Template-Type: ReDIF-Paper 1.0 Author-Name: Gunay Akel Author-Name-First: Gunay Author-Name-Last: Akel Author-Email: gakel@konya.edu.tr Author-Workplace-Name: Necmettin Erbakan University Title: Relationship Between Exchange Rates and Stock Prices in Transition Economies Evidence from Linear and Nonlinear Causality Tests Abstract: The existence of causation linkage between stock prices and exchange rates is one of the popular debate especially since the beginning of 1990s. The aim of this paper is to investigate the nature of the causal transmission mechanism between foreign exchange and stock markets in 9 transition countries (i.e., Bulgaria, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, and Russia) for the periods of 1995-2011. The results of the paper show that uni-directional linear Granger causality running from exchange rates to stock prices for 4 countries (i.e., Czech Republic, Hungary, Poland, and Romania) and a feedback exists between two markets for only Russia when both linear and nonlinear Granger causality are used. Length: 13 pages Creation-Date: 2014-07 Publication-Status: Published in Proceedings of the Proceedings of the 2nd Economics & Finance Conference, Vienna, Jul 2014, pages 1-13 File-URL: https://iises.net/proceedings/2nd-economics-finance-conference-vienna/table-of-content/detail?cid=4&iid=1&rid=1783 File-Function: First version, 2014 Number: 0401783 Classification-JEL: C22, F31 Keywords: Exchange Rates, Stock Prices, Transition Economies, Linear and Nonlinear Causality Tests Handle: RePEc:sek:iefpro:0401783 Template-Type: ReDIF-Paper 1.0 Author-Name: Suha Alawi Author-Name-First: Suha Author-Name-Last: Alawi Author-Email: suha_alalawi@hotmail.co.uk Author-Workplace-Name: King Abdulaziz university Title: Corporate Governance and Cartel formation Abstract: This paper examines the relationship between corporate governance and cartel formation, A firm?s participation in cartel depends upon the potential problems that may arise due to price fixing and the incentives provided to the management. The top levels of management such as the board of directors and the CEO are responsible for deciding if the firm will participate in the cartel and manage the corporate governance activities of collusive price fixing agreements. The study is focused on UK cartel firms which has the highest representation in the sample. A total number of 150 cartel firms in 52 cases from all around the world between the years 1990 to 2008 are involved in this study, of which 114 are UK firms. Therefore, this study is dominated by UK firms. The study concludes that UK-based cartel firms characterised by having larger board size compared to non-cartel firms; lower percentage of independent directors (non-executive); higher average of board remuneration; less likely that cartel is formed by family-owned and controlled firm (large shareholders); having older CEOs represented on the board; having CEO who served a less number of years as a director; less likely to have a female CEO represented; more likely to have CEOs who?s combined CEO-chairman position; and a higher average of CEOs bonuses and compensation packages. Length: 25 pages Creation-Date: 2014-07 Publication-Status: Published in Proceedings of the Proceedings of the 2nd Economics & Finance Conference, Vienna, Jul 2014, pages 14-38 File-URL: https://iises.net/proceedings/2nd-economics-finance-conference-vienna/table-of-content/detail?cid=4&iid=2&rid=1246 File-Function: First version, 2014 Number: 0401246 Classification-JEL: G34, L40 Keywords: Cartels; Antitrust agreements; Corporate governance; Competition; Agency theory. Handle: RePEc:sek:iefpro:0401246 Template-Type: ReDIF-Paper 1.0 Author-Name: Demissie Alemayehu Author-Name-First: Demissie Author-Name-Last: Alemayehu Author-Email: alem@stat.columbia.edu Author-Workplace-Name: Columbia University and Pfizer Inc Title: Methodological Considerations in Cost-Effectiveness Analysis Abstract: In decision making regarding optimal resource allocation to safeguard public health, policymakers and healthcare providers rely on the availability and reliability of data about the relative costs and benefits of competing treatment options. One such an approach is based on cost effectiveness analysis (CEA) which is intended to be used as a combined metric of both the costs and health outcomes of alternative intervention strategies. However, the usual measures used in CEA are not readily analyzable based on standard statistical paradigms for inference. Further, reliable data may not always be available to estimate relevant parameters. Accordingly, it is essential to employ nonstandard procedures to compensate for information gaps and to address inferential difficulties. In this paper, we outline the issues associated with some of the commonly used techniques, with particular emphasis on the so-called network meta-analysis and indirect comparisons. Additional reference is made to the complexities introduced when data are used from observational studies. It is concluded that effective use of CEA in healthcare policy presupposes a careful appreciation of the underlying issues, and implementation of robust remedial measures to mitigate their impacts. Length: 10 pages Creation-Date: 2014-07 Publication-Status: Published in Proceedings of the Proceedings of the 2nd Economics & Finance Conference, Vienna, Jul 2014, pages 39-48 File-URL: https://iises.net/proceedings/2nd-economics-finance-conference-vienna/table-of-content/detail?cid=4&iid=3&rid=1651 File-Function: First version, 2014 Number: 0401651 Classification-JEL: C18 Keywords: Cost-Effectiveness Analysis, Network Meta-analysis, Indirect Comparisons, Health Economics Handle: RePEc:sek:iefpro:0401651 Template-Type: ReDIF-Paper 1.0 Author-Name: Timotheos Angelidis Author-Name-First: Timotheos Author-Name-Last: Angelidis Author-Email: timotheos.angelidis@gmail.com Author-Workplace-Name: University of Peloponnese Author-Name: Nikolaos Tessaromatis Author-Name-First: Nikolaos Author-Name-Last: Tessaromatis Author-Email: nikolaos.tessaromatis@edhec.edu Author-Workplace-Name: EDHEC Business School and EDHEC Risk Institute Title: Global portfolio management under state dependent multiple risk premia Abstract: In this paper, we assess the benefits from international factor diversification under a regime based portfolio construction framework that takes into account the dynamic changes in stock markets. We show that there are significant costs to investors who fail to (a) pursue an international diversification strategy using sources of return other than the market premium and (b) take into account the existence of regimes in portfolio construction and asset allocation. Short sale and tracking error constraints reduce but do not eliminate the gains from a dynamic global factor portfolio. Implementation through commercially available, investable factor indices to provide efficient and low cost building blocks to construct a dynamic diversified factor portfolio in practice preserves most of the benefits from state dependent portfolio construction. Length: 34 pages Creation-Date: 2014-07 Publication-Status: Published in Proceedings of the Proceedings of the 2nd Economics & Finance Conference, Vienna, Jul 2014, pages 49-82 File-URL: https://iises.net/proceedings/2nd-economics-finance-conference-vienna/table-of-content/detail?cid=4&iid=4&rid=966 File-Function: First version, 2014 Number: 0400966 Classification-JEL: G11 Keywords: Diversification benefits, Factor returns, Regime Switching Models. Handle: RePEc:sek:iefpro:0400966 Template-Type: ReDIF-Paper 1.0 Author-Name: Lourdes Gabriela Daza Aramayo Author-Name-First: Lourdes Gabriela Daza Author-Name-Last: Aramayo Author-Email: dazaaramayo@gmail.com Author-Workplace-Name: Center for Latin American Studies, University of Economics in Prague Title: FDI attractiveness in Latin America Abstract: This paper focuses on the identification of the variables determining the attractiveness of foreign direct investment in Latin America, represented by 17 countries over a period of time from 1996 to 2011. It considers variables traditionally not taken into account, such as the tax rate and institutional factors, which have revealed important explanatory variables also traditionally considered as GDP, inflation, population, the share of GDP by sector, the income level, etc. According to the analysis in this paper and the results obtained, it is very clear that institutional factors such as the size of the economy and the population have an influence in attracting FDI flows. The institutional quality is determinative for the attraction of foreign direct investment to these countries. Property rights, monetary freedom and investment freedom, are institutional indicators of great relevance as explanatory factors for attracting foreign direct investment, while government expenditures follows to a lesser degree. Length: 19 pages Creation-Date: 2014-07 Publication-Status: Published in Proceedings of the Proceedings of the 2nd Economics & Finance