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on Transition Economics |
| By: | Ivana Marinovic Matovic (Addiko Bank AD Belgrade) |
| Abstract: | CEO compensations are an effective instrument for adjusting the interests of managers and equity owners, so that full engagement and commitment can only be expected of managers who are sufficiently motivated. Among other things, sufficient motivation is achieved by the use of adequate CEO compensations. This paper analyzes applied models of CEO compensation, and their levels, in the Republic of Serbia and EU member countries. Comparison of CEO compensation in the Republic of Serbia and EU countries will enable the positioning of the Republic of Serbia in the context of EU integration; as well as enable Serbian business organizations to track trends that are current, and structure their CEO compensations to meet managers’ expectations in terms of attractiveness, and equity owners in terms of cost efficiency. The paper will try to determine the existing differences in CEO compensation levels, conditioned by the degree of economic development of the observed countries. The paper will analyze the factors that directly or indirectly affect the level of CEO compensation. It will try to determine which components of CEO compensation are mostly used in business organizations from the EU, and compare the results with business organizations from the Republic of Serbia in order to improve existing practice. As CEO compensations are still underdeveloped area in the Republic of Serbia, the contribution of the paper is expected to be significant, for Serbian business organizations that operate, or plan to operate, on the international market, and allow their managers to work in EU countries. Strategy and policy of CEO compensation is a very sensitive area, so the focus of the paper is on identifying existing differences that could be used in terms of convergence of the CEO compensation practice in the Republic of Serbia to the one that is present in the more advanced EU countries, in the context of EU integration. |
| Keywords: | CEO compensation, Republic of Serbia, EU integration, compensation trends |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:smo:cpaper:8im&r=all |
| By: | Andrei V. Belyi; Peter Havlik (The Vienna Institute for International Economic Studies, wiiw); Artem Kochnev; Ilya B. Voskoboynikov |
| Abstract: | Chart of the month The Russian economy and oil prices by Peter Havlik Opinion corner Russia’s new social contract in light of the oil taxation reforms by Andrei V. Belyi The fiscal rule and the foreign exchange market in Russia Stepping in the same river twice? by Artem Kochnev Last month the Central Bank of Russia announced its return to the foreign exchange market, according to the fiscal rule implemented in 2017. This note finds that the previous round of the currency interventions by the Bank of Russia was effective in stabilising exchange rate movements by counterbalancing the effects of the oil price changes on the Russian currency. Global slowdown and the Russian economy by Ilya B. Voskoboynikov The article reviews long-run sources of Russian economic growth and demonstrates that the stagnation of the Russian economy in the past decade can be considered in the context of the global productivity slowdown. Conventional industry growth accounting shows that in contrast to the transformational recession before 1998, the recent stagnation of 2008-2014 is primarily the outcome of a slowdown in total factor productivity (TFP) growth and a deterioration in the allocation of labour, rather than bottlenecks in capital inputs. Monthly and quarterly statistics for Central, East and Southeast Europe |
| Keywords: | oil price, balance of payments, oil taxation, social contract, ‘energy superpower’ concept, fiscal rule, foreign exchange market, growth accounting, total factor productivity, structural change, capital intensity |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:wii:mpaper:mr:2019-02&r=all |
| By: | Mitsuru Katagiri |
| Abstract: | The legacy of non-performing loans and high opportunity cost of government financing of bank recapitalization impeded the efficiency of financial intermediation and are an important policy issue in Vietnam. This paper presents a theoretical and empirical analysis of the issue. An empirical analysis using corporate data indicates credit misallocation between state owned enterprises and private firms in Vietnam. On the theoretical side, a micro-founded banking model is embedded in a political economy setting to assess the factors determining the size of bank recapitalization and its effects on the efficiency of financial intermediation, economic growth and welfare. The analysis suggests that recapitalization depends on an array of factors, including the tightness of the government budget and the decision maker’s concern for the favored sector. |
| Date: | 2019–09–06 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:19/189&r=all |
| By: | Beata Guziejewska (University of Lodz); Joanna Dzia?o (Lazarski University) |
