Global Financial Corporation Essay

Global Financial Corporation (GF) a subsidiary of Global Equipment Company (GEC) is tasked with handling financing for those customers who wish to purchase GEC heavy equipment. Currently GF only processes 51% of the leases within the â€Å"10 days or less† time frame, with some loans taking up above 41 days. Ms. Rodriguez, the Vice President of GF has been directed to decrease loan processing time to 10 days or less with the current staff she has. The current structure of the analysis and evaluation stage does not maximize staff time effectively and as a consequence creates a bottleneck in the process. We recommend switching to a case manager structure. lLan applications can be processed and completed in approximately 3 days. This would allow for an increase in volume to 255 without adding staff (assuming 60% are remain new applications), which is a 16.9% increase, exceeding the 10% anticipated application increase. Background Global Financial Corporation (GF) a subsidiary of Global Equipment Company (GEC) is tasked with handling financing for those customers who wish to purchase GEC heavy equipment. Due to the expense of the equipment many customers chose to finance the purchase with a lease agreement. Currently these loans are processed at GF Bakersfield location, which employs 14 people. A competitor of GEC has promised processing of financing in â€Å"10 days or less†. Currently GF only processes 51% of the leases within the â€Å"10 days or less† time frame, with some loans taking up above 41 days. Ms. Rodriguez, the Vice President of GF has been directed to decrease loan processing time with the current staff she has. Problems The Bakersfield office is operating at only 86% of capacity utilizing 2990.5 hours of processing time (full capacity 3485 hours). In October they processed 218 applications, 89 were standards and 129 were News. The analysis by region shows that Region 1 is handling the most applications at 78 (52 new, highest number among the different regions), averaging 126.7 hours which, equates to 20.1 days. Region 2 is only handling a total of 66 applications (35 new) with an average processing time of 5.7 days, and Region 3 handling 74 applications (42 new), averaging 8.7 days. The Northeast office handles about 35% more applications with essentially the same staff. Only 51% of the applications are processed within the 10 day or less requirement. Analysis of the Current Processing Steps 1. Analysis and evaluation stage is a single channel, interest rate multi channel, loan terms single channel, and final issuing a multichannel. (Exhibit A)The current structure of the analysis and evaluation stage does not maximize staff time effectively and as a consequence creates a bottleneck in the process. With the single channel structure loan applications are unevenly distributed among teams and create higher idle time for teams with less volume of loan applications to process. Utilization among regions varies greatly between 73% – 95%. The following observation of the current structure was achieved using the MMK model (See exhibit B): * Expected wait time in the system for an application in Region 1 is approximately 37 days, with actual processing time of 14.10 hours. This is where the bottleneck occurs as it takes the evaluation team over 16 days out of the 37 to perform the review of 78 applications. * Expected wait time in the system for an application in Region 2 is approximately 11 days, with an actual processing time of 13.40 hours. Of the three Regions, Region 2 processed the least applications of 66 during the quarter being reviewed. With a utilization rate of 73%, Region 2 experienced the most idle time in the evaluation process. * Expected wait time in the system for an application in Region 3 was approximately 15 days, with an actual processing time of 13.56 hours. With utilization rate of 84%, this Region has the ability to handle an increase in applications. * Each region utilized over ten days of average time in system and showed bottlenecks. 2.  Interest rate stage is a multi channel process and is working effectively. Applications are processed quickly and are usually turned over to the next step within 30 minutes. The utilization rate is consistent at 64%, which means that this staff member can continue to devote only half of his time to this task. 3.  Loan terms stage is a single channel and has similar issues as the analysis and evaluation department. It creates bottleneck and work is unevenly distributed. 4. Final issuing stage is an effective multichannel process with a consistently high utilization percentage. Each application takes less than 4 hours to process and utilizes time consistently at 93% of capacity. Alternatives Redistribute the staff to eliminate the bottlenecks in the process. Automate the input of information into a computer database at the sales level eliminating duplicate entry. * Generic queue would decrease processing time to 9 days. Evaluation will drastically reduce to 2 days of processing, increasing utilization and reducing idle time. Active time in the system will be reduced to 13.72 hours. Change all stages to a multiple, multiphase channel (Exhibit C &D). There would still bottleneck from the evaluation stage. * Case manager would increase active time of application to 18.5 hours; however, significantly reduce queuing time to approximately 3 days. This is assuming there are no teams during the evaluation stage and that the average time would double to 9.5 hours, which may not be the case. Change to multiple channel – assignment – multiphase. (Exhibit E &F) Eliminate bottleneck, service rate of 22.2 per FTE, per quarter. Recommendation We recommend switching to a case manager structure. This would mean that one person will be responsible for the completion of a loan application (Exhibit E). This will provide for most efficient way to minimize idle time and maximize utilization rate. Loan applications can be processed and completed in approximately 3 days. This would allow for an increase in volume to 255 without adding staff (assuming 60% are remain new applications), which is a 16.9% increase, exceeding the 10% anticipated application increase.

Reasearch metods

Your mission is to apply tools of financial analysis to determine the major causes of Grant's financial problems. If you had been performing this analysis contemporaneously with the release of publicly reported information, when would you have become skeptical of the ability of Grant to continue as a viable going concern? One of the major causes of Grant's financial problem, Is regarding the credit extension and credit terms.These credit terms let consumers only pay $1 for their minimum monthly payments, regardless of the total amount of purchases. This caused Grant to obtain a short-term loan of $600 million to cover the credit of consumer purchases. Another major cause of Grant's financial problem, would be the new product line that he wanted to Implement and It being eliminated from the stores. In addition, numerous stores were also closing which diminished their revenues and chances In reaping the benefit of opening new stores to accommodate the middle-income consumers.From the p ublicly reported Information, I would have become skeptical of the ability f Grant to continue as a viable concern when he Implemented the new strategy of credit extension. The new strategy put W. T. Grant In a position to procure finances from several different banks to absorb the credit from purchases. With the short- term loan not being significant enough to overcome those events, the company had to close a number of stores that were not profitable. The short-term debt Increased almost $20,000 from 1966 to 1967 because of the credit extension to customers and not collecting accounts receivable.Even with the customer Installment receivable Increasing from 1967 to 1968 by almost $30,000, the credit Limit for customer purchases were not being paid fully so the company had to take out more short-term loans. They also had to pull the strategy of Introducing a new product line, which Included furniture and private-brand appliances. The closing of numerous stores would also bring a subs tantial loss of $177 million and a decreases In credit operations accounting. Another problem of Grant continuing as a viable going concern would be the ability for Grant to pay for merchandise.Having a problem tit paying for merchandise will also show a tremendous loss In sales and revenue. This can be seen In the Income statement from sales Increasing, but the net Income decreasing every year since 1972 and having a negative value of 177,340 In year 1975. The retained earnings can also show that In year 1975 the decrease was over $200,000. Research methods By bladderwort One of the major causes of Grant's financial problem, is regarding the credit the new product line that he wanted to implement and it being eliminated from the revenues and chances in reaping the benefit of opening new stores to accommodateFrom the publicly reported information, I would have become skeptical of the ability of Grant to continue as a viable concern when he implemented the new strategy of credit exte nsion. The new strategy put W. T. Grant in a position to procure finances to close a number of stores that were not profitable. The short-term debt increased not collecting accounts receivable. Even with the customer installment receivable increasing from 1967 to 1968 by almost $30,000, the credit limit for customer loans. They also had to pull the strategy of introducing a new product line, which included furniture and private-brand appliances.The closing of numerous stores would also bring a substantial loss of $177 million and a decreases in credit concern would be the ability for Grant to pay for merchandise. Having a problem with paying for merchandise will also show a tremendous loss in sales and revenue. This can be seen in the income statement from sales increasing, but the net income decreasing every year since 1972 and having a negative value of 177,340 in year 1975. The retained earnings can also show that in year 1975 the decrease was over

International Political Economy Research Paper Example | Topics and Well Written Essays - 1750 words

International Political Economy - Research Paper Example These included the entry of the Scandinavian monetary union and the Latin Monetary Union into the spectrum. In case a country was lacking in the membership of any of the international unions, trading operations were facilitated by common involvement in the gold systems by the international partners, regardless of their independence and colony status. Great Britain became top on the economic list of best performing countries. The country had developed massive economic, political, industrial influence, and was technically controlling more of the global market. According to Forbes (22), whereas capital controls similar to the Bretton Woods System had not yet been implemented, imbalances in capital flows were rarer than the post 1970 era. In light of its economic dominance, Britain's investment in other countries helped to control any imbalances across the world; the capital exports continued to grow when Britain's financial system hit a crisis, thus enabled other nations to recover reve nue lost from commodity exports. In light of this, this period witnessed mostly consistent economic growth and fairly infrequent economic crises. Unlike the Bretton Woods standards, the global financial order witnessed between 1870 and 1914 was not established at a common high level meeting; rather it underwent natural growth. In light of this, the Gilded Age that witnessed rapid economic development in North America squarely contributed to the stability of the monetary standard. After World War I The era between the two World Wars (1919-1939) witnessed a slump in the world economic status (White 411). Between 1919 and 1939, major economic players concentrated on their internal policies at the expense of global economy. Basically, both international business activities and capital flows reduced like never before. During the First World War nation-states had technically steered clear from the gold standard. Only the United States saw its significance, albeit temporarily, especially i n mid-1920s. Notably, within the first half of 1930s, the common standard was basically a disjointed system of using exchange rates. Forbes noted that in this period, major global economic powers such as Great Britain and the United States realized that the internationally accepted gold standard practically deviated from the widely acceptable national policy of retaining autonomy (23). To safeguard their gold reserves, nation-states, sometimes saw it wise to increase interest rates and adopt a general deflationary economic policy. This policy was aimed at averting a downturn, in cases where countries had reduced interest rates to trigger more investment and growth. Heston and Summers (97) argued that the need to reintroduce the gold standard in Britain may have been driven by the financial institutions to hurt the local working class. Great Britain emerged from the World War I financially weaker than the United States, allowing the latter to substitute her as the top-most financial giant in the world. America however was hesitant to take over her trading partner’s leadership role, because of isolationism and the need to concentrate on local issues. In contrast to Great Britain’s economic strength before the 1914, US capital exports were not counter cyclical. Fleming indicated that they grew faster in line with the America’s economic development until 1928, when the pangs of Great Depression began to bite (61). The intensification of the

