Impact of Financial ratios and Financing constraints on Firms

Impact of Financial ratios and Financing constraints on Firms

Financing constraints on Firms – Any business owner will want to find out the performance of his or her company in order to make informed management decisions. In addition, an investor will want to have accurate financial position of any business firm for investment decision processes. In this regard, business organizations and financial analysts use a variety of analytical tools that are aimed at comparing the existing relative strengths and weaknesses of their businesses.

These basic tools and techniques have enabled the investors as well as the analysts to develop fundamental analysis systems (Butzen & Fuss, 2003). Therefore, ratio analysis was developed as a tool that established the functions of quantitative analysis in the financial statement numbers. These ratios link the financial statements and determine figures that are comparable between sectors, companies, and across industries. Therefore, financial ratios have a significant financial analysis technique that is used for comparative analysis.

Small and growing business firms use financial ratios to determine how their businesses perform.  A significant financial ratio is the activity ration that is used in measuring how companies are efficient in utilizing their assets (World Bank, 2005). Therefore a negative ratio will force a company or an organization to either increase or decrease their assets or liabilities.

These ratios are widely used by investors who can easily check out the overall operation of a prospective company for investment decisions (Harrison et al, 2002). If the overall performance of a company is determined to be poor, a company may lose investor confidence and as a result, lose business.  

In addition, activity ratios are deemed to be turnover ratios that are associated with a balance sheet line item and an income statement line item. Generally, income statements are used for measuring the performance of any company, but for a specified period of time. However, the balance sheet provides data for a specific point in time. The advantage of using activity ratios is that they are able to give an average figure between the two financial statements. This means that companies or organizations are able to determine the rate of turning over their liabilities or assets. This helps the companies to control their receivables or inventories per year (Harrison et al, 2002).

Financing Constraints and Turnover

Moreover, there are inventory turnovers that are used in the management effectiveness of any business organization (Butzen & Fuss, 2003). This ratio is determined when the cost of goods sold is divided by the average inventory. In this regard, a company is able to know whether its inventory is sold at a higher rate, when the turnover is recorded to be high. This ratio is then significant in giving companies signals for inventory management effectiveness. In addition, this kind of inventory ratio communicates that there are less resources which are tied up in the company’s inventory (Butzen & Fuss, 2003).

However, it is also important to understand that an unusually high turnover means that the company’s inventories are too lean. Consequently, the management discovers that the company may be ineffective in keeping up with the demand that is increasing (Harrison et al, 2003). Therefore the management is forced to act swiftly in adjusting the company’s operations to fit a favorable inventory ratio. Investors are keen in checking out companies with high inventory turnovers since it means that that specific industry gets stale quickly, thus an attractive investment option.

Another significant financial ratio is the receivables turnover ratio, that enables a business organization determines how fast it collects the bills that are outstanding (Harrison et al, 2002). This specific ratio determines the effectiveness of any company credit policy towards its customers.

In this regard, negative receivables will force a company to have stringent credit policies that are aimed at ensuring that bills are collected as easily and fast as possible (Butzen & Fuss, 2003). This particular ratio is achieved by dividing the all the net revenues with the average receivables. In this case a company is able to know how many times per financial period, it is able to collect all its outstanding bills and have the cash used in the operations of the business.

However, it is important for a prospective investor to understand that a high turnover does not only indicate that the company is operating in the best interests of its customers. A high turn over may also indicate that the business company policies are too stringent and thus the company is missing out on sales opportunities to its competitors (Harrison, et al, 2002).

Alternatively, a low turnover or which is seen declining means that the company’s customers are struggling with the credit policy that is set out by the company and thus are having trouble paying their bills. In this regard, this turnover ratio is very significant when any company is developing its credit policy.

Creditors are able to measure how effective companies are in paying off their financial obligations, when determining whether to extend their credit facilities to them. The financial ratio that is used in this case is the liquidity ratio, that helps establish any company’s ability in meeting its financial obligations usually short-term financial obligations (Harrison et al, 2003). However, it is important to understand that the level of liquidity is not standard and thus varies from different existing industries.

One example is a business that runs a grocery store; this business entity, usually demands cash on a regular basis in order to run its business operations. In contrast, a technological run store will need less operational cash in the daily running business operations. In addition, every business has its own unique trend over the liquidity ratio that is recorded over a financial period.

When a company wants to expand its business operations, it is the ideal option of seeking long term financial services. In this regard, a company is able to measure or determine its payback ability by calculating its solvency ratio. This is an important financial ratio that either allows a company to get long-term financing or to stay steer on it. This ratio is able to do this because it provides an insight to the capital structure of any company as well as its existing financial leverage that is being used by a firm (Butzen & Fuss, 2002).

Financing Constraints and Profitability

In the recent years, investors use the insolvency ratio in determining whether firms have adequate cash flows that are important in paying fixed charges or even the interest payment. Therefore, a company that presents low cash flows is deemed to be overburdened with its debts. In this scenario, investors may opt out and the company’s bondholders are likely to push the company into default.

Ratios are an important tool of making profitable financial decisions from any angle, whether as an investor or as a business firm. All these financial ratios have their own distinct impact of firms and business organizations. They present financial constraints that may hinder firms from accessing venture capital or financial aid from companies. In addition, other constraints may include rising interest rates as well as inflation (World Bank, 2005).

Therefore, it is very stringent for companies strive in building contingencies in their cash flow budgets that are important in dealing with such adverse changes that may occur in the financial environment. In addition, it will be a bad idea for any start up firm to rely fully on loans from financial institutions such as banks or funding from venture capitals for their business plans (World Bank, 2005). This is because there could be a rise of financial constraints that would be unfavorable for the company. A financial constraint such as inflation could mean that raw materials or labor costs may consequently increase to higher levels causing such startups to close business.

References

Butzen P., Fuss, C. (2003) Firm’s Investment and Finance Decisions: Theory and Practice. New York: Routledge

Harrison, A., McMillan M., & Love, I. (2002). Global Capital Flows and Financing Constraints. New York: Rowman & Littlefield Publishers.

World Bank. (2005). Financial Sector Assessment: A Handbook. New York: International Monetary Fund.

Finance Dissertation Topics

Financing Constraints Project
Financing Constraints Project

Post-Traumatic Stress Disorder (PTSD) Integrated Management

Post-Traumatic Stress Disorder (PTSD) Integrated Management

Post-Traumatic Stress Disorder remains one of the leading stress-related disorders and psychological issues in society today. An understanding on to the treatment of and the management of the disorder for those with and prone to the problem is necessary. A lot of research, and shown in the literature review below, has explored the specific areas of interest and the common strategies used by psychologists, medical doctors and other professionals in the treatment of and management of Post-Traumatic Stress Disorder.

It, however, remains a challenge to find and implement an integrated approach towards Post-Traumatic Stress Disorder treatment and management. It is the labor of this research review to bring together articles and ideas from empirical reports and researches on managing and treating Post-Traumatic Stress Disorder with an aim to create an integrated approach towards the management and treatment of the disorder.

The research recognizes the diversity of possible remedies towards Post-Traumatic Stress Disorder and seeks to bring together four out of the many possible approaches for a program that offers effective remedies for Post-Traumatic Stress Disorder. It recognizes that effective management and treatment of Post-Traumatic Stress Disorder will require a practising psychologist to look beyond the symptoms he or she can see and consider the external inputs to the individual.

As a conceptual framework, therefore, effective management of and treatment for Post-Traumatic Stress Disorder is equal to successful identification of the external factors affecting, influencing and worsening Post-Traumatic Stress Disorder plus the internal factors affecting, influencing and worsening the Post-Traumatic Stress Disorder in the individual. This proposition includes several faces about Post-Traumatic Stress Disorder. First, the disorder is a non-hereditary one and the person suffers Post-Traumatic Stress Disorder in the course of their life.

This is triggered by traumatic experiences such as rape, domestic violence, war and other terrible occurrences such as terrorism and molestation. These are all external factors which often are out of control of the person will. They infiltrate the person’s peaceful course of life from outside and are often unpredictable. They can be summed up as external pressures that lead to Post-Traumatic Stress Disorder. Secondly, the disorder, once it takes its seat in the person’s life, causes several psychological and psychosocial changes in the individual that alter the general behavior of the person and especially, their perception of various stimuli.

The person starts to associate different stimuli with the trauma-related events that they witnessed a long time ago and therefore subjects the individual to a troubled life. lastly, the person being addressed and who is the Post-Traumatic Stress Disorder patient lives in a society of human beings who, from time to time, interact with the patient at different levels. Such interactions will cause various reactions by the society or the individual.

