Federalism and Immigration Essay Example for Free

Federalism and Immigration Essay The term immigration describes the movement and settlement of people who are not US citizens into the United States of America. Throughout history, America has been receiving immigrants from distant lands who come to settle in the United States. As early as the nineteenth century, there were many people from other corners of the world who left their homelands to settle in the US. The reasons for early immigration were, among others, famine, flight from persecution in their homelands and search for better economic opportunities. Thus between 1870 and 1900, the United States received approximately 12 million migrants (Library of Congress 2004). This immigration trend into the United States has continued unabated well into the twenty first century and presently the foreign born population constitutes a significant proportion of the total American population. But of particular concern is the case of illegal immigrants who have infiltrated virtually every corner of the United States. In a 2005 population survey, it was estimated that there were more than 11.1 million illegal immigrants living in the United States and the numbers are steadily increasing with each passing year (Passel, 2006). An uncontrolled influx of immigrants into the US can adversely affect the economy and has invited a negative public opinion from U.S residents. For this reason, the federal government has had to come up with several immigration policies and laws with which to control the immigration process and to curb the influx of illegal immigrants. Although immigration policy is conventionally a realm of the federal government, recently, there have been efforts to include both the state and local governments in the process. This development has been met with different reactions as some people support the idea while others openly question its validity as applied to the constitution. Is the involvement of state and local law enforcement agencies in the enforcement of immigration laws a violation of the U.S constitution? Why the state and local law enforcers are being involved in immigration law enforcement The federal government is probably not to blame for not being able to adequately handle the immigration situation. Apparently it operates a limited force of an estimated 2,000 federal agents.   Yet statistics show that there are more than twelve million immigrants living illegally in the United States and every year, there is an influx averaging 800,000. Some of them, around 450,000, are absconders who have already been issued with a deportation order but have not yet left the country. Some of them have even been found guilty of some deportable crimes but are yet to be deported. Cleary, the federal government has not been able to effectively implement the federal immigration laws across the entire country, simply because it lacks enough manpower. The number of illegal aliens in America far outweighs the force that is meant to control them at the ration of approximately 5,000 to 1. It is for this reason that decisions were made to include the state and local law enforcers in the implementation of immigration laws. This move added an additional 700,000 law enforcers to the immigration police force thereby increasing the capability of the federal government to effectively enforce the immigration laws (Booth, 2006). Legislations supporting the involvement of state and local law enforcers in immigration There are several legislations which have been proposed to facilitate the involvement of the state and local law enforcers in the implementation of immigration laws. In the late twentieth century, the federal government started making subtle efforts to involve state and local governments in immigration. The year 1996 marked a turning point in the involvement of state and local governments in enforcement of immigration laws. During this year, Congress introduced the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) which brought significant changes in state handling of aliens (â€Å"The constitutionality of immigration federalism†, 2005). Through this act, Congress gave the states authority to discriminate against immigrants in public benefits programs by deciding who was eligible and who was not. Since the states are not allowed to classify aliens under the equal protection doctrine, the federal government took measures to devolve immigration decision making authority to the states so that their welfare discrimination would not be viewed as a violation of the constitution but rather, as immigration law making (Wishnie, 2002). The immigration laws of 1996 encouraged the state and local governments to take part in the implementation of immigration laws and authorized them to cooperate with the U.S Immigration and Naturalization Service (INS). Ordinances which had previously prevented the INS and the local agencies from communicating were removed and the states were allowed to deny drivers’ licenses to illegal immigrants. This led to an increase in the number of detained illegal immigrant.In 2001, the September 11 attacks further intensified local government involvement in the enforcement of immigration and in 2002, the U.S Department of Justice declared that in its point of view, the state and local governments possessed an â€Å"inherent authority† to enforce immigration laws (Wishnie, 2002). In 2003, H.R 2671, the Clear Law Enforcement for Criminal Alien Removal Act (CLEAR Act) was introduced by the U.S House of representatives. It stated in part that the State and local law enforcers had the authority to enforce immigration laws and declared that any state with no statute to enable the implementation of federal immigration laws within a two year period after the act had been enacted be denied certain federal incarceration assistance. It also proposed compensation of the State or local authority for the apprehension of illegal immigrants within their jurisdictions as well as the provision of personal liability immunity to personnel who enforced the immigration laws; whether they are from a federal, State or local agency. However, this bill never became law (GovTrack.us, 2003). In November 2003, S.1906, the Homeland Security Enhancement Act (HSEA) was introduced into parliament by the U.S senate. Under the HSEA, all violations of immigration laws committed by immigrants would be criminalized. The act also proposed that the states which did not repeal the policies that hindered their police from enforcing the immigration laws be denied funds from Criminal Alien Assistance Program (SCAAP) so as to induce them to enforce these laws. The SCAAP program reimburses the States any costs that they may have incurred in their incarceration of non US citizens. This Act was met with sharp disagreements with the opponents arguing that it would