Essay --

Many students from all over the globe seek to take admission in different universities of USA but unfortunately many are unable to do so due to different problems like financial need, etc. So many different foundations have started funding the international students who are meritorious, talented and due to financial need or some other problem can’t afford to take admission. Scholarships for the Indian Students at any University in USAGiven below are some of the scholarships available for admission in Masters’ degree in any university of USA for the international students. Though the list contains mainly those scholarships for the Indian students in which they are eligible. The scholarships available here are: 1. Fulbright Foreign Students Program in USA This scholarship enables graduate students and young professionals from other countries of the world to research and study in US for a year or more at US universities and institutes. Eligibility: Any international candidate who is holding bachelors’ or equivalent degree is eligible for this scholarship Scholarship Amount: Full funding for the duration of study which includes tuition fees, airfare, living stipend, health insurance, etc. How to Apply: The applications are processed by the bi – national Fulbright Commission / Foundation or US Embassies. So the candidates need to apply through the Fulbright Commission / Foundation or US Embassies of their home countries, but it must be done before the deadline. For more details visit: http://foreign.fullbrightonline.org/about/foreign-fullbright 2. OFID Scholarship Awards for International Students OFID stands for The OPEC Fund for International Development. This foundation offers scholarship to those international stu... ...ime Minister Obuchi. He actually believed in â€Å"people building the next era†. This scholarship is to support innovative and imaginative post – graduate research in the areas of development. Eligibility: Any international candidates who have completed their bachelors’ or equivalent degree and must be a person of high intellectual promises are eligible. The candidate must be within the age of 40 years. Scholarship Amount: Between $ 6,000 and $ 10,000 in two or three installments How to Apply: All the candidates need to submit the application form along with the documents mentioned in the form before the deadline to the address â€Å"Fellowship Programme Section, UNESCO, 7, Place de Fontenoy, 75352 Paris 07†. Also an advance copy may be sent by fax to 33.1.45.68.55.03. For more details visit: http://portal.unesco.org/en/ev.php-URL_ID=14635&URL_DO=DO_TOPIC&URL_SECTION=201.html

Individual Learning Project Essay

The organization selected for analysis and evaluation is American Lake Credit Union. This organization is composed of two main branches, both located in Tacoma, Washington. In contrast to banks, Credit Unions are smaller organizations and are directed by members who are selected via a vote to serve in an all-volunteer board of directors for the organization (Scott, and Johnston, p.2, 2011). Specifically, this credit union was founded in 1948 and has grown since then. (C. Fitzer, personal communication April 7, 2014). For instance, although the organization is small in size through a partnership with a credit union network, it is able to provide general financial services at diverse locations throughout the country (CO-OP Financial Services, 2013). In addition, the active CEO Fantz (2013) asserted that the organization’s mission is to â€Å"provide a variety of quality services to a diversified membership while maintaining financial soundness†; additionally, they current ly reported close to 50 billion dollars in assets on organization’s balance sheet. Strengths, Weaknesses, Opportunities, and Threats (SWOT) Analysis Arumugam, Chang, Ooi, and The (2008), emphasized that in order to facilitate the drive towards high performance, many companies are using self-assessment tools to measure their current position and develop strategy in order to asses where they are and where they want to be within their industry. (p.141). SWOT analysis is one of this tools or processes. Boone and Kurtz (2006) defined the concept of SWOT analysis as a methodical approach to develop strategy as it compels managers to do an internal reality check, and an analysis of the external environment (p.274-275). This assertion is echoed by Blocher, Stout, Juras, and Cokins (2013) in which the scholars lectured the process of SWOT analysis as a process that provides the opportunity to methodologically examine internal and external factors in order to complete a self-assessment of the organization, and examine the environment in order to create a solid foundation for sound strategy for the organization (p. 36-38). The general quadrants of a complete SWOT analysis are strengths, weakness,  opportunities, and threats. These are listed in Table 1 for American Lake Credit Union. Table 1 Strengths -High quality aggressive employee training programs parallel with organization high audit and regulatory compliance rates -Membership to CO-OP Shared Branch Network 1 -Local Market Position/Community Relations Program -Cost Advantage and Pricing compared to banks -Physical Locations -Strong and Experienced Managers Weaknesses -Employee Turn-Over -Requirements to become a member -Lack of Market Differentiation as it relate to financial Services2 -Only two physical branches -Lack of a business/Market Development Section -Technology, bad turn around in communications equipment repair, need to redo contract for local IT Support Opportunities -Online Market -Branch Expansion -External Training Program -Rotating Customer Base in the local installation -College population in nearby universities -Available location for Branch at Air Force Location Threats -Military drawdown (long term), affect main target market -More exposed to economic issues (recessions) than bigger organizations due to limited size -Loss of one segment of the market with the deactivation of 4-2 Brigade Combat Team -Columbia Bank Plans to Open Facility in the immediate area 2 -Cyber Crimes External Note. Lists Adapted from (C. Fitzer, personal communication April 7, 2014) with the exception of: 1. CO-OP Financial Services. (2013). What is CO-OP ATM and CO-OP