What Creates Fear In Horror Movies?

What Creates Fear In wickedness Movies?Why I am frightened?With my dissertation, I dont want to explain the inbuilt repulsion motion-picture show floor, nor mention tout ensemble the important coachs or the actu tout ensembley outperform icons in this genre. My aim is to go to bed what makes the community scary in a painting, what ar the elements that concretely bring ins a firm t atomic number 53ing of anxiety and stress.To achieve this goal, prototypal of all I will analyse the reservoir of the cinema (the quiet pictures) in order to know which is the ground of our up-to-date execration cinema culture. I think before trying to analyse any topic oneself must(prenominal) know the origins of this specific topic, the reality beca mapping this topic its comparable it currently is. laterwards that, I will make a quick review of the repugnance hires of each decade until the appearing of the first aversion scud in first-person perspective.This is because I th ink that the first-person perspective horror aims atomic number 18 the culmination of our inquiry to sc ar the public, I think that kind of picture shows atomic number 18 our current best bet in this issue.So with the help of the psychoanalysis of this kind of movies together with the analysis of the origins of the horror shoot genre, I expect to know how and what authentically makes us scary.Before first-person perspective horrorThe horror film genre innate(p) at the homogeneous sequence than the cinema, although did it unintentionally. Larrive dun train La Ciotat (Arrival of a train at the Ciotat) throw in by Lumire Brothers at 1986,showed merely the arrival of a train in a course of study at a railway station. Despite of it, the public who went for the first time to see the film, became frightened and ran out of the room believing that the train would list out of the filmdom and run over them(Martin Loiperdinger and Bernd Elzer, 2004).That first smacking of mis giving using a motion-picture photography was because the viewers in those daytimes didnt know anything al closely cinema, cam period shots and audiovisual language in general. So, from then on, it would be necessary to find new ways to sc ar and stress the public, more(prenominal) than deliberate ways. This result in the birth of the horror film genre, whose object lens is to make feel the public in danger, sc atomic number 18d, frightened, bid the audience who was observance the train arriving in the Lumires film.Silent Movies, the beginningLogically, the first horror movies were in the field of silent films. Thus, the first horror movies were silent, in black-and-white, and they employ to be closely linked to the fantasy genre, prevailing mythic or leg exterminateary characters who lived among the society. here(predicate) are some outstanding exemplarsFrankenstein (1910)conductor J. Searle Dawley province United States continuation 12 min.Plot snap adaption of Mar y Shelleys overb grey Frankensteinor besides calledThe modern Prometheus, published in 1818. Victor Frankenstein is a unsalted student of 35 social classs old who is trying to create the ultimate creature. However, his experiments led him to create a terrible monster, deformed, which constantly attacks the pile near it. But the creature disappears when Victor Frankenstein falls in love.The film was recorded in fixed television camera and using long shots during all its duration.Der automaton (The Golem)(1915)Director Paul Wagener Country Germany Duration 84 min.PlotFilm adaption of Gustav Meyrinks novel with the same name. The rabbi Loew sees in the stars a sign of that a catastrophe will engulf the Jewish populate. Meanwhile, the emperor of Prague gives a command to ostracize the Jews of the city. The rabbi deci stilboestrol to create a clay bet, the Golem, which what will save the Jews ghetto.This production is split up into five chapters and has dickens calamitys, The Golem and the Dancing Girl and The Golem How He Came Into the World. Both are also inspired in the medieval Prague merely they dont belong to the same genre as the original one.Das Kabinett des DoktorCaligari (The Cabinet of Dr. Caligari) (1919)Director Robert Wiene Country Germany Duration 51 min.Plot dickens friends, Francis and Alan, visit a fair in Holstenwall t take (north of Germany). Once there, the distressed Dr. Caligari and his faithful somnambulist friend Cesare announcesthat they are able to divine the future. Alan asks how long he has to live. To which question Cesare replied that he will die before cockcrow tomorrow, a prophecy which is fulfilled. later that his friend, Francis, begins to investigate the seer (Cesare) and the sinister bear upon to find out the truth roughly what happened.In this film close to of the plot is presented like a flashback told by Francis, the friend of Alan. The film it is a radiating example of German Expressionist Cinemas for e or so forays into the genre of psychological horror and is also one of the first films to include an anti-climatic twist at the end of the paper(Broken offeror.com, 2007 ,n.p.).Nosferatu(1922)Director F.W. Murnay Country Germany Duration 94 min.Plot An unauthorized adaptation of Bram Stokers Dracula novel. Year 1981, the German estate agent doubting doubting Thomas Hutter goes to Transylvania to visit the count Orlok in him castle to close a turn to on the land purchase. During the visit happens a series of mysterious events that makes Thomas suggest that the count is a lamia. Unfortunately, in that moment the contract is already signed and Orlok is going to him new mansion in Wismark (Germany). Thomas Hutter dismays the spank about Ellen, him wife.Nosferatu its also considered a German expressionism film. Despite of is non the first vampire movie. Nosferatu is by chance one of the most influential vampire films of all time (Colin Odell and Michelle Le Blanc, 2010, p.13). In this early age of the cinema, the silenthorror films get employ to narrate a hi level about a mythological, legendary or non-natural character. The robot for example, is not plain a fiction character created by Gustav Meyrink in his novel the golem is also a medieval folklore and an old Jewish legend. The first stories obaut golems date back to the beginning of Judaism and they say that the golem is created from clay and a divine spark that gives life(Karina Garca, 2007). So, the golem is a mythological character of jutular culture since centuries, in the same way that the figure of the vampire, myth in the folklore of many cultures since immemorial times. Despite of it, the word vampire (in their different language forms) began to be utilise in the medieval era being associated, for example, as a victim and, even, the cause of the many epidemics and diseases occurred in the eighteenth-century Europe(Carol Senf, 1988). In the other hand, characters as Frankenstein are more re cent and, although nowadays its a character of the popular culture, originally were simply a fictitious character created in 1818 by Mary Shelleys.In any gaffe, all these characters are characterized by not entirely be fictional characters, only when because they are mythological and legendary creatures (Frankenstein maybe not exactly) present in popular culture for centuries. So lots so that, for example, until the early twentieth century there were killing vampire kits which were given to travelers to protect themselves from vampire attacks(UsaToday.com, 2003). Thats it, the people of that time rattling believed that they could be attacked by a vampire or see a golem next to a rabbi. In the face of Frankenstein, the belief was not in that particular character, nevertheless in the possibility of the existence of similar monsters in the reality due to advances in science and, above all, the technology in the nineteenth century.In the case of Caesar, the somnambulist of Dr. Caligari, is not exactly the same case but the earth are the same. Caesar although is not a monster acts as one. He sleeps in a coffin, him look is supernatural and frightening, he doesnt have willingly and, above all, he can predict the future. Maybe Caesar is like a pythoness or a witch, enough to scary the superstitious people of that time.In conclusion, the aid generated by these films was due the superstitious of the people and, more generally, because that films also pop the question a revealing mirror image of the anxieties of their time. Nosferatu (1922) is not simply a tale of vampirism, but offers heart-rending images of a town beleaguered by premature and ergodic deaths, echoes of the Great War and the Great Flu Epidemic fatalities (Karina Wilson, 2005 ,n.p.)Regarding technological aspects of these movies, they are strongly motivated by the theater. Thus, they were trying to immerse the viewer into the novel finished the use of different melodies (always present thr oughout the film, there were no voices)with different usances. On one hand, there were the atmosphere melodies, utilize most of the time as a resource that remained in the background to create the desired feeling depending of the location or the typeface of action that is exposit in the film. In the other hand, there were the mystery melodies, used to spellbind the viewer or stressed in the principal pictures of the movie.Referring the camera, the shots were prone to be quiet long and statics, only interposed by close-ups shots of the characters but rarely by close-ups shots of the actions. Maybe the influence of the theater was still quite strong on this aspect.Sound films, natural the screamOpposed to the silent film, a operose film (or talkies) is a motion picture with synchronized sound which appearedin the mid- to youthful 1920s, although it was not until the early 1930s when this technique turned habitual. Films such as Dracula (1931), Freaks (1932), King Kong (1933), The Wolf Man (1941), Cat People (1942) or some of the adaptions of Robert Louis Stevensons novels, like Dr. Jekyll and Mr. Hyde (1931),The Invisible Man (1933) or The Body abductor muscle (1945) are good examples of the horror films which the people used to watch in that time. These films maintained the base of the silent movies but giving now much more importance to the homophile-monster of the story, which is now its indisputable protagonist. Now these characters were, in most of the times, purely fictional, and the way that used to get terrorize the public was simply convey to their appearance and their screams or, simply, their horrific sounds. The use of close-ups shots was increasing, in these days the real claim were the monster itself, so the events of the films was far removed from the e preciseday realities and the glide slope war.In the decade of 1950s, the beginning of the post-war era and the cold war, the people lived ceaselessly with the fear of war. In this era films like Godzilla (1954), It Came From Beneath the Sea (1955), The fly ball (1958) or The Wasp Woman (1960) were the stars of the horror film genre.All these films part the story about an animal which is converted into a giant or inappropriate creature because of reasons such as radiation, technological advances or advanced biologic experiments. The relationship with atomic bombs and the anxieties about nuclear weapons is clear, one of the most public fears in the people of the time (Marc Jancovich, 1996). Furthermore, at the end of the decade was the born of the movies about UFOs, stranges and in general foreign forms of life threats. So in 1947 occurred The Roswell Incident, born the acronym U.F.O and all of that maybe originated the fear of people about noncitizen invasions. Movies like Invasion of the Bodysnatchers (1956) or Plan 9 from Outer outer space (1958) are good examples of that although there is another theory about the fear of alien invasion in that time that argues that is merely a regulation for fears of Soviet Union aggression (Marc Jancovich, 1996). although this type of films will raise through decades, with films like Alien (1979), Independence Day (1996) or even clairvoyant Activity (2007), among many others. This is an example of a fear which is constantly scaring people during the decades, more or less intensively depending of the actuality.Modern times, the fear became kindTeens of the time hadnt experienced the war, the social stability was a fact and the pop culture had born, welcome to the mid-sixties. Hitchcock was still alive and the films Psycho (1960) and The Birds (1963) were proof of this. Horror films and thrillers had intertwined by one of the maters of the cinema. The people were afraid of losing their stable life, but not because attacks ofthe monsters or runed experiments, but because people of flesh and bone. approximately of the movies of Alfred Hitchcock and other films like Blood Feast (1963) are a proof of that.On the other hand, the films about ghost and living souls grew in popularity, films like Carnival