Creating Long-Term Value in Europe's Capital Markets: Opportunities and constraints. 1st Interim Report of the CEPS-ECMI Task Force on Asset Allocation in Europe. CEPS Research Report, November 2017

Capital markets have reached different stages of development throughout Europe, and matching the supply and demand of capital on a cross-border basis remains an elusive goal. As a consequence, the participation of retail investors in capital markets as well as the size and structure of the non-bank financial sector vary significantly across member states. In 2016, the total financial assets of European households and the investment portfolios of asset managers, insurers and pension funds amounted to over €35 trillion each

Growth Effects of Spatial Redistribution Policies

Regional income disparities have increased in many European countries recently, even as national and supra-national policy instruments were created to correct them. To explain these evolutions, we develop a two-region, two-sector model with migration and public investment in infrastructure and education. Accumulation and creation of new ideas and technologies as well as migration are at the core of differential regional growth. In this framework, we assess the effectiveness of structural funds, modelled on the EU policy. In a numerical example calibrated to Portugal, we find that, to diminish the initial gap in income per capita, the backward region needs to receive over 8% of its own GDP in structural funds, while the actual disbursements were around 4%. We also find that maximizing innovation in the backward region conflicts in the short run with the goal of maximizing its income per capita. Moreover, the rich region has an incentive to bias the allocation of structural funds towards human capital formation.two-region economy, structural change, migration, regional policy, European Union

New approaches regarding business combinations

The accounting for business combinations is a very important area, therefore it needs a high quality accounting standard that could be used for both domestic and cross-border financial reporting. IASB issued in January 2008 the revised IFRS 3 Business Combinations, which aims to help both users and preparers of the consolidated financial statements by improving the relevance, reliability and comparability of the information reported by companies around the world. This article aims to highlight few significant changes in the accounting treatment of business combinations that have arisen from the revised IFRS 3, focusing on the accounting principles surrounding the recognition and measurement of the identifiable net assets of the acquiree and any non-controlling interest in the acquiree and on the implications for calculating and measuring goodwill.control, acquisition method, fair value, non-controlling interest, goodwill

ROMANIAN COMPANIES’ WEB-BASED DISCLOSURE CHOICES AND CAPITAL MARKETS

This article aims to investigate the web-based disclosure choices andpractices among Romanian companies listed on Bucharest Stock Exchange. Web-based disclosure offers advantages that are absent in paper-based voluntarydisclosure: it can be accessed globally at much lower costs and it can be updatedmuch more timely also at much lower costs. Another goal of the paper is to establishthe criteria in order to select properly the sample companies. After presenting theadvantages and eventual risks of Internet Financial Reporting and analyzing previousinvestigative reports and articles, this paper investigates the degree to whichRomanian listed companies to disclose financial and non-financial information areusing the Internet. The web sites of these companies were examined throughout May2007 to May 2008, with a view to determining which companies present voluntaryfinancial or non-financial data in addition to the Annual Report and Accounts.internet financial reporting, mandatory and voluntary disclosure, capital markets,listed companies

ACCRUAL ACCOUNTING ADOPTION IN THE ROMANIAN PUBLIC SECTOR

In Romania the development of public sector accounting was initiated in 2002, and enlarged for all public sector entities in 2005, but the transition is a static process although there are many issues that should be changed. Based on Hepworth’s (2003) preconditions of success in adoption accrual accounting for public sector, this paper aims to analyse through a qualitative research whether accruals implementation in Romanian public sector was fulfilling its purposes or not. Financial information disclosed through public sector entities’ financial statements make the connection between citizens and state over the last one’s capacity to respond to community’s goals

Capital adequacy and risk management - premises for strengthening financial system stability