Shared Branch?. Retrieved from http://co-opsharedbranch.org/participating-cus/ 2. (C.H. Chapman, personal Communication April 8, 2014) This source is a marketing consultant for non-profit organizations, has worked closely with the American Lake Credit Union, and provided fresh feed back into the credit union during the interviews. A brief discussion of Table 1 is provided below: In the area of strengths the one of the most important strengths provided during the interview was their current training program for federal  regulatory compliance, this put the organization at an advantage even with more developed organizations In the area of weaknesses, the biggest challenge was employee turnover. Even with the recession and the current job market good talent could and can be found, but it is hard to retain with the current compensation and benefit plans offered In the area of opportunities, the online market presents a strong market that the organization has not exploited as much as they could In the area of threats, the main target market of the American Lake Credit Union is the current drawdown within the Department of Defense structure, in the short term, the population have currently lost 1400 service members and their families, in the long term more loses in market are expected (C. Fitzer, personal communication April 7, 2014) American Lake Credit Union Balanced Scorecard Soderberg, Kalagnanam, Sheehan, and Vaidyanathan (2011) presented the balance scorecard as a strategic planning procedural tool used by organizations to balance financial concerns, customer concerns, process concerns, and innovation concerns with the main purpose of developing appropriate strategy in favor of a more favorable market position (p. 689-690). Similarly, Lawrence and Webber (2008) illustrated the process as a concoction of focused key quadrants, people and knowledge, internal, customer, and financial indicators with the main purpose of developing metrics to measure all areas of performance (p.79). In the case of American Lake Credit Union, interview and analysis with C. Fitzer and C.H. Chapman provided enough data to produce the balanced scorecard depicted in Table 2 below. -Reduce Exposure to default Loans -Cash Flow/Balance Sheet -Selected cost savings in utilities and materials -Reduction in days for accounts receivable -Customer Service/Satisfaction -Customer Loyalty -Trend in Customers that transferred direct deposit accounts -Customer Surveys (Measured Quarterly (QTLY)) -Mystery Shopper feedback to manager -Trend in returning customers – Number of Customer complaints -10 new customers a week (Account Holding) -10% increase in market share by end of fiscal year 2015 -95% Satisfaction on surveys per quarter -100% satisfaction in mystery shopper experience -Less than eight percent customer complaint rate quarterly -Participate in community awareness events -Sponsor small activities for customers -Provide Western Union Services at discount to customers with direct deposit to the institution -Open new Branch at local AF Base -Implement Secret Shopper Program -Implement Customer Service Training Table 2 (continued) General Quadrants Critical Success Factors/Goals Metrics/Measured Trends Towards Goals Goal Initiative Internal Process -Processes Efficiency and Quality -Productivity when doing direct customer interactions -Number of errors in financial processes -Cycle time/customer wait time -Time spent doing internal tasks -Less than 5 errors per shift -Less than 10 minutes from check in to check out for customers regarding of the time of the day -Decrease time doing internal tasks by 25% without loss of quality -Implement lean six sigma principles -Sustain compliance Training Program -Integrate yearly refresher for all employees (training will be employee led) Learning and Growth -Skill Development and Sustainment -Competitive Benefits/Compensation -Employee Access and Input in Strategic Planning -Number of errors in financial processes -Employee Surveys -Employee Turn-over rates -90% employee satisfaction rate in surveys -Minimize employee turnover rate by % by 50% FY 15 -Integrate yearly refresher for all employees (training will be employee led) -Implement a more comprehensive benefit package for employees, main target is well performing and those with longevity -Involved Employees in strategy development and asked for feedback on current decision Note. Lists Adapted from (C. Fitzer, personal communication, April 7, 2014) with the exception of: 1. CO-OP Financial Services. (2013). What is CO-OP ATM and CO-OP Shared Branch?. Retrieved from http://co-opsharedbranch.org/participating-cus/ 2. (C.H. Chapman, personal communication, April 8, 2014) This source is a marketing consultant for non-profit organizations, has worked closely with the American Lake Credit Union, and provided fresh feed back into the credit union during the interviews. Discussion of Critical Success Factors (CSFs) Blocher et al. (2013) defined critical success factors as â€Å"measures of the aspects of the firm’s performance that are essential to its competitive advantage and therefore to its success† (p. 898). Tables 2 depicted the selected CSFs within the standard four quadrants of the balance score card, and these are discussed in detail below. Financial The financial success factors are important because these defined the aspect of the main purpose of a business, to make a profit. The specific CSFs within the financial quadrant and the rational for their selection are explained below. Increase Gross Profit. This was selected by the interviewed organization representative because in her professional opinion it was the best way to determine the effectiveness and financial health of the organization (C. Fitzer, personal communication, April 7, 2014). Furthermore, in accordance to Bloomsbury Information (2009), this an important factor to consider because a high gross profit margin ratio, high gross profit margin ratio indicates that a business can make a reasonable profit on sales, as long as overheads do not increase. Investors pay attention to the gross profit margin ratio because it tells them how efficient your business is compared to competitors. It is sensible to track gross profit margin ratios over a number of years to see if company earnings are