Josephine Obiageli Opene-Terry, B. Uzoechina, K. Okeyika, N. F. Ezenwobi, A. A. Oladipo, Vincent Chuks Okafor
The relationship between exchange rate (EXR) and foreign trade (FT) in Nigeria has been a contentious issue since Nigeria’s independence in 1960. This study investigated the link between exchange rate and foreign trade through the prism of exchange rate pass-through (EXRPT) to domestic prices, utilizing monthly data from 2011 to 2022. The study was built on two models—the base and main models respectively. Employing the VAR technique and its Vector Error Correction Model (VECM) extension, the paper found that EXRPT to consumer prices is incomplete in the short run but its effect was found to be higher on imports than on consumer prices. It follows that the impact of EXRPT diminishes along the price chain. Results from the main model indicate that the impact of domestic prices on balance of trade was found to be negative with elasticity of −0.437541and is also statistically significant, thus, confirming the Marshal-Lenner condition. The Marshal-Lenner condition and findings of this study provide evidence that depreciating exchange rate is not recommended for an import inelastic country like Nigeria.
{"title":"Inflation-balance of trade nexus in Nigeria: The impact of exchange rate pass-through","authors":"Josephine Obiageli Opene-Terry, B. Uzoechina, K. Okeyika, N. F. Ezenwobi, A. A. Oladipo, Vincent Chuks Okafor","doi":"10.24294/fsj.v6i2.5736","DOIUrl":"https://doi.org/10.24294/fsj.v6i2.5736","url":null,"abstract":"The relationship between exchange rate (EXR) and foreign trade (FT) in Nigeria has been a contentious issue since Nigeria’s independence in 1960. This study investigated the link between exchange rate and foreign trade through the prism of exchange rate pass-through (EXRPT) to domestic prices, utilizing monthly data from 2011 to 2022. The study was built on two models—the base and main models respectively. Employing the VAR technique and its Vector Error Correction Model (VECM) extension, the paper found that EXRPT to consumer prices is incomplete in the short run but its effect was found to be higher on imports than on consumer prices. It follows that the impact of EXRPT diminishes along the price chain. Results from the main model indicate that the impact of domestic prices on balance of trade was found to be negative with elasticity of −0.437541and is also statistically significant, thus, confirming the Marshal-Lenner condition. The Marshal-Lenner condition and findings of this study provide evidence that depreciating exchange rate is not recommended for an import inelastic country like Nigeria.","PeriodicalId":447992,"journal":{"name":"Financial Statistical Journal","volume":" 6","pages":""},"PeriodicalIF":0.0,"publicationDate":"2024-07-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"141828328","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 examines the nexus between the shadow economy and financial development in Uganda making use of yearly time series data over the period 1991 to 2017 and autoregressive distributed lag (ARDL) method is applied. Findings are quite telling. We find that financial development reduces the shadow economy in a significant manner, in both the long- and short-run. This finding is robust to the use of alternative measures of financial development. Our results have far reaching implications. Firstly, findings indicate that financial structure plays a key role in mitigating the increase of the shadow economy given that the financial sector can provide access to credit that eases financial constraints faced by entrepreneurs. Thus, a well-functioning financial sector could facilitate access to credit by entrepreneurs which reduces their motivation to operate underground. These findings seem to suggest that reforming financial institutions to facilitate improved access to domestic credit could help tackle widespread informality in developing economies. Additionally, minimizing informality also requires reforming the political system, institutional framework and macroeconomic environment to become responsive to the needs of businesses.
