Rating Agencies on the International Financial Market: an Approach in Terms of the Transaction Cost Economy

Rating agencies, by the assigned risk grades, point out the quality of debtors and credit instruments in terms of the probability to cease payments and the recovery possibilities. The existence and development of rating agencies on the capital markets is generally explained by the capacity they have to facilitate transparency and efficiency of markets, by reducing the informational asymmetry between the issuers and investors. It is acknowledged by the professional literature that rating agencies diminish the problems of adverse selection and moral hazard. This paper is another theoretical manner of approach, trying to prove that one of the main explanations of the rating agencies existence is the fact that these organizations allow the economy of the transaction costs. The first part of the article briefly describes the concepts of transaction and transaction costs. Also, this part presents a synthetic image of the role of rating agencies on the capital market. The second part makes an analysis of the transaction with rating, as a contractual transaction and, at the same time, a producer of externalities. The paper explains why the transactions with rating can be considered hybrid mechanisms of governance generating externalities upon the exchanges on the financial markets, allowing the creation of new hybrid organizational structures on these markets. Moreover an attempt has been made to list the main categories of transaction costs saved due to the rating agencies requirements.rating, rating agencies, transaction costs, financial market

CREDIT RISK ASSESSMENT BY RATING AGENCIES: STANDARDIZATION VERSUS SUBJECTIVITY

The development of the international financial market, the globalization of the financial resources and the increase of the world economic insecurity have been accompanied by the exponential rising of the corporate rating after 1980. There are three big agencies at mondial level, Moody’s, Standard&Poor’s and Fitch, which cover more than 94% of the international credit rating. The objective of this paper is to emphasize the conceptual and procedural similarities and differences of the mentioned agencies, with reference to the concepts and indicators used in the credit risk assessment. The main conclusions are: (1) the scales of risk assessment related to a security or entity used by the great rating agencies are approximately identical for the investment grade category, but they are different starting with the speculative grade category (2) the credit risk grade is based on a common standard list of risk factors.credit risk, rating agencies, risk factors

INTERNAL RATINGS SYSTEMS: AN EMPIRICAL APPROACH

The objective of this article is to describe the standard architecture of an internal rating system, based on the theoretical references and empirical evidences of a limited number of banking groups operating in UE, USA and Romania. The first part of the paper sets out the theoretical and conceptual framework and it defines the methodology. The second part is focused on the internal rating system components and its organization.credit risk parameters, risk management, rating assignment

Industrial Agglomerations and Clusters. The Textile and Textile Products Industry from Romania

The objective of this article is to identify the formal clusters and potential clusters from the textile and the textile products from Romania. The statistical method has been used to delimit the potential clusters. In addition, there have been studied all the available works and internal and international reports on Romania, having as topic this type of industrial organization. The research conclusions are the following: (1) there are two young formal clusters, holding the premises of a “triple helix”: Astrico North-East and TMV South-East; (2) the spreading of the textile organizations, next to the structure of formal clusters, suggests the possibility of the natural building of three clusters: a common one for the North Eastern and Eastern regions, another one for the Central region and the third for the North-Western and Western regions. With reference to the professional literature, this work brings the picture of the spatial distribution of the textile industry in Romania.cluster, textile industry, region, agglomeration.

THE BOUNDARIES OF THE FIRM. THE CASE OF OIL INDUSTRY IN ROMANIA

The economic theory of the firm has met an exponential growth in the last decades different from the traditional neoclassical approach. In the first part of the paper we are skimming through the most spread approaches, namely the theory of incomplete contracts and evolutionary school. In the second part we apply the explications on integration provided by the economics of transaction costs with an example on the oil industry in Romania. A brief qualitative analysis reaches out the conclusion that cutting transaction and agency costs is one of the factors that leads to integration within the studied sector.Transaction Cost, Agency Theory, Oil

