Finance Articles

Finance articles section focuses on various concepts of finance like budget, stock market and economics of various products & services. Apart from these articles on global financial institutions, different banking systems and topics of international importance in the field of finance are present.



Islamic Banking 30 October 2010

At a time when the banking industry is trying to recover from the worst ever economic crisis, the Islamic Banking has stood tall and remained unaffected from the global turmoil. Islamic banking is based on Sharia Islamic law which prohibits payment or acceptance of interest fees for lending and accepting of money respectively as well as investing in business that provide goods and services considered contrary to its principles.

 

Behavioral Finance 30 October 2010

Behavioral finance is the study of investor’s psychology while making financial decisions. In traditional framework, a security’s price equals its fundamental value i.e. the discount sum of future returns. The underlying hypothesis that price reflects its fundamental value is known as the Efficient Market Hypothesis. If the market is efficient, there is no arbitrage opportunity. In fact, any deviation from no arbitrage values must trigger an immediate reaction from markets and the rapid disappearance of the mispricing. However, this does not happen every time. Investors often fall prey to their own and sometimes others' mistakes due to the use of emotions in financial decision-making. Behavioral finance tries to understand how people forget the fundamentals and use emotions in financial decision making.

 

Jawaharlal Nehru National Urban Renewal Mission 30 October 2010

Jawaharlal Nehru National Urban Renewal Mission(JNNURM) is a city modernisation scheme launched by Government of India. It involves an investment of around $20 Bn over a period of 5-7 years. The main idea behind this programme is to improve the quality of life of the people living in cities. It comprises if 2 sub missions
a) Sub mission for urban infrastructure and governance. Its primary focus is on water supply, sanitation, waste management, road network.
b) Sub mission for basic services to the urban poor.

 

Derivatives: Weapons of Mass Destruction 30 October 2010

As the fear of double dip recession in United States further catches on, one debate which will continue forever; are derivatives responsible for economic recession which led to failure of major financial institutions and leading world economies. The debate started in 2002, when world’s leading investor called derivatives as “Weapons of mass destruction”. Former Fed Chairman Allan Greenspan stated that derivatives have become so huge because it is providing some economic value to their users.

 

Will Dollar survive as a Reserve currency 30 October 2010

US dollar is not the world’s key currency by policy design, just as English is not the leading global language by policy design. It is the evolutionary outcome of practice and experience. However the scenario has changed drastically in the past few years; the US trade deficit, federal budget deficit, low interest rate, and low GDP growth compared to the high – GDP growth rest–of-the-world has caused the dollar to decline against the world’s major currencies. Current US fiscal and monetary policies have propelled that deterioration forward. So it comes as no surprise when many leading economies of the world have questioned the status of dollar as reserve currency. But still by end of 2008 the dollar accounts for 61.54 percent of central bank reserves (Source IMF).

 

Reverse Mortgage: Is India Ready for it ? 30 October 2010

There are sections of ageing population in India who do not have regular source of income but may have assets which may not be providing any income. They are either dependent on their children to support them or depend on retirement savings which may not be sufficient to support their lifestyle. In order to support this section of population, The National Housing Bank, apex body on housing finance in India, came out with the guidelines on reverse mortgage in early 2007.

 

GDP of a country & its Calculation ! 30 October 2010

Gross Domestic Product is the total market value of all goods and services produced in the country in a particular year. It is equal to total consumer, investment and government spending, plus the value of exports and minus the value of imports.

GDP can be measured in mainly two ways

1. Income Approach

2. Expenditure Approach