The Capital Structure Determinants on Banking Sector of Western Balkan Countries

The study examines the capital structure of the Western Balkan banking industry across the period 2015 - 2020. Forty-seven of the total Western Balkan-based commercial banks were included in the study. By constructing a balanced panel, this study uses pooled ordinary least squares fixed and random effects regressions to examine the relationship between bank book leverage as the dependent variable and bank-specific explanatory variables that include profitability, leverage ratio, bank size, earnings volatility, collateral, growth opportunities, and liquidity. These reports are examined using linear regression analysis. The study shows a significant positive relationship between profitability and book leverage for the period studied. In contrast, leverage ratio, earnings volatility, collateral, growth, and liquidity significantly negatively impact the book leverage of Western Balkan banks. The findings have practical implications for bank executives. They will assist them in identifying the bank-specific factors that influence the capital structure and selecting values that promote optimal capital structure. The findings of this study can help regulators develop an effective prudential framework. This study opens up new avenues for further research in this area for academics, researchers, and analysts

DETERMINANTE NETO KAMATNE MARŽE POSLOVNIH BANAKA NA KOSOVU

The aim of this paper is to investigate internal and external determinants that impact the Net Interest Margin (NIM). The paper employs an OLS-PSCE procedure using quarterly Panel Data (From March 2013 to December 2019) for commercial banks in Kosovo. Results suggest that the Net Interest Margin in the banking sector in Kosovo is mostly influenced by factors within the bank such as: Loan-to-Deposit Ratio; Operation Costs and Fee Income, but less affected by external factors besides inflation. In addition, results suggest that external factors do not influence the net interest margin; therefore, a governmental policy intervention might not have an impact on Net Interest Margin. The results of the research are important for commercial banks in Kosovo, since they can help improve the efficiency through the internal and external indicators that are impacting the NIM.Cilj ovog rada je istražiti unutarnje i vanjske determinante koje utječu na neto kamatnu maržu (NIM). Rad koristi proceduru OLS-PSCE koristeći tromjesečne podatke panela (od ožujka 2013. do prosinca 2019.) za poslovne banke na Kosovu. Rezultati pokazuju da je neto kamatna marža u bankarskom sektoru na Kosovu uglavnom pod utjecajem čimbenika unutar banke kao što su: omjer kredita i depozita i operativnih troškova i prihodi od naknada, ali manje pod utjecajem vanjskih čimbenika osim inflacije. Osim toga, rezultati sugeriraju da vanjski čimbenici ne utječu na neto kamatnu maržu; stoga intervencija vladine politike možda neće imati utjecaja na neto kamatnu maržu. Rezultati istraživanja važni su za poslovne banke na Kosovu, jer mogu pomoći u poboljšanju učinkovitosti kroz interne i vanjske pokazatelje koji utječu na NIM

THE IMPACT OF WORKING CAPITAL MANAGEMENT ON SME PROFITABILITY – EVIDENCE FROM KOSOVO*

The study attempts to show the impact of working capital management on the profitability of ninety-eight Kosovo-based SMEs, primarily in the manufacturing and construction sectors. The data were obtained from the financial statements of these companies for the years 2010 through 2020, and the assumptions were verified using the Ordinary least square (OLS) method. To express SMEs profitability, return on assets (ROA) is taken as a dependent variable, while to express working capital management, independent variables are taken: the inventory turnover period (INTP), receivables collection period (TRCP), trade payable period (TPP), and cash conversion cycle (CCC). In addition, are taken four control variables (size of companies, current ratio, sustainable growth, and leverage), which are not a variable of interest in the study but could influence the outcomes. The results reveal that SMEs increase profitability by decreasing the cash INTP and increasing TRCP, TPP, and CCC. By analyzing the effect of working capital management on profitability in the context of SMEs in Kosovo, this research contributes new knowledge to the existing literature

Analysis of Financial Performance of the Banking System in Kosovo - 2014-2019 Period

The banking system plays an important role in the economic development of a country. A banking insti­tution is indispensable in a modern society. It plays a key role in the economic development of a country and focuses the essence of the money market on an developed country. The basic function of banks is to collect deposits as much as possible from customers and mobilize it in the most favorable and profitable sector such as industry, trade, agriculture, entertainment, etc.This study mainly attempts to analyze the financial performance of commercial banks in Kosovo cove­ring the period 2014 - 2019. There are many past studies in which researchers used different financial reports to control the financial performance of commercial banks such as: Return on Assets (ROA), Return on Equ­ity (ROE), Return on capital (ROC), Return on Fixed Operating assets (ROFA), Report of costs on Income (C / I) etc. Based on the accounting data, we used the key coefficients that are: ROA, ROE and NIM for estimating financial performance. The findings of the study may be useful for managing commer­cial banks in Kosovo

Deindustrialization of Kosovo and establishment of the private sector in Kosovo - Obstacles

