Logistics and operation managment Essay Example | Topics and Well Written Essays - 2250 words

Logistics and operation managment - Essay Example Scheduling can be defined as the process of controlling, arranging and optimizing the workload in the manufacturing or production process. It is used for allocating the machinery and plant resources, planning production processes, planning human resources and purchasing material. Inventory management, capacity planning and scheduling is of great significance, as it can be associated with the financial benefits of the organizations. The imbalance between these supply chain operations may lead to an unnecessarily increased work in process, deteriorated delivery performance and frustrated staff in the sales and manufacturing departments. However, for most of the organizations excess capacity can certainly be unnecessary and costly. The inability to properly handle these processes can also be considered as a barrier in achieving maximum organization performance. In addition to this inventory management, capacity planning and scheduling are all considered to be significant factors in the choice of technology of the organization. These processes help in determining that how much capacity must be needed by the firm, the schedule and all the processes related to inventory management that are required for manufacturing a great product or begin the production of an en tire new product (R.Arnold, 2010). The imbalance between inventory management, capacity planning and scheduling may result in under or over stocking of items. Under-stocking of items may result in lost sales, missed deliveries, production bottlenecks, dissatisfied customers and it also unnecessarily ties up the funds of the organization that could have been more productive if used elsewhere. Overstocking may have fewer drawbacks attached to it; however the cost of excessive overstocking may be quiet staggering in the cases when the inventory holding cost is high, as the matter may easily get out of the hands of the

Negative effects of technology in education Research Paper

Negative effects of technology in education - Research Paper Example One of the most fundamental golden rules that have to be observed when using technology in education is that moderation is everything and this is because of the fact that technology can easily be overused within the classroom, and this can cause a negative effect on the entire learning experience. It is true that some of these effects are already being seen from student texting and internet usage during class and there are also increased prevalence of plagiarism for coursework and general deficiency of respect for accurate language usage particularly when writing essays. This is a clear indicator of the consequences that technology usually has on the intellectual abilities of the current generation and is a display of the overall power of the internet. According to David Gelernter, â€Å"computers are our worst educational nightmares come true.† While it is a fact that independent thought has greatly been encouraged through the reading of books and has ensured the development of new ideas, this ability would be immensely diminished if there were no books in the world because it is only through the study of old ideas that new ideas are developed. Technology that is used in education, such as the internet will inevitably lead to the extinction of books from the education system because it is the source of plenty of information. However, despite the large reserves of information within this technology, the internet does not have the qualities which books have because most of the information gotten from it is often instant and shallow. The internet does not allow individuals to contemplate on the information which they have just received, as books do and the lack of independent thought because of the absence of books is likely to put the human race into a dark age of intellectual stagnation. The ability to think through the study of the previous work of scholars is what has helped the academic advancement of many children in the past and the inability to thi nk and the reliance on shallow sources of information such as the internet is likely to see the end of the academic system as we know it. Students are able to learn about their past from books and with this knowledge, the take action to avoid the mistakes of their past. The use of technology in education has to be moderated because it is a fact that books have been and still are the most credible source of academic information for centuries, and without books, one would conclude that there can be no history. Gelenter further states that â€Å"teaching children to understand the orderly unfolding of a plot or argument is a critical part of education and this is why the study of stories and arguments is only possible through books and because of the developing lack of interest in them, slowly but surely, students are likely to end up without a culture of analyzing their environment. This can clearly be seen when most of the children today prefer watching television, playing video gam es and even social networking on the internet to having intellectual discussions. The power of the media has become so great that many students in the education system do not have the will, or the inclination, to live a different sort of life. When individual students are asked what they learned

Managing data and information as a nurse infromatics specialist Essay

Managing data and information as a nurse infromatics specialist - Essay Example Informatics and information technology specialists, as well as assistance of nursing technicians are utterly important in this field. The various databases are created for several purposes besides information management. One of the core competences resulting from such a system is marketing. A majority of patients mostly prefers institutions with an accurate and elaborate database. Besides, efficiency is another main advantage derived from the use of these systems. Majority of the databases is made to increase the speed and capability of the organization. Database systems are developed through a number of issues and a number of strategies that have been employed over a long period. These are mostly known as the dimensions of database construction. Several dimensions are used in the development of database systems for not only nursing but virtually all fields. The core field that will have to be assessed is the data transformation dimension, which is basically the main field in databas e construction. Database construction involves the development of a field, or a transformational item that will directly and automatically convert raw information or data into information that can be stored. For this part of the system, an already developed system for this purpose, say digital computers, or the usual computer system, and the development of servers to store data will