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1
., Mardiansyah, and Dian Octaviani, ME. "ANALISIS SIMULTAN ANTARA ALIRAN MODAL, NILAI TUKAR DAN INFLASI DI INDONESIA PERIODE 2000.01 – 2012.09." Media Ekonomi 21, no. 1 (November 3, 2017): 42. http://dx.doi.org/10.25105/me.v21i1.792.
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<p>Globalization and the open economic enchanced the integration of financial market and the economic condition in several countries. The effects of such integration shows in the movement of capital flows between countries. The potential risks of the capital flows, such as sudden reversal, the pressure on the exchange rate and high inflation and the susceptibility on financial sector, might be be arised. The goal of this research is to analyze the relationship between capital flows, exchange rates and inflation in Indonesia period 2000.01 – 2012.09. The method used in this research is simultaneous equations method. The model equations in this study are divided into two, which are a short-term investments are proxied from portfolio investment and long-term investments proxied from foreign direct investment. The results of the first model estimates the short-term investments shows that the exchange rate and inflation does not significant affecting short-term investments, but the ratio of domestic interest rates to foreign interest has a positive and significant impact on short-term investments. While, a short-term investments has negative and significant impact on exchange rate IDR per USD and inflation positive and significant effect on exchange rate. Factors affecting the rate of inflation is SBI interest rate and the money supply. One the other hand, the results of the second model estimation shows that the exchange rate and inflation has positive and significant impact on the flow of foreign direct investment. Inflation rate does not alter the terms of the investor’s decision in investing in Indonesia, because it was followed by the improvement in economic conditions in Indonesia.<br />Keywords: Capital Flows, Exchange Rate, Inflation, Simultaneous Equation</p>
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Saymeh, Abdul Aziz Farid, Marwan Mohammad Abu Orabi, and Abdullah A. S. Alshourah. "The Impact of Inflation Prospects on Investments of Industrial Companies (Jordan’ case)." WSEAS TRANSACTIONS ON BUSINESS AND ECONOMICS 18 (May 21, 2021): 916–28. http://dx.doi.org/10.37394/23207.2021.18.87.
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This paper aimed to evaluate the impact of inflation prospects on investments of Industrial Companies in Jordan. The main objective is to elaborate the most relevant and feasible techniques to improve the prospects for developing the invests in the industrial sector. In the introduction part, inflation prospects and selected methods of analysis via available information resources were defined. It is well known that inflation is a prominent economic phenomenon in the modern world. The financial inflation is the prime objective of present study because it is primarily concerned with the investment process, especially to consider that inflation almost affects both the foreign and domestic direct investments by almost equal rates. The topic of industrial development is highly concerned with process of investment in Jordan. This research deals with the inflation effect on investment outcomes of most industrial companies in Jordan. This study will contribute to enrich the existing literature with financial structure and investment decisions via monetary inflation represented by capital, commodity and imports within the set of industrial companies. The study tool is a questionnaire that collected the needed data aiming to elaborate the preset conclusions of this research. Pearson correlation testing program was implemented to measure the relation between inflation and investment procedures. Overall outcomes revealed that the lowest coefficient observed between imports inflation. and all other variables were reversed, most increases in imports inflation were almost stabilized by the decrease of the other variables. While all other correlation values were positive.
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Kurniawan, Aboy, Adnan Haris Musa, and Rachmad Budi Suharto. "Faktor-Faktor yang Mempengaruhi Tingkat Pengangguran di Provinsi Kalimantan Timur." FORUM EKONOMI 19, no. 2 (January 10, 2018): 131. http://dx.doi.org/10.29264/jfor.v19i2.2119.
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The purpose of this study was to determine the effect of population, inflation and investments in open unemployment in the province of East Kalimantan. The method or tool of analysis used in this research is multiple regression analysis approach to the classical assumptions are processed in a detailed explanation. This study uses secondary data obtained from the Central Statistics Agency (BPS). From the results of data analysis that I do can be concluded that: (1) Large population can move the market in terms of demand through the multiplier effect due to the aggregate demand is high. (2) From the results it is observed that there is a close relationship between inflation and unemployment. (3) The size of investments that occurred in the community will greatly affect the size of employment opportunities created.Keywords: Regression Analysis, Population, Inflation, Investment, Unemployment.
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Stanić, Stanko, and Željko V. Račić. "Analysis of Macroeconomic Factors Effect to Gross Domestic Product of Bosnia and Herzegovina Using the Multiple Linear Regression Model." ECONOMICS 7, no. 2 (December 1, 2019): 91–97. http://dx.doi.org/10.2478/eoik-2019-0022.
