Analysis of Financial Management Practices

The provided document is a collection of references related to financial management, including books, journals, and online articles. The content covers topics such as carry trades, currency markets, corporate social responsibility, and the impact of sustainability on financial performance. The assignment likely requires students to analyze these references and provide insights into the relationship between financial management practices and sustainability.

Individual Essay

Table of Contents
INTRODUCTION...........................................................................................................................1
ARTICLE 1: Diversification role of currency momentum for carry trade: Evidence from
financial crises.................................................................................................................................1
Introduction ................................................................................................................................1
Literature Review .......................................................................................................................1
Methodology ..............................................................................................................................2
Findings ......................................................................................................................................2
Conclusion ..................................................................................................................................3
ARTICLE 2: The impact of social and environmental sustainability on financial performance: A
global analysis of the banking sector...............................................................................................3
Introduction ................................................................................................................................3
Literature Review .......................................................................................................................4
Methodology ..............................................................................................................................4
Findings ......................................................................................................................................5
Conclusion ..................................................................................................................................5
Contrast ...........................................................................................................................................6
Conclusion ......................................................................................................................................6
REFERENCES................................................................................................................................8

INTRODUCTION
In this report, there is discussion about some articles which provides complete
information about financial management. Financial management refers to the policies plans,
strategies through which finance of company or country can be managed. This is the way which
helps to perform business activities (Brigham and Houston, 2012). This main focus on ratios,
equities and debts which helps to conduct business activities according to change in plans and
policies. There are two articles which is based on positivist and interpretivist. One article is
related to diversification in currency momentum and its impact on financial crises, while second
article is influence of social as well as environmental sustainability on overall financial position
of company.
ARTICLE 1: Diversification role of currency momentum for carry trade:
Evidence from financial crises.
Introduction
This article is based on the analysis of the diversification role of currency diversification
role of currency momentum for carry trade crashes during the turbulent periods surrounding the
1997–1998 Asian financial crisis and the 2007–2008 global financial crisis. This is a wide area
of study which described that style-based research in regards to foreign exchange market has
always attracted academic community and currency trader (Menkhoff and et. al., 2012).
Basically carry trades on a basic extent, Foreign exchange momentum are emphasises on two
different and popular investment styles in Foreign exchange market. The widespread use of CT
and MOM trading strategies is recognised as the key reason for the substantive growth in the
Foreign Exchange market turnover, during the time duration of 2001 to 2004. The strategies
basically depend on long as well as short terms positions in foreign currencies conditional on a
signal available one period before, but they differ in the conditioning variable upon which the
positions are formed.
Literature Review
As per this method, there is discussion about difference in role of currency momentum
(MOM) for carry trade (CT). This article is related to interpretivist which provides theoretical
knowledge about research topic. There is examination of CT and MOM both, so there are some
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issues with both of it. This affects financial condition of country in industry. Policies of CT and
MOM are different. In case of carry trade, it establish short position through high yielding
currencies. While MOM traders establish short position in winning currency. Due to their
diversify role, there is economic crises for country which is not specific and relevant to
understand. In case market crashes, then in this case there is negative impact on CT because this
sounds to be less attractive. Hence there is discussion about “Dynamic combined CT-MOM”
through which economic performance can be improved. MOM displays low correlation with
global uncertainties in market. With change in currency rate, there is impact on economy of
country with high risk (Higgins, 2012). So with use of combined strategy, it is easy to understand
changes which are taking place in external environment. With use of both strategies knowledge
about change in financial assistance of country is possible. When traders invest money in more
profitable option, then there is impact on changing market conditions.
With using combination of CT and MOM equal weighted advantage can be achieved. If
investors invests in CT for longer duration, then this is profitable because it does not covers
impact of business operations (Mancini, Ranaldo and Wrampelmeyer, 2013). MOM is related
with financial cycle which justifies the diversification advantage. While in case of CT technique
knowledge about global risk aversion.
