Effect of the Financial Crash on Islamic Banks in the UK

Effect of the Financial Crash on Islamic Banks in the UK Chapter 1: Introduction Introduction to the Subject Background of the Subject General Objective The purpose of this study is to examine how the internal factors of the Islamic Banking affected their performance before, during and after the financial crisis in the GCC in comparison to the conventional banking in the same area. Research Questions This study aims to answer the following questions: How did the financial crisis affect the profitability of Islamic Banks in comparison to Conventional Banks? What are the internal factors (bank specific characteristics) that influence the profitability of Islamic banking for every year from 2006 2009? Did these factors have the same impact on the profitability of Islamic Banking before, during and after the financial crisis? Did these internal factors influence the profitability of Islamic Banking in the same manner as of the Conventional Banking? Need for the Study Significance of the Study Assumptions of the Study Limitations of the Study Although we cannot neglect the importance of the external factors on the profitability of Islamic Banking, they were not included in this study. To understand the reason behind this decision, we need to go through the different types of external factors and how they are classified: Macroeconomic Factors Country Regulation Rules Bank Regulation Rules These factors were not included for the following reasons: Since we are examining the performance of 92 banks (27 Islamic Banks and 65 Conventional Banks) in 6 countries, the number of countries used in the study is not significant enough to study the impact of GDP and inflation accurately on Bank profitability especially when examining each year separately Country Regulation Rules as per the IMF Database, although it differs slightly for the selected countries, did not change over the period from 2006 to 2009. This means that for each bank, these factors remained constant. Data about Bank Regulation Rules could not be obtained for GCC banks Delimitation of the Study This study was delaminated to the Islamic and Conventional Banks in the GCC whose data could be obtained in the Bankscope database. Chapter 2: Literature Review Overview of Islamic Banking Islamic Baking has established as an alternative to conventional interest-based banking. The first stirring of the Islamic Banking movement began in 1963 by Dr. Ahmed Alnajar in a small town in Egypt, called Mit Ghamar. Dr. Alnajar completed his education in Germany and found that it had many saving banks operating on interest. He took the idea from a savings bank in Germany and created his own small Islamic bank that was interest free. After Dr. Alnajars small bank proved successful, the establishment of other Islamic banks followed. In 1971, the Nasser Social Bank was founded in Egypt with the objective of lending out money as a charity on the basis of a profit and loss sharing system and helping people in need. And in 1975, the idea of Islamic banking spread to other Islamic regions such Dubai Islamic bank in United Arab Emirates and The Islamic Development (IDB) Bank in Jeddah, Saudi Arabia (Wilson, 1990). Even though Islamic Banking has only been around for thirty years and is still in an evolving stage, Islamic Banking is the fastest growing segment of the credit markets in the Muslim countries. In 2009, Assets held by Islamic Banking banks rose by 28.6 percent to $822bn from $639bn in 2008, according to The Bankers â€Å"Top 500 Islamic Financial Institutions† survey while conventional banks posted annual asset growth of just 6.8 percent. Furthermore, GCC states accounted for $353.2bn or 42.9 percent of the global aggregate, while Iran remained the largest single market for Shariah-compliant assets, accounting for 35.6 percent of the total. Finally, Islamic banking operations are not limited to Islamic countries but are spreading throughout the world. One reason is the growing trend toward transcending national boundaries, and unifying Muslims into a political and economic entity that could have a significant impact on the pattern of world trade (Abdel-Magid, 1981). Islamic Banking Rules and Principles Islamic banking rules are according to the Islamic Shariah derived from the Quran and prophet Mohameds sayings. The three main practices that are clearly prohibited in the Quran and the prophets sayings are, Riba (Interest), Gharar (Uncertainty), and Maysir (Betting). Prohibition of Riba or any predetermined or fixed rate in financial institutions is the most important factor in the Islamic principles pertaining to banking. As stated in the Quran â€Å"Allah forbids riba†. Riba means an increase and under Shariah the term refers to the premium that must be paid by the borrower to the lender along with the principle amount as a condition for the loan (Omar and Abdel, 1996). Gharar occurs when the purchaser does not know what has been bought and the seller does not know what has been sold. In other words, trading should be clear by stating in a contract the existing actual object(s) to be sold, with a price and time to eliminate confusion and uncertainty between the buyers and the sellers. Maisir is considered in Islam as one form of injustice in the appropriation of others wealth. The act of gambling, sometimes referred to betting on the occurrence of a future event, is prohibited and no reward accrues for the employment of spending of wealth that an individual may gain through means of gambling. Under this prohibition, any contract entered into, should be free from uncertainty, risk and speculation. Contracting parties should have perfect knowledge of the counter values intended to be exchanged as a result of their transactions. Therefore, and according to Ahmed and Hassan (2007), the principles of Islamic banking and finance enshrined from al-Quran and Prophet Mohamed‘s Sayings can be summed up as follows: Any predetermined payment over and above the actual amount of principal is prohibited. The lender must share in the profits or losses arising out of the enterprise for which the money was lent. Making money from money is not acceptable in Islam. Gharar (deception) and Maisir (gambling) are also prohibited. Investments should only support practices or products that are not forbidden or even discouraged by Islam. Islamic Banking Products Islamic Banking products have to be done according to Islamic rules and principles, based on profit and loss sharing as well as avoiding interest. According to BNM statistics 2007, Al Bai Bithaman Ajil financing is the most common in Islamic Banking. There are a lot of Islamic Banking products; however there are some famous Islamic products that will be discussed in this section. 1. Al Bai Bithaman Ajil /BBA This involves the credit sale of goods on a deferred payment basis. In BAA, the Islamic bank will purchase certain assets on a deferred payment basis and then sell the goods back to the customer at an agreed price including some margin or profit. The customer will make payment by installments over an agreed period. A fixed rate BBA is a powerful hedging tool against interest rates (Rosly, 1999). 2. Murabahah Murabahah is a contract of sale. The Islamic Bank acts as a middle man and purchases the goods requested by the customer. The bank will later sell the goods to the customer in a sale and purchase agreement, whereby the lender re-sales to the borrower at a higher price agreed on by both parties. These are more for short term financing 3. Mudharabah According to Kettel (2006), Mudharabah is a basic principle of profit and loss, where instead of lending money at a fixed rate return, the banker forms a partnership with the borrower, thereby sharing in a ventures profit and loss. Mudharabah is an agreement between the lender and entrepreneur, whereby the lender agrees to finance the project on a profit sharing basis according to a predetermined ratio agreed by both parties concerned. If there are any losses the lender will bear all the losses. 4. Musharakah Musharakah means partnership whereby the Islamic institution provides the capital needed by the customer with the understanding that they both share the profit and loss according to a formula agreed before the business transaction is transacted. In Musharakah all partners are entitled to participate in the management of the investment but it is not compulsory. Musharakah can help in providing financing for large investments in modern economic activities 5. Al Ijarah Ijarah means meaning to give something on a rental basis. In Ijarah, the bank acquires ownership based on the promise and leases back to the client for a given period. The customer pays the rental but the ownership still remains with the bank or lender. As the ownership remains with the lessor (bank), it continues to give the service for which it was rented. Under this contract, the lessor has the right to re-negotiate the quantum of the lease payment at every agreed interval to ensure rental remains in line with the market rates (Hume, 2004). 6. Wadiah Wadiah is a trust contract and the bank provides gift (hibah) and various types of benefits to the customer. This is exactly like a normal conventional savings account. 7. Istisna Istisna allows one party buys the goods and the other party undertakes to manufacture them according to agreed specifications. Normally, Istisna is used to finance construction and manufacturing projects. 8. Salam Salam is defined as the forward purchase of specified goods with full forward payment. This contract is normally used for financing agricultural production. According to Hassan (2004), Salam based future contracts for agricultural commodities, supported by Islamic Banks, can help to overcome the agricultural financial problems Table 2.1 lists the products of conventional banking and their correspondent products in Islamic Banking. Source: Obaidullah, 2005 Financial Crisis and the Islamic Banking To be able to compete with conventional banks, Islamic banks have to offer financial products that are comparable to the ones offered by the conventional banks. This exposes the Islamic banks to similar credit, liquidity and risks driven by market instability. Despite that, Islamic banks managed to remain stable at the early phases of the crisis. That was driven by three main Factors. First, Islamic banks financing activities are strongly tied to the real economic activities than their conventional counterpart. Even though Musharakah and Mudharabah both provide better risk sharing while keeping strong link to the real sector, they are used minimally for different reasons. Most financing activities are done through Murabah and Ijarah followed by Istinsa. In the GCC and during 2007, Murabaha comprised of 65.4%, Ijarah 12.78% and Istinsa 2.83%. Both Murabaha and Ijrah transactions require the Islamic bank to know the clients purspose and use of finance as well the ownership of the asset by the bank. This help in ensuring that the funds are used for their stated purposes. On the other hand, conventional banks do not require disclosing the use of funds as long as the client is believed to creditworthy or can post suitable collateral. Second, Islamic banks avoid direct exposure to exotic and toxic financial derivative products. Since Shariah prohibits riba and gharar, the asset portfolio of Islamic banks did not include any