Advanced Financial Reporting Essay Example | Topics and Well Written Essays - 2000 words

Progressed Financial Reporting - Essay Example Another method of accomplishing development is through Merger and Acquisition (abridged as M&A). The previous is additionally known is natural development where the firm uses its own assets (held profit, stores and overflow, or value capital) for financing development. The later is otherwise called inorganic development where the acquirer firm purchases the benefits and liabilities of the target(s) as on a given date (Sherman, 2010, p.1). Accordingly, M&A are outer development system that picks up notoriety chiefly because of globalization. It has become a significant a significant path for firms to grow their item portfolios and increasing new markets. M&A likewise encourages the firm’s to secure information, most recent innovation and improved administration abilities. What's more, M&A has been seen as incredibly effective for explicit parts like pharmaceuticals where broad Research and Developments are required. Research and development doesn't just require enormous capital venture yet in addition requires information in applicable regions with the goal that the objective item stays skilled on worldwide scale (Kumar and Yadav, 2005, pp.51-63). The fundamental intention in any M&A is to encounter a cooperative energy in existing activities just as benefit of the organizations. Be that as it may, it is additionally essential to take note of that not the sum total of what M&A have been effective before and therefore some neglected to augment esteems prompting gigantic capital misfortunes (Frensch, 2007, pp.48-49). In July 2013, TD Travel of Cheshire gained Hotel scene, the lodging booking organization of Bristol and therefore made another substance by rebranding called Corporate Travel International. The consolidated element is relied upon to support incomes for both the organizations to more than ?100 million and furthermore utilize in excess of 160 staff across various units. Concerning the above late securing, the goal of this examination is to talk about with reasons regarding why such business mix has occurred and furthermore clarify the likely results or issues that the organizations may look in future. Merger and Acquisition Strategy As on July 12, 2013, TD Travel finished the obtaining of Hotel Scene. The acquirer for this situation is TD Travel where as the gained is Hotel scene. The arrangement was account and upheld by private value venture firm LDC. The procurement is required to make one of the biggest and autonomous corporate travel and booking specialist substance of UK. The organizations have chosen to re-brand the joined business into Corporate Travel International. It is additionally expected that such M&A will make a cooperative energy that can support the incomes of the new joined business element of more than ?100 million. The organizations are additionally hoping to utilize more than 160 staffs in various branches situated across London, Liverpool, Wilmslow, Bristol, and Hull. From the public statement of the organization it was discovered that the executive of LDC is idealistic about the M&A and has suggested the arrangement. He additionally accepts that the supervisory crew of TD Travel is experienced and spurred and along these lines holds tremendous potential to take the new substance to the following degree of invigorating development direction. With respect to financing of the arrangement, a bundle of working capital and senior obligation offices was given by Lloyds Banking Group’s Finance and Acquisition group. The arrangement was basically driven by Relationship Director of TD Travel, Richard Townsend. The duties of lead supervisor and warning of the arrangement was given to BDO LLP which is additionally one of the most rumored Accountancy and Business

9/11 Research Paper Essay

The official record of 9-11 doesn't give a sound clarification of where any very hot material in the WTC breakdown heaps could have originated from, nor does it give a sound clarification for the strangely relentless warmth at Ground Zero. Various misdirecting and misleading proclamations are spread to cover this quandary of the official record. In Part I a few sources are accumulated identifying with the especially high temperatures, as well as to the tireless warmth at Ground Zero. The vast majority of these sources assembled know quite a bit about science or in building. A few sources are proclamations by individuals who took an interest in the administration of Ground Zero. The foundation of a portion of the sources is given in detail. In the subsection â€Å"Thermal images† a few highlights of distributed warm pictures are tended to. Some of them are in strife with the suspicion that the high temperatures/steady warmth marvel was expected exclusively to consuming flames See more: Experiment on polytropic process Essay In Part II disinformation systems, procedures and contentions are tended to that effectively avoid an exhaustive open discussion about the wonders of â€Å"molten steel†, astoundingly high temperatures and diligent warmth at Ground Zero. The articles and portions examined are from NIST, from supposed â€Å"debunking† sites, and from standard broad communications. It will be demonstrated that the announcements and proposals by NIST and â€Å"debunkers† in regard of these marvels are misdirecting or wrong. In a portion of the cases an inappropriate or deluding proclamations or proposals are legitimately expressed. In these cases it will be demonstrated why an announcement or proposal isn't right or deceiving, and signs will be talked about that the creators more likely than not known about the way that their announcements or recommendations aren't right or misdirecting. These announcements or recommendations have the nature of disinformation1. Concerning different cases it will be indicated that deceptive recommendations are spread by the utilization of language that is deliberately manipulative. Notwithstanding the articles and portions that are straightforwardly identified with the high temperature/persevering warmth wonders at Ground Zero some broad communications articles are talked about that manage these marvels certainly by managing the more extensive subject.

Raising Capital for an Under-Performing Business

Raising Capital for an Under-Performing Business When starting a new business, you must have done your homework: how to take care of the logistics, the smaller details such as compliance documentation, and even the ways on how you can raise capital that you need to augment the available money. You must have looked into every possible avenue to raise the exact amount of capital you need to get your business off the ground and start earning money.That may have been easy. But what if, in the course of your business, you realize that you are having a harder time than usual to get back the amount of capital you initially invested? What if your business was declared to be underperforming? The most logical answer and solution that you may hear would be to inject more capital into it so that you can effect changes and innovations to try and turn things around.It’s a sound suggestion, and even your business advisors will most likely agree. However, there is that small problem of how to go about raising capital, especially considering the fact that the business is not doing as well as expected. © Shutterstock | DRogatnevThis guide will 1) show you the reality underperforming businesses have to face, 2) what to do before raising capital, and 3) how under-performing business can raise capital.THE REALITY OF UNDERPERFORMING BUSINESSESA business is considered to be underperforming if its potential just does not align with reality. In simpler terms, an underperforming business is one that is on its way to failing. If left unchecked, it might end up wrapping up its operations and declaring bankruptcy.When asked, underperforming businesses may come up with a lot of reasons on why they are failing. According to author Ian Altman, the top 3 excuses of companies for their lower-than-expected performance are:Their business is different, hence, general business concepts don’t apply to them. This perception comes with the risk of being unyielding or closed to new ideas and concepts. They stick to what they think is best, without entertaining other possibilities that could improve bus iness performance.They are used to a certain way of doing business, and they do not think they can try another tack. This is another excuse for being close-minded in business. Business concepts are constantly evolving, and refusal to evolve along with it means you will be left behind, including the performance of your business.They do not have enough resources, such as time, manpower and money. This is the most common excuse given by businesses that are not performing as expected. They blame it on lack of this or that. Money is a usual issue, and they often say, “if only we had more cash or capital, then we would be able to improve operations and increase the performance of the company”.We will not go in detail when it comes to the reasons for the poor performance of companies, but we will address that last excuse: lack of capital. If only they had more capital, they’ll definitely be able to turn the failing company around.Now here’s the catch: not a lot of investors or fina ncial institutions are willing to invest in a company that appears to be failing. Lenders on the other hand will also be very hesitant to work with such companies. They are most likely to think that it is a poor investment, one that won’t give them a return on investment.Large and established companies may have an easier time, but the small to medium-sized businesses are often struggling when it comes to raising capital. It is common to find that when they were just starting out and looking to raise capital, they may have already had a hard time attracting investors and capital providers to fund them. It is bound to be even tougher to convince existing or new investors to pump more money in a small company that is showing signs of struggle in performance. It’s certainly not going to be easy.BEFORE ACTIVELY RAISING CAPITALIt may have pained you, but it is time to face facts. The numbers don’t lie, and you have to accept the reality that your business is underperforming, and if nothing is done, it may be on its way to failure. Do you immediately decide that you need more capital, and proceed straight to employing capital-raising techniques? You have to stop for a while and check a few things first to ensure that you don’t find yourself in the same situation you are in.Before spending any more money on the business, assessment of the current state of affairs in the business is crucial.Determine the cause of cash and capital shortageMore often than not, a sure sign that a business is in trouble is a cash crisis. It may suddenly find itself having trouble paying its employees’ salaries and wages, or even fund the working capital of the company. Try to identify why you are experiencing this shortage, in order for you to evaluate whether the cause is something that you can have a solution for. Assess the viability of business in the futureYou have to ascertain whether the company is going to be worth saving. It doesn’t make a whole lot of business sense i f you proceed to raise capital in order to save a business that will not really be viable several short months into the future, does it?Identify other possible solutionsAt this point, the most important question you have to address is this: is raising capital the only way for your business to regain its footing and improve its performance? What if there are other methods that you can employ in order to address the problem, without resorting to raising additional capital? Are these methods within reach?Determine how much capital is neededNaturally, you should know how much capital you will need in order to turn things around for your underperforming business. You also have to take into account the cost of capital once a potential investor has been found.Identify the aspects of the business that may appeal to an external investorYou have to anticipate the possibility that you may fail to raise capital on your own, so you have to resort to external sources, which are commonly outside i nvestors. Considering the fact that your business is already underperforming, you have to expect to be asked to defend your position, or provide justifications on why investors should listen to you and give their money to use as capital.By identifying the commercial angles or benefits that you can use to attract the interest of an investor, you will be better prepared when you have to convince them to trust you with their money.HOW UNDERPERFORMERS CAN RAISE CAPITALIf you are determined to turn things around and you think that your underperforming business has a chance of becoming profitable and growing in the future, then you should next look into ways on how you can raise capital.Be capital-ready“Capital-ready” means the state where a business is adequately prepared to raise capital. Preparedness is a good sign that you are ready to take the challenge of improving the performance of the business, if only you will have additional capital to work with.The Business Strategy Blog s uggests the following documentation to be prepared in order to show how capital-ready you are.A business plan for the next one to three years, listing down clear strategies that you will undertake to achieve business goals.A financial model for the period covered in the business plan. This will show whether the business is viable, or whether it will turn in profits in its future operations. It is also in this model that you will indicate the amount of capital required.Updated due diligence business records that will lend your business and your plan credibility in the eyes of potential investors.An exit plan for your business, with emphasis on plans on repayment of outside capital sources. Naturally, potential investors and lenders want to cover all their bases, so if you can give them some assurance that they won’t be left high and dry when the business wraps up its operations, then you are increasing your chances of convincing them to trust you.Look internallyIt may be possible f or you to “raise” cash internally. Here, you have to seek self-help opportunities to improve cash position. They may undertake any of the following:Aggressive management of working capital. “Working capital” refers to the capital that the business utilizes in its day-to-day operations, and is indicative of the company’s efficiency. It is also the figure that represents the short-term financial health (liquidity) of a company. If the business has a positive working capital, operations can be sustained so the extra capital needed is for growth.  In accounting records, working capital considers the current assets and current liabilities of the company, encompassing items such as cash, accounts receivables, inventory, accounts payable and current debts or obligations due.  Out of the several strategies of managing working capital, the best approach would be the aggressive one if you are looking to raise capital internally. Aggressive working capital management means that you w ill focus on profitability. Therefore, you will depend greatly on trade credit and short-term finances, keeping your current assets (cash, accounts receivables and inventory) low, or at just-enough levels.  Needless to say, this is a very high-risk strategy. However, as long as you ensure the smoothness of the operating cycle, then it can help you raise the capital that you need for your underperforming business.Reduction of operating costs. Look at your current operations. Are there areas where you can employ cost-cutting measures, so you can use the savings for other purposes instead? This calls for a study of your business processes and the costs incurred at every turn. Evaluate whether you are spending too much on a process, and identify the areas that you can stop or downgrade. An organizational audit may reveal that some employees on your payroll have redundant job descriptions. You may consider reassigning tasks to employees or dropping some items from the payroll. If your as sessment reveals that you can save money by shortening your production process without compromising quality of your final products, you may decide to do so after realizing how much savings you can get out of it.Sell or divest idle assets. Take a look at your current inventory of fixed assets. There may be some assets that are underutilized or completely idle, and you may even be incurring maintenance costs on them. In short, you are spending money on them, but you’re not gaining any benefit from them. Consider selling these assets and add the proceeds to your capital.Sell or divest underperforming business segments or divisions. If your business is comprised of several business segments, identify those that are not performing well, or even incurring losses for your business. Conducting further study is advised, so you can decide on whether to close some segments or not.Debt restructuring. This is a popular solution for companies that are facing cash flow problems. It involves rene gotiating the terms of existing debts that are already considered to be delinquent. There are several reasons for debt restructuring, and one of them is to raise capital.Through debt restructuring, an underperforming business can avoid defaulting on an existing debt or obligation. They may also negotiate for lower interest rates, which translates to savings and a way to manage working capital more aggressively. You may also negotiate that your existing creditors or lenders will not have a share in your profits, as long as you meet your loan payments as they fall due.Look to external sources of capitalIf after looking in your own company for ways to raise capital and you still don’t have the amount that you seek, it is time to look outside of the company.Good news: there are actually people who make a living from investing in underperforming business. Your job is to find them and convince them to invest in your business.These types of investors are actively looking for underperform ers, or businesses that incur more losses than gains, and evaluate their potential for a turnaround. Usually, they will buy out the founder or owner of the business, and send in their own people. Or they could hire a turnaround professional. In some cases, the investor will not send his own people, but choose to back the current management team of the company instead. What do you do when you find these potential sources of capital? Keep in mind that the hardest part is to convince them to back your idea of turning your business around. This will ensure that you still have control over your business. Here’s what to do with these external sources of capital.Know who your potential investors are. Carry out a small some research on their expectations from you and your business. This is especially if you do not have a prior business relationship with them. Knowing their expectations will enable you to prepare your proposal in such a way that will easily convince them to invest in your business.When you are seeking external sources of capital, you have to position your business for capital-raising. Make sure that you are ready to receive the capital and take your business back to where it belongs. Know exactly what you will do with the money once it hits your bank account.Highlight the benefits to your potential investors. What is in it for them if they invest in your business? What can they expect to get if they invest on your business, despite the fact that it is underperforming? Investors expect a return on their investment, so it would be a good idea to highlight that part for them.Let them know how their money will be used. The investors will obviously want to know where their money will go, because they, too, want to ascertain whether they are making a good investment or not. You’d want to be specific on the activities you will carry out, so give them details of your action plan, not just the general idea mapped out on your business plan.Be honest. Investo rs are shrewd. They can easily tell right away whether you are being up front with them. Avoid sugarcoating. Tell them exactly what you need the additional capital for, and provide concrete backup for your claims.Do not be greedy. Ask only what you need. You have a plan in mind, you need money for it. Therefore, you should stick to that plan, including the costs you expect to incur in its execution. Asking for more will only give your business a bad impression (as if the fact that it is already performing below par is not already basis for a bad impression in the eyes of potential investors) so do not aggravate it.Engage the help of an external advisor who is an expert in turnaround managementThis is actually a good idea, especially if you already have your hands full trying to contain the crisis within the business. At times, you have to admit that you need help, and a turnaround professional can give you helpful input on how you can raise capital.Underperforming businesses have a long and tough road ahead of them, and one of the biggest obstacles is raising capital. Expect to put a lot of work into raising capital, especially if you intend to obtain them from external sources. Do not expect to have an easy time of it, but do not lose heart, because it can still be done.

