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The Impact of Information Technology on Finance

The Impact of Information Technology on Finance. Dr. Eskandar Tooma. Knowledge Based Economy. Advancement in IT has contributed to the global integration and mass market reach creating what we now call a “knowledge Based Economy” Databases More efficient and symmetric information.

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The Impact of Information Technology on Finance

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  1. The Impact of InformationTechnology on Finance Dr. Eskandar Tooma

  2. Knowledge Based Economy • Advancement in IT has contributed to the global integration and mass market reach creating what we now call a “knowledge Based Economy” • Databases • More efficient and symmetric information

  3. Potential Difficulties of a Knowledge based Economy • Income disparity within a country between dissimilar social groups both by earning and by education level. • Costs of building the physical information infrastructure can be extremely high for developing countries. • Costs for setting the national platform for human software development can be colossal. • Security is a major issue • difficulties to manage access control and other security policies when tens of thousands of users may be permitted to log in to a computer system .

  4. Areas of Finance affected by Technology • Investments • Corporate • Banking

  5. Investments IT provided a more efficient market structure and better decisions • Streamline data • Modern clearing and settlement systems using the latest computer and telecommunications technology. • Online stock trading through discount brokerage firms • Computer Software • Using simulations packages: Neural Network Artificial Stock Markets • Reallocation of risk. In summary IT has made possible the creation, valuation, and exchange of the complex financial products on a global basis.

  6. Corporate IT proved to be very helpful in Mergers & Acquisitions and Capital Budgeting • Expansion of knowledge and reduction in uncertainty. • Information has become vastly more available in real time Better decisions. • Development of Financial markets and expansion trading activities • Information from Paper to Electronic form  large amounts of financial information as well as value could be processed and transferred across markets. • Global Market linking local markets through networks In summary Empower the firm’s decision making by increasing • access to information, • capacity to process that information • capacity to reach out directly to other stakeholders without restraint

  7. Banking IT contributed to banking systems in general as well as banking products • Real Time Gross Settlement (RTGS) inter-bank payment systems as the cornerstone of a modern electronic financial system • Monetary Network-a "system of systems" that links market participants internationally • Internet-based banking • Smart Cards • Online Credit Check

  8. Concluding Remarks • Investments: • arabfinance.com • Automation of floor trading • CASE faster clearing and settlement dates • Corporate: • British Petroleum (formerly AMOCO) Real options. • Banking: • AAIB  smart cards

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