On What It Does (Not) Explain by Bert Scholtens, and Dick van Wensveen Vienna: SUERF (SUERF Studies: 2003/1) ISBN 3-902109-15-7 Keywords: Financial Intermediation, Corporate Finance, Assymetric Information, Economic Development, Risk Management, Value Creation, Risk Transformation. JELclassificationnumbers: E50,G10,G20,L20,O16  © 2003 SUERF, ViennaCopyright reserved. Subject to the exception provided for by law, no part of this publication may be reproduced and/or published in print, by photocopying, on microfilm or in any other way without the written consent of the copyright holder(s); the same applies to whole or partial adaptations. The publisher retains the sole right to collect from third parties fees payable in respect of copying and/or take l egal or other action for this purpose. THE THEORY OF FINANCIAL INTERMEDIATION AN ESSAY ON WHAT IT DOES (NOT) EXPLAIN+ by Bert Scholtens* Dick van Wensveen†  Also read: Theories Seen in OjtAbstract This essay reflects upon the relationship between the current theory of financial intermediation and real-world practice. Our critical analysis of this theory leads to several building blocks of a new theory of financial intermediation. Current financial intermediation theory builds on the notion that intermediaries serve to reduce transaction costs and informational asymmetries. As developments in information technology, deregulation, deepening of financial markets, etc. end to reduce transaction costs and informational asymmetries, financial intermediation theory shall come to the conclusion that intermediation becomes useless. This contrasts with the practitioner’s view of financial intermediation as a value-creating economic process. It also conflicts with the continuing and increasing economic importance of financial intermediaries. From this paradox, we conclude that current financial intermediation theory fails to provide a satisf actory understanding of the existence of financial intermediaries. We wish to thank Arnoud Boot, David T. Llewellyn, Martin M. G. Fase and Robert Merton for their help and their stimulating comments. However, all opinions reflect those of the authors and only we are responsible for mistakes and omissions. * Associate Professor of Financial Economics at the University of Groningen; PO Box 800; 9700AVGroningen;TheNetherlands(correspondingauthor). †  Professor of Financial Institutions at the Erasmus University of Rotterdam; PO Box 1738; 3000 DR Rotterdam; The Netherlands, (former Chairman of the Managing Board of MeesPierson).We present building blocks for a theory of financial intermediation that aims at understanding and explaining the existence and the behavior of real-life financial intermediaries. When information asymmetries are not the driving force behind intermediation activity and their elimination is not the commercial motive for financial intermediaries, the question arises which paradigm, as an alternative, could better express the essence of the intermediation process. In our opinion, the concept of value creation in the context of the value chain might serve that purpose.And, in our opinion, it is risk and risk management that drives this value creation. The absorption of risk is the central function of both banking and insurance. The risk function bridges a mismatch between the supply of savings and the demand for investments as savers are on average more risk averse than real investors. Risk, that means maturity risk, counterparty risk, market risk (interest rate and stock prices), life expectancy, income expectancy risk etc. , is the core business of the financial industry.Financial intermediaries can absorb risk on the scale required by the market because their scale permits a sufficiently diversified portfolio of investments needed to offer the security required by savers and policyholders. Financial intermediaries are not just agents wh o screen and monitor on behalf of savers. They are active counterparts themselves offering a specific product that cannot be offered by individual investors to savers, namely cover for risk. They use their reputation and their balance sheet and off-balance sheet items, rather than their very limited own funds, to act as such counterparts.As such, they have a crucial function within the modern economy. TABLE OF CONTENTS 1. Introduction7 2. The Perfect Model9 3. Financial Intermediaries in the Economy11 4. Modern Theories of Financial Intermediation15 5. Critical Assessment21 6. An Alternative Approach of Financial Intermediation31 7. Building Blocks for an Amended Theory37 8. A New Research Agenda41 References45 Appendix A53 Tables 1. Share of Employment in Financial Services in Total Employment (percentages)12 2. Share of Value-Added in Financial Services in GDP (percentages)12 3.Financial Intermediary Development over Time for About 150 Countries (percentages)12 4. (Stylized) Conte mporary and Amended Theory of Financial Intermediation38 SUERF56 SUERF Studies57 1. Introduction When a banker starts to study the theory of financial intermediation in order to better understand what he has done during his professional life, he enters a world unknown to him. That world is full of concepts which he did not, or hardly, knew before and full of expressions he never used himself: asymmetric information, adverse selection, monitoring, costly state verification, moral hazard and a couple more of the same kind.He gets the uneasy feeling that a growing divergence has emerged between the micro- economic theory of banking, as it took shape in the last three decades, and the everyday behavior of bankers according to their business motives, expressed in the language they use. This essay tries to reflect on the merits of the present theory of financial intermediation, on what it does and does not explain from both a practical and a theoretical point of view. The theory is impres sive by the multitude of applications in the financial world of the agency theory and the theory of asymmetric information, of adverse selection and moral hazard.As well as by their relevance for important aspects of the financial intermediation process, as is shown in an ever-growing stream of economic studies. But the study of all these theories leaves the practitioner with the impression that they do not provide a satisfactory answer to the basic question; which forces really drive the financial intermediation process? The current theory shows and explains a great variety in the behavior of financial intermediaries in the market in their relation to savers and to investors/entrepreneurs.But as far as the authors of this essay are aware, it does not, or not yet, provide a satisfactory answer to the question of why real-life financial institutions exist, what keeps them alive and what is their essential contribution to (inter)national economic welfare. We believe that this question cannot be addressed by a further extension of the present theory, by the framework of the agency theory and the theory of asymmetric information. The question goes into the heart of the present theory, into the paradigm on which it is based.This paradigm is the famous classical idea of the perfect market, introduced by Marshall and Walras. Since then, it has been the leading principle, the central point of reference in the theory of competition, the neoclassical growth theory, the portfolio theory and also the leading principle of the present theory of financial intermediation. Financial intermediaries, according to that theory, have a function only because financial markets are not perfect. They exist by the grace of market 7 8Introduction imperfections.As long as there are market imperfections, there