consistent, growing, or declining. For businesses, knowing your gross profit margin ratio is important because it tells you whether your business is pricing goods and services effectively. Reduce exposure to default loans. The concept implies reduction of credit risk. The term credit risk is illustrated by He and Xiong (2012), as the risk the organization takes when issuing a loan; furthermore, if the organization’s loan or debt market deteriorates, and loans go into default the organization would take loses in its investment (p. 391). This is important because if this risk is identified and mitigated in an effective way the organization will not be as exposed to financial loses. Customer Factors This specific quadrant addresses the customer and objectives to increase or develop value and differentiation from the point of view of the customer (Beard, 2009, p. 279). Specific CSFs for the organization in this specific quadrant are as follows. Prospective customer perspective towards the organization- This refers specifically for that segment of the market that are not customers of the organization yet. Lautenslager (2003) reported that aachieving a good perspective from this outer segment will allow the organization to attract new customers, expand its market, and build the  organization as an attractive brand which can translate in to new business and profits. Customer Service/Satisfaction- This term refers to the extent that the clientele is pleased with the product line or service provided by the organization. As a general concept this is important because if the customer is unhappy is likely that he would not comeback; furthermore, it is likely that he will walk away, repel other prospective customers, or even existing customers (Naik, 2011). Customer Loyalty- This objective is one of the fundaments of many business organizations. This is extremely important for any organization because once customer loyalty is achieved, these customers will purchase the organization’s products and services repetitively, the more loyal the customer, the harder it will be for a competitor to draw him, and they can provide a good source of advertising and new customers by word of mouth. (C.H. Chapman, personal Communication April 8, 2014). Internal Process Internal processes are another part of the quadrant that when disregarded can cost the organization in terms of effectives, quality, gross margin, and revenue. It refers to those processes that are internal to the organization, like appraisals, self-audits, customer interactions, and quality checks for example. Processes Efficiency and Quality- This area refers to the internal processes of the organization, for example, it was mentioned during the interviews that that one employee on the organization creates a weekly balance sheet, and that job usually takes about one hour. Streamlining this and similar other processes save the organization on employee hours that could be used for customer care or employee training (C. Fitzer, personal communication, April 8, 2014). Productivity when doing direct customer interactions- This refers to the amount of time that it takes to do a customer transaction from the moment that they enter the facility until they are complete. It may take a customer about 20 minutes during the busy time of the day to perform the transaction due to crowding. Altering the way the organization conduct some of this processes will allow for the â€Å"line† to move faster, and affecting the customer satisfaction factor. Learning and Growth The quadrant of learning and growth is fundamental to the American Lake Credit Union because of the environment in which financial organizations operate in our time. Constant changes to the financial regulations at the state, and federal levels, added to the technological advances call for continuous organizational development in order to remain relevant with the environment. Therefore, developing a learning collective workforce and retaining this work force is fundamental to any business organization today. The specific CSFs on this quadrant are discussed below. Skill Development and Sustainment- Currently, the organization has a very strong training program in the areas of federal compliance. The intent is to sustain this strong program, and enhanced it by adding employee training in new technologies, internal processes, and customer service; moreover, ensuring the program is employee led and centric, thus, giving a sense of ownership to the workforce (C. Fitzer, personal communica tion, April 8, 2014). Competitive Benefits/Compensation- C. Fitzer (personal communication, April 8, 2014) mentioned that this was one of the main employee complaints in regards to the employee programs within the organization. Implementing, a more comprehensive benefits/compensation plan will ensure that employee turnover rate is minimized and allow the organization to retain the experienced employees. Employee Access and Input in Strategic Planning- Allowing employees to have more impute on the decision making process for the organization will give management a fresher perspective that can be valuable when making those decisions. Plus, it will give sense of ownership to the workforce constraining any resistance to strategic changes. Evaluation of American Lake Credit Union in Achieving its CSFs Financial Any for profit organization is always on the look to increase its profit and solidify or expand its market position. Firstly, the risk reduction initiatives of education and member involvement combined with market expansion should facilitate the current goal of 10% increase in gross profit margin by the end of FY 15 (personal communication, April 8, 2014). Examining the balance Sheet quarterly will allow the organization to follow up and address trends that would constrain this goal. Currently, on the last quarter they were down by 2% from the quarter before, but on this quarter they are up 4% (personal communication, April 8, 2014). This may sound like a wave of percentages, but taking other factors into consideration as the  proposed expansion to the local AFB, cutting unnecessary costs on internal processes and supplies, initiatives to reduce cycle time for accounts receivable, and other initiatives within Table 2 an increase of 