be used. The server will store the information whereas the computers, connected to the servers will be used for as the access interfaces for the users. Besides the transformation of data, developing a dimension or criterion for information storage is vital and crucial, for instance, deciding who can access the information and who can alter the content in the information. The basic overall consideration that will be used in the development of this data management system is the basic and common use of fact tables. According to Langer (2007), basic use of data management tables and dimensional factual infor mation is crucial in the development of database dimension systems. These systems basically involve the entry of information that has been crosschecked by a supervisor for certainty. The use of factual tables is the simplest data entry method used in most database systems, which allows even the least technologically aware employee to use the system after the use of basic training. The final dimension that will have to be considered in this case is the basic consideration of context. What information will be contained in the information system and what will not. Automatically, the information used will be of a digital and alphanumerical nature. This is judged through the consideration of patient information that has to be put in words and not only digits or amounts the client in question has consumed. Besides patients’ information, employee information, such as their experience and their applicability to the patients’ conditions can be used in assigning different nurses to different patients depending on their familiarity with the conditions in question. According to Roussel (2006), general nursing informatics encompasses the inclusion and use of various dimensions from nurses’ information, to patients’ conditions and information, their respective usage of hospital facilities, such as beds, electronics and other similar facilities. In addition to that, practically any nurse can use consideration the

Public Relations Essay Example | Topics and Well Written Essays - 1000 words - 2

Public Relations - Essay Example The importance of public relations is necessary in all kinds of organizations as mainly synergy between organizational goals with employees performance is important. Organizations that spend time and money on public relations are deemed to be more successful in the industry (Travis, 2012). There are two mainstream dimensions of public relations; organizational functions and societal functions. The organizational function basically discusses the relationships of employees and stakeholder within the firm. The establishment of systems and frameworks that would assist in the communication of employees and would allow them to bond vividly in the organizational tasks is organizational functions. The societal functions basically discusses that what organization is giving to the society and how is it responding to them. Use of media or any other channel that would address masses is the societal dimension of public relations (Stacks, 2010). The purpose of this paper is to exemplify about public relations and its components. Present precise picture about the proceedings of public relations and how it is benefiting the organizations. Organizational Function The main purpose of organizational functions of public relations remains to enhance the profitability of the organization. The escalation in conventional practices rampant in the organization may affect business negatively therefore improvements in the organizational cultures is of great virtue and magnitude. It is important that there would be no disputes and quarrels among the employees and everybody would work for the enhancement of organizational goals and objectives. ... The organizational function signifies that paramount revenues can be made if there is internal rest in the organization. Multinational organizations tend to work immensely on the organizational functions of public relations as ensuring all employees are on the same page to work is imperative (Smith, 2012). The functions of public relations in the organizations include better communication channel between employees, engaging them in different activities, launching training and development sessions, improve feedback system and gauge leadership too. In Coca cola international, public relations within the organization are taken very seriously. The management has ensured that employees working in different capacities would maintain good public relations. The maintenance of good public relations within and outside organization brings good name for the company and for the person himself. The organizational function of public relations enhances motivation of employees too, if it is implement ed in delegate manner. The feeling of getting importance by the organization is one of the most inspirational feelings that an employee gets. The maintaining of relationships with external bodies by formulating strategic plans is a part of public relations. For instance sustaining and attaining relations with government institutes (Rainey, 2009). Societal Functions The networking and bonding of the organization publically is the societal functions of public relations. Organizations tend to work vigorously on the societal function of public relations to make good name in the general public. Image of the organization contains sheer value and magnitude which cannot be neglected. People tend to talk and converse about the organizations who have poor relations with the general

Problem Identifier Essay Example | Topics and Well Written Essays - 750 words

Problem Identifier - Essay Example The quality of care availed to clients seeking medical attention and care in this institution is of utmost importance. The hospital staff ensures ethical considerations in evaluating, examining, and in making health care related resolutions geared towards the improvement of services. As it is common knowledge, being admitted in a hospital is no joke and is therefore hard and complicated to both the patient and family members. In consideration of these factors, observing and respecting the needs and requirements of the patients is important (Rosner, 2007). This paper describes ethical issues as a challenge to the Mount Sinai administration. Rosner (2007) further asserts that before any treatment commences, it is important for a health care practitioners administering care to ensure that all personal and medical information associated and as well provided by the patient is treated with utmost confidentiality. Certain well established health institutions such as Mount Sinai further acts as training institutions for students aspiring to become doctors as well as other practitioners. These institutions are also target by international bodies involved in conducting health related research. In such case, it is very difficult to main confidentiality of patients’ information. This is