of Souls (1962) or The lasting (1963). And not far from the ghosts were the zombies, Night of The Living Dead (1968) of George A. Romero, a important of zombies and dead livings movies.After the optimism of the 1960s, the 1970 was marked by a certain frustration. The fear probable in the horror films of the 1970sis the fear of children and the often fatal process of accouchement Eraserhead (1976) is a good example of that. Now the enemy was not in the space or in the Europe with the war. Now the fear was among us, inside(a) our billet, our mum, our dad or even our sister. Films such as The Exorcist (1973), The Texas chain saw Massacre (1974), Shivers (1975), Halloween (1978) or The Shinning (1980), narrates the story of murders that occur in our neighborhood or foundation for people more or less close to us. In that time, there was a social deep-seated paranoia that the m oral shift of the 1960s had creates a culture of young monsters without moral capable of killing.And in the yr 1980 was when the first-person perspective horror film appeared.3. Terror in first-person perspectiveAfter a century of horror films, nowadays we are witnessing an important standard of films narrated in first-person perspective. Is not a fad, nor a trend, but gradually this type of products has grown in number and, especially, in popularity. The Blair Witch Project or, most recently, Paranormal Activity, are good examples of this situation. Both films were able to make feel the audience terrified when it comes out of the cinema. But this achievement was no thanks to a wonderful special effects, or thanks to the presence of very well made monsters and nor thanks to a heartbreaking melodies. That was because the audience sincerely thought that the story was real and that they could be a victim of a similar experience(Manel E. Diaz, 2010). They probably discussed the facts narrated in the movie with a family member, a henchman or a friend a few days after the viewing. In fact, the movie hit them deeply, turning into an everyday fear during maybe a week after have watched the movie.First-person perspective horror filmsHere some examples of this kind of horror movies, most of which are recorded as a mockumentary or also called mock infotainment film. Originally the mockumentarieswere used as a television genre to analyze or comment current events becausethe realism of the stories were higher when this set up was used.Soon the mockumentary wasalso used by the cinema, movies asDavid HolzmanHYPERLINK http//en.wikipedia.org/wiki/David_Holzmans_DiaryHYPERLINK http//en.wikipedia.org/wiki/David_Holzmans_Diarys Diary (1967), The Rutles (1978) or Man Bites Dog (1992) among many others, are a good example of that. Butit was precisely in the genre of horror movies where their use seemed to have a greater impact on the public.Cannival Holocaust(1980)DirectorRu ggeroDeodato Country Italy Duration 95 min.Plot The movie tells the story of four documentarians who deep into the jungle (Amazon Rainforest) to film the life of the indigenous tribes with cannibal habits. Two month later, after they fail to return, the anthropologist Harold Monroe travels to the place to try to rescue the documentarians. Unfortunately, Monroe and him team discovers that the documentarians has been dispatch and eaten by the indigenous. Surprisingly, they could find oneself the lost can of films which reveals the missing documentarians fate and all them experience into the jungle, including how they died. The alleged(a) content of that can of films is part of the film itself.The film was presented by the director as whether all the length were real everything you see in the movie is real, even the deaths of animals and people. Thats it, the documentarians are really dead and were really tortured and murdered by the indigenous. These statements together with the co ntent of the supposed rescued can of films and the format in which the film was presented (like a documental, with an important number of camera-in-hand scenes) achieved that the public believed that the story really happened. Despite all this, the whole content of the movie is fiction, unless perhaps the animal deaths(Randy Malamud, 2010 2-3).In the year 1988 appeared a good continuation of the movie called Cannibal Holocaust IIthis one was more really like a Giallo rather than a documentary.Alien Abduction Incident in Lake County (1998)Director Dean Alioto Country United StatesDuration 93 min.Plot An American family is celebrating the dinner of thanksgiving when suddenly the fuses are gone and the house goes dark. Some of the members of the family decides to go outside to check the fuse box, but something mysterious happens an obscure flying object lands near them. This event will mark the beginning of a darknessmare night when the aliens will try to abduct the family.The who le film is presented as the recording of the familys son, who films all the events occurred during the night with his new camera because he wants become a cinema director. This fact makes that the public thinks that the filming is real, although in the end of it they can see that all is fiction. Instead of the foregoing films, this one is not made like a documentary (although it has conglomerate elements typical of this kind of format), but its presented as a real mob photograph.The Blair Witch Project(1999)Directors Daniel Myrick and Eduardo Sanchez Country United StatesDuration 86 min.PlotIn October of 1994, three student film makers disappeared in the woods near Burkittesville, Maryland. iodine year later, their footage was found (The Blair Witch Project, 1999 n.p.). With this statement the film starts. So, the story is about those three students who were recording a documental about a local anaesthetic legend about the Blair Witch.As in Cannibal Holocaust the film was pre sented as whether all the footage were real, as the students were really dead in the end of the film and the content of them footage was the film itself (but the whole film is fiction). The technics resources used for this affaire were the same as in Cannibal Holocaust (camera-in-hand scenes, story tell in first person perspective as the camera were the look of the character, documentary form, low image quality to make the story more believable,). Despite of it, unlike Cannibal Holocaust the film The Blair Witch Project managed to be a really commercial success being one of the most profitable films in the story. Perhaps the innovative viral marketing campaign that succumbed before the release of the film was one of the reasons of for its success.In the year 1988 appeared a sequel of the movie called The Blair Witch Project 2 which was simply a common horror movie.Apparently, it is already preparing a second sequel that would be more faithful to the original.REC (2007)DirectorJau meBalaguer and Paco Plaza CountrySpainDuration 85 min.PlotEvery night Angela and her cameraman, who works for a local TV channel in Barcelona, have to make a draw about the routine of one collective of the city. That night they must go along with the firefighters of the city to cover an apparently minor incident in a building in the center of Barcelona. Once they get there, they crystalize that the residents of this building appear to be infected and that the building has been quarantined, a night of incubus has started. The whole content of the movie is presented as the footage recorded by the cameraman who works with Angela.There is an American film called Quarantine which is a Hollywood remake of the spanish original movie. In 2009 premiered the sequel, REC 2, which replaces the idea of an infection by a curse. Currently the directors of the original film are works in the third part of the film.There are more horror filmthat uses the first-person perspective,films asDiary of the Dead (George A. Romero), The Last Broadcast (Stefan Avalos), Cloverfield (Matt Reeves) or Paranormal Activity and its sequel (Tod Williams).The most part of the films receptive used the documental or mockumentaries format, quite of some of them like Alien Abduction Incident in Lake Countywhich uses the formatof a home video or REC, which uses the format of a TV report.4. Format Topic, the observe for panic attackAs spectators, we have always felt protected from the dangers that are shown in the horror movies. That is thanks to the border of the diegesis, that fine line, the thickness of the screen.When we enter at the cinema we know that everything we will see is fiction, drama, a gambol to scare us in the case of the horror films. We can remember the camera and all the casting and the crew filming every scene of this movie. However, when we watch a documentary for example, our feelings are totally different so we are really convinced that every action showed in the scree n really happened and, in general, we are convinced that the whole reality showed in this documentary is the same reality as ours. This fact makes us promptly empathize with the protagonists of the documentary because we already know that we can life and feel the same experiences that they are showing on the screen. In the other hand, if the documentary is in Africa and is about the danger of the snake bites, is probably that a European spectator doesnt feel as much empathy about the events showed as an Asiatic one for example.This is because be attacked for a venomous snake is much more possible in Asia than in Europe. So there are two things that mark our level of empathy with what were seeing on the screen, the type of visual taradiddle or format used and the topic of the film.The most part of the films exposed in the previous point have used the documental or mockumentaries format, instead of some of them like Alien Abduction Incident in Lake Countywhich uses the formatof a h ome video or REC, which uses the format of a TV report, it doesnt matter. What is really important is the use of a format that we associate with the reality. Every day we see in the news reports about local or world-wide events and, for this reason, when we watch a film narrated with that same format we feel that the story is real. By chance, this type of formats (these are normally used to tell the reality) used to get the camera perspective to show the information, as the home video uses the same perspective to show the quotidian life of a family for example. Soin the case of the horror films in first-person point of view is not the perspective what makes us feel in danger, but the format.About the topic, as happens in the silent movies, will cause more or less fear depending on what level its close to us. So nowadays a first-person perspective horror movie about vampires wont scare us much as if was about the Flu A for example. In the other hand, there are some topics which sca re us during all our storey as for example, alien invasions. But inside every topic there are also a wide variety of manners of reaching the viewer. In the film Alien Abduction Incident in Lake County for example, the people who is attacked live in a rural area away from the civilization and, for this reason, they cant ask for help. However, in the film Paranormal Activity the people is attacked by aliens when they are sleeping. So is reasonable to say that Paranormal Activity has potential for scare more many people than Abduction Incident in Lake County because not everyone lives in a rural area, however, everyone sleeps. The same example its attributable to the film Cannibal Holocaust. The nightmare lived for the documentarians happen in the Amazons How many of the spectators have never been in the amazons? A large minority of them, sure. However, how many of the spectators have been sleeping during the night in a forest like the students of The Blair Witch Project? Surely a lot of them, maybe families with them children or friends making a picnic or a bivouac during the summer. Although the film could have been even scarier if for example it had occurred in a neighborhood in the outskirts of big city. So a really large part of the audience would feel identified with it and, maybe, when they would return home they would be a little bit afraid at least.So, in the same way that throughout the history of horror movies, nowadays we are scared about those topics whose are close to us. But not only nearby topics, also films with characters wholived situations that we can live in our quotidian lives. During the history of the horror films we have seena large amount of films about issues of concern to the entire population, global issues. Instead, to really scare the public its better to find adjacent topics, more personal, all this bearing in mind that a movie is a commercial product that should appeal to millions of people.In conclusion, for make a really terri fying movie we have to speak about a fear which can be felt by the people in their everyday life and furthermore, we have to use a format which is used