10% gross margin by the end of FY 15 is a realisti c and achievable goal for this organization. Customer Satisfaction Customer satisfaction will be measured monthly, analyzed and evaluated quarterly, taking in to consideration trends in customers that transferred direct deposit accounts, customer surveys, mystery shopper feedback, and trends in returning customers (C. Fitzer, personal communication, April 8, 2014). Currently’ the organization have a high customer satisfaction rate with survey results depicting up to 88% on all customer surveys and only three formal complaints last quarter (C. H. Chapman, personal communication, April 8, 2014). This fact combined with the implementation of the secret shopper program on the first quarter of FY 15, and the customer care training program initiatives will give a customer care advantage to the organization over other local competitors (C. Fitzer, personal communication, April 8, 2014). On the other hand, although the process for customer complaints seemed to be effective at the collection and solving states, there was no current intent on adding these as part of the customer care training program. This was recommended by this author to the manager under interview. Using an objective approach, after taking into consideration the current customer satisfaction trends and rates, the upcoming initiatives, it can be assessed that the goal of 95% customer satisfaction rate will be achieved and likely surpassed by the end of FY 15. Internal Process American Credit Union is looking to reduce errors in internal processes, increase effectiveness in customer processes, and decrease the time doing internal tasks. The current goals of less than five errors per shift, less than 10 minutes from check in to check out for customers regarding of the time of the day, decrease time doing internal tasks by 25% without loss of quality are achievable, but will require commitment of the leadership and the workforce. For instance, sustaining the current regulatory compliance training program, and implementing lean six sigma principles should provide  the tools to succeed in this area. However, with all the other initiatives on the horizon, and the plans for expansion in to the local AFB it will require extra effort for the organization as a collective to achieve those goals without de-prioritizing other initiatives. Learning and Growth In the case of American Lake Credit Union a robust education and training program, a more comprehensive concoction of compensation and benefits will translate into the development of a better and brighter workforce, and the retaining of this work force. This will be measure by taking into consideration the number of errors in financial processes, employee Surveys, and employee turn-over rates. Some of the initiatives on this area such as consider input from employees in strategic decisions and sustainment training will sharply motivate employees within this area. Moreover, the current goal of 90% employee satisfaction rate in surveys and to minimize employee turnover rate by 50% by FY 15 is very achievable if this area is somewhat prioritized by management. However, as reported in the article Putting People First (2011), management must keep in mind that newly trained and educated employees will take their knowledge and new skill sets somewhere else for better pay and or benefits, if the proposed compensation and benefit packets are implemented (p.25-26). Final Thoughts The purpose of this document was to provide a short description of American Credit Union along with a SWOT Analysis, Balanced Score card, and discussion of these. It can be assessed with the information provided that although there are challenges ahead, the current financial status of the organization selected is healthy and the ambitions for the future achievable as they exploit their strengths, their environment, and address their weaknesses. Lastly, as long as the management remained focused, committed, and is able to maintain the workforce motivated it is likely that the organization will achieve its goals. References Arumugam, V., Chang, H., Ooi, K., and Teh, P. (2009). â€Å"Self-assessment of TQM practices: a case analysis†, The TQM Journal, 21(1), 46 – 58. Retrieved from http://www.emeraldinsight.com.ezproxy.liberty.edu:2048/journals.htm?articleid =1766744&show=abstract#sthash.TkDGZoZ7.dpuf Beard, D. F. (2009.). Successful applications of the balanced scorecard in higher education. Journal of Education for Business, 84(5), 275-282. Retrieved from http://go.galegroup.com.ezproxy.liberty.edu:2048/ps/i.do?id=GALE%7CA199801168&v=2.1&u=vic_liberty&it=r&p=AONE&sw=w&asid=0a844270d80075c057b128b38e50a6e7 Blocher, E., Stout, D. S., Juras, P.E., & Cokins, G. (2013). Cost Management: A Strategic Emphasis (6th ed.). New York, NY: McGraw-Hill Irwin. Boone, L. and Kurtz, D. (2006). Contemporary Business. Mason, OH: Thomson South-Western CO-OP Financial Services. (2013). What is CO-OP ATM and CO-OP Shared Branch?. Retrieved from http://co-opsharedbranch.org/participating-cus/ Fantz, E. (2013). Annual Report. Retrieved from http://www.americanlake.org/pdf/annualreport.pdf Bloomsbury Information. (2009). Gross profit margin ratio. Retrieved from http://www.liberty.edu:2048/login?url=http://literati.credoreference.com.ezproxy.liberty.edu:2048/content/entry/qfinance/gross_profit_margin_ratio/0 He, Z., & Xiong, W. (2012). Rollover Risk and Credit Risk. Journal of Finance, 67(2), 391-429. Lautenslager, A. (2003), Why You Need PR: Getting the word out about your product or service should always be a priority. Retrieved form http://www.entrepreneur.com/article/65672# Lawrence, A.T., and Weber, J. (2008).Business & Society Stakeholders, Ethics, Public Policy (12th ed). New York, NY: McGraw-Hill Irwin. Naik, A. (2011). Why is Customer Satisfaction Important. Retrieved from http://www.buzzle.com/articles/why-is-customer-satisfaction-important.html Putting people first. (2011). Devel opment and Learning in Organizations, 25(1), 25-27. doi:http://dx.doi.org/10.1108/14777281111096816 Scott, K., and Johnston, C. R. (2011). Factors affecting the adoption of consumer oriented information technology biometrics solutions by the credit union industry. Journal of Technology Research, 2, 1-13. Retrieved from http://search.proquest.com/docview/887909140?accountid=12085 Soderberg, M., Kalagnanam, S., Sheehan, N., and Vaidyanathan, G. (2011) â€Å"When is a balanced scorecard a balanced scorecard?, International Journal of Productivity and Performance Management, 60(7) 688-708

