The impact of non-performing loans on the profitability of listed Euro-Mediterranean commercial banks

This paper is based on the unpublished Thesis by Psaila, A. (2019) “The Impact of Non Performing Loans on the profitability of listed Euro-Mediterranean commercial banks” supervised by Dr. S. Grima. An earlier version of this article has been presented in ICABE 2019 www.icabe.grPurpose: To analyze the impact of NPLs on listed commercial bank’s profitability, in particular their ROA (Return on Assets), in the Euro-Mediterranean area. We aim to determine whether the change in the level of NPLs in listed commercial banks is either positively or negatively impacting the ROA of the concerned banks. Furthermore, knowing that the liquidity and the solvency of a bank are both equally important to maintain a robust financial position, a Liquidity (LQDT) and Solvency (SLVT) ratio were considered to help explain the variances with NPLs and ROA. Design/Methodology/Approach: We adopted a purposive research design using panel data (2013-2017) from data published on Thomson Reuters Eikon or annual reports of the 35 listed commercial banks in the Euro-Mediterranean region. We used descriptive statistics and four regression models, namely; the Pooled OLS regression model, Fixed Effects (FE), Random Effects (RE) and the Arellano-Bond (AB), through STATA/IC 15.1. Findings: Findings show that there is a negative impact of NPLs on ROA, indicating that problematic loans negatively impact listed commercial bank’s profitability in the EuroMediterranean region. Also, it was indicated that the Solvency ratio (SLVT) is the only controlling factor that can significantly explain variances within NPLs and ROA. Practical Implications: These results carry with them significant consequences for the bank’s financial stability within the Euro-Mediterranean countries and the role of the risk management function of listed commercial banks.peer-reviewe

A Computer-Based Incentivized Food Basket Choice Tool: Presentation and Evaluation

Objective To develop and evaluate a low-cost computer-based tool to elicit dietary choices in an incentive compatible manner, which can be used on-line or as part of a laboratory study. Methods The study was conducted with around 255 adults. Respondents were asked to allocate a fixed monetary budget across a choice of around a hundred grocery items with the prospect of receiving these items with some probability delivered to their home by a real supermarket. The tool covers a broad range of food items, allows inference of macro-nutrients and calories, and allows the researcher to fix the choice set participants can choose from. We compare the information derived from our incentivized tool, and compare it to alternative low-cost ways of measuring dietary intake, namely the food frequency questionnaire and a one-shot version of the 24-hour dietary recall, which are both based on self-reports. We compare the calorie intake indicators derived from each tool with a number of biometric measures for each subject, namely weight, body-mass-index (BMI) and waist size. Results The results show that the dietary information collected is only weakly correlated across the three methods. We find that only the calorie intake measure from our incentivized tool is positively and significantly related to each of the biometric indicators. Specifically, a 10% increase in calorie intake is associated with a 1.5% increase in BMI. By contrast, we find no significant correlations for either of the two measures based on self-reports. Conclusion The computer-based tool is a promising new, low-cost measure of dietary choices, particularly in one-shot situations where such behaviours are only observed once, whereas other tools like 24-hour dietary recalls and food frequency questionnaires may be more suited when they are administered repeatedly. The tool may be useful for research conducted with limited time and budget.</p

A Computer-Based Incentivized Food Basket Choice Tool: Presentation and Evaluation

We present and evaluate a new incentive-based tool to measure people’s dietary choices in a low-cost and time effective manner. Respondents are asked to allocate a fixed monetary budget across a choice of around a hundred grocery items with the prospect of receiving these items with some probability delivered to their home by a real supermarket. The tool has the advantage of offering a broad coverage of dietary choices, allows inference of macro-nutrients and calorie, and allows the researcher to fix the choice set participants can choose from. We compare the information derived from our incentivized tool, and compare it to alternative low-cost ways of measuring dietary intake, namely the food frequency questionnaire and a one-shot version of the 24- hour dietary recall, which are both based on self-reports. We invited 255 low income participants to our laboratory and collected measures using these three alternative tools. We compare the calorie intake indicators derived from each tool with a number of biometric measures for each subject, namely weight, body-mass-index (BMI) and waist size. The results show that the dietary information collected is only weakly correlated across the three tools. We also find that only the calorie intake measure from our incentivized tool is positively and significantly related to each of these biometric indicators. By contrast, we find no significant correlations for either of the two measures based on self-reports. We therefore argue that our tool may be useful for research conducted with limited time and budget

