Financial integration and financial development in transition economies : what happens during financial crises ?

This papers provides an empirical analysis of the role of financial development and financial integration in the growth dynamics of transition countries. We focus on the role of financial integration in determining the impact of financial development on growth, distinguishing "normal times" from periods of financial crises. In addition to confirming the significant positive effect on growth exerted by financial development and financial integration, our estimates show that a higher degree of financial openness tends to reduce the contractionary effect of financial crises, by cushioning the effect on the domestic supply of credit. Consequently, the high reliance on international capital flows by transition countries does not necessarily increase their financial fragility. This implies that financial protectionism is a self-defeating policy, at least for transition countries.Transition economies, financial integration, financial crises, economic growth, threshold effects.

PREDVIĐANJE BANKROTA POMOĆU POLU-PARAMETARSKOG MODELA JEDINSTVENOG INDEKSA

Semi-parametric methods are virtually neglected in the bankruptcy prediction literature. This paper compares the logit model, as the standard parametric model for bankruptcy prediction, to the semi-parametric model developed by Klein and Spady (1993). Special care is devoted to the effect of choice-based sampling prediction accuracy. The choice of the sampling and estimation method lead to a similar trade offs. Using choice-based sampling and logit model leads to minimization of risk exposure. Samples unbalanced across groups and the semi-parametric method allow for better overall prediction accuracy and thus profit maximization.Polu-parametarski modeli su doslovno zanemareni u literaturi o predviđanju bankrota. Ovaj rad uspoređuje logit model, kao standardni parametarski model za predviđanje bankrota, sa poluparametarskim modelom kojeg su razvili Klein i Spady (1993). Posebna je pažnja posvećena efektu choice-based uzorkovanja na točnost predviđanja. Odabir metode uzorkovanja i procjene dovele su do sličnih balansiranja (trade offs). Korištenje choice-based uzorkovanja i logit modela dovodi do minimaliziranja rizika. Nebalansirani uzorci i polu-parametarska metoda omogućuju generalno bolju kvalitetu predviđanja te tako i maksimizaciju profita

A novel model for hourly PM2.5 concentration prediction based on CART and EELM

Hourly PM2.5 concentrations have multiple change patterns. For hourly PM2.5 concentration prediction, it is beneficial to split the whole dataset into several subsets with similar properties and to train a local prediction model for each subset. However, the methods based on local models need to solve the global-local duality. In this study, a novel prediction model based on classification and regression tree (CART) and ensemble extreme learning machine (EELM) methods is developed to split the dataset into subsets in a hierarchical fashion and build a prediction model for each leaf. Firstly, CART is used to split the dataset by constructing a shallow hierarchical regression tree. Then at each node of the tree, EELM models are built using the training samples of the node, and hidden neuron numbers are selected to minimize validation errors respectively on the leaves of a sub-tree that takes the node as the root. Finally, for each leaf of the tree, a global and several local EELMs on the path from the root to the leaf are compared, and the one with the smallest validation error on the leaf is chosen. The meteorological data of Yancheng urban area and the air pollutant concentration data from City Monitoring Centre are used to evaluate the method developed. The experimental results demonstrate that the method developed addresses the global-local duality, having better performance than global models including random forest (RF), v-support vector regression (v-SVR) and EELM, and other local models based on season and k-means clustering. The new model has improved the capability of treating multiple change patterns

Control of inflation on the road to the European Monetary Union : the case of Slovenia

Published online: 8 December 2014This paper analyzes the monetary policy of Slovenia on the path to euro adoption. Analysis of the exchange rate pass-through effect supports the link between the practice of real exchange rate targeting within the managed float regime and inflationary developments. With a counterfactual policy experiment in a cointegrating vector autoregressive (VAR) model, it is shown that stabilizing the nominal exchange rate and entering into the European Exchange Rate Mechanism (ERM II) sustainably reduced inflation to a level compatible with the Maastricht criteria, without creating any significant imbalances in the economy. For this reason, it can be expected that the stabilizing effects of exchange rate stability will continue under the European Monetary Union (EMU)

Non-linear growth effects of financial development: Does financial integration matter?

Using both macro- and industry-level data this paper analyses the non-linear effects of financial development and international financial integration on economic growth in Europe. Special attention is devoted to modeling threshold effects with respect to the depth of financial markets as a measure of economies' absorption capacity. Results reveal evidence of significant non-linear effects, with less developed European countries gaining more from financial development. In contrast, benefits of international financial integration become significant at higher levels of financial development. The data show that monetary integration in Europe significantly contributed to a higher degree of financial integration. Entry of new EU members to the European Monetary Union may thus be the mechanism ensuring a virtuous development circle, as the adoption of the Euro may allow the development of domestic financial markets and financial integration to go hand-in-hand.

Non-linear growth effects of financial development: Does financial integration matter?

Using both macro- and industry-level data this paper analyses the non-linear effects of financial development and international financial integration on economic growth in Europe. Special attention is devoted to modeling threshold effects with respect to the depth of financial markets as a measure of economies' absorption capacity. Results reveal evidence of significant non-linear effects, with less developed European countries gaining more from financial development. In contrast, benefits of international financial integration become significant at higher levels of financial development. The data show that monetary integration in Europe significantly contributed to a higher degree of financial integration. Entry of new EU members to the European Monetary Union may thus be the mechanism ensuring a virtuous development circle, as the adoption of the Euro may allow the development of domestic financial markets and financial integration to go hand-in-hand

Financial integration and financial development in transition economies: What happens during financial crises?

<p><span style="font-family: 'Times New Roman', serif;">This paper provides an empirical analysis of the role of financial development and financial integration in the growth dynamics of transition countries. We focus on the role of financial integration in determining the impact of financial development on growth, distinguishing “normal times” from periods of financial crises. In addition to confirming the significant positive effect on growth exerted by financial development and financial integration, our estimates show that a higher degree of financial openness tends to reduce the contractionary effect of financial crises, by cushioning the effect on the domestic supply of credit. Consequently, the high reliance on international capital flows by transition countries does not necessarily increase their financial fragility. This implies that financial protectionism is a self-defeating policy, at least for transition countries.</span></p&gt

Financial integration and financial development in transition economies : what happens during financial crises ?.

This papers provides an empirical analysis of the role of financial development and financial integration in the growth dynamics of transition countries. We focus on the role of financial integration in determining the impact of financial development on growth, distinguishing "normal times" from periods of financial crises. In addition to confirming the significant positive effect on growth exerted by financial development and financial integration, our estimates show that a higher degree of financial openness tends to reduce the contractionary effect of financial crises, by cushioning the effect on the domestic supply of credit. Consequently, the high reliance on international capital flows by transition countries does not necessarily increase their financial fragility. This implies that financial protectionism is a self-defeating policy, at least for transition countries.Transition economies, financial integration, financial crises, economic growth, threshold effects.

Financial integration and financial development in transition economies: What happens during financial crises?

Italy’s first Fascist government applied a large-scale privatization policy between 1922 and 1925. The government privatized the state monopoly of match sale, eliminated the State monopoly on life insurances, sold most of the State-owned telephone networks and services to private firms, reprivatized the largest metal machinery producer, and awarded concessions to private firms to build and operate motorways. While ideological considerations may have had a certain influence, privatization was used mainly as a political tool to build confidence among industrialists and to increase support for the government and the Partito Nazionale Fascista. Privatization also contributed to balancing the budget, which was the core objective of Fascist economic policy in its first phase.transition economies,financial integration,financial crises,economic growth,threshold effects