Issues

Journal & Issues

Volume 11 (2022): Issue 3 (September 2022)

Volume 11 (2022): Issue 2 (May 2022)

Volume 11 (2022): Issue 1 (January 2022)

Volume 10 (2021): Issue 3 (September 2021)

Volume 10 (2021): Issue 2 (May 2021)

Volume 10 (2021): Issue 1 (January 2021)

Volume 9 (2020): Issue 3 (September 2020)

Volume 9 (2020): Issue 2 (May 2020)

Volume 9 (2020): Issue s1 (July 2020)

Volume 9 (2020): Issue 1 (January 2020)

Volume 8 (2019): Issue 3 (September 2019)

Volume 8 (2019): Issue 2 (May 2019)

Volume 8 (2019): Issue 1 (January 2019)

Volume 7 (2018): Issue 3 (September 2018)

Volume 7 (2018): Issue 2 (May 2018)

Volume 7 (2018): Issue 1 (January 2018)

Volume 6 (2017): Issue 3 (September 2017)

Volume 6 (2017): Issue 2 (May 2017)

Volume 6 (2017): Issue 1 (January 2017)

Volume 5 (2016): Issue 3 (September 2016)

Volume 5 (2016): Issue 2 (May 2016)

Volume 5 (2016): Issue 1 (January 2016)

Volume 4 (2015): Issue 3 (September 2015)

Volume 4 (2015): Issue 2 (May 2015)

Volume 4 (2015): Issue 1 (January 2015)

Volume 3 (2014): Issue 3 (September 2014)

Volume 3 (2014): Issue 2 (May 2014)

Volume 3 (2014): Issue 1 (January 2014)

Journal Details
Format
Journal
eISSN
2336-9205
First Published
11 Mar 2014
Publication timeframe
3 times per year
Languages
English

Search

Volume 5 (2016): Issue 2 (May 2016)

Journal Details
Format
Journal
eISSN
2336-9205
First Published
11 Mar 2014
Publication timeframe
3 times per year
Languages
English

Search

8 Articles
Open Access

Measuring the Channels of Monetary Policy Transmission: A Factor-Augmented Vector Autoregressive (Favar) Approach

Published Online: 20 May 2016
Page range: 5 - 40

Abstract

Abstract

There is more consensus on the effects of monetary policy than its transmission mechanism. Two channels of transmission mechanisms are the conventional interest rate channel and the credit channel. I investigate the channels of monetary policy transmission in the U.S. using the factor-augmented vector autoregressive (FAVAR) models developed by Bernanke, Boivin & Eliasz (2005). The newly developed FAVAR approach allows the researcher to include all relevant macroeconomic variables in the model and analyze them. Therefore, the FAVAR models span a larger information set and generate better estimates of impulse response functions than the commonly used vector autoregressive (VAR) models that utilize only 4–8 variables. I include 154 monthly U.S. time series variables for the period 1970–2014. The findings support the existence of the credit channel in the U.S. The conclusion remains the same when the non-borrowed reserve operating regime (October 1979–October 1982) is removed from the sample period.

Keywords

  • Monetary policy
  • Credit channel
  • Interest rate channel
  • Dynamic factors
  • VAR
  • FAVAR
  • Impulse response functions

JEL

  • E52
  • E58
  • C32
  • C43
Open Access

Relevance of Low Inflation in the Southeastern European Countries

Published Online: 20 May 2016
Page range: 41 - 63

Abstract

Abstract

The paper starts from the assumption that the significant reduction of the inflation problem is a result of the long-term dynamics of economic growth in countries with developing markets and, as a result, operational inability of multinational companies to increase accumulation through the policy of raising prices by creating space for their full expansion. We believe that in such circumstances civil theories on the causes of inflation are dominantly of class character. We check negative repercussions of low inflation on the examples of the countries of South-East Europe, in the regimes with fixed and flexible exchange rates, and with different strategies of monetary policy. We conclude that destructive implications of the financial crisis and psychological factors have a negative impact on a sustainable low-inflation environment, regardless of the monetary-exchange regime. We propose that low and stable inflation rates can be followed by a series of negative implications for the overall economic system, which our analysis of the observed countries proves.

