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Speculation is essential for maintaining liquidity within futures markets. Deviations in speculative trading about a liquidity level may, however, distort market price performance. The liquidity level for FCOJ futures has been derived. Speculation in excess of liquidity occurred infrequently and such excesses showed only limited effects on price performance.

Small farm credit is important in public programs of developing countries. It is supported to finance increased productivity through modernization and to replace the exploitive moneylender. However, expectations often exceed performance. Indian research suggests the discrepancy may be traced to failure to account for the needs of liquidity management. It suggests, too, that programs that are designed to account for liquidity management can lead to modernization and to improved viability of small farms as well.

SUMMARY This paper attempts to develop rigorous, if somewhat less than fully operational, definitions of the twin concepts of individual nation and world international liquidity. These definitions make the international liquidity of an individual country (Zi, in the case of country i) a probability-weighted sum of its foreign assets, liabilities, lines of credit and prior commitments, and world liquidity (L) the sum of the various Li. It is argued that the state of a nation's balance of payments at any time may fruitfully be expressed in terms of the rate of change of its international liquidity so defined. Inasmuch as such a formulation removes the restriction that balance of payments surpluses and deficits of all nations net to zero, it supplies the ancient words ‘favorable’ and ‘unfavorable’ with new significance. Finally, the paper considers several classes of current schemes to increase world liquidity. The definitions prove helpful in indicating just what conditions must obtain if reformers’ hopes are not to be frustrated.

This paper describes a conceptually sound and powerful model to aid bank managers in short and long range decision making for the management of the financial performance of the bank. The planning model is a key element in an integrated computer-based planning system which includes a forecast of economic, monetary, and loan market conditions, an analysis of internal relationships, and a system of reports which provide management with access to historical data and planning summaries. The planning model at the heart of the system, contains an imbedded linear programming algorithm to optimize “balance sheet management” decisions within liquidity and capital adequacy constraints. The model recognizes the interaction between assets and liabilities, it recognizes the time value of money, and it accommodates the difference between the net marginal yield for decision making, and the gross average yield used for determining revenue. Finally, the model recognizes the crucial role of liquidity with an important treatment of gross cash flows from normal asset turnover as a major source of liquidity, and the liquidity aspects of liabilities, as well as the more traditional concept of asset marketability.

I NTERNATIONAL LIQUIDITY iS receiving a great deal of attention these days. Some students of the subject think there is too much of it and no likelihood of a shortage in the visible future; others think there soon may be too little of it. Moreover, some are satisfied that the present institutional arrangements for creating liquidity can gradually evolve to take care of future needs, while others dispute this and insist that a major overhaul is required. Most people, however, are simply confused by the assertions and counterassertions of the experts. This is not surprising, because some of the problems are very complex, even from a purely technical standpoint. To make matters worse, national and international political objectives of sovereign governments are intertwined with the technical considerations. And to complicate matters still further, a number of eminent economists have developed plans which are labeled with their names, and each of these men presumably hopes to go down in history as the principal author of whatever international currency reform finally is adopted; as a result, some of the most active discussions seem at times to be contests for historical glory rather than dispassionate and well balanced presentations of the issues. For example, the distinguished British publication, The Economist, in its May 29, 1965 issue, attempts to summarize the leading plans for international monetary reform in an article entitled "The Great Liquidity Debate." The article's subtitle is "Who's Been Borrowing My Plan?," and the introductory paragraph observes: "A series of speeches by a now familiar band of experts" . . . shows "that they are prepared to be commendably flexible-as long as the end product still bears their name." No wonder not only laymen but also many serious students of monetary affairs are confused by the welter of conflicting statements about the nature of the problems and the merits and weaknesses of the various solutions being proposed. What I shall try to do in this article is to sketch some of the issues, without adx ancing any plan of my own and without attempting to review each of the leading plans, in the hope that this broad and simplified approach will provide some helpful glimpses of the fundamental issues involved. Concern about international liquidity really represents concern about a well functioning international monetary system. A well functioning international monetary system may be defined as one which permits countries to deal with balance-of-payments deficits and surpluses without having to subject their domestic economies to abrupt swings in employment and prices, and also without having to resort to exchange controls, restrictionist or discriminatory trade practices, or internationally disruptive changes in their exchange rates. In appraising the present international monetary system, therefore, we must ask two questions, which are complementary to each other. First, does the system adequately provide for financing of imbalances in countries' international receipts and payments when these occur, and, second, does it adequately promote the elimination of such imbalances as promptly as is possible without disrupting international trade and capital movements, and without shattering the domestic economic objectives of consistently high levels of employment and reasonably stable prices? If the first test of a well functioning international monetary system is to be satisfied, the total volume of international reserves, together with the supply of available international credit and its distribution among countries, must always be adequate to permit countries to finance balance-of-payments deficits for a reasonable period of time, by one means or another. The important consideration is that deficit countries should not feel compelled to take precipitate measures to reduce their external payments or to increase their foreign exchange receipts -measures which either would wrench their domestic economy or would merely abruptly transmit the burden of adjustment to other countries, which in David L. Grove, formerly a vice president of the Federal Reserve Bank of San Francisco, is now a vice president and economist of Blyth & Co., Inc., an investment banking firm. Mr. Grove earned his A.B. degree at Harvard and holds a Master's in public administration, and a Ph.D. in economics.