damage the good relationships that local law enforcers had forged with immigrants in their area even as its proponents felt that its enactment would boost national security (NILC, 2004). In 2005, some legislation pieces similar to the 2003 Clear Act and the 2003 HSEA Act were reintroduced by Congress. Both of these bills asserted that the state and local law enforcement was allowed to aid the federal government in the implementation of immigration laws. It is worth noting that the 2005 CLEAR Act also proposed that the allocation of federal funds to local authorities be made dependent on whether they supported the federal government in the implementation of the immigration laws (Booth, 2006). All these legislations were in an effort to make the state and local governments assume more responsibility in controlling immigration so as to enhance the effectiveness of local law enforcement efforts. Public opinion on immigration and federalism Several studies have revealed that a majority of Americans feel that immigration into the United States is out of hand and would wish for better laws to sustain the influx especially of illegal immigrants. In a recent Rasmussen public opinion poll, it was established that one out of every four U.S citizens was very angry about the current American immigration policy. 28% of those who were interviewed expressed frustration with this policy while 62% expressed the need for a stricter border control. As of August 2008, 74% of Americans felt that the federal government was not doing enough to control the borders (Rasmussen reports, 2008). It is precisely because of these sentiments that Congress introduced the above pieces of legislation. Generally, the devolution of policy making decisions to the state and local governments has received widespread support from the public (Wishnie, 2002). Interestingly however, this particular move has been met with sharp differences in opinion whereby there are those who are in support of the move while others oppose it. Those who are in support of these laws argue that they are essential in order to beef up security especially in the face of recent terrorism attacks among other crimes which are purported to have been committed by aliens. However, those who oppose the move feel that making local law enforcers responsible for the implementation of these laws will overburden them, making them inefficient in other crucial sectors. Others feel that such a move is ill- advised at it will unnecessarily divert the already scarce local resources from the regular law enforcement functions such as the protection of industrial facilities as well as the channels of commerce. There are also sentiments that such a move could erode the relationship that local law enforcers have established with the local immigrant communities, thereby impeding the fight against crime as the aliens, especially the illegal ones, become more apprehensive in coming out with information on various crimes as they are afraid of being deported. But perhaps the most significant argument of all against the devolution of immigrant policy implementation from the federal government to the state and local government is that â€Å"it violates the constitutional principles of federalism by allowing state and local officials to assume distinctly federal roles† (Booth, 2006).

Essay --

Professional Development for Strategic Managers Introduction Professional development can provide the drive to progress your career, keeps managers across the industry more competitive. Mostly, professional development is something you will do everyday of your life without even thinking about it, however, being aware of the development you tackle, will allow you to record this and develop in a practical way. In order to maximise your prospective for lifetime employability, it is important to maintain high levels of professional competence by continually improving your skills and knowledge. It is essential to take ownership of your career and its continuing professional development, because of this ever changing market environment as you may no longer be able to depend on your employers to identify and satisfy your development necessity. The impact of such changes has increased the demands on professionals to maintain documentary evidence of their continued competence; because of the swift technology advancement in organisations. It is very important developing a personal portfolio of your professional activities and their relevance to your current job and your continued career as well as future ambitions. Task 1. Be able to assess personal and professional skills required to achieve strategic goals T1.1: Using appropriate methods to evaluate personal skills required to achieve strategic goals Professional skills are those skills obtained by an individual and necessary for use in a particular assignment or profession. These skills are developed over a period of time and are endlessly sharpen by working in the particular professional area. The skills are mostly used in businesses and professional organisations to expand the ... ...port personal development at the individual level in the organisation. At the individual level, self development involves the following; †¢ Improvement of social abilities †¢ Developing talents or strengths †¢ Improving knowledge †¢ Improvement in self awareness †¢ Improving or identifying potential †¢ Executing or defining personal development plan Conclusion In order to be effective, the objectives set at personal development and performance review should relate in part to the organisation’s key strategic objectives. The job description should have a connection, where suitable, with the strategic organisational and departmental goals. These strategic outcomes need to be translated for practical application at departmental and individual level. It is important for staff to understand what their organisation is trying to achieve and the implications for their work.

Soft Thinking and Intellectual Capital