Integrative And Analytical Tools For The Business

Integrative and Analytical Tools To be successful in any modern business there are a few things that must take place. The company has to get oriented; it needs to identify the primary objectives of the business, as well as define the scope, and finally perform both internal and external analysis of the operations. Each of these things has their place and since our company is one of the best out there, the first three have already been established. What we are here today to do is to perform the analysis portion. There are many different forms of analysis tools for the company to choose from. Some of the heavy hitters are the SWOT or strengths, weaknesses, opportunities and threat tool. The MOST analysis tool focuses on the mission, the objectives, the strategies and the tactics in order for the company to meet its needs. The last tool that will be discussed here is the PEST analytical tool. PEST stands for political, economic, sociological, and technological. Breaking each o ne of these into more details can show the level of value each one has in the analytical world. The SWOT analysis is most often used in the beginning stages of a company. The main area of focus is the external and internal factors to identify where the best opportunities for improvement are. The SWOT tool also helps point out danger areas and where improvements can be made. The first area the tool analyze are the company s strength. This is where your company has an advantage over theShow MoreRelatedDescription of Conjoint Analysis1257 Words   |  5 Pagespopularity is conjoint analysis, a quantitative methodology that is discussed further below, followed by a summary of the research and important findings in the conclusion. Review and Discussion Description of Conjoint Analysis and Examples of Business Applications Conjoint analysis is a quantitative methodology that measures the perceived values of various possible product designs (Calantone Di Benedetto, 1990). Respondents participating in conjoint analyses view several variations in productRead MoreDavid Osborn s Applied Imagination By Alex Osborn1025 Words   |  5 PagesIn the chapter XIX of his book, â€Å"Detailed procedures of Brainstorming,† he demonstrates brainstorming as a tool for the creative collaboration of groups. Brainstorming has been used as one of the most well known and useful tool of creative problem solving. Its fame stemmed from the persistent and solid need to develop and improve productivity of groups. Osborn, too, has drawn a number of tools and methodologies to creative problem solving. His claims regarding brainstorming and creative problem solvingRead MoreDetailed Procedures Of Brainstorming By Alex Osborn1057 Words   |  5 Pages In chapter XIX of his book, â€Å"Detailed procedures of Brainstorming,† he demonstrates brainstorming as a tool for the creative collaboration of groups. Brainstorming has been used as one of the most well-known and useful tools of creative problem solving. Its fame stemmed from the persistent and solid need to develop and improve productivity of groups. Osborn, too, has drawn a number of tools and methodologies to creative problem solving. His claims regarding brainstorming and creative problem solvingRead MoreThe University Of A Private Higher Learning Institution Located At St. Louis County, Missouri Essay1039 Words   |  5 PagesThe Walker College of Health provides online and on-campus degree programs in nursing, music therapy, rehabilitation counseling, occupational therapy and health care management. The School of Business offers online and on-campus programs in accounting, marketing, cyber security, information systems and business administration. The university operates educational centers in Lake Saint Louis and Sunset Hills in Missouri as well as the Scott Air Force Base in Illinois. 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Interdisciplinary studies allows me to analyze, educate, and integrate cultural in a diverse communities. This semester I am taking an introduction to interdisciplinary studies, an interpersonal skills in leadership, analytical and information literacy, interdisciplinary critical thinking, and a capstone internship partnership courses, which helps me professionally. My capstone internship is, in counseling, at an elementary school. I like volunteering and working withRead MoreDesign Thinking and How It Will Change Management Educati on: An Interview and Discussion8683 Words   |  35 Pagesand services is a critical component of business competitiveness, to the extent that major companies such as Procter and Gamble have committed themselves to becoming design leaders. Beyond product and service design, however, design thinking—approaching management problems as designers approach design problems—may have important implications for management, an emerging prospect that has begun to gain recognition in both academic literature and the business press. In The Sciences of the ArtificialRead MoreBalanced Scorecard at Futura Industries1256 Words   |  5 Pagesareas has proven to be the most effective in keeping Futura focused on delivering excellent customer experiences that continue to drive customer loyalty and repeat sales (Gumbus, Susan, 2003). Futura management has also created an analytical framework called the Cool Tool that shows the companys financial performance on a monthly basis and also a llows for comparison of customers based on profitability contributions (Gumbus, Susan, 2003). These analytics and metrics of performance also serve to further

The Stress of Attending College - 1326 Words

Deciding to go to college is the hardest decision a student can make and the most stressful. Caused by many reasons, the stress is present whether one is in their first year of college or their last. Deciding to attend college is frightening for students; this is because it means going into the world and growing up. Along with the decision come a number of stressful responsibilities and changes that a student has to put up with. The reasons for so much stress fall into one of three categories: academic stress, which has anything to do with studying for classes, financial stress, which has to do with paying for school, and personal stress. Many students experience stress, and they have to combine their busy lives and the demands of college and still make time for themselves. We all experience stress in college getting ready for exams, completing papers, or adjusting to college life. We all know that being stressed for a long time may cause health issues. Although stress can be harmful at times, it can also be good and stimulating. Stress can also be good, because of facing new challenges helps students grow up and learn new things. Dealing with academic and personal stressors is the hardest part about college, and it will interfere with personal life and help experiment life’s options. A major academic stressor that college student have are grades. In college, in order to get into a certain program for the career students are competing with each other due to grades.Show MoreRelatedPersonal Responsibility and College Success1282 Words   |  6 PagesPersonal Responsibility and College Success Cody Murphy GEN/200 October 16, 2012 Alyse Stone Personal Responsibility and College Success Thesis Statement Some people believe that they can keep their same routines and successfully complete a college degree. Students must analyze and adjust their personal responsibilities to be successful while attending college. 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At the very last minute his roommate awakens him. It’s only another anxiety dream. The very fact that dreams like Jack’s are common suggests that college is a stressful situation for young people. The cause of this stress can be academic, financial, and personalRead MoreCollege Education Should Be Free933 Words   |  4 Pagesdegree. These institutes are community college and technology centers. These institutes offer degrees for less money, which makes it affordable for anybody to attend who wants to. Recently, Obama stated that he is trying to make community college free for a student s to have the option to get a college education (Paquette). College education should be free for anybody who wants to take the time to learn n ew things like public high school. Community colleges offer associates and bachelor’s degree