one of the challenges that I faced by the administration in Mount Sinai Hospital. ... There is certain information regarding a patient that can bring negative consequences. For instance, individuals suffering from HIV/AIDS are sometimes stigmatized. Making public the HIV status of an individual can therefore lead to stigmatization. Maintaining confidentiality of patients’ records is regarded beneficial as it avails or presents clients with safe and comfortable surrounding that encourages them to seek for medical attention. It is very difficult for people to seek medical attention in a particular health institution if they are aware of the fact that their personal medical information will fall into the hands of the public. An individual is also likely to open up completely to a physician if s/he is sure that his/her medical information will be treated with utmost confidentiality (Title, 2000). It is also important to posit that confidentiality boosts the confidence of individuals seeking treatment and it is also a means of articulating value, admiration, and hig h opinions towards patients. Extent and impact Researchers have always inquired for patient’s information for methodical investigations every other day in this health institution. Students are always involved in the treatment and decision making processes of patients’ care because it is the only way they can learn and gain medical experience. There are few cases where these learners and researchers have been involved in diverging private information regarding the patients either intentionally or unintentionally. Breach of confidentiality has its disadvantages or impacts. Physicians and other medical practitioners found guilty of breaching confidentiality in a court of law are punished and their medical license can be

Smoking in the UK - economic analysis of its costs Essay Example for Free

Smoking in the UK economic analysis of its costs Essay United Kingdom was the original state of smoking prevalence and smoking has caused widespread death of the first countries. According to ASH1 (2011) there are about 10 million adults who smoke cigarettes in Great Britain which is about a sixth of the total UK population. Throughout the United Kingdom, there was about one-third per cent of all the middle ages deaths caused by smoking. Therefore, United Kingdom is one of the most importance states of tobacco control. Government control on cigarette consumption through different instruments such as advertising-all advertising and promotion of tobacco are banned in the UK; taxation-taxation is probably the most effective means of reducing tobacco consumption. Raising tobacco prices through taxation can result in significant benefits to the economy. For instance, a 5% price increase would result in 190,000 fewer smokers and increase government revenue by à ¯Ã‚ ¿Ã‚ ½520 million per year in the first five years. As can be seen in figure 1, the numbers show that between 1991 and 2001 the retail price of cigarettes increased by about 80% in real terms. This is explained to a large extent by tax increases; over the same period the proportion of tax in the retail price rose from 73% to 80%. 1.2 Definition 1.2.1 External benefit External benefit is the benefit to the third party who is not involved into the activity which causes the cost (Anderton, 2008:96) 1.2.2 External cost External cost is the cost to the third party who is not involved into the activity which causes the cost (Anderton, 2008:96) 1.3 Theory This topic exist the relationship between demand and price which is if price increases, the quantity demanded becomes lower. Furthermore, taxation is a factor of the increase and decrease of demand and supply. Besides, advertising also is an important factor to influence the demand of cigarette. 1.4 Aims This article will tell you the positive and negative externalities of cigarette smoking. Moreover, it offers how effective the government had been done for reducing consumption of cigarette and also the other opinions of government instruments which can control the consumption of tobacco are included. 2. Finding 2.1 External benefit of smoking Nowadays, there is a great deal of data show that cigarette is not good for our human. However, smoking cigarette still has its advantage. According to an article published in 1995 in Neuroscience Biobehavioral Reviews, the smoking rates of schizophrenics have much higher than people with other mental illnesses. Therefore, smoking cigarette can alleviate symptoms of mental illnesses such as anxiety and schizophrenia. 2.2 External cost of smoking 2.21 Secondhand smoking In a research, passive smoking cause about 600,000 deaths per year all over the world. (ASH 1,2011)Thus, secondhand smoking is a big problem in UK. It is not only passive smoker easier than the smoker to get decease; it is also influence the later generations. According to an article Smoking in Public place (2003) shows that the link between passive smoking and both lung cancer and coronary heart disease, increasing the risk for each by around 25%. Secondhand smoking also does harm to babies and children which with an increased risk of respiratory infections, increased severity of asthma symptoms, more frequent occurrence of chronic coughs, phlegm and wheezing, and increased risk of cot death and glue ear.(ASH1, 2011) 2.3 The policy of UK Government ?2.31 The ban of advertising Advertisement has high influence in propagating. Thus, prohibiting the advertising of cigarette is a useful way to control the consumption of tobacco. The Tobacco Advertising and Promotion Act which was enacted in 2003, prohibited virtually all forms of tobacco advertising and promotion, including print media and billboards, and sponsorship of sport was finally forbidden by July 2005. Moreover, as the ASH (2011) said that the UK Government estimated that banning cigarette advertising would lead to the decrease of consumption of around 3%. 