are intermediaries. As soon as markets are perfect, intermediaries are redundant; they have lost their function because savers and investors dispose of the perfect information needed to find each other directly, immediately and without any impediments, so without costs, and to deal at optimal prices. This is the general equilibrium model a la Arrow-Debreu in which banks cannot exist. Obviously, this contrasts with the huge economic and social importance of financial intermediaries in highly developed modern economies.Empirical observations point at an increasing role for financial intermediaries in economies that experience vastly decreasing information and transaction costs. Our essay goes into this paradox and comes up with an amendment of the existing theory of financial intermediation. The structure of this paper is as follows. First, we introduce the foundations of the modern literature of financial intermediation theory. From this, we infer the key predictions with respect to the role of the financial intermediary within the economy.In Section 3, we will investigate the de facto role of financial intermediaries in modern economies. We discuss views on the theoretical relevance of financial intermediaries for economic growth. We also present some stylized facts and empirical observations about their current position in the economy. The mainstream theory of financial intermediation is briefly presented in Section 4. Of course, we cannot pay sufficient attention to all developments in this area but will focus on the basic rationales for financial intermediaries according to this theory, i. . information problems, transaction costs, and regulation. Section 5 is a critical assessment of this theory of financial intermediation. An alternative approach of financial intermediation is unfolded in Section 6. In Section 7, we present the main building blocks for an alternative theory of financial intermediation that aims at understanding and explaining the behavior of real-life financial intermediaries. Here, we argue that risk management is the core issue in understanding this behavior.Transforming risk for ultimate savers and lenders and ris k management by the financial intermediary itself creates economic value, both for the intermediary and for its client. Accordingly, it is the transformation and management of risk that is the intermediaries’ contribution to the economic welfare of the society it operates in. This is – in our opinion – the hidden or neglected economic rationale behind the emergence and the existence and the future of real-life financial intermediaries.In Section 8, we conclude our essay with a proposal for a research agenda for an amended theory of financial intermediation. 2. The Perfect Model Three pillars are at the basis of the modern theory of finance: optimality, arbitrage, and equilibrium. Optimality refers to the notion that rational investors aim at optimal returns. Arbitrage implies that the same asset has the same price in each single period in the absence of restrictions. Equilibrium means that markets are cleared by price adjustment – through arbitrage â€⠀œ at each moment in time.In the neoclassical model of a perfect market, e. g. the perfect market for capital, or the Arrow-Debreu world, the following criteria usually must be met: –no individual party on the market can influence prices; – conditions for borrowing/lending are equal for all parties under equal circumstances; –there are no discriminatory taxes; –absence of scale and scope economies; –all financial titles are homogeneous, divisible and tradable; – there are no information costs, no transaction costs and no insolvency costs; –all market parties have ex ante nd ex post immediate and full information on all factors and events relevant for the (future) value of the traded financial instruments. The Arrow-Debreu world is based on the paradigm of complete markets. In the case of complete markets, present value prices of investment projects are well defined. Savers and investors find each other because they have perfect inform ation on each others preferences at no cost in order to exchange savings against readily available financial instruments.These instruments are constructed and traded costlessly and they fully and simultaneously meet the needs of both savers and investors. Thus, each possible future state of the world is fully covered by a so-called Arrow-Debreu security (state contingent claim). Also important is that the supply of capital instruments is sufficiently diversified as to provide the possibility of full risk diversification and, thanks to complete information, market parties have homogenous expectations and act rationally.In so far as this does not occur naturally, intermediaries are useful to bring savers and investors together and to create instruments that meet their needs. They do so with reimbursement of costs, but costs are by definition an element – or, rather, characteristic – of market imperfection. Therefore, intermediaries are at best tolerated and would be elim inated in a move towards market perfection, with all intermediaries becoming 9 10The Perfect Model redundant: the perfect state of disintermediation. This model is the starting point in the present theory of financial intermediation.All deviations from this model which exist in the real world and which cause intermediation by the specialized financial intermediaries, are seen as market imperfections. This wording suggests that intermediation is something which exploits a situation which is not perfect, therefore is undesirable and should or will be temporary. The perfect market is like heaven, it is a teleological perspective, an ideal standard according to which reality is judged. As soon as we are in heaven, intermediaries are superfluous. There is no room for them in that magnificent place.Are we going to heaven? Are intermediaries increasingly becoming superfluous? One would be inclined to answer both questions in the affirmative when looking to what is actually happening: Incre asingly, we have to make do with liberalized, deregulated financial markets. All information on important macroeconomic and monetary data and on the quality and activities of market participants is available in ‘real time’, on a global scale, twenty-four hours a day, thanks to the breathtaking developments in information and communication technology.Firms issue shares over the Internet and investors can put their order directly in financial markets thanks to the virtual reality. The communication revolution also reduces information costs tremendously. The liberalization and deregulation give, moreover, a strong stimulus towards the securitization of financial instruments, making them transparent, homogeneous, and tradable in the international financial centers in the world. Only taxes are discriminating, inside and between countries. Transaction costs are still there, but they are declining in relative importance thanks to the cost efficiency of ICT and efficiencies of scale.Insolvency and liquidity risks, however, still are an important source of heterogeneity of financial titles. Furthermore, every new crash or crisis invokes calls for additional and more timely information. For example, the Asia crisis resulted in more advanced and verifiable and controllable international financial statistics, whereas the Enron debacle has put the existing business accounting and reporting standards into question. There appears to be an almost unstoppable demand for additional information. 