Conference, Vienna, Jul 2014, pages 83-101 File-URL: https://iises.net/proceedings/2nd-economics-finance-conference-vienna/table-of-content/detail?cid=4&iid=5&rid=1923 File-Function: First version, 2014 Number: 0401923 Classification-JEL: N46, F21, P45 Keywords: Foreign Direct Investment, FDI attractiveness, FDI determinants, theories of FDI, Latin America Handle: RePEc:sek:iefpro:0401923 Template-Type: ReDIF-Paper 1.0 Author-Name: Pawel Bialynicki-Birula Author-Name-First: Pawel Author-Name-Last: Bialynicki-Birula Author-Email: bialynip@uek.krakow.pl Author-Workplace-Name: Cracow University of Economics Title: Impact of global financial crisis on healthcare expenditures in developed countries Abstract: Current financial crisis, branded as global, has severely affected economies of developed countries. Revenue drops, high deficits and debt forced actions taken in many countries to seek savings and changes of socio-economic structures. This paper concerns the issue of consequences of the downturn for healthcare sector in developed countries. It aims at obtaining answers to questions concerning the course of adjustments with respect to financing health expenditures, and, in particular, scale and rate of their possible reduction in the situations of high-pressure from public finances. In order, the issues of trends in basic economic parameters at the time of crisis, and then the volumes and tendencies for respective categories of healthcare expenditures have been discussed. Determinants of creation of new health care policy instruments on international scale involving implementation of rescue (bailout) programs in countries affected by the crisis have been discussed. Length: 19 pages Creation-Date: 2014-07 Publication-Status: Published in Proceedings of the Proceedings of the 2nd Economics & Finance Conference, Vienna, Jul 2014, pages 118-136 File-URL: https://iises.net/proceedings/2nd-economics-finance-conference-vienna/table-of-content/detail?cid=4&iid=6&rid=1539 File-Function: First version, 2014 Number: 0401539 Classification-JEL: H51, E60, G01 Keywords: Financial crisis, Financing healthcare, Healthcare systems, Health policy** The paper has been prepared as a part of research grant funded by the National Science Centre ?The use of interactive methods of governance in shaping social policy? no UMO-2011/03/B/HS5/00899. Handle: RePEc:sek:iefpro:0401539 Template-Type: ReDIF-Paper 1.0 Author-Name: Sehilat Bolarinwa Author-Name-First: Sehilat Author-Name-Last: Bolarinwa Author-Email: sehilatabike@gmail.com Author-Workplace-Name: LAGOS STATE UNIVERSITY Author-Name: Babatunde Yusuf Author-Name-First: Babatunde Author-Name-Last: Yusuf Author-Email: babatundeyusufr@yahoo.com Author-Workplace-Name: LAGOS STATE UNIVERSITY Author-Name: Khadijah Idowu Author-Name-First: Khadijah Author-Name-Last: Idowu Author-Email: idowuadeola2@yahoo.com Author-Workplace-Name: LAGOS STATE UNIVERSITY Author-Name: Jamiu Tijani Author-Name-First: Jamiu Author-Name-Last: Tijani Author-Email: olakunletijani@yahoo.com Author-Workplace-Name: LAGOS STATE UNIVERSITY Title: Abandonment of Capital Investments and Survival of Small and Medium Enterprises: Evidence from Nigeria Abstract: This paper presents empirical evidence on the impact of abandonment of capital investments on the survival of small and medium enterprises (SMEs) in Nigeria. It employs mixed methodological framework to question the extent to which abandonment of capital investments affects the performance of SMEs in five districts in Lagos. The study adopted survey inferential design. A total of 250 questionnaires were administered to different sets of enterprises, out of which 220 valid responses were received representing 88 per cent. Moreover, judgmental sampling technique was adopted for the purpose of this study. To validate or give further support to the results from specific data sources, triangulation method was used. This method includes both qualitative and quantitative phases. Content validity was adopted. Data gathered from the questionnaire were analysed with the aid of descriptive statistical techniques (such as standard deviation and arithmetic mean) and inferential statistical techniques (Regression analysis and ANOVA). Furthermore, multivariate analysis of factor analysis and its constituent tests were equally employed. Findings related to the study clearly show that the performance of SMEs is characterised by numerous problems including: lack of proper and effective capital budgeting mechanism, failure to access loan, lack of funds, strict banking policies, unethical business practices, lack of stable business policy, among others. The study also discovers that poor capital budgeting practice impacts on the survival of SMEs in Nigeria. The main contribution of this paper to knowledge lies in capital budgeting decision and abandonment option. This has strengthened our understanding that abandonment of capital investments is a critical factor in explaining SMEs survival in Nigeria. Length: 18 pages Creation-Date: 2014-07 Publication-Status: Published in Proceedings of the Proceedings of the 2nd Economics & Finance Conference, Vienna, Jul 2014, pages 137-154 File-URL: https://iises.net/proceedings/2nd-economics-finance-conference-vienna/table-of-content/detail?cid=4&iid=7&rid=1626 File-Function: First version, 2014 Number: 0401626 Classification-JEL: C12, O22, O10 Keywords: Abandonment; Capital Investments; Survival; Capital Budgeting Theory; SMEs Handle: RePEc:sek:iefpro:0401626 Template-Type: ReDIF-Paper 1.0 Author-Name: K L Chawla Author-Name-First: K L Author-Name-Last: Chawla Author-Email: kchawla50@gmail.com Author-Workplace-Name: Fore School of Management Author-Name: Pankaj Kumar Gupta Author-Name-First: Pankaj Kumar Author-Name-Last: Gupta Author-Email: pkg123@eth.net Author-Workplace-Name: Centre for Management Studies, JMI University, New Delhi Title: Financial Perspectives of Globalization in Emerging Economies ? Concerns for India Abstract: Emerging economies (BRIC) are now on forefront of globalization in the resent scenario. From a financial perspective, globalization has resulted in huge financial flows to these economies that inter-alia include Portfolio investments by Foreign Institutional Investors (FII), Foreign Direct Investment by firms and institutions, External commercial borrowing and international resource mobilization. We argue that this spurt in financial globalization has resulted in volatility in financial markets, particularly stock markets and indirect contribution to GDP growth rate simultaneously creating concerns for the government policy makers and regulators especially in a country like India. We examine the case of India via investigation on association between GDP and stock market volatility and other selected macro economic indicators. The results on co-integrations, regression and GARCH specifications indicate that a positive significant impact of globalization on India's financial indicators. We find portfolio investments as deterrents to stock market volatility. Also, in some cases we find no integration across BRIC nations on selected macro economic variables. Length: 18 pages Creation-Date: 2014-07 Publication-Status: Published in Proceedings of the Proceedings of the 2nd Economics & Finance Conference, Vienna, Jul 2014, pages 190-207 File-URL: https://iises.net/proceedings/2nd-economics-finance-conference-vienna/table-of-content/detail?cid=4&iid=8&rid=1601 File-Function: First version, 2014 Number: 0401601 Classification-JEL: F01, F36, F21 Keywords: Financial Globalization, Foreign Direct Investment (FDI), Gross Domestic Product (GDP), Volatility, Foreign Institutional Investors (FII) Handle: RePEc:sek:iefpro:0401601 Template-Type: ReDIF-Paper 1.0 Author-Name: Donghyuk Choi Author-Name-First: Donghyuk Author-Name-Last: Choi Author-Email: dhchoi@kistep.re.kr Author-Workplace-Name: KISTEP Author-Name: Joseph Kang Author-Name-First: Joseph Author-Name-Last: Kang Author-Email: joseph@kistep.re.kr Author-Workplace-Name: KISTEP Author-Name: Chiyong Kim Author-Name-First: Chiyong Author-Name-Last: Kim Author-Email: cykim@kistep.re.kr Author-Workplace-Name: KISTEP Title: Effect of R&D on firms? growth: discrepancy between sales growth and employment expansion Abstract: In this paper, we analyze the effect of firms? R&D investment on sales growth and employment expansion. We attempt to shed light on the R&D investment effect by comparing the difference of R&D influence on these two growth dimensions. The estimation results of the panel fixed-effect model show that the previous year?s R&D investment has a significant and positive association with the current year?s sales growth but does not result in significant employment expansion. We also conduct a two-digit industry-level analysis based on the Korean Standard Industrial Classification (KSIC), using a quantile regression model, to examine how the discrepancy between sales growth and employment expansion differs between industries. Among various manufacturing industries, high-tech industries