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Abstract This paper presents the application of the multiple regression analysis model in macroeconomic research using the model of Bosnia and Herzegovina in the period from 2005 to 2018. The objective of the research is to evaluate the effects of macroeconomic factors (independent variables) to gross domestic product (dependent variable), and based on theoretical and methodological research. Applying the Enter method, out of six independent variables, they are all included in the regression model, whereas the sequence of inclusion in the model is the following: foreign direct investments, Import, Export, Growth rate, unemployment and inflation. Numerous research indicate positive connection between gross domestic product as the dependent variable and foreign direct investments, Import, Export, Growth rate, unemployment and inflation, as independent variables. Other factors negligibly explain the most important indicator of economic activities of a country. Our assignment is to either confirm or reject the abovementioned statement.
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Li, Tie Qun. "An Empirical Research on the Relationship between Real Estate Prices and Inflation." Applied Mechanics and Materials 55-57 (May 2011): 1992–96. http://dx.doi.org/10.4028/www.scientific.net/amm.55-57.1992.
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The former researches referring to inflation and real estate prices concentrated mainly on the stock prices rather than the real estate prices. Owing to the enlarging ratio of real estate industry in national economy with each passing day, as well as the overheating real estate prices in recent years, the relationship between real estate prices and inflation is particularly vital to the monetary policy making for the monetary authorities. According to the test analysis of data from 2001 to 2009, it is found that real estate prices is Granger Cause of inflation while inflation is not the Granger Cause of real estate prices in this paper. Through the Effects of Wealth, Credit and Tobin, real estate prices drive the growth of social consumption and investments and expand the total social demand which possess an positive effect on inflation; nevertheless the rising of real estate prices causes the rising of currency for real estate purchasing, which, under the circumstance of that currency supply remains, will inevitably bring about the reduction of currency for other consumption and investments and restrain the total social demand which would mean a suppression of continuous rising of prices of other commodity and labor service. All these show that real estate also has a negative effect on inflation. The cancellations between the two effects make the long-term influence real estate bearing on inflation is not obvious. The experimental results indicate that when the price of real estate rises 1%, inflation only rises 0.058%. Consequently, a strict controlling of the amount of money issued is the key factor for keeping the over rapid rising of real estate prices from leading to inflation.
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Nafisah, Hilyatun, and Supriyono Supriyono. "Analysis of The Effect of Macroeconomics On Net Assets Value (NAV) of Sharia Mutual Funds In Indonesia." International Journal of Islamic Business and Economics (IJIBEC) 4, no. 1 (May 17, 2020): 11. http://dx.doi.org/10.28918/ijibec.v4i1.1527.
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Net Asset Value (NAV) is a measure of investment performance for sharia mutual funds derived from the entire value of the mutual fund portfolio fewer liabilities. This research aims to analyze the effect of the rupiah exchange rate, inflation, Jakarta Islamic Index (JII) and Bank Indonesia Sharia Certificate (SBIS) on Net Asset Value (NAV) of Sharia Mutual Funds. The object in this research consisted of 5 companies registered with the Financial Services Authority (OJK) from 2012-2019. Panel data regression analysis was used to test the hypothesis in this study. A random effect is used to determine the differences in the effect. The result of this study concluded that rupiah exchange rate, inflation and JII and SBIS effect on NAV of sharia mutual funds simultaneously. Partially, an unstable rupiah exchange rate is considered to have an impact on the company's production factors and affect the validity of the stock price; This causes investments no longer be attractive to investors, thereby reducing the value of investments that have an impact on the declining mutual fund NAV. Inflation decreases the real income of people with fixed income will also reduce the value of wealth in the form of money so that people will prefer to invest their money in the form of real assets that will result in reduced investment in the financial and capital markets and lower the NAV value of Islamic Mutual Funds. JII describes the performance of stocks which are one of the portfolios of sharia mutual funds. If the JII index value rises, then the increase in the portfolio of sharia mutual funds that share type will also rise which will have an impact on the increase in the nett asset value of sharia mutual funds. SBIS does not affect the Sharia Mutual Funds NAV. The relationship between SBIS and the Sharia Mutual Fund NAV as well as the relationship between interest rates and stock prices is negative or in the opposite direction. If interest rates rise at an adequate level, investors will try to move their investments from stocks to deposits.
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Acquah-Sam, Emmanuel. "Influencers of Inflation in Ghana." European Scientific Journal, ESJ 13, no. 7 (March 31, 2017): 140. http://dx.doi.org/10.19044/esj.2017.v13n7p140.