2.32 The prohibiting in public place Smoking in public places and workplaces is now banned by law in UK. Except some places which include guest bedrooms in hotels and certain rooms in care homes, hospices and prisons. (ASH, 2011)Other public place and work place must no smoking such as restaurant. One typical example is Pizza Hut restaurants where smoking has no longer been permitted in all the 350 restaurants since early this year (Smoking in public place, 2003) 3. Discussions 3.1 Taxation Raising tobacco prices through increase taxation is a useful means. Smoking always bad for our health and a lot of young people also smoke. Controlling consumption of tobacco by taxation is probably the most effective (and certainly the most cost-effective) means. As we can see in Table2, the tax of cigarette was always increasing from 1990 to 2011.So when the price of tobacco increase, the demand of cigarette follows decrease. According to ASH 3the Treasury earned à ¯Ã‚ ¿Ã‚ ½10.5 billion in revenue from tobacco duties for the financial year 2009-2010 (including VAT) Thus, government can control the consumption of cigarette reducing so that decreases the death of people who died because of smoking. From a data The UK tax paid tobacco market is worth around à ¯Ã‚ ¿Ã‚ ½14 billion. The market is dominated by cigarettes, which represent 93.3% of the total duty paid market(ASH,2011), we can imagine how great extent the government increases the duty of cigarette. The taxation is about 76% of the price of a packet of cigarettes. The price of cigarettes has a major effect on cigarette consumption. Higher tobacco taxes reduce smoking and smoking related sickness people, so the number of smoker will cut down. Some people who have no high income will stop smoking, or never start because of the high cost. 3.2Advertising Advertisement is a very useful way to propagate. Thus, the government in UK is aware enough of this fact and declares martial law of advertising. AS the ASH said that the Government estimated that the ban on tobacco advertising in the UK would lead to a drop in consumption of around 3%, saving approximately 3000 lives in the long term.(ASH,2010)Most conspicuous forms of tobacco advertising and promotion in the UK were banned and all the package of cigarette must be normal not magnificent. All forms of tobacco advertising and promotion are banned in the UK with the exception of limited advertising at the point of sale. This will end when a ban on the display of tobacco products in large shops enters into force from 6 April 2012. Small shops will have until April 2015 to comply with the law.(ASH3, 2011)Moreover, the UK government introduced picture warnings on cigarette packs in October 2008. The picture of package will make smoker feel nausea because the picture is about what result after people smoking such as yellow tooth or black lung. This is also the efficacious means to reduce the consumption of tobacco and the number of smokers. 4. Conclusion 4.1 Summary All in all, smoking has more disadvantages than advantages even only harm and no good. As we all know, teenager smoking is also a problem which must be solved. It is easy to get disease and smokers often live in a short life. So governments try various devices to restrain the consumption of cigarette to resolve these problems. 4.2 Recommendation In order to efficaciously control the consumption of cigarette, government can set up more festival about banning smoking and propagate some preferential policy. For example, when people agree to give up smoking, the person will get corresponding subsidize. 5. Reference Anderton.A(2008) Economics(5th Edition) Harlow Person Education ASH1(2011)[online]Smoking statistics Available at http://www.ash.org.uk/information/facts-and-stats/fact-sheets [Accessed at 16/12/2011] ASH2 (2011)[online]Tobacco regulation Available at http://www.ash.org.uk/information/facts-and-stats/fact-sheets [Accessed at 16/12/2011] ASH3 (2011)[online]Tobacco economics Available at http://www.ash.org.uk/information/facts-and-stats/fact-sheets [Accessed at 16/12/2011] Neuroscience and Biobehavioral Reviews. [online]Volume 29, Issue 6. 2005; 1021-1034 Available at http://www.sciencedirect.com/science/article/pii/S0149763405000874[Accessed at 7/12/2011] Parliamentary Office of Science and Technology (2003) Smoking in public place Available at http://www.parliament.uk/documents/post/pn206.pdf

Impact of Commercial Paper in the Indian Money Market

Impact of Commercial Paper in the Indian Money Market In todays competitive environment, firms find themselves in a perpetual race to acquire the cheapest source of finance to leverage their companies and gain a competitive advantage. All this is undertaken by companies to satisfy their masters – the shareholders. Finance is a very scarce commodity. A company can satisfy its funding needs generally through two sources namely, equity and debt. It is common practice to use a mix of both in the capital structure. Further the company may rely on two sources of finance – long term sources and short term sources. Long term sources of finance typically include – Shares, debentures, venture capital, public deposits, government grants, mortgage, retained profits, loans from financial institutions, loans from commercial banks etc. Whereas, short term sources of finance include – Overdraft, trade credit, factoring, cash credit, loans advances, discounting of bills, commercial paper etc. A very interesting segment of finance to note is that of money markets. It is an important component of financial markets and is a short term market with maturity period of 1 year or less. The most common instruments traded in the money markets include –treasury bills, certificates of deposits, repurchase agreements, commercial paper (CP) etc. Commercial paper is a short-term debt instrument of the money market. It is an unsecured promissory note with a fixed maturity of 7 to 365 days. It is issued at a discount and redeemed at par. The origin of commercial paper can be traced back to the late 19th century when it grew rapidly as a source of corporate financing until 1920s when it all but disappeared during the Depression. Momentum picked up after the Second World War and a notable incident in the commercial paper market was the Penn Central  [1]  failure which shook the market and temporarily halted its growth (Calomiris, Himmelberg, Wachtel, 1994). Commercial paper as a source of short term funds to Indian corporate sector was introduced from 1990 by the then government in the process of continuing reforms. The direct objective of commercial paper was to improve the short-term liquidity. That is by releasing the pressure on bank funds for medium sized borrowers and enabling companies with high credit ratings to rais e funds directly from the markets (Reddy, 1999). Commercial paper can be further categorized into financial and nonfinancial commercial paper. Nonfinancial commercial paper is issued by nonfinancial corporations, typically large industrial or service firms and utility companies. Financial paper on the other hand is issued by financial companies such as banks (Shen, 2003). From the investors point of view, commercial paper carries with it a great many advantages like low risk due to issuance by prime rated companies, limited reinvestment risk because the commercial papers are generally issued for a short time horizon thereby protecting the investor from large interest rate fluctuations. Investors are also keen on the fact that commercial paper gives higher yields when compared to other short-term investments such as treasury bills or certificate of deposits (Standard Poors, 2008). On the flip side commercial paper is not absolutely risk free, there are certain risks attached to commercial paper – credit risk in that the company may be unable to pay the investors on maturity though this is an extremely rare event, interest rate risk which arises due to the changes in the market