Criminal Behavior Conditioning Essays

Criminal Behavior Conditioning Essays Criminal Behavior Conditioning Essay Criminal Behavior Conditioning Essay Dr. Terrie Moffitt provides consent to the detection and early intervention concept for developmental/behavioral issues. Since 1993, Dr. Moffitt has focused on two youth types- both developmental in nature- that lead to delinquency. Dr. Moffitt defined these problematic individuals as either life-course-persistent (LCP) offenders, or adolescent-limited (AL) offenders. Where the AL offenders exhibit shorter cycles of delinquency that begin and usually end within his/her adolescent years, the LCP offenders begin at much earlier age and continues into the adolescent years. Researchers agreed with Dr. Moffitt that high-risk youth can be identified at an early age with great accuracy (Dodge Pettit, 2003; Hill, Lochman, Coie, Greenberg, 2004; Lochman Conduct Problems Prevention Research Group, 1995). But an important factor to note, is that they begin to parallel influence/cause during his/her adolescent years of delinquency. It is not enough to simply review statistics or parental accounts because it may confuse anyone trying to identify the two types of offenders (Moffitt, Caspi, Dickson, Silva, Stanton, 1996). Since Dr. Moffitt first standardized her developmental theory, she also brought forth the significance of many different but interwoven variables including: genetics, social pressure, observation, and parental nurturing (Moffitt et al, 1993, 1996; Moffitt, 1995, 2005). Another comparable theory also contends that younger offenders are at greater risk of more serious criminal offending (Gerald Patterson 1982, 1986). This (Coercion Developmental) theory cites parental involvement as major factor in psychosocial related delinquency. In addition, negative transitions or inconsistent monitoring of the child will contribute to the onset of delinquency (Brennan et al. , 2003; Patterson, 1982). A child may use temperamental actions to gain control. This behavioral pattern continues until the adolescent develops a consistent interpersonal approach of coercion. Whatever the root cause of delinquency, finality comes in the form of treatment or incarceration. However, more restraining measures for the serious offender- out-of-home treatment or incarceration- are not as effective and are extremely expensive (Henggeler, 1996). Indeed, data show that incarceration may not even serve a community protection function (Henggeler 1996, p. 139). † One theory is that prevention programs or treatment that only focuses on one risk factor â€Å"is unlikely to lead to long-lasting change in delinquency because multiple other forces act to support anti- social development (Dodge Pettit, 2003). † Alternately, selective pre vention (or incarceration) is designed to corral these â€Å"at risk† youth. The principle with selective prevention/incarceration is that ‘an ounce of prevention is worth a pound of cure. The programs may range from family involvement to exterior intervention; regimented treatment to outdoor activities. However, it is important to begin the selective prevention/incarceration early in the child’s life and cross-examine multiple influential factors. Then, continue the same preventive measures to ensure new influences do not create new risks (Tremblay and Craig, 1995; Dodge Pettit, 2003). Dr Moffitt encourages programs designed at identifying the â€Å"at risk† youth before defining the subsequent delinquency. A similar theory involving multiple planes of identification is multi-systemic therapy (Henggeler Borduin, 1990; Henggeler, Melton, Smith, 1992; Scherer, Brondino, Henggeler, Melton, Hanley, 1994). When interpreting this therapy approach, multiple major factors come into play- school, family, counselors. Based on Dr. Moffitt’s developmental theories and mindset, I believe that she would have the same opinion of some researchers- utilize every social and genetic variable and create selective prevention/incarceration as a (best practice) approach to early detection of potential delinquency. In my freshman opinion, I feel that it requires a multitude of data to determine exact cause and effect. If you combine the following: National Crime Victimization Survey; broad-spectrum interviews of delinquents; Census interviews; marital patterns; religious or faith data; medical-intervention records; and psychosocial observation in the form of treatment, one may be able to create a better understanding in the patterns of delinquency. Unfortunately, research-to-date is small in comparison to the magnitude of influence. The relationship between parenting (disciplinary practice) and family (background) with delinquency is far too in-depth for a few hundred words to define. Parental styles, genetics, social interaction, socio-economic factors, religion, academic standards- the list goes on, and on- all factor into the potential to become an offender. Simply stated, exposure is the common denominator. While many factors can be a major, let us first address parental styles. There are four types of parental styles: authoritarian; permissive; authoritative; and neglecting (Diana Baumrind 1991a). While one parent chooses to control child’s life, another parent may be permissive and render no control. Even as a parent tries to be rational and reasonable, a different style is neglecting and detached from the child. Alone, no style is without imperfections. Other factors combine with the parenting style to create a more complex behavioral pattern. Coercive, easier methods of parenting require less administrative energy when compared with a style that emphasizes emotional interaction and patience. A pattern of too much corporal punishment to maintain control promotes a negative self-concept in the child or may carry the cycle of violence to another victim. Nonetheless, it is not easy to assume which styles provide more â€Å"at risk† factors than others without additional rationale. Parental practices that involve consistent interaction are additional strategies employed by some. A child may be pushed to achieve specific academic, social, or athletic goals across different contexts and situations (Hart, Nelson, Robinson, Olsen, McNeilly-Choque, 1998). A child may receive monetary gratuity designed to teach him/her to manage money. Some children thrive in other event-specific interaction- reading, attendance to sports or arts events, or giving time to school rooms and/or activities. Herein, lies factors that produce the advent