Media Influence upon Teen Eating Disorders Essay

Media Influence upon Teen Eating Disorders - Essay Example Thesis Eating disorders in teens are caused by false body images popularized by media and propagated by media advertising. Teenagers copy and borrow their identities from the media trying to look like their favorite film stars or glamorous men and women splashed all over billboards. While others procedure in trimming down their bodies are having strict diets and even go to gyms in order to be physically fit. But several people especially those who suffer obesity are trying to take medicines-which might lead their lives at risk because of the content of the medicines-which will burn out their unnecessary fats. According to statistical results, "up to 10 million teens develop eating disorders, abnormal attitudes and behaviors with foods, which include anorexia nervosa or bulimia nervosa" (Eating Disorders 2005). If a teenager does not meet certain standards she/he can be "excluded" from social interaction. Media popularizes slim bodies depicting that a slim body can make teens happier and even luckier. The problem is that, in most cases teens change their appearance in order to meet social identity but no t because of absolute necessity. These health problems had already been known for quite some time and yet, though young girls are in focus as being most affected (Eating Disorders Starting to Bite 25). Recent studies show that the psychological disease of eating disorder is quickly spreading beyond young girls and even to young men. As western pop culture is shipped abroad to sell western commodities, the problem goes as well like unwanted freebies that are stuck and taped around a product. Black, Asian, and Hispanic girls are plagued by unhealthy eating habits because they simply wish to achieve the same physical attributes of celebrities they idolized (Gauntlett 36). Society's response to social identity and sets limits on the behavior and beliefs that can be tolerated in society, slim bodies, ideal body shape and a thin waistline. "Super models in all the popular magazines have continued to get thinner and thinner. Modeling agencies have been reported to actively pursue Anorexic models" (The Media 2007). Differences in social identity can motivate teens to acts of extreme violence against those whom they classify as 'other'. To avoid these stereotypes teens are forced to change their appearance in order to meet criteria of an ideal body. Social identity plays a crucial role in contemporary society determining certain standards of body image and beauty. "Community of culture and unity of meaning depicted by different media are the main sources that allow the construction and experience of social identity" (Hamburg 75). This search is also evident at the individual level through the need to belong to a community. In the current era, the ideal body represents one of these standards: social identify is its product. Films, magazines and popular TV shows depict the differences between an ugly and ideal body which can be achieved by diet. "On television, in magazines and newspapers, we are continually exposed to the notion that losing weight will make us happier and it will be through "THIS diet plan" (The Media 2007). Critics admit that the young audience is easily affected by popular images and media idols. In many cases, media forces teens to change their a

Werewolves Essay Example | Topics and Well Written Essays - 1250 words

Werewolves - Essay Example The werewolves (though referred to differently from a place to another) were among such species of living creatures, which roamed the thick forests as well as within the dark of the nights and which, according to many societies, were very dangerous, and thus required to be avoided by human beings (Regel1-5). Communities and social groups developed legends, which would explain the existence of these werewolves, the manners to fight them and ways to kill them as they were seen to kill people. Many cultures in the past had much ascription to beliefs of existence of these beings (traces that are in existent even in the present day era). Despite the continued existence of these figures of werewolves within the fiction fields in the film industry, there is a real concern of the extinction of these werewolves as they were. Nevertheless, the existence of the Bigfoot, the Yeti as well as the Sasquatch in the 19th century raises concerns of whether this would point to the evolution of the trad itional werewolves; and in case, this would be the explanation to the evolution. The theory of natural selection and evolution as described by Charles Darwin has been pointed to be the most influential among other theoretical frameworks explaining the existence and extinction of living species. With cultural beliefs, cultural changes and superstitions being of important in explaining the cessation of the werewolves biological reality, the Darwinian evolution theory centered on natural selection and was thus equally central in this explanation. Nevertheless, the critics of such theories of evolution (as they are used in explaining the disappearance of these species werewolves) would have it that this theory does not hold essence in explaining the emergence of other scientific legitimate monsters as they are. History has it that the existence of werewolves could be traced quite far back though some

Latin American Revolution in Film Essay Example | Topics and Well Written Essays - 1250 words

Latin American Revolution in Film - Essay Example Henry Lane Wilson was an American ambassador, who considered the necessities of the population, but insisted on the theory, that the appropriate democratic government could not be formed by means of a rebel. Wilson’s aim was to return the prosperous background for the foreign investments to Latin America. To achieve this aim he formed the Republican Party and became its active member. The next term â€Å"caudillo cult of personality† refers to the political military leader of Latin America Caudillo. His personality was accepted as a charismatic image, supported by many people. Caudillo was the one, who could command the army and at the same time held the attention of the crowds of admirers. The third term â€Å"Cristero War coartacion† refers to the rebel in Mexico, which took place in 1926. The revolution bared the religious character. It was represented by a movement of peasants, who called themselves â€Å"Cristeros† and fought for the rights of the Chu rch. The Revolution of 1910-1917 years is the period of Civil War in the history of Mexico. It began as an uprising against the dictatorship of Porfirio Diaz and ended by the adoption of a new constitution. The number of victims during the period of the Civil War in Mexico, according to various sources, ranges from 500 thousand to 2 million people. The Revolution consisted of four stages: In 1876, the General Porfirio Diaz, who established his dictatorship for the further three and a half decades, represented the authority of Mexico. Diaz continued the work of his predecessors Benito Juarez and Sebastian Lerdo de Tejada, whose main aim was to modernize and attract foreign investment to Latin America. Diaz believed that, to achieve this purpose, it was necessary to ensure political stability in the country. As a result, he has made an agreement with the major factions of liberals and conservatives, and weakened the effect of anti-clerical reforms,

Article Writing about FingerID Example | Topics and Well Written Essays - 1000 words

Writing about FingerID - Article Example echanism of authentication also compels the user to remember different passwords for multiple accounts since it is very dangerous to maintain the same password for all accounts. A new authentication mechanism has been proposed that will save the user from the hassle of remembering multiple passwords and provide effective security for the web services- FingerID. FingerID authenticates the users on the basis of their registered finger prints and provide single sign-in to multiple accounts. The advancement in the internet technology has enabled thousands of companies to offer their services online. The availability of the services attracts the users to utilize them but compels the users to make online accounts. This results in the presence of user’s personal information at different domains and organizations on the internet and multiple login credentials for the user. Every organization might not be following reliable security measures to safeguard the user information thereby creating security and privacy threats for the users. Some organizations deploy security measures for the storage of their data but fail to concentrate on the security mechanisms handling the exchange of data from one source to the other. The user’s information might be used for malicious purposes and result in identity thefts. The distributed nature of information increases the chances of inappropriate usage. Another issue that is faced with the existing web services is the lack of usability and accessibility. Usability makes the web experience more convenient for the user and accessibility introduces features and functionalities for users with disabilities. Most of the web services do not follow the standards that are meant to ensure the availability of accessibility and usability on the websites. These standards help the developers and designers evaluate their websites with respect to the usability and accessibility aspects and to ensure that their users do not face any difficulty in

Teacher Tenure in California Research Paper Example | Topics and Well Written Essays - 1250 words

Teacher Tenure in California - Research Paper Example he teachers become eligible for the tenure they gain security towards their position and can only be dismissed if the school authority is able to put forward a just cause. The state law even proposed that the tenured teachers may be dismissed if they are giving unsatisfactory performance (Jederberg 43). However, as per the policy if the performance of students is low in the state it is not considered to be a condition for dismissal of teachers which in turn has resulted into more number of students exhibiting low performance. The dismissal conditions as highlighted by the court decision states that the school authority needs to give a prior notice to the employee before initiating any form of proceedings regarding dismissal due to unsatisfactory performance of a teacher. The teacher tenure policy majorly focused towards the well being of students and to retain those teachers who performed well and discard those who are not able to meet the standards of the school policy. The ones who supported the policy stated that the policy majorly aimed towards development and growth of students so that they are able to perform well in their career path. The other end of this provision was that it provided the flexibility to the school authority to focus more on performing teachers and reduce the cost by eliminating those teachers who did not perform well. The notice that would be given to the teachers before the dismissal must also include some of the behavioral instances that need to be communicated three months prior to filing charges. The major purpose of the policy was not to hide the underperforming teachers behind the tenure and to facilitate more of academic achievement of the students. There are almost 6 million students who are enrolled in the public s chools of California and thus the law was to support these students so that they are provided with an appropriate guidance. The tenure is always a security provision for teachers but this policy was aligned more towards

An analysis of how 'management via accounting' can be applied to keep Essay

An analysis of how 'management via accounting' can be applied to keep fuel costs as low as possible at a low-cost airline, w - Essay Example This management essay is going to provide complete solutions and management measure for airline fuel management. These solutions cover fuel forecasting and planning, procurement, inventory and logistic management, contract management, and accounting and tax management. As a result, finance and purchase teams acquire a complete overview of airline inventory and obligation when they hedge and purchase fuel. Airline companies’ accounting management can automate and reduce fuel costs by processing of both financial derivatives and physical fuel purchases used in hedging. Therefore, the accounting department should come up with aggregated financial-physical fuel view positions and cost risk exposure (Calder, 2013:9). In fuel planning and budgeting, the accounting department must conduct an analysis of â€Å"what-if† situations such as changes in the type of aircraft used, introduction of new airports and routes, and forward cost curves. In addition, the accounts department m ust be able to report on actual fuel costs versus forecasted fuel costs to enable it calculate the airlines hedged fuel plan (Calder, 2013:9). Airline accounts management can effectively curl fuel use and get investments directly to the company’s bottom line through operating efficiently. ... lancing method ensure an favorable centre of gravity for all airplanes, the airport entrance planning is considered to ensure low fuel burn on the entrance grounds, and ensure there are daily operations improvement to recover from trouble shooting activities hence limiting burning of wasted fuel (Centre for Aviation, 2013). Currently, all airlines’ accounting departments must ensure that they have Fuel management information system, which is imperative to monitor fuel expenses and assist the accountants in coming up with effective solutions to minimize fuel costs. This is because airline fuel cost has become the biggest cost ranging between 25% and 50% of annual airline expenditure in all airlines across the world. Airline calculations indicate that one dollar rise in fuel cost is equivalent to 1.6 billion dollars expenses of an entire airline company. It is highly important for airline accounting department to develop effective fuel management software such as FuelPlus Softwa re (Calder, 2013:9). This efficient fuel expense and management software in the accounting department can bring massive positive effect on the progressive running of an airline operation and cause a direct effect on the airlines profitability, sustainability, and competitiveness (Channel 4 Dispatches, 2013). As reported by Centre for Aviation (CAPA) recently, the financial optimism is now becoming the main cause of higher fuel prices. Whilst in the old days, Fuel management system was seen as primarily a method of bringing commercial advantages, it is currently becoming an important element of an airline expense management toolkit. Fuel management is not just monitoring operational information, but also a widespread enterprise that involves all departments in the airport. The accounting

