What is Monetary Transmission Mechanism? The monetary transmission mechanism refers to the process through which monetary policy decisions affect economic growth, prices, and other aspects of the economy. The chart below illustrates a simplified monetary transmission mechanism, which will be further analyzed in this article. Central Bank Action Central banks throughout the world share similar…
What is Inflation Targeting? Inflation targeting is a common practice among central banks globally that aims to influence the level of prices in an economy through the use of several monetary policy tools. Creation of the Inflation-Targeting Framework The inflation-targeting framework currently implemented among most central banks was developed in New Zealand in 1988-89 when…
Functions of Money Money performs four main functions in today’s society. It mainly serves as: A medium of exchange A standard of deferred payment A store of wealth A measure of value Barter Economy In theory, people are generally able to exchange goods and services without the need for a monetary transaction between the parties…
What is a Funding Request? The funding request section of a business plan is an outline of the future funding requirements of a company. Usually, the time scale is limited to the next five years, especially in cases of startups with an uncertain future. Information needs to be provided about the company’s future financial plans,…
Definitions of Money The definitions of money vary by country but generally include at least a measure for narrow money and one for broad money. Money is a medium of exchange and, more generally, any medium that can be used for the exchange of goods and services. Narrow Money vs. Broad Money Money includes bills…
What are Stakeholder Impact Analyses? Stakeholder impact analyses or stakeholder analyses refer to the use of analytical tools and techniques to analyze the effect of business decisions on stakeholders. Understanding Stakeholder Impact Analysis Stakeholder impact analysis uses analytical tools and techniques to quantify and analyze the effect of business decisions on the stakeholders of the…
What is Business Strategy vs Business Model? Setting up and successfully running a business involves differentiating between business strategy vs business model. To reach their goals and achieve success, owners need to adopt the right strategy for their business. Strategic thinking involves selecting among several business models and, sometimes, switching to a new model whenever…
What is Borrower’s Capacity? A borrower’s capacity is the borrower’s ability to make its debt payments on time and in full amount. It is one of the 5 C’s of Credit analysis, together with collateral, covenant, character, and conditions. Factors that Affect a Borrower’s Capacity A borrower’s ability to pay its debt obligations on time…
What is the Advance-Decline (A/D) Line? The Advance-Decline (A/D) line is an indicator that is utilized by investors who want to measure the number of individual stocks. The A/D line can determine whether the stocks are participating in either a market fall or market rise. Understanding Advance-Decline (A/D) Lines To be explained further, the A/D…
What is Hax’s Delta Model? Hax’s Delta Model is a strategic framework with a pro-consumer approach toward the implementation of effective management and corporate business strategies in an organization. The Delta Model was developed by Arnoldo Hax (of the Sloan School of Management at MIT) and Dean Wilde. It is a relatively modern business strategy…