Keywords

  • inflation/deflation
  • aggregate demand
  • monetary and fiscal policy
  • exchange rate/inflation rate targeting

JEL

  • E52
  • E61 and E62
Open Access

Financial Education of Children and Youth

Published Online: 20 May 2016
Page range: 65 - 79

Abstract

Abstract

More and more individuals are becoming overindebted and facing difficulties in managing personal finance. On the other hand, financial products are becoming more and more complex, with numerous concealed risks. The level of financial literacy of youth and children is unsatisfactory both in the region and globally. Such a situation could lead to personal problems (financial distress), aggravated financial stability, with reverse adverse implications on economic growth. Many international studies have also confirmed these hypotheses.

The aim of this paper is to point to the importance of financial education of youth and children, as well as to give some guidance on how to develop a national programme for increasing financial literacy. The paper develops a five-step programme with the main topics covering the drafting of a national strategy for developing financial literacy of youth and children and its implementation.

Keywords

  • Financial Education
  • Children
  • Youth
  • Programme
  • National Strategy

JEL

  • I22 and I25
Open Access

A Comparison of Different Short-Term Macroeconomic Forecasting Models: Evidence from Armenia

Published Online: 20 May 2016
Page range: 81 - 99

Abstract

Abstract

We evaluate the forecasting performance of four competing models for short-term macroeconomic forecasting: the traditional VAR, small scale Bayesian VAR, Factor Augmented VAR and Bayesian Factor Augmented VAR models. Using Armenian quarterly actual macroeconomic time series from 1996Q1 – 2014Q4, we estimate parameters of four competing models. Based on the out-of-sample recursive forecast evaluations and using root mean squared error (RMSE) criterion we conclude that small scale Bayesian VAR and Bayesian Factor Augmented VAR models are more suitable for short-term forecasting than traditional unrestricted VAR model.

Keywords

  • vector autoregression
  • Bayesian estimation
  • principal components
  • recursive regression
  • forecast evaluation
  • macroeconomic indicators
  • Armenia

JEL

  • C11
  • C13
  • C52
  • C53
Open Access

Determinants of Credit Growth: The Case of Montenegro

Published Online: 20 May 2016
Page range: 101 - 118

Abstract

Abstract

In the period before the crisis, Montenegro experienced a rapid credit growth, which coincided with the privatization of several banks and was followed by the entry of foreign banking groups, amplifying the banks’ lending process and increasing competition in this sector. This paper focuses on identification and estimation of determinants of credit growth in Montenegro, exploring both demand and supply side factors, and particularly paying attention to supply factors. Our findings confirm that positive economic developments and an increase in banks’ deposit potential lead to higher credit growth. Furthermore, our findings emphasize that the banking system soundness is decisive for promoting further bank’s lending activities. We provide evidence that the weakening of banks’ balance sheets, in terms of high non-performing loans and low solvency ratio, has a negative effect on credit supply.

In addition, this paper provides a nuanced analysis of the determinants of credit growth by allowing these to be different before and after the global financial crisis. The post-crisis model finds that credit supply indicators gained in importance in explaining credit growth, while the model in pre-crisis period provides evidence that both demand and supply indicators matter in explaining credit growth.

Keywords

  • credit growth
  • global financial crisis
  • fixed effects linear model

JEL

  • E32
  • E44
  • E51
  • G21
Open Access

Cross Check of the Tax Base in Serbia – Informative Tax Return Sample

Published Online: 20 May 2016
Page range: 119 - 131

Abstract

Abstract

The tax system of the Republic of Serbia is characterized by a very low level of income taxation. It is a particularly acute problem in cross-checking the tax base. The legislature tried to solve this problem by the introduction of the informative tax return (IPP). The problem is even greater because the situations encountered have not been analysed in science and tax theory, and very often have not been covered by applicable laws. A specific challenge for the tax authorities represent taxpayers whose incomes are primarily realized abroad (usually persons from the world of entertainment). This paper describes the basic forms of tax offences characteristic of income tax evasion and discusses how to solve them, with a particular focus on the implementation of cross-checking the tax base.