3. Financial Intermediaries in the EconomySo, we are making important progress in our march towards heaven and what happens? Is financial intermediation fading away? One might think so from the forces shaping the current financial environment: deregulation and liberalization, communication, internationalization. But what is actually happening in the real world? Do we really witness the demise of the financial institutions? Are the intermediaries about to vanish from planet E arth? On the contrary, their economic importance is higher than ever and appears to be increasing.This is the case even during the 1990s when markets became almost fully liberalized and when communication on a global scale made a real and almost complete breakthrough. The tendency towards an increasing role of financial intermediation is illustrated in Tables 1 and 2 that give the relative contribution of the financial sector to the two key items of economic wealth and welfare in most nations, i. e. GDP and labor. These tables show that, even in highly developed markets, financial intermediaries tend to play a substantial and increasing role in the current economy.Furthermore, Demirguc-Kunt and Levine (1999) among others, conclude that claims of deposit money banks and of other financial institutions on the private sector have steadily increased as a percentage of GDP in a large number of countries (circa 150), rich and poor, between the 1960s and 1990s. The pace of increase is not declining in the 1990s. This is reflected in Table 3. In the 1960s, Raymond Goldsmith (1969) gave stylized facts on financial structure and economic development (see appendix A). He found that in the course of economic development, a country’s financial system grows more rapidly than national wealth.It appears that the main determinant of the relative size of a country’s financial system is the separation of the functions of saving and investing among different (groups of) economic units. This observation sounds remarkably modern. Since the early 1990s, there has been growing recognition for the positive impact of financial intermediation on the economy. Both theoretical and empirical studies find that a well-developed financial system is beneficial to the economy as a whole. Basically the argument behind this idea is that the efficient allocation of capital within an economy fosters economic growth (see Levine, 1997).Financial intermediation can affect economic growth by acting on the saving rate, on the fraction of saving channeled to investment or on the social marginal productivity of investment. In general, financial development will be positive for economic growth. But some improvements in risk-sharing and in the 11 12Financial Intermediaries in the Economy credit market for households may decrease the saving rate and, hence, the growth rate (Pagano, 1993). Table 1: Share of Employment in Financial Services in Total Employment (percentages) Source: OECD, National Accounts (various issues)Table 2: Share of Value-Added in Financial Services in GDP (percentages) Source: OECD, National Accounts (various issues) Table 3: Financial Intermediary Development over Time for About 150 Countries (percentages) Source: Demirguc-Kunt and Levine (1999, Figure 2A) 1970 1980 1985 1990 1995 2000 Canada 2. 4 2. 7 2. 9 3. 0 3. 2 3. 1 France 1. 8 2. 6 2. 9 2. 8 2. 7 2. 8 Germany 2. 2 2. 8 3. 0 3. 1 3. 3 3. 3 Japan 2. 4 3. 0 3. 2 3. 3 3. 4 3. 5 Switzerland â€⠀œ – 4. 6 4. 8 4. 8 4. 9 United Kingdom – 3. 0 3. 5 4. 6 4. 4 4. 4 United States 3. 8 4. 4 4. 7 4. 8 4. 8 4. 8 1970 980 1985 1990 1995 2000 Canada 2. 2 1. 8 2. 0 2. 8 2. 9 3. 1 France 3. 5 4. 4 4. 8 4. 4 4. 6 4. 8 Germany 3. 2 4. 5 5. 5 4. 8 5. 8 5. 7 Japan 4. 3 4. 5 5. 5 4. 8 5. 6 5. 3 Netherlands 3. 1 4. 0 5. 3 5. 6 5. 5 5. 8 Switzerland – – 10. 4 10. 3 13. 1 12. 8 United States 4. 0 4. 8 5. 5 6. 1 7. 2 7. 1 1960s 1970s 1980s 1990s Liquid liabilities/GDP 32 39 47 51 Claims by deposit money banks on private sector/GDP 20 24 32 39 Financial Intermediaries in the Economy13 There are different views on how the financial structure affects economic growth exactly (Levine, 2000). The bank-based view holds that bank-based systems – particularly at early stages of economic development – foster economic growth to a greater degree than market-based systems. ? The market-based view emphasizes that markets provide key financial services that stimulate innovation and long-run growth. ? The financial services view stresses the role of banks and markets in researching firms, exerting corporate control, creating risk management devices, and mobilizing society’s savings for the most productive endeavors in tandem.As such, it does regard banks and markets as complements rather than substitutes as it focuses on the quality of the financial services produced by the entire financial system. ? The legal-based view rejects the analytical validity of the financial structure debate. It argues that the legal system shapes the quality of financial services (for example La Porta et al. , 1998). The legal-based view stresses that the component of financial development explained by the legal system critically influences long-run growth.Political factors have been introduced too, in order to explain the relationship between financial and economic development (see Fohlin, 2000; Kroszner and Strahan, 2000; Rajan and Zingales, 2000). From empir ical research of the relationship between economic and financial development, it appears that history and path-dependency weigh very heavy in determining the growth and design of financial institutions and markets. Furthermore, idiosyncratic shocks that surprise institutions and markets over time appear to be quite important.Despite obvious connections among political, legal, economic, and financial institutions and markets, long-term causal relationships often prove to be elusive and appear to depend upon the methodology chosen to study the relationship. 1 But it is important to realize that efficient financial intermediation confers two important benefits: it raises 1 For example, see Berthelemy and Varoudakis, 1996; Demetriades and Hussein, 1996; Kaplan and Zingales, 1997; Sala-i-Martin, 1997; Fazzari et al. , 1988; Levine and Zervos, 1998; Demirguc-Kunt and Levine, 1999; Filer et al, 1999; Beck and Levine, 2000; Beck et al. 2000; Benhabib and Spiegel, 2000; Demirguc-Kunt and Mak simovic, 2000; Rousseau and Wachtel, 2000; Arestis et al. , 2001; Wachtel, 2001. 14Financial Intermediaries in the Economy the level of investment and savings, and it increases the efficiency in the allocation of financial funds in the economic system. There is a structural tendency in the composition of national wealth represented in financial titles in many countries, especially the Anglo Saxon, towards the substitution of bank held assets (bank loans etc. ) by securitized assets held by the public (equity, bonds) (Ross, 1989).This substitution is often interpreted as a proof of the disintermediation process (e. g. Allen and Santomero, 1997). However, this substitution does not imply that bank loans are not growing any more. To the contrary, they continue to grow, even in the U. S. where the substitution is most visible (see Boyd and Gertler, 1994; Berger et al. , 1995). Therefore, this substitution may not be interpreted as a sign of a diminishing role of banking in general. This is because it is the banks that play an essential role in the securitized instruments.They initiate, arrange and underwrite the floating of these instruments. They often maintain a secondary market. They invent a multitude of off-balance instruments derived from securities. They provide for the clearing of the deals. They are the custodians of these constructions. They provide stock lending and they finance market makers in options and