Determinants of Debt Maturity Structures in Pakistan

Determinants of Debt Maturity Structures in Pakistan CHAPTER 1 Rapid changes in financial service industries make it essential to determine the profitability of financial institution. Banks plays a key role in financial market of a country and for this its very important to evaluate that bank operate in efficient manner also what are the factors which affect the profitability of banks. A bank generates profit from the differential between the level of interest it pays for deposits and other sources of funds, and the level of interest it charges in its lending activities. Historically, profitability from lending activities has been dependent on the needs and strengths of customers. In modern era, investors have demanded a more stable revenue stream and banks have therefore placed more emphasis on transaction fees, primarily loan fees but also included service charges on an array of deposit activities and other services (international banking, foreign exchange, insurance, investments, wire transfers, etc.). Lending activities provide the huge size of income to commercial banks. In the past 10 years banks have taken many measures to ensure that bank remain profitable while responding to increasingly changing market conditions. Financial sector of Pakistan structured on Scheduled and Unscheduled Banks. Scheduled Banks are regulated by the State Bank of Pakistans Regulations, through different wings, and are subject to different SBP regulatory requirements such as capital and liquidity reserve requirements. The financial division analysts were projected higher profitability in 2008. That projection made possible because State Bank of Pakistan has raised its discount rate in which the banks can invest to earn a good return. The rising lending rates contributed considerably to ensuring an increased profitability acknowledged by State bank of Pakistan. Factors that affect the profitability of Commercial Banks are both Endogenous and Exogenous. Endogenous factors are within the Control of Management such as quality of management and its policies, efficiency of management in generating revenues and controlling costs, bank capitalization and location. Exogenous factors are outside management control, especially macro economic indices such as Interest rates, Exchange rates, Inflation, and other regulatory and market constraints. The banking sector has been a source of stability for this country, because as you have seen in many countries, the banking sector has weakened and outright nationalization has taken place in some countries. However, the reforms that have taken place in Pakistan banking sector over the past 8 to 10 years have given stability and strength to this sector. There are some ratios, by which can measure the strength of a banking sector, and the most important amongst those ratios is Capital Adequacy; our countrys average capital adequacy 8 percent some banks have less or some banks have more. Macro stability taken some time to trickle down was not something that happens over a month or two, because macro stability causes improvement in the confidence and that improvement caused investment decisions to become positive. As Pakistan banking sector presented stable condition. The country was not very export-dependent either, which is why the global decrease in trade has not had a big impact on Pakistan. Pakistan has the potential to achieve self-sufficiency over a period of time and create a major surplus for agriculture. Banks in Pakistan over the last eight to ten years have been more selective in the client base, apart from the consumer side, because the consumer loans are only 14 percent of the total loans its much lower than other countries. Country had faced some problems in the consumer loans, especially those banks that had become too aggressive in this sector, but the rest whether its corporate or agriculture have remained stable. Growth of Banking Sector: Profitability of the banking sector has been breaking its own record year after year during this ongoing decade. The commercial banking sector in Pakistan regulated by the state bank of Pakistan. SBP introduced several structural changes. Beside higher standards of corporate governance at management and board level, the banks are adhering to SBP prudential regulations, consistent with BIS standards. 36 Commercial Banks (26 local banks and 10 foreign banks) of which 22 were listed on stock exchange. Many merger/acquisition took place. Asset of banking sector registered a increase to reach at Rs 3.7 trillion (2005) with annual growth rate of 15.2% that outpaced economic growth (2005-06) 85 % of banking sector are in private hands. 1.3 Earning And Profitability Strong earnings and profitability profile of banks reflects the ability to support present and future operations. More specifically, this determined the capacity to absorb losses, finance its expansion programs, pay dividend to its shareholders and build up adequate level of capital. There were many different indicators used to serve the purpose, the best and most widely used indicator return on assets (ROA). Earning demanded most visible in case of foreign banks in 1998. The stress on earnings and profitability was expected although the steps taken by the SBP to improve liquidity. Not only liquid assets to total assets ratio turn down sharply, earning assets to total assets also dropped. T-Bill portfolio of banks declined considerably, as that were less compensated. Banks reduced return on deposits to sustain their spread. The financial institutes were not able to contain the decline in ROA due to declining stock and remuneration of their earning assets. CHAPTER 2 LITERATURE REVIEW Research on the determinants of bank profitability has focused on the returns of bank assets and equity, and net interest rate margins. It has traditionally explored the impact on bank performance of bank-specific factors, such as risk, market power, and regulatory costs. Many researchers have focused on the impact of macroeconomic factors on bank performance and profitability. According to Flennery (2000) tested the hypothesis that market rate fluctuations adversely affect commercial bank profits. The finding have responded of revenue and cost of fund to market rate changes then determine whether regulators should take pains to stabilize market conditions. Market rate levels emerge as a prominent influence on intermediary costs and revenues, but the effects of market rate changes effectively cancel one another for most large banks. The research found significant sensitivity to interest rate and it was unstable over the time. By Brick (1994) estimated of market risk, interest rate risk, and foreign exchange risk continues to be unstable. The result of risk differed by bank type and period. As interest rate risk declines, foreign exchange increases; the result suggested that the market continues to reflect changes in the economic and regulatory situation of commercial banks in the pricing of bank stocks. The adverse impact of Interest Rate fluctuations on the profitability of Commercial Banks can be hedge with sound application of modern interest rate risk management theories and tools. Used accounting decompositions, as well as panel regressions, Al-Haschimi (2007) studied the determinants of bank net interest rate margins in 10 Sub Saharan African countries. Author found that credit risk and operating inefficiencies explain most of the variation in net interest margins across the region. Macroeconomic risk has only limited effects on net interest margins in the study. DemirgÃÆ' ¼ÃƒÆ' §-Kunt and Huizinga (1999) used bank level data for 80 countries for the periods 1988-95; analyze how bank characteristics and the overall banking environment affect both interest rate margins and bank returns. In considering both measures, this study provides a decomposition of the income effects of a number of determinants that affect depositor and borrower behavior, as opposed to that of shareholders. Results suggested that macroeconomic and regulatory conditions have a pronounced impact on margins and profitability. Lower market concentration ratios lead to lower margins or profits, while the effect of foreign ownership varies between industrialized and developing countries. Foreign banks have higher margins and profits compared to domestic banks in developing countries, while the opposite holds in developed countries. Hualan Cia and Weing (1992) studied on the effect of interest rate change on stock return and bank profitability, investigated the sensitivity of Canadian banks stock return and the profitability to change in interest rate. Used the data of Canadian banks on both the actual and unexpected change of different time series of interest rate indices, the short, intermediate and long term interest rate have significant negative correlation with bank stock return and profitability. The analysis showed through regression analysis by calculated the ratios of financial statements of banks. This measured the Canadian bank profitability against interest rate changes found that the net interest income and net income were not significantly related to change of interest rate. Flannery (1981) the study examined the relation between the interest rate sensitivity of common stock returns and the maturity composition of the firms nominal contracts. Used a sample of actively traded commercial banks and stock savings and loan associations, common stock returns are found to be correlated with interest rate changes. The co-movement of stock returns and interest rate changes positively related to the size of the maturity difference between the firms nominal assets and liabilities. Facts supported the hypothesis that the effect of nominal interest rate changes on common stock prices related to the maturity composition of a firms net nominal asset holding. For commercial bank and SL stocks, changes in interest rates were found to be significantly related to stock price movements. Also cross-sectional variation in the interest rate sensitivity measure was significantly related to the maturity mismatch of the bank assets and liabilities. Dependable with the nominal contracting hypothesis, the maturity composition of nominal contracts was found to be a significant factor affecting common stock returns. Coyne (1973) Commercial Bank Profitability by Function, The study was concerned with the cost, price and profit by function. It estimated the profit for real estate, installment, commercial and agricultural loans, and investments for banks stratified by size of deposit and the method, that was used to make that determination; the degree to which the average price (interest rate) by function known to the bank and, expressed by a sample period, whether it was equal to or greater than the cost of funds by function; and the degree to which the bank was able to determine its profit by function. The results of the surveyed were representative of the aggregate commercial banking community, the study concluded by the cost of funds estimates to average balance sheet for the Representative Bank of America (RBA).Raw data were obtained from the Federal Reserve Bank of Clevelands functional cost analysis of forty-one banks. Surveyed to the chief executive officer of 510 commercial banks provides insight into the manner in which commercial banks utilize. The author designed to provide a method of cost and profit calculation to the numerous small and medium-sized banks who indicated in response to the authors survey that the author knew little or nothing about the costs by function. The results of the investigation in general and the profitability of RBA in particular representative of the entire banking community, this study was provide help to individual banks as well as policy-making levels of state and national government where questions concerning matters such as usury laws and price (interest rate) controls appear to be taking a disproportionately large amount of time and effort to resolve. Goddard, Molyneux and Wilson (2004) determined the dynamic panel and cross-sectional regressions used to estimate growth and profit equations for a sample of commercial, savings, and co-operative banks from five major European Union countries during the mid-1990s. Methodologically unified the growth and profit strands in the previous empirical literature. Profit was an important prerequisite for future growth. High capital assets ratio tendency grow slowly in banking sector, and growth was connected to macroeconomic conditions. There were few systematic influences on bank growth. The resolution of profit appears higher for savings and co-operative banks than for commercial banks has attempted to unify the growth and profit strands in the literature by examining the performance of European banks during the 1990s. It reported univariate, bivariate, and multivariate versions of a two-equation model, which attempts to capture two-way causality between growth and profit while controlling for a range of other determinants