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

Akrani, G. 2010. Disequilibrium in the Balance of Payment – Meaning , Causes.

BusinessDictionary.com. n.d.. What is unfavorable balance of payments? definition and meaning.

Cherunilam, F. 2010. International business. New Delhi: PHI Learning Private Limited.

Dabrowski, M. 2006. Rethinking balance-of-payments constraints in a globalized world. [e-book] Available through: Munich Personal RePEc Archive

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

Deresky, H. 2011. International Management. Boston, Mass.: Pearson.

Eicher, T., Mutti, J., Turnovsky, M. and Dunn, R. 2009. International economics. London: Routledge.

Essay.uk.com. n.d.. Negative and positive impact of globalisation

Hale, G. 2013. Federal Reserve Bank San Francisco | Research, Economic Research, Europe, Balance of Payments, European Periphery

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

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

Jain, T. 2008. Macroeconomics and Elementary Statistics. V K Publications.

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

Kumar, R. 2008. International economics. New Delhi: Excel Books.

Landefeld, J., Moulton, B. and Whichard, O. 2008. The Impact of Multi-National Companies on Balance of Payments and National Accounts

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

Palgrave-journals.com. 2004. United Kingdom Balance of Payments: The Pink Book – Further information on UK balance of payments

Shoo, D. 2005. Economic Effects of Multinational Corporations | eHow

Sloman, J. 1998. Essentials of economics. London: Prentice Hall Europe.

Stein, L. 1984. Trade & structural change. London: Croom Helm.

The Economic Times. 2011. MNCs lower tax burden by swopping domicile – The Economic Times.

The Sydney Morning Herald. 2013. Multinationals cry foul at tax changes

Van De Kuil, A. 2008. Strategies of Multinational corporations in the emerging markets China and India. Mu¨nchen: GRIN Verlag GmbH.

Vinals, J. 2004. “European Central Bank Statistics and Their Use for Monetary and Economic Policy Making”, paper presented at Second ECB Conference on Statistics, European Central Bank, 22 and 23 April 2004. Germany: European Central Bank.

Wang, P. 2005. The economics of foreign exchange and global finance. New York, NY: Springer.

Wilamoski, P. and Tinkler, S. 1999. The trade balance effects of U.S. foreign direct investment in Mexico. Atlantic Economic Journal, 27 (1), pp. 24-37

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

Balance of Payments Relevant Links

International Finance Management

Click Here To View Finance Dissertation Topics

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.

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.

Click Here To View Finance Dissertation Topics

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.

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.

Click Here To View Finance Dissertation Topics

Challenges of Brexit

Challenges of Brexit: Luxury Concierge Business in the UK

Challenges of Brexit – The UK public voted to leave the European Union on June 23, 2016. The leave is termed as Brexit and carries along with numerous speculations of potential effects to businesses within the UK and the world over. Lawyers and legal experts have had mixed reactions where a section argues of the potential risks to businesses while the remaining section argues of the potential benefits (Cooper, 2016, p. 414; Redelinghuys, 2016, p. 24). However, the Brexit calls for a negotiation between UK and Europe. The vote does not have legal effects on the laws of the UK and EU. As a result, the UK will remain part of the EU until an agreement to exit is signed or in a period of two years after the UK government issues a formal notice of exit (McLaren, 2016, p. 29).

The Brexit denies the UK some of its rights to participate in EU processes and thus has potential implications on the businesses in the UK. This report will analyze the possible implications of the Brexit on the luxury concierge businesses in the UK. Luxury concierge business is a customer service-based business that attends to visitors through the arrangement of luxury services such as hotel bookings, hotel servings, and air tickets (Som & Blanckaert, 2015, p. 90). The business encompasses many institutions such as hospitals, office buildings, airports, malls, colleges, corporations and apartment buildings. The luxury concierge business in the UK has in the previous past recorded an extraordinary growth. The business is however affected by the Brexit since it deals with several customers from several countries outside the UK (Sinn, 2016, p. 42). Besides, the article will review the possible strategic plans that the luxury concierge businesses can take to address the potential effects of the Brexit.

