This paper investigates trends and determinants in intra-industry trade in Croatia. Intra-industry trade refers to a two-way trade of differentiated products. The level of intra-industry trade between Croatia and EU, CEE, and countries worldwide is calculated using the Grubel-Lloyd index under HS-2 and HS-4 product groups. Dynamic changes in intra-industry trade are shown by calculating marginal intra-industry trade indices. In addition to this, bilateral weighted adjusted intra-industry trade indices for Croatia and 24 most important trading partner countries are calculated in the period from 2001 to 2017. A panel-econometric analysis investigates the determinants of intra-industry trade in Croatia using a random effects model due to time-invariant characteristics of some determinants. The results of the analysis show that gross domestic product, common border, EU membership, and the distance between Croatia and trading partner countries have significant influence on the level of intra-industry trade in Croatia.
{"title":"Intra-industry Trade in Croatia: Trends and Determinants","authors":"Hrvoje Jošić, Berislav Žmuk","doi":"10.15179/ces.22.1.1","DOIUrl":"https://doi.org/10.15179/ces.22.1.1","url":null,"abstract":"This paper investigates trends and determinants in intra-industry trade in Croatia. Intra-industry trade refers to a two-way trade of differentiated products. The level of intra-industry trade between Croatia and EU, CEE, and countries worldwide is calculated using the Grubel-Lloyd index under HS-2 and HS-4 product groups. Dynamic changes in intra-industry trade are shown by calculating marginal intra-industry trade indices. In addition to this, bilateral weighted adjusted intra-industry trade indices for Croatia and 24 most important trading partner countries are calculated in the period from 2001 to 2017. A panel-econometric analysis investigates the determinants of intra-industry trade in Croatia using a random effects model due to time-invariant characteristics of some determinants. The results of the analysis show that gross domestic product, common border, EU membership, and the distance between Croatia and trading partner countries have significant influence on the level of intra-industry trade in Croatia.","PeriodicalId":42059,"journal":{"name":"Croatian Economic Survey","volume":" ","pages":""},"PeriodicalIF":0.4,"publicationDate":"2020-06-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.15179/ces.22.1.1","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"46307810","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
There are many kinds of international operations, and entities from different countries can operate in different regulatory frameworks. This is why comparative international accounting has become more and more important. There are great efforts made by the EU, the IASB, the FASB, and other institutions in order to achieve comparable financial statements. Still, there are many accounting differences among the countries. The EU member states are restricted by the European Regulation on the application of the IFRS but the regulation of accounting principles for micro, small, and medium sized entities represents the national regulators’ choice. The main goal of the paper is to provide a description of the existing accounting framework and the standard setting process in two European countries: Croatia and Poland. Research methodology is based on a critical analysis of scholarly literature and the comparison of Polish and Croatian Accounting Acts, Polish Accounting Standards and Croatian Financial Reporting Standards, in terms of main accounting principles for assets. The authors test the thesis that the national accounting standard setting process affects the form and content of accounting principles and standards. Therefore, the research focus is related to several accounting areas and the paper investigates accounting principles for different kinds of assets.
{"title":"Assets Measurement Principles According to Croatian and Polish Accounting Standards","authors":"I. Sačer, Beata Zyznarska-Dworczak","doi":"10.15179/ces.22.1.2","DOIUrl":"https://doi.org/10.15179/ces.22.1.2","url":null,"abstract":"There are many kinds of international operations, and entities from different countries can operate in different regulatory frameworks. This is why comparative international accounting has become more and more important. There are great efforts made by the EU, the IASB, the FASB, and other institutions in order to achieve comparable financial statements. Still, there are many accounting differences among the countries. The EU member states are restricted by the European Regulation on the application of the IFRS but the regulation of accounting principles for micro, small, and medium sized entities represents the national regulators’ choice. The main goal of the paper is to provide a description of the existing accounting framework and the standard setting process in two European countries: Croatia and Poland. Research methodology is based on a critical analysis of scholarly literature and the comparison of Polish and Croatian Accounting Acts, Polish Accounting Standards and Croatian Financial Reporting Standards, in terms of main accounting principles for assets. The authors test the thesis that the national accounting standard setting process affects the form and content of accounting principles and standards. Therefore, the research focus is related to several accounting areas and the paper investigates accounting principles for different kinds of assets.","PeriodicalId":42059,"journal":{"name":"Croatian Economic Survey","volume":" ","pages":""},"PeriodicalIF":0.4,"publicationDate":"2020-06-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.15179/ces.22.1.2","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"43269515","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Smart Specialization Strategy (S3) has become a dominant regional economic development field with significant policy traction, in particular within the European Union. However, questions are being raised about its operationalization and a gap has been identified with respect to the role of innovation intermediaries' interventions in support of the developing regional-sectoral innovation systems. In particular, reasons for diverging policy approaches of "niche specialization" versus "regional advantage" in comparable situations should be examined to illuminate the contextual factors impacting the interpretation of the intermediaries' mandates. In this paper, the cases of two leading investments in innovation intermediation in the emerging New Space sector are analyzed (Space-SI and Higgs Centre for Innovation) in two EU NUTS level 1 regions (Slovenia and Scotland), which were previously peripheral players in this technological domain. In particular, using a novel innovation intermediation interventions' classification, this paper identifies the difference between research and development (R&D) and business development (BD) support foci in the two locales, noting some of the contextual factors associated with them and arguing for the long-term balancing of the two approaches.