of bank performance. The growth regressions suggested as banks became larger in relative terms, their growth performance tended to improve further. This pattern was strongest for commercial banks. Banks that sustained high capital-assets and liquidity ratios records low profitability. There was some evidence of a positive association between concentration and profitability, but little evidence of a link between bank-level x-inefficiency and profitability. While such patterns continue, concentration in European banking exhibited a natural tendency to increase. There was proof of positive perseverance of growth, although this tends to decline when additional control variables were included in the bivariate and multivariate growth models. The estimated coefficients on the covered profit term in the growth equations lend strong support to the notion that profit is an important sign to future growth. In the profit regressions, there was some variation in the estimated short-run between ownership types and countries. This reflected the fact that savings and co-operative banks are subject to various business and geographical restrictions that smother competition. The study favored th e SCP hypothesis of a positive association between concentration and profitability, but little apparent relationship between bank level inefficiency and profitability. In Latin America, Gelos (2006) studied the determinants of bank interest margins using bank and country level data. Author found that spreads are large because of relatively high interest rates because of macroeconomic risk, including from inflation, less efficient banks, and higher reserve requirements. In a study of United States banks for the period 1989-93, Angbazo (1997) found that net interest margins reflect primarily credit. In addition, there was evidence that net interest margins are positively related to core capital, non-interest bearing reserves, and management quality, but negatively related to liquidity risk. Ho and Saunders (1981) applied the model of to analyze the determinants of interest margins in six countries of the European Union and the US during the period 1988-95. Authors found that macroeconomic volatility and regulations have a significant impact on bank interest rate margins. The results also suggested an important trade-off between ensuring bank solvency, defined by high capital to asset ratios, and lowering the cost of financial services to consumers, as measured by low interest rate margins. Athanasoglou, Delis and Staikouras (2006) applied a dynamic panel data model to study the performance of Greek banks over the period 1985-2001, and find some profit persistence, a result that signal that the market structure not perfectly competitive. The results also showed that the profitability of Greek banks shaped by bank-specific factors and macroeconomic control variables, which were not under the direct control of bank management and industry formation, did not appear to significantly affect profitability. Athanasoglou (2008) studied the profitability behavior of the south eastern European banking industry over the period 1998-2002. The empirical result suggested that the enhancement of bank profitability in those countries requires new standards in risk management and operating efficiency, which, according to the evidence presented in the paper, crucially affect profits. A key result that effect market concentration was positive, while the picture regarding macroeconomic variables was mixed. A number of studies have emphasized the relation between macroeconomic variables and bank risk. Saunders and Allen (2004) surveyed on pro-cyclicality in operational, credit, and market risk exposures. Such cyclical effects mainly results from systematic risk originate from common macroeconomic influences or from interdependencies across firms as financial markets and institutions consolidate internationally. It ultimately exacerbates business cycle fluctuations due to adverse effects on bank lending capacity. Using equity returns data over the period 1973-2003, Allen and Bali (2004) examined the disastrous risk of financial institutions. Results suggested evidence of pro-cyclicality in both tragic and operational risk measurements, implying that macroeconomic, systematic, and environmental factors play a considerable role in determining the risk and returns of financial institutions. Pi and Timme (1993) investigated the relationship of concentration of decision management and control in one person on the cost efficiency level of the bank and return on assets. On the basis of the study found that the banks whose Chairman and CEO be same person had significantly less efficiency than those banks that possessed not similar governance structure and show that performance was affected by top management structure. Isik and Hassan (2003) estimated cost, allocate, technical, pure technical and scale efficiency of Turkish banking industry from 1988 to 1996. This study considered capital, loan able funds as bank short-term loans, long-term loans, risk adjustment off balance sheet items and other earning assets as output of bank. Thistle, McLeod and Conrad (1989) have found that (a) balance sheet composition depends on both the level and change in interest rates , (b) banks response to changes in interest rates in different, depending on whether rates are rising or falling. Authors determined the relation between banks portfolio of assets and liabilities and interest rate was stable. Several possible caused of instability. The econometric techniques employed allow for continuous change in the structure of the empirical model. The study found that the portfolio-interest rate relationship depends on the level of interest rates and exogenous assets, as well as their rate and direction of change Samy Ben Naceur (2005) investigated the impact of banks characteristics, financial structure and macroeconomic indicators on banks net interest margins and profitability in the Tunisian banking industry for the 1980-2000 periods. The study found individual bank characteristics explained a substantial part of the within-country variation in bank interest margins and profitability. High interest margin and profitability tend to be associated with banks that hold a relatively high amount of capital, and with large overheads. The study found that the inflation had a positive force for net interest margin; while economic growth has no incidence. Another factor was financial structure and its impact on banks interest margin and profitability; found that concentration be less beneficial to the Tunisian commercial banks than competition whereas for stock market development had a positive effect on bank profitability. This reflected the corresponding between bank and stock market growth. The study found that the disintermediation of the Tunisian financial system was favorable to the banking sector profitability. Some authors examined on banking of south European region, the determinants of bank interest margins adopt two alternative modeling frameworks used dealership approach and a micro-model of the banking-firm approach, study found bank as a dynamic dealer, setting interest rates on loans and deposits to balance the asymmetric arrival of loan demands and deposit supplies by Staikouras. The bank interest margins were shown to be fees charged by banks for the provision of liquidity. The alternative approach was the micro-model of the banking firm, the study found the banking firm in a static way, setting where demands and supplies of deposits and loans simultaneously clear both markets. Choi, Elyasiani and Kopecky (1992) estimated a multi-index model that considered market risk, interest sensitivity, and exchange rate risk of commercial bank stock returns. Dummy models were used to separate the period of pre- and post-October 1979 and to split the results attributable to money center banks from other banks. A significant exchange rate effect occurs for money center banks after October 1979, while interest sensitivity was stronger before October 1979. The exchange rate effect was attributing to raised hedge foreign loan exposure of money center banks. The bank profitability typically measured by the return on assets (ROA) and/or the return on equity, usually expressed as a function of internal and external determinants. Internal determinant factors that were mainly influenced by a banks management decisions and policy objectives. Such profitability determinants are the level of liquidity, provisioning policy, capital adequacy, expenses management, and bank size. On the other hand, the external determinants, both industry and macroeconomic related, also known variables that reflect the economic and legal environments where the financial institution operates. By Bourke (1989) determined; Liquidity risk, arising from the possible inability of a bank to accommodate. Decreased in liabilities or to fund increases on the assets side of the balance sheet, considered an important determinant of bank profitability. The loans market, especially credit to households and firms, risky and has a greater expected return than other bank assets, such as government securities. That expected a positive relationship between liquidity and profitability. Duca and McLaughlin (1990) studied that variations in bank profitability were largely attributable to variations in credit risk, since increased exposure to credit risk normally associated with decreased firm profitability. Miller and Noulas (1997) suggested that the more financial institutions are exposed to high risk loans, the higher the accumulation of unpaid loans and the lower the profitability. Even though leverage (capitalization) has been demonstrated to be important in explaining the performance of financial institutions, its impact on bank profitability was ambiguous. As lower capital ratios suggest a relatively risky position, one might expect a negative coefficient on this variable. Molyneux and Thornton (1992) observed a positive relationship, suggesting that high profits earned by firms be appropriated in the form of higher payroll expenditures paid to more productive human capital. It should be appealing to identify the dominant effect, in a developing banking environment like Malaysia. Authors used Bank size to capture potential economies or diseconomies of scale in the banking sector. The variable controls for cost differences and product and risk diversification according to the size of the financial institution. The first factor could lead to a positive relationship between size and bank profitability were significant economies of scale, while the second factor negative one was increased diversification leads to lower credit risk and lower returns. Berger, Hanweck, Humphery (1987) discussed that marginal cost savings can be achieved by increasing the size of the banking firm, especially as markets develop. Eichengreen and Gibson (2001) suggested that the effect of a growing banks size on profitability may be positive up to a certain limit. Beyond the point, the effect of size was negative due to bureaucratic and other reasons. Bank profitability be sensitive to macroeconomic conditions despite the trend in the industry towards greater geographic diversification and larger use of financial engineering techniques to manage risk associated with business cycle forecasting. Generally, higher economic growth encourages bank to lend more and permits them to charge higher margins, as well as improving the quality of their assets. 2.1 The Determinants of Bank Performance: Studies on the determinants of banks interest margin and profitability have focused on single country sides and a panel of countries. 2.1a Single country studies As most of the studies on bank performance are conducted in the US and emerging markets. Neeley and Wheelock (1997) explored the profitability of a sample of insured commercial banks in the US for the 1980-1995 periods. Authors found that bank performance positively related to the annual percentage changes in the states per capita income. The main Studies on the determinants of banks performance in emerging countries were carried out in Colombia Barajas et al. (1999) document significant effects of financial liberalization on banks interest margins for the Colombian case. Although the overall spread has not declined after financial reform, the relevance of the different factors behind the bank spreads were affected by such measures. Another change linked with the liberalization process was the increase of the coefficient of loan quality after the liberalization. Afanasieff, Lhacer and Nakane (2002) make used of panel data techniques to uncover the main determinants of the bank interest spreads in Brazil. Ben Naceur and Goaied (2001) investigated the determinants of the Tunisian banks performances during the period 1980-1995. The research indicated that the best performing banks were those who had struggled to improve labor and capital productivity, maintained a high level of deposit accounts relative to their assets and had been able to reinforce their equity. Guru, Staunton and Balashanmugam (2002) attempted to identify the determinants of successful deposit banks in order to provide practical guide for improved profitability performance of these institutions. The study was based on a sample of 17 Malaysian commercial banks over the 1986-1995. The profitability determinants were divided in two main categories, internal determinants (liquidity, capital adequacy and expenses management) and the external determinants (ownership, firm size and external economic conditions). The finding of that study revealed that efficient expenses management was one of the most significant in explaining high bank profitability. Among the macro indicators, high interest ratio was associated with low bank profitability and inflation was found to have a positive effect on bank performance. 