| Abstract: | The ongoing processes of decentralization, which are present in many countries, cause a growing proportion of public funds to be collected and spent at the local government tier, which necessitates the use of fiscal rules not only at the state level. This issue may raise some controversy due to the specific character, autonomy and empowerment of local government and local communities. Therefore, the analysed subject is based on three questions: 1. Limited fiscal autonomy of local self-government and it?s consequences 2. A real need for and the scope of the use of fiscal rules in local government finance, 3. The informal factors that directly determine the indebtedness in local governments in the light of literature and selected empirical research. We use a descriptive method supported by an analysis of financial data and a case study as it presents selected aspects of Polish experience in the subject matter. The results of the analysis seem to point to the necessity of the use of fiscal rules in local government finance, which paradoxically strengthens the processes of decentralization, democratization, technological advancement and globalization. Some primary results of our research indicate investment expenditure, own revenues, number of companies (level of GDP) and election cycle as important, significant factors (in statistical meaning) effecting the local deficit and debt. The conclusions list the advantages of the use of fiscal rules at the local government tier and large diversity of informal conditions across the whole country. |
| Keywords: | municipal finance, fiscal rules, municipal debt |
| JEL: | E62 H19 H79 |
| Date: | 2019–07 |
| URL: | http://d.repec.org/n?u=RePEc:sek:iacpro:8711414&r=all |
| By: | Teodora Borota; Fabrice Defever; Giammario Impullitti |
| Abstract: | In this paper, we document large heterogeneity in innovation policy and performance between old and new EU member states, and present firm-level evidence on the close link between foreign direct investment (FDI) spillovers and eastern European firms' innovation. Guided by these facts and motivated by the pressing debate on further EU integration, we build a two-region endogenous growth model to analyse the gains from innovation policy cooperation in an economic union. The two regions, the West (the old members) and the East (the new post-2004 members), feature firms competing in innovation for market leadership, are integrated via free trade and costly technology transfer via FDI and have different innovation performance and policy. Calibrating the model to reproduce key features of the EU economy, we compare the outcomes of an East-West R&D subsidy war with a coop- eration scenario with unified subsidy across regions, and obtain three main results. First,we find that the dynamic gains spurring from the impact of cooperation on the economy's growth rate are sizable and substantially larger than the static gains obtained internalising the strategic motive for subsidies. Second, our model suggests that the presence of FDI and multinational production alleviates the strategic motive and increases the gains from cooperation. Third, separating FDI and innovation policy generates larger gains from cooperation, a policy complementarity driven by the knowledge spillovers carried by FDI. |
| Keywords: | Optimal innovation policy, growth theory, international policy coordination, EU integration, FDI spillovers. |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:not:notgep:2019-14&r=all |
| By: | Inese Pel?a (University of Latvia); Nora ?ibilda - Kinna (University of Latvia); Jana Simanovska (Vidzeme University of Applied Sciences) |
| Abstract: | Green public procurement (GPP) is a process whereby public and municipal authorities seek to procure goods and services with the lowest environmental impact throughout their entire life cycle, taking into account also the life cycle costs compared to products with the same primary function. GPP can reduce not only the environmental impact, but also promote social benefits and budget savings. The requirements for GPP and the procedure for its application in Latvia are determined by governmental regulations. That requires mandatory application of the GPP to seven groups of goods and services, among them food and catering services. In 2017, the share of total procurements that self reported application of GPP was 11.8% in financial expression, but in 2018 - 18.4%. In 2017, according to self reports 54% of all food product tenders and 79% catering services were marked as GPP tenders. In 2018 already 90% of all food product tenders and 99% catering services are marked as GPP tenders. However, to what extent we can rely on self reports? To evaluate application of GPP requirements for food products and catering services, we screened in total 106 tenders (73 tenders for the supply of food products and 33 for catering services), which were published from July 1, 2017 till July 1, 2018, comparing the tender documents with the governmental regulations. We found that the terms in the Technical Specifications and other tender documents were often unclear. The most common included criterion was requirement that the food products supplied may not contain or be produced from genetically modified organisms (97%). While the second most frequently used criterion is so called higher quality food (28%) e.g. certified as organic, national quality schemes or from integrated agriculture. However, only 4% of the tender documents gave higher priority exclusively for organic food compared to local quality schemes or integrated agriculture. Considering that organic foods are usually higher priced, it can be assumed that only in 4% of cases procurements result in delivering organic food. 18% of the tenders require foods from the national food quality scheme, and 16% of the tenders require products from either organic farming or integrated agriculture. In order to promote organic food, purchasers should more clearly require organic products. |
| Keywords: | Green public procurement, food and catering services, case study Latvia |
| JEL: | H70 Q50 |
| Date: | 2019–06 |
| URL: | http://d.repec.org/n?u=RePEc:sek:iacpro:9011298&r=all |
| By: | Wu, Harry X. |