Financial Information Retrieval and Analysis of Hewlett-Packard Essay

Financial Information Retrieval and Analysis of Hewlett-Packard - Essay Example The company also offers multi-vendor customer services such as applications and business domains, technology consulting, as well as outsourcing and support service across the infrastructure. The company additionally offers IT management software, information management solutions, risk management solutions, security intelligence, application testing and delivery software, big data analytics, and a broad range of investment solutions to its customers. One of Hewlett-Packard’s main competitors in the industry is Toshiba Corporation.   Return on equity (ROE) indicates the amount of profit generated from the shareholders’ investment in Hewlett-Packard (HP). The ROE for the company was18.30% while the average return on equity for the industry was 17.50%, and that of Toshiba Corporation was 5.26%, all for the preceding year. These figures indicate that Hewlett Packard is more profitable than the other companies within the same industry. The company may be generating more profits from the shareholders’ investments in the company as compared to other companies in the same industry. The net profit margin for Hewlett-Packard is 4.68% while the industry average is 4.20%, and for Toshiba, it is 0.92% only. The profit margin for HP indicates that the company is more efficient in converting sales into profits as compared to most companies in the industry. The company’s EPS (2.62) is greater than both for the industry (0.96) and Toshiba (1.76). The EPS for HP is an indication of more favorable return on in vestments for Hewlett-Packard. The price-earnings (P/E) ratio for the company is 14.82 compared to the industry ratio which is 16.0 and for Toshiba which is 39.53. The P/E for HP is lower, thus indicating lower growth in terms of future earnings.  

Marketing Orientation Essay Example for Free

Marketing Orientation Essay There have been many studies of the term ‘marketing orientation’, and its presence within organisations. Marketing orientation is an approach that companies take which centres its activities towards achieving customer satisfaction through effective marketing. It is where customers form the basis of an organisations performance and overall success. In order to achieve successful marketing orientation, a company must organise an effective structure through planning its activities, products and services successfully. This will help the company on focusing its aims and objectives on the needs and requirements of its customers, in order to establish a relationship that will increase performance and success. ‘Market orientation is the organisation wide development of market intelligence pertaining to customer needs. ’ (Kohli and Jaworski, 1990. p12) Two approaches to marketing Orientation have been suggested by Avlonitis and Gounaris (1999), focusing on the practices and culture that the company adopts. It has been interpreted by Avlonitis and Gounaris (1999) that marketing orientation is either ‘a company attitude or company behaviour. This is whether a company is customer orientated or focuses on a competitive advantage through marketing orientation. Other authors have similiar thoughts upon these approaches to marketing orientation. Drucker (1954) believes that customers perceive marketing as an ‘activity involving the entire organisation’, rather than being a specific company process. The author’s view coincides with the work of Avlonitis and Gounaris (1999), as he focuses on the attitude organisations have in satisfying customer needs. The oth er side to this approach is the significance of a company’s culture towards marketing orientated activities. Felton (1959) states; ‘It is the attitudes and beliefs of a workforce that control the level of orientated activities a company strives to achieve,’ implying the focus is on themselves competing rather than putting the customer first. Trout and Ries (1985) perceive marketing orientation as an effort by companies to increase competitor advantage, rather than satisfy customer needs. Therefore the company’s culture is focusing its strategy on competitor orientation in order to achieve success. An organisations performance is a very important aspect of successful marketing orientation. Narver and Slater (1990) state that marketing orientation is based on 3 performance measures, which include ‘customer and competitor orientation, and inter-functional coordination. ’ Introducing effective performance measures can have positive influences on companies, as it helps the company’s culture set aims and objectives for a successful approach to marketing orientation. Jobber (2007) also describes the importance of these measures, stating; ‘A marketing concept culture that manifests in corporate activities to create superior value for customers. However, specific marketing activities relating to the behaviour of a company have ‘emphasis on managerial control rather than the natural culture of the organisation’ (Ellis, 2004), which relates to the work of Trout and Ries (1985) and their beliefs of company’s influencing the importance of competitor orientation over the satisfaction of their customers. Sharp (1991) argues the approach to marketing orientation as described by Drucker (1954), saying that it’s more than just about customer focus; Market orientation has a principle element of focusing on available markets and customer needs. Sharp criticises this view of orientation, as costs of maintaining customer focus will incur in unstable markets, affecting a companies orientation plan. In order to balance this procedure, a company needs equal focus in its approach to marketing orientation, which will help achieve success and efficiency. The link between organisational strategic thinking (Sharp, 1991) and managerial control (Ellis, 2004) helps towards a successful company through competitor orientation. Ellis states that effective performances increase through analysing competitor actions, in order to create a competitor advantage. However, company’s still need to be responsive to customer needs due to volatile markets. Overall increases of a company’s orientation, resulting from effective customer satisfaction, will then lead to greater performances (Kohli and Jaworski, 1990). The relationship between performance and marketing orientation is analysed negatively to strategic marketing. Sin (2005) considers the ‘external environmental aspects’ of marketing orientation, emphasising the importance of linking performance and marketing orientation in order to meet the needs of customers. Sin believes that if companies developed their approaches towards linking these two factors, a more in depth examination of customers needs could be undertaken, which would lead to higher performances within the company. Sin agrees with Sharp’s views, by describing the inclusion of customer needs as well as company aims and objectives. A strategic way of thinking is described by Sharp, where marketing orientation is described as being the most relevant, as it focuses on company, and not just market characteristics. The analyses of various journal articles relating to marketing orientation has led me to understand the different issues relating to marketing orientation. I agree with Kohli and Jaworski (1990) that a company should balance its orientation between customer focus and its aims and objectives, for effective performances. The authors were very clear and focused on what strategies were effective in approaching marketing orientation. I felt that this analysis helped me understand the best method of adopting marketing orientation and how to effectively respond to customer demands, as well as creating a competitive advantage. Limitations to the analysis were discussions from Felton (1959) and Trout and Ries (1995). The views of these authors concentrated on companies who adopted marketing orientation to create a competitive advantage as its main priority. The context of this article focused totally on businesses success and shadowed the importance of customer orientation, something which I feel is crucial for overall success.

