Sba Clik It By 1 Essays - Luv, , Term Papers

Sba Clik It By 1 i didn't know nuttin till da day of birth i was all grown up by ma parets on this earth. life went on till da last day i remember, it was sixth grade that i'll never furget ever. now i'm in eigth grade gone out wit sum girlys, sum were crackheads and sum were flirtys. i remember ones mom was a dyke da other one i didnt hella like...now i'm scoppin sum other chix like ursula and melissa i only want one more hit then i'll rest probly in peace till da next month of september. are you thinkin why september well folkx iss cuz in september i start highskool and imma want different girls to feel all over. i ain't sayin im sum kinda pervert im juss sayin that ma skools filled wit nerds. now i be wantin straight a's and a girlfrend...please god let me get ursula or melissa harris! luv ya both* peace luv and all of tha above...eugenie Music Essays

Density of Pennies Lab essays

Density of Pennies Lab essays The means of this experiment will be to work with the density of pennies. I will be enforcing the concepts of accuracy and precision as I repeat one step three times. In addition, I will begin to perform percent errors. The main purpose of this experiment will be to discover if any differences exist with comparison of pennies dated before 1982 to pennies dated after 1982, such as the average of the volume and the average of the mass. And last but not least, I will practice my expertise of determining densities of objects, as in this case, the pennies. The procedures of this experiment will be easy. I will determine the mass of forty pennies dated before 1982 with a balance, and also for the pennies dated after 1982. I will repeat this three times for each group of pennies and find the average. Then I will pour the pennies into a graduated cylinder of water and record the volume for both groups of pennies. I will also repeat this three times and calculate the average. Next, I will determine the volume of the pennies alone, repeat it three times, and determine the average volume. Then, I will verify the density of each group of pennies, by using the equation D=M/V. Finally, I will compare and contrast the data I collected with Data Table 2-4. The concepts to this experiment are not very complicated, because it only involves simple concepts. For instance, the density formula: mass divided by volume. In addition, the concepts of accuracy and precision are involved in this experiment. Accuracy is the closeness of measurements to the correct or accepted value. Precision is the closeness of a set of measurements. The notion of significant figures perhaps may also be utilized in this experiment. Lastly, percent error will be used in the data processing, which is defined as the absolute value of the accepted value subtract the experimental value, divided by the accepted value, and multiplied by 100. ...

Controversy analysis Essay Example | Topics and Well Written Essays - 1500 words

Controversy analysis - Essay Example This essay reviews five articles on water scarcity and what they say or not say about wastewater management. Since water scarcity is growing day by day, being an important cause of the issue, can improvement in wastewater management help in solving the problem? As early as 1955, Packman argued that water scarcity is a national issue and must be resolved through policymaking, before it seriously derails the development of America, in the article, â€Å"Water for the Future.† He is an important source of information because he has presented an issue that not many reporters analyze and discuss during his time. Packman blames human mismanagement and the uneven distribution of fresh ground and surface water for water issues. He claims that the government and private sector should look into supporting diverse options to properly manage water scarcity, and these are: 1) efficient management of existing water resources; 2) reusing water, including wastewater; 3) increasing water suppl y through artificial rain production; and 4) improving research on water desalination. The strengths of the article are the use of authoritative sources and the emphasis on the issue and how to resolve it. Packer employs diverse credible articles to support his statements. For instance, he says: â€Å"Measures to combat water shortages must be based on consideration of the fact that water, unlike other resources, cannot be saved by non-use.† He supports this claim by providing evidence: â€Å"The conservation of water is not so much the saving of a decreasing' supply for some greater need in the future, as, for example, the storing of natural gas, but the control and use of water to the optimum advantage of all.† Packer gives proper in-text citation for his claims. Moreover, Packer effectively uses logos that can bring attention to urgency of water shortage. He underscores that water shortage is a reality, and to not manage water through different ways will result to d evelopmental and health catastrophes in the future. The weakness of the article is its lack of conclusion. Packer abruptly ends the article after discussing policy issues. He should have summarized his findings and discussed the implications of the policies and resolutions he proposed to increase the effectiveness of his argument. In â€Å"Global Water Shortages,† Mary H. Cooper expands the political implications of water shortages that Packard mentioned, and where she argues that the next wars and conflicts will not revolve around oil, but water, because of its scarcity and increasing demand from people of different nations and communities. She is an important source because she specializes in environmental, energy and defense issues (CQ Researcher). Before she joined The CQ Researcher as a staff writer in 1983, she worked as a reporter and Washington correspondent for the Rome daily newspaper l'Unita (CQ Researcher). Cooper claims that one of the most pressing underlying ca uses of territorial disputes is the shortage of water. Since countries are sharing water sources, they are doing everything they can to defend this basic need. She includes

Tax issues memo Research Paper Example | Topics and Well Written Essays - 1500 words

Tax issues memo - Research Paper Example y hurdle for Norman is that, as much as he is getting involved into this lucrative venture, the fact remains that he also has to complete his mandates as a student. This is the reason why he even opted to be taking some of his revisions and assignments within his car through proper utilization of that outstanding app. Up to this point, Norman feels a little bit excited that he is not only a mere student but a CEO of his own small enterprise. This hence brings out some sort of discussion whether Norman is in a position of being an independent contractor or an employee. The main understanding can be attained by giving out some distinctions between these two aspects. While the "independent contractor" differs from the standard employee, exact designation based on your responsibility has to be agreed on before starting any task so as to avoid unnecessary inconveniences With increase in economic hurdles and the cost of living in the contemporary world, various possible measures or opportunities have to be fully utilized by individuals so as to ensure success in all sectors of life. This can probably be possible if the aspect of multi-tasking and other such- like commitments are put into consideration. Human multitasking refers  to apparent individual’s performance of managing more than a single task simultaneously. This term was derived from the aspect of  computer multitasking. A good example is when an individual takes phone calls and types an email at the same time. Multitasking has often resulted in time wastage due to the aspect of  context switching  and has apparently caused more errors because of insufficient  attention. As much as multitasking can be viewed as being the key towards success in some of the sectors, it might only be applicable to a few individuals who have set their minds right. Otherwise, research shows that it often leads to various mishaps such as poor performances due to lack of concentration, time wasting, dampness, reduced productivity,

An Argument for the Conviction of the West Memphis Three Essay

An Argument for the Conviction of the West Memphis Three - Essay Example There were other pieces of evidence but they stood out either because there was nothing to counter them or that they were indeed logical. The main reason why the West Memphis Three should be convicted is that Jessie Misskelley pointed out in his detailed statement that the three of them were the ones who brutally tortured and murdered the three young boys. Based on the recorded statement of Jessie Misskelley for the police, he saw Damien Echols hit Christopher Byers, and Jason Baldwin hit Stevie Branch, and that he was the one who captured Michael Moore while the latter was running (Paradise Lost: The Child Murders at Robin Hood Hills 41:43). The details of the interrogation are a proof that the interrogation and Misskelley’s answers to the questions could not have been merely set up by the police beforehand. Besides, the police would not have been that lazy as to set up three young men just to have the case closed early. The aforementioned statement of Misskelley was hardly n ullified by any of the defense lawyers. Another strong evidence against the West Memphis Three, particularly against Jessie Misskelley is that he was able to identify the boys in the pictures shown by the police. Although he made a mistake with the identification of Christopher Byers, mistaking him for Michael Moore, still he was able to identify them by face. The mere fact that he could identify the victims is actually a strong proof that he had contact with them prior to the trial. One more problem to this is that Jessie did not even tell any of his lawyers or his family that he was forced by the police to make such a confession. It was merely the lawyers who said so. Arguments of the defense in favor of Jessie included his mental handicap (34:35). Nevertheless, based on the deputy’s statement, Jessie was not tortured, maligned or harmed in any way prior or during the confession (47:31). The deputy could not have been lying under oath, based on the tone of his voice, and ba sed on the fact that Jessie did not vehemently or even secretly said that he was indeed harmed. Besides, Jessie’s reactions in court, like bowing his head, are that of a guilty man. Moreover, he has not in any way told his lawyers how innocent he was or how untrue his confession was. Another argument directed against Jessie is his sexual nature (36:20). As he was talking to his girlfriend on the phone, he recalls all the times that he has had sex with her. He may be young and still sexually active and he may only have said such things because he was talking to his girlfriend, and perhaps he was only saying so because he has been deprived of sex since he was arrested. Nevertheless, showing such sexual behavior and pretending in court that he has a mental handicap somehow simply fit the picture of a maniacal killer under the guise of an innocent lunatic. The point is that he may have had a mental handicap as what his lawyers pointed out but his highly sexual nature allowed him to be a sexual criminal at the same time. One other small detail against Jessie is the statement of his stepmother which somehow shows that she possibly believes that he has done it (21:30). She does not seem to show remorse or sympathy for him even while Jessie’s father and whole family do. For a close acquaintance or a family member who believes that it is possible for one to commit a crime is actually strong evidence against him. On the other hand, the evidence against Damien Echols, as proposed by the defense, may be rather fragmented but it remains a fact that if one puts the evidence together, it definitely makes a picture of a murderer. Damien, who looks more like a man who is capable of murder without remorse, has a pentagram in his book (1:11:00), is interested in Wicca (1:14:08), associates with Aleister

