Organic growth: Where a firm develops as a result of its internal efforts, e.g. by increasing market share. This form of ‘growing’ a firm differs from that of expanding through external acquisition of other businesses.
Purchasing power parity: A level of exchange rate between two currencies such that the buying power of each is the same in their domestic markets. For example, if 1 pound buys the same amount in the UK that $1.50 buys in the US, then purchasing power parity holds at the exchange rate of $1.50 to the pound.
Qualitative market research: A way to collect, analyse and interprete data that involves observing what people do and lsitening to what they say.
Recourse: The right to claim indemnification from the seller of a financial instrument if the originator of that instrument does not honour the commitment given on it. A bill of exchange stamped non-recourse or without recourse is not endorsed for payment.
Tax credit: An amount of tax deemed to have been paid that may be offset against a tax liability or reclaimed by the taxpayer if they have no liability
Undercapitalized: A company is said to be undercapitalized if it does not have sufficient capital to meet its due creditors even though it is making an accounted profit.
Value at risk (VAR): Risk exposure. VAR models are used to calculate the risks involved in ownership of financial securities (e.g. derivatives) which are subject to changing market prices of the underlying assets.
Wholesale banking: The making of loans or acceptance of deposits between banks and other financial institutions, especially in the interbank market. As distinct from retail banking, a term for the activities of the commercial banks carried out with the general public and business enterprises.
X-efficiency: the effectiveness of a firm’s management in extracxting the absolute possible maximum output of the firm, given the resources available. X-efficiency is a measure of waste, or the failure of a firm in a myriad of ways to under-perform, representing the discrepancy between the efficient behaviour as implied by economic theory and the observed behaviour in practice.
Source: Penguin Int’l Dictionary of Business & Finance
Compiled by Osman Kargbo: ousafrik@yahoo.com, +220 5221982/7345313
