The Efficacy Of Early Warning Systems Finance Essay - Free Essay Example

Sample details Pages: 16 Words: 4811 Downloads: 10 Date added: 2017/06/26 Category Finance Essay Type Research paper Did you like this example? This document examines the efficacy of early warning systems with respect to predicting incipient financial distress of banking institutions. Their practical use by policy makers is limited, even in the international financial institutions. This is a paradox since the changing nature of banking risks as more economies liberalise and develop their financial systems, as well as ongoing innovation, makes the use of EWS for informing policies aimed at preventing crises more necessary than ever. Don’t waste time! Our writers will create an original "The Efficacy Of Early Warning Systems Finance Essay" essay for you Create order A model of banks with different of total assets (small, medium large) is selected, financial and economic data for individual banks are collected, and EWSs that have been applied in banking studies are tested. During a period of few bank failures, the relevance of this bank failure model for surveillance depends to some extent on the accuracy of the model in predicting which banks will have their supervisory ratings downgraded to problem status in future periods. Rather than attempting to guess bank failure as in previous banking literature, we classify banks as capital adequate or capital inadequate and seek to predict inadequately capitalized banks one year prior to the initial decline of the capital ratio. The early warning systems models developed in this document could identify capital inadequate banks with a sufficient amount of accuracy. It is important to consider the policy makers objectives when designing predictive models and setting related thresholds since there i s a sharp trade-off between correctly calling crises and false alarms. Introduction Economic crisis caused a loss a lot of assets and hit banks and money markets and stock markets. Many experts put global and causes of the crisis and tried to put many of the solutions, in order not to repeat the crisis, with the yoke of crises frequently occur once in a while. Usually in a crisis Wallis rush to withdraw some or most of their money from banks, resulting in a smaller cache and entry into force of the banks as quickly lead to bankruptcy of the bank, or falling into financial hardship unless the state stepped quickly to support the bank or if the bank insured money of depositors. It has been said and will say a lot about how that occurred where the global economic crisis, which began in the precursors to the disclosure of the same several months ago. The world know this crisis with the emergence of the subprime mortgage crisis that took place in the United States to be followed by United kingdom after period, and peaked following the announcement of a number of ins titutions and banks in the forefront of the World famous Leman Brothers for bankruptcy, due to lack of liquidity, and the inability to meet the demands of customers, forcing some into bankruptcy, and caused the collapse of the market. The causes of the crisis The reasons for the current global financial crisis back to the year 2006 and the outbreak of the so-called crisis of high-risk loans, which introduced the banking sector and U.S. banking in the spiral of losses and disorders, and claimed the lives of hundreds of thousands of American citizens. The crisis erupted high-risk loans because of the feet of many of the authorized banks in real estate loans to hundreds of thousands of citizens with limited income, ignoring the rule of caution and risk assessment. And adopted the banks of this approach is characterized by unprecedented growth of the real estate sector and a significant reduction of interest rates in place, which resulted in significant numbers of Americans to the conviction that the highly favorable opportunity to buy a house. With the sudden increase of interest rates in the banking markets of America, a large number of Americans have been unable to repay their loans, and the numbers have increased over the months to crea te an atmosphere of panic in financial markets and among investors in the real estate sector. Banks have been affected in the relevant high-risk loans more than other because of high interest rates, and their impact on the situation of borrowers with modest incomes. As soon as the first disturbance, accelerated banks to the confiscation of homes who are unable to repay the loans and sell them on the back of a sudden and severe crisis for the real estate sector is a result of declining prices by much. The series deal with the repercussions of the financial crisis since the outbreak of the credit crunch, high-risk, the central banks in the United States, Europe and Asia are being forced to move, leaving her only the choice between changing interest rates, pumping money into banks affected. The U.S. Federal Reserve deliberately approaches the first option, which took the initiative in many times to reduce the rate fell from 5.25 percent in June 2006 to 2 percent in April 2008. Not only has the U.S. government take this action, but has chosen