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Essay Available:
Pages:
11 pages/≈3025 words
Sources:
10 Sources
Style:
Harvard
Subject:
Accounting, Finance, SPSS
Type:
Essay
Language:
English (U.S.)
Document:
MS Word
Date:
Total cost:
$ 57.92
Topic:

Significance of the End of Cheap Capital for Growth-Oriented Enterprises

Essay Instructions:

Your report must have a managerial focus and should have both academic and practical relevance.
• To address the academic aspect will require you to appropriately refer to theoretical models, and then reflect on their applicability, usefulness and limitations.
• The practical aspect will include your conclusions, your critical interpretation of the real-world facts (insight) and your recommendations or proposed view of future developments (foresight)
• You will conduct research and analysis at both the industry and corporate levels with evaluating the implications of this analysis
• You will analyse and interpret real organisational problems
• You will deliver valuable insights and recommendations to a defined target audience through the project
• Maximum of 3,000 words, no less than 2,700 words.
Select and apply technical expertise (e.g. financial analysis, mathematical modelling, information technology, forecasting) and research skills (e.g. the evaluation and synthesis of existing literature, familiarity with sources and use of data, analysis and presentation of findings) to support and direct organisational decision-making
• Develop viable solutions for complex contemporary business management challenges
• Frame viable choices to complex problems for businesses and organisations operating in fast changing technology-driven global economy
• Communicate their analyses and proposed solutions clearly and persuasively.
Use of literature & theory: analytical appreciation of existing literature and choice of theoretical issues relevant to your aims and objectives
• Analysis: use of evidence, analysis and argument. Use of knowledge, tools and skills from the programme
• Quality and structure of written report: rationale of report structure, quality of references to literature sources, ability to convey ideas in a clear and concise manner
• Conclusions and recommendations: strength of conclusions, i.e. their relevance, solidity and significance
Assessment - Marking
• The report requires that you both describe and analyse the data in some way in order to draw conclusions from it. Your conclusions, or reflections, should normally address both theoretical and practical implications.
• Your report is expected to make appropriate use of some of the concepts, models or principles that you have learned during the MSc.
• An absolute requirement is a full and detailed list of references that will be sufficient to allow any reader to identify and access the sources you have used.
• As you are a master student we expect you to demonstrate independent thinking based on analyses and arguments.

Essay Sample Content Preview:

WHAT IS THE SIGNIFICANCE OF THE END OF CHEAP CAPITAL FOR GROWTH-ORIENTED ENTERPRISES?
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Executive Summary
Since 1970 and the early 2000s, the world has been experiencing an era of cheap capital. During this period, most businesses flourished since the capital was cheaper and readily available. However, between 2002 and 2008, the world experienced the era of the end of cheap capital. One of the reasons that caused the end of this era was the economic weaknesses in the developing countries, the lack of application of outstanding monetary policies by the central bank to stimulate growth, and less demand for credit by the indebted households. Even though the condition seemed to stabilize between 2009 and 2002, the COVID-19 outbreak ended the second period of cheap capital. For example, China factory services were reduced in November 2022 due to increased COVID-19 cases (Kennedy, 2022). This reason has caused most growth-oriented enterprises to experience problems. For example, they are passing a long process to access loans than the way they were before. Furthermore, most investors are not ready to invest in the business since the risk and the cost is high. If this trend is managed, it will likely continue negatively affecting growth-oriented enterprises; measures should be taken to control it. Therefore, the government should collaborate with business leaders, policymakers, and investors to create an outstanding environment for this business to thrive.
Introduction
Over the years, there has been a discussion regarding the cheap capital. Some people have been highlighting that the era of cheap capital has finally ended, while others are disputing it, stating that we are still in that era. However, it is interesting that despite this intense topic, some people still do not understand what this era stands for. A low-interest rate credit or loan characterized the cheap capital era. Furthermore, this was when the central bank, such as the Federal Reserve, had set low-interest rates. In most instances, the cheap money was usually good for the borrowing individuals but hurt the investments such as money market funds, saving accounts, bonds, and CDs. Furthermore, cheap capital is likely to negatively impact the borrower since the borrower takes on excessive leverage if they cannot repay all the loans.
Background
The trend of cheap capital has a long history. For instance, since 1980, there has been a clear variation in the cost of capital in most countries which had come together as financial markets became global while the risk premiums existing in the developing countries fell drastically. Furthermore, there was plenty of capital, while the long-term interest rates were reduced drastically due to reduced investment in assets such as machinery and infrastructure. Furthermore, global investment also fell, causing a decline in the demand for capital at a higher rate than the supply growth the Asian current-account surpluses have created. Most people, therefore, blamed the "saving glut" as the main cause of the low-interest rates, which caused low global investment.
However, over the years, this trend has been reversing. F...
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