Search results for: financial analysis

Authors: Trisiladi Supriyanto

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Although much research has been done on the pricing benchmark both in terms of fiqh or Islamic economic perspective, but no substitution for the concept of interest (rate of interest) up to now in the application of Islamic Banking because some of the jurists from the middle east even allow the use of a benchmark rate such as LIBOR (London Interbank Offered Rate) as a measure of Islamic financial asset prices, so in other words, they equate the concept of rate of interest with the concept of rate of profit, which is the core reason (raison detre) for the replacement of usury as instructed in the Quran. This study aims to find the concept of rate of profit on Islamic banking that can create economic justice and stability in Islamic Banking and Capital market. 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 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 that are measured from the Islamic financial asset price volatility in Islamic Bond Market in Capital Market.

Keywords: Rate of profit, economic justice, stability, equitable distribution of income, equitable distribution of wealth

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Authors: Marat Kozhomberdiev

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The research will investigate the modern corporate finance management technologies currently used in the era of digitalization of the global economy and the degree to which financial institutions are utilizing these new technologies in the field of corporate finance management in Kyrgyzstan. The main purpose of the research is to reveal the role of financial management technologies as joint service centers, intercompany banks, specialized payment centers in the third-world country. Particularly, the analysis of the implacability of automated corporate finance management systems such as enterprise resource planning system (ERP) and treasury management system (TMS) will be carried out. Moreover, the research will investigate the role of cloud accounting systems in corporate finance management in Kyrgyz banks and whether it has any impact on the field of improving corporate finance management. The study will utilize a data collection process via surveying 3 banks in Kyrgyzstan, namely Mol-Bulak, RSK, and KICB. The banks were chosen based on their ownerships, such as state banks, private banks with local authorized capital, and private bank with international capital. The regression analysis will be utilized to reveal the correlation between the ownership of the bank and the use of new financial management technologies. The research will provide policy recommendations to both private and state banks on developing strategies for switching and utilizing modern corporate finance management technologies in their daily operations.

Keywords: digital economy, corporate finance, digital environment, digital technologies, cloud technologies, financial management

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Authors: Humayun Murshed, Shibly Abdullah

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The research conducted in early seventies apparently assumed the existence of a universal decision model for union negotiators and furthermore tended to regard financial information as a ‘neutral’ input into a rational decision-making process. However, research in the eighties began to question the neutrality of financial information as an input in collective bargaining rather viewing it as a potentially effective means for controlling the labour force. Furthermore, this later research also started challenging the simplistic assumptions relating particularly to union objectives which have underpinned the earlier search for universal union decision models. Despite the above developments there seems to be a dearth of studies in developing countries concerning the use of financial information in collective bargaining. This paper seeks to begin to remedy this deficiency. Utilising a case study approach based on two enterprises, one in the public sector and the other a multinational, the universal decision model is rejected and it is argued that the decision whether or not to use financial information is a contingent one and such a contingency is largely defined by the context and environment in which both union and management negotiators work. An attempt is also made to identify the factors constraining as well as promoting the use of financial information in collective bargaining, these being regarded as unique to the organizations within which the case studies are conducted.

Keywords: collective bargaining, developing countries, disclosures, financial information

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Authors: Marco Barassi, Nicola Spagnolo

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This paper uses a DCC-GARCH model framework to examine mean and volatility spillovers (i.e. causality in mean and variance) dynamics between financial centers and the stock market indexes of the BRICS countries. In addition, tests for changes in the transmission mechanism are carried out by first testing for structural breaks and then setting a dummy variable to control for the 2008 financial crises. We use weekly data for nine countries, four financial centers (Germany, Japan, UK and USA) and the five BRICS countries (Brazil, Russia, India, China and South Africa). Furthermore, we control for monetary policy using domestic interest rates (90-day Treasury Bill interest rate) over the period 03/1/1990 - 04/2/2014, for a total of 1204 observations. Results show that the 2008 financial crises changed the causality dynamics for most of the countries considered. The same pattern can also be observed in conditional correlation showing a shift upward following the turbulence associated to the 2008 crises. The magnitude of these effects suggests a leading role played by the financial centers in effecting Brazil and South Africa, whereas Russia, India and China show a higher degree of resilience.