{"title":"The nexus between the shadow economy and financial development in Uganda","authors":"S. Esaku, Salmon Mugoda","doi":"10.24294/fsj.v6i2.6408","DOIUrl":"https://doi.org/10.24294/fsj.v6i2.6408","url":null,"abstract":"This paper examines the nexus between the shadow economy and financial development in Uganda making use of yearly time series data over the period 1991 to 2017 and autoregressive distributed lag (ARDL) method is applied. Findings are quite telling. We find that financial development reduces the shadow economy in a significant manner, in both the long- and short-run. This finding is robust to the use of alternative measures of financial development. Our results have far reaching implications. Firstly, findings indicate that financial structure plays a key role in mitigating the increase of the shadow economy given that the financial sector can provide access to credit that eases financial constraints faced by entrepreneurs. Thus, a well-functioning financial sector could facilitate access to credit by entrepreneurs which reduces their motivation to operate underground. These findings seem to suggest that reforming financial institutions to facilitate improved access to domestic credit could help tackle widespread informality in developing economies. Additionally, minimizing informality also requires reforming the political system, institutional framework and macroeconomic environment to become responsive to the needs of businesses.","PeriodicalId":447992,"journal":{"name":"Financial Statistical Journal","volume":" 17","pages":""},"PeriodicalIF":0.0,"publicationDate":"2024-07-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"141830457","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}
Michael Provide Fumey, John Wiredu, Agnes Nyamenaose Essuman
Tax revenue is an important public asset that contributes significantly to a nation’s economic development. The primary function of every government is to make provision in terms of infrastructure facilities, development, and better living conditions for its people. Due to the government’s limited resources, it is necessary to impose taxes on all residents and businesses to strengthen its financial situation because it is impossible for it to carry out this large task in an effective manner. Governments have always passed numerous tax laws, and they have been amended to withstand the test of time. Therefore, this study’s goal is to determine whether taxes have an impact on economic development in the Cape Coast Metropolis in Ghana. The study used the quantitative approach, survey technique, and questionnaire for the data collection process. A sample size of 115 respondents comprising the staff of the domestic tax revenue division’s workforce and owners of registered SMEs were engaged in the study. The data was analyzed using the SPSS version 26. The results indicated that the majority of the staff of Ghana Revenue Authority (GRA) considered payment of tax as beneficial to the state while few of the staff did not consider payment of tax as beneficial to the state. In addition, the study outcomes show that respondents are aware of the extent to which tax revenue can be used by the government for economic development. Furthermore, the researchers recommended that the head of GRA create a strong regulatory framework to monitor how tax money is used for economic growth. They should also make an effort to ensure that the tax revenue generated will be wisely used for the growth of the metropolis. This will make taxpayers appreciate the need to pay their taxes because they know they will benefit from it in the end in the form of social and economic developments.
{"title":"Evaluating taxation’s dual impact on business and social development: A case study of the Cape Coast metropolis in Ghana","authors":"Michael Provide Fumey, John Wiredu, Agnes Nyamenaose Essuman","doi":"10.24294/fsj.v6i2.3833","DOIUrl":"https://doi.org/10.24294/fsj.v6i2.3833","url":null,"abstract":"Tax revenue is an important public asset that contributes significantly to a nation’s economic development. The primary function of every government is to make provision in terms of infrastructure facilities, development, and better living conditions for its people. Due to the government’s limited resources, it is necessary to impose taxes on all residents and businesses to strengthen its financial situation because it is impossible for it to carry out this large task in an effective manner. Governments have always passed numerous tax laws, and they have been amended to withstand the test of time. Therefore, this study’s goal is to determine whether taxes have an impact on economic development in the Cape Coast Metropolis in Ghana. The study used the quantitative approach, survey technique, and questionnaire for the data collection process. A sample size of 115 respondents comprising the staff of the domestic tax revenue division’s workforce and owners of registered SMEs were engaged in the study. The data was analyzed using the SPSS version 26. The results indicated that the majority of the staff of Ghana Revenue Authority (GRA) considered payment of tax as beneficial to the state while few of the staff did not consider payment of tax as beneficial to the state. In addition, the study outcomes show that respondents are aware of the extent to which tax revenue can be used by the government for economic development. Furthermore, the researchers recommended that the head of GRA create a strong regulatory framework to monitor how tax money is used for economic growth. They should also make an effort to ensure that the tax revenue generated will be wisely used for the growth of the metropolis. This will make taxpayers appreciate the need to pay their taxes because they know they will benefit from it in the end in the form of social and economic developments.","PeriodicalId":447992,"journal":{"name":"Financial Statistical Journal","volume":"37 25","pages":""},"PeriodicalIF":0.0,"publicationDate":"2024-04-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140728347","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}
Nikonov Maksim, Shishkin Alexei, Konev Dmitry, Dolmatov Aleksandr
The following research paper is devoted to the complex topic of modeling stochastic financial markets using the example of auction markets. The presented model for market makers’ behavior on stochastic auction markets contributes practically to the field of studying portfolio optimization, risk management, market participants’ balance processes, and prediction problems via cutting-edge machine learning and statistics approaches. The reliability of the given model is proved practically with the help of modern machine learning methods of validation, namely, combinatorial splits. A client-server model for remote simulation was implemented, as well as interpreted language in C++. XGBoost, Catboost, LSTM, NN Ensemble, and H2O Auto-ML models were considered in the course of building the decision model. Hyperparameters were obtained via Optuna. Besides that, the developed model was backtested on historical data of different financial assets, starting with stocks and ending with commodity prices and foreign exchange rates. Within all models, positive Sharpe ratios have been obtained, which indicates the robustness of the model. The paper offers a valuable framework for market maker decision-making stochastic modeling, examining its pricing mechanisms and financial risk management as crucial for exchanges, funds, and other financial institutions, which makes it relevant in the context of the current dynamics of the development of financial markets and the increase in trading volumes.