This research will identify the third class of elements part to a Post-Traumatic Stress Disorder patient effective intervention program as the secondary factors. The level or ability of such a society in handling depression and especially, Post-Traumatic Stress Disorder, will determine at a large scale, the trajectory of the individual towards or away from recovery. This is because society will be the support state of the patient.

Addressing Post-Traumatic Stress Disorder

In developing the program and with a view to a multifaceted approach to managing and treating Post-Traumatic Stress Disorder, this review adopts the framework: effective treatment of Post-Traumatic Stress Disorder = addressing external factors + internal factors + external secondary factors. To effectively address the factors, the treatment for Post-Traumatic Stress Disorder will acknowledge the need to include four domains of parties and knowledge necessary for a holistic person, where holistic means addressing all the issues party to Post-Traumatic Stress Disorder and necessary for sustained relief and recovery from the disorder.

As such, the research identifies four main domains of psychology that are important for integration in the treatment of and management of Post-Traumatic Stress Disorder. The domains include the psychological practitioners on the clinical, cognitive, social and rehabilitative. The four are chosen based on their contributions towards a holistic personal focus by psychological practitioners on the clinical, cognitive, social and rehabilitative treatment and management programs, which may take place at the hospital and the home.

There is a seamless connection between the four domains highlighted above and which will be used in the literature review. First, the patient needs drugs that are used to alleviate the deconstructive thoughts and flashbacks and often, the false sense of danger of alarm with patients with psychological practitioners on the clinical, cognitive, social and rehabilitative. The program would include a clear and accurate clinical identification of the problem through careful consultation with a doctor, more so, a psychologist or a clinician.

This is usually the first step in attending to a patient of any kind as long as they can respond to the consultant’s investigation unbiased. Upon the identification of the problem, there is a need for pharmaceuticals to identify the right drugs, if there are any, to counter the traumatic ideation and experiences or memories of the patients, toning down the symptoms of the disorder. Above that, medical science should establish science-based, theoretical and clinical knowledge perspective in relieving, preventing and understanding human psychological ill-health. on the other hand, there is the need to manage the social circles of the patents in such a way that the circles promote, rather than worsening, the recovery process of the patients. The social domain calls for the acts of those around the victim to be controlled so as to produce pro-healing efforts for the victim.

Social psychology studies how people’s acts affect those of others, in our case, the wellbeing of people with Post-Traumatic Stress Disorder. Upon understanding the clinical and social inputs necessary for the whole recovery of the Post-Traumatic Stress Disorder patient, the effective program should consider understanding and attending to primary diseases or states of well-being that promote Post-Traumatic Stress Disorder. An example is spinal and brain injury.

Such patients are more likely to suffer from Post-Traumatic Stress Disorder than any other healthy person. The connection between the chronic diseases and the disorder will be studied carefully with a view to a better management strategy for such patients. A proactive means to curbing the possibility of Post-Traumatic Stress Disorder arising from or among such parents will be reviewed with a view to using rehabilitative psychology as a domain and input to managing the disorder. To yield the best results and for an effective therapy for persons with the disorder, cognitive psychology will be applied.

This psychology includes, among other things, managing the cognitive behavior, including perception, of the Post-Traumatic Stress Disorder patient. It has been shown to be one of the most effective means to treating Post-Traumatic Stress Disorder and other research shows that cognitive behavioral therapy works very well, most effectively, when combined with injunction interventions such as eye movement desensitization and reprocessing. Ultimately, the four domains will rely on each other for the successful treatment of and management of the disorder.

While these domains have been used before, the integration of the four for a single program aimed at effective treatment of post-traumatic stress disorder has not been recorded. It is the burden of this review to show the critical need to have the disorder approached from different angles, hence the development of this literature review pending deeper research thereafter.

This literature was chosen on basis of their primacy and direct address to the various domains as well as their verifiability, coming from an authentic and official library. In so doing, the literature review hypothesizes that only an integrated approach to managing Post-Traumatic Stress Disorder would fully address the growing prevalence of Post-Traumatic Stress Disorder in America.

Discussion

Post-traumatic stress disorder is as a result of the interacting external and internal factors that are related to or associated with the first instance of the traumatic experience and sustain or repress subsequent manifestations of trauma. Specifically, it is a psychological disorder regulated by factors which the person can control and others that he can’t control. Therapy ought to, therefore, recognize the different angles and interventions necessary for Post-traumatic stress disorder treatment for holistic treatment.

Experts consider a holistic approach to health and wellness as the optimal approach, given the side effects and resultant disorders and symptoms of ill-health or anti-social behavior that can result from psycho-social disorders. To them, treating the identified disease without paying attention to the external and internal climate encouraging the disease or disorder would only offer short-term reprieve but leaving nothing for the long-term. Without the holistic approach to ill-health, therefore, treatment would be ineffective in psycho-social disorder (Auxier, Farley & Seifert, 2011).

Clinical Psychology Domain

The first step for an already exposed population ought to be an investigative approach to identify those with post-traumatic stress disorder symptoms and those who do not. Cognitive approaches can be used and this may include a simulation of the suspected event that is feared to have caused post-traumatic stress disorder as well as clinical trials or measures. Clinical psychology, as the term denotes, interests itself with the science-based theoretical and clinical evidence approaches to relieving human suffering from diseases.

In the case of post-traumatic stress disorder and in psychology, it includes the active interrogative, investigative and documentation process to identifying people with or without post-traumatic stress disorder. It seeks to understand ill-health from an evidence point of view. Integrated health management calls for thorough investigations to identify a problem before working on a solution, the reason why clinical psychology comes next to none of the four interventions and domains of psychology in this integrated literature review.

In a study carried out by Ferry, F., Bunting, B., Murphy, S., O’Neill, S., Stein, D., and Koenen, K. in 2014, the authors reported that many issues of violence precipitated post-traumatic stress disorder in Northern Ireland, a zone potential of violence and civil threats. They noted that the population sample of 4340 subjects revealed possibilities of post-traumatic stress disorder upon children and adult exposure to the death of a close friend or a loved person such as children, parents or a sibling, partner violence or threat to a partner or close friend can lead to post-traumatic stress disorder.

These are common occurrences in our societies with people getting assaulted with freehand, crude weapons or guns in every corner. The church shootings, school shootings and street racialized shootings, as well as domestic gun violence in America, expose our children and loved ones to health stressors akin to the situation in Northern Ireland. The implication of their study is that such people as having witnessed assault or violence by a close friend or a loved one need to be screened for, on a going basis, post-traumatic stress disorder among other disorders.

Those found with the slightest of symptoms for post-traumatic stress disorder should be attended to with counselling and where necessary, with cognitive behavioral therapy and eye movement desensitization and reprocessing programs among other interventions.

While programs for therapy and interventions among people with post-traumatic stress disorder would be an effective proactive means to reducing and eliminating post-traumatic stress disorder in the population, there are several internal factors that hinder the quick recovery from the disorder. Seligowski, A. V., Miron, L. R., and Orcutt, H. K. (2015) identify self-compassion as a positive factor in reducing trauma and traumatic manifestations for persons with post-traumatic stress disorder.

Those with high levels of self-compassion and self-pity are more likely to recover and cooperate than those who have reduced self-compassion. This discovery means that cognitive behavioral therapy should include enhancing the individual self-awareness of their condition and their self-compassion, which, predictably, should enhance their means to recovery. The results indicate a need to further research on the other personal emotional factors that could contribute to faster recovery.

However, clinically critical empirical results from two researches show that drug abuse and substance abuse, as well as psychological inflexibility, are two factors that lead to prolonged post-traumatic stress disorder and irresponsiveness in treatment. The first study indicates that psychological flexibility is a positive factor in the treatment of post-traumatic stress disorder while inflexibility is a negative contributor. Those who are willing to flex their opinions and views concerning themselves and concerning the encounters they went through are more likely to recover than are those who are inflexible.

Again, high inflexibility is a predictor for increased post-traumatic stress disorder manifestation (Meyers et al, 2018). Clinicians and psychologists ought to understand this and similar factors that make recover from post-traumatic stress disorder difficult among patients and develop programs that seek to increase the psychological flexibility of patients and persons likely to be or already exposed to post-traumatic stress disorder. On the other hand, Reisman (2016) associates’ drug and substance use with post-traumatic stress disorder, noting that in a study including US war veterans, the majority of them were drug abusers.

Drug abuse, he notes further, can lead to a worsening state of post-traumatic stress disorder, given that the drugs can lead to further depression and impaired judgment, which can, in turn, lead to suicidal ideation. Among the drugs most commonly abused by war veterans are alcohol and cocaine as well as cigarette, all of which have side effects and withdrawal effects as well as cause ill-health in large contents. Still, drug abuse can hinder cooperation between a therapist and the patient and the intervention program should understand the drug history of the patient as well as their current drug abuse status.