futures. Thus, banks are crucial drivers of financial innovation. Furthermore, it is still an unsolved question of how the off-balance instruments should be counted in the statistics of national wealth.Their huge notional amounts do not reflect the constantly varying values for the contracting parties. Banks are moving in an off-balance direction and their purpose is increasingly to develop and provide tradable and non-tradable risk management instruments. And other kinds of financial intermediaries play an increasingly important role in the same dir ection, both in securitized and non-tradable instruments, both on- and off-balance: insurance companies, pension funds, investments funds, market makers at stock exchanges and derivative markets.These different kinds of financial intermediaries transform risk (concerning future income or accidents or interest rate fluctuations or stock price fluctuations, etc. ). Risk transformation and risk management is their job. Thus, despite the globalization of financial services, driven by deregulation and information technology ,and despite strong price competition, the financial services industry is not declining in importance but it is growing. This seems paradoxical. It points to something important which the modern financial intermediation theory, and the neo-classical market theory on which it is based, do not explain.Might it be the case that it overlooks something crucial? Something that is to be related to information production but that is, so far, not uncovered by the theory of fin ancial intermediation? 4. Modern Theories of Financial Intermediation In order to give firm ground to our argument and to illustrate the paradox, we will first review the doctrines of the theory of financial intermediation. 2 These are specifications, relevant to the financial services industry, of the agency theory, and the theory of imperfect or asymmetric information.Basically, we may distinguish between three lines of reasoning that aim at explaining the raison d’etre of financial intermediaries: information problems, transaction costs and regulatory factors. First, and that used in most studies on financial intermediation, is the informational asymmetries argument. These asymmetries can be of an ex ante nature, generating adverse selection, they can be interim, generating moral hazard, and they can be of an ex post nature, resulting in auditing or costly state verification and enforcement. The informational asymmetries generate market imperfections, i. . deviations from the neoclassical framework in Section 2. Many of these imperfections lead to specific forms of transaction costs. Financial intermediaries appear to overcome these costs, at least partially. For example, Diamond and Dybvig (1983) consider banks as coalitions of depositors that provide households with insurance against idiosyncratic shocks that adversely affect their liquidity position. Another approach is based on Leland and Pyle (1977). They interpret financial intermediaries as information sharing coalitions.Diamond (1984) shows that these intermediary coalitions can achieve economies of scale. Diamond (1984) is also of the view that financial intermediaries act as delegated monitors on behalf of ultimate savers. Monitoring will involve increasing returns to scale, which implies that specializing may be attractive. Individual households will delegate the monitoring activity to such a specialist, i. e. to the financial intermediary. The households will put their deposits with the i ntermediary. They may withdraw the deposits in order to discipline the intermediary in his monitoring function.Furthermore, they will positively value the intermediary’s involvement in the ultimate investment (Hart, 1995). Also, there can be assigned a positive incentive effect of short-term debt, and in particular deposits, on bankers (Hart and Moore, 1995). For example, Qi (1998) and Diamond and Rajan (2001) show that deposit finance can create 2 We have used the widely cited reviews by Allen, 1991; Bhattacharya and Thakor, 1993; Van Damme, 1994; Freixas and Rochet 1997; Allen and Gale, 2000b; Gorton and Winton, 2002, as our main sources in this section. 15 6Modern Theories of Financial Intermediation the right incentives for a bank’s management. Illiquid assets of the bank result in a fragile financial structure that is essential for disciplining the bank manager. Note that in the case households that do not turn to intermediated finance but prefer direct finance, t here is still a â€Å"brokerage† role for financial intermediaries, such as investment banks (see Baron, 1979 and 1982). Here, the reputation effect is also at stake. In financing, both the reputation of the borrower and that of the financier are relevant (Hart and Moore, 1998).Dinc (2001) studies the effects of financial market competition on a bank reputation mechanism, and argues that the incentive for the bank to keep its commitment is derived from its reputation, the number of competing banks and their reputation, and the competition from bond markets. These four aspects clearly interact (see also Boot, Greenbaum and Thakor, 1993). The â€Å"informational asymmetry† studies focus on the bank/borrower and the bank/lender relation in particular. In bank lending one can basically distinguish transactions-based lending (financial statement lending, asset- based lending, credit scoring, etc. ) and relationship lending.In the former class information that is relatively easily available at the time of loan origination is used. In the latter class, data gathered over the course of the relationship with the borrower is used (see Lehman and Neuberger, 2001; Kroszner and Strahan, 2001; Berger and Udell, 2002). Central themes in the bank/borrower relation are the screening and monitoring function of banks (ex ante information asymmetries), the adverse selection problem (Akerlof, 1970), credit rationing (Stiglitz and Weiss, 1981), the moral hazard problem (Stiglitz and Weiss, 1983) and the ex post verification problem (Gale and Hellwig, 1985).Central themes in the bank/lender relation are bank runs, why they occur, how they can be prevented, and their economic consequences (Kindleberger, 1989; Bernanke, 1983; Diamond and Dybvig, 1983). Another avenue in the bank/lender relationship are models for competition between banks for deposits in relation to their lending policy and the probability that they fulfill their obligations (Boot, 2000; Diamond and Raja n, 2001). Second is the transaction costs approach (examples are Benston and Smith, 1976; Campbell and Kracaw, 1980; Fama, 1980).In contrast to the first, this approach does not contradict the assumption of complete markets. It is based on nonconvexities in transaction technologies. Here, the financial intermediaries act as coalitions of individual lenders or borrowers who exploit economies of scale or scope in the transaction technology. The notion of transaction costs encompasses not only exchange or monetary transaction costs (see Tobin, 1963; Towey, 1974; Fischer, 1983), but also search costs and monitoring and auditing costs (Benston and Smith, 1976). Here, the role of Modern Theories of Financial Intermediation17 he financial intermediaries is to transform particular financial claims into other types of claims (so-called qualitative asset transformation). As such, they offer liquidity (Pyle, 1971) and diversification opportunities (Hellwig, 1991). The provision of liquidity is a key function for savers and investors and increasingly for corporate customers, whereas the provision of diversification increasingly is being appreciated in personal and institutional financing. Holmstrom