CDOs, CMBSs, and CDSs which turned out to be highly toxic for conventional banks and amplifying factor for the crisis. These derivative products, initially used for hedging purposes, became device for highly speculative investments among conventional financial institutions. Unavailability of hedging instruments for Islamic financial institutions, which was perceived as weakness before the crisis, became a strengthening factor for them. However, exposure to other investment risks driven from equity markets, sukuk, real-estate and ownership stakes in other businesses remain a source of concern when overdone or undertaken purely for speculative gains. Third, Islamic banks in general have a larger proportion of their assets in liquid form than their conventional counterparts. This is driven by two main reasons: (1) there is no lender of last resort (LOLR) facility available to Islamic banks, and they do not have access to market liquidity in the form of the interbank market, high liquidity was maintained for risk management purpose. (2) Excess liquidity is required due to lack of interest-free short-term investment opportunities as real economic investments require some development period. As the global financial crisis became a global economic crisis, it started to affect Islamic banks in an indirect manner. The financial crisis has triggered a chain reaction whereby the slowdown in the real economies of the developed countries has started to affect economic growth and investment activities in export driven economies of the developing countries through lower trade in goods and services as well as through the declining commodity prices including that of oil. The economic downturn is not only affecting the investment and financing activities of financial institutions including those of Islamic banks, it is also reducing the funding of these banks through lower personal savings and declining corporate profits. It should be noted that most of the Islamic banking industry comprises of commercial banks whose major funding source are retail deposits, investment banking constitutes only a small portion of the industry. Islamic banks in some regions may face risk on their fina ncing and investment side of the balance sheet due to the crisis induced volatility of equity markets where these banks have large positions. Downturn in the real estate markets where these banks have large direct and indirect exposures is also another source of risk. Similarly, the changing wealth position of their high-net-worth (HNW) clients who also hold financial exposure in the hard-hit conventional financial sector of the West and therefore are now postponing any investment plans is also a factor. The relative importance of each of these factors varies by the region. For example, the banks in the GCC and particularly in the UAE are more exposed to real estate market risk, followed by risk of international equity markets. For the banks in Asia, their investments in domestic and international equity markets are a source of concern as equity markets are showing higher volatility. In some of the countries, the existing fiscal imbalance which has widened after the crisis is also a factor in the increased volatility of the markets Previous Literature The study of bank profitability is an important tool to evaluate bank operation by examining the different factors affecting bank profitability and using these factors for management planning and strategic analysis. In the last four decades, many studies have been conducted to study both bank profitability and the determinants of bank profitability either for particular country or for a panel of countries. These studies normally divide these factors into internal factors and external factors. Internal factors represent the bank-specific characteristics such as bank size, liquidity structure; liabilities†¦etc while external factors can be macroeconomic factors such as inflation and GDP growth or Country-specific regulations rules and practices. In the area of banking profitability, many studies have been conducted to investigate the profitability of conventional banks while only few were conducted in the field of Islamic banking. In this chapter, we will review these studies for conventional banking first and then will focus on studies in the Islamic banking field. Then we will cover the conceptual framework of this research. Conventional Banking Different studies have been conducted in the field of conventional banking profitability. Short (1979), Bourke (1989), Molyneux and Thornton (1992), Goddard, Molyneux, and Wilson (2004), Peters et al. (2004) are some of the researchers in the field. Short (1979) is one of the early scholars who studied the relationship between banking profit rates and concentration for sixty banks in Canada, Western Europe and Japan during the 1970s and he included independent variables including government ownership and concentration by using H index to quantify concentration. Results showed that the government ownership impact on profitability varied throughout the countries studied but expressed an overall negative relationship. He also found evidence that indicated higher concentration rates lead to higher profit rates (Short, 1979). Bourke (1989) also compared concentration to bank profitability but included other determinants. Bourke (1989) covered ninety banks in Australia, Europe, and North America between 1972 and 198 and examined different internal and external factors: internal factors such as staff expenses, capital ratio, liquidity ratio, and loans to deposit ratio; external factors such as regulation, size of economies of scale, competition, concentration, growth in market, interest rate, government ownership, and market power. His results show that increase in government ownership leads to lower profitability in banking. He also found that concentration, interest rates, and money supply are positively related to profitability along with capital and reserves of total assets as well as cash and bank deposits of total assets. Bourke adds that well capitalized banks enjoy cheaper access to sources of funds as they are less risky than less capitalized banks (Bourke, 1989). Later, Molyneux and Thornton (1992) studied the determinants of European banks profitability. The paper examined eighteen counties in Europe between 1986 and 1989. This paper replicated Bourkes (1989) work by using internal and external determinants of bank profitability. However, Molyneux and Thornton (1992) results showed that government ownership expresses a positive coefficient with return on capital (profitability) which contradicts with Bourkes findings. Other results were similar to Bourkes, showing that concentration, interest rate, and money supply were positively related to bank profitability (Molyneux and Thornton, 1992). In one of the recent papers on bank profitability on European banks, Goddard, Molyneux, and Wilson (2004) shows similar findings to the paper by Molyneux and Thornton (1992). It investigates the determinants of profitability in six European countries and it covered 665 banks between 1992 and 1998. The study used cross-sectional and dynamic panel models. The variables used in the regression analysis were ROE, the logarithmic of total assets, Off Balance Sheet (OBS) dividends, Capital to Asset Ratio (CAR). The results from both models were similar: evidence reveals that there is a positive relationship between size (total assets) and profitability. Meanwhile, OBS appears to have a positive relationship with profitability for UK but neutral or negative for other European countries. Moreover, results also state that CAR has a positive relationship with profitability. Furthermore, the paper touched on ownership type by indicating that there is high competition in banking due to the fact t hat there is foreign bank involvement in domestic banks, and that profitability is not linked to ownership (Goddard, Molyneux, and Wilson, 2004). Peters et al. (2004) studied the characteristics of banks in post-war Lebanon for the years 1993 to 2000 and compared the results to a group of banks from five other countries in the Middle East including UAE, KSA, Kuwait, Bahrain and Oman for the years 1995 through 1999. They used Return on Equity (ROE) measure profitability and leverage and they employed regression models that relate bank profitability ratios to various explanatory variables. This study tests the relationships between bank profitability and size, asset portfolio composition, off-balance sheet items, ownership by a foreign bank, and the ratio of employment to assets. The results show a strong association between economic growth and bank profitability, whether measured by ROE or ROA. They found that Lebanese banks are profitable, but not as profitable as a control group of banks from five other countries located in the Middle East. Islamic Banking In the area of Islamic Banking, Bashir (2000) assessed the performance of Islamic banks in eight Middle Eastern countries. He analyzed important bank characteristics that affect the performance of Islamic banks by controlling economic and financial structure measures. The paper studied fourteen Islamic banks from Bahrain, Egypt, Jordan, Kuwait, Qatar, Sudan, Turkey, and United Arab Emirates between 1993 and 1998. To examining profitability, the paper used Non Interest Margin (NIM), Before Tax Profit (BTP), Return on Assets (ROA), and Return on Equity (ROE) as performance indicators. There were also internal and external variables: internal variables were bank size, leverage, loans, short-term funding, overhead, and ownership; external variables included macroeconomic environment, regulation, and financial market. In general, results from the study confirm previous findings and show that Islamic banks profitability is positively related to equity and loans. Consequently, if loans and equity are high, Islamic banks should be more profitable. If leverage is high and loan to assets is also large, Islamic banks will be more profitable. The results also indicate that favorable macro-economic conditions help profitability (Bashir, 2000). Hassoune (2002) examined Islamic bank profitability in an interest rate cycle. In his paper, compared ROE and ROA Volatility for both Islamic and conventional banks in three GCC region, Kuwait, Saudi Arabia, and Qatar. He states that since Islamic banking is based on profit and loss sharing, managements have to generate sufficient returns for investors given that they are not willing accept no returns (Hassoune, 2002). Bashir and Hassan (2004) studied the determinants of Islamic banking profitability covers 43 Islamic Banks between 1994 and 2001 in 21 countries. Their figures show Islamic banks to have a better capital asset ratio compared to commercial banks which means that Islamic banks are well capitalized. Also, their paper used internal and external banks characteristics to determine profitability as well as economic measures, financial structure variables, and country variables. They used, Net-non Interest Margin (NIM), which is non interest income to the bank such as, bank fees, service charges and foreign exchange to identify profitability. Other profitability indicators adopted were Before Tax Profit divided by total assets (BTP/TA), Return on Assets (ROA), and Return on Equity (ROE). Results obtained by Bashir and Hassan (2004), were similar to the Bashir (2000) results, which found