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Economics and business journals focus on publishing papers coming from the fields of applied economics, corporate finance, financial investments, markets, institutions, industrial organization, international trade, marketing and similar.
Business and Economics
Abstract
There exists a vast empirical literature on Financial Sector Development (FSD) and the income inequality nexus; however, it lacks consensus. To study this, 24 studies with 87 regression estimates on financial institution depth and income inequality were collected. This paper used the most common method of economic meta-analysis, the Partial Correlation Coefficient (PCC), to answer the question: What is the magnitude and impact, if any, of financial institution depth on income inequality? In addition, a multivariate meta-regression model was used to find moderator variables that produced mixed results in the literature. The results show that the global average comovement of financial institution depth (domestic credit) on income inequality is very small but positive; suggesting that growth in domestic credit may widen income inequality. The positive correlation between domestic credit and income inequality highlights how financial institutions use household income and collateral as a signal when deciding on credit applications. Finally, the multivariate regression results suggest that the present heterogeneity within the literature stems from different methodologies and control variables included in the econometric models, and panel studies that mix countries with heterogeneous characteristics. These suggest that different components of FSD may impact income inequality differently.
Abstract
The article analyses the current issues contributing to the volatility of Bitcoin as the reliability of this new technology diminishes, leading to increased unpredictability of its value. Legal efforts and literature regarding Bitcoin have primarily focused on protecting society from the illegal use of this digital technology, with little emphasis on integrating it as an asset. However, this article proposes that countries adopt Bitcoin-related legislation, incorporating recognition and regulation clauses to transform Bitcoin into a stable, less volatile and functional digital asset. In the context of legal history, primary legal domains, such as contracts, family, trade and others, have been integrated through recognition and regulation processes. Therefore, we argue that adopting Bitcoin-specific legislation that recognizes this new technology while comprehensively regulating the associated risks would enhance the coin's stability and reduce volatility, ultimately increasing trust among digital investors and users.
Abstract
The objective of this research is to identify factors that determine the moral hazard in banks by using discrete choice models (probit and logit regression). A specially constructed indicator was used to quantitatively assess moral hazard as the average difference between the better rating of a client in a bank and the most conservative rating of the same client in the banking sector. This is an example where moral hazard manifests itself as the tendency of management in banks to underestimate credit risk. The results showed that state-owned banks and foreign privately-owned banks with evident problems at the level of their headquarters had higher values of this quantitative indicator of moral hazard. Also, banks whose financial result and capital are highly sensitive to a small increase in non-performing loans, as well as banks that at any time in the observed period had a problem with meeting regulatory capital requirements, showed a greater propensity to moral hazard, as measured by this indicator. In the above cases, in the absence of quality corporate governance, management in banks tends to show performance better than it actually is. The obtained results for Serbia in comparison with the previous research give the possibility to quantitatively confirm additional specific factors important for explaining moral hazard (composite variable of the type of ownership and capital restrictions, variables that perform only the transmission of certain forms of management behaviour, size, capital and profit sensitivity, credit risk level, etc.), in addition to the common factors of moral hazard, such as the type of ownership in the bank, capital restrictions, etc.
Abstract
Economic freedom is crucial in determining policies for economic performance of nations and monitoring changes in the international economic order. Evaluating economic freedom requires the use of multiple indicators related to each other. Traditional statistical analyses used as an evaluation tool are often constrained by the probability distribution of indicators or sample size. To overcome these shortcomings, this paper uses grey factor analysis (GFA) to evaluate the economic freedom of countries. GFA can be used with multiple interrelated indicators without requirements about the probability distributions or sample size. The absolute degree of grey incidence matrix is used instead of the correlation matrix in factor analysis and GFA integrates the advantages of grey system theory into factor analysis. The analysis covers data for 2010 and 2020 about 20 economic freedom indicators in 36 selected countries. Two factors explain a significant part of the variance for both years. The scores for countries were obtained using the explained variance ratio as a weight. Our results show that GFA provides more accurate results than traditional statistical analyses.