to go away in their quest to prevent the spread of the crisis, which decided to nationalize the three big banks. Manifestations of this crisis, Manifestations of this crisis, for example, the following: Rush to withdraw deposits from the banks; because capital is coward, and this as stated by the mass media. The fact that many financial institutions to freeze loans to companies and individuals for fear of the difficulty of recovery. Lack of cash in circulation of individuals, companies and financial institutions, and this led to a sharp contraction in economic activity and all aspects of life; which led to the suspension of the borrowers to repay their faith. Low level of transactions in the financial markets, and this caused confusion and disruption in the indicators of ups and downs. Low level of energy used by the companies due to lack of liquidity and a freeze on access to loans from financial institutions, but interest rates are very high and difficult guarantees. Lower sales, especially in real estate, cars, etc.; because of poor liquidity. Increasing rate of unemployment due to the bankruptcy and liquidation, and every employee and worker threatened with dismissal. Increased demand for social subsidies from governments. Low rates of consumption and spending, saving and investment, and this has led to more: recession, unemployment, and slower, stop, and liquidation and bankruptcy. Banking is one of the more closely supervised industries in the United States, reflecting the view that bank failures have stronger adverse effects on economic activity than other business failures. Capital adequacy is central to regulatory oversight of security, safety and reliability in the U.S. banking system. From a regulatory point of view, inadequate capital reflects financial distress that often leads to failure and crash. Regulators ability to predict bank capital shortage would really improve the success of the supervisory process, thereby affording regulators extra time to closely watch potential crisis banks and force sanctions (on dividend payments, asset increase, new business activities, salaries, deposit rates, etc.) to facil itate institutional recovery. Because inadequate capitalization is a pre-condition to bank failure, it has been the focus of widespread study. It is well documented in the literature that financial distress is a prolonged process that in general takes place over an extended period of time. Previous work on financial distress attempts to predict bank failure or closure by regulatory authorities. These studies observe the endpoint in the timeline of financial distress, which extends from the early phase of inability to earn competitive profits to a period of financial turmoil and ultimate failure. Consistent with this judgment, Gilbert, Meyer, and Vaughn (1999) attempt to predict banks that are likely to develop financial problems in the near future predicting a CAMELS downgrade from a safe level (rated 1 or 2) to a watch list level (rated 3, 4, or 5).4 Using a logit analysis, found a simple equity to asset ratio to be one of the important predictors for a CAMELS downgrade. Thi s article describes the process of developing an early warning system for banks to predict financial crises in the God of the banks capital significantly. We apply both logit analysis as well as trait recognition analysis (TRA), a neural network-like method, to the financial and economic data for the period 1988 to 1990. Literature on Predicting Financial Distress Several studies have examined financial distress, which is a pre-condition to firms failure. In general, these studies have found that accounting information can detect incipient financial distress of nonfinancial firms, and that different firm states on the financial distress continuum appear to be independent of one another. There are two branches of literature on financial distress the multinomial choice approach and the survival time approach. multinomial choice models In multinomial choice models a number of states of the firm are hypothesized to exist. For example, some studies define five possible states financial stability, omitting or reducing dividend payments, default on loan payments protection from the Bankruptcy Act, and bankruptcy and liquidation. Some studies define a continuum of financial distress. Others collapse these five states into non bankrupt, financially weak, and bankrupt firms. In most of these studies, an ordinal logistic regression (OLGR) technique is employed, where the response variable is multinomial (as opposed to binomial), and explanatory variables are used to approximation the cumulative probability that a firm is a member of the response states. An additional branch of financial distress, survival time research, these techniques were primarily developed in the medical and biological sciences, but they are also widely used in the social and economic sciences, as well as in engineering, censored observations arise whenever the dependent variable of interest represents the time to a terminal event, and the duration of the study is limited in time. Censored observations may occur in a number of different areas of research. For example, in economics