{"title":"Model of stochastic auctions using level market index","authors":"Nikonov Maksim, Shishkin Alexei, Konev Dmitry, Dolmatov Aleksandr","doi":"10.24294/fsj.v6i2.2931","DOIUrl":"https://doi.org/10.24294/fsj.v6i2.2931","url":null,"abstract":"The following research paper is devoted to the complex topic of modeling stochastic financial markets using the example of auction markets. The presented model for market makers’ behavior on stochastic auction markets contributes practically to the field of studying portfolio optimization, risk management, market participants’ balance processes, and prediction problems via cutting-edge machine learning and statistics approaches. The reliability of the given model is proved practically with the help of modern machine learning methods of validation, namely, combinatorial splits. A client-server model for remote simulation was implemented, as well as interpreted language in C++. XGBoost, Catboost, LSTM, NN Ensemble, and H2O Auto-ML models were considered in the course of building the decision model. Hyperparameters were obtained via Optuna. Besides that, the developed model was backtested on historical data of different financial assets, starting with stocks and ending with commodity prices and foreign exchange rates. Within all models, positive Sharpe ratios have been obtained, which indicates the robustness of the model. The paper offers a valuable framework for market maker decision-making stochastic modeling, examining its pricing mechanisms and financial risk management as crucial for exchanges, funds, and other financial institutions, which makes it relevant in the context of the current dynamics of the development of financial markets and the increase in trading volumes.","PeriodicalId":447992,"journal":{"name":"Financial Statistical Journal","volume":"27 2-4","pages":""},"PeriodicalIF":0.0,"publicationDate":"2023-11-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139265205","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 takes a look at overcoming the problems faced by processors of cassava in Nigeria and how important the processing of cassava is to the Nigerian economy. The importance of the cassava processing industry cannot be overemphasized. Apart from providing food security, provision of employment opportunities for the ever-teeming population, it serves as a foreign exchange earner to boost the economy and provide raw materials for industries such as textile, pharmaceutical and alcohol. The roots and leaves of cassava are also source of medicine, it is also used in the production of biofuel. The paper also looked at the myriad of problems associated with the processing operations and delved into the challenges of the cassava processing industry which includes: a lack of basic infrastructural facilities, lack of access to finance the industry, excessive cost of processing equipment, poor market accessibility and limited government support. The paper proffers solutions as ways forward in taking the cassava processing industry in Nigeria to the next level.
{"title":"Overcoming the problems facing cassava processing industry in Nigeria","authors":"Lois Omolola Abiodun, Opeyemi Adeniyi Oyelade, Yinka Segun Ademiluyi, Olusola Adetola Ogunjirin, Jelili Aremu Oyedokun","doi":"10.24294/fsj.v6i1.2524","DOIUrl":"https://doi.org/10.24294/fsj.v6i1.2524","url":null,"abstract":"This paper takes a look at overcoming the problems faced by processors of cassava in Nigeria and how important the processing of cassava is to the Nigerian economy. The importance of the cassava processing industry cannot be overemphasized. Apart from providing food security, provision of employment opportunities for the ever-teeming population, it serves as a foreign exchange earner to boost the economy and provide raw materials for industries such as textile, pharmaceutical and alcohol. The roots and leaves of cassava are also source of medicine, it is also used in the production of biofuel. The paper also looked at the myriad of problems associated with the processing operations and delved into the challenges of the cassava processing industry which includes: a lack of basic infrastructural facilities, lack of access to finance the industry, excessive cost of processing equipment, poor market accessibility and limited government support. The paper proffers solutions as ways forward in taking the cassava processing industry in Nigeria to the next level.","PeriodicalId":447992,"journal":{"name":"Financial Statistical Journal","volume":"45 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-10-13","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135804927","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}
Blockchain technology has evolved from an enigmatic concept to a pioneering new frontier for our collective digital infrastructure in the last two decades. Its vast potential has transcended industries and possesses the capacity to transform domains as diverse as healthcare and online gaming fundamentally. However, Blockchain technology has thus far demonstrated its most efficient and effective application within the financial sector. The financial industry has benefited significantly by adapting this new technology (Blockchain) in terms of transactional transparency, security, and operational effectiveness. Blockchain is made feasible by developing immutable, decentralized, and distributed ledgers that can be viewed in real-time by numerous parties without intermediaries. As a result, transaction processing is secure and dependable, reducing the likelihood of fraud, errors, and delays. Because of their decentralized nature and smart contract technology, these instruments permit the establishment of novel financial services, such as P2P lending, decentralized insurance, and decentralized asset management. Rapid Blockchain adoption revolutionizes the financial sector, ushering in a new era of innovation and upheaval.