a positive relationship between capital and profitability but a negative relationship between loans and profitability. Bashir and Hassan also found total assets to have a negative relationship with profitability which amazingly means that smaller banks are more profitable. In addition, during an economic boom, banks profitability seems to improve because there are fewer nonperforming loans. Inflation, on the other hand, does not have any effect on Islamic bank profitability. Finally, results also indicate that overhead expenses for Islamic banks have a positive relation with profitability which means if expenses increase, profitability also increases (Bashir and Hassan, 2004). Alkassim (2005) examined the determinants of profitability in the banking sector of the GCC countries and found that asset have a negative impact on profitability of conventional banks but have a positive impact on profitability of Islamic banks. They also observed that positive impact on profitability for conventional but have a negative impact for Islamic banking. Liu and Hung (2006) examined the relationship between service quality and long-term profitability of Taiwans banks and found a positive link between branch number and long-term profitability and also proved that average salaries are detrimental to banks profit. Masood, Aktan and Chaudhary (2009) studied the co-integration and causal relationship between Return on Equity and Return on Assets for 12 banks in KSA for the period between 1999- 2007. For their research, the used time series model of ADF unit-root test, Johansen co-integration test, Granger causality test and graphical comparison model. They found that there are stable long run relationships between the two variables and that it is only a one-direction cause-effect relationship between ROE and ROA. The results show that ROE is a granger cause to ROA but ROA is not a granger cause to ROE that is ROE can affect ROA input but ROA does not affect the ROE in the Saudi Arabian Banking sector. Conceptual Framework Theoretical framework is a basic conceptual structure organized around a theory. It defines the kinds of variables that are going to be used in the analysis. In this research, the theoretical framework consists of seven independent variables that represent four aspects of the Bank Characteristics. Theses aspects are the Bank Size (Total Assets), Capital Structure (Equity and Tangible Equity), Liquidity (Loans and Liquid Assets) and Liabilities (Deposits and Overheads). Bank profitability is the dependent variable and two measures of bank profitability are used in this study, namely return on average equity (ROAE) and return on average assets (ROAA). In this section we develop the hypothesis to be examined in this research paper. Development of Hypotheses This paper attempts to test seven hypotheses. A hypothesis is a claim or assumption about the value of a population parameter. It consists either of a suggested explanation for a phenomenon or of a reasoned proposal suggesting a possible correlation between multiple phenomena. According to Becker (1995), hypothesis testing is the process of judging which of two contradictory statements is correct. Hypothesis 1: Profitability has a positive and significant relationship with the total assets (ASSETS). Total Assets of a company represents its valuables including both tangible assets such as equipments and properties along with its intangible assets such as goodwill and patent. For banks, total assets include loans which are the basis for bank operations either through interest or interest-free practices. Total assets is used as a tool to measure the bank size; banks with higher total assets indicate bigger banks. Molyneux and el (2004) included total assets in their study and found a positive significant relationship between total assets and profitability. Therefore, total assets are expected to have positive relation with profitability which means that bigger banks are expected to be more profitable. Total assets are converted logarithmic to be more consistent with the other ratios Hypothesis 2: Profitability has a positive and significant relationship with equity to asset ratio (EQUITY). Total equity over total assets measures banks capital structure and adequate. It indicated bank ability to withstand losses and handle risk exposure with shareholders. Hassan and Bashir (2004) examined the relationship between EQUITY and bank profitability and found positive relationship. Therefore, EQUITY is included in this stud Effect of the Financial Crash on Islamic Banks in the UK Effect of the Financial Crash on Islamic Banks in the UK Chapter 1: Introduction Introduction to the Subject Background of the Subject General Objective The purpose of this study is to examine how the internal factors of the Islamic Banking affected their performance before, during and after the financial crisis in the GCC in comparison to the conventional banking in the same area. Research Questions This study aims to answer the following questions: How did the financial crisis affect the profitability of Islamic Banks in comparison to Conventional Banks? What are the internal factors (bank specific characteristics) that influence the profitability of Islamic banking for every year from 2006 2009? Did these factors have the same impact on the profitability of Islamic Banking before, during and after the financial crisis? Did these internal factors influence the profitability of Islamic Banking in the same manner as of the Conventional Banking? Need for the Study Significance of the Study Assumptions of the Study Limitations of the Study Although we cannot neglect the importance of the external factors on the profitability of Islamic Banking, they were not included in this study. To understand the reason behind this decision, we need to go through the different types of external factors and how they are classified: Macroeconomic Factors Country Regulation Rules Bank Regulation Rules These factors were not included for the following reasons: Since we are examining the performance of 92 banks (27 Islamic Banks and 65 Conventional Banks) in 6 countries, the number of countries used in the study is not significant enough to study the impact of GDP and inflation accurately on Bank profitability especially when examining each year separately Country Regulation Rules as per the IMF Database, although it differs slightly for the selected countries, did not change over the period from 2006 to 2009. This means that for each bank, these factors remained constant. Data about Bank Regulation Rules could not be obtained for GCC banks Delimitation of the Study This study was delaminated to the Islamic and Conventional Banks in the GCC whose data could be obtained in the Bankscope database. Chapter 2: Literature Review Overview of Islamic Banking Islamic Baking has established as an alternative to conventional interest-based banking. The first stirring of the Islamic Banking movement began in 1963 by Dr. Ahmed Alnajar in a small town in Egypt, called Mit Ghamar. Dr. Alnajar completed his education in Germany and found that it had many saving banks operating on interest. He took the idea from a savings bank in Germany and created his own small Islamic bank that was interest free. After Dr. Alnajars small bank proved successful, the establishment of other Islamic banks followed. In 1971, the Nasser Social Bank was founded in Egypt with the objective of lending out money as a charity on the basis of a profit and loss sharing system and helping people in need. And in 1975, the idea of Islamic banking spread to other Islamic regions such Dubai Islamic bank in United Arab Emirates and The Islamic Development (IDB) Bank in Jeddah, Saudi Arabia (Wilson, 1990). Even though Islamic Banking has only been around for thirty years and is still in an evolving stage, Islamic Banking is the fastest growing segment of the credit markets in the Muslim countries. In 2009, Assets held by Islamic Banking banks rose by 28.6 percent to $822bn from $639bn in 2008, according to The Bankers â€Å"Top 500 Islamic Financial Institutions† survey while conventional banks posted annual asset growth of just 6.8 percent. Furthermore, GCC states accounted for $353.2bn or 42.9 percent of the global aggregate, while Iran remained the largest single market for Shariah-compliant assets, accounting for 35.6 percent of the total. Finally, Islamic banking operations are not limited to Islamic countries but are spreading throughout the world. One reason is the growing trend toward transcending national boundaries, and unifying Muslims into a political and economic entity that could have a significant impact on the pattern of world trade (Abdel-Magid, 1981). Islamic Banking Rules and Principles Islamic banking rules are according to the Islamic Shariah derived from the Quran and prophet Mohameds sayings. The three main practices that are clearly prohibited in the Quran and the prophets sayings are, Riba (Interest), Gharar (Uncertainty), and Maysir (Betting). Prohibition of Riba or any predetermined or fixed rate in financial institutions is the most important factor in the Islamic principles pertaining to banking. As stated in the Quran â€Å"Allah forbids riba†. Riba means an increase and under Shariah the term refers to the premium that must be paid by the borrower to the lender along with the principle amount as a condition for the loan (Omar and Abdel, 1996). Gharar occurs when the purchaser does not know what has been bought and the seller does not know what has been sold. In other words, trading should be clear by stating in a contract the existing actual object(s) to be sold, with a price and time to eliminate confusion and uncertainty between the buyers and the sellers. Maisir is considered in Islam as one form of injustice in the appropriation of others wealth. The act of gambling, sometimes referred to betting on the occurrence of a future event, is prohibited and no reward accrues for the employment of spending of wealth that an individual may gain through means of gambling. Under this prohibition, any contract entered into, should be free from uncertainty, risk and speculation. Contracting parties should have perfect knowledge of the counter values intended to be exchanged as a result of their transactions. Therefore, and according to Ahmed and Hassan (2007), the principles of Islamic banking and finance enshrined from al-Quran and Prophet Mohamed‘s Sayings can be summed up as follows: Any predetermined payment over and above the actual amount of principal is prohibited. The lender must share in the profits or losses arising out of the enterprise for which the money was lent. Making money from money is not acceptable in Islam. Gharar (deception) and Maisir (gambling) are also prohibited. Investments should only support practices or products that are not forbidden or even discouraged by Islam. Islamic Banking Products Islamic Banking products have to be done according to Islamic rules and principles, based on profit and loss sharing as well as avoiding interest. According to BNM statistics 2007, Al Bai Bithaman Ajil financing is the most common in Islamic Banking. There are a lot of Islamic Banking products; however there are some famous Islamic products that will be discussed in this section. 