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Background:文章背景
According to Telegraph.co.uk (2008), there are two distinct budgets of the 2012 London Olympics. One of the budgets which include the infrastructure, venue and security costs, they will be met by a publicly-funded of £9.3 billion, of which £2.2bn is the contingency reserve funds. The operation costs of the Olympic Games are met by a private sector budget of £2bn, in which the cost of £1bn will come from London’s domestic sponsors (£650m), ticket sales and merchandise. However, because some companies affected by the financial crisis, they lacked capital, so they gave up cooperative relations with the Olympic Games. According to Lloyds TSB.com that Lloyds TSB is the one of the first sponsors. as the Official Banking and Insurance Partner to the 2012 Olympic, Lloyds TSB has been designed to help companies of all sizes, from all of the world, catch the commercial opportunities, and launched Visa Debit Card, which is issued with their current accounts, to help their customers share in the 2012 Games. And they will be launching further products and services.
2012年伦敦奥运会的预算有两种截然不同的方式：其中包括基础设施，场地和安保费用的预算，他们将会见了由公帑资助的英镑9.3亿美元，其中22亿英镑的应急储备资金。奥运会的营运成本，满足私营部门的预算为20亿英镑，其中10亿英镑的成本将来自伦敦的国内赞助商（£650米），proposal范文门票销售和商品。然而，由于受金融危机影响，一些企业缺乏资金，所以他们放弃了与奥运会的合作关系。据英国劳氏TSB.com，劳埃德信托储蓄银行（Lloyds TSB）是第一批赞助商之一。劳埃德信托储蓄银行（Lloyds TSB）已作为官方银行和保险业2012年奥运会的合作伙伴，旨在帮助各种规模的企业，所有的世界，捕捉商业机会，并启动了Visa借记卡，而发出的经常账户，帮助他们的客户份额，在2012年的奥运会。而且他们将推出更多的产品和服务。
I am interested in the merits that Olympic Games will bring to Official Partner, and uncertainty of the risk and profits of Lloyds TSB. Therefore, I want to explore which good effects Olympic Games will bring to Lloyds TSB and give some reasonable suggestion to Lloyds TSB.我很感兴趣奥运会官方合作伙伴，和劳埃德信托储蓄银行（Lloyds TSB）的风险和利润的不确定性带来的优点。因此，我想探讨的奥运会将带来良好的效果劳埃德信托储蓄银行（Lloyds TSB），并给出一些合理的建议，劳埃德信托储蓄银行（Lloyds TSB）。
Specific Objectives:具体目标：
To identify the factors that can affect the bank capital by London 2012 Olympics要确定因素，可以影响银行资本金由2012年伦敦奥运会
To exam the impacts that credit risk relate to banks in the Olympics.要考试的影响，信贷风险有关银行在奥运会上
To verify the relationship between bank and operating cost during the period of Games.奥运会期间，要验证银行和运营成本之间的关系
To identify the factors that exchange rate effect bank profitability.要确定的因素，汇率影响银行的盈利能力
Client Organization:
The potential customers of bank
The investors of banking market
Significance of the issue to the client:
Potential customers could get more knowledge of banking business, and then choose one suitable product for themselves.
Investors may acquire some worthwhile information, such as relevant data for their research project and whether they should invest banking market.
Project design and methodology:
Data Collection:
According literature review, I had known that numerous determinants affect bank profitability. Among variables, causal relationships will be established. So this project can be identified as an explanatory study. Primary and secondary sources of data will be carried out in this project.
The primary data: In order to find out which influences will be brought to Lloyds TSB, I will collect a great amount of relevant data from the former bank partners of Olympic Games, such as Westpac Banking Corporation, BANK OF CHINA and so on. Analysis the net profits before tax, total assets, total equity, loan loss provisions, total loan, operating expenses and another data on banks’ balance sheets and profit & loss accounts from annual reports.
The secondary data: I will use documentary and multiple source data. The former includes official website of organizations. And the latter involves journals and books.
Develop a model for testing & statistical methods choose:
I will choose Multiple Regression Analysis method to test my hypotheses. Because my hypotheses suits Multiple Regression Analysis which enter several independent variables into the same type of regression equation and predict a single dependent variable. A separate regression coefficient then is calculated for each independent variable that describes its individual relationship with the dependent variable. It is a more realistic model, because in the world, we live in predictions almost depends upon multiple factors, not just one.