and Tirole (2001) suggest that this liquidity should play a key role in asset pricing theory.The result is that unique characteristics of bank loans emerge to enhance efficiency between borrower and lender. In loan contract design, it is the urge to be able to efficiently bargain in later (re)negotiations, rather than to fully assess current or expected default risk that structures the ultimate contract (Gorton and Kahn, 2000). With transaction costs, and in contrast to the information asymmetry approach, the reason for the existence of financial intermediaries, namely transaction costs, is exogenous. This is not fully the case in the third approach.The third approach to explain the raison d’etre of financial intermediaries is based on the regulation of money production and of saving in and financing of the economy (see Guttentag and Lindsay, 1968; Fama, 1980; Mankiw, 1986; Merton, 1995b). Regulation affects solvency and liquidity with the financial institution. Diamond and Rajan (2000) show that bank capital affects bank safety, the bank’s ability to refinance, and the bank’s ability to extract repayment from borrowers or its willingness to liquidate them.The legal-based view especially (see Section 3), sees regulation as a crucial factor that shapes the financial economy (La Porta et al. , 1998). Many view financial regulations as something that is completely exogenous to the financial industry. However, the activities of the intermediaries inherently â€Å"ask for regulation†. This is because they, the banks in particular, by the way and the art of their activities (i. e. qualitative asset transformation), are inherently insolvent and illiquid (for the example of deposit insurance, see Merton and Bodie, 1993).Furthermore, mo ney and its value, the key raw material of the financial services industry, to a large extent is both defined and determined by the nation state, i. e. by regulating authorities par excellence. Safety and soundness of the financial system as a whole and the enactment of industrial, financial, and fiscal policies are regarded as the main reasons to regulate the financial industry (see Kareken, 1986; Goodhart, 1987; Boot and Thakor, 1993).Also, the financial history shows a clear interplay between financial institutions and markets and the regulators, be it the present-day specialized financial supervisors or the old-fashioned sovereigns (Kindleberger, 1993). Regulation of financial intermediaries, especially of banks, is costly. There are the direct costs of administration and of employing the supervisors, and 18Modern Theories of Financial Intermediation there are the indirect costs of the distortions generated by monetary and prudential supervision.Regulation however, may also gene rate rents for the regulated financial intermediaries, since it may hamper market entry as well as exit. So, there is a true dynamic relationship between regulation and financial production. It must be noted that, once again, most of the literature in this category focuses on explaining the functioning of the financial intermediary with regulation as an exogenous force. Kane (1977) and Fohlin (2000) attempt to develop theories that explain the existence of the very extensive regulation of financial intermediaries when they go into the dynamics of financial regulation. Thus, to summarize, according to the modern theory of financial intermediation, financial intermediaries are active because market imperfections prevent savers and investors from trading directly with each other in an optimal way. The most important market imperfections are the informational asymmetries between savers and investors. Financial intermediaries, banks specifically, fill – as agents and as delegated monitors – information gaps between ultimate savers and investors. This is because they have a comparative informational advantage over ultimate savers and investors.They screen and monitor investors on behalf of savers. This is their basic function, which justifies the transaction costs they charge to parties. They also bridge the maturity mismatch between savers and investors and facilitate payments between economic parties by providing a payment, settlement and clearing system. Consequently, they engage in qualitative asset transformation activities. To ensure the sustainability of financial intermediation, safety and soundness regulation has to be put in place. Regulation also provides the basis for the intermediaries to enact in the production of their monetary services.All studies on the reasons behind financial intermediation focus on the functioning of intermediaries in the intermediation process; they do not examine the existence of the real-world intermediaries as s uch. It appears that the latter issue is regarded to be dealt with when satisfactory answers on the former are being provided. Market optimization is the main point of reference 3 The importance of regulation for the existence of the financial intermediary can best be understood if one is prepared to account for the historical and institutional setting of financial intermediation (see Kindleberger, 1993; Merton, 1995b).Interestingly, and illustrating the crucial importance of regulation for financial intermediation, is that there are some authors who suggest that unregulated finance or ‘free banking’ would be highly desirable, as it would be stable and inflation-free. Proponents of this view are, among others, White, 1984; Selgin, 1987; Dowd, 1989. Modern Theories of Financial Intermediation19 in case of the functioning of the intermediaries. The studies that appear in most academic journals analyze situations and conditions under which banks or other intermediaries are making markets less imperfect as well as the impediments to their optimal functioning.Perfect markets are the benchmarks and the intermediating parties are analyzed and judged from the viewpoint of their contribution to an optimal allocation of savings, that means to market perfection. Ideally, financial intermediaries should not be there and, being there, they at best alleviate market imperfections as long as the real market parties have no perfect information. On the other hand, they maintain market imperfections as long as they do not completely eliminate informational asymmetries, and even increase market imperfections when their risk aversion creates credit crunches.So, there appears not to be a heroic role for intermediaries at all! But if this is really true, why are these weird creatures still in business, even despite the fierce competition amongst themselves? Are they truly dinosaurs, completely unaware of the extinction they will face in the very near future? This seems highly unlikely. Section 3 showed and argued that the financial intermediaries are alive and kicking. They have a crucial and even increasing role within the real-world economy. They increasingly are linked up in all kinds of economic transactions and processes.Therefore, the next section is a critical assessment of the modern theory of financial intermediation in the face of the real-world behavior and impact of financial institutions and markets. 