Monday, February 24, 2020
Contemporary Theories Of Knowledge - Research Paper Example Meaning and purpose are often taken to mean the same thing but in this case, they will be taken to mean different things. Personal lives may be taken to mean an individualÃ¢â¬â¢s account of his/her experience but for the sake of this essay, I will take personal lives as the generalized experience of people rather than the effect on my own personal life. This is because one personÃ¢â¬â¢s account of existence cannot explain fully the extent to which knowledge produces meaning and purpose as some knowledge is second-hand. Knowledge for Plato is Ã¢â¬Å"justified true beliefÃ¢â¬ (Lagemaat 24; Lemos 9; Russell, n.p). The Ã¢â¬Å"whole pointÃ¢â¬ of knowledge as this would mean that the absolute or only point of knowledge is to produce meaning and purpose hence one has to agree or disagree with the statement but not to a certain extent. However, I will argue that knowledge produces meaning but sometimes does not produce purpose in our lives. Although knowledge influences our purpose in life, purpose can be achieved through different ways without knowledge. As stated earlier, knowledge is Ã¢â¬Ëjustified true belief.Ã¢â¬ However, the concepts of truth and belief need the explanation as they are controversial concepts. According to Dunn, the truth is Ã¢â¬Å"things that can be justified and believed inÃ¢â¬ (n.p). It distinguishes knowledge from belief hence what we claim to know must be true, if mere belief, it is true or false (Lagemaat 24). As such, believing that something is true does not make it true. According to the correspondence theory of truth, we can know if something is true through our sense experience while for coherence theory, a proposition must match with what we know to be true. Knowledge can also be true if the majority of people believe in it (Dunn, n.p). For pragmatists, the truth is whatever is useful to us.
Saturday, February 8, 2020
The economy of a specific developing country - Essay Example The nation has experienced a major transformation from a centrally planned economy to a developed and functional market economy (Heshmati, 16). Even with the progress, China is still far from development. Ten years ago, the Gross Domestic Product (GDP) of China was placed sixth largest in the world (Bailey 180). Between 2001 and 2010, the GDP had increased four times (Tselichtchev n.p.). ChinaÃ¢â¬â¢s economy has grown by 9% for the last 30 years; from 1978-2004, its GDP grew by 9.7 % a year, faster than the worldÃ¢â¬â¢s average (Hongyi 159). In recent times, the GDP has increased by 11.3 times; between 2005-2007 ChinaÃ¢â¬â¢s GDP has increased by 11%-11.6% annually (Hongyi 159). Hongyi points out that annual per capita GDP growth rate stood at roughly 7%-8% in 2010, but it is estimated be about 6%-7% by 2020 (159). The income distribution of resources has worsened due to ChinaÃ¢â¬â¢s transition to a market economy. The inequality in China is rampart between the rural areas and the urban areas; this is felt with the unequal distribution of resources. The inequality is felt by the increase of the rural wage employment and increased inequality of distribution of resources of urban income. The income inequality has been brought about by economic reforms, and began when the rural areas began being deprived of resources. Even with the new reforms, the poverty rates have increased (Bergsten, Gill and Lardy 31). China is a communist country, with a communist government. The Chinese Government has acquired strong capabilities of macroeconomic control. The market economy in China is a kind of government led market economy, and the government has strong control of the macroeconomics (Yu 32). The Chinese Government has helped the Chinese people, like the public sector in dealing with the difficulty of globalization. Nevertheless, the Government has also hindered the Chinese people; this is because of the inadequate continuity of
Wednesday, January 29, 2020