Lot of problems Free Essays

People of Choral are facing lot of problems due to lack of bridge. Ferry service Is available till 2. 00 am and if there is any medical emergency, people have to face lot of problems. We will write a custom essay sample on Lot of problems or any similar topic only for you Order Now It is noticed that many women’s at the time of their pregnancy had stayed outside Choral with fear. A long queue Is found waiting for ferry. There are lots of fights amongst the people. Many people from Blowhole, Mayhem sides use this ferry for coming to Pianism. One can see fights between villagers from Choral and the outsiders. The persons who are most affected are the students. Students have to Walt or many hours at ferry stop because of which they reach late. BENEFITS Benefits which Islanders will get from the construction of bridge are:- Choral Island will be developed. Transport problem will be automatically solved. The pressure that Choral ferry has to bear will be reduced. Etc If this ferry is used for tourists who come to enjoy scenic beauty of Choral Island, huge revenue can be earned by the government. After completion of this bridge the distance from Pianism to Bucolic will be reduced by around km and hence pressure on Mona Bridge will be reduced. All these benefits will depend on, from which way the bridge will be instructed. Government has proposed construction of bridge from different sides. Government has presently planned to construct bridge Joining Choral to Sally village, which has been agreed by all villagers. But the villagers from Sally are opposing this bridge. According to them Khan land will be reduced. Traffic problem will be caused leading to k-joss in their own village. Some people of Choral are also of the opinion that, after construction of the bridge, Choral village will lose its identity. According to some environmentalist Choral bird century will be affected. One person from the village said that, he is so much fed up of this issue that, he does not want construction of bridge. As according to him, it will only remain as a dream. Shawls Scotchman : Salvo Scotchman: Conclusion : Dallas Earmarked According to me, Choral Bridge Is Just a vote bank Issue used by our politicians. They do not view It as a development activity rather Is a Just dream of Islanders. CHORAL BRIDGE By Skirts-Scotchman People of Choral are facing lot of problems due to lack of bridge. Ferry service is outside Choral with fear. A long queue is found waiting for ferry. There are lots of sights amongst the people. Many people from Bucolic, Mayhem sides use this ferry for coming to Pianism. One can see fights between villagers from Choral and the outsiders. The persons who are most affected are the students. Students have to wait Benefits which islanders will get from the construction of bridge are:- earned by the government. After completion of this bridge the distance from Pianism Cashing Scotchman : Disk’s Earmarked According to me, Choral Bridge is Just a vote bank issue used by our politicians. They do not view it as a development activity rather is a Just dream of islanders. How to cite Lot of problems, Papers

Acid Rain (573 words) Essay Example For Students

Acid Rain (573 words) Essay Acid RainAcid rain refers to all types of precipitationrain, snow, sleet, hail, fogthat is acidic in nature. Acidic means that these forms of water have a pH lower than the 5.6 average of rainwater. Acid rain kills aquatic life, trees, crops and other vegetation, damages buildings and monuments, corrodes copper and lead piping, damages such man-made things as automobiles, reduces soil fertility and can cause toxic metals to leach into underground drinking water sources. Rain is naturally acidic because carbon dioxide, found normally in the earths atmosphere, reacts with water to form carbonic acid. While pure rains acidity is pH 5.6-5.7, actual pH readings vary from place to place depending upon the type and amount of other gases present in the air, such as sulphur oxide and nitrogen oxides. The term pH refers to the free hydrogen ions (electrically charged atoms) in water and is measured on a scale from 0 to 14. Seven is considered neutral and measurements below seven are acidic while those above it are basic or alkaline. Every point on the pH scale represents a tenfold increase over the previous number. Thus, pH 4 is 10 times more acidic than pH 5 and 100 times more so than pH 6. Similarly, pH 9 is 1O times more basic than pH 8 and 100 times more basic than pH 7. The acid in acid rain comes from two kinds of air pollutants sulphur dioxide (SO2) and nitrogen oxides (NOx). These are emitted primarily from utility and smelter smokestacks and automobile, truck and bus exhausts, but they also come from burning wood. When these pollutants reach the atmosphere they combine with gaseous water in clouds and change to acidssulphuric acid and nitric acid. Then, rain and snow wash these acids from the air. Acid rain affects lakes, streams, rivers, bays, ponds and other bodies of water by increasing their acidity until fish and other aquatic creatures can no longer live. Aquatic plants grow best between pH 7.0 and 9.2 (Bourodemos). As acidity increases (pH numbers become lower), submerged aquatic plants decrease and deprive waterfowl of their basic food source. At pH 6, freshwater shrimp cannot survive. At pH 5.5, bottom-dwelling bacterial decomposers begin to die and leave undecomposed leaf litter and other organic debris to collect on the bottom. This deprives planktontiny creatures that form the base of the aquatic food chainof food, so that they too disappear. Below a pH of about 4.5, all fish die.Acid rain harms more than aquatic life. It also harms vegetation. The forests of the Federal Republic of Germany and elsewhere in Western Europe, for example, are believed to be dying because of acid rain. Scientists believe that acid rain damages the protective waxy coating of leaves and allows acids to diffuse into them, which interrupts the evaporation of water and gas exchange so that the plant no longer can breathe. This stops the plants conversion of nutrients and water into a form useful for plant growth and affects crop yields. Perhaps the most important effects of acid rain on forests result from nutrient leaching, accumulation of toxic metals and the release of toxic aluminum. Nutrient leaching occurs when acid rain adds hydrogen ions to the soil which interact chemically with existing minerals. This displaces calcium, magnesium and potassium from soil particles and deprives trees of nutrition. Science Essays

Short Selling Essays

Short Selling Essays Short Selling Essay Short Selling Essay Short selling Short selling is a practice of selling a borrowed security that the seller does not necessarily own. Short sellers are generally betting that the price of security will go down, and  assume that they will be able to lock of short selling Short seller borrows the security for a given fee and sells it short on the market for Rs 40000. If tomorrow the price of security drops to Rs 38000, short seller could buy it back in order to return the security and lock a profit of 2000 (the price difference between 40000 and 38000), less the borrowing fee. Islamic Point of View Short selling is prohibited (Haram) from the Shariah perspective. Shariah scholars found several reasons behind which, short selling is considered haram, and the reasons are as follows:- 1- selling something you doesn’t own:-In Islamic transactions; to sell something you must first have the ownership of what is being sold or the subject of the sale. Therefore in order to sell a security, the security must be owned by the seller and not borrowed which is the case in short selling. 2- Riba:-Short selling is associated with the conventional borrowing and lending system of securities which includes a series of interest-based charges for services, and interested payments on borrowed securities. And as we all know, charging interest on services and borrowed securities is considered as Riba. 3- Speculation: Since short sellers are watching out for fluctuations in the markets, to sell the share at a higher price and buy it back at a lower price and pocket the difference. Speculation has been perceived negatively due to its resemblance with gambling. 4- Gharar/ Ghobun :- there is uncertainty in the contract and the buyer is also deceived. 5- unjust deeds Hamish Jiddiya Token money, down payment  by a party  intending to purchase certain goods who wishes to confirm the intention to do so by paying an amount to the seller as token money or down payment to secure the goods. Hamish Jiddiya is a collateral given for a promise to purchase. If the buyer is not proceeding to purchase, the seller can demand compensation for the actual damage, if the collateral is higher, the buyer receives an amount back, if the actual damage is higher, the the seller can demand additional compensation above the collateral. Arba’un The term Arba’un means an amount of money that the customer as purchase orderer pays to the Bank after concluding the Murabahah sale, with the provision that if the sale is completed during a prescribed period, the amount will be counted as part of the price. If the customer fails to execute the Murabahah sale, then the Bank may retain the whole amount. Waqf A Wakf is an unconditional and permanent dedication of property with implied detention in the ownership of God in such a manner, that the property of the owner may be extinguished and its profits may revert to or be applied for the benefit of mankind except for purposes prohibited by Islam. Examples of Waqf Land Buildings: one or more persons provide Cash as waqf to purchase land and buildings, e. g. a small shopping complex. Once the complex is purchased, the property may be classified as a waqf property and waqf rules apply. The property may not be sold (except to replace), be gifted, or inherited. The property remains intact and may not be spent. The rental income that is produced by the complex may be used for any shariah compliant purpose. Valid contract The remedy of specific performance presupposes the existence of a valid contract between the parties to the controversy. The terms of the contract must be definite and certain. This is significant because equity cannot be expected to enforce either an invalid contract or one that is so vague in its terms that equity cannot determine exactly what it must order each party to perform. It would be unjust for a court to compel the performance of a contract according to ambiguous terms interpreted by the court, since the court might erroneously order what the parties never intended or contemplated. Example A homeowner (who is over the age of 18 and of sound mind) signed a contract with the appliance store to buy a refrigerator. The homeowner pays for the refrigerator and the appliance store presents the refrigerator for the homeowner to take home. Void contract A void contract is not a contract and has no effect in a court of law and cannot be enforced in a court of law. Most commonly, a void contract will be missing one or all of the essential elements needed for a valid contract. Neither party needs to take action to terminate it, since it was never a contract to begin with. Example A contract that was between an illegal drug dealer and an illegal drug supplier to purchase a specified amount of drugs for a specified amount. Either one of the parties could void the contract since there is no lawful objective and hence missing one of the elements of a valid contract. Voidable Contracts A voidable contract is a contract, which may appear to be valid, and has all of the necessary elements to be enforceable, but has some type of flaw, which could cause one or both of the parties to void the contract. The contract is legally binding, but could become void. If there is an injured party involved, the injured party or the defrauded must take action, otherwise the contract is considered valid. Example A contract entered into with a minor could be voidable. Bai Tawliyah Bai Tawliyah Is a sale and buy-back agreement, is a type of Islamic finance that is a banking activity that is congruent with Shariah, which are the principles of Islamic law. Bai Tawliyah is a part of Islamic finance, such as a Muslim mortgage, where there is transaction of buying and selling between the customer and the financial institution. The financial institution, or the financier, will purchase an asset from a customer and the price that they pay for the asset will be disbursed by the terms that the financial institution lays out. Because of this the asset that is purchased is one that the payments are deferred and the price paid will be done so in installments. The second sale in this type of Islamic finance is done so in order to make the customer obliged to the financial institution. Commutative contracts Commutative contracts are those in which what is done, given, or promised by one party is considered same as the other or in consideration of what is done, given or promised by the other. A contract of sale is an example of a commutative contract. Put in a simple form, commutative contracts are contracts where the contracting parties give and receive something similar or an equivalent. An Example is a sale at less than two thirds of the value. Non-Commutative contract A non-compensatory contract in which a property is donated by one party to another against no consideration. The donor transfers ownership of the property to the done free of any commitment or obligation. Refrences ukessays. com/essays/economics/short-selling. php http://jazaa. rg/knowledge-center/islamic-finance-terminology/h/hamish-jiddiyah/ almustafatrust. org/content/Donate/Islamic/types/waqf. htm http://legal-dictionary. thefreedictionary. com/Valid+Contract trainagents. com/DesktopModules/EngageCampus/CourseContent. aspx? ModuleType=StudentMyCourses;CrsPageType=Topic;CourseRecordID=107;LessonRecordID=1372;TopicRecordID=24861;Demo=True http://definitions. uslegal. com/c/commutative-contracts/ http://majdbakir. com/islamic-finance/n/noncommutative-contract . html