2.1b Panel country studies The panel country studies were focused on European companies and developed and developing countries. Molyneux and Thornton (1992) were the first to explore thoroughly the determinants of bank profitability on a set of countries. Authors used sample of 18 European countries during the 1986-1989. The finding represented a significant positive association between the return on equity and the level of interest rates in each country, bank concentration, and government ownership. Abreu and Mendes (2002) investigated the determinants of banks interest margins and profitability for some European countries in the last decade. The authors reported that well capitalized banks face lower expected bankruptcy costs and advantages translate into better profitability. Although with a negative sign in all regressions, the unemployment rate was relevant in explaining bank profitability. Bashir (2000) examined the determinants of Islamic banks performance across eight Middle Eastern countries for 1993-1998. A number of internal and external factors were used to predict profitability and efficiencies. Controlling for macroeconomic environment, financial market situation and taxation, the results showed that higher leverage and large loans to asset ratios, lead to higher profitability. The author reported in his study that foreign-owned banks are more profitable that the domestic. The result also found the evidence that taxation impacts negatively bank profitability. Final result of study was that macroeconomic setting and stock market development have a positive impact on profitability. DemerguÃÆ' §-Kunt and Huizingha (1999) examined the determinants of bank interest margins and profitability using a bank level data for 80 countries in the 1988- 1995 period. The set of variables included several factors accounting for bank characteristics, macroeconomic conditions, taxation, regulations, financial structure, and legal indicators. The study reported that a larger ratio of bank assets to GDP and a lower market concentration ratio lead to lower margins and profits. Foreign banks have higher margins and profits than domestic banks on developing countries, while the opposite prevail in developed countries. DemerguÃÆ' §-Kunt and Huizingha (2001) presented evidence on the impact of financial development and structure on bank profitability using bank level data for a large number of developed and developing countries over the 1990-1997 period. The study found that financial development has a very important impact on bank performance. It reported that higher bank development was related to lower bank performance. Stock market development on the other hand, leads to increased profits and margins for banks especially at lower levels of financial development, indicating complementarities between bank and stock market. CHAPTER 3 THEORETICAL FRAMEWORK AND HYPOTHESIS The interest rate assummed to be one of the most important factors that affect commercial banks profitability. The issue which deals in the study was the affect of market interest rate fluactuation has adversly related to commercial bank profitability. This thesis study bring opportunity to established a relationship between fluctuations in interest rates and the performance of commercial banks in Pakistan during the period of 2004- 2008. The main purpose of this study was to determine the implication of fluctuations in market interest rates on the profitability of commercial banks in Pakistan. This study provide Major causes of interest rate fluctuations The extent to which commercial banks are set to manage interest rate related risks. Major causes of Interest Rate Fluctuation were unstable government Policies, Unstable Economic Environment, unavailability of long-term funds, Inflation. The factors that affect the commercial bank profitability were significant mismatch in the maturity profiles of Assets and Liabilities, Frequent Interest Rate Fluctuations, under capitalization of banks, Poor Collateral of credits. Pakistans financial sector included nationalized, foreign, and private banks; and Non-banking Financial Institutions (NBFIs) which include Development Finance Institutions (DFIs), Investment Banks, leasing companies, modarabas, and housing finance companies. Scheduled Banks know as also commercial bank regulated by the State Bank of Pakistan regulated through different wings, and subject to different SBP regulatory requirements such as capital and liquidity reserve requirements. Factors that affect the profitability of Commercial Banks are both Endogenous and Exogenous. Endogenous factors are within the Control of Management such as quality of man Determinants of Debt Maturity Structures in Pakistan Determinants of Debt Maturity Structures in Pakistan CHAPTER 1 Rapid changes in financial service industries make it essential to determine the profitability of financial institution. Banks plays a key role in financial market of a country and for this its very important to evaluate that bank operate in efficient manner also what are the factors which affect the profitability of banks. A bank generates profit from the differential between the level of interest it pays for deposits and other sources of funds, and the level of interest it charges in its lending activities. Historically, profitability from lending activities has been dependent on the needs and strengths of customers. In modern era, investors have demanded a more stable revenue stream and banks have therefore placed more emphasis on transaction fees, primarily loan fees but also included service charges on an array of deposit activities and other services (international banking, foreign exchange, insurance, investments, wire transfers, etc.). Lending activities provide the huge size of income to commercial banks. In the past 10 years banks have taken many measures to ensure that bank remain profitable while responding to increasingly changing market conditions. Financial sector of Pakistan structured on Scheduled and Unscheduled Banks. Scheduled Banks are regulated by the State Bank of Pakistans Regulations, through different wings, and are subject to different SBP regulatory requirements such as capital and liquidity reserve requirements. The financial division analysts were projected higher profitability in 2008. That projection made possible because State Bank of Pakistan has raised its discount rate in which the banks can invest to earn a good return. The rising lending rates contributed considerably to ensuring an increased profitability acknowledged by State bank of Pakistan. Factors that affect the profitability of Commercial Banks are both Endogenous and Exogenous. Endogenous factors are within the Control of Management such as quality of management and its policies, efficiency of management in generating revenues and controlling costs, bank capitalization and location. Exogenous factors are outside management control, especially macro economic indices such as Interest rates, Exchange rates, Inflation, and other regulatory and market constraints. The banking sector has been a source of stability for this country, because as you have seen in many countries, the banking sector has weakened and outright nationalization has taken place in some countries. However, the reforms that have taken place in Pakistan banking sector over the past 8 to 10 years have given stability and strength to this sector. There are some ratios, by which can measure the strength of a banking sector, and the most important amongst those ratios is Capital Adequacy; our countrys average capital adequacy 8 percent some banks have less or some banks have more. Macro stability taken some time to trickle down was not something that happens over a month or two, because macro stability causes improvement in the confidence and that improvement caused investment decisions to become positive. As Pakistan banking sector presented stable condition. The country was not very export-dependent either, which is why the global decrease in trade has not had a big impact on Pakistan. Pakistan has the potential to achieve self-sufficiency over a period of time and create a major surplus for agriculture. Banks in Pakistan over the last eight to ten years have been more selective in the client base, apart from the consumer side, because the consumer loans are only 14 percent of the total loans its much lower than other countries. Country had faced some problems in the consumer loans, especially those banks that had become too aggressive in this sector, but the rest whether its corporate or agriculture have remained stable. Growth of Banking Sector: Profitability of the banking sector has been breaking its own record year after year during this ongoing decade. The commercial banking sector in Pakistan regulated by the state bank of Pakistan. SBP introduced several structural changes. Beside higher standards of corporate governance at management and board level, the banks are adhering to SBP prudential regulations, consistent with BIS standards. 36 Commercial Banks (26 local banks and 10 foreign banks) of which 22 were listed on stock exchange. Many merger/acquisition took place. Asset of banking sector registered a increase to reach at Rs 3.7 trillion (2005) with annual growth rate of 15.2% that outpaced economic growth (2005-06) 85 % of banking sector are in private hands. 1.3 Earning And Profitability Strong earnings and profitability profile of banks reflects the ability to support present and future operations. More specifically, this determined the capacity to absorb losses, finance its expansion programs, pay dividend to its shareholders and build up adequate level of capital. There were many different indicators used to serve the purpose, the best and most widely used indicator return on assets (ROA). Earning demanded most visible in case of foreign banks in 1998. The stress on earnings and profitability was expected although the steps taken by the SBP to improve liquidity. Not only liquid assets to total assets ratio turn down sharply, earning assets to total assets also dropped. T-Bill portfolio of banks declined considerably, as that were less compensated. Banks reduced return on deposits to sustain their spread. The financial institutes were not able to contain the decline in ROA due to declining stock and remuneration of their earning assets. CHAPTER 2 LITERATURE REVIEW Research on the determinants of bank profitability has focused on the returns of bank assets and equity, and net interest rate margins. It has traditionally explored the impact on bank performance of bank-specific factors, such as risk, market power, and regulatory costs. Many researchers have focused on the impact of macroeconomic factors on bank performance and profitability. According to Flennery (2000) tested the hypothesis that market rate fluctuations adversely affect commercial bank profits. The finding have responded of revenue and cost of fund to market rate changes then determine whether regulators should take pains to stabilize market conditions. Market rate levels emerge as a prominent influence on intermediary costs and revenues, but the effects of market rate changes effectively cancel one another for most large banks. The research found significant sensitivity to interest rate and it was unstable over the time. By Brick (1994) estimated of market risk, interest rate risk, and foreign exchange risk continues to be unstable. The result of risk differed by bank type and period. As interest rate risk declines, foreign exchange increases; the result suggested that the market continues to reflect changes in the economic and regulatory situation of commercial banks in the pricing of bank stocks. The adverse impact of Interest Rate fluctuations on the profitability of Commercial Banks can be hedge with sound application of modern interest rate risk management theories and tools. Used accounting decompositions, as well as panel regressions, Al-Haschimi (2007) studied the determinants of bank net interest rate margins in 10 Sub Saharan African countries. Author found that credit risk and operating inefficiencies explain most of the variation in net interest margins across the region. Macroeconomic