What is the Earnings Credit Rate (ECR)? The earnings credit rate (ECR) is the interest paid by banks on the deposits of customers. Banks apply the ECR on balances that depositors leave in their non-interest-yielding accounts. The amount calculated after applying the ECR is used to credit service fees. Banks usually peg the ECR to the…
What is Earnings Management? Earnings management is a practice followed by the management of a company to influence the earnings reported in financial statements. It is executed to match a set target and is different from managing the underlying business of the company. An earnings management strategy uses accounting methods to present an excessively positive…
What is Modified Cash Basis? Modified cash basis refers to an accounting method that utilizes the features of both the accrual and cash basis methods. It is also called hybrid accounting, where the cash basis of accounting is used to prepare the financials with the addition of accrual adjustments. The modified cash basis of accounting…
What is the Money Flow Index? Money Flow Index (MFI) is a movement indicator used in technical analysis that looks at time and price to measure the trading pressure — buying or selling. It is also called volume-weighted Relative Strength Index (RSI), as it includes volume, unlike RSI, which only incorporates price. Positive money flow…
What is Big Data in Finance? Big data in finance refers to large, diverse (structured and unstructured) and complex sets of data that can be used to provide solutions to long-standing business challenges for financial services and banking companies around the world. The term is no longer just confined to the realm of technology but…
What is Churning? Churning can be defined as the practice of executing trades for a customer’s investment account by a broker or brokerage firm for the sole purpose of generating commission from the account. It occurs when a broker engages in excessive buying and selling of securities in a customer’s account that is unnecessary to…
What is Autonomous Consumption? Autonomous consumption refers to the expenditures that a consumer needs to make, regardless of their income level. Certain goods and services must be purchased even when an individual is broke or with little to no disposable income. They include goods such as food, shelter (rent and mortgage), and hygiene products, and…
What is a Middle Income Country (MIC)? The term Middle Income Country (MIC) is used by the World Bank Group to refer to nation-states with a per capita Gross National Income (GNI) within a predetermined bandwidth. The MIC categorization enables the World Bank to analyze and determine specific policy prescriptions for countries within the category….
Who is a Middleman? A middleman plays the role of an intermediary in a distribution or transaction chain who facilitates interaction between the involved parties. Middlemen specialize in performing crucial activities involved in the purchase and sale of goods in their flow from producers to the ultimate buyers. They typically do not produce anything but…