Summer Vacation Essay Example for Free

Summer Vacation Essay The summer i had was amazing. I did so many different things. I went to camp, went to USA, and went to the beach. I had so much fun. I just hope next summer is as exciting as this one. First of all I went to my camp with tons of my friends. (name of camp) was so much fun! I spent money on ______ and me and my friends did so much different things. The only problem is that i had to wake up early. That was a bummer. Secondly i went to USA. I woke up early, and took a long bus ride. That wasnt that fun. But i went to really nice places. (list a couple places and explain part of it) Last, i went to the beach with my family. I got a great tan! I love just sitting in the sand and soaking up the sun. I relaxed and it was really fun spending it with my family. I went swimming too. Of course its not as fun if i didnt go swimming, the water was so refreshing. In conclusion, my summer was so amazing and im really excited for next summer. The infamous â€Å"What I did on my Summer Vacation Essay†, I’m not sure I was ever assigned that one. Suddenly I see myself in Junior English. I was 16, flat chested, boyfriendless, wanting desperately to have the whole fitting popular feeling behind me. And it almost was, but only almost because there I was sitting in my name brand jeans thought I probably spent all my birthday money on. I am also pretty sure that I woke up at least an hour before school started to get my hair just right. I am still clueless with what to do with makeup but that never stopped me then. I wish I had had enough sense to throw on those old comfy jeans. The ones with the holes in them ( not on purpose), a soft t-shirt and pulled my hair into a ponytail†¦Ã¢â‚¬ ¦but that wardrobe would have to wait until college. But back to my 16 year old self, English was just a class. Not one I particularly looked forward to either. If anyone had asked my favorite subject I never would have said English. I dreaded the essays and sentence diagramming. I did look forward to the reading lists, although , I tried not to appear too eager. I complained as much as the rest as the class, but at home I read them. Cover to cover. Usually well before the deadline. I hated homework of read chapters one and two. I read books, like I later learned to drink beer. Fast until I finished. I couldn’t stop at the end of chapter two. I needed to know what happened like I needed another drink. And I liked the excuse to read, at this stage I of felt like I needed one. Reading was kind of cool for a while. Me and Ramona Quimby were the best of friends in elementary school. I also went through a slightly embarrassing Babysitters Club phase, but am pleased to report that the Sweet Vally High Twins and I never clicked. Sometime in junior high those books seemed babyish, and replaced with talking on the phone, listening to music ( really bad music I might add) and learning how to French kiss. So when we got our reading lists every year I dug in. So, back to the first week of English III. You already have most of the background, but what you don’t know is that I was more than a bit guarded. I didn’t like letting people in. Really in. Being vulnerable wasn’t exactly safe in my family and well not that safe for anyone in high school period. That being said I would have killed for our first writing assignment to be â€Å"what I did on my summer vacation†. Surely I would have written something amusing or satirical. I doubt I would have truly written about our beach vacation where more than likely my parents screamed at each other, I got 3rd degree burns and most of my family got drunk and passed out. Possibly even me. I can’t remember that summer in particular but they were all pretty much the same. Not to say there weren’t any warm memories from those summer beach retreats. Surprisingly there are many, but at 16 you kind of gravitate towards the bad stuff. The melancholy teenager hanging on to anything to give her a thick wall to build around herself. Yes, I would have written something light and clever and given it a really zingy title. I was well known for my zingy titles. Instead Mrs. Lampo asked us to write not one silly essay but a collection of private personal ones. I believe it was called a â€Å"me book†. I cringed as she described the assignment. Now, as a teacher I can see what she was trying to do. She wanted to get to know us. Who we were, what we liked, how we wrote, how to reach us. The problem was, I was 16 and she was one of them. A grown up. A teacher. A mom of a kid in our class. She was not to be trusted. How could I write all these essays on who I was, my strongest influences, the things I was most proud of etc.. Maybe later in the year. Maybe by April or something when we had a chance to feel each other out. Not now. Not the first week. I can picture her clearly. She was about my mom’s age. Short, with short dark hair. She was always very smartly dressed, much more stylish than my mom and with her toes perfectly pedicured. She always seemed a bit shifty to me. She had this large mole on her face that I couldn’t help but stare at as she lectured. It was about the size of a dime and I swear it got bigger as the year went on. It has made me really self councious about my own mole. I keep thinking about having it removed all because of the time I spent making fun of hers in the 11th grade. She was probably a pretty good teacher, although she made me uneasy. Usually good teachers fall into one of two categories: cold, hard and feared, but eventually that fear turns into respect and the cold starts to warm. This would be Mrs. Holmes my 6th grades science teacher and first F I ever received on a test. Next would be the warm and encouraging type. You learned so much simply because you wanted to please them. This would be my 10th grade English teacher, Mrs. Prejean who introduced me to Anne Sexton on the first day ( no damn summer vacation essays from her either). I wouldn’t have memorized that ridiculously long Friends, Romans, Countrymen speech for anyone else. Mrs. Lampo didn’t quite fit into either category. I suppose she was hard, but not especially challenging. I didn’t warm to her, nor did I truly respect her. I did, however, like to argue with her. This was her fault of course. She introduced our poetry unit with this long flowery speech about how no opinion or interpretation of a poem could be wrong. There were no dumb questions or bad observations. Once again, as a fellow educator I can see what she was trying to do. She wanted to create a safe atmosphere for us to speak up and discuss. The only problem with that was she announced to my class that my observation was dead wrong only 15 minutes after her flowery speach. I didn’t burn with shame, instead I took it as a challenge. Maybe this challenge was just what I needed to motivate me to prove myself to her academically or maybe all it motivated me to do was toilet paper her house and leave an egg in her mailbox with a threatening note about Thoreau. Back to my first week assignment†¦These personal essays had a cold fearful grip on me. Usually my writing process involved mulling the topic over for a bit and then pouring it all out on paper the day or so ( or occasionally the period) before it was due. I didn’t proofread or spellcheck. I finished them in a flurry and handed them in. I think I was afraid if I gave them a proper reading I would be too embarrassed to even have them graded. My spelling was not something to be envied. I never quite got a great grasp on grammar either. To this day I couldn’t tell you what a gerrand is. I somehow managed to get As, although my papers were usually heavily marked with red.. These essays were different. I was supposed to reveal something about myself. To her. To someone who could be my mother†¦and that would be the last person I wanted to be unguarded around. Sometimes I still feel that way. I briefly just considered making it all up. Some fictional crap that would satisfy her little assignment and still get me a good grade. It might even be fun, making things the way I wanted them to be instead of how they were. I also considered doing what I usually ( yes still) do when I am a bit uncomfortable and guarded†¦being funny. Writing decent essays, but not digging in. Keeping them on the surface and full of satire. The struggle was I couldn’t do either. It felt like I would be cheapening it somehow. I didn’t trust this Mrs. Lampo or her mole. It was still too early to tell if she would earn my respect, but I realized the writing already had. That it didn’t just get to scratch the surface or be passed off as a joke. That it was bigger than my fear. So I did it. I wrote about my fears and my hopes and my proudest moments. I put it all on paper and fearfully turned it in. Who it was this 16 year old girl thought she was. I saved one of those essays. I think it is in my high school box up in my parent’s attic. I did get an A. I can’t remember if it was really any good or not. I didn’t sign up to be my high school newspaper editor or go on to pursue a degree in journalism. I didn’t spend all my free time writing short stories instead of watching 90210, but it did teach me that this writing stuff was real. It had to be vulnerable, and it was most certainly to be respected, big hairy mole and all.