interest rates. This risk is mitigated because most commercial papers are issued for short term and most of the investors hold onto the paper until maturity thereby they are unaffected by price movements. Rollover risk is also present because most papers are retired by the companies by making a fresh issue. This risk is also minimized by securing a bank line of credit. The major risk facing commercial paper is liquidity risk which affects the market as a whole. The whole market turns hostile, interest rates rise and the issuer becomes unable to rollover or make fresh issues (Standard Poors, 2008). To guide the investors in making rational and informed decisions, it is mandatory for the commercial paper issue to gain a credit rating from recognized agencies. Ratings give an idea as to the risk attached to the commercial paper and the overall picture of the firm. A substandard rating implies that the firm is extremely risky and there is probability that the firm may default on its payment. In U.S., the recognized credit rating agencies include Standard Poors, Moodys, Fitch, A.M. Best etc. In the commercial paper rating mechanism practiced by Standard Poors, a rating of ‘A1+ is the highest possible score meaning that the firm is creditworthy and there is no risk of default whereas a rating of ‘A3 and below notifies that the instrument is speculative or junk. In India, Credit Rating Information Services of India Ltd. (CRISIL) and Investment Information and Credit Rating Agency of India Ltd. (ICRA) are the reputed rating agencies. The other notable agencies operating in India are FITCH ratings and Credit Analysis and Research Ltd. (CARE). According to the RBI, for a commercial paper to be issued in India the company must have a minimum credit rating of P-2 as per the CRISIL rating scale or its equivalent. Rating is extremely important as the regulations laid down specify that money market funds can invest only in commercial papers having the minimum rating of P-2. Commercial paper scores over bank line of credit or short term loans in many aspects. A company that has high credit ratings enjoys many privileges – they can access lower cost commercial paper, flexible maturity periods to match their cash flow stream. Commercial paper in essence is an unsecured promissory note. Thereby, there is no lien created on its assets. Moreover, there is no limitation on the end-use of funds generated through commercial paper issue. They are traditionally favored as they are cheaper when compared to bank loan, as low as 3.5 % for three months 5.6 to 5.75 % per year. Banks cannot match this rate since their cost of funds itself works out to almost 6% (Pathak, 2009). Money market funds are the largest holders of commercial paper (Standard Poors, 2008). The other investors in commercial paper include trust funds, retirement and pension funds, insurance companies and other large firms having extra funds to invest in them. Individual investors find it difficult to deal in this market because commercial papers are usually sold in very large denominations. To overcome this, they invest in it through money market mutual funds. In India commercial banks were the subscribers of almost 80% of all commercial paper issues but that trend has been declining and as in the U.S., mutual funds are becoming the prominent investors. The recent financial crisis affected almost all the major economies around the globe. The U.S. was the epicenter of this financial earthquake. The recession had far reaching effects many companies folded, investment houses lost their prominence and were absorbed by larger entities and banks were bailed out by the government to avert an economic disaster. The commercial paper market first felt the effects of the crisis on August 2007 when the market contracted sharply as a reaction to the subprime crisis (Shrivastava, 2008). The crisis deepened during September 2008 beginning with the default of Lehman brothers. A large money market fund, the Reserve Primary Fund announced that it had suffered losses to the tune of $785 million as a result of holding Lehman Brothers commercial paper. This spread shockwaves through the entire market and investors were in a hurry to redeem their holdings. In a space of one month the total value of commercial paper outstanding reduced by 15% from $1.76 trillion to $1.43 trillion (Kacperczyk Schnabl, 2009). The Indian economy is intimately tied to the global economy; as such any fluctuations in the global market will have repercussions in the Indian financial market also. Global financial crisis manifested itself in India on January 2008 resulting in the crash of the Indian stock market caused due to the fleeing of FIIs (foreign institutional investors). The Indian commercial sector found itself in a race to acquire funds due to the drying up of several avenues of fund notably, external commercial borrowing. To counter this, bank finance in the form of investments in shares, bonds, debentures, commercial paper etc. expanded more than the previous year (Joseph, 2009). So on a contrast with the commercial paper market of America, the commercial paper market in India was on a rise during 2007. In the U.S., the Federal Reserve undertook unprecedented steps to stabilize the commercial paper market. Federal Reserve of New York introduced the Commercial Paper Funding Facility (CPFF) whereby the Federal Reserve would buy the paper directly from eligible issuers (Federal Reserve, 2008). In early January 2009 the Federal Reserve was the single largest purchaser of commercial paper and accounted to having almost 22% of the market. The facility purchases the commercial paper and holds onto it till maturity and the returns received upon maturity are utilized to pay off Federal Reserve of New York which had provided the capital to initiate the facility. At its peak the Federal Reserve held almost $357 billion worth of commercial paper, that holding was gradually reduced over the years and at the time of the withdrawal of the facility during February 2010, the amount had dwindled down to $3.94 billion (Zumbrun, 2010). In India, the commercial paper market is extremely healthy and as p er the latest outstanding figures it is 1,03,915 crores. 1.1 Aim of the project To understand the role of commercial paper in the Indian money market along with the changes in risk return and also the total outstanding during the period of financial crisis. 1.2 Need of the study India is the second fastest growing economy in the world. The policy makers aspire to attain double digit growth rate. During our review of literature we came to understand that no significant study had been undertaken to understand the effect of the financial crisis on the returns of commercial paper in India. Moreover, studies concerning commercial paper on a global level are also limited. We attempt to fill this knowledge gap. There is wide literature in the form of articles regarding the effects of the financial crisis on the American commercial paper market. We are attempting to understand if the effects of recession on the American commercial paper market have also affected its Indian counterpart. 