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DETERMINANTS OF BUSINESS LOAN DEFAULT IN GHANA

Author(s): Ellis Kofi Akwaa-Sekyi,Portia Bosompra / Language(s): English Issue: 1/2015

The initiation, funding, servicing and monitoring of loans by financial intermediaries has been done without regard to some critical factors which could have averted the likelihood of default. The study aimed at measuring the extent that owner-specific, borrower-specific, loan and lender-specific characteristics could determine the probability of loan default. The study used logistic regression for 224 business customers of a bank in Ghana from its nation-wide branches. The study found that owner’s extra income (ownership characteristics), multiple borrowing, diversion of loan purpose (borrower characteristics), loan price, loan purpose, loan age, repayment plan (loan characteristics) and underfunding (lender characteristics) significantly determined the probability of business loan default. The overall model predicted up to 78.5% of variations in the likelihood of default. The hierarchy of strong determinants given by their odd ratios were loan purpose (47.9 times), underfunding (19.2 times), diversion of loan purpose (11.7 times) multiple borrowing (9.4 times) and owner’s extra income (8.2 times). The study can conclude that financial intermediaries should be wary of the credit granting process taking cognisance of ownership, borrower, loan and lender characteristics especially the significant predictors. Combining quantitative and qualitative variables as determinants of default could be considered in future.

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MARKET INSURANCE AND RISKS IN THIS FIELD

Author(s): Catrina Ersilia / Language(s): English Issue: 2/2017

The insurance market can be considered a market where all sorts of anomalies can be encountered or a current acquisition for a situation considered to be certain or relative future, depending on the type of insurance. For the most part, assurance is based on a premise, a hypothesis that is generally based on several factors of influence. Generally, the most important factors in making such a decision are generated by the human-sensitive factor or the economicprotective. Therefore, by joining the insurance market and purchasing any kind of insurance, we must also take into account the risks that arise from these products. Generally, most people perceive these insurance policies in different areas as a future guarantee without considering additional elements that can highlight risk elements that may alter the expected outcome of the acquirer. An important element to mitigate these risks would be the implementation and use of internal control over the supply chain, control that would make a difference between an activity under normal, predictable and legal conditions and a random activity with many elements of risk that can cause major damage to those involved, and to the insurer and the insured. Through this paper, the author aimed to highlight the importance of internal control in insurance companies, as well as the consequences of the lack of internal control within these societies.

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The Impact of R&D Collaboration on Technological Innovation in European Countries

Author(s): Kamilia Loukil / Language(s): English Issue: 4/2018

The present study examines the impact of collaboration in research and development (R&D) on technological innovation in emerging and developing countries. For this purpose, we use data on R&D expenditures performed by the public sector and funded by the business sector and R&D expenditures performed by the business sector and funded by abroad for R&D collaboration, while technological innovation is measured by US patent applications. Linear regressions are applied on data for 22 countries during the period 2006-2013. Findings show that both types of collaboration increases the innovation level. The main conclusion of our study is that the promotion of R&D cooperation between all sectors of the economy is an effective instrument of innovation policy in European countries.

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Impact of Digitalization in Business World

Author(s): Alina Magdalena Ilcus / Language(s): English Issue: 4/2018

Digitalization is in every field of our lives: education and schools, social networking, in business, as almost each company has a website and in business processes: marketplaces, logistics, and more and more, in accounting. Consequently, the current age became “digital era”. Digital technology allows making tasks faster and more accurate. That’s why, its growth impacts digital marketplace and continues to grow each and every year: Amazon, Alibaba, Ebay, Emag, Olx. Digital networking is developing fast too: Facebook, Instagram, Twitter, Pinterest, LinkedIn. This article focuses on being digital issue in the business world by presenting some of its advantages and why it is important going digital for companies.

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Proposal for a Decision Support System to Predict Financial Distress

Author(s): Madalina Ecaterina Popescu / Language(s): English Issue: 1/2015

In the context of economic instability a decision support system that could provide early warning signals of financial distress to a company a few years before actually turning to insolvency could play an important role in the decision making processes inside a company. Thus, the aim of this paper consists in developing a decision support system for financial distress for the case of the Romanian companies listed on the Bucharest Stock Exchange. A practical solution for predicting financial distress with one or even two years in advance is presented and the results of the models’ prediction accuracy are encouraging us to believe that these models can actually improve the strategic management and planning departments in a company.