Chapters 15 20 Questions Answers Essay 1. In Chapter 15, Amir meets with the dying Rahim Khan. Where are they? Peshawar, Pakistan 2. What does Amir say about cliches? Why does Amir use the cliche about an elephant in the room to describe his meeting with Rahim Khan? They are usually dead on. The elephant is the truth about Rahim KhanÃ¢â¬â¢s condition Ã¢â¬â he is dying and doesnÃ¢â¬â¢t have much time left. 3. Afghanistan has been seized by what political group in Chapter 15? Taliban 4. In Chapter 16, Rahim tells us what happened to Hassan. What has happened? Where is he living? Hassan went to live in a village just outside Bamiyan where. Rahim Khan finds Hassan, who tells him that Ali was killed by a landmine. Rahim Khan asks Hassan and his wife, Farzana, to live with him. Hassan at first refuses, but agrees after learning of BabaÃ¢â¬â¢s death. Their first baby was a stillborn girl. HassanÃ¢â¬â¢s mother, Sanaubar, returns to the home, starving and ill. Hassan and his wife nurse his mother back to health. She in turn delivers FarzanaÃ¢â¬â¢s son, Sohrab. Sanaubar dies when Sohrab is four. 5. Who is Farzana? Who is Sohrab? Farzana is HassanÃ¢â¬â¢s wife. Sohrab is their son. 6. What happened in 1998 by the Taliban in Mazar-i-Sharif ? The Taliban massacred many Hazaras in Mazar-i-Sharif. 7. In Chapter 17, Rahim gives Amir a letter from Hassan, who wrote it six months before. What is the tone of this letter? How does Amir react? Hassan is the same old Hassan; a loyal friend who is concerned about Amir. Hassan wrote the letter with excitement and pride. Hassan says he would like to see Amir again. Rahim Khan reveals, however, that Hassan and his wife were murdered by the Taliban a month after the letter was written. Their son, Sohrab, is now living in an orphanage in Kabul. 8. In Chapter 18, Amir finds out that both Hassan and his wife were shot by the Taliban while trying to protect Babas house, as a result, orphaning their son. Rahim tells Amir it is his job to find Sohrab in Karteh-Seh, Afghanistan, and take him to an orphanage in Peshawar, Pakistan. What is Amirs reaction? Do you think Rahims dying wish is unfair? Why or why not? AmirÃ¢â¬â¢s reaction is of shock and anger. He doesnÃ¢â¬â¢t understand why no one told him this before. RahimÃ¢â¬â¢s wish is not unfair Ã¢â¬â this is how Amir will remove the guilt and pay back Hassan for what Amir never did in the alleyway years ago. 9. How does the cliche, like father, like son mentioned on page 238, relate to Baba and Amir? Baba and Amir were more alike than heÃ¢â¬â¢d ever known. Ã¢â¬Å"We had both betrayed the people who would have given their lives for us. And with that came this realization: that Rahim Khan has summoned me here to atone not just for my sins but for BabaÃ¢â¬â¢s too. Ã¢â¬ (209) 10. What clues hint at the secret that is revealed in Chapter 17-18? Baba had always been so close to Hassan and it makes sense now why he loves Hassan so much. (forgiveness of Ã¢â¬Å"theftÃ¢â¬ , cleft lip, threatened Amir over the Ã¢â¬Å"new servantsÃ¢â¬ comment, bought the same gifts for Hassan and Amir (kite) Ã¢â¬â treated them equally, wishes Hassan was here (in America), etc.) 11. In Chapter 19, Farid is engaged to drive Amir from Peshawar to Afghanistan. Describe his first impression of Amir. When Farid said, Youve always been a tourist here, you just didnt know it, (page 245), what did he mean? What is Farids impression of emigrant Afghans who return to visit Afghanistan? Many are shocked at the changes in Afghanistan. They are like tourists in the country, considering the many horrible changes that have taken place. Farid believes that Amir has always been a tourist. Amir has only known a better Afghanistan. Afghanis only come back to sell their land and leave again. 12. What realization does Amir come to in Chapter 19? Amir realizes his life has been a lie all along. Baba favored Hassan in the past Ã¢â¬â Amir realizes this as a sign that Hassan is his half-brother. He also realizes he must leave to help Sohrab right away before he talks himself out of going. This was his last chance at redemption. (195) 13. In Chapter 20, Amir sees Kabul for the first time since leaving. Describe what he sees. Amir is shocked by the state of Afghanistan. On arriving in Kabul he discovers it has been severely damaged by twenty years of war. The Taliban patrol the streets looking for people to punish. Amir is advised to avoid even looking at them. Amir feels pain and sadness at what he sees. 14. In Chapter 20, the director of the orphanage, Zaman, tells Amir that Sohrab was taken by a Taliban official who takes children, usually girls, about once a month for his sexual pleasure. The official gave Zaman a great deal of cash. How does Zaman defend his actions? He has so many other children he must take care of. If he were not there, they would starve and die. If Zaman refuses, it could destroy the orphanage and save others from being taken and/or killed. The money also provides for their needs (i. e. food. ).