we may study the survival of new businesses or the survival times of products such as automobiles. Survival time research Survival time research, Predicts the probable time to failure using financial, economic, managerial, and regulatory factors. Using Cox proportional hazards models, as well as split-population survival time models, earlier studies compute survival time relative to bank closure or failure. In general, the empirical results support the notion that financial distress is a dynamic process that can be predicted using financial, economic, and other explanatory variables. We applied a survival time model with time-varying predictors to savings and loan (SL) institutions. Interestingly, the authors noted that, among numerous studies attempting to predict SL failure, only one variable was significant in all such studies the equity capital ratio. Our study attempts to shut this gap in the literature by using the equity capital ratio as the dependent variable to reflect an early stage of financial distress. Our aim is to build up a model that predicts one of two states capital-adequate ve rsus capital-inadequate where the latter state represents incipient financial distress to be predicted by bank supervisors. The Methodology EWS Models Use the EWS Survey, to measure the amount of knowledge of individuals about the early warning system in financial institutions and its relationship to economic crises that occur in the world. Objectives of the study Identify the current situation on the economic crisis Measure the individual information about the early warning system Procedural steps Sample Study The sample study consists of 100 individuals which distributed in different ministries, institutions, some branches of the Bank and the training institutes. The tables and graphs showing the distribution of the following members of the sample by: GENDER male female total Gender 42 41 83 Table 1: Distribution of the sample by gender figure 1: Distribution of the sample by gender AGE  20-35 36-50 51-above total Age 52 26 5 83 Table 2: Distribution of the sample by age figure 2: Distribution of the sample by age SALARY  under 1000 1000-2000 above 2000 salary 61 17 5 Table 3: Distribution of the sample by salary figure 3: Distribution of the sample by salary JOB  Business Economy other job 29 3 51 Table 4: Distribution of the sample by job figure 4: Distribution of the sample by job NO. OF BANKS THAT DEAL WITH  1 2 3 or more No. of banks that deal with 49 24 10 Table 5: Distribution of the sample by the number of banks that deal with figure 5: Distribution of the sample by the number of banks that deal with Building Study Tool We designed a Questionnaire to measure the amount of knowledge of individual on the economic crisis(Appendix 1) The Questionnaire consists of public statements and two area : 1-The first area about the economic crisis 2-The second area about the early warning system Applying the Tool study -The questioner was distributed to different ministries, institutions, some branches of the Bank and the training institutes Survey was sent to many groups of individuals on 14-12-2009 via fax, e-mail and by hand. Data was collected through 17-12-2009. 83 responses were received from 100 surveys. Programming Study Tool The questionnaire data was insert and analyze using Microsoft spreadsheets . Data and Empirical Results Survey Results from the viewpoint of individual The public question results : Notice here that the sample almost equally between males and females. It is noted that a large proportion of respondents said their incomes less than a thousand Kuwaiti Dinars ($ 3000) and they represent a large segment of workers in the community. These individuals are most affected by any economic crisis It is noted that one-third of respondents working in the business sector and the rest spread over other sectors. It is noted that a large proportion of respondents dealing with one bank and a significant proportion of individuals dealing with two banks and a few deals with three banks Results of the study are divided into two parts: 1-The first part about the economic crisis 2-The second part about the early warning system Part1 : Economic crisis have you heard about the Economic crisis that occurred recently? Yes No I dont know Q1 81 2 0 Table 6 It is noted that most of the respondents (97.5%) ha d heard about the economic crisis, either through television or radio or newspapers or friends or seminars. figure 6 Did you expect the economic crisis?  Yes No I dont know Q2 34 47 2 Table 7 There are convergent between the percentage who predicted the crisis and among those who did not. figure 7 Is the economic crisis affected your ability purchasing?  Yes No I dont know Q3 48 35 0 Table 8 A percentage of its purchasing power was affected (57.8%) more than those who did not(42.1%), either because of lack of their incomes or because of their expulsion from their jobs or reduce their salaries or high prices of some goods. figure 8 Is the economic crisis affected the number of your trips?  Yes No I dont know Q4 34 46 3 Table 9 Proportions of those not affected by its ability to travel (55.4%)more than those who affected(40.9%), because of the decline in oil prices, which led to lower fuel prices, which in turn lower prices of air tickets. figure 9 Is the economic crisis affected your Bank?  