Abstract: This paper deals with the impact of decrease in interest rates on the performance of commercial and cooperative banks in the Eurozone measured by net interest margin. The analysis was performed on balanced dataset of 268 commercial and 726 cooperative banks spanning the 2008-2015 period. We employed Fixed Effects estimation panel method. As expected, we found a negative relationship between market rates and net interest margin. Our results suggest that the impact of negative interest income differs across individual banking business models. More precisely, those cooperative banks were much more hit by the decrease of market interest rates which might be due to their ownership structure and more restrictive business regulation.
Abstract: The aim of this paper is to develop an empirical
research on the nature and consequences of corporate governance on
Eurozone Insurance Industry risk taking attitude. More particularly,
we analyzed the effect of public ownership on risk taking with
respect to privately held Insurance Companies. We also analyzed the
effects on risk taking attitude of different degrees of ownership
concentration, directors compensation, and the dimension/diversity of
the Board of Directors. Our results provide quite strong evidence that,
coherently with the Agency Theory, publicly traded insurance
companies with more concentrated ownership are less risky than the
corresponding privately held.
Abstract: In this work, we attempt to associate firm
characteristics with innovative activity. We collect microdata from
listed firms of selected Eurozone Country-members, after the
beginning of 2007 financial crisis. The following literature, several
indicators of growth and performance were selected and tested for
their ability to interpret innovative activity. The main scope is to
examine the possible differences in performance and growth between
innovative and non-innovative firms, during a severe recession.
Additionally to that, a special focus will be held on whether
macroeconomic performance and national innovation system,
determines the extent of innovators' performance. Preliminary
findings, through correlation matrices and non-parametric tests,
strongly indicate the positive relation between innovative activity and
most of the measures used (profitability, size, employment),
confirming that even during a recessionary period, innovative firms
not only survive but also seem to succeed better economic results in
almost all indexes relative to non-innovative. However, even though
innovators seem to perform better in all economies examined, the
extent of that performance seems to be strongly affected by the
supportive mechanisms (financial and structural) that their country
provides. Thus, it is clear, that the technologically intensive 'gap'
between European South and North, during the economic crisis,
became chaotic, due to the harsh austerity measures and reduced
budgets in those countries, even in sectors with high potentials in
economic activity and employment, impairing the effects of crisis and
enhancing the vicious circle of recession.
Abstract: In this work, we attempt to analyze the contribution of
innovative activities to firm performance and growth. We examine
economic data from some of the economies that were heavily
affected by current economic crisis: the countries of southern Europe
(Portugal, Italy, Greece and Spain) and Ireland. Following literature,
an appropriate econometric model is developed and several indicators
are tested in order to disclose possible relation with innovative
activity. Findings confirm the crucial effect of innovative process in
economic activity, in firm and country level.
Abstract: This paper focuses on sovereign credit risk meaning a
hot topic related to the current Eurozone crisis. In the light of the
recent financial crisis, market perception of the creditworthiness of
individual sovereigns has changed significantly. Before the outbreak
of the financial crisis, market participants did not differentiate
between credit risk born by individual states despite different levels
of public indebtedness. In the proceeding of the financial crisis, the
market participants became aware of the worsening fiscal situation in
the European countries and started to discriminate among
government issuers. Concerns about the increasing sovereign risk
were reflected in surging sovereign risk premium. The main of this
paper is to shed light on the characteristics of the sovereign risk with
the special attention paid to the mutual relation between credit spread
and the CDS premium as the main measures of the sovereign risk
premium.
Abstract: The current situation in the eurozone raises a number of topics for discussion and to help in finding an answer to the question of whether a common currency is a more suitable means of coping with the impact of the financial crisis or whether national currencies are better suited to this. The economic situation in the EU is now considerably volatile and, due to problems with the fulfilment of the Maastricht convergence criteria, it is now being considered whether, in their further development, new member states will decide to distance themselves from the euro or will, in an attempt to overcome the crisis, speed up the adoption of the euro. The Czech Republic is one country with little interest in adopting the euro, justified by the fact that a better alternative to dealing with this crisis is an independent monetary policy and its ability to respond flexibly to the economic situation not only in Europe, but around the world. One attribute of the crisis in the Czech Republic and its mitigation is the freely floating exchange rate of the national currency. It is not only the Czech Republic that is attempting to alleviate the impact of the crisis, but also new EU member countries facing fresh questions to which theory have yet to provide wholly satisfactory answers. These questions undoubtedly include the problem of inflation targeting and the choice of appropriate instruments for achieving financial stability. The difficulty lies in the fact that these objectives may be contradictory and may require more than one means of achieving them. In this respect we may assume that membership of the euro zone might not in itself mitigate the development of the recession or protect the nation from future crises. We are of the opinion that the decisive factor in the development of any economy will continue to be the domestic economic policy and the operability of market economic mechanisms. We attempt to document this fact using selected countries as examples, these being the Czech Republic, Poland, Hungary, and Slovakia.