{"title":"The Ten Million Euro Question: How Do Innovation Intermediaries Support Smart Specialization?","authors":"Matjaz Vidmar","doi":"10.15179/ces.21.2.2","DOIUrl":"https://doi.org/10.15179/ces.21.2.2","url":null,"abstract":"Smart Specialization Strategy (S3) has become a dominant regional economic development field with significant policy traction, in particular within the European Union. However, questions are being raised about its operationalization and a gap has been identified with respect to the role of innovation intermediaries' interventions in support of the developing regional-sectoral innovation systems. In particular, reasons for diverging policy approaches of \"niche specialization\" versus \"regional advantage\" in comparable situations should be examined to illuminate the contextual factors impacting the interpretation of the intermediaries' mandates. In this paper, the cases of two leading investments in innovation intermediation in the emerging New Space sector are analyzed (Space-SI and Higgs Centre for Innovation) in two EU NUTS level 1 regions (Slovenia and Scotland), which were previously peripheral players in this technological domain. In particular, using a novel innovation intermediation interventions' classification, this paper identifies the difference between research and development (R&D) and business development (BD) support foci in the two locales, noting some of the contextual factors associated with them and arguing for the long-term balancing of the two approaches.","PeriodicalId":42059,"journal":{"name":"Croatian Economic Survey","volume":" ","pages":""},"PeriodicalIF":0.4,"publicationDate":"2019-12-02","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.15179/ces.21.2.2","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"45201765","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Trade negotiations between the European Union, on the one hand, and the United States and Canada, on the other, have raised concerns of European consumers fearing food safety issues. Trade dispute settlements between these countries on food imports to the EU and remedies against the European Communities are other substantial factors governing the bilateral and multilateral trade policies between these countries. This study sheds light on various aspects of the particular issue of poultry imports to the EU during the period 1996-2014. First, we analyse the mechanisms of EU market protection through the evolution of tariffs and non-tariff measures (NTMs), both descriptively and econometrically. Second, we provide bilateral ad valorem equivalents (AVEs) of NTMs imposed on the imports of poultry to the EU. These AVEs, which are equivalent to tariffs, hint towards the diverse impact of NTMs on various exporters based on their production compatibilities with EU standards. Third, we analyse the quality impact of NTMs, which are also differentiated by the exporting countries. Overall, this detailed study may assist dispute settlement bodies of the World Trade Organisation in analysing cases related to regulatory NTMs for which there is lack of scientific evidence.
{"title":"EU Trade Regulations and Imports of Hygienic Poultry","authors":"Mahdi Ghodsi, Robert Stehrer","doi":"10.15179/CES.21.2.4","DOIUrl":"https://doi.org/10.15179/CES.21.2.4","url":null,"abstract":"Trade negotiations between the European Union, on the one hand, and the United States and Canada, on the other, have raised concerns of European consumers fearing food safety issues. Trade dispute settlements between these countries on food imports to the EU and remedies against the European Communities are other substantial factors governing the bilateral and multilateral trade policies between these countries. This study sheds light on various aspects of the particular issue of poultry imports to the EU during the period 1996-2014. First, we analyse the mechanisms of EU market protection through the evolution of tariffs and non-tariff measures (NTMs), both descriptively and econometrically. Second, we provide bilateral ad valorem equivalents (AVEs) of NTMs imposed on the imports of poultry to the EU. These AVEs, which are equivalent to tariffs, hint towards the diverse impact of NTMs on various exporters based on their production compatibilities with EU standards. Third, we analyse the quality impact of NTMs, which are also differentiated by the exporting countries. Overall, this detailed study may assist dispute settlement bodies of the World Trade Organisation in analysing cases related to regulatory NTMs for which there is lack of scientific evidence.","PeriodicalId":42059,"journal":{"name":"Croatian Economic Survey","volume":" ","pages":""},"PeriodicalIF":0.4,"publicationDate":"2019-12-02","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.15179/CES.21.2.4","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"49298187","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper adds to the limited research conducted on labor markets with low female labor force participation, providing the first multivariate analysis for Kosovo. The determinants of female labor force participation (FLFP) in Kosovo are investigated utilizing an eclectic model, comprising of individual, household, and socio-economic determinants, to analyze data from the Kosovo Labor Force Survey. Both supply and demand factors contribute to the explanation of the low FLFP in Kosovo. The results confirm that: age, marital status, education, labor market demand and the composition of the household are significant determinants of FLFP. These findings indicate the importance of taking a household level approach when analyzing labor force participation in countries with low female force participation.