Impact of Internal Factors on Islamic Banking

Impact of Internal Factors on Islamic Banking Introduction to the Subject Background of the Subject General Objective The purpose of this study is to examine how the internal factors of the Islamic Banking affected their performance before, during and after the financial crisis in the GCC in comparison to the conventional banking in the same area. Research Questions This study aims to answer the following questions: How did the financial crisis affect the profitability of Islamic Banks in comparison to Conventional Banks? What are the internal factors (bank specific characteristics) that influence the profitability of Islamic banking for every year from 2006 à ¢Ã¢â€š ¬Ã¢â‚¬Å" 2009? Did these factors have the same impact on the profitability of Islamic Banking before, during and after the financial crisis? Did these internal factors influence the profitability of Islamic Banking in the same manner as of the Conventional Banking? Need for the Study Significance of the Study Assumptions of the Study Limitations of the Study Although we cannot neglect the importance of the external factors on the profitability of Islamic Banking, they were not included in this study. To understand the reason behind this decision, we need to go through the different types of external factors and how they are classified: Macroeconomic Factors Country Regulation Rules Bank Regulation Rules These factors were not included for the following reasons: Since we are examining the performance of 92 banks (27 Islamic Banks and 65 Conventional Banks) in 6 countries, the number of countries used in the study is not significant enough to study the impact of GDP and inflation accurately on Bank profitability especially when examining each year separately Country Regulation Rules as per the IMF Database, although it differs slightly for the selected countries, did not change over the period from 2006 to 2009. This means that for each bank, these factors remained constant. Data about Bank Regulation Rules could not be obtained for GCC banks Delimitation of the Study This study was delaminated to the Islamic and Conventional Banks in the GCC whose data could be obtained in the Bankscope database. Chapter 2: Literature Review Overview of Islamic Banking Islamic Baking has established as an alternative to conventional interest-based banking. The first stirring of the Islamic Banking movement began in 1963 by Dr. Ahmed Alnajar in a small town in Egypt, called Mit Ghamar. Dr. Alnajar completed his education in Germany and found that it had many saving banks operating on interest. He took the idea from a savings bank in Germany and created his own small Islamic bank that was interest free. After Dr. Alnajarà ¢Ã¢â€š ¬Ã¢â€ž ¢s small bank proved successful, the establishment of other Islamic banks followed. In 1971, the Nasser Social Bank was founded in Egypt with the objective of lending out money as a charity on the basis of a profit and loss sharing system and helping people in need. And in 1975, the idea of Islamic banking spread to other Islamic regions such Dubai Islamic bank in United Arab Emirates and The Islamic Development (IDB) Bank in Jeddah, Saudi Arabia (Wilson, 1990). Even though Islamic Banking has only been around for thirty years and is still in an evolving stage, Islamic Banking is the fastest growing segment of the credit markets in the Muslim countries. In 2009, Assets held by Islamic Banking banks rose by 28.6 percent to $822bn from $639bn in 2008, according to The Bankerà ¢Ã¢â€š ¬Ã¢â€ž ¢s à ¢Ã¢â€š ¬Ã…“Top 500 Islamic Financial Institutionsà ¢Ã¢â€š ¬? survey while conventional banks posted annual asset growth of just 6.8 percent. Furthermore, GCC states accounted for $353.2bn or 42.9 percent of the global aggregate, while Iran remained the largest single market for Shariah-compliant assets, accounting for 35.6 percent of the total. Source: Asian Banker Research, 2009 Finally, Islamic banking operations are not limited to Islamic countries but are spreading throughout the world. One reason is the growing trend toward transcending national boundaries, and unifying Muslims into a political and economic entity that could have a significant impact on the pattern of world trade (Abdel-Magid, 1981). Islamic Banking Rules and Principles Islamic banking rules are according to the Islamic Shariah derived from the Quran and prophet Mohamedà ¢Ã¢â€š ¬Ã¢â€ž ¢s sayings. The three main practices that are clearly prohibited in the Quran and the prophetà ¢Ã¢â€š ¬Ã¢â€ž ¢s sayings are, Riba (Interest), Gharar (Uncertainty), and Maysir (Betting). Prohibition of Riba or any predetermined or fixed rate in financial institutions is the most important factor in the Islamic principles pertaining to banking. As stated in the Quran à ¢Ã¢â€š ¬Ã…“Allah forbids ribaà ¢Ã¢â€š ¬?. Riba means an increase and under Shariah the term refers to the premium that must be paid by the borrower to the lender along with the principle amount as a condition for the loan (Omar and Abdel, 1996). Gharar occurs when the purchaser does not know what has been bought and the seller does not know what has been sold. In other words, trading should be clear by stating in a contract the existing actual object(s) to be sold, with a price and time to eliminate confusion and uncertainty between the buyers and the sellers. Maisir is considered in Islam as one form of injustice in the appropriation of othersà ¢Ã¢â€š ¬Ã¢â€ž ¢ wealth. The act of gambling, sometimes referred to betting on the occurrence of a future event, is prohibited and no reward accrues for the employment of spending of wealth that an individual may gain through means of gambling. Under this prohibition, any contract entered into, should be free from uncertainty, risk and speculation. Contracting parties should have perfect knowledge of the counter values intended to be exchanged as a result of their transactions. Therefore, and according to Ahmed and Hassan (2007), the principles of Islamic banking and finance enshrined from al-Qurà ¢Ã¢â€š ¬Ã¢â€ž ¢an and Prophet Mohamedà ¢Ã¢â€š ¬Ã‹Å"s Sayings can be summed up as follows: Any predetermined payment over and above the actual amount of principal is prohibited. The lender must share in the profits or losses arising out of the enterprise for which the money was lent. Making money from money is not acceptable in Islam. Gharar (deception) and Maisir (gambling) are also prohibited. Investments should only support practices or products that are not forbidden or even discouraged by Islam. Islamic Banking Products Islamic Banking products have to be done according to Islamic rules and principles, based on profit and loss sharing as well as avoiding interest. According to BNM statistics 2007, Al Bai Bithaman Ajil financing is the most common in Islamic Banking. There are a lot of Islamic Banking products; however there are some famous Islamic products that will be discussed in this section. Al Bai Bithaman Ajil /BBA This involves the credit sale of goods on a deferred payment basis. In BAA, the Islamic bank will purchase certain assets on a deferred payment basis and then sell the goods back to the customer at an agreed price including some margin or profit. The customer will make payment by installments over an agreed period. A fixed rate BBA is a powerful hedging tool against interest rates (Rosly, 1999). Murabahah Murabahah is a contract of sale. The Islamic Bank acts as a middle man and purchases the goods requested by the customer. The bank will later sell the goods to the customer in a sale and purchase agreement, whereby the lender re-sales to the borrower at a higher price agreed on by both parties. These are more for short term financing Mudharabah According to Kettel (2006), Mudharabah is a basic principle of profit and loss, where instead of lending money at a fixed rate return, the banker forms a partnership with the borrower, thereby sharing in a ventureà ¢Ã¢â€š ¬Ã¢â€ž ¢s profit and loss. Mudharabah is an agreement between the lender and entrepreneur, whereby the lender agrees to finance the project on a profit sharing basis according to a predetermined ratio agreed by both parties concerned. If there are any losses the lender will bear all the losses. Musharakah Musharakah means partnership whereby the Islamic institution provides the capital needed by the customer with the understanding that they both share the profit and loss according to a formula agreed before the business transaction is transacted. In Musharakah all partners are entitled to participate in the management of the investment but it is not compulsory. Musharakah can help in providing financing for large investments in modern economic activities Al Ijarah Ijarah means meaning to give something on a rental basis. In Ijarah, the bank acquires ownership based on the promise and leases back to the client for a given period. The customer pays the rental but the ownership still remains with the bank or lender. As the ownership remains with the lessor (bank), it continues to give the service for which it was rented. Under this contract, the lessor has the right to re-negotiate the quantum of the lease payment at every agreed interval to ensure rental remains in line with the market rates (Hume, 2004). Wadiah Wadiah is a trust contract and the bank provides gift (hibah) and various types of benefits to the customer. This is exactly like a normal conventional savings account. Istisna Istisna allows one party buys the goods and the other party undertakes to manufacture them according to agreed specifications. Normally, Istisna is used to finance construction and manufacturing projects. Salam Salam is defined as the forward purchase of specified goods with full forward payment. This contract is normally used for financing agricultural production. According to Hassan (2004), Salam based future contracts for agricultural commodities, supported by Islamic Banks, can help to overcome the agricultural financial problems Table 2.1 lists the products of conventional banking and their correspondent products in Islamic Banking. Deposit Services Current Deposit Wadiah Wad Dhamana / Qard Hasan Savings Deposit Wadiah Wad Dhamana / Mudaraba General Investment deposit Mudaraba Special Investment deposit Mudaraba Retail / Consumer Banking Housing Property Finance BBA / Ijara wa Iktina /Diminishing Musharaka Hire Purchase Ijara Thumma Al-Bai Share Financing BBA / Mudaraba / Musharaka Working Capital Financing Murabahah/ Bai Al-Einah/ Tawarruq Credit Card Bai Al-Einah/ Tawarruq Charge Card Qard Hasan Corporate Banking/ Trade Finance Project Financing Mudaraba / Musharaka / BBA / Istisna / Ijara Letter of Credit Musharaka/ Wakala/ Murabaha Venture Capital Diminishing Mudaraba/ Musharaka Financing Syndication Musharaka + Murabaha/ Istisna / Ijara Revolving Financing Bai Al-Einah Short-term Cash Advance Bai Al-Einah/ Tawarruq Working Capital Finance Murabaha/ Salam/ Istijrar Letter of Credit Murabaha Letter of Guarantee Kafala + Ujr Leasing Ijara Export/ Import Finance Musharaka/ Salam/ Murabaha Work-in-Progress, Construction Finance Istisna Bill Discounting Bai al-Dayn Underwriting, Advisory Services Ujr Treasury / Money Market Investment Products Sell buy-back agreements Bai al-Einah Islamic Bonds Mudaraba / Mushraka + BBA / Istisna / Ijara Government Investment Issues Qard Hasan/ Salam/ Mudaraba Other Products Services Stock-Broking Services Murabaha/ Wakala/ Joala Funds Transfer (Domestic Foreign) Wakala/ Joala Safe-Keeping Collection (Negotiable Instruments) Wakala/ Joala Factoring Wakala/ Joala/ Bai al-Dayn Administration of Property, Estates and Wills Wakala Hiring of Strong Boxes Amana/ Wakala Demand Draft, Travellerà ¢Ã¢â€š ¬Ã¢â€ž ¢s Cheques Ujr/ Joala ATM Service, Standing Instruction, Telebanking Ujr Source: Obaidullah, 2005 Financial Crisis and the Islamic Banking Previous Literature The study of bank profitability is an important tool to evaluate bank operation by examining the different factors affecting bank profitability and using these factors for management planning and strategic analysis. In the last four decades, many studies have been conducted to study both bank profitability and the determinants of bank profitability either for particular country or for a panel of countries. These studies normally divide these factors into internal factors and external factors. Internal factors represent the bank-specific characteristics such as bank size, liquidity structure; liabilitiesà ¢Ã¢â€š ¬Ã‚ ¦etc while external factors can be macroeconomic factors such as inflation and GDP growth or Country-specific regulations rules and practices. In the area of banking profitability, many studies have been conducted to investigate the profitability of conventional banks while only few were conducted in the field of Islamic banking. In this chapter, we will review these studies for conventional banking first and then will focus on studies in the Islamic banking field. Then we will cover the conceptual framework of this research. Conventional Banking Different studies have been conducted in the field of conventional banking profitability. Short (1979), Bourke (1989), Molyneux and Thornton (1992), Goddard, Molyneux, and Wilson (2004), Peters et al. (2004) are some of the researchers in the field. Short (1979) is one of the early scholars who studied the relationship between banking profit rates and concentration for sixty banks in Canada, Western Europe and Japan during the 1970à ¢Ã¢â€š ¬Ã¢â€ž ¢s and he included independent variables including government ownership and concentration by using H index to quantify concentration. Results showed that the government ownership impact on profitability varied throughout the countries studied but expressed an overall negative relationship. He also found evidence that indicated higher concentration rates lead to higher profit rates (Short, 1979). Bourke (1989) also compared concentration to bank profitability but included other determinants. Bourke (1989) covered ninety banks in Australia, Europe, and North America between 1972 and 198 and examined different internal and external factors: internal factors such as staff expenses, capital ratio, liquidity ratio, and loans to deposit ratio; external factors such as regulation, size of economies of scale, competition, concentration, growth in market, interest rate, government ownership, and market power. His results show that increase in government ownership leads to lower profitability in banking. He also found that concentration, interest rates, and money supply are positively related to profitability along with capital and reserves of total assets as well as cash and bank deposits of total assets. Bourke adds that well capitalized banks enjoy cheaper access to sources of funds as they are less risky than less capitalized banks (Bourke, 1989). Later, Molyneux and Thornton (1992) studied the determinants of European banks profitability. The paper examined eighteen counties in Europe between 1986 and 1989. This paper replicated Bourkeà ¢Ã¢â€š ¬Ã¢â€ž ¢s (1989) work by using internal and external determinants of bank profitability. However, Molyneux and Thornton (1992) results showed that government ownership expresses a positive coefficient with return on capital (profitability) which contradicts with Bourkeà ¢Ã¢â€š ¬Ã¢â€ž ¢s findings. Other