Methodology
The present exploration work is based on interpritivist research, thus it is an effective tool
that plays effective role in developing an in-depth theoretical analysis in which the issue of
article is discussed. Interpretive research tends to heavenly relay on qualitative data, thus
qualitative data may add more precision and clearer understanding of the phenomenon of interest
(Burnside, 2011). Interpretive research is considered as a research paradigm which is relay on the
assumption that social reality is not singular or objective, but is rather shaped through human
experiences and social contexts, and is therefore best studied within its socio-historic context by
reconciling the subjective interpretations of its various participants (Burnside, Eichenbaum and
Rebelo, 2011). Qualitative research mainly relies on non-numeric data, like wise interviews and
observations, in opposition to quantitative investigation that employs numeric data like as scores
and metrics. Hence, qualitative research is not amenable to statistical procedures such as
regression analysis, but is coded through techniques like content analysis.
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Findings
From the analysis of article it has been analysed that this research paper basically
investigates the diversification role of currency momentum (MOM) for carry trade (CT) crashes
during times of stress. In this an empirical heterogeneous agent model is created as a new trading
strategy that co-operate or combine carry trade and force individual where the relational weight
given to both signals is based on their previous presentation. The major outcome of this, is that
the combined scheme is extremely well hedge with the emergence of coveted diversification
merits during the financial crises. This information has essential implications for the exercise of
currency portfolio management at the times of intensify financial issues and uncertainty. It is
essential for the traders to holding an effective position in CT and MOM strategy for making
their self aware in regards to their asymmetric time that are varying through shifting trends. This
sort of knowledge helps an individual or trader in diversifying their positions and manage their
portfolios in more appropriate manner.
Conclusion
Form the above given description of the article it has been concluded that during financial
crises MOM strategy is recognised as the attractive strategy which plays effective role in
managing the financial recession and provide diversification advantages for CT unwinds. In
basic terms, execution of currency portfolio depend of the sign of the predicted returns through
MOM indicator generated statistically and economically significant net of transaction cost
returns. At the time duration of financial crises both CT and MOM returns are coherently
correlated and move in divers direction. On the other side CT and MOM signals assist to more
favourable performance like positive skewness, lower losses, higher return etc. as compared with
the naive CT alone strategy.
ARTICLE 2: The impact of social and environmental sustainability on
financial performance: A global analysis of the banking sector
Introduction
This article is based on the impact of social and environmental sustainability on financial
performance of the banking sector globally (Saeidi and et. al., 2015). As we know, social and
environmental sustainability are not a new concept so by examining the cross-sectional linear
regression and non-linear threshold regression, it can be founded that access to finance has
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significant ally positive effects on financial performance of banks. As the banking sector plays
an important role in the sustainable development because sustainability is one of the most
significant trends currently going on in the industry. There are increasing number of literature
which can impact investors long-term performance (Madura, 2011). In it investors can find early
Market opportunities that can drive business ahead than their rivals for longer period of time.
The sustainability of company can be practised from the banks operating outside i.e. customers
and community relationship, investment portfolio and banks financing. As banks are considered
as the heart of modern markets. They can easily raise funds due to several factors such as growth
in economy, prosperity and enabling innovation.
Literature Review
There is impact on performance of environmental and social sustainability of country. In
case of financial planning and performing business operations, sustainability of country has to be
considered. There are around 713 brands from different 75 countries in 2013-15 which has to be
considered in order to analyse effect on banking institutions. Banks organisations who have asset
less than £2 billion who gives good return on equity to stakeholders. There are some strategies
such as principle for Responsible investment, World Business Council for sustainable
development, etc. which provides best way to pan and manage functions and assets of financial
resources (Islam, Ahmed and Hasan, 2012). There is difference in working style which important
and relevant to understand changes which has to made in language if business to get sustainable
development of business. Social and environmental aspects are not new because it affects long
term performance of organisation. Social and environmental aspects has good corporate
performance in emerging markets i.e. 65.4% while in developed countries, it is 38.0%. Banks are
working to provide good financial services to society, so there is positive impact on sustainable
growth of country. These days, there is concept of social suitability which aims ant improving
overall performance of society (Dew and Xiao, 2011). There is proper recording of corporate
sustainable disclosure in books of accounts of bank or at website. This research article is related
to positivism so there is discussion about some data about banks. In order to analyse positive
impact with social and financial position of country, there is analysis of 385 banks. It is analysed
that from portfolio, there is higher return are analysed through equity.