Economic competition in Kosovo : an empirical analysis

Purpose: With this article we aim to lay out the results of an investigation on the development and protection of economic competition in Kosovo, focusing specifically on the analysis of the level of competition in the Gjilan region. We deal with the legislative aspects of the competition in the sensitive sectors (banks, insurance, gas stations and pharmacies) where the competition is damaged and present the measures for improvement based on the EU practices. Design/Methodology/Approach: The used method is to lay out a realistic picture of (1) the level of competition development, (2) the areas where competition is undermined, (3) the general business knowledge about the functioning and enforcement of the law on competition protection, and (4) the concrete measures to be taken in order for competition to function based on the rules of the market economy. Findings: Results show that on average, respondents believe that their sector is relatively well-regulated and competitive, although there are clear areas of improvement, notably with regards to the difficulties encountered when doing business, the effectiveness of Kosovo's existing legislative framework and the existence of monopoly power within most sectors. Practical Implications: The role of competition authorities in curbing anti-competitive practices needs strengthening, as attested by the results obtained, and more needs to be done when it comes to tackling collusive business practices, particularly among pharmacies and banks. Originality/Value: The most vulnerable areas where competition is violated are telecommunications, transport, insurance, energy, procurement, petroleum products, banking and financial services and pharmacies sectors. Therefore, there is a need for inter-institutional cooperation, especially cooperation with and empowerment of, economic regulators.peer-reviewe

The PRIMO FORTE framework for good governance in public, private and civic organisations : an analysis on small EU states

Purpose: In this article we lay out and discuss a framework proposed by the Public Risk Management Organisation (PRIMO) (https://www.primo-europe.eu/) of which the authors are board members and the results of a test on public and private entities of EU small jurisdictions, specifically Malta, Slovenia, Luxembourg, Lithuania, Latvia, Estonia and Cyprus. These are countries within the EU having less than 3 million people population. Design/methodology/approach: We collected our primary data by using a semi-structured questionnaire and administering it to participants who are working directly or indirectly with entities within these EU states. The questionnaire was structured using the FORTETM acronym as themes, ‘Financial and compliant design’, ‘Object orientation and delivery’, ‘Responsibility and stewardship’, ‘Tools and processes for creation’ and ‘Environmental awareness and interaction’, with 5 statements under each theme to which participants were required to answer using a 5-point Likert-scale ranging from “Strongly Disagree” to “Strongly Agree”. We, however, allowed the participants to open up and discuss each statement and recorded these comments. Some demographic data was also collected as to the type of entity the participants are working with, the level of expertise on governance of the participant and the size of the entity. The quantitative data was subjected to statistical analysis while the results from the open ended question was analysed using the Thematic approach. Findings: Factor analysis provided support for the FORTE Good Governance model for both the Private and Public entities, no-matter if they are small or large. Originality/value: The study provides a better understanding and supports the FORTE Model established by PRIMO-Europe, after approximately 15 years of collecting data on public risks and for the first time tests it on both Private and Public entities, in large and small firms in small EU Jurisdictions. Moreover, this model contributed to the vast literature on models of risk management within organisations, but was not validated empirically for reliability of the factors, and on small jurisdictions. Therefore, the significance and importance of such a study lies firstly on the premise that testing on small countries, can be deemed as small laboratories for more complex politics, regulations and policies of larger countries.peer-reviewe