to link to the explanation of real events, a format like the documentary for example. The horror films in first-person perspective uses this formats, but not always speaks about the most terrifying topic thus its depends of the global issues that there are when the film is released.ConclusionsAfter more than a century of watching films, the human as a spectator feels so comfortable that its difficult to scare. The people goes to the cinema knowing that the reality showed in the screen is not the same reality that the one they lives. And also knowing that the characters who are in the film are well-paid actors. In fact, they expect to enjoy with a good dramatization, a well narrated fiction story and, maybe, some spontaneous scare.As did Orson rise in his radio broadcast War of the Worlds in 1938, the key for scare the public is to c atch them off guard. And it has to be made inside their own reality, without allowing them to protect themselves with the diegesis of the fiction. The history has shown us that the best way to achieve this purpose is to narrate a fictional story using the same techniques that we would use whether the story was real. In fact, Larrive dun train La Ciotat (Arrival of a train at the Ciotat) recorded by Lumire Brothers at 1986 its a documentary (in its way), not a fiction movie.So,the first-person horror movies uses this techniques to scare the audience, but that is not the only thing to keep in mind. The topic of the movie is also important,a really terrifying movie has to speak about a fear which can be felt by the people in their everyday life, something that can really happen to them. This is a human fact, the people always has felt fear by the dangers of his surrounding, of his country, of his town, of his neighborhood, on his lives.BybliographyBrokenProjector, 2007, Kammerspielfil m, http//www.brokenprojector.com/wordpress/?p=9Electronically accessed twenty-fourth November, 2010.Elzer, B. Loiperdinger, M. (2004), The Moving Image 4. Minnesota University of Minnesota Press.Garca, K. (2007), ObservacionesFilsoficas Magazine, http//www.observacionesfilosoficas.net/golem.htmlElectronically accessed 24th November, 2010.Jancovich, M. (2006), Rational Fears.Manchester Manchester University Press.Le Blanc, M. Odell, C. (2000), Vampire Films. Harpenden Pocket EssentialsMalamud, R. (2003), Poetic Animals and Animals Souls.Georgia Palgrave Macmillan.Senf, C. (1988),The Vampire in Nineteenth nose candy English Literature.Wisconsin Popular Press.Myrick, D. Sanchez, E. (1999) The Blair Witch Project. Haxan Films.Usa Today. (2003), Vampire Killing Kits Sells for $12,000, http//www.usatoday.com/news/offbeat/2003-10-31-vampire_x.htmElectronically accessed 24th November, 2010.Wilson, K. (2005a), Horror Film History, http//www.horrorfilmhistory.com/index.php?pageID=1920s E lectronically accessed 24th November, 2010.

Islamic Banking Deposits and Profitability Relationship

Muslim nookieting Deposits and favourableness familyThe purpose of this research con is to analyze the clash of Moslem imprecateing Deposits ( indueiture, nest egg and oc trusdeucerthy tarradiddles) on the historicaliseableness flier hard roe of the Muslim lingoing perseverance in Paksitan. For this purpose, date serial publication data of el stock-still quarters lotion the flow rate 2007 to 2009 is way outn for the require inconsistents from State margin of Pakistans quarterly editions of the Muslim swearing bulletin. The gos fork outed that all the beat variables had a world-shattering confirmatory relation with the meshingability of Muslim edges. The aim is to go to the lit on gravel-favourableness kin of Muslim coin banks.Muslim banking is a banking bodily serve up base on Moslem tenets, which do non allow the give and receiving of intimacy (riba) and promotes advantage parting-out in the conduct of banking business. (Ghazali, 2 008). tally to the up-to-the-minute quarterly edition of State swan of Pakistans Moslem situateing Bulletin?, the followity Shariah-compliant assets worldwide present grown to to the high-pitchedest degree US$ 700 billion with yearly growth exceeding 10.0 percent during the old decade and be communicate to grow to US$ 1.6 trillion by 2012. State banking concern of Pakistans strategical plan for Muslim banking attention launched in 2008, aims to improver the surface of it of the Muslim banking indus punish to 12.0 percent (of fall banking assets) by 2012.Muslim pecuniary institutions do non completely play a vital role in re antecedent mobilization, resource allocation and practice session but argon to a fault actively involved in the hunt down of implementing government m whizztary policy. unconnected from religious offering nearly all handed-down banking facilities, Muslim banks as well incite domestic and international trades. Seeing the poten tial drop of the Muslim market, western stuffy- ground pecuniary institutions much(prenominal) as Citibank, JP Morgan, Deutsche Bank, ABN Amro and American talk clear introduced reside-free harvest-tides to customers. Similarly, multinational corpo proportionalityns such(prenominal) as General Motors, IBM and Dewoo Corporation give up already begun to use interest-free service.(Haron and Azmi, 2003).Studies that measure the influence of various factors that determine Muslim banks favourableness ar until straight at initial stage. Few attempts bring up till now been made to empirically analyze the Muslim banks movement. In the Moslem banking literature, the usage of Haron (1996a) was the first attempt to go out factors that contributed towards Moslem banks positivity. Most of the research employ multiple reasoning anchorward analysis proficiency in measuring the kindred among the determining factors and positivity ratios.Ext residualing the previous bailiw ick in Islamic banks per playance, this writing examines the strength of kinship amongst fasten variables and utileness of Islamic banks employ univariate atavism methodology. By t separatelying the acquaintance betwixt Islamic banks capital punishment and the alluviation variables, this paper contributes to the on-going demonstrateion on the secures and gainfulness kin of Islamic banks.The paper is divided into s up to now split. The literature review on determinants of Islamic bank performance is highlighted in character 2. Section 3 examines the methodology used in analyzing the kin between the gravels variables used in this con and the performance of Islamic banks. Section 4 presents the discussion and implication. The references be listed in divide 5. The tables argon listed in sectionalisation 6 and figures in section 7.Literature ReviewThe satisfying erectation of Islamic Finance is that the dickens sides of the equation (i.e. the fund- interpr etrs and the fund-users) work in accordance as partners, without situateors creation secure of whatsoever hand from those who use their bills. In practice, Islamic banks draw or so ternion-quarters of the non bad(p) from their secureors, and do non stock warrant any precise train of check to these fund-providers. (Shubber and Alzafri,2008).Ghafoor (1995) states that all Islamic banks arouse trio kinds of bank rely looks rate of flow, nest egg and coronation. veritable or prerequisite locate depicts be al closely the same as in all naturalized banks. Deposit is assured. nest egg deposit method of storeyings function in different ways. In some banks, the depositors allow the banks to keep use of their money but they extend to a tackle of being paid the complete amount back from the bank. Banks adopt a weigh of methods of inducing their customers to deposit with them, but profit is non promised. In differents, nest egg key outs are treated as trustment describes but with less unforgiving conditions as to withdrawals and minimum equilibrize. Capital is not assured but the banks take care to invest capital from such accountings in fairly safe short-term projects. Therefore, demean profit pass judgment are expect and that similarly only on a section of the average minimum balance on the ground that a high direct of reserve notes lease to be kept at all fourth dimensions to join up withdrawal demands. Contrastingly, Investment deposits are accepted for a determine or indefinite period of clip and the investors consent in pass off to share the profit (or wrong) in an agree pro set with the bank. Capital is not assured. (Ghafoor, 1995).Some IFIs (Islamic Financial Institutions) classify deposits in terms of wadiah or amanah. Current accounts of IFIs are regarded as qard hasan or qard ( alternatively, as wadiah/amanah). (Farooq, 2008). Qard al-Hasana is defined as deposits whose full(a) re give wayment on de mand is guaranteed by bank. (Ahmad, 1994). The deposits in the period account are regarded as if they are loans from the customers to the bank and therefore, expatriate no accord to the account holders.? (Al-Jarhi and Iqbal. 2001). Deposit accounts are n some(prenominal) a liability nor love ocellusss capital. They are a hybrid? source of capital, and must be acknowledge as such. Depositors are partners with the bank, but absorb it away no ownership rights. (Shubber and Alzafri,2008).Sudin Haron (1996) mentions that the onlyness allows the banks to accept two types of deposits, i.e., qard al-hasanah deposits and term enthronement deposits. The qard al-hasanah deposits take ons legitimate as tumefy as nest egg accounts which vary in their operational rules. (Ahmad, 1994). If it is allowed that the borrower can wear pointless money voluntarily, then treating deposits as qard-hasan allows the banks as the borrowers to ante up extra money to the depositors (lenders). U nlike sparings account services at ceremonious banks, where depositors are automatically rewarded upon appointment of their silver, frameers to nest egg account holders are reliant on the Shariah (Islamic laws) principles which are full by Islamic banks when offering this service. When wadiah (trusteeship) or qard hassan (benevolent loan) are used, the re criminals are simply at the discretion of the banks. (Sudin Haron, 1996).Nienhaus, (2004) debates that if the customers of Islamic banks desire a return on their pecuniary resource, they should pay into investiture accounts (also called conjunction accounts or PLS, profit and sledding overlap accounts). Whereas, deferred payment balances on these accounts are not considered deposits in the received sense. The returns on Islamic banks enthronisation accounts are not unflinching in show up the customers participate by a certain proportion in the monetary outcome of the utilization of their enthronement notes by the bank. These ensues could also result in a loss. In illustration of loss, the clients volition strike to bear a portion of the loss which would tighten the nominal note nurture of the credit balances of their respective investing accounts. In such a situation, the clients cannot claim a full reimbursement of the money paid in. The full reimbursement, however, is constituent for a deposit in the strict sense. (Nienhaus, 2004).Rosly and Zaini, (2008) take that the public in widely distributed format their money in banks for either fulfilling transactional needs or for investment funds needs. To coif the transactional objective, Islamic banks offer services such as wadiah yad dhamanah deposit, which helps safekeeping of their deposit money with guarantee services. In this product, depositors no longer deposit specie to receive a flash-frozen income. Instead, they place their deposits for security.Wadiah yad dhamanah spuriouss safekeeping with guarantee. Wadiah yad d hamanah depositors permit the Islamic bank to invest their money in return for deposit safety that they got for free. Since the caretaker service is inc verged without a fee, the Islamic bank holds no legal compulsion to pay depositors a predetermined return and whitethorn do so only on voluntary basis. In this way, the bank holds choice on profit statistical distribution policy in the form of gift (hibah). The same is not correct for Islamic fit(p) deposits, oft sequences cognize as mudarabah investment deposits. In this partnership composition, no guarantee is addicted over to capital justification and heady income, as it runs under fair play principle. It is a precarious product as the underlying puzzle is based on profitloss sharing organisation. Profits are shared only in case of performing investments, maculation capital may depreciate or even shrink if the investment ends in losings. (Rosly and Zaini, 2008).Haron and Azmi, (2004) discuss that similar to stodgy b anks, Islamic banks also rely on depositors money as a discern source of fund. Bank Muamalat Malaysia Berhad for example, had tot deposits amounting to 94 percent of issue forth liabilities and shareholders legality at the end of December 2003. succession in the case of Jordan Islamic Bank, Islamic Bank of Bangladesh, Bank Muamalat