1.3 Objectives of the study The following are some the objectives that we hope to accomplish during the course of our study. a. To understand the role of commercial paper as an instrument in Indian Money Market. b. To understand risk return movement of commercial paper in India during the financial crisis. c. Comparative analysis of risk return between American Indian commercial paper. d. Understand the changes in commercial paper outstanding of both American and Indian commercial paper market during the financial crisis. 1.4 Hypothesis There is a positive correlation between Indian U.S. discount rates. Indian U.S. commercial paper outstanding have decreased during the period of financial crisis. 1.5 Methodology The study is quantitative in nature. We will be relying exclusively on secondary sources of data, significantly the reports generated by the Reserve Bank of India. Statistical tools such as measures of central tendency, measures of variation and correlation will be used. 1.6 Limitations of the project The major problem being faced is scarce information regarding the Indian commercial paper market. Time constraint will limit the extent depth of the study. The data regarding commercial paper rates for both India and U.S. has been published only up to November 2009 at the time of study. 1.7 Chapter Plan The following is a brief summary of the chapters within the project. Chapter 1: Introduction – Provides a brief insight into the history, role and functioning of commercial paper as a money market instrument. This is followed by the aim, the need, objectives and a brief overview of the methodology followed by the limitations of the study. Chapter 2: Literature review – A broad review of literature which was deemed relevant to the study. The literature mainly comprise of empirical studies undertaken by various researchers. Chapter 3: Methodology and the methods – The data source, statistical tools are highlighted in this chapter. Chapter 4: Analysis and Interpretation of the data collected. Using the techniques mentioned in the methodology, a thorough analysis of the data is conducted. A brief interpretation is also provided. Chapter 5: Conclusion – Concludes the study with a summary of our findings. Chapter 2: Literature Review 2.1 According to Saurabh Ghosh and Narayan Chandra Pradhan (2009) The authors have tried to understand the determinants of WADR (weighted average discount rate) and how these determinants have affected their movement over the past 5 years after adjusting for seasonal fluctuation. The real and financial variables considered for the study were: Index of industrial production (IIP), Amount of CP issued, Cut-off yield 364 days, Call/Notice money, Sensex, Indian Rupees – U.S. Dollar exchange rate bank credit. A close movement and dependency was found out between WADR and the call rate the 364 day treasury bill yield. Although initially there wasnt much co-movement between WADR and the BSE Sensex, co-movements were noticeable after December 2005.The empirical results indicate that there has been an increase in the average monthly issuance, WADR and volatility of WADR over the years. However, around 80% of the commercial paper issued by companies over the last five years was from ‘Prime-rated companies. 2.2 According to Matthias Kahl, Anil Shivdasani Yihui Wang (2008) Firms access commercial paper market to enhance their financial flexibility. Firms use it to fund investment when attractive projects arise and they have insufficient internal funds. Another way in which commercial paper may be used to increase a firms financial flexibility is as bridge financing. They argue that commercial paper borrowing in positively correlated with investment expenditures and negatively correlated with cash holdings. 2.3 According to Pengjie Gao and Hayong Yun ± (2009) The collapse of Lehman brothers was followed by a virtual closing of the commercial papers market, followed by which a number of firms drew excessively on their remaining lines of credit out of fear that weakened banks would reduce their loan commitments. Aggregate commercial paper borrowing declined 15% after the collapse of Lehman brothers, but the effect was concentrated among firms with high default risk. High risk borrowers that were negatively impacted by the decline in the commercial paper market after Lehmans default substituted commercial paper with lines of credit. Low risk borrowers remained as they were. 2.4 According to Charles W. Calomiris, Charles P. Himmelberg Paul Wachtel (1994) The authors arrived at three conclusions. Firstly, there is a flight to quality during a downturn. Firms with strong balance sheets exploit this demand to reduce their cost of short-term borrowing. Secondly, firms in strong financial condition issue commercial paper during downturns in order to extend credit to other firms which may include customers of the firm. As the economy weakens, customers pay their bills more slowly and firms may extend more trade credit as a means of financing their customers short-term credit needs. There is evidence that commercial paper is used to finance trade credit. Finally, increased commercial paper issuance is used to finance inventories. Further, they established links between growth of commercial paper in relationship between the paper market and the commercial bank portfolios. At various times the growth of the commercial paper market was attributed to – (i.) Banks with weak loan demand that were searching for an alternative asset. (ii.) Regulatory constraints that made bank deposits unattractive. (iii.) Market conditions that made bank loans relatively expensive. 2.5 According to John P. Judd (1979) The researcher argues that commercial paper market has replaced the banking sector as the primary source of short-term funds for large financially sound nonfinancial firms. Banks can compete effectively only if the value of the intermediate services that they provide to the lenders/borrowers is greater than the spread between the lending and borrowing rates that they must charge to cover the costs of doing business and absorbing risk. However, it was found that the value from the intermediate services were relatively small and hence the switch over to commercial paper. 