Essays on media reportage and economic behaviour

This thesis looks at the economics of mass media from a variety of perspectives. The main aim is to analyse the key factors that influence media reporting behaviour, and in turn the impact of reportage on individual decision-making processes. The first chapter provides a brief summary of the contextual background of this thesis, by presenting the main points tackled in the subsequent chapters as well as a concise overview of the main contributions across various fields of study. The second chapter explores the relationship between advertisers and the media using a simple model of horizontal and vertical product differentiation in a duopolistic setting. In this framework, when a news story is published one firm will benefit in terms of higher consumer demand and profits, while the other will suffer. Firms can influence the media's decision to publish the news story or withhold it via advertising expenditure. The main result shows that in equilibrium when news signals conform to people's prior beliefs, extreme or strong stories will be withheld from publication by the media. This is because strong stories will result in a drastic decline in profits for one firm, thus providing it with an incentive to switch over and change its production process to mimic the other (beneficiary) firm, thereby eliminating vertical product differentiation. Therefore, the beneficiary firm would have an incentive to ensure that the news story is withheld to prevent this increase in competition and the subsequent erosion of its profit margins. The results provide an alternative rationale to explain recent evidence on under-reporting by the U.S. media in relation to various issues like climate change and the nutritional content of food. The third chapter looks at the responsiveness of individual private behaviour to media coverage of a particular news story. Survey data on charitable gift-giving in the U.S. are used in order to analyse the impact of newspaper coverage of the 2004 Indian Ocean tsunami on both the likelihood and magnitude of monetary disbursements towards the relief effort. The identification strategy employed in this paper exploits differences in county-level growth rates of violent crime in order to account for the variation in newspaper coverage of the tsunami, thus circumventing potential endogeneity problems. The results show that media coverage only had a modest effect on people's decision to donate or not, but conversely had a significant and non-trivial impact on the amount of money donated. Furthermore, this impact was larger for young adults within the 25-34 age bracket and individuals who had undertaken some form of voluntary work in the previous year. These results hold even after the implementation of various robustness tests, and serve to highlight the growing influence of the media on people's behaviour. The final chapter analyses the impact of media reports on electoral outcomes, and in particular the extent to which soft or sensationalist news reportage influences voting. Survey data on individual voting behaviour during the 2000 U.S. Presidential election is used, together with a novel dataset on the amount of coverage afforded to the Monica Lewinsky scandal over the period January 17, 1998 to August 31, 2000. We first show that Lewinsky coverage was not driven by the newspapers' political bias, but rather by other factors including tabloid journalism. This independence enables us to focus solely on the impact of media reports on voting, in contrast to the rest of the literature which deals with the electoral influence of politically-biased media outlets. We then look at how newspaper coverage of the Lewinsky scandal influenced voting patterns in the 2000 U.S. Presidential election. To account for potential endogeneity issues we use county-level variation in the number of deaths caused by extreme weather events as an instrument for Lewinsky articles. We find that media coverage of the scandal had a positive and statistically significant impact on the likelihood of voting for George W. Bush, and conversely a negative influence on the probability of voting for Al Gore: this pattern is visible among both Democrats and Republicans. The results are robust to various tests, and raise several questions regarding the media's role within the democratic process

Establishing the contributing factors to the resurrection of PIIGS banks following the crisis : a panel data analysis

In this article, we analyse empirically the factors that allowed for the improvement and strengthening of the banking systems in Greece, Ireland, Italy, Portugal and Spain (known as the PIIGS) during the post-financial crisis period 2011-2016. We use panel data on 200 banks and measure their financial soundness using the z-score. Our results show that the improvement is mainly due to managerial factors. To ensure stability, banks must monitor their loans and avoid non-performing loans. The public authorities should try to control banks’ size, encouraging medium-sized banks since these tend to perform better on average while limiting the existence of banks, whose size and importance (despite economies of scale) can destabilize the entire system in case of bankruptcy. Finally, different from previous studies, we include herein the refinancing programmes into the analysis of financial soundness and show that the financial assistance programs have been necessary to ensure the recovery of the banking systems.peer-reviewe