The general forms of regression model can be specified as following:
Πit = a+β1(Capital)+ β2(Credit risk)+ β3(operating cost)+β4(Exchange rate risk)+Еit
Where Πit is the profitability of bank, I at time t, with i=1, 2, 3, …, N, t=1, …, T, a is a constant term, and Еit is the disturbance.
Propose relevant hypotheses for empirical testing:
H1. There is a highly and positively relationship between Capital and bank profitability.
H2. Credit risk is negatively and significantly related to bank profitability.
H3. There is a positive relationship between operating cost and bank profitability.
H4. Exchange rate risk has a negative relationship with bank profitability.
Literature/preliminary reading list:
Bank Cost of Capital and International Competition, Steven A. Zimmer and Robert N. McCauley (1991).
Steven A. Zimmer and Robert N. McCauley (1991) examined competitive conditions and market structure in the banking industry, and investigate their interrelationship. Subsequently, they used some cases to analysis that what factors affect banking profitability. And use lots of formulas and charts to test these factors, such as cost of capital, the cost of equity, and the cost of subordinated debt, etc. At last, they explained international differences in bank cost of capital and bank specific factors.
1999 Annual Financial Report, Westpac Australia’s First Bank.
This Annual Financial Report contains detailed information for the disclosure requirements of both Australia and the United States Securities and Exchange Commission. In the part of Financial review, it has operating data, management’s discussion and analysis of financial condition and results of operations.
Bank of China Limited, H-Share Code: 3988, 2008 Annual Report
This Annual report was cleared to indicate several key figures, such as operating Figures, Assets and Liabilities Figures and Ratios. Through the text, it described the specific circumstances of the 2008 performance.
Determinants of bank profitability: evidence from the Greek banking sector, Constantinos Alexiou & Voyazas Sofoklis (2009)
The paper investigated the effects of banks and macroeconomic determinants of bank profitability, and used an empirical framework that incorporated the traditional Structure Conduct Performance hypothesis. After that, through analysis data to identify that this method had been applied to six Greek banks.
Identify key factors & Measure:
The key factors which all have a correlative relationship with the dependent key factor bank profitability. And in my dissertation, I will use the software of SPSS to analyze these data.
I would like to choose profitability as dependent variable represents the key factor bank profitability.
Return on Assets (ROA) ratio = (Net Income + Interest Expense – Interest Tax savings) / Average Total Assets
It is a kind of common figure used to compare performance of financial institutions, such as banks, because its vast assets will have a face value that is closed to their actual market value.
Return on Equity (ROE) ratio = Net Income after tax / Shareholder Equity
ROE indicates the return to shareholders on their equity and equals ROA times the total AE ratio.
Capital:
Assets to Equity (AE) ratio = Equity / Total Assets
It is widely used in the empirical research as the key capital ratio.
Credit risk:
Loan loss provisions to total loans (LLP) ratio = Loan loss provisions / Total loans
Operating cost
Overheads efficiency (OEA) ratio = Operating expenses / Total assets
It is the best proxy for the average cost of non-financial inputs to banks.
Exchange rate (EXR) risk
A common approach to measuring and monitoring exchange rate risk is to limit the size of the open positions in each currency as of the close of business each day.
References:
Bank of China Limited, H-Share Code: 3988, 2008 Annual Report, to be published in late April 2009. Available at:
Constantinos Alexiou & Voyazas Sofoklis (2009), “Determinants of bank profitability: evidence from the Greek banking sector”, Economic Annals, Volume LIV No.182
Lloyds TSB.com, 2012 Products, Available at: #p#分页标题#e#http://www.lloydstsblondon2012.co.uk/2012Products.aspx
Telegraph.co.uk, Paul Kelso (2008), financial crisis: How London 2012 is affected by the credit crunch. Available at: http://www.telegraph.co.uk/sport/othersports/olympics/london2012/3160857/Financial-crisis-How-London-2012-is-affected-by-the-credit-crunch-Olympics.html
Westpac Australia’s First Bank, “1999 Annual Financial Report”. Available at: http://www.westpac.com.au/docs/pdf/aw/ic/wbcafr.pdf
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