A Comparative Study Of The Banks In Nepal - Free Essay Example

Sample details Pages: 12 Words: 3601 Downloads: 9 Date added: 2017/06/26 Category Statistics Essay Did you like this example? A well-structured financial sector is of special importance for the economic growth in both developed and developing countries. The commercial banking sector should be well organized and efficient for the growth of an emerging economy. Commercial Banks which forms one of the backbones of the financial sector are the intermediary link in facilitating the flow of funds from the savers to investors. Don’t waste time! Our writers will create an original "A Comparative Study Of The Banks In Nepal" essay for you Create order By providing a means of mobilizing domestic savings and proficiently channeling them into productive investments, they lower the cost of capital to investors and accelerate the economic growth of a nation. No underdeveloped country can well progress without setting up a sound system of commercial banking system.[1] Nepal is an agrarian based economy with a GDP of $ 33.26 billion[5]. Nepalese banking industry has considerable changes over past decades because of liberalization, deregulation, improving information technology and globalization. The financial sector liberalization resulted in the entry of new firms in the market, which also added more pressure on competitiveness of individual banks; deregulation widened the scope of activities and expanded the banking activities; advancement in technology resulted into new methods to perform banking activities. Furthermore, the banks, these days, are entering into non-banking markets while other financial institutions are entering into the banking markets that have conventionally been served by the banks. These changes have altered the structure and market behavior of Nepalese banking industry. Currently there are 26 commercial banks out of which 6 are joint venture banks, 63 development banks and 77 financial institutions in Nepal. At present there is only one international bank operating in Nepal which is Standard Chartered Bank Limited. It started operation in Nepal since 1987 as a joint-venture operation and today it is a part of Standard Chartered Group having an ownership of 75% in the company and 25% shares owned by the Nepalese public. Nepal after its commitment to the World Trade Organization (WTO) during its accession in 2004, has allowed foreign banks to make their foray in Nepal to do only wholesale banking  from Jan. 1, 2010. Initially before the agreement with WTO (GATS), the Central Bank regulation allowed foreign shareholders to acquire maximum of 51% shares. Later the regulation changed which allowed foreign ownership of 75% and the recent regulation of 2010 allows 100% foreign ownership (i.e. allows a local entity to be a branch of a foreign company) in the banking industry. Entering of foreign firms is likely to generate benefits to financial sector as well as the economy as a whole (Chau HB, 2003). The effects can be seen mainly through an increase in efficiency and technological advancements as mentioned above. Over the past decade, the Nepalese banking industry has been doing well and has a number of new firms entering into the market. However, there is only one foreign bank and 6 joint-venture banks in the banking sector, though the government has liberalized the financial sector and allowed foreign banks to have 100% foreign ownership. With limited number of foreign banks in Nepal, it is still unclear whether entering of foreign banks, including joint venture, helps to improve overall performance of banking sector as well as to spillover some benefit to domestic banks in Nepal. Objectives To answer the key question above, there are two objectives of the research paper. To measure and analyze the performance of three types of banks namely domestic bank, joint-venture bank, and foreign bank and to explain the variation in performances of these banks. To identify whether the entry of foreign banks, including joint venture, banks would be beneficial for domestic banks which still dominate the financial market in Nepal. 1.3. Scope and limitations of the Study This study will only focus on three types of banks, i.e. domestic bank, joint-venture bank, and foreign bank, and it will offer an insight on the advantages of foreign banks in Nepal. Furthermore it will provide the reasons pertaining to variations in performance of the banks. The main limitation in this study is that there is only one foreign bank in Nepal till date, so the interpretation of the performance of the foreign bank in Nepal could be restricted to some degree. 1.4. Research Methodology This section develops research methodology to reach the objectives of the study. The banking sector in Nepal will be divided into three groups, namely foreign owned banks; joint-venture banks, and domestic banks. For this research, foreign-owned banks will be classified as those which have started a branch or subsidiary in the host country where the share of foreign bank ranges from 51% to 100% while joint venture banks will be classified as those in which foreign investors own the total equity of 50% or less and domestics banks are those which are purely owned by the Nepalese. The foreign owned banks are separated from joint-venture banks in this study because these two types of banks tend to have different operational management, resulting in their different performance. The research methodology is composed of both quantitative and qualitative analysis. First, the qualitative approach is applied to examine the structure and development of financial sector in Nepal during 2000-2010. The financial policy, especially competition-restriction regulation in Nepalese banking sector is also reviewed, mainly through official documents from central bank and international organization. Then the quantitative approach is developed to measure the performance and efficiency of banking sectors in Nepal. This is done by conducting various financial