Week 5

Being a finance student, most of the time I refer to Investopedia, it is a search engine related with financial subject matters. Although it started as an online financial dictionary, as the time passes it offers an abundance of financial content, from articles, dictionary terms, tutorials and video, to frequently asked questions and exam preparation quizzes. Notable is Investopedia's Stock Simulator and FXtrader, where users can register for free and practice their investing skills with $100,000 in virtual cash in either the stock market or fast paced foreign exchange market.

While going through this search engine, I found out that financial services sector is the largest in the world in terms of earnings and comprise the widest range of business. I also found an interesting article published by Harvard University named "The role of the financial services sector in expanding economic opportunity", which is a very good article. This article deals with the reach of financial services companies to the different class of the people. While going through this article I found how microfinance has changed the outlook of the financial services industries and some important facts about microfinance. Microfinance has become an important source of debts for people living under poverty line and the growing awareness has led to growing recognition of two important facts:

• The poor are able to pay(often very high interest rates) for financial services, and
• They present no greater credit risk than the average higher-income borrower. In fact, many microfinance institutions have better repayment rates than traditional commercial financial institutions.

By these shocking facts, it is clear that it is better to provide loan to poor people rather than providing it to higher-income borrower. It will help banks or financial institutions to reduce their bad debts and be secured of where they are investing their money.

In context of Nepal, banking industry is high-risk business but not necessarily high profit industry. It is quite difficult to manage risk and return in banking industry. May it be because of the political instability or due to liquidity crunch it has always been a high risk market. Likewise, internal management system in some of the commercial banks of Nepal is still following traditional management system of government. The pyramid shape organizational structure of some banks caused adverse effect in their business development. Hence, some banks are still lacking modern approach of reaching their customers or existing in the market.

Although we don't care about politics but politics will somehow care about us or affect our daily lives. Trade unions inside an organization gives pressure to the management to select their supporters as an employee which can prohibit selection of  independent graduates like us. Likewise, too much of liquidity crunch can lead to bankruptcy which will lower the rate of employment opportunities. Internal and external environmental forces could also affect our entrance to these industries. Internal forces like traditional management system, pyramid shaped organization structure and existence of trade unions and external forces like rules and regulations of government, change in market interest rates, inflation rates and political instability could affect our entrance. 

There will always be some factors which can affect our career whether in positive or negative way, it is better  if we prepare ourselves to tackle these factors and move on with our careers.