such as electronics are characterized by large discrepancies. Based on the estimation results, we discuss industrial policies for sustainable growth when a nation such as South Korea follows a high-growth strategy by increasing the rate of R&D investment. Length: 12 pages Creation-Date: 2014-07 Publication-Status: Published in Proceedings of the Proceedings of the 2nd Economics & Finance Conference, Vienna, Jul 2014, pages 208-219 File-URL: https://iises.net/proceedings/2nd-economics-finance-conference-vienna/table-of-content/detail?cid=4&iid=9&rid=1582 File-Function: First version, 2014 Number: 0401582 Classification-JEL: L25, O43 Keywords: R&D, firm growth, sustainable growth Handle: RePEc:sek:iefpro:0401582 Template-Type: ReDIF-Paper 1.0 Author-Name: Jie Dai Author-Name-First: Jie Author-Name-Last: Dai Author-Email: jie.dai@smu.ca Author-Workplace-Name: FISMS, Sobey School of Business, Saint Mary's University Title: Assessing Solvency of Financial Institutions: An Option-theoretic Approach Abstract: In this paper, we quantify the subtle concepts of soundness and safety of financial institutions through option pricing theory. This approach permits to intuit many solvency issues, including capital adequacy, financial strain or distress, balance sheet rebuilding and critical recapitalization, through private capital injections or government rescue programs. Numerical examples to implement the involved calculations are provided to illustrate the economic principles that underpin many governmentsponsored rescue plans, such as the Troubled Assets Relief Program (TARP) in the U.S. This option approach applies easily to the general topic of capital structure decisions and thereby improves upon the static theory which is usually limited to trade-off between tax benefits and bankruptcy costs. Length: 28 pages Creation-Date: 2014-07 Publication-Status: Published in Proceedings of the Proceedings of the 2nd Economics & Finance Conference, Vienna, Jul 2014, pages 240-267 File-URL: https://iises.net/proceedings/2nd-economics-finance-conference-vienna/table-of-content/detail?cid=4&iid=10&rid=1522 File-Function: First version, 2014 Number: 0401522 Classification-JEL: G01, G28, G32 Keywords: Soundness and safety of financial institutions, Capital adequacy, Recapitalization Handle: RePEc:sek:iefpro:0401522 Template-Type: ReDIF-Paper 1.0 Author-Name: Kloudová Dana Author-Name-First: Kloudová Author-Name-Last: Dana Author-Email: xklod06@vse.cz Author-Workplace-Name: University of Economics, Prague Title: Estimating Output Gap and Potential Output for Russia and Its Uselfulness by Forecasting Inflation Abstract: This paper deals with an estimation of output gap and potential output for Russian´s economy. Three methods of estimation have been used for estimating these two unobservable variables: Hodrick-Prescott filter, production function and SVAR model. All methods of estimation showed very similar course, although an obtained values were not identical. Then obtained values of the output gap were used to analyse the ability of output gap to forecast inflation. Two simple gap models were used for this purpose. The results showed that output gap could be used as useful indicator if inflation, according to all methods of estimation output gap. Length: 18 pages Creation-Date: 2014-07 Publication-Status: Published in Proceedings of the Proceedings of the 2nd Economics & Finance Conference, Vienna, Jul 2014, pages 268-285 File-URL: https://iises.net/proceedings/2nd-economics-finance-conference-vienna/table-of-content/detail?cid=4&iid=11&rid=2134 File-Function: First version, 2014 Number: 0402134 Classification-JEL: C53, E31, E32 Keywords: output gap, HP filter, SVAR model, production function, Kalman filter, inflation Handle: RePEc:sek:iefpro:0402134 Template-Type: ReDIF-Paper 1.0 Author-Name: Atul Dar Author-Name-First: Atul Author-Name-Last: Dar Author-Email: atul.dar@smu.ca Author-Workplace-Name: Saint Mary's University Title: The Impact of Imperfect Information on the Wages of Native-Born and Immigrant Workers: Evidence from the 2006 Canadian Census Abstract: This paper empirically examines how imperfect information about wage offers and reservation wages among employees and employers respectively impacts on the wages of Canadian born and immigrant workers. We estimate these effects from 2006 census data using a two-tier stochastic wage frontier. Our main contributions are: first, the use 2006 census data allows us to examine how the international transferability of immigrant human capital (or the lack of it) impacts on worker and employer information - this could not be done with earlier censuses, but is a critical factor that separates the labour market experience of immigrants (especially newcomers) from that of native-born Canadians; second, we adopt a more general approach to information gaps by re-parameterizing the frontier model to incorporate the impact of individual differences on labour market information; and third, we allow worker and employer information gaps to vary due to industry fixed effects. Our findings show that Canadian-born and immigrants with similar characteristics tend to experience quite similar wage gaps in the aggregate. While those gaps show significant variation across some industries for both immigrants and Canadian-born workers, and wage gaps due to worker imperfect information are also similar both groups, wage gaps driven by employer imperfect information are much larger among immigrants. As well, the results show that the variability in the amount of information that workers and employers possess is clearly more substantial among immigrants, thereby pointing to greater uncertainty about their wage outcomes. Our analysis of immigrants shows that while the effects of acquiring their degree prior to migration increases the size of wage gaps due to employer and worker imperfect information, these impacts are relatively modest when compared to those arising from a lack of language skills. Length: 18 pages Creation-Date: 2014-07 Publication-Status: Published in Proceedings of the Proceedings of the 2nd Economics & Finance Conference, Vienna, Jul 2014, pages 286-303 File-URL: https://iises.net/proceedings/2nd-economics-finance-conference-vienna/table-of-content/detail?cid=4&iid=12&rid=1532 File-Function: First version, 2014 Number: 0401532 Classification-JEL: J01, J24, J30 Keywords: imperfect information, two-tier wage frontier, wage gaps, Canadian-born and immigrant workers, 2006 census Handle: RePEc:sek:iefpro:0401532 Template-Type: ReDIF-Paper 1.0 Author-Name: Rukmani Gounder Author-Name-First: Rukmani Author-Name-Last: Gounder Author-Email: R.Gounder@massey.ac.nz Author-Workplace-Name: Massey University Title: Does Remittances Finance Welfare Development?: Evidence from the South Pacific Island Nation of Fiji Abstract: Remittances to developing nations have become an important source of income to finance the recipient households? livelihoods, where changes in expenditure patterns, consumption and savings-investment nexus for long term development lead to improve in wellbeing. The Pacific Islands have also seen to a significant rise in remittances and it has become a steady source of foreign exchange earnings. The island nations have a sizeable migration flow to Australia, New Zealand, the United States and United Kingdom as well as to other Pacific islands. A large number of emigrants from Fiji also migrate to Canada. More recently, remittances form a substantial flow through temporary labour schemes. Fiji?s rising migrant stock has seen remittances as the second largest foreign exchange earner after tourism surpassing other foreign capital flows of foreign aid, foreign direct investment as well as earnings from major commodity exports. It has large off-shore labour markets through specific employment abroad for teachers, nurses, care takers, sports personnel, military personnel and security officers in Australia, New Zealand, Dubai, United Kingdom, Middle East and the United Nations peace keeping force in the conflict-laden countries. The link between remittances and expenditure patterns has become an important nexus in the global welfare development framework. By increasing income of the recipient households?, remittances have gained impetus in the development agenda for its contribution to individual welfare through a range of consumption goods, entrepreneurial small and medium scale business and poverty reduction. Remittances impact on households? welfare shows that this financial inflow has been used for consumer durable and non-durable goods, food, housing, savings, investment and developing human capital, i.e., schooling and health outcomes. Its eventual developmental impact depends on the sustainability and what categories of consumption and innovative investment expenditures the households spend remittances on. This study examines the impact of remittances on welfare development in Fiji using the household income and expenditure survey 2002-03 dataset for 5,245 households. Expenditure