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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 1 (January 2020)

Volume 9 (2020): Issue s1 (July 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 7 (2018): Issue 3 (September 2018)

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

Search

10 Articles
Open Access

The Relationship between Current Account Deficits and Growth in Montenegro: ARDL Bounds Testing Approach

Published Online: 10 Sep 2018
Page range: 5 - 24

Abstract

Abstract

In this study, we investigate the relationship between current account deficits and growth in Montenegro by applying the bounds testing (ARDL) approach to co-integration for the period from the third quarter of 2011 to the last quarter of 2016. The bounds tests suggest that the variables of interest are bound together in the long run when growth is the dependent variable. The results also confirm a bidirectional long run and short run causal relationship between current account deficits and growth.

The short run results mostly indicate a negative relationship between changes in the current account deficit GDP ratio and the GDP growth rate. This means that any increase of the value of independent variable (current account deficit GDP ratio) will result in decrease of the rate of GDP growth and vice versa.

The long-run effect of the current account deficit to GDP ratio on GDP growth is positive. The constant (β0) is positive but also the (β1), meaning that with the increase of CAD GDP ratio of 1 measuring unit, the GDP growth rate would grow by 0,5459. This positive and tight correlation could be explained by overlapping structure of the constituents of CAD and the drivers of GDP growth (such as tourism, energy sector, agriculture etc.).

The results offer new perspectives and insights for new policy aiming for sustainable economic growth of Montenegro.

Keywords

  • Current account deficit
  • ARDL Bounds testing
  • Granger Causality
  • Co-integration
  • Montenegro Economy

JEL Classification

  • C22
  • E17
  • E27
  • F32
  • F41
  • F43
  • H62
Open Access

Central Bank Independence – The Case of the Central Bank of Montenegro

Published Online: 10 Sep 2018
Page range: 25 - 40

Abstract

Abstract

In recent decades, there has been a trend in increasing the level of independence of central banks. The key factor that has contributed to a growing interest in this concept is grounded in economic theory that confirms the link between a lower inflation rate and a greater level of central bank independence. For this reason, in many countries, the existing regulations relating to central bank have been modified to protect its position from the absolute influence of the executive power of the state. This trend was particularly prevalent in transition countries, which was conditioned primarily by the EU accession criteria. The aim of this paper is to analyse independence of the Central Bank of Montenegro through the prism of functional, institutional, financial, and personal independence, and to assess the level of its legal independence by using appropriate indices.

Keywords

  • central bank independence
  • indices
  • Montenegro

JEL Classification

  • E52
  • E58
Open Access

Swiss Franc from the Croatian Perspective

Published Online: 10 Sep 2018
Page range: 41 - 56

Abstract

Abstract

In Croatia and other countries of Central and Eastern Europe, as a consequence of deep financial integration and abolition of capital controls, considerable loans to households indexed to the Swiss franc have emerged. Although all of researchers of the Swiss franc do not agree entirely on whether the Swiss franc is a safe haven currency, its property of continuous appreciation is commonly accepted. There was a continuous appreciation of the Swiss franc over the Croatian kuna. This paper examines the performance of several ARCH-based models for Swiss franc against the Croatian kuna on daily data sets within time period from 1997 to 2010. Evaluating the models through standard information criteria Component ARCH (1,1) is found to be the best-fitting model.

Keywords

  • Swiss franc
  • asymmetric GARCH
  • exchange rate
  • Croatia

JEL Classification

  • C13
  • C58
  • F31
  • F32
  • G15
Open Access

The Implementation of Basel Committee BCBS 239: Short analysis of the new rules for Data Management

Published Online: 10 Sep 2018
Page range: 57 - 72

Abstract

Abstract

In January 2013, the Basel Committee on Banking Supervision issued 14 principles for effective risk data aggregation and risk reporting (BCBS 239) and outlined the paths to compliance for globally systemically important banks (G-SIBs) and domestic systemically important banks (D-SIBs).The Basel Committee devised BCBS 239 in order to ensure that banks and other financial institutions could monitor risks more effectively through superior data aggregation, enabling an overall more reliable and efficient risk management process. In a McKinsey report from June 2015 (Harreis et al, 2017) it is estimated that an average G-SIB would have to spend approximately 230 million USD and an average D-SIB 75 million USD to aggregate risk data that was previously dispersed over a wide variety of systems, geographic locations and banking groups. As the BCBS 239 for G-SIBs deadline was - at the time of writing – 10 months overdue, what approach towards compliance will prove to be more effective? In this article, the new principles according to BCBS 239 are described, criticized and one possible solution to meet the requirements is presented.