Yes No I dont know Q5 34 39 10 Table 10 figure 10 Do you take a loan from the bank because of the economic crisis?  Yes No I dont know Q6 15 67 1 Table 11 We note here that most of the respondents (80.7%)did not take loans because of the crisis and that back to either they take loans in the past and they cannot take again, or because they dont need loan. figure 11 Do you feel that the economic crisis affected your behavior in dealing with banks?  Yes No I dont know Q7 29 54 0 Table 12 We note here that some members of the sample (34.9%)affected by their dealings with the bank this may be due to the presence of installment or obligations of the bank they could not meet them. figure 12 Have you taken your actions for fear of another economic crisis?  Yes No I dont know Q8 43 39 1 Table 13 We note here that some members of the sample (51.8%)taken precautions for fear of another crisis, because they hurting of the current crisis, we find some of them shift from work in the private sector to the government sector. figure 13 Do you expect another economic crisis?  Yes No I dont know Q9 53 17 13 Table 14 We note here that most of the respondents (63.8%) do not expect a repeat of the crisis once again. figure 14 Part 2: Early Warning system Have you heard about the Early Warning System?  Yes No I dont know Q10 16 67 0 Table 15 We note here that most of the respondents (80.7%) had not heard of early warning systems, due to a lack of informing, or because of lack of attention because of government-sponsored banks and guarantee deposits figure 15 Do you deposit your money in banks that rely on early warning system?  Yes No I dont know Q11 10 5 1 Table 16 We note here that most of the respondents deposit their money in bank that rely on EWS because of government-sponsored banks and guarantee deposits. figure 16 Do you feel the importance of the existence of early warning system?  Yes No I dont know Q12 14 2 0 Table 17 We note here that most of the respondents who had heard about the early warning system believe the importance of having early warning systems in the bank. figure 17 Do you agree with the need to adopt financial institutions and economic of early warning system?  Yes No I dont know Q13 13 2 1 Table 18 We note here that most of the respondents who had heard about the early warning system agree with the need to adopt financial institutions and economic of early warning system. figure 18 Do you agree that the early warning system reduces the incidence of economic crises?  Yes No I dont know Q14 13 2 1 Table 19 We note here that most of the respondents who had heard about the early warning system agree that the early warning system reduces the incidence of economic crises. figure 19 Summary and Conclusions This paper has sought to empirically test the efficacy of EWS models as prediction tools in identifying incipient capital inadequacy in U.S. commercial banks. Our results demonstrate that capital deficient banks are much different from other banks in terms of their financial health. We find that capital adequacy is a broad concept that requires review of a wide array of different kinds of financial and economic variables. In addition, the TRA results highlight the importance of complex interaction variables in identifying banks with deficient capital. Our EWS models could detect the early onset of financial distress in commercial banks one year in advance with a reasonable degree of accuracy. By implication, the EWS models can be used to provide a timely signal of impending bank problems to supervisory agencies. Our group belief, international financial institutions do not employ an EWS specifically for banking crisis. However, given the ongoing liberalization of emerging mar ket financial sectors as well as the changing nature of banking risks as more economies move into market and securitized banking phases, the use of EWS for crisis prevention is more necessary than ever. It is important to consider the policy maker objectives when designing predictive models since there is a trade of between correctly calling crises and false alarms. In this sense our study confirms that EWS for banking crises are a necessary but not sufficient tool for predicting further crisis episodes, since a generalized global model cannot be a substitute for country-specific prudential surveillance. Group Recommendation of Some solution of the problem: Adaptation of this crisis as the financial crisis on financial institutions is to adapt away from the fact that the crisis has, in fact, is a crisis of the capitalist system in its foundation underlying mechanisms and in terms of work and in terms of ethics in his dealings and explained as follows: in its foundation, the system of modern capitalist embrace to say the following: (a more efficient economic role of the state not to have a role in it), we believe that this is a real reason for the crisis and the President of the capitalist system. Here we say that Islamic economics does not is left to the entire economy with the decisions of individuals, but there