of Indonesia, and Bank Shariah Mandiri of Indonesia, the corresponding amounts were 94%, 86%, 76%, and 79%, respectively. These figures herald the vast high total of the depositors money as a come out of finance for Islamic banks. Hence, it becomes native for the management of Islamic banks to identify the factors that are al close likely to allure customers end making in depositing their capital with Islamic banks. (Haron and Azmi, 2004).With the exception of a remove done by Metawa and Almossawi (1998) where organized religion was seen as a contend influencing customers choice to concentrate Islamic banks in Bahrain, separate studies d efy turn out counter wise. The indorse from studies done in Sudan and Turkey, for example, cave ined that religion was not the main(prenominal) motive for customers choosing Islamic banks (Erol and El-Bdour, 1989). Likewise, studies conducted in Malaysia and capital of Singapore revealed both religion and profit as the rendering for people maintaining their connector with Islamic banks (Haron et al., 1994 Gerrad and Cunningham, 1997). Since depositors are attracted by gelt, it is vital for Islamic banks management to be aware of the fact that return rate on deposits persuade their customers decision to deposit. (Haron and Azmi, 2004).Relating to mercenary banks deposit composition, Hester and Zoellner (1966) and Heggested (1977) put up that sequence and savings deposits had a meaningful backward correlation with positivistness. Smirlocks (1985) findings show a crucial peremptory birth amid demand deposits and profits. In contrast, Fraser and flush (1971) run agrou nd that loan rate time deposit rate and loan-to-deposit ratio had no outcome on positivity. Haron (1996a) arrange evidence to suggest that on-line(prenominal), savings and investment accounts of Islamic banks are positively related to favourableness. Fraser et al (1974) considered operate embodys, deposit and loan structures as factors within the control of management and undercoat that the factor which had the biggest control on bank performance was bank cost followed by banks deposit and loan composition.Heggested (1977) prove that banks heavily devoted to time and savings deposits earned considerably lower returns than banks which have higher(prenominal) credit on demand deposits. Smirlock (1985) sustain that demand deposits were a cheaper source of capital and had a positive shock on bank profits.In the literature, the volume of studies ready that savings and time deposits have a negative birth with profitability, while a positive consanguinity has been launch fo r menstruation account deposits. Haron (2004) comprise that nearly all deposit structure variables had no substantive blood with the profitability ratios. Deposits in current account, was the only variable which had a satisfying human human relationship with Banks portion of income as a voice of total assets and Net profit in the beginning value as a pct of total assets. Each 1% sum up in the current account holdings outgrowthd the banks income by 0.034% and profit before tax by 0.036%. This end result was in line with the findings report by Smirlock (1985). Since a current account service is considered a cost-free facility, it is anticipate that the more(prenominal) than funds deposited into this account, the more Islamic banks would stand to profit. Interestingly, no world-shaking relationship was found between current account deposits and ingrained income as a percentage of total assets, which implied that an addition in current accounts does not generate more e ffect to the bank as a whole but only functions as a cost saving measure. That is, no returns are paid to these depositors. In the case of savings and investment accounts, even though their relationships with all profitability ratios were at an insignificant level, the signs of their regression coefficients warranted besides clarification. No contradiction with the findings of accomplished banking literature with regard to savings accounts was apparent. A negative relationship was found between savings account deposits and the profitability measures. This result suggests that any increase in savings accounts depart reduce profits and it corresponds to the findings in the current banking literature (see for example Hester and Zoellner, 1966 and Heggested, 1977).The results on Investment account deposits in Harons (2004) theatre are not similar to those findings inform in earlier researches. Hester and Zoellner (1966) and Heggested (1977), for example, found that flash-frozen de posit facilities had an inverse relationship with profitability. Since some of the characteristics of investment deposits at Islamic banks are similar to the fixed deposit facilities of naturalized banks, it is expected that more funds deposited into these accounts would result in less profit to the bank. In contrast, Smirlock (1985) believed that an change magnitude amount in fixed deposits would have a positive relationship with a banks profitability. Harons (2004) study found that Investment account deposits had a positive relationship with all profitability measures and thus, confirmed Smirlocks scheme.Haron and Azmi (2004) attempted to look into the strength of influence between both internal and external variables and profitability of Islamic banks in selected countries using timeseries techniques of cointegration and error-correction mechanism. They found a significant semipermanent relationship between profitability measures of Islamic banks and determining variables su ch as liquidity, deposit items, assets structure, inflation and money supply. They also found that Investment account deposits was the only variable which had a significant relationship with all iii profitability ratios. For Current account deposits, a positive relationship was found with Banks portion of income as a percentage of total assets. The result indicated that a 1% increase in current account holdings increased the banks portion of income by 0.064%. Given that current account facility is a cost-free service, the more funds deposited into this account, the higher profits bequeath be made useable to Islamic banks. Interestingly, current account deposits had no significant relationship with Total income as a percentage of total assets implying that an increase in current accounts does not generate more income to the bank, but only functions as a cost saving measure. On other words, Islamic banks do not pay any rewards to their depositors. These results were in line with the findings of Haron (1996a, 2004). Savings deposits variable was found to have a significant positive relationship with Total income as a percentage of total assets. For each 1% rise in savings account, total income increased by 0.26%. This was in line with typical banking practices whereby Islamic bank could use the funds deposited in this account for fat purposes and thus, generating additional revenue for the bank.Increases in deposits size has a positive impact on Earnings per share (EPS), as a portion of depositors profits is minused as a fee for the social welfare of the bank and its shareholders. (Shubber and Alzafri, 2008). Returns on Islamic deposits are though flexible in nature since returns are based on performance earlier than promise upfront as bare in all interest bearing deposits. Although the mudarabah range (investment deposit rates) are quoted using the rates given in the previous months, they are not fixed beforehand and serve as an indicative rate of ret urn on Mudarabah deposits (ROMD). The Mudarabah (investment deposits) contract works on profitloss sharing principles while fixed deposits of naturalized banks are based on the contract of debt. As an equity product, a Mudarabah deposit offers no principal protection and legal claims against any form of returns. To postulate up for the risk pictorial matter of the product, Mudarabah depositors are expected to be given higher returns relative to that of commercial banks fixed depositors who negateed risk. (Rosly and Zaini, 2008).Haron and Shanmugam (1995) in their study try to link the profit rates to Islamic banks deposits. Using Pearsons Correlation and for the first time Order Autoregressive model, they found absolute negative relationship between the two variables. Likewise, their finding showed a positive additive relationship between conventional and Islamic bank deposits.Haron and Ahmed (2000) argue that people who placed their deposits at saving and investment account facilities were channelize by the profit motive. The utility maximisation theory amongst the Muslim customers was and confirmed by the negative relationship between the rate of interest in conventional banks and the sum deposited in interest-free deposit facilities. Muslims should be head by Islamic doctrines when making their stinting decisions. Therefore, role of educating people regarding Islamic banking carcass should be played globally. It is therefore a challenging task. (Haron and Ahmed, 2000).Shubber and Alzafri, (2008) theorize that EPS (Earnings per share) improves as the level of deposits increases, as depositors were viewed as sharers in the profit and loss, rather than being entitled to a fixed interest rate. This supports that increasing deposits have a positive impact on EPS (Earnings per share). Increasing deposits, therefore, do not direct any increment in the cost of equity. In fact, equity holders benefited from larger deposits, as owners of the latter pay o ut management fees, which is deducted from the depositors share of the profits. Also, the market value of Islamic banks is free-lance of WACC. (Shubber and Alzafri,2008).Haron and Azmi (2004a) demonstrated that with the exception of fixed and investment deposits, any increase in rates of interest, deposits at conventional system go away increase and deposits at Islamic system will decrease, and vice-versa. As for the fixed and investment deposits, indeterminate results were found. One possible explanation for this is that rates of profit for deposits at Islamic system are known at the end of the deposit period and not at the send-off as opposed to the conventional system. whatever upward changes in interest rate of conventional system will have an adverse impact to the deposit levels in the Islamic system. Therefore, rates of profit of Islamic system must at any time be similar to those of the conventional system. Finally, religious dimension can be considered as an important section to attract more people to deposit their funds in the Islamic system. This could also be the reason why more and more conventional banks are starting to offer Islamic banking facilities to their customers not only in Malaysia but also to other parts of the world. (Haron and Azmi, 2004a).Hasan and Bashir (2003) argue that the rising rivalry and continuous innovation to provide monetary services, all contribute to a increasing interest in a detailed evaluation of Islamic banks. Depositors are interested in evaluating the performance of their banks since they are not given fixed returns and the nominal determine of their deposits are not assured. In stressful to make best use of the value of shareholders investment, Islamic banks are expose to risks. Hence, analyzing the Islamic banks performance is important from sparing and public policy perspectives. (Hasan and Bashir, 2003).methodological analysisThis study uses univariate regression analysis to examine the relationshi p between deposits and profitability of Islamic banking pains in Pakistan. Univariate regression is a method of regression analysis that uses one explanatory variable to predict determine of a single dependent variable. SPSS software is apply to obtain the univariate regression. In this study, deuce-ace independent variables titled Fixed deposits, Savings Deposits and Current account deposits have been used. The dependent variable of profitability is measurable by roe which is the ratio of a banks net after-tax income divided by its total equity capital. The return on equity ( roe) is considered to be one of the profitability performance ratios (Tarawneh, 2006). It indicates how effectively the management of the bank is able to turn shareholders funds (i.e. equity) into net profit. ROE (Return on Equity) has been tested separately for the trinity independent deposit variables to avoid the issue of multicolanalogueity since all the deposit variables are highly correlated to each other.This paper attempts to test three hypotheses. According to Becker (1995), hypothesis testing is the process of judging which of two contradictory accounts is correct. conjecture 1 Investment Deposits increase the profitability of Islamic banks. system 2 Saving Deposits increase the profitability of Islamic banks. scheme 3 Current taradiddle Deposits increase the profitability of Islamic banks.The data for this study is time series data taken from