Stock Market Performance and the Real Economic Activity

Stock Market Performance and the Real Economic Activity Whether national economy is affecting the stock market or other way round? A lot of studies have done on the past what are relationship of these variables. In my work I have used cointegration and Granger Causality method to find out the relationship between the stock index price and Economic growth indicator GDP. Introduction The debate of whether stock market is associated with economic growth or the stock market can be served as the economic indicator to predict future. According to many economists stock market can be a reason for the future recession if there is a huge decrease in the stock price or vice versa. However, there are evidence of controversial issue about the ability of prediction from the stock market is not reliable if there is a situation like 1987 stock market crashed followed by the economic recession and 1997 financial crises. (Stock market and economic growth in Malaysia: causality test). The aim of the study is to find the relation between the stock market performance and the real economic activity in case of four countries The UK, The USA, Malaysia and Japan. With my limited knowledge I have tried to find out the role of financial development in stimulating economic growth. A lot of economists have different view about stock market development and the economic growth. If we focus on some related literature published on this topic one question arises: Is economic development is affected by stock market development? Even though there are lots of debate on some are saying that stock market can help the economy but the effect of stock market in the economy especially in the economy is very little. Ross Levine suggested in his paper published in 1998 that recent evidence suggested stock market can really give a boom to economic growth. (REFERENCE) It is not really possible to measure the growth by simply looking at the ups and down in the stock market indicator and by looking at the rates of growth in GDP. A lot of things can cause in the growth of stock market like changes in the banking system, foreign participation in the in the financial market may participate strongly. Apparently it seems that these developments can cause development of stock market followed by the good economic growth. But to check the accuracy one required to follow an appropriate method which would meaningfully measure whether stock price is really effecting the economic growth or not? In my work I have tried to find out the co integrating relationship between Stock price and GDP and tried to check if there is a long run and short run relationship between the stock price and GDP. The method used for the studies is Engle Granger co integration method. To do this I have used ADF (Augmented Dickey Fuller Test) to check for the stationary behaviour of the variables and then I have performed the Engle Granger Engle Granger co integration method followed by residual based error correction model. To check for the short run relationship I have used 2nd stage Engle Granger co integration method. To check the causal effect of the four countries stock market and economic growth I used Granger Causality Method. In this paper I have reviewed some studies of scholars which I have discussed on the literature review part. This paper contains five parts Part two is about the literature based on the past wok of scholars. Part Three discussed about the Data. Part four is about the methodology, Results are discussed on part five and part six is all about the summary and conclusion of the whole study. In my work I have founded there is no long run relationship between stock market and economic growth in all four countries. In addition there is no causal relation between stock index yield and the national economy growth rate. The empirical results of the thesis concludes that the possibility of seemingly abnormal relationship between the stock index and national economy of these for countries. Literature Review: Stock market contributes to economic growth in different ways either directly or indirectly. The functions of stock market are savings mobilization, Liquidity creation, and Risk diversification, keep control on disintermediation, information gaining and enhanced incentive for corporate control. The relationship between stock market and economic growth has become an issue of extensive analysis. There is always a question whether the stock market directly influence economic growth. A lot of research and results shows that there is a strong relationship between stock market and economic growth. Evidence on whether financial development causes growth help to reconcile these views. If we go back to the study of Schumpeter (1912) his studies emphasizes the positive influence on the development of a countrys financial sector on the level and the potential risk of losses caused by the adverse selection and moral hazard or transaction costs are argued by him how necessary the rate of growth argues that financial sectors provides of reallocating capital to minimize the potential losses. Empirical evidence from king and Levine (1983) show that the level of financial intermediation is good predictor of long run rates of growth, capital accumulation and productivity. Enhanced liquidity of financial market leads to financial development and investors can easily diversify their risk by creating their portfolio in different investments with higher investment. Another study from Levine and Zervos (1996) using the data of 24 countries found that a strong positive correlation between stock market development and economic growth. Their expanded study on 49 countries from 1976-1993, they used Stock Market liquidity, Economic growth rate, Capital Accumulating rate and output Growth Rate. They found that all the variables are positively correlated with each other. Demiurgic and Maksimovic (1996) have found positive causal effects of financial development on economic growth in line with the ‘supply leading hypothesis. According to his studies countries with better financial system has a smooth functioning stock market tend to grow much faster as they have access to much needed funds for financially constrained economic enterprises by the large efficient banks. Related research was done for the past three decades focusing on the role of financial development in stimulating economic growth they never considered about the stock market. An empirical study by Ming Men and Rui on Stock market index and economic growth in China suggest that possible reason of apparent abnormal relationship between the stock Index and national economy in china. Apparent abnormal relationship may be because of the following reason inconsistency of Chinese GDP with the structure of its stock market, role played by private sector in growth of GDP and disequilibrium of finance structure etc. The study was done using the cointegration method and Granger causality test, the overall finding of the study is Chinese finance market is not playing an important role in economic development. (Men M 2006 China paper). An article by Indrani Chakraborti based on the case of India presented in a seminar in kolkata in October, 2006 provides some information about the existence of long run stable relationship between stosk market capitalization, bank credit and growth rate of real GDP. She used the concept of the granger causality after using both the Engle-Granger and Johansen technique. In her study she found GDP is co-integrated with financial depth, Volatility in the stock market and GDP growth is co integrated with all the findings the paper explain that the in an overall sense, economic growth is the reson for financial development in India.(Chakraboty Indrani). Few writers from Malaysia found that stock market does help to predict future economy. Stock market is associated with economic growth play as a source for new private capital. Causal relationship between the stock market and economic growth which was done by using the formal test for causality by C.J. Granger and yearly Malaysia data for the period 1977-2006. The result from the study explain that future prediction is possible by stock market. A study focused on the relationship between stock market performance and real economic activity in Turkey. The study shows existence of a long run relationship between real economic activity and stock prices†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦ Result from the study pointed out that economic activity increases after a shock in stock prices and then declines in Turkish market from the second quarter and a unitary (Turkish paper) An international time series analysis from 1980-1990 by By RAGHURAM G. RAJAN AND LUIGI ZINGALES shows some evidence of the relation between stock market and economic growth. This paper describes whether economic growth is facilitated by financial development. He found that financial development has strong effect on economic growth. (Rajan and Zingales, 1998) The study of Ross LEVINE AND SARA ZERVOS on finding out the long run relationship between stock market and bank suggest a positive effect both the variables has positive effect on economic growth. International integration and volatility is not properly effected by capital stock market. And private save saving rates are not at all affected by these financial indicators. The study was done on 47 countries data using cross sectional analysis. In theory the conventional literature on growth was not sufficient enough to look for the connection between financial development and economic growth and the reason is they were focused on the steady state level of capital stock per workerof productivity. And they were not really concentrated on the rate of growth. Actually the main concern was legitimated to exogenous technical progress. (Levine and Zervos 1998) Belgium Stock market study with economic development shows the positive long run relationship between both the variables. In case of Belgium the evidences are quiet strong that Economic growth is caused by the development of the stock market. It is more focused between the period 1873 and 1935; basically this period is considered as the period of rapid industrialization in Belgium. The importance of the stock market in Belgium is more pronounced after liberalization of the stock market in 1867-1873. The time varying nature of the link between stock market development and economic growth is explained by the institutional change in the stock exchange. They also tried to find out the relationship to the universal banking system. Before 1873 the economic growth was based on the banking system and after 1873 stock market took the place. (Stock Market Development and economic growth in Belgium, Stijin Van Nieuwerburg, Ludo Cuyvers, Frans Buelens July 5, 2005) Senior economist of the World Banks Policy research department Ross Levine has discussed about Stock market in his paper Stock Markets: A Spur to economic growth on the impact of development. Less risky investments are possible in liquid equity market and it attracts the savers to acquire an asset, equity. As, they can sell it quickly when they need access to their savings, and if they want to alter their portfolio. Though many long term investment is required for the profitable investment. But reluctance of the investors towards long term investment as they dont have the access to their savings easily. Permanent access to capital is raised by the companies through equity issues as they are facilitating longer term, more profitable investments and prospect of long term economic growth is enhanced as liquid market improves the allocation of capital. The empirical evidence from the study strongly suggests that greater stock markets create more liquidity or at least continue economic gr owth. (Levine. R A spur to economic Growth) A lot of research has established that future economic growth is influenced by countrys financial growth, stock market index returns are another factor of economic growth. The researcher focused to extend their study; they tie together these two strings and started analyzing the relationship between banking industry, stock returns and future economic growth. Research was done on 18 developed and 18 emerging markets and the results are positive and noteworthy relationship between future GDP and stock returns. Few important features can also be predicted such as bank-accounting-disclosure standards, banking crises, insider trading law enforcement and government ownership of banks. (Bank stock returns and economic growth q Rebel A. Cole a, Fariborz Moshirian b,*, Qiongbing Wu c a Department of Finance, DePaul University, Chicago, IL 60604, USA b School of Banking and Finance, The University of New South Wales, Sydney, NSW 2052, Australia c Newcastle raduate School of Business, The University of Newcastle, Newcastle, NSW 2300, Australia Received 29 September 2006; accepted 26 July 2007Available online 21 September 2007) Another paper was focused on the linkages between financial development and economic growth using TYDL model for the empirical exercises by Purna Chandra Padhan suggests that both stock price and economic activity are integrated of order one and Johansen-Juselias Coin-integration tests for this study found one co integrating vector exists. It is proved by the spurious relation rule in this study the existence of at least one direction of causality. He described that bi-directional causality between stock price and economic growth meaning that economic activity can be enhanced by well developed stock exchange and vice-versa. ( Title:  The nexus between stock market and economic activity: an empirical analysis for India Author(s): Purna Chandra Padhan Journal: International Journal of Social Economics Year: 2007 Volume: 34 Issue: 10  Page: 741 – 753 DOI: 10.1108/03068290710816874 Publisher: Emerald Group Publishing Limited) Chee Keong Choong (Universiti Tunku Abdul Rahman Malaysia) Zulkornain Yusop (Universiti Putra Malaysia) Siong Hook Law (Universiti Putra Malaysia) Venus Liew Khim Sen (Universiti Putra Malaysia) Date of creation: 23 Jul 2003 Tried to find out the importance of the causal relationship of Financial development and economic growth. The findings of their study usin autoregressive Distributed lag (ARDL) describes about the positive long run impact on economic growth Granger causality also suggest same results. A study by Randall Filler(2000) using 70 countries data over the period 1985-1997 proves that there is a very little relationship between economic growth and stock market especially in developing countries and currency appreciation has occurred. From the result of the study we can see that an important role may be played by the stock market in an economy, and these are not essential for economic growth. However, another study on Iran by N. Shahnoushi, A.G Daneshvar, E Shori and M. Motalebi 2008 Financial development is not