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The effects of inflation on the economic life of the citizenry of a country and the theoretical causes have led to numerous researches in the area. Annual inflation rates in Ghana since 1990 show a fluctuating trend depicting how unsuccessful various governments and policy-makers have battled with changes in the general price level. The theoretical and empirical literature on inflation seem to suggest that the causes of inflation are multifaceted, and time specific, as well as dependent on the level of development of a country. This paper attempts to explore some of major triggers of inflation Ghana for decision-making and implementation as well as adding to existing researches in the area. It uses multiple linear regression analysis based on structural equation modelling through path analysis. It concludes that interest rate, proxied by Treasury bill rates, is the only major variable that has a positive and significant effect on inflation in Ghana with regard to the time period studied. Factors such as GDP growth, market capitalisation, gross fixed investment, and foreign direct investments proved insignificant in influencing inflation in Ghana. This study lends support to the fact that inflation reacts positively to changes in interest rates, therefore, governments and policy-makers must consider it critical when pursuing propoor growth policies.
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Sabauri, Levan. "INFLUENCE OF ACCOUNTING BALANCE INDICATORS ON INVESTMENT EVALUTION." Applied Finance and Accounting 2, no. 1 (November 16, 2015): 57. http://dx.doi.org/10.11114/afa.v2i1.1158.
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The work considers essential matters of cash flow return on investments. The basic of CFROI® methodology is the idea of a company as the integrity of projects. Those projects have different moments and terms of development and effect as well as the various rates of payback. Subject to the goals of the analysis, they are represented as a single consolidated project which generates cash flows within the term of useful life of those assets to which the investments are aimed. The CFROI® is based on the main idea – to determine the inflation-adjusted cash flows in favor of every capital owner and to compare them with the inflation-adjusted historical investments which have been put in the business in consideration of the depreciated cost of non-depreciable assets according to the internal rate. The work focuses on the detailed analysis of the CFROI® components. All components are considered separately and in connection with each other that makes the single chain determining the cash rate of return on investments. Within the analysis of cash rate of return on investments it is important to determine the duration of life cycle of strategic investments which is directly related to the establishment of the average age of the fixed depreciated tangible assets. When determining the average asset age noteworthy is by what formula it will be calculated. Based on the practical examples the work presents the cases of “artificial rejuvenation” of depreciated assets and “artificial aging” of assets. The work also determines the values of total investments and total cash flows, their effect on calculation of the cash rate of return on investments. Parallel with investments and cash flows there is also considered the role of IRR and MIRR for calculation of CFROI. Together with the investment model of calculation there has been applied calculation with CFROI coefficient which is based on the use of data of the economical depreciation of total investments. Therefore, the operating cash flows are recurrent and reiterated and they create the necessary idea of the profit to be received from a business in future. CFROI® value is measured on the annual basis. It may be subject to modification. Noteworthy is to determine the internal rate of return (IRR) of a business in the current conditions. CFROI® is of analytical predictable nature. However, it shall be applied with a particular caution. In the final analysis, the purport of the company existence is to return all investments deposited in it and to receive the adequate revenue which will compensate alternative expenses and bring profit to the company.
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Dahunsi, Olusola. "Effect of Interest Rate Liberalisation on Domestic Savings in Nigeria." Journal of Advanced Research in Economics and Administrative Sciences 1, no. 2 (November 8, 2020): 123–33. http://dx.doi.org/10.47631/jareas.v1i2.59.
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Purpose: Empirical investigations into the interest rate effects on domestic savings have provided mixed results. Hence, this study examined the interest rate effects on domestic savings in line with the financial liberalization hypothesis since the period of structural adjustment program (SAP) in Nigeria. Approach/Methodology/Design: Data on gross domestic savings, interest rate, gross capital formation, and rate of inflation from 1986 to 2018 were obtained and analyzed using the autoregressive distributed lag (ARDL) technique. Findings: The results revealed that interest rate and gross domestic savings are co-integrated in the long-run. The study showed that while capital formation positively affects domestic savings, the interest rate affects domestic savings negatively since the economic reforms of 1986 in Nigeria. Practical Implications: The results of the study are important for the Nigerian government to promote home-grown investments through domestic savings and capital formation. This will be made possible in the face of interest rate liberalization in which a higher interest rate serves as incentives for the household to save more thereby increasing domestic savings of the economy. Originality/value: The study further revealed that the long-run relationship exists between domestic private investments and interest rates.
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Fosu, Prince. "Does Railway Lines Investments Matter for Economic Growth?" ECONOMICS 9, no. 1 (June 1, 2021): 11–24. http://dx.doi.org/10.2478/eoik-2021-0004.