the quarterly editions of the Islamic banking bulletin? make by the State Bank of Pakistan. These bulletins publish the consolidate financial statement variables representing the entire Islamic banking industry of Pakistan including all the full fledge Islamic banks (Al Baraka Islamic bank, Bank Islami Pakistan limited, Dawood Islamic bank Limited, Dubai Islamic bank limited, Emirates international Islamic bank Ltd and Meezan Bank Ltd.) as well as the Islamic branches of conventional banks (Askari Bank Limited, Bank Al Fala h Ltd., Bank Al Habib, Faysal Bank, Habib metropolitan bank, MCB Bank Ltd, National bank of Pakistan, Soneri Bank Ltd, Standard Chartered Bank, The Bank of Khyber, Royal bank of Scotland, coupled Bank Ltd). The model period for this study is limited from 2007 to 2009 as most of the Islamic banks started operations from 2007 in Pakistan. Hence, the consolidated data of the eleven sequent quarters has been used in this study.The general equations of the three models areProfitability = b0 + b1(ID)(1)Profitability = b0 + b1(SD)(2)Profitability = b0 + b1(CD)(3)Where,b0 = intercept (constant) mutualist variableProfitability = ROE (Return on Equity)Independent variablesID = Investment DepositsSD = Savings DepositsCD = Current Account DepositsResultsThe results of the regression analysis for model.1, 2 and 3 are shown in Tables 1, 2 and 3 respectively. All the three models were significant at the 5% level of significance. The value of the adjust coefficient of purpose (adjusted R2) for ROE in model.1 is 0.4 which demonstrates that 40% of the variableness in total is explained by its linear association with Fixed deposits variable. As for model 2 and 3, the corresponding value of adjusted R2 are 0.399 and 0.377 respectively. A relatively small value of adjusted R2 does not necessarily mean that the model is in appropriate to measure the relationship between independent and dependent variables. (Haron, 2004).The value of adjusted R2 is normally influenced by a trope of predictive variables relative to the sample size and it becomes smaller as we have fewer observations per predictor variable (Hair et al., 1995). To provide a rationale for the section in R2 and adjusted R2 value, the Dublin-Walter test was conducted. The Dublin-Walter statistics values for all the three values were less than two which proves that the variance was receivable to negative autocorrelation in the sample observations. Also, the adequacy of a model for predicting is formalize by the F- test. (Haron, 2004). As presented in Table 1, 2 and 3, all F-ratio values are statistically significant at 5% significance level for all profitability models. Hence, these results confirmed that the models applied were useful for measuring the relationship between deposits variable items and the profitability variable.DiscussionThe results supported all the three hypotheses that Investment, Savings and Current account deposits increase the profitability of Islamic banks. This result is in line with Haron (1996a, 2004) who founded evidence to suggest that all three sources of funds (current, savings and investment accounts) for Islamic banks are positively related to profitability.Hypothesis 1 of this study suggested that investment deposits increase the profitability of Islamic banks. The results show that the value of the adjusted coefficient of determination (adjusted R2) for ROE in model.1 is 0.4 which demonstrates that 40% of the disagreement in total is explained by its linear association with investment deposits variable. Hence, results support Hypothesis 1.Similarly, hypothesis 2 stated that savings deposits increase the profitability of Islamic banks. The results show that the value of the adjusted R2 for ROE in model.2 is 0.399 at 5% significance which shows that 39.9% of the variation in total is explained by its linear association with savings deposit variable. Hence, results also support Hypothesis 2.Finally, hypothesis 3 proposed that savings deposits increase the profitability of Islamic banks. The results show that the value of the adjusted R2 for ROE in model.3 is 0.377 which shows that 37.7% of the variability in total is explained by its linear association with savings deposit variable at 5% level of significance. Hence, results support Hypothesis 3 also. All these results were significant at a 5% level of significance.Referring to previous literature, the results are mixed. In the literature, most studies found that savings and investment deposits have an inverse relationship with profitability, while a positive relationship has been found for current account deposits. In this study, the current account deposit variable had significant positive relationship with profitability. This result is in line with the findings reported by Smirlock (1985), Haron (1996a, 2004) and Haron Azmi (2004). Since a current account service is considered a cost-free facility, it is expected that the more funds deposited into this account (current), the more Islamic banks will stand to profit.In the case of savings deposits, a positive relationship was found between these deposits and profitability. This result suggests that any increase in savings accounts will increase profits and this is in line with Haron (1996a) and Haron Azmi (2004) as Islamic banks can use these savings funds deposited in this account for nut-bearing purposes and therefore, generating additional revenue for the Islamic banks.The results on investment deposits in this study are not similar to most of the findings reported in commercial banking literature. For example, Hester and Zoellner (1966) and Heggested (1977) found that fixed deposit facilities had an inverse relationship with profitability. In contrast, Smirlock (1985), Haron (1996a, 2004), Haron and Azmi (2004) believed that an increasing amount in fixed deposits would have a positive relationship with a banks profitability. This study found that investment deposits had a positive relationship with all profitability measures and thus, confirmed Smirlocks, Harons and Azmis hypothesis.In light of the above findings, Islamic banking provides a better and ethical alternative that is not only Riba-free check to the rules of Shariah but also profitable to depositors and investors since all the deposit accounts are positively correlated to profitability. Since, Islamic banking provides three different interest-free deposit facilities to its depositors and investors to facilitate them accor ding to their financial needs, people should invest in these deposit accounts in order to patronize the Islamic banking industry and to receive good returns in the form of hiba from these Islamic banks.In addition, Ghazali (2008) suggests that Islamic banking is indeed relevant to the current economic crisis. The global financial nuclear meltdown stemming from the US actually poses an chance for the Islamic banking system to demonstrate its distinctiveness. The financial meltdown revealed the desperate need for a system like Islamic finance, based on the principle of profit-sharing where both parties are subjected to probable losses and returns. It is a fair and just system. This is contrasting to the conventional system, where Islamic banks do not acquire or trade debt rather they manage upstanding assets which are tied to real economic activities.. This is really an opportunity for the Islamic financial community to reveal to the global market that the Islamic financial system i s actually a robust and feasible alternative to the conventional interest-based system.Hence, people should support the Islamic banking industry worldwide since deposits are positively related to the profitability of Islamic banks. Hence, increased deposits would result in higher profitability of Islamic banks which in return would provide higher returns to its depositors. This would lastly lead to implement a justified and ethical economic system which encourages a fair distribution of wealth and resources throughout the society.This study can be extended to include more time series and cross-section(a) data of Islamic banks of other countries. The study may also be extended to cover other determinants of Islamic banking profitability.Islamic Banking Deposits and Profitability RelationshipIslamic Banking Deposits and Profitability RelationshipThe purpose of this research study is to analyze the impact of Islamic Banking Deposits (Investment, Savings and Current accounts) on the pro fitability measure ROE of the Islamic banking industry in Paksitan. For this purpose, time series data of eleven quarters covering the period 2007 to 2009 is taken for the required variables from State Bank of Pakistans quarterly editions of the Islamic banking bulletin. The results showed that all the deposit variables had a significant positive relation with the profitability of Islamic banks. The aim is to contribute to the literature on deposit-profitability relationship of Islamic banks.Islamic banking is a banking activity based on Islamic principles, which do not allow the paying and receiving of interest (riba) and promotes profit sharing in the conduct of banking business. (Ghazali, 2008). According to the latest quarterly edition of State Bank of Pakistans Islamic Banking Bulletin?, the total Shariah-compliant assets worldwide have grown to about US$ 700 billion with annual growth exceeding 10.0 percent during the past decade and are projected to grow to US$ 1.6 trillion by 2012. State Bank of Pakistans strategic plan for Islamic banking industry launched in 2008, aims to increase the size of the Islamic banking industry to 12.0 percent (of total banking assets) by 2012.Islamic financial institutions do not only play a vital role in resource mobilization, resource allocation and employment but are also actively involved in the course of implementing government monetary policy. Apart from offering nearly all traditional banking facilities, Islamic banks also assist domestic and international trades. Seeing the potential of the Islamic market, western conventional-based financial institutions such as Citibank, JP Morgan, Deutsche Bank, ABN Amro and American Express have introduced interest-free products to customers. Similarly, multinational corporations such as General Motors, IBM and Dewoo Corporation have already begun to use interest-free services.(Haron and Azmi, 2003).Studies that assess the influence of various factors that determine Islamic ba nks profitability are still at initial stage. Few attempts have up till now been made to empirically analyze the Islamic banks performance. In the Islamic banking literature, the work of Haron (1996a) was the first attempt to examine factors that contributed towards Islamic banks profitability. Most of the research used multiple regression analysis technique in measuring the relationship among the determining factors and profitability ratios.Extending the previous work in Islamic banks performance, this paper examines the strength of relationship between deposit variables and profitability of Islamic banks using univariate regression methodology. By studying the association between Islamic banks performance and the deposit variables, this paper contributes to the on-going discussion on the deposits and profitability relationship of Islamic banks.The paper is divided into seven sections. The literature review on determinants of Islamic bank performance is highlighted in Section 2. Se ction 3 examines the methodology used in analyzing the relationship between the deposits variables used in this study and the performance of Islamic banks. Section 4 presents the discussion and implication. The references are listed in section 5. The tables are listed in section 6 and figures in section 7.Literature ReviewThe whole ft of Islamic Finance is that the two sides of the equation (i.e. the fund-providers and the fund-users) work in agreement as partners, without depositors being assured of any return from those who use their money. In practice, Islamic banks draw approximately three-quarters of the capital from their depositors, and do not guarantee any precise level of return to these fund-providers. (Shubber and Alzafri,2008).Ghafoor (1995) states that all Islamic banks have three kinds of deposit accounts current, savings and investment. Current or demand deposit accounts are almost the same as in all conventional banks. Deposit is assured. Savings deposit accounts fu nction in different ways. In some banks, the depositors permit the banks to make use of their money but they attain a guarantee of being paid the complete amount back from the bank. Banks adopt a number of methods of inducing their customers to deposit with them, but profit is not promised. In others, savings accounts are treated as investment accounts but with less strict conditions as to withdrawals and minimum balance. Capital is not assured but the banks take care to invest capital from such accounts in fairly risk-free short-term projects. Therefore, lower profit rates are expected and that too only on a section of the average minimum balance on the ground that a high level of reserve funds need to be kept at all times to meet up withdrawal demands. Contrastingly, Investment deposits are accepted for a predetermined or indefinite period of time and the investors consent in advance to share the profit (or loss) in an agreed proportion with the bank. Capital is not assured. (Ghaf oor, 1995).Some IFIs (Islamic Financial Institutions) classify deposits in terms of wadiah or amanah. Current accounts of IFIs are regarded as qard hasan or qard (alternatively, as wadiah/amanah). (Farooq, 2008). Qard al-Hasana is defined as deposits whose full repayment on demand is guaranteed by bank. (Ahmad, 1994). The deposits in the current account are regarded as if they are loans from the customers to the bank and therefore, bear no yield to the account holders.? (Al-Jarhi and Iqbal. 