are individuals in the state with economic decision. Islamic jurisprudence by the richness and wide on the role of the state and nature of the tools and understanding of the evolution. So, we say that the treatment of the entrances to this crisis was the introduction of Islam to the decision on the management of economic p artnership between both the State and individuals. B- in terms of the mechanisms of the capitalist system: multiple of these mechanisms, but we refer only to the interest system which is managed by the capitalist economy, and we remember that the system of interest with his control in the capitalist system, but criticized by economists and capitalists permanent link system crisis in the interest of many of their writings here provide a solution to the mechanism of action of the Islamic economic system with reference only to the subject of the basis upon which the funding mechanism, a system of participation, this system has no system of co-effectiveness and economic efficiency is not economic when the Islamists alone, but when the economists who have studied this system objectively and impartially. Under the impact of financial crisis offers contemporary Muslims as the Islam of the system of participation to be the mechanism governing the work of financial institutions. This syst em of legislation of the Almighty God believes in achieving economic stability and this alternative courses and violent fluctuations caused by the system of interest. In terms of micro and macro view of the economy, the financial crisis of contemporary adaptations of partial adjustment is said it is a crisis at banks or at the level of the stock market, and this adaptation as a minor part of this crisis is now hitting all sectors of the economy. Here we come to the Islamic economy; Islam does not deal with the economy separate intervals, but the entire economy is taking his view to accommodate a total of all sectors of the economy and its branches. Islam, when funding be organized, for example, it takes all matters of economy in terms of equal distribution of incomes, where the interests of society and in terms of interest and not that which is known in the organization of Islam to the economy. In summary, Islam takes all matters of the economy as a complex and interactive, this adaptation of the true economic reality leads to the proper management of the economy. . Economy of the Islamic moral economy: the phrase start by talking on the economy, ethics and this is highly complex in spite of the economy, some economists have warned against the danger to separate economy from ethics, however, the reality of modern capitalist economy no uncertain terms that the role of ethics in the economy and this command from the clarity in the contemporary economic reality, does not need to prove it. Hence the one of the largest Islamic contributions in the economy. Economics of Islam is linked firmly to ethics in all aspects of the economy and the production sector, for example, is governed by specific ethical disciplines of Islam, and the area of finance at the same level, even in consumption is governed by specific ethical controls. So, we say that Islam addresses the economy with moral links secured setbacks arise because of a lack of ethics Here we refer to what is said about the current financial crisis and the reasons that led to and including those related to the lack of morality when some managers financial institutions in capitalist societies. The application of control systems of banks and early warning to financial institutions, and provides the prediction of the expected losses to banks by estimating the potential future losses. Statistical early warning models are useful models to predict the banks that may face problems in the future, and thus the banks that need more intensive monitoring. But to ensure this benefit must be to continue the development of such models in terms of accuracy and reliability, studies have shown that the introduction of some economic variables in these models, such as unemployment and economic growth rate and growth rate of per capital income, increases the ability of these models to predict, as studies have shown the need to use these models in the analysis of scenarios. Educate people about th e crises and early warning systems and the need for these systems in all banks and financial institutions. Discussion: First: the spread of moral corruption, economic, such as: exploitation, lies and malicious rumors, fraud, fraud, monopoly and illusory, and these vices lead to injustice, which leads to the oppressed people complained when they could not afford it, and thereby lead to disgruntled civilians and social revolutions occur when non-payment of debts and loans. Secondly: One of causes of the crisis as well as the article is becoming a weapon of tyranny and tyrants, and control over policy and decision-making sovereign in the world, and money is the god materialists Third: The interest-based banking system on a system of interest taking and giving, and works within the system, debt trading and buying and selling broker, the higher the interest rate on deposits, the higher the interest rate on loans to individuals