Tuesday, January 21, 2020
The Effects of Industrialization on Society The Industrial Revolution changed society from an agriculture based community into a thriving urban city through many interrelated changes. One of the most important changes was the quantity and rate of products produced to meet the rising demand. Large industrial factories increased efficiency and productivity, which caused a shift in economy. Karl MarxÃ¢â¬â¢s believed that the new changes overturned established economies as well as society. He voiced his view through the Communist Manifesto to show people the negative effect industrialization was having on society. Prior to the Industrial Revolution, society and economics were largely determined by land and agriculture. Growth was slow and people relied on traditional means to survive. The majority of societies were farmers who raised crops and animals for a living. However, in the eighteenth century, the population exploded and grew at a significant rate. The four primary factors behind this growth are: a decline in death rate, an increase in the birth rate, the virtual elimination of plagues, and an increase in the availability of food [[i]]. This burst of population created an excessive amount of workers, who were not needed in the agriculture society. The need for workers in agriculture decreased due to the advances in technology and tools. A large number of people as well as perspective farmers had to find jobs elsewhere. This is one of the important factors in the shift of the population from rural areas to the more urban cities. The introduction of machinery initiated the Industrial Revolution making factories an important way of life. The machinery in factories used the pow... ...is, and Francisco LouÃ §Ã , As Time Goes By (New York: Oxford University Press, 2001), 164-168. [v]. Freeman and LouÃ §Ã , 194. [vi]. Montagna, [vii]. The Acts 29 Times. [viii]. Fielden, John, The Curse of the Factory System (New York: Frank Cass and Company Limited, 1969), xiii. [ix]. Wing, Charles, Evils of the Factory System (New York: Frank Cass and Company Limited, 1967), clxxxv. [x]. Fielden, 34-35. [xi]. Chris Rohmann, A World of Ideas (New York: Random House Publishing, 1999), 249. [xii]. Rohmann, 249. [xiii].Marx, Karl. Ã¢â¬Å"Communist Manifesto.Ã¢â¬ History and Religious Studies. 1st ed. Page 19. [xiv]. Marx, 16.