results were similar to Bourkeà ¢Ã¢â€š ¬Ã¢â€ž ¢s, showing that concentration, interest rate, and money supply were positively related to bank profitability (Molyneux and Thornton, 1992). In one of the recent papers on bank profitability on European banks, Goddard, Molyneux, and Wilson (2004) shows similar findings to the paper by Molyneux and Thornton (1992). It investigates the determinants of profitability in six European countries and it covered 665 banks between 1992 and 1998. The study used cross-sectional and dynamic panel models. The variables used in the regression analysis were ROE, the logarithmic of total assets, Off Balance Sheet (OBS) dividends, Capital to Asset Ratio (CAR). The results from both models were similar: evidence reveals that there is a positive relationship between size (total assets) and profitability. Meanwhile, OBS appears to have a positive relationship with profitability for UK but neutral or negative for other European countries. Moreover, results also state that CAR has a positive relationship with profitability. Furthermore, the paper touched on ownership type by indicating that there is high competition in banking due to the fact t hat there is foreign bank involvement in domestic banks, and that profitability is not linked to ownership (Goddard, Molyneux, and Wilson, 2004). Peters et al. (2004) studied the characteristics of banks in post-war Lebanon for the years 1993 to 2000 and compared the results to a group of banks from five other countries in the Middle East including UAE, KSA, Kuwait, Bahrain and Oman for the years 1995 through 1999. They used Return on Equity (ROE) measure profitability and leverage and they employed regression models that relate bank profitability ratios to various explanatory variables. This study tests the relationships between bank profitability and size, asset portfolio composition, off-balance sheet items, ownership by a foreign bank, and the ratio of employment to assets. The results show a strong association between economic growth and bank profitability, whether measured by ROE or ROA. They found that Lebanese banks are profitable, but not as profitable as a control group of banks from five other countries located in the Middle East. Islamic Banking In the area of Islamic Banking, Bashir (2000) assessed the performance of Islamic banks in eight Middle Eastern countries. He analyzed important bank characteristics that affect the performance of Islamic banks by controlling economic and financial structure measures. The paper studied fourteen Islamic banks from Bahrain, Egypt, Jordan, Kuwait, Qatar, Sudan, Turkey, and United Arab Emirates between 1993 and 1998. To examining profitability, the paper used Non Interest Margin (NIM), Before Tax Profit (BTP), Return on Assets (ROA), and Return on Equity (ROE) as performance indicators. There were also internal and external variables: internal variables were bank size, leverage, loans, short-term funding, overhead, and ownership; external variables included macroeconomic environment, regulation, and financial market. In general, results from the study confirm previous findings and show that Islamic banks profitability is positively related to equity and loans. Consequently, if loans and equity are high, Islamic banks should be more profitable. If leverage is high and loan to assets is also large, Islamic banks will be more profitable. The results also indicate that favorable macro-economic conditions help profitability (Bashir, 2000). Hassoune (2002) examined Islamic bank profitability in an interest rate cycle. In his paper, compared ROE and ROA Volatility for both Islamic and conventional banks in three GCC region, Kuwait, Saudi Arabia, and Qatar. He states that since Islamic banking is based on profit and loss sharing, managements have to generate sufficient returns for investors given that they are not willing accept no returns (Hassoune, 2002). Bashir and Hassan (2004) studied the determinants of Islamic banking profitability covers 43 Islamic Banks between 1994 and 2001 in 21 countries. Their figures show Islamic banks to have a better capital asset ratio compared to commercial banks which means that Islamic banks are well capitalized. Also, their paper used internal and external banks characteristics to determine profitability as well as economic measures, financial structure variables, and country variables. They used, Net-non Interest Margin (NIM), which is non interest income to the bank such as, bank fees, service charges and foreign exchange to identify profitability. Other profitability indicators adopted were Before Tax Profit divided by total assets (BTP/TA), Return on Assets (ROA), and Return on Equity (ROE). Results obtained by Bashir and Hassan (2004), were similar to the Bashir (2000) results, which found a positive relationship between capital and profitability but a negative relationship between loans and profitability. Bashir and Hassan also found total assets to have a negative relationship with profitability which amazingly means that smaller banks are more profitable. In addition, during an economic boom, banks profitability seems to improve because there are fewer nonperforming loans. Inflation, on the other hand, does not have any effect on Islamic bank profitability. Finally, results also indicate that overhead expenses for Islamic banks have a positive relation with profitability which means if expenses increase, profitability also increases (Bashir and Hassan, 2004). Alkassim (2005) examined the determinants of profitability in the banking sector of the GCC countries and found that asset have a negative impact on profitability of conventional banks but have a positive impact on profitability of Islamic banks. They also observed that positive impact on profitability for conventional but have a negative impact for Islamic banking. Liu and Hung (2006) examined the relationship between service quality and long-term profitability of Taiwanà ¢Ã¢â€š ¬Ã¢â€ž ¢s banks and found a positive link between branch number and long-term profitability and also proved that average salaries are detrimental to banksà ¢Ã¢â€š ¬Ã¢â€ž ¢ profit. Masood, Aktan and Chaudhary (2009) studied the co-integration and causal relationship between Return on Equity and Return on Assets for 12 banks in KSA for the period between 1999- 2007. For their research, the used time series model of ADF unit-root test, Johansen co-integration test, Granger causality test and graphical comparison model. They found that there are stable long run relationships between the two variables and that it is only a one-direction cause-effect relationship between ROE and ROA. The results show that ROE is a granger cause to ROA but ROA is not a granger cause to ROE that is ROE can affect ROA input but ROA does not affect the ROE in the Saudi Arabian Banking sector. Conceptual Framework Theoretical framework is a basic conceptual structure organized around a theory. It defines the kinds of variables that are going to be used in the analysis. In this research, the theoretical framework consists of seven independent variables that represent four aspects of the Bank Characteristics. Theses aspects are the Bank Size (Total Assets), Capital Structure (Equity and Tangible Equity), Liquidity (Loans and Liquid Assets) and Liabilities (Deposits and Overheads). Bank profitability is the dependent variable and two measures of bank profitability are used in this study, namely return on average equity (ROAE) and return on average assets (ROAA). Financial Crisis Internal Factors (Bank-Specific) Islamic Banking Profitability H1: Bank Size H2, H3: Capital Structure H4, H5: Liquidities H6, H7: Liabilities Return on Average Assets (ROAA) Return on Average Equity (ROAE) In this section we develop the hypothesis to be examined in this research paper. Development of Hypotheses This paper attempts to test seven hypotheses. A hypothesis is a claim or assumption about the value of a population parameter. It consists either of a suggested explanation for a phenomenon or of a reasoned proposal suggesting a possible correlation between multiple phenomena. According to Becker (1995), hypothesis testing is the process of judging which of two contradictory statements is correct. Hypothesis 1: Profitability has a positive and significant relationship with the total assets (ASSETS). Total Assets of a company represents its valuables including both tangible assets such as equipments and properties along with its intangible assets such as goodwill and patent. For banks, total assets include loans which are the basis for bank operations either through interest or interest-free practices. Total assets is used as a tool to measure the bank size; banks with higher total assets indicate bigger banks. Molyneux and el (2004) included total assets in their study and found a positive significant relationship between total assets and profitability. Therefore, total assets are expected to have positive relation with profitability which means that bigger banks are expected to be more profitable. Total assets are converted logarithmic to be more consistent with the other ratios Hypothesis 2: Profitability has a positive and significant relationship with equity to asset ratio (EQUITY). Total equity over total assets measures bankà ¢Ã¢â€š ¬Ã¢â€ž ¢s capital structure and adequate. It indicated bank ability to withstand losses and handle risk exposure with shareholders. Hassan and Bashir (2004) examined the relationship between EQUITY and bank profitability and found positive relationship. Therefore, EQUITY is included in this study and it is expected to have a positive relation with performance because well capitalized banks are less risky and more profitable (Bourke, 1989) Hypothesis 3: Profitability has a positive and significant relationship with Tangible Equity to total liabilities ratio (TNGEQTY). Tangible Equity represents the subset of shareholderà ¢Ã¢â€š ¬Ã¢â€ž ¢s equity that is not common shares and not intangible asset. Tangible Equity became very popular after the financial crisis as a measure of bank viability since it indicates of how much ownership equity owners of common stock would receive in the event of a companyà ¢Ã¢â€š ¬Ã¢â€ž ¢s liquidation. Beltratti and Stulz (2009) examined tangible equity to liabilities in their study to examine why some banks perform better during the financial crisis and found positive and insignificant relationship between TNEQTY and bank profitability. Therefore, TNEQTY is included in this study and it is expected to have positive relationship since banks with better capital structure in since of more equity à ¢Ã¢â€š ¬Ã¢â‚¬Å" seems to perform better. Hypothesis 4: Profitability has a positive and significant relationship with the loans to assets ratio (LOANS). Total loans over total assets a liquidity ratio used that indicates how much of bank assets are tied to loans. For banks, the higher LOANS ratio means less liquidity. Demirguc-Kunt and Huizinga, (1997) found positive relationship between LOANS and bank profitability. LOANS is included in this study and anticipated to have positive relationship with profitability. Furthermore, conventional banks rely on interest-based loans while Islamic banks rely on profit and loss sharing interest-free lending. Therefore, this ratio is also used to compare the performance of interest-based loans and interest-free lending. Hypothesis 5: Profitability has a positive and significant relationship with the liquid assets to total assets ratio (LIQUID). Liquid assets include currency, deposit accounts, and negotiable instruments that can be converted easily into cash. Liquid assets to total assets ratio is a liquidity ratio that measure how easily the banksà ¢Ã¢â€š ¬Ã¢â€ž ¢ assets can be converted into cash. Beltratti and Stulz (2009) found that LIQUID has positive and significant relation with profitability as banks with more liquid assets tend to perform better. Therefore, LIQUID is included in this study and expected to have positive relationship with profitability. Hypothesis 6: Profitability has a reverse and significant relationship with the deposits to assets ratio (DEPOSITS). Deposits to total ratio is another liquidity indicator but is considered a liability since they measure the impact of liabilities on profitability. Bashir and Hassan (2004) examined deposits in their study and found a negative relationship with profitability. Therefore, we expect that DEPOSITS to have negative relationship with profitability. Hypothesis 7: Profitability has a positive and significant relationship with the overhead to assets ratio (OVERHEAD). Overhead costs represent all bank expenses excluding interest expenses as they are considered as operations expenses. Overhead over total assets is a liability ratio that measures the operation efficiency of the bank. Alkassim (2005) included OVERHEAD in his research and found positive relationship to profitability. Therefore, OVERHEAD is included in this study and expected to have positive relationship to profitability. Chapter 3: Methods Data Sample From 2006 to 2008 2009 Country Islamic Banks Conventional Banks Islamic Banks Conventional Banks Bahrain 12 14 5 5 Saudi Arabia 2 9 1 7 Qatar 3 5 2 4 Kuwait 4 14 1 3 Oman 0 6 0 3 UAE 6 17 0 7 Total 27 65 9 29 The data used in this analysis were extracted from Bankscope data for all Islamic and Conventional Banks in the GCC for the period from 2006 to 2009. Using Bankscope has many advantages: it has information for over 30,000 banks, plus the accounting information is presented in a standardized format. Therefore, the accounting information of Islamic Banking is adjusted to be comparable with accounting information of conventional banks. The data used for this study are from a pooled time-series cross-sectional data. The data are taken from various countries. Sample period for this study is from 2002 to 2007. Cross-sectional data provide information on variables for a given period of time. While time series data give information about variables over a number of periods of time. The data for internal variables are obtained from BankScope database which is compiled by International Bank Credit Analysis Limited (IBCA). Using BankScope has two advantages. Firstly, it has information for 11,000 banks, accounting for about 90% of total assets in each country. Secondly, the accounting information at the bank level is presented in standardized formats, after adjustments for differences in accounting and reporting standards. The data for external variables are obtained from World Economic Outlook 2008 database, published by International Monetary Fund (IMF). A total of 60 Islamic banks from 18 countries were chosen in this study. The selected banks are those which are classified as Islamic bank in BankScope database. The Islamic banks have available data for at least one year between 2002 and 2007. This yielded an unbalanced panel data consisting of 260 observations. However, after eliminating cases with missing data, only 155 observations of balanced panel data are left. Variable Definition Independent Variable: Profitability Measures There are many ratios that have been used by researchers to measure bank profitability but the two most often used ratios are the return on assets (ROA) and the return on equity (ROE) (Iqbal et al., 2005). Return on Assets