of self-esteem and results may vary. Studies also reveal that observation has a responsive affect and often leads to social competence, peer acceptance, and less antisocial behavior (Hart et al. ,1998). An inviting parent that elevates care and affection or one that encourages higher educational are examples of styles hat promotes rather than demotes development. Secondly, a child’s socio-economic situation may hinder development into a non-offender. While the parent can deter negative behavior and reinforce positive outlook, the child may nevertheless fall prey to social environmental factors. Observation of deviant behaviors may possibly encourage the same. The nation’s economic crisis of 2009 resulted in many parents assuming second jobs- such as low-paying part-time work on weekends- to keep the family financially afloat (Bartol, 2008, 2011). This may necessitate â€Å"juggling† child care duties among day-care centers, relatives, babysitters, and neighbors. Likewise, caregiver styles and practices can escalate negative results. The early relationship between an infant and a caregiver largely determines the quality of social relationships later in life (Bowlby, 1969). Similar to the notion that â€Å"it takes a village to raise a child,† interaction with perceived models of authority and care can mold a child into positive results or into patterned delinquency. In addition, impoverished parents (or family), may create internal stresses and possibly abuse- both physical and mental. Further, the child’s development may digress into inadequate social, self-regulation, or temperament skill sets. Stress caused by poverty in urban settings is believed to diminish parents’ capacity for supportive and consistent parenting (Dodge, Greenberg, Malone, and Conduct Problems Prevention Research Group, 2008; Hammond Yung, 1994). If anti-social peers reject someone who is already struggling, then there may be a compounded risk factor. As Terrie Moffitt (2005) provided, we know certain risk factors are closely linked to delinquency and criminal behavior, but how or why they are linked is largely unknown. Thirdly, depending on the definition of â€Å"family,† the structure necessitates the parenting style. It is estimated that over 12 million American families with children are maintained by only one parent (U. S. Bureau of the Census, 2001). Early studies based on official data found that delinquents were more likely than non delinquents to come from homes where parents were divorced r separated (Eaton Polk, 1961; Glueck Glueck, 1950; Monahan, 1957; Rodman Grams, 1967). This led to conclusions that the single-parent home- or the â€Å"broken home† as it was called- could be blamed for much delinquency and thus could be considered a risk factor (Bartol, 2011). More recently, researchers examine associated factors such as the quality of the relationship, economic status, and levels of emotional suppo rt provided to the family by other modeling adults- extended family members or community agents. However, there is definitive results that single-parent homes that are conflict-free produce children from that are less likely to be delinquent than those shaped in highly conflicted, but â€Å"intact† homes (Gove Crutchfield, 1982). A family of different origin, has become a normal part of today’s society. Many researchers agree to also define a family as persons related by blood or by legal arrangements- adoptions, legal guardianships, civil unions. Researchers also point out that long-term committed relationships- either as friends or as sexual partners- are also considered as family. No matter the style of the living arrangement, blood-relative, or single-parent family, the structure becomes the focal point. As Flynn (1983, p. 13) asserts, â€Å"One point is indisputably clear in the literature: A stable, secure, and mutually supportive family is exceedingly important in delinquency prevention. † Parental alcoholism elevates risk for a variety of negative child outcomes, including behavioral difficulties, antisocial behavior, and subsequent alcoholism (Loukas, Zucker, Fitzgerald, Krull, 2003; Zucker et al. , 2000). Interestingly, Loukas and her colleagues (2003) found that the presence of paternal alcoholism in the family may be more important than maternal alcoholism in contributing to a son’s antisocial behavior and maladjustment. The aggressive behavior that is demonstrated in domestic violence is clearly a form of parental psychopathology. Lastly, related to parental styles is the parental supervision or monitoring of children. In parental monitoring, â€Å"refers to parents’ awareness of their child’s peer associates, free-time activities, and physical whereabouts, when outside the home† (Snyder Patterson, 1987, pp. 25–26). Just as a â€Å"structured† or â€Å"broken† home dictates, so too is the amount and quality of parental monitoring is influenced by a number of things- divorce, finances, job loss, parental psychological disorders, substance abuse, or death. Monitoring appears to be especially important from about age nine to mid-adoles cence, an observation that has received substantial support from several studies (Laird, Pettit, Bates, Dodge, 2003). Will a Substantially-Recruited High School Football Player Alter His Tackling Style By Observing His Favorite NFL Player Doing the Same? In recent months, the National Football League (NFL) has mandated various penalties to players for purposely making violent tackles on unsuspecting opposing players. The penalties were usually a monetary fine imposed; growing by each offense. However, the rash of career-ending and life-threatening injuries was not subsiding. In fact, Rodney Harrison, a former NFL player and NBC Analyst who was penalized for illegal hits at several points in his career was quoted, â€Å"that the NFL has to do more than fine offenders if it really wants to change the big-hitting culture.. Harrison further added, Ive had plenty of hits like this and fining me $5 or $10 grand really didnt affect me. But I got to a point where they suspended me and I knew the effect on my teammates, the disappointment of me not being out there; not the $100,000 that got taken away from me, but the fact that I wasnt out there. Thats what they are going to have to do if they want to change the nature of these hits. You hav e to suspend guys. † The NFL is currently utilizing other methods of penalty- suspension- as a method of deterrence. Will a substantially-recruited high school football player model himself and alter his