Keywords

  • BCBS 239
  • Principles
  • Finrep - Chisholm’s analysis
  • Risk data engine
  • financial stability

JEL Classification

  • C80
  • G18
  • N20
Open Access

Inflation Expectations in Turkey: Determinants and Roles in Missing Inflation Targets

Published Online: 10 Sep 2018
Page range: 73 - 90

Abstract

Abstract

This paper aims at specifying the determinants of 12-month ahead and 24-month ahead inflation expectations in Turkey by using monthly data from April 2006 to December 2016. Put differently, this paper tries to shed light on how inflation expectations respond to changes in past inflation rate, inflation target, output gap, USD/TL exchange rate, oil price, and EMBI in Turkey. To this end, the paper first conducts unit root tests in order to detect the order of integration of the variables. Then, the paper employs the autoregressive distributed lag approach to examine whether there is a cointegration relationship among variables and to estimate long-run parameters. According to the findings, 12-month ahead expected inflation rate is positively related to past inflation rate, inflation target, output gap, USD/TL exchange rate, and oil price and is negatively related to EMBI. Besides, 24-month ahead expected inflation rate is positively related to past inflation rate and USD/TL exchange rate and is negatively related to inflation target and EMBI. Upon its findings, the paper makes some inferences about the success of inflation targeting strategy in Turkey.

Keywords

  • the Central Bank of the Republic of Turkey
  • inflation targeting
  • inflation expectations
  • decision makers and experts
  • autoregressive distributed lag approach

JEL Classification

  • C22
  • E52
  • E58
Open Access

Central Bank Credibility, Independence, and Monetary Policy

Published Online: 10 Sep 2018
Page range: 91 - 110

Abstract

Abstract

The main motives behind the adoption of an inflation targeting regime largely relate to the notion of credibility, transparency of monetary policy and the autonomy of the central bank, which explicitly undertakes to achieve a certain inflation target. This paper examines the effects of inflation targeting in emerging economies in relation to the degree of independence of the central bank and the credibility of monetary policy. We find effects in emerging economies with little central bank independence, so our findings suggest that the central bank’s credibility, transparency and independence is a prerequisite for emerging economies to experience a decline in inflation following the adoption of inflation targeting.

Keywords

  • Credibility
  • transparency
  • central bank independence
  • inflation targeting

JEL Classification

  • E52
  • E63
Open Access

Macroeconomic and Bank-Specific Determinants of Non-Performing Loans: Evidence from Nepalese Banking System

Published Online: 10 Sep 2018
Page range: 111 - 138

Abstract

Abstract

This paper aims to evaluate the macroeconomic and bank-specific determinants of non-performing loans (NPL) in the Nepalese banking system using both static and dynamic panel estimation approaches. The study considers 30 Nepalese commercial banks over the period 2003-2015 and uses 7 bank-specific and 5 macroeconomic variables to assess the impact of banking management and economic indicators on NPL. The findings show that NPLs have significant positive relationship with the export to import ratio, inefficiency, and assets size and a negative relationship with the GDP growth rate, capital adequacy, and inflation rate. The results of the empirical study indicate low economic growth as the primary cause of high NPLs in Nepal and suggest that efficient management and effective financial policies are required for a stable financial system and economy. This is the first complete study in the Nepalese banking system and also the first study that has evaluated the effects of remittance, public debts and interest spreads on NPL. The findings of this study will be helpful in designing the macroprudential and fiscal policies in Nepal.

Keywords

  • economic condition
  • financial stability
  • generalized method of moments
  • monetary policy
  • non-performing loans
  • static panel estimation

JEL Classification

  • E44
  • G21
Open Access

Application of Ethics in the Accounting Profession with an Overview of the Banking Sector

Published Online: 10 Sep 2018
Page range: 139 - 158

Abstract

Abstract

This paper aims to investigate the readiness of the accounting community in Montenegro to implement the Code of Ethics for Professional Accountants.

Also, the aim of this paper is to present the existing situation in the accounting profession in Montenegro, especially when it comes to the regulatory environment, in terms of whether it represents an incentive or limitation for the application of the latest ethical standards in the accounting profession.

In modern business conditions, the relationship between ethics and business becomes the subject of research by numerous experts. The accounting profession took on itself the great responsibility to provide financial information to the public through professional accountants. Professional accountants are daily influenced by the challenges of the accounting profession.

In the accounting profession, ethical problems involve two difficulties that are interconnected. One relates to the question of the nature of the accounting information in terms of whether it is a private or public good, and the other arises from asymmetrically distributed accounting data between those who benefit from the company’s business.