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Methodology
This considered as the most essential aspect that provides a systemic direction to the
investigator to implement investigation activities in proper manner (Matute‐Vallejo, Bravo and
Pina, 2011). This particular article is based on positivism methodology, that is basically applied
to analyse an approach to the study of society which mainly based on scientific evidence
likewise statistics or experiments, in respect to revel the potential truth regarding how society
basically operates. In the context of philosophy, positivism relay on factual knowledge that are
attained by observation involving measurements. Positivism research is basically focuses on
quantitative observations that assist to statistical analyses, thus in this information is available in
the form of states and figures (Khan and et. al., 2011). It has been noted that “as a philosophy,
positivism is in conformity with human experience which results in empiricist view. Thus, in
positivism work the investigator is self-directed form the study and there are no inclusion for
human interests within the study.
Findings
The considered report mainly focuses on the impact which has been carried by social and
environmental sustainability on financial performance: A global analysis of the banking sector.
Now a day's sustainability on social and environmental grounds is considered as paramount trend
in financial markets since past few decades. It is important for banking sector is to analyse the
relationship among the performance and sustainability of business. however banks requires give
due consideration to value map the material social or environmental indicator into business
operations through valuable data availability and quality. This create value in providing help to
the investigator i.e. future and current shareholders to incorporate sustainability analysis into the
decision making process to further improve business processes. The study also founds that the
materiality elements for environmental social and sustainability impacted over the financial
institutions. Materiality is recognised as the potential aspect in the learning of sustainability
performance in the banking sector. This study focuses on using material dataset in examining the
impact of social and environmental sustainability performance on banks’ financial performance.
Undertaking this approach will be helpful in fulfilling the gap in the existing empirical literature,
which mostly relies on the non-material dataset.
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Conclusion
This study shows that banking sector have been with us as long as people have been
using money. From the above study, it can be concluded that social and environmental
sustainability is one of the most significant trends in financial sector and has focussed on why
such undertaking should be chased by financial institutions that looks towards improving their
business performance, particularly financial performance. As such this study has enlarged the
understanding of relationship among various known variables that are related with financial
management. It has been also founded from this study that knowledge of environment can't be
derived in effective manner in a person apart from that their decisions can be influenced by other
elements like culture, values or behaviour of customers. Various type of technologies can be
used for enhancing the efficiency of operations so that better competitive advantage can be
gained by the financial sector. By inclusion of an interactive term, it helped to realize, how this
affirmative sustainability is being transmission into the business positions of banks.
Contrast
The present report is based on the analysis of financial management and this
determinations are conducted on the basis of two different articles that are based on interprtivism
and positivism analysis. The article of Variegation role of currency momentum for carry trade:
Main evidence of financial crises is consist on Interpretivists philosophical approach and the
another article Influence of social and environmental sustainability on the financial position: An
International analysis of banking sector is based on positivist philosophical approach. These two
are two different analysis that are based on two different perspectives. Positivity and
Interpretability are considered as two most essential approaches which are using in the
sociological investigation and study. Hence, it can be said that these are the primary criteria for
conducting an investigation work to provide support to an exploration (Renz, 2016). In the
existing exploration work, positivist approach is recognised as the most essential and suitable
approach because, the study is based on financial management and Positivists approach is most
common and likely to apply quantitative analysis through applied methods of statistics etc.
positivists basically prefer quantitative tools like wise structured questionnaire, social survey and
official statistics, thus these are having potential representativeness and reliability. Both
positivist and Interpretivists are effective tools but for this particular analysis positivist approach
is more reliable as this is effective in providing proper quantitative information in the form of
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stats, facts and figures. In the financial research projects justifications are developed on the basis
of statistic information.