Abstract
This paper aims to evaluate the influence of investment and R&D expenditures on the performance of large companies that are headquartered in the Europe using regression analysis of the generalized method of moments. The independent control variables are GDP per capita and the interest rate represented by the yield of 10-year state bonds. The sample period is 2010–2018. Our result shows that the growth of R&D expenditures and investments negatively affected the profitability ratios of the firms in the year of implementation. While concentrating on the macroeconomic control variables, the results support an assumption about the positive effects of GDP on the majority of the net income, ROA and ROE estimates. On the other hand, negative effects of interest rates were found.
Abstract
Tax evasion is reducing the revenues of public budgets of many European Union (EU) Member States (MS). To improve the effectiveness of tax collection, during the last decade authorities in several MS have taken measures to reduce the value added tax (VAT) gap (i.e., revenue received as a percentage of theoretical liability). In the Central and Eastern European region, VAT gap reduction measures have been implemented effectively in Hungary and Poland, whereas in Romania the effectiveness of these measures is very low: Romania has been the worst-performing EU MS in collecting VAT for more than 10 years. Our study analyses the factors influencing this VAT gap. Our analysis relied mainly on a fixed effects panel regression model, using for a balanced panel an individual and time fixed-effects with cluster-robust standard errors model, and for the unbalanced panel the fixed-effects regression with individual-specific slopes. Our results show that the size of the VAT gap is primarily influenced by five variables: the transparency index, the tax collection ratio, the law enforcement index, the VAT revenues ratio and the digitisation index.
Abstract
Real estate crowdfunding is a relatively new alternative financing and investing method. This research aims to identify factors which might increase investors' willingness to participate in real estate crowdfunding campaigns. We analyse 195 lending-based real estate crowdfunding campaigns from four Spanish platforms. Project success is measured by duration, i.e. the time required to reach the funding target. We assess the impact of the funding target, the annual return, the loan duration, several risk-related metrics and the minimum investment amount. We find that the higher the funding target and the minimum investment amount, the longer it takes to reach the target. We document that investors prefer projects where the maturity of the loan is shorter. We also find that construction-type projects reach the funding target faster than other type of fundraising goals. At the same time, we do not find any association between the annual return or risk-related metrics and project success. To assure successful fundraising, real estate crowdfunding platforms should prioritize those real estate projects which are highly popular among investors (i.e. construction-type projects with short maturity). Real estate developers, in turn, should crowdfund projects which are demanded by the crowdinvestors and use their traditional financing methods for the remaining projects.
Abstract
Significant parts of the work of the great economist and economic visionary János Kornai function as a magnifying glass in economic theory, philosophy and history. Kornai examined economic systems and system-mixes with substantial details, for then being able to focus his audiences' attention on the most relevant and critical aspects of them. One of Kornai's masterpieces, The Socialist System – a book which recently passed its 30-year publishing anniversary – is such a political economy lens on communism. I am attempting a concise conversion of this magnifying glass, to apply a Galileian metaphor, into an economic telescope. In other words, I am adding another economic lens – that of moral economics – to the Kornaian viewpoints. In a short analysis going through various dimensions of The Socialist System, I am coupling Kornai's thoughts with moral economic ideas, both from the classical and the contemporary moral economy streams. The goal with this exercise of respectfully refreshing a toolkit and style of economic analysis is to then gaze into, and partially describe a potential multitude, or spectra of economic systems, which may manifest in econodiversity.
Abstract
Kornai challenged not only the dominant economic views of the socialist system, but also those of market economies. The former brought him fame, and the latter remained, so to speak, his scientific testament. He studied the systemic properties of different economic systems through the analytical grid of the sign of aggregate excess supply, which defined three categories: shortage economies, equilibrium economies and surplus economies. In this paper, we show that business plans postulated with the aim of realizing strictly positive net retained profits in nominal terms exclude equilibrium economies; these business plans imply a surplus economy. This definition of the business plan makes it possible to combine seemingly disparate results from different parts of the economic literature. An economy in which business plans are the rule and no economic agent can run a permanent negative budget is a surplus economy, which manifests itself in the phenomena of both growth imperative and realization problem. In short, all these phenomena are the manifestations of the same essence: the working of the business plans.