risk has only limited effects on net interest margins in the study. DemirgÃÆ' ¼ÃƒÆ' §-Kunt and Huizinga (1999) used bank level data for 80 countries for the periods 1988-95; analyze how bank characteristics and the overall banking environment affect both interest rate margins and bank returns. In considering both measures, this study provides a decomposition of the income effects of a number of determinants that affect depositor and borrower behavior, as opposed to that of shareholders. Results suggested that macroeconomic and regulatory conditions have a pronounced impact on margins and profitability. Lower market concentration ratios lead to lower margins or profits, while the effect of foreign ownership varies between industrialized and developing countries. Foreign banks have higher margins and profits compared to domestic banks in developing countries, while the opposite holds in developed countries. Hualan Cia and Weing (1992) studied on the effect of interest rate change on stock return and bank profitability, investigated the sensitivity of Canadian banks stock return and the profitability to change in interest rate. Used the data of Canadian banks on both the actual and unexpected change of different time series of interest rate indices, the short, intermediate and long term interest rate have significant negative correlation with bank stock return and profitability. The analysis showed through regression analysis by calculated the ratios of financial statements of banks. This measured the Canadian bank profitability against interest rate changes found that the net interest income and net income were not significantly related to change of interest rate. Flannery (1981) the study examined the relation between the interest rate sensitivity of common stock returns and the maturity composition of the firms nominal contracts. Used a sample of actively traded commercial banks and stock savings and loan associations, common stock returns are found to be correlated with interest rate changes. The co-movement of stock returns and interest rate changes positively related to the size of the maturity difference between the firms nominal assets and liabilities. Facts supported the hypothesis that the effect of nominal interest rate changes on common stock prices related to the maturity composition of a firms net nominal asset holding. For commercial bank and SL stocks, changes in interest rates were found to be significantly related to stock price movements. Also cross-sectional variation in the interest rate sensitivity measure was significantly related to the maturity mismatch of the bank assets and liabilities. Dependable with the nominal contracting hypothesis, the maturity composition of nominal contracts was found to be a significant factor affecting common stock returns. Coyne (1973) Commercial Bank Profitability by Function, The study was concerned with the cost, price and profit by function. It estimated the profit for real estate, installment, commercial and agricultural loans, and investments for banks stratified by size of deposit and the method, that was used to make that determination; the degree to which the average price (interest rate) by function known to the bank and, expressed by a sample period, whether it was equal to or greater than the cost of funds by function; and the degree to which the bank was able to determine its profit by function. The results of the surveyed were representative of the aggregate commercial banking community, the study concluded by the cost of funds estimates to average balance sheet for the Representative Bank of America (RBA).Raw data were obtained from the Federal Reserve Bank of Clevelands functional cost analysis of forty-one banks. Surveyed to the chief executive officer of 510 commercial banks provides insight into the manner in which commercial banks utilize. The author designed to provide a method of cost and profit calculation to the numerous small and medium-sized banks who indicated in response to the authors survey that the author knew little or nothing about the costs by function. The results of the investigation in general and the profitability of RBA in particular representative of the entire banking community, this study was provide help to individual banks as well as policy-making levels of state and national government where questions concerning matters such as usury laws and price (interest rate) controls appear to be taking a disproportionately large amount of time and effort to resolve. Goddard, Molyneux and Wilson (2004) determined the dynamic panel and cross-sectional regressions used to estimate growth and profit equations for a sample of commercial, savings, and co-operative banks from five major European Union countries during the mid-1990s. Methodologically unified the growth and profit strands in the previous empirical literature. Profit was an important prerequisite for future growth. High capital assets ratio tendency grow slowly in banking sector, and growth was connected to macroeconomic conditions. There were few systematic influences on bank growth. The resolution of profit appears higher for savings and co-operative banks than for commercial banks has attempted to unify the growth and profit strands in the literature by examining the performance of European banks during the 1990s. It reported univariate, bivariate, and multivariate versions of a two-equation model, which attempts to capture two-way causality between growth and profit while controlling for a range of other determinants of bank performance. The growth regressions suggested as banks became larger in relative terms, their growth performance tended to improve further. This pattern was strongest for commercial banks. Banks that sustained high capital-assets and liquidity ratios records low profitability. There was some evidence of a positive association between concentration and profitability, but little evidence of a link between bank-level x-inefficiency and profitability. While such patterns continue, concentration in European banking exhibited a natural tendency to increase. There was proof of positive perseverance of growth, although this tends to decline when additional control variables were included in the bivariate and multivariate growth models. The estimated coefficients on the covered profit term in the growth equations lend strong support to the notion that profit is an important sign to future growth. In the profit regressions, there was some variation in the estimated short-run between ownership types and countries. This reflected the fact that savings and co-operative banks are subject to various business and geographical restrictions that smother competition. The study favored th e SCP hypothesis of a positive association between concentration and profitability, but little apparent relationship between bank level inefficiency and profitability. In Latin America, Gelos (2006) studied the determinants of bank interest margins using bank and country level data. Author found that spreads are large because of relatively high interest rates because of macroeconomic risk, including from inflation, less efficient banks, and higher reserve requirements. In a study of United States banks for the period 1989-93, Angbazo (1997) found that net interest margins reflect primarily credit. In addition, there was evidence that net interest margins are positively related to core capital, non-interest bearing reserves, and management quality, but negatively related to liquidity risk. Ho and Saunders (1981) applied the model of to analyze the determinants of interest margins in six countries of the European Union and the US during the period 1988-95. Authors found that macroeconomic volatility and regulations have a significant impact on bank interest rate margins. The results also suggested an important trade-off between ensuring bank solvency, defined by high capital to asset ratios, and lowering the cost of financial services to consumers, as measured by low interest rate margins. Athanasoglou, Delis and Staikouras (2006) applied a dynamic panel data model to study the performance of Greek banks over the period 1985-2001, and find some profit persistence, a result that signal that the market structure not perfectly competitive. The results also showed that the profitability of Greek banks shaped by bank-specific factors and macroeconomic control variables, which were not under the direct control of bank management and industry formation, did not appear to significantly affect profitability. Athanasoglou (2008) studied the profitability behavior of the south eastern European banking industry over the period 1998-2002. The empirical result suggested that the enhancement of bank profitability in those countries requires new standards in risk management and operating efficiency, which, according to the evidence presented in the paper, crucially affect profits. A key result that effect market concentration was positive, while the picture regarding macroeconomic variables was mixed. A number of studies have emphasized the relation between macroeconomic variables and bank risk. Saunders and Allen (2004) surveyed on pro-cyclicality in operational, credit, and market risk exposures. Such cyclical effects mainly results from systematic risk originate from common macroeconomic influences or from interdependencies across firms as financial markets and institutions consolidate internationally. It ultimately exacerbates business cycle fluctuations due to adverse effects on bank lending capacity. Using equity returns data over the period 1973-2003, Allen and Bali (2004) examined the disastrous risk of financial institutions. Results suggested evidence of pro-cyclicality in both tragic and operational risk measurements, implying that macroeconomic, systematic, and environmental factors play a considerable role in determining the risk and returns of financial institutions. Pi and Timme (1993) investigated the relationship of concentration of decision management and control in one person on the cost efficiency level of the bank and return on assets. On the basis of the study found that the banks whose Chairman and CEO be same person had significantly less efficiency than those banks that possessed not similar governance structure and show that performance was affected by top management structure. Isik and Hassan (2003) estimated cost, allocate, technical, pure technical and scale efficiency of Turkish banking industry from 1988 to 1996. This study considered capital, loan able funds as bank short-term loans, long-term loans, risk adjustment off balance sheet items and other earning assets as output of bank. Thistle, McLeod and Conrad (1989) have found that (a) balance sheet composition depends on both the level and change in interest rates , (b) banks response to changes in interest rates in different, depending on whether rates are rising or falling. Authors determined the relation between banks portfolio of assets and liabilities and interest rate was stable. Several possible caused of instability. The econometric techniques employed allow for continuous change in the structure of the empirical model. The study found that the portfolio-interest rate relationship depends on the level of interest rates and exogenous assets, as well as their rate and direction of change Samy Ben Naceur (2005) investigated the impact of banks characteristics, financial structure and macroeconomic indicators on banks net interest margins and profitability in the Tunisian banking industry for the 1980-2000 periods. The study found individual bank characteristics explained a substantial part of the within-country variation in bank interest margins and profitability. High interest margin and profitability tend to be associated with banks that hold a relatively high amount of capital, and with large overheads. The study found that the inflation had a positive force for net interest margin; while economic growth has no incidence. Another factor was financial structure and its impact on banks interest margin and profitability; found that concentration be less beneficial to the Tunisian commercial banks than competition whereas for stock market development had a positive effect on bank profitability. This reflected the corresponding between bank and stock market growth. The study found that the disintermediation of the Tunisian financial system was favorable to the banking sector profitability. Some authors examined on banking of south European region, the determinants of bank interest margins adopt two alternative modeling frameworks used dealership approach and a micro-model of the banking-firm approach, study found bank as a dynamic dealer, setting interest rates on loans and deposits to balance the asymmetric arrival of loan demands and deposit supplies by Staikouras. The bank interest margins were shown to be fees charged by banks for the provision of liquidity. The alternative approach was the micro-model of the banking firm, the study found the banking firm in a static way, setting where demands and supplies