The UK legal framework for its EU membership and the processes through which it fulfills its EU obligations is found in the European Community’s Act 1972. The EU law includes the principle of direct effect meaning individuals and business can invoke an EU provision for a particular country or with another individual (Fichtner et al., 2016, p. 359; Sked, 2015, p. 41). The EU treaties of the direct effects explain further that the obligations are unconditional, precise and do not require additional measures at either the national or European level. The EU precedence principle is also advantageous to business enterprises. The principle states that the EU laws are superior to the national laws of the member states and that the member states may not exercise a national law that contradicts the EU law (Laughlin, 2016, p. 49). The exit from the EU implies that the EU courts have no control over the UK issues. The luxury concierge business, therefore, does not enjoy the benefits of the above two principles with significant effects on the business.

Challenges of Brexit and Effect on Trade

The effects of the Brexit have caused market volatilities and ongoing uncertainty about the future of the businesses in the UK. The luxury concierge business thus requires putting in place contingency plans and developing strategies to address the uncertainties (Mcloughlin & Aaker, 2010, p. 79). The business corporations should identify the aspects of their businesses likely to be affected by the Brexit. The corporate should consider forming teams that report to the senior management to assess the potential impacts of the Brexit on the businesses (Bianchi, Cosenz and Marinković, 2015, p.84). The companies cannot yet conduct a detailed long-term planning at the period of the post-Brexit regime. However, the companies are better placed when the management knows where the issue lies as that will give an idea of the planning process (Shackle, 2016, p. 13).

The luxury concierge business enterprises also need to assess their position on the Brexit whether the enterprises will comment actively or contribute their views relevant to the luxury concierge industry (Fichtner et al., 2016, p. 301). The enterprises may also consider their participation in the initiatives that shape the post-Brexit regime (Simms, 2016, p. 26).

At the moment, there are three exit models following the referendum vote to exit the EU. The Norway model will see the UK join the European Free Trade Association and European Economic Area (EEA). The condition will allow the UK to access a single market and the EU trade without restrictions and tariffs (Harris, 2016, p. 43; McDonnell, 2016, p. 20). However, the UK will be barred from accessing the critical EU trade agreements. The Swiss model provides that the UK can join the European Free Trade Association only and enter bilateral agreements with the EU in specific sectors (Shankar & Carpenter, 2012, p. 47).

The process is, however, lengthy and complex in addition to costly. Finally, the totally out model suggests that the UK assumes the same position as any other member of the World Trade Organization (WTO) (Smith, 2016, p. 20). The position implies that the UK can negotiate a free trade agreement with the EU after seven years of negotiation between the EU and Canada.

With the perceived challenges of Brexit and the above three models, the luxury concierge businesses can consider reviewing the industry terms dealing with licensing, cross-border operations, a forum for disputes, tax, and terms dealing with material adverse effect (Rieth, Michelsen & Piffer, 2016, p. 577). The enterprises should moreover consider Brexit as a risk factor in contracts. Therefore, the enterprises must enter into the contracts very carefully to avoid the unintended consequences given the uncertainties of the post-Brexit conditions.

It is imperative for the luxury concierge businesses to have conversations with the customers, suppliers, and clients, especially those in the EU to make clear the contractual relationships in this post-Brexit period. The businesses should examine their supply chain for any vulnerability such as an increase in import costs that will likely be transferred to firms.

Challenges of Brexit has made the UK no longer bound by the EU’s VAT directives thus giving the UK government more flexibility to set the rate of sales tax and the items subject to each rate. The administrative burden for the luxury concierge business will rise as a result of reduced access to the EU’s coordinated vat tax collection system (Chipman, 2016, p. 36; Doherty, 2016, p. 12). The enterprises should, therefore, engage with the government and with the EU to help shape their priorities in the European and domestic context. The businesses should pay greater attention to the decisions around infrastructure, taxation, digital policy and immigration since the areas significantly affect the enterprises. Finally, the businesses need to put arrangements to prevent the uncertainties of complying with different laws in the UK and the post-Brexit EU (Millett, 2011, p. 88).