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Balance Sheet of a Central Bank – A Source of Information about the Economic Position of a Country. A Comparative Study of USA and China

Author(s): Rumiana Górska / Language(s): English Issue: 4/2014

The objective of the paper is to present the results of a comparative analysis of the balance sheets of the central banks of USA and China in order to investigate how they reflect the changes in the international positions of these countries on the world economic scene after 2000. The growth of a country’s GDP is usually accompanied by an increase in the monetary base (and consequently the monetary aggregates), but there are also other factors determining the changes in a central bank’s balance sheet. The study presented in the paper contains two steps. First, the collateral of money issue in USA and China during the period 2000-2012 is compared. The main collateral of money issue in USA are U.S. Treasury securities, but after 2008 also mortgage-backed securities. The main collateral of money issue in China are foreign assets. Second step of the study is a comparison of the international position of these countries. The presented analysis confirms that the collateral of money issue in USA is debt, which reflects the position of USA as a world debtor. The collateral of money issue in China are foreign assets, mainly foreign currencies, which reflects the role of China as a world exporter and creditor.

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Board Dynamics and Financial Reporting Quality in Nigeria

Author(s): Victor Chiedu Oba / Language(s): English Issue: 2/2014

The code of corporate Governance code (2011) in Nigeria was ushered with a target to enhance the monitoring function of board of directors and audit committees. This study investigates the ability of certain board dynamics to influence management attitude in relation to reporting quality in Nigerian listed firms. Accruals, a proxy for financial reporting quality is estimated using the Dechow and Dichev model. Using a panel data obtained from annual reports of 69 listed Nigerian firms from 2008 to 2012, the study documents that board independence, board tenure, gender diversity and directors’ shareholding are significant predictors of financial reporting credibility in Nigeria. The board size was found to have a neutral effect on financial reporting quality. This study extends existing literature by contributing to knowledge on how board traits influence financial reporting quality in emerging economies such as Nigeria.

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The Influence of Working Assets Efficiency Management on the Profitability of Trade in Serbia

Author(s): Radojko Lukić / Language(s): English Issue: 5/2013

The efficiency of working assets (working capital) management is one of the crucial factors of performance in trade. It is quite understandable when one takes into account the fact that the biggest part of total assets of the trading companies is related to working assets, i.e. inventories as a part of current assets. With the application of appropriate methodology this paper explores determinants and impact of efficiency of working assets management on the profitability of trade in Serbia for the 2008-2012 period, based on an example of commercial companies which are required by law to submit the final financial statements. General conclusion is that there was insufficient efficiency of working assets in observed period, which was reflected on the profitability of trade in Serbia. Related to this, it is necessary to take all relevant measures to improve the efficiency of working assets in order to increase the profitability of trade in Serbia. This especially applies to the application of modern information and communication technologies, particularly in the supply chain management (enterprise resource planning system, RFID).

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The Impact of Value Added Intellectual Coefficient Components on Financial Health

Author(s): Faris Nasif Al-Shubiri / Language(s): English Issue: 3/2013

The success of any sector in the financial market depends on how administrators can manage their companies? And this case reflected on the success in the market, which is characterized by intense competition and this also depends on the creativity and the technology used, which includes knowledge, experience and skills. This study therefore tries to investigate the impact of value added intellectual coefficient components on financial health in Jordanian industrial sector listed in Amman Stock Exchange. The results were based on the data taken from 11 industrial sectors from 2005- 2011. The results indicates a statistically significant impact of human, employed element and intellectual capital as whole and financial health as productivity and profitability dependent variables at a strong level 1% but statistically significant structural capital with the dependent variable is liquidity at a strong level 1%. The researcher recommends attention to the assets of knowledge and encourages the efforts of human development, training and motivating them while giving flexibility to employees for the purposes of creativity and innovation.

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What Future for Social Reporting and Accountability in Academic Systems. An Overview of the Italian Case

Author(s): Paolo Ricci / Language(s): English Issue: 2/2013

The present work aims to give an overview of accountability systems in Italian universities and of their prospects following recent reform laws. After a sketch of pre-reform conditions and of the rationale behind change, particularly focused on the improvement of non-financial communication towards stakeholders, the work deals with social reporting in academic research and education, its potential developments and the first results reached. Further work is still needed to fully grasp measurement complexities and the potential lying in the evaluation of academic performance – especially with relation to sociality and sustainability – that plays an important role in national and international ranking systems.