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Abstract The $20.81 trillion U.S. economy relies on a vast infrastructure network to thrive; however, empirical studies that examined that impact of infrastructure on economic growth in the U.S. are limited. This study’s principal objective was to examine the effect of railway lines on economic growth using annual data from 1980 to 2016 and cointegration analysis. The results showed a positive and significant impact of railway lines on economic growth in the long-run and short-run. The impulse response analysis indicates that shocks to railway lines initially cause GDP growth rates to increase and decrease continuously. The variance decomposition analysis also suggests that overtime, railway lines contribute largely to the variations in economic growth followed by inflation and population. This study’s outcome has important implications not only for the U.S. economy but also for developing and emerging countries. The results suggest that railway lines investments matter for economic growth in the U.S.
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Luszniewicz, Jacek. "Procesy inflacyjne w Polsce w latach 1945-1955 - przejawy, fazy, uwarunkowania, konsekwencje. Przyczynek do badań nad inflacją w PRL." Kwartalnik Kolegium Ekonomiczno-Społecznego. Studia i Prace, no. 2 (November 28, 2014): 93–121. http://dx.doi.org/10.33119/kkessip.2014.2.5.
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The subject of this paper is inflation in Poland in the first decade after the Second World War and its goals include identification of causes, examples, phases and consequences of inflation in People’s Poland in that period. In socialist economy inflation was only in small part expressed by increase in prices and in large part in different examples of “bad” market (shortages, queues, rationing etc.). Therefore the analysis concentrtes on inflation understood as consumer surplus demand. Subsequent parts of the text analyse: theories on inflation sources and mechanisms in socialist economies and inflation in Poland between 1945–1949 and from 1950–1955. Our research showed that consumer surplus demand was almost permanent which allowed to consider inflation (although not in open form) a permanent feature of socialist economy in Poland. The results of research also confirmed the hypothesis on surplus investments in industry as fundamen‑ tal and cyclically returning cause of inflation that existed also in the so called pro‑consumption phases of economic policy. During limited investment expansion periods inflation was limited through severe and consequently executed deflation measures (such as in 1948 and 1949). During conversion to market production similar effect was achieved by blocking wage increase (1954–1955). Sporadic use and ineffectiveness of anti ‑inflation policy instruments was caused primarily by limits set by political and doctrinal principles.
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Vangjeli, Eleni, and Jorida Agolli. "The Influencing Factors on Unemployment Level - The Case of Albania." European Journal of Interdisciplinary Studies 3, no. 3 (May 19, 2017): 103. http://dx.doi.org/10.26417/ejis.v3i3.p103-112.
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Research background: The empirical studies in labor market indicated that there are many factors that affect unemployment. These studies have analyzed these factors and concluded that exist a mutual relationship between them and unemployment. The relation between employment and FDI were studied by Craigwell (2006) and Karlsson et al. (2009). The effects of minimal wage on employment were studied by Katz and Kruger (1992) and Card (1992a) as well as Stephen Machin and Alan Manning (1994). Card, D. and Krueger, B. (1994) analyzed the effects of minimum wage raise, on fast-food restaurants in New Jersey and Pennsylvania. On the other hand, Neumark and Wascher (2000) in their findings explained that raising the minimal wage by 10% reduced the teenager employment rate with 1-2% and brought the reduction of total employment by 1.5-2%. Meanwhile, Grossberg and Sicilian (2004), found mixed results in their estimations of the minimal wage effects on employment duration period. Krugman, P(2015) one of the economy nobelist defends the theory of raising the minimal wage as a condition for improving the wellbeing. W. Phillips, (1958) studied a negative inverse relation between unemployment and inflation. Barro (1995), De Gregorio (1994), Bruno (1994) concluded that low inflation is accompanied by economic growth and higher employment level. Purpose of the article: The main aim of this article is to study and analyse factors affecting unemployment levels, because the unemployment is a critical problem in our country. We have analyzed the mutual effect of selected factors on unemployment level. The selected factors are FDI, domestic investments, inflation and minimal wage. Methodology/methods: To calculate the impact of this factors on the unemploymentlevel was used time series data for the period 1995 – 2013. Relying on time series data was made regression analysis using SPPS-21 program. Findings: Based on the testing results, we conclude that FDI, domestic investments and inflation affect negatively the unemployment level and this effect is statistically important, whereas the minimal wage has a low positive effect but such effect is not important.
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Vangjeli, Eleni, and Jorida Agolli. "The Influencing Factors on Unemployment Level - The Case of Albania." European Journal of Interdisciplinary Studies 8, no. 1 (May 19, 2017): 103. http://dx.doi.org/10.26417/ejis.v8i1.p103-112.
