This means that changes in the interest rate can have a big impact on consumption and investment spending. The interest rate tends to increase and decrease as the price level increases and decreases. This means that a higher interest rate raises the cost of borrowing and discourages investment and consumption spending, whilst a lower price level has the opposite result. In summary, lower interest rates make it cheaper to borrow. This tends to encourage spending and investment.
As stated in Dr. Aurangzeb (2012), the performance of stock markets is affected by the interest rates and it has a negative and significant impact. Whenever the interest rates increases, the investor will tend to invest less in stock markets and move their investment to other sector which is less costly and more profitable. The other reason could be the investor finds that it is more profitable to save their money in the bank instead investing in the risky and fluctuated stock
Effects of Inflation on Business Community: Inflation is welcomed by entrepreneurs and businessmen because they stand to profit by rising prices. They find that the value of their inventories and stock of goods is rising in money terms. They also find that prices are rising faster than the costs of production, so that their profit is greatly
It can grow even more if the discount rate also goes up. Next up is investments. There is no doubt that increasing interest rate in most cases results in cost decrease of state and corporate bonds. Purchasing these bonds can bring benefits to those who buy them, but not to the owners of the bonds. Companies also might face difficulties after interest rate increase, especially the ones that pay out large dividends.
Inflation commonly reflected by an increase in the general price level of good and service in a particular economy. As high inflation happen in the economy, the real purchasing power of consumer tend to diminish; while in the banking sectors, the real rate of return of bank asset tend to trim down compare to liabilities. The inflation level of the country is one of the important determinants of banks‟ profitability as it affects the real rate of return of bank’s assets. Zeitun (2012) assumed that inflation could be an important macroeconomic factor that affects the banks‟ profitability in which the impact of inflation is depending on how quickly is the increase in operating expense as compares to the inflation rate. Perry (1992) suggested that
Organizations can do this in several ways, for example by creating incentivized goals, keeping employees in the loop or acknowledging their accomplishments. Employees like to have their hard work recognized and this motivates them to perform their operations even better. When it comes to the negative effects of this phenomenon, the greatest impact is on revenue and profitability. For example, according to the "Organization Science" magazine, the estimated cost of a lost employee earning $8 per hour at a retail chain store is $3,500 to $25,000. Factors which affect this include hiring expenses, training labor, lost sales and productivity.
When people realize that prices will keep on soaring, it causes a sense of irrationality and panic. Hence, resulting in them spending their money now rather than later, with the sense of intellect that they would be saving money. Likewise, if people require purchasing extra, they will take loans. The banks, knowing people will do so, increase their interest rates. Moreover, it decreases unemployment rates.
Because the clothing retail sales is through the development trend in the fashion industry, driven by the main retail clothing company operating risk is much higher. Retail clothing company will have a lower ratio, optimal leverage for investors to feel comfortable to meet with the company, in both good bad ability of capital structure and their responsibilities. Market conditions may significantly affect capital structure situation of the company. Under the assumption that a company need to borrow money for new plant. If the market is struggling, meaning investors are limiting companies to enter, because of concerns about money, borrow may be higher than the interest rate the company will pay.
First of all we can say it has a high impact on the economy of a country. The fluctuation that takes place because of the exchange rates has a great influence on the economy of a country as a whole. It also helps in the growth and development of an