Keywords: financial crises, DCC-GARCH model, volatility spillovers, economics

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Authors: Palash Bandyopadhyay

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Background and significance of the study: Crude oil and natural gas is of crucial importance due to its increasing demand in India. The demand has been increased because of change of lifestyle overtime. Since India has poor utilization of oil production capacity, constantly the import of it has been increased progressively day by day. This ultimately hit the foreign exchange reserves of India, however it negatively affect the Indian economy as well. The financial performance of crude oil and natural gas companies in India has been trimmed down year after year because of underutilization of production capacity, enhancement of demand, change in life style, and change in import bill and outflows of foreign currencies. In this background, the current study seeks to measure the financial performance of crude oil and natural gas companies of India in the post liberalization period. Keeping in view of this, this study assesses the financial performance in terms of liquidity management, solvency, efficiency, financial stability, and profitability of the companies under study. Methodology: This research work is encircled on yearly ratio data collected from Centre for Monitoring Indian Economy (CMIE) Prowess database for the periods between 1993-94 and 2012-13 with 20 observations using liquidity, solvency and efficiency indicators, profitability indicators and financial stability indicators of all the major crude oil and natural gas companies in India. In the course of analysis, descriptive statistics, correlation statistics, and linear regression test have been utilized. Major findings: Descriptive statistics indicate that liquidity position is satisfactory in case of three crude oil and natural gas companies (Oil and Natural Gas Companies Videsh Limited, Oil India Limited and Selan exploration and transportation Limited) out of selected companies under study but solvency position is satisfactory only for one company (Oil and Natural Gas Companies Videsh Limited). However, efficiency analysis points out that Oil and Natural Gas Companies Videsh Limited performs effectively the management of inventory, receivables, and payables, but the overall liquidity management is not well. Profitability position is very much satisfactory in case of all the companies except Tata Petrodyne Limited, but profitability management is not satisfactory for all the companies under study. Financial stability analysis shows that all the companies are more dependent on debt capital, which bears a financial risk. Correlation and regression test results illustrates that profitability is positively and negatively associated with liquidity, solvency, efficiency, and financial stability indicators. Concluding statement: Management of liquidity and profitability of crude oil and natural gas companies in India should have been improved through controlling unnecessary imports in spite of the heavy demand of crude oil and natural gas in India and proper utilization of domestic oil reserves. At the same time, Indian government has to concern about rupee depreciation and interest rates.

Keywords: financial performance, crude oil and natural gas companies, India, linear regression

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Authors: Ndagi Salihu

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Corporate governance mechanisms are the control measures for ensuring that all the interests groups are equally represented and management are working towards wealth creation in the interest of all. Therefore, there are many empirical studies during the last three decades on corporate governance and firm performance. However, little is known about the effects of family ownership on the relationship between corporate governance and firm performance, especially in the developing economy like Nigeria. This limit our understanding of the unique governance dynamics of family ownership with regards firm performance. This study examined the impact of family ownership on the relationship between governance mechanisms and financial performance of publicly listed companies in Nigeria. The study adopted quantitative research methodology using correlational ex-post factor design and secondary data from annual reports and accounts of a sample of 23 listed companies for a period of 5 years (2014-2018). The explanatory variables are the board size, board composition, board financial expertise, and board audit committee attributes. Financial performance is proxy by Return on Assets (ROA) and Return on Equity (ROE). Multiple panel regression technique of data analysis was employed in the analysis, and the study found that family ownership has a significant positive effect on the relationships between corporate governance mechanisms and financial performance of publicly listed firms in Nigeria. This finding is the same for both the ROA and ROE. However, the findings indicate that board size, board financial expertise, and board audit committee attributes have a significant positive impact on the ROA and ROE of the sample firms after the moderation. Moreover, board composition has significant positive effect on financial performance of the sample listed firms in terms of ROA and ROE. The study concludes that the use of family ownership in the control of firms in Nigeria could improve performance by reducing the opportunistic actions managers as well as agency problems. The study recommends that publicly listed companies in Nigeria should allow significant family ownership of equities and participation in management.

Keywords: profitability, board characteristics, agency theory, stakeholders

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Authors: Mirjana Dragas, Marli Gonan Bozac, Morena Paulisic

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Corporate social responsibility (CSR) is a balance between strategic and financial goals of companies, as well as social needs. The integration of competitive strategy and CSR in food and beverage industry has allowed companies to find new sources of competitive advantage. The paper discusses the fact that socially responsible companies encourage co-operation with socially responsible suppliers in order to strengthen market competitiveness. In addition to the descriptive interpretation of the results obtained by a questionnaire, factor analysis was used, while principal components analysis was applied as a factor extraction method. The research results based on two multiple regression analyses show that: (1) selecting the CSR supplier explains a statistically significant part of the variance of the results on the scale of financial aspects of competitiveness (as much as 44.7% of the explained variance); and (2) selecting the CSR supplier is a significant predictor of non-financial aspects of competitiveness (explains 43.9% of the variance of the results on the scale of non-financial aspects of competitiveness). A successful competitive strategy must ultimately support the growth strategy. This implies an analytical approach to finding factors that influence competitiveness through socially sustainable solutions and satisfactory top management decisions.

