Search results for: capital market financing

Authors: Y. Fandja, O. Colot, M. Croquet

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Small and medium-sized firms (SMEs) face difficulties in accessing bank credit. Bank credit is actually the main source of external financing for SMEs. In general, SMEs are risky businesses because of the potential opacity maintained by the leader in the management of affairs, the agency conflicts between business owners and third-party funders and the potential opportunism of the leader due to the incompleteness of the contracts. These elements accentuate the problems of information asymmetries between SMEs and bankers leading to capital rationing. Moreover, the last economic crisis reinforced this rationing of capital. However, a long-term relationship between SMEs and their bank would enable the latter to accumulate a set of relevant information allowing the reduction of information asymmetry and, consequently, the reduction of credit rationing. The objective of this research is to investigate the lived experience of SMEs loan officers in their relationships with their clients in order to understand how these relationships can affect the financing structure of these SMEs. To carry out this research, an Interpretative Phenomenological Analysis is implemented. This approach is part of the constructivist paradigm and refers to the subjective narratives of the individual rather than to an objective description of the facts. The role of the researcher is to explore the lived experience of the interviewees and to try to understand the meaning they give to this experience. Currently, several sixty-minute semi-structured interviews with loan officers for SMEs have been conducted. The analysis of the content of these interviews brought out three main themes. First, the relationship between the credit officer and the company manager is complex because the credit officer is not aware of establishing a personal relationship with his client. Second; the emotional involvement in the bank financing decision is present and third, the trust in the relationship between the credit officer and his client is very important. The originality of this research is to use the interpretative phenomenological analysis more specific to psychology and sociology in order to approach in a different way the problem of the financing of SMEs through their particular relations with the bankers.

Keywords: financing structure, interpretative phenomenological analysis, relationship financing, SME

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Authors: O. Colot, M. Croquet, L. Cultrera, Y. Fandja Collince

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The objective of our research is to evaluate the impact of the allowance for corporate equity (ACE) on the financial structure of Belgian SME in order to highlight the potential existence of a fiscal leverage. To limit the biases linked to the rationing of the capital further to the financial crisis, we compare first the dynamic evolution of the financial structure of the Belgian firms over the period 2006-2015 by focusing on three sub-periods: 2006-2008, 2009-2012 and 2013-2015. We give then an international size to this comparison by including SMEs from countries adjoining Belgium (France, Germany, Netherlands and the United Kingdom) and within which there is no ACE. This comparison allows better understanding the fiscal advantage linked to the ACE of firms evolving in a relatively unstable economic environment further to the financial crisis of 2008. This research is relevant given the economic and political context in which Belgium operates and the very uncertain future of the Belgian ACE. The originality of this research is twofold: the long study period and the consideration of the effects of the financial and economic crisis on the financing structure of Belgian SMEs. The results of this research, even though they confirm the existence of a positive fiscal leverage for the tax deduction for venture capital on the financing structure of Belgian SMEs, do not allow the extent of this leverage to be clearly quantified. The comparative evolution of financing structures over the period 2006-2015 of Belgian, French, German, Dutch and English SMEs shows a strong similarity in the overall evolution of their financing.

Keywords: allowance for corporate equity, Belgium, financial structure, small and medium sized firms

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Authors: Mengyu Lu, Yongsheng Guo

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This study investigates how employee incentives affect employee performance in financing from customers. This study followed a grounded theory approach where data were collected through 29 interviews. Main themes and categories were identified through the coding processes. This study found that casual conditions, including financial barriers, informal finance, business location, customer base and customer relationship, influenced the adoption of customer finance in the case of SMEs. The SMEs build and maintain long-term relationships with customers through personal communications. The SMEs engage and motivate employees in customer communications and business financing strategy through financial incentives programs, including bonuses, salary rises, rewards and non-financial incentives, including training opportunities, extra holiday leave, and flexible working hours. Employee performance was measured through financing contribution and job contribution. As a consequence, customers will be well served by employees and get a better customer experience. SMEs can get benefits such as employee engagement, employee satisfaction and sustainable financing sources. This study gets in sight of employee incentives in improving employee performance in customer finance and makes implications to human capital theories. Suggestions are provided to the decision-makers in businesses as incentive programs improve employee performance that, eventually contributes to overall business performance.