{draw:frame} University of Glamorgan MSc International Logistics and Transport Programme/Strategic Procurement Management STRATEGY AS PRACTICE Soft Systems Thinking and Intellectual Capital Assignment 1 *Student No: *08193738 Assignment Date: 5 April 2009 *Submission Date:* 15 May 2009 Module Lecturer: Paul Davis Word Count:* * *2,* 600 Critically evaluate the role that Soft Systems thinking can play in promoting organisations Intellectual Capital. To evaluate the benefits of Soft Systems Thinking (SST) in promoting an organisational intellectual capital it is necessary to understand the concept of Soft Systems Methodology and how this methodology can be used to foster teamwork, communities of practice and social learning, and whether these learning outcomes adds knowledge to employees, and leads to improved professional practice and efficacy. So what price do you put on learning – and as an intangible asset does it need to be measured to promote Intellectual Capital (IC) to support the â€Å"effective delivery of strategic goals by focusing management activities and processes†. Andriessen (2004). Soft Systems Methodology (SSM) advocated by Checkland and Scholes (1990) is a methodology based on applying systems thinking to non system situations. It is a holistic way of dealing not with the problem but the â€Å"situation† in where there are â€Å"social, political and human activities† Checkland and Scholes (1990). As opposed to â€Å"hard system methodologies, which can be quantified, measured and are technology orientated. Soft Systems takes a group of â€Å"actors† through a process of a shared â€Å"problem† appreciation. Learning about the problem, then formulating a root definition of interrelated systems, these examine the relationships of the relevant subsystem: which are the stakeholders, such as customers, employees, the worldview (weltanschauungen) and the management who are â€Å"all active in the system and take collective action to improve the situation† Checkland (1981) Senge (1990) also describes systems thinking as having five learning disciplines, personal mastery, me_ntal models, shared vision, team learning, and the overarching discipline of systems thinking. Therefore, soft systems thinking is a tool that helps in the solving of problems involving human activities where the outcome is learning. Soft systems thinking can enable subjective perceptions of problems and potential solutions. Checkland and Scholes (1990). There are a number of different issues and approaches that can be used to develop a framework for the application of systems thinking for promoting the intellectual capital of any organisation. Soft Systems Methodology (SSM) advocated by Checkland and Scholes (1990) helps to achieve a clearer understanding of organisational issues and problem â€Å"situations†, as it approaches issues holistically. â€Å"System thinking is a discipline for seeking wholes, recognizing patterns and interrelationships, and learning how to structure those relationships in a more effective and efficient way † Senge and Lannon-Kim (1991. Therefore, managers having a range of skills and knowledge can add value to any improvement initiative. Rose and Haynes (2001) developed and used the methodology in a number of settings in the NHS and Iles and Sunderland (2001) cited the potential of SSM as an aid to implementing organisational change initiatives at King’s College Hospital London. (Iles and Sunderland, 2001:35) Soft systems thinking can help organisations to develop new perspectives, as it accounts for factors that otherwise would be ignored. A human activity system, can compliment strategic frameworks, such as the â€Å"Balance Scorecard† to co-ordinate business activities and improve internal and external communications. Kaplan and Norton (1992) However, humans view problems differently because they come from different backgrounds, and have different cultural roots, experience, and education, and as a subsystem, different personalities and philosophies to life. Therefore; if a group of managers at different management levels and different departments are all involved in a complex â€Å"problem situation†, SST maybe an excellent tool to create a conceptual understanding of a problem, but it does not represent the real world, but by using system rules and principles it allows thinking to be structured, to develop some models, and the situation can be expressed as a rich picture Checkland, (1981); Checkland and Scholes (1990) Although, Checkland (1999) contrasts with the emphasis on reductionists thinking on obvious problems with definite solutions. People interpret problem situations from particular standpoints and in terms of distinctive interests. Fortune and Peters (1995) speaks about ‘complex discursive’ networks challenging the understanding of systems, problems and solutions to problems. This system of relationships between people, activities, and the world is defined by Lave and Wenger (1991), as a Community of Practice, (CoP) ‘which develops over time’ and ‘in relation to’ other central and overlapping communities of practice’ and is a fundamental condition for the existence of knowledge. The approach focuses on the â€Å"social interactive dimensions of situated learning†. As people in the group interact with each other, establishing a relationship through mutual engagement and a sense of joint enterprise. Wenger (2000) describes three modes of belonging to a social learning system, as â€Å"engagement, imagination and alignment†. These cannot be formed, but have to evolve overtime, as new members join and others leave. So how can organisations like the NHS establish communities of practice? Brown and Duguid (2001a) suggests managers can seek to structure spontaneity, structuring fragmented practice across the organisation, they can encourage alignments of changing practices between communities thereby assisting the transfer of knowledge across the organisation. (Brown and Duguid 2001a). An equally important view has emerged under the banner of ‘the knowledge-based view of the firm' (Grant 1996), emphasises the necessity of organisations to develop and increase the knowledge and learning capabilities of employees through knowledge gaining, knowledge sharing, and knowledge transfer, to achieve competitive advantage. To take it further Lave and Wenger (1991) saw the gaining of knowledge as a social process, in which people participated in communal learning, but at different levels depending on their authority in the group. It is the shared commitment that binds the members of the CoP in a single social entity, and although members of the CoP build up tangible communal resources, such as written files, procedures, processes and policies, (hard knowledge) intangible resources are also being built up such as experiences rituals and idioms (soft knowledge). Hildreth and Kimble (2002) argued that the underlying problems of managing this knowledge was that Knowledge Management (KM) failed to recognise that knowledge itself consists of both hard and soft knowledge, much like the Chinese concepts of Yin and Yan and are mutually interdependent. â€Å"Knowledge by itself produces nothing; only when it is integrated into a task does knowledge benefit society. (Drucker 1992) Hislop (2004) examined three cases studies of CoP’s in large European organisations and concluded that only one was successful in sharing knowledge between communities. The other two failed to do so because they did not share the same identity. So it could be concluded that although CoP’s are self controlled and self directed, and maybe of value to the business organisation, the actual benefit and contribution to the organisation could also be uncertain. Maybe, because group solidarity