patterns of the households are estimated for various categories and further disaggregated by ethnicity, i.e. Fijian and Indo-Fijian households. The results provide some implications for social financing for wellbeing and note the empowering and visionary opportunities of remittances to be part of development. Length: 20 pages Creation-Date: 2014-07 Publication-Status: Published in Proceedings of the Proceedings of the 2nd Economics & Finance Conference, Vienna, Jul 2014, pages 304-323 File-URL: https://iises.net/proceedings/2nd-economics-finance-conference-vienna/table-of-content/detail?cid=4&iid=13&rid=1213 File-Function: First version, 2014 Number: 0401213 Classification-JEL: F37, I31, O12 Keywords: International Migration, Remittances, Social financing, Welfare, Development, Fiji Handle: RePEc:sek:iefpro:0401213 Template-Type: ReDIF-Paper 1.0 Author-Name: Pankaj Kumar Gupta Author-Name-First: Pankaj Kumar Author-Name-Last: Gupta Author-Email: pkg123@eth.net Author-Workplace-Name: Centre for Management Studies, JMI University Author-Name: Jasjit Bhatia Author-Name-First: Jasjit Author-Name-Last: Bhatia Author-Email: jasjit.arora@gmail.com Author-Workplace-Name: Centre for Management Studies, JMI University Title: Investment Behavior in Post-Crisis Period ? Comparison of Indian Publics and Private Firms Abstract: Corporate investment in capital assets plays an important role in the total capital investment in the country particularly in the developing nations like India. The policy emphasis on corporate investment in India has undergone a major change in the last decade in line with the liberalization move. Also, the optimal investment strategy is crucial for business enterprise with the growing turbulence in the economies more importantly after the global financial crisis. Optimal allocation of capital to the right investment projects is of paramount importance to the firm and economy. We are, therefore, motivated to analyze the factors that influence the investment behavior of firms in India and comparison between the public and private firms. We choose a period of 2007-2013 reflecting the after effects of the global financial crisis. The investment behavior has been analyzed with along with the selected variables reflecting cash flow movements, dividend distribution, and firm?s size and leverage aspect of financing total assets using a panel regression methodology considering both fixed and random effects models. We find that in case of private firms, the investment behavior is significant influenced by the firm size leaving the dividend payout, cash flows and leverages. However, investment by public firms is more affected by government policies rather than their own financial variables. We find that this behavior has significantly contributed to the robustness of the economic conditions after the crisis. Length: 22 pages Creation-Date: 2014-07 Publication-Status: Published in Proceedings of the Proceedings of the 2nd Economics & Finance Conference, Vienna, Jul 2014, pages 324-345 File-URL: https://iises.net/proceedings/2nd-economics-finance-conference-vienna/table-of-content/detail?cid=4&iid=14&rid=1660 File-Function: First version, 2014 Number: 0401660 Classification-JEL: C22, G11, G32 Keywords: Investment Behavior, Leverage, Capital Structure Dividend Payout, Global Crisis Handle: RePEc:sek:iefpro:0401660 Template-Type: ReDIF-Paper 1.0 Author-Name: Ginés Hernández-Cánovas Author-Name-First: Ginés Author-Name-Last: Hernández-Cánovas Author-Email: gines.hernandez@upct.es Author-Workplace-Name: Universidad Politécnica de Cartagena Author-Name: Ana Mol-Gómez-Váquez Author-Name-First: Ana Author-Name-Last: Mol-Gómez-Váquez Author-Email: ana.mlgv@gmail.com Author-Workplace-Name: Universidad Politécnica de Cartagena Author-Name: Johanna Koëter-Kant Author-Name-First: Johanna Author-Name-Last: Koëter-Kant Author-Email: j.koeter-kant@vu.nl Author-Workplace-Name: Vrije Universiteit Amsterdam Title: Legal and institutional determinants of factoring in SMEs: Empirical analysis across 25 European countries Abstract: We use a survey data set of 4348 SMEs from 25 European countries to analyze the association between the use of factoring as a form of SME financing and the legal environment of the country where in which they operate. Our findings indicate that firms operating in countries with legal environments that weakly protect the rights of creditors, such as those under French-civil-law, with political instability or high enforcement costs, are more likely to use factoring. We hypothesize that in such environments bank financing could be more restricted and factoring might be an alternative source to alleviate SMEs financing constraints. In line with this argument, we find that firms experiencing some financing difficulties are more likely to use factoring. We also show that the likelihood of using factoring increases for firms located in growing economies. Factoring might be a means for these firms to finance the enlargement of their business activity. (Ginés Hernández-Cánovas acknowledges financial support by Fundación Séneca (Project 15403/PHCS/10), and by Ministerio de Ciencia e Innovación (Project ECO2011-29080) Length: 16 pages Creation-Date: 2014-07 Publication-Status: Published in Proceedings of the Proceedings of the 2nd Economics & Finance Conference, Vienna, Jul 2014, pages 347-362 File-URL: https://iises.net/proceedings/2nd-economics-finance-conference-vienna/table-of-content/detail?cid=4&iid=15&rid=1481 File-Function: First version, 2014 Number: 0401481 Classification-JEL: G00, G30, G32 Keywords: Factoring, SMEs financing, financial constraints, legal system. Handle: RePEc:sek:iefpro:0401481 Template-Type: ReDIF-Paper 1.0 Author-Name: Emilie Jasova Author-Name-First: Emilie Author-Name-Last: Jasova Author-Email: entropa@seznam.cz Author-Workplace-Name: University of Economics Title: A Model for Estimation of NAIRU Extended by Demand Shocks and its Application to Business Cycle Analysis in the Labour Market in Hungary and Poland Abstract: Article seeks to extend the Standard Gordon's " Triangle " model with demand shocks. The demand shocks are represented by a newly derived Current discount indicator (CDI). The recession on the labour market in Hungary and Poland was influenced by the growth of future consumption preferences of consumers. Negative gaps of unemployment increased during the recession only in Hungary. Short period subsequent boom in Hungary is linked with excessive pessimism of consumers what reduced unemployment positive gap and shortened the period with positive gape. In Poland the negative vision of future development in the economy resulted in shortening the period of boom. Policymakers should create more positive expectations and prevent to transfer negative emotions on the labour market. Length: 15 pages Creation-Date: 2014-07 Publication-Status: Published in Proceedings of the Proceedings of the 2nd Economics & Finance Conference, Vienna, Jul 2014, pages 363-377 File-URL: https://iises.net/proceedings/2nd-economics-finance-conference-vienna/table-of-content/detail?cid=4&iid=16&rid=1788 File-Function: First version, 2014 Number: 0401788 Classification-JEL: E24, E32, E37 Keywords: Unemployment gap, psychological factor, Kalman Filter, Phillips Curve, NAIRU Handle: RePEc:sek:iefpro:0401788 Template-Type: ReDIF-Paper 1.0 Author-Name: Martin Komrska Author-Name-First: Martin Author-Name-Last: Komrska Author-Email: komrska.martin@gmail.com Author-Workplace-Name: University of Economics, Prague Author-Name: Marek Hudík Author-Name-First: Marek Author-Name-Last: Hudík Author-Email: hudik@cts.cuni.cz Author-Workplace-Name: Centre for Theoretical Study, Charles University and Academy of Sciences, Prague Title: Were Hayek?s Monetary Policy Recommendations Inconsistent?* Abstract: Contrary to the received view, we maintain that Hayek?s monetary policy recommendations were not inconsistent. The prevalent perception of early Hayek as the money stream stabilizer and late Hayek as the price level stabilizer is attributable to an unjustified normative interpretation of Hayek?s positive analysis. We argue that in his contributions to monetary theory, Hayek took the goals of monetary policy as exogenously given and analysed the efficiency of different means to achieve these goals. Hayek?s allegedly inconsistent switch from being a critic to an advocate of price level stabilization is explained by a change in the issues on which he focused, rather than by a change in his theoretical views. We also claim that Hayek was always aware that every practical monetary policy involves difficult trade-offs and was thus reluctant to impose his own value judgments about what people should strive for.*We would like to thank Pavel Potu?