How to Get Your CDL in West Virginia and Wisconsin

How to Get Your CDL in West Virginia and Wisconsin This article is useful for anyone who wants to get a CDL in West Virginia or Wisconsin. If you want to learn about earning a CDL at other states, we have put together a comprehensive guide on how to get a commercial driver’s license in every state of the country. West VirginiaYou need a CDL if you are going to drive:Any vehicle combination with a gross vehicle weight rating (GVWR) of 26,001+ pounds, as long as the GVWR of the towed vehicle(s) is over 10,000 pounds. (Class A)A single vehicle with a GVRW of 26,001+ pounds; or  this vehicle towing another that is less than 10,000 pounds. (Class B)A vehicle with a weight rating of less than 26,001 pounds,  or such a vehicle towing another that is less than 10,000 pounds:  Vehicles that are designed for 16 passengers or more, including the driver, and  Vehicles used to transport hazardous materials.  (Class C)In order to obtain a CDL:You must be at least 18 years old and have 2 years of driving experience.You must  meet specific physical qualification standards and carry a medical certificate to show evidence of such qualification.If you are unable to become medically certified, you may be eligible for a medical waiver.The ExamsAll applicants must take either a written or oral knowledge test and pass  and answer at least 80% of the questions correctly.  You must test for the desired endorsements you have listed on the test card at the time you test for general knowledge, but you may get a test card for other endorsements at a later date if you wish to add them.If you fail the knowledge exam, you may not retest for 7 days. You may try to pass the exam three times on the original fees.After you pass the written exams, you will receive a commercial driver’s instruction permit. Only after you have your learner’s permit can you then take your road (skills) tests.After you pass your road tests, you can then receive your CDL.WisconsinIf you are going to drive any of the following vehicl es, you must obtain a CDL:Vehicles that weigh 26,000+ pounds, determined by the highest of the following:manufacturer’s gross vehicle weight rating (GVWR)manufacturer’s gross combination weight rating (GCWR) when the towed unit has a GVWR, registered weight, or gross weight of  10,000+ poundsactual weightregistered weightA vehicle carrying hazardous materials that require placarding under federal lawA vehicle designed or used to carry 16+ people, including the driverThe ExamsFirst, you must take and pass the appropriate knowledge test(s) for the vehicle you plan to drive.CDL knowledge tests are free, and take take at least 1 to 1.5 hours to complete. You must answer  80%+ questions correctly to pass.  You must present a valid Class D license at the time of testing.After you pass the knowledge exam, you can obtain your  Commercial Driver Learner permit (CLP).  Your CLP will be valid for 180 days. You can use a  CLP to practice driving with a qualified instru ctor or CDL driver  who has  a valid license at or above the level of your permit.You must hold a CLP  for 14 days prior to taking your road test(s).After you schedule and pass the pre-trip, backing test and skills test(s) with an approved third party tester, you can receive your CDL.

12-day chase for Lincoln's killer Essay Example | Topics and Well Written Essays - 250 words

12-day chase for Lincoln's killer - Essay Example David Herold helped Lewis Powell into the house of Secretary for State William H. Seward and later fled due to the commotion and rendezvoused with John Wikes Booth outside Washington. John Surratt was a friend of John Wilkes Booth while Mrs. Mary Surratt was his mother. She ran the boarding house where the conspiracy to murder Lincoln and other officials was hatched. George Atzerodt was supposed to kill the Vice President Andrew Johnson but was unable to muster the courage to do so. He spent the evening drinking instead. Lewis Powell entered the house of William H. Seward in hopes of killing him but failed to do so. James W. Pumphrey arranged the horse used by Wilkes to escape from the theatre after assassinating Lincoln. Wilkes hopes to decimate the leadership of the Union by assassinating the top three officials in the government. He believed that this would buy the Confederacy some time to react. 2. Jones’s hid both John Wilkes Booth and David Herold for a full five days in Zekiah Swamp that was near his house. Later he gave them provisions to cross the Potomac River. Thomas Jones was a Confederate supporter so he hid John Wilkes Booth and David Herold. However, as the manhunt gained momentum, Thomas Jones felt it necessary to move the assassins to another location. 3. The Washington Press labelled Booth as a villain and a coward among other deplorable and condescending names. However, Booth noted in his journal that no matter what the newspapers said, he had acted boldly and would not repent on his actions.

Germany and the germans class Essay Example | Topics and Well Written Essays - 1000 words

Germany and the germans class - Essay Example er polished his oratory skills but at the same time he could afford himself to unbosom himself to his confidents, which was unacceptable during official speeches. Trevor-Roper set himself a mission to study the development of Hitler’s thinking - the point that is usually ignored by historians. Hitler’s personality is revealed through these conversations in all its unpleasant grandeur. The most interesting notes are dated by 1941-1942. At that time Hitler was on the rise and orated with a special inspiration. After Stalingrad, everything changed. It all ended when the Fuhrer, who was hiding in the bunker, increasingly practiced his eloquence only in the circle of sleepy secretaries or in the presence of his aide and doctor... Conversation topics were all but the most essential and urgent - the military one. England, America, India, painting, music, architecture, Aryan Jesus, Bolshevik St. Paul, pharaohs, the Maccabees, Julian the Apostate, King Farouk, vegetarianism and Vikings, the Ptolemaic system, the era of glaciation, Shintoism, prehistoric dogs, spartan soup – despite his utter ignorance, Hitler covered almost all possible issues in his talks. Hitler was tireless in his speeches. Albert Speer and Otto Dietrich unanimously talk about Hitler’s pathological and integral feature â€Å"speech egoism† (Redeegoizmus). It is very interesting to get to know what Hitler reasoned about himself and his empire, how he became a practical politician and political philosopher in one person, Napoleon and Spengler at the same time, who imagined himself to be a Roman emperor entrusted with the sacred mission to plunge the Huns - Russians and destroy Carthage - Britain. I would like to turn attention to Hitler’s opinion of his political opponents on the other side of the English Channel, in the U. S. and Soviet Union. He mentioned that both Anglo-Saxon are worth each other. His general characterization of Roosevelt is striking – the President is an imbecile, a