The cost and information management effect in SMEs : an empirical analysis

Purpose: The purpose of the study is to analyse costs and information management as determinants of the final price strategy, the cost components and to identify the impact of factors affecting the performance of SMEs. Design/Methodology/Approach: The methodology is based on the comparative analysis of data using both primary and secondary sources. The data collected are analyzed using the regression method. The results show that cost and information management contributes to determinate the company’s price of goods and services. Findings: The research for SMEs shows that company performance depends on managerial decision taking into account cost management and accounting information. Decision-making in this context is determined by making a choice between alternatives and it is based on objectives. Cost and information management has a key goal, to organize costs by creating products and services, so company managers can use cost information as a guide to setting sales prices and inventory estimates by determining profits. Practical Implications: This work will be useful to the people in the academic field, readers, and knowledge seekers and will be of great relevance in the area of managerial decisions and performance appraisal. Originality/Value: It contributes to the knowledge of financial managers and other accountants as it will assist them in effective planning and control.peer-reviewe

The Maltese financial services industry’s perception on the regulators : an empirical analysis

In this study, we analyse the perception of players within the financial services industry with regards to the Maltese industry regulators, specifically the Financial Intelligence Analysis Unit (FIAU), the Malta Financial Services Authority (MFSA), the Central Bank of Malta (CBM) and the Information and Data Protection Commission (IDPC). We used the Five Factor Model of personality (FFM), which is a hierarchical organisation of personality traits in terms of five basic dimensions, which are conscientiousness, agreeableness, neuroticism, openness to experience and extraversion. Results show that in general, both the regulated entities and the regulators gave high scores for each of the five traits, indicating that the overall perception of regulators in Malta is positive. From the perspective of the regulated entities, conscientiousness emerged as the key trait, with openness/intellect ranking the lowest. Conversely, regulators rated themselves highest on openness/intellect, with the lowest score given to extraversion. The qualitative results indicate that regulators needed to 1) improve on communication with the regulated entities, which is generally very formal, 2) curb high staff turnover, and 3) strengthen their efficiency in taking timely decisions – resulting from unnecessary bureaucracy. On the positive side, results revealed that the regulators are known to be flexible and ready to listen.peer-reviewe

A computer-based incentivized food basket choice tool:Presentation and evaluation

First published online: 10 January 2019Objective To develop and evaluate a low-cost computer-based tool to elicit dietary choices in an incentive compatible manner, which can be used on-line or as part of a laboratory study. Methods The study was conducted with around 255 adults. Respondents were asked to allocate a fixed monetary budget across a choice of around a hundred grocery items with the prospect of receiving these items with some probability delivered to their home by a real supermarket. The tool covers a broad range of food items, allows inference of macro-nutrients and calories, and allows the researcher to fix the choice set participants can choose from. We compare the information derived from our incentivized tool, and compare it to alternative low-cost ways of measuring dietary intake, namely the food frequency questionnaire and a one-shot version of the 24-hour dietary recall, which are both based on self-reports. We compare the calorie intake indicators derived from each tool with a number of biometric measures for each subject, namely weight, body-mass-index (BMI) and waist size. Results The results show that the dietary information collected is only weakly correlated across the three methods. We find that only the calorie intake measure from our incentivized tool is positively and significantly related to each of the biometric indicators. Specifically, a 10% increase in calorie intake is associated with a 1.5% increase in BMI. By contrast, we find no significant correlations for either of the two measures based on self-reports. Conclusion The computer-based tool is a promising new, low-cost measure of dietary choices, particularly in one-shot situations where such behaviours are only observed once, whereas other tools like 24-hour dietary recalls and food frequency questionnaires may be more suited when they are administered repeatedly. The tool may be useful for research conducted with limited time and budget.NUDGE-IT [607310