and companies and the beneficiary is the banks and financial intermediaries, the burden and injustice is that borrowers who receive on loans, whether for consumption or for production purposes. Some economists have argued that real development cannot be achieved and the rational use of factors of production only if the interest rate is zero, because it would bring stability and security, also said that the system of interest leads to a concentration of funds in the hands of a few will control the wealth. Forth: The financial system and the traditional banking system debt at higher interest rates, or replace the loan due and payable loan new interest rate is high, and this places additional burdens on the borrowers inability to pay the first loan; because of the higher interest rate. Fifth: The bad manners of financial intermediation institutions which are based on loans and induce people to them and lure them with fraud, and deceit, and ignorance to take loans from financial institutions, high commissions and ask if there is risk, and who bears the risk of all is the borrower who does not about him or force, and this is what actually happened, which ultimately leads to the crisis. Sixth: The over-expansion and the introduction of credit cards without balance (overdraft), which carry high costs and the owner of the causes of this crisis, and when the cardholder is unable to pay off its debt, has increased the interest rate, and so on until the inquiries by the or under his car or his house, and this is what actually happened to many holders of these cards and led to an imbalance in the House budget and the cause of the crisis in some of the riba-based banks. References: Coats, P. K. and L. F. Fant. 1993. Recognizing financial distress patterns using a neural network tool. Financial Management 22: 142-155. Whalen, G. and J. B. Thomson. 1988. Using financial data to identify changes in bank Condition. Economic Review, Federal Reserve Bank of Cleveland: 17-26. James B Thomson Predicting Bank Failures in 1980s Federal Reserve Bank of Cleveland Economic Review, 1991, Quarter 1 pages 9-20. Alejandro Gaytà ¡n and Christian A. Johnson Octubre 2002 , A REVIEW OF THE LITERATURE ON EARLY WARNING SYSTEMS FOR BANKING CRISES, Central Bank of Chile, Working Papers James Kolari, Dennis Glennon, Hwan Shin and Michele Caputo Predicting Large US Commercial Bank Failures Economic and Policy Analysis Working Paper 2000-1, January 2000, Office of the Comptroller of the Currency. E Philip Davis and Dilruba Karim1,(2007), COMPARING EARLY WARNING SYSTEMS FOR BANKING CRISES, A case study, Brunel University and NIESR West London, pp1-26 Kolari , J., D. Glennon, H. Shin, and M. Caputo. 2000. Predicting large U.S. commercial bank failures. Working Paper No. 2000-1, U.S. Comptroller of the Currency (Washington, D.C.). Whalen, G. and J. B. Thomson. 1988. Using financial data to identify changes in bank Condition. Economic Review, Federal Reserve Bank of Cleveland: 17-26. Spong, K. 1985. Banking Regulation: Its Purposes, Implementation, and Effects. Second Edition. Federal Reserve Bank of Kansas City, Division of Bank Supervision and Structure R. Alton Gilbert, Andrew P. Meyer and Mark D.Vaughan,(2000), The Role of a CAMEL Downgrade Model in Bank Surveillance, https://research.stlouisfed.org/wp/2000/2000-021.pdf ,octobor 2009 Ranjana Sahajwala and Paul Van den Bergh,( December 2000) , BASEL COMMITTEE ON BANKING SUPERVISION, https://www.bis.org/publ/bcbs_wp4.pdf , October 2009 Richard C. Cook, (November 29, 2009), The Economic Crisis and What Must be Done, https://www.prisonplanet.com/the-economic-crisis -and-what-must-be-done.html , December 2009 Mark Thoma on Saturday, (October 4, 2008), What Caused the Financial Crisis?, https://economistsview.typepad.com/economistsview/2008/10/what-caused-the.html , December 2009 By Mustaq Koya, Idialogue Magazine (Australia) January 2009 Edition, Global Economic Crisis, An Islamic Perspective, https://islamicsystem.blogspot.com/2009/01/global-economic-crisis-islamic.html , December 2009 Kabir Hassan,(Novembar 17,2009), The Global financial crisis and the Islamic finance solution, https://www.sesrtcic.org/imgs/news/image/Presentation-FinCrisisAndIFSolution.pdf , December 2009

The Benefits Of Online Books - 828 Words

In today’s time, modern campuses are trying to build better economic models to reduce cost and make campus life more efficient, and like many campuses, Clark too, is going through that transition phase. It recently closed its Book Store and opened an online service to make it available to more students and to encourage sales. However, the crippling costs of textbooks due to monopoly set by copyright laws have caused major problems for students (Soos). In addition to that, the resale value of the same book to students is relatively low. The monopolized price of text books and their little resale value with in store books has led to an online informal market where students act like buyer and suppliers. The problem branches out to several†¦show more content†¦Due to monopolized prices, students have designed their own unofficial online market on platforms like Facebook. Students interact on groups made on Facebook and