Keywords: SMEs, financing from customers, employee incentives, performance-based measurement

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Authors: Yongsheng Guo, Mengyu Lu

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This study investigates how Chinese SMEs manage financial risks in customer financing. 32 interviews were conducted, and grounded theory models were developed to link the causal conditions, actions, and consequences. This study found that Chinese ethical principles, including integrity, friendship, reciprocity, and cultural traits, including collectivism, acquaintance society, and long-term orientation, provide conditions for customer financing. The SMEs establish trust-based relationships with customers and build a social network. The SMEs reduce financial risk through diversification, frequent operations and enterprise reputations. Both customers and SMEs can get benefits, including customer experience and financial rewards for customers and financial resources and customer base for SMEs. But there are some problems, like default for customers and financial cost for enterprises. This study develops a resource and process capability theory of SMEs and a customer capital and customer value theory to connect finance, accounting, and management concepts.

Keywords: CRM, culture, ethics, financing from customer, SME

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Authors: Rahul Ravindranathan, R. P. Gokul

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India, in its efforts towards economic and social development, is currently experiencing a heavy demand for energy. Due to the lack of sufficient domestic energy reserves, the country is highly dependent on energy imports which has increased rapidly at a rate of about 12 % per annum since 2005. Hence, India is currently focusing its efforts to manage this energy supply and demand gap and eventually achieve energy security. One of the most cost effective means to reduce this gap is by adopting Energy efficiency measures in the country. Initial assessments have shown that Energy efficiency measures have an energy conservation potential of about 23%. For an estimated investment potential of USD 8 Billion, the annual energy savings was estimated to be about 180 Billion Units per annum. In order to explore this huge energy conservation potential, many critical factors need to be considered to achieve practical energy savings. Financing options for these investments is one such major factor. Not only has India come out with various policy level as well as technology level drives to promote Energy efficiency but it has also developed various financing schemes to promote investment in Energy Efficiency projects. The Public sector has already come out with certain financing schemes such as the Partial Risk Guarantee Fund (PRGF), Venture Capital Fund (VCF), Partial Risk Sharing Fund (PRSF) etc., and various sectors are gradually utilizing these schemes to implement energy saving measures. However, additional financing options are required in order to explore the untouched energy conservation potential in the country. Hence, there is a need to develop some innovative financing options for India which would motivate the private sectors as well as financing institutions to invest in these energy saving measures. This paper shall review the existing financing schemes launched by the Government of India and highlight the key benefits as well as challenges with respect to these schemes. In addition to this, the paper would also review new and innovative financing schemes for India and how the same could be adopted in other parts of the globe especially in South and South East Asia. This review would provide an insight to the various Governments as well as Financial Institutions in coming out with new financing schemes for their country.

Keywords: energy, efficiency, financing, India

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Authors: Yurdum Cokadar

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The United States is the country where the majority of highly skilled immigrants are hosted. Two-thirds of foreign-born migrants from Turkey - an underrepresented and understudied immigrant group in the United States - are highly skilled. Generated by the aim of filling this gap in the literature, the motivation of this research is to understand highly skilled Turkish immigrant women’s integration into the U.S. labor market, including barriers that they face and strategies they develop to rebuild their career after relocation. The in-depth interviews of 20 highly skilled Turkish women residing in the U.S. revealed that the majority of women participants are either not integrated into the labor market, occupy positions below their skill, or cannot reach the same upper segments of the labor market in the host country, arising from a range of structural and personal barriers interplaying in their career trajectories. Furthermore, many of them cannot transfer their social and cultural capital gained in their home country into the United States. The labor market participation process of these women is analyzed in the light of Bourdieu’s theory of capital and the intersectional approach of gender, class and ethnicity in order to understand the positions of highly skilled immigrant women in the host country labor market.