Monday, January 13, 2020
1. Discuss how the principles of job design and reinforcement theory apply to the performance problems at the Hovey and Beard Company. Principals of Job design exhibited at the Hovey and Beard Company, a production company who made toys. Toy painters were experiencing the following problems: New painters learned at a slower pace (making the other painters lose money on rewards per piece) the assembly line hooks moved too fast, painters blamed management. Incentive pay wasnÃ¢â¬â¢t adequate for workers and it was too hot working so close to the drying ovens. One painter, who worked with the company the longest, was appointed by other painters to address their concerns with the supervisor. Supervisor listened and worked closely with painters to address their concerns; he worked well and incorporated the goal setting theory with the painters. Changing the work design of the painters work station, management used a positive reinforcement theory to make the painters part of the solution. Management installed fans, installing a timer on the hook device: fast, medium and slow, letting the workers choose the time of day to change the speed. Managers keep the incentives going with the learning bonus and the per piece reward. Also, update meetings were being held to keep everyone on the same page. Production was 50% higher. Other employees felt the inequity in the company, they were skilled labors and not making as much money as the painters, with this management stopped all incentives for the painters; everything went back to the original work environment, because management felt the negative reinforcement towards the skilled labors. Management should have looked into a more effective process. The supervisor, who managed the painters (equity theory), left the company to seek other employment 2. Analyze the performance problems using the Ã¢â¬Å"performance diagnosis modelÃ¢â¬ in Chapter 7. Exhibit 7.6 Performance Diagnosis Model When analyzing the Performance Diagnosis Model, and answering no to the question Ã¢â¬Å"Do both the boss and the subordinate agree that the subordinates performance needs to be improved?Ã¢â¬ , leads us to perception, by the subordinate. There are not different views between manager and subordinate. When the answered is Ã¢â¬Å"yesÃ¢â¬ and a subordinates performance needs to improve, three performance problems arise. 1. Resource problem, subordinate does not have enough resource support; he/she may need material, personnel support and cooperation from interdependent work groups. 2. Training problem, the subordinate may not have enough training/skills to adequately perm his/her job. 3. Aptitude problem, supplying subordinate with more resources for job performance, including more training if necessary. Manager can refit subordinate into different position or release employee from company. If the subordinates performance needs improvement and it is not a result of inadequate ability, it will than become a motivation problem. Lack of motivation from subordinate can stem from three different problems. 1. Expectation problems between subordinate and manager, bad communication can lead to different views on job requirements and goals between manager and subordinate. 2. Incentive problems, subordinate does not feel his/her job performance makes a difference, he/she has not been given enough feed back or reinforcements , no reward system either intrinsic or extrinsic from management. 3 Salience problem, a subordinate questioning whether or not rewards/incentives are worth his/her job performance. Manager may reinforce incentives and rewards, becoming more creative in the nature of the reward. Manager needs to be more flexible and creative with rewards, having his/her subordinates choose which is better for them and their job performance. The Ã¢â¬Å"Performance Diagnosis ModelÃ¢â¬ is an understandable tool for managers to alleviate job performance problems, re-designing jobs, relocating subordinates to different positions if necessary, setting different goals that help job performance and using different methods of motivation, instead of concluding that poor performance from subordinates may stem from personality issues or bad attitudes.
Sunday, January 5, 2020