ák for his helpful comments on an earlier draft. Any mistakes are, of course, ours. Length: 10 pages Creation-Date: 2014-07 Publication-Status: Published in Proceedings of the Proceedings of the 2nd Economics & Finance Conference, Vienna, Jul 2014, pages 306-315 File-URL: https://iises.net/proceedings/2nd-economics-finance-conference-vienna/table-of-content/detail?cid=4&iid=17&rid=2133 File-Function: First version, 2014 Number: 0402133 Classification-JEL: B22, B31, B53 Keywords: F. A. Hayek; monetary policy; Austrian business cycle theory; price level stabilization; money stream stabilization Handle: RePEc:sek:iefpro:0402133 Template-Type: ReDIF-Paper 1.0 Author-Name: Neviana Krasteva Author-Name-First: Neviana Author-Name-Last: Krasteva Author-Email: nevianak@bsconsult.bg Author-Workplace-Name: Sofia University ?St. Kliment Ohridski? Title: Contemporary Economic and Social Trends and Their Impact on Marketing Abstract: The focus of this study is the impact that the recent economic and social tendencies have upon the marketing of firms. The ways in which the marketing policies and practices are influenced by the dynamic changes in the physical space, demographics, behavioral models and economic growth will be examined.The scarcity of resources leads not only to a search of new sources and surrogate technologies, but also to a struggle on the firm level to lower the operational costs without diminishing the value of their products to the consumers. The heightened ecological concerns and stricter regulations necessitate the presence of a ?green idea? in most products not as an extra, but as an expected characteristic for which no additional money is charged. The changes in the demographic structure and the increase in percentage of older people, especially in the developed world, calls for marketing to be targeting the solvent parts of the population; these are no longer just the traditional group aged 18-34, but the generation of the baby-boomers which preceded them. The increased frequency of divorces also modifies the needs of the consumers and the general client profile. The increased presence of the digital and on-line worlds in the daily life of people also alters the consumer behavior; the presence and active marketing use of social networks and Internet resources is no longer a choice, but a must for companies. The global shifts of the centers of economic power towards the modernistic markets of China, India, Brazil and Russia present new problems about market presence and consumer satisfaction of well-known Euro-American brands and companies in those countries. The reverse trend is also present ? more and more firms from emerging economies are highly successful in promoting their products in the markets of the developed world.Last but not least, the technological changes, the adjustment in the character of small retailers, the rise of powerful distributors with great sway in negotiations and the momentum that the digitalization of commerce has all have deep impact on the way marketing programs and channels are structured. The recognition and adequate addressing of all of these trends is a key challenge before businesses across the world in the 21st century. Length: 21 pages Creation-Date: 2014-07 Publication-Status: Published in Proceedings of the Proceedings of the 2nd Economics & Finance Conference, Vienna, Jul 2014, pages 316-336 File-URL: https://iises.net/proceedings/2nd-economics-finance-conference-vienna/table-of-content/detail?cid=4&iid=18&rid=1600 File-Function: First version, 2014 Number: 0401600 Classification-JEL: M31 Keywords: Contemporary marketing, Physical environment, Resource scarcity, Behavioral models, Demographic profile, Social networks, Change in retail Handle: RePEc:sek:iefpro:0401600 Template-Type: ReDIF-Paper 1.0 Author-Name: Max Kubat Author-Name-First: Max Author-Name-Last: Kubat Author-Email: max.kubat@centrum.cz Author-Workplace-Name: University of Economics, Prague Title: Does Basel III bring anything new? A comparison between capital accords Basel II and Basel III Abstract: Basel Accords represent the most important documents of banking supervision. Basel II came into force almost at the same time as the financial crisis set in. Relatively soon after this, the work on the new capital accord known as Basel III was initiated. The question is whether the new agreement brings something really principally different from Basel II, or whether it is just a tool to reassure the public and markets with some form of stricter requirements. Basel Committee is based on G-20 countries representation. Introduction contains a brief explanation of how the Basel capital accords are reflected in European law. The first part of the article explains core principles of Basel II with several possible explanations of its failure. The second part clarifies the main principles of Basel III and compares them with Basel II. The criterion for comparison is search for fundamental distinctions between the introduced tools. From five monitored areas (definition of capital, capital requirements, risk coverage, leverage ratio, liquidity management) three of them meet this criterion. The redefinition of capital means only better clarification and unification of definitions. The risk coverage part focuses on technical issues, but no new risks are perceived. There is a significant change about new capital requirements. Two new buffers are requested. While previous capital requirement were based on direct connection with risks, the connection between capital conservation buffer and countercyclical buffer is only indirect to measured risks. Also the leverage ratio and liquidity management bring new tools and thus principle change. There is a significant change in leverage ratio that brings a new tool which is not based on risk. It makes the calculation easier and should avoid cheating in capital manipulation. Liquidity management is a completely new part of banking regulation measures, therefore there is nothing to compare with Basel II. Length: 19 pages Creation-Date: 2014-07 Publication-Status: Published in Proceedings of the Proceedings of the 2nd Economics & Finance Conference, Vienna, Jul 2014, pages 337-355 File-URL: https://iises.net/proceedings/2nd-economics-finance-conference-vienna/table-of-content/detail?cid=4&iid=19&rid=1713 File-Function: First version, 2014 Number: 0401713 Classification-JEL: L51, F02, G28 Keywords: Basel capital accords; Basel II; Basel III; capital requirements; capital adequacy Handle: RePEc:sek:iefpro:0401713 Template-Type: ReDIF-Paper 1.0 Author-Name: Munoz Lucie Author-Name-First: Munoz Author-Name-Last: Lucie Author-Email: lucie.munoz1@gmail.com Author-Workplace-Name: ECE Paris School of Engineering Author-Name: Boudet Florian Author-Name-First: Boudet Author-Name-Last: Florian Author-Email: boudet@ece.fr Author-Workplace-Name: ECE Paris School of Engineering Author-Name: Galano Victoria Author-Name-First: Galano Author-Name-Last: Victoria Author-Email: vgalano92@gmail.com Author-Workplace-Name: ECE Paris School of Engineering Author-Name: Gmira Douaa Author-Name-First: Gmira Author-Name-Last: Douaa Author-Email: douaa.gmira@gmail.com Author-Workplace-Name: ECE Paris School of Engineering Author-Name: Reina Alizée Author-Name-First: Reina Author-Name-Last: Alizée Author-Email: reina@ece.fr Author-Workplace-Name: ECE Paris School of Engineering Title: Co-integrated Commodity Forward Pricing Model Abstract: Commodities pricing needs a specific approach as they are often linked to each other and so are expectedly doing their prices. They are called co-integrated when at least one stationary linear combination exists between them. Though widespread in economic literature, and even if many equilibrium relations and co-movements exist in economy, this principle of co-movement is not developed in derivatives field. Present study focuses on the following problem: How can the price of a forward agreement on a commodity be simulated, when it is co-integrated with other ones? Theoretical analysis is developed from Gibson-Schwartz model and analytical solution is given for short maturities contracts and under risk-neutral conditions. Application has been made to crude oil and heating oil energy commodities and result confirms the applicability of proposed method. Length: 7 pages Creation-Date: 2014-07 Publication-Status: Published in Proceedings of the Proceedings of the 2nd Economics & Finance Conference, Vienna, Jul 2014, pages 356-362 File-URL: https://iises.net/proceedings/2nd-economics-finance-conference-vienna/table-of-content/detail?cid=4&iid=20&rid=1426 File-Function: First version, 2014 Number: 0401426 Classification-JEL: C32, D40 Keywords: Co-integration, Commodities, Forward Pricing, Gibson-Schwartz. Handle: RePEc:sek:iefpro:0401426 Template-Type: ReDIF-Paper 1.0 Author-Name: Eduard Marinov Author-Name-First: Eduard Author-Name-Last: Marinov Author-Email: eddie.marinov@gmail.com Author-Workplace-Name: Economic Research Institute at BAS Title: Economic Determinants of Regional Integration in Developing Counties Abstract: Regional integration is often viewed as a way to support development and economic growth in developing countries through the related with it benefits to trade and welfare. Economic integration theory goes through two development stages