2001). Deposit accounts are incomplete a liability nor equity capital. They are a hybrid? source of capital, and must be acknowledged as such. Depositors are partners with the bank, but enjoy no ownership rights. (Shubber and Alzafri,2008).Sudin Haron (1996) mentions that the law allows the banks to accept two types of deposits, i.e., qard al-hasanah deposits and term investment deposits. The qard al-hasanah deposits includes current as well as savings accounts which vary in their operational ru les. (Ahmad, 1994). If it is allowed that the borrower can pay extra money voluntarily, then treating deposits as qard-hasan allows the banks as the borrowers to pay extra money to the depositors (lenders). Unlike savings account services at conventional banks, where depositors are automatically rewarded upon appointment of their funds, returns to savings account holders are reliant on the Shariah (Islamic laws) principles which are practiced by Islamic banks when offering this service. When wadiah (trusteeship) or qard hassan (benevolent loan) are used, the returns are entirely at the discretion of the banks. (Sudin Haron, 1996).Nienhaus, (2004) argues that if the customers of Islamic banks desire a return on their funds, they should pay into investment accounts (also called participation accounts or PLS, profit and loss sharing accounts). Whereas, credit balances on these accounts are not considered deposits in the conventional sense. The returns on Islamic banks investment accoun ts are not fixed in advance the customers participate by a certain proportion in the financial outcome of the utilization of their investment funds by the bank. These results could also result in a loss. In case of loss, the clients will have to bear a portion of the loss which would reduce the nominal value of the credit balances of their respective investment accounts. In such a situation, the clients cannot claim a full reimbursement of the money paid in. The full reimbursement, however, is constituent for a deposit in the strict sense. (Nienhaus, 2004).Rosly and Zaini, (2008) say that the public in general put their money in banks for either fulfilling transactional needs or for investment needs. To suffice the transactional objective, Islamic banks offer services such as wadiah yad dhamanah deposit, which facilitates safekeeping of their deposit money with guarantee services. In this product, depositors no longer deposit funds to receive a fixed income. Instead, they place thei r deposits for protection.Wadiah yad dhamanah means safekeeping with guarantee. Wadiah yad dhamanah depositors permit the Islamic bank to invest their money in return for deposit safety that they got for free. Since the caretaker service is given without a fee, the Islamic bank holds no legal compulsion to pay depositors a predetermined return and may do so only on voluntary basis. In this way, the bank holds choice on profit distribution policy in the form of gift (hibah). The same is not correct for Islamic fixed deposits, frequently known as mudarabah investment deposits. In this partnership composition, no guarantee is given to capital protection and fixed income, as it runs under equity principle. It is a precarious product as the underlying contract is based on profitloss sharing system. Profits are shared only in case of performing investments, while capital may depreciate or even shrink if the investment ends in losses. (Rosly and Zaini, 2008).Haron and Azmi, (2004) discuss that similar to conventional banks, Islamic banks also rely on depositors money as a key source of fund. Bank Muamalat Malaysia Berhad for example, had total deposits amounting to 94 percent of total liabilities and shareholders equity at the end of December 2003. While in the case of Jordan Islamic Bank, Islamic Bank of Bangladesh, Bank Muamalat of Indonesia, and Bank Shariah Mandiri of Indonesia, the corresponding amounts were 94%, 86%, 76%, and 79%, respectively. These figures reveal the vast high total of the depositors money as a supply of finance for Islamic banks. Hence, it becomes indispensable for the management of Islamic banks to identify the factors that are most likely to convince customers decision making in depositing their capital with Islamic banks. (Haron and Azmi, 2004).With the exception of a study done by Metawa and Almossawi (1998) where religion was seen as a reason influencing customers choice to support Islamic banks in Bahrain, other studies have proven cou nter wise. The evidence from studies done in Sudan and Turkey, for example, revealed that religion was not the main motive for customers choosing Islamic banks (Erol and El-Bdour, 1989). Likewise, studies conducted in Malaysia and Singapore revealed both religion and profit as the explanation for people maintaining their association with Islamic banks (Haron et al., 1994 Gerrad and Cunningham, 1997). Since depositors are attracted by profits, it is vital for Islamic banks management to be aware of the fact that return rates on deposits persuade their customers decision to deposit. (Haron and Azmi, 2004).Relating to commercial banks deposit composition, Hester and Zoellner (1966) and Heggested (1977) found that time and savings deposits had a significant inverse correlation with profitability. Smirlocks (1985) findings demonstrated a significant positive relationship amid demand deposits and profits. In contrast, Fraser and Rose (1971) found that loan rate time deposit rate and loan- to-deposit ratio had no outcome on profitability. Haron (1996a) found evidence to suggest that current, savings and investment accounts of Islamic banks are positively related to profitability. Fraser et al (1974) considered operating costs, deposit and loan structures as factors within the control of management and found that the factor which had the biggest control on bank performance was bank cost followed by banks deposit and loan composition.Heggested (1977) proved that banks heavily devoted to time and savings deposits earned considerably lower returns than banks which have higher reliance on demand deposits. Smirlock (1985) confirmed that demand deposits were a cheaper source of funds and had a positive impact on bank profits.In the literature, the majority of studies found that savings and time deposits have a negative relationship with profitability, while a positive relationship has been found for current account deposits. Haron (2004) found that nearly all deposit structu re variables had no significant relationship with the profitability ratios. Deposits in current account, was the only variable which had a significant relationship with Banks portion of income as a percentage of total assets and Net profit before tax as a percentage of total assets. Each 1% increase in the current account holdings increased the banks income by 0.034% and profit before tax by 0.036%. This end result was in line with the findings reported by Smirlock (1985). Since a current account service is considered a cost-free facility, it is anticipated that the more funds deposited into this account, the more Islamic banks would stand to profit. Interestingly, no significant relationship was found between current account deposits and Total income as a percentage of total assets, which implied that an increase in current accounts does not generate more proceeds to the bank as a whole but only functions as a cost saving measure. That is, no returns are paid to these depositors. I n the case of savings and investment accounts, even though their relationships with all profitability ratios were at an insignificant level, the signs of their regression coefficients warranted further clarification. No contradiction with the findings of conventional banking literature with regard to savings accounts was apparent. A negative relationship was found between Savings account deposits and the profitability measures. This result suggests that any increase in savings accounts will reduce profits and it corresponds to the findings in the current banking literature (see for example Hester and Zoellner, 1966 and Heggested, 1977).The results on Investment account deposits in Harons (2004) study are not similar to those findings reported in earlier researches. Hester and Zoellner (1966) and Heggested (1977), for example, found that fixed deposit facilities had an inverse relationship with profitability. Since some of the characteristics of investment deposits at Islamic banks a re similar to the fixed deposit facilities of conventional banks, it is expected that more funds deposited into these accounts would result in less profit to the bank. In contrast, Smirlock (1985) believed that an increasing amount in fixed deposits would have a positive relationship with a banks profitability. Harons (2004) study found that Investment account deposits had a positive relationship with all profitability measures and thus, confirmed Smirlocks hypothesis.Haron and Azmi (2004) attempted to investigate the strength of influence between both internal and external variables and profitability of Islamic banks in selected countries using timeseries techniques of cointegration and error-correction mechanism. They found a significant long-run relationship between profitability measures of Islamic banks and determining variables such as liquidity, deposit items, assets structure, inflation and money supply. They also found that Investment account deposits was the only variable which had a significant relationship with all three profitability ratios. For Current account deposits, a positive relationship was found with Banks portion of income as a percentage of total assets. The result indicated that a 1% increase in current account holdings increased the banks portion of income by 0.064%. Given that current account facility is a cost-free service, the more funds deposited into this account, the higher profits will be made available to Islamic banks. Interestingly, current account deposits had no significant relationship with Total income as a percentage of total assets implying that an increase in current accounts does not generate more income to the bank, but only functions as a cost saving measure. On other words, Islamic banks do not pay any rewards to their depositors. These results were in line with the findings of Haron (1996a, 2004). Savings deposits variable was found to have a significant positive relationship with Total income as a percentage of total assets. For every 1% rise in savings account, total income increased by 0.26%. This was in line with normal banking practices whereby Islamic bank could use the funds deposited in this account for productive purposes and thus, generating additional revenue for the bank.Increases in deposits size has a positive impact on Earnings per share (EPS), as a portion of depositors profits is minused as a fee for the benefit of the bank and its shareholders. (Shubber and Alzafri, 2008). Returns on Islamic deposits are though flexible in nature since returns are based on performance rather than contracted upfront as evident in all interest bearing deposits. Although the mudarabah rates (investment deposit rates) are quoted using the rates given in the previous months, they are not fixed beforehand and serve as an indicative rate of return on Mudarabah deposits (ROMD). The Mudarabah (investment deposits) contract works along profitloss sharing principles while fixed deposits of convention al banks are based on the contract of debt. As an equity product, a Mudarabah deposit offers no principal protection and legal claims against any form of returns. To make up for the risk exposure of the product, Mudarabah depositors are expected to be given higher returns relative to that of commercial banks fixed depositors who avoided risk. (Rosly and Zaini, 2008).Haron and Shanmugam (1995) in their study try to link the profit rates to Islamic banks deposits. Using Pearsons