| Abstract: | This research note reiterates the productivity theory in the Solow growth accounting framework to explore an institutional interpretation of changes in total factor productivity. In theory, total factor productivity or TFP growth is a costless gain in output, which captures the effect of positive externalities caused by spillovers of technological and organizational changes in a perfect market system. This provides a yardstick to gauge institutional effect on output in an imperfect market system if all inputs are properly measured. Using the Chinese case, I show that an integrated approach a la Jorgenson and Griliches (1967) that ensures a consistency between theory, methodology and measurement can facilitate empirical exercises even with data problems, and a so-constructed TFP index for China can satisfactorily reproduce China's post-reform productivity path with institutional interpretations. |
| Keywords: | Total factor productivity (TFP) growth, Factor reallocation effect on TFP growth, Institution, Economic reform |
| JEL: | C80 H70 O40 P30 |
| Date: | 2019–08 |
| URL: | http://d.repec.org/n?u=RePEc:hit:hitcei:2019-4&r=all |
| By: | Ivana Marinovic Matovic (Addiko Bank AD Belgrade, Serbia) |
| Abstract: | Bancassurance is not just a sale of insurance products at bank counters, but a complex cooperation involving both partners in the project realization, with the goal of satisfying their own interests as well as clients' interests. In the Republic of Serbia, banks began to deal with insurance activities in 2007. Since then, the sale of insurance products through banks has been constantly growing. The paper will present the current bancassurance models in the Republic of Serbia: integral distribution; expert distribution and combined distribution. The paper will present the comprehensive condition of bancassurance in the Republic of Serbia, above all the legal framework of the bancassurance concept; activities necessary for the successful implementation of bancassurance; market participants; competition among banking products and insurance products; the current level of cooperation between banks and insurance companies. Participants in the insurance market established by the Republic of Serbia, such as the National Mortgage Insurance Corporation, the Serbian Export Credit and Insurance Agency and the Deposit Insurance Agency, will be presented in paper, with an overview of the advantages and disadvantages of state insurance regulations. By gathering facts and data based on available literature and public databases, the current state of the insurance market and the possibilities for further development of bancassurance in the Republic of Serbia will be determined. The choice of a bancassurance model is essential for the successful functioning of the overall concept and its long-term sustainability in a dynamic business environment. The paper points to the fact that by designing an adequate bancassurance model, there may be a significant development of the Serbian financial services market. |
| Keywords: | Bancassurance, Insurance, Banking, Financial services, Republic of Serbia |
| Date: | 2019–07 |
| URL: | http://d.repec.org/n?u=RePEc:smo:dpaper:08im&r=all |
| By: | Renata Pajewska-Kwa?ny (Warsaw School of Economics) |
| Abstract: | Over past few years, a steady and dynamic development of the private healthcare sector has been observed in Poland. The main underlying factor of this phenomenon is connected with the insufficiency of the public healthcare system. Another factor, which is a desire to satisfy healthcare needs on the high, exclusive level by the richest group of clients, appears to be less significant. The results of regularly carried social research in Poland, under the ?Social Diagnosis? project clearly show that one of the highly appreciated values is health, regardless the social group, the rich and the poor, the elderly and the younger generation. However, the use of private sector services generates high costs, especially in case of chronic diseases or frequent family members? diseases. In such situations private sector services, based on priciples out of pocket, entail high costs which exceed financial capability of many households. In order to meet the expectations, like in developed western economies, private health insurance appeared in Poland about 15 years ago ? being a market response for the social healthcare needs.Despite a countless legal, political and economic obstacles, the area of commercial healthcare insurance is evolving dynamically as a subject of transformation connected with the gradually changing attitude of Poles towards this issue. Insurance companies, in their operating strategies, are devoting more and more space to creating new product offer in terms of cost treatment insurance.Thus, the aim of this research is the analysis of changes, in both the quantity and quality range, which have been noticed recently in the field of commercial healthcare insurances in Poland with the process of all commercial insurances in the background. Particular attention will be paid to the issues of the evolution of risk management in health insurance, and thus change of approach to the offered insurance products. |
| Keywords: | healthcare sector, health insurance, insurance policy, commercial insurance |
| JEL: | I13 G22 |
| Date: | 2019–06 |
| URL: | http://d.repec.org/n?u=RePEc:sek:iacpro:9011480&r=all |
| By: | Chih-Hai Yang (National Central University); Tadashi Ito (Gakushuin University); Toshiyuki Matsuura (Keio University) |