Keywords: deskilling, gender, class and ethnicity, highly skilled women immigrants, integration into the U.S. the labor market, labor market participation, skilled migration, theory of capital

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Authors: Muhammad Bahrul Ilmi

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The purpose of this research is to analyze the influence of Islamic financing and work relation founding simultaneously and partially towards non-performing financing in Islamic banks. This research was regression quantitative field research, and had been done in Muammalat Indonesia Bank and Islamic Danamon Bank in 3 months. The populations of this research were 15 account officers of Muammalat Indonesia Bank and Islamic Danamon Bank in Surakarta, Indonesia. The techniques of collecting data used in this research were documentation, questionnaire, literary study and interview. Regression analysis result shows that Islamic financing and work relation founding simultaneously has positive and significant effect towards non performing financing of two Islamic Banks. It is obtained with probability value 0.003 which is less than 0.05 and F value 9.584. The analysis result of Islamic financing regression towards non performing financing shows the significant effect. It is supported by double linear regression analysis with probability value 0.001 which is less than 0.05. The regression analysis of work relation founding effect towards non-performing financing shows insignificant effect. This is shown in the double linear regression analysis with probability value 0.161 which is bigger than 0.05.

Keywords: Syariah financing, work relation founding, non-performing financing (NPF), Islamic Bank

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Authors: Khalid Hassan Abdesamed, Kalsom Abd Wahab

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Economic development and growth are significantly linked to the consistent and sustainable sector of small and medium enterprises (SMEs). Banks are the frontrunners in financing and advising SMEs. The main objective of the study is to assess the tendency of SMEs to use the Islamic bank. Model was developed using quantitative method with a hypothetical-deductive testing approach. Model (N = 364) used primary data on the tendency of SMEs to use Islamic banks gathered from questionnaire. It is found by Mann-Whitney test that the tendency to use Islamic bank varies between those firms which consider formal financing with the ones relying on informal financing with the latter tends more to use Islamic bank. This study can serve academic researchers, policy makers, and developing countries as a model of SMEs’ desirability to Islamic banking.

Keywords: formal financing, informal financing, Islamic bank, SMEs

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Authors: Meysam Doaei, Mojtaba Kavand

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WAQF as a part of Islamic social security system is developed in Islam. Traditional WAQF has some limitations which are resolved in WAQF Sukuk. In regard to acceptability of Islamic finance in the world, WAQF Sukuk also has been developing in Islamic countries. In this paper, concept of WAQF, traditional and modern WAQF financing are presented. Then, WAQF Sukuk, its application and its model in Iran are developed.

Keywords: Al-mawqūfat development, traditional financing, modern financing, WAQF Sukuk

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Authors: Zidane Abderrezaq

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This paper’s primary objective is to identify the relative importance of various Islamic financial products, in theory and in practice, by examining the financing records of the Bank Islam Malaysia (Berhad) and the Algeria Islamic Bank. Currently, seven available Islamic financing products are considered viable alternatives to interest-based conventional contracts: mudarabah (trust financing), musharakah (equity financing), ijarah (lease financing), murabahah (trade financing), qard al-hassan (welfare loan), bay` bi al-thaman al-ajil (deferred payment financing), and istisna` (progressive payments). Among these financial products, mudarabah and musharakah are the most distinct. Their unique characteristics (at least in theory) make Islamic banks and Islamic financing viable alternatives to the conventional interest-based financial system. The question before us is to determine the extent of mudarabah and musharakah in Islamic financing in practice. The data are as follows: the average mudarabah is 5% of total financing, and the average musharakah is less than 3%. The combined average of mudarabah and musharakah for the two Islamic banks is less than 4% of the total finance and advances. The average qard al-hassan is about 4%, while istisna` does not yet exist in practice. Murabahah is the most popular and dominates all other modes of Islamic financing. The average use of murabahah is over 54%. When the bay` bi al-thaman al-ajil is added to the murabahah, the percentage of total financing is shown to be 82.68%. This paper also explores some possible reasons why these two Islamic banks appear to prefer murabahah to mudarabah and musharakah.

Keywords: Islamic banking, Islamic finance, Islamic banking rofitability, investment banking

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Authors: Glessiane de O. Almeida, Sérgio Murilo C. Messias, Iracema Machado de Aragão Gomes

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This article discusses issues related to the System of Innovation: Comparing economies of Brazil and South Africa. Having as this study aimed at comparing the Innovation System of the countries mentioned. Then briefly describe the process of Venture Capital/Risk Capital and present the industry innovation in Brazil and South Africa. The methodological approach described in this article is descriptive and the approach is qualitative, taking as a basis secondary data relating to research articles. The main results are related to the different forms of financing of Venture Capital used by countries compared, in addition to the training and economic policy. And finally, it was highlighted the importance of implementation of policy reforms for the Brazil and Africa in the innovation process.