of deposits and loans simultaneously clear both markets. Choi, Elyasiani and Kopecky (1992) estimated a multi-index model that considered market risk, interest sensitivity, and exchange rate risk of commercial bank stock returns. Dummy models were used to separate the period of pre- and post-October 1979 and to split the results attributable to money center banks from other banks. A significant exchange rate effect occurs for money center banks after October 1979, while interest sensitivity was stronger before October 1979. The exchange rate effect was attributing to raised hedge foreign loan exposure of money center banks. The bank profitability typically measured by the return on assets (ROA) and/or the return on equity, usually expressed as a function of internal and external determinants. Internal determinant factors that were mainly influenced by a banks management decisions and policy objectives. Such profitability determinants are the level of liquidity, provisioning policy, capital adequacy, expenses management, and bank size. On the other hand, the external determinants, both industry and macroeconomic related, also known variables that reflect the economic and legal environments where the financial institution operates. By Bourke (1989) determined; Liquidity risk, arising from the possible inability of a bank to accommodate. Decreased in liabilities or to fund increases on the assets side of the balance sheet, considered an important determinant of bank profitability. The loans market, especially credit to households and firms, risky and has a greater expected return than other bank assets, such as government securities. That expected a positive relationship between liquidity and profitability. Duca and McLaughlin (1990) studied that variations in bank profitability were largely attributable to variations in credit risk, since increased exposure to credit risk normally associated with decreased firm profitability. Miller and Noulas (1997) suggested that the more financial institutions are exposed to high risk loans, the higher the accumulation of unpaid loans and the lower the profitability. Even though leverage (capitalization) has been demonstrated to be important in explaining the performance of financial institutions, its impact on bank profitability was ambiguous. As lower capital ratios suggest a relatively risky position, one might expect a negative coefficient on this variable. Molyneux and Thornton (1992) observed a positive relationship, suggesting that high profits earned by firms be appropriated in the form of higher payroll expenditures paid to more productive human capital. It should be appealing to identify the dominant effect, in a developing banking environment like Malaysia. Authors used Bank size to capture potential economies or diseconomies of scale in the banking sector. The variable controls for cost differences and product and risk diversification according to the size of the financial institution. The first factor could lead to a positive relationship between size and bank profitability were significant economies of scale, while the second factor negative one was increased diversification leads to lower credit risk and lower returns. Berger, Hanweck, Humphery (1987) discussed that marginal cost savings can be achieved by increasing the size of the banking firm, especially as markets develop. Eichengreen and Gibson (2001) suggested that the effect of a growing banks size on profitability may be positive up to a certain limit. Beyond the point, the effect of size was negative due to bureaucratic and other reasons. Bank profitability be sensitive to macroeconomic conditions despite the trend in the industry towards greater geographic diversification and larger use of financial engineering techniques to manage risk associated with business cycle forecasting. Generally, higher economic growth encourages bank to lend more and permits them to charge higher margins, as well as improving the quality of their assets. 2.1 The Determinants of Bank Performance: Studies on the determinants of banks interest margin and profitability have focused on single country sides and a panel of countries. 2.1a Single country studies As most of the studies on bank performance are conducted in the US and emerging markets. Neeley and Wheelock (1997) explored the profitability of a sample of insured commercial banks in the US for the 1980-1995 periods. Authors found that bank performance positively related to the annual percentage changes in the states per capita income. The main Studies on the determinants of banks performance in emerging countries were carried out in Colombia Barajas et al. (1999) document significant effects of financial liberalization on banks interest margins for the Colombian case. Although the overall spread has not declined after financial reform, the relevance of the different factors behind the bank spreads were affected by such measures. Another change linked with the liberalization process was the increase of the coefficient of loan quality after the liberalization. Afanasieff, Lhacer and Nakane (2002) make used of panel data techniques to uncover the main determinants of the bank interest spreads in Brazil. Ben Naceur and Goaied (2001) investigated the determinants of the Tunisian banks performances during the period 1980-1995. The research indicated that the best performing banks were those who had struggled to improve labor and capital productivity, maintained a high level of deposit accounts relative to their assets and had been able to reinforce their equity. Guru, Staunton and Balashanmugam (2002) attempted to identify the determinants of successful deposit banks in order to provide practical guide for improved profitability performance of these institutions. The study was based on a sample of 17 Malaysian commercial banks over the 1986-1995. The profitability determinants were divided in two main categories, internal determinants (liquidity, capital adequacy and expenses management) and the external determinants (ownership, firm size and external economic conditions). The finding of that study revealed that efficient expenses management was one of the most significant in explaining high bank profitability. Among the macro indicators, high interest ratio was associated with low bank profitability and inflation was found to have a positive effect on bank performance. 2.1b Panel country studies The panel country studies were focused on European companies and developed and developing countries. Molyneux and Thornton (1992) were the first to explore thoroughly the determinants of bank profitability on a set of countries. Authors used sample of 18 European countries during the 1986-1989. The finding represented a significant positive association between the return on equity and the level of interest rates in each country, bank concentration, and government ownership. Abreu and Mendes (2002) investigated the determinants of banks interest margins and profitability for some European countries in the last decade. The authors reported that well capitalized banks face lower expected bankruptcy costs and advantages translate into better profitability. Although with a negative sign in all regressions, the unemployment rate was relevant in explaining bank profitability. Bashir (2000) examined the determinants of Islamic banks performance across eight Middle Eastern countries for 1993-1998. A number of internal and external factors were used to predict profitability and efficiencies. Controlling for macroeconomic environment, financial market situation and taxation, the results showed that higher leverage and large loans to asset ratios, lead to higher profitability. The author reported in his study that foreign-owned banks are more profitable that the domestic. The result also found the evidence that taxation impacts negatively bank profitability. Final result of study was that macroeconomic setting and stock market development have a positive impact on profitability. DemerguÃÆ' §-Kunt and Huizingha (1999) examined the determinants of bank interest margins and profitability using a bank level data for 80 countries in the 1988- 1995 period. The set of variables included several factors accounting for bank characteristics, macroeconomic conditions, taxation, regulations, financial structure, and legal indicators. The study reported that a larger ratio of bank assets to GDP and a lower market concentration ratio lead to lower margins and profits. Foreign banks have higher margins and profits than domestic banks on developing countries, while the opposite prevail in developed countries. DemerguÃÆ' §-Kunt and Huizingha (2001) presented evidence on the impact of financial development and structure on bank profitability using bank level data for a large number of developed and developing countries over the 1990-1997 period. The study found that financial development has a very important impact on bank performance. It reported that higher bank development was related to lower bank performance. Stock market development on the other hand, leads to increased profits and margins for banks especially at lower levels of financial development, indicating complementarities between bank and stock market. CHAPTER 3 THEORETICAL FRAMEWORK AND HYPOTHESIS The interest rate assummed to be one of the most important factors that affect commercial banks profitability. The issue which deals in the study was the affect of market interest rate fluactuation has adversly related to commercial bank profitability. This thesis study bring opportunity to established a relationship between fluctuations in interest rates and the performance of commercial banks in Pakistan during the period of 2004- 2008. The main purpose of this study was to determine the implication of fluctuations in market interest rates on the profitability of commercial banks in Pakistan. This study provide Major causes of interest rate fluctuations The extent to which commercial banks are set to manage interest rate related risks. Major causes of Interest Rate Fluctuation were unstable government Policies, Unstable Economic Environment, unavailability of long-term funds, Inflation. The factors that affect the commercial bank profitability were significant mismatch in the maturity profiles of Assets and Liabilities, Frequent Interest Rate Fluctuations, under capitalization of banks, Poor Collateral of credits. Pakistans financial sector included nationalized, foreign, and private banks; and Non-banking Financial Institutions (NBFIs) which include Development Finance Institutions (DFIs), Investment Banks, leasing companies, modarabas, and housing finance companies. Scheduled Banks know as also commercial bank regulated by the State Bank of Pakistan regulated through different wings, and subject to different SBP regulatory requirements such as capital and liquidity reserve requirements. Factors that affect the profitability of Commercial Banks are both Endogenous and Exogenous. Endogenous factors are within the Control of Management such as quality of man

Out of School Youth Essay

ASEM Trust Fund for the Asian Financial Crisis Implementation Completion Memorandum Philippine Out-of-School Children and Youth Development (POSCYD) Project ASEM Trust Fund No. 023514 Background and Objectives: In the Philippines, the trend for the past ten years show that for every 10 pupils who enroll in grade school, only 7 graduate. The same ratio is experienced among the high school students. Main reasons cited for dropping-out are mostly poverty related. While basic education is free, many poor families are unable to finance the ancillary school needs of their children. Deprived of completing high school education, the out-of-school youth are further marginalized from acquiring technical skills. As mandated by the law, technical education in the Philippines is a post secondary course. The continuing inability of many poor young people to complete basic education and/or undertake technical education, consign them to the vicious cycle of poverty. Their lack of education constrains their access to better-paying jobs or ability to succeed in entrepreneurial pursuits, all of which require higher degree of literacy. Workers with solid foundation in technical education, have better chances of landing jobs. Amidst increasing incidence of out of school youth exacerbated by political and economic crises, the project seeks to: 1. develop and test mechanisms that will enable children in the age group 7 to 14 to be schooled or remain in school; and 2. pilot the implementation of an employment and entrepreneurship program for youth in the 15 to 24 year age group, integrating technical skills development with life skills development. TF no. 023514 was implemented in conjunction with TF no. 023513, which is bank managed. Achievement of Trust Fund Objectives1 Under TF no. 023514, a total of 16 sub-projects were funded from ASEM World Bank grant to the POSCYD Project. Of the 16, two (2) sub-projects focused on bringing back out-of-school children and youth back to formal