tackling style by simply observing his favorite NFL player doing the same? If not, what if he met both the victim of a violent tackle and the offender? The independent variables are equally the favorite NFL players that give violent hits, and ones that received violent (and injury resultant) hits. The dependent variables are talented defensive players (decisions) about to leave high school and are being heavily recruited into college. Both Ordinal and Ratio data will be collected. To determine a level of persuasion, Ordinal data will be necessary (influenced more severe tackling, same/unchanged tackling; influenced less severe tackling); for both observation from afar, and actual/perceived interaction with victim and offender. Ratio data will be collected to determine the percentages of players that felt their respective play (influenced/uninfluenced) somehow altered their ability to be recruited. The hypothetical result is to segment how violence may be altered when measured through observation of others and through social interaction with participants. This may be able to translate how offenders may be able to recant their violent tendencies if a â€Å"role model† also recants. Operant conditioning is fundamental to some criminal behavior. It is present in all humans and probably less-focused as a pre-cursor to progressive criminal behavior. Do this, get response; do that, get a different response. Now, which response was â€Å"better or worse† in the offender’s opinion? And, if for the worse, how bad and is the offender prepared? Unfortunately, smaller crimes or even lawful activities can often lead to greater severity of deviant behavior. For instance, a male interprets the â€Å"mixed† sexual signals of a female during intercourse as â€Å"okay† this time. In fact, without knowing, is reinforcing the mixed signal by continually giving positive overall feedback without focusing on the things that are not okay. Then, the male continues this activity(s) to other partners until someone finally signals the behavior as improper or deviant. The reaction up to this point may not replicate the reaction in the instant- rejection. The eventual offender reacts in an emotional manner now considered criminal- an aggravated assault. Somewhere the operant conditioning has misaligned the offender to think that it was always â€Å"okay. † Now, it is not okay and the offender is not prepared for the response. On another angle, the victim is married to the offender. He/she has typically submitted to the behaviors and finally decides the behavior to be deviant. He/she has continually obliged due to conditioned reasons and pre-conceived consequences. Hopefully, the offender will see the reasoning, understand, and agree to dismiss harmful aggression. However, he/she may not and now operant conditioning is present for both sides. Sutherland’s (1939) position of differential association theory centers a neutrality of initial human behavior. The criminal tendency is learned through association with other, â€Å"bad company. † Likewise, good behavior can be attributed to the association with positive influences of other’s actions. Over the course of observation of others within a group, a subject is more likely to duplicate the consensus of behavior- good or bad. This is due, in part, to the conceived definition of what may be right or wrong because others are doing the same. While a valued approach, this theory did not break down the types of learning from other’s actions. By simply boiler-plating that all will do as the majority does, leaves many influences on the table. Differential Association-Reinforcement (DAR) theory gives greater detail into the interactions with others. In especially deviant behaviors, a subject would also need to observe other factors- strength, frequency, reinforcements (positive and negative) all packaged in a stimuli. In other words, a subject may run with a â€Å"bad company,† but if they receive other positive reinforcements for other aspects, then he/she is not pre-destined to become deviant. The physiological factors associated with aggression have great range- from genetics that some researchers parallel with animal instincts to cognitive reasoning for choosing how to deal with the aggression. The genetic and animal approach can easily be identified by observation of humans. Humans can be territorially aggressive in protection mode, as well as, in social matters. This trait is â€Å"built-in† through years of development and remains unchanged. I believe it may also be defined as impulsive- stimuli will invoke a reaction. However, humans have also developed a â€Å"knack† for deciding what is, or is not, appropriate behavior. Through social interaction and learned behaviors, humans as a whole can discern if aggression is necessary and to what level it should or should not be levied. Equally important is the ability to observe punishment and negative consequences in order to draw conclusion on appropriate (aggressive) behavior. Medicinal and medically-invasive measure may also be taken in order to subside aggressions. Later it was proposed (Zillmann, 1988) that arousal carries substantial weight in factoring situational aggression. These factors may include sexual, negative excitement, or other stimuli that combine to create an aggressive behavior. Pre-existing conditions can intertwine with real-time observations and carryout immediate aggression. Other recent researchers add that skill-sets and gender help determine the aggressor’s initial reaction. Once the arousal is recognized, the person may react with reflexive response and/or cognitively think before reacting. The research is varied when relying on simple factors such as, driving (road rage), video games, and peer rejection. Social observation (socialization) also factors into the potential aggressor’s reaction. Therein, I believe genders have an internal â€Å"triage† that quickly determines the most valuable return on behavioral investment. In addition, if aggression becomes favor with the person, he/she must then determine the types of overt aggression are pointed threats of bodily harm, physical assault, rape, murder, or road rage and can be linked to childhood tendencies of similar behaviors. Covert aggression is indirect and most often, unders of covert aggression are passive-aggressive exchanges, disguised theft or fraud, internet or electronic hassle. Social and aggressive behavior is managed largely through daily experiences by cognitive scripts. â€Å"A script suggests what events