Keywords: innovation, Venture Capital, Economy, National Innovation System (NIS), BRICS

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Authors: Godwin Chigozie Okpara, Eugine Iheanacho

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The paper set out to assess the sustainability of debt in the Nigerian economy. Precisely, it sought to determine the level of debt sustainability and its impact on the growth of the economy; whether internationalization of capital market has positively influenced debt sustainability’s impact on economic growth; and to ascertain the direction of causality between external debt sustainability and the growth of GDP. In the light of these objectives, ratio analysis was employed for the determination of debt sustainability. Our findings revealed that the periods 1986 – 1994 and 1999 – 2004 were periods of severe unsustainable borrowing. The unit root test showed that the variables of the growth model were integrated of order one, I(1) and the cointegration test provided evidence for long run stability. Considering the dawn of internationalization of capital market, the researcher employed the structural break approach using Chow Breakpoint test on the vector error correction model (VECM). The result of VECM showed that debt sustainability, measured by debt to GDP ratio exerts negative and significant impact on the growth of the economy while debt burden measured by debt-export ratio and debt service export ratio are negative though insignificant on the growth of GDP. The Cho test result indicated that internationalization of capital market has no significant effect on the debt overhang impact on the growth of the Economy. The granger causality test indicates a feedback effect from economic growth to debt sustainability growth indicators. On the bases of these findings, the researchers made some necessary recommendations which if followed religiously will go a long way to ameliorating debt burdens and engendering economic growth.

Keywords: debt sustainability, internalization, capital market, cointegration, chow test

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Authors: Irena Paramita Pramono

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Islamic bank is a financial industry with huge potential to grow in Indonesia. Profit-sharing agreement in the operations of Islamic banks distinguishes Islamic banks with conventional banks. Profit-sharing agreement allows sharing of benefits and risks between shahibul maal and mudharib in islamic bank. This study aimed to observe the patterns of influence between the risk-sharing agreement, financing risk and Profitability in Islamic banks. This research used several Islamic banks as sample and path analysis method. The empirical results of this research shows that the profit-sharing agreement in deposits structure has no direct significant effect to ROA, but it has indirect effect to ROA through profit-sharing financing. On the other hand, profit-sharing financing has direct and indirect influence to ROA through financing risk. This research shows that profit-sharing financing has a positive significant effect to the financing risk and also to the ROA. The research recommends Islamic banks to continue using and developing profit-sharing agreement in its operational activities, hence to create value.

Keywords: Islamic bank, profit-loss sharing agreement, financing risk, profitability

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Authors: Sintayehu Aynalem Aseres, Raminder Kaur Sira

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Increasingly, protected areas have been confronting with inadequate conservation funds that make it tough to antithesis the continuing of annihilation. The problem is even grave in developing countries, where Protected Areas (Pas) are mainly government-administered. Subsequently, it needs a strong effort to toughen the self-financing capability of PAs by ripening alternative sources of sustainable financing for realizing the conservation goals, in particular, to save the remaining natural planet. This study, therefore, designed to estimate visitors’ willingness to pay (WTP) for the additional conservation fees using a contingent valuation method. The effect relationship between WTP and both socio-demographic and non-economic factors was scrutinized by binary logistic regression. The mean WTP of foreign visitors has estimated at US$ 7.4 and for that of domestic visitors at US$1, with annual aggregate revenue of US$29, 200. The WTP was strongly influenced by income, satisfaction, environmental concern and attitude. The study has policy implications for the conservationists and park authorities to estimate the non-use values of PAs for developing market-based conservation instruments.

Keywords: conservation, ecotourism, sustainable financing, willingness to pay, protected areas, bale mountains national park

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Authors: Dishant Shahi, Aradhya Shandilya, Nand Kumar

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We study here the impact of the black component referred to as X component in the text on Real estate transactions. The X component involved not only acts as friction in transaction but also leads to dysfunctionality in the capital market of real estate. The effect of the component is presented by using a model of economy which seeks resemblance with that of India involving property deals. The rigidities which hinder smooth transactions in property or land deals are depicted and their impact on the economy as a whole has been modelled. The effect of subprime crisis (2007) on Indian housing capital market and the role which the X component played during it, is also included in one of the sections. In the entire text, we have utilised 4 Quadrant graphs to study supply and demand causalities involved in commercial real estate. At the end we have included the impact of demonetisation as a move to counter the problem of overvaluation in the property assets arising due to the X component. The case of Demonetisation which has been the latest move by the Indian Government to control huge amount of black money in circulation has been included along with its impact on the housing and rent as well as the capital market.