2.6 According to Pu Shen (2003) Before the current drop in commercial paper outstanding there was a past occurrence in 2002 when the market for nonfinancial paper declined rapidly. The author tries to understand the factors that led to the unusual decline. To achieve this he considered the factors that could have reduced the supply of credit as well as factors that could have reduced the demand in the commercial paper market. On the basis of this analysis, a conclusion was reached that both demand and supply contributed to the decline. Supply in this context means willingness of the investors to participate in the market. Willingness can be reduced by two factors – Actual or perceived deterioration of the creditworthiness of borrowers and general reduction in investors tolerance for risk. On the demand side, two factors reduce the need for corporations to borrow in the commercial paper market. One factor is decline in inventories which reduces companies short-term financing needs. The other factor is a switc h by firms from borrowing short-term in the commercial paper market to borrowing longer in the bond market. 2.7 According to Dan Covitz Chris Downing (2002) A model is created to explain the relationship between short term and long term yield spreads. Short term spreads cannot be explained by insolvency model because of large spread. Many a times short and long term spreads are negatively correlated. Their explanation for observed risk spreads rests on a distinction between the fixed and liquid assets of a firm. A simple model was proposed in which a firm with a low level of liquid assets may be forced to turn to outside sources of funds to meet its short-term obligations. Funds raised from outside can bring in delay in payments to creditors, which can affect the short term creditors more than long term creditors. Variety of insolvency-risk and liquidity-risk proxies were used and was found that liquidity risk help explain short-term spreads during periods of market stress, but explains very little about long-term spreads. Their empirical findings indicated that while liquidity is an important determinant, the credit risk is the dominant determinant of Commercial Paper credit spread. A literature survey regarding Asset Backed Commercial Paper (ABCP) was conducted, but was disregarded as it was not relevant to the research at hand. A working group has recommended that ABCPs be introduced to deepen the commercial paper in India. Following this the RBI issued the draft guidelines on securitization of standard assets on April 4, 2005. Chapter 3: Methodology Research basically means a quest for knowledge. The primary purpose for applied research is discovering, interpreting and the development of methods and systems for the advancement of knowledge on a wide variety of scientific matters (Wikipedia.com).In this chapter the methodology and methods to be used for analyzing the commercial paper market are briefly discussed along with the problems encountered and the steps that were taken to overcome them. 3.1 Types of Data There are broadly two types of data that are available at the disposal of a researcher. 3.1.1. Primary Data We may rely on primary data if the research calls for raw data that has been collected at the source and has not been subject to any manipulation. Primary data can be qualitative or quantitative. The core benefit of this type of data is that the researcher can exercise a high degree of control over the method and tailor the data collection methods to suit the needs of his research. 3.1.2. Secondary Data Primary data collected by one person may become the secondary data of another. Secondary data has many benefits that make it very appealing. The most obvious advantage is that the data is very economical since the cost of collecting it is usually very little when compared to primary data. It also saves the time of the researcher which would otherwise have been spent on the data collection process. Another key advantage is that in the process of searching for data relevant to the problem, the understanding of the researcher of the problem is improved and there can be changes in the idea in light of the secondary data collected (Beri, 2003). That is not to say that there are no limitations to it. The major risk undertaken by the researcher when collecting secondary data is that the accuracy of the data is compromised. Subsequent problems may be the availability, relevance and sufficiency. Our research relies on secondary data specifically the commercial paper rates published by the Reserve Bank of India and The Federal Reserve. Since these institutions are the apex central banks of India and United States of America respectively, we assume that the data provided by them is highly accurate and can be safely used in our study. Internet Research. As the name implies, it is the practice of using the World Wide Web for research purposes. After identification of our topic, we had to undertake an internet research to gain more background information about it and further our understanding of the topic. Several newspaper articles published on the internet was used to draw a rough chronology of the events in both the Indian U.S. commercial paper markets during the period of study. 3.2. Time Period The financial crisis was well underway during the early half of 2007 due to subprime mortgages default. We have divided the time period of our study into two distinct frames to analyze and draw logical conclusions. 3.2.1 First Time Period (November 2007-October 2008) We have selected November 2007 as the initiation point of the first time period our study due to the fact that the stock markets in America was in turmoil and falling rapidly. Leading up to this point there were certain major market developments, the LIBOR (London Interbank Borrowing Rate) reaches its highest level since 1998. Northern Rock collapses and receives emergency support from Bank of England. Major Banks such as UBS and Citigroup announce losses numbering in the billions due to subprime mortgage defaults. September 2008 was a very dynamic and crucial month in the context of the financial crisis. U.S. government bails out mortgage lenders Freddie Mac Fannie Mae, which hold almost half of all outstanding mortgages in the U.S. Bank of America proposes to take over Merrill Lynch for USD 50 billion. Lehman brothers files for bankruptcy making it the biggest corporate bankruptcy ($ 639 billion) in the history of U.S.A. Morgan Stanley Goldman Sachs loses their status as investment banks. They become traditional commercial banks (Mauro F. Guillà ©n, 2009). The first time period concludes on October 2008. The reason we have selected this particular month is that in the aftermath of Lehman Brothers bankruptcy, the commercial paper market contracted severely. Investors lost their confidence and companies were finding it difficult to make fresh issues of commercial paper. 3.2.2 Second Time Period (November 2008-November 2009) For companies that use commercial paper as a short-term funding mechanism, a sudden stoppage of access to the market will push them to the brink of bankruptcy. The Federal Reserve recognized this and initiated the Commercial Paper Funding Facility towards the end of October 2008. The major objective was to stabilize the commercial paper market and provide the necessary funding to the companies. Our second time period picks off from this point and continues till present. 