are to happen in the environment, how the person should behave in response to these events, and what the likely outcome of those behaviors would be†(Huesmann, 1988, p. 15). Scripts may be learned through direct experience or observing significant others (Bushman Anderson, 2001). Once learned and established, the script is usually adhered becomes resistant to change into adulthood. However, each script is different and unique to each person, and to become established must be practiced from time to time (Bartol, 2011) Furthermore, an important role in determining which scripts are stored in memory is the â€Å"evaluation of the appropriateness. † (Huesmann, 1988, p. 19). Conflicting scripts that intrude someone’s personal standards are unlikely to be stored or utilized. According to Blackman, chronic criminality can be understood as â€Å"an attempt to maintain status or mastery of a social environment from which they feel alienated† (1998, p. 174). The well-rehearsed cognitive script of persistent, lifelong offenders, therefore, is to dominate- often in a hostile manner- social environments they perceive as hostile. The other model has been developed by Kenneth Dodge and his colleagues (Dodge, 1986; Dodge Coie,1987), and is called the hostile attribution model. Insomuch, there is a bias because youth (and adults) prone toward violence are more likely to interpret unsuspecting actions as hostile and threatening than are their less aggressive counterparts (Dodge, 1993b). People described as having hostile attribution bias â€Å"tend to view the world through blood-red tinted glasses. † (Dill, Anderson, Anderson, Deuser, 1997). Children with a hostile attribution bias are much more likely than the average child to misinterpret actions from others as aggression (Hubbard et al. , 2001). Also, the bias is present in both boys and girls (Vitale, Newman, Serin, Bolt, 2005). Similarly, Serin and Preston (2001, p. 259) conclude, â€Å"Aggressive juvenile offenders have been found to be deficient in social problems of reactive aggression include: anger expressions; temper tantrums; and vengeful hostility- â€Å"hot-blooded† aggressive acts. Reactive aggression appears to be a reaction to frustration and is associated with a lack of control due to high states of arousal. In general, reactive aggression is a hostile act displayed in response to a perceived threat or provocation. However, proactive aggression includes: bullying; domination; teasing; name-calling; and coercive acts- more â€Å"cold-blooded† aggressive actions. (Dodge, et al. 1997). In difference, proactive aggression is less emotional, and hopeful of rewards. In theory, the basis of proactive aggression is found in social learning that is controlled and maintained by reinforcement.

Production and Growth Essay Example | Topics and Well Written Essays - 1250 words

Production and Growth - Essay Example On the other hand, explaining differences relating to growth and productivity among countries around the world required significant understanding of their determinants. It also important to note that, growth rates among different countries around the world are not constant; in fact, they are highly dynamic (Zhihua and Kai, 4). Moreover, countries that are considered poor are not destined to a state of poverty; for instance, countries such as Singapore had low incomes during 1960, but currently her incomes have significantly increased. Therefore, economic stability of a country is not taken for granted since; there are increased chances of being overtaken by other poorer countries that are growing more rapidly. FACTORS AFFECTING PRODUCTIVITY AND GROWTH GDP and income in a country increases due to workers’ productivity, thereby leading to increased living standards for the citizens. Productivity and growth rate in a given country is also facilitated by technological knowledge si nce it enhances the production process. Furthermore, in order to understand productivity and growth in a country, human capital is understood based on perspective through which people contribute to expansion of knowledge acquired in the field of production. Furthermore, there is need to understand policies, which influence determinants of growth in a country. Some of these growth determinants include international trade, health, nutrition, health, property rights and political instability and others; In fact, it is also vital to understand investment, savings and the policies that affect them. Output per unit labor is also one of the major determinants of living standards among citizens in a country. Therefore, the discussion in this paper focuses on comparing productivity in different countries depending on physical and human capital per worker, and natural resources. Moreover, evaluation of growth among different countries is based in technological advancement, which improves livi ng standards. INCOMES AND GROWTH AROUND THE WORLD Rates of growth among countries across the world are highly dynamic due to numerous underlying factors. Therefore, numerous changes occur over a period of time, whereby poor countries acquire chances of improving their productivity and growth to an extent of surpassing other countries. On the other hand, decisions made by various political actors in a given country can affect their growth negatively or positively; thus, leading to decline or increase of productivity. The graphs below show GDP per captial during 2009 and growth rate from 1970 up to 2009 for different countries in order to compare their growth and productivity rates. DETERMINANTS OF PRODUCTIVITY Physical Capital per worker (K/L) In any country, the physical capital refers to the tools and machinery used for production and infrastructure such as roads and ports, which facilitates mobilization of factors of production. In fact, physical capital is an attribute of growth and productivity in a given country since it is applied in production of output. However, there is a profound difference between physical capital and technology since it constrained, thereby being used by particular workers. In this case, productivity and growth is caused by substantial difference in physical capital between developed and developing countries. For instance, a survey conducted in 2000

Introduction to film studies Essay Example | Topics and Well Written Essays - 1000 words - 1