Keywords: X-component, 4Q graph, real estate, capital markets, demonetisation, consumer sentiments

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Authors: Wafa Ghonaim

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Though quite fast on growth, Islamic financing at large, and its diverse instruments, is a controversial matter among scholars. This is evident from the ongoing debates on its Shariah compliance. Arguments, however, are inciting doubts and concerns among clients about its credibility, which is harming this lucrative sector. The work here investigates, particularly, some issues related to the Tawarruq instrument. The work examines the issues of linking Murabaha and Wakala contracts, the reselling of commodities to same traders, and the transfer of ownerships. The work affirms that a multi-agent smart electronic market design would facilitate Shariah compliance. The smart market exploits the rational decision-making capabilities of autonomous proxy agents that enable the clients, traders, brokers, and the bank buy and sell commodities, and manage transactions and cash flow. The smart electronic market design delivers desirable qualities that terminate the need for Wakala contracts and the reselling of commodities to the same traders. It also resolves the ownership transfer issues by allowing stakeholders to trade independently. The bank administers the smart electronic market and assures reliability of trades, transactions and cash flow. A multi-agent simulation is presented to validate the concept and processes. We anticipate that the multi-agent smart electronic market design would deliver Shariah compliance of personal financing to the aspiration of scholars, banks, traders and potential clients.

Keywords: Islamic finance, share'ah compliance, smart electronic markets design, multiagent systems

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Authors: Sobar M. Johari, Ida Putri Anjarsari

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In the transmission of monetary instrument towards real sector of the economy, Bank Indonesia as monetary authority has developed Islamic Bank Indonesia Certificate (abbreviated as SBIS) as an instrument in Islamic open market operation. One of the monetary transmission channels could take place through financing channel from which the fund is used as the source of banking financing. This study aims to analyse the impact of Islamic monetary instrument towards output or economic growth. Data used in this research is taken from Bank Indonesia and Central Board of Statistics for the period of January 2008 until December 2015. The study employs Granger Causality Test, Vector Error Correction Model (VECM), Impulse Response Function (IRF) technique and Forecast Error Variance Decomposition (FEVD) as its analytical methods. The results show that, first, the transmission mechanism of banking financing channel are not linked to output. Second, estimation results of VECM show that SBIS, PUAS, and FIN have significant impact in the long term towards output. When there is monetary shock, output or economic growth could be recovered and stabilized in the short term. FEVD results show that Islamic banking financing contributes 1.33 percent to increase economic growth.

Keywords: Islamic monetary instrument, Islamic banking financing channel, economic growth, Vector Error Correction Model (VECM)

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Authors: N. Yachou, R. Aboulaich

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Home is a basic necessity for human life, that why home financing takes a large chunk of people’s income. Therefore, Islamic and Conventional Banks try to offer new product in order to respond to customer needs related to home financing. Basing on this fact, we propose a Modified Diminishing Partnership model based on profit and loss sharing to reduce the duration of getting the full shares in the house property. Our proposition will be represented by the rental that customer has to give every month to the bank with redemption to increase his shares on the property of the house.

Keywords: home financing, interest rate, rental rate, modified diminishing partnership

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Authors: Md. Qamruzzaman, Wei Jianguo

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Over the decade, it is observed that financial development, through financial innovation, not only accelerated development of efficient and effective financial system but also act as a catalyst in the economic development process. In this study, we try to explore insight about how financial innovation causes economic growth in Bangladesh by using Vector Error Correction Model (VECM) for the period of 1990-2014. Test of Cointegration confirms the existence of a long-run association between financial innovation and economic growth. For investigating directional causality, we apply Granger causality test and estimation explore that long-run growth will be affected by capital flow from non-bank financial institutions and inflation in the economy but changes of growth rate do not have any impact on Capital flow in the economy and level of inflation in long-run. Whereas, growth and Market capitalization, as well as market capitalization and capital flow, confirm feedback hypothesis. Variance decomposition suggests that any innovation in the financial sector can cause GDP variation fluctuation in both long run and short run. Financial innovation promotes efficiency and cost in financial transactions in the financial system, can boost economic development process. The study proposed two policy recommendations for further development. First, innovation friendly financial policy should formulate to encourage adaption and diffusion of financial innovation in the financial system. Second, operation of financial market and capital market should be regulated with implementation of rules and regulation to create conducive environment.

