Financial Engineering for Management Improvement

Introduction

This research will focus on financial engineering. Ruppert (57) defines financial engineering as “A multidisciplinary field involving financial theory, the methods of engineering, the tools of mathematics and the practice of programming.” On the other hand, Neftci (45) defines financial engineering as “The application of technical methods, especially from mathematical finance and computational finance, in the practice of finance.” In both definitions, it is clear that financial engineering involves the application of technical or mathematical approaches in the practice of finance. The research will investigate the relevance of financial engineering in improving financial management in the current competitive world.

Statement of Problem

Many organizations are still struggling to manage their limited resources to meet the insatiable needs in the market. They find themselves in very complex situations where they have to budget for the limited financial resources to meet the needs of various departments. In many cases, it is possible to find that some sensitive areas are not assigned the needed resources, while others have been given resources that exceed the reasonable amount. This research seeks to determine if financial engineering can be used to solve such problems. The following question will help in guiding this study.

  1. What is the relevance of financial engineering in solving the problem of resource allocation within various departments within an organization?

Proposed Study

This research will focus on financial engineering, and how firms are currently using it to solve the problem of resource allocations. Many organizations have been struggling to manage their resources to meet various needs in various departments. Various approaches have been proposed and practiced in an attempt to improve the efficiency in resource allocation and management. This study will specifically focus on the relevance of financial engineering in solving this problem.

Scope of the Study

To investigate the relevance of financial engineering in helping to solve the problem of resource allocation, we plan to use several questions that will guide us into getting the relevant data. The following questions will be used in this regard.

  1. What is financial engineering?
  2. How does financial engineering help in resource planning?
  3. What are some of the challenges that an organization faces when using financial engineering?
  4. What infrastructural developments are needed when using financial engineering?

The above questions define the scope of this study. Finding effective answers to them will help us get the knowledge of the relevance of financial engineering.

Methods

This research will use both primary and secondary sources of data. The primary sources of data will include interviews with financial experts, the survey of financial planning processes within the selected institutions, and observation of the implementation of financial programs within the participating firms. Secondary data will be collected from books, journal articles, and reliable online sources that focus on financial engineering.

Qualifications of the Researcher

The researchers are students of finance and human resource who have an interest in investigating the importance of financial engineering in resource planning and what can be done to ensure that organizations use this tool to improve their efficiency in resource management.

Conclusion

This research will investigate how companies can use financial engineering in planning for limited resources in the most effective manner. The question below will guide this process.

How relevant is financial engineering in planning for financial resources?

Approval

With the approval of our lecturer, and with any suggestions, we will continue the research.

Works Cited

Neftci, Salih. Principles of Financial Engineering. Burlington: Elsevier, 2008. Print.

Ruppert, David. Statistics and Data Analysis for Financial Engineering. New York: Springer, 2011. Print.