considered as an effective factor to the economic growth. The study was focused on the causal relationship between the financial development and economic growth. Time series data used for the study from the period 1961-2004. Granger causality shows there is no co integrating relationship between financial development and economic growth in Iran only the economical growth leads to financial development. Establishing link between savings and investment is very much important and financial market provides that. Transient or lasting growth is the ultimate affect of the financial market. Economic growth can be influenced by financial market by improving the productivity of the capital, Investment to firms can be channelled and greater capital accumulation by increasing savings. To ensure the stability of the financial market potential regulation is important due to asymmetric information, especially at the time of financial liberalization. (Economic Development and Financial Market Tosson Nabil Deabes Moderm Academy for technology aand computer sciences; MAM November 2004 Economic Development Financial Market Working Paper No. 2 ) Data: The empirical analysis was carried out using the quarterly data for The UK, The USA, Japan and Malaysia. The data were collected from the DataStream for the period 1993I to 2008III. Economic growth is measured as the growth rate of gross domestic product (GDP) of each country with the help of stock prices SP. For the software processing I used Eviews 6.0 for the planned regression in order to get the results. The empirical analysis is done from the quarterly data from the stock market indices and the and the GDP between the first quarter of 1993 and the fourth quarter of 2008. All the data has been extracted from the data stream and expressed in US$. The data for Japan share price is from Tokyo Stock Exchange. Malaysias Share price is form Kuala Lumpur Composite Index, UKs is from UK FT all share price index and USA share price is taken from the DOW Jones industrial share price index. The nature of the Data is series used for the time series regression. List of Variables: UGDP UK GDP USP UK Share price LUGDP Log of UK GDP LUSP Log of UK Share price USGDP USA GDP USSP USA (DOW Jones) Share price LUSGDP Log of USA GDP LUSSP Log of USA Share price MGDP Malaysia GDP MSP Malaysia Share price LMGDP Log of Malaysia GDP LMSP Log of Malaysia Share price JGDP Japan GDP JSP Japan Share Price LJGDP Log of Japan GDP LJSP Log of Japan Share price Methodology: Cointegration long term common stochastic trend between non stationary time series. If non-stationary series x and yare both integrated of same order and there is a linear combination of them that is stationary, they are called co integrated series. A common stochastic trend is shared in Cointegration. It follows that these two series will not drift apart too much, meaning that even they may deviate from each other in the short-term, they will revert to the long-run equilibrium. This fact makes cointegration a very powerful approach for the long-term analyses. Meanwhile, cointegration does not imply high correlation; two series can be co integrated and yet have very low correlations. Cointegration tests allow us to determine whether financial variables of different national markets move together over the long run, while providing for the possibility of short-run divergence. The first step in the analysis is to test each index series for the presence of unit roots, which shows whether the series are nonstationary. All the series must be nonstationarity and integrated of the same order. To do this, we apply both the Augmented Dickey-Fuller (ADF) test. Once the stationarity requirements are met, we proceed Granger bivariate cointegration (1987) procedure. 30 International Research Journal of Finance and Economics Issue 24 (2009) Series Stationary Test: In this study I have used Augmented Dickey Fuller Test (ADF) to test the stationary of variables. The unit root test is usually used to confirm stationary of a series. The ADF is test for unit root where I have checked the Unit root and strong negative numbers of unit root is being rejected by the null hypothesis (level of significance). In this study I have used Augmented Dickey Fuller Test (ADF) to check whether the series is stationary or not. ADF test is based on the estimate of the following regression: is in this case variable of interest = , is the differencing operator, t is the time trend and is the random component of zero mean and constant variance. The parameters to be estimated are { } Null and alternative hypothesis of unit root test are: , () () Here with the test we can find the estimates of are equal to zero or not. Y is said to be stationary if the cumulative distribution of the ADF statistics by showing that if the calculated ratio of the coefficient is less than the critical value according to Fuller (1976). If we accept the Ho the sequence is predicted to be having unit root and if Ho is rejected then we can say that the series doesnt have unit root. This proves that the series is stationary. The co–integration test can only be performed if both the sequences are all integrated of order I (1). Cointegration Test: Engle and Granger (1987) first established the cointegration method. It is a method of measuring long term diversification based on data. Linear combination of two non stationary series shows that they are integrated in order one I(1) that is stationary. And this is a co integrated series. Cointegration Long term common random trend between non stationary time series. The linear combination of both the non stationary series can be stationary if both the variables are integrated in same order. Cointegration is a very powerful approach in the long term analysis because a common stochastic trend is shared in cointegration that mean two series will not drift separately too much. They might deviate from each other but in the long run but eventually the will revert back in the long run. If there is very low correlation between the series still the series can be co-integrated as high correlation is not implied in cointegration. The reason for choosing the method as it will allow us to check the move between the variable in the long run even there might be a divergence in the short run. The first step in the analysis is check each index series whether the series for the presence of unit root which shows whether the series is non stationary. The method that I followed to do this is Augmented Dickey Fuller Test (ADF). I proceed the Granger cointegration technique 1987 when the stationary requirements are met. According to Engle and Granger (1987) to check for cointegration if both the variables and are integrated with order one the proposed method for cointegration residual-based test for cointegration (Engle-Granger method). So from the above method we can find the equation By regressing with And after that and is denoted as the estimated regression coefficient vectors. After that I saved the residual from the above equation. Then, = – is representing the estimated residual vector. If the residual is integrated with order zero that means the series for the residual is stationary, and and are then co integrated and vice versa. I have checked it by performing Augmented Dickey fuller test on the residual series on level value with intercept only of each country. An in this situation (1, -) is called co-integrating vector if the series is stationary. Therefore is a co integrating equation, so, from it we can say that there is long run relationship between and. Granger causality test: Granger causality test is applied if the relationship is lagged between the two variables to determine the direction of relation in statistical term. It gives information about the short term relationship between the variables. In terms of conceptual definition causality is consist of different ideas, this concept produce a relation between caused and results were agreed upon. Aristo defines that there exist a link between causes and results and without causes these results are impossible. And this is strong relationship. Some economists believe that the idea of causality is the mix of both theoretical and explanation and statistical concept. The frontline operational definition of causality is given by some economist, but Granger is the one who provided the information to understand it correctly and completely. Granger causality approach (1969), lets think the variable y is Economic Growth (GDP) and x is Stock price index, if it is possible to predict the past values of y and x than from the lagged values of y alone. X is said to be granger caused by and y is helping in predicting it. in case of a simple bivariate model, causality can be tested between stock market growth and economic growth. Granger causality run on the basis of the following bivariate regressions of the form: (1) (2) Where GDP denotes economic growth and SP denotes the stock price index and they explain the changes in growth. Variables are expressed in logarithm form. The distribution of and are uncorrelated by assumption. From the equation one it can be said that current GDP is related to lagged values of itself and as well as that of SP. And equation 2 postulates same kind of behaviour for SP. Both the equations can be obtained by ordinary least squares (OLS). The f statistics are the Wald statistics for the joint hypothesis: and F test is carried out for the null hypothesis of no Granger causality. The formula of f statistic is Lagged term is defined here by m; number of parameter is defined as k. Test result for Unit Root: Augmented Dickey Fuller Model (ADF) is used to test the stationary of each variable. Null and alternative hypothesis describes about the investigation of unit root. If the null is accepted and alternative is rejected then the variable non stationary behaviour and vice versa is stationary. Variables level/1st Difference Augmented Dickey Fuller Statistic(ADF) test Japan t statistic value With Trend t statistic value With trend and Intercept 1% 5% 10% 1% 5% GDP Level -2.653258 -3.522887     -2.901779 -2.588280   -2.693600   -4.088713   -3.472558 1st Difference -9.053185 -3.524233   -2.902358 -2.588587 -9.003482   -4.090602   -3.473447 Share Price Level   -2.116137 -3.522887     -2.901779 -2.588280   -2.203273   -4.088713   -3.472558 1st Difference   -6.899295 -3.524233   -2.902358 -2.588587   -6.844396   -4.090602   -3.473447 Table 01: Unit root test for stationary Japan If we have a look on the unit root test for the variables GDP and Share price to find out the stationary behaviour the Augmented Dickey Fuller Test with intercept and with intercept and trend in level and first difference. The t statistic value with trend is -2.653258 which is higher than the critical values in 1%, 5% and 10% critical value. The same applies with intercept and trend as the t statistic value -2.693600 is higher than the critical value in all the level of critical value. So from the nature of stationary behaviour we can say in level GDP shows nonstationary behaviour. And the first difference LnGDP is integrated with order one. In case of LnSP the results with intercept and with intercept trend in level are -2.116137 and -2.203273 which is higher than the critical values shows non stationary behaviour as they are higher than the critical value. The unit root test for the variables at first difference shows stationary as the t statistic value is than the critical value i n all level and they are integrated in order one. Variables level/1st Difference Augmented Dickey Fuller Statistic(ADF) test Malaysia t statistic value With Trend t statistic value With trend and Intercept 1% 5% 10% 1% 5% GDP Level -1.195020 -3.522887     -2.901779 -2.588280 -1.933335   -4.088713   -3.472558 1st Difference -5.951843 -3.524233   -2.902358 -2.588587 -5.923595   -4.090602   -3.473447 Share Price Level   -1.900406 -3.522887     -2.901779 -2.588280   -1.891183   -4.088713   -3.472558 1st Difference   -7.842122 -3.524233   -2.902358 -2.588587   -7.779757   -4.090602   -3.473447 The unit root test result for LMGDP and LMSP values presented in natural logarithm. And the level values with intercept and with intercept and trend for LMGDP is -1.195020 and -1.93335 respectively. The values are higher than the critical value means the series has non stationary behaviour. On the other hand the 1st difference values with intercept and with intercept and trend are -5.951843 and -5.923595 respectively. The 1st difference values are integrated with order one. And in the same way I did the ADF test to check for Stationary behaviour of LMSP in level and first difference with intercept and trend. The values in level are -1.900406 and -1.891183 with intercept and trend us higher than the critical value and the series is not integrated with order one. The first difference t statistic values are -7.842122 and -7.779757 with intercept and with intercept and trend respectively are less than the critical value in both the case implies that the series is integrated with order on e. Variables level/1st Difference Augmented Dickey Fuller Statistic(ADF) test UK t statistic value With Trend t statistic value With trend and Intercept 1% 5% 10% 1% 5% GDP Level -0.690866 -3.522887     -2.901779 -2.588280 -2.377333   -4.088713   -3.472558 1st Difference -7.474388 -3.524233   -2.902358 -2.588587 -7.439027   -4.090602   -3.473447 Share Price Level -1.711599 -3.522887     -2.901779 -2.588280 -1.261546   -4.088713   -3.472558 1st Difference -7.254574 -3.524233   -2.902358 -2.588587 -7.391821   -4.090602   -3.473447 The results from Augmented Dickey Fuller test (ADF) for UK GDP in level with intercept and with intercept and trend is –0.690866 and -2.377333 respectively. Both the values in level are higher than the critical value and are integrated in order 0 shows non stationary behaviour. The t statistic values in 1st difference with intercept and with intercept and trend are -7.474388 and -7.439207 respectively. Which suggest that the critical values are less than the critical values in 1%, 5% and 10% level. So from the above hypothesis it can be said that it series is integrated with order one. When I performed the unit root test using the same method the series in level with intercept and with intercept and trend the values in are -1.711599 and -1.261546 respectively. The values are higher than the critical values implies that they are not integrated in order one shows non stationary behaviour. However, the 1st difference value of log natural share price is -7.254573 and -7.391821 wit h intercept and with intercept and trend respectively. So from the result we can say that the series is integrated in order one in both the cases with intercept and with intercept and trend. So the series in first difference is stationary. Variables level/1st Difference Augmented Dickey Fuller Statistic(ADF) test USA t statistic value With Trend t statistic value With trend and Intercept 1% 5% 10% 