in-school and another two (2) through alternative learning system for their basic education. Eleven (11) sub-projects provided integrated technical education and one (1) provided formal in-school basic education and integrated technical education to different sets of beneficiaries. In addition to the 16, a youth summit held in the 16 regions in the country led by the Department of Social Welfare and Development was also funded. Please see attachment for list and briefs of the 16 sub-projects funded under TF023514 1 A total of 566 poor out-of-school children and youth went back to formal primary or secondary school through three (3) sub-projects. They were provided with ancillary school needs such as uniforms, shoes, bags, notebooks and subsidy for school fees, transportation expenses, school projects and field trips. For those who have no access or cannot attend regular classes, alternative learning systems in basic education were provided. The Accreditation and Equivalency (A & E) Program of the Bureau of Non-Formal Education, Department of Education (DepEd), was offered to a total of 753 out-of-school youth who wanted to achieve an equivalency of high school education and another 300 participated in the Angelicum College Home Study Program, a private initiative. A total of 1,290 high school dropouts were enrolled in integrated technical education . All of the technical education courses undertaken by the target beneficiaries are tied up with skills that are in demand by different industries and provide for on-the-job training and employment assistance. Alternative learning system, to resolve deficiencies in basic education and life skills training, to enable the youth to cope with personal and interpersonal conflicts are incorporated in these courses. A â€Å"Skills for Life† Program, specially designed for the Filipino Youth, was developed with assistance from the International Youth Foundation (IYF). Except for one (1), all sub-project proponents sent participants to the teacher’s training course conducted in May and November/December 2001 by a consultant of IYF. In cooperation with the DepEd, training for Non-formal Education A & E Program instructional managers was provided to teachers from 11 integrated technical education sub-project proponents. The Youth Labor Demand Study was completed and now serves as reference material for the POSCYD Project Team and is made available to other interested parties. The 16 sub-projects funded were implemented with counterpart resources from government, business sector and civil society organizations. Concerted resource generation and complementation has, however, not been achieved at the national level and to a limited extent at the local level. The POSCYD Project has an Oversight Board that provides direction and general policies and does the final review of sub-project proposals for funding through its Executive Committee. There is also a Technical Working Committee that recommends to the Oversight Board general directions to take and sub-project proposals for approval. Together with direct beneficiaries of the TF # 23513, the POSCYD Project exceeded its target of 3,000 by 1,872 for a total of 4, 872. With the average trend of about 15% dropout rate, the resulting net direct beneficiaries is 4,119, exceeding the 3,000 target by about 37%. It must be noted, however, that one integrated technical education proponent, the Laguna State Polytechnic College, a government school (funded under TF #23513), offered the curriculum it developed under its POSCYD Project funded subproject, as a subject to high school graduates taking information/communication technology courses. The said sub-project has total of 553 students who finished or are still undertaking the subject. Execution Experience and Results The formal start of the Project was delayed by about eight (8) months due to the need to design a working arrangement, as articulated in the memorandum of agreement, acceptable to both the Department of Social Welfare and Development (DSWD) and Children and Youth Foundation of the Philippines (CYFP). Both institutions, DSWD (representing government) and CYFP (representing civil society) were new to the working and funding arrangements that involved financial and technical support from a multilateral organization like World Bank. Furthermore, there were no precedents to use as references. 2 Most competency building programs in the country for the out-of-school children and youth are addressed to those in especially difficult circumstances or are of above average intelligence and diligence. Furthermore, technical education is a post secondary course in the Philippines. Except for one, it was the first time for all the sub-project proponents in integrated technical education to accept substantial numbers of high school dropouts as trainees. Given the opportunity, most poor out-of-school children and youth, are interested to undertake basic and/or technical education. Among those who took advantage of the initiatives of the POSCYD Project, however, many were forced to dropout again. They are usually the ones who have to help augment family income, regularly perform household chores and/or take care of their younger siblings. Others could simply not afford out-of-pocket expenses such as transportation expenses despite the subsidy that some of the sub-project proponents provided. Among the estimated 15% of the out-of-school children and youth who were assisted to enroll in formal/non-formal basic education and integrated technical education that once more discontinued their studies, poverty is still the most prevalent reason. They are said to come from the poorest of the poor who sometimes go to school without breakfast, would eat candies for lunch and hardly have any transportation money. Money they spend is usually money that is taken away from the daily food needs of their families, thus they opt to work if jobs are available. Among the out-of-school children and youth who were brought back to formal school for their basic education, the dropout rate is 13%. If compared to the estimated national average dropout rate in school year 1997-98 of 7. 42% for grade school and 10. 76% in high school, the experience of the POSCYD Project would seem high. It must, however, be noted that the base used in the computation that resulted to 7% national drop out rate included all students, not just the poor ones. Without the initiative of the POSCYD Project, its total of 870 beneficiaries (TF 23513 & TF 23514) in formal in-school basic education would have remained out-of-school. Home based alternative learning system is an answer to the basic education needs of those not willing or could not go back to formal school for different reasons. About 12% of those who enrolled in the A & E program of Department of Education implemented by a proponent, discontinued their studies. Finishers of this system who pass the Department Education testing can work with the government and/or enroll in specific universities for their college education. Demand for this type of basic education is relatively high in places like Maguindanao and Cotabato City where there is serious peace and order problem and suffering from lack of secondary high schools. The A & E sub-project based in these areas and funded under TF no. 023513, requested to increase their target beneficiaries from 300 to 400. The proponent eventually had a total of 433 A & E enrollees. It is noteworthy to mention that among the 1,156 who finished the A & E Program, 82, pursued higher A & E lessons, 111 attended vocational education, 124 enrolled back in formal school to finish basic education, 38 went on to college and 98 found employment/self-employment. Another alternative learning system in basic education is the Home Study Program of Angelicum College. It follows its regular curricula for elementary and high school, but specially designed for those who could not attend regular classes in a formal school due to poverty, distance from school, need to work or illness. Students study at their own paces and are assisted by any tutor who has had higher education. Some of its clients are young prisoners. Out of the total 300 enrollees from different areas, 19. 7% dropped out. Main reasons cited are inability of tutors to reach participants from far-flung areas, transfer of residences and lost of interest. Among the enrollees in integrated technical education, those prone to dropping out again are the ones in especially difficult circumstances and those undertaking courses with more than six (6) month time frames. If the beneficiaries of the Laguna State Polytechnic College (who catered to high school graduates and offered curricula developed as a subje ct in tertiary education) were to be deducted from the total 3 integrated technical education beneficiaries of the POSCYD Project, the dropout rate would increase from 15% to 17%. This is high compared to the national average, which is said to be below 10%. 2 Inspite of the attempt of several sub-project proponents to provide additional subsidy such as transportation money and meals, dropout rates continue to be high. Since they are considered of age (16 to 24 years old), often, there is pressure from their own selves and/or their parents to earn to help augment family income. Among the poor Filipino families, it is not unusual for the elder children to sacrifice opportunities for higher education to help send their siblings to school or provide for their basic needs. To minimize a repeat of their dropping out of school or alternative learning systems, sub-project proponents intensified their support services by the providing the beneficiaries with support activities such as tutoring/remedial classes, mentoring, counseling and student and parent participation. The sub-project proponents of the Project are all well experienced in the implementation of basic education and/or technical education programs. Most of them, as mentioned earlier in this report, had no previous program for the out-of-school youth or high school undergraduates. The sub-project proponents had to beef up and intensify certain support services which they normally do not offer to their target beneficiaries. It was further observed that many of them tend to lack skills in planning, monitoring and evaluation. Thus, they were provided with technical assistance and training in these functions of project management to improve the effectiveness of their education programs. To further improve their effectiveness, selected proponents were provided with training in the implementation of the NFE A & E Program of the DepEd, Skills for Life Program for Filipino Youth and the first phase of Building Local Tri-Sector Partnerships. To maximize the employment of graduates of technical education graduates, priority in the selection of sub-projects, was given to institutions with existing industry tie -ups or are willing to tie -up courses offered with industries. These tie -ups include not only providing opportunities for apprenticeship and employment of graduates, but in the revision of curricula to suit the specific labor needs of the industries that are in demand. The worsening economic situation is negatively affecting these industry tie -ups. Some companies that used to offer allowances to technical education students undergoing apprenticeship can no longer afford to do so. Many of those who considered employment of technical education graduates have served notice that they cannot absorb new workers. An assessment done by an outside agency showed that despite the bad economic situation in the country, the trend in employment/selfemployment rate of technical education beneficiaries of the POSCYD Project is 70%, compared to the national average of 44% In terms of partnerships, sub-project proponents were able to tap resources from more than 200 different institutions that belong to the government, civil society and/or business sector. Among the contributed resources are technical assistance, training, tools/equipment, materials, use of facilities, community participation and to a limited extent, allowances of students. Of the overall estimated value of counterpart resources infused into the POSCYD Project from the three (3) sectors, about 9% each came from government and business sector, 18% from civil society and 27% from the sub-project proponents. About 39% of the resources of the POSCYD Project came from the ASEM Fund financial grant. Based on this experience, it is obvious that there is a greater need to find more strategies on how to tap resources from government and business sector. The planned building of local tri-sector partnerships did not materialize as projected. The initial attempt to organize regional consortia was rejected by institutions from the three (3) sectors consulted in the five (5) target regions. They advised that with limited resources, the POSCYD Project must focus on 2 Estimated national dropout rate of less than 10% is based on experience of technical schools that offer courses to high school graduates and which do not necessarily focus on poor out-of-school youth. 