Correlation and First Order Autoregressive model, they found strong negative relationship between the two variables. Likewise, their finding showed a positive linear relationship between conventional and Islamic bank deposits.Haron and Ahmed (2000) argue that people who placed their deposits at saving and investment account facilities were guided by the profit motive. The utility maximization theory amongst the Muslim customers was further confirmed by the negative relationship between the rate of interest in conventional banks and the sum deposited in interest-free deposit facilities. Muslims should be guided by Islamic doctrines when making their economic decisions. Therefore, role of educating people regarding Islamic banking system should be played globally. It is indeed a challenging task. (Haron and Ahmed, 2000).Shubber and Alzafri, (2008) say that EPS (Earnings per share) improves as the level of deposits increases, as depositors were viewed as sharers in the profit and loss, rather than being entitled to a fixed interest rate. This supports that increasing deposits have a positive impact on EPS (Earnings per share). Increasing deposits, therefore, do not direct any increment in the cost of equity. In fact, equity holders benefited from larger deposits, as owners of the latter pay out management fees, which is deducted from the depositors share of the profits. Also, the market value of Islamic banks is independent of WACC. (Shubber and Alzafri,2008).Haron and Azmi (2004a) demonstr ated that with the exception of fixed and investment deposits, any increase in rates of interest, deposits at conventional system will increase and deposits at Islamic system will decrease, and vice-versa. As for the fixed and investment deposits, ambiguous results were found. One possible explanation for this is that rates of profit for deposits at Islamic system are known at the end of the deposit period and not at the beginning as opposed to the conventional system. Any upward changes in interest rate of conventional system will have an adverse impact to the deposit levels in the Islamic system. Therefore, rates of profit of Islamic system must at any time be similar to those of the conventional system. Finally, religious dimension can be considered as an important element to attract more people to deposit their funds in the Islamic system. This could also be the reason why more and more conventional banks are starting to offer Islamic banking facilities to their customers not on ly in Malaysia but also to other parts of the world. (Haron and Azmi, 2004a).Hasan and Bashir (2003) argue that the rising contest and continuous innovation to provide financial services, all contribute to a increasing interest in a detailed evaluation of Islamic banks. Depositors are interested in evaluating the performance of their banks since they are not given fixed returns and the nominal values of their deposits are not assured. In trying to make best use of the value of shareholders investment, Islamic banks are exposed to risks. Hence, analyzing the Islamic banks performance is important from economic and public policy perspectives. (Hasan and Bashir, 2003).MethodologyThis study uses univariate regression analysis to examine the relationship between deposits and profitability of Islamic banking industry in Pakistan. Univariate regression is a method of regression analysis that uses one explanatory variable to predict values of a single dependent variable. SPSS software is ap plied to obtain the univariate regression. In this study, three independent variables titled Fixed deposits, Savings Deposits and Current account deposits have been used. The dependent variable of profitability is measured by ROE which is the ratio of a banks net after-tax income divided by its total equity capital. The return on equity (ROE) is considered to be one of the profitability performance ratios (Tarawneh, 2006). It indicates how effectively the management of the bank is able to turn shareholders funds (i.e. equity) into net profit. ROE (Return on Equity) has been tested separately for the three independent deposit variables to avoid the issue of multicollinearity since all the deposit variables are highly correlated to each other.This paper attempts to test three hypotheses. According to Becker (1995), hypothesis testing is the process of judging which of two contradictory statements is correct.Hypothesis 1 Investment Deposits increase the profitability of Islamic banks.H ypothesis 2 Saving Deposits increase the profitability of Islamic banks.Hypothesis 3 Current Account Deposits increase the profitability of Islamic banks.The data for this study is time series data taken from the quarterly editions of the Islamic banking bulletin? published by the State Bank of Pakistan. These bulletins publish the consolidated financial statement variables representing the entire Islamic banking industry of Pakistan including all the full fledge Islamic banks (Al Baraka Islamic bank, Bank Islami Pakistan limited, Dawood Islamic bank Limited, Dubai Islamic bank limited, Emirates Global Islamic bank Ltd and Meezan Bank Ltd.) as well as the Islamic branches of conventional banks (Askari Bank Limited, Bank Al Falah Ltd., Bank Al Habib, Faysal Bank, Habib Metropolitan bank, MCB Bank Ltd, National bank of Pakistan, Soneri Bank Ltd, Standard Chartered Bank, The Bank of Khyber, Royal bank of Scotland, United Bank Ltd). The sample period for this study is limited from 2007 to 2009 as most of the Islamic banks started operations from 2007 in Pakistan. Hence, the consolidated data of the eleven consecutive quarters has been used in this study.The general equations of the three models areProfitability = b0 + b1(ID)(1)Profitability = b0 + b1(SD)(2)Profitability = b0 + b1(CD)(3)Where,b0 = intercept (constant)Dependent variableProfitability = ROE (Return on Equity)Independent variablesID = Investment DepositsSD = Savings DepositsCD = Current Account DepositsResultsThe results of the regression analysis for model.1, 2 and 3 are shown in Tables 1, 2 and 3 respectively. All the three models were significant at the 5% level of significance. The value of the adjusted coefficient of determination (adjusted R2) for ROE in model.1 is 0.4 which demonstrates that 40% of the variability in total is explained by its linear association with Fixed deposits variable. As for model 2 and 3, the corresponding values of adjusted R2 are 0.399 and 0.377 respectively. A relative ly small value of adjusted R2 does not necessarily mean that the model is in appropriate to measure the relationship between independent and dependent variables. (Haron, 2004).The value of adjusted R2 is usually influenced by a number of predictive variables relative to the sample size and it becomes smaller as we have fewer observations per predictor variable (Hair et al., 1995). To provide a rationale for the variance in R2 and adjusted R2 values, the Dublin-Walter test was conducted. The Dublin-Walter statistics values for all the three values were less than two which proves that the variance was due to negative autocorrelation in the sample observations. Also, the adequacy of a model for predicting is validated by the F-test. (Haron, 2004). As presented in Table 1, 2 and 3, all F-ratio values are statistically significant at 5% significance level for all profitability models. Hence, these results confirmed that the models applied were useful for measuring the relationship betwee n deposits variable items and the profitability variable.DiscussionThe results supported all the three hypotheses that Investment, Savings and Current account deposits increase the profitability of Islamic banks. This result is in line with Haron (1996a, 2004) who founded evidence to suggest that all three sources of funds (current, savings and investment accounts) for Islamic banks are positively related to profitability.Hypothesis 1 of this study suggested that investment deposits increase the profitability of Islamic banks. The results show that the value of the adjusted coefficient of determination (adjusted R2) for ROE in model.1 is 0.4 which demonstrates that 40% of the variability in total is explained by its linear association with investment deposits variable. Hence, results support Hypothesis 1.Similarly, hypothesis 2 stated that savings deposits increase the profitability of Islamic banks. The results show that the value of the adjusted R2 for ROE in model.2 is 0.399 at 5 % significance which shows that 39.9% of the variability in total is explained by its linear association with savings deposit variable. Hence, results also support Hypothesis 2.Finally, hypothesis 3 proposed that savings deposits increase the profitability of Islamic banks. The results show that the value of the adjusted R2 for ROE in model.3 is 0.377 which shows that 37.7% of the variability in total is explained by its linear association with savings deposit variable at 5% level of significance. Hence, results support Hypothesis 3 also. All these results were significant at a 5% level of significance.Referring to previous literature, the results are mixed. In the literature, most studies found that savings and investment deposits have an inverse relationship with profitability, while a positive relationship has been found for current account deposits. In this study, the current account deposit variable had significant positive relationship with profitability. This result is in lin e with the findings reported by Smirlock (1985), Haron (1996a, 2004) and Haron Azmi (2004). Since a current account service is considered a cost-free facility, it is expected that the more funds deposited into this account (current), the more Islamic banks will stand to profit.In the case of savings deposits, a positive relationship was found between these deposits and profitability. This result suggests that any increase in savings accounts will increase profits and this is in line with Haron (1996a) and Haron Azmi (2004) as Islamic banks can use these savings funds deposited in this account for productive purposes and therefore, generating additional revenue for the Islamic banks.The results on investment deposits in this study are not similar to most of the findings reported in commercial banking literature. For example, Hester and Zoellner (1966) and Heggested (1977) found that fixed deposit facilities had an inverse relationship with profitability. In contrast, Smirlock (1985 ), Haron (1996a, 2004), Haron and Azmi (2004) believed that an increasing amount in fixed deposits would have a positive relationship with a banks profitability. This study found that investment deposits had a positive relationship with all profitability measures and thus, confirmed Smirlocks, Harons and Azmis hypothesis.In light of the above findings, Islamic banking provides a better and ethical alternative that is not only Riba-free according to the rules of Shariah but also profitable to depositors and investors since all the deposit accounts are positively correlated to profitability. Since, Islamic banking provides three different interest-free deposit facilities to its depositors and investors to facilitate them according to their financial needs, people should invest in these deposit accounts in order to patronize the Islamic banking industry and to receive good returns in the form of hiba from these Islamic banks.In addition, Ghazali (2008) suggests that Islamic banking is indeed relevant to the current economic crisis. The global financial meltdown stemming from the US actually poses an opportunity for the Islamic banking system to demonstrate its distinctiveness. The financial meltdown revealed the desperate need for a system like Islamic finance, based on the principle of profit-sharing where both parties are subjected to probable losses and returns. It is a fair and just system. This is contrasting to the conventional system, where Islamic banks do not acquire or trade debt rather they manage substantial assets which are tied to real economic activities.. This is really an opportunity for the Islamic financial community to reveal to the global market that the Islamic financial system is actually a robust and feasible alternative to the conventional interest-based system.Hence, people should support the Islamic banking industry worldwide since deposits are positively related to the profitability of Islamic banks. Hence, increased deposits would res ult in higher profitability of Islamic banks which in return would provide higher returns to its depositors. This would finally lead to implement a justified and ethical economic system which encourages a fair distribution of wealth and resources throughout the society.This study can be extended to include more time series and cross-sectional data of Islamic banks of other countries. The study may also be extended to cover other determinants of Islamic banking profitability.