1% Stock Market Performance and the Real Economic Activity Stock Market Performance and the Real Economic Activity Whether national economy is affecting the stock market or other way round? A lot of studies have done on the past what are relationship of these variables. In my work I have used cointegration and Granger Causality method to find out the relationship between the stock index price and Economic growth indicator GDP. Introduction The debate of whether stock market is associated with economic growth or the stock market can be served as the economic indicator to predict future. According to many economists stock market can be a reason for the future recession if there is a huge decrease in the stock price or vice versa. However, there are evidence of controversial issue about the ability of prediction from the stock market is not reliable if there is a situation like 1987 stock market crashed followed by the economic recession and 1997 financial crises. (Stock market and economic growth in Malaysia: causality test). The aim of the study is to find the relation between the stock market performance and the real economic activity in case of four countries The UK, The USA, Malaysia and Japan. With my limited knowledge I have tried to find out the role of financial development in stimulating economic growth. A lot of economists have different view about stock market development and the economic growth. If we focus on some related literature published on this topic one question arises: Is economic development is affected by stock market development? Even though there are lots of debate on some are saying that stock market can help the economy but the effect of stock market in the economy especially in the economy is very little. Ross Levine suggested in his paper published in 1998 that recent evidence suggested stock market can really give a boom to economic growth. (REFERENCE) It is not really possible to measure the growth by simply looking at the ups and down in the stock market indicator and by looking at the rates of growth in GDP. A lot of things can cause in the growth of stock market like changes in the banking system, foreign participation in the in the financial market may participate strongly. Apparently it seems that these developments can cause development of stock market followed by the good economic growth. But to check the accuracy one required to follow an appropriate method which would meaningfully measure whether stock price is really effecting the economic growth or not? In my work I have tried to find out the co integrating relationship between Stock price and GDP and tried to check if there is a long run and short run relationship between the stock price and GDP. The method used for the studies is Engle Granger co integration method. To do this I have used ADF (Augmented Dickey Fuller Test) to check for the stationary behaviour of the variables and then I have performed the Engle Granger Engle Granger co integration method followed by residual based error correction model. To check for the short run relationship I have used 2nd stage Engle Granger co integration method. To check the causal effect of the four countries stock market and economic growth I used Granger Causality Method. In this paper I have reviewed some studies of scholars which I have discussed on the literature review part. This paper contains five parts Part two is about the literature based on the past wok of scholars. Part Three discussed about the Data. Part four is about the methodology, Results are discussed on part five and part six is all about the summary and conclusion of the whole study. In my work I have founded there is no long run relationship between stock market and economic growth in all four countries. In addition there is no causal relation between stock index yield and the national economy growth rate. The empirical results of the thesis concludes that the possibility of seemingly abnormal relationship between the stock index and national economy of these for countries. Literature Review: Stock market contributes to economic growth in different ways either directly or indirectly. The functions of stock market are savings mobilization, Liquidity creation, and Risk diversification, keep control on disintermediation, information gaining and enhanced incentive for corporate control. The relationship between stock market and economic growth has become an issue of extensive analysis. There is always a question whether the stock market directly influence economic growth. A lot of research and results shows that there is a strong relationship between stock market and economic growth. Evidence on whether financial development causes growth help to reconcile these views. If we go back to the study of Schumpeter (1912) his studies emphasizes the positive influence on the development of a countrys financial sector on the level and the potential risk of losses caused by the adverse selection and moral hazard or transaction costs are argued by him how necessary the rate of growth argues that financial sectors provides of reallocating capital to minimize the potential losses. Empirical evidence from king and Levine (1983) show that the level of financial intermediation is good predictor of long run rates of growth, capital accumulation and productivity. Enhanced liquidity of financial market leads to financial development and investors can easily diversify their risk by creating their portfolio in different investments with higher investment. Another study from Levine and Zervos (1996) using the data of 24 countries found that a strong positive correlation between stock market development and economic growth. Their expanded study on 49 countries from 1976-1993, they used Stock Market liquidity, Economic growth rate, Capital Accumulating rate and output Growth Rate. They found that all the variables are positively correlated with each other. Demiurgic and Maksimovic (1996) have found positive causal effects of financial development on economic growth in line with the ‘supply leading hypothesis. According to his studies countries with better financial system has a smooth functioning stock market tend to grow much faster as they have access to much needed funds for financially constrained economic enterprises by the large efficient banks. Related research was done for the past three decades focusing on the role of financial development in stimulating economic growth they never considered about the stock market. An empirical study by Ming Men and Rui on Stock market index and economic growth in China suggest that possible reason of apparent abnormal relationship between the stock Index and national economy in china. Apparent abnormal relationship may be because of the following reason inconsistency of Chinese GDP with the structure of its stock market, role played by private sector in growth of GDP and disequilibrium of finance structure etc. The study was done using the cointegration method and Granger causality test, the overall finding of the study is Chinese finance market is not playing an important role in economic development. (Men M 2006 China paper). An article by Indrani Chakraborti based on the case of India presented in a seminar in kolkata in October, 2006 provides some information about the existence of long run stable relationship between stosk market capitalization, bank credit and growth rate of real GDP. She used the concept of the granger causality after using both the Engle-Granger and Johansen technique. In her study she found GDP is co-integrated with financial depth, Volatility in the stock market and GDP growth is co integrated with all the findings the paper explain that the in an overall sense, economic growth is the reson for financial development in India.(Chakraboty Indrani). Few writers from Malaysia found that stock market does help to predict future economy. Stock market is associated with economic growth play as a source for new private capital. Causal relationship between the stock market and economic growth which was done by using the formal test for causality by C.J. Granger and yearly Malaysia data for the period 1977-2006. The result from the study explain that future prediction is possible by stock market. A study focused on the relationship between stock market performance and real economic activity in Turkey. The study shows existence of a long run relationship between real economic activity and stock prices†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦ Result from the study pointed out that economic activity increases after a shock in stock prices and then declines in Turkish market from the second quarter and a unitary (Turkish paper) An international time series analysis from 1980-1990 by By RAGHURAM G. RAJAN AND LUIGI ZINGALES shows some evidence of the relation between stock market and economic growth. This paper describes whether economic growth is facilitated by financial development. He found that financial development has strong effect on economic growth. (Rajan and Zingales, 1998) The study of Ross LEVINE AND SARA ZERVOS on finding out the long run relationship between stock market and bank suggest a positive effect both the variables has positive effect on economic growth. International integration and volatility is not properly effected by capital stock market. And private save saving rates are not at all affected by these financial indicators. The study was done on 47 countries data using cross sectional analysis. In theory the conventional literature on growth was not sufficient enough to look for the connection between financial development and economic growth and the reason is they were focused on the steady state level of capital stock per workerof productivity. And they were not really concentrated on the rate of growth. Actually the main concern was legitimated to exogenous technical progress. (Levine and Zervos 1998) Belgium Stock market study with economic development shows the positive long run relationship between both the variables. In case of Belgium the evidences are quiet strong that Economic growth is caused by the development of the stock market. It is more focused between the period 1873 and 1935; basically this period is considered as the period of rapid industrialization in Belgium. The importance of the stock market in Belgium is more pronounced after liberalization of the stock market in 1867-1873. The time varying nature of the link between stock market development and economic growth is explained by the institutional change in the stock exchange. They also tried to find out the relationship to the universal banking system. Before 1873 the economic growth was based on the banking system and after 1873 stock market took the place. (Stock Market Development and economic growth in Belgium, Stijin Van Nieuwerburg, Ludo Cuyvers, Frans Buelens July 5, 2005) Senior economist of the World Banks Policy research department Ross Levine has discussed about Stock market in his paper Stock Markets: A Spur to economic growth on the impact of development. Less risky investments are possible in liquid equity market and it attracts the savers to acquire an asset, equity. As, they can sell it quickly when they need access to their savings, and if they want to alter their portfolio. Though many long term investment is required for the profitable investment. But reluctance of the investors towards long term investment as they dont have the access to their savings easily. Permanent access to capital is raised by the companies through equity issues as they are facilitating longer term, more profitable investments and prospect of long term economic growth is enhanced as liquid market improves the allocation of capital. The empirical evidence from the study strongly suggests that greater stock markets create more liquidity or at least continue economic gr owth. (Levine. R A spur to economic Growth) A lot of research has established that future economic growth is influenced by countrys financial growth, stock market index returns are another factor of economic growth. The researcher focused to extend their study; they tie together these two strings and started analyzing the relationship between banking industry, stock returns and future economic growth. Research was done on 18 developed and 18 emerging markets and the results are positive and noteworthy relationship between future GDP and stock returns. Few important features can also be predicted such as bank-accounting-disclosure standards, banking crises, insider trading law enforcement and government ownership of banks. (Bank stock returns and economic growth q Rebel A. Cole a, Fariborz Moshirian b,*, Qiongbing Wu c a Department of Finance, DePaul University, Chicago, IL 60604, USA b School of Banking and Finance, The University of New South Wales, Sydney, NSW 2052, Australia c Newcastle raduate School of Business, The University of Newcastle, Newcastle, NSW 2300, Australia Received 29 September 2006; accepted 26 July 2007Available online 21 September 2007) Another paper was focused on the linkages between financial development and economic growth using TYDL model for the empirical exercises by Purna Chandra Padhan suggests that both stock price and economic activity are integrated of order one and Johansen-Juselias Coin-integration tests for this study found one co integrating vector exists. It is proved by the spurious relation rule in this study the existence of at least one direction of causality. He described that bi-directional causality between stock price and economic growth meaning that economic activity can be enhanced by well developed stock exchange and vice-versa. ( Title:  The nexus between stock market and economic activity: an empirical analysis for India Author(s): Purna Chandra Padhan Journal: International Journal of Social Economics Year: 2007 Volume: 34 Issue: 10  Page: 741 – 753 DOI: 10.1108/03068290710816874 Publisher: Emerald Group Publishing Limited) Chee Keong Choong (Universiti Tunku Abdul Rahman Malaysia) Zulkornain Yusop (Universiti Putra Malaysia) Siong Hook Law (Universiti Putra Malaysia) Venus Liew Khim Sen (Universiti Putra Malaysia) Date of creation: 23 Jul 2003 Tried to find out the importance of the causal relationship of Financial development and economic growth. The findings of their study usin autoregressive Distributed lag (ARDL) describes about the positive long run impact on economic growth Granger causality also suggest same results. A study by Randall Filler(2000) using 70 countries data over the period 1985-1997 proves that there is a very little relationship between economic growth and stock market especially in developing countries and currency appreciation has occurred. From the result of the study we can see that an important role may be played by the stock market in an economy, and these are not essential for economic growth. However, another study on Iran by N. Shahnoushi, A.G Daneshvar, E Shori and M. Motalebi 2008 Financial development is not