Introduction to film studies - Essay Example uelle Seinger is about a book dealer whose primary aim is to make money and who is hired by a wealthy book collector to track down a particular book called ‘The Ninth Gate’. The book dealer is also supposed to authenticate the book. Only one of the three copies of this book exists in the world and the wealthy collector is very keen on getting hold of this book, as he believes that this book will be able to conquer evil. The opening sequence of the film is very arresting and the focus shall be on that particular sequence while analyzing the mise en scene. The director begins the film by taking a wide shot of an old man shown sitting in a room and writing a note at his desk. Then the camera slowly moves towards a small chair focussing on it for about thirty seconds before panning straight to the top of the ceiling where a rope is shown hanging from a chandelier. While the camera is zooming on this sequence, the background music and the sound of a clock ticking away build up the suspense and makes the audience is filled with an ominous feeling that something terrible is going to happen. The director then skilfully cuts the camera from the rope on the chandelier to a medium shot of the old man where it stays on him showing him stopping his writing and then folding the sheet of paper. The atmosphere of suspense is reaching a crescendo as the camera again suddenly cuts from this shot to follow the old man’s legs while he is walking towards the chair. Because of the skilful placement of the camera and shot angles, the audience has already got an inkling of what’s going to happen but the music and the camera shots keep the suspense building till it reaches the man climbing onto the chair, putting his head through the rope and tightening it and then quickly pushing away the chair. As the chair falls down on the second try, the audien ce can see the man’s feet trembling and the sound of the broken neck along with the background score heightens the drama in the

Counterstereotype Essay Example for Free

Counterstereotype Essay Stereotypes are so prevalent in our everyday lives that people don’t even realize that they are making racist comments. They are so use to making these comments in their own inner circles, that they don’t even realize how detrimental they can be outside of their circle. Stereotypes affect people’s social lives, emotions, and how people interact with their environment. Stereotypes, prejudice and discrimination are known to be related but having different concepts. Stereotypes are regarded as the most cognitive component, prejudice as the affective and discrimination as the behavioural component of prejudicial reactions. That slight pause in the processing of a stereotype gives conscious, unprejudiced beliefs a chance to take over. With time, the tendency to prevent automatic stereotyping may itself become automatic. Past studies have shown that people perform poorly in situations where they feel they are being stereotyped. Are there lingering effects of prejudice? Does being stereotyped have an impact beyond the moment when stereotyping happens? Stereotypes have an enormous impact of how we feel. It affects people’s social lives, emotions, and how people interact with their environment. Regarding the quote, â€Å"If you prick us, do we not bleed? If you tickle us, do we not laugh? If you poison us, do we not die? And if you wrong us, shall we not revenge? From The Merchant of Venice by Shakespeare, even after a person leaves a situation where they faced negative stereotypes, the effects of coping with that situation remain. People are more likely to be aggressive after theyve faced prejudice in a given situation. They are more likely to exhibit a lack of self-control. They have trouble making good, rational decisions and are more likely to over-indulge on unhealthy foods. These days’ people are afraid to be themselves, because they fear other people. They don’t want people to think something bad for them. Secrets, thoughts, and ideas, are all held down. Stereotypes can be an obstacle as to how open you are with people and how you make people feel when you are with them. Instead of focusing on all the mistakes of each person, we should start paying more attention of how unique each person is. Stereotype causes people to feel lonely and even sometimes depressed. It’s also harmful for their environment and their social life. We should keep stereotypes out of the picture, even though sometimes we can be victims ourselves. The study of culture may someday tell us where the seeds of prejudice originated; for now, the study of the unconscious shows us just how deeply theyre planted.

Red Badge of Courage Essay: Battle for Adulthood :: Red Badge Courage Essays

A Battle for Adulthood in Red Badge of Courage    Throughout the novel, The Red Badge of Courage, written by Stephen Crane, a theme is portrayed within a battle that takes place during the Civil War. It is that each person must find the courage to win his or her won battle for maturity or adulthood. A soldier, who is also the main character, Henry Fleming, exemplifies this theme.    Henry Fleming begins as an immature soldier who enlists in the army without knowing a reason why. Henry has a romantic view of the war, and expects it to be glorious: â€Å"They [battles] might not be distinctly Homeric, but there seemed to be much glory in them. He [Henry] had read of marches, sieges, conflicts, and he had longed to see it all.† Henry obviously lacks maturity because he was very determined to enlist in the army, but tries to blame the government for being at war.    Henry starts to realize that there are no heroes and that there are no individuals: â€Å"He had grown to regard himself merely as a part of a vast blue demonstration.† Therefore he is beginning to fight the battle within himself into adulthood. Henry looses some of his selfishness and gains concern for others, another stepping stone: â€Å"He felt the subtle battle brotherhood more potent even than the cause for which he was fighting.† Henry deserts a dying soldier and runs from a battle, but recognizes that running away was wrong. It isn’t a mature action, but he is mature to realize the magnitude of running.    With the knowledge of his past mistakes, Henry goes into battle without thinking about the past and fights heroically. After a general makes a derogatory remark about Henry and his comrades, it reveals Henry’s change of attitude. He accepts the comment without rebellion and fights with courage. Because of the success of fighting bravely, Henry has the self-esteem to deal with his mistakes as an adult. As a mature person he can learn from his mistakes.