{"title":"Bucking the Trend: Female Labor Market Participation in Kosovo","authors":"Ardiana Gashi, Artane Rizvanolli, N. Adnett","doi":"10.15179/ces.21.2.3","DOIUrl":"https://doi.org/10.15179/ces.21.2.3","url":null,"abstract":"This paper adds to the limited research conducted on labor markets with low female labor force participation, providing the first multivariate analysis for Kosovo. The determinants of female labor force participation (FLFP) in Kosovo are investigated utilizing an eclectic model, comprising of individual, household, and socio-economic determinants, to analyze data from the Kosovo Labor Force Survey. Both supply and demand factors contribute to the explanation of the low FLFP in Kosovo. The results confirm that: age, marital status, education, labor market demand and the composition of the household are significant determinants of FLFP. These findings indicate the importance of taking a household level approach when analyzing labor force participation in countries with low female force participation.","PeriodicalId":42059,"journal":{"name":"Croatian Economic Survey","volume":"21 1","pages":"85-116"},"PeriodicalIF":0.4,"publicationDate":"2019-12-02","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.15179/ces.21.2.3","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"46628443","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper investigates the role of Special Economic Zones (SEZs) in the Western Balkans in supporting industrial policy for economic development. It shows that Serbia and North Macedonia have both implemented policies to establish networks of SEZs that have attracted a relatively large amount of new foreign direct investment, mainly into the motorcar and components industries. Although many jobs have been created and some improvements in export competitiveness have occurred, there is no evidence of improvements in labour productivity or widespread technology spill-over to local economies. The import intensity of production is extremely high, implying little linkage to local economies. The qualitative interviews further reveal limited linkages between SEZ-based companies and local businesses, limited technology transfer, and a lack of appropriate skills among the workforce. In particular, there is insufficient capacity in the motorcar components supply chain. The paper concludes that governments have used SEZ policies as an alternative to regional and local development policies based on smart specialisation. In order to take advantage of the opportunity offered by SEZs, governments in the region should put more effort into developing local supply chains, aligning their policies towards SEZs and smart specialisation in order to leverage the advantages of an increased inflow of direct foreign investment for sustainable economic development in the future.
{"title":"Attracting FDI to the Western Balkans: Special Economic Zones and Smart Specialisation Strategies","authors":"W. Bartlett, B. Krasniqi, Jasmina Ahmetbašić","doi":"10.15179/ces.21.2.1","DOIUrl":"https://doi.org/10.15179/ces.21.2.1","url":null,"abstract":"This paper investigates the role of Special Economic Zones (SEZs) in the Western Balkans in supporting industrial policy for economic development. It shows that Serbia and North Macedonia have both implemented policies to establish networks of SEZs that have attracted a relatively large amount of new foreign direct investment, mainly into the motorcar and components industries. Although many jobs have been created and some improvements in export competitiveness have occurred, there is no evidence of improvements in labour productivity or widespread technology spill-over to local economies. The import intensity of production is extremely high, implying little linkage to local economies. The qualitative interviews further reveal limited linkages between SEZ-based companies and local businesses, limited technology transfer, and a lack of appropriate skills among the workforce. In particular, there is insufficient capacity in the motorcar components supply chain. The paper concludes that governments have used SEZ policies as an alternative to regional and local development policies based on smart specialisation. In order to take advantage of the opportunity offered by SEZs, governments in the region should put more effort into developing local supply chains, aligning their policies towards SEZs and smart specialisation in order to leverage the advantages of an increased inflow of direct foreign investment for sustainable economic development in the future.","PeriodicalId":42059,"journal":{"name":"Croatian Economic Survey","volume":"21 1","pages":"5-35"},"PeriodicalIF":0.4,"publicationDate":"2019-12-02","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.15179/ces.21.2.1","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"48968650","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In our paper we study the perceived innovativeness of entrepreneurs, i.e. owners and managers of start-ups in three neighboring countries—Slovenia, Croatia, and Hungary—based on the research framework and adult population surveys within the Global Entrepreneurship Monitor (GEM) research cycles in 2016 and 2017. Innovativeness is studied as a multidimensional process: from the perspective of technologies, product innovations, and competition. Our results show that higher innovativeness of products/services produced by early-stage entrepreneurs is associated with higher levels of technological innovativeness and with lower levels of market competition. Neither gender nor age shows a statistically significant relationship with the product/service innovativeness of early-stage entrepreneurs. The results also show that the specific institutional environment in each country does not moderate the relationships between the innovativeness of products/services on one hand, and technological and market competition viewpoints of innovativeness, on the other.