resell their books at a higher price than they would get at the bookstore. Students who buy them find cheaper versions of the books compared to the market and most prefer to interact in the group. Clark has a Facebook group called â€Å"Clark Book Exchange† where major part of the Clark population exchange books and sell it at a price most people are willing to pay. Ironically, â€Å"Clark Book Exchange† provides a more competitive market environment than the entire textbook industry. Government or universities can solve this problem, in this case Clark, by funding the production of textbooks directly, and placing the content in public domain. This way, textbooks which are partially public goods because of their intended use, are in their right place. While, economically this solution solves the market problem, it is not pragmatic. Implementing such a solution will require a lot of resources, planning and organization at a large scale. 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Recognition And Employees Job Satisfaction -Myassignmenthelp.Com

Question: Discuss About The Recognition And Employees Job Satisfaction? Answer: Introducation Organizational Behavior focuses on enhancing the productive performance level of the employees. By taking into consideration recent scenario, it is seen that to conduct the activities smoothly it is important to consider organizational theories. The theories of organization consider the human resources and give direct impact on the goals of the company. Productive performance should be taken into consideration so that the goals and objectives can be attained. Organizational behavior theories have a connection with people and groups who are conducting their day to day operations (Healy, 2016). There are many concepts concerned with the organizational behavior. It is seen that to attain overall goals and objectives the company has to give emphasis on job performance and to promote innovation. The managers of the organization should give emphasis on increasing the satisfaction level to adopt effective techniques so that the activities can be conducted smoothly. It is evaluated that organizational theories helps to analyze the behavior of the employees who are working in the organization. If the activities of the organization are conducted according to the theories then it will help the employees to complete the work in an effective manner. Productivity level is only increased if proper benefits are offered to the employees or the workers conducting their routine activities in the organization (Grubb, 2015). Proper knowledge of the activities should be there to the employees so that they can efficiently work to achieve their desired target. Profits can only be attained if the workers of the organization are efficient to conduct the activities. This paper will take into consideration theories like X and Y theory, Herzberg's theory, Goal setting theory, Maslow's hierarchy of needs. It is analyzed that the level of competition is increasing day by day, so it is important for the employees to be dedicated towards the work. There should be proper management of work so that conflicts between the employees can be reduced (Hwang and Lee, 2016). Employee relation plays a great role to encourage the employees to work efficiently. If there is proper relation between the employees then the activities can be conducted smoothly. To enhance the motivation level of the employees the managers has to consider personality factors like psychology, sociology, anthropology, political science, and economics. The focus is given by the managers to manage the activities of the employees. It is analyzed that psychology factor takes into consideration the behavior of the individual on the basis of the incentives. Sociology evaluates the link between the workers. Social psychology considers the situations like stress and conflicts. Stress and conflicts should be properly managed so that overall objective can be accomplished. Anthropology has a link with the consumers, traditions and social norms of the organization. Political Science also evaluates the power that gives emphasis on incentives so that the productive performance of the employees c an be increased (Korschun et al., 2014). Job designing also helps to increase the productivity of the employees. At the time of hiring the employees, it is important to evaluate the capability so that the activities can be conducted smoothly. Job designing gives emphasis on minimizing the conflicts of the employees and also helps to attain overall objectives. One of the theories is a cognitive theory in which there are two motivation systems. One is intrinsic and other is extrinsic that gives proper correspondence with the two kinds of the motivator. Intrinsic motivators are related to achievement, responsibility, and competence (Braver et al., 2014). It is related to the motivator that comes from the performance of the employees and with the interest of work. Extrinsic is related to pay, feedback and working conditions. It comes from a person-environment and it is controlled by others. Intrinsically individuals who are motivated conduct the activities according to their own satisfaction