Even despite JacksonÃ¢â¬â¢s victory on May 2nd, by the next morning HookerÃ¢â¬â¢s forces were still in a strong position. Union forces numbered 76,000 to LeeÃ¢â¬â¢s 43,000 and overnight ReynoldsÃ¢â¬â¢ corps from Fredericksburg had arrived to replace HowardÃ¢â¬â¢s defeated corps. Hooker then ordered Sickles to withdraw his men from Hazel Grove to a new position on Plank Road. This decision by Hooker was another costly mistake because it conceded the only high ground to the Confederates. After SicklesÃ¢â¬â¢ movement back to Plank Road, the Union line resembled a giant horseshoe around Chancellorsville. At approximately 5:30 a.m., Lee attacked the Union line from all three sides: Stuart, who had taken over for Jackson from the west, Anderson from the southeast, and McLaws from the east. Using their newly acquired ground at Hazel Grove as an artillery platform to support the assault, the Confederates beat back the UnionÃ¢â¬â¢s fierce resistance around Chancellorsville . At around 10 a.m. after the heaviest fighting of the battle, Hooker ordered his army to retreat to a position circling their ford site of the Rappahannock. As Lee rode up to survey the scene at Chancellorsville wild triumphant shouts came from his soldiers (Sears 365). However, LeeÃ¢â¬â¢s moment was cut short upon the news that SedgwickÃ¢â¬â¢s forces had broken through the ConfederateÃ¢â¬â¢s east flank at Fredericksburg. Sedgwick, following orders from Hooker had attacked EarlyÃ¢â¬â¢s small Confederate contingent left at Fredericksburg at 7 a.m. EarlyÃ¢â¬â¢sShow MoreRelatedThe Battle Of Gettysburg By Bruce Caton1453 Words Ã |Ã 6 Pages The Battle of Gettysburg took place on July 1st-3rd, 1863 (Gettysburg: heading). The battle occurred in and around the town of Gettysburg, Pennsylvania which is located in Adams County. Gettysburg is located in a very rocky area and has a lot of hills. 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They are interrupted by the sound of cannon fire and Lee decides to ride toward the guns. It is discovered from BufordÃ¢â¬â¢s point of view that the rebels have begun to attack, and his line is able to repel the first rebelRead MoreThe First Battle of Bull Run Essay ex amples759 Words Ã |Ã 4 PagesTHE FIRST BATTLE OF BULL RUN BY COLLINS MCKAY On July 21, 1861, two armies, one confederate and the other Union, prepared for the first major land battle of the Civil War. In 1861 Abraham Lincoln was sworn in as President. The Southern states had seceded and the South had fired on and captured Fort Sumter on April 12 1861. After the Fort Sumter battle, both the North and the South began preparing for war by raising armies. 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The Southern states had seceded and the South had fired on and captured Fort Sumter on April 12 1861. nbsp;nbsp;nbsp;nbsp;nbsp;After the Fort Sumter battle, both the North and the South began preparing for war by raising armies. This was done quickly and neither side spent muchRead MoreEssay about Civil War Battles of Chancelorsville and Gettysburg871 Words Ã |Ã 4 Pagesonly two battles in the whole Civil War yet countless lives were lost in each one. These battles were only two months apart. The goal of this paper is to give information on these two Civil War battles Chancelorsville and Gettysburg. The Battle of Chancelorsville In the Battle of Chancelorsville, Hooker was the Union general and Lee was the Confederate general. Hooker had 130,000 men and Lee had 60,000 men. Hooker had more men and supplies and Lee was outnumbered. Before the battle Hooker saidRead MoreThe Battle Of Gettysburg And The Civil War Essay1448 Words Ã |Ã 6 Pagesmost gruesome war in American History began. The Battle of Gettysburg was fought in the small town of Gettysburg, Pennsylvania. The Union Army under the command of General George G. Meade faced the Confederate Army led by General Robert E. Lee. They clashed for a long, tragic, three days, but at a costly expense of human life. The American Civil War was one of the most significant battles that the United States has ever been engaged in. On the lines, there were brothers lined up across from one another
Saturday, December 28, 2019
Sample details Pages: 9 Words: 2574 Downloads: 5 Date added: 2017/06/26 Category Finance Essay Type Narrative essay Did you like this example? Introduction Securitisation is a structured finance technique that allows for credit to be provided directly to market processes rather than through financial intermediaries. Securitisation describes the process and the result of converting regular and classifiable cash flows from a diversified pool of illiquid existing or future assets of similar type, size and risk category into tradable, debt and equity obligations (liquidity transformation and asset diversification process). Securitisation was first started in United States after the housing market collapsed in early 1930s. DonÃ¢â¬â¢t waste time! Our writers will create an original "Securitisation Techniques In Financial Markets Finance Essay" essay for you Create order There are three government sponsored agencies which are involved in creation of mortgage back securities, known as Ginnie Mae (GNMA) Fannie Mae (FNMA) and Freddie Mac (FHLMC) (A.Saunders, M. Cornett, 2008 p.815) In simple securitisation is a process where pool of illiquid assets such as long term loans, mortgages, and other illiquid assets are transferred into liquid assets by selling them to outside investors. Securitisation has become very popular with the banks worldwide as it helps the financial institutes to write off the illiquid assets of their balance sheet, helps to reduce the taxes, frees the capital for