The effect of dividend policy on share price volatility : an analysis of Mediterranean banks' stocks

This empirical study investigates the relationship between share price volatility and dividend payments in the case of Mediterranean Banks. We use the dividend yield and the dividend payout as proxies of dividend policy, and regress these ratios together with other control variables to model share price volatility. The robustness of the results is assessed by re-using a data set which omits the outliers relating to the 2007 financial crisis and by forming sub-samples using a clustering procedure. Our results show that inferences may differ across samples and depending on the treatment of outlier observations. Besides adding new empirical evidence, our results offer insights to academics, stock traders and corporate managers in terms of better understanding the effect of dividend policies on share price volatility and its related risks and opportunities.peer-reviewe

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This paper is based on the unpublished Thesis by Psaila, A. (2019) “The Impact of Non Performing Loans on the profitability of listed Euro-Mediterranean commercial banks” supervised by Dr.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

The current financial crisis and derivative misuse

The paper aims to discuss the role played by derivatives in the financial crisis and to identify whether it is these instruments or other factors that were behind it. Moreover, it looks at literature on control systems within the firms throughout the aforementioned event, to identify and bring to light any flaws and gaps. Moreover, it highlights opinions of persons involved, testimonies, papers and reports drawn-up, the lessons learnt and their mitigating factors, in order to enable address of the issues and avoid replay. The article suggests that many factors contributed to the quick deterioration in credit markets and large losses. Although, this has sometimes been attributed to one single main factor (i.e. the massive interlocking web of Over the Counter derivatives exposures), to take down the entire financial system would have taken more than just this. There are arguments both in favour and against this opinion, however the fact may be that a mixture of the exploitation of the New Financial Architecture self regulatory model by unethical traders, compounded by the fact that the financial structure allowed the financial institutions to set inflated prices on derivatives with unknown values, such as Credit Default Swaps could have been the culprit. Therefore, to avoid replay, there is need for transparency and accountability as proposed by the European Commission and also an external regulatory framework that stops unethical traders.peer-reviewe

A study on the impact of the short selling ban on FIBS

In this paper we investigate how the short selling ban affected stock markets in France, Italy, Belgium and Spain and whether the required response was really achieved and reflected in the market. Although some argue that the short selling ban was needed for the market to get back on its feet, others argue that short selling is a tool that improves market efficiency and banning such trading strategy might lead to detrimental effects on the market. Therefore, the purpose of this study was to show whether the short selling ban had a positive or negative effect, both in the short-term and long-term, on the financial markets. Moreover, to determine whether short selling is an effective tool and whether it really drives the stock prices down when the financial markets are going through bad moments. Consequently, uncover whether the short selling ban has had a permanent impact on the financial markets and whether it really had an effect on the FIBS. To do this we used market data and a selection of stock returns, which included banned stocks in the FIBS financial markets and non-banned financial stocks from non-FIBS before, during and after the short-selling ban in August 2011. It was found that the short selling ban led to higher volatility in the FIBS countries and also had a spill over effect on non-FIBS countries. Furthermore, the impact of the short selling ban on volatility was only deemed to be for a short-term period, with the exception of Spain. Also, the short selling ban slowed down price discovery in Belgium, France and non-FIBS countries, whereas the short selling ban did not affect Spain and Italy. Furthermore, all countries including the non-FIBS countries illustrated a better price discovery position after the ban was lifted; therefore the short selling ban only had a short-term impact on price discovery. Moreover, there was a long-term positive effect on prices with improvement in stock market prices for all FIBS countries with a positive impact on non-FIBS countries. However, liquidity in all FIBS and non-FIBS countries suffered a short-term negative impact.peer-reviewe

Factors affecting the consumers’ choice of payment instrument in Poland

“The project is financed within the framework of the program of the Minister of Science and Higher Education under the name "Regional Excellence Initiative" in the years 2019 - 2022; project number 001/RID/2018/19; the amount of financing PLN 10,684,000.00.”Purpose: This contribution presents the main findings of a recent survey on consumer payment behavior in Poland. The authors aim to determine the factors influencing the choice of the payment instrument by consumers. This in order to better understand the reason why cash is still the main paying instrument being used by Polish consumers. Design/Methodology/Approach: A survey was carried out between the 7th and 21st February 2019, using Computer-Assisted Personal Interview (CAPI), administered on a nationwide sample of Polish nationals aged 15 and above. A total of 1005 interviews were conducted. To ensure the representativeness of the collected data, the edge weighting was applied in accordance with the structure of the Polish population, including variables of gender, age, and education and the iterative technique (rim weighting). Findings: Findings show that despite the development of the cashless payments, the position of cash is still powerful, because it fulfills consumers’ expectations and although, the role of cashless payments increases, this is not happening at the fast pace that the institutional stakeholders of the financial market would expect. Cash in many respects has a lead on the market of the consumer payments, both with respect to the ease of use and the cost of transaction. Practical implications: Understanding consumer trends in their use of payment methods is important for policy makers, the economy in general and the National Central Bank which need reliable statistical data to enable comparison with other countries on the levels of development in their payment systems, the determination of monetary policy and to carry out strategic decisions concerning the cash cycle and the effectiveness of the payment system. Originality/Value: Without precise knowledge of how people actually pay for goods and services, a country is devoid of solid statistical foundations and will result in speculation.peer-reviewe