{"title":"Perceived Innovativeness and Competitiveness of Early-Stage Entrepreneurs","authors":"P. Tominc","doi":"10.15179/CES.21.1.3","DOIUrl":"https://doi.org/10.15179/CES.21.1.3","url":null,"abstract":"In our paper we study the perceived innovativeness of entrepreneurs, i.e. owners and managers of start-ups in three neighboring countries—Slovenia, Croatia, and Hungary—based on the research framework and adult population surveys within the Global Entrepreneurship Monitor (GEM) research cycles in 2016 and 2017. Innovativeness is studied as a multidimensional process: from the perspective of technologies, product innovations, and competition. Our results show that higher innovativeness of products/services produced by early-stage entrepreneurs is associated with higher levels of technological innovativeness and with lower levels of market competition. Neither gender nor age shows a statistically significant relationship with the product/service innovativeness of early-stage entrepreneurs. The results also show that the specific institutional environment in each country does not moderate the relationships between the innovativeness of products/services on one hand, and technological and market competition viewpoints of innovativeness, on the other.","PeriodicalId":42059,"journal":{"name":"Croatian Economic Survey","volume":" ","pages":""},"PeriodicalIF":0.4,"publicationDate":"2019-06-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.15179/CES.21.1.3","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"48486276","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Major events in Croatia regarding economy and politics in the last three years have been related to the Agrokor concern. Agrokor is one of the biggest companies/concerns in Croatia and Southeastern Europe. Since some of Agrokor’s stocks are listed on the Croatian stock market, the economic and political events regarding Agrokor have affected the stock market as well to an extent. In this study we observe the effects of several economic and political events on stock returns on the Zagreb Stock Exchange, by dividing the sample into two groups. The first group consists of Agrokor’s stocks and the other group consists of stocks of other companies which are listed and frequently traded on the market. The methodology used in the study was event study, by using parametric and non-parametric tests. The results indicate that specific economic and political events have affected Agrokor’s stock returns negatively. Other stock returns were not affected, or were affected positively, but not statistically significantly.
{"title":"Effects of Economic and Political Events on Stock Returns: Event Study of the Agrokor Case in Croatia","authors":"Tihana Škrinjarić, Zrinka Orlović","doi":"10.15179/CES.21.1.2","DOIUrl":"https://doi.org/10.15179/CES.21.1.2","url":null,"abstract":"Major events in Croatia regarding economy and politics in the last three years have been related to the Agrokor concern. Agrokor is one of the biggest companies/concerns in Croatia and Southeastern Europe. Since some of Agrokor’s stocks are listed on the Croatian stock market, the economic and political events regarding Agrokor have affected the stock market as well to an extent. In this study we observe the effects of several economic and political events on stock returns on the Zagreb Stock Exchange, by dividing the sample into two groups. The first group consists of Agrokor’s stocks and the other group consists of stocks of other companies which are listed and frequently traded on the market. The methodology used in the study was event study, by using parametric and non-parametric tests. The results indicate that specific economic and political events have affected Agrokor’s stock returns negatively. Other stock returns were not affected, or were affected positively, but not statistically significantly.","PeriodicalId":42059,"journal":{"name":"Croatian Economic Survey","volume":"1 1","pages":""},"PeriodicalIF":0.4,"publicationDate":"2019-06-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.15179/CES.21.1.2","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"43834492","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Even though Croatia is among the most active EU countries when it comes to tackling undeclared economic activities, not much is known about the effectiveness of numerous policy measures introduced since joining the EU. As there is no systematic approach toward quantification of the undeclared economy in the newest member state, this paper fills the gap by presenting a tailored and robust procedure based on the Multiple Indicators and Multiple Causes (MIMIC) method. The methodology developed is then applied to assess the magnitude of the phenomenon in Croatia for the 2004–2017 period. The analysis reveals that the undeclared economy in Croatia has remained rather stable during the last decade and a half, with its value added ranging between HRK 24.1 and 26.9 billion. Accounting for 7.8 percent of the total GDP in 2017, undeclared undertakings represent a significant obstacle, which should therefore be systematically addressed. What is more, the findings indicate a rising trend, thus challenging the efficiency of the current policy approach by the Croatian government.