each of which addresses the political and economic context relevant for its time. The first stage is regarded as classic theory or static analysis and includes the traditional theories of economic integration that explain the possible benefits of integration. The second stage includes the new economic integration theories that are often referred to as dynamic analysis of economic arrangements. Besides these two, there is a third type of integration theories that deals with the effects, benefits and constrains of the economic integration arrangements of developing and least developed countries because in most cases, theories of economic integration and its benefits ? of dynamic ones, but even more of static ones, are not fully applicable to integration agreements among developing and least developed countries. The current paper tries to come up with a conclusion on what parts of classic and new integration are applicable to the integration arrangement among developing countries and tries to summarize these theories in three main groups ? general economic, market-related and trade-related factors and effects. Length: 21 pages Creation-Date: 2014-07 Publication-Status: Published in Proceedings of the Proceedings of the 2nd Economics & Finance Conference, Vienna, Jul 2014, pages 363-383 File-URL: https://iises.net/proceedings/2nd-economics-finance-conference-vienna/table-of-content/detail?cid=4&iid=21&rid=1524 File-Function: First version, 2014 Number: 0401524 Classification-JEL: F02, F15 Keywords: Economic Integration Theory, Developing Countries Integration Handle: RePEc:sek:iefpro:0401524 Template-Type: ReDIF-Paper 1.0 Author-Name: Ali Nazemi Author-Name-First: Ali Author-Name-Last: Nazemi Author-Email: anahita.farsaee@gmail.com Author-Workplace-Name: University of Economic Sciences Author-Name: Anahita Farsaee Author-Name-First: Anahita Author-Name-Last: Farsaee Author-Email: anahita.farsaee@gmail.com Author-Workplace-Name: University of Economic Sciences Title: Non-Competitive Potential in the Iranian Electricity Market Abstract: The electricity markets worldwide have distinctive particularities due to some political and historical reasons. However, principal guidelines of market design remain very similar. The Iranian electricity market has been inaugurated as a pay-as-bid market in 2004. Although the Iranian electricity market has had positive consequences, the economic discussion about proper market design and architecture is in its infancy. The main goal of this paper is analyzing market power and efficiency in the Iranian electricity market.Generally, in spite of the fact that Iranian electricity market is not a high concentrated market, it has potential for non-competitive results. Analyzing results and other facts of the market shows that the most important reason for this is the urgent shortage of supply threshold in this market, rather than the extent of concentration in the industry. Length: 7 pages Creation-Date: 2014-07 Publication-Status: Published in Proceedings of the Proceedings of the 2nd Economics & Finance Conference, Vienna, Jul 2014, pages 384-390 File-URL: https://iises.net/proceedings/2nd-economics-finance-conference-vienna/table-of-content/detail?cid=4&iid=22&rid=1511 File-Function: First version, 2014 Number: 0401511 Classification-JEL: D49 Keywords: market power, efficiency, Iranian Electricity Market Handle: RePEc:sek:iefpro:0401511 Template-Type: ReDIF-Paper 1.0 Author-Name: Saban Nazl?oglu Author-Name-First: Saban Author-Name-Last: Nazl?oglu Author-Email: snazlioglu@pau.edu.tr Author-Workplace-Name: Pamukkale University Author-Name: Muhsin Kar Author-Name-First: Muhsin Author-Name-Last: Kar Author-Email: mkar@konya.edu.tr Author-Workplace-Name: Necmettin Erbakan University Author-Name: Gunay Akel Author-Name-First: Gunay Author-Name-Last: Akel Author-Email: gakel@konya.edu.tr Author-Workplace-Name: Necmettin Erbakan University Title: Relationship Between Exchange Rates and Stock Prices in Transition Economies Evidence from Linear and Nonlinear Causality Tests Abstract: The existence of causation linkage between stock prices and exchange rates is one of the popular debate especially since the beginning of 1990s. The aim of this paper is to investigate the nature of the causal transmission mechanism between foreign exchange and stock markets in 9 transition countries (i.e., Bulgaria, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, and Russia) for the periods of 1995-2011. The results of the paper show that uni-directional linear Granger causality running from exchange rates to stock prices for 4 countries (i.e., Czech Republic, Hungary, Poland, and Romania) and a feedback exists between two markets for only Russia when both linear and nonlinear Granger causality are used. Length: 12 pages Creation-Date: 2014-07 Publication-Status: Published in Proceedings of the Proceedings of the 2nd Economics & Finance Conference, Vienna, Jul 2014, pages 391-402 File-URL: https://iises.net/proceedings/2nd-economics-finance-conference-vienna/table-of-content/detail?cid=4&iid=23&rid=1683 File-Function: First version, 2014 Number: 0401683 Classification-JEL: C22, F31 Keywords: Exchange Rates, Stock Prices, Transition Economies, Linear and Nonlinear Causality Tests Handle: RePEc:sek:iefpro:0401683 Template-Type: ReDIF-Paper 1.0 Author-Name: Pavla Nikolovova Author-Name-First: Pavla Author-Name-Last: Nikolovova Author-Email: pavla.nikolovova@cerge-ei.cz Author-Workplace-Name: CERGE-EI Author-Name: Filip Pertold Author-Name-First: Filip Author-Name-Last: Pertold Author-Email: filip.pertold@cerge-ei.cz Author-Workplace-Name: CERGE-EI Author-Name: Mario Vozar Author-Name-First: Mario Author-Name-Last: Vozar Author-Email: mario.vozar@cerge-ei.cz Author-Workplace-Name: CERGE-EI Title: Self-employment and Small Workplaces in the Czech and Slovak Republics: Microeconometric Analysis of Labor Force Transitions Abstract: In this paper we investigate the role of the business cycle for the transitions of Czech and Slovak workers to informal economy using Czech and Slovak Labor Force Survey data. We use two approximations for the participation in informal economy, self-employment and employment in small workplace (10 and fewer workers or 5 and fewer workers). Both statuses are potentially associated with the participation in an informal economy. Using the similar methodology as presented in Bosh and Maloney (2007), we show that recent recession caused substantial increase in transitions of workers from formal into both self-employment and employment. As compare to pre-recession time the flow into self- increased more than 4 times. The increase in transitions to small workplaces is less pronounced. Length: 37 pages Creation-Date: 2014-07 Publication-Status: Published in Proceedings of the Proceedings of the 2nd Economics & Finance Conference, Vienna, Jul 2014, pages 403-439 File-URL: https://iises.net/proceedings/2nd-economics-finance-conference-vienna/table-of-content/detail?cid=4&iid=24&rid=2132 File-Function: First version, 2014 Number: 0402132 Classification-JEL: J21, H26 Keywords: informal economy, business cycle, labor force Handle: RePEc:sek:iefpro:0402132 Template-Type: ReDIF-Paper 1.0 Author-Name: Ceyhun Can Ozcan Author-Name-First: Ceyhun Can Author-Name-Last: Ozcan Author-Email: ccozcan@konya.edu.tr Author-Workplace-Name: Necmettin Erbakan University Author-Name: Ahmet Sahbaz Author-Name-First: Ahmet Author-Name-Last: Sahbaz Author-Email: sahbaz@gantep.edu.tr Author-Workplace-Name: Gaziantep University Author-Name: Ugur Ad?guzel Author-Name-First: Ugur Author-Name-Last: Ad?guzel Author-Email: uadiguzel@cumhuriyet.edu.tr Author-Workplace-Name: Cumhuriyet University, Author-Name: Saban Nazlioglu Author-Name-First: Saban Author-Name-Last: Nazlioglu Author-Email: snazlioglu@pau.edu.tr Author-Workplace-Name: Pamukkale University Title: The Nature of Shocks to Turkish exchange rates: what panel approach says? Abstract: This paper investigates the behavior of Turkish exchange rates within the context of purchasing power parity (PPP) hypothesis, -employing ten Turkish real exchange rates during January 2002-May 2012-, by means of recent developments in panel unit root testing procedures. When we account for nonlinearity, smooth structural shifts, and cross-section dependency, the empirical analysis supports that PPP hypothesis is valid for Eurozone and European countries (Denmark, Norway, Sweden, Switzerland, and United Kingdom), while it does not hold for non-European trading partners (Canada, Japan, Saudi Arabia, and USA). From the empirical results, we can conclude that PPP hypothesis is hold in the countries which have the free trade agreement, while it is violated in the countries in which there are trade barriers and greater distance. The findings therefore provide important policy implications for Turkey about determining equilibrium exchange rates with Eurozone and other European Union countries. Length: 20 pages Creation-Date: 2014-07 Publication-Status: Published in Proceedings of the Proceedings of