Keywords: competitiveness, corporate social responsibility, food and beverage industry, supply chain decision making

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Authors: Giulia Dal Maso

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Within the contemporary financial capitalist configuration, the interplay of Chinese statecraft and financialization has shaped a new ‘ecology of financial expertise.’ This indicates the emergence of a new financial technocratic governance; that is increasingly changing the Chinese economy, reducing the state’s administrative and fiscal functions and increasing state assets in accordance with a new shareholder logic. In this shift, the creation of the stock market by the state was conceived not only as a new redistributor of wealth but as a ‘clearing house’ for social discontent resulting from work casualization, wage repression and a lack of social welfare. Since its inception in the wake of Deng Xiaoping’s reforms, the Chinese state has used the stock market as a means of securing social legitimation by providing a prearranged space where the disaggregated and vulnerable subjects left behind by the dismantlement of the collective work units of the Maoist period (danwei) can congregate. However, fieldwork which included both participant observation as well as interviews with investors in brokerage rooms in Shanghai (where one of only two mainland Chinese stock exchanges is situated) reveals that both new formal and informal financial experts—namely the haigui (Chinese returnees with a financial degree abroad) and sanhu (individual Chinese scattered players), are equally dissatisfied with their investing activities. They express discontent with the state, which they hold responsible for the summer 2015 financial crisis and for the financial turmoil that jeopardizes China’s financial and political project. What the investors want is a state that will guarantee the continuation of the current gupiaore ‘stock fever’. This paper holds that, by embracing financialization, the state is undermining the contract at the base of its legitimacy.

Keywords: Chinese state, Deng Xiaoping, financial capitalism, individual investors

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Authors: Josip Visković, Josip Arnerić, Ante Rozga

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Based on the fact that volatility is time varying in high frequency data and that periods of high volatility tend to cluster, the most successful and popular models in modelling time varying volatility are GARCH type models. When financial returns exhibit sudden jumps that are due to structural breaks, standard GARCH models show high volatility persistence, i.e. integrated behaviour of the conditional variance. In such situations models in which the parameters are allowed to change over time are more appropriate. This paper compares different GARCH models in terms of their ability to describe structural changes in returns caused by financial crisis at stock markets of six selected central and east European countries. The empirical analysis demonstrates that Markov regime switching GARCH model resolves the problem of excessive persistence and outperforms uni-regime GARCH models in forecasting volatility when sudden switching occurs in response to financial crisis.

Keywords: central and east European countries, financial crisis, Markov switching GARCH model, transition probabilities

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Authors: Arzu K. Kamberli, Tolga Ulusoy

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Technological developments and the resulting global communication have made the 21st century when large capitals are moved from one end to the other via a button. As a result, the flow of capital inflows has accelerated, and capital inflow has brought with it crisis-related infectiousness. Considering the irrational human behavior, the financial crisis in the world under the influence of the whole world has turned into the basic problem of the countries and increased the interest of the researchers in the reasons of the crisis and the period in which they lived. Therefore, the complex nature of the financial crises and its linearly unexplained structure have also been included in the new discipline, econophysics. As it is known, although financial crises have prediction mechanisms, there is no definite information. In this context, in this study, using the concept of electric field from the electrostatic part of physics, an early econophysical approach for global financial crises was studied. The aim is to define a model that can take place before the financial crises, identify financial fragility at an earlier stage and help public and private sector members, policy makers and economists with an econophysical approach. 2001 Turkey crisis has been assessed with data from Turkish Central Bank which is covered between 1992 to 2007, and for 2001 Argentina crisis, data was taken from IMF and the Central Bank of Argentina from 1997 to 2007. As an econophysical method, an analogy is used between the Gauss's law used in the calculation of the electric field and the forecasting of the financial crisis. The concept of Φ (Financial Flux) has been adopted for the pre-warning of the crisis by taking advantage of this analogy, which is based on currency movements and money mobility. For the first time used in this study Φ (Financial Flux) calculations obtained by the formula were analyzed by Matlab software, and in this context, in 2001 Turkey and Argentina Crisis for Φ (Financial Flux) crisis of values has been confirmed to give pre-warning.