Keywords

  • professional ethics
  • accounting profession
  • professional accountant
  • ethics of managing accountants

JEL Classification

  • G000
  • G210
Open Access

Are Capital Ratios Procyclical? Evidence from Turkish Banking Data

Published Online: 10 Sep 2018
Page range: 159 - 180

Abstract

Abstract

This paper contributes to the literature by providing recent empirical evidence about the positioning of the capital adequacy ratios (Basel II capital adequacy ratio and leverage ratio as proposed by Basel III) of Turkish banks and the business cycle. As in many emerging countries, the Turkish real sector is highly dependent on the banking loans for financing, and consequently, the macroeconomic system is vulnerable to the supply of bank loans. The results reveal that the Basel II capital adequacy ratio of Turkish banks is procyclical at a statistical significance in normal and crisis times. The results of cyclicality tests of the leverage ratio are mixed: if nominal GDP growth is taken as a business cycle indicator, it is procyclical; however, the credit-to-GDP gap signals countercyclical leverage ratios in normal times. In crisis times, the leverage ratio of the Turkish banking system is determined to be countercyclical.

Keywords

  • Capital
  • capital adequacy ratio
  • leverage rate

JEL Classification

  • G21
Open Access

Pre & Post-Merger Financial Performance: An Indian Perspective

Published Online: 10 Sep 2018
Page range: 181 - 200

Abstract

Abstract

The paper compares the before and after merger position of long term profitability with respect to selected Indian banks for a period of 2003-04 to 2013-2014. The financial performance is evaluated on the basis of various variables. The study found a negative impact of merger on return on equity, return on assets, Net profit ratio, yield on advance and yield on investment. However, variables, namely, the Earnings per Share, Profit per employee and Business per employee have shown positive trend and grown after the merger. It has been observed that after the merger, the Assets, Equity, Investment and advances of all banks increases, but due to underutilization, their respective yield decreases. On a contrary, the business per employee and profit per employee have increased due to optimum utilization of human resources. By applying the Comparative Analysis, the paper also assesses the financial performance of acquiring bank with the banking industry. The Bank of Baroda and Oriental bank of commerce has found decreases in Yield on Advances and yield on investment as compared to average of all banks in the postmerger period. State bank of India & IDBI Bank has higher business per employee and profit per employee as compared to industry average.

Keywords

  • Merger
  • Financial performance
  • Bank
  • India

JEL Classification

  • G21
  • G34
10 Articles
Open Access

The Relationship between Current Account Deficits and Growth in Montenegro: ARDL Bounds Testing Approach

Published Online: 10 Sep 2018
Page range: 5 - 24

Abstract

Abstract

In this study, we investigate the relationship between current account deficits and growth in Montenegro by applying the bounds testing (ARDL) approach to co-integration for the period from the third quarter of 2011 to the last quarter of 2016. The bounds tests suggest that the variables of interest are bound together in the long run when growth is the dependent variable. The results also confirm a bidirectional long run and short run causal relationship between current account deficits and growth.

The short run results mostly indicate a negative relationship between changes in the current account deficit GDP ratio and the GDP growth rate. This means that any increase of the value of independent variable (current account deficit GDP ratio) will result in decrease of the rate of GDP growth and vice versa.

The long-run effect of the current account deficit to GDP ratio on GDP growth is positive. The constant (β0) is positive but also the (β1), meaning that with the increase of CAD GDP ratio of 1 measuring unit, the GDP growth rate would grow by 0,5459. This positive and tight correlation could be explained by overlapping structure of the constituents of CAD and the drivers of GDP growth (such as tourism, energy sector, agriculture etc.).

The results offer new perspectives and insights for new policy aiming for sustainable economic growth of Montenegro.

Keywords

  • Current account deficit
  • ARDL Bounds testing
  • Granger Causality
  • Co-integration
  • Montenegro Economy

JEL Classification

  • C22
  • E17
  • E27
  • F32
  • F41
  • F43
  • H62
Open Access

Central Bank Independence – The Case of the Central Bank of Montenegro

Published Online: 10 Sep 2018
Page range: 25 - 40

Abstract

Abstract

In recent decades, there has been a trend in increasing the level of independence of central banks. The key factor that has contributed to a growing interest in this concept is grounded in economic theory that confirms the link between a lower inflation rate and a greater level of central bank independence. For this reason, in many countries, the existing regulations relating to central bank have been modified to protect its position from the absolute influence of the executive power of the state. This trend was particularly prevalent in transition countries, which was conditioned primarily by the EU accession criteria. The aim of this paper is to analyse independence of the Central Bank of Montenegro through the prism of functional, institutional, financial, and personal independence, and to assess the level of its legal independence by using appropriate indices.