further investments, and reduces risk. Different researchers have given different definitions to securitisation, (Y. Altunbas, et.al) defines Securitisation as the process whereby individual bank loans and other financial assets are bundled together into tradable securities, which are sold onto secondary market. The other definition given by (C. Cardone-Riportella, et.al ) is Securitisation is a financial technique that allows a batch of illiquid assets to be transformed into a liquid tradable instrument with a known flow of income payments. Whereas (S. Saunderson, 1997 p.359) defines securitisation as a framework in which some illiquid assets of a corporation or a financial institution are transformed into a package of securities backed by these assets, through careful packaging, credit enhancement, liquidity enhancement, and structuring. The other definition given by (Cox, 1990 p.2 and Kendall, 1996 p.1-2) securitisation is the process where pools of individual loans, receivables or debt instruments are packaged in the form of securities, the credit status or rating of the securities are enhanced and distributed to investors in simple we could explain securitisation as a mechanism of pooling of a group of loans and selling them to the investors in the secondary market. This paper aims to understand the process of securitisation, its advantages and disadvantages, and then we will look onto some cases on financial institutes which did failed for too much dependence on securitisation, Northern Rock Bank was one of the bank which collapsed in UK due to overdependence on Securitisation and short term funds. Until 2007 Securitisation was the most favourable process used by banks and different financial institutions but too much dependence on it lead many financial institutes to collapse. Process of Securitisation There are a number of participants in Securitisation process, firstly there is an Originator- which is usually a financial firm, or a bank, the assets of the originator such as mortgages, credit card receivables, automobile loans, etc are pooled together to securities for writing off those assets from the Originators Balance sheet. In second step there is an Issuer- often called as Special Purpose Vehicle (SPV). The SPV is a company or it can be another Bank which is specially set up for the purpose of securitisation. The SPV holds the securities, which are the sole owners of the securitised assets, the SPV issues the notes/bonds to the investors which are backed by the pool of assets, but before the notes/bonds been issued there are several other parties are involved during this process, such as the credit scoring companies, Trustees, Servicer. The rating agency advices the originator on assets, examines the credit quality of the pooled assets, and rates the assets to AAA, or AAB, etc. before the bonds been issued to investors. In some cases the underwriters are involved as well during this process. A servicer in many instances is an originator. The servicer is responsible to collect the interest/instalments on loans/mortgages deriving from the pooled assets and pays it to the Trustees. Servicer entitles for a fee for the timely collection of instalments. Trustees act on behalf of investors and looks onto the performance of the other parties involved in the process, reviews periodic information on the pooled assets and takes any legal action on defaults to protect the investors. The large purchasers of the securities are insurance companies and pension funds. These bonds issued are very much favourable to the investors as they are less risky compared to any other investments. These bonds are protected against the default risk. For e.g. a bond is issued by a mortgage backed security and the property price goes down or the buyer defaults then the bondholders w ould be at risk unless been insured by the external guarantor, or even if the originator went bankrupt then too the bonds are safe, as the bonds are insured and are low on credit risk. Originator (e.g. Bank creates mortgages on Balance Sheet) Sale proceeds (payments) Asset Pool SPV Class A Notes Investors (life insurance, pension funds) Note issue Class B Notes Class C Notes The above chart demonstrates the process of securitisation in simplest mode. As we can see the originator pools the assets and transfers them to a SPV and then the notes/bonds are sold in the secondary market. The sale proceeds are transferred to the originator and can be reused to create new mortgages. (A. Teesdale, 2003, A. Sayman) Case Study To simplify the process of securitisation, we can take one case study of a ABC commercial bank established in the European union. ABC bank is involved in retail and corporate banking sector, and also provides loans to housing consumer sector, special financial services, and investment fund management. The main business of bank is to provide housing finance. ABC bank intends to expand, for which it requires additional