Keywords: econophysics, financial crisis, Gauss's Law, physics

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Authors: Maria Krambia-Kapardis, Andreas Kapardis

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The paper discusses regulatory and legislative measures implemented by various nations in an effort to avert another financial crisis. More specifically, to address the financial crisis, the European Commission followed the practice of other developed countries and implemented a European Economic Recovery Plan in an attempt to overhaul the regulatory and supervisory framework of the financial sector. In 2010 the Commission introduced the European Systemic Risk Board and in 2011 the European System of Financial Supervision. Some experts advocated that the type and extent of financial regulation introduced in the European crisis in the wake of the 2008 crisis has been excessive and counterproductive. In considering how different countries responded to the financial crisis, global regulators have shown a more focused commitment to combat industry misconduct and to pre-empt abusive behavior. Regulators have also increased funding and resources at their disposal; have increased regulatory fines, with an increasing trend towards action against individuals; and, finally, have focused on market abuse and market conduct issues. Financial regulation can be effected, first of all, through legislation. However, neither ex ante or ex post regulation is by itself effective in reducing systemic risk. Consequently, to avert a financial crisis, in their endeavor to achieve both economic efficiency and financial stability, governments need to balance the two approaches to financial regulation. Fiduciary duty is another means by which the behavior of actors in the financial world is constrained and, thus, regulated. Furthermore, fiduciary duties extend over and above other existing requirements set out by statute and/or common law and cover allegations of breach of fiduciary duty, negligence or fraud. Careful analysis of the etiology of the 2008 financial crisis demonstrates the great importance of corporate governance as a way of regulating boardroom behavior. In addition, the regulation of professions including accountants and auditors plays a crucial role as far as the financial management of companies is concerned. In the US, the Sarbanes-Oxley Act of 2002 established the Public Company Accounting Oversight Board in order to protect investors from financial accounting fraud. In most countries around the world, however, accounting regulation consists of a legal framework, international standards, education, and licensure. Accounting regulation is necessary because of the information asymmetry and the conflict of interest that exists between managers and users of financial information. If a holistic approach is to be taken then one cannot ignore the regulation of legislators themselves which can take the form of hard or soft legislation. The science of averting a financial crisis is yet to be perfected and this, as shown by the preceding discussion, is unlikely to be achieved in the foreseeable future as ‘disaster myopia’ may be reduced but will not be eliminated. It is easier, of course, to be wise in hindsight and regulating unreasonably risky decisions and unethical or outright criminal behavior in the financial world remains major challenges for governments, corporations, and professions alike.

Keywords: financial crisis, legislation, regulation, financial regulation

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Authors: Apedzan Emmanuel Kighir

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This research investigates dividends smoothing among non-financial companies trading on the Nigerian Stock Exchange in an era of unclaimed dividends from 2004 to 2013. There has been a raging controversy among Regulatory Authorities, Company Executives, Registrars of Companies, Shareholders and the general public regarding the increasing incidence of unclaimed dividends in Nigeria. The objective of this study is to find out if corporate earnings management through dividends smoothing is implicated in unclaimed dividends among Nigerian non-financial firms. The research used panel data and employed Generalized Method of Moment as method of analysis. The research finds evidence of dividends-smoothing in this era of unclaimed dividends in Nigeria. The research concludes that dividends-smoothing is a trigger and red flag for unclaimed dividends, an output of earnings management. If earnings management and hence unclaimed dividends in Nigeria is allowed to continue, it will lead to great consequences to the investors and corporate policy of government. It is believed that the research will assist investors and government in making informed decisions regarding dividends policy in Nigeria.

Keywords: dividends smoothing, non financial companies, Nigerian stock exchange, unclaimed dividends, corporate earnings management

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Authors: Joelle Thng, Li Fang

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Objective: As programming becomes a highly valued and sought-after skill in the economy, many universities have started offering Python courses to help students keep up with the demands of employers. This study focuses on designing a university module that effectively educates undergraduate students on financial analysis using Python programming. Methodology: To better satisfy the specific demands for each sector, this study adopted a qualitative research modus operandi to craft a module that would complement students’ existing financial skills. The lessons were structured using research-backed educational learning tools, and important Python concepts were prudently screened before being included in the syllabus. The course contents were streamlined based on criteria such as ease of learning and versatility. In particular, the skills taught were modelled in a way to ensure they were beneficial for financial data processing and analysis. Results: Through this study, a 6-week course containing the chosen topics and programming applications was carefully constructed for finance students. Conclusion: The findings in this paper will provide valuable insights as to how teaching programming could be customised for students hailing from various academic backgrounds.