Impact of Internal Factors on Islamic Banking Impact of Internal Factors on Islamic Banking Introduction to the Subject Background of the Subject General Objective The purpose of this study is to examine how the internal factors of the Islamic Banking affected their performance before, during and after the financial crisis in the GCC in comparison to the conventional banking in the same area. Research Questions This study aims to answer the following questions: How did the financial crisis affect the profitability of Islamic Banks in comparison to Conventional Banks? What are the internal factors (bank specific characteristics) that influence the profitability of Islamic banking for every year from 2006 à ¢Ã¢â€š ¬Ã¢â‚¬Å" 2009? Did these factors have the same impact on the profitability of Islamic Banking before, during and after the financial crisis? Did these internal factors influence the profitability of Islamic Banking in the same manner as of the Conventional Banking? Need for the Study Significance of the Study Assumptions of the Study Limitations of the Study Although we cannot neglect the importance of the external factors on the profitability of Islamic Banking, they were not included in this study. To understand the reason behind this decision, we need to go through the different types of external factors and how they are classified: Macroeconomic Factors Country Regulation Rules Bank Regulation Rules These factors were not included for the following reasons: Since we are examining the performance of 92 banks (27 Islamic Banks and 65 Conventional Banks) in 6 countries, the number of countries used in the study is not significant enough to study the impact of GDP and inflation accurately on Bank profitability especially when examining each year separately Country Regulation Rules as per the IMF Database, although it differs slightly for the selected countries, did not change over the period from 2006 to 2009. This means that for each bank, these factors remained constant. Data about Bank Regulation Rules could not be obtained for GCC banks Delimitation of the Study This study was delaminated to the Islamic and Conventional Banks in the GCC whose data could be obtained in the Bankscope database. Chapter 2: Literature Review Overview of Islamic Banking Islamic Baking has established as an alternative to conventional interest-based banking. The first stirring of the Islamic Banking movement began in 1963 by Dr. Ahmed Alnajar in a small town in Egypt, called Mit Ghamar. Dr. Alnajar completed his education in Germany and found that it had many saving banks operating on interest. He took the idea from a savings bank in Germany and created his own small Islamic bank that was interest free. After Dr. Alnajarà ¢Ã¢â€š ¬Ã¢â€ž ¢s small bank proved successful, the establishment of other Islamic banks followed. In 1971, the Nasser Social Bank was founded in Egypt with the objective of lending out money as a charity on the basis of a profit and loss sharing system and helping people in need. And in 1975, the idea of Islamic banking spread to other Islamic regions such Dubai Islamic bank in United Arab Emirates and The Islamic Development (IDB) Bank in Jeddah, Saudi Arabia (Wilson, 1990). Even though Islamic Banking has only been around for thirty years and is still in an evolving stage, Islamic Banking is the fastest growing segment of the credit markets in the Muslim countries. In 2009, Assets held by Islamic Banking banks rose by 28.6 percent to $822bn from $639bn in 2008, according to The Bankerà ¢Ã¢â€š ¬Ã¢â€ž ¢s à ¢Ã¢â€š ¬Ã…“Top 500 Islamic Financial Institutionsà ¢Ã¢â€š ¬? survey while conventional banks posted annual asset growth of just 6.8 percent. Furthermore, GCC states accounted for $353.2bn or 42.9 percent of the global aggregate, while Iran remained the largest single market for Shariah-compliant assets, accounting for 35.6 percent of the total. Source: Asian Banker Research, 2009 Finally, Islamic banking operations are not limited to Islamic countries but are spreading throughout the world. One reason is the growing trend toward transcending national boundaries, and unifying Muslims into a political and economic entity that could have a significant impact on the pattern of world trade (Abdel-Magid, 1981). Islamic Banking Rules and Principles Islamic banking rules are according to the Islamic Shariah derived from the Quran and prophet Mohamedà ¢Ã¢â€š ¬Ã¢â€ž ¢s sayings. The three main practices that are clearly prohibited in the Quran and the prophetà ¢Ã¢â€š ¬Ã¢â€ž ¢s sayings are, Riba (Interest), Gharar (Uncertainty), and Maysir (Betting). Prohibition of Riba or any predetermined or fixed rate in financial institutions is the most important factor in the Islamic principles pertaining to banking. As stated in the Quran à ¢Ã¢â€š ¬Ã…“Allah forbids ribaà ¢Ã¢â€š ¬?. Riba means an increase and under Shariah the term refers to the premium that must be paid by the borrower to the lender along with the principle amount as a condition for the loan (Omar and Abdel, 1996). Gharar occurs when the purchaser does not know what has been bought and the seller does not know what has been sold. In other words, trading should be clear by stating in a contract the existing actual object(s) to be sold, with a price and time to eliminate confusion and uncertainty between the buyers and the sellers. Maisir is considered in Islam as one form of injustice in the appropriation of othersà ¢Ã¢â€š ¬Ã¢â€ž ¢ wealth. The act of gambling, sometimes referred to betting on the occurrence of a future event, is prohibited and no reward accrues for the employment of spending of wealth that an individual may gain through means of gambling. Under this prohibition, any contract entered into, should be free from uncertainty, risk and speculation. Contracting parties should have perfect knowledge of the counter values intended to be exchanged as a result of their transactions. Therefore, and according to Ahmed and Hassan (2007), the principles of Islamic banking and finance enshrined from al-Qurà ¢Ã¢â€š ¬Ã¢â€ž ¢an and Prophet Mohamedà ¢Ã¢â€š ¬Ã‹Å"s Sayings can be summed up as follows: Any predetermined payment over and above the actual amount of principal is prohibited. The lender must share in the profits or losses arising out of the enterprise for which the money was lent. Making money from money is not acceptable in Islam. Gharar (deception) and Maisir (gambling) are also prohibited. Investments should only support practices or products that are not forbidden or even discouraged by Islam. Islamic Banking Products Islamic Banking products have to be done according to Islamic rules and principles, based on profit and loss sharing as well as avoiding interest. According to BNM statistics 2007, Al Bai Bithaman Ajil financing is the most common in Islamic Banking. There are a lot of Islamic Banking products; however there are some famous Islamic products that will be discussed in this section. Al Bai Bithaman Ajil /BBA This involves the credit sale of goods on a deferred payment basis. In BAA, the Islamic bank will purchase certain assets on a deferred payment basis and then sell the goods back to the customer at an agreed price including some margin or profit. The customer will make payment by installments over an agreed period. A fixed rate BBA is a powerful hedging tool against interest rates (Rosly, 1999). Murabahah Murabahah is a contract of sale. The Islamic Bank acts as a middle man and purchases the goods requested by the customer. The bank will later sell the goods to the customer in a sale and purchase agreement, whereby the lender re-sales to the borrower at a higher price agreed on by both parties. These are more for short term financing Mudharabah According to Kettel (2006), Mudharabah is a basic principle of profit and loss, where instead of lending money at a fixed rate return, the banker forms a partnership with the borrower, thereby sharing in a ventureà ¢Ã¢â€š ¬Ã¢â€ž ¢s profit and loss. Mudharabah is an agreement between the lender and entrepreneur, whereby the lender agrees to finance the project on a profit sharing basis according to a predetermined ratio agreed by both parties concerned. If there are any losses the lender will bear all the losses. Musharakah Musharakah means partnership whereby the Islamic institution provides the capital needed by the customer with the understanding that they both share the profit and loss according to a formula agreed before the business transaction is transacted. In Musharakah all partners are entitled to participate in the management of the investment but it is not compulsory. Musharakah can help in providing financing for large investments in modern economic activities Al Ijarah Ijarah means meaning to give something on a rental basis. In Ijarah, the bank acquires ownership based on the promise and leases back to the client for a given period. The customer pays the rental but the ownership still remains with the bank or lender. As the ownership remains with the lessor (bank), it continues to give the service for which it was rented. Under this contract, the lessor has the right to re-negotiate the quantum of the lease payment at every agreed interval to ensure rental remains in line with the market rates (Hume, 2004). Wadiah Wadiah is a trust contract and the bank provides gift (hibah) and various types of benefits to the customer. This is exactly like a normal conventional savings account. Istisna Istisna allows one party buys the goods and the other party undertakes to manufacture them according to agreed specifications. Normally, Istisna is used to finance construction and manufacturing projects. Salam Salam is defined as the forward purchase of specified goods with full forward payment. This contract is normally used for financing agricultural production. According to Hassan (2004), Salam based future contracts for agricultural commodities, supported by Islamic Banks, can help to overcome the agricultural financial problems Table 2.1 lists the products of conventional banking and their correspondent products in Islamic Banking. Deposit Services Current Deposit Wadiah Wad Dhamana / Qard Hasan Savings Deposit Wadiah Wad Dhamana / Mudaraba General Investment deposit Mudaraba Special Investment deposit Mudaraba Retail / Consumer Banking Housing Property Finance BBA / Ijara wa Iktina /Diminishing Musharaka Hire Purchase Ijara Thumma Al-Bai Share Financing BBA / Mudaraba / Musharaka Working Capital Financing Murabahah/ Bai Al-Einah/ Tawarruq Credit Card Bai Al-Einah/ Tawarruq Charge Card Qard Hasan Corporate Banking/ Trade Finance Project Financing Mudaraba / Musharaka / BBA / Istisna / Ijara Letter of Credit Musharaka/ Wakala/ Murabaha Venture Capital Diminishing Mudaraba/ Musharaka Financing Syndication Musharaka + Murabaha/ Istisna / Ijara Revolving Financing Bai Al-Einah Short-term Cash Advance Bai Al-Einah/ Tawarruq Working Capital Finance Murabaha/ Salam/ Istijrar Letter of Credit Murabaha Letter of Guarantee Kafala + Ujr Leasing Ijara Export/ Import Finance Musharaka/ Salam/ Murabaha Work-in-Progress, Construction Finance Istisna Bill Discounting Bai al-Dayn Underwriting, Advisory Services Ujr Treasury / Money Market Investment Products Sell buy-back agreements Bai al-Einah Islamic Bonds Mudaraba / Mushraka + BBA / Istisna / Ijara Government Investment Issues Qard Hasan/ Salam/ Mudaraba Other Products Services Stock-Broking Services Murabaha/ Wakala/ Joala Funds Transfer (Domestic Foreign) Wakala/ Joala Safe-Keeping Collection (Negotiable Instruments) Wakala/ Joala Factoring Wakala/ Joala/ Bai al-Dayn Administration of Property, Estates and Wills Wakala Hiring of Strong Boxes Amana/ Wakala Demand Draft, Travellerà ¢Ã¢â€š ¬Ã¢â€ž ¢s Cheques Ujr/ Joala ATM Service, Standing Instruction, Telebanking Ujr Source: Obaidullah, 2005 Financial Crisis and the Islamic Banking Previous Literature The study of bank profitability is an important tool to evaluate bank operation by examining the different factors affecting bank profitability and using these factors for management planning and strategic analysis. In the last four decades, many studies have been conducted to study both bank profitability and the determinants of bank profitability either for particular country or for a panel of countries. These studies normally divide these factors into internal factors and external factors. Internal factors represent the bank-specific characteristics such as bank size, liquidity structure; liabilitiesà ¢Ã¢â€š ¬Ã‚ ¦etc while external factors can be macroeconomic factors such as inflation and GDP growth or Country-specific regulations rules and practices. In the area of banking profitability, many studies have been conducted to investigate the profitability of conventional banks while only few were conducted in the field of Islamic banking. In this chapter, we will review these studies for conventional banking first and then will focus on studies in the Islamic banking field. Then we will cover the conceptual framework of this research. Conventional Banking Different studies have been conducted in the field of conventional banking profitability. Short (1979), Bourke (1989), Molyneux and Thornton (1992), Goddard, Molyneux, and Wilson (2004), Peters et al. (2004) are some of the researchers in the field. Short (1979) is one of the early scholars who studied the relationship between banking profit rates and concentration for sixty banks in Canada, Western Europe and Japan during the 1970à ¢Ã¢â€š ¬Ã¢â€ž ¢s and he included independent variables including government ownership and concentration by using H index to quantify concentration. Results showed that the government ownership impact on profitability varied throughout the countries studied but expressed an overall negative relationship. He also found evidence that indicated higher concentration rates lead to higher profit rates (Short, 1979). Bourke (1989) also compared concentration to bank profitability but included other determinants. Bourke (1989) covered ninety banks in Australia, Europe, and North America between 1972 and 198 and examined different internal and external factors: internal factors such as staff expenses, capital ratio, liquidity ratio, and loans to deposit ratio; external factors such as regulation, size of economies of scale, competition, concentration, growth in market, interest rate, government ownership, and market power. His results show that increase in government ownership leads to lower profitability in banking. He also found that concentration, interest rates, and money supply are positively related to profitability along with capital and reserves of total assets as well as cash and bank deposits of total assets. Bourke adds that well capitalized banks enjoy cheaper access to sources of funds as they are less risky than less capitalized banks (Bourke, 1989). Later, Molyneux and Thornton (1992) studied the determinants of European banks profitability. The paper examined eighteen counties in Europe between 1986 and 1989. This paper replicated Bourkeà ¢Ã¢â€š ¬Ã¢â€ž ¢s (1989) work by using internal and external determinants of bank profitability. However, Molyneux and Thornton (1992) results showed that government ownership expresses a positive coefficient with return on capital (profitability) which contradicts with Bourkeà ¢Ã¢â€š ¬Ã¢â€ž ¢s findings. Other