indicators of three types of banks in Nepal namely foreign bank, joint venture banks and domestic banks. Comparison of the indicators among these three types of banks over the past decades will provide the clear analysis of different performance between foreign-owned and domestic banks. The indicators can be grouped into four aspects, namely profitability; operational costs; staff productivity; risk prevention. Table 1 shows financial indicators that will be conducted according these four aspects. Table: 1    Indicators Rational Profitability Profitability à ¯Ã¢â‚¬Å¡Ã‚ ·Profit Margin (Net Profit/Total Income) Profit margin is very useful when comparing  companies in similar industries. A higher profit margin indicates a more profitable company that  has better control over  its costs compared to  its competitors. Profit margin is  displayed as a percentage; a 20% profit margin, for example, means the company has a net income of $0.20 for each dollar of sales. Profitability à ¯Ã¢â‚¬Å¡Ã‚ · Return on Asset (Net Profit/Total asset) ROA figure gives investors an idea  of how effectively the company is converting the money  it has  to invest into net income. The higher the ROA number, the better, because the company is earning more money on less investment. For example, if one company has a net income of $1 million  and total  assets of $5 million, its ROA is 20%; however, if another company earns the same amount but has total assets of $10 million,  it has  an ROA of 10%. Based on this example, the first company  is better at converting its investment into profit. Profitability à ¯Ã¢â‚¬Å¡Ã‚ ·Ãƒâ€šÃ‚  Return On Equity (Net Profit/Equity) The amount of net income  returned  as a percentage  of shareholders equity.  Return on equity  measures a corporations profitability  by revealing how much  profit a company generates  with the money shareholders have invested.  Ãƒâ€šÃ‚  Higher The ROE better the company. Profitability à ¯Ã¢â‚¬Å¡Ã‚ · Interest Rate Spread (Interest Earning Ratio-Interest Expense Ratio) The difference between the average yields a financial institution receives from loans and other interest-accruing activities and the average rate it pays on deposits and borrowings. The greater the spread, the more profitable the financial institution is likely to be; the lower the spread, the less profitable the institution is likely to be. Risk prevention Risk Prevention à ¯Ã¢â‚¬Å¡Ã‚ ·Capital to Risk Weighted Assets (CRAR) Total Capital/ (RWAs) This ratio is used to protect depositors and promote the stability and efficiency of financial systems around the world. à ¯Ã¢â‚¬Å¡Ã‚ ·Core CRAR = Tier I Capital / RWAs Tier one capital is that which can absorb losses without a bank being required to cease trading. This measures the capital standard of the bank à ¯Ã¢â‚¬Å¡Ã‚ ·Adjusted CRAR = (Total Capital Net NPAs)/(RWAs Net NPAs) This relates to the bankà ¢Ã¢â€š ¬Ã¢â€ž ¢s ability to sustain the losses due to risk exposures is the bankà ¢Ã¢â€š ¬Ã¢â€ž ¢s capital. The intermediation activity exposes the bank to a variety of risks. Staff productivity Staff Productivity à ¯Ã¢â‚¬Å¡Ã‚ ·Profit per employee (Net Profit/ No. of Employee) This helps to measure how productive the employees are in the bank by calculating profit generated by every employee. Higher the figure better for the company. à ¯Ã¢â‚¬Å¡Ã‚ ·Net Income per employee (Net Total Income/ Number of Employees) This also helps to measure income generated by every employee in the company Operational costs Overhead Expense à ¯Ã¢â‚¬Å¡Ã‚ · Overhead expense/total income The accurate accounting and allocation of over-head expenses are very important factors in calculating the true cost of the company Operating Expense Ratio à ¯Ã¢â‚¬Å¡Ã‚ · Operating Expense/ Net Income The Operating Expense Ratio is usually viewed as a measurement of management efficiency.   This is because management usually has greater control over operating expenses than they do over revenues. In addition to analyzing different performance between foreign-owned and domestic banks, this study further analyze whether entering of foreign banks helps to improve efficiency of domestic bank. This is done by (1) Structured interviews with managers of central bank and commercial banks. Specifically, the interview will provide detailed analysis on which factors do help to improve performance of domestic banking sector in Nepal; could foreign-owned banks influence performance of domestic banks; and which channels do foreign-owned banks influence domestic banks, and (2) by à ¢Ã¢â€š ¬Ã…“Granger causality testà ¢Ã¢â€š ¬? between domestic bank performance and foreign bank performance. This will be done on profitability, staff productivity and operational costs. 1.5. Organization of the study There will be five chapters in the study. Chapter 1 provides introduction, objective, scope and limitation, and methodology of the study. Chapter 2 reviews relevant theoretical and empirical literature on foreign bank penetration and domestic bank performance in both developed and developing countries to lay the groundwork for developing analytical framework and methodology in examining the impacts of foreign bank penetration on domestic bank performance in Nepal. Chapter 3 examines the structure and development of financial sector in Nepal as well as financial policy over the past decades. The results of banking performance are shown in this chapter. Chapter 4 discusses the impacts of foreign banks to domestic banks, both qualitative and quantitative. Chapter 5 provides conclusion and policy inferences. Chapter 2 Literature Review This section reviews relevant theoretical and empirical literature on foreign bank penetration and domestic bank performance in both developed and developing countries. This is done in order to lay the groundwork for developing analytical framework and methodology in examining the impacts of foreign bank penetration on domestic bank performance in Nepal. Penetration of foreign bank can come in different forms, such as branch offices, subsidiaries, joint ventures, or strategic partnerships. Branch offices, for instance, are an integral part of the parent company, that is, they have no capital of their own. Subsidiaries, however, are their own corporate entities, which are fully owned by the parent