Keywords: financial innovation, economic growth, GDP, financial institution, VECM

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Authors: Koffi Sodokin

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Financing microstructures are increasingly seen as a means of financial inclusion and improving overall well-being in developing countries. In practice, digital transformation in finance can accelerate the optimal functioning of financing microstructures, such as access by households to microfinance and microinsurance. Large households' access to finance can lead to a reduction in income inequality and an overall improvement in well-being. This paper explores the impact of access to digital finance and financing microstructures on household well-being and the reduction of income inequality. To this end, we use the propensity score matching, the double difference, and the smooth instrumental quantile regression as estimation methods with two periods of survey data. The paper uses the FinScope consumer data (2016) and the Harmonized Living Standards Measurement Study (2018) from Togo in a comparative perspective. The results indicate that access to digital finance, as a cultural game changer, and to financing microstructures improves overall household well-being and contributes significantly to reducing income inequality.

Keywords: financing microstructure, microinsurance, microfinance, digital finance, well-being, income inequality

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Authors: Lucian J. Pitt

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The primary purpose of this study is to understand the differences in the relationship between working capital management efficiency, working capital investment decisions and working capital finance decisions and the profitability of firms within the context of two African developing economies, Kenya and Nigeria. The study finds that there is a significant difference in the relationship between the firm’s profitability and the working capital variables which suggests different challenges for working capital management in each of these countries.

Keywords: working capital management, working capital investment, working capital finance, profitability, cash conversion cycle

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Authors: Novawiguna Kemalasari, Ahmad Badawi Saluy

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Recent economic developments are more dependent on the value created by intangible assets than tangible company's assets. Intangible assets in question is intellectual capital that is recognized as the basis of individual, organizational, and general competition in the 21st century. The rapid global economy and technological innovations that have led to tough competition in the business world, make IC creation, management, measurement, and evaluation an important indicator in improving company performance that will affect the value of the company in the future. This study aims to determine the strong influence of intellectual capital on corporate performance, and how the influence of human capital on structural capital and relation capital. By distributing questionnaires to 100 employees of banking companies in Jakarta with middle and upper positions. Approach method used is Partial Least Square (PLS) Based on research that has been done, it can be concluded that human capital has influence on relation capital and structural capital. Similarly, the influence on the performance of the company turned out to human capital and relation capital has a significant influence, but structural capital has a non-significant effect on company performance.

Keywords: human capital, structural capital, relation capital, corporate performance

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Authors: Trisiladi Supriyanto

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This study aims to establish a concept of rate of profit on Islamic banking that can create economic justice and stability in the Islamic Financial Market (Banking and Capital Markets). A rate of profit that creates economic justice and stability can be achieved through its role in maintaining the stability of the financial system in which there is an equitable distribution of income and wealth. To determine the role of the rate of profit as the basis of the profit sharing system implemented in the Islamic financial system, we can see the connection of rate of profit in creating financial stability, especially in the asset-liability management of financial institutions that generate a stable net margin or the rate of profit that is not affected by the ups and downs of the market risk factors, including indirect effect on interest rates. Furthermore, Islamic financial stability can be seen from the role of the rate of profit on the stability of the Islamic financial assets value that are measured from the Islamic financial asset price volatility in the Islamic Bond Market in the Capital Market.

Keywords: economic justice, equitable distribution of income, equitable distribution of wealth, rate of profit, stability in the financial system

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Authors: Hussen Nasir, Mohd Fitri Mansor, Noor Hidayah Abu

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Liberation of the SME market led to a dynamic competitive business environment. SMEs are considered as an engine for economic growth of most nations. SMEs must be willing to adopt the latest technology and incorporate innovation as part of their business strategies. The aim of this study is to examine the innovation practices (innovation strategy and innovation culture) towards sustaining SME’s performance and the moderating effect of intellectual capital on the relationship of innovation practices on SME’s performance. The study will identify the strongest variables that influence the SMEs performance and proposed several hypothesis toward innovation and intellectual capital. Finally, the study will propose a theoretical framework. The current study will contribute to the knowledge of important on the element of intellectual capital as well as innovation practices in the SMEs performance.