Keywords

  • income tax
  • tax evasion
  • enforcement
  • tax authorities
  • informative tax return

JEL

  • H20
  • H24
  • H25
  • H26
Open Access

The Interaction Between FX and Credit Risk as an Example of Intersection of Monetary and Financial Stability Policy Goals – The Case of Serbia

Published Online: 20 May 2016
Page range: 133 - 155

Abstract

Abstract

The financial system of Serbia is highly bank-centric and euroised, which is a common specific feature of financial systems in developing countries. High level of euroisation represents an adequate environment for the development of emphasized interaction of foreign exchange and credit risks; therefore, creation of the spillover mechanism of foreign exchange risk to credit risk is immanent for euroised systems. Although maintaining the stability of the dinar exchange rate is a secondary goal of the National Bank of Serbia in relation to price and financial stability as the primary goals, in terms of existence of the aforesaid spillover mechanism, maintaining stability of the dinar exchange rate represents the area where there is an interaction between the goals of monetary policy (price stability) and those of financial stability policy (maintaining and strengthening the financial system’s stability). In order to explore whether the spillover mechanism of foreign exchange risk to credit risk exists in Serbia’s financial system, the vector autoregressive (VAR) model is applied on data from the Serbian banking sector to quantify the impact of changes in the dinar exchange rates on the rate of non-performing loans (NPLs); the sample was formed in the period of increased instability of the dinar exchange rate, from 31 January 2008 to 31 December 2010. As we have quantitatively confirmed the impact of increase in the dinar exchange rate on the increase of 90-120 days past due NPLs, we can conclude that the existence of expressed interaction between foreign exchange risk and credit risk in the Serbian financial system represents a paradigm of the regulator’s need to achieve contemporary goals of monetary and financial stability policy by maintaining relative stability of the dinar exchange rates. Depreciation of the local currency has inflationary pressure on price stability and simultaneously influences the achievement of financial stability goals through the spillover mechanism of foreign exchange risk to credit risk. In addition to taking systematic measures to reduce the level of euroisation and introduce the specific regulatory requirements, in order to protect banks and clients from the dinar exchange rate volatility, the regulator faces extremely important task of maintaining relative stability of the dinar exchange rate as the instrument to simultaneous achievement of goals of monetary and financial stability policies.

Keywords

  • FX risk
  • credit risk
  • non-performing loans
  • monetary policy
  • financial stability policy

JEL

  • E51
  • E58
  • G28
  • G32
  • G21
Open Access

Some Empirical Evidence of Loan Loss Provisions for Albanian Banks

Published Online: 20 May 2016
Page range: 157 - 173

Abstract

Abstract

In this paper we used a panel of Albanian banks for the period 2004-2014 to examine the main determinants of loan loss provisions. In addition, we tested how the latest crisis has affected provisioning behaviour of the banks. We find that loan loss provisions of banks are driven by non-discretionary components and economic fluctuations. Furthermore, we find a positive and significant result between earnings before interest, taxes and provisions and loan loss provisions, thus confirming the income smoothing hypothesis. Our estimated results do not support the capital management and signalling hypotheses. We also find that the global crisis has contributed significantly to the procyclicality of loan loss provisioning in Albania and banks continued to do income smoothing during the crisis.

Keywords

  • Loan loss provisions
  • Procyclicality
  • Income Smoothing
  • Albanian banks
  • Dynamic GMM

JEL

  • G21
  • C33
  • C36
8 Articles
Open Access

Measuring the Channels of Monetary Policy Transmission: A Factor-Augmented Vector Autoregressive (Favar) Approach

Published Online: 20 May 2016
Page range: 5 - 40

Abstract

Abstract

There is more consensus on the effects of monetary policy than its transmission mechanism. Two channels of transmission mechanisms are the conventional interest rate channel and the credit channel. I investigate the channels of monetary policy transmission in the U.S. using the factor-augmented vector autoregressive (FAVAR) models developed by Bernanke, Boivin & Eliasz (2005). The newly developed FAVAR approach allows the researcher to include all relevant macroeconomic variables in the model and analyze them. Therefore, the FAVAR models span a larger information set and generate better estimates of impulse response functions than the commonly used vector autoregressive (VAR) models that utilize only 4–8 variables. I include 154 monthly U.S. time series variables for the period 1970–2014. The findings support the existence of the credit channel in the U.S. The conclusion remains the same when the non-borrowed reserve operating regime (October 1979–October 1982) is removed from the sample period.