company. Similarly, joint ventures are separate corporate entities owned jointly by more than one parent company. Finally, foreign banks may establish a strategic partnership by buying a majority stake of an already existing domestic bank. Weller Scher (1999) The main difference between the various operational forms of foreign banks is their regulatory treatment. The regulatory treatment of the banks differs amongst domestic banks, joint-venture banks and foreign owned banks. Although there are different forms of foreign bank penetration, foreign owned banks are defined as those in which foreign investors own more than 50% of the total equity. Okuda and Rungsomboon, (2004). Decree on Foreign Banks, Phillip Fox 2006, distinguished foreign banks as Foreign Bank Branches (FBB), Foreign Invested Banks (FIB) and Joint Venture Banks (JVB). FBB is a dependent subsidiary of a foreign bank, for which the foreign bank has provided written guarantee that it will be responsible for all obligations and undertakings under FBB. A 100% FIB is established as a separate legal entity with capital being contributed from only foreign entities. Amongst the foreign investors, there must be a à ¢Ã¢â€š ¬Ã…“parent bankà ¢Ã¢â€š ¬? and it must hold more than 50% charter capital. A JVB is established as a separate legal entity, with capital being contributed from one or more foreign banks and domestic banks. Capital is not divided into shares. In JVBs, the capital contribution rate by the foreign bank(s) is capped at 50% of the capital of the bank. The regulations and supervision of financial sector in a host country are crucial in affecting the penetration of foreign banks. Over the past decade, most of the banks throughout the world have started standardizing their policies relating to financial sector according to Basel committee (Basel II Basel III)[7] Although Basel system has been introduced and regulations and supervision of banking sectors began to be standardized, regulations relating to competition within the banking sector, which influence the penetration of foreign bank and market structure of banking sector, vary significantly across countries and regions. According to Barth, Caprio and Levin (2001), there are three key aspects of the regulations relating to competition within the banking sector, namely 1) Limitations on Foreign Ownership of Domestic Banks determine (whether there are any limitations placed on the ownership of domestic banks by foreign banks); (2) Limitations on Foreign Bank Entry determine (whether there are any limitations placed on the ability of foreign banks to enter the domestic banking industry) and (3) Entry into Banking Requirement determine (whether there are specific legal submissions required to obtain a license to operate as a bank). The restrictions on overall bank activities and ownership vary from country to country. The research on Regulation and Supervision of Banks around the World by Barth, Caprio and Levine (2001) mentions that there are two measures of the size of a countryà ¢Ã¢â€š ¬Ã¢â€ž ¢s banking industry. First measure is total bank assets as a percentage of GDP and the other is the number of banks per 100.000 people. . Both these measures show substantial variation across countries. Countries like Germany, Switzerland, Netherlands, and United Kingdom have very high total bank assets as a percentage of GDP whereas United States and Asian countries are much lower. However the number of banks per 100,000 people is not much different in the countries mentioned above. The following Table shows the differences in restriction on banking system in some countries.[8] Countries Percent of total bank assets government owned Percent of total bank assets foreign owned Overall bank activities and ownership restrictiveness Professional Supervisor per bank Bangladesh 70 6 3.0 8 India 80 0 2.5 5.5 Nepal 20 35 2.0 4 Sri Lanka 55    1.8                   Cambodia 16 71 3.5    Indonesia 44 7 3.5 3 Malaysia 0 18 2.5 4.7 Philippines 12 13 1.8 7 Thailand 31 7 2.3 10 Singapore 0 50 2.0 1                New Zealand 0 99 1.0 0.6 Australia 0 17 2.0 2                United States 0    1.3 0.7                Germany 42 4 1.3 1 United Kingdom 0    1.3 0.7 Belgium       2.3 0.7 Switzerland 15 9 1.3    The table clearly shows that the countries in ASEAN region have higher restrictions on banking activities and ownership in comparison to countries like New Zealand and United States. The regulations are different in each country and do not match even if the countries are in the same region. But Professional supervision per bank is lower in developed countries like United States, New Zealand, United Kingdom whereas developing counties have higher no. of supervision per bank. According to the research the highest restrictions on overall bank activities and ownership are imposed by countries like Bhutan, Cambodia, China, Indonesia, Vietnam and lowest restrictions by New Zealand then Germany, Austria and United Kingdom. In countries like New Zealand and United states the government ownership of banks is zero percent whereas India, Bangladesh has very high percent of government-owned banks. Although the regulations on banking competition vary, over the last decades, restrictions on foreign bank penetration have been relaxed as part of financial reform and foreign bank penetration increased substantially in many countries. This could be because the host country expects the positive impacts of increased foreign bank penetration in the host countryà ¢Ã¢â€š ¬Ã¢â€ž ¢s banking system. Trade agreements have also played a major role in liberalization of market entry for foreign banks as financial services are required for international trade, production and investments. Governments usually support flow of foreign investment and this has been evident especially after various financial crises. Many countries in Southeast Asia started liberalizing foreign investment after the Asian financial crisis. The Asian crisis appeared to have catalyzed the liberalization of FDI restrictions in the banking sector across several ASEAN countries. Chau H.B (2003) A number of empirical studies analyze the impacts of foreign bank entry on domestic financial sector in a host country. The impacts can be grouped into three aspects. Firstly, foreign