The challenges of Brexit and associated risks can strike anytime. The effects will affect the exports because of the wide array of commercial links that the luxury concierge business has with the EU across the B2B and B2C space. The UK government will have to negotiate trade agreements with more than 50 countries that it enjoyed preferential treatment with while in the EU. The government may not have the capacity to open many new large-scale negotiations with other countries equal to that of the EU thus necessitating the businesses to have a defined strategy to address the challenges as they will occur.

Bibliography

Bianchi, C., Cosenz, F. and Marinković, M., 2015. Designing dynamic performance management systems to foster SME competitiveness according to a sustainable development perspective: empirical evidences from a case-study. International Journal of Business Performance Management 31, 16(1), pp.84-108.

Chipman, J 2016, ‘Why Your Company Needs a Foreign Policy’, Harvard Business Review, 94, 9, pp. 36-43, Business Source Complete, EBSCOhost, viewed 18 October 2016.

Cooper, B 2016, ‘See EU later: Brexit and us’, Governance Directions, 68, 7, pp. 414-417, Business Source Complete, EBSCOhost, viewed 18 October 2016.

Fichtner, F, Steffen, C, Hachula, M, & Schlaak, T 2016, ‘Brexit decision is likely to reduce growth in the short term’, DIW Economic Bulletin, 26/27, pp. 301-307, Business Source Complete, EBSCOhost, viewed 18 October 2016.

Fichtner, F, Steffen, C, Hachula, M, Junker, S, Kirby, S, Michelsen, C, Rieth, M, Schlaak, T, & Warren, J 2016, ‘Brexit decision puts strain on German economy’, DIW Economic Bulletin, 6, 31, pp. 359-362, Business Source Complete, EBSCOhost, viewed 18 October 2016.

Harris, P 2016, ‘Bracing for Brexit’, The National Interest, 143, p. 43, Academic OneFile, EBSCOhost, viewed 18 October 2016.

Laughlin, LS 2016, ‘WHERE TO INVEST AFTER A BRITISH BREAKUP’, Fortune, 174, 2, pp. 49-52, Business Source Complete, EBSCOhost, viewed 18 October 2016.

McDonnell, J 2016, ‘Do we want to drift towards a Tory Brexit, or make the case to end austerity across Europe?’, New Statesman, 5317, p. 20, Literature Resource Center, EBSCOhost, viewed 18 October 2016.

McLaren, L 2016, ‘Cleaning up the mess: the job of rescuing Britain from post-Brexit chaos will fall on women politicians–including the new PM’, Maclean’s, 29-30, Academic OneFile, EBSCOhost, viewed 18 October 2016.

Mcloughlin, D., & Aaker, D. A. (2010). Strategic market management: global perspectives. Hoboken, N.J., Wiley.

Millett, S. M. (2011). Managing the future: a guide to forecasting and strategic planning in the 21st century. Axminster, Triarchy.

Redelinghuys, P 2016, ‘BREXIT: Blessing or balls-up? (Cover story)’, Finweek, pp. 24-27, Business Source Complete, EBSCOhost, viewed 18 October 2016.

Rieth, M, Michelsen, C, & Piffer, M 2016, ‘Uncertainty shock from the Brexit vote decreases investment and GDP in the Euro Area and Germany’, DIW Economic Bulletin, 6, 32/33, pp. 575-582, Business Source Complete, EBSCOhost, viewed 18 October 2016.

Shackle, S 2016, ‘A city left behind: post-Brexit tensions simmer’, New Statesman, 5327, p. 13, Literature Resource Center, EBSCOhost, viewed 18 October 2016.

Shankar, V., & Carpenter, G. S. (2012). Handbook of marketing strategy. Cheltenham, UK, Edward Elgar Pub.

Simms, B 2016, ‘A new balance of power: is full political union of the eurozone the only way to stop the disintegration of Europe after Brexit?’, New Statesman, 5322, p. 26, Literature Resource Center, EBSCOhost, viewed 18 October 2016.

Sinn, H 2016, ‘A Brexit Lesson: Is a Single Currency Not Worth the Gamble?’, International Economy, 30, 3, pp. 42-70, Business Source Complete, EBSCOhost, viewed 18 October 2016.