| Abstract: | This paper examines the duration of intermediate goods imports and its determinants for Japanese affiliates in China. In addition to product characteristics, we consider also the influences of affiliate and parent firm characteristics, as well as regional agglomeration. Based on a unique parent?affiliate?transaction matched panel dataset over the 2000?2006 period, we adopt a discrete-time hazard model to conduct empirical estimations. Results show that products with a higher upstreamness index, differentiated goods, and process-trade goods are less likely to be substituted for local procurement. Firms located in agglomerated regions with more foreign affiliates tend to shorten the duration of imports from their home country. In terms of parent-firm characteristics, multinational enterprises that have many foreign affiliates or greater foreign production experience continue to import intermediate goods for a longer duration. |
| Keywords: | Trade duration, FDI, Intermediate goods, Agglomeration |
| Date: | 2019–07 |
| URL: | http://d.repec.org/n?u=RePEc:sek:iacpro:8710587&r=all |
| By: | Alexander Kostrov; Mikhail Mamonov |
| Abstract: | This paper investigates the phenomenon of hidden negative capital (HNC) associated with bank failures and introduces a product mismatch hypothesis to explain the formation of HNC. Given that troubled banks tend to hide negative capital in financial statements from regulators to keep their licenses, we attempt to capture this gambling behavior by evaluating product mismatches reflecting disproportions between the allocation of bank assets and the sources of funding. We manually collect unique data on HNC and test our hypothesis using U.S. and Russian banking statistics for the 2004–2017 period (external validity argument). To manage the sample selection concerns, we apply the Heckman selection approach. Our results clearly indicate that product mismatch matters and works similarly in both U.S. and Russian banking systems. Specifically, an increase in mismatch has two effects: it leads to a higher probability that a bank’s capital is negative and raises the conditional size of the bank’s HNC. Further, we demonstrate that the mismatch effect is heterogeneous with respect to bank size being at least partially consistent with the informational asymmetry view. Our results may facilitate improvements in the prudential regulation of banking activities in other countries that share similar features with either the U.S. or Russian banking systems. |
| Keywords: | bank failure; hidden negative capital; product mismatch; misreporting; Heckman selection model; |
| JEL: | G21 G33 C34 |
| Date: | 2019–03 |
| URL: | http://d.repec.org/n?u=RePEc:cer:papers:wp636&r=all |
| By: | Dorota Podedworna-Tarnowska (SGH Warsaw School of Economics); Daniel Kaszy?ski (SGH Warsaw School of Economics) |
| Abstract: | The existence of underpricing effect in IPO has been investigated by a several studies conducted on the basis of stock exchanges in numerous countries. This phenomenon has been explained in the literature with the help of agency theory, signaling, cascading, behavioral theories among others. Numerous exogenous and endogenous factors of IPO underpricing has been identified in several empirical researches. The influence of these various determinants mostly depends upon different level of the capital market development, different structures of the markets, countries? specific regulation. The aim of this article is to present and investigate the degree of underpricing depending on the form of IPO: an issue of new shares in the shape of a public subscription, a sale of existing shares in the shape of a public subscription, a combination of both previous variants or an introducing shares into trading without sale offering. The research is based on the historical data available from the Warsaw Stock Exchange. The analysis is conducted among IPOs that took place over the period 2005-2018. The numerical results indicate the differential effect on the degree of underpricing effect in IPO resulting from various forms of IPO. |
| Keywords: | IPO, underpricing, public subscription, share sale, share issue, listing |
| JEL: | G11 G23 G32 |
| Date: | 2019–06 |
| URL: | http://d.repec.org/n?u=RePEc:sek:iacpro:9011477&r=all |
| By: | Sebastian Bodu (Romanian-American University, Bucharest, Romania) |
| Abstract: | Two are the external sources of corporate financing: equity and debt. These are exclusive (other sources of external financing no longer exist, but only variants thereof) and can be combined in turn. Capital with which a company is financed is its engine, no company being able to operate without capital regardless of the industry. Funding may be private or public. Private financing is provided through banking credit or equity contracted through direct negotiation with investors. Each mode of financing has advantages and disadvantages, not only in terms of financial costs (direct) but also indirect costs. Internal funding source is self-financing, i.e. reinvesting the company's profit instead of distributing it in the form of dividends. Balancing the use of internal and external financing sources, as well as the share of an external source in relation to another external source, primarily depending on the cost of financing (direct or opportunity) is a difficult, important and complex decision. The more the company is and / or the more attractive for investors, the more varied the range of financing options and the cost structure that is heavily influenced by rating agencies. Conversely, a small company without too many development prospects will not have access to all available sources in the market and will have to confine itself to small bank loans. Corporate contributions can be in cash, in kind, in debt and in services. To hedge foreign exchange risk, some companies resort to hedging through options on the foreign exchange market in the form of risk transactions in the opposite direction to that assumed by the contracted loan. |
| Keywords: | contributions, company, corporate finance, currency, debt, dividends, equity, loan, profit, statute of limitation |
| Date: | 2019–07 |
| URL: | http://d.repec.org/n?u=RePEc:smo:dpaper:016sb&r=all |