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Research background: The empirical studies in labor market indicated that there are many factors that affect unemployment. These studies have analyzed these factors and concluded that exist a mutual relationship between them and unemployment. The relation between employment and FDI were studied by Craigwell (2006) and Karlsson et al. (2009). The effects of minimal wage on employment were studied by Katz and Kruger (1992) and Card (1992a) as well as Stephen Machin and Alan Manning (1994). Card, D. and Krueger, B. (1994) analyzed the effects of minimum wage raise, on fast-food restaurants in New Jersey and Pennsylvania. On the other hand, Neumark and Wascher (2000) in their findings explained that raising the minimal wage by 10% reduced the teenager employment rate with 1-2% and brought the reduction of total employment by 1.5-2%. Meanwhile, Grossberg and Sicilian (2004), found mixed results in their estimations of the minimal wage effects on employment duration period. Krugman, P(2015) one of the economy nobelist defends the theory of raising the minimal wage as a condition for improving the wellbeing. W. Phillips, (1958) studied a negative inverse relation between unemployment and inflation. Barro (1995), De Gregorio (1994), Bruno (1994) concluded that low inflation is accompanied by economic growth and higher employment level. Purpose of the article: The main aim of this article is to study and analyse factors affecting unemployment levels, because the unemployment is a critical problem in our country. We have analyzed the mutual effect of selected factors on unemployment level. The selected factors are FDI, domestic investments, inflation and minimal wage. Methodology/methods: To calculate the impact of this factors on the unemploymentlevel was used time series data for the period 1995 – 2013. Relying on time series data was made regression analysis using SPPS-21 program. Findings: Based on the testing results, we conclude that FDI, domestic investments and inflation affect negatively the unemployment level and this effect is statistically important, whereas the minimal wage has a low positive effect but such effect is not important.
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Aggarwal, K. K., and Arun Kumar Tyagi. "Inventory and Credit Decisions Under Inflationary Conditions With Inflation Induced Bad-Debts." International Journal of Operations Research and Information Systems 9, no. 3 (July 2018): 52–76. http://dx.doi.org/10.4018/ijoris.2018070103.
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This article describes how a credit period, through its influence on demand, becomes a determinant of inventory decisions; therefore, inventory decisions should be determined jointly with credit decisions. Inflation and time value of money affects valuation of investments; hence their effect should not be disregarded in decision-making. Selling on credit exposes a firm to an additional dimension of default risk from customers as a result of inflation. Consequently, this article presents a mathematical model for the joint determination of optimal inventory and credit decisions for a day-terms credit-linked demand by incorporating the effects of inflation and the time value of money. It is assumed that an increase in the rate of inflation leads to an increase in bad-debts. The objective of the model is to maximize the present value of a firm's net profit per unit of time by jointly optimizing the day-terms credit period and order interval. A numerical example, sensitivity analysis, and observations are presented to illustrate the effectiveness of the proposed model.
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Gursida, Hari. "The Influence of Fundamental and Macroeconomic Analysis on Stock Price." JURNAL TERAPAN MANAJEMEN DAN BISNIS 3, no. 2 (December 1, 2017): 222. http://dx.doi.org/10.26737/jtmb.v3i2.324.
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<p>The purpose of this research is to analyze the effect of fundamental and macroeconomic analysis on stock price. The research was conducted at a coal company listed on the Indonesia Stock Exchange. Fundamental analysis measured by current ratio, debt to equity ratio (DER), earning per share (EPS), return on assets (ROA), and total assets turnover (TATO), while macroeconomic analysis is measured by inflation and exchange rate. Current ratio (CR) has a positive effect on Stock Price. Strengthening this level of liquidity can provide information to investors to decide to buy shares of companies that tend to be healthy and stable. Return on assets (ROA) has a positive and significant influence on stock price. Efforts to maximize the level of profitability by increasing the value of return on assets can provide information to investors that investments invested in the company will provide good profit. The impact of stock prices will rise. While debt to equity ratio (DER), earning per share (EPS) and total assets turnover (TATO) have no effect on Stock Price. Macroeconomic analysis shows: (a) Inflation rate has no effect on stock price of coal company. This can be because the inflation rate in Indonesia is at the level of 6% -7% per year and included in the category of mild inflation. Mild inflation resulted in very slow economic growth, not affecting stock prices. The exchange rate has a negative and significant effect on coal company stock price. If the Rupiah is depreciated then the stock price of the coal company will decrease.</p>
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Hidayat, Raden Ai Lutfi. "PENGARUH VARIABEL RASIO KEUANGAN DAN MAKROEKONOMI TERHADAP PEMBERIAN KREDIT SEKTOR UMKM OLEH PERBANKAN DI INDONESIA." Jurnal Manajemen dan Pemasaran Jasa 9, no. 2 (January 12, 2018): 253. http://dx.doi.org/10.25105/jmpj.v9i2.2035.