in human communities, is often at the price of hostility/non-cooperation towards non-group members. â€Å"There appears to be a natural human inclination for dividing the world into friends and enemies that is the basis of all politics. † (Fukuyama, 1995) So knowledge maybe personified tacitly in the experiences of a community of practitioners in an organisation or explicitly in the written files, but Knowledge Management (KM) is a critical task for any organisation. Reducing tacit knowledge into numbers the organisation stands to lose money, although knowledge can be safely stored on computer systems – the actual value could be lost if an employee leaves with the tacit knowledge on how to use the explicit knowledge. Employee retention/turnover is important as downsizing and retirement can cause a loss of shared knowledge and knowledge could be transferred to competitors and be damaging to an organisations competitive advantage. (Stovel and Bontis (2002). Stovel and Bontis (2002) also advocate that â€Å"productivity will drop for a time due to the learning curve involved as new employees’ gain the knowledge of the tasks involved and understands and learns from the organisational culture. Information and data can be stored but it is not until it has been processed in the minds of an individual and is communicated to others does it become knowledge (Alavi and Leidener 2001) so to make tacit knowledge explicit, there has to be knowledge transfer. Knowledge transfer within and between organisations is not a one-way activity, but a process of trial and error, feedback, and mutual adjustment of both the source and the recipient (Von Krogh, 2003: 373). There have been a number of studies which have shown that some of the benefits of knowledge sharing/transfer can help solve problems and increase performance, adaptation, collaboration and innovation. (Constant, Sproull and Kiesler, 1996; Brown and Duguid, 2000). However, there is a great deal of literature on knowledge management and innumerable definitions of knowledge and what knowledge is, Blackler (1995) describes knowledge as â€Å"multifaceted and complex, being both situated and abstract, implicit and explicit, distributed and individual, physical and mental, developing and static, verbal and encoded. † While Fowler and Pryke’s (2003) views the more human element of knowledge â€Å"as much the perception arising from information and refracted through the individual’s personal lens†. Whereas, Knowledge Management Systems refers to information systems, particularly with the use of technology, which is adopted and designed to support employees, there is an emerging awareness that there is a social element to the area of knowledge management, which focuses on a more human centred approach, as a means of managing knowledge in organisations (Hildreth et el 1999) It is now recognised that the performance of any organisation, private and public is very much dependent upon the knowledge of the employees. But, it is the social element or the concept of â€Å"social capital† and its role in knowledge management for developing and gaining competitive advantage, and more broadly intellectual capital (IC) popularised by Stewart in Fortune magazine (1994) which has relational elements and comprises of human capital, structural capital, and organisational capital (Edvinsson and Malone, 1997; Stewart, 1997; Sveiby, 1997; Guthrie and Petty, 2000) and is viewed also as being central to the sustainability of competitive advantage. Edvinson and Malone (1997) defined human_ capital_ as the value of everything that ‘leaves the company at five p. m. † That is to say that only the shared knowledge assets or the _structural _capital only remains, when employees walk out through the door. Social capital can be defined as a set of informal values or norms shared among members of a group that permits them to cooperate with one another. â€Å"If members of the group come to expect that others will behave reliably and honestly, then they will come to trust one another. Trust acts like a lubricant that makes any group or organisation run more efficiently. † (Fukuyama, 1999, p16) With trust and the co-operation in groups and the social interactions based on informal communication, the building of networks can have economic benefits, with the creation of business opportunities through networking as trust reduces the costs of contracts and legal actions and shared values can make negotiations more successful. Social capital may also create business opportunities by facilitating and exchanging semi – confidential information and mutual ncouragement. (Glaser, Edward L. , Laibson, David, and Sacerdote, Bruce 2002), Intellectual Capital is the intangible economic value of organisational capital (structures, processes and culture) and human capital (skills, behaviour and knowledge) and it is the intangible asset of knowledge that is now being added to the classical production factors of land labour and capital. Growth and innovation are now rel ying on the intellectual capital /knowledge of an organisation, and how it uses the knowledge to compete in the market (Kim and Mauborgine (1999). The field of intellectual capital stems from the need of organisations to have to quantify assets. So efficient management of intellectual capital is directly linked to measurement and valuation (Andrieseen 2004) and has necessitated the introduction of reporting and valuations models for IC (Liebowitz and Suen 2000) and as the literature suggest the most popular measure of IC is the difference between the market value and the book value of a knowledge based firm (Brennan and Connell 2000. ) According to (Tuban and Aronson 2001) Knowledge is critically important because as an asset it appreciates rather than depreciates. Knowledge increases so intellectual capital is going to improve. So by using systems thinking to promote Intellectual Capital could be a powerful approach for understanding the nature of ‘problems situations’ and the way they are dealt with and how to go about improving results. The key benefit of the system is that it involves seeing the whole picture and creates insights to problems and can nurture the way that communities of practice can co-operate and learn through shared knowledge and experiences. System thinking is not an easy approach as it requires a substantial investment of effort, and thought, though the results can be more than worth the investment. Central to these ideas is that intellectual capital is ‘embedded in both people and systems. The stock of human capital consists of humans (the knowledge skills and abilities of people) social (the valuable relationships among people) and organisational (the processes and routines within the firm)’ (Wright et al 2001:716). But there are criticisms of Soft Thinks Thinking as the system is unable to deal with conflicting