{"title":"Exploring the influence of Blockchain in the financial services: Quick assessment of its applications across various financial domains","authors":"Kamrun Naher, Mohammad Shamsu Uddin","doi":"10.24294/fsj.v6i1.2228","DOIUrl":"https://doi.org/10.24294/fsj.v6i1.2228","url":null,"abstract":"Blockchain technology has evolved from an enigmatic concept to a pioneering new frontier for our collective digital infrastructure in the last two decades. Its vast potential has transcended industries and possesses the capacity to transform domains as diverse as healthcare and online gaming fundamentally. However, Blockchain technology has thus far demonstrated its most efficient and effective application within the financial sector. The financial industry has benefited significantly by adapting this new technology (Blockchain) in terms of transactional transparency, security, and operational effectiveness. Blockchain is made feasible by developing immutable, decentralized, and distributed ledgers that can be viewed in real-time by numerous parties without intermediaries. As a result, transaction processing is secure and dependable, reducing the likelihood of fraud, errors, and delays. Because of their decentralized nature and smart contract technology, these instruments permit the establishment of novel financial services, such as P2P lending, decentralized insurance, and decentralized asset management. Rapid Blockchain adoption revolutionizes the financial sector, ushering in a new era of innovation and upheaval.","PeriodicalId":447992,"journal":{"name":"Financial Statistical Journal","volume":"24 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-10-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135969559","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 middle-income trap has been in developmental discussions for the better part of the last decade since the inability of most Latin American countries to break out of it. There is renewed interest in the concept since the realisation that one of the biggest economies in the world, i.e., China could be caught in it. While there is abundant literature on the part that social infrastructure and human capital development plays, the effect of financial systems is relatively ignored. This paper seeks to fill this gap by understanding the role of financial system variables in escaping the middle-income trap. By taking a sample of thirteen countries and using two classification techniques—Naive Bayes and random forest, it is concluded that both bank-based measures and market-based measures have an impact on income levels. These results have strong implications on understanding how to break out of the trap for policymakers.
{"title":"Old trap for a new mule: A study on the role of financial systems in escaping the middle-income trap","authors":"Srijanie Banerjee, Manish Sinha, Mrinalini Kacker","doi":"10.24294/fsj.v6i1.2301","DOIUrl":"https://doi.org/10.24294/fsj.v6i1.2301","url":null,"abstract":"The middle-income trap has been in developmental discussions for the better part of the last decade since the inability of most Latin American countries to break out of it. There is renewed interest in the concept since the realisation that one of the biggest economies in the world, i.e., China could be caught in it. While there is abundant literature on the part that social infrastructure and human capital development plays, the effect of financial systems is relatively ignored. This paper seeks to fill this gap by understanding the role of financial system variables in escaping the middle-income trap. By taking a sample of thirteen countries and using two classification techniques—Naive Bayes and random forest, it is concluded that both bank-based measures and market-based measures have an impact on income levels. These results have strong implications on understanding how to break out of the trap for policymakers.","PeriodicalId":447992,"journal":{"name":"Financial Statistical Journal","volume":"117 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-10-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135095151","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 financial performance of energy companies has become a significant object of investigation in the most recent international literature following the processes of privatization, liberalization and deregulation that have characterized these enterprises in the last twenty years. The objective of this work is to carry out an analysis of the main international literature on the subject. To this end, the main aspects considered as determining the aforementioned performances will be highlighted, constructing a related synthesis framework with possible further and future research guidelines.