4 localized tri-sector partnerships. Thus, the Project is now focusing on assisting proponents in the development of local tri-sector partnerships that will revolve around the out-of-school youth and the specific education services offered. Only two (2) of the five (5) planned local tri-sector partnerships were organized. The Philippine Peso steadily devaluated from P38 to P50 per US$1 resulting to shortfall in the usage of the US$780,000 ASEM Grant from World Bank. In Philippine Peso term, however, the Project was able to spend more than the original budget with concurrence from World Bank. Emerging Lessons The experience in the initial pilot phase of the POSCYD Project points to the following emerging lessons in building the competencies of the out-of-school children and youth: 1. Government, civil society and business organizations come from different cultures, but with patience and openness, these three (3) sectors can closely work together to maximize Project benefits. 2. The ordinary poor out-of-school children and youth who are basic education dropouts is a relatively neglected sub-sector. 3. Poor out-of-school children and youth have special learning needs brought about by their deficient cognitive experiences and lack of psycho-social skills that must be understood by all those who will be involved in their education. In addition to meeting their ancillary education expenses, they need to be provided with support services such as mentoring/tutoring, counseling and life skills training. 4. Youth and parent participation have also been determined as important factors in minimizing discontinuance in the education of former out-of-school children and youth. 5. The dropout rate becomes even higher for students in especially difficult circumstances such as extreme poverty, victims of abuse and those coming from dysfunctional families. These types of students would need a lot of financial and intensified support services for them to sustain their education. 6. There is a big demand for alternative learning systems in basic education, specially in areas where there is prevalence of abject poverty (slum areas), critical peace and order situation and/or lack of access to elementary and high schools. Government should encourage, cultivate and recognize the private sector’s initiative to develop innovative learning systems to meet varying demands of the youth. 7. Direct tie -ups with industries for curriculum development/revision, apprenticeship of students and employment of graduates are important to ensuring high employment rates of beneficiaries. 8. One-on-one partnerships with different organizations from government, civil soci ty and business e sector can be successful. However, partnership with government is affected by patronage politics and with business sector, by the economic situation in the country. 9. Building organized local tri-sector partnership can be realized, but difficult to start and even more difficult to maintain. There is a need to identify and work with â€Å"champions† from the target sectors and a point person within the organization who can devote time to crucial activities. 10. Institutions providing competency build ing opportunities to the youth can be good in implementation, but usually need strengthening in terms of project planning, monitoring and evaluation and adaptation of support mechanisms necessary for out-of-school children and youth beneficiaries. Activity Sustainability At the local level, sub-project proponents are being assisted in the building of tri-sector partnerships that will take the lead in generating and complementing resources for out-of-school children and youth concerns in general, and the education services offered to them in particular. It is envisioned that to large 5 extent, organized tri-sector partnerships shall enable the sub-project proponents to maximize generation of resources and not become entirely dependent on funding agencies. It is, however, a reality that generation of local resources can be limited, especially in small cities and towns and poorer provinces. Thus, sub-project proponents must be referred to other funding agencies At the national level, there is a need to promote actively out-of-school children and youth concerns and strategies that will enable them to go back to school or undertake technical education. In this way, more institutions from the different sectors of society will hopefully put more focus in allevia ting the situation. The large number of out-of –school children and youth underscores the need for government, civil society and business sector to jointly remedy the situation. Overall Assessment Over-all, we believe that the project was successful in meeting its objectives. The results show that it has exceeded its physical targets. Long-term benefits are expected to be felt by the recipients and important lessons have been generated which will assist the various stakeholders in designing future interventions for OSY. Data Sheet Trust Fund No: TF23514 Project ID No. : P065823 Project Title: PILOT PROJECT FOR THE DEVELOPMENT OF OUT OF SCHOOL YOUTH Recipient Country: Philippines Project Executed by: Recipient Sector: Education Task Team Leader: Teresa J. Ho Managing Unit: EASHD Grant Approval Date: Grant Amount: (in US$) Grant Agreement Date: Closing Date: April 29, 1999 US$780,000 June 7, 2000 October 31, 2001 FY Disbursements (actuals in US$) (as of reporting date) 2000 Amount US$ 78,000. 00 FY 2001 Amount US$ 521,285. 95 FY 2002 Amount US$ 26,665. 70 6 1. Lists of consultant contracts awarded: 1. 1 Erda Tech Foundation, Inc. 1. 2 Mary Help of Christians – 1st sub-project – 2nd sub-project 1. 3 Phil. NGO Council on Population Health & Welfare 1. 4 Angelicum College, Inc. 1. 5 Ayala Foundation, Inc. 1. 6 Pearl S. Buck International, Inc. 1. 7 Valenzuela City Gov’t. 1. 8 Paranaque Dev’t. Foundation, Inc. 1. 9 Center for Social Research-VISCA 1. 10 National Training School for Boys 1. 11 Salesian Society of St. John Bosco-Borongan 1. 12 Department of Social Welfare & Development (Youth Summit) 1. 13 Taguig Jewelry Producers, Inc 1. 14 Meralco Foundation, Inc. 1. 15 Holy Trinity College 1. 16 Don Bosco Technical Institute-Makati( 2nd subproject) 1. 17 Phil. Business for Social Progress-Evaluation of Sub-projects 1. 18 Center for Labor Education, Advocacy, and Research Development Foundation, Inc. 2. Visibility (mention of funding sources in Contracts, publications, seminars, etc. ) -Partners Orientation & Planning workshops -Accreditation & Equivalency -Building Local Tri-Sectoral Partnership -Sub-Project Assessment -Post Project Evaluation 3. Incremental Operating Costs-CYFP Amount: (in US$) 46,796. 91 25,833. 86 22,108. 50 35,484. 06 17,158. 54 42,094. 84 15,917. 21 6,994. 66 31,830. 23 17,313. 81 14,359. 84 16,686. 42 39,153. 70 20,277. 63 36,713. 63 27,462. 82 52,491. 02 16,634. 10 8,867. 61 19,913. 01 Nationality: Filipino Filipino Filipino Filipino Filipino American Filipino Filipino Filipino Filipino Filipino Filipino Filipino Filipino Filipino Filipino Filipino Filipino Filipino 111,963. 36 Filipino _________ TOTAL $ 626,055. 76 1. Compliance with visibility provision (as notified to you upon internal approval of the proposed grant) Proponents of sub-projects were oriented that funding for the POSCYD Project came from ASEM-World Bank. In documents that specify grants received, ASEM-World Bank is always acknowledged as the source of funding. In the POSCYD Project Orientation meetings held in the five (5) target regions and for different interest groups, ASEM was always mentioned as the source of the World Bank Grant for the Project. The same holds true for workshops conducted. In the mid-term Project assessment review attended by the President Gloria MacapagalArroyo and leaders from government, civil society and business sector, the affair was labeled as the POSCYD Project ASEM Grant Mid-Term Review. The ASEM Grant to the POSCYD Project is always acknowledged in all reports prepared. 7 BRIEF PROFILES OF ASSISTED PROJECTS under the ASEM $780,000. 00 GRANT Formal Basic Education Project Title and Brief Basic Education Project for Out of School Children and Youth or Children and Youth at Risk of Dropping Out of School (Subic, Zambales and San Jose del Monte Bulacan – Region 3) A replication of the on-going sponsorship project in Ormoc City, aimed at bringing back out-of-school children and youth to formal school in elementary and high school. The project shoulders the basic education of 300 OSCY and CYRDOS. Proponent’s Profile Pearl S. Buck International, Inc. Pearl S. Buck International was founded in 1968 by the late Nobel and Pulitzer-prize winning author Pearl S. Buck. It has set up various offices around the country including one in Ormoc City. Among PSBI’s educational activities include: early childhood care and development, enhancing families ability to manage and sustain their children’s education, school attendance support, and a study now pay later assistance to vocational and college students. It also offers livelihood skills training, micro-credit assistance and savings mobilization, and job placement services. Paranaque Development Foundation, Inc. Paranaque Development Foundation, Inc. (PDFI) was organized and registered in the Security and Exchange Commission (SEC) on June 28, 1968. The organization is focused on the organization of grassroots groups as well as the integration and synchronization of the various social service organizations. PDFI aims to mobilize the different sectors in creating a mutually loving, caring, and sharing community that will provide the poor the capabilities to be self-reliant. Inputs of Partners Rustan Corp. and Little Caesar’s Corp. have pledged sponsorship assistance for beneficiaries who intend to pursue vocational courses. These companies have also promised to provide financial support for the life skills training of the learners. Integrated Project for Marginalized OSCY (Paranaque City – NCR) A formal education project aimed at bringing back out-of-school children and youth to formal school in elementary and high school. The project sponsors the basic education of 300 Paranaque-based OSCY . Parent volunteers have committed to assist PDFI in recruiting beneficiaries, assessing project implementation, and monitoring of project accomplishments. Save the Children – US and Terre des Hommes have expressed willingness to fund the training on peer counseling and life skills, and family/community support respectively. The local barangay council has been tapped to provide assistance to the health seminars. The Japanese Embassy has committed to provide sewing machines and other equipment for the training of adult members of the trainees’ families. The Rotary Club of Paranaque shall be tapped to fund the training. Accreditation and Equivalency (A & E) – ALS Non-Formal Education – Accreditation and Equivalency for the Out of School Youth (Bacoor, Cavite – Region 4) A facilitation and conduct of the Accreditation and Equivalency (A&E) Program of the Bureau of Non-Formal Education–Department of Education, Culture and Sports, aimed at preparing OSCY in Bacoor, Cavite in attaining equivalency for their educational level. The project facilitates the A&E education of 700 OSCY clients. Philippine NGO Council on Population, Health and Welfare, Inc. PNGOC is a registered private voluntary organization founded in 1987 by 17 national and local population NGOs. The organization was envisioned to create self-reliant and socially responsible Filipino families. PNGOC embraces five program thrusts namely: networking, advocacy, organizational development, human resource development, and provision of technical and financial assistance to small NGOs in the countryside. The DECS-BNFE provided the framework of the Non-Formal Education – Accreditation and Equivalency and facilitated the training of the PNGOC instructional managers (IMs). The local government of Bacoor, Cavite provided the learning centers being utilized by the learners as well as developed and disseminated the advocacy information on the project. 