the 2nd Economics & Finance Conference, Vienna, Jul 2014, pages 440-459 File-URL: https://iises.net/proceedings/2nd-economics-finance-conference-vienna/table-of-content/detail?cid=4&iid=25&rid=1591 File-Function: First version, 2014 Number: 0401591 Classification-JEL: C23, F31 Keywords: Purchasing power parity, Turkey, panel unit root Handle: RePEc:sek:iefpro:0401591 Template-Type: ReDIF-Paper 1.0 Author-Name: Ondrej Ptacek Author-Name-First: Ondrej Author-Name-Last: Ptacek Author-Email: ptacekondrej@seznam.cz Author-Workplace-Name: University of Economics, Faculty of Economics Author-Name: Bozena Kaderabkova Author-Name-First: Bozena Author-Name-Last: Kaderabkova Author-Email: b.kaderabkova@centrum.cz Author-Workplace-Name: University of Economics, Faculty of Economics Title: Gap Analysis of Venture Capital Markets Abstract: Venture capital is one of most important alternative sources of capital for early stage of enterprise development. It is largely acknowledged that there occurs a market gap in European venture capital markets as there are much more companies in search for an investor than that actually obtain investment. Some authors find this an example of a market failure in the access to finance of micro to medium sized enterprises. There are also authors saying that identification of a market gap does not automatically establish a market failure, as the investors balance both risk and potential gain. We found out that at the supply side of venture capital, the market gap is caused by risk aversion and imperfect information on future development or market acceptation of innovative products in some European countries. At the demand side, imperfect information occurs as young entrepreneurs have often limited knowledge in alternative sources of financing or low level of strategic management abilities, which again discourages potential investors. Length: 14 pages Creation-Date: 2014-07 Publication-Status: Published in Proceedings of the Proceedings of the 2nd Economics & Finance Conference, Vienna, Jul 2014, pages 460-473 File-URL: https://iises.net/proceedings/2nd-economics-finance-conference-vienna/table-of-content/detail?cid=4&iid=26&rid=1730 File-Function: First version, 2014 Number: 0401730 Classification-JEL: G24 Keywords: venture capital, asset management, private equiity, financial markets Handle: RePEc:sek:iefpro:0401730 Template-Type: ReDIF-Paper 1.0 Author-Name: Jiri Rotschedl Author-Name-First: Jiri Author-Name-Last: Rotschedl Author-Email: jiri@rotschedl.com Author-Workplace-Name: University of Economics, Prague Title: Designing a New Derivation of the Subjective Discount Rate and its Application in the Czech Republic Abstract: The paper deals with the derivation of the subjective discount rate and for this purpose; it introduces a new subjective discount index: Current Discount Index (CDI). The author assumes a very close relationship with the commonly known subjective discount rate (?). CDI is derived indirectly from the ratio of loans to deposits of households. New index is considered the aggregate variable of the subjective discount rate (?), of the elasticity of intertemporal substitution (1/?) and also other unspecified psychological factors (?). The values of CDI in the Czech Republic suggest reasons why there was a long-term decline in household consumption during the years 2012 and 2013. Length: 11 pages Creation-Date: 2014-07 Publication-Status: Published in Proceedings of the Proceedings of the 2nd Economics & Finance Conference, Vienna, Jul 2014, pages 474-484 File-URL: https://iises.net/proceedings/2nd-economics-finance-conference-vienna/table-of-content/detail?cid=4&iid=27&rid=1778 File-Function: First version, 2014 Number: 0401778 Classification-JEL: E21, D91 Keywords: Subjective discount rate, subjective discount factor, consumption of households, intertemporal choice, current discount index Handle: RePEc:sek:iefpro:0401778 Template-Type: ReDIF-Paper 1.0 Author-Name: Kishor Sharma Author-Name-First: Kishor Author-Name-Last: Sharma Author-Email: ksharma@csu.edu.au Author-Workplace-Name: Charles Sturt University Author-Name: Wei Wang Author-Name-First: Wei Author-Name-Last: Wang Author-Email: wwei@tuc.cn Author-Workplace-Name: TUC Title: Foreign Investment and Vertical Specialisation: An Analysis of Emerging Trends in Chinese Exports Abstract: This paper contributes to the literature on the role of foreign direct investment and vertical specialisation in China?s growth trajectory. Globalisation of the world economy, together with well-developed physical infrastructure, and falling costs of transport and communications, has led to a significant increase in foreign investment into China to take advantage of its comparative advantage in labour intensive activities. Initially foreign investment came to simple assembly line (such as textile, clothing, electronic goods), but gradually China attracted FDI to sophisticated manufacturing industries (such as, ICT products, office and medical equipments etc), giving rise to vertical specialisation in its exports. Over one quarter of Chinese exports appears to be due to the expansion of back-and?forth transactions in vertically fragmented cross-border production process. Our analysis suggests that foreign input content in Chinese exports is high and rising. When the share of ?foreign value-added? in Chinese exports is taken into account the ?actual trade balance? is much lower than what ?raw trade balance? would indicate.As expected, share of foreign input content (vertical specialization) is high in Chinese exports of high-tech industries (such as, communications equipment, computers and other electronic equipment manufacturing etc) and low in labor-intensive industries such as (food and tobacco, textile, leather products, footwear etc). China?s increased involvement in global production network as an assembly centre has created an opportunity for other countries and countries in the region to benefit from its rapid integration with the world economy as its imports of parts and components have grown dramatically and most of these imports come from advanced economies such as US, Europe and newly industrialised economy. Clearly, China?s success story has led to win-win situation, improving welfare globally. As China is committed to continue to integrate with the world economy, its involvement in processing trade will continue. However, China will require to upgrade skills of its workforce through appropriate human capital development policy, otherwise higher wages (for semi-skilled workers) can wipe out its comparative advantage in low-end assembly trade brought about by globalisation. Policy makers in China should also need to think carefully how to embark on industrial upgrading to sustain growth. Length: 23 pages Creation-Date: 2014-07 Publication-Status: Published in Proceedings of the Proceedings of the 2nd Economics & Finance Conference, Vienna, Jul 2014, pages 485-507 File-URL: https://iises.net/proceedings/2nd-economics-finance-conference-vienna/table-of-content/detail?cid=4&iid=28&rid=1580 File-Function: First version, 2014 Number: 0401580 Classification-JEL: F19 Keywords: Foreign Investment, Vertical Specialisation, China, Exports Handle: RePEc:sek:iefpro:0401580 Template-Type: ReDIF-Paper 1.0 Author-Name: Ria Sinha Author-Name-First: Ria Author-Name-Last: Sinha Author-Email: rias.echo@gmail.com Author-Workplace-Name: TERI University Author-Name: Manipadma Datta Author-Name-First: Manipadma Author-Name-Last: Datta Author-Email: manipadma.datta@teriuniversity.ac.in Author-Workplace-Name: TERI University Title: Emerging Role of Environmental, Social and Governance Factors in Corporate Finance and Investment: Indian Scenario so Far as Compared to Some of the Developed Economies Abstract: Environmental, Social and Governance (ESG) challenges have changed the world of business and investment altogether. The business enterprises the world over have already started to recognize this fact and experimenting in several ways to explore newer business opportunities hidden therein. As a result, sustainability as a concept has gained much importance to business and investment houses nowadays. Several studies and research surveys have been conducted in developed markets relating to the awareness of ESG factors in financial investments. The motivation behind the surveys has been to ascertain the level of ESG consciousness among the asset managers and to find out the relevant gaps in understanding the materiality of ESG factors for the purpose. This paper is an attempt to study the state of ESG Investment in developing economies vis-ŕ-vis the developed ones with a special reference to Indian Financial Sector. The responses of 22 asset managers, i.e. 18 mutual fund managers and 4 Private Equity Managers from a pilot survey conducted in Mumbai, India, have been analyzed. Corporate Governance factors have clearly gained an edge over Environment and Social factors among asset managers surveyed. This study is intended to be carried out on a larger scale