Effective intervention, therefore, would start by preventing drug abuse among persons exposed to traumatic war experiences as these are precipitates for further and worsening post-traumatic stress disorder.

As a breakthrough in post-traumatic stress disorder management and treatment, there are drugs that have been found to work best in addressing the symptoms of post-traumatic stress disorder and which ought to be used as the initial strategy for treating the disorder. In pharmacotherapy addressing post-traumatic stress disorder, drugs that act directly on the serotonergic systems are effective when used for a long period.

They actively suppress the trauma thoughts and flashbacks that cause the symptoms for the disorder and thus intervene for a change in the post-traumatic stress disorder experience of the person. The drugs include but are not limited to monoamine oxidase inhibitors and selective serotonin re-uptake inhibitors (Sauer & Bhugra, 2001).  The former includes the drugs used to inhibit monoamine oxidase A or B or both, abbreviated as MAO-A and MAO-B. the two monoamine inhibitors work against depression by functioning as strong anti-depressants and throwing the depressed out of panic and social phobia. As the person becomes less panicked and more sociable, the post-traumatic stress disorder symptoms are mitigated.

Likewise, the selective serotonin reuptake inhibitors are active and powerful antidepressants, functioning by increasing the extracellular amounts of neurotransmitter serotonin through reduced reabsorption or reuptake into the presynaptic cell. This lowers depression, thus, countering the depressive effects of post-traumatic stress disorder. This calls for, however, a patient and intelligent examination of the progress and a combination with conservative therapy strategies such as cognitive behavioral therapy and the eye movement desensitization and reprocessing as the length of time for the drug administration is not a direct predictor or factor for the speed of or level of recovery.

Therapy, therefore, should concentrate on eliminating the psycho-social instabilities through a combination of pharmacological and psychological therapies such as eye movement desensitization and reprocessing and cognitive behavioral therapy (Gutermann, Schwartzkopff & Steil, 2017).

Social Psychology Domain

Social psychology engages itself with the manner or processes and reasons why one person’s acts influence or affect the other. In this domain and in line with Post-traumatic stress disorder, there are several social environment factors that would hinder the full recovery of the Post-traumatic stress disorder patient, even when effective drugs have been provided and complete therapy or recovery has been foreseen. first, physicians and counsellors must understand that in order to design a therapy program for a person suffering from Post-traumatic stress disorder and whose impact event that led to the disorder was due to an encounter they went through, the intensity of the disorder is as often directly proportional to the period of time or intensity of exposure they had with the traumatic event.

Chou et al (2011) studied a group of 1966 children who had post-traumatic stress disorder arising from physical abuse by their relatives or a close friend at home. The authors noted that the longer the children, all of whom were from grades 4 to 8, expressed symptomatic PTDS relative to their period of exposure. They had severe peri-traumatic subjective reactions as compared to those exposed for a short time.

This is because during the time of exposure, the traumatic events continue to register in the persons conscious and subconscious mind and their somatic cells end up relating every repeating event of trauma to the former, and subsequently to the first encounter, growing a bolder association of the stimuli and the results of their experience. This implies that a patient who experienced traumatic events for a whole decade should be given more attention, subject to their resilience and response to therapy, that one who has just had a day’s experience.

The social approach is important because while the research indicates a direct relationship between the time of exposure of the patient to the traumatic event, research also finds that intimate partner abuse can lead to post-traumatic stress disorder with a sample of 128 African-American women population, the authors noticed that the strategies the women would choose would determine whether or not they will end up in post-traumatic stress disorder and if yes, to what extent.

The authors noted that both psychological non-physical and physical abuse leads to Post-Traumatic Stress Disorder. However, they noted that non-physical psycho-social abuse was more prevalent as compared to the physical abuse (Mills, Hill & Johnson, 2018). What this means is that for a woman living with an abusive woman or a man living with an abusive woman as a husband and wife, there are chances that either party, the aggrieved one, will suffer post-traumatic stress disorder. Given the home setting and husband-wife relationships and the time the two spend together, there will always be prolonged exposure to the trauma-causing abusive events to the abused party.

A wife may spend a prolonged life with an abusive husband and vice versa without opting out of the relationship. Gain, the one party can take advantage of the intimate relationship to advance their ill-aimed mistreatment or violence towards their spouses in an America where husband-wife wrangles and tensions are always a probability. This consists of Runyon, Deblinger & Steer (2014) who noted in their research that parental abuse would lead to post-traumatic stress disorder. In their case, if one parent is caring and comforting while the other one is abusive or neglecting, such a mismatch wouldn’t cancel the probability for Post-Traumatic Stress Disorder.

If the one causes the children to go through hellish experiences while the other, probably the mother, creates an encouraging and positive environment for the growing children, they will experience Post-Traumatic Stress Disorder still. The pampering of one parent cannot, therefore, reverse the damages caused by the other. In their review, the authors noted that the effects brought about by the abusive parent were independent with the love shown by another, meaning that the parent will inflict the son or daughter with trauma-causing experiences that cannot be compensated through love and care from another parent.

As such, proactive prevention of post-traumatic stress disorder includes the training for parents to actively provide the right environment for their children and for relatives of adults suffering the disorder to eliminate cases of inhumane treatment by other family members in order to provide an environment that discourages the development and persistence of post-traumatic stress disorder.

Also, Oravecz et al note in their study that post-traumatic stress disorder is not a preserve for persons working in war-torn areas or terror zones, accident occasions and other fatal experiences. They argue and research the prevalence of post-traumatic stress disorder among persons working in Slovene medical emergency units.

The authors realize that post-traumatic stress disorder is common among staff working in ICU and other critical incidence areas in the hospitals, results which can be generalized across the medical profession and the hospital environment all over the world. It is needful, in the spirit of a proactive preventive approach towards post-traumatic stress disorder, to cover such staff as are working in areas that expose them to traumatizing conditions of disease and human sufferings which cause flashbacks among clinical and medical officers. These include all people dealing with broken or missing human limbs out of accidents and other emergencies referred to hospitals and being attended by medical and support staff. One such a program for self-care and organized human resource care ought to be continuous counselling and retraining to cope with and withstand the many cases of critical illnesses and cases of accidents witnessed by the medical officers.

In their studies, Zulueta (2007 and Evans et al (2009) conclude that indeed, persons exposed to September 11, 2001, World Trade Center disaster and persons witnessing mass violence had similar outcomes; they both suffered post-traumatic stress disorder. Zulueta notes that mass violence leads to mass detachment and separation between children and their parents as well as relatives and subject the witnesses to inhumane conditions which trigger trauma symptoms.

Such witnesses may need immediate attention, a subject that delves to the preventive program of post-traumatic stress disorder intervention methods. On the other hand, 842 people who had been involved in the world trade Centre attack showed that those who had any forms of disability were more prone to post-traumatic stress disorder compared to those who didn’t. The two studies outline the need for witnesses of mass violence or terror attacks should be attended to proactively with counselling sessions and especially, those who have any forms of disability, as they are more likely to develop post-traumatic stress disorder than those who are whole and healthy.

The September 11, 2001 World Trade Center report reveals that these categories of individuals are more likely to suffer post-traumatic stress disorder because of their limitations in movement as well as their inability to flee from the scene which subjects them to more horrible conditions of susceptibility as compared to their fellow workers, friends or family members without disabilities.

Rehabilitative Psychology Domain

Understanding the social demographics prone to the likelihood of developing post-traumatic stress disorder is as important as is the understanding of cases where the disorder is likely to develop among people undergoing medical care or critical treatment. Rehabilitative psychology deals with the psychological processes among people undergoing medical treatment.

These are being rehabilitated or treatment for serious injuries such as cancer, spinal injury, brain injury among other excruciating diseases. People with such illnesses are likely to suffer post-traumatic stress disorder due to the memories and/or nightmares they experience. Their therapists ought to understand the challenges they face, the manifestations they have which are symptomatic of post-traumatic stress disorder and how to address them before they advance to a more serious case of post-traumatic stress disorder.

The likelihood that a worker who witnessed fatalities at the place of work will develop Post-Traumatic Stress Disorder is high in the US as well as any other place in the world. In the United Steelworkers research, about 26 percent reported Post-Traumatic Stress Disorder symptoms while another 21 percent reported subthreshold Post-Traumatic Stress Disorder symptoms (Blake et al, 2014). Blake also notes that such people may benefit if a program for counselling and continuous screening was availed for them and they would be in less danger of developing post-traumatic stress disorder symptoms.