Challenges of Money Market Mkt in India Essay

The India money market is a monetary system that involves the lending and borrowing of short-term funds. India money market has seen exponential growth just after the globalization initiative in 1991. It has been observed that financial institutions do employ money market instruments for financing short-term monetary requirements of various sectors such as agriculture, finance and manufacturing. The performance of the India money market has been outstanding in the past 20 years. The central bank of the country – the Reserve Bank of India (RBI) has always been playing the major role in regulating and controlling the India money market. The intervention of RBI is varied – curbing crisis situations by reducing the cash reserve ratio (CRR) or infusing more money in the economy. Money market instruments take care of the borrowers’ short-term needs and render the required liquidity to the lenders. The varied types of India money market instruments are treasury bills, repurchase agreements, commercial papers, certificate of deposit, and bankers acceptance. The major players in the money market are Reserve Bank of India (RBI), Discount and finance House of India (DFHI), banks, financial institutions, mutual funds, government and the giant corporate houses. Indian money market has a dichotomic structure. It has a simultaneous existence of both organized and unorganized money markets. The organized structure consists of the RBI , all scheduled and commercial banks and other recognized financial institutions as mentioned above. However, the unorganized part of the market consists of local moneylenders, indigenous bankers, traders, etc. This part of the market is outside the purview of the RBI. Issues and challenges of the Indian money market The money market in India has undergone tremendous developments since past twenty years. However, it is still not free of certain rigidities that are hampering the growth of the market. They are: 1. Dichotomy between Organized and Unorganized Sectors: The most important defect of the Indian money market is its division into two sectors: (a) the organised sector and (b) the unorganized sector. There is little contact, coordination and cooperation between the two sectors. In such conditions it is difficult for the Reserve Bank to ensure uniform and effective implementations of monetary policy in both the sectors. 2. Predominance of Unorganized Sector: Another important defect of the Indian money market is its predominance of unorganised sector. The indigenous bankers occupy a significant position in the money-lending business in the rural areas. In this unorganized sector, no clear-cut distinction is made between short-term and long-term and between the purposes of loans. These indigenous bankers, which constitute a large portion of the money market, remain outside the organized sector. Therefore, they seriously restrict the Reserve Bank’s control over the money market, 3. Wasteful Competition: Wasteful competition exists not only between the organised and unorganised sectors, but also among the members of the two sectors. The relation between various segments of the money market are not cordial; they are loosely connected with each other and generally follow separatist tendencies. For example, even today, the State Bank of Indian and other commercial banks look down upon each other as rivals. Similarly, competition exists between the Indian commercial banks and foreign banks. 4. Absence of All-India Money Market: Indian money market has not been organised into a single integrated all-Indian market. It is divided into small segments mostly catering to the local financial needs. For example, there is little contact between the money markets in the bigger cities, like, Bombay, Madras, and Calcutta and those in smaller towns. 5. Inadequate Banking Facilities: Indian money market is inadequate to meet the financial need of the economy. Although there has been rapid expansion of bank branches in recent years particularly after the nationalization of banks, yet vast rural areas still exist without banking facilities. As compared to the size and population of the country, the banking institutions are not enough. 6. Shortage of Capital: Indian money market generally suffers from the shortage of capital funds. The availability of capital in the money market is insufficient to meet the needs of industry and trade in the country. The main reasons for the shortage of capital are: (a) low saving capacity of the people; (b) inadequate banking facilities, particularly in the rural areas; and (c) undeveloped banking habits among the people. 7. Seasonal Shortage of Funds: A Major drawback of the Indian money market is the seasonal stringency of credit and higher interest rates during a part of the year. Such a shortage invariably appears during the busy months from November to June when there is excess demand for credit for carrying on the harvesting and marketing operations in agriculture. As a result, the interest rates rise in this period. On the contrary, during the slack season, from July to October, the demand for credit and the rate of interest decline sharply. 8. Diversity of Interest Rates: Another defect of Indian money market is the multiplicity and disparity of interest rates. In 1931, the Central Banking Enquiry Committee wrote: â€Å"The fact that a call rate of 3/4 per cent, a hundi rate of 3 per cent, a bank rate of 4 per cent, a bazar rate of small traders of 6.25 per cent and a Calcutta bazar rate for bills of small trader of 10 per cent can exist simultaneously indicates an extraordinary sluggishness of the movement of credit between various markets.† The interest rates also differ in various centres like Bombay, Calcutta, etc. Variations in the interest rate structure is largely due to the credit immobility because of inadequate, costly and time-consuming means of transferring money. Disparities in the interest rates adversely affect the smooth and effective functioning of the money market. 