1. Al Bai Bithaman Ajil /BBA This involves the credit sale of goods on a deferred payment basis. In BAA, the Islamic bank will purchase certain assets on a deferred payment basis and then sell the goods back to the customer at an agreed price including some margin or profit. The customer will make payment by installments over an agreed period. A fixed rate BBA is a powerful hedging tool against interest rates (Rosly, 1999). 2. Murabahah Murabahah is a contract of sale. The Islamic Bank acts as a middle man and purchases the goods requested by the customer. The bank will later sell the goods to the customer in a sale and purchase agreement, whereby the lender re-sales to the borrower at a higher price agreed on by both parties. These are more for short term financing 3. Mudharabah According to Kettel (2006), Mudharabah is a basic principle of profit and loss, where instead of lending money at a fixed rate return, the banker forms a partnership with the borrower, thereby sharing in a ventures profit and loss. Mudharabah is an agreement between the lender and entrepreneur, whereby the lender agrees to finance the project on a profit sharing basis according to a predetermined ratio agreed by both parties concerned. If there are any losses the lender will bear all the losses. 4. Musharakah Musharakah means partnership whereby the Islamic institution provides the capital needed by the customer with the understanding that they both share the profit and loss according to a formula agreed before the business transaction is transacted. In Musharakah all partners are entitled to participate in the management of the investment but it is not compulsory. Musharakah can help in providing financing for large investments in modern economic activities 5. Al Ijarah Ijarah means meaning to give something on a rental basis. In Ijarah, the bank acquires ownership based on the promise and leases back to the client for a given period. The customer pays the rental but the ownership still remains with the bank or lender. As the ownership remains with the lessor (bank), it continues to give the service for which it was rented. Under this contract, the lessor has the right to re-negotiate the quantum of the lease payment at every agreed interval to ensure rental remains in line with the market rates (Hume, 2004). 6. Wadiah Wadiah is a trust contract and the bank provides gift (hibah) and various types of benefits to the customer. This is exactly like a normal conventional savings account. 7. Istisna Istisna allows one party buys the goods and the other party undertakes to manufacture them according to agreed specifications. Normally, Istisna is used to finance construction and manufacturing projects. 8. Salam Salam is defined as the forward purchase of specified goods with full forward payment. This contract is normally used for financing agricultural production. According to Hassan (2004), Salam based future contracts for agricultural commodities, supported by Islamic Banks, can help to overcome the agricultural financial problems Table 2.1 lists the products of conventional banking and their correspondent products in Islamic Banking. Source: Obaidullah, 2005 Financial Crisis and the Islamic Banking To be able to compete with conventional banks, Islamic banks have to offer financial products that are comparable to the ones offered by the conventional banks. This exposes the Islamic banks to similar credit, liquidity and risks driven by market instability. Despite that, Islamic banks managed to remain stable at the early phases of the crisis. That was driven by three main Factors. First, Islamic banks financing activities are strongly tied to the real economic activities than their conventional counterpart. Even though Musharakah and Mudharabah both provide better risk sharing while keeping strong link to the real sector, they are used minimally for different reasons. Most financing activities are done through Murabah and Ijarah followed by Istinsa. In the GCC and during 2007, Murabaha comprised of 65.4%, Ijarah 12.78% and Istinsa 2.83%. Both Murabaha and Ijrah transactions require the Islamic bank to know the clients purspose and use of finance as well the ownership of the asset by the bank. This help in ensuring that the funds are used for their stated purposes. On the other hand, conventional banks do not require disclosing the use of funds as long as the client is believed to creditworthy or can post suitable collateral. Second, Islamic banks avoid direct exposure to exotic and toxic financial derivative products. Since Shariah prohibits riba and gharar, the asset portfolio of Islamic banks did not include any CDOs, CMBSs, and CDSs which turned out to be highly toxic for conventional banks and amplifying factor for the crisis. These derivative products, initially used for hedging purposes, became device for highly speculative investments among conventional financial institutions. Unavailability of hedging instruments for Islamic financial institutions, which was perceived as weakness before the crisis, became a strengthening factor for them. However, exposure to other investment risks driven from equity markets, sukuk, real-estate and ownership stakes in other businesses remain a source of concern when overdone or undertaken purely for speculative gains. Third, Islamic banks in general have a larger proportion of their assets in liquid form than their conventional counterparts. This is driven by two main reasons: (1) there is no lender of last resort (LOLR) facility available to Islamic banks, and they do not have access to market liquidity in the form of the interbank market, high liquidity was maintained for risk management purpose. (2) Excess liquidity is required due to lack of interest-free short-term investment opportunities as real economic investments require some development period. As the global financial crisis became a global economic crisis, it started to affect Islamic banks in an indirect manner. The financial crisis has triggered a chain reaction whereby the slowdown in the real economies of the developed countries has started to affect economic growth and investment activities in export driven economies of the developing countries through lower trade in goods and services as well as through the declining commodity prices including that of oil. The economic downturn is not only affecting the investment and financing activities of financial institutions including those of Islamic banks, it is also reducing the funding of these banks through lower personal savings and declining corporate profits. It should be noted that most of the Islamic banking industry comprises of commercial banks whose major funding source are retail deposits, investment banking constitutes only a small portion of the industry. Islamic banks in some regions may face risk on their fina ncing and investment side of the balance sheet due to the crisis induced volatility of equity markets where these banks have large positions. Downturn in the real estate markets where these banks have large direct and indirect exposures is also another source of risk. Similarly, the changing wealth position of their high-net-worth (HNW) clients who also hold financial exposure in the hard-hit conventional financial sector of the West and therefore are now postponing any investment plans is also a factor. The relative importance of each of these factors varies by the region. For example, the banks in the GCC and particularly in the UAE are more exposed to real estate market risk, followed by risk of international equity markets. For the banks in Asia, their investments in domestic and international equity markets are a source of concern as equity markets are showing higher volatility. In some of the countries, the existing fiscal imbalance which has widened after the crisis is also a factor in the increased volatility of the markets Previous Literature The study of bank profitability is an important tool to evaluate bank operation by examining the different factors affecting bank profitability and using these factors for management planning and strategic analysis. In the last four decades, many studies have been conducted to study both bank profitability and the determinants of bank profitability either for particular country or for a panel of countries. These studies normally divide these factors into internal factors and external factors. Internal factors represent the bank-specific characteristics such as bank size, liquidity structure; liabilities†¦etc while external factors can be macroeconomic factors such as inflation and GDP growth or Country-specific regulations rules and practices. In the area of banking profitability, many studies have been conducted to investigate the profitability of conventional banks while only few were conducted in the field of Islamic banking. In this chapter, we will review these studies for conventional banking first and then will focus on studies in the Islamic banking field. Then we will cover the conceptual framework of this research. Conventional Banking Different studies have been conducted in the field of conventional banking profitability. Short (1979), Bourke (1989), Molyneux and Thornton (1992), Goddard, Molyneux, and Wilson (2004), Peters et al. (2004) are some of the researchers in the field. Short (1979) is one of the early scholars who studied the relationship between banking profit rates and concentration for sixty banks in Canada, Western Europe and Japan during the 1970s and he included independent variables including government ownership and concentration by using H index to quantify concentration. Results showed that the government ownership impact on profitability varied throughout the countries studied but expressed an overall negative relationship. He also found evidence that indicated higher concentration rates lead to higher profit rates (Short, 1979). Bourke (1989) also compared concentration to bank profitability but included other determinants. Bourke (1989) covered ninety banks in Australia, Europe, and North America between 1972 and 198 and examined different internal and external factors: internal factors such as staff expenses, capital ratio, liquidity ratio, and loans to deposit ratio; external factors such as regulation, size of economies of scale, competition, concentration, growth in market, interest rate, government ownership, and market power. His results show that increase in government ownership leads to lower profitability in banking. He also found that concentration, interest rates, and money supply are positively related to profitability along with capital and reserves of total assets as well as cash and bank deposits of total assets. Bourke adds that well capitalized banks enjoy cheaper access to sources of funds as they are less risky than less capitalized banks (Bourke, 1989). Later, Molyneux and Thornton (1992) studied the determinants of European banks profitability. The paper examined eighteen counties in Europe between 1986 and 1989. This paper replicated Bourkes (1989) work by using internal and external determinants of bank profitability. However, Molyneux and Thornton (1992) results showed that government ownership expresses a positive coefficient with return on capital (profitability) which contradicts with Bourkes findings. Other results were similar to Bourkes, showing that concentration, interest rate, and money supply were positively related to bank profitability (Molyneux and Thornton, 1992). In one of the recent papers on bank profitability on European banks, Goddard, Molyneux, and