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The Unintended Consequences of Accounting Harmonization in a Transition Country: A Case Study of Management Accounting of Private Czech Companies

Author(s): David Procházka / Language(s): English Issue: 4/2017

The paper addresses the impact of adoption of International Financial Reporting Standards on the mutual relations between financial and management accounting of private Czech companies under foreign control. Being acquired by a parent company, a subsidiary loses its independence and faces institutional duality, as it must respond to the parent’s directives and is simultaneously confronted with local pressures. Using data from a survey, the logistic regression model provides evidence that subsidiaries under foreign control steadily integrate IFRS-based principles into their management accounting subsystems. The study extends current research on the integration of management and financial accounting by identifying a special case from a transition country where management accounting of subsidiaries converges with financial accounting of parents. A radical change in the traditional organization of management accounting is the strategic response of subsidiaries to the constraints of the local regulatory framework for financial reporting and taxation. However, aligning subsidiary practices with the parent’s goals is conditioned by the existence of a functioning compensation scheme of the subsidiary’s management with reference to IFRS-based results.

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Director Training and Financial Disclosure: Asian Insights

Author(s): Qaiser Rafique Yasser,Abdullah Al Mamun,Marcus Rodrigs / Language(s): English Issue: 2/2017

We provide evidence regarding the relationship between director training programs and improved financial reporting. Director Training Programs (DTP) help directors better understand the specific context in which a firm operates, including its operations and environment; awareness of business norms and values; standards of probity and accountability; and their fiduciary duties as an agent of investors. This study explores a recent requirement for director training and its effect on the quality of financial reporting for publicly listed companies in three eastern countries. This study examines the relationship between DTP and the quality of financial reporting of Australian, Malaysian and Pakistani publicly listed companies by using a sample of data from 2011 to 2013. We determined that Australian companies that incur additional DTP expenditures and have a flexible training schedule (Online DTP)improve their financial reporting quality and that a well established DTP positively affects financial reporting quality in Malaysia. In addition, the results indicate that firm size negatively affects financial reporting quality in the Asia Pacific and older companies (firm age) suffer from low-quality financial reporting.

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International Accounting Standardisation Effects on Business Management during the Global Financial Crisis

Author(s): Gyorgy Csebfalvi / Language(s): English Issue: 1/2012

This study examined the impact of the adoption of international accounting standards on the management performance of businesses listed on the Budapest Stock Exchange in Hungary. The financial data are taken from accounts published on the Budapest Stock Exchange and in the Hungarian Business Information database. The adoption decision model tested if the demand from internal performance evaluations is a factor in businesses decisions to adopt international accounting standards during the global financial crisis situations. The results show that those businesses which have adopted international standards achieved higher and statistically significant positive coefficients than those following local accounting rules. We found that larger firms (those with more leverage, higher market capitalization and substantial foreign sales) were more likely to have adopted international accounting standards. This suggests that the increase in the sensitivity of turnover to accounting performance post-adoption is primarily driven by heightened turnover sensitivity to accounting losses.

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Considerations on the Institutional Independence Statute of the Romanian Court of Accounts

Author(s): Elena–Carmen Bragadireanu / Language(s): English Issue: 2/2011

The article is an analysis of the way the principle of independence works at the level of the Romanian Court of Accounts, the institution habilitated by legal provisions to conduct the financial control/audit activity, in order to obtain an assurance that the financial resources required to cover common needs, their distribution in relation to the priorities set by the competent bodies, as well as the use of public funds are unfold in conditions of economical and social efficiency, involving harmonization of interests, sizing of financial resources and, last but not least, their channeling towards various programmed destinations.

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The Importance of Implementing CRM in Cost Management

Author(s): Florica Badea / Language(s): English Issue: S2/2009

CRM (Customer relationship management) is formed from a major element of business strategy of a modern company, and it’s based on creating and developing of personalized relations with customers, having the purpose of raising the level of satisfaction and profitability of Romanian and international organizations. The implementation of CRM has the following advantages: optimizing the sale potential, increased reactivity, customization, etc. The coordination of the management’s life cycle of customers from different countries is a difficult problem. This problem could be solved by finding a CRM partner who is capable of fitting in with the international strategy of customer relationship management, of having a quick reaction to the evolution of different markets of the multinational and adopting a customized approach of every market.