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<em>The purpose of this study is to investigate the impact of financial ratios and macroeconomic variables toward SME’s credit on banking sector in Indonesia. In this research, financial ratio variables are the capital adequacy ratio, non performing loan, operating expenses per operating income, third party fund, return on assets, and business credit program. Macroeconomic variables is inflation, the gross domestic product, interest rate of working capital, and interest rate of investment. The research’s samples are banks in Indonesia that are divided based on their types in the period of 2004-2014. The method uses panel data multiple linear regression with random effect model. The results of this study are that CAR, NPL, and BOPO has a significantly negative effect on SME’s credit; DPK, ROA, KUR, inflation, and GDP have a significantly positive effect on SME’s credit. Interest rate of working capital has a significantly negative effect on SME’s credit and interest rate investments do not have a significantly effect on SME’s credit.</em>
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Macchia, Gianluca. "Economic recovery and inflation risk: what is the “price” to manage debt?" Risk Management Magazine 16, no. 2 (August 18, 2021): 21–34. http://dx.doi.org/10.47473/2020rmm0088.
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It is clear the action of policy makers aimed at supporting the economic recovery, holding up consumption in the short term as well as public investments in the long terms. Furthermore, policy makers exploit a favorable monetary policy as long as inflation allows it. This effect can be surely considered a current and future issue that impacts on the levels of government debt, the sustainability and the new Fed overshooting strategy for inflation (AIT) which makes flexible the optimal 2% target. In terms of portfolio management, these effects are very negative considering both the exposure to government debt and the impact on the credit and equity assets. High levels of inflation are certainly useful in order to manage the debt in real terms, but it could turn to be a risk for portfolio management. This study aims to show how these risks linked with inflation can impact on the value of the different types of investment portfolios characterized by different levels of volatility, different asset classes and equity/corporate factor exposures. Through the application of a composite scenario on several variables, ad-hoc stress tests and scenarios, the article shows the key-role of an ex-ante risk management participation for a proper asset-allocation.
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Al-Jafari, Mohamed Khaled. "Determinants of Economic Growth in BRICS Countries: A Panel Data Analysis Approach." International Journal of Accounting and Financial Reporting 8, no. 3 (July 24, 2018): 29. http://dx.doi.org/10.5296/ijafr.v8i3.13372.
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This study investigates the driving forces of economic growth in BRICS (Brazil, Russia, India, China, and South Africa) countries. Therefore, explanatory variables including foreign direct investment, investment in information and technology, inflation rate, economic size and domestic credit provided to private sectors are utilized. In addition, unit root tests and the error correction model are employed on a data collected from 2000 till 2014. Results indicate that variables are stationary and integrated at the first order. On the other hand, foreign direct investment found to have a positive and significant effect on economic growth in the long-run. In contrary, investment in information and technology, inflation rate and economic size exhibited a negative and significant effect on economic growth. The short-run results show that the economic size variable has a negative and significant effect on economic growth, while the rest of the other variables found to be insignificant. The findings are consistent with previous literatures suggesting that BRICS policymakers must encourage foreign direct investments and eliminate any obstacles in order to achieve a high and sustainable economic growth.
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Adiputra, I. Gede, and Azhar Affandi. "The Effect of Micro and Macroeconomic on Investment Opportunity." AMAR (Andalas Management Review) 2, no. 2 (November 23, 2018): 59–81. http://dx.doi.org/10.25077/amar.2.2.59-81.2018.
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The purpose of this study is to obtain results: the influence of micro and macroeconomic factors of the company on investment opportunities. This research is conducted in five ASEAN countries, such as; Indonesia, Malaysia, Singapore, Thailand, and the Philippines (ASEAN-5). The microeconomic factors are measured by firm size, financial risk, profitability, and debt policy. The macroeconomic factors are measured by interest rates, exchange rates, inflation, and economic growth. The analysis unit of this study is 175 large capacity manufacturing industries listed on ASEAN-5 stock exchanges for the 2012-2017 period. The data analysis technique used is panel data regression analysis. The result shows that the Debt Equity Ratio has a negative and significant effect on investment opportunities in Microeconomic influence for the ASEAN-5 Countries. Risk does not have a significant effect on investment opportunities. Profitability is insignificant for the ASEAN-5 Countries and is significant for the State of Singapore, Thailand. Firm Size is significant for Indonesia, Malaysia, Singapore, and the Philippines. GDP growth has a significant effect on investment opportunities for the ASEAN-5 countries. The interest rate has harmed the opportunities of investment in Indonesia, Malaysia, and Singapore. Inflation has a negative and significant effect in Indonesia, Malaysia, Thailand, and the Philippines. Exchange rates are significant for Indonesia, Malaysia, and Singapore. Investment opportunities have a positive effect on the value of the company in ASEAN-5 Countries. The benefits of this study for creditors are as a guideline for disbursing credit, and for investors it is as a guideline for placing capital investments in companies that have favorable debt and equity considerations in five (5) ASEAN Countries.