results were similar to Bourkeà ¢Ã¢â€š ¬Ã¢â€ž ¢s, showing that concentration, interest rate, and money supply were positively related to bank profitability (Molyneux and Thornton, 1992). In one of the recent papers on bank profitability on European banks, Goddard, Molyneux, and Wilson (2004) shows similar findings to the paper by Molyneux and Thornton (1992). It investigates the determinants of profitability in six European countries and it covered 665 banks between 1992 and 1998. The study used cross-sectional and dynamic panel models. The variables used in the regression analysis were ROE, the logarithmic of total assets, Off Balance Sheet (OBS) dividends, Capital to Asset Ratio (CAR). The results from both models were similar: evidence reveals that there is a positive relationship between size (total assets) and profitability. Meanwhile, OBS appears to have a positive relationship with profitability for UK but neutral or negative for other European countries. Moreover, results also state that CAR has a positive relationship with profitability. Furthermore, the paper touched on ownership type by indicating that there is high competition in banking due to the fact t hat there is foreign bank involvement in domestic banks, and that profitability is not linked to ownership (Goddard, Molyneux, and Wilson, 2004). Peters et al. (2004) studied the characteristics of banks in post-war Lebanon for the years 1993 to 2000 and compared the results to a group of banks from five other countries in the Middle East including UAE, KSA, Kuwait, Bahrain and Oman for the years 1995 through 1999. They used Return on Equity (ROE) measure profitability and leverage and they employed regression models that relate bank profitability ratios to various explanatory variables. This study tests the relationships between bank profitability and size, asset portfolio composition, off-balance sheet items, ownership by a foreign bank, and the ratio of employment to assets. The results show a strong association between economic growth and bank profitability, whether measured by ROE or ROA. They found that Lebanese banks are profitable, but not as profitable as a control group of banks from five other countries located in the Middle East. Islamic Banking In the area of Islamic Banking, Bashir (2000) assessed the performance of Islamic banks in eight Middle Eastern countries. He analyzed important bank characteristics that affect the performance of Islamic banks by controlling economic and financial structure measures. The paper studied fourteen Islamic banks from Bahrain, Egypt, Jordan, Kuwait, Qatar, Sudan, Turkey, and United Arab Emirates between 1993 and 1998. To examining profitability, the paper used Non Interest Margin (NIM), Before Tax Profit (BTP), Return on Assets (ROA), and Return on Equity (ROE) as performance indicators. There were also internal and external variables: internal variables were bank size, leverage, loans, short-term funding, overhead, and ownership; external variables included macroeconomic environment, regulation, and financial market. In general, results from the study confirm previous findings and show that Islamic banks profitability is positively related to equity and loans. Consequently, if loans and equity are high, Islamic banks should be more profitable. If leverage is high and loan to assets is also large, Islamic banks will be more profitable. The results also indicate that favorable macro-economic conditions help profitability (Bashir, 2000). Hassoune (2002) examined Islamic bank profitability in an interest rate cycle. In his paper, compared ROE and ROA Volatility for both Islamic and conventional banks in three GCC region, Kuwait, Saudi Arabia, and Qatar. He states that since Islamic banking is based on profit and loss sharing, managements have to generate sufficient returns for investors given that they are not willing accept no returns (Hassoune, 2002). Bashir and Hassan (2004) studied the determinants of Islamic banking profitability covers 43 Islamic Banks between 1994 and 2001 in 21 countries. Their figures show Islamic banks to have a better capital asset ratio compared to commercial banks which means that Islamic banks are well capitalized. Also, their paper used internal and external banks characteristics to determine profitability as well as economic measures, financial structure variables, and country variables. They used, Net-non Interest Margin (NIM), which is non interest income to the bank such as, bank fees, service charges and foreign exchange to identify profitability. Other profitability indicators adopted were Before Tax Profit divided by total assets (BTP/TA), Return on Assets (ROA), and Return on Equity (ROE). Results obtained by Bashir and Hassan (2004), were similar to the Bashir (2000) results, which found a positive relationship between capital and profitability but a negative relationship between loans and profitability. Bashir and Hassan also found total assets to have a negative relationship with profitability which amazingly means that smaller banks are more profitable. In addition, during an economic boom, banks profitability seems to improve because there are fewer nonperforming loans. Inflation, on the other hand, does not have any effect on Islamic bank profitability. Finally, results also indicate that overhead expenses for Islamic banks have a positive relation with profitability which means if expenses increase, profitability also increases (Bashir and Hassan, 2004). Alkassim (2005) examined the determinants of profitability in the banking sector of the GCC countries and found that asset have a negative impact on profitability of conventional banks but have a positive impact on profitability of Islamic banks. They also observed that positive impact on profitability for conventional but have a negative impact for Islamic banking. Liu and Hung (2006) examined the relationship between service quality and long-term profitability of Taiwanà ¢Ã¢â€š ¬Ã¢â€ž ¢s banks and found a positive link between branch number and long-term profitability and also proved that average salaries are detrimental to banksà ¢Ã¢â€š ¬Ã¢â€ž ¢ profit. Masood, Aktan and Chaudhary (2009) studied the co-integration and causal relationship between Return on Equity and Return on Assets for 12 banks in KSA for the period between 1999- 2007. For their research, the used time series model of ADF unit-root test, Johansen co-integration test, Granger causality test and graphical comparison model. They found that there are stable long run relationships between the two variables and that it is only a one-direction cause-effect relationship between ROE and ROA. The results show that ROE is a granger cause to ROA but ROA is not a granger cause to ROE that is ROE can affect ROA input but ROA does not affect the ROE in the Saudi Arabian Banking sector. Conceptual Framework Theoretical framework is a basic conceptual structure organized around a theory. It defines the kinds of variables that are going to be used in the analysis. In this research, the theoretical framework consists of seven independent variables that represent four aspects of the Bank Characteristics. Theses aspects are the Bank Size (Total Assets), Capital Structure (Equity and Tangible Equity), Liquidity (Loans and Liquid Assets) and Liabilities (Deposits and Overheads). Bank profitability is the dependent variable and two measures of bank profitability are used in this study, namely return on average equity (ROAE) and return on average assets (ROAA). Financial Crisis Internal Factors (Bank-Specific) Islamic Banking Profitability H1: Bank Size H2, H3: Capital Structure H4, H5: Liquidities H6, H7: Liabilities Return on Average Assets (ROAA) Return on Average Equity (ROAE) In this section we develop the hypothesis to be examined in this research paper. Development of Hypotheses This paper attempts to test seven hypotheses. A hypothesis is a claim or assumption about the value of a population parameter. It consists either of a suggested explanation for a phenomenon or of a reasoned proposal suggesting a possible correlation between multiple phenomena. According to Becker (1995), hypothesis testing is the process of judging which of two contradictory statements is correct. Hypothesis 1: Profitability has a positive and significant relationship with the total assets (ASSETS). Total Assets of a company represents its valuables including both tangible assets such as equipments and properties along with its intangible assets such as goodwill and patent. For banks, total assets include loans which are the basis for bank operations either through interest or interest-free practices. Total assets is used as a tool to measure the bank size; banks with higher total assets indicate bigger banks. Molyneux and el (2004) included total assets in their study and found a positive significant relationship between total assets and profitability. Therefore, total assets are expected to have positive relation with profitability which means that bigger banks are expected to be more profitable. Total assets are converted logarithmic to be more consistent with the other ratios Hypothesis 2: Profitability has a positive and significant relationship with equity to asset ratio (EQUITY). Total equity over total assets measures bankà ¢Ã¢â€š ¬Ã¢â€ž ¢s capital structure and adequate. It indicated bank ability to withstand losses and handle risk exposure with shareholders. Hassan and Bashir (2004) examined the relationship between EQUITY and bank profitability and found positive relationship. Therefore, EQUITY is included in this study and it is expected to have a positive relation with performance because well capitalized banks are less risky and more profitable (Bourke, 1989) Hypothesis 3: Profitability has a positive and significant relationship with Tangible Equity to total liabilities ratio (TNGEQTY). Tangible Equity represents the subset of shareholderà ¢Ã¢â€š ¬Ã¢â€ž ¢s equity that is not common shares and not intangible asset. Tangible Equity became very popular after the financial crisis as a measure of bank viability since it indicates of how much ownership equity owners of common stock would receive in the event of a companyà ¢Ã¢â€š ¬Ã¢â€ž ¢s liquidation. Beltratti and Stulz (2009) examined tangible equity to liabilities in their study to examine why some banks perform better during the financial crisis and found positive and insignificant relationship between TNEQTY and bank profitability. Therefore, TNEQTY is included in this study and it is expected to have positive relationship since banks with better capital structure in since of more equity à ¢Ã¢â€š ¬Ã¢â‚¬Å" seems to perform better. Hypothesis 4: Profitability has a positive and significant relationship with the loans to assets ratio (LOANS). Total loans over total assets a liquidity ratio used that indicates how much of bank assets are tied to loans. For banks, the higher LOANS ratio means less liquidity. Demirguc-Kunt and Huizinga, (1997) found positive relationship between LOANS and bank profitability. LOANS is included in this study and anticipated to have positive relationship with profitability. Furthermore, conventional banks rely on interest-based loans while Islamic banks rely on profit and loss sharing interest-free lending. Therefore, this ratio is also used to compare the performance of interest-based loans and interest-free lending. Hypothesis 5: Profitability has a positive and significant relationship with the liquid assets to total assets ratio (LIQUID). Liquid assets include currency, deposit accounts, and negotiable instruments that can be converted easily into cash. Liquid assets to total assets ratio is a liquidity ratio that measure how easily the banksà ¢Ã¢â€š ¬Ã¢â€ž ¢ assets can be converted into cash. Beltratti and Stulz (2009) found that LIQUID has positive and significant relation with profitability as banks with more liquid assets tend to perform better. Therefore, LIQUID is included in this study and expected to have positive relationship with profitability. Hypothesis 6: Profitability has a reverse and significant relationship with the deposits to assets ratio (DEPOSITS). Deposits to total ratio is another liquidity indicator but is considered a liability since they measure the impact of liabilities on profitability. Bashir and Hassan (2004) examined deposits in their study and found a negative relationship with profitability. Therefore, we expect that DEPOSITS to have negative relationship with profitability. Hypothesis 7: Profitability has a positive and significant relationship with the overhead to assets ratio (OVERHEAD). Overhead costs represent all bank expenses excluding interest expenses as they are considered as operations expenses. Overhead over total assets is a liability ratio that measures the operation efficiency of the bank. Alkassim (2005) included OVERHEAD in his research and found positive relationship to profitability. Therefore, OVERHEAD is included in this study and expected to have positive relationship to profitability. Chapter 3: Methods Data Sample From 2006 to 2008 2009 Country Islamic Banks Conventional Banks Islamic Banks Conventional Banks Bahrain 12 14 5 5 Saudi Arabia 2 9 1 7 Qatar 3 5 2 4 Kuwait 4 14 1 3 Oman 0 6 0 3 UAE 6 17 0 7 Total 27 65 9 29 The data used in this analysis were extracted from Bankscope data for all Islamic and Conventional Banks in the GCC for the period from 2006 to 2009. Using Bankscope has many advantages: it has information for over 30,000 banks, plus the accounting information is presented in a standardized format. Therefore, the accounting information of Islamic Banking is adjusted to be comparable with accounting information of conventional banks. The data used for this study are from a pooled time-series cross-sectional data. The data are taken from various countries. Sample period for this study is from 2002 to 2007. Cross-sectional data provide information on variables for a given period of time. While time series data give information about variables over a number of periods of time. The data for internal variables are obtained from BankScope database which is compiled by International Bank Credit Analysis Limited (IBCA). Using BankScope has two advantages. Firstly, it has information for 11,000 banks, accounting for about 90% of total assets in each country. Secondly, the accounting information at the bank level is presented in standardized formats, after adjustments for differences in accounting and reporting standards. The data for external variables are obtained from World Economic Outlook 2008 database, published by International Monetary Fund (IMF). A total of 60 Islamic banks from 18 countries were chosen in this study. The selected banks are those which are classified as Islamic bank in BankScope database. The Islamic banks have available data for at least one year between 2002 and 2007. This yielded an unbalanced panel data consisting of 260 observations. However, after eliminating cases with missing data, only 155 observations of balanced panel data are left. Variable Definition Independent Variable: Profitability Measures There are many ratios that have been used by researchers to measure bank profitability but the two most often used ratios are the return on assets (ROA) and the return on equity (ROE) (Iqbal et al., 2005). Return on Assets