Keywords

  • Monetary policy
  • Credit channel
  • Interest rate channel
  • Dynamic factors
  • VAR
  • FAVAR
  • Impulse response functions

JEL

  • E52
  • E58
  • C32
  • C43
Open Access

Relevance of Low Inflation in the Southeastern European Countries

Published Online: 20 May 2016
Page range: 41 - 63

Abstract

Abstract

The paper starts from the assumption that the significant reduction of the inflation problem is a result of the long-term dynamics of economic growth in countries with developing markets and, as a result, operational inability of multinational companies to increase accumulation through the policy of raising prices by creating space for their full expansion. We believe that in such circumstances civil theories on the causes of inflation are dominantly of class character. We check negative repercussions of low inflation on the examples of the countries of South-East Europe, in the regimes with fixed and flexible exchange rates, and with different strategies of monetary policy. We conclude that destructive implications of the financial crisis and psychological factors have a negative impact on a sustainable low-inflation environment, regardless of the monetary-exchange regime. We propose that low and stable inflation rates can be followed by a series of negative implications for the overall economic system, which our analysis of the observed countries proves.

Keywords

  • inflation/deflation
  • aggregate demand
  • monetary and fiscal policy
  • exchange rate/inflation rate targeting

JEL

  • E52
  • E61 and E62
Open Access

Financial Education of Children and Youth

Published Online: 20 May 2016
Page range: 65 - 79

Abstract

Abstract

More and more individuals are becoming overindebted and facing difficulties in managing personal finance. On the other hand, financial products are becoming more and more complex, with numerous concealed risks. The level of financial literacy of youth and children is unsatisfactory both in the region and globally. Such a situation could lead to personal problems (financial distress), aggravated financial stability, with reverse adverse implications on economic growth. Many international studies have also confirmed these hypotheses.

The aim of this paper is to point to the importance of financial education of youth and children, as well as to give some guidance on how to develop a national programme for increasing financial literacy. The paper develops a five-step programme with the main topics covering the drafting of a national strategy for developing financial literacy of youth and children and its implementation.

Keywords

  • Financial Education
  • Children
  • Youth
  • Programme
  • National Strategy

JEL

  • I22 and I25
Open Access

A Comparison of Different Short-Term Macroeconomic Forecasting Models: Evidence from Armenia

Published Online: 20 May 2016
Page range: 81 - 99

Abstract

Abstract

We evaluate the forecasting performance of four competing models for short-term macroeconomic forecasting: the traditional VAR, small scale Bayesian VAR, Factor Augmented VAR and Bayesian Factor Augmented VAR models. Using Armenian quarterly actual macroeconomic time series from 1996Q1 – 2014Q4, we estimate parameters of four competing models. Based on the out-of-sample recursive forecast evaluations and using root mean squared error (RMSE) criterion we conclude that small scale Bayesian VAR and Bayesian Factor Augmented VAR models are more suitable for short-term forecasting than traditional unrestricted VAR model.

Keywords

  • vector autoregression
  • Bayesian estimation
  • principal components
  • recursive regression
  • forecast evaluation
  • macroeconomic indicators
  • Armenia

JEL

  • C11
  • C13
  • C52
  • C53
Open Access

Determinants of Credit Growth: The Case of Montenegro

Published Online: 20 May 2016
Page range: 101 - 118

Abstract

Abstract

In the period before the crisis, Montenegro experienced a rapid credit growth, which coincided with the privatization of several banks and was followed by the entry of foreign banking groups, amplifying the banks’ lending process and increasing competition in this sector. This paper focuses on identification and estimation of determinants of credit growth in Montenegro, exploring both demand and supply side factors, and particularly paying attention to supply factors. Our findings confirm that positive economic developments and an increase in banks’ deposit potential lead to higher credit growth. Furthermore, our findings emphasize that the banking system soundness is decisive for promoting further bank’s lending activities. We provide evidence that the weakening of banks’ balance sheets, in terms of high non-performing loans and low solvency ratio, has a negative effect on credit supply.

In addition, this paper provides a nuanced analysis of the determinants of credit growth by allowing these to be different before and after the global financial crisis. The post-crisis model finds that credit supply indicators gained in importance in explaining credit growth, while the model in pre-crisis period provides evidence that both demand and supply indicators matter in explaining credit growth.