{"title":"The financial performance of energy companies: A review of literature","authors":"Felicetta Iovino","doi":"10.24294/fsj.v6i1.2348","DOIUrl":"https://doi.org/10.24294/fsj.v6i1.2348","url":null,"abstract":"The financial performance of energy companies has become a significant object of investigation in the most recent international literature following the processes of privatization, liberalization and deregulation that have characterized these enterprises in the last twenty years. The objective of this work is to carry out an analysis of the main international literature on the subject. To this end, the main aspects considered as determining the aforementioned performances will be highlighted, constructing a related synthesis framework with possible further and future research guidelines.","PeriodicalId":447992,"journal":{"name":"Financial Statistical Journal","volume":"212 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-10-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135197543","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 purpose of the study is the theoretical and methodological substantiation of the mechanism of forming the stability of banks as a component of state regulation of the state of national security. The research methodology is based on comparing the approaches of different countries to the formation of the national security system, identifying standard features and individual characteristics depending on national interests and the conditions of their socio-economic development. The results of the analysis of the experience of different countries are the basis for recognising the importance of Ukraine in ensuring the stability of banks, which depends on the possibility of crediting businesses and citizens, making non-cash payments, and paying pensions, including temporarily occupied territories. Identifying the factors affecting the stability of banks in the conditions of crisis phenomena and choosing the methodology for assessing the strength of banks made it possible to select the most effective instruments for influencing the stability of banks and to outline the tasks for Ukraine. In addition, the monitoring of indicators of the strength of banks and achievements in the sustainable development of the state and regions contribute to the assessment of the effectiveness of public administration at the appropriate levels.
{"title":"Ensuring the stability of banks in the context of national security: Tasks for Ukraine","authors":"Mykola Mykolaichuk, Olena Lesyk, Olha Todorova","doi":"10.24294/fsj.v6i1.2445","DOIUrl":"https://doi.org/10.24294/fsj.v6i1.2445","url":null,"abstract":"The purpose of the study is the theoretical and methodological substantiation of the mechanism of forming the stability of banks as a component of state regulation of the state of national security. The research methodology is based on comparing the approaches of different countries to the formation of the national security system, identifying standard features and individual characteristics depending on national interests and the conditions of their socio-economic development. The results of the analysis of the experience of different countries are the basis for recognising the importance of Ukraine in ensuring the stability of banks, which depends on the possibility of crediting businesses and citizens, making non-cash payments, and paying pensions, including temporarily occupied territories. Identifying the factors affecting the stability of banks in the conditions of crisis phenomena and choosing the methodology for assessing the strength of banks made it possible to select the most effective instruments for influencing the stability of banks and to outline the tasks for Ukraine. In addition, the monitoring of indicators of the strength of banks and achievements in the sustainable development of the state and regions contribute to the assessment of the effectiveness of public administration at the appropriate levels.","PeriodicalId":447992,"journal":{"name":"Financial Statistical Journal","volume":"38 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-09-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135477595","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 research aims to examine the trade-off between strategies to cope with financial failure because Iraqi banks suffer from a high level of risk. Some of these banks work more with return on investment compared to risk-free return, while others are able to achieve a higher return for the same period. In this situation, there is a need for a trade-off between the elected strategies as expressed in the following research question: How can financial strategies be traded-off to cope with financial failure? The research hypothesis is: “The trade-off between financial strategies to cope with financial failure can be achieved by using financial modeling.” For the purpose of this research, the merger and acquisition strategies were used. Data was collected from the financial reports of 13 banks (covering the period of 2011–2020). Eight banks were selected and examined for their lowest and highest return on assets (ROAs). Four recorded low ROAs and the remaining four recorded high ROAs. Then, one bank was selected from each group, of which respective strategies were compared covering the period from 2016 to 2021. The financial modeling using the Excel program showed that the Eps of merger strategy is higher than the Eps of acquisition.
{"title":"Using financial modeling to trade-off between financial strategies","authors":"Majeed Mohsen Mohammad, Karar Muhsin Thajil","doi":"10.24294/fsj.v6i1.2203","DOIUrl":"https://doi.org/10.24294/fsj.v6i1.2203","url":null,"abstract":"This research aims to examine the trade-off between strategies to cope with financial failure because Iraqi banks suffer from a high level of risk. Some of these banks work more with return on investment compared to risk-free return, while others are able to achieve a higher return for the same period. In this situation, there is a need for a trade-off between the elected strategies as expressed in the following research question: How can financial strategies be traded-off to cope with financial failure? The research hypothesis is: “The trade-off between financial strategies to cope with financial failure can be achieved by using financial modeling.” For the purpose of this research, the merger and acquisition strategies were used. Data was collected from the financial reports of 13 banks (covering the period of 2011–2020). Eight banks were selected and examined for their lowest and highest return on assets (ROAs). Four recorded low ROAs and the remaining four recorded high ROAs. Then, one bank was selected from each group, of which respective strategies were compared covering the period from 2016 to 2021. The financial modeling using the Excel program showed that the Eps of merger strategy is higher than the Eps of acquisition.","PeriodicalId":447992,"journal":{"name":"Financial Statistical Journal","volume":"259 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-09-07","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"116227377","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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