5. Critical Assessment Two issues are of key importance. The first is about why we demand banks and other kinds of financial intermediaries. The answer to this question, in our opinion, is risk management rather than informational asymmetries or transaction costs. Economies of scale and scope as well as the delegation of the screening and monitoring function especially apply to dealing with risk itself, rather than only with information.The second issue that matters is why banks and other financial institutions are willing and able to tak e on the risks that are inevitably involved in their activity. In this respect, it is important to note that financial intermediaries are able to create comparative advantages with respect to information acquisition and processing in relation to their sheer size in relation to the customer whereby they are able to manage risk more efficiently. We suggest Schumpeter’s view of entrepreneurs as innovators and Merton’s functional perspective of financial intermediaries in tandem are very helpful in this respect.One should question whether the existence of financial intermediaries and the structural development of financial intermediation can be fully explained by a theoretical framework based on the neo-classical concept of perfect competition. The mainstream theory of financial intermediation, as it has been developed in the past few decades, has – without any doubt – provided numerous valuable insights into the behavior of banks and other intermediaries and their managers in the financial markets under a broad variety of perceived and observed circumstances.For example, the â€Å"agency revolution†, unleashed by Jensen and Meckling (1976), focussed on principal-agent relation asymmetries. Contracts and conflicts of interest on all levels inside and outside the firm in a world full of information asymmetries became the central theme in the analysis of financial decisions. Important aspects of financial decisions, which previously went unnoticed in the neo- classical theory, could be studied in this approach, and a â€Å"black box† of financial decision making was opened. But the power of the agency heory is also her weakness: it mainly explains ad hoc situations; new models based on different combinations of assumptions continuously extend it. 4 In nearly all 4 To this extent, one can draw a striking parallel with the traditional Newtonian view of the natural world. The planetary orbits round the Sun can be explained very well with the Newtonian laws of gravitation and force. Apparent anomalies in the orbital movement of Neptune turned out to be caused by the influence of an hitherto unknown planet (Pluto).Its (predicted) astronomical 21 22Critical Assessment financial decisions, information differences and, as a consequence, conflicts of interest, play a role. Focussed on these aspects, the agency theory is capable of investigating nearly every contingency in the interaction of economic agents deviating from what they would have done in a market with perfect foresight and equal incentives for all agents. However, the applications from agency theory have mainly anecdotal value; they are tested in a multitude of specific cases.But the theory fails to evolve into a general and coherent explanation of what is the basic function of financial intermediaries in the markets and the economy as a whole. Various researchers interested in real world financial phenomena have pointed out that banks in particular do make a difference. They come up with empirical evidence that banks are special. For example, Fama (1985) and James (1987) analyze the incidence of the implicit tax due to reserve requirements. Both conclude that bank loans are special, as bank CDs have not been eliminated by non-bank alternatives that bear no reserve requirements.Mikkelson and Partch (1986) and James (1987) look at the abnormal returns associated with announcements of different types of security offerings and find a positive response to bank loans. Lummer and McConnel (1989) and Best and Zhang (1993) have confirmed these results. Slovin et al. (1993) look into the adverse effect on the borrower in case a borrower’s bank fails. They find Continental Illinois borrowers incur significant negative abnormal returns during the bank’s impending failure. Gibson (1995) finds similar results when studying the effects of the health of Japanese banks on borrowers.Gilson et al. (1990) find that the likelihood o f a successful debt restructuring by a firm in distress is positively related to the extent of that firm’s reliance on bank borrowing. James (1996) finds that the higher the proportion of total debt held by the bank, the higher the likelihood the bank debt will be impaired, and so the higher the likelihood that it participates in the restructuring. Hoshi et al. (1991) for Japan and Fohlin (1998) and Gorton and Schmid (1999) for Germany also find that in these countries, banks provide valuable services that cannot be replicated in capital markets.Current intermediation theory treats such observations often as an anomaly. But, in our perspective, it relates rather to the insufficient explanatory power of the current theory of financial intermediation. observation was regarded as an even greater victory for Newtonian theory. However, it took Einstein and Bohr to reveal that this theory is only a limit case as it is completely unable to deal with the behavior of microparticles (s ee Couper and Henbest, 1985; Ferris, 1988; Hawking, 1988). Critical Assessment23The basic reason for the insufficient explanatory power of the present intermediation theory has, in our opinion, to be sought in the paradigm of asymmetrical information. Markets are imperfect, according to this paradigm, because the ultimate parties who operate in the markets have insufficient information to conclude a transaction by themselves. Financial intermediaries position themselves as agents (â€Å"middlemen†) between savers and investors, alleviating information asymmetries against transaction costs to a level where total savings are absorbed by real investments at equilibrium real interest rates.But in the real world, financial intermediaries do not consider themselves agents who intermediate between savers and investors by procuring information on investors to savers and by selecting and monitoring investors on behalf of savers. That is not their job. They deal in money and in risk, n ot in information per se. Information production predominantly is a means to the end of risk management. In the real world, borrowers, lenders, savers, investors and financial supervisors look at them in the same way, i. . risk managers instead of information producers. Financial intermediaries deal in financial services, created by themselves, mostly for their own account, via their balance sheet, so for their own risk. They attract savings from the saver and lend it to the investor, adding value by meeting the specific needs of savers and investors at prices that equilibrate the supply and demand of money. This is a creative process, which cannot be characterized by the reduction of information asymmetries.In the intermediation process the financial intermediary transforms savings, given the preferences of the saver with respect to liquidity and risk, into investments according to the needs and the risk profile of the investor. It might be clear that for these reasons the views of Bryant (1980) and of Diamond and Dybvig (1983) on the bank as a coalition of depositors, of Akerlof (1970) and Leland and Pyle (1977) on the bank as an information sharing coalition, and of Diamond (1984) on the bank as delegated (†¦ monitor, do not reflect at all the view of bankers on their own role. Nor does it reflect the way in which society experiences their existence. Even with perfect information, the time and risk preferences of savers and investors fail to be matched completely by the price (interest rate) mechanism: there are (too many) missing markets. It is the financial intermediary that somehow has to make do with these missing links. The financial intermediary manages risks in order to allow for the activities of other types of households within the economy.One