Keywords

  • credit growth
  • global financial crisis
  • fixed effects linear model

JEL

  • E32
  • E44
  • E51
  • G21
Open Access

Cross Check of the Tax Base in Serbia – Informative Tax Return Sample

Published Online: 20 May 2016
Page range: 119 - 131

Abstract

Abstract

The tax system of the Republic of Serbia is characterized by a very low level of income taxation. It is a particularly acute problem in cross-checking the tax base. The legislature tried to solve this problem by the introduction of the informative tax return (IPP). The problem is even greater because the situations encountered have not been analysed in science and tax theory, and very often have not been covered by applicable laws. A specific challenge for the tax authorities represent taxpayers whose incomes are primarily realized abroad (usually persons from the world of entertainment). This paper describes the basic forms of tax offences characteristic of income tax evasion and discusses how to solve them, with a particular focus on the implementation of cross-checking the tax base.

Keywords

  • income tax
  • tax evasion
  • enforcement
  • tax authorities
  • informative tax return

JEL

  • H20
  • H24
  • H25
  • H26
Open Access

The Interaction Between FX and Credit Risk as an Example of Intersection of Monetary and Financial Stability Policy Goals – The Case of Serbia

Published Online: 20 May 2016
Page range: 133 - 155

Abstract

Abstract

The financial system of Serbia is highly bank-centric and euroised, which is a common specific feature of financial systems in developing countries. High level of euroisation represents an adequate environment for the development of emphasized interaction of foreign exchange and credit risks; therefore, creation of the spillover mechanism of foreign exchange risk to credit risk is immanent for euroised systems. Although maintaining the stability of the dinar exchange rate is a secondary goal of the National Bank of Serbia in relation to price and financial stability as the primary goals, in terms of existence of the aforesaid spillover mechanism, maintaining stability of the dinar exchange rate represents the area where there is an interaction between the goals of monetary policy (price stability) and those of financial stability policy (maintaining and strengthening the financial system’s stability). In order to explore whether the spillover mechanism of foreign exchange risk to credit risk exists in Serbia’s financial system, the vector autoregressive (VAR) model is applied on data from the Serbian banking sector to quantify the impact of changes in the dinar exchange rates on the rate of non-performing loans (NPLs); the sample was formed in the period of increased instability of the dinar exchange rate, from 31 January 2008 to 31 December 2010. As we have quantitatively confirmed the impact of increase in the dinar exchange rate on the increase of 90-120 days past due NPLs, we can conclude that the existence of expressed interaction between foreign exchange risk and credit risk in the Serbian financial system represents a paradigm of the regulator’s need to achieve contemporary goals of monetary and financial stability policy by maintaining relative stability of the dinar exchange rates. Depreciation of the local currency has inflationary pressure on price stability and simultaneously influences the achievement of financial stability goals through the spillover mechanism of foreign exchange risk to credit risk. In addition to taking systematic measures to reduce the level of euroisation and introduce the specific regulatory requirements, in order to protect banks and clients from the dinar exchange rate volatility, the regulator faces extremely important task of maintaining relative stability of the dinar exchange rate as the instrument to simultaneous achievement of goals of monetary and financial stability policies.

Keywords

  • FX risk
  • credit risk
  • non-performing loans
  • monetary policy
  • financial stability policy

JEL

  • E51
  • E58
  • G28
  • G32
  • G21
Open Access

Some Empirical Evidence of Loan Loss Provisions for Albanian Banks

Published Online: 20 May 2016
Page range: 157 - 173

Abstract

Abstract

In this paper we used a panel of Albanian banks for the period 2004-2014 to examine the main determinants of loan loss provisions. In addition, we tested how the latest crisis has affected provisioning behaviour of the banks. We find that loan loss provisions of banks are driven by non-discretionary components and economic fluctuations. Furthermore, we find a positive and significant result between earnings before interest, taxes and provisions and loan loss provisions, thus confirming the income smoothing hypothesis. Our estimated results do not support the capital management and signalling hypotheses. We also find that the global crisis has contributed significantly to the procyclicality of loan loss provisioning in Albania and banks continued to do income smoothing during the crisis.

Keywords

  • Loan loss provisions
  • Procyclicality
  • Income Smoothing
  • Albanian banks
  • Dynamic GMM

JEL

  • G21
  • C33
  • C36

Plan your remote conference with Sciendo