Banks in carrying out their operations are certainly not free from various kinds of risks. Bank business risk is the uncertainty regarding an outcome that is expected or expected to be received. Non Performing Loan (NPL) Is a financial ratio related to credit risk. Loan to Deposit Ratio (LDR) is a ratio that measures a Bank's ability to meet its obligations. This study aims to determine the effect of credit risk (NPL), liquidity risk (LDR) partially and simultaneously on profitability as indicated by the ROA (Return to Assets) ratio using multiple linear regression tests for state-owned banks listed on the Indonesia Stock Exchange for the period 2015- 2019. This type of research is descriptive research with secondary data derived from the financial statements of listed BUMN banks and obtained directly from the website on the Indonesia Stock Exchange. This study uses data from 2015-2019 with a sample size of 4 Bumn Banks from a total population of 20 Bumn Banks. The results of this study indicate that; 1) Credit Risk (NPL) simultaneously affects profitability partially; 2) Partially liquidity risk (LDR) has no effect on profitability; and 3) Credit Risk and Liquidity Risk simultaneously affect profitability.

THE MONETARY status of gold, especially its status as an international means of settlement, has been the subject of lively and sometimes bitter debate in the past few years. The debate has centered principally on the issue of whether or not the price of gold should be raised as a means of increasing international liquidity.' The question of the proper price for gold is by no means a new problem in international finance. It was widely discussed, for example, after World War I; in 1933-34, the period of revaluation in the United States; and between 1937 and 1940 when there were persistent rumors of, and considerable professional support for, a reduction in the official United States price of gold.2 Since 1949, however, there

The objective of the research is to find out the behavior of the people regarding their financial/economic activities. A survey of Banks’ Customer was conducted on the selected branch inside Kathmandu valley of 28 Member Institution(s) [MI(s)] of Nepal Bankers’ Association (NBA) for this research, during April to June 2010 with a sample size of 30 respondents from each Banks. Removing inconsistent data sets, however, ultimately a total of 834 data were used for the analysis. The results showed that young, educated, salaried, man from the eastern region of Nepal with high monthly income were the major consumer of banking services provided by the MI(s). Analysis also showed that customers held a large amount of cash at hand, usually had transactions with more than one bank, and preferred the use of ATM (Automatic Teller Machine) or Debit-Cards rather than traditional instruments like Cheques. They rated the service quality and staff behavior of their banks to be of utmost importance for choosing it, followed by technological innovations, number of branches/ATMs, and other characteristics. Hence, the enhancement of service quality and pleasant behavior from staff may contribute towards client retention as well as increment in future. Technological innovation and adding up number of outlets may also help to some extent. Young generation customers are reluctant to use Cheques and had been increasingly found to use ATM-Cards, even for shopping. The trend is sure to increase more in future in the urban areas and banks should also maintain/increase providing this service for competitive necessity if not for competitive advantage. Consumers find no specific reasons for holding large amount of cash at hand although several occasions of periodic cash shortages might have triggered this habit. Hence, efficient liquidity management on part of banks and sufficient liquidity supply by NRB (Nepal Rastra Bank) could help improve the situation. This may also help bringing back more money to the formal banking channels. Differential products and services account for only around one-fourth of reasons for having different bank accounts, but the banks could find a niche market in this regard by providing specifically differentiated products and services. Lack of awareness is also prevalent and may be one of the reasons of non-acceptance of modern technologies by some of the consumers of the financial services. Hence, customer education/awareness programs could be helpful for the banks to increase the use of latest technologies introduced by them. Some of the customers were also found to be using the services of financial intermediaries other than the MI(s) of NBA. Less formality, less procedural hassles, high interest rate on deposits, and easy access to credit are stated to be the major reasons for using these intermediaries. Hence, reducing hassles and the length of time for processing services may help enhance the business volume of MI(s). Also, by providing higher interest rate on deposits may reduce incentives to use other financial intermediaries and help MI(s) to increase their deposit growth. The feedback of customers include the demand for additional facilities, upgrading modern technologies, provision of quick and of international-class services, transparency in transactions with the customers, opening branches/ATMs in closures/strikes like situation, solving cash shortage problems that occurs on some specific occasions, among others. Considering these issues and implementing reasonable suggestions may help enhance the business of MI(s) and hence are recommended.