would expect that the theory of the firm would pay ample attention to the driving forces behind entrepreneurial activity and could thus explain in more general terms the existence of financial intermedia tion as an entrepreneurial 24Critical Assessment activity. However, this is not the focus of that theory. The theory of the firm is preoccupied with the functioning of the corporate enterprise in the context of market structures and competition processes.In the wake of Coase (1937), the corporate enterprise is part of the market structure and can even be considered as an alternative for the market. This view laid the foundation for the transaction cost theory (see Williamson, 1988), for the agency theory (Jensen and Meckling, 1976), and for the theory of asymmetric information (see Stiglitz and Weiss, 1981 and 1983). Essential in the approaches of these theories is that the corporate enterprise is not treated as a â€Å"black box†, a uniform entity, as was the case in the traditional micro-economic theory of the firm.It is regarded as a coalition of interests operating as a market by itself and optimizing the opposing and often conflicting interests of different stakeholders (clients, personnel, financiers, management, public authorities, non-governmental organizations). The rationale of the corporate enterprise is that it creates goods and services, which cannot be produced, or only at a higher price, by consumers themselves. This exclusive function justifies transaction costs, which are seen as a form of market imperfection.The mainstream theory of the firm evolved under the paradigm of the agency theory and the transaction costs theory as a theory of economic organization rather than as a theory of entrepreneurship. A separate line of thinking in the theory of the firm is the dynamic market approach of Schumpeter (1912), who stressed the essential function of entrepreneurs as innovators, creating new products and new distribution methods in order to gain competitive advantage in constantly developing and changing markets.In this approach, markets and enterprises are in a continuous process of â€Å"creative destruction† and the entrepreneurial function is pre-eminently dynamic. Basic inventions are more or less exogenous to the economic system; their supply is perhaps influenced by market demand in some way, but their genesis lies outside the existing market structure. Entrepreneurs seize upon these basic inventions and transform them into economic innovations. The successful innovators reap large short-term profits, which are soon bid away by imitators.The effect of the innovations is to disequilibrate and to alter the existing market structure, until the process eventually settles down in wait for the next (wave of) innovation. The result is a punctuated pattern of economic development that is perceived as a series of business cycles. Financial intermediaries, the ones that mobilize savings, allocate capital, manage risk, ease transactions, and monitor firms, are essential for economic growth and development. That is what Joseph Schumpeter argued early in this century.Now there is evidence to support Schumpeter’ s view: financial services promote development (see King and Critical Assessment25 Levine, 1993; Benhabib and Spiegel, 2000; Arestis et al. , 2001; Wachtel, 2001). The conceptual link runs as follows: Intermediaries can promote growth by increasing the fraction of resources society saves and/or by improving the ways in which society allocates savings. Consider investments in firms. There are large research, legal, and organizational costs associated with such investment.These costs can include evaluating the firm, coordinating financing for the firm if more than one investor is involved, and monitoring managers. The costs might be prohibitive for any single investor, but an intermediary could perform these tasks for a group of investors and lower the costs per investor. So, by researching many firms and by allocating credit to the best ones, intermediaries can improve the allocation of society’s resources. Intermediaries can also diversify risks and exploit economies of scale .For example, a firm may want to fund a large project with high expected returns, but the investment may require a large lump-sum capital outlay. An individual investor may have neither the resources to finance the entire project nor the desire to devote a disproportionate part of savings to a single investment. Thus profitable opportunities can go unexploited without intermediaries to mobilize and allocate savings. Intermediaries do much more than passively decide whether to fund projects. They can initiate the creation and transformation of firms’ activities.Intermediaries also provide payment, settlement, clearing and netting services. Modern economies, replete with complex interactions, require secure mechanisms to settle transactions. Without these services, many activities would be impossible, and there would be less scope for specialization, with a corresponding loss in efficiency. In addition to improving resource allocation, financial intermediaries stimulate individ uals to save more efficiently by offering attractive instruments that combine attributes of depositing, investing and insuring.The securities most useful to entrepreneurs – equities, bonds, bills of exchange – may not have the exact liquidity, security, and risk characteristics savers desire. By offering attractive financial instruments to savers – deposits, insurance policies, mutual funds, and, especially, combinations thereof – intermediaries determine the fraction of resources that individuals save. Intermediaries affect both the quantity and the quality of society’s output devoted to productive activities. Intermediaries also tailor financial instruments to the needs of firms.Thus firms can issue, and savers can hold, financial instruments more attractive to their needs than if intermediaries did not exist. Innovations can also spur the development of financial services. Improvements in computers and communications have triggered financial inn ovations over the past 20 years. Perhaps, more important for developing countries, growth can increase the demand for financial services, sparking their adoption. 26Critical Assessment In translating these concepts to the world of financial intermediation, one ends up at the so-called functional perspective (see Merton, 1995a).The functions performed by the financial intermediaries are providing a transactions and payments system, a mechanism for the pooling of funds to undertake projects, ways and means to manage uncertainty and to control risk and provide price information. The key functions remain the same, the way they are conducted varies over time. This looks quite similar to what Bhattacharya and Thakor (1993) regard as the qualitative asset transformation operations of financial intermediaries, resulting from informational asymmetries.However, in our perspective, it is not a set of operations per se but the function of the intermediaries that gives way to their presence in t he real world. Of course, we are well aware of the fact that in the real-world the everyday performance of these different functions can be experienced by clients as – to quote Boot (2000) – †an annoying set of transactions†. The key functions of financial intermediaries are fairly stable over time. But the agents that are able and willing to perform them are not necessarily so. And neither are the focus and the instruments of the financial supervisors.An insurance company in 2000 is quite dissimilar in its products and distribution channels from one in 1990 or 1960. And a bank in