This paper aims at analysing activities, and some of the causes of deindustrialization of Kosovo’s economy, and the stage of initial establishment of the private sector in Kosovo. The purpose of the paper is to present the current situation and development orientations, namely to review some of the obstacles from the perspective of entrepreneurs, with a view of eliminating such obstacles and fostering development. The paper shall provide a comparison of exports and imports, with a special focus on obstacles to Kosovo’s SMEs. This paper shall prove an overview on the situation of SME development and its sectors, and it is an effort to mirror the main obstacles preventing competitiveness and development of the sector. The analysis in this paper represent an effort to inform stakeholders with the sector, and help interested parties to take necessary action in improving the situation in the sector, and to assist sectors in benefitting from business opportunities, by creating a business development conducive environment, so that the changes occurring in the sector feed economic development, foster employment and help in attracting foreign investmentsThe main goal of the paper is to provide a basis for informing various actors involved in industrial development policy making in Kosovo.On the other hand, it is also an effort to contribute in consolidating information and statistical records, with a view of providing an accurate overview on Kosovo’s industry

Application of Target Cost and its Impact on the Businesses

Target Cost has been a topic of debate in terms of importance and the benefits it brings to the businesses that adopt this technique. Experts in the field of strategic management accounting have different views on the degree of relevance of the Target Cost technique. This research will conduct a critical evaluation of Target Cost using the qualitative research method from different viewpoints and perspectives, and is based on secondary data that are derived from books and scientific works of renowned experts in the field of strategic management accounting. Furthermore, this research paper adopts the narrative analysis method to assess the importance of technique usage. It concludes that Target Cost has proven to be a successful technique in the marketplace for many businesses and organizations.Keywords: Target Cost, strategy, accounting, technique, competition, performance, structure, organization, market, design, profits

Bank profitability determinants: evidence from Kosovo and Albania

This research aims to examine the factors that impact the profitability of commercial banks in Kosovo and Albania. Profitability is crucial in the financial sector as it directly affects policymakers, regulators, and bank management. The study focuses on several determinants of bank profitability, including the number of employees, loan interest rate, non-performing loans, and total loans. The study employed quarterly secondary data spanning from 2010 to 2020, resulting in 400 observations. The analysis used multiple linear regression, influenced by the huge number of observations and the applicability of ordinary least squares (OLS) for such studies. This method allowed for a thorough examination of the interactions between the dependent and independent variables, providing a more in-depth understanding of the factors driving bank profitability. The statistical significance was determined using software such as STATA and SPSS. The dependent variables in the analysis are return on assets (ROA) and return on equity (ROE). The findings reveal that the loan interest rate, total loans, and non-performing loans significantly influence the profitability of the analyzed banks in Albania and Kosovo. Furthermore, the total number of loans and employees are statistically significant determinants of ROE. These findings provide valuable insights for bank management and policymakers in enhancing bank profitability and stability

The Effect of Direct and Indirect Taxes on Economic Growth in Developed Countries

This paper examines how the economic growth in advanced countries is affected by various types of tax revenue. Ten developed countries were chosen based on the Human Development Index, and data from 1995 to 2020 were examined using the feasible generalized least squares method. A total of 260 observations spanning 26 years were available for analysis. The purpose of this paper is to investigate the influence of direct and indirect taxes on economic growth in selected developed countries. According to our results, the growth of these countries was positively influenced by corporate income taxes and taxation on specific goods and services. However, there are adverse impacts from taxes on personal income, contributions to social security, and a tax on value-added. For a beneficial impact on these nations’ growth, we suggest policymakers concentrate on taxes on corporations and specific services and goods. Furthermore, it is important to consider the adverse impacts of personal taxation and value-added taxation on growth

A Review on Accounts Manipulation Via Loan Loss Provisions to Manage Earnings and impact of IFRS

Among research on financial reporting in banking industry, studies specifically investigate estimation on provisions that are important bank accruals. Using a non-statistical technique of meta-synthezis on our review, we have researched the motives, existence, and effects of IFRS in income smoothing. Management can apply income smoothing based on self interest purposes that are related to work contracts and bonuses, then about dividents, about their reputation regarding the prediction of incomes, to avoid lack of analists’ expectations on incomes, to signal information on incomes, etc. Most of the research identify income smoothing in the banking sector, but also in other industries. Aside from this, based on research, application of IFRS-es has not decreased income smoothing in most of the countries where the studies were conducted. &nbsp

IFRS 9 Transition Effect on Financial Stability of Kosovo Commercial Banks

From January 1, 2018, most of the commercial banks in Kosovo adopted IFRS 9. The new standard introduces the expected credit loss model to allow for timely recognition of credit losses, estimated not only on the actual credit loss but also on forward-looking information regarding the current loan portfolio. Although, transition phases may lead to increasing impairments and a decrease in banks’ equity, which directly influences the financial stability of banks. This paper examines the day-one transition effect of IFRS 9 on the level of assets balance, allowance for loan losses, and capital regulatory class II of banks in Kosovo. To test our hypothesis, we have performed a comparative analysis for the six biggest commercial banks in Kosovo to identify correlation and causality between studied variables. As a statistical technique, we have employed a “paired sample t-test†where we compare financial indicators before and after adopting IFRS 9 to examine the impact on financial stability for commercial banks in Kosovo. Our results are in line with the results of recent studies in the IFRS 9 field and conclude that the transition phase has a significant influence on the recognition of additional loan impairment but assets and capital regulations are not affected significantly. Results demonstrate the transition to IFRS 9 causes instability and re-consolidation of capital, but in the long-run reduce the possibility for large and sudden losses. Commercial banks in Kosovo should follow a balanced growth approach without compromising the quality of the loan portfolio