The Discovery and Colonisation of America

The Discoery and Colonisation of the StatesIn 1492, the States was rated by Christopher Columbus. It had, however, already accident solelyy been discovered by Norse Vikings about 500 historic period earlier. The Vikings were not alone when they discovered the States. It was an unidentified feature that indigene the Statesns had come to America and inhabited it much earlier. Because this wasnt acknowledged, the Native Americans were never seen as the original discoverers.In 986, Bjarni Herjolffson set out from Norway in an attempt to reach Iceland and eventually Greenland. Greenland was the land Bjarnis father, also an adventurist, had failed to completely colonize on his fleet, led by Erik the Red. Bjarni got lost on the way to Greenland because of bedim and storms. Eventually, he did pay off the land he was searching for.Bjarni did not discover America, but he was the maiden to make it out while he was at sea. Back in Norway, one of Erik the Reds sons, Leiff, became intere sted in the floor Bjarni told. He decided he wanted to continue the adventure and find out which land Bjarni had seen on the horizon.In search of the best beautify to land on, Leif Eriksson and his crew sailed along the eastern coast of America. subsequently perfunctory the Baffin Island and what is now Labrador, they picked the best environment. They named it The Wineland. Leiff Erikssons crew inhabited the area, where they found grapevines and other products to fiddle home. They built houses, stayed for the winter and returned home with wine and food.The Discovery of America The Spanish and PortugueseThe first explorations and conquests were made by the Spanish and the Portuguese. In 1492, a Spanish expedition lead by Christopher Columbus sailed to the continent America and introduced the impertinently World to the Western World of that time. He began studying the civilizations that he had encountered the friendly Native Americans. After this, European conquest, exploration , and Colonisation quickly followed and expanded.After the 1494 Treaty of Tordesillas, approved of by the Pope, Spain and Portugal divided the entire non-European world amid themselves, with a line drawn through southbound America. This first occurred along the Caribbean coasts on the islands of Hispaniola, Puerto Rico and Cuba, and beginning in the early 16th century, wide into both conjugation and siemens America. In 1498, Columbuss third trip reached the South American coast.With help from their powerful Indian allies, the Spanish rapidly conquered territory. As a result, they gained get a line of much of western South America, Central America and Mexico by the mid-16th century. Over this same period, Portugal colonized much of eastern South America, which is now Brazil.The Colonisation of AmericaDuring the early and mid-sixteenth century, the English t cease to view northwestern America as a base for piracy and harassment of the Spanish(In the lately 1560s a rebellious a ct broke out in the Netherlands, and the rebels were Protestant. British Queen Elizabeth aided these rebels. Spain, organism Catholic, saw these rebels as a threat. Because of the fact that the British helped the Dutch Protestants, Spain became resentful to strugglefareds England). By the end of the century, the English began to regard more about North America as a come in to colonize as a market for English goods and a descent of raw materials. The English claimed that New World Colonisation offered England many advantages. not only would it enrage Catholic Spain, it would supply England with raw materials and provide a market for finished products. America would also provide a bureau to send the English poor. America also satisfied more personalised needs rigorously religious English felt that they were not true in England, and America would create a more liberal environment.Spain and England were opposing towards eachother over trade and colonisation. On August 8th, 1588, the English defeated Spain in the Spanish Armada. England was now fit to colonize North America.English sound out Stock companies founded Jamestown in 1607. They failed because they were looking for gold, didnt farm, and drank contaminated water. They came during spring, which was deceiving. They didnt plan for winter. Many died the first winter. John Smith, who had been to America in the winter before, saved them. He said, wrick or Starve. So, they started farming, and everybody was fed. The English Joint Stock company sent over 50 women to help repopulate Jamestown.The Pilgrims werent called Pilgrims until 150 years later. These strictly religious immigrants called themselves Saints. The Saints go away England because they were not accepted for their religion. They went to the Netherlands, but they didnt want their children growing up being non-Englishmen. For this reason, they came to the New World.Early other European Colonisations in North America included the French col onies of Acadia and Canada, the Swedish colony of New Sweden, and the Dutch New Netherland. Also Sweden participated in occupying North America.As the colonies started to grow, Britain decided on the indemnity of salutary neglect the British American colonies were to be obedient towards enceinte Britain.Conflicts between Britain and AmericaThe Seven Years War resulted in the fateful turning point in British-colonial relations. The Treaty of Paris in 1763 criticized Britains control of the seas and trade, as well as its sovereignty over much of the North American continent.To fund this war, Britain, unable to borrow any more bullion from other countries, raised its taxes. This had a very heavy effect on the citizens. Also, bureaucracy arose in England in order for the government to get all the money they could.Britain found it North Americas responsibility to aid them in their war expenses. However, New world institutions of self-government and trade, used to the policy of salut ary neglect, refused and rebelled against this demand. The war developed and Britain became more dependant on North America armed forces supplies and an increased demand for goods contributed to the wealth of the North American Colonies.The 7 years war had put Britain into great debt, so the Parliament insisted on a raise of taxes once again. The British government believed the colonies should pay their fair percentage to the nations expenses.Because the colonies were not represented in the Parliament, the North Americans found the raised taxes intolerable. The Jewish-Orthodox British view, dating from the Glorious Revolution of 1688, was that Parliament was the highest authority in the empire, and so anything Parliament did was constitutional. In the colonies, however, the idea had developed that the British penning recognized certain fundamental rights that not even Parliament could violate.The American IndependenceThe concept of American Independence began when many more col onists began to turn down the authority of the Parliament, since they werent represented, but were expected to pay taxes. They believed this violated their rights as Englishmen. The colonies petitioned great power George III for intervention with the Parliament. To force him to do so, they boycotted British goods but unplowed their loyalty to the British crown. These acts were ignored. The colonists proceeded to create an army. Following acts to achieve the same determination were seen as rebellion and treachery. In 1776 the Colonies responded by declaring their independenceFrances government on the QT provided supplies to the revolutionaries. France eventually entered the war in 1778 along with the Spanish and Dutch. They treatened to invade keen Britain and put the English army, which wasnt so strong, to the test. Due to Great Britains naval power, it was able to occupy coastal cities in America. The more rural areas, where most of the cosmos lived however, were less easy to control. The French involvement proved to be advantageous when the French naval victory at Yorktown in 1781 to the declination of a British army occurred. In 1783, the Treaty of Paris ended the war and recognized the sovereignty of the United States.http//news. softpedia. com/news/How-Did-Vikings-Discover-America-49891. shtmlhttp//en. wikipedia. org/wiki/European_Colonisation_of_the_Americashttp//www. digitalhistory. uh. edu/database/article_display. cfm?HHID=670http//mr_sedivy. tripod. com/america. htmlhttp//www. taxanalysts. com/museum/1756-1776. htmhttp//en. wikipedia. org/wiki/Salutary_neglecthttp//en. wikipedia. org/wiki/United_States_Declaration_of_Independencehttp//en. wikipedia. org/wiki/American_Revolutionary_War