Keywords: curriculum development, designing effective instruction, higher education strategy, python for finance students

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Authors: Antonia Müller, Svend Reuse

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The Brexit referendum in June 2016 led to different publications analysing potential consequences for European and British insurance companies under the European Passport. This study addresses a research gap, regarding the measures taken by insurance companies based in the United Kingdom and thus on structural changes to the European insurance market by an innovative structured Solvency and Financial Condition Report content analysis. In scope are all insurance companies based in the United Kingdom, that fall under the Solvency II supervisory regime. The results show that the majority of British Solvency II insurance companies in scope, conducting cross-border business to the European Union, have applied and reported measures to be able to continue operating this cross-border business after Brexit. In addition, the study shows that 34 new insurance companies based in the European Union were established as a result of Brexit, indicating structural changes to the European insurance market.

Keywords: brexit, europe, insurance market, solvency and financial condition repot, structural changes

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Authors: Abongile Zweni

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As a post-apartheid strategy to redress the social imbalances of the past, local governments are tasked with the role of delivering crucial services to their constituents. Apart from political instability, evidence shows that managers in South African municipalities lack effective financial management skills and competencies. This resulted in a failure to fulfill its administrative obligations, particularly municipal financial management. Most municipalities have, however, failed in this role, which has led them to be placed under administration by the provincial government in terms of Section 139 of the constitution of the Republic of South Africa. Thus, this study proposed a leadership conceptual framework for effectively managing ever-eroding municipal finances in South Africa. The study adopted a desktop research approach to explore the key components of leadership and municipal financial management toward the development of the conceptual framework. The study fostered a better understanding of the need for transformation in relation to the current financial management practices and sustainability of a municipality. Moreover, the conceptual framework applies not only to municipalities but also to other government departments and public authorities in the country for financial management.

Keywords: leadership, municipal finance, financial performance, management skills, municipality

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Authors: Sana Masmoudi Mardassi, Yosra Makni Fourati

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Regulators highlight the importance of the Audit Committee (AC) as a key internal corporate governance mechanism. One of the most important roles of this committee is to oversee the financial reporting process. The purpose of this paper is to examine the link between the characteristics of an audit committee and the financial reporting quality by investigating whether the characteristics of audit committees are associated with improved financial reporting quality, especially the Real Earnings Management. In the current study, a panel data from 80 nonfinancial companies listed on the Amsterdam Stock Exchange during the period between 2010 and 2017 were used. To measure audit committee characteristics, four proxies have been used, specifically, audit committee independence, financial expertise, gender diversity and AC meetings. For this research, a linear regression model was used to identify the influence of a set of board characteristics of the audit committee on real earnings management after controlling for firm audit committee size, leverage, size, loss, growth and board size. This research provides empirical evidence of the association between audit committee independence, financial expertise, gender diversity and meetings and Real Earnings Management (REM) as a proxy of financial reporting quality. The study finds that independence and AC Gender diversity are strongly related to financial reporting quality. In fact, these two characteristics constrain REM. The results also suggest that AC- financial expertise reduces to some extent, the likelihood of engaging in REM. These conclusions provide support then to the audit committee requirement under the Dutch Corporate Governance Code rules regarding gender diversity and AC meetings.

Keywords: audit committee, financial expertise, independence, real earnings management

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Authors: Shuofen Hsu, Ya-Yi Chao, Chao-Wei Li

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This paper investigates the factors of whether firms’ quarterly consolidated financial statements to be voluntary reviewed by auditor. To promote the information transparency, the Financial Supervisory Commission of Executive Yuan in Taiwan ruled the Taiwanese listed companies should announce the first and third quarterly consolidated financial statements since 2008 to 2012, while the Commission didn’t require the consolidated financial statements should be reviewed by auditors. This is a very special practice in emerging market, especially in Taiwan. The valuable data of this period is suitable for us to research the determinants of firms’ voluntary review decision in emerging markets. We collected the auditors' report of each company and each year of Taiwanese listed companies since 2008 to 2012 for our research samples. We use probit model to test and analyze the determinants of voluntary review decision of the first and third quarterly consolidated financial statements. Our empirical result shows that the firms whose first and third quarterly consolidated financial statements are voluntary to be reviewed by auditors have better ranking of information transparency, higher audit quality, and better corporate governance, suggesting that voluntary review is a good signal to firms’ better information and corporate governance quality.