considered as an effective factor to the economic growth. The study was focused on the causal relationship between the financial development and economic growth. Time series data used for the study from the period 1961-2004. Granger causality shows there is no co integrating relationship between financial development and economic growth in Iran only the economical growth leads to financial development. Establishing link between savings and investment is very much important and financial market provides that. Transient or lasting growth is the ultimate affect of the financial market. Economic growth can be influenced by financial market by improving the productivity of the capital, Investment to firms can be channelled and greater capital accumulation by increasing savings. To ensure the stability of the financial market potential regulation is important due to asymmetric information, especially at the time of financial liberalization. (Economic Development and Financial Market Tosson Nabil Deabes Moderm Academy for technology aand computer sciences; MAM November 2004 Economic Development Financial Market Working Paper No. 2 ) Data: The empirical analysis was carried out using the quarterly data for The UK, The USA, Japan and Malaysia. The data were collected from the DataStream for the period 1993I to 2008III. Economic growth is measured as the growth rate of gross domestic product (GDP) of each country with the help of stock prices SP. For the software processing I used Eviews 6.0 for the planned regression in order to get the results. The empirical analysis is done from the quarterly data from the stock market indices and the and the GDP between the first quarter of 1993 and the fourth quarter of 2008. All the data has been extracted from the data stream and expressed in US$. The data for Japan share price is from Tokyo Stock Exchange. Malaysias Share price is form Kuala Lumpur Composite Index, UKs is from UK FT all share price index and USA share price is taken from the DOW Jones industrial share price index. The nature of the Data is series used for the time series regression. List of Variables: UGDP UK GDP USP UK Share price LUGDP Log of UK GDP LUSP Log of UK Share price USGDP USA GDP USSP USA (DOW Jones) Share price LUSGDP Log of USA GDP LUSSP Log of USA Share price MGDP Malaysia GDP MSP Malaysia Share price LMGDP Log of Malaysia GDP LMSP Log of Malaysia Share price JGDP Japan GDP JSP Japan Share Price LJGDP Log of Japan GDP LJSP Log of Japan Share price Methodology: Cointegration long term common stochastic trend between non stationary time series. If non-stationary series x and yare both integrated of same order and there is a linear combination of them that is stationary, they are called co integrated series. A common stochastic trend is shared in Cointegration. It follows that these two series will not drift apart too much, meaning that even they may deviate from each other in the short-term, they will revert to the long-run equilibrium. This fact makes cointegration a very powerful approach for the long-term analyses. Meanwhile, cointegration does not imply high correlation; two series can be co integrated and yet have very low correlations. Cointegration tests allow us to determine whether financial variables of different national markets move together over the long run, while providing for the possibility of short-run divergence. The first step in the analysis is to test each index series for the presence of unit roots, which shows whether the series are nonstationary. All the series must be nonstationarity and integrated of the same order. To do this, we apply both the Augmented Dickey-Fuller (ADF) test. Once the stationarity requirements are met, we proceed Granger bivariate cointegration (1987) procedure. 30 International Research Journal of Finance and Economics Issue 24 (2009) Series Stationary Test: In this study I have used Augmented Dickey Fuller Test (ADF) to test the stationary of variables. The unit root test is usually used to confirm stationary of a series. The ADF is test for unit root where I have checked the Unit root and strong negative numbers of unit root is being rejected by the null hypothesis (level of significance). In this study I have used Augmented Dickey Fuller Test (ADF) to check whether the series is stationary or not. ADF test is based on the estimate of the following regression: is in this case variable of interest = , is the differencing operator, t is the time trend and is the random component of zero mean and constant variance. The parameters to be estimated are { } Null and alternative hypothesis of unit root test are: , () () Here with the test we can find the estimates of are equal to zero or not. Y is said to be stationary if the cumulative distribution of the ADF statistics by showing that if the calculated ratio of the coefficient is less than the critical value according to Fuller (1976). If we accept the Ho the sequence is predicted to be having unit root and if Ho is rejected then we can say that the series doesnt have unit root. This proves that the series is stationary. The co–integration test can only be performed if both the sequences are all integrated of order I (1). Cointegration Test: Engle and Granger (1987) first established the cointegration method. It is a method of measuring long term diversification based on data. Linear combination of two non stationary series shows that they are integrated in order one I(1) that is stationary. And this is a co integrated series. Cointegration Long term common random trend between non stationary time series. The linear combination of both the non stationary series can be stationary if both the variables are integrated in same order. Cointegration is a very powerful approach in the long term analysis because a common stochastic trend is shared in cointegration that mean two series will not drift separately too much. They might deviate from each other but in the long run but eventually the will revert back in the long run. If there is very low correlation between the series still the series can be co-integrated as high correlation is not implied in cointegration. The reason for choosing the method as it will allow us to check the move between the variable in the long run even there might be a divergence in the short run. The first step in the analysis is check each index series whether the series for the presence of unit root which shows whether the series is non stationary. The method that I followed to do this is Augmented Dickey Fuller Test (ADF). I proceed the Granger cointegration technique 1987 when the stationary requirements are met. According to Engle and Granger (1987) to check for cointegration if both the variables and are integrated with order one the proposed method for cointegration residual-based test for cointegration (Engle-Granger method). So from the above method we can find the equation By regressing with And after that and is denoted as the estimated regression coefficient vectors. After that I saved the residual from the above equation. Then, = – is representing the estimated residual vector. If the residual is integrated with order zero that means the series for the residual is stationary, and and are then co integrated and vice versa. I have checked it by performing Augmented Dickey fuller test on the residual series on level value with intercept only of each country. An in this situation (1, -) is called co-integrating vector if the series is stationary. Therefore is a co integrating equation, so, from it we can say that there is long run relationship between and. Granger causality test: Granger causality test is applied if the relationship is lagged between the two variables to determine the direction of relation in statistical term. It gives information about the short term relationship between the variables. In terms of conceptual definition causality is consist of different ideas, this concept produce a relation between caused and results were agreed upon. Aristo defines that there exist a link between causes and results and without causes these results are impossible. And this is strong relationship. Some economists believe that the idea of causality is the mix of both theoretical and explanation and statistical concept. The frontline operational definition of causality is given by some economist, but Granger is the one who provided the information to understand it correctly and completely. Granger causality approach (1969), lets think the variable y is Economic Growth (GDP) and x is Stock price index, if it is possible to predict the past values of y and x than from the lagged values of y alone. X is said to be granger caused by and y is helping in predicting it. in case of a simple bivariate model, causality can be tested between stock market growth and economic growth. Granger causality run on the basis of the following bivariate regressions of the form: (1) (2) Where GDP denotes economic growth and SP denotes the stock price index and they explain the changes in growth. Variables are expressed in logarithm form. The distribution of and are uncorrelated by assumption. From the equation one it can be said that current GDP is related to lagged values of itself and as well as that of SP. And equation 2 postulates same kind of behaviour for SP. Both the equations can be obtained by ordinary least squares (OLS). The f statistics are the Wald statistics for the joint hypothesis: and F test is carried out for the null hypothesis of no Granger causality. The formula of f statistic is Lagged term is defined here by m; number of parameter is defined as k. Test result for Unit Root: Augmented Dickey Fuller Model (ADF) is used to test the stationary of each variable. Null and alternative hypothesis describes about the investigation of unit root. If the null is accepted and alternative is rejected then the variable non stationary behaviour and vice versa is stationary. Variables level/1st Difference Augmented Dickey Fuller Statistic(ADF) test Japan t statistic value With Trend t statistic value With trend and Intercept 1% 5% 10% 1% 5% GDP Level -2.653258 -3.522887     -2.901779 -2.588280   -2.693600   -4.088713   -3.472558 1st Difference -9.053185 -3.524233   -2.902358 -2.588587 -9.003482   -4.090602   -3.473447 Share Price Level   -2.116137 -3.522887     -2.901779 -2.588280   -2.203273   -4.088713   -3.472558 1st Difference   -6.899295 -3.524233   -2.902358 -2.588587   -6.844396   -4.090602   -3.473447 Table 01: Unit root test for stationary Japan If we have a look on the unit root test for the variables GDP and Share price to find out the stationary behaviour the Augmented Dickey Fuller Test with intercept and with intercept and trend in level and first difference. The t statistic value with trend is -2.653258 which is higher than the critical values in 1%, 5% and 10% critical value. The same applies with intercept and trend as the t statistic value -2.693600 is higher than the critical value in all the level of critical value. So from the nature of stationary behaviour we can say in level GDP shows nonstationary behaviour. And the first difference LnGDP is integrated with order one. In case of LnSP the results with intercept and with intercept trend in level are -2.116137 and -2.203273 which is higher than the critical values shows non stationary behaviour as they are higher than the critical value. The unit root test for the variables at first difference shows stationary as the t statistic value is than the critical value i n all level and they are integrated in order one. Variables level/1st Difference Augmented Dickey Fuller Statistic(ADF) test Malaysia t statistic value With Trend t statistic value With trend and Intercept 1% 5% 10% 1% 5% GDP Level -1.195020 -3.522887     -2.901779 -2.588280 -1.933335   -4.088713   -3.472558 1st Difference -5.951843 -3.524233   -2.902358 -2.588587 -5.923595   -4.090602   -3.473447 Share Price Level   -1.900406 -3.522887     -2.901779 -2.588280   -1.891183   -4.088713   -3.472558 1st Difference   -7.842122 -3.524233   -2.902358 -2.588587   -7.779757   -4.090602   -3.473447 The unit root test result for LMGDP and LMSP values presented in natural logarithm. And the level values with intercept and with intercept and trend for LMGDP is -1.195020 and -1.93335 respectively. The values are higher than the critical value means the series has non stationary behaviour. On the other hand the 1st difference values with intercept and with intercept and trend are -5.951843 and -5.923595 respectively. The 1st difference values are integrated with order one. And in the same way I did the ADF test to check for Stationary behaviour of LMSP in level and first difference with intercept and trend. The values in level are -1.900406 and -1.891183 with intercept and trend us higher than the critical value and the series is not integrated with order one. The first difference t statistic values are -7.842122 and -7.779757 with intercept and with intercept and trend respectively are less than the critical value in both the case implies that the series is integrated with order on e. Variables level/1st Difference Augmented Dickey Fuller Statistic(ADF) test UK t statistic value With Trend t statistic value With trend and Intercept 1% 5% 10% 1% 5% GDP Level -0.690866 -3.522887     -2.901779 -2.588280 -2.377333   -4.088713   -3.472558 1st Difference -7.474388 -3.524233   -2.902358 -2.588587 -7.439027   -4.090602   -3.473447 Share Price Level -1.711599 -3.522887     -2.901779 -2.588280 -1.261546   -4.088713   -3.472558 1st Difference -7.254574 -3.524233   -2.902358 -2.588587 -7.391821   -4.090602   -3.473447 The results from Augmented Dickey Fuller test (ADF) for UK GDP in level with intercept and with intercept and trend is –0.690866 and -2.377333 respectively. Both the values in level are higher than the critical value and are integrated in order 0 shows non stationary behaviour. The t statistic values in 1st difference with intercept and with intercept and trend are -7.474388 and -7.439207 respectively. Which suggest that the critical values are less than the critical values in 1%, 5% and 10% level. So from the above hypothesis it can be said that it series is integrated with order one. When I performed the unit root test using the same method the series in level with intercept and with intercept and trend the values in are -1.711599 and -1.261546 respectively. The values are higher than the critical values implies that they are not integrated in order one shows non stationary behaviour. However, the 1st difference value of log natural share price is -7.254573 and -7.391821 wit h intercept and with intercept and trend respectively. So from the result we can say that the series is integrated in order one in both the cases with intercept and with intercept and trend. So the series in first difference is stationary. Variables level/1st Difference Augmented Dickey Fuller Statistic(ADF) test USA t statistic value With Trend t statistic value With trend and Intercept 1% 5% 10% 1%