Muslim Commercial Bank Ratio Analysis

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Ratio Analysis of Axis Bank Essay - 1760 Words

With regard to those greater and more conspicuous economical frauds, or malpractices equivalent to frauds, of which so many deplorable cases have become notorious—committed by merchants and bankers between themselves or between them and those who have trusted them with money, such a remedy as above described is not available, and the only resources which the present constitution of society affords against them are a sterner reprobation by opinion, and a more efficient repression by the law. Neither of these remedies has had any approach to an effectual trial. It is on the occurrence of insolvencies that these dishonest practices usually come to light; the perpetrators take their place, not in the class of malefactors, but in that of insolvent debtors; and the laws of this and other countries were formerly so savage against simple insolvency, that by one of those reactions to which the opinions of mankind are liable, insolvents came to be regarded mainly as objects of compassion, and it seemed to be thought that the hand both of law and of public opinion could hardly press too lightly upon them. By an error in a contrary direction to the ordinary one of our law, which in the punishment of offences in general wholly neglects the question of reparation to the sufferer, our bankruptcy laws have for some time treated the recovery for creditors of what is left of their property as almost the sole object, scarcely any importance being attached to the punishment of the bankrupt for any misconduct which does not directly interfere with that primary purpose. For three or four years past there has been a slight counter-reaction, and more than one bankruptcy act has been passed, somewhat less indulgent to the bankrupt; but the primary object regarded has still been the pecuniary interest of the creditors, and criminality in the bankrupt himself, with the exception of a small number of well-marked offences, gets off almost with impunity. It may be confidently affirmed, therefore, that, at least in this country, society has not exerted the power it possesses of making mercantile dishonesty dangerous to the perpetrator. On the contrary, it is a gambling trick in which all the advantage is on the side of the trickster: if the trick succeeds it makes his fortune, or preserves it; if it fails, he is at most reduced to poverty, which was perhaps already impending when he determined to run the chance, and he is classed by those who have not looked closely into the matter, and even by many who have, not among the infamous but among the unfortunate. Until a more moral and rational mode of dealing with culpable insolvency has been tried and failed, commercial dishonesty cannot be ranked among evils the prevalence of which is inseparable from commercial competition.

Financial Ratio Analysis for HSBC - UK Essays

Ratio Analysis of Brac Bank - Term Paper

The keeping of accounts of the government at all levels also places the central banks at a voltage position to advise the government on financial matters. The central bank assists the government in the preparation of the national budget. The central bank also grants major loans to the government in period of crisis such as economic depression or war. It also advice the government on how and when to borrow.

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I think that the operations of the Bank produce much too great and important effects on the general business of the country to admit of its considering, as other bankers may do, only its own safety and pecuniary interest.

How to Analyze Your Business Using Financial Ratios


HSBC bank is a wholly owned subsidiary of HSBC Holding plc

In this way. One particular kind of commercial crisis, and perhaps the worst kind, is occasioned by previous over speculation and over trading, which is always accompanied by an undue extension of credit, and by a rise of prices of a speculative character, having no sufficient justification in the circumstances of the markets. Now when this is the case, there must necessarily come a revulsion, which is normally brought about by an increase of imports owing to the rise of prices, and by a diminution of exports. That produces a drain of bullion and a collapse of prices, and this collapse of prices is generally brought about by the necessity which the speculators are in of selling in order to fulfil their engagements. Now this speculative rise of prices, I apprehend, is usually attended by an increased quantity of bank notes. It does not follow that it is caused by it, because the speculative purchases generally take place on credit for a certain term; and even if they did not, the transactions between dealers are generally not liquidated by means of bank notes. However, there comes a time in this series of phenomena when the dealers begin to be pressed, when the rise of prices has stopped, but when the speculators do not yet despair of their rising again. At such a time there are generally great applications to bankers for loans, in order to enable the speculators to hold on; and I think the effect of the Act of 1844 is to prevent them from getting those loans to the extent to which they might do but for the Act. And I think that very often the speculative rise of prices is upheld, and has been upheld, as a matter of history, by loans which the Bank of England and other banks have made to merchants and holders of goods, the effect of which has been to prevent them from being under the necessity of selling so soon as they otherwise must have done. The consequence of this is, that the fall of prices is retarded, that the drain of gold continues longer, and that therefore the reserve of the Bank comes nearer to being exhausted; and when the time comes that they are really alarmed about their reserve, they are obliged to pull up more suddenly, and to make a greater reduction of discounts or a larger sale of securities then they otherwise need do, and thereby produce a greater alarm, sometimes amounting to panic, and a greater destruction of credit in the country, and the whole thing is rendered more calamitous than it otherwise would be. In that case, I think, the provisions of the Act do good, because there is no doubt that before the Act existed, the Bank used often in such cases to make loans by the reissue of notes which had been returned to it in exchange for bullion. This appears to me to be the great advantage of the Act; but against it there are two things to be set. One is, I do not think that this mode of operation is so much required now as it perhaps was at one time, because the commercial public generally, and the Bank Directors, understand much better than they did the nature of a commercial crisis, and the extreme mischief which they do both to themselves and to the public by upholding over speculation, and I do not think that they at all need the provisions of the Act in order to induce them in that case to conduct themselves as the Act would make them. In the next place, I think that if in the first stage of this process the Act operates usefully, it operates exceedingly injuriously in the latter stage; that is to say, when the revulsion has actually come, and when, instead of there being an inflated state of credit, there has been an extraordinary destruction of credit, and there is nothing like the usual amount of credit that there is at other times. At such a time the Bank can hardly lend too much; it can hardly make advances to too great an extent, as long as it is to solvent firms, because its advances only supply the place of the ordinary and wholesome amount of credit, which is then in deficiency. But the Bank, under the operation of the Act, can only make those advances at such a time from their deposits. Now it is very true that the deposits are likely to be large at those times, because at those times people leave their money in deposit; they leave it within call, to be able to have it at any moment when they want it, and therefore the Bank deposits are larger than usual. But still this resource is not sufficient, as was proved in 1847, when the Bank Directors, after doing the very utmost which they could do from their deposits to relieve the distressed state of trade by advances to solvent firms, were obliged to go to the Government to ask for a suspension of the Act, and the Government were obliged to grant it.

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In order to explain that, it is necessary to go into some particulars. I think that as long as the Bank confines its advances to merchants and general dealers, to what is called the mercantile public, people who deal in goods but who do not pay wages, its issues never originate a rise of prices, because a dealer only uses notes for the purpose of fulfilling previous engagements. Dealers never make purchases in the first instance with Bank notes; the dealers to whom Bank notes are paid usually either send them into deposit, or pay them to persons who send them into deposit. But the operation is different when advances are made to manufacturers or others who pay wages. When that is the case, the notes do or may get into the hands of labourers and others who expend them for consumption, and in that case the notes do constitute in themselves a demand for commodities, and may for some time tend to promote a rise of prices; and when they do so, and there is not any other cause for that rise of prices than the issue of notes, that constitutes over-issue, that is to say, an issue that will be followed by a revulsion.