Keywords: voluntary review, information transparency, audit quality, quarterly consolidated financial statements

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Authors: Nadezhda Kvatashidze

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The conceptual framework of International Financial Reporting Standards determines the basic principles of accounting. The said principles have multiple applications, with professional judgments being one of those. Recognition and assessment of the information contained in financial reporting, especially so the somewhat uncertain events and transactions and/or the ones regarding which there is no standard or interpretation are based on professional judgments. Professional judgments aim at the formulation of expert assumptions regarding the specifics of the circumstances and events to be entered into the report based on the conceptual framework terms and principles. Experts have to make a choice in favor of one of the aforesaid and simulate the situations applying multi-variant accounting estimates and judgment. In making the choice, one should consider all the factors, which may help represent the information in the best way possible. Professional judgment determines the relevance and faithful representation of the presented information, which makes it more useful for the existing and potential investors. In order to assess the prospected net cash flows, the information must be predictable and reliable. The publication contains critical analysis of the aforementioned problems. The fact that the International Financial Reporting Standards are developed continuously makes the issue all the more important and that is another point discussed in the study.

Keywords: conceptual framework, faithful representation, professional judgement, relevance

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Authors: Shobhit Mittal

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Headcount budgeting stands as a pivotal element in organizational financial management, extending beyond traditional budgeting to encompass strategic resource allocation for workforce-related expenses. This process is integral to maintaining financial stability and fostering a productive workforce, requiring a comprehensive analysis of factors such as market trends, business growth projections, and evolving workforce skill requirements. It demands a collaborative approach, primarily involving Human Resources (HR) and finance departments, to align workforce planning with an organization's financial capabilities and strategic objectives. The dynamic nature of headcount budgeting necessitates continuous monitoring and adjustment in response to economic fluctuations, business strategy shifts, technological advancements, and market dynamics. Its significance in talent management is also highlighted, aligning financial planning with talent acquisition and retention strategies to ensure a competitive edge in the market. The consequences of incorrect headcount budgeting are explored, showing how it can lead to financial strain, operational inefficiencies, and hindered strategic objectives. Examining case studies like IBM's strategic workforce rebalancing and Microsoft's shift for long-term success, the importance of aligning headcount budgeting with organizational goals is underscored. These examples illustrate that effective headcount budgeting transcends its role as a financial tool, emerging as a strategic element crucial for an organization's success. This necessitates continuous refinement and adaptation to align with evolving business goals and market conditions, highlighting its role as a key driver in organizational success and sustainability.

Keywords: strategic planning, fiscal budget, headcount planning, resource allocation, financial management, decision-making, operational efficiency, risk management, headcount budget

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Authors: Judit Nagy

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Many scientific studies claim that financial education should start as early as possible. Children are much more capable of and willing to absorb new concepts than adults. If we introduce children to financial knowledge early, their behaviour and attitudes to this subject will change, increasing later success in this area of life. However, poor financial decisions may entail severe consequences, not only to individuals but even to the wider society. Good financial decisions and economic attitudes may contribute to economic growth and well-being. Whilst in several countries, education about financial awareness and fundamentals is available, the understanding and acquisition of complex economic knowledge and the development of children’s independent problem-solving skills are still lacking. The results suggest that teaching economic and financial knowledge through accounting and making lectures interactive by using special tools of positive education is critical to stimulating children’s interest. Eighty percent of the students in the study liked the combined and interactive lecture. Introducing this kind of knowledge to individuals is a relevant objective, even at the societal level.

Keywords: positive psychology, education innovation, primary school, gender, economics, accounting, finance, personal finance, mathematics, economic growth, well-being, sustainability

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Authors: Ibtissam Mharzi Alaoui, Camélia Sehaqui

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The success of a bank depends upon its effective risk management. With the growing complexity and diversity of financial products and services, as well as the accelerating pace of globalization over the past decade, risk management is becoming increasingly difficult. thus, all measurement and monitoring functions must be much more vigorous, relevant and adequate. The Shariah non-compliance risk is specific aspect of Islamic finance which ipso facto, deserves particular attention. It affects the validity of all Islamic financial contracts and it turns out to be likely to result in considerable losses on the overall Islamic financial institutions (IFIs). The purpose of this paper is to review the theoretical literature on Shariah non-compliance risk in order to give a clearer understanding of its sources, causes and consequences. Our intention through this work is to bring added value to the Islamic finance industry all over the world. The findings provide a useful reference work for the Islamic banks in structuring (or restructuring) of their own system of shariah risk management and internal control.