In the last decades, we have witnessed the progressive integration of European financial system, as a result of the cumulative effect of markets' liberalization, innovation and globalisation, and of harmonization of the regulations and implementation of financial reforms by the EU Member States. In this context, increased risk of financial instability necessarily requires the development of standards and codes of best practices in order to improve financial system integrity and stability, and to insure the health of the global banking and financial markets. From this perspective, the Basel II Accord represents a true revolution, aiming the improvement of the consistency of capital regulations internationally and better operational risk management practices. As a member of the EU, Romania is currently through the stages of implementation of Basel II, starting 1st of January 2008. As a central bank, NBR main objectives are: to adapt national legislation; to coordinate the efforts of credit institutions to develop new strategies regarding solvency, capital adequacy and measurement system for each risk category; to impose the disclosure requirements for financial reports and to adapt the IT system.Basel II Accord, capital adequacy, financial system stability, minimum capital requirements, risk management, risk-weighted assets

The OTC derivatives markets after financial reforms. CEPS ECMI Commentary No. 36, May 2014

Over the past five years, over-the-counter (OTC) derivatives markets have received heightened regulatory attention, due to their opaqueness, size and interconnectedness, with a view to improving the robustness, safety and resilience of this market segment. There has been continued progress in the follow-up to the G-20 commitments, with the EU (EMIR, MIFID II, CRD/CRR IV, MAD) and the US (Swap Execution Facility or SEF, Title VII of Dodd-Frank Act, Basel III) leading in the implementation timelines and capturing approximately 80-90% of the overall market. Based on the data compiled for the yearly ECMI Statistical Package, this commentary provides a snapshot of the current status of the global OTC derivatives markets by: i) identifying general trends over the past decade, ii) looking at the changes in the market structure (instruments and participants), iii) estimating the uncollateralised derivatives exposure and iv) examining the relationship between OTC derivatives and exchange-traded derivatives (ETD)

EFFECTS OF INTERNATIONAL FINANCIAL CRISIS ON THE FINANCIAL SYSTEM AND MONETARY POLICY

The current financial and economic crisis seems to be unprecendentely in the last half century. The economic downturn extented in the USA, Europe and Japan seems to be much more painful than the economic downturn in 1981-1982. A massive drop of confidence is under way, both across the business sector, and the consumers, both reacting by cutting costs. The U.S. Government and some governments in Europe, are trying to recover stability, and nationalized parts of their financial sectors to an extent that is in conflict with the modern capitalism basics. Today the entire world seems to change its direction, shaping its course to a period wherein the state role will be higher, and that of the private sector will be lower. This will be probably the most dramatic consequence of the current economic crisis.liquidity, inflation, financial-accounting reportings, fiscal policy, financial markets

Fostering Institutional Investment in Europe’s Capital Markets Reality vs. Expectations. 2nd Interim Report of the CEPS-ECMI Task Force on Asset Allocation in Europe. ECMI Research Reports April 2018

The Capital Markets Union (CMU) initiative has set out important priorities in the area of asset allocation, such as increasing retail participation, promoting sustainable investment, and removing barriers to cross-border activities. Capital markets are expected to enhance long-term value creation in the real economy, and institutional investors to play a more constructive role in achieving this overall objective. This second Interim Report is based on the discussions among the experts present at the Task Force meeting held on 24 October 2017, additional secondary research and targeted bilateral consultations. The main ideas will be considered Final Task Force Report, which will put forward a series of policy recommendations supported by in-depth quantitative and qualitative analysis. More detailed information about the Task Force is available here

IMPACT OF LUMP-SUM TAX IN ROMANIA

Any enterprise is willing to get a higher profit and when taxation is low and when this is higher. As a manager, you do not justify your presence in the top, if you do not want to maximize your business opportunities, and get as much as possible. Therefore, the new lump-sum tax introduced by means of the Government Emergency Ordinance no. 34/2009, from our point of view, it directly acts over the firms’ financing. The Government Emergency Ordinance no.34/ 2009 concerning the introduction of the lumpsum tax in Romania, the measures that restrict and remove costs that can be deductible in a firm’s accounting, as well as those related to the rise of the tax to be paid by microenterprises caused strong debates in the business environment, especially within small businessmen. Financiers could not mention how long the firms would pay the lump-sum tax, because according to economic forecasts, many of them will not succeed to outrun the crisis and forecast a gloomy period for Romania, especially when, according to deadlines in the ordinance, many measures will be maintained up to the end of the next year, that obviously indicates the date when the state authorities expect a modification of the situation.business environment, SME, income, tax, profit, turnover