Benefits of Financial Liberalisation

Benefits of Financial Liberalisation A EUROPEAN POLICY ABSTRACT: This paper extends to test if the short and in the long run. Weak indica- the same short-run increase in cyclical tions are found that this may happen par- volatility arising from financial integration tially due to the anchoring of expectations is observed in this specific sample of â€Å"emerg-provided by the EU Accession, and to the ing markets. This work finds signs that, more robust institutional framework contrary to other emerging markets, this imposed by this process onto the countries in does not happen: for the future Member question. States, financial integration, similarly to the KEY WORDS: Enlargement, European outcome observed in mature market Union, financial liberalization, booms, 81 economies, reduces cyclical volatility both in busts, cycles, volatility. 1. INTRODUCTION Financial and capital flows liberalization can play a fundamental role in increasing growth and welfare. Typically, emerging or developing economies seek foreign savings to solve the inter-temporal savings-investment problem. On the other hand, current account surplus countries seek opportunities to invest their savings. To the extent that capital flows from surplus to deficit countries are well intermediated and, therefore, put to the most productive use, they increase welfare. Liberalization can, however, also be dangerous, as has been witnessed in many past and recent financial, currency and banking crises. It can make countries more vulnerable to exogenous shocks. In particular, if serious macroeconomic imbalances exist in a recipient country, and if the financial sector is weak, be it in terms of risk management, prudential regulation and supervision, large capital flows can easily lead to serious financial, banking or currency crises. A number of recent crises, like those in Ea st Asia, Mexico, Russia, Brazil and Turkey (described, for example, in IMF (2001)), and, to some extent, the Argentinean episode of late 2001, early 2002, have demonstrated the potential risks associated with financial and capital flows liberalization. Central and Eastern Europe has a somewhat different experience, when compared to other emerging regions, concerning the financial liberalization process, as the process there seems to have been much less crisis-prone than in, for instance, Asia or Latin America. This maybe, at least partially, because the current high degree of external and financial liberalization in the Central Eastern European countries (CEECs), beyond questions of economic allocative efficiency, must be understood in terms of the process of Accession to the European Union. The EU integration process implies legally binding, sweeping liberalization measures-not only capital account liberalization, but investment by EU firms in the domestic financial services, and the maintenance of a competitive domestic environment, giving this financial liberalization process strong external incentives (and constraints). Those measures were implemented parallel to the development of a highly sophisticated regulatory and supervis ory structure, again based on EU standards. This whole process happened also with the EUs technical and financial support, through specific programs-like the PHARE one, for these so-called Accession, and the TACIS, for the former Soviet Union ones- and direct assistance from EU institutions, like the European Commission, the European Parliament and the European Central Bank (also, on a very early stage of the transition process, the influence of the IMF in setting up policies and institutions in several countries in the region-an intervention widely considered to haven been successful-was important: see Hallerberg et al., 2002). Additionally, EU membership seems to act as an anchor to market expectations (see Vinhas de Souza and Hà ¶lscher, 2001), limiting the possibilities of self- fulfilling financial crises and regional contagion (see Linne, 1999), which had the observed devastating effects in both Asia and Latin America (even a major event, like the Russian collapse of 1998, had very reduced regional side effects). Several regional episodes of financial systems instability did happen (see Vinhas de Souza, 2002(a) and Vinhas de Souza, 2002(b)), but none with the prolonged negative consequences observed in other region (which was also due to the effective national policy actions undertaken after those episodes). This studys main aim is to expand the Kaminsky and Schmukler database (see Kaminsky and Schmukler, 2003), from now on indicated as KS, to include the Accession and Acceding Countries from Eastern Europe (namely, for Bulgaria, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania , Slovakia and Slovenia). In their original work, KS build an extensive database of external and financial liberalization, which includes both developed countries and countries from emerging regions (but not from Eastern Europe). With that, they create different indexes of liberalization (capital account, banking and stock markets: see Table I below) and using them individually and in an aggregate fashion, test for the effects and causality of this process on financial and real volatility, for the existence of differences between regions, and for the effects of the ordering of the liberalization process. One underlying hypotheses of this work is that the existing regulatory and institutional framework in Eastern Europe, plus a more sustainable set of macro policies, played an important role in enabling liberalization to largely deliver the welfare enhancing outcomes that it is supposed to. Such an â€Å"anchoring role of the European Union in the CEECs, through the process of EU membership, and through the effective imposition of international standards of financial supervision and regulation, may indicate that, beyond multilateral organizations like the IMF or the OECD, a greater, pro-active regional stabilizing role in emerging markets by regional actors, for instance, the United States, or by some regional sub-grouping, like Mercosur, may also be welfare enhancing for other â€Å"emerging regions. 2. CAPITAL ACCOUNT The achieving of capital account liberalization happened rather swiftly in most of the countries in our sample: by the mid 1990s, all bar Bulgaria and Romania had been declared Article VIII compliant (for those two countries, this happened in 1998: see Table II below). One of the main driving forces behind this was the process of European Integration, for which external liberalization is a pre-requisite: in the early to mid-1990s, all the countries had signed Association Agreements with the European Union (frequently preceded by trade liberalization agreements with the EU, also called â€Å"Europe trade agreements, usually with years given to the countries to prepare for their full implementation) and formally applied for EU membership. Another additional factor supporting liberalization was IMF and OECD membership: four of the larger countries in our sample became OECD members during the second half of the 1990s. Another factor to be considered, is the endogenous decision process to liberalize in a sustainable fashion. 3. BANKING SECTOR Financial integration, in the form of the opening up the banking sector to foreign banks, is seen as being positive, on a micro level, as foreign banks are usually better capitalized and more efficient than their domestic counterparts (of course, the domestic banking sector eventually catches-up: for an indication of this process at the ACs, see, among others, Tomova et al., 2003). Also from a macroeconomic perspective, financial integration maybe positive for the Eastern European countries, both for long run growth and, as there are indications that foreign banks do not contract either their credit supply nor their deposit base, in helping to smooth the cycle (see de Haas and Lelyveld, 2003: they find some indication that this is linked to the better capitalization base and prudential ratios, as better capitalized domestic banks behave similarly to foreign banks). Given the bank-centered nature of virtually all the financial systems of the future Member States, this is particularly important for them. In most of the member states, the initial stage of the creation of the two-tier banking system, modeled on the Western European â€Å"universal bank system, was characterized by rather liberal licensing practices and limited supervision policies (aimed at the fast creation of a de novo commercial, private banking sector: see Fleming et al., 1996, Balyozov, 1999, Enoch et al., 2002, Sà ¶rg et al., 2003). This caused a mushrooming of new banks in those countries in the early 1990s. Parallel to this, a series of banking crises, of varied proportions, affected most of those de novo banking systems, due to this lax institutional framework, inherited fragilities from the command economy period (the political need to support state-owned, inefficient industries, with the consequent accumulation of bad loans and also the financing of budget deficits), macroeconomic instability, risky expansion and investment strategies and also sheer inexperience, both from the investor s and from regulators. Progressively, the re-capitalization, privatization and internationalization of the banking system (mostly into the hands of EU financial conglomerates), coupled with the implementation of a more robust, EU-modeled institutional framework, did away with most of those problems. Two of the worst cases where the set of Baltic banking crises and the Bulgarian episode, which are described in more detail below. Other smaller banking crises happened in Estonia in 1994 and 1998, and in Latvia in 1994. Caprio and Klingebiel, 2003, report smaller episodes of â€Å"financial sector distress in the Czech Republic (94-95), Hungary (93), Poland (91-93), Romania (98-00), Slovakia (97) and Slovenia (92-94). The initial proliferation of banks was, quite naturally, followed by a process of consolidation and strengthening-parallel to the privatization of the remnant state-owned components of the financial system- of the banking sector in most of those economies (in Bulgaria, from 81 banks in 1992 to 35 in 2001, in the Czech Republic from 55 in 1995 to 38 in 2001, Estonia, from 42 in 1992 to 7 currently, while Hungary had 33 banks in 2002, showing only a very slight decrease from the early 1990s, Latvia from 56 in 1994 to 23, Lithuania from 27 in 1993 to 13, in Poland from 8 1 in 1995 to 71 in 2001, in Romania from 45 in 1998 to 41 in 2001, in Slovakia from 22 in 2000 to 19 in 2001, and in Slovenia, where the number fell from 25 to 21 during 2001 alone). This consolidation process was frequently led by foreign companies, which now hold the majority of the assets of the banking system in virtually all of them-contrary to the situation in the current EU Member States-bar Slovenia. This process now has a component of regional expansion of the Eastern European banks themselves, or, more precisely in most cases, the regional expansion of Western banks via some of their locally-owned subsidiaries (see Sà ¶rg et al., 2003, ibid). The share of banking assets to GDP, nevertheless, is still far below the Euro area average (which stood at around 265% of GDP by end 2001), compared with 47% in Bulgaria, 136% in the Czech Republic, 72% in Estonia and Latvia, 32% in Lithuania, 63% in Poland, 60% in Hungary, 30% in Romania, 96% in Slovakia and 94% in Slovenia (data also for 2001). Another peculiar feature of the banking system in the region is that foreign currency lending -usually euro-denominated-to residents is very high, especially in the Balti c republics: with 80% of total loans in Estonia, 56% in Latvia and 61% in Lithuania. Also, the Baltic countries have substantial shares of deposits by non-residents, with over 10% in Estonia and Lithuania and close to 5% in Latvia (Latvia, with its close trading ties to Russia, has a particular strategy of selling itself as a stable financial services center to CIS depositors: see IMF, 2003(b), ibid). The supervision system has also substantially improved, and, following recent international-and EU- best practice, is now centered in independent universal supervisory agencies in the most advanced of those countries (Reininger et al., 2002, ibid., estimate that the formal regulatory environment for the Czech Republic, Hungary and Poland is actually above the EU, and that its actual enforcement level is at its average;Liive, 2003, gives a description of the Estonian experience that culminated in the creation of the EFSA -Estonian Financial Supervisory Authority- in January 2002). 3.1 BANKING CRISES IN EASTERN EUROPE The Baltic bank crises were, to different degrees, linked to liquidity difficulties related tolerations with Russia (in the November 1992 Estonian case, by the freezing of assets held by some Estonian banks in their former Moscow headquarters, while the Latvian and Lithuanian episodes of, respectively, March and December 1995, were caused by the drying-up of lucrative trade-financing opportunities with Russia, whose export commodities, at that time, were still below world price levels) and regulatory tightening (Latvia, Lithuania), compounded by the elimination of credit opportunities with the implementation of the Estonian and Lithuanian CBAs (Currency Board Arrangements). In Lithuania, as in Bulgaria, the financing of the budget deficit also played a role. In the Estonian and Latvian cases, around 40% of the assets of the banking system where compromised, in the Lithuanian and Bulgarian cases, around a third. The Bulgarian 1996-1997 crisis eliminated a third of its banking sector, and led the country to hyperinflation (reaching over 2000% in March 1997, see Yotzov, 2002). Its roots lie in the political instability that preceded it (which, on its turn, led to inadequate real sector reform, with state-owned, loss making enterprises being financed via the budget deficit or through arrears with the, at the time, still mostly state-owned part banking sector: those arrears were, in turn, partially monetized by the Bulgarian National Bank -BNB- and the largest state bank, the State Savings Bank -SSB). Periodic foreign exchange crises (March 1994, February 1997) and bank runs (late1995, late 1996, early 1997) were part of this picture. The implementation of tighter supervisory procedures during 1996 (giving the BNB the power to close insolvent banks), and a tightening of policy actually led to more bank runs. A caretaker government in February 1997 (before a newly elected government took power in May) paved the way to longer lasting reform and the implementation of t he CBA, with its tighter budget constraints towards both the government and the banking sector. This reform process happened with the support from multilateral institutionsamely, (namely the IMF). 