Free Essays - Memories and Motherhood in Landscape for a Good Woman :: Landscape for a Good Woman Essays

Memories and Motherhood in Landscape for a Good Woman The relevance and subsequent interpretation of memories as they relate to one's desire to mother ". . . refusal to reproduce oneself is a refusal to perpetuate what one is, that is, the way one understands oneself to be in the social world." -- pg. 84 In reading Carolyn Kay Steedman's Landscape for a Good Woman, two themes took center stage: Memories and Motherhood. As the book unfolds Steedman repeatedly points out that childhood memories are used by individuals for various purposes; rather than objective recollections dominated by facts, she proposes that they are more subjective in nature, likely to alter with time or as circumstances dictate. Thus, fact has very little relevance, taking a back seat to the history we create for ourselves. ". . . childhood is a kind of history, the continually reworked and re-used personal history that lies at the heart of each present" -- pg. 128 Though she examined sociological, political, economic and psychoanalytic issues, one aspect Steedman fails to address is the biological, as in the so-called "biological clock". Frankly, her argument may benefit from this phenomena. Though women in their teens and early twenties frequently express an emphatic lack of desire for children, citing specifics of their personal histories to support these decisions, years later the same memories are given an opportunity to soften, recede or even disappear altogether. Thus, in light of this altered history, the individual in question feels more at ease reassessing her choices (in light of these memories) and considering motherhood a viable alternative. "We all return to memories and dreams . . . again and again; the story we tell of our own life is reshaped around them. But the point doesn't lie there, back in the past, back in the lost time at which they happened; the only point lies in interpretation." -- pg. 5 Another point Steedman only touches on lightly is her sister's interpretation of the past. Personally, I find it fascinating to discuss childhood events with siblings who participated in the same events. The significance of seemingly unrelated experiences, occurring after the occasion in question, together with personal feelings, frequently cause siblings' recollections of the same events to differ. In light of Steedman's work, it is easier now to understand how children, raised by the same parents, offered the same opportunities and sharing the same historical events, may end up with radically different memories.