Keywords

  • central bank independence
  • indices
  • Montenegro

JEL Classification

  • E52
  • E58
Open Access

Swiss Franc from the Croatian Perspective

Published Online: 10 Sep 2018
Page range: 41 - 56

Abstract

Abstract

In Croatia and other countries of Central and Eastern Europe, as a consequence of deep financial integration and abolition of capital controls, considerable loans to households indexed to the Swiss franc have emerged. Although all of researchers of the Swiss franc do not agree entirely on whether the Swiss franc is a safe haven currency, its property of continuous appreciation is commonly accepted. There was a continuous appreciation of the Swiss franc over the Croatian kuna. This paper examines the performance of several ARCH-based models for Swiss franc against the Croatian kuna on daily data sets within time period from 1997 to 2010. Evaluating the models through standard information criteria Component ARCH (1,1) is found to be the best-fitting model.

Keywords

  • Swiss franc
  • asymmetric GARCH
  • exchange rate
  • Croatia

JEL Classification

  • C13
  • C58
  • F31
  • F32
  • G15
Open Access

The Implementation of Basel Committee BCBS 239: Short analysis of the new rules for Data Management

Published Online: 10 Sep 2018
Page range: 57 - 72

Abstract

Abstract

In January 2013, the Basel Committee on Banking Supervision issued 14 principles for effective risk data aggregation and risk reporting (BCBS 239) and outlined the paths to compliance for globally systemically important banks (G-SIBs) and domestic systemically important banks (D-SIBs).The Basel Committee devised BCBS 239 in order to ensure that banks and other financial institutions could monitor risks more effectively through superior data aggregation, enabling an overall more reliable and efficient risk management process. In a McKinsey report from June 2015 (Harreis et al, 2017) it is estimated that an average G-SIB would have to spend approximately 230 million USD and an average D-SIB 75 million USD to aggregate risk data that was previously dispersed over a wide variety of systems, geographic locations and banking groups. As the BCBS 239 for G-SIBs deadline was - at the time of writing – 10 months overdue, what approach towards compliance will prove to be more effective? In this article, the new principles according to BCBS 239 are described, criticized and one possible solution to meet the requirements is presented.

Keywords

  • BCBS 239
  • Principles
  • Finrep - Chisholm’s analysis
  • Risk data engine
  • financial stability

JEL Classification

  • C80
  • G18
  • N20
Open Access

Inflation Expectations in Turkey: Determinants and Roles in Missing Inflation Targets

Published Online: 10 Sep 2018
Page range: 73 - 90

Abstract

Abstract

This paper aims at specifying the determinants of 12-month ahead and 24-month ahead inflation expectations in Turkey by using monthly data from April 2006 to December 2016. Put differently, this paper tries to shed light on how inflation expectations respond to changes in past inflation rate, inflation target, output gap, USD/TL exchange rate, oil price, and EMBI in Turkey. To this end, the paper first conducts unit root tests in order to detect the order of integration of the variables. Then, the paper employs the autoregressive distributed lag approach to examine whether there is a cointegration relationship among variables and to estimate long-run parameters. According to the findings, 12-month ahead expected inflation rate is positively related to past inflation rate, inflation target, output gap, USD/TL exchange rate, and oil price and is negatively related to EMBI. Besides, 24-month ahead expected inflation rate is positively related to past inflation rate and USD/TL exchange rate and is negatively related to inflation target and EMBI. Upon its findings, the paper makes some inferences about the success of inflation targeting strategy in Turkey.

Keywords

  • the Central Bank of the Republic of Turkey
  • inflation targeting
  • inflation expectations
  • decision makers and experts
  • autoregressive distributed lag approach

JEL Classification

  • C22
  • E52
  • E58
Open Access

Central Bank Credibility, Independence, and Monetary Policy

Published Online: 10 Sep 2018
Page range: 91 - 110

Abstract

Abstract

The main motives behind the adoption of an inflation targeting regime largely relate to the notion of credibility, transparency of monetary policy and the autonomy of the central bank, which explicitly undertakes to achieve a certain inflation target. This paper examines the effects of inflation targeting in emerging economies in relation to the degree of independence of the central bank and the credibility of monetary policy. We find effects in emerging economies with little central bank independence, so our findings suggest that the central bank’s credibility, transparency and independence is a prerequisite for emerging economies to experience a decline in inflation following the adoption of inflation targeting.