level and achievement. It is evaluat ed that if they analyze that they are conducting some activities then it is just because of the pay or the working environment (Stoyanov, 2017). It is evaluated that if there are powerful extrinsic motivators then it can reduce the motivation level of the intrinsic motivator. For example: if the boss who is always turned towards the rewards will give focus to intrinsically motivated individuals. It is seen that on the Maslow hierarchy intrinsic motivators tend to be on the high level (Shields e al., 2015). Job satisfaction also enhances the performance of the employees. It is seen that if the individual who is satisfied with the job conducts the activities with efficiency and dedication and helps to accomplish overall goals and objectives of the organization. Satisfaction comes when the employees are satisfied with the activities assigned to them. In this Maslow hierarchy will be taken into consideration (Truss et al., 2013). In this, it is seen that self-actualization on the job takes into consideration training, advancement, growth and creativity. Esteem needs consider recognition, high status, and responsibilities. Belongingness needs consider team, clients, and superiors who give assistance at the time of conducting the activities. Safety needs consider work safety, job security. The physiological needs consider basic salary and good working environment. So, it is important to consider the needs so that the employees can feel motivated and happy to conduct the activities of the organization. It is essential that the companies should give extra benefits so that satisfaction level of the employees can be enhanced (Katzenbach and Smith, 2015). Rewards should be given to the employees by analyzing their performance and also their behavior. It is important to give rewards by analyzing the way of working and also the behavior of an individual with the other employees. Rewards that are given by the companies help to enhance the satisfaction level of the employees and also assist in making the right decision. Right decision to conduct the activities of the organization is essential as it helps to sustain in the competitive environment. Managers of the organization should give rewards to the employees according to their capability and the outcome of the overall activities they performed (Zeb et al., 2014). "SMART GOAL" theory is also the theory that helps the managers of the organization to set goals by analyzing the capability and working capability of the individuals. If the goals of the organization are good enough then innovative ideas can also be attained. If goal setting theory is considered then it is evaluated that dissatisfaction can be reduced of the employees who are conducting their routine activities (Yusoff et al., 2013). X and Y theory also helps to evaluate the satisfaction of the employees. X reflects monetary advantages and Y reflects independence of the employees. The workers of Theory X are considered as lazy and theory Y is considered as the best employees that help the organization to enhance the goodwill in the organization. The companies consider theory X and Y so that the positive outcome can be attained and also confidence level of the employees can be enhanced. It is essential for the top management to focus on the objectives of the organization so that the activities can be conducted smoothly. The job of the employees is to conduct the activities with full dedication and responsibility so that goals and objectives of the organization can be attained. The employees should be assigned those tasks that can be completed with efficiency. If the tasks are assigned that are not according to the employees, then it can be difficult to complete it with efficiency and dedication. The working environment of the organization should be positive and employees should be active to grab the opportunity that prevails in the organization. The activities of the organization should be easy so that positive results can be attained (Mathieu et al., 2016). By focusing on the paper, it is concluded that organizational behavior theories give assistance to the companies so that the activities can be conducted smoothly. It is essential that the company should maintain proper relation with the employees so that they can give feedback without hesitating. It is essential that the company should have positive relations with the workers of the organization. Policies and procedure of the organization help the employees to conduct the activities of the organization in a proper manner. It is evaluated that workplace environment helps to motivate the employee's efficiency. Managers should focus on the enhancing the capability of the employees so that they can conduct the activities accordingly. If the workers of the organization are capable to operate the activities in an efficient manner then it will help to attain growth. Growth is important for every organization and for achieving large market share the employees of the organization has to work efficiently. It is important for the workers to create target so that the goals can be attained in a proper way. 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