Wilson (2004) shows similar findings to the paper by Molyneux and Thornton (1992). It investigates the determinants of profitability in six European countries and it covered 665 banks between 1992 and 1998. The study used cross-sectional and dynamic panel models. The variables used in the regression analysis were ROE, the logarithmic of total assets, Off Balance Sheet (OBS) dividends, Capital to Asset Ratio (CAR). The results from both models were similar: evidence reveals that there is a positive relationship between size (total assets) and profitability. Meanwhile, OBS appears to have a positive relationship with profitability for UK but neutral or negative for other European countries. Moreover, results also state that CAR has a positive relationship with profitability. Furthermore, the paper touched on ownership type by indicating that there is high competition in banking due to the fact t hat there is foreign bank involvement in domestic banks, and that profitability is not linked to ownership (Goddard, Molyneux, and Wilson, 2004). Peters et al. (2004) studied the characteristics of banks in post-war Lebanon for the years 1993 to 2000 and compared the results to a group of banks from five other countries in the Middle East including UAE, KSA, Kuwait, Bahrain and Oman for the years 1995 through 1999. They used Return on Equity (ROE) measure profitability and leverage and they employed regression models that relate bank profitability ratios to various explanatory variables. This study tests the relationships between bank profitability and size, asset portfolio composition, off-balance sheet items, ownership by a foreign bank, and the ratio of employment to assets. The results show a strong association between economic growth and bank profitability, whether measured by ROE or ROA. They found that Lebanese banks are profitable, but not as profitable as a control group of banks from five other countries located in the Middle East. Islamic Banking In the area of Islamic Banking, Bashir (2000) assessed the performance of Islamic banks in eight Middle Eastern countries. He analyzed important bank characteristics that affect the performance of Islamic banks by controlling economic and financial structure measures. The paper studied fourteen Islamic banks from Bahrain, Egypt, Jordan, Kuwait, Qatar, Sudan, Turkey, and United Arab Emirates between 1993 and 1998. To examining profitability, the paper used Non Interest Margin (NIM), Before Tax Profit (BTP), Return on Assets (ROA), and Return on Equity (ROE) as performance indicators. There were also internal and external variables: internal variables were bank size, leverage, loans, short-term funding, overhead, and ownership; external variables included macroeconomic environment, regulation, and financial market. In general, results from the study confirm previous findings and show that Islamic banks profitability is positively related to equity and loans. Consequently, if loans and equity are high, Islamic banks should be more profitable. If leverage is high and loan to assets is also large, Islamic banks will be more profitable. The results also indicate that favorable macro-economic conditions help profitability (Bashir, 2000). Hassoune (2002) examined Islamic bank profitability in an interest rate cycle. In his paper, compared ROE and ROA Volatility for both Islamic and conventional banks in three GCC region, Kuwait, Saudi Arabia, and Qatar. He states that since Islamic banking is based on profit and loss sharing, managements have to generate sufficient returns for investors given that they are not willing accept no returns (Hassoune, 2002). Bashir and Hassan (2004) studied the determinants of Islamic banking profitability covers 43 Islamic Banks between 1994 and 2001 in 21 countries. Their figures show Islamic banks to have a better capital asset ratio compared to commercial banks which means that Islamic banks are well capitalized. Also, their paper used internal and external banks characteristics to determine profitability as well as economic measures, financial structure variables, and country variables. They used, Net-non Interest Margin (NIM), which is non interest income to the bank such as, bank fees, service charges and foreign exchange to identify profitability. Other profitability indicators adopted were Before Tax Profit divided by total assets (BTP/TA), Return on Assets (ROA), and Return on Equity (ROE). Results obtained by Bashir and Hassan (2004), were similar to the Bashir (2000) results, which found a positive relationship between capital and profitability but a negative relationship between loans and profitability. Bashir and Hassan also found total assets to have a negative relationship with profitability which amazingly means that smaller banks are more profitable. In addition, during an economic boom, banks profitability seems to improve because there are fewer nonperforming loans. Inflation, on the other hand, does not have any effect on Islamic bank profitability. Finally, results also indicate that overhead expenses for Islamic banks have a positive relation with profitability which means if expenses increase, profitability also increases (Bashir and Hassan, 2004). Alkassim (2005) examined the determinants of profitability in the banking sector of the GCC countries and found that asset have a negative impact on profitability of conventional banks but have a positive impact on profitability of Islamic banks. They also observed that positive impact on profitability for conventional but have a negative impact for Islamic banking. Liu and Hung (2006) examined the relationship between service quality and long-term profitability of Taiwans banks and found a positive link between branch number and long-term profitability and also proved that average salaries are detrimental to banks profit. Masood, Aktan and Chaudhary (2009) studied the co-integration and causal relationship between Return on Equity and Return on Assets for 12 banks in KSA for the period between 1999- 2007. For their research, the used time series model of ADF unit-root test, Johansen co-integration test, Granger causality test and graphical comparison model. They found that there are stable long run relationships between the two variables and that it is only a one-direction cause-effect relationship between ROE and ROA. The results show that ROE is a granger cause to ROA but ROA is not a granger cause to ROE that is ROE can affect ROA input but ROA does not affect the ROE in the Saudi Arabian Banking sector. Conceptual Framework Theoretical framework is a basic conceptual structure organized around a theory. It defines the kinds of variables that are going to be used in the analysis. In this research, the theoretical framework consists of seven independent variables that represent four aspects of the Bank Characteristics. Theses aspects are the Bank Size (Total Assets), Capital Structure (Equity and Tangible Equity), Liquidity (Loans and Liquid Assets) and Liabilities (Deposits and Overheads). Bank profitability is the dependent variable and two measures of bank profitability are used in this study, namely return on average equity (ROAE) and return on average assets (ROAA). In this section we develop the hypothesis to be examined in this research paper. Development of Hypotheses This paper attempts to test seven hypotheses. A hypothesis is a claim or assumption about the value of a population parameter. It consists either of a suggested explanation for a phenomenon or of a reasoned proposal suggesting a possible correlation between multiple phenomena. According to Becker (1995), hypothesis testing is the process of judging which of two contradictory statements is correct. Hypothesis 1: Profitability has a positive and significant relationship with the total assets (ASSETS). Total Assets of a company represents its valuables including both tangible assets such as equipments and properties along with its intangible assets such as goodwill and patent. For banks, total assets include loans which are the basis for bank operations either through interest or interest-free practices. Total assets is used as a tool to measure the bank size; banks with higher total assets indicate bigger banks. Molyneux and el (2004) included total assets in their study and found a positive significant relationship between total assets and profitability. Therefore, total assets are expected to have positive relation with profitability which means that bigger banks are expected to be more profitable. Total assets are converted logarithmic to be more consistent with the other ratios Hypothesis 2: Profitability has a positive and significant relationship with equity to asset ratio (EQUITY). Total equity over total assets measures banks capital structure and adequate. It indicated bank ability to withstand losses and handle risk exposure with shareholders. Hassan and Bashir (2004) examined the relationship between EQUITY and bank profitability and found positive relationship. Therefore, EQUITY is included in this stud

An Overview of the Website Buying Process :: Sell Website Buy Web Site

An Overview of the Website Buying Process Buying a website: It's a brand new ball game Unless you've bought or sold a website in the past, you'll find that buying a website can be a confusing and even trying experience for the unprepared. That's why it's important for you to take the time to read this explanation of the process. Even if you're a veteran in website transfers, understanding the process will assist you in working with our firm. Getting Started: Questions and more questions The search for a website almost always starts with a visit to a web site like the one we host at Votan. Sometimes the prospective Buyer is a Corporation, Private Investment Group or a sophisticated Private Investor who has a very definite idea of the type of website wanted. But, often the website Buyer is a first time Buyer and is still in the formative or exploratory phase of the search. Many times a Buyer's first question is, "What kinds of websites do you have?" Well, we have lots of websites, so that's a tough question to answer without some idea of the Buyer's resources, skills and needs. In order for us to find you a match made in heaven, we need to uncover answers by questioning you and learning more about you. So the first and most important step is telling us about you. Be patient when we ask, "How many days per week are you comfortable working?" and "Do you like having employees?" and "How much cash do you have for a down payment?" and many other questions. We're not just asking: We're narrowing your search and saving you time and aggravation. Our web site Buyer registration offers a questionnaire that is a great way to narrow your search and help us help you find the business of your dreams. Defining the search: Non-confidential Summaries After we've talked for a while, we can probably begin narrowing the search to a few appropriate business opportunities. At this point, we communicate non-confidential summaries of our exclusive opportunities to you in a number of ways. Since you're viewing our web site you can see the non-confidential summaries of our exclusive listings by simply using the "Businesses For Sale" button. VR non-confidential summaries show our profile #, a description of the business, a summary of financial performance, the reasons why we think it may be a good opportunity and the asking price.