Sked, A 2015, ‘The case for Brexit’, Challenges of Brexit and The National Interest, 140, p. 41, Academic OneFile, EBSCOhost, viewed 18 October 2016.

Smith, G 2016, ‘THE BREXIT CRISIS THAT WASN’T’, Fortune, 174, 5, p. 20, Business Source Complete, EBSCOhost, viewed 18 October 2016.

Som, A, & Blanckaert, C 2015, The Road to Luxury: The Evolution, Markets and Strategies of Luxury Brand Management, Singapore: Wiley, eBook Collection (EBSCOhost), EBSCOhost, viewed 18 October 2016.

Doherty, C. 2016, “Forever friends?”, Financial Director, pp. 12-13.

Relevant Posts

Brexit and The European Union Dissertation

Dissertation BREXIT UK Construction Labour Market

Estimating Macroeconomic Effects of Brexit Using Gravity and State Space Models

If you enjoyed reading this post on challenges of Brexit, I would be very grateful if you could help spread this knowledge by emailing this post to a friend, or sharing it on Twitter or Facebook. Thank you.

MBA Thesis Topics

This post intends to provide you with a list of quality MBA thesis topics and how to structure your own MBA thesis. Move universities differ when it comes to writing a thesis, this includes referencing style and word count. The MBA thesis structure below will provide useful when structuring your MBA thesis, I have used the below structure on a couple of occasions and benefited from it.

MBA Thesis Structure – Essential Components

Introduction

Writing a dissertation introduction is perceived as a relatively straightforward aspect of the dissertation writing process. The reason for this may be that we often find typical components in an introduction that we can use, regardless of the study we are writing. One of the challenges of writing a good introduction, however, is to be brief, and to stay focused – This will help you with to write the best MBA thesis topics.

An incoherent or unfocused introduction, or one that is over-lengthy, may detract from the overall grade of the dissertation and will not create a good impression on the reader(s). Be mindful that you should avoid being anecdotal in your introduction (i.e. writing as if you are telling a story) and you will also need to avoid wasting words by stating the obvious and writing a series of over-generalized statements.

a clear statement of your MBA thesis aims and objectives;
the problems to be solved to reach your objectives, and initial ideas on how to solve them;
you may also indicate a gap in knowledge, if applicable
research questions – if a research project

Literature Review

Unearthing new theories don’t materialise easily out of nowhere; they build upon the findings of previous academic research and explorations. A literature review illustrates how the academic investigation you are conducting fits with what has been written before and puts it into perspective. A literature review demonstrates to your reader that you are able to:

• Understand and critically analyse the background research
• Select and source the information that is necessary to develop a context for your research
• Shows how your investigation relates to previous research
• Reveals the contribution that your investigation makes to this field
• Provides evidence that may help explain your findings later

If you are doing a dissertation, or significant assignment it is likely that you will need to include a literature review. If you are doing a lab write-up or a shorter report, some background reading may be required to give context to your work, but this is usually included as an analysis in the introduction and discussion sections.

What is a literature review?A literature review is an analysis of existing research which is relevant to your research topic, demonstrating how it relates to your investigation. It explains and justifies how your investigation may help answer some of the questions or gaps in this area of research.

A literature review is not a straightforward summary of everything you have read on the topic and it is not a chronological description of what was discovered in your field. A longer literature review may have headings to help group the relevant research into themes or topics. This gives a focus to your analysis, as you can group similar studies together and compare and contrast their approaches, any weaknesses or strengths in their methods, and their findings.

One common way to approach a literature review is to start out broad and then become more specific. Think of it as an inverted triangle. (1) First briefly explain the broad issues related to your investigation; you don’t need to write much about this, just demonstrate that you are aware of the breadth of your subject (2) Then narrow your focus to deal with the studies that overlap with your research. (3) Finally, hone in on any research which is directly related to your specific investigation.

Proportionally you spend most time discussing those studies which have most direct relevance to your research. How do I get started? Start by identifying what you will need to know to inform your research:

What research has already been done on this topic?What are the sub-areas of the topic you need to explore?