Oil Price and Economic Resilience. Romania’s Case

The emerging economies that do not face fiscal, monetary and foreign debt pressures can use the savings generated by lower oil prices for investments in order to generate economic growth. Hence, there is no doubt that the oil price affects the economy’s resilience to shocks. The importance of this impact derives from the magnitude of the price change and its diffusion within the economy. Moreover, the sustainability of any company and of the economy as a whole is subject to the availability and the price of the energy resources. The cost of these resources is an important variable used in the majority of the models regarding the assessment of sustainable development. Therefore, this article examines the impact of the oil price changes on industrial production in Romania. We found that, similar to other countries, in Romania, the growth rate of industrial production responds more strongly to a rise in oil prices. Thus, the oil Brent price has an asymmetric effect on the production evolution. This finding suggests that macroeconomic stabilization is more difficult to achieve when the oil price rises

KEY DETERMINANTS OF NON-PERFORMING LOANS IN ROMANIAN BANKING SECTOR. A VAR APPROACH

The aim of this paper is to analyze the macroeconomic determinants of the percentage of non-performing loans (NPL) in Romanian banking sector. The vector autoregressive (VAR) model is estimated on quarterly data for period 2003-2015. Our empirical analysis confirms that economic growth is negatively related to NPL while unemployment and credit cycle positively influenced the evolution of nonperforming loans in Romania

Time to Default in Credit Scoring Using Survival Analysis

Credit risk assesment has been dominated by logistic and probit regression techniques. As the use of credit scoring has expanded over the past 20 years, concerns have been raised about whether its use may unfairly affect minorities. The aim of this paper is to investigate the behavioral of gender variable in different credit scoring models and what are the benefits of using this variable. The first result shows that females have a probability of surviving 22 months of 75%; conversely, for the male group, the probability of surviving the same time is slightly more than 75%. Adding education as variable, we observe that male with university degree recorded a survival probability of 90% after 20 months, male with high school 75% while female with high school only 50%. The hazard for female is in average 1.12 times the hazard for males. The results show that the single and divorced females survive more than males in the same marital status

Air Pollution and Human Development in Europe: A New Index Using Principal Component Analysis

EU countries to measure human development incorporating the ambient PM2.5 concentration effect. Using a principal component analysis, we extract the information for 2010 and 2015 using the Real GDP/capita, the life expectancy at birth, tertiary educational attainment, ambient PM2.5 concentration, and the death rate due to exposure to ambient PM2.5 concentration for 29 European countries. This paper has two main results: it gives an overview about the relationship between human development and ambient PM2.5 concentration, and second, it provides a new quantitative measure, PHDI, which reshapes the concept of human development and the exposure to ambient PM2.5 concentration. Using rating classes, we defined thresholds for both HDI and PHDI values to group the countries in four categories. When comparing the migration matrix from 2010 to 2015 for HDI values, some countries improved the development indicator (Romania, Poland, Malta, Estonia, Cyprus), while no downgrades were observed. When comparing the transition matrix using the newly developed indicator, PHDI, the upgrades observed were for Denmark and Estonia, while some countries like Spain and Italy moved to a lower rating class due to ambient PM2.5 concentration

Organisational Culture Shifting Into Online Learning. Virtual Learning Practices

History taught us that the best time to talk about adaptability and innovation is that of disruption, crisis and adverse conditions. This research paper addresses the pre- and post-pandemic learning environment in terms of online and classroom delivery. The main objective of this research paper is to analyze factors that have been impacted by the shift from face-to-face (or in person) to online learning practices, assessing elements related to a learning session as: logistics, participation adoption, tools, feedback and geographical span. As research method, the approach incorporates a case study on the European population of one of the major players in the service industry in analyzing European relevant training data points, over a period of three years. Reasoning of data comparison is aligned to data relevance, hence one-year pre pandemic versus two years in the forced virtual delivery of pandemic conditions. The main aspects under research were aiming for a found analysis of a sustainable shift while understanding the implications of such changes. The result of the study shows a positive learning landscape, with multiple opportunities for those ready to adapt, a trusted tool for sustainability and yet at the early age of becoming one of the core elements for keeping relevant in the business imperatives. The element of novelty in this study suggests impact, shift, dependability and responsibility for learning at scale; and the global impact of the adapted learning opportunities, such as awareness, relevance and adoption rate of learning offerings