Blake and company used a representative population sample of 89 individuals. It is not in industries and factories where accidents are likely to occur where workers are exposed to the development of post-traumatic stress disorder. In a separate study by Abeyasinghe and other researchers in 2012, the authors find that people who had been in the military and had lost either one or more limbs or body parts or had suffered a spinal injury in the course of their work developed a post-traumatic stress disorder. Such statistics show how often employees in the military are likely to suffer post-traumatic stress disorder, given the many chances of amputations and accidents leading to spinal injury among the men in uniforms.

During their rehabilitation programs, they are prone to flashbacks of the events leading to their injuries and loss of their limbs or the amputation, thus, suffering from post-traumatic stress disorder symptoms. This is akin to the experiences of industrial workers witnessing or being affected by industrial accidents, as studied by Blake et al (2014). Similarly, Wisco et al (2014) carried out a study that involved people who had served in the Afghanistan war as US veterans. In the study, the authors sought to establish the relationship between their experiences and traumatic brain injury, post-traumatic stress disorder and suicidal ideation.

Suicidal ideation is a subset of post-traumatic stress disorder but a symptom of other psychological and psychiatric disorders. They found that among the veteran’s study which accounted for 824 males and 825 females, there was an increased risk of post-traumatic stress disorder and suicidal ideation. These findings point to the devastating results of traumatic experiences by war veterans and their younger ones, those already in the battlefields through the army and other counter-terrorism programs. They also indicate the need for more proactive programs to attend to survivors of war, not just in the battlefield marshal’s category, but also among volunteers and good Samaritans who risk their lives to save perishing souls in war areas.

Bahraini et al (2013) studied a population of people living with and undergoing treatment for traumatic brain injury with an intention to establish the relationship between those undergoing rehabilitation for brain injury and post-traumatic stress disorder. The authors realized that all the secondary data used, with 16 different and diverse sources screened, pointed to the increased development of post-traumatic stress disorder symptoms among such patients.

Specifically, suicidal ideation was marked as prevalent ideation among patients undergoing treatment for brain injury caused by traumatic injury. Such populations require active and proactive screening for post-traumatic stress disorder, given the high chances of the development. In the same manner, people suffering from spinal cord injury were all found to have increased chances of suffering post-traumatic stress disorder (Otis, Marchand & Courtois, 2012). In a similar but separate study, Caspi and a group of researchers noted that the memory of the traumatic event is associated with increased risk for Post-Traumatic Stress Disorder.

While people suffering from critical brain and spinal injury are likely to have flashbacks of what happened, their memory of such events would lead to higher chances and prevalence of post-traumatic stress disorder during and after their rehabilitation. The study of 120 subjects showed that those who remember the events will suffer post-traumatic stress disorder while those who don’t remember them will not (Caspi et al, 2005).

These findings, combined with the study on persons who got amputated on either or all limbs, reveals the importance of proactive intervention by counselors to persons or groups of persons undergoing brain, spinal or amputation surgery and treatment. The treatment part is important but is inadequate if the environmental factors in terms of memories will not be addressed. This calls for programs such as cognitive behavioral therapy and eye movement desensitization and reprocessing which help to rebuild the narratives or memories of the events to friendlier versions.

Cognitive Psychology

Having identified the factors leading to, precipitating and contributing to persistence of traumatic flashbacks and other post-traumatic stress disorder manifestations or symptoms, an effective program ought to consider the cognitive behavior and possible approaches to reframing or refashioning the cognitive processes of the patients and people likely to suffer from post-traumatic stress disorder due to their exposure to diverse situations.

Such factors include how a person views himself once they have post-traumatic stress disorder and the value, they attach to themselves. Keshet, H., Foa, E. B., & Gilboa-Schechtman, E. (2018) shows through empirical research that indeed, women who are victims of traumatization suffer from a negative self-image. Management of post-traumatic stress disorder, therefore, should focus on reversing the negative self-perception of women and reconstructing positivity through the cognitive behavioral therapy ascertained as an effective intervention for long-term recovery. Also, women who are repeatedly teased suffer from post-traumatic stress disorder, a situation that is common among most societies where wife battering and demeaning is still active and where women suffer direct and indirect teasing from fellow women or workers.

Such an understanding should help cognitive therapists to manage post-traumatic stress disorder among such clients by counselling for teasing and similar exposures. Kishimoto, Goto and Hashimoto (2014), however, notes that such negative effects can be reversed using drugs such as gabapentin and lamotrigine. The drugs help to mitigate painful experiences as well as unpleasant experiences resulting pressure from teasers and other manipulative experiences from peers and men who tease women, as shown by Kishimoto, Goto and Hashimoto.

Prolonged exposure therapy has been recommended as an effective pro-cognitive strategy to address post-traumatic stress disorder among the worst-hit and mild patients, posing as one of the means through which psychologist can address post-traumatic stress disorder (Kumpula et al, 2017). Again, the method can be combined with other effective programs such as cognitive behavioral therapy for effectiveness and efficiency, noting that drugs help to mitigate for the short-term while cognitive behavioral therapy, eye movement desensitization and reprocessing and prolonged exposure normalizes the experiences, reduces the phobia and intervenes for a post-traumatic stress disorder.

In another research, Ogle, Siegler, Beckham and Rubin (2017) find that neuroticism increases post-traumatic stress disorder symptom severity by amplifying the emotionality, rehearsal, and centrality of trauma memories. Neurotic persons, that is, people with high scores in the personality trait measures using the big five personality traits, are more prone to post-traumatic stress disorder as the status makes one more easily depressed and subject to anxiety and depression.

The cognitive behavioral therapy, as such, ought to focus on taming neuroticism for such individuals, meaning that the psychologists need to understand the person’s character profile. This, according to Reid (2005), should include active mediation and intervention for the memory reprocessing and reconstruction of the actual experiences through flashbacks. Also, active mediation for insomnia and nightmares, which brings back the old experiences as if they were fresh (Reid, 2005), ought to be addressed to improve both sleep quality and the speed of recovery from post-traumatic stress disorder (Krakow et al, 2001).

Critique

The literature used in this review is an integration of various approaches to research on managing post-traumatic stress disorder using the four domains, that is, clinical, rehabilitative, social and cognitive psychology. The four areas are pre-selected domains, based on the need to approach therapy for post-traumatic stress disorder as a psychological problem that includes various external and internal factors either repressing or enhancing the disorder.

The data from the four domains and the literature reviewed contains results from empirical and scholarly studies by authors using sample studies, giving the results credibility and reliability as an ideal resource portfolio for post-traumatic stress disorder research. the literature fully represents the four domains in terms of both active and proactive interventions as well as internal and external factors affecting the recovery and extent of post-traumatic stress disorder. The use of empirical data and studies enhances generalizability, given that they derive their conclusions from representative samples of subjects using experimental and explorative studies.

They derive their authority from the experimental, explorative and empirical nature, relating real-life experiences of war veterans and women subjected to teasing, domestic violence, children subjected to traumatic experiences such as war and accidents among other experiences, and clinical research in drugs and other therapies for a post-traumatic stress disorder. The studies, nevertheless, do not reveal an outright or evidence-based integration and this is why the literature review aims to explain the need for integrated management of post-traumatic stress disorder.

Post-Traumatic Stress Disorder (PTSD) Integrated Management
Post-Traumatic Stress Disorder (PTSD) Integrated Management

The pieces of evidence raised from the literature matches the claims made in the introduction that post-traumatic stress disorder needs an integrated approach towards management and therapy since it is a multi-factor disorder. The APA ethical principles of psychologists and code of conduct require express permission from the subject’s party to human-subject studies and these have been followed in the majority of the literature above which required human involvement as subjects. The standards were almost uniform across the literature with individuals participating in all the studies doing so upon personal consents from a person with the capacity to give consent, that is, free from any perceptual bias.

Synthesis – Post-Traumatic Stress Disorder

The research review explains, in much detail, the integration of diverse means of treating and managing post-traumatic stress disorder. Chou, Su, Wu and Chen (2011) notes that among other things, the time exposure affects the recovery process while the drug use period doesn’t affect the effectiveness of the treatment. This is necessary for therapists given that the post-traumatic stress disorder problem calls for both pharmacological and conservative methods of therapy. In this case, an integrative approach would call for both drug and non-drug-based therapy programs personalized for the specific cases, given that different groups of individuals have different internal and external factors affecting their ability to recover and the recovery process.

Also, understanding the internal and external environmental inputs should come first in mediating for a post-traumatic stress disorder. This calls for the need to investigate further how the four domains can be effectively applied to fasten and sustain therapy. In the literature, again, cognitive behavioral therapy, eye movements desensitization and reprocessing have been noted as critical approaches towards the treatment and management of post-traumatic stress disorder with a careful drug administration to suppress depression and ignite sociability.