4. STOCK MARKETS The existence of stock markets is assumed to be beneficial for economic performance. In principle, it provides a way for companies to raise capital at lower costs than through simple banking intermediation, and because it is not as restricted a source of capital as internal financing. Also, it is assumed that the existence of alternative modes of finance may reduce the likelihood of credit crunches caused by problems with the banking sector (see Greenspan, 2000). Additionally, the existence of external ownership is (or was, given the recent problems with market-based governance in the US and the EU, and the shift towards a more regulated environment) assumed to provide better governance for the management of firms. The majority of economic analyses seem to support the position that a diversified financing mix is positive for economic growth and stability. As described in the previous section, all the financial sectors in the Member States are bank-centered, with stock markets playing marginal roles in most of them (and, in some, a very marginal role: in Bulgaria, Slovakia and Romania, their average market capitalization in GDP terms is below 5%: see Figure I below). All of these countries had (re-)established stock markets by the mid-90s (see Table III above). About half of the future Member States used them to drive the initial process of re-privatization, either via mass issues of voucher certificates for residents (the most famous case of this strategy was the Czech Republic), or via IPOs (Initial Public Offerings) re-privatization processes, to lock-in domestic and foreign strategic investors (see Claessens at al., 2000). In the voucher-driven privatization, the initial large number of investors and traded stocks in those stock markets was soon concentrated in a rather limited number of institutional investors-domestic and foreign- and â€Å"blue chip stocks. In the IPO-driven markets, the number of stocks and investors actually tended to increase with time, albeit from a rather concentrated base. Even in the largest ones, nevertheless, market capitalization, as a GDP share, was and remains rather low (see Figure I below), and far below the EU average (around 72% of GDP). Only in the Czech Republic, Estonia, Hungary and Slovenia the average market capitalization is above a 20% GDP share, while in Romania is below 1% in several years. Also, the average market turnover is equally below the one observed in comparable EU economies. Similarly to what is observed in the banking sector, the initial regulatory environment was deliberately lax, and the regulators were plagued by much the same problems of inexperience and limited number of staff and resources. This does not mean that domestic agents in those countries lack access to the financial services supposed to be provided by stock markets: the very process of opening up, the increase in cross-border trade in financial services, the harmonization of rules for capital trading with the EU (including the ongoing efforts of the Lamfalussy Committee towards a single European market for securities: according to the current proposal, small and medium size firms would be able to use a simplified prospectus valid throughout the EU and choose the country of its approval), plus the development of information technology, all imply that is not actually necessary-nor economically optimal, given economies of scale-for each individual country to have its own separate stock market. One must also recall that the current national stock markets in the mature developed economies are themselves the result of process of consolidation-and closing-of smaller regional stock markets (as was observed in Bulgari a in the early 1990s), which still today coexist with larger, dominant national stock exchanges even in some mature markets, like Germany and the US. Nevertheless, the observed tendency of domestic larger companies, with presumed better growth prospects, to list abroad (see Table IV below), due to the obvious cost and liquidity advantages of the larger international stock markets, does seems, on balance, to deprive those stock markets of liquidity (see Claessens at al., 2003). On the other hand, nonresidents seem to play a major role in most of those markets (accounting for 77% of the capitalization in Estonia, 70% in Hungary and half of the free-float capitalization in Lithuania). All the specific questions described above concerning the way those stock exchanges were founded and their later developments, plus their relative smallness and shallowness, affect the dynamics of their stock market indexes (SMI), and are clearly reflected by them (as one may see in Figure II, below). This, coupled with the rather limited duration of the series, may affect their adequacy as proxies of financial cycles. Source: Datastream, modified by the authors. The price indexes here were converted to US Dollars and re-based to a common reference period were they equal 100, May of 1998. The country codings are as described in the Annexes. 5. ESTIMATED INDEXES The construction of the index for this new sample of countries was the core of this work. A comprehensive effort was done to crosscheck the information collected from papers and publications with national sources. Below we present the estimated monthly index, for the period January 1990 to June 2003 (see Figure III). The base data for its construction was collected from IMF and EBRD publications, and then exhaustively verified both with national sources and with works written about the individual countries and the region. This is an index that falls with liberalization, where maximum liberalization equals one and minimum three (in this sense, one could actually see it as an index of financial repression). As an additional robustness check, the year-end value of the index here constructed was regressed on the combined EBRDs yearly indexes of banking sector reform and non-banking financial sector reform. The results from a panel regression with the index constructed here on the LHS and the EBRD index on the RHS yield a coefficient of .60, and correlations among the individual country- specific index series range from -0.91 to -0.35. As one may see from Figure III above, the process of integration and liberalization was almost continuous throughout the 1990s and early 2000s. The spikes in the â€Å"Full Liberalization Index in the early 1990s do not indicate reversals: the merely reflect the entry into the sample of the newly independent Baltic republics. As former members of the Soviet Union, they â€Å"enter the world as highly closed economies, but those countries introduced liberalization reforms almost immediately from the start. After this, a slight increasing trend, that does reflect a mild liberalization reversal, is observed, starting mid-1994 and lasting until early 1997, from when a continuous liberalization trend is observed. Noteworthy here is the fact that virtually none of the obvious candidates for a reversal of liberalization (the 1997 Asian Crisis, the collapse of the Czech monetary arrangement in 1997, the collapse of the Bulgarian monetary arrangement in 1996/97, the 1998 Russian Crisis, the 1999-2001 oil price shocks-as all those economies are highly dependent of imported energy sources) seems to have driven these mild liberalization reversals. Comparing the Full Index constructed here with the one constructed by KS, for similar time samples, one may observe that the ACs start substantially below the average level of other emerging markets- i.e., they are more liberalized, but both the â€Å"entry of the initially less liberalized former Soviet republics, plus continuous liberalization efforts in the emerging market KS set reverse this situation. A similar liberalization reversal trend in both the ACs and the merging market set is observed from early 1994, but it is actually slightly stronger on the ACs sample, until its reversal in 1996. By the end of our sample, the ACs are clearly below the final value for the emerging set in KSs sample. This sort of remarkably fast pattern of the ACs â€Å"leapfroging towards best international practice is also observed in several types of institutional frameworks, like, for instance, monetary policy institutions and instruments (see Vinhas de Souza and Hà ¶lscher, 2001): a process that virtually took decades for Western central banks was compressed in a half a dozen years in the Future Member States. Nevertheless, by the end of the sample, both emerging and ACs are still above the level of mature, developed economies. Analyzing the individual components of the index (see Figure V), one may see that, abstracting again from the initial spikes in the index, which are, as explained above, caused by the addition of new countries to the sample, the 1994/1997 reversal of liberalization was essentially driven by the Financial Sector liberal ization component. As will become clear with the country specific analysis below, this was related, in most cases, to-and here it must be stressed that those were rather limited reversals-to the banking crises that plagued several countries in our sample in the early to mid 1990s. Comparing now the individual components of the Full Index constructed here with the ones from KS, again for emerging and mature economies, it becomes clear that the reversals observed in Figure IV were driven by different sources in the emerging set (increase in capital account restrictions) and ACs set (financial sector): see Figure VI. All the indexes for mature economies are, again as one would expect, substantially lower. One could, in principle, aggregate the countries in our sample in three different groups: rapid liberalizers (the ones that followed a â€Å"big bang early approach, without major reversals: Bulgaria, Estonia, Latvia, Lithuania), consistent liberalizers (the ones that followed a more delayed path, but also without major roll backs: the Czech Republic, Hungary, Poland) and cautious liberalizers (the ones whose liberalization path was either openly inconsistent or downright mistrustful: Romania, Slovakia, Slovenia). 5.1 COUNTRY-BY-COUNTRY LIBERALIZATION PATH. In Bulgaria, virtually no sign of a liberalization reversal is observed, even during the substantial stress experienced by the country during the banks runs of 1996/97 and the ultimate collapse of the floating regime in 1997 (beyond ad hoc restrictive measures adopted by the banks themselves). As in most of the countries in my sample, the stock market is the last one to liberalize, but does so in a faster fashion. Nevertheless, this is in most cases a data quasi-artifact that arises from the later (re-)constitution of the stock exchange itself. In the Czech Republic, a limited reversal of the financial sector liberalization is observed from late1995 to late 1997, namely, via the imposition of limits on banks short-term open positions towards on-residents, as a way to limit the exposure of the financial sector to the inflows brought about by the hard peg and the potential gains with interest rate differentials. After the peg was replaced by the current float regime, this restriction i s duly removed. In Estonia, again, virtually no sign of a liberalization reversal is observed, even during the bank runs of the early 1990s, the unwinding of the 1997 bubble, nor during the 1998 Russian crisis. Again, the stock market is the last one to liberalize, but one more time, this arises from the later constitution of the stock exchange. In Hungary, also no signs of any liberalization reversal are observed. Hungary was an early reformer, introducing some liberalization measures already during the late 1980s, but the profile of its reform path is much more discounted through time, as compared, for instance, with the Baltic countries. In Latvia, a rather limited reversal of the financial sector liberalization is observed from mid 1996all the way to early 2003: resulting from the 1996 banking crisis, specific aggregate lending limits to regions (i.e., limits on exposure to non-OECD countries, bar the other Baltic republics) are imposed. In Lithuania, a limited reversal of the f inancial sector liberalization is observed from early 1998, also resulting from the experienced banking crisis: reserve requirements on deposits on foreign accounts by non-resident are introduced; In Poland, no signs of any liberalization reversal are observed. Similarly to Hungary, the profile of its reform path is much more discounted through time; In Romania, no signs of any liberalization reversal are observed, but the reform path is a decidedly slow and cautious one: at the end of the sample, it has the highest (i.e., less liberalized) score for the â€Å"Full Index of all countries in the sample: 1.60 (see Table V). In Slovakia, no signs of any liberalization reversal are observed. Here, the reform path is characterized by a broad stagnation since the Czechoslovak partition till 1998/1999, when, after a change in the political leadership, reforms are re-started, reaching after that levels similar to the other â€Å"Vise grad countries in a rather quick fashion. In Slovenia, one of the most consistently cautious Member States concerning the advantages of integration and liberalization, reversals are indeed observed in all three indexes, since early 1995in the capital account and financial sector components, and from early 1997 in the stock market one. Since early 1999, with the entry in effect of the EU Association Agreement, across-the-board further (re)liberalization measures have been introduced. 6. FINANCIAL CYCLES AND LIBERALIZATION The financial cycle coding which is used by KS defines cycles as a at least twelve month-long strictly downwards (upwards) movement, followed by a equally upwards (downwards) 12-month movement from the through (peak) of a stock market index, measured in USD, as they should reflect returns from the point of view of an international investor. As described in the stock market section of this work, one must be warned that there are specific factors in the countries in our sample that may affect the effectiveness of a stock market index as an adequate proxy of financial cycles, at least for the sample here considered. Beyond that, these series have a rather limited time extension (our sample covers the 01:1990-06:2003 period). Adapting KS criteria to the limited time dimension of our sample, we use a less stringent definition of â€Å"cycle, the same algorithm as above but with a 3-month window for the cycle (Edwards et al., 2003, use a 6-month window). With this we get 118 observations for all countries in our sample. Of these 118 cycles, 61 are upward, with an average of 7.51 months duration, and 57 are downward, with an average of 8.20 months of duration. 7. CONCLUSION The main aim of this paper was to extend the index developed by Kaminsky and Schmukler, 2003, for a specific sample of countries, namely, the previously centrally planned economies from Central and Eastern Europe, and to perform a similar analysis on them. Our results do lend some support to the basic assumption of this study: in spite of all the limitations of the time series used (their shortness, the fact that they were buffeted by several country-specific and common shocks), a re-estimation of KSs core regressions strongly supports the notion that financial liberalization does generate benefits both in the short and in the long run, measured via the extension of the amplitude of upward cycles and its reduction for downward cycles of stock market indexes. Importantly, these results diverge from KS, as in their work â€Å"emerging markets experience a relative short run increase in the amplitude of downward cycles. Another noteworthy feature is that only minor liberalization rever sals, led by the financial sector component, were observed in the aggregate index. Also, those reversals do not seem to be driven by â€Å"contagion from shocks in other emerging markets (like the Asian or Russian crisis), but reflect country-specific shocks. When considering the individual components of the index separately, again signs of minor reversals in financial sector liberalization are observed, related to temporary reactions to the several banking crisis observed in the region. Concerning the importance of institutions and of the EU Accession, this papers initial assumption was that the mostly positive results above would come about due to the anchoring of expectation provided by the perspective of entry into the EU already by mid-2004 (or 2007, in the case of Bulgaria and Romania) for the countries here analyzed, and by the imposition of a more robust macro and institutional framework by the requirements of the Accession process itself. Signs of this are not found in the KS regressions, perhaps because the liberalization index itself captures the effects of the EU Accession process. Finally, using a different framework than KSs to assess the affects of liberalization on financial, real and nominal volatility, most of the econometric results seem to support the previous ones, but they seem to indicate that the capital account liberalization is the element that most consistently and significantly reduces volatility. On this final section, the majority the econometric results seem to support some specific role for the EU Enlargement process in reducing volatility. Benefits of Financial Liberalisation Benefits of Financial Liberalisation A EUROPEAN POLICY ABSTRACT: This paper extends to test if the short and in the long run. Weak indica- the same short-run increase in cyclical tions are found that this may happen par- volatility arising from financial integration tially due to the anchoring of expectations is observed in this specific sample of â€Å"emerg-provided by the EU Accession, and to the ing markets. This work finds signs that, more robust institutional framework contrary to other emerging markets, this imposed by this process onto the countries in does not happen: for the future Member question. States, financial integration, similarly to the KEY WORDS: Enlargement, European outcome observed in mature market Union, financial liberalization, booms, 81 economies, reduces cyclical volatility both in busts, cycles, volatility. 