Financial institution

Assignment no: 04 + 05

Submitted to:
Mam Sahir

Submitted by:
Eisha maham

Roll no:
18Arid-832
BBA 6th
Section:
A

Gujarat Institute of Management Sciences PMAS-

Arid agriculture University Rawalpindi

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Definite Loss Large Loss Accidental Loss

o The loss takes place at
a known time, in a
known place, and from
a known cause. The
classic example is
death of an insured
person on a life
insurance policy. Fire,
automobile accidents,
and worker injuries
may all easily meet
this criterion.
o Other types of losses
may only be definite in
theory. Occupational
disease, for instance,
may involve prolonged
exposure to injurious
conditions where no
specific time, place, or
cause is identifiable.
Ideally, the time, place,
and cause of a loss
should be clear enough
that a reasonable
person, with sufficient
information, could
objectively verify all
three elements.
o The size of the loss o The
must be meaningful
from the perspective of
the insured. Insurance
premiums need to
cover both the
expected cost of losses,
plus the cost of issuing
and administering the
policy, adjusting
losses, and supplying
the capital needed to
reasonably assure that o Events that contain
the insurer will be able
to pay claims.
o For small losses, these
latter costs may be
several times the size
of the expected cost of
losses. There is hardly
any point in paying
such costs unless the
protection offered has
real value to a buyer.
event that
constitutes the trigger
of a claim should be
fortuitous, or at least
outside the control of
the beneficiary of the
insurance. The loss
should be ‘pure,’ in the
sense that it results
from an event for
which there is only the
opportunity for cost.
speculative elements
such as ordinary
business risks or even
purchasing a lottery
ticket are generally not
considered insurable

Assignment 4
Q. Differentiate among following:
o Accidental loss
o Large loss
o Definite loss

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 Assignment 5
How strong can be the impact of the bank’s lending policy on the
situation in the construction sector?
Introduction:
In many countries, a strong correlation was found between the change in the
economic and financial situation of enterprises and the credit policy of banks.
The research shows that there is a dependency, correlation between the change
in the rate of economic growth of the country, economic and financial situation
of economic entities, citizens 'incomes, enterprises' investment, investment risk,
liquidity risk, debt, creditworthiness, creditworthiness of enterprises, etc. and the
changing the credit policy of commercial banks that provide corporate loans
and consumer loans to citizens.
However, in recent years, especially before the emergence of the global
financial crisis in 2008, it was possible to diagnose a reverse correlation, i.e.
that banks, mainly investment banks in low interest rates activated the entire
banking sector, including primarily retail commercial banking to provide
subsequent mortgage loans even for borrowers no longer possessing
creditworthiness. Credit rating agencies issued the highest AAA
recommendations for the loan packages sold, most of which were of low quality
and low creditworthiness. Insurance companies insured transactions of very high
credit risk. Acting on behalf of banks, the media published articles suggesting a
good prospect of economic development, a continuation of good economic
conditions, including the real estate market, a further rise in property prices.
Many financial institutions, media institutions and investment firms participating in
this procedure commonly used unethical business practices.

Purpose
Banking sector reforms can impact the development of the real sector. However, there is very
little known about this impact on the construction sector in a developing country context. This
study evaluates the impact of the banking sector reform on the construction output using the
banking sector reform in Nigeria in 2005 (2005 BSRP) as a case.
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Methodology
The study used econometric methodology comprising unit root test for stationary, Johansen
test for co integration, Analysis of Variance (ANOVA) and the Analysis of Covariance
(ANCOVA). Time series data covering a period from 1981 to 2017 (37 years) about the
banking and construction sector performances are analyzed using ten-time series equations.
Findings
The ANOVA estimates reveal that the 2005 BSRP positively impacted the construction
output (CNS) and construction sector growth rate (CGR). However, the ANOVA estimates
reveal that the gross domestic product (GDP) and bank total loan (BTL) had a positive impact
on construction output in the period (1981-2017) before and after the 2005 BSRP, and
consequently removing the effect of the 2005 BSRP on construction output.
Conclusion
This paper concludes that the banking sector reform has positive impact on Construction
output in the Nigerian construction industry. The impact is greater and lasting when the reform
is directly targeted at improving construction output.
Explained
In developing countries, banking sector reforms are to firstly, reposition the banking system, and
secondly, to channel resources for the development of the real sectors. However, evidence about the
latter is very contradictory, thereby casting doubt on the impact of banking sector reform. Meanwhile,
there was a banking sector reform in Nigeria in 2005 with known impacts in the banking sector.
Research on the impact of the reform in the real sector in a developing country is lacking. Therefore,
using an econometric methodology, this study evaluates the effects of the banking sector reform on
the construction sector output using the banking sector reform in Nigeria in 2005 as a case. The
following are the conclusions.
1. Notably, compared to developed countries, the banking system in developing countries is
weak to support the real sector development. However, the findings reveal that the banking
sector reform in Nigeria in 2005 has a positive impact in the construction sector, especially
on the construction output and the construction growth rate. Therefore, this study
concludes that the banking sector reform is essential to reposition the banking system to
increase the capability to the banks to support the development of the real sectors in
developing countries.

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 2. The results of the ANCOVA estimates reveal that the impact of the GDP on
construction output removes (Model 6) the impact of the banking sector reforms on
construction output in Nigeria. Therefore, while the banking sector reform is essential for real
sector development, the study concludes that the strength of such reform is more crucial to
influence the construction output.
3. This study concludes that the strength of the banking sector reform, particularly to develop the
real sector, can be increased through the interventionist-reforms of the government. In
developing countries, the directed credit reform in the banking sector is useful for the
government to develop the construction sector.
Originality/Value
This study provides empirical evidence of the dependence between banking sector reform and
construction sector performance in a developing country context. Also, the study
demonstrates the relationship between GDP, banking sector reform and construction
sector performance in a developing country context

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