Keywords: Shariah non-compliance, risk management, financial products, Islamic finance.

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Authors: S. Forughi, A. De Zoysa, S. Bhati

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The present study focuses on the environmental performance of the companies in the electricity-producing sector and its relationship with their financial performance. We will review the major studies that examined the relationship between the environmental and financial performance of firms in various industries. While the classical economic debates consider the environmental friendly activities costly and harmful to a firm’s profitability, it is claimed that firms will be rewarded with higher profitability in long run through the investments in environmental friendly activities. In this context, prior studies have examined the relationship between the environmental and financial performance of firms operating in different industry sectors. Our study will employ an environmental indicator to increase the accuracy of the results and be employed as an independent variable in our developed econometric model to evaluate the impact of the financial performance of the firms on their environmental friendly activities in the context of companies operating in the Australian electricity-producing sector. As a result, we expect our methodology to contribute to the literature and the findings of the study will help us to provide recommendations and policy implications to the electricity producers.

Keywords: Australian electricity sector, efficiency measurement, environmental-financial performance interaction, environmental index

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Authors: Lawrence Ngalim

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The paucity of entrepreneurial finance in Sub-Saharan Africa (SSA) can plausibly be tied to her comparatively less-developed capital markets, which potentially hurts entrepreneurial activities. The high rate of informality in SSA worsens information asymmetry, which restricts the supply of funds in a heavily bank-led environment. In this paper, we ask whether the adoption of recent technological improvements in delivering financial services, such as crowdfunding, assists the financially excluded within Africa. Secondly, we investigate the individual determinants of crowdfunding, such as income, level of education, demographics, culture/trust, and the effects of crowdfunding on households’ usage of formal financial services. The paper discusses the long-term policy implications of this particular type of fintech in achieving financial inclusion within the regional bloc and its advantage for Africa-Agenda-2063.

Keywords: fintech, banks, entrepreneurship, regional integration

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Authors: Dwi Wijiastutik, Tarjo, Yuni Rimawati

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The purpose of this empirical study is to analyse how to the market reaction and the conservative degree changes on the adoption of International Financial Reporting Standart (IFRS) through Jakarta Islamic Index. The study also has given others additional analysis on the profitability, capital structure and size company toward IFRS adoption. The data collection methods used in this study reveals as secondary data and deep analysis to the company’s annual report and daily price stock at yahoo finance. We analyse 40 companies listed on Jakarta Islamic Index from 2010 to 2014. The result of the study concluded that IFRS has given a different on the depth analysis to the two of variance analysis: Moderated Regression Analysis and Wilcoxon Signed Rank to test developed hypotheses. Our result on the regression analysis shows that market response and conservatism principle is not significantly after IFRS Adoption in Jakarta Islamic Index. Furthermore, in addition, analysis on profitability, capital structure, and company size show that significantly after IFRS adoption. The findings of our study help investor by showing the impact of IFRS for making decided investment.

Keywords: IFRS, earnings response coefficient, conservatism principle

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Authors: Alev Atak

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We study the endogeneity in the cryptocurrency market over the branching ratio of the Hawkes process and evaluate the movement of self-excitability in the financial markets. We consider a semi-parametric self-exciting point process regression model where the excitation function is assumed to be smooth and decreasing but otherwise unspecified, and the baseline intensity is assumed to be a linear function of the regressors. We apply the empirical analysis to the three largest crypto assets, i.e. Bitcoin - Ethereum - Ripple, and provide a comparison with other financial assets such as SP500, Gold, and the volatility index VIX observed from January 2015 to December 2020. The results depict variable and high levels of endogeneity in the basket of cryptocurrencies under investigation, underlining the evidence of a significant role of endogenous feedback mechanisms in the price formation process.

Keywords: hawkes process, cryptocurrency, endogeneity, reflexivity

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Authors: Shpetim Rezniqi

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Over the years has increased, and increasingly has become necessary to make audit of financial statements. An auditor to perform an audit, should plan its audit in order to provide a high-quality audit and to be performed in an economic, efficient, effective and timely. This phase of the audit is also important stages of reach to the final goal of an audit to be professional and based in Kosovo and International Standards on Auditing. Always considering Kosovo as a new state and once out of war, where everything in its entrepreneurship started from the lowest stage of economic development and aim at development and regional and European integration, planning and performing audit becomes even more important.