the war scare :: essays research papers

The War Scare  Ã‚  Ã‚  Ã‚  Ã‚   It has been said that the United States is just like the Roman Empire. We started off small, became a great power, and hit a high point in life, all of which have happened to the United States. Now, in the twenty-first century, we are putting ourselves in places and positions that many believe that we do not belong in. For Example, in the country of Afghanistan, we have â€Å"worn out our welcome†. We went over there, set up American businesses, and basically took over their business flow. We have been asked nicely to leave, been told to leave, and finally threatened, but we did not take it seriously enough. Well, our decisions have come back to haunt us. Now, we face the fate of the great Roman Empire. Falling to our knees and being crushed, or at least bumped down below a world power.   Ã‚  Ã‚  Ã‚  Ã‚  On September eleventh, two thousand and one, our world was smacked in the face and pushed to its knees. The United States has reason to believe that a known terrorist, Osama Bin Laden, organized the high-jacking of four transcontinental flights, and told them to crash into both the World Trade Center towers, the Pentagon, and the White House. At eight o-clock, Central Time, the first plane hit one of the World Trade Center towers, and five minutes later, the other tower was hit. Millions stood and watched the buildings burn, and eventually fall. Our head for all military operations, the Pentagon, was crashed into, and the whole West Side was destroyed. The last flight crashed harmlessly into a field in Pennsylvania, thanks to the people who sacrificed their lives to save others. The world was getting back on its feet, the damage was being picked up, and the United States was living up to its name for once. However, it was not over yet, for a plague had begun to sp read across our land. Letters that had been filled with anthrax were being sent to senators, heads of major companies, and other high positioned people in the U.S. The first case of anthrax that was fatal happened in North Carolina while the victim was sitting by a stream. It was believed that the deadly spores could not leak out of the sealed envelope, and if they did, it would not be in large enough numbers to harm anyone, especially postal workers. When the first case died of inhalation anthrax, the government was jumping all over it, and then two postal workers died of inhalation anthrax because they just handled the mail that had anthrax spores in them.

Economics †Product Differentiation in Monopoly Essay

Monopolies are firms that are the sole or dominant suppliers of a good or service in a given market. And what sets apart monopolies from competitive firms is â€Å"market power†- the ability of a firm to affect the market price. Price discrimination is the business practice of selling the same good at different prices to different customers, even though the cost of production is the same for all customers. Only monopolies can practice price discrimination, because otherwise competition would prevent price discrimination. Price discrimination increases the monopolist’s profits, reduces the consumer surplus and reduces the deadweight loss. (the buyers of the lower-priced product should not be able to resell the product to the higher-priced market. Otherwise, the monopoly will not be able to maintain price differentials. ) The monopolist must be able to identify segments of the market that are willing to pay different prices, and then market its products accordingly. A common technique to achieve this is by making it harder to get the lower prices, since wealthier consumers value their time more than their money. Some ways the monopolistic firms can implement discriminatory pricing are; †¢Linear Approximation Technique or Markup Pricing Technique †¢Personalized Pricing – extracting the maximum amount a customer is willing to pay for the product. †¢Coupons and Rebates – providing coupons to attract more customers or providing personalized discounts. †¢Bulk pricing – offering lower prices when customer buys a huge quantity of the same product. †¢Bundling – joining products or services together in order to sell them as a single combined unit. Block pricing – Charging more for the first set of the product, then less for each additional product bought by the same consumer. †¢Group Pricing- charging different customers different price based on factors such as race, gender, age, abilities etc. and also â€Å"psychographic segmentation†- dividing consumers based on their lifestyle, personality, values, and social class. †¢Charging different prices based on geographic location. Some products may be cheaper to produce in different places and based on the cost of the good sold the monopolistic firm can charge different prices in order to maximize its profits. Placing restrictions or other â€Å"inferior† characteristics on the low-price good or service, so as to make it sufficiently less attractive to the high price segment †¢Establishing a schedule of â€Å"volume discounts† (â€Å"block pricing†) such that only large-volume buyers (who may have more elastic demands) qualify †¢Using a two-part tariff, where the customer pays an up-front fee for the right to buy the product and then pays additional fees for each unit of the product consumed.