9. Absence of Bill Market: The existence of a well-organized bill market is essential for the proper and efficient working of money market. Unfortunately, in spite of the serious efforts made by the Reserve Bank of India, the bill market in India has not yet been fully developed. The short-term bills form a much smaller proportion of the bank finance in India as compared to that in the advanced countries. Many factors are responsible for the underdeveloped bill market in India: * Most of the commercial transactions are made in terms of cash. * Cash credit is the main form of borrowing from the banks. Cash credit is given by the banks against the security of commodities. No bills are involved in this type of credit. * The practice of advancing loans by the sellers also limits the use of bills. * Heavy stamp duty discourages the use of exchange bills. * Absence of acceptance houses is another factor responsible for the underdevelopment of bill market in India. * In their desire to ensure greater liquidity and public confidence, the Indian banks prefer to invest their funds in first class government securities than in exchange bills. * The RBI also prefers to extend rediscounting facility to the commercial banks against approved securities. Comparison of Indian money market with Developed & Developing economies MONEY MARKET IN A DEVELOPED ECONOMY (with the US in reference) The domestic money market in the United States carries out the largest volume of transactions of any such market in the world; its participants include the most heterogeneous group of financial and nonfinancial concerns to be found in any money market; it permits trading in an unusually wide variety of money substitutes; and it is less centralized geographically than the money market of any other country. Although there has always been a clustering of money market activities in New York City and much of the country’s participation in the international money market centers there, a process of continuous change during the 20th century has produced a genuinely national money market. The unit banking system: This system has led inevitably to striking differences between money market arrangements in the United States and those of other countries. At times, some smaller banks almost inevitably find that the wholesale facilities of the money market cannot provide promptly the funds needed to meet unexpected reserve drains, as deposits move about the country from one bank to another. MONEY MARKET IN DEVELOPING COUNTRIES Well-developed money markets exist in only a few high-income countries. In other countries money markets are narrow, poorly integrated, and in many cases virtually nonexistent. Despite the many differences among countries, one can say in general that the degree of development of a country’s financial system, including its money markets, is directly related to the level of its economy. Most developing countries, except those having socialist systems, have the encouragement of money markets as a policy objective, if only to provide outlets for short-term government securities. At the same time many of these governments pursue low-interest-rate policies in order to reduce the cost of government debt and to encourage investment. Such policies discourage saving and make money market instruments unattractive. Nevertheless, a demand for short-term funds and a supply of them exist in all market-oriented economies. In many developing countries these pressures have led to â€Å"unorganized money markets,† which are often highly developed in urban areas Such markets are unorganized because they are outside â€Å"normal† financial institutions; they manage to escape government controls over interest rates; but at the same time they do not function very effectively because interest rates are high and contacts between localities and among borrowers and lenders are limited. Money Market Instruments in India: 1. COMMERCIAL PAPERS (CPs) : Commercial Paper (CP) is a negotiable short-term unsecured promissory note with fixed maturity, issued by well-rated companies generally sold on discount basis. It does not originate from any specific self-liquidating trade transaction like commercial bill which generally arise out of specific trade or commercial transaction. CP was introduced in India in 1990 with a view to enabling highly rated corporate borrowers to diversify their sources of short-term borrowings and to provide an additional instrument to investors. The CP rates usually lie between prime lending rate of commercial banks and some benchmark interest rate like 91-day Treasury bill rate, bank rate, 3 month MIBOR, Average Call Money Rate, etc. Except for the bank rate, which is a policy- induced rate, other rates are market determined. Risks associated with Cps: Credit Risk: Moderate to high. The ratings of the company issuing the commercial paper should be monitored; i.e., A-1/P-1. Liquidity Risk: Moderate. If a company has credit problems it may receive a negative credit watch, which will lead to a rating being downgraded. Commercial paper also may be somewhat difficult to sell. Market Risk: Moderate, due to the short-term nature of this security. CHALLENEGES ASSOCIATED WITH CPs: * Higher financial costs force organizational decisions and changes * Substantial initial collateral requirements * More risky as debt holders can force closure of MFI * More tricky cash flow management as principal is repaid * Early negotiations require a new set of skills and contacts * Local banks may not be willing to be cooperative * Loans may be dollarized in an inflationary situation * Too many subsidized loans can retard move to market rate 2. CERTIFICATE OF DEPOSITS (CDs) : This scheme was introduced in July 1989, to enable the banking system to mobilize bulk deposits from the market, which they can have at competitive rates of interest. The major features are:   Who can issue- Scheduled commercial banks (except RRBs) and All India Financial Institutions within their `Umbrella limit’. Investors- Individuals (other than minors), corporations, companies, trusts, funds, associations etc Maturity -Min: 7 days Max : 12 Months (in case of FIs minimum 1 year and maximum 3 years). Amount- Min: Rs.1 lac, beyond which in multiple of Rs.1 lac Interest Rate- Market related. Fixed or floating Loan- Against collateral of CD not permitted Pre-mature cancellation- Not allowed Transfer, Endorsement & delivery- Any time Other conditions †¢ If payment day is holiday, to be paid on next preceding business day †¢Issued at a discount to face value †¢Duplicate can be issued after giving a public notice & obtaining indemnity CHALLENGES ASSOCIATED WITH CDs: * No additions are permitted to be made to any CD. Unless otherwise required by law CDs may not be withdrawn prior to maturity. When one purchases a CD, he has to agree with the issuing depository institution to keep your funds on deposit for the term of the CD. * CDs are not automatically renewed * CDs are relatively illiquid and taxable instruments. Hence, generally people do not find an incentive to hold CDs. * One might not get a fixed interest rate if you choose the wrong type of CD. It’s important to understand the distinction between variable-rate CDs (which can be less predictable) and those that offer fixed rates. 