nature of social systems, and that it is a conceptual methodology and does not represent the real world, and the methodology implies that actors in a situation have the freedom to instigate change and that conflict does exist but the methodology relies on compromise. Douglas and MacGregor 1960 in his book â€Å"Human side of Enterprise â€Å"maintained that there are two fundamental approaches to managing people. Many managers tend towards theory x, and generally get poor results. Enlightened managers use theory y, which produces better performance and results, and allows people to grow and develop. Which demonstrates that you can’t legislate for human behaviour and those humans also by nature can be territorial and will protect their domain, by advocating knowledge is power. Lave and Wenger (1991) fail to explore the implications of the distribution of power when discussing CoP and Marshall and Rollinson (2004) suggests that Lave and Wenger ( 1991) discussions of meaning can be misinterpreted as ‘ excessively quiescent and consensual’ while in reality such activities are plagued by misunderstanding and disagreements. Without trust the members of the community of practice may be reluctant to share knowledge, and may become static in terms of their knowledge base be resistant to change. There are limitations to the communities of practice but, its does allow the means to explore the transfer of tacit knowledge management tools focused on the codification of knowledge. But a community of practice is one of a number of knowledge management tools, and different organisations require different tools. Other tools maybe needed to be developed to manage tacit knowledge as from the critic that soft thinking systems may not always be appropriate as a knowledge management tool. References Alavi, M. and D. Leidner 2001 Knowledge Management and Knowledge Management Systems: Conceptual Foundations and Research Issues MIS Quarterly 25(1): 107-136 Andriessen, D. (2004). IC valuation and measurement: classifying the state of the art. Journal of Intellectual Capital, 5, 230-242. Blacker F (1995) Knowledge, Knowledge work and organisations: An overview and interpretation, Organisation Studies 16 (6) Bontis, N. 1998). Intellectual capital: an exploratory study that develops measures and models. Management Decision, 36, 63-76. Bontis, N. (2002). Managing organizational knowledge by diagnosing intellectual capital: Framing and advancing the state of the field. ?n Nick Bontis (? d. ), World Congress on Intellectual Capital readings (13-56). Woburn, MA: Butterworth-Heinemann. Bontis, N. , Dragonett i, N. C. , Jacobsen, K. & Roos, G. (1999). The knowledge toolbox: A review of the tools available to measure and manage intangible Resources. European Management Journal, 17, 391-402. Brennan, N. and Connell, B. (2000) â€Å"Intellectual capital: current issues and policy implications†, _Journal of Intellectual capital_, Vol. 1, No. 3, pp206-240. Brooking, A. (1996). Intellectual capital: Core asset for the third millennium enterprise. London: International Thomson Business Press. Brown J S and Duguid P (2000a) Structure and Spontaneity; knowledge and organisation – In Nonaka, I and Teece D (Eds) Managing Industrial Knowledge London Sage, 44-67. Checkland, Peter B. , 1981. Systems Thinking, Systems Practice. Chichester, UK: John Wiley & Sons. Checkland, Peter B. , and Jim Scholes, 1990. Soft Systems Methodology in Action. Chichester, UK: John Wiley & Sons Constant, D. , Sproull L. , and Kiesler, S. (1996). The kindness of strangers: The usefulness of electronic weak ties for technical advice. Organization Science, 7(2): 119-135. Drucker P F (1992). The New Society of Organisations: 70(5):95-104 Edvinsson, L. (1997). Developing intellectual capital at Skandia. Long Range Planning, 30, 366-373. Edvinsson, L. and Malone, M. S. (1997), Intellectual Capital, Piatkus, London. Edvinsson, L. & Sullivan, P. (1996). Developing a model for managing intellectual capital. European Management Journal, 14, 356-364. Eisenhardt, K. M. and Santos, F. M. (2002) â€Å"Knowledge-based view: a new theory of strategy? in Pettigrew, A. (Ed. ), Handbook of Strategy and Management, London, Sage, pp. 138-64. Fukuyama, F (1991) The Great Disruption p16 New York Simon and Shuster Fukuyama, F (1995) Trust: The Social Virtues and the Creation of Prosperity (New York: Free Press, 1995), chapter 9. Glaser, Edward L. , Laibson, David, and Sacerdote, Bruce (2002), An Economic Approach to Social Capital, Nov. 112, pp 437-458 Grant, R. M. 1996. Towards a knowledge-based theory of the firm. Strategic Management Journal, 17 (Winter Special Issue), 108-122. Hildreth P and Kimble C (2002) The Duality of Knowledge â€Å"Information Research 8(1) paper no 142 Hildreth P Wright P and Kimble C (1999) Knowledge management are we missing something? Information Systems – The Next Generation. Hislop D (2004) The Paradox of Communities of Practice: Knowledge Sharing between Communities. Guthrie, J. and Petty, R. (2000), â€Å"Intellectual capital: Australian annual reporting practices. † Journal of Intellectual Capital, vol. no. 3, pp. 241-251. Handy, C. B. (1989). The age of unreason. London: Arrow Books Ltd. Iles V and Sutherlandk K (2001) Organisational Change: A Review of Health Care Managers, Professionals and Researchers, National Coordination Centre for NHS Service Delivery and Organisation R and D London. Kaplan, R. S. & Norton, D. P. (1992). The Balanced Scorecard – measures that drive performance . Harvard Business Review, January-February, 71-79. Kim, W. C. & Mauborgne, R. (1999), ‘Strategy, value innovation, and the knowledge economy’, Sloan Management Review Spring, 41–53. Lave J and Wenger E (1991) Situated Learning: Legitimate Peripheral Participation Cambridge University Press Liebowitz, J. & Suen, C. (2000). Developing knowledge metrics for measuring. Journal of Intellectual Capital, 1, 54-67. Rose J and Haynes M (2001) A Soft Systems Approach to the Evaluation of Complex Interventions in the Public Sector, Manchester Metropolitan University Press. Senge, P (1990) The Fifth Discipline: The Art and Practice of the Learning Organisation, Doubleday New York 1990. Senge, P. & Lannon-Kim, C. (1991). Recapturing the spirit of learning through a systems approach. Stewart, T. A. (1997), _Intellectual Capital: The New Wealth of _Organizations, Doubleday/Currency, New York, NY. Sveiby, K. E. (1997), The_ New Organizational Wealth: Managing and Measuring_ Knowledge-based Assets, Berrett-Kohler, San Francisco, CA. Krogh von, G. 2003. Knowledge Sharing and the Communal Resource. In M. Easterby-Smith and M. Lyles, A. (Ed. ), Handbook of Organizational Learning and Knowledge Management: 372-392. Malden, Oxford, Melbourne, Berlin: Blackwell Publishing. Mulgan G (2002) Policy-Making in the Global Commons Connect No 5 pp 6-18 Centre for Management and Policy Studies.