finance but banks liability consist of long term B rated debt which it intends to replace with less expensive process and even wants to free a part of regulatory capital. So it could expand in to BB-rated country. The bank could achieve this by two processes. We will look at the initial position of Bank Balance sheet ASSET 1000 Housing Loans 605 Securities 245 Cash at hand 30 Interbank Placement 120 LIABILITIES 1000 Retail Deposits 662 Interbank Deposit 68 BB rated Loans 225 Shareholders Equity 45 The Bank has two option on funding first by taking a collateralised Loan or by Securitisation. Bank wishes to raise Euro 200 million in both the cases. Collateralised Loan: In this the Bank takes a collateralised loan of Euro 200 million whose interest rate is 9.5% which is less expensive then the B rated Bonds. By doing this the Banks asset side of the Balance sheet remains unchanged. A new liability is shown on the Banks Balance sheet. The net interest income is improved as cost of funding is decreased. The bonds proceeds are replaces by a loan. But this process is not that favourable compared to securitisation. The other method which Bank could take is securitisation. In this process the Bank pools the low risk housing loans together and sells them to XYZ company which is a special purpose vehicle (SPV). The ABC Bank has set up a XYZ SPV to implement the securitisation transaction. To min imise the initial capital and tax burden the SPV is registered in Lichtenstein. The borrowers of the loan continue to pay the loan instalments to the originator i.e., ABC company and ABC company then passes them to the SPV. SPV issues either Bonds/ Notes and sells them to investors in the secondary market. The SPV pays the sale proceedings to the originator. So now the Banks Balance sheet has changed. ASSETS 1000 Housing Loans 405 Securities 245 Cash at hand 230 Interbank Placement 120 LIABILITIES 1000 Retail Deposits 662 Interbank Deposit 68 BB rated Loans 225 Shareholders Equity 45 The Balance sheet of XYZ Company appears as; ASSETS 201 Housing Loan 200 Cash 1 LIABILITIES 201 Securities 200 Equity 1 So from the above procedure we could see Securitisation procedure is favourable as it takes off the long term assets from its Balance sheet and makes quick availability of cash and transfers risk to other parties. There are many more advantages to securitisation which are given below. Advantages of Securitisation Securitisation is very much favourable to many of the financial institutes and is accepted worldwide. Banks securitise their assets to free the long term investments and reduce risks. Different researchers have given different advantages to Securitisation, (A. Jobst, 2006, H. Shin, 2008, D. Barnes, N. Warman, 2000, www.rbnz.govt.nz, www.rbidocs.rbi.org.in) like securities which are issued by securitisation have a good credit rating as they are backed by assets and are scored by credit rating agencies, so these securities get sold quickly in the secondary market. The cost of raising fund via securitisation is a cheaper mode then borrowing money on interest, or depending on deposits. The other benefit to the Banks is it helps to reduce or pass on risk to other parties, Banks face many different risks on the loans, such as interest rate risk that the interest rate will move on diverse side and it will affect the Banks profitability or make loss. Liquidity risk that the Bank wont have enough cash to pay its depositors. Credit risk that the borrower will default and wont be able to pay the debt. So securitisation is preferred by the Banks as it helps to reduce or pass on risk to other parties. Securitisation helps Bank to covert the illiquid assets in to liquid funds very quickly which could be reinvested and helps to raise the turnover of the assets on Banks Balance sheet. It also gives regulatory advantage. As per the rules set by Basel II pillar I minimum Capital requirement Banks do need to hold minimum Capital to risk weighted asset ratio. (www.bis.com) By securitisation process the assets are taken off the Banks Balance sheet which helps to reduce the minimum Capital holding requirement which in turn improves the leverage ratio and further improves the Return on Equity. The Income of the Financial Institutes is improved as the Banks charges onetime fee on loans it processes and by retaining the responsibility to service them the Banks income of loan charges are unaffected by any change in interest rates. It even builds up confidence for the Financial Institutes in the financial market. It helps Financial Institutes to diversify to loans portfolio beyond few companies, industries, or geographical location and can increase their sources of fees and interest income. It also helps to invest in to different lines of business and avoid single type of credit risk. Further easy available of funds help the Financial Institutes to compete and even benefits the borrowers to borrow at low rate of interest. Disadvantages