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Nkam, Fonkam Mongwa, Akume Daniel Akume, and Molem Christopher Sama. "Macroeconomic Drivers of Private Equity Penetration in Sub-Saharan African Countries." International Business Research 13, no. 1 (December 19, 2019): 192. http://dx.doi.org/10.5539/ibr.v13n1p192.
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The objective of this study is to investigate in to the drivers of private equity penetration in Cameroon, Nigeria, Ghana, Kenya and South Africa. Secondary data was collected from private equity and venture capital data bases (CapitalIQ, Preqin, Burgiss and Mergermarket), World Bank development indicators, regional private equity and venture capital associations and country specific stock market websites. The Panel Two-Stage Least Squares Instrumental Variables (2SLS IV), Panel Corrected Standard Errors (PCSE) and Feasible Generalised Least Squares (FGLS) estimation techniques were used. This was due to potential problems of endogeneity and spherical errors of serial correlation, heteroskedasticity, cross sectional dependence and multicollinearity. The results using the 2SLS IV estimation technique show that stock market capitalisation, GDP per capita, banking credit to private sector, real exchange rate and private investments are key macroeconomic drivers of private equity penetration in the selected Sub-Saharan African countries. Inflation had negative and insignificant effect on private equity penetration in the selected countries. The results using the PCSE and FGLS estimation techniques show that the signs of all the variables remain the same as was the case in the 2SLS IV estimation technique though the magnitudes were different. However, the results of PCSE and FGLS estimation techniques show that banking credit to private sector is significant in the FGLS model while private investments is significant in the PCSE model. GDP per capita, real exchange rate, stock market capitalisation and inflation are significant in both the PCSE and FGLS estimation techniques.
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Khan, Muhammad Kamran, Jian-Zhou Teng, and Muhammad Imran Khan. "The effect of worker remittances on economic growth: An ARDL approach." Engineering Economics 30, no. 4 (October 30, 2019): 434–41. http://dx.doi.org/10.5755/j01.ee.30.4.21830.
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Worker remittances are the main source of financial flow to any economy. This study intended to scrutinize the effect of remittance inflow on Pakistan’s economy over the period 1976- 2016 by employing autoregressive distributed lag (ARDL) technique; because this method has been recently developed and has different advantages as compared to time series methods. ARDL method was applied to scrutinize the long run and the short run effect of worker remittances on Pakistan’s economy. This study concluded that Pakistan’s economy is positively affected by remittance inflow, foreign direct investment and the gross domestic saving in the long run, while Pakistan’s economy negatively affected by inflation and consumption in the long run. Remittances received from immigrant support economic growth in Pakistan because remittances inflow is mostly utilized for investment purpose. To further improve the economic development of Pakistan’s economy, it is suggested that policy maker in Pakistan encourage and motivate migrants to send remittances through proper channels to Pakistan, so that these inflows of remittances be used in such profitable investments that help to improve economic growth.
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Doktoralina, Caturida Meiwanto, and Fikki Mutarotun Nisha. "Mudharabah Deposits Among Conventional Bank Interest Rates, Profit-Sharing Rates, Liquidity and Inflation Rates." International Journal of Financial Research 11, no. 1 (October 10, 2019): 25. http://dx.doi.org/10.5430/ijfr.v11n1p25.
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This paper aims to examine the effect of conventional bank interest rates (CBIR), profit-sharing rates (PS), the level of liquidity proxied in the finance-to-deposit ratio (FDR) and the inflation rate (IR) against mudharabah deposits (MDs). The sample comes from eight Islamic public banks registered in the Financial Services Authority (OJK) and Bank Indonesia (BI) for the period from 2013 to 2017. The research uses a data panel regression analysis using EViews 8 to test the significance of tribal-level influence on conventional bank interest, profit-sharing growth rate, liquidity level and inflation rate. The results provide evidence that conventional interest rates do not affect MDs; the profit-sharing rate has a significant positive effect on MDs; the FDR has a positive effect on MDs, and the IR does not affect MDs. The results can increase our understanding of the variables that affect the volume of MDs. The results of this research have practical implications for people who will invest, giving them a better basis for making deposit and investment decisions by looking at interest rates and profit-sharing systems that are in line with Islamic investment principles that apply no uncertainty (Garar), interest (Riba) and gambling (Maisir) investments to cover all aspects of life (way of life).
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Wanjiku, Sophia, Joshua Bosire, and Joshua Matanda. "EFFECT OF MACRO-ECONOMIC FACTORS ON FINANCIAL PERFORMANCE IN KENYA OF REGISTERED REAL ESTATE INVESTMENTS TRUSTS." International Journal of Finance and Accounting 6, no. 1 (September 27, 2021): 72–92. http://dx.doi.org/10.47604/ijfa.1381.