Keywords: intellectual capital, innovation practices, SMEs, performance, innovation strategy, innovation culture

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Authors: Ishna Indika Jusi, Rifana Meika

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Terrorism financing method in Indonesia is developing at an alarming rate, to the point, it is now becoming more complex than before. Terrorists traditionally use conventional methods like robberies, charities, and courier services to fund their activities; today terrorists are able to utilize modern methods in financing their activities due to the rapid development in financial technology nowadays; one example is by hacking an illegal Fintech Company. Therefore, this research is conducted in order to explain and analyze the consideration behind the usage of an illegal fintech company to finance terrorism activities and how to prevent it. The analysis in this research is done by using the theory that is coined by Michael Freeman about the reasoning of terrorists when choosing their financing method. The method used in this research is a case study, and the case that is used for this research is the terrorism financing hacking of speedline.com in 2011 by Rizki Gunawan. Research data are acquired from interviews with the perpetrators, experts from INTRAC (PPATK), Special Detachment 88, reports, and journals that are relevant to the research. As a result, this study found that the priority aspects in terms of terrorist financing are security, quantity, and simplicity while obtaining funds.

Keywords: Fintech, illegal, Indonesia, technology, terrorism financing

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Authors: Abraham Castellanos, Christophe Durville, Sophie Echenim

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In this article, a portfolio optimization problem is performed in a Solvency II context: it illustrates how advanced optimization techniques can help to tackle complex operational pain points around the monitoring, control, and stability of Solvency Capital Requirement (SCR). The market SCR of a portfolio is calculated as a combination of SCR sub-modules. These sub-modules are the results of stress-tests on interest rate, equity, property, credit and FX factors, as well as concentration on counter-parties. The market SCR is non convex and non differentiable, which does not make it a natural optimization criteria candidate. In the SCR formulation, correlations between sub-modules are fixed, whereas risk-driven portfolio allocation is usually driven by the dynamics of the actual correlations. Implementing a portfolio construction approach that is efficient on both a regulatory and economic standpoint is not straightforward. Moreover, the challenge for insurance portfolio managers is not only to achieve a minimal SCR to reduce non-invested capital but also to ensure stability of the SCR. Some optimizations have already been performed in the literature, simplifying the standard formula into a quadratic function. But to our knowledge, it is the first time that the standard formula of the market SCR is used in an optimization problem. Two solvers are combined: a bundle algorithm for convex non- differentiable problems, and a BFGS (Broyden-Fletcher-Goldfarb- Shanno)-SQP (Sequential Quadratic Programming) algorithm, to cope with non-convex cases. A market SCR minimization is then performed with historical data. This approach results in significant reduction of the capital requirement, compared to a classical Markowitz approach based on the historical volatility. A comparative analysis of different optimization models (equi-risk-contribution portfolio, minimizing volatility portfolio and minimizing value-at-risk portfolio) is performed and the impact of these strategies on risk measures including market SCR and its sub-modules is evaluated. A lack of diversification of market SCR is observed, specially for equities. This was expected since the market SCR strongly penalizes this type of financial instrument. It was shown that this direct effect of the regulation can be attenuated by implementing constraints in the optimization process or minimizing the market SCR together with the historical volatility, proving the interest of having a portfolio construction approach that can incorporate such features. The present results are further explained by the Market SCR modelling.

Keywords: financial risk, numerical optimization, portfolio management, solvency capital requirement

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Authors: Amrial, Yuri Oktaviani, Ziyan Muhammad Farhan

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On the phase of shifting paradigm into sustainability, Indonesia is involved in Sustainable Development Goals (SDGs) project. That act is revealed by creating Medium and Long Term Roadmap for Sustainable Finance in Indonesia which collaborated design by Indonesia Financial Service Board (OJK) and Ministry of Environment and Forestry. One of alternative for that infrastructure financing is sharia-based financing, Green Sukuk (Sukuk specified on sustainable infrastructure project). Green Sukuk for infrastructure financing in Indonesia can be issued by the government in the form of Sukuk Project Financing. Moreover, banks in Indonesia can also participate for the issuance of Green Sukuk. So that the banks can create a financing for people who are concerned about environmental issues. By using qualitative methods and literature review, this paper aims to discuss potential, strategy and planning of Green Sukuk for financing sustainable infrastructure in the purpose of SDGs. This paper will benefit for government to give scientific discussion on the strategy of Green Sukuk in promoting sustainable goals infrastructure project in Indonesia.