Conclusion
From the detailed analysis of the project it has been concluded that financial management
is a wide concept that is effective in managing the financial aspects of every size of business.
The proper analysis on financial management is done on the basis of two articles that are
emphasis on the aspect of financial management. From the analysis of first article which is based
on Changing role of currency momentum in order to carry out trade. From the evidence of
financial issues, it has been concluded that during the time of financial impasse, MOM Strategy
is one of the alluring strategy for investment. When taken in segregation both MOM and CT
move in adverse directions. As compared to CT strategy, when we combine CT and MOM they
give more favourable returns. This evidence also state us about the the managing the currency
along with the academic finance literature, holding trades in position in CT and MOM as well as
to academic finance literature. Traders holding position in CT and MOM strategy must also
know about asymmetric time varying shifting trend. This help traders to expand the position and
manage their portfolio properly. On the contrary from the analysis of the second article which is
related with the influences of social as well as environmental sustainability on the financial
performance: A global evaluation of the banking sector: A global analysis of the banking sector,
it has been concluded that social and environmental suitability is required for the growth of
banking sector. The organisations are widely concern on enhancing its operations through
developing the sustainability and reducing environmental errors.
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REFERENCES
Books and Journals
Brigham, E. F. and Houston, J. F., 2012. Fundamentals of financial management. Cengage
Learning.
Burnside, C., 2011. Carry trades and risk (No. w17278). National Bureau of Economic
Research.
Burnside, C., Eichenbaum, M. and Rebelo, S., 2011. Carry trade and momentum in currency
markets. Annu. Rev. Financ. Econ.. 3(1). pp.511-535.
Dew, J. and Xiao, J. J., 2011. The financial management behavior scale: Development and
validation. Journal of Financial Counseling and Planning. 22(1). p.43.
Higgins, R. C., 2012. Analysis for financial management. McGraw-Hill/Irwin.
Islam, Z. M., Ahmed, S. U. and Hasan, I., 2012. Corporate social responsibility and financial
performance linkage: Evidence from the banking sector of Bangladesh. Journal of
Organizational Management. 1(1). pp.14-21.
Khan, H. U. Z., and et. al., 2011. Corporate sustainability reporting of major commercial banks
in line with GRI: Bangladesh evidence. Social responsibility journal. 7(3). pp.347-362.
Madura, J., 2011. International financial management. Cengage Learning.
Mancini, L., Ranaldo, A. and Wrampelmeyer, J., 2013. Liquidity in the foreign exchange market:
Measurement, commonality, and risk premiums. The Journal of Finance. 68(5).
pp.1805-1841.
Matute‐Vallejo, J., Bravo, R. and Pina, J. M., 2011. The influence of corporate social
responsibility and price fairness on customer behaviour: evidence from the financial
sector. Corporate Social Responsibility and Environmental Management. 18(6).
pp.317-331.
Menkhoff, L., and et. al., 2012. Carry trades and global foreign exchange volatility. The Journal
of Finance. 67(2). pp.681-718.
Renz, D. O., 2016. The Jossey-Bass handbook of nonprofit leadership and management. John
Wiley & Sons.
Saeidi, S. P., and et. al., 2015. How does corporate social responsibility contribute to firm
financial performance? The mediating role of competitive advantage, reputation, and
customer satisfaction. Journal of business research. 68(2). pp.341-350.
Online
Yamani. E., 2019. Diversification role of currency momentum for carry trade: Evidence from
financial crises. [Online]. Available through:
<https://www.sciencedirect.com/science/article/pii/S1042444X18302135>.
Nizam, E., Ng. A., Dewandaru. G., Nagayev. R. and Nkoba M. A., 2019. The impact of social
and environmental sustainability on financial performance: A global analysis of the
banking sector. [Online]. Available through:
<https://www.sciencedirect.com/science/article/pii/S1042444X18300215>.
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