of Securitisation Along with the advantages given above there are some disadvantages as well which are given by many researchers. Until 2007 securitisation was the very much acceptable and favourable process used by many Financial Institutes worldwide (H.Shin, 2009) says there are two pieces of received wisdom concerning securitisation one old and one new. The old role emphasise a positive role played by securitisation but the subsequent credit crises has somewhat tarnished the positive image. Easy and cheap available money has motivated the borrowers and companies to borrow and lend more than they should. Many researchers as, (H Shin, 2009. D. Rakesh have argued that the main reason for the subprime crisis was the securitisation, over dependence on it has nailed the fianacial system in many countries. Securitisation is a very complex process with many different parties involved in it such as SPV, credit rating agencies, underwriters, Trustees, etc. So it is difficult for Banks to ensure that all risks arising from securitisation are appropriately managed. The Securitisation process is expensive when the assets to be securitised are not large. The other disadvantage is that Banks would securities all their best assets, thereby lowering the overall quality of assets on Balance sheet, Since the better quality of assets are more likely to be suitable for securitisation. Securitisation Failure Until 2007 Securitisation was the most preferred process used by financial institutes for their growth, but after 2007 due to the credit crunch and too much dependence on securitisation lead the financial institutes to collapse, we could see this from the figures in Europe the total volume of securitised assets grew from 78.2 billion Euros in 2000 to 711.3 billion Euros in 2008, but later it dropped to 414.1 billion euros in 2009, due to freezing of credit market and loss of confidence on asset backed securities. From the current sub-prime crisis we have learned the lesson that even too much dependence on securitisation could even lead the companies to failure, so was the case with northern Rock bank in U.K. it was the first bank in U.K. which experienced a bank run and had to rush to Bank of England as a lender of last resort. Securitisation was the central part of the Northern Rocks overall business strategy (D. Llewellyn, 2008) The main business of Northern Rock was to lend mort gages, and to fund these mortgages it depended heavily on securitisation and short term funding. Northern Rock pooled it mortgages and sold them in the secondary market in form of Mortgage Back Securities (MBS). These MBS were purchased by banks around the world. Securitisation and Colateralized Debt Obligation (CDO) were the two major instruments of the financial market turmoil. Easy availability of funds via securitisation motivated the financial institutes to lend money to sub-prime buyers with low income, credit ratings, etc. (H.Shin, 2009) says As Balance sheet expands new borrowers must be still need to expand, then Banks have to lower their lending standard in order to lend to subprime borrower. The seed of the subsequent downturn in the credit cycle are thus sown. When the interest rates went high almost 80% of the borrowers defaulted which led many banks go bankrupt, further led property markets go down and affected the whole economy. This is when the credit market freezed up especially for asset backed securities, MBS, CDOs. As a result of this there was a loss of confidence on asset backed securities throughout the globe. Although Northern Rock was not exposed to US sub-prime mortgage it become caught up in all this because of its business model: securitisation as a central strategy and reliance on short term money market funding. (D. Llewellyn, 2008) Due to loss of confidence on ABS and freeze in capital made Northern Rock to suffer, as it could not securities its mortgage loan in the funding market and had to hold the assets on its balance sheet. Majority of the assets of Northern Rock were long term residential mortgages so had little scope to reduce the Balance sheet in a flexible way once the crisis struck (H. Shin, 2008) like northern rock there were many different companies worldwide which did collapsed due to overdependence on Securitisation. Conclusion The aim of this article was to indicate how Securitisation process works, what are the advantages and disadvantages of securitisation. A case study is presented to better understand the securitisation process. The example of Northern Rock failure is been highlighted in this article to understand that overdependence of securitisation could lead to failure. From the current sub-prime crisis Basel committee has made some efforts to improve the banking capital structure by increasing the percentage of minimum capital requirement. Besides the current financial crisis Securitisation will continue to play a significant role in future for banks to grow.