to ascertain the level of ESG consciousness among asset managers in their investment decisions. These surveys will undoubtedly highlight the changing investment scenario in India, thereby highlighting the emerging role of ESG factors in corporate finance and Investment in the country. Length: 35 pages Creation-Date: 2014-07 Publication-Status: Published in Proceedings of the Proceedings of the 2nd Economics & Finance Conference, Vienna, Jul 2014, pages 508-542 File-URL: https://iises.net/proceedings/2nd-economics-finance-conference-vienna/table-of-content/detail?cid=4&iid=29&rid=1398 File-Function: First version, 2014 Number: 0401398 Classification-JEL: O16, C83, G00 Keywords: Environment, Social, Corporate Governance, Corporate Finance, Investment, Asset Management Handle: RePEc:sek:iefpro:0401398 Template-Type: ReDIF-Paper 1.0 Author-Name: Sami Taban Author-Name-First: Sami Author-Name-Last: Taban Author-Email: staban@ogu.edu.tr Author-Workplace-Name: Osmangazi University Author-Name: Tayfur Bayat Author-Name-First: Tayfur Author-Name-Last: Bayat Author-Email: tayfur.bayat@inonu.edu.tr Author-Workplace-Name: ?nönü University Author-Name: Ferit Önder Author-Name-First: Ferit Author-Name-Last: Önder Author-Email: fonder@ksu.edu.tr Author-Workplace-Name: Kahramanmara? Sütçü ?mam University Title: Fisher Effect in Austria Causality Approach Abstract: In this study, we aim to investigate relationship between interest rate and consumer price index in Austria by using quarterly data belonging 1990:Q1 to 2013:Q4.period in the context of Fisher (1930) hypothesis. We employ linear unit root test and causality tests. according to linear Granger causality test, there is no causal relationship between the variables in Austria. So the time domain causality analyses imply that Fisher?s hypothesis is not valid in Austria. Forth, frequency domain causality test results imply bi-directional causality while the Fisher effect is valid in the short run. Also the causality runs from inflation rate to interest rate in the long run. At the end of analysis, results imply that Fisher effect is not validity for Austria in this period. Length: 10 pages Creation-Date: 2014-07 Publication-Status: Published in Proceedings of the Proceedings of the 2nd Economics & Finance Conference, Vienna, Jul 2014, pages 543-552 File-URL: https://iises.net/proceedings/2nd-economics-finance-conference-vienna/table-of-content/detail?cid=4&iid=30&rid=1542 File-Function: First version, 2014 Number: 0401542 Classification-JEL: C22, E43, E58 Keywords: Fisher Effect, Interest Rate, Inflation Rate, Causality Handle: RePEc:sek:iefpro:0401542 Template-Type: ReDIF-Paper 1.0 Author-Name: Marek Vokoun Author-Name-First: Marek Author-Name-Last: Vokoun Author-Email: marek.vokoun@vse.cz Author-Workplace-Name: University of Economics, Prague Title: R&D and Innovation Activities ? Search for Better Definitions and an Economic-Historical Approach* Abstract: The paper examines the challenges social scientists face when analysing innovation, especially R&D and innovation activities of firms, i.e. their strategies in typical stages of an innovation process in a defined economy. The motivation behind is to describe properly the innovation activities of firms in the proper economic-historical context. There are many ways innovation can be understood (inter-culturally/inter-nationally) and different ways in which firms, institutions, and governments organize and undertake innovation activities. Entrepreneurs and multinationals are an essential part of market mechanism and innovation is, ex ante, beneficial for them. There are many theories and the current ones demand interdisciplinary approach. It is due to the dynamic nature of innovation and the global context ? economic crises, the Internet. At the end of the paper current definition misunderstanding in social sciences is discussed and a better understanding is introduced, which builds upon the simultaneous nature and almost interchangeable relationship between innovation, imitation and invention. Length: 24 pages Creation-Date: 2014-07 Publication-Status: Published in Proceedings of the Proceedings of the 2nd Economics & Finance Conference, Vienna, Jul 2014, pages 553-576 File-URL: https://iises.net/proceedings/2nd-economics-finance-conference-vienna/table-of-content/detail?cid=4&iid=31&rid=2131 File-Function: First version, 2014 Number: 0402131 Classification-JEL: L60, O38, D24 Keywords: Innovation, imitation, invention, firm?s strategies, market conditions, institutions, productivity, cliometrics, developing country, endogenous growth, technological change. Handle: RePEc:sek:iefpro:0402131 Template-Type: ReDIF-Paper 1.0 Author-Name: Wenge Wang Author-Name-First: Wenge Author-Name-Last: Wang Author-Email: wenge.wang@auckland.ac.nz Author-Workplace-Name: University of Auckland Title: Independent Directors and Corporate Performance in China: a Meta-Empirical Study Abstract: This article reviews empirical studies on the relationship between independent directors and firm performance in Chinese listed companies. The purpose is to generalize empirical evidence on the theoretical claim that independent directors can improve firm performance by performing their monitoring role over management as expected by Chinese regulators. To fulfil this purpose, this article conducts a meta-empirical study by collecting 30 sample articles of existing empirical studies on the relationship between independent directors and firm performance in Chinese listed companies after the independent director institution has been introduced from corporate America to corporate China. The meta-empirical study is to review and generalize an integrated empirical evidence whether independent directors can improve firm performance in Chinese listed companies or not. Based on the statistical data from 30 collected sample articles, this article identifies four categories (board independence, independent directors? characteristic, background and compensation) that authors of 30 sample articles use to test the correlation between independent directors and firm performance in Chinese listed companies. From the integrated empirical evidence from 30 collected sample articles, this article finds on the whole that board independence has no significant impact on firm performance, that independent directors? characteristics and background have a controversial effect on firm performance and that independent directors? compensation has a significant positive effect on firm performance. This may suggest that independent directors may primarily play an advisory role but not a monitoring role in Chinese listed companies. Length: 32 pages Creation-Date: 2014-07 Publication-Status: Published in Proceedings of the Proceedings of the 2nd Economics & Finance Conference, Vienna, Jul 2014, pages 577-608 File-URL: https://iises.net/proceedings/2nd-economics-finance-conference-vienna/table-of-content/detail?cid=4&iid=32&rid=1247 File-Function: First version, 2014 Number: 0401247 Classification-JEL: K22, G38 Keywords: Independent directors, corporate performance, Chinese listed companies Handle: RePEc:sek:iefpro:0401247 Template-Type: ReDIF-Paper 1.0 Author-Name: Semih Yon Author-Name-First: Semih Author-Name-Last: Yon Author-Email: yon@itu.edu.tr Author-Workplace-Name: Istanbul Technical University Author-Name: Cafer Erhan Bozdag Author-Name-First: Cafer Erhan Author-Name-Last: Bozdag Author-Email: bozdagc@itu.edu.tr Author-Workplace-Name: Istanbul Technical University Title: Test of Log-Normal Process with Importance Sampling for Options Pricing Abstract: Log-normal process and martingale restriction bring some bias on the premium for option pricing models. It is possible to reduce the bias by adding more parameters like jump diffusion, stochastic volatility or regime switching. In this case closed form solutions and numerical approximations suffer from the dimension of the problem. Monte Carlo integration then appears to be unique solution for high dimensional calculations. However variance of the output of interest should be decreased in Monte Carlo applications in order to have confident results. The method of Importance Sampling can be used in an attempt to reduce variance. In this study we test the log-normal process for options pricing via Importance Sampling Monte Carlo. Our analysis is based on the theory of variance reduction and we don?t have any empirical data. Numerical results indicate that the risk neutral density should be substituted in the range of moneyness. Length: 11 pages Creation-Date: 2014-07 Publication-Status: Published in Proceedings of the Proceedings of the 2nd Economics & Finance Conference, Vienna, Jul 2014, pages 609-619 File-URL: https://iises.net/proceedings/2nd-economics-finance-conference-vienna/table-of-content/detail?cid=4&iid=33&rid=1571 File-Function: First version, 2014 Number: 0401571 Classification-JEL: G13, G00, C15 Keywords: Options pricing, lognormal process, variance reduction, importance sampling, moneyness Handle: RePEc:sek:iefpro:0401571