Germany is quite different from one in the UK. Very different financial institutions and also very different financial services can be developed to provide the de facto function. Furthermore, we have witnessed waves of financial innovations, consider swaps, options, futures, warrants, asset backed securities, MTNs, NOW accounts, LBOs, MBOs and MBIs, ATMs, EFTPOS, and the distribut ion revolution leading to e-finance (e. . see Finnerty, 1992; Claessens et al. , 2000; Allen et al. , 2002). From this, financial institutions and markets increasingly are in part complementary and in part substitutes in providing the financial functions (see also Gorton and Pennacchi, 1992; Levine, 1997). Merton (1995a) suggests a path of the development of financial functions. Instead of a secular trend, away from intermediaries towards markets, he acknowledges a much more cyclical trend, moving back and forth between the two (see also Rajan and Zingales, 2000).Merton argues that although many financial products tend to move secularly from intermediaries to markets, the providers of a given function (i. e. the financial intermediaries themselves) tend to oscillate according to the product-migration and development cycle. Some products also move in the opposite direction, for example the mutual fund industry changed the composition of the portfolios of US households substantially, that is, from direct held stock to indirect investments via mutual funds (Barth et al. , 1997). In our view, this mutual Critical Assessment27 und revolution in the US – and elsewhere – is a typical example of the increasing role for intermediated finance in the modern economy. Thus, in our opinion, one should view the financial intermediaries from an evolutionary perspective. They perform a crucial economic function in all times and in all places. However, the form they have changes with time and place. Maybe once they were giants, dinosaurs so to say, in the US. Nowadays, they are no longer that powerful but they did not lose their key function, their economic niche.Instead, they evolved into much smaller and less visible types of business, just like the dinosaurs evolved into the much smaller omnipresent birds. Note that most of the theoretical and empirical literature actually refers to banks (as a particular form of financial intermediary) rather than to all finan cial institutions conducting financial intermediation services. However, the bank of the 21st century completely differs from the bank that operated in most of the 20th century. Both its on- and off-balance sheet activities show a qualitatively different composition.That is, away from purely interest related lending and borrowing business towards fee and provision based insurance-investment-advice-management business. At the same time, the traditional insurance, investment and pension funds enter the world of lending and financing. As such, financial institutions tend to become both more similar and more complex organisations. Thus, it appears that the traditional banking theories relate to the creation of loans and deposits by banks, whereas this increasingly becomes a smaller part of their business.This is not only because of the changing composition of their income structure (not only interest-related income but also fee-based income). Also it is the case because of the blurring borders between the operations of the different kinds of financial intermediaries. Therefore, we argue first that the loan and the deposit only are a means to an end – which is acknowledged both by the bank and the customer – and that the bank and the non-bank financial intermediary increasingly develop qualitatively different (financial) instruments to manage risks.Questioning whether informational asymmetry is the principal explanatory variable of the financial intermediation process – what we do – does not imply denial of the pivotal role information plays in the financial intermediation process. On the contrary, under the strong influence of modern communication technologies and of the worldwide liberalization of financial services, the character of the financial intermediation process is rapidly changing. This causes a – until now only relative – decrease in traditional 28Critical Assessment forms of financial intermediation, namely in on-balance sheet banking.But the counterpart of this process – the increasing role of the capital markets where savers and investors deal in marketable securities thanks to world wide real time information – would be completely unthinkable without the growing and innovating role of financial intermediaries (like investment banks, securities brokers, institutional investors, finance companies, investment funds, mergers and acquisition consultants, rating agencies, etc. ). They facilitate the entrepreneurial process, provide bridge finance and invent new financial instruments in order to bridge different risk preferences of market parties by means of derivatives.It would be a misconception to interpret the relatively declining role of traditional banks, from the perspective of the financial sector as a whole, as a general process of disintermediation. To the contrary, the increasing number of different types of intermediaries in the financial markets and their increasing importance as financial innovators point to a swelling process of intermediation. Banks reconfirm their positions as engineers and facilitators of capital market transactions.The result is a secular upward trend in the ratio of financial assets to real assets in all economies from the 1960s onwards (see Table 3). It appears that informational asymmetries are not well-integrated into a dynamic approach of the development of financial intermedation and innovation. Well-considered, information, and the ICT revolution, plays a paradoxical role in this process. The ICT revolution certainly has an excluding effect on intermediary functions in that it bridges informational gaps between savers and investors and facilitates them to deal directly in open markets.This function of ICT promotes the exchange of generally tradable, thus uniform products, and leads to the commoditizing of financial assets. But the ICT revolution provokes still another, and essentially just as revolutionary, effect , namely the customizing of financial products and services. Modern network systems and product software foster the development of ever more sophisticated, specific, finance and investment products, often embodying option-like structures on both contracting parties which are developed in specific deals, thus â€Å"tailor made†, and which are not tradable in open markets.Examples are specific financing and investment schemes (tax driven private equity deals), energy finance and transport finance projects, etc. They give competitive advantages to both contracting parties, who often are opposed to public knowledge of the specifics of the deal (especially when tax aspects are involved). So, general trading of these contracts is normally impossible and, above all, not aimed at. (But imitation after a certain time lag can seldom be prevented! Informational data (on stock prices, interest and exchange rates, commodity and energy prices, Critical Assessment29 macroeconomic data, etc. ) are always a key ingredient of these investment products and project finance constructions. In this respect, information is attracting a pivotal role in the intermediation function because it is mostly the intermediation industry, not the ultimate contract parties that develop these new products and services. The function of information in this process, however, differs widely from that in the present intermediation