where ri, represents the total return of a company's security; ai measures the return arising from specific company effects; R1I represents the return of a broadly based pool of assets characteristic of general business, and 1int is a random variable with zero mean and zero intertemporal and intercompany covariance. When the assumptions of the capital asset pricing model are fulfilled a company's risk premium, i.e. its expected return less the pure rate of interest, is proportional to the risk premium of the market as a whole. P is the factor of proportionality for it can be shown that:2

International liqidity may, for purposes of analysis, be classified as (a) Primary, (b) Subsidiary, and (c) Ad hoc. In estimating the total quantum of international liquidity particularly from the viewpoint of dveloping countries, we exclude ad hoc liquidity. The major supply of international liquidity is concentrated in the hands of industrial countries; while the major demand for international liquidity arises from developing countries which fall under Article XIV of the I.M.F. The problem of international liquidity, therefore, exists essentially for the developing countries only. This paper suggests policy guidelines to get over the problem.

IN DECIDING upon a combination of bonds for investment, investors are certain to consider financial, or default, risk. Another important consideration, and one that is often overlooked, is the possible risk the market associates with length of time to maturity. It is contended that the longer the maturity, the greater the uncertainty and corresponding risk to the investor. As a result, a liquidity, or risk, premium is said to be necessary to compensate investors for the uncertainty associated with investment in long-term securities.' The magnitude of this premium would be dependent upon the length of time to maturity. In this paper, we will explore the possibility of liquidity premiums as they affect specifically the market for Treasury securities.

What follows is concerned with analysing the evidence available on the overall position of the company and personal sectors as things have developed over the last ten years, and more particularly since 1965. The basic information has been arranged in the form of half-a-dozen tables. What appears to emerge is that personal spending and saving have continued at a reasonable and uninterrupted level, modestly increasing in real terms, but that in addition the liquidity position has been further reinforced by switches of assets. In contrast, the liquidity of the company sector has been very seriously reduced, possibly to the extent of damaging its capacity for expansion should effective demand be allowed to increase.

This chapter reviews the problem of monetary liquidity. In every commodity type of economy, both the population and the enterprises hold, as a rule, reserves of money in the form of cash or bank accounts, to maintain a certain level of liquidity. Monetary liquidity, in the broad sense of the word, is the ability to meet current financial liabilities. In the narrow sense of the word, monetary liquidity is the reserve of money needed for expected expenditures. From a macroeconomic point of view, the crux of the matter is how to increase the internal supply of money, more or less in line with increased domestic production. In a capitalist economy, the balancing of the purchasing power of the population with the supply of goods and services is not, and cannot be, a basic problem because there is no central authority that could directly determine wages and earnings and the supply of goods and services.

The experiment in convertibility launched a year ago faces the same two problems that contributed so much to the early wreckage of a similar experiment some thirty years ago — the shortage of gold and, largely in consequence of that shortage, the undue reliance on national currencies as international reserves. The ratio of world monetary gold stocks to annual imports has fallen persistently throughout the post-war years to less than 40 per cent in 1958, compared with 110 per cent in 1938. The International Monetary Fund recently estimated at $ 700 million a year the total increase in monetary gold stocks that can be expected in the foreseeable future from new gold production and Russian gold sales in Western markets. This is less than 1.5 per cent of current world reserves — of gold and foreign exchange — compared with the annual growth of about 5-6 per cent in the volume of world trade and manufacturing activity in most post-war years. It is evident that in the years ahead gold alone will not ensure the maintenance of adequate reserves in an expanding world economy. If new ways of economizing gold cannot be found — as they were found in the nineteenth century — current trends must lead, sooner or later, to widespread deflation, devaluation or the reimposition of trade and exchange restrictions.