Keywords

  • Credibility
  • transparency
  • central bank independence
  • inflation targeting

JEL Classification

  • E52
  • E63
Open Access

Macroeconomic and Bank-Specific Determinants of Non-Performing Loans: Evidence from Nepalese Banking System

Published Online: 10 Sep 2018
Page range: 111 - 138

Abstract

Abstract

This paper aims to evaluate the macroeconomic and bank-specific determinants of non-performing loans (NPL) in the Nepalese banking system using both static and dynamic panel estimation approaches. The study considers 30 Nepalese commercial banks over the period 2003-2015 and uses 7 bank-specific and 5 macroeconomic variables to assess the impact of banking management and economic indicators on NPL. The findings show that NPLs have significant positive relationship with the export to import ratio, inefficiency, and assets size and a negative relationship with the GDP growth rate, capital adequacy, and inflation rate. The results of the empirical study indicate low economic growth as the primary cause of high NPLs in Nepal and suggest that efficient management and effective financial policies are required for a stable financial system and economy. This is the first complete study in the Nepalese banking system and also the first study that has evaluated the effects of remittance, public debts and interest spreads on NPL. The findings of this study will be helpful in designing the macroprudential and fiscal policies in Nepal.

Keywords

  • economic condition
  • financial stability
  • generalized method of moments
  • monetary policy
  • non-performing loans
  • static panel estimation

JEL Classification

  • E44
  • G21
Open Access

Application of Ethics in the Accounting Profession with an Overview of the Banking Sector

Published Online: 10 Sep 2018
Page range: 139 - 158

Abstract

Abstract

This paper aims to investigate the readiness of the accounting community in Montenegro to implement the Code of Ethics for Professional Accountants.

Also, the aim of this paper is to present the existing situation in the accounting profession in Montenegro, especially when it comes to the regulatory environment, in terms of whether it represents an incentive or limitation for the application of the latest ethical standards in the accounting profession.

In modern business conditions, the relationship between ethics and business becomes the subject of research by numerous experts. The accounting profession took on itself the great responsibility to provide financial information to the public through professional accountants. Professional accountants are daily influenced by the challenges of the accounting profession.

In the accounting profession, ethical problems involve two difficulties that are interconnected. One relates to the question of the nature of the accounting information in terms of whether it is a private or public good, and the other arises from asymmetrically distributed accounting data between those who benefit from the company’s business.

Keywords

  • professional ethics
  • accounting profession
  • professional accountant
  • ethics of managing accountants

JEL Classification

  • G000
  • G210
Open Access

Are Capital Ratios Procyclical? Evidence from Turkish Banking Data

Published Online: 10 Sep 2018
Page range: 159 - 180

Abstract

Abstract

This paper contributes to the literature by providing recent empirical evidence about the positioning of the capital adequacy ratios (Basel II capital adequacy ratio and leverage ratio as proposed by Basel III) of Turkish banks and the business cycle. As in many emerging countries, the Turkish real sector is highly dependent on the banking loans for financing, and consequently, the macroeconomic system is vulnerable to the supply of bank loans. The results reveal that the Basel II capital adequacy ratio of Turkish banks is procyclical at a statistical significance in normal and crisis times. The results of cyclicality tests of the leverage ratio are mixed: if nominal GDP growth is taken as a business cycle indicator, it is procyclical; however, the credit-to-GDP gap signals countercyclical leverage ratios in normal times. In crisis times, the leverage ratio of the Turkish banking system is determined to be countercyclical.

Keywords

  • Capital
  • capital adequacy ratio
  • leverage rate

JEL Classification

  • G21
Open Access

Pre & Post-Merger Financial Performance: An Indian Perspective

Published Online: 10 Sep 2018
Page range: 181 - 200

Abstract

Abstract

The paper compares the before and after merger position of long term profitability with respect to selected Indian banks for a period of 2003-04 to 2013-2014. The financial performance is evaluated on the basis of various variables. The study found a negative impact of merger on return on equity, return on assets, Net profit ratio, yield on advance and yield on investment. However, variables, namely, the Earnings per Share, Profit per employee and Business per employee have shown positive trend and grown after the merger. It has been observed that after the merger, the Assets, Equity, Investment and advances of all banks increases, but due to underutilization, their respective yield decreases. On a contrary, the business per employee and profit per employee have increased due to optimum utilization of human resources. By applying the Comparative Analysis, the paper also assesses the financial performance of acquiring bank with the banking industry. The Bank of Baroda and Oriental bank of commerce has found decreases in Yield on Advances and yield on investment as compared to average of all banks in the postmerger period. State bank of India & IDBI Bank has higher business per employee and profit per employee as compared to industry average.

Keywords

  • Merger
  • Financial performance
  • Bank
  • India

JEL Classification

  • G21
  • G34

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