Property tax and local finance of Kosovo - an overview

Purpose: In this article, we lay out the results of an analysis of the role of property tax regime in the local finance of Kosovo and highlight the current advantages and weaknesses. Design/Methodology/Approach: We do this by carrying out an analysis of the legislation in force, which regulates financial issues at the central and local levels, the functioning of property tax, and other financial implications for municipalities. In doing this we review the level of dependence of municipalities on central government, grants and their share, as well as other issues which have an impact on fiscal decentralization. We also analyse tax system and its evolution, the participation of tax categories and municipality tax in central and local budgets and give specific accentuation to property taxation, role in the taxation system and local finances. Moreover, we present the institutional structures and their competencies, relationship between central and local institutions. Findings: The current situation and system in place leaves much to be desired and property taxes may have more potential as a revenue source for municipalities. Practical Implications: This article shows the importance for municipalities to find a means to self-finance through their own sources. Originality/Value: We define needs for strengthening the Own Source Revenues (OSR), taking strong and coordinated steps to improve the management and collection of OSRs in general and property tax in particular.peer-reviewe

Competition policy in the Western Balkan countries

Purpose: In this paper, we lay out the analysis and provide an overview of the functions carried out by the national competition authorities in the Western Balkan countries and demonstrate their compliance with EU rules. We deal with the level of implementation of competition rules on prohibited agreements, abuse of dominant position, notification of concentration and state aid. Design/Methodology/Approach: We provide an overview of the stage these countries have arrived at in fulfilling their obligation on competition issues based on the Stabilisation and Association Agreement, which is a step forward for EU integration. We do this by carrying out a comparative analysis of the data collected from both primary and secondary sources, in order to demonstrate the current situation on competition in the Western Balkan countries and determine the most appropriate means to build strong and efficient National Competition Authorities. Findings: Findings show that competition in Balkan countries is still in a phase of development and more needs to be done in order to create an adequate competition regime. Practical Implications: We propose measures in order to ensure the effective implementation of the law on the protection of competition and the market economy. Originality/Value: When going through a phase of transformation, political change and integration, it is important to refer to other experiences, especially when trying to form part of the EU integration.peer-reviewe

THE EFFECT OF THE FINANCIAL CRISIS ON EMERGING MARKETS. A COMPARATIVE ANALYSIS OF THE STOCK MARKET SITUATION BEFORE AND AFTER

In this paper the authors present the findings of an analyses carried out to establish whether the BRIC’s stock market returns were affected by the U.S. financial stress during the 2008 Financial Crisis. To do this the authors studied the relationship between the U.S. Stock Markets and the BRIC countries’ stock and bond market returns. They carried out a regression analysis which consisted of running an equation of the dependent variable - the BRIC’s stock market returns, against a number of regressors -explanatory variables, which include the U.S.’ industrial production, the U.S.’ unemployment rate, the U.S.’ S&P500, the Michigan confidence index, the BRIC’s consumer price index, the industrial production, the Gross Domestic Product and the consumer price index of each individual country; Brazil, Russia, India and China respectively. Then the authors used a single-equation time series model to explain spillover effects emanating from the US onto the BRIC markets. They analysed the whole data series from 2003 to 2014. Then sub-divided this data to analyse the post crisis effects on the BRICS equity market. The index of Brazil, Russia, India and China respectively. - BOVESPA (Brazil), MICEX (Russia), NIFTY (India) and China Security Index (CSI300) were the dependent variables of the model. Moreover, the model takes the US stock market index, the S&P500 as a benchmark variable. Results obtained, revealed that the BRICs were subject to a spillover effect during and following the financial crisis

Analysis of the influencing factors on the farmers’ take-up of greenhouse agricultural insurance cover : a case study

The purpose of this study is to analyse the insurance claims and insurance intentions of the farmers who are engaged in greenhouse cultivation and to determine the influencing factors affecting the insurance process. Various methods were used in the study since results obtained from one source were deemed insufficient in explaining the insurance behaviours of farmers. These included a survey, interview, document analysis and a literature review. The survey data was analysed using basic statistics and ANOVA. Findings indicate that that the intention of the farmers to take an greenhouse agricultural insurance coverage is not influenced by factors relating to the experience of previous damages, positivity, reason, and facilitation. However, it is influenced by factors relating to the farmers’ attitude and the obstacles they face. The most prominent influential factors preventing farmers from purchasing agriculture insurance are physical problems (1) derived from insufficient resources, (2) property and deed-title issues in greenhouse areas and (3) the problems regarding damage payments. It is emphasised that insurance-related problems can be solved by a macro-scale agricultural reform and communication between the relative parties. These findings can be used as a tool in policy development by farmers, insurance institutions and related government institutions.peer-reviewe

Risk Management Practices Adopted by European Financial Firms with a Mediterranean Connection

Following the economic and financial crises, any activity involving internal controls, especially risk management, has been given more attention. With this study, we aim to contribute further to the existing literature on risk management by looking at practices adopted by financial services firms licenced in Europe with a Mediterranean connection. We used parts of a questionnaire adopted by two of the authors in another study on risk management practices adopted by Maltese financial services firms and sent it to prospective candidates who work closely within risk management, to collect our data. This resulted in 1635 participants. This data was used to (1) bring to light the mechanisms and strategies used in risk management by these organisations to maximise their opportunities, manage their risks, and maintain stability in their financials. Also, (2) we check if this is perceived as contributing to ‘principled performance’. Finally, (3) we examine the extent to which risk management capabilities offer a competitive advantage to these firms. Our findings evidence that the objective by EMP and the EU, that is to ensure that members operate ‘on the same level playing field’ within risk management, in financial services of firms with a Euro-Mediterranean connection, has been achieved