Introduction Of The History Of Bank Of International Settlement And Basel Financial Essay - Free Essay Example

Sample details Pages: 11 Words: 3279 Downloads: 2 Date added: 2017/06/26 Category Finance Essay Type Argumentative essay Did you like this example? The Bank for International Settlements (BIS) is the institutional home of the Basel Committee on Banking Supervision. Headquartered in Basel, Switzerland, the organizations mandates are to promote international monetary and financial cooperation and serve as a bank for central banks. The BIS also houses the secretariats of several committees and organizations focusing on the international financial system, including the Basel Committee, although these entities are not formally a part of the BIS. BIS membership currently totals 55 central banks. The BIS was created in 1930 within the framework of the Young Plan to address the issue of German reparations. Its focus soon shifted to the promotion of international financial cooperation and monetary stability. These goals were initially pursued through regular meetings of central bank officials and economic experts directed toward promoting discussion and facilitating decision-making processes, as well as through the development of a research staff to compile and distribute financial statistics. The BIS also played a role in implementing and sustaining the Bretton Woods system. Don’t waste time! Our writers will create an original "Introduction Of The History Of Bank Of International Settlement And Basel Financial Essay" essay for you Create order Besides, Basel is third most populous city with about 166,000 inhabitants. Located where the Swiss, French and German borders meet, Basel also has suburbs in France and Germany. With 830,000 inhabitants in the tri-national urban agglomeration as of 2004, Basel is Switzerlands second largest urban area. Basel functions as a major industrial centre for the chemical and pharmaceutical industry. The Basel region, culturally extending into German Baden-Wuttemberg and French Alsace, reflects the heritage of its three states in the modern latin name Regio TriRhena. It has the oldest university of the Swiss Confederation (1460). Basel is German-speaking; the local variant of the Swiss German dialect is called Basel German. The detail indicator in Basel I, II, III. Basel I, which is the first credit risk analysis instrument start used in 1998 and also called as Basel Accord. They are classified into different categories of the banks assets according to different credit risk, carrying risk weights of zero, ten, twenty, fifty, and up to one hundred percent. The basic risk weighted assets are required to for banks capital is equal to 8%. However, there is argument from JP Morgan Chase, he mentioned that 8%of minimum requirement is unreasonable, and implement credit default swaps so that in reality they would have to hold capital equivalent to only 1.6% of assets. According to Ahmed Khalidi (2007), they mentioned that Basel I was designed to establish minimum levels of capital for internationally active banks. The main setting of the standards is based on rules of the thumb, that is relatively crude method of assigning risk weights on balance sheet and off balance sheet asset categories. Besides, this also focussed on credit risks but ignoring the bulk of the multiple risks may face in banking industry today. For Basel II, there is the second of the Basel Accords, which are recommendations on banking laws and regulations issued by the Basel Committee on Banking Supervision. Basel II uses three pillars concepts, which are minimum capital requirements, supervisory review and market discipline. From previous researchers Wignall Atkinson (2010) found that, the simplified Basel II approach is more granular than Basel I, but retains its basic features. When facing the financial crisis, the Basel Committee cutting the risk weight to mortgages by some 30% and much more in the complicated version. In additional, for the weight for lending between banks was in lower percentage which 20% under Basel I, and it still maintained the same portion in Basel II, but it likely to cut 20 30 % under the sophisticated approach. Based on the research done by Ahmed Khalidi (2007), they have examined the process of development of the Basel Accord from a simple and crude credit risk measurement based capital adequacy accord into a comprehensive risk control framework grounded on three different pillars as below. The first pillar, which is aims to improve the link between bank capital and the risks that could lead to Bank insolvency. There are three major component of risks are can be calculated, which are credit risk, operational risk, and market risk. The calculation of credit risk may separate to three different degree namely standardized approach, which Foundation IRB and Advance IRB. IRB stands for Internal Rating-Based Approach. Besides, also have three different approaches to mention, which is BIA, standardized approach, and the internal measurement approach. The method to measure the market risk is VaR (value at risk). The second pillar is supervisory pillar which aims to improve the supervision capacity of regulators to control the risk of bank failure. The deals of the first pillar, which giving regulators much improved tools over those available under Basel I, it also provides the framework to dealing with other risks may face by all banks. This will improve the risk management system of banking industry. The third pillar is aims to promote greater stability in the financial system. This pillar is allowed the market discipline to operate by requiring lenders to publicly provide banks risk management methods, risk rating measurement and risk distributions. In order to strengthen the banks competitive; they must make that lend greater insight into the adequacy of their capitalisation. Basel III is a new global regulatory standard on bank capital adequacy and liquidity agreed by the members of the Basel Committee on Banking Supervision. This third version of the Basel is found during the global Financial Crisis. Basel III is more focussed on the banks capital requirements and introduces the new rules of bank liquidity or bank leverage. Based on the OECD estimation, the implementation of this Basel III may improve the annual GDP growth by 0.005 0.15 % point. The development of Basel I, II, III and beyond From Basel I to Basel II The initial Basel I Accord was based on a simple model to measure capital. The starting objective for Basel I was to ensure banks to maintain enough capital to absorb losses without causing systemic problems. Besides it also play an important role in the soundness of banks by avoiding competitiveness conflicts between each others (Wignall Atkinson, 2010). Although it was very simple to be used but this approach had became less effective for the bank to measure its capital over these years. There are problems appeared in Basel I such as it measure the risk based across exposure groups and not the individual elements of credit worthiness within these groups. Besides, this approach also lack of sufficient risk