3. TREASURY BILLS (T-BILLS) : Treasury bills, popularly known as T-bills, are short-term finance bills issued by the government. They are not backed by any trade transaction, like the commercial bills. These bills are highly liquid and risk-free as they are backed by a guarantee from the government. They were earlier issued for 91 days but now there are also 182 days and 364 days treasury bills. These treasury bills are floated through auctions conducted by RBI. The Reserve Bank of India as the leader and controller of money market, buys and sells these treasury bills. The buying and selling operations are conducted by DFHI on behalf of RBI for stabilizing the money market. Who can buy – Treasury bills can be purchased by any one (including individuals) except State govt. These are issued by RBI and sold through fortnightly or monthly auctions at varying discount rate depending upon the bids. Denomination – Minimum amount of face value Rs.1L and in multiples thereof. There is no specific amount/limit on the extent to which these can be issued or purchased. Maturity : 91-days TBs, 182-days TBs, 364-days TBs and two types of 14-days TBills. Rate of interest -Market determined, based on demand for and supply of funds in the money market. CHALLENGES ASSOCIATED WITH T-BILLS: * T-Bills do not fetch very attractive yields. * Though T-bills are sold through auction in order to ensure market rates for the investor, in actuality, competitive bids are almost absent. The RBI is compelled to accept these non-competitive bids , hence, adequate returns are not available. It makes T-bills unpopular. * Generally , the investors hold T-Bills till maturity and they do not come for circulation. Hence, active trading and mobility in T-bill market is adversely affected. 4. REPURCHASE AGREEMENT (REPO AND REVERSE REPO) : Repo is a money market instrument, which enables collateralized short term borrowing and lending through sale/purchase operations in debt instruments. Under a repo transaction, a holder of securities sells them to an investor with an agreement to repurchase at a predetermined date and rate. In the case of a repo, the forward clean price of the bonds is set in advance at a level which is different from the spot clean price by adjusting the difference between repo interest and coupon earned on the security. A reverse repo is the mirror image of a repo. For, in a reverse repo, securities are acquired with a simultaneous commitment to resell. Hence whether a transaction is a repo or a reverse repo is determined only in terms of who initiated the first leg of the transaction. When the reverse repurchase transaction matures, the counterparty returns the security to the entity concerned and receives its cash along with a profit spread. One factor which encourages an organization to enter into reverse repo is that it earns some extra income on its otherwise idle cash. Broadly, there are four types of repos available in the international market when classified with regard to maturity of underlying securities, pricing, term of repo etc. They comprise buy-sell back repo, classic repo bond borrowing and lending and tripartite repos. CHALLENGES ASSOCIATED WITH REPURCHASE AGREEMENTS: * As far as risks are concerned although repos are collateralized transactions they are still exposed to counterparty risk and the issuer risk associated with the collateral. As far as the counterparty risk is concerned, the investor should be able to liquidate the securities received as collateral, thus largely offsetting any loss. Against this the seller /lender of bonds will hold cash or other securities as protection against non-return of the lent securities. In both the cases it is to be ensured that the realizable value equals or exceeds the exposure. * There is also the concentration risk resulting from illiquid issues which are used as collateral in the transaction. * Again, even where global agreements are signed full transfer of ownership as per contractual protections could be enforced only where a clean legal opinion is available in respect of jurisdiction concerned. In other words, repos are also prone to legal risks if care is not taken. 5. MONEY MARKET MUTUAL FUNDS (MMMF): 6. COLLATERALIZED BORROWING AND LENDING OBLIGATION (CBLO) It is a money market instrument as approved by RBI, is a product developed by CCIL (Clearing Council of India Ltd) . CBLO is a discounted instrument available in electronic book entry form for the maturity period ranging from one day to 90 Days (can be made available up to one year as per RBI guidelines). CBLO is explained as under: †¢ An obligation by the borrower to return the money borrowed, at a specified future date; †¢ An authority to the lender to receive money lent, at a specified future date with an option/privilege to transfer the authority to another person for value received; †¢ An underlying charge on securities held in custody (with CCIL) for the amount borrowed/lent. Banks, financial institutions, primary dealers, mutual funds and co-operative banks, who are members of NDS, are allowed to participate in CBLO transactions. Non-NDS members like corporate, co-operative banks, NBFCs, Pension/Provident Funds, Trusts etc. are allowed to participate by obtaining Associate Membership to CBLO Segment. In order to enable the market participants to borrow and lend funds, CCIL provides the Dealing System through: – Indian Financial Network (INFINET), a closed user group to the Members of the Negotiated Dealing System (NDS) who maintain Current account with RBI. – Internet gateway for other entities who do not maintain Current account with RBI.

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