Keywords: control, accounting, planning, analysis

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Authors: Seyedmohsen Mortazavi

Abstract:

The purpose of this research is to investigate the personality types of internal auditors on the quality of financial reporting in companies admitted to the Tehran Stock Exchange. Personality type is one of the issues that emphasizes the field of auditors' behavior, and this field has attracted the attention of shareholders and stock companies today, because the auditors' personality can affect the type of financial reporting and its quality. The research is applied in terms of purpose and descriptive and correlational in terms of method, and a researcher-made questionnaire was used to check the research hypotheses. The statistical population of the research is all the auditors, accountants and financial managers of the companies admitted to the Tehran Stock Exchange, and due to their large number and the uncertainty of their exact number, 384 people have been considered as a statistical sample using Morgan's table. The researcher-made questionnaire was approved by experts in the field, and then its validity and reliability were obtained using software. For the validity of the questionnaire, confirmatory factor analysis was first examined, and then using divergent and convergent validity; Fornell-Larker and cross-sectional load test of the validity of the questionnaire were confirmed; Then, the reliability of the questionnaire was examined using Cronbach's alpha and composite reliability, and the results of these two tests showed the appropriate reliability of the questionnaire. After checking the validity and reliability of the research hypotheses, PLS software was used to check the hypotheses. The results of the research showed that the personalities of internal auditors can affect the quality of financial reporting; The personalities investigated in this research include neuroticism, extroversion, flexibility, agreeableness and conscientiousness, all of these personality types can affect the quality of financial reporting.

Keywords: flexibility, quality of financial reporting, agreeableness, conscientiousness

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Authors: Sadia Bibi, Karim Ullah

Abstract:

Islamic banks have excess liquidity, which needs proper management to earn a high rate of return on them to remain competitive. However, they lack assets-backed avenues and rely on a few sukuks, which led them to liquidity management issues. Financial engineering comes forward to innovate and develop instruments for the requisite financial problem. Still, they face many challenges, explored in the context of liquidity management in Islamic banks. The rigorous literature review shows that Shariah compliance, competition from the conventional banks, lack of sufficient instruments, derivatives are still not accepted as legitimate products, the inter-bank market being less developed, and no possibility of lender of last resort is the six significant constraints to financial engineering for liquidity management of Islamic banks. To further explore the problem, a multiple case study strategy is used to extend and develop the theory with the philosophical stance of social constructivism. Narrative in-depth interviews over the telephone are conducted with key personnel at treasury departments of selected banks. Data is segregated and displayed using NVivo 11 software, and the thematic analysis approach identifies themes related to the constraints. The exploration of further constraints to financial engineering for liquidity management of Islamic banks achieves the research aim. The theory is further developed by the addition of three more constraints to the theoretical framework, which are i) lack of skilled human resources, ii) lack of unified vision, and iii) lack of government support to the Islamic banks. These study findings are fruitful for the use of the government, regulatory authorities of the banking sector, the State Bank of Pakistan (Central Bank), and the product design & development division of Islamic banks to make the financial engineering process feasible and resolve liquidity management issues of Islamic banks.

Keywords: financial engineering, liquidity management, Islamic banks, shariah compliance

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Authors: Jun Ming Moey, Zhiyaun Chen, David Nicholson

Abstract:

Bad actors are often hard to detect in data that imprints their behaviour patterns because they are comparatively rare events embedded in non-bad actor data. An unsupervised machine learning framework is applied here to detect bad actors in financial crime datasets that record millions of transactions undertaken by hundreds of actors (<0.01% bad). Specifically, the framework combines ‘shallow’ (PCA, Isolation Forest) and ‘deep’ (Autoencoder) methods to detect outlier patterns. Detection performance analysis for both the individual methods and their combination is reported.

Keywords: detection, machine learning, deep learning, unsupervised, outlier analysis, data science, fraud, financial crime

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Authors: Bita Mashayekhi, Hamid Kalhornia

Abstract:

One of the most important roles of financial reporting is improving the firms’ investment decisions; however, there is not much supporting evidence for this claim in emerging markets like Iran. In this study, the effect of financial reporting transparency in investment efficiency of Iranian firms has been investigated. In order to do this, 336 listed companies on Tehran Stock Exchange (TSE) has been selected for time period 2012 to 2015 as research sample. For testing our main hypothesis, we classified sample firms into two groups based on their deviation from expected investment: under-investment and over-investment cases. The results indicate that there is positive significant relationship between financial transparency and investment efficiency. In the other words, transparency can mitigate both underinvestment and overinvestment situations.

Keywords: corporate governance, disclosure, investment decisions, investment efficiency, transparency

Procedia PDF Downloads 340