MNC transactions foreign exchange exposure : an application

The main aim of this article is to investigate the foreign exchange exposure in international transactions and how it affects profitability and the market value of firms. The present study analyses the transaction cost associated with these transactions which is part of a more extended research using a questionary sent to multinational companies included in the Forbes 500. Results are consistent with other studies supporting the hypothesis that foreign exposure is a main problem in international business and it must be treated in a unique way by IAS.peer-reviewe

Do Imports and Exports Adjust Nonlinearly? Evidence from 100 Countries

A country is said to live within its international budget constraint if its exports and imports are cointegrated. Previous studies that tried to verify the cointegration between exports and imports used linear models and supported the theory in almost 50% of countries. In this paper, when we use the nonlinear ARDL approach and asymmetry cointegration method, we support the long-run link between imports and exports in 94 out of 100 countries in our sample. This study is not only the most comprehensive study in the literature, but it is also the first to show that, indeed, trade flows adjust in a nonlinear fashion

Empirical evidence on the relationships between concentration and profitability in Latin American banking

There has been growth in globalization as a result of increased liberalization. This has also resulted in an increase in the role of financial institutions, such as banks. It is the purpose of this study to test Classen’s (2001) hypothesis that increase foreign bank presence has positive welfare implications and that the functioning of national banking markets are improved as a result. Using financial data for 2003 this paper will examine the influence of foreign bank entry on Latin American domestic markets.Latin American banking; Concentration and Profitability; Foreign Bank Influence

A financial econometric analysis of the determinants of interest rate risk in the US

We introduce a macroeconomic system which we use for interest rate determination, after which we generate the interest rate risk premium. Considering this risk premium function, we investigate, test and determine the macro-variables which affect the interest rate risk premia by using a GARCH(p,q) and an ARCH-M model. The empirical results examine ten different interest rate risk premia and fifteen factors. Factors with significant effects on risk premia are: the real risk-free rate of interest, the inflation rate, the unemployment rate, the growth of GDP and industrial production, the growth of national debt and current account deficit, the money supply growth, the yield differentials on S-T and L-T securities and other variables. The conclusion is that, if we can decrease the volatility of the aforementioned determinants, we can also reduce interest rate risk and, consequently, the risk premium, thus, improving social interest.peer-reviewe

Financial assets, expected return and risk, speculation, uncertainty, and exchange rate determination

Purpose: The objective of this paper is to determine the movements (long-term trend) of the exchange rate by forecasting the rate of return and risk (return to variability ratio, RVR) that financial assets have in two economies and for four different investments. Design/Methodology/Approach: Risk averse speculators will try to maximize their return and minimize their risk by investing domestically or abroad, but these capital flows will affect the value of the two currencies (their exchange rate). Findings: The empirical results show that before 2001 the return in the U.S. was high and the dollar was appreciated; after 2001, the same return became negative and the dollar was depreciated, but after 2004 the returns have growing positively for the U.S., and the returns for the Euro-zone are falling. Practical Implications: We can say that the dollar may appreciate with respect to euro, except if we will have any other domestic or external shocks on the two economies. Still the results of this analysis are not very conclusive. Originality/value: International investors are investing in countries with higher return and lower risk. This increase in demand for these assets, increases the demand for currency in that country and its currency is appreciated.peer-reviewe

An econometric study of forecasting French foreign exchange rates

Purpose: The objective of this paper is to study possible diversity of exchange rate models, by applying both parametric and nonparametric techniques, and examines said models’ collective predictive performance. Design/Methodology/Approach: We shall choose the forecasting predictor with the smallest Root Mean Square Forecast Error (RMSE). The better type of exchange rate model is in the Autoregressive model’s equation, according to the empirical evidence, although none of this data yields an optimal forecast. Findings: In our conclusion, the error correction versions of these exchange rate models will be adjusted so that credible long-run elasticities can be imposed on each model’s fundamental variables.peer-reviewe

Empirical evidence on the relationships between concentration and profitability in Latin American banking

There has been growth in globalization as a result of increased liberalization. This has also resulted in an increase in the role of financial institutions, such as banks. It is the purpose of this study to test Classen’s (2001) hypothesis that increase foreign bank presence has positive welfare implications and that the functioning of national banking markets are improved as a result. Using financial data for 2003 this paper will examine the influence of foreign bank entry on Latin American domestic markets

Empirical evidence on the relationships between concentration and profitability in Latin American banking

There has been growth in globalization as a result of increased liberalization. This has also resulted in an increase in the role of financial institutions, such as banks. It is the purpose of this study to test Classen’s (2001) hypothesis that increase foreign bank presence has positive welfare implications and that the functioning of national banking markets are improved as a result. Using financial data for 2003 this paper will examine the influence of foreign bank entry on Latin American domestic markets

Do Imports and Exports Adjust Nonlinearly? Evidence from 100 Countries

A country is said to live within its international budget constraint if its exports and imports are cointegrated. Previous studies that tried to verify the cointegration between exports and imports used linear models and supported the theory in almost 50% of countries. In this paper, when we use the nonlinear ARDL approach and asymmetry cointegration method, we support the long-run link between imports and exports in 94 out of 100 countries in our sample. This study is not only the most comprehensive study in the literature, but it is also the first to show that, indeed, trade flows adjust in a nonlinear fashion

An Econometric Study of Arkansas Secondary School Teachers' Attitudes Toward and Understanding of Economic Education

The primary purposes of this study were to assess the understanding and attitudes of teachers, to determine the interaction effects of certain variables, and to determine if there is a correlation between understanding of economic concepts and attitude toward economic education. The problem of the study was an assessment of the attitudes toward and understanding of economic concepts held by secondary school teachers in Arkansas who taught economics or economics-related subjects