Drug Testing and Ethics Essay

Is drug testing an unwarranted invasion of employee privacy? Which is more important–getting drugs out of the workplace or protecting the privacy of the employee? What about other health-threatening activities, i. e. smoking outside of working hours, unprotected sex, etc. Should employers be able to question or test employees or potential employees about these activities? Both of these scenarios are tricky ones. On the one hand, any employer would want to get drugs out of the workplace. On the other hand you don’t want to invade an employee’s privacy. At the same time some jobs may require employees to conform to a certain standard of behavior both on and off the job, but how much is too much? How much should be employees be judged and how high of a standard should be set. Where do we draw the line? Shaw and Barry in their text Moral Issues in Business state â€Å"A firm has a legitimate interest in employee conduct off the job only if it affects work performance† (Shaw & Barry 2010, p477). It can be argued that as long as the drug use doesn’t affect the employee’s work performance, then he shouldn’t be tested. If he is tested and the result is positive, but work performance is satisfactory, then drug use should not be considered as grounds for termination. Perhaps a better way to state this could be that as long as employee performance meets or exceeds the expected standards, then drug testing should not be used even if drug use is suspected. Egoism can be used to argue from both points of view. According to this theory, â€Å"an act is morally right if and only if it best promotes an agent’s interests† (Shaw & Barry, 2010 p59). Following this theory, if the employer drug tests several employees and fires all who test positive, then they are acting in their best interests. On the other hand, if the employee’s best interests are served through their drug usage, then the employee has acted in the best moral way that he can. Using this theory does however raise some interesting questions. If the best possible person for a specific job is fired as a result of a drug test result, and the company’s performance in that specific department falls as a result of this, then was the action a morally right one? From a personal point of view, I believe that drug testing should be used only if the job requirements demand it. I don’t see any need for the person who picks up my garbage to be tested. I do however see a need for the school crossing guard at my children’s school to be tested. The person who shovels the snow from my driveway in the winter and mows my lawn in the spring and summer doesn’t need to be drug tested. My doctor should be. Several years ago my husband and I had a spat over my decision to hire the town drunk to do some lawn work and prune some tree branches off our roof. In all fairness I had no idea that he was the town drunk when I hired him, I was out in our backyard picking up fallen branches and he walked by at that moment. He asked if I had any odd jobs to be done and since he came across as clean and presentable and lucid I hired him on the spot. It wasn’t until three weeks later when my husband came home early and saw Bruce (the town drunk) at the top of a 50 foot tree sawing branches off that he realized who his new handyman was. Since he was usually the one on call at night whenever Bruce had one of his â€Å"benders† and had had cleaned him up several times, he now knew where Bruce was getting his drinking money from. My husband came home and told me he’d fired him. I rehired Bruce a day later. My reasoning was that he’d never shown up drunk, he did a great job on any task I set for him and his fee was reasonable. It was within my best interests to keep Bruce employed therefore I was acting as an egoist. It was within Bruce’s best interests to remain employed since it gave him the money to support his habit. He was acting as an egoist. We were both also following the theory of Libertarianism under which each person is free to live as he or she wishes â€Å"free from the interference of others† (Shaw & Barry, 2010 p122). My husband in his decision to fire Bruce was also acting partially from an egoist point of view since an unemployed Bruce meant a sober Bruce which meant no trips to the ER which meant that my husband wouldn’t have to deal with a cursing, screaming, bloody drunk Bruce. At the same time he was also acting from Kant’s theory which states that â€Å"Only when we act from a sense of duty does our action have moral worth† (Shaw & Barry, 2010 p69). My husband felt that it was his duty as a member of the medical profession, not to enable a habit that could possibly cause harm to an individual. A high incidence of false positive results in drug testing is another reason for the argument that drug testing should not be used. In researching this paper I was surprised to learn how many over the counter drugs can produce false positive results. According to an article on The National Center for Biotechnology Information website entitled â€Å"Commonly prescribed medications and potential false positive urine drug screens† published Aug 15th 2010, â€Å"A number of routinely prescribed medications have been associated with triggering false-positive UDS results. Verification of the test results with a different screening test or additional analytical tests should be performed to avoid adverse consequences for the patients. † Some of the more common drugs that could produce false positive results were nonprescription nasal inhalers such as Vicks, antihistamines, antidepressants, and antibiotics such as Amoxicillin which has been associated with false positive urine screens for cocaine. Employers should not be able to question or test employees about other behaviors that they might consider health threatening. This is a rather grey area and raises the questions of where to draw the line. For example if a company which is trying to reduce health insurance costs, decides to eliminate all smokers from their payroll since it costs more to insure smokers, shouldn’t they then eliminate overweight employees who are more likely to develop health problems than fit ones? What about employees with pre-existing conditions such as high cholesterol or high blood pressure or kidney problems? Shouldn’t they be eliminated as well? Should employers be allowed to use polygraph tests to â€Å"screen† out potentially costly employees who may engage in illegal drug use or any of these activities? The polygraph test, or as it is more commonly known, the lie detector test measures several physiological with in the human body such as increased blood pressure, increased pulse and respiration. However in spite of what most people believe it is not the most reliable test. Shaw and Barry in their text Moral Issues in Business list three assumptions made by those who advocate for the use of these tests. These assumptions are *  1.  Lying will automatically trigger a distinctive response to the question. * 2. Polygraphs are very accurate. * 3. Polygraphs cannot be beaten. (Shaw & Barry, 2010 p480). Unfortunately for these advocates while the polygraph test measures bodily responses to questions it cannot indicate whether or not the response is actually a lie. A person who has a history of being abused may register different reactions to questions along that subject area and all that these reactions may indicate is discomfort to the question not necessarily that the response to the question itself is a lie. Opinions vary as to just how accurate the tests are with the percentages ranging from 90% to as low as 55%, the higher percentages coming not surprisingly from the American Polygraph Association. Finally polygraph tests can be beaten and even generate false positives. Spies John Walker and Aldrich Ames both passed polygraph tests as did Gary Ridgeway the â€Å"Green Killer†. Ames actually passed two different polygraph tests. Since these tests are costly, using them as a screening method for either new hires or present employees may not be the best solution and should be considered on a case by case basis. Other methods should be used before resorting to polygraphs testing such as drug testing which may indicate previous drug use (although as has been mentioned earlier some false positive results may occur) or even background tests which may turn up questionable incidents. If during the course of these two checks questions are raised about the employee or new hire, then the employer could resort to the use of a polygraph. It could be argued that utilizing either or both of these two other methods is even more costly to the employers but I would say that any employer who needs to use a polygraph test to weed out potentially costly employees could afford to administer the extra tests to be absolutely sure. Fortunately for most employees, the Employee Polygraph Protection Act of 1988 which protects the rights of employees and outlines the usage and restrictions of lie detector tests states: â€Å"The EPPA prohibits most private employers from using lie detector tests, either for preemployment screening or during the course of employment. Employers generally may not require or request any employee or job applicant to take a lie detector test, or discharge, discipline, or discriminate against an employee or job applicant for refusing to take a test or for exercising other rights under the Act†Ã¢â‚¬ ¦ It then goes on to outline just which employers are permitted to utilize lie detector tests †¦ â€Å"Subject to restrictions, the Act permits polygraph (a type of lie detector) tests to be administered to certain job applicants of security service firms (armored car, alarm, and guard) and of pharmaceutical manufacturers, distributors, and dispensers. Subject to restrictions, the Act also permits polygraph testing of certain employees of private firms who are reasonably suspected of involvement in a workplace incident (theft, embezzlement, etc. ) that resulted in specific economic loss or injury to the employer. † (United States Department of Labor website) My argument to using a polygraph test therefore would be that assuming that the employer fell into one of these categories then yes they should be permitted to utilize lie detector tests but only as a last resort. I submit this argument using the rule utilitarianism theory. This is not to be confused with act utilitarianism. Under act utilitarianism, â€Å"we ask must ask ourselves what the consequences of a particular act in a particular situation will be for all those affected. If its consequences bring more total good than those of any alternative course of action, then this action is the right one† (Shaw & Barry, 2010 p63) The action that produces the greatest amount of happiness is the right one. Rule utilitarianism asks â€Å"what moral code †¦ a society should adopt to maximize happiness. The principles that make up that code would then be the basis for distinguishing right actions from wrong actions† (Shaw & Barry, 2010 p80-81). Under act utilitarianism, if 20 employees were polygraphed and 15 of them failed the test and were fired as a result, then the action would not be a moral one since more people would be left unhappy rather than happy. Using those same figures, if the rule or moral code that needed to be followed was that of a no drug policy, and the same 20 employees were polygraphed and again 15 failed and were fired, then the action would be a morally right one since firing the 15 employees made sure that the moral code was enforced. References http://www.ncbi.nlm.nih.gov/pubmed/20689123 http://en.wikipedia.org/wiki/Polygraph_test http://www.dol.gov/compliance/guide/eppa.htm#who