Notably, the literature reveals that understanding the precipitates to post-traumatic stress disorder, the factors that enhance post-traumatic stress disorder, the conditions that suppress post-traumatic stress disorder, the drugs that inhibit the disorder symptoms and the means to intervention for the disorder are all to be jointly addressed for a sustainable therapy for a post-traumatic stress disorder. I propose that a systematic management program ought to include the clinical, empirical and environmental understanding of the individual cases. This ought to include both the stressors the individual is currently facing, the events that triggered the traumatic manifestation and the symptoms party to the specific case, including the drugs most effective in the inhibitory process, in order for a holistic intervention and optimal results to be realized.

The psychologist, again, should seek to understand the social factors, the cognitive factors and therapy options, the clinical evidence and the rehabilitation experiences and voids for people with post-traumatic stress disorder in order to effectively handle the client from an empirical or informed point of view. Finally, effective post-traumatic stress disorder prevention, treatment and management ought to include different players which include pharmacologists, psychologists, and clinicians.

Conclusion

As the literature above has revealed, post-traumatic stress disorder continues to be one of the most challenging mental issues in the world today. While the problem has attracted much research and inquiry into effective combinations of conservative methods and drug-based therapy programs, there is no clear research as to how cognitive behavioral therapy, eye movement desensitization and reprocessing can be combined with drugs to ensure faster and more effective therapy.

Still, there is a need for a deeper understanding of the interacting factors leading to prolonged or sustained post-traumatic stress disorder symptoms among people who have experienced war, industrial accidents, violence and child abuse among other issues of mental torture or trauma. In so doing, the social psychologist needs to participate in developing a good and supportive external environment for the patient to recover.

This may include counselling the caretakers of the patient to avoid such events and stimuli as will remind the person of their traumatic experiences and cognitive behavioral therapy secondary care activities that include physical exercise and social activities. The cognitive psychologist will need to reframe the individual’s self-perception or help the victim to normalize their traumatic experiences through exposure therapy, cognitive behavioral therapy and eye movement desensitization and reprocessing therapy techniques, all of which aim at healing the patient from the short and long term effects of post-traumatic stress disorder as well as the clinicians to effectively identify post-traumatic stress disorder symptoms in patients and evidence-based interventions for post-traumatic stress disorder clients.

Such an approach, that is, an integrated approach to post-traumatic stress disorder management using multifaceted psychological approaches, as explained by the research from the four domains of rehabilitative, clinical, social and cognitive psychology, would make post-traumatic stress disorder treatment and management more effective and efficient. It would also make psychologists more effective and knowledgeable, alleviating the health concerns arising from post-traumatic stress disorder-prone populations such as the survivors of war and military strikes as well as the victims of Karen and Burma among other like-stricken areas.

There are however questions to be answered going forward. First, what combinations of the conservative techniques of cognitive behavioral therapy, eye movement desensitization and reprocessing and exposure therapy work best and why? The answer to this question would grant psychologist an informed database to rely on for empirical evidence in conservative non-drug-based therapy for post-traumatic stress disorder treatment.

Secondly, what would be the best approach for equipping psychologists with the knowledge necessary to implement the four domains in developing a single integrated program for post-traumatic stress disorder therapy? This answer ought to lead the research to the development of a knowledge approach, one in which the psychologist is supposed to understand various modules concerned with the post-traumatic stress disorder integrated management and therapy in order to understand the pharmacological, social and cognitive strategies for an optimal interventional program.

Lastly, the question as to the cost implications of an integrated approach to post-traumatic stress disorder management and treatment arises, seeing that the more knowledgeable the psychologist ought to be, the higher an asset he or she becomes and the more expensive he is likely to become. Also, the more attention is given to individual clients, the more expensive it is likely to be. These are some of the questions that need to be answered alongside the proposition for an integrated approach to post-traumatic stress disorder management.

References

Abeyasinghe, N. L., de Zoysa, P., Bandara, K. M. K. C., Bartholameuz, N. A., & Bandara, J. M. U. J. (2012). The prevalence of symptoms of Post-Traumatic Stress Disorder among soldiers with amputation of a limb or spinal injury: A report from a rehabilitation centre in Sri Lanka. Psychology, health & medicine, 17(3), 376-381.

Auxier, A., Farley, T., & Seifert, K. (2011). Establishing an integrated care practice in a community health center. Professional Psychology: Research and Practice, 42(5), 391.

Bahraini, N. H., Simpson, G. K., Brenner, L. A., Hoffberg, A. S., & Schneider, A. L. (2013). Suicidal ideation and behaviours after traumatic brain injury: a systematic review. Brain Impairment, 14(1), 92-112.

Blake, R. A., Lating, J. M., Sherman, M. F., & Kirkhart, M. W. (2014). Probable PTSD and impairment in witnesses of work-related fatalities. Journal of loss and trauma, 19(2), 189-195.

Caspi, Y., Gil, S., Ben-Ari, I. Z., Koren, D., Aaron-Peretz, J., & Klein, E. (2005). Memory of the traumatic event is associated with increased risk for PTSD: A retrospective study of patients with traumatic brain injury. Journal of Loss and Trauma, 10(4), 319-335.

Chou, C. Y., Su, Y. J., Wu, H. M., & Chen, S. H. (2011). Child physical abuse and the related PTSD in Taiwan: The role of Chinese cultural background and victims’ subjective reactions. Child abuse & neglect, 35(1), 58-68.

de Zulueta, C. F. (2007). Mass violence and mental health: Attachment and trauma. International Review of Psychiatry, 19(3), 221-233.

Evans, S., Patt, I., Giosan, C., Spielman, L., & Difede, J. (2009). Disability and posttraumatic stress disorder in disaster relief workers responding to September 11, 2001 World Trade Center disaster. Journal of clinical psychology, 65(7), 684-694.

Ferry, F., Bunting, B., Murphy, S., O’Neill, S., Stein, D., & Koenen, K. (2014). Traumatic events and their relative PTSD burden in Northern Ireland: a consideration of the impact of the ‘Troubles’. Social psychiatry and psychiatric epidemiology, 49(3), 435-446.

Gutermann, J., Schwartzkopff, L., & Steil, R. (2017). Meta-analysis of the long-term treatment effects of psychological interventions in youth with PTSD symptoms. Clinical child and family psychology review, 20(4), 422-434.

Keshet, H., Foa, E. B., & Gilboa-Schechtman, E. (2018). Women’s self-perceptions in the aftermath of trauma: The role of trauma-centrality and trauma-type. Psychological trauma: theory, research, practice and policy.

Kishimoto, A., Goto, Y., & Hashimoto, K. (2014). Post-traumatic stress disorder symptoms in a female patient following repeated teasing: treatment with gabapentin and lamotrigine and the possible role of sensitization. Clinical Psychopharmacology and Neuroscience, 12(3), 240.

Krakow, B., Johnston, L., Melendrez, D., Hollifield, M., Warner, T. D., Chavez-Kennedy, D., & Herlan, M. J. (2001). An open-label trial of evidence-based cognitive behavior therapy for nightmares and insomnia in crime victims with PTSD. American Journal of Psychiatry, 158(12), 2043-2047.,

Kumpula, M. J., Pentel, K. Z., Foa, E. B., LeBlanc, N. J., Bui, E., McSweeney, L. B., … & Rauch, S. A. (2017). Temporal sequencing of change in posttraumatic cognitions and PTSD symptom reduction during prolonged exposure therapy. Behavior therapy, 48(2), 156-165.

Meyer, E. C., La, H. B., DeBeer, B. B., Kimbrel, N. A., Gulliver, S. B., & Morissette, S. B. (2018). Psychological inflexibility predicts PTSD symptom severity in war veterans after accounting for established PTSD risk factors and personality. Psychological trauma: theory, research, practice and policy.

Mills, C. P., Hill, H. M., & Johnson, J. A. (2018). Mediated effects of coping on mental health outcomes of African American women exposed to physical and psychological abuse. Violence against women, 24(2), 186-206.

Ogle, C. M., Siegler, I. C., Beckham, J. C., & Rubin, D. C. (2017). Neuroticism increases PTSD symptom severity by amplifying the emotionality, rehearsal, and centrality of trauma memories. Journal of personality, 85(5), 702-715.

Oravecz, R., Penko, J., Suklan, J., & Krivec, J. (2018). Prevalence Of Post-Traumatic Stress Disorder, and Coping Strategies Among Slovene Medical Emergency Professionals. Sigurnost, 60(2).

Otis, C., Marchand, A., & Courtois, F. (2012). Risk factors for posttraumatic stress disorder in persons with spinal cord injury. Topics in spinal cord injury rehabilitation, 18(3), 253-263.