differentiation for individual loans and no recognition of diversification benefits. In conclusion, Basel I is lack of soundness in risk management. After many issues appearing during the time of implementation of Basel I, Basel II was created as the improvement of Basel I to overcome its limitations. The main difference between Basel 1 accord and Basel II accord is Basel II accord was not confined with the rating factor and was based on the fact one size fits all. However, Basel II accord mainly focuses on the rating factors of the borrowers. In Basel II, there are changes in internal processes and have developed a better risk management practices such as securitization monitoring and management of exposures and activities. Basel II has included three compliance frameworks based on the business model of the bank. The Standardized Approach which is almost similar to the Basel I rules was created and smaller, less-complex banks is required to follow it. However, for larger and more complex banks will be encouraged to adopt an Internal Ratings Based (IRB) Approach that directly links a banks risk ratings with its regulatory capital requirements. IRB approach seeks to differentiate risk on an asset-by-asset level for better decision making (Powell). Comparing to Standardized approach, IRB required more highly-complex modeling and expertise. Under the requirement in Basel I the weight for lending between banks was only 20% and the percentage still maintain at the same level under the simplified Basel II. However it has increased by 10% under the sophisticated approach. Lastly, Basel 3 pillar was applied in the Basel II. Pillar 1 provides guidelines for minimum capital requirements more accurate to each banks actual risk of economic loss. Next, pillar 2 evaluates the activities and risk profiles of individual banks. However, pillar 3 leverages the ability of market discipline to motivate prudent management by enhancing the degree of transparency in banks public reporting to shareholders and customers. From Basel II to Basel III However, there was also imperfection for Basel II in practicing the approach. In Basel II pillar 2 which is supervisory review process, is difficult to keep up with changes in market structure, practices and complexity. If there was a mistake in the supervisory in the review process, it will cause the policy makers will be ineffective in countering defects in Pillar 1 and therefore the Pillar 2 will be affected as well (Wignall Atkinson, 2010). Basel III have listed down the new capital and liquidity requirement to replace the Basel II for a better performance of job. There are few changes of development in Basel III compare to Basel II. First, there was an increased of quality of capital which there should be more than 50% of common equities and retained earnings as predominant component in tier 1instead of debt-like instruments. Besides, Basel III also increased the quantity of capital as well. The minimum common equity of tier 1 has increased from 2.0% to 4.5%. However, the total capital increased from 8.0% to 10.5%. Basel III now requires the banks to determine their capital requirement for counterparty credit risk using of stressed inputs. It can help to remove pro-cyclicality which will appear with using current volatility-based risk inputs. Moreover, leverage ratio was introduced for the intention of helping to avoid the build-up in excess leverage that can lead to a deleveraging credit crunch in a crisis situation. Leverage has been reduced through introduction of backstop leverage ratio. The leverage limit is set as 3%, i.e. a banks total assets should not be more than 33 time bank capital. Next, it also increase short term liquidity coverage by introducing the 30-day Liquidity Coverage Ratio (LCR) which helps ensure that global banks have sufficient high-quality liquid assets to withstand a stressed funding scenario specified by supervisors. The following table represents the summary of Basel I, II, and III. Basel I Basel II Basel III Main Functions -also called Basel Accord classified the different categories of the banks assets according to different credit risk uses three pillars concepts minimum capital requirements, supervisory review and market discipline Pillar 1 Minimum Capital Requirements Pillar 2 Supervisory Review Pillar 3 Market Discipline strengthens bank capital requirements and introduces new regulatory requirements on bank liquidity and bank leverage Capital for Systemically Important Banks only -No capital for Systemically Important Banks only -Systemically important banks should have loss absorbing capacity beyond the standards announced today 2 New Liquidity Ratio -Liquidity Coverage Ratio (LCR) -Net Stable Funding Ratio (NSFR) No -LCR focuses on the shorter end of the time horizon. -NSFR looks at a medium term horizon. Common Equity Tier 1 capital Total Capital Common Equity Tier 1 capital Total Capital Minimum Requirements 2.0% 4.0% 8.0% 4.5% 6.0% 8.0% Additional Capital Conservation Buffer Not applicable 2.5% Additional Countercyclical Buffer Range Not applicable 0% 2.5% Additional Requirements For Systemically Important Financial Institutions Not applicable May be added to the other risk-weighted requirements Leverage ratio Not applicable May in effect add to the risk-weight requirements The related paper discussion on the changes in the indicator, along the development of Basel I to II to III. Basel I is the framework of minimum capital standards introduced in 1988 by the Basel Committee on Banking Supervision and it was designed to enhance the safety and soundness of the international banking system thus to increase the competitive pressure for creating a more level playing field among internationally competitive banks where small difference on pricing could have competitive impact (Ahmed Khalidi (2007). Basel I was emphasized on the credit risk, all of the banks assets were categorized on five classification based on credit risk, such as holding risk weights of 0%, 20%, 50%, and 100%. A new 150% rating comes in Basel II for borrowers with poor credit ratings (Wikipedia, 2011). According to Basel I, those international banks are required to maintain their capital equivalent to 8% of risk weighted assets. However, it has been criticized because the low risk sensitiveness of its capital requirements may lead to greater risk raking and regulatory capital arbitrage practices by banks, furthermore it focused only on the credit risk while ignoring the bulk of multiple risks facing by banks today. Therefore, Basel II has been developed which relies on the three pillars as such capital requirement, supervisory review and market discipline to achieve the safety and soundness of the financial system. The new framework addresses the perceived shortcomings and structural weakness of Basel I and it is fairly complex compare to the crude risk weight of the Basel I in order to make its understanding implementation a challenge to both regulatory and the regulated community. In Basel II, it was focused on financial and operational risk that faced by bank. It created an international standard for banking regulators to