Family Environment and Delinquency Essay

When a child loses a parent through death, desertion, divorce, or long separation, some form of deprivation is bound to result. Where, as is generally the case, the male parent is missing, the child is placed under an obvious economic handicap. Absence of either parent may also cause a certain affectional loss for the child. In addition, the complementary control, example, and guidance given by both parents are wanting and complete socialization of the child is rendered more difficult. At the death of a parent no cultural opposition is imposed upon the situation. Rather, social and economic assistance both public and private is readily forthcoming. Furthermore, the acquisition of a stepparent through remarriage of the remaining parent may even reestablish something of a family norm for the bereaved child. But, in cases of desertion and divorce (and illegitimacy) we have an entirely different set of circumstances. Here we frequently find the child exposed to a highly emotionalized atmosphere of discontent and discord. The child most often remains with the mother only, financial support may be withheld by the father, or the parents may fight over the child’s custody. In case of desertion no new father may legally become part of the child’s home. And the subtle challenge of public disapproval of the family situation and the psychological impact of a seeming rejection by one’s parents may becloud the child’s outlook. Divorce in many cases is indeed simply a formal recognition or acknowledgement of an already socially broken home, and it is generally appreciated that the home in constant discord might cause the child more harm than if the parental relationship were severed. Such reasoning has merit, but, interestingly enough, this argument has been used to justify divorce rather than to plead for the rehabilitation or prevention of unhappy families. Such a viewpoint, it should also be noted, contradicts another social philosophy which holds that even a bad home is better than no home at all for the child. There are many varieties of broken homes and many correspondingly different kinds of family relationships involved. Even the social disparateness in family structure which results from long-term hospitalization, military service, or employment of the breadwinner away from home, may bring about some serious consequences for the members of a family. On the other hand, the conventional family structure may cloak a host of baneful influences or situations harmful to a child’s wholesome development. To say it in another way, all broken homes are not bad ones, and all conventional types are not good ones. This article is not concerned with a delineation of all possible types of homes and their effect on children, but rather it is restricted to a consideration of the more evident types of broken homes as they relate to children who are apprehended for committing delinquent acts. With the establishment of juvenile courts in the United States around 1900 and the compilation of social statistics on youth who were brought before these courts, observers were struck by the high proportion–40 to 50 percent–of all delinquent children who came from broken homes. Since it was far beyond normal expectancy that such a proportion of all youth was similarly disadvantaged, early writers saw broken homes to be an important, if not the greatest single proximate (causal) factor in understanding juvenile delinquency. There was no denial that the broken home was only one of a number of factors to take into account and that the age of the child and the quality of the home life, as well as the mere fact of a break, were important. A number of studies have shown, however, that abnormal or defective family relationships are much more prevalent among families of delinquent children than among families of comparable children who do not become delinquent. This aspect of the matter is a subject unto itself. Not counting the statistical tabulations of many juvenile courts over the years, dozens of studies have been made which deal with the broken home and juvenile delinquency or crime. Some of the early studies attempted to estimate the proportion of broken homes in the population at large from existing census data, to use for a comparison with their special groups of delinquent or institutionalized children. A common conclusion was that delinquent children had about twice the proportion of broken homes as did children in the general population. A few comparisons were made of boys in the same school or city area, revealing a greater prevalence of broken homes among the delinquent group; while one such comparison of several groups of children in 1918 suggested that more orphans were found in the delinquent group. The first major attempt at a controlled comparison was made by Slawson in 1923, using delinquent boys in four state institutions and boys in three New York City public schools, from which he concluded that there were over twice as many broken homes in his delinquent group.6 Concurrently, in England, Cyril Burt analyzed a group of misbehaving (â€Å"delinquent†) children and public school children of the same age and social class. Although his classification of â€Å"defective family relationships† included other factors besides the broken home, he, too, found the problem children to be doubly disfavored. And, in 1929, Mabel Elliott compared the family structure of her group of Sleighton Farm girls mostly sex offenders with that of a group of Philadelphia working-class continuation school girls, revealing the respective proportions of broken homes to be 52 and 22 percent. Even greater refinement was introduced into the question by Shaw and McKay when they compared boys against whom official delinquency petitions were filed in the juvenile court of Chicago in 1929, with other boys drawn from the public school population of the same city areas. They found that a rather high proportion (29 percent) of the school boys 10 to 17 years of age came from broken homes. After the school population data were carefully adjusted statistically for age and ethnic composition to make them comparable with the delinquent group, the proportion of broken homes rose to 36.1 percent for the school group, as compared to 42.5 percent for the delinquent boys. This result, as Shaw and McKay interpreted it, â€Å"suggests that the broken home, as such, is not an important factor in the case of delinquent boys in the Cook County juvenile court,† while other writers further interpreted the findings as showing that broken homes generally are â€Å"relatively insignificant in relation to delinquency.† Even accepting the above figures for Chicago, mathematical exception has been taken to such interpretations. From an over-all viewpoint it is well to remember that a large proportion of children from broken homes do not become delinquent, but this hardly refutes the inescapable fact that more children from broken homes, as compared to unbroken homes, become delinquent. Even among families having delinquents, siblings are more often delinquent in the broken family group. For the social analyst, the broken home may be regarded either as a symptom or as a consequence of a larger process, but for the child it becomes a social fact with which he has to abide. In a very real sense the abnormal structure of his family may impede his own normal adjustment and in some cases may bring him into conflict with the requirements of the larger society, more so than if he were surrounded by a conventional family milieu. That so many children surpass this handicap is an exemplification of their own resilience and a demonstration of the presence of other forces acting towards the child’s socialization in the community, rather than a proof of the unimportance of normal family life in the development of norms of conduct or the unimportance of the handicaps experienced by me child in the broken home. In former years when divorce was less common and desertion less apparent perhaps, broken homes were probably thought to be largely a result of the death of a parent. The material and other losses to such children may not have been readily perceived. How such a simple event as death could wreak enduring havoc with the child’s development was difficult to discern. Hence, disbelief in the importance of orphan hood as to delinquency causation, coupled with the very unsatisfactory nature of the early studies, no doubt led some sociologists to take exception to the prevailing beliefs and to question the whole relationship. A convergence of information from the other disciplines as to the deleterious effects of divorce and desertion or family separations upon the child, as well as a psychological appreciation of the different nature of these types of family disruption, brought a more unanimous acknowledgment of the importance of the socially broken home. In some quarters the recent â€Å"wave† of delinquency has been interpreted to be a result of the growth of divorce and separation. However, information on the particular family relationships of children in the community and those who become delinquent are generally lacking. We know that over the past 50 years there has been a lessening of orphan hood through improvement in life expectancy, and an upward rise in family dissolutions through desertion and divorce, until now there seems to have been a reversal in the relative importance of the two factors of death and social discord in the breaking up of a child’s family. Oddly enough, in spite of the change in the nature of broken homes the high over-all proportion of delinquent children from broken homes apparently has not changed significantly. One large minority in the population consistently shows twice the average rate of socially broken homes and twice the average rate of delinquency. Other groups with strong family cohesiveness show below average rates of delinquency. Such apparent associations cannot be dismissed as happenstance. On the whole very little disagreement has been expressed over the probable harmful influence of the socially broken home on the child. This does not gainsay, however, the deprivation consequent to the loss of a parent through death. Indeed, the same high proportions of delinquents were found to come from broken homes more than a generation ago when orphan hood loomed larger as the reason for family disruption. Of even more importance to the child than the nature of the break is the fact of a break in his home. All in all, the stability and continuity of family life stands out as a most important factor in the development of the child. It would seem, therefore, that the place of the home in the genesis of normal or delinquent patterns of behavior should receive greater practical recognition. The relationship is so strong that, if ways could be found to do it, a strengthening and preserving of family life, among the groups which need it most, could probably accomplish more in the amelioration and prevention of delinquency and other problems than any other single program yet devised. If delinquency is more likely to occur in a disorganized family than in a â€Å"normal† one, the family situation may somehow create the delinquency. But how? Perhaps a disorganized family tends to produce children with sick personalities, and sick personalities have unusual difficulty conforming to social rules. On some such assumptions consensus appeared possible on the causal connection between family disorganization and delinquency. Then Shaw and McKay suggested, after a comparison of the incidence of broken homes among Chicago schoolboys and male juvenile delinquents, â€Å". . . That the broken home as such [does not seem to be] a significant causal factor in cases of delinquent boys brought before Cook County Juvenile Court.† To many, this study seemed to imply that the family, an institution so important in the socialization process, was irrelevant to delinquency. The authors of the study did not draw so radical an inference from their data. Although the formal break in the family may not in itself be an important determining factor, it is probable that the conflicts, tensions, and attitudes which precipitate the disorganization may contribute materially to the development of the delinquency and the personality problems of the child. The actual divorce or separation of the parents may not be so important a factor in the life of the child as the emotional conflicts which have resulted in the break in the family relationships.