Reid, M. D. (2005). Memory as initial experiencing of the past. Philosophical Psychology, 18(6), 671-698.

Reisman, M. (2016). PTSD treatment for veterans: What’s working, what’s new, and what’s next. Pharmacy and Therapeutics, 41(10), 623.

Runyon, M. K., Deblinger, E., & Steer, R. A. (2014). PTSD symptom cluster profiles of youth who have experienced sexual or physical abuse. Child abuse & neglect, 38(1), 84-90.

Sauer, J., & Bhugra, D. (2001). Drug treatments in post-traumatic stress disorder. International Review of Psychiatry, 13(3), 189-193.

Seligowski, A. V., Miron, L. R., & Orcutt, H. K. (2015). Relations among self-compassion, PTSD symptoms, and psychological health in a trauma-exposed sample. Mindfulness, 6(5), 1033-1041.

Wisco, B. E., Marx, B. P., Holowka, D. W., Vasterling, J. J., Han, S. C., Chen, M. S., … & Keane, T. M. (2014). Traumatic brain injury, PTSD, and current suicidal ideation among Iraq and Afghanistan US veterans. Journal of Traumatic Stress, 27(2), 244-248.

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Did you find any useful knowledge relating to Post-Traumatic Stress Disorder (PTSD) in this post? What are the key facts that grabbed your attention? Let us know in the comments. Thank you.

Balance of Payment

Balance of Payments and Multinational Corporations

Introduction

Balance of Payments – Over the last two decades, the world economy has been changed to an extent on which the nations are interconnected with each other in terms of commerce and financial relationship. This circumstance is popularly known as globalization (Vinals, 2004). This interconnection not only helps to exchange goods or service but also force to keep account of financial payment between two countries (Dabrowski, 2006). This record is known as balance of payment. Generally, a multinational corporation has a strong relationship with the balance of payment between two countries (Stein, 1984). The multinational corporation may be affected positively or negatively in the host or home country by the balance of payment (Wilamoski and Tinkler, 1999). The positive relation between MNCs and Balance of Payment creates many opportunities for the multinational corporation. A manager of multinational company must take necessary steps to grab those nice opportunities.

What is Balance of Payment?

Balance of payment is a process of keeping record of transaction of a country with the rest of the word. It includes not only payment for goods and services but also all others payment over the border (Chamberlin, 2009). According the Sloman John, Balance of payment is an account that contains all monetary transaction of a country with the other countries of the world (1998). The transactions contain exports, import, incoming payment and transfer of finance. The balance of payment is usually evaluated based on certain period such as year.  It is also calculated on a single currency, normally US dollar (Mcbride, 2007).

Sources of money are considered positive and deployed of funds is negative items. According to Investopedia, the balance of payment generally should be zero to be optimum (2013). However, it does not happen most of the time. The balance of payment is normally surplus or deficit for maximum country. A surplus balance of payment is said to be exist when the incoming payment is higher than total transfer.  On the other hand, a deficit balance of payment is said to be exist when the transfer payment is higher than the incoming payment.

What is Multinational Corporations or MNCs?

A multinational corporations or MNCs, also known as Multinational enterprise (MNE), is a company that operates is business or produce and sale product in more than one country (Daniels, Radebaugh and Sulivan, 2001). According to Van De Kuil, a multinational corporation follows the internationalized philosophy and operates its business both home and host country (2008).

He also added that to be a multinational corporation, a company must have the assets and facilities outside the border of national country. The host country, home country and the multinational company get benefits from a multinational trade (Kokko, 2006). The host country gets higher tax or vat, the home country get foreign currency and the multinational company get profit. Here is some example of well-known multinational company Honda, Toyota, Google, HSBC, Wal-Mart, Samsung and chevron etc.

Relevance of Balance of Payments to Multinational Corporation

There is a strong relationship between the balance of payment and Multinational Corporation. A multinational corporation helps both host and home country to increase their balance of payment. In the contrary, the balance of payment situation of a country impact the operation of a multinational corporation by changing the rules and regulation based on country specific needs (Ker and Yeates, 2013). Let us look the relevance of balance of payment to Multinational Corporation in terms of different situation.

Relevance Based on “Direct impact”

 A country in which a multinational company is located tends to be get higher balance of payment. It experiences capital inflow when a multinational company get started with a certain fee. It also gets funds or money from the portion of profit of that Multinational Company (Shoo, 2005). On the other hand, the multinational company helps to improve the balance of payment of home country. The home country gets funds when the MNC make profit and return the money to the home country.

Relevance Based on “Regulatory Relation”

Another positive or negative relation between balance of payment and the MNCs is regulatory relationship. The balance of payment represents the foreign reserve of a country. The trade policy of a country changes with the changes on balance of payment position. If a country has negative balance of payment, it tries to hold the money by encouraging more export than import (Hale, 2013). It also tries to get more tax or VAT from the normal sources. This tighten money policy affects the business flow of multinational companies. They have to give more tax to the government. The sales volume of MNCs may rise because the local producer is busy to export in other countries. The MNCs can be the market leader. It may not happen all time.

The rules and regulation may be strict for both domestic and multinational companies. On the other hand, if a country more reserve or balance of payment, it tries to deployed money. It encourages import than import or it invests money to another country as FDI or foreign direct investment. It may reduce the tax burden for MNCs (Bhusnurmath, 2011). By this way, the MNC can get maximum profit. The host country may be benefited from this policy by getting portion of profit when it will get back to it.

Relevance Based on “Measurement Challenge”

The MNC puts a measurement challenge of balance of payment for both home and host country. The goal of a Multinational company is to maximize the profit in after tax all over the world. To do this, they allocate resources, make mixing price system and make extra bill. These conducts is very difficult to measure for the regulatory bodies (Landefeld, Moulton, and Whichard, 2008). There are some good reasons behind this; the resources of production are not same in all countries and the price too. Therefore, it is very tough to evaluate the perfect amount of balance of payment. The mix price is also difficult to detect. Therefore, the proper amount of payment is in question in all countries due the inappropriate recording of MNCs transactions.

Relevance Based on “Foreign Exchange”

The balance of payment is a better indicator of country’s financial status. It helps to evaluate the foreign exchange rate of a country. This exchange rate has direct or indirect effect to the multinational corporation (Wang, 2005). When a currency of a country is strong, the import will cheaper and the export will less competitive. This situation puts pressure to the MNCs to adjust the situation. At that price of goods tends to be cheaper so that the multinational corporation must adjust their price level. Again, when the exchange rate of a country is weaker, the import will expensive and export will high competitive because of inflation. This situation makes higher price level within the country and the MNC have to adjust their price in a high level.

Relevance Based on “Asset Reserve”

The balance of payment also consists of asset such as gold reserve. The higher gold reserve means country has higher trade surplus and thus the higher money supply. This tends to create inflation within the country. Therefore, the MNCs can make higher profit by raising their price level. Conversely, when there is a trade deficit means low assets reserve. This makes the price lower because there is a low money supply. Therefore, the MNCs must adjust their prices level to cope up with host country’s policy.

Relevance Based on “Decision Making”

The balance of payment statistics is very important for all kinds of decision makers. The authority of a country looks carefully the flow of balance of payment. The balance of payment generally is a great indicator of future exchange rate of a country. This put pressure to the monetary authority to take necessary steps to control the money supply. Again, the balance of payment indicates the proper amount of assets reserve for a country. This makes concern for the fiscal authority. They should determine the trade policy, VAT, income taxes and the policy for the multinational corporation. Therefore, we can say, balance of payment accounts are closely related to the overall saving, investment and price policy of a country.

Relevance Based on “Business Policy”

The MNCs are also a good user of balance of payment statistics. They must assess the balance of payment both host and home country for their business policy. The policy of a MNC much depends on the balance of payments flow because change in balance of payment also changes the rules and regulations. When a multinational company try to start their business in another country, they must assess the domestic balance of payment. Because the domestic balance of payment, indicate the permission. If the host country has surplus balance of payment, the MNC can start their operation.

Conversely, if the balance of payment is in deficit position the MNC may not get the foreign investment permission. Again, the MNC must assess the host country’s balance of payment. If the host country has already huge surplus balance of payment, it may not give permission to a new MNC because it tries to invest their money not get money. Conversely, if the balance of payment is in deficit position in the host country, they may welcome new money flow to their country. Thus, the balance of payment position in host and home country affect the decision of business start up. The MNC should also asses the foreign exchange rate position in home and host country.

The weaker currency in home country means the multinational company have to pay more to start their business in another country. Conversely, if the exchange rate is weaker in host country, the Multinational Corporation can start their business cheaply in the host country. Balance of payments also influence the interest rate because of high bank reserve, the MNC also have to consider the interest rate in the host country. The higher the interest rate means the higher business cost for MNC in the host country.