1. INTRODUCTION Financial and capital flows liberalization can play a fundamental role in increasing growth and welfare. Typically, emerging or developing economies seek foreign savings to solve the inter-temporal savings-investment problem. On the other hand, current account surplus countries seek opportunities to invest their savings. To the extent that capital flows from surplus to deficit countries are well intermediated and, therefore, put to the most productive use, they increase welfare. Liberalization can, however, also be dangerous, as has been witnessed in many past and recent financial, currency and banking crises. It can make countries more vulnerable to exogenous shocks. In particular, if serious macroeconomic imbalances exist in a recipient country, and if the financial sector is weak, be it in terms of risk management, prudential regulation and supervision, large capital flows can easily lead to serious financial, banking or currency crises. A number of recent crises, like those in Ea st Asia, Mexico, Russia, Brazil and Turkey (described, for example, in IMF (2001)), and, to some extent, the Argentinean episode of late 2001, early 2002, have demonstrated the potential risks associated with financial and capital flows liberalization. Central and Eastern Europe has a somewhat different experience, when compared to other emerging regions, concerning the financial liberalization process, as the process there seems to have been much less crisis-prone than in, for instance, Asia or Latin America. This maybe, at least partially, because the current high degree of external and financial liberalization in the Central Eastern European countries (CEECs), beyond questions of economic allocative efficiency, must be understood in terms of the process of Accession to the European Union. The EU integration process implies legally binding, sweeping liberalization measures-not only capital account liberalization, but investment by EU firms in the domestic financial services, and the maintenance of a competitive domestic environment, giving this financial liberalization process strong external incentives (and constraints). Those measures were implemented parallel to the development of a highly sophisticated regulatory and supervis ory structure, again based on EU standards. This whole process happened also with the EUs technical and financial support, through specific programs-like the PHARE one, for these so-called Accession, and the TACIS, for the former Soviet Union ones- and direct assistance from EU institutions, like the European Commission, the European Parliament and the European Central Bank (also, on a very early stage of the transition process, the influence of the IMF in setting up policies and institutions in several countries in the region-an intervention widely considered to haven been successful-was important: see Hallerberg et al., 2002). Additionally, EU membership seems to act as an anchor to market expectations (see Vinhas de Souza and Hà ¶lscher, 2001), limiting the possibilities of self- fulfilling financial crises and regional contagion (see Linne, 1999), which had the observed devastating effects in both Asia and Latin America (even a major event, like the Russian collapse of 1998, had very reduced regional side effects). Several regional episodes of financial systems instability did happen (see Vinhas de Souza, 2002(a) and Vinhas de Souza, 2002(b)), but none with the prolonged negative consequences observed in other region (which was also due to the effective national policy actions undertaken after those episodes). This studys main aim is to expand the Kaminsky and Schmukler database (see Kaminsky and Schmukler, 2003), from now on indicated as KS, to include the Accession and Acceding Countries from Eastern Europe (namely, for Bulgaria, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania , Slovakia and Slovenia). In their original work, KS build an extensive database of external and financial liberalization, which includes both developed countries and countries from emerging regions (but not from Eastern Europe). With that, they create different indexes of liberalization (capital account, banking and stock markets: see Table I below) and using them individually and in an aggregate fashion, test for the effects and causality of this process on financial and real volatility, for the existence of differences between regions, and for the effects of the ordering of the liberalization process. One underlying hypotheses of this work is that the existing regulatory and institutional framework in Eastern Europe, plus a more sustainable set of macro policies, played an important role in enabling liberalization to largely deliver the welfare enhancing outcomes that it is supposed to. Such an â€Å"anchoring role of the European Union in the CEECs, through the process of EU membership, and through the effective imposition of international standards of financial supervision and regulation, may indicate that, beyond multilateral organizations like the IMF or the OECD, a greater, pro-active regional stabilizing role in emerging markets by regional actors, for instance, the United States, or by some regional sub-grouping, like Mercosur, may also be welfare enhancing for other â€Å"emerging regions. 2. CAPITAL ACCOUNT The achieving of capital account liberalization happened rather swiftly in most of the countries in our sample: by the mid 1990s, all bar Bulgaria and Romania had been declared Article VIII compliant (for those two countries, this happened in 1998: see Table II below). One of the main driving forces behind this was the process of European Integration, for which external liberalization is a pre-requisite: in the early to mid-1990s, all the countries had signed Association Agreements with the European Union (frequently preceded by trade liberalization agreements with the EU, also called â€Å"Europe trade agreements, usually with years given to the countries to prepare for their full implementation) and formally applied for EU membership. Another additional factor supporting liberalization was IMF and OECD membership: four of the larger countries in our sample became OECD members during the second half of the 1990s. Another factor to be considered, is the endogenous decision process to liberalize in a sustainable fashion. 3. BANKING SECTOR Financial integration, in the form of the opening up the banking sector to foreign banks, is seen as being positive, on a micro level, as foreign banks are usually better capitalized and more efficient than their domestic counterparts (of course, the domestic banking sector eventually catches-up: for an indication of this process at the ACs, see, among others, Tomova et al., 2003). Also from a macroeconomic perspective, financial integration maybe positive for the Eastern European countries, both for long run growth and, as there are indications that foreign banks do not contract either their credit supply nor their deposit base, in helping to smooth the cycle (see de Haas and Lelyveld, 2003: they find some indication that this is linked to the better capitalization base and prudential ratios, as better capitalized domestic banks behave similarly to foreign banks). Given the bank-centered nature of virtually all the financial systems of the future Member States, this is particularly important for them. In most of the member states, the initial stage of the creation of the two-tier banking system, modeled on the Western European â€Å"universal bank system, was characterized by rather liberal licensing practices and limited supervision policies (aimed at the fast creation of a de novo commercial, private banking sector: see Fleming et al., 1996, Balyozov, 1999, Enoch et al., 2002, Sà ¶rg et al., 2003). This caused a mushrooming of new banks in those countries in the early 1990s. Parallel to this, a series of banking crises, of varied proportions, affected most of those de novo banking systems, due to this lax institutional framework, inherited fragilities from the command economy period (the political need to support state-owned, inefficient industries, with the consequent accumulation of bad loans and also the financing of budget deficits), macroeconomic instability, risky expansion and investment strategies and also sheer inexperience, both from the investor s and from regulators. Progressively, the re-capitalization, privatization and internationalization of the banking system (mostly into the hands of EU financial conglomerates), coupled with the implementation of a more robust, EU-modeled institutional framework, did away with most of those problems. Two of the worst cases where the set of Baltic banking crises and the Bulgarian episode, which are described in more detail below. Other smaller banking crises happened in Estonia in 1994 and 1998, and in Latvia in 1994. Caprio and Klingebiel, 2003, report smaller episodes of â€Å"financial sector distress in the Czech Republic (94-95), Hungary (93), Poland (91-93), Romania (98-00), Slovakia (97) and Slovenia (92-94). The initial proliferation of banks was, quite naturally, followed by a process of consolidation and strengthening-parallel to the privatization of the remnant state-owned components of the financial system- of the banking sector in most of those economies (in Bulgaria, from 81 banks in 1992 to 35 in 2001, in the Czech Republic from 55 in 1995 to 38 in 2001, Estonia, from 42 in 1992 to 7 currently, while Hungary had 33 banks in 2002, showing only a very slight decrease from the early 1990s, Latvia from 56 in 1994 to 23, Lithuania from 27 in 1993 to 13, in Poland from 8 1 in 1995 to 71 in 2001, in Romania from 45 in 1998 to 41 in 2001, in Slovakia from 22 in 2000 to 19 in 2001, and in Slovenia, where the number fell from 25 to 21 during 2001 alone). This consolidation process was frequently led by foreign companies, which now hold the majority of the assets of the banking system in virtually all of them-contrary to the situation in the current EU Member States-bar Slovenia. This process now has a component of regional expansion of the Eastern European banks themselves, or, more precisely in most cases, the regional expansion of Western banks via some of their locally-owned subsidiaries (see Sà ¶rg et al., 2003, ibid). The share of banking assets to GDP, nevertheless, is still far below the Euro area average (which stood at around 265% of GDP by end 2001), compared with 47% in Bulgaria, 136% in the Czech Republic, 72% in Estonia and Latvia, 32% in Lithuania, 63% in Poland, 60% in Hungary, 30% in Romania, 96% in Slovakia and 94% in Slovenia (data also for 2001). Another peculiar feature of the banking system in the region is that foreign currency lending -usually euro-denominated-to residents is very high, especially in the Balti c republics: with 80% of total loans in Estonia, 56% in Latvia and 61% in Lithuania. Also, the Baltic countries have substantial shares of deposits by non-residents, with over 10% in Estonia and Lithuania and close to 5% in Latvia (Latvia, with its close trading ties to Russia, has a particular strategy of selling itself as a stable financial services center to CIS depositors: see IMF, 2003(b), ibid). The supervision system has also substantially improved, and, following recent international-and EU- best practice, is now centered in independent universal supervisory agencies in the most advanced of those countries (Reininger et al., 2002, ibid., estimate that the formal regulatory environment for the Czech Republic, Hungary and Poland is actually above the EU, and that its actual enforcement level is at its average;Liive, 2003, gives a description of the Estonian experience that culminated in the creation of the EFSA -Estonian Financial Supervisory Authority- in January 2002). 3.1 BANKING CRISES IN EASTERN EUROPE The Baltic bank crises were, to different degrees, linked to liquidity difficulties related tolerations with Russia (in the November 1992 Estonian case, by the freezing of assets held by some Estonian banks in their former Moscow headquarters, while the Latvian and Lithuanian episodes of, respectively, March and December 1995, were caused by the drying-up of lucrative trade-financing opportunities with Russia, whose export commodities, at that time, were still below world price levels) and regulatory tightening (Latvia, Lithuania), compounded by the elimination of credit opportunities with the implementation of the Estonian and Lithuanian CBAs (Currency Board Arrangements). In Lithuania, as in Bulgaria, the financing of the budget deficit also played a role. In the Estonian and Latvian cases, around 40% of the assets of the banking system where compromised, in the Lithuanian and Bulgarian cases, around a third. The Bulgarian 1996-1997 crisis eliminated a third of its banking sector, and led the country to hyperinflation (reaching over 2000% in March 1997, see Yotzov, 2002). Its roots lie in the political instability that preceded it (which, on its turn, led to inadequate real sector reform, with state-owned, loss making enterprises being financed via the budget deficit or through arrears with the, at the time, still mostly state-owned part banking sector: those arrears were, in turn, partially monetized by the Bulgarian National Bank -BNB- and the largest state bank, the State Savings Bank -SSB). Periodic foreign exchange crises (March 1994, February 1997) and bank runs (late1995, late 1996, early 1997) were part of this picture. The implementation of tighter supervisory procedures during 1996 (giving the BNB the power to close insolvent banks), and a tightening of policy actually led to more bank runs. A caretaker government in February 1997 (before a newly elected government took power in May) paved the way to longer lasting reform and the implementation of t he CBA, with its tighter budget constraints towards both the government and the banking sector. This reform process happened with the support from multilateral institutionsamely, (namely the IMF). 