East Coast vs. West Coast Essay

Throughout the nineties there was an movement in hip hop, the infamous East coast rap vs West coast between rap musicians. It was a separational movement that caused both sides to end the lives of two most influential rappers in the music industry, Notorious B.I.G and Tupac Shakur. Both rappers with similar backgrounds have changed the music scene completely with one sudden movement. Known mainly for their rivalry against one another and compared because of the backgrounds, these two artist had quite a distinctiveness to one another. Notorious B.I.G and Tupac Shakur are great influential artist in the music industry and had similar backgrounds but distinctive enough to cause a separation that influenced the music industry then and now. I had watched a documentary, based off of the infamous rappers and their start up in the music industry, titled Tupac and Biggie where I got information on both sides. To begin with both rappers had similar upbringing for instance, were born in the sta te of New York, Tupac in Harlem and Biggie in Brooklyn. However, Tupac did move around growing up to Baltimore, Maryland in 1984 and finally to Oakland, California in 1988 by the age of 17. Biggie had more of an interesting beginning, unlike his soon to be rival, he had been raised by a single mother who was a teacher and had lived in a 3 bedroom apartment, not how he claimed on his song ‘Juice’ as a â€Å"one-room shack†. Meanwhile, Tupac was also raised by a single mother, however had been a part of the anti-government group the Black Panther Party, which would later be a foundation to his rap verses on political stans. Like most rappers they both would have a rough upbringing, and Biggie would start drug dealing at the age of 14 to help support his family, till discovered musically. Interestingly enough, Tupac had an interest in acting and attended performing art schools and create his passion for poetry, turned later to rap rhymes. Tupac was the fortunate one, and was able to join a music group to help his career while Biggie had to perform out in the streets, as the footage shows. Also, in the film, they discuss how both rappers dropped out of h igh school around the same age, 17,and both to pursue their music passions and help support the family they had. The upcoming of both rappers would influence each on their music that would have an impact on the top charts. Musically, both rappers had distinctive sounds, Biggie was known to have a better flow and well produced beat that  was more Top 40, while Tupac had a greater influence on lyricism because of his deep passion for poetry and political stans. Tupac was well known to speak his mind explicitly and rhymed about topics such as, women rights, african american discrimination, and police injustice. Something most seem to forget is that Biggie used to have open shows for Tupac before the notorious rapper would have his own high fame, this also showed that both rappers had a great friendship before a great dispute The documentary shows rare footage of the two hugging after Biggie’s first album release and great success. The two were loved by audiences and fans but had showed within the top charts throughout the nineties. On ratings Biggie was in the lead with fewer singles that reached higher spots on the charts. Meanwhile, Tupac delivered over 15 singles, and not as many reaching high spots as Biggie had with only 10 singles. Although, both lyrically did have similar writing, rapping about poor upbringings, whether it was an alter ego for Biggie or reality for Tupac, fans wanted more of this profound explicit music. Undoub tedly the two are compared to see which was better, personally cannot judge which was better because of the differences they had on their music, biggie flowed, but tupac spoke. Another great influence these both rappers had for their music and personal lives, was the cliques they surrounded themselves with throughout their high points in fame and fortune. The film talks about how Tupac joined a musical rap group when he had moved to California, Digital Underground, but later had gone solo and joined the record company, Death Row Records. Meanwhile Biggie was signed onto Bad Boy Records, and he had been signed onto the record company by another famous rapper Diddy. Tupac was around many people however, one of his many allegiances was Suge Knight. Suge Knight is an founder of the record company Tupac had been signed onto and was often seen with Tupac by the media in photographs and video footage. Throughout the film the audience is drawn towards the conclusion that Suge Knight was involved in both deaths of Tupac and Biggie. Aswell as Suge Knight, Diddy was also involved in the murders of both musicians, as the film goes on. The death of both rappers were similar but different from one another. The dispute between the rappers had started because of Suge Knight and Diddy, creating the West Coast vs East Coast dispute in the Hip Hop commu nity. This great dispute would have each Coast of rappers defensive over the side they were representing, and cause a huge  rivalry between everyone. From rap group NWA to rappers such as, Snoop Dogg and Nas, everyone in the Hip Hop world took a side. After releasing a record titled â€Å"Who Shot Ya?† Tupac was under the impression Biggie had been set out to kill him after a robbery at his home that nearly ended his life with the theifs holding him at gunpoint one night. This would add fuel to the burning flame that they were trying to burn out caused by the record company executives, Suge and Diddy. After one diss record after another the two rappers, Biggie and Tupac seemed to enjoy the drama but were on high alert for one another. However in the end, Tupac was shot and killed in Las Vegas, Nevada on September 13, 1996, he had been kicked out and forced to leave a casino one night after a brawl. Less than a year later, Biggie was shot and killed on March 9, 1997 in Los Angeles, California. Biggie had left a recording studio in Los Angeles, and when outside was shot in his vehicle. Both rappers had a big influence on the music industry, however the fans were left with legends gone too soon. More importantly the deaths of the rappers were a huge impact on the community they each had represented. In Brooklyn, during the funeral of the Notorious B.I.G. many fans of the community were outside in the streets showing their respect that the rapper had deserved. In the film you see footage of the funeral with hundreds of fans onlooking the hearse carrying his body throughout the streets of Brooklyn that he had onced hussled to make a living. At one point of the funeral footage, you can see fans playing one of his hit singles and dancing to the rap song, showing that no matter if dead or alive, the rapper would live on and have respect in the community and be played. However on the other Coast, only close friends of Tupac attended his funeral even though there were many candle lighting ceremonies for the rapper from fans. Tupac was cremated and his ashes were spreaded into the ocean in the West Coast, as well as a few of his favorite things such as, Hennessy liquor, cigarettes, cd’s and gold chains. The legacy of each rapper was different from one another, Tupac spoke for Afr ican American men that had been mistreated by the corrupted justice system, and also towards women, and the respect they should deserve from men. The Notorious B.I.G. left his community with aspiration on being able to succeed no matter where you came from and gave hope to many. Both of the rappers left an impact on the music industry and had different legacies for their community and fans.  Without a doubt, both rappers have had influenced many modern day rappers that are or aren’t in the industry today. The documentary shows different musicians, some that are not even in the rap genre, talking about how each rapper left an impact on their lives, A famous rapper by the name of 50 cent says in the film, that there was not going to be another rapper like Tupac and that there was not going to be another rapper like Biggie. Many artist now pay homage to both rappers to show respect on the struggle Hip Hop has had in being accepted. Now a days rappers have showed respect in many ways such as giving shout outs on songs to the rappers or sample beats from past hits of the late rappers, to even having holograms of the artist at live shows. Another sign of respect to the artist is that their music goes on, even after being gone, unreleased music of both rap pers rises to the public every now and then to remember the days the rappers held the crown. Biggie has released three albums since his death and Tupac five, music that was intended to be released at a point but after the misfortunate deaths was never completely finished. With posthumous albums being released it gives inspiration for musicians to get more of a better understanding of the rappers and pass techniques used by the rappers. The distinctiveness in each rappers work of music, left an influential aspiration for other musicians in the industry, Biggie had a better rhythm with his rhymes and Tupac was open to talk about social issues going on. In the end, both rappers were raised differently and had different backgrounds that influenced their work. Yet throughout their careers the similarities of the rappers was visible and the distinctiveness caused a barrier in their friendship. Leading to a grand movement in music history, but also the the deaths of both rappers. Tupac and Biggie are some of the greatest influentials of rap music and have caused similar aspirations for other artist. Works Cited Biggie and Tupac. Dir. Nick Broomfeild. Perf. The Notorious B.I.G., Tupac Shakur, Nick Broomfeild. FilmFour, 2002. DVD.

American Involvment in World War I Essay

This investigation assesses American involvement in World War I before military intervention, and how this led to military intervention. In order to assess these causes, one must examine America’s involvement in the war before combat, the events that launched America’s military intervention in the war, American sentiments about the war before military intervention, and Woodrow Wilson’s actions before the war. Two sources used in the essay, America’s Great War: World War One and the American Experience by Robert H.  Ziegler and Woodrow Wilson’s speech to congress on April 2nd, 1917 are evaluated for their origins, values, purposes and limitations. The investigation does not asses the pre-war situations of any countries but the United States, and does not asses American military involvement during the First World War Summary Of Evidence Prior to 1917, America was already deeply involved in the First World War, though they did not have troops fighting in the trenches overseas. First, American involvement in the war was purely as a producer and creditor to the Allied Powers. The war, while catastrophic for the countries involved in its atrophied trench battles, provided America with an astronomical boost to its economy, from 2 billion dollars in exported materials in 1913 to nearly 6 billion dollars in exports in 1916. This economic boom was mainly brought on by Britain’s dependency on American foodstuffs and manufactured goods.. The economic ties between America and Britain tightened with public subscription loans. By 1917, Britain had borrowed 2. 