Finance Essays Balance of Payment
Finance Essays

Changes in Balance of Payment and Management Actions

What is change in balance of payment?

Balance of Payments should be equal in all time. However, in reality, it does not happen. The balance of payment is continuously fluctuating all time. This is called disequilibrium of balance of payment. According to TR Jain, disequilibrium payment is a situation when the balance of payment fluctuates from zero (2008). Another author Cherunilam argues that a country’s balance of payment is disequilibrium when there is surplus or benefit (2010). There are three types of changes in balance of payment favourable, unfavourable and balance. Favourable balance of payment means surplus balance of payment. Unfavourable balance of payment means deficit balance of payment. Balance in BOP means equal incoming fund and outgoing funds.

Causes of Changes in Balance of Payments

There are various causes of change in balance of payment. From them, Raj Kumar, author of international economics pointed out three main reasons such as economic, political and natural (2008). He said that if a country is in developing position it must be in deficit balance of payment. The reasons behind economic cause are huge economic development in infrastructure, inflation or deflation, cyclical fluctuation and changes in foreign exchange rates. Again, the reasons behind political cause in balance of payment are political instability and international relations. The natural consequences such as earthquakes, hurricane and others are the reason for natural cause in balance of payment.

Result of Changes in Balance of Payment

The changes in balance of payment may affect positively or negatively to the economy. Here are some Results of changes in Balance of payment:

  • Positive effects of Changes in BOP increase the creditability of a country. Conversely, Negative changes in BOP lower the international creditability.
  • Positive changes decrease the foreign dependency in terms of financial help. Conversely, Deficit changes in BOP increase the foreign economic dependency.
  • Surplus changes increase the foreign exchange reserve. Conversely, Negative changes in BOP deplete the foreign exchange reserve.
  • Reserve of gold is increase in the case of surplus balance of payment. Conversely, the reserve of gold decreases and goes away in negative BOP situation.
  • Negative balance of payment hampers the economic development. Conversely, positive balance of payment improves the economic condition.
  • Surplus balance of payment increases the global market leadership for the home multinational company. Conversely, Deficit balance of payment hampers to get global market leadership position.

Opportunities for MNCs Revealed by Changes in Balance of Payments

The changes in balance of payment position affects positively and negatively for a country’s economy. As the MNCs are one of the important parts of economy, it also gets affected due to changes in balance of payment. Here are some opportunities for MNCs revealed by the changes in balance of Payments.

Business Growth: A multinational company can get business growth advantages in both home and host country. If the home country has surplus balance of payment, the authority approves MNC to start their business internationally. It means they do not mind in capital outflow from the nation as they have surplus funds to invest. On the other hand, a MNC can expand their business to a host country if they have negative balance of payment. They must try to grab money from the other national to increase their business infrastructure. For this reason, MNC is the best way to get finance.

Low start-up cost: A multinational company can start their operation cheaply in host country due to changes in balance of payment. If the host country has deficit balance of payment, they must encourage funds flow from MNC with low regulations and cost. Again, if the home country has high balance of payment, they allow MNC to start its business with lower fees.

Tax benefits: An MNC can also get tax benefits both home and host country due to fluctuation of balance of payment. The home country encourages FDI when it has surplus balance of payment. For this reason, the tax tends to be lower than deficit BOP to encourage foreign direct investment. Again, in the host country the MNC gets lower tax benefit due to deficit balance of payment (Robert, Dunn and Mutti, 2009). The MNC can also get the lower tax benefit, when the country tries to increase their export and reduce import.

Exchange rate benefits: The fluctuation of exchange rate is highly related to balance of payment. This exchange rate or balance of payment affects the operation cost positively or negatively to a multinational corporation. The MNC pay less if the home country has higher balance of payment or strong exchange rate. Here, they get exchange rate benefits due to weak currency in host country. This strong exchange rate also reduces the resources costs in the host country. Moreover, the MNC can get bill paying benefits due to change in balance of payment system.

Low cost of operation: A multinational corporation can experience low cost of operation due changes in balance of payment in both home and host country. It can get factors of production such as land, labour, machinery and others tools at low prices where the balance of payment is lower. Because, lower balance of payment indicates high rate of unemployment in the host country.

Higher Sales: A multinational corporation can increase their sales due to impact the balance of payment in the host countries. When a country experience lower balance of payment, it tries to increase the export and reduce import to get higher balance of payment. To do this, the country should ensure high production unit. The domestic producer may unable to cope up this policy. Therefore, the MNC get the opportunity to sales more during the recovery situation in balance of payment.

Higher Profit: A multinational corporation can make higher profit due to changes in balance of payment. As we discuss earlier MNC can sale higher volume in the host country in the recovery situation. By this, it can make higher profit because higher sales means higher profit (Deresky, 2009). On the other hand, the MNC can make higher profit if the currency of host country is devaluated. For example, European MNC operates its business in US. If the US dollar is weaker than Euro, the European countries will get higher value of money when they convert the money into their own currency.

Measures to exploit opportunities revolved by changes in Balance of Payments

As a MNC operates internationally, it must cope up with the changes on balance of payment in both home and host country. The manager of MNC should be careful to grab every opportunity provided by the BOP. The management measures have been given below:

Seek for growth: A manager of Multinational Corporation should always seek for business growth in home, host or any other country. To seek the business growth opportunity the MNC have to assess the balance of payment position. If the balance of payment is favourable, the manager should grab the opportunity for growth.

Alert all time: The manager should be alert all time to grab the best opportunity for business. As there are various obstacles for a multinational business, the manager have to overcome the obstacle by grabbing the best available opportunity.

Acquire new technology: New technology is very important for a business to get the competitive advantages. A company can implement a new technology to track the balance of payment related data to know the future trend of exchange rate, business cost and tax rate.

Hire business analyst: The manager can hire a business analyst to analyze the balance of payment data and recommend the best opportunity. The analyst also may responsible for making quick and instant decision regarding balance of payment trend.

Implementing short and long-term strategy: The manager can implement a short and long-term strategy for grabbing the opportunity of balance of payment. The short-term strategy may be for less than one year and the long-term strategy may be for above the one year. In addition, this strategy should include the yearly business strategy.

Conclusion

Due to high impact of globalization, every country must engage business internationally through Multinational Corporation. The multinational corporation contribute in the economy of related party’s as well whole world. This report describes that there is a strong relevance of balance of payment to Multinational Corporation. They are related to each other’s in terms of direct impact, regulatory relation, assets measurement, foreign exchange, business policy and decision-making.

This report also describes that the changes in balance of payment creates some opportunities for MNC such as business growth, low start up cost, exchange rate, higher sales and higher profit benefit. Moreover, this report suggests that a manager of a company should take some important measures such as implementing new technology, higher business professional and hiring business analyst to grab the best available opportunity revealed by changes in the balance of payments.

References

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Daniels, J., Radebaugh, L. and Sulivan, D. 2011. International business. Boston: Pearson.

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Investopedia.com. 2013. What Is The Balance Of Payments?

Investopedia.com. 2013. How The Federal Reserve Manages Money Supply

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Kokko, A. 2006. The Home Country Effects of FDI in Developed Economies. [e-book] Stockholm School of Economics

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Mcbride, C. 2007. How to Calculate the Balance of Payments | eHow

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meritnation.com. n.d.. What are the advantages & disadvantages of MNCs?

Balance of Payments Relevant Links

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Asset Price Bubbles

Central Bank Response to Asset Price Bubbles

Recent research in the area of macroeconomics has been focused on trying to identify the causes of the 2007 – 2008 global financial crisis and determining best central bank monetary policies to prevent future crises. A debate that has for the last few decades been settled is now being revived; “lean” versus “clean” handling of asset Price bubbles.

The prevailing consensus of central bank monetary policy has followed the “Greenspan Doctrine” established in the 1970’s for dealing with asset price bubbles. Alan Greenspan, who was the chairman of the U.S. Federal Reserve from 1987 to 2006, believed that cleaning up after an asset bubble burst was less costly and damaging to the economy than allowing central banks to burst bubbles; attempting to “Lean Against The Wind (LATW) (Wadhwani, 2008)” on rising asset bubbles to prevent a bigger burst. This perspective was widely accepted by central banks around the world.