4. STOCK MARKETS The existence of stock markets is assumed to be beneficial for economic performance. In principle, it provides a way for companies to raise capital at lower costs than through simple banking intermediation, and because it is not as restricted a source of capital as internal financing. Also, it is assumed that the existence of alternative modes of finance may reduce the likelihood of credit crunches caused by problems with the banking sector (see Greenspan, 2000). Additionally, the existence of external ownership is (or was, given the recent problems with market-based governance in the US and the EU, and the shift towards a more regulated environment) assumed to provide better governance for the management of firms. The majority of economic analyses seem to support the position that a diversified financing mix is positive for economic growth and stability. As described in the previous section, all the financial sectors in the Member States are bank-centered, with stock markets playing marginal roles in most of them (and, in some, a very marginal role: in Bulgaria, Slovakia and Romania, their average market capitalization in GDP terms is below 5%: see Figure I below). All of these countries had (re-)established stock markets by the mid-90s (see Table III above). About half of the future Member States used them to drive the initial process of re-privatization, either via mass issues of voucher certificates for residents (the most famous case of this strategy was the Czech Republic), or via IPOs (Initial Public Offerings) re-privatization processes, to lock-in domestic and foreign strategic investors (see Claessens at al., 2000). In the voucher-driven privatization, the initial large number of investors and traded stocks in those stock markets was soon concentrated in a rather limited number of institutional investors-domestic and foreign- and â€Å"blue chip stocks. In the IPO-driven markets, the number of stocks and investors actually tended to increase with time, albeit from a rather concentrated base. Even in the largest ones, nevertheless, market capitalization, as a GDP share, was and remains rather low (see Figure I below), and far below the EU average (around 72% of GDP). Only in the Czech Republic, Estonia, Hungary and Slovenia the average market capitalization is above a 20% GDP share, while in Romania is below 1% in several years. Also, the average market turnover is equally below the one observed in comparable EU economies. Similarly to what is observed in the banking sector, the initial regulatory environment was deliberately lax, and the regulators were plagued by much the same problems of inexperience and limited number of staff and resources. This does not mean that domestic agents in those countries lack access to the financial services supposed to be provided by stock markets: the very process of opening up, the increase in cross-border trade in financial services, the harmonization of rules for capital trading with the EU (including the ongoing efforts of the Lamfalussy Committee towards a single European market for securities: according to the current proposal, small and medium size firms would be able to use a simplified prospectus valid throughout the EU and choose the country of its approval), plus the development of information technology, all imply that is not actually necessary-nor economically optimal, given economies of scale-for each individual country to have its own separate stock market. One must also recall that the current national stock markets in the mature developed economies are themselves the result of process of consolidation-and closing-of smaller regional stock markets (as was observed in Bulgari a in the early 1990s), which still today coexist with larger, dominant national stock exchanges even in some mature markets, like Germany and the US. Nevertheless, the observed tendency of domestic larger companies, with presumed better growth prospects, to list abroad (see Table IV below), due to the obvious cost and liquidity advantages of the larger international stock markets, does seems, on balance, to deprive those stock markets of liquidity (see Claessens at al., 2003). On the other hand, nonresidents seem to play a major role in most of those markets (accounting for 77% of the capitalization in Estonia, 70% in Hungary and half of the free-float capitalization in Lithuania). All the specific questions described above concerning the way those stock exchanges were founded and their later developments, plus their relative smallness and shallowness, affect the dynamics of their stock market indexes (SMI), and are clearly reflected by them (as one may see in Figure II, below). This, coupled with the rather limited duration of the series, may affect their adequacy as proxies of financial cycles. Source: Datastream, modified by the authors. The price indexes here were converted to US Dollars and re-based to a common reference period were they equal 100, May of 1998. The country codings are as described in the Annexes. 5. ESTIMATED INDEXES The construction of the index for this new sample of countries was the core of this work. A comprehensive effort was done to crosscheck the information collected from papers and publications with national sources. Below we present the estimated monthly index, for the period January 1990 to June 2003 (see Figure III). The base data for its construction was collected from IMF and EBRD publications, and then exhaustively verified both with national sources and with works written about the individual countries and the region. This is an index that falls with liberalization, where maximum liberalization equals one and minimum three (in this sense, one could actually see it as an index of financial repression). As an additional robustness check, the year-end value of the index here constructed was regressed on the combined EBRDs yearly indexes of banking sector reform and non-banking financial sector reform. The results from a panel regression with the index constructed here on the LHS and the EBRD index on the RHS yield a coefficient of .60, and correlations among the individual country- specific index series range from -0.91 to -0.35. As one may see from Figure III above, the process of integration and liberalization was almost continuous throughout the 1990s and early 2000s. The spikes in the â€Å"Full Liberalization Index in the early 1990s do not indicate reversals: the merely reflect the entry into the sample of the newly independent Baltic republics. As former members of the Soviet Union, they â€Å"enter the world as highly closed economies, but those countries introduced liberalization reforms almost immediately from the start. After this, a slight increasing trend, that does reflect a mild liberalization reversal, is observed, starting mid-1994 and lasting until early 1997, from when a continuous liberalization trend is observed. Noteworthy here is the fact that virtually none of the obvious candidates for a reversal of liberalization (the 1997 Asian Crisis, the collapse of the Czech monetary arrangement in 1997, the collapse of the Bulgarian monetary arrangement in 1996/97, the 1998 Russian Crisis, the 1999-2001 oil price shocks-as all those economies are highly dependent of imported energy sources) seems to have driven these mild liberalization reversals. Comparing the Full Index constructed here with the one constructed by KS, for similar time samples, one may observe that the ACs start substantially below the average level of other emerging markets- i.e., they are more liberalized, but both the â€Å"entry of the initially less liberalized former Soviet republics, plus continuous liberalization efforts in the emerging market KS set reverse this situation. A similar liberalization reversal trend in both the ACs and the merging market set is observed from early 1994, but it is actually slightly stronger on the ACs sample, until its reversal in 1996. By the end of our sample, the ACs are clearly below the final value for the emerging set in KSs sample. This sort of remarkably fast pattern of the ACs â€Å"leapfroging towards best international practice is also observed in several types of institutional frameworks, like, for instance, monetary policy institutions and instruments (see Vinhas de Souza and Hà ¶lscher, 2001): a process that virtually took decades for Western central banks was compressed in a half a dozen years in the Future Member States. Nevertheless, by the end of the sample, both emerging and ACs are still above the level of mature, developed economies. Analyzing the individual components of the index (see Figure V), one may see that, abstracting again from the initial spikes in the index, which are, as explained above, caused by the addition of new countries to the sample, the 1994/1997 reversal of liberalization was essentially driven by the Financial Sector liberal ization component. As will become clear with the country specific analysis below, this was related, in most cases, to-and here it must be stressed that those were rather limited reversals-to the banking crises that plagued several countries in our sample in the early to mid 1990s. Comparing now the individual components of the Full Index constructed here with the ones from KS, again for emerging and mature economies, it becomes clear that the reversals observed in Figure IV were driven by different sources in the emerging set (increase in capital account restrictions) and ACs set (financial sector): see Figure VI. All the indexes for mature economies are, again as one would expect, substantially lower. One could, in principle, aggregate the countries in our sample in three different groups: rapid liberalizers (the ones that followed a â€Å"big bang early approach, without major reversals: Bulgaria, Estonia, Latvia, Lithuania), consistent liberalizers (the ones that followed a more delayed path, but also without major roll backs: the Czech Republic, Hungary, Poland) and cautious liberalizers (the ones whose liberalization path was either openly inconsistent or downright mistrustful: Romania, Slovakia, Slovenia). 5.1 COUNTRY-BY-COUNTRY LIBERALIZATION PATH. In Bulgaria, virtually no sign of a liberalization reversal is observed, even during the substantial stress experienced by the country during the banks runs of 1996/97 and the ultimate collapse of the floating regime in 1997 (beyond ad hoc restrictive measures adopted by the banks themselves). As in most of the countries in my sample, the stock market is the last one to liberalize, but does so in a faster fashion. Nevertheless, this is in most cases a data quasi-artifact that arises from the later (re-)constitution of the stock exchange itself. In the Czech Republic, a limited reversal of the financial sector liberalization is observed from late1995 to late 1997, namely, via the imposition of limits on banks short-term open positions towards on-residents, as a way to limit the exposure of the financial sector to the inflows brought about by the hard peg and the potential gains with interest rate differentials. After the peg was replaced by the current float regime, this restriction i s duly removed. In Estonia, again, virtually no sign of a liberalization reversal is observed, even during the bank runs of the early 1990s, the unwinding of the 1997 bubble, nor during the 1998 Russian crisis. Again, the stock market is the last one to liberalize, but one more time, this arises from the later constitution of the stock exchange. In Hungary, also no signs of any liberalization reversal are observed. Hungary was an early reformer, introducing some liberalization measures already during the late 1980s, but the profile of its reform path is much more discounted through time, as compared, for instance, with the Baltic countries. In Latvia, a rather limited reversal of the financial sector liberalization is observed from mid 1996all the way to early 2003: resulting from the 1996 banking crisis, specific aggregate lending limits to regions (i.e., limits on exposure to non-OECD countries, bar the other Baltic republics) are imposed. In Lithuania, a limited reversal of the f inancial sector liberalization is observed from early 1998, also resulting from the experienced banking crisis: reserve requirements on deposits on foreign accounts by non-resident are introduced; In Poland, no signs of any liberalization reversal are observed. Similarly to Hungary, the profile of its reform path is much more discounted through time; In Romania, no signs of any liberalization reversal are observed, but the reform path is a decidedly slow and cautious one: at the end of the sample, it has the highest (i.e., less liberalized) score for the â€Å"Full Index of all countries in the sample: 1.60 (see Table V). In Slovakia, no signs of any liberalization reversal are observed. Here, the reform path is characterized by a broad stagnation since the Czechoslovak partition till 1998/1999, when, after a change in the political leadership, reforms are re-started, reaching after that levels similar to the other â€Å"Vise grad countries in a rather quick fashion. In Slovenia, one of the most consistently cautious Member States concerning the advantages of integration and liberalization, reversals are indeed observed in all three indexes, since early 1995in the capital account and financial sector components, and from early 1997 in the stock market one. Since early 1999, with the entry in effect of the EU Association Agreement, across-the-board further (re)liberalization measures have been introduced. 6. FINANCIAL CYCLES AND LIBERALIZATION The financial cycle coding which is used by KS defines cycles as a at least twelve month-long strictly downwards (upwards) movement, followed by a equally upwards (downwards) 12-month movement from the through (peak) of a stock market index, measured in USD, as they should reflect returns from the point of view of an international investor. As described in the stock market section of this work, one must be warned that there are specific factors in the countries in our sample that may affect the effectiveness of a stock market index as an adequate proxy of financial cycles, at least for the sample here considered. Beyond that, these series have a rather limited time extension (our sample covers the 01:1990-06:2003 period). Adapting KS criteria to the limited time dimension of our sample, we use a less stringent definition of â€Å"cycle, the same algorithm as above but with a 3-month window for the cycle (Edwards et al., 2003, use a 6-month window). With this we get 118 observations for all countries in our sample. Of these 118 cycles, 61 are upward, with an average of 7.51 months duration, and 57 are downward, with an average of 8.20 months of duration. 7. CONCLUSION The main aim of this paper was to extend the index developed by Kaminsky and Schmukler, 2003, for a specific sample of countries, namely, the previously centrally planned economies from Central and Eastern Europe, and to perform a similar analysis on them. Our results do lend some support to the basic assumption of this study: in spite of all the limitations of the time series used (their shortness, the fact that they were buffeted by several country-specific and common shocks), a re-estimation of KSs core regressions strongly supports the notion that financial liberalization does generate benefits both in the short and in the long run, measured via the extension of the amplitude of upward cycles and its reduction for downward cycles of stock market indexes. Importantly, these results diverge from KS, as in their work â€Å"emerging markets experience a relative short run increase in the amplitude of downward cycles. Another noteworthy feature is that only minor liberalization rever sals, led by the financial sector component, were observed in the aggregate index. Also, those reversals do not seem to be driven by â€Å"contagion from shocks in other emerging markets (like the Asian or Russian crisis), but reflect country-specific shocks. When considering the individual components of the index separately, again signs of minor reversals in financial sector liberalization are observed, related to temporary reactions to the several banking crisis observed in the region. Concerning the importance of institutions and of the EU Accession, this papers initial assumption was that the mostly positive results above would come about due to the anchoring of expectation provided by the perspective of entry into the EU already by mid-2004 (or 2007, in the case of Bulgaria and Romania) for the countries here analyzed, and by the imposition of a more robust macro and institutional framework by the requirements of the Accession process itself. Signs of this are not found in the KS regressions, perhaps because the liberalization index itself captures the effects of the EU Accession process. Finally, using a different framework than KSs to assess the affects of liberalization on financial, real and nominal volatility, most of the econometric results seem to support the previous ones, but they seem to indicate that the capital account liberalization is the element that most consistently and significantly reduces volatility. On this final section, the majority the econometric results seem to support some specific role for the EU Enlargement process in reducing volatility.