8 Home Study Program – ALS The Home Study Program (Palawan, Leyte and Occidental Mindoro) A formal alternative learning system that shall enable OSY to graduate from elementary and high school with an Angelicum Diploma without hav ing to attend school every day —they can attend to schoolwork within their homes. Selflearning modules based on a formal education curriculum are provided the learners. The project assists 300 OSCY in pursuing their basic education through formal ALS. Angelicum College Angelicum College was founded on July 5, 1972 as an alternative school that veers away from the traditional educational system. Through the efforts of Fr. Rogelio Alarcon, proponent of the Home Study Program, the school was able to solicit funding from former President Joseph Estrada’s Social Fund. Consequently, the school was able to offer the Program, for free, to out of school youth. From July to August 2000, the total OSY enrolled in the Program has reached about 2000 in 50 different areas throughout the country. Three partner implementors, Runggiyan Foundation (Leyte), Plan International (Mindoro), and Holy Trinity College (Palawan) are managing and coordinating the operations of the Home Study Program in their respective areas. With support from the LGUs, Sangguniang Kabataan, and community elders, the partner implementors identified, recruited, screened, and selected the OSY beneficiaries, and identified, recruited and deployed the volunteer coordinators and volunteer tutors. The LGUs pledged to assist the partner implementors follow up and monitor the Volunteers. Technical Education PALIHAN III: Technical and Vocational Skills Training for OSYs (Metro Manila, NCR) A technical skills training and placement for urban poor out-of-school youth in Metro Manila. â€Å"Palihan† means anvil or mould. Hence, it embodies the ideal of molding the OSY to become productive and responsible citizens. Technical courses offered include: Food Processing, Food Service, Leather Craft, Cons truction Work, and Glass Etching. The project intends to assist the non-formal technical education of 200 OSY. Empowering Disadvantaged Women in Pampanga (Mabalacat, Pampanga, Region 3) A technical skills training in industrial electronics for sexually abused and prostituted young women in the province of Pampanga and their placement in electronics firms at the special economic zone. The project purposes to benefit 80 female OSY who are enrolled in formal technical education. ERDA TECH Foundation ERDA TECH Foundation, established in 1996, is a non-stock, not for profit foundation dedicated to assisting children and youth age 12 to 18 years old who are disadvantaged by poverty. The Foundation’s main goal is to get children and youth, from the streets and from poor communities, who are interested in pursuing a secondary education with a vocational program that will train and nurture them into becoming productive members of society — meaning, being able to earn a living, becoming physically and emotionally stable and prepared to start a decent family life. Mary Help of Christians-Technology Center for Women The Mary Help of Christians – Technology Center for Women was established in 1993 to provide a home and school for disadvantaged young women where they can learn various employable technical skills. In hopes of molding trainees to become good and productive Christians, the Center has integrated the technical education course with values education, ethics and Christian Living. The Center has a 100% placement rate and has since graduated 120 young women who are now regular employees in various companies. Jewelry Skills Training and Placement Project for OSY in Taguig (Taguig, National Capital Region) Taguig Jewelry Producers’ Cooperative The TJPC is the pioneering group of skilled jewelry makers in Metro Manila, having been TJPC was assisted by TESDA, which arranged for the use of the training venue and other training facilities. Congessional funds shall help cover the administrative cost of the The technical education of the trainees is a collaborative effort between ERDA TECH and the Marikina Institute of Science and Technology (MIST). MIST provided training facilities and equipment needed for the training. Jollibee Foods Corp. has committed to accept the trainees for the in-plant training as well as their job placement. Enzio, Corp. has also agreed to employ the graduates of the training course. Spencer & Co. shall help shoulder the transportation and meal allowances of the trainees in the in-plant training. As part of the business sector’s contribution to the project, the post-training employment of the young women will be at the follow ing semicon companies: American Power Conversion, National Electronic Corporation, Amertron, Inc. , Sanyo Semiconductors, Luen Thai, and Computer Data Center, Inc. The Municipal Mayor of Mabalacat town in Pampanga provided the transport allowances of the trainees. 9 A technical skills training in jewelry making for OSY in Taguig and their placement in jewelry firms in Metro Manila. For its initial batch, the project aims to graduate 35 OSY trainees in jewelry making. registered as a cooperative in July 1994. TJPC is composed of 28 members/ shareholders and boasts of a strong network of 3,337 cooperatives in the Metro Manila area where it can draw support in terms of dealership or marketing of jewelry products.

Heavenly Creatures Essay

heaGreat films often hinge on the successful presentation of one or two key scenes, to what degree do you agree with this statement Many great films do hinge on the successful presentation of one or two key scenes, these scenes are normally well crafted establishment scenes that straight away emerse the audience deep into the film and its culture or in most cases the scenes are climatic endings that bring together the central themes in a spectacular way. It is normally these central themes that a great film is marbled with and is most likely than not what makes a film hinge on being a great film. A great film is one sends a powerful message, influencing us to think and make great judgments through these central themes. However for these keys scenes to have any effect they must be presented successfully using well thought out visual and/or verbal film techniques that engage the audience. Therefore I agree with this statement to the full extent, as it is clear that the presentation of the key scenes in a film will either make or break a film giving it the title of being a â€Å"great† film. Will this is exactly why we write a thesis – here you have left the reader in no doubt as to your opinion on the question – good work. A Film that has become a great film through the successful presentation of two key scenes is Peter Jacksons Film Heavenly Creatures. It was a great film because the two key scenes that the movie hinged on, the beginning and end of the film, were successfully presented in such a way that the key ideas were brought together so the audience could freely engage with the movie and be influenced by its powerful messages. Heavenly creatures is about two young girls that attend Christchurch Girls High in 1950’s New Zealand. Jackson has presented to us the true story of how these girls committed Matricide. Matricide is the act of murdering your own mother. This story is compelling as it explores how the girls got to the point where they were able to go through with what was so alien to the rest of the population of Christchurch at the time. The first scene is key as it shows the girls running through Victoria park covered in blood screaming, this scene intercuts between the girls running onto a boat laughing and smiling. However the final scene of the movie shows the girls murdering their mum whilst also intercutting between the boat scene, whoever the difference is one of the girls, Pauline, is being left behind. These two scenes are key because whilst being similar, they had some relevant key differences that convey the key ideas well. Why Jackson was compelled to present this story as a film was because of the powerful message presented. This powerful message was the consequences of when a friendship becomes an obsession. This is what is conveyed and is what I think drove these girls to commit the act of matricide. Therefore it is the successful presentation of the beginning and the final scene of the movie via the use of well crafted visual techniques that conveyed this key idea making this film a great film. See the benefit of using the key words from the question – clarity. Firstly, Jackson’s presentation of the key idea of the consequences of when a friendship becomes an obsession is the intercutting of the scenes between the girls at Victoria park in both the beginning and end off the movie. Jackson used the visual technique of manipulated the images of the girls initially running onto the boat to a sepia tone to distinguish between the two scenes but to also distinguish that one is reality and one is fantasy.. This helped me to understand that the girls running onto the ship was a sort of metaphorical fantasy to the dream of how badly they wanted to be together to be happy. The fact that the girls were shown to be laughing told also reinforces this thought. The relevant point of difference between the two sepia scenes at the beginning and at the end is that in the end scene it is only Juliet running on to the boat and Pauline is getting pushed away by the crowd, not being able to get on the boat. As this scene is being intercut with the girls murdering Paul’s mother, it suggested to me that Pauline had finally come to the conclusion that no matter what the girls could not be together. Paul’s screams in the sepia images blend in with the screams from the murder in a dramatic and chilling way. I gained a sense for the tremendous emotional pain Pauline was feeling which contrasts from the laughing from the initial sepia scene. This helped me to understand how much of an obsession the girls friendship became and how it seems credible that this could consequently lead these girls to the murder. Therefore this is just one example of how these two key scenes have been successfully presented to powerfully convey the main idea of the film which is the consequences of a friendship becoming an obsession justifying that Heavenly Creatures is a great film. Good, good, good. Another way Jackson presents the key idea of the consequences of when a friendship becomes an obsession is by the use of camera visual techniques. The first camera technique that he uses that helped me understand this idea was the use of close-ups especially in the final scene. Jackson uses close-ups of the Honora’s terror filled face and both girls wicked blood thirsty faces as they took turns bludgeoning Honora to death. To me this hit home hard, Jackson’s use of close-ups to the audience made the viewing of the murder all the more real as the raw emotion of all the characters is forced upon us. I felt as though I was fully emerged and apart of the murder as much as the girls themselves which upon reflection there expressions helped me to understand the radicalism of the consequences of the girls out of control obsessive relationship. Including your own reaction is a convincing tactic. Furthermore, another visual technique used by Jackson to further convey the key idea of the film was the use of low angle shots in the final scene of the movie. Jackson used these to explain the shift in power of the relationship from Juliet to Pauline. This is shown where there are low angle shots of Pauline giving her a dominating stature in contrast to Juliet. This is a clever contrast to the start of the movie where Pauline is a shy low self esteemed girl, however to my understanding, it seems that as the movie has progressed Pauline and Juliet’s roles have reversed. This helped me to understand that the developed obsession between the girls friendship consequently changed Pauline for the worst and therefore had much greater consequences. Therefore, I believe Jackson’s use of camera visual techniques have helped to successfully present the two key scenes in the film as they have given me greater insight into the key idea of the film of the consequences of when a friendship becomes an obsession. As this theme has been portrayed effectively and compellingly this reiterates that this is a great film. In conclusion, Jackson has been successful in the presenting the key idea of the consequences of when a friendship becomes and obsession through the successful presentation of the two key scenes which are the beginning and end scenes in Victoria park. He has done this through the use of well thought out visual techniques and contrasting differences between the two scenes. Firstly showing how the friendship has become an obsession through the use of the intercutting between the sepia scenes. Secondly showin through the use of low angle shots how the obsessive relationship has changed paul and finally shown through the use of close-ups the terrible consequences of the girls obsession. The Consequences of when a friendship becomes an obsession has peen portrayed clearly and compellingly to the audience throughout this film. This was Peter Jacksons aim. He has specifically chosen this story due to its peculiar circumstances and presented his interpretation and exploration as to how two girls could go through with such an insane act, therefore he has developed this key idea and conveyed it successfully therefore making Heavenly Creatures a â€Å"great† film. Therefore this confirms that great films often hinge on the successful presentation of one or two key scenes as seen in Heavenly Creatures. William Dunlop William – a convincing response – using the tips given in class this week is a major contributor to this, such a small thing but highly effective. To move to Excellence, we need to hear about how what Jackson shows you also makes you think about, for example how can you relate to these key themes or who else or what else do they remind you of? (Universal perspective). Merit.