exercise when decided the amount of capital that banks need to maintain and guard against the financial and operational risk. Basically, regulatory capital requirements for credit risk in Basel II are calculated according to two alternative approaches which are the Standardized and the Internal Ratings-Based (IRB). Standardized approach of the Basel II framework assembles the simplest options with the objective by simplifying choices for certain banks and supervisors for measuring the other determinants. For operational risk, there are 3 different approaches which are basic indicator approach, standardized approach, and the internal measurement approach whereas for the market risk, the preferred approach is VaR (value at risk). Besides that, Basel II was highlight on the three main fundamentals which are capital allocation to be more risk se nsitive, divided operational risk from credit risk and reduce the scope for regulatory arbitrage. Moreover, it has provided clearer picture on the definition of bank capital by using three pillars concept. In addition, Basel II put more attention on Pillar 1 by describing the different approaches to compute the minimum requirement. It seems that the principles and objectives of Pillar 2 and Pillar 3 is not very precise which left to national supervisors discretion. For Pillar 2, the supervisory review, supervisor tend to determine the banks rating based on its capital and risk levels. Low rated banks will be comparing to high rated banks to tighter the dividend restrictions in order to build capital. For Pillar 3, market discipline, public statement about the banks rating has been made by supervisor through showing the informational role played by rating agencies. It also shown the discipline enforced by uninsured depositors in order to allow the supervisor to reduce banks risk taki ng incentives by reducing the fraction of insured deposits. Overall, Basel II represents a rise in the risk sensitivity of banking regulation and supervision hence it reduces banks risk taking incentives and supervision cost (Elizalde, 2007). Basel III is a comprehensive set of measures to strengthen the regulation, supervision and risk management of the banking sector. It helps to improve the banking sectors ability to absorb shocks arising from economic and financial stress. The minimum regulatory standard for Tier 1 capital ratio has been increased from 4% in Basel II to 6% in Basel III. Basel III continues to be viable capital standard and it does not replace Basel I or Basel II in which Basel III is about more than just capital ratios. It proposed stronger capital framework by increasing the significantly the quality, the coverage, and the required level of bank capital. The components which include credit risk, market risk and operational risk have been adjusted in Basel III. Besides, the new definition of capital also has been adjusted where there are no sub-categories of Tier 2, elimination of Tier 3 category due to no real impact, and minimum requirements established for common equity Tier 1, Tier 2 and total cap ital has been set. Furthermore, there are new rules for counterparty credit risk to be finalized, for instance, the capital adequacy ratio is being raised where the minimum common equity requirement will be 4.5% as compare to the current 2%. A capital conservation buffer of 2.5% is to make sure that banks maintain the level of buffer of capital that can be used to absorb losses during periods of financial and economic stress, thus it will be added to the 4.5% to make a total requirement of 7% common equity to total risk-weighted assets. In Basel III, a countercyclical buffer within a range of 0% 2.5% of common equity or other fully loss absorbing capital will be implemented according to national circumstances. There are also two new liquidity ratios which consist of liquidity coverage ratio and net stable funding ratio are introduced in Basel III. Liquidity coverage ratio is focused on the shorter end of the time horizon and is aimed at ensuring that each bank owns liquid resources to such an amount that short term cash obligations are fulfilled even under a severe stress. In addition, Basel III is introducing a global minimum liquidity standard for internationally active banks that includes a 30-day liquidity coverage ratio requirement underpinned by a longer-term structural liquidity ratio. While, net stable funding ratio looks at a medium term horizon and focused on the structural balance between maturities of a banks assets and liabilities. It is aimed at preventing banks from exposing themselves to extreme maturity transformation risks by funding medium and long term assets with very short term liabilities. Besides that, based on Wikipedia (2011), the introduction of leverage ratio is an additional measurement of Basel II risk-based framework. The purposes of the introduction of leverage ratio are put a floor under the buildup of leverage in banking sector and to introduce additional safeguards against model risk and measurement error by increasing the r isk based with the measurement based on gross exposures. Moreover, in Basel III, it will help to strengthen the risk coverage of the capital frameworks especially for counterparty credit exposures arising from banks derivatives, repo and securities financing transactions. Hence, it also emphasize on raising the capital buffers backing these exposures while reduce procyclicality (Wikipedia, 2011). It would help to provide additional incentives to move OTC derivative contracts to central counterparties and most probably will be clearing houses. Student should gather own conclusion that Include: Agree, Disagree or Unable to make conclusion due to scarcity of data or information. In a nutshell, we can see that there is improvement through the development of Basel which is useful to adapt in fast changing economic and financial environment. Moreover, it is acts as a comprehensive guideline in helping the financial institutions to reshape their capital structure in order to improve their performance in gaining confidence from the public. Since the happening of global financial crisis, Basel has become one of the most important elements to ensure the banks always maintain its capital requirement for its soundness. In addition, the Basel developments show that the country issue is being focused thus it can enhance the ownership of the standard developed. There are few advantages of using the Basel to operate the banks performance level, which is it can raise the quality, consistency and transparency of capital base Tier 1 capital. Next, it helps to enhance risk coverage, from Basel II to Basel III there is apply a multiple of 1.25 to the asset value correlation of exposures to regulate financial firms with assets of at least $ 25 billion. This would have the effect of raising risk weights for such exposures. It may reduce the exposure risk of the assets of financial institutions and minimize the mistake when calculated the intrinsic value of the assets through the Basel. Last but not least, it may improve the leverage ratio of financial institution through Basel III.