banks promote efficiency (competition and new technology) in domestic financial sector. A larger foreign bank presence can improve the competitiveness of the banking sector. Greater competition is advantageous for many reasons: to enhance the efficiency of financial services; to stimulate innovation; and to contribute to stability. It can also widen access of qualified borrowers to financing, which may increase aggregate lending and so enhance growth. A competitive and well-organized banking system can also improve the effectiveness of monetary policy transmission by tightening the link between policy rates and deposit/lending rates. (BIS paper No. 23) Foreign banks also help in availability of funds and acquisition of consumer-marketing skills. Chau (2003) In addition, foreign bank entry introduces new technology; financial services and advanced management skills, which existing domestic banks lack. The new technology and skills introduced by foreign banks include new financial products, advanced IT technology, and sophisticated bank management techniques. These are expected to contribute to lower operational expenses, amplified profitability, and better bank risk management. Forced by market competition, domestic banks may emulate the new financial products and management skills. Okuda Rungsomboon (2004). The presence of foreign bank also improves the corporate governance structure of the domestic banks. This includes breaking down the family-controlled structure and improving the decision making process. Chau H.B (2003) Unite and Sullivan (2001) has found that increase in foreign bank entry narrows the interest rate spreads and also reduces operating expenses. Foreign banks induces domestic banks to be more efficient, the increased competition forces domestic banks to take in less creditworthy customers and foreign participation induces domestic banks to spend more on improving their operations. However, Okuda Rungsomboon (2004) found that the entry of foreign banks is expected to negatively affect the operations of domestic banks but overall performance is likely to progress in the long run. Secondly, the entry of foreign banks is associated with reallocation of loans. Findings suggest that foreign banks improves credit access for many credit-worthy firms but some firms with positive net present value without opaque information will have difficulty obtaining loans. More developed countries, such as the U.S., Japan, and those in the European community, argue that Less Developed countries should allow foreign banks to enter into their economies. By increasing competition, foreign bank entry may boost the supply of credit and improve efficiency. Gormley (2006) Foreign banks are comparatively less likely to lend to à ¢Ã¢â€š ¬Ã…“soft informationà ¢Ã¢â€š ¬? firms, and more likely to lend to à ¢Ã¢â€š ¬Ã…“hard informationà ¢Ã¢â€š ¬? firms. à ¢Ã¢â€š ¬Ã…“Soft informationà ¢Ã¢â€š ¬? refers to information that cannot be easily publicly verified by a third party. à ¢Ã¢â€š ¬Ã…“Hard informationà ¢Ã¢â€š ¬? on the other hand refers to credible and publicly verifiable information, such as a foreign firmà ¢Ã¢â€š ¬Ã¢â€ž ¢s authentically audited balance sheets, or government guarantees. Mian(2003.) The loan portfolio of foreign banks consists of only credible clients which mean that the chances of default are very less. The domestic banks will be compelled to give loans to non-credible clients because the credible clients will be mostly handled by foreign banks. This will have greater chances of loan defaults for domestic banks. Thirdly, foreign banks are geographically spread relative to domestic banks; therefore they are less affected by adverse shocks in the domestic country. Both foreign and private domestic banks have similar low probabilities of being assisted by the government in times of difficulty but foreign banks are considerably more likely of being bailed out by their parent bank. For example, if the local subsidiary in a developing country of a foreign bank runs into trouble, it may get an injection of new capital from its parent bank to bail it out. This access to liquidity directs to a lesser deposit cost for foreign banks. Furthermore, foreign banks have access to advanced technology, outside resources and expertise which facilitates them in providing better service than the domestic banks. However, there might be some drawbacks that make the foreign banks perform worse than domestic banks in the host country. Firstly, a large foreign banking existence could mean that information available to host country supervisors can be reduced and the decision-making and risk management shifts to the parent bank. The delisting of the equity of local partner on the local exchange removes an important source of market intelligence for the foreign bank. In addition, if the integrated firmsà ¢Ã¢â€š ¬Ã¢â€ž ¢ equities are delisted in the local market, host country controllers can also lose access to key foreign bank decision-makers. Secondly, a country might be more exposed to shocks due to foreign banks presence. External events which affect the parent bank will affect the branches or subsidiaries. The factors that determine exposure to such external shocks, whether it is greater with onshore foreign banking as compared to traditional cross-border bank lending, and the propositions for regulatory and supervisory policy also demand further investigation. Lastly Accounting Standards could also be a problem for foreign banks unlike the domestic banks which have clear set of accounting standards set within its organization. There is a need for transparent and reliable accounting and financial reporting but for foreign banks; usually parent banks and their foreign subsidiaries often have different accounting standards, which can lead to discrepant financial balances, even when they are based on the same financial information. This might lead to complexity in comparison between international financial statements which could raise doubt in the reliability of banks financial statements. Differences may occur in different tax treatment, deferred taxes, valuation and accounting of repos, amortization of goodwill, treatment of past due loans and from provision and inflationary accounting adjustments. Moreno and Villar (2005)