3.3 Statistical Techniques Statistics is termed as the science of making effective use of numerical data. It deals with all aspects of it including collection, analysis and interpretation of such data collected. To facilitate our analysis, we had to rely on certain statistical tools and the software SPSS. 3.3.1 Measures of Central Tendency The most commonly used tool for understanding ‘averages is the arithmetic mean. A single value which is a representation of the entire mass of data taken into calculation. It is neither the highest nor the lowest value in the data set. It takes into account all the values in the study. It is in essence a single value around which the other variables in the study tend to cluster. The arithmetic mean is also laden with a certain disadvantage namely the tendency of the mean to get unduly affected by the presence of extreme values. 3.3.2 Measures of Variation Using mean will only supply us with a single figure representing the entire data. We cannot understand the dispersion of the values from the mean. To overcome this obstacle, we need to use a measure of variation. We have decided to study the variation utilizing the tool ‘standard deviation. Standard deviation helps us to measure the risk associated with commercial paper. Standard deviation will be equal to zero when all the numbers in the sample are very close to one another. The more dispersed they are the greater will be the standard deviation. 3.3.3 Correlation Mean and standard deviation does not allow us to compare two different variables. In such a scenario we may use correlation to understand if any relation exists between two variables. If relation is proved, correlation further helps us to judge to what degree the relation is present and the significance of it. The correlation coefficient ‘r ranges from -1.0 to +1.0. The closer ‘r is to either poles, the higher the correlation. Towards +1 indicates a positive correlation whereas closer to -1 is an indicator of negative correlation. 3.3.4 Simple Bar Diagrams/ One-dimensional Bar diagrams Simple bar diagrams are considered to be the most commonly used diagrammatic representation of data. Only the length of the bar matters, the width of a single bar is present only for drawing attention to the figures and making clear cut conclusions. We have used bar diagrams to depict the trend of commercial paper outstanding in both the Indian U.S. commercial paper markets over the period of study. 3.3.5 Times Series Graphs We have utilized time series graphs to chart the movement of risk across the time period of study. The reason for the selection of this technique is due to its usefulness in giving a quick idea about the trend of the variable over a period of time. The other added advantage is that it allows a comparison of two variables also across the time period. Chapter 4: Findings Analysis 4.1 Introduction In this chapter, we attempt to make a systematic analysis of the secondary data that we have collected from Reserve Bank of India Federal Reserve System. The raw data was transferred to Microsoft Excel software after proper scrutiny. The data was analyzed by using the statistical tools present in the Microsoft Excel SPSS programmes. As we have described earlier in the methodology, descriptive statistics like standard deviation, arithmetic mean and inferential statistics like correlation were used to analyze the data. Data presentation tools like Simple bar diagram and Time series graphs were utilized to present the data logically and in an understandable manner. The discount rates provided by RBI consisted of low high rates. The average of the discount rates was calculated to make a meaningful analysis and enable comparison with the U.S. commercial paper discount rates, since the Federal Reserve provides only a single rate. Moreover in the U.S. the commercial paper market is sub-divided into two broad strata, i.e. financial and non-financial commercial paper. Both of these were taken into account to enable the study to be more comprehensive and significant. The U.S. commercial paper outstanding amounts were converted into Indian rupees on the basis of foreign exchange rate prevalent in the time period of study. This was conducted on a month wise basis from November 2007 till November 2009. 4.2. Analysis of Data The following section contains an analysis of the data. 4.2.1 The first analysis conducted was to trace the movement of discount rate in India during the first time period. Table.1. Mean Standard Deviation of Indian Discount Rate during November 2007- October 2008 Mean 10.9242 Std. Deviation 1.70208 Interpretation 68% of the time, the average discount rate shall vary between 9.6 and 12.6. That means for nearly 8 months of the study period, the rate of return of commercial paper in India will be between 9.6 12.6 95% of the time, the discount rate shall vary between 7.5 and 14.3. The overall trend from the observed figures indicates forward direction. The cause behind this trend maybe the accelerated inflation rate. The investing communitys confidence levels are weakened, as a result the expected levels of discount rate also increases. Another reason may be that the investors are worried about the exposure of Indian banks to U.S. subprimes. For instance ICICI exposure to Citibank Asset backed securities is one important reason behind uncertainty in Indian money market segment. Graph.1. Movement of discount rate during Period 1 Interpretation Until December 2007, the discount rates did not undergo much fluctuation. From January 2008 till April 2008, the rates were subject to wide changes the average rate reached heights like 11.88 and depths of 8.73. In March, the market on expectations of a promising RBI credit policy announcement has shown an upward surge. But the RBI maintained the status quo, the bank rate, the repo rate and the reverse repo rate were unchanged. Following this the returns show a decline and thereafter it has shown a rising trend till October 2008. Corresponding to this period, the inflation rates in India had also been growing at an accelerated pace. The inflation in India during March was 5.11%, this shot up to 12.63% in August and declined to just 10.72% by October end. If the inflation rate increases, the nominal interest rates also increases, as a result commercial paper discount rate is also showing an increase. The discount rate rose to an all time high of 14.23 in October 2008.This abnormal rise in discount rates may be linked to Lehman Brothers declaring bankruptcy in U.S.A. on September 15, 2008. Because of the bankruptcy, the investors have lost their confidence on money market instruments. This event might have triggered investors in the Indian commercial paper market to seek higher discount rates on the Indian commercial paper. As a result pushing up the discount rates on commercial paper issued by the Indian corporate sector. 4.2.2 This analysis deals with the movement of discount rate in