7 billion dollars from American creditors. Historian Paul Koistinen wrote â€Å"Without American supplies, Britain could not continue the war; without American financing of almost 10$ million a day †¦ Britain would exhaust its reserves of gold and securities by March 1917. Its dependence was total. Cutting back procurement . . . would produce disaster in England† Originally, America did nothing but reap the reward of â€Å"neutrality†. When Americas turned their eyes to the stage of war in Europe, they were truly terrified. One Chicago newspaper joked â€Å"A hearty vote of thanks to Columbus for having discovered America†. This sentiment was echoed by many American citizens, who showed pride in President Woodrow Wilson’s decision to declare America a neutral state in the war. Americans thoughts on the war lied in their bloodlines, as a majority of Americans were descendants from either Allied or Central Powers nations. Most Americans, early in the war at least, didn’t understand the war or why it was being fought, and were glad that America wasn’t involved. However, these robust Anti-Involvement sentiments began to fade after May 7 1915, the day of the Lusitania crisis. German U-Boats torpedoed and sunk a passenger liner in British waters, killing nearly 1,200 civilians, including 128 American citizens. The murder of these innocents set off the first widespread pro war feelings in Americans. This outrage was justified, but was also heightened by yellow journalism that demonized Germans as barbarians and deranged killers. President Woodrow Wilson, taking note of this event and the outrage it caused, warned the Germans that any further violation of American rights would result in â€Å"Strict Accountability† for these actions. This, as well as the bloody war dragging on in Europe, brought up the question of military preparedness in the United States. By 1916, pro-preparedness sentiment was widespread, as 135,000 supporters of expanding the military marched on New York City’s 5th Avenue, for 12 hours. In Chicago, 130,000 telephone operators moved in the shape of an American flag, goose-stepping down State Street. In the election of 1916, Woodrow Wilson ran against Charles E. Hughes, who was backed by Theodore Roosevelt, former president and staunch Allied Powers supporter, as well as an advocate for military preparedness. Woodrow Wilson won the election by only about 600,000 popular votes. However, these sentiments were met with an equally strong anti-militarism force, saying that in a chaotic world, America must be a beacon and resist entrance into war, and resist building an enormous military. Strong anti-militaristic sentiments began to fade when British intelligence officers intercepted a telegram sent from Foreign Secretary of the German Empire Arthur Zimmermann to the German ambassador of Mexico, Heinrich von Eckardt. This infamous proposal, known as the Zimmermann note, proposed that Mexico wage war against the United States. Throughout America’s neutrality in World War 1, President Wilson had acted as a mediator, but with tension building to a terminal level and with the Zimmermann note, Wilson was forced to ask congress to bolster America’s military forces on April 2nd 1917. Later in the same year, America sent its first military forces oversees Evaluation Of Sources Robert H Zieger: America’s Great War: World War One and the American Experience Origins- (2000) Zieger is a respected labor historian Purpose- Provides an in-depth look at American involvement in the war. Value- The economic statistics and quotations from various primary and secondary sources allow the reader to evaluate the validity of the claims Zieger makes. Limitations- does not provide any new opinions or claims Woodrow Wilson, April 2nd 1917 to congress to persuade congress to bring the United States Origin- German hostile actions towards the United States Purpose- Persuade congress to declare war on Germany and the Central Powers Value- clearly outlined Wilson’s reason’s for entering war Limitations- doesn’t explain the underlying causes of military intervention or pressure from big business to declare war for entry  Analysis America’s involvement in World War One began with producing vital weapons and foodstuffs for the Allied Powers, as well as economically supporting the Allied nation’s governments. Throughout the war, the German Empire repeatedly acted belligerently towards the neutral United States, sinking passenger lines, killing Amer ican civilians. Tension with Germany also rose after the proposal to Mexico asking the Mexican army to wage war on the United States. These belligerent German acts, however, would not have held as much effect as they did if American political opinions had not been shifted by the German actions, the economic pressure of close ties to the Allied nations, or social pressure brought along by shifting political attitudes. These all contributed to tensions growing regarding American military involvement I World War One President Woodrow Wilson was a stalwart proponent of American neutrality in the First World War for the almost all of the war, but the American political climate at the time forced his hand.. He was able to win this election because most voters at the time had pro-neutrality sentiments. However, Wilson took into account his slim margin of victory, and the Republican’s yearning for a prepared military. These yearnings were brought on mainly by the Lusitania sinking. A major proponent for intervention, the previously mentioned Theodore Roosevelt, denounced these acts of the German Empire as acts of piracy. Roosevelt’s popularity made these statements extremely well heard. This shift in public opinion helped force President Wilson’s hand. America’s involvement in World War One before it entry in combat was extremely vital, producing millions of dollars’ worth of material for Britain and France, as well as financing the war through small loans. This dependency was built by J. P Morgan, who traded nearly 3 billion dollars’ worth of goods with the allied powers. By 1917, America had invested 2. 7 billion dollars in Britain alone. Historian Paul Koistinen’s quote regarding British dependency on American trade shows how deeply entrenched America was with the war’s affairs pre involvement. These statistics show that the allied powers were completely dependent on American economic support American corporations had an immense amount of wealth in the war, and if they Allied powers lost the war, all of their investments would be worth nothing, because the countries that had been responsible for repaying these debts would no longer exist. The war was taking a detrimental toll on the populations of the warring nations, and the war was almost completely atrophied. It was only a matter of time before one side lost, and it was essential to American business that it was the Allied Powers. Had the allied powers lost to the central powers, American financers would have lost 2. 7 billion dollars as a whole, 2. 7 billion dollars that were needed to give to American business, 2. 7 billion dollars that banks needed to stay in business. Throughout pre-involvement America, as early as the dawn of the war, so called â€Å"hyphenated Americans†, had opinions on what side of the war to support, dependent on their country of origin. German-Americans, the largest ethnic group at the time , supported what they thought of as their motherland, Germany, therefore supported the Central Powers. The second largest ethnic group, Irish-Americans, saw Great Britain as an oppressor, therefore were also supporters of the central powers. However, most Americans at the time were still pro-neutrality. A Chicago newspaper, expressing thanks to Columbus, wrote an article on the blessing of the Atlantic Ocean. This was a popular sentiment at the time, and many Americans were proud of Wilson’s decision to be neutral. After the sinking of American ocean liner Lusitania the support of neutrality began to fade. Before the Lusitania disaster, however, 92 ships had been sunken by aggressive German action. None of these attacks had gained as much publicity, partially due to the fact that the previous sinking’s hadn’t been as destructive. But this was also due to the fact that the Lusitania sinking was grabbed onto by yellow journalists. â€Å"The blood of these murdered victims cries for vengeance. If that cry is unheard, the people of the United States will always bear upon them the stigma of the greatest humiliation ever put upon a nation. Writes a reporter from the Toronto Telegram. President Wilson demanded that German U-Boats stop sinking civilian liners, and if they continued to do so, they would be met with military retaliation. This didn’t stop Germans from sinking boats, and Wilson’s failure to take action against them infuriated Americans. Observing the protests in American cities at the time, one can judge that huge masses of people were strongly in favo r of interventionism. Conclusion The process of the American military joining the Allied Powers seemed inevitable from the start of the war, but still took hostile action and over reaction to spark military involvement. America’s pre-war economic ties to Europe and America’s reliance on trade with these nations during the war made America’s involvement with these nations too deep to let them lose the war, therefore forcing combat. Woodrow Wilson’s strong stance on neutrality couldn’t stand up to the enormous pressure he faced from the people of the United States.

Participant Groups Essay

Describe the Problem – The local community has constantly experienced trouble from the activity of youth gangs that are usually at odds with one another. Their conflicts usually end up in violent riots at different public places such as the plaza, the park, and the children’s community playground. Although most of these events happen during the dead of night and hardly any non-gang member in the community has gotten hurt because of them, the riots usually end up destroying community property such as street lamps, road signs, etc. The local sheriff’s department is usually inadequate in patrolling the streets at night. Their small number can only afford only a couple of deputies to do nightshifts. Hence, the gangs usually get away with their riots. Select Intended Participant Groups – Volunteers from the community who are agreeable to the creation of a neighborhood watch. They mainly comprise of young men and concerned fathers who are willing to take shifts at beefing up the night watch. Select a Setting – The community, including and most especially the sites usually frequented by the youth gangs such as the community playground, the park, and the plaza. Set Goals and Objectives – To reduce and eventually eliminate the incidence of youth violence at night due to youth gang riots. Select an Appropriate Intervention – A neighborhood watch. This is the formation of a group of dedicated individuals who would patrol at night as an auxiliary, unarmed division of the sheriff department’s nightshift watch. Locate Resources for your Intervention – vehicles can be solicited from willing contributors, rented from a local shop, or provided by the volunteers themselves. Communication equipment can be borrowed from the excess in the sheriff’s department. Funding for gas, batteries, and other miscellaneous materials shall be requested from the company. Involve the Community – Aside from the volunteers, the rest of the community will be made aware of the intervention through various information dissemination drives involving the school and the community leaders. Develop your Activities and Materials – Activities include violence pacification training of volunteers by sheriff’s department, volunteer evaluation and subsequent deployment. Materials to be developed are mobility and communications equipment. Staff your Intervention – The staff for the intervention consist of the volunteers, and selected deputies from the sheriff’s department to provide the necessary training and evaluation of volunteers. Train your Staff – Training involves violence pacification techniques, proper use of communication hardware, driving protocol, and aggression response protocols. Implement your Intervention – Implementation shall proceed as soon as enough volunteers have been trained and appropriate resources have been acquired. Monitor your Intervention – Each head volunteer per deployment is expected to monitor and record the events that transpire during his watch and submit reports to the company for evaluation. Evaluate your Intervention – the evaluation will be based on volunteer records, volunteer and community assessment, and independent assessment done by company representatives. The key points of evaluation are the rate of youth violence due to gangs after intervention implementation, community response and the viability of continued implementation.