There are mainly four arguments against LATW monetary policy. First, bubbles are difficult to predict; the market would likely detect asset bubbles before regulators would and the market would be able to orderly deflate those bubbles through natural market processes. Secondly, there is evidence that raising interest rates (a central bank strategy for determent) doesn’t reduce the inflation of bubbles since investors are likely to take the risk on high interest rate assets in the midst of an asset bubble based on the expectation of high returns on those assets. Third, the Fed is incapable of isolating dangerous asset bubbles from normal rising asset prices; monetary policy could ham-handedly attempt to prevent asset bubbles but have the effect of harming normal asset prices. Lastly, proactively bursting asset bubbles could make the burst harsher than if the bubble were allowed to burst on its own.

Those cautions have kept the Greenspan Doctrine in place since the late 80’s, but in the aftermath of the 2007 – 2008 crisis, many economists are beginning to wonder if the “lean” strategy may actually be cleaner than the Greenspan Doctrine. Not to mention, the Greenspan Doctrine assumed that bubbles could not be as destructive as the most recent housing bubble. Could central banks develop monetary policy strategies that are more precise in detecting and deterring asset bubbles?

Combating Price Bubbles

Clearly, setting aside the lean versus clean debate, there are standard monetary principles that have not always been followed or enforced. Namely, regulators should demand more transparent disclosure, require more capital and liquidity, apply stricter monitoring of risk, stronger enforcement of compliance, and more accountability for regulators charged with overseeing the financial stability of markets. These policies need to be either reinstated and or reinforced to help stabilize the markets during asset bubbles or otherwise.

But for central banks to devise better strategies for combating bubble driven asset pricing, it is necessary to rethink the Greenspan Doctrine considering how ill-prepared the central banks were for dealing with the crisis in the financial markets. Or, perhaps both strategies have a time and place in setting monetary policy. Frederic Mishkin argues that there is a way to apply the LATW strategy to the financial markets if first central banks understand that there are two different types of bubble driven assets and each one requires a different monetary strategy.

Asset-pricing bubbles are divided into “credit bubbles” – like the housing bubble – and “irrational exuberance bubbles” – like the dot-com bubble (Mishkin, 2011).” He argues that because credit bubbles are so destructive to the economy and so hard to clean up that it would be appropriate for central banks to focus their monetary policies on predicting and deflating credit bubbles before they grow too large. Credit bubbles are linked to the financial markets so intricately that whenever there is a credit bubble like the one just experienced, its bursting usually leaves in its wake a deep recession, a financial crisis and a long period of slow growth and high unemployment.

Asset Price Bubbles
Asset Price Bubbles

Unlike normal recessions, there was no sharp recovery after the last three big asset bubbles. Because it is so hard to recover from credit bubbles, trying to head them off and prevent them is necessary. The LATW can be applied and should factor in to central bank policy because credit bubbles are much easier to identify. Each credit bubble shares certain symptoms that could alert regulators to the problem: lower lending standards, premiums on risk become abnormally low and credit is being extended at a much faster and higher rate (Mishkin, 2011).

The central bank targets these credit bubbles by slowly raising interest rates to discourage excessive risk taking in the credit markets. By inflating the interest rates on these assets, central banks can tamp down exuberance as well as spark growth in a slowing economy (The Financial Times LTD, 2014). This requires central banks to turn their focus more sharply and aggressively towards monitoring and reacting to irregularities in asset pricing more than the traditional singular focus on controlling inflation (Wadhwani, 2008) (Gambacorta & Signoretti, 2013). Lastly, this type of proactive monetary policy could have the effect of reducing moral hazard through proactive responses to booms as opposed to the reactionary approach to booms after the bust; this could discourage the reckless risk taking that typifies credit bubbles (The Financial Times LTD, 2014).

While economists are still debating the merits of the LATW strategy of curtailing asset price bubbles, it is without question that the traditional standards of monetary oversight have been too lax over recent decades and reinforcing those policies will go a long way to restoring healthy checks and balances to the world market. However, it has also become very clear that these boom and bust cycles threaten financial stability in such a way that central banks can no longer ignore fluctuations in credit markets. While focusing on controlling inflation is still a target for central bank monetary policy, central banks must now focus efforts on developing Bubble Policies (Rudebusch, 2005) that can prevent or deflate asset price bubbles before they can do real damage to the economy

References

Brittan, S., Meltzer, A. H., Wolf, M., Smaghi, L. B., Schlesinger, H., Mayer, M. Frankel, J. (2009, Fall). Should, or Can, Central Banks Target Asset Prices? A Symposium of Views

Gambacorta, L., & Signoretti, F. M. (2013, July). Should monetary policy lean against the wind? – an analysis based on a DSGE model with banking.

Mishkin, F. S. (2011). How Should Central Banks Respond to Asset Price Bubbles? The ‘Lean’ versus ‘Clean’ Debate After the GFC. Reserve Bank of Australia June Bulletin, 59-67.

Rudebusch, G. D. (2005, August 5). Monetary Policy and Asset Price Bubbles.

The Financial Times LTD. (2014, April 16). Definition of leaning against the wind. Retrieved from Financial Times Lexicon: http://lexicon.ft.com/term?term=leaning-against-the-wind

Wadhwani, S. (2008). Should Monetary Policy Respond to Asset Price Bubbles? Revisiting the Debate. National Institute Economic Review, 25 – 34.

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Where Can I Find Finance Dissertations

Where Can I Find Finance Dissertations?

Finance Dissertations – I graduated from university just over a decade ago and I distinctly remember how fellow students and I found it difficult choosing a finance dissertation topic in our final year. We had the added pressure of on going assignments coupled with starting a finance dissertation. Reflecting back on my personal experiences, it takes time, dedication and after many attempts you should be able to start your finance dissertation once you have identified a suitable topic and title.

This article will help you formulate a strategy for your finance dissertation, some of these ideas will be glaringly obvious to you, I let you decide; selecting the dissertation topic is the preliminary and most important element. Decide on a topic that you are keen on and have good knowledge of, don’t base your dissertation on a topic which you know little about as this may lead to a weak and less substantial research dissertation. It will advantageous to look at assessments you have already completed on your finance degree as you will be able to exploit and enhance this research, you should be able to base your finance dissertation on the existing research you have undertaken. I completed three finance assignments based on international finance constraints of developing countries, I found that I got a good understanding of this field of study and I based my finance dissertation on this topic. This helped me out immensely as I could base my dissertation on subject matter I am familiar with and I had existing resource at hand such as journals, key literature and articles. I suggest that you assess what you have already covered during your degree as this may lead you to formulate a robust finance dissertation topic.

Finance Dissertations
Finance Dissertations

Once you have decided on a dissertation title or topic you need to ensure you have the correct resources at hand, this would include relevant articles, prominent literature in the field of finance and access to up to date journals. You will find that your university’s library will host many academic databases and you must exploit these as they will host a plethora of finance subject material, this will prove vital in the dissertation literature review section of you research project. I suggest referencing journal articles no older than 5 years unless you are referencing a key piece of research by a prominent scholar. Don’t quote outdated reference material as it will detract from your overall grade, keep it cutting edge and up to date.

Finance Dissertation Topic Ideas

Try to focus your dissertation topic on finding the solution for upcoming problems in the finance industry or within a dynamic organisation. Examine how international finance has become such a critical factor in global economies. Try to identify how global finance has changed over the past decade notably within developing countries. Assess how retail banking is changing and how internet banking has boomed in recent years. Analyse stock market behaviour across different boundaries and look at the financial competitiveness of nations. Discuss investment opportunities for global companies and nations; the list of topics goes on. You can always attribute advantages and disadvantages to these areas. Below is a list of sample finance dissertations I used when creating my own dissertation, they may prove useful to you.

Sample Finance Dissertations

Dissertation – A Cross Boarder Analysis Into Credit Scoring

Dissertation – Implementation of Microfinance

Dissertation – An Analysis into the Effectiveness of Margin Financing A UK Based Exploratory Study

Dissertation – Feasibility and Deployment of the Four-Factor Asset Pricing Model in the UK Stock Market

Dissertation – Rivalry And Integration Strategies Of Global Stock Exchanges

More Finance Dissertation Examples Here

I recommend that you use statistical analysis in your dissertation analysis section, this will help underpin your findings and prove that you can use appropriate finance models in a research project. You have the opportunity to critique finance models at some point in your research, only do this if you have a valid reason to do so. Using at least two finance models such as dividend discount model (DCF), value at risk (VaR), expected return, regression analysis, forecasting and standard deviation should be included in your finance dissertation.

Don’t forget to reference all material used in your dissertation in the reference and bibliography section, this is so important. You do not want to write an outstanding research project and run the risk of dissertation plagiarism. Always abide by your university’s plagiarism guidelines, it is very easy to fall into this trap especially when using material found on the internet.

I’m sure this article will help you write your own finance dissertation topics and that the links will provide guidance. Feel free to add any comments or additional advice that would add to this post.

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