{"title":"Undeclared Economy in Croatia during the 2004–2017 Period: Quarterly Estimates Using the MIMIC Method","authors":"Josip Franić","doi":"10.15179/CES.21.1.1","DOIUrl":"https://doi.org/10.15179/CES.21.1.1","url":null,"abstract":"Even though Croatia is among the most active EU countries when it comes to tackling undeclared economic activities, not much is known about the effectiveness of numerous policy measures introduced since joining the EU. As there is no systematic approach toward quantification of the undeclared economy in the newest member state, this paper fills the gap by presenting a tailored and robust procedure based on the Multiple Indicators and Multiple Causes (MIMIC) method. The methodology developed is then applied to assess the magnitude of the phenomenon in Croatia for the 2004–2017 period. The analysis reveals that the undeclared economy in Croatia has remained rather stable during the last decade and a half, with its value added ranging between HRK 24.1 and 26.9 billion. Accounting for 7.8 percent of the total GDP in 2017, undeclared undertakings represent a significant obstacle, which should therefore be systematically addressed. What is more, the findings indicate a rising trend, thus challenging the efficiency of the current policy approach by the Croatian government.","PeriodicalId":42059,"journal":{"name":"Croatian Economic Survey","volume":" ","pages":""},"PeriodicalIF":0.4,"publicationDate":"2019-06-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.15179/CES.21.1.1","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"48962453","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The main objective of this paper is to explore the adjustment of bank business activities to new regulatory capital requests using panel data analyses of the European banking system. The research hypothesis assumes that the increase in capital requirements affects the banks’ balance sheet adjustment and bank lending to the non-financial sector. The banks can maintain the higher regulatory capital ratio by increasing the volume of share capital or by decreasing the risk-weighted assets and bank lending activities. The high equity premium upon a new equity issue due to asymmetric information about the bank’s net worth discourages the current shareholder to issue additional capital, which has resulted in bank lending constraints and has increased non-risk bank assets. Banks’ response to new capital requirements can announce a long-term negative impact to real economy and bank depending borrowers. The model of empirical analysis of the banking sector adjustment to new capital requirements will be demonstrated on the sample of publicly listed banking firms in the European Union in the period 2000–2016 using dynamic panel-data estimation with the Generalized Method of Moments (GMM) in one-step.
{"title":"Banking System Adjustment to Regulatory Capital Requirements","authors":"Ivica Klinac, Roberto Ercegovac","doi":"10.15179/CES.20.2.3","DOIUrl":"https://doi.org/10.15179/CES.20.2.3","url":null,"abstract":"The main objective of this paper is to explore the adjustment of bank business activities to new regulatory capital requests using panel data analyses of the European banking system. The research hypothesis assumes that the increase in capital requirements affects the banks’ balance sheet adjustment and bank lending to the non-financial sector. The banks can maintain the higher regulatory capital ratio by increasing the volume of share capital or by decreasing the risk-weighted assets and bank lending activities. The high equity premium upon a new equity issue due to asymmetric information about the bank’s net worth discourages the current shareholder to issue additional capital, which has resulted in bank lending constraints and has increased non-risk bank assets. Banks’ response to new capital requirements can announce a long-term negative impact to real economy and bank depending borrowers. The model of empirical analysis of the banking sector adjustment to new capital requirements will be demonstrated on the sample of publicly listed banking firms in the European Union in the period 2000–2016 using dynamic panel-data estimation with the Generalized Method of Moments (GMM) in one-step.","PeriodicalId":42059,"journal":{"name":"Croatian Economic Survey","volume":" ","pages":""},"PeriodicalIF":0.4,"publicationDate":"2018-12-31","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.15179/CES.20.2.3","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"49296488","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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