What other research (perhaps not directly on the topic) might be relevant to your investigation?

How do these sub-topics and other research overlap with your investigation?

A discussion of the technical literature you have read, explaining why it is relevant for your project critical analysis, e.g. strength, applicability and weakness

Identify any knowledge/research gap and how you may address this gap, if applicable

Note down all your initial thoughts on the topic. You can use a list to help you identify the areas you want to investigate further. It is important to do this before you start reading so that you don’t waste time on unfocused and irrelevant reading.

Searching for sources It’s easy to think that the best way to search for texts is to use the Internet – to ‘Google it’. There are useful online tools that you may use, like Google Scholar. However, for most literature reviews you will need to focus on academically authoritative texts like academic books, journals, research reports, government publications. Searching Google will give you thousands of hits, few of them authoritative, and you will waste time sorting through them. A better idea is to use databases. These are available through the Library in paper and electronic (usually online) forms.

Requirements – MBA Thesis Topics

User requirements for the target system, if applicable; or
Requirements to achieve the success of your project

Evaluation Framework

Evaluation of your proposed system (if building a software system); or
evaluation of your research project, including e.g.
- quality of data used: e.g. reliability, coverage/completeness
- quality of data collection method, e.g. limitations of sampling methods
- quality of analytical methods used, e.g., any limitations? Any bias?
- quality of conclusions drawn, e.g. are they affected by potential bias of input data due to methods used, incompleteness of data, etc.
- quality of presentations, e.g. which visualisations used to view complex data – what diagrams have been used, are they suitable?
- quality of tools used, e.g. are they appropriate? Have you encountered any problems, if so, how did you overcame them?

Methodology

initial design of software or design of experiments, if applicable; or
methodology for carrying out your research project, inc. where/how you plan to source your data, how you plan to group them, what methods you plan to deploy for analysis,
you can draw a methodology diagram for this.
Questionnaire, if any.

Project Plan

PLES issues
Timetable and work plan for the whole year, agreed with your supervisor, and specifying activities, deliverable and deadlines. See an example timetable here: project management information:
Make sure that you have clearly labelled your time allocation on evaluation and how you will meet the deadlines, etc.
Risk analysis and remedies/management

References

Appendix (as needed)

An appendix (plural is “appendices”) is a section added to the end of your dissertation. It includes material that expands and explains the subject matter you have discussed in earlier sections. Each appendix should cover a distinct aspect of your subject. Follow the steps below and you will learn how to write an appendix and its importance to your writing. This is essential for MBA thesis topics.

Blank consensus form (if interview/survey are to be conducted)
Blank questionnaire (if interview/survey are to be conducted)
Data tables or diagrams (if appropriate)
Copy of questionnaire or survey
Copies of personal correspondence
Interview questions
Transcripts of interviews
Large graphs
Maps
Illustrations or photographs
Explanation of technical information or formulas
Diagrams
Raw data

And that’s it, everything you need to include. As with everything, it’s a good idea to check with your dissertation supervisor before handing in as they’re the authority on how your University wants your dissertation. Remember, it’s the starting that’s the hard part, once you’ve sat down and committed the time, it should come quite easily.

MBA Thesis Topics Notes

Always check the marking sheet/rubric and make sure that you have meet all of the required work. Also make sure that you observe the percentage allocation for each of the categories and that you have provided sufficient to meet the percentage.
The above is the minimum set of requirements. If you have done more than what is suggested here, for instance a preliminary implementation or tests of existing software tools, by all means report it.
Make sure you do not exceed the maximum pages allowed. If you have useful graphs and data, you can include them in appendix.
Make sure you run spell checker to make sure there is no spelling errors.
Make sure you have a clear format
Make sure you use formal language

Any special format? The cover sheet must include:

your full name
your supervisor’s name
title of your project
the captions “Deliverable One”

MBA Thesis Topics Relevant Posts

MBA Dissertation Proposal Writing

MBA Dissertation Ideas

Thanks for taking the time out to read this MBA thesis topics blog post and I hope you found it useful. I would be grateful if you could share this blog post via Twitter, Facebook, or Google+ I would like to generate as much social media buzz around this post.