During the Anglo-American financial negotiations in 1943 which laid the groundwork for the International Monetary Fund, a malicious little ditty (probably not of British manufacture) was circulated among the delegates: ‘In Washington Lord Halifax Once whispered to Lord Keynes: “It’s true they have the money-bags, But we have all the brains ”’

Payments adjustment and the role of international reserves in facilitating it raise some of the major unsolved economic problems of our day. They can be approached from a number of points of view and at many levels. I propose to stay at the simplest level and discuss the basic aspects of the problem, partly because these are often overlooked in the heat of discussion over the finer points of detail, and partly also because the slow administrative procedures of an international and multilingual congress like the present leave me no other choice. I am forced to write this in the midst of the March gold crisis for delivery half a year later; only by concentrating on the eternal verities of the subject can I hope not to be overtaken by events.

The classic article about liquidity premiums is Kessel [3]. Kessel regresses the liquidity premium, measured as the difference between the forward rate and the actual future spot rate, against the current spot rate and observes a positive relation between the level of the current spot rate and the size of the liquidity premium. Olsen alters Kessel's model in two respects. First, he introduces a proxy for risk or uncertainty about interest rates as an additional determinant of the liquidity premium. Second, instead of using the actual future spot rate as a measure of the expected future spot rate, he specifies the expected future spot rate as a linear combination of the current and past spot rates.

Today great emphasis is being placed upon the need to maintain adequate supplies of money in the economy in the face of continuing balance of payments deficits. This emphasis reflects a desire to assure a. continuous high level of economic activity and low unemployment rates.

Empirical investigation of the predictive power of financial ratios has recently received considerable attention [3], [4], [18], [19]. Prognostic efficiency should, of course, be a function of analytical integrity. The apparent analytical simplicity of some financial ratios is deceptive, and searching reexamination of their rationale is a needful complement to empirical investigation of their utility. The purpose of this paper is to critically evaluate the current ratio, and, in the light of resultant insights, to propose a new liquidity index to replace it. Two factors require the critique as a vital complement to the index proposal. First, it is relative merit that guides choice among alternatives. Second, the recent literature suggests that the status still enjoyed by the current ratio in the face of some cogent critical reviews,' reflects not so much a lack of superior alternatives,2 but the belief that limitations of the ratio complicate or qualify, but do not confound or obscure its interpretation. It is shown here, however, that when the sales rate is varied, but efficiency of working capital management and liquidity are held constant, the current ratio may exhibit any one of several possible behavior patterns-e.g., an increasing or decreasing trend, a U-shaped, inverted U-shaped, or some other pattern. Thus, neither absolute values nor trends in the current ratio can be given a consistent general interpretation, even under conditions highly favorable to consistency.

THE purpose of this paper is to "explain" changes in cash balances held by large manufacturing corporations over the two decades preceding World War II. The analysis is based upon data for a sample covering 45 large manufacturing corporations in 11 industries developed by the Financial Research Program of the National Bureau of Economic Research. Although the corporations included in the sample are few in number they are responsible for a great part of all business sales and they own a great part of all business assets. Many of them are among the largest concerns in the country; each has total assets of $10 million or over.2 Cash balances of corporations are considered as consisting of two components, (a) transaction money and (b) "free" money.3 In the present analysis the choice of factors causing fluctuations in each of these components is based on theoretical grounds.

I. Introduction, 79. — II. Inventory management and supply of liquidity, 80. —III. Empirical findings, 87. — IV. Conclusions, 93.