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Organizational Management of the European Court of Auditors

Author(s): Celestin Constantin,Roxana Gănescu / Language(s): English Issue: S2/2009

In a modern democratic society, the functioning of an independent external audit is essential for complying with the obligation of transposing in efficient actions and of reporting the economic use of the public funds. The European Court of Auditors is the external control institution of the European Union and it contributes to improving in various aspects the financial management of the Union’s funds. The Court plays a crucial part for the Union’s citizens. The European Commission that has the mission of the European Union’s budget execution, must make sure that the Union’s funds are well managed, in compliance with the applicable legislation in the field. The Union’s funds’ management and control are performed in cooperation with the member states. The Union’s expenses are the object of multiple controls on several levels, both inside the Committee representing the administration of the member states and in the beneficiary countries. The Committee performs an internal audit, which contributes to providing an adequate control system and that must function as efficiently as possible. The Court’s purpose is that of an external auditor that assesses the budget financial management, so that there is provided an effective management to the citizens’ benefit.

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The Analysis of the Operative Profit Margin of Trade Companies in Serbia

Author(s): Radojko Lukić / Language(s): English Issue: 5/2018

Both theoretical and practical importance has recently been attached to an analysis of the operating profit margin as a measure of the long-term performance of companies. In the integrated financial reporting it is presented through various indicators based on it. In view of this, we have made a comparative analysis of the operating profit margin and its impact on the performance of trade companies in Serbia and comparable countries. The general conclusion is that it shows a growth tendency and is, nevertheless, lower in comparison to trading companies from countries of a developed market economy. In order to increase the operating profit margin, as a measure of long-term performance, it is necessary to manage the financial structure of the trading companies in Serbia as effectively as possible.

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Analysis of The Financial Performance of Entities from Tourism Industry

Author(s): Daniel Dumitru Leon / Language(s): English Issue: 17/2018

Tourism is currently one of the sectors with the most important growth potential, alongside the IT sector. A healthy tourism sector is beneficial to a country's economy, because it contributes directly to employment, contributes to the creation of added value and, last but not least, helps balancing the balance of payments. Romania is considered to be a country with a huge touristic potential, but unfortunately we do not really know how to value it. In this article I will determine what is the evolution of the financial performances of the entities in the tourism industry. Thus, in order to achieve this study, I will apply a series of performance indicators on 5 companies that are active in the tourism industry, for the time period 2012 - 2016, companies listed on the Bucharest Stock Exchange. I will try to determine the current situation with regard to the financial performance of these entities, as well as the main factors that directly influence these increases.

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Microeconomic Factors Affecting Banks’ Financial Performance: The Case of Romania

Author(s): Lavinia Mihaela Guţu / Language(s): English Issue: 07/2015

Banks are important cells in the economy as they have a significant role by maintaining and encouraging the development of economic sectors. They refocus the resources from those who have surplus to those which have a deficit. Therefore, as any other enterprises, performance is highly desirable for banks and, then, it is crucial to discover what the main factors that influence this objective are. So, this paper analyzes the microeconomic factors affecting bank’s financial performance focusing on 11 entities for the period between 2003 and 2013. The performance is measured by return on assets. The independent variables used are bank’s size, financial leverage,loans to assets ratio, deposits to assets ratio, number of employees, liquidity, net result and monetary policy rate. The results show that bank’s size, loans to assets ratio and liquidity have not a significant impact on performance. Financial leverage has a negative impact, meanwhile the number of employees, deposits to assets ratio and net result have a positive effect.

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Determinants of bank profitability: Islamic versus conventional banks

Author(s): Tariq Alzoubi / Language(s): English Issue: 3/2018

This research analyzes the determinants of bank profitability by investigating the internal factors that affect the profitability of Islamic banks and conventional banks. It then compares the results from the two types in order to understand how they differ from each other. As previous researchers focus on either Islamic or conventional banks, this research will analyze both by comparing how they are each influenced by profitability factors. Few researches have attempted to compare the profitability of Islamic and conventional banks using a relatively small sample. This research uses a fixed effect panel data analysis on a large sample of 68 banks (42 Islamic and 26 conventional banks) from 13 MENA countries, covering the period of 2006 until 2016. Using several variables, including bank size, equities to assets, loans to assets, deposits to assets, cash to assets and securities to assets, the results show that bank size, equities to assets and deposits to assets have a significant positive effect on Islamic banks’ profitability, while they have a significant negative effect on conventional banks’ profitability; loans to assets and cash to assets have no effect on bank profitability for either Islamic or conventional banks; and securities to assets has a significant negative effect on Islamic banks’ profitability, while it has a significant positive effect on conventional banks’ profitability. The results also show that bank size, equities to assets, deposits to assets and cash to assets contribute more to Islamic banks’ profitability compared to conventional banks, while loans to assets and securities to assets contribute more to conventional banks’ profitability compared to Islamic banks.

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