Keywords: green sukuk, infrastructure, SDGs, sustainable

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Authors: Naveed Iqbal Chaudhry, Mian Saqib Mehmood, Asif Mehmood

Abstract:

This study investigates the motivators of foreign direct investment (FDI) which will provide a panacea tool and ground breaking results related to it in case of Pakistan. The study considers exchange rate, market size and human capital as the motivators for attracting FDI. In this regard, time series data on annual basis has been collected for the period 1985–2010 and an Augmented Dickey–Fuller (ADF) and Phillips–Perron (PP) unit root tests are utilized to determine the stationarity of the variables. A bound testing approach to co-integration was applied because the variables included in the model are at I(1) – first level stationary. The empirical findings of this study confirm the long run relationship among the variables. However, market size and human capital have strong positive and significant impact, in short and long-run, for attracting FDI but exchange rate shows negative impact in this regard. The significant negative coefficient of the ECM indicates that it converges towards equilibrium. CUSUM and CUSUMSQ tests plots are with in the lines of critical value, which indicates the stability of the estimated parameters. However, this model can be used by Pakistan in policy and decision making. For achieving higher economic growth and economies of scale, the country should concentrate on the ingredients of this study so that it could attract more FDI as compared to the other countries.

Keywords: ARDL, CUSUM and CUSUMSQ tests, ECM, exchange rate, FDI, human capital, market size, Pakistan

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Authors: Erinma Chibuzo Nwandu

Abstract:

Graduates unemployment has risen astronomically in spite of the emphasis on teaching of small scale business and Entrepreneurship in schools. This study sets out to evaluate the effect of teaching small scale business and Entrepreneurship on graduates’ unemployment in Nigeria. This study adopted the survey research design. Thus the nature of data for this study is primary, sourced by the use of a questionnaire administered to a sample of two thousand and sixty-five (2065) respondents drawn from groups of graduates who are employed, unemployed and self-employed in South East Nigeria. Simple percentages, Chi-square and regression analysis were used to derive useful and meaningful information and test the hypotheses respectively. Findings from the study suggest that Nigeria graduates are ill prepared to embark on small-scale business and entrepreneurship after graduation, and that teaching of small scale business and entrepreneurship in Nigeria tertiary institutions is ineffective on graduate unemployment reduction. Findings also suggest that while a lot of graduates agreed that they have taken a class(s) on small scale or entrepreneurship, they received more theoretical teachings than practical, more so while teachings on small scale business or entrepreneurship motivated graduates to think of self-employment, most of them cannot do a good business plan and hence could not benefit from some kind of Government assisted program for small-scale business and bank loan for the sake of small scale business. Thus, so many graduates are not interested in small scale business or entrepreneurship development as a result of lack of startup capital. The study thus recommends that course content and teaching method of entrepreneurship education needs to be reviewed and re-structured to constitute more practical teachings than theoretical teachings. Also, graduates should be exposed to seminar /workshop for self-employment at least once every semester. There should be practical teaching and practice of developing a business plan that will be viable to attract government or private sponsorship as well for it to be viable to attract financing from financing institutions. Government should provide a fund such as venture capital financing arrangement to empower business startups in Nigeria by graduates’.

Keywords: entrepreneurship, small scale business, startup capital, unemployment

Procedia PDF Downloads 240

Authors: Adeleke Omolade

Abstract:

The study investigated the impacts of capital goods' import and human capital on the economic growth of the Sub Sahahra Africa (SSA). 30 countries were used in the Panel- ARDL analysis where economic growth is the dependent variables and capital goods' import, human capital, primary export, investment exchange rate, among others were used as the independent variables. The result from the panel analysis indicates that capital goods' import will significantly and positively influence economic growth but human capital fails to have significant positive impact on economic growth of the SSA. Earlier the trend analysis and the correlation results have shown that there is a weak association between capital goods' import and human capital in the SSA. The results offer an expository analysis that reveals that the quality of the human capital is very germane to the effective utilization of capital goods' import for the purpose of growth in a primary goods' export dominated region like the SSA.

Keywords: capital goods import, economic growth, human capital, Sub-Sahara Africa

Procedia PDF Downloads 208