This is a timely book. Professor Triffin, whose ideas were largely responsible for the shape of E.P.U., is a foremost authority on his subject. He writes with lucidity and persuasiveness. He has not only much practical experience of negotiations over a number of years, but also a rich knowledge of monetary history, such as is found in only a few contemporary writers. He is a fine theorist, and at the same time has a very good sense of how abstract doctrine should be resolved into practical proposals. In his main theme he is, according to my view, on the side of the angels: he holds a sufficient provision of international liquidity to be of prime importance. And he has no difficulty in showing that the present provision is inadequate and, over the coming years, will grow more so. In his wide-ranging discussions of monetary philosophy and in his historical retrospects, there is much that might call for comment. But it seems expedient in the space available to concentrate upon his constructive plan for increasing liquidity. His proposal is to transform the International Monetary Fund into being in effect a world central bank ; this is linked with a plan for terminating the use of the dollar and sterling as international currencies. Member countries would hold part of their reserves in the form of deposits with the I.M.F., drawable on by cheque, the deposits to be acquired in the first instance by the transfer of existing assets from the central banks to the I.M.F. These deposits would subsequently be increased by lending and open-market operations undertaken on a rising scale by the I.M.F., and designed to increase world liquidity in the aggregate (i.e. including gold accessions) by 3 per cent. (or 4 per cent. or 5 per cent.) a year. First, it is needful to deal with certain technical aspects of this plan. It is to be feared that it would not give so substantial an increase in liquidity as Professor Triffin appears to claim for it. 1. Initially there might be a rather large loss of liquidity. Central Banks are to surrender certain liquid assets that they now have, mainly foreign exchange and gold, in return for deposits of equal amount with the reconstructed International Monetary Fund. Central Banks are to be required to maintain 20 per cent. of their gross reserves in the form of deposits with the I.M.F. These deposits can be used to discharge international indebtedness, but are to be maintained at 20 per cent. of gross reserves. This requirement must be deemed to ' Gold and the Dollar Crisis, by Robert Triffin. Yale University Press, 1960. pp. xiv +195. 38s.

DR. JAMES TOBIN, in his interesting analLI ysis of the shape of the liquidity preference function and the effectiveness of alternative monetary-fiscal policies,' refers to my discussion of the same problems.2 I would like to develop more fully some statements contained in my earlier discussion and to comment on Dr. Tobin's views and findings. In a passage in which he criticizes my views on interest, Dr. Tobin argues in effect that, for logical reasons, it is necessary to assume that the liquidity preference function becomes infinitely elastic at sufficiently low rates of interest (or, in any event, before the rate becomes negative). For, at the zero rate there surely exists an unqualified preference for cash as against claims;3 and if we take into account the institutional costs of credit operations, then this floor is set not at the zero rate but at some very low positive rate. An economist who maintains that, in the usual range of changes in interest rates, the demand for idle balances may possess little elasticity to interest, should add that the liquidity function must become perfectly elastic at the institutional floor-level (i.e., above the zero rate, at a level determined by institutional costs) . I am in agreement with Dr. Tobin. In my book in which I suggested that liquidity functions may be rather inelastic in the usual range of changes in interest rates I made at least one explicit statement which is the precise equivalent of the foregoing (italicized) proposition (pp. I86-87). I should have made an explicit statement also in another passage, and I will do so in the forthcoming second edition of the book (on pp. I70-7I). However, throughout my analysis, I assumed the validity of this proposition. My statements concerning the small elasticity of liquidity functions are explicitly limited to the "usual range of changes in interest rates." The diagrams in my book are drawn merely for positive interest rates, and I believe that it is made clear that the lower limit is not really meant to be the zero rate proper but some very low rate including the institutional costs in question. Negative rates are not included because it is maintained that negative rates are qualitatively different phenomena in that they express subsidies.4 No private individual or institution can be made to hold securities at negative rates, if money can be held free of cost.5 Acceptance of the italicized proposition in the preceding paragraph does not imply abandonment of views expressed in my book. But Dr. Tobin is right in insisting that the implications of this proposition should be made clear. The main point in this connection is that as long as the liquidity function is inelastic above the floor-level in question, the conclusion with respect to policy is that which was presented in my book.6 The conclusion with respect to pol

The major point made in the Dudley G. Luckett and Michael P. Murray Comment (LM) is that the conclusions drawn in our paper are meaningless because the number of standard deviations used in our liquidity measure is arbitrary.l We will demonstrate that this accusation is without foundation and that the same conclusions hold whether the number of standard deviations used in the liquidity measure is within the relevant range of lower confidence bounds for investors or whether 20 standard deviations are used in the case of extreme risk aversion.