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Purpose: The purpose of the study was to determine the macroeconomic effect on Registered Real Estate Investments Trusts (REITs) financial performance in Kenya.
Materials and Methods: Causal research design was used to describe the REITs financial performance. This study used the population comprising of thirteen REITs firms in Kenya. The entire population (census) was used for the study. This study utilized secondary sources of data to get the information required to satisfy the research objectives. Time series data on REITs financial performance was computed for a four-year period as at 1st January 2016 to 31stDecember 2019, thus making use of 4 data points. The process of data analysis entailed preparation of the collected data through cleaning, editing and coding so that statistics could be keyed in the SPSS (statistical package for social sciences) package. The data was presented through tables and figures
Results: The regression model results without the moderating variable showed that R = 0.792, R² = 0.627 indicating that 62.7% of the variance in the REITs financial performance can be accounted for by the independent variables (macroeconomic variables). On the other hand, the regression model results with the moderating variable showed that R = 0.838, R² = 0.703 indicating that 70.3% of the variance in the REITs financial performance can be accounted for by the independent variables (macroeconomic variables) and the moderating variable considered in this study.
Unique contribution to theory, practice and policy: The study recommended that the government and REITs stakeholders should focus on policies and strategies that encourage favorable balance of payment in Kenya. REITs develop and design their products to suit consumers tastes and preferences to ensure their increased as consumption increases. Lastly, the government should expand the money supply to lower the inflation rates through tight fiscal and economic policies.
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Bullard, Steven H., Thomas J. Straka, and Jon P. Caulfield. "Inflation and the rule-of-thumb method of adjusting the discount rate for income taxes." Canadian Journal of Forest Research 31, no. 1 (January 1, 2001): 52–58. http://dx.doi.org/10.1139/x00-139.
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The rule-of-thumb method of adjusting discount rates for income taxes is (after-tax rate) = (before-tax rate) × (1 tax rate). Previous researchers have concluded that the rule-of-thumb adjustment for income taxes is accurate only when the investment alternative used to define the opportunity cost of capital has certain characteristics: if other investments are limited to land rental, taxable bonds, and bank certificates of deposit, for example. In the present article we demonstrate that inflation is also an important factor in the rule-of-thumb's accuracy in accounting for income taxes. If the unmodified rule-of-thumb adjustment for income taxes is applied to a discount rate specified in uninflated terms, the estimated discount rate may be significantly higher or lower than the actual rate. If applied to real interest rates and not corrected for the effect of inflation, the rule-of-thumb will overestimate the after-tax discount rate that is equivalent to a specific before-tax rate; it will underestimate the before-tax rate equivalent to an after-tax rate specified in real terms. Discount rates estimated by the unmodified rule-of-thumb applied in real terms can be six percentage points or more too high or too low, depending on the rate of inflation, the income tax rate, and whether a before-tax or an after-tax discount rate is being estimated. We present modified rule-of-thumb formulas to adjust real discount rates for income taxes. They include a correction factor to account for the impact of inflation. We summarize these and other formulas used to adjust discount rates for inflation and income taxes in discounted cash flow analysis.
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Sugiartiningsih, Sugiartiningsih. "PENGARUH INFLASI INDONESIA TERHADAP PENERIMAAN PENANAMAN MODAL ASING LANGSUNG KOREA SELATAN DI INDONESIA PERIODE 2000-2014." Jurnal Manajemen Maranatha 17, no. 1 (November 9, 2017): 33. http://dx.doi.org/10.28932/jmm.v17i1.416.
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One of the keys to success in improving the economic prosperity of a country is evident from its response to bilateral or multilateral relations, particularly in the making of investments. Indonesia as a country that has started the construction of the New Order can not be separated from the role of foreign capital. In reality in the 1990s looks acceptance by the Indonesian foreign capital is relatively low compared to the developing countries in Asia. China is the largest recipient of foreign capital, followed by Singapore and Malaysia. In more remote Indonesian government continues its efforts to increase Foreign direct investment, especially from South Korea. As we all know South Korea is an important trading partner for Indonesia. Indonesia bilateral relations with South Korea have occurred since the New Order and has impacted the relatively low added value for Indonesia, especially in the 1990s. In the development of bilateral relations between the two countries increased, especially after entering the Reformation Era. This condition is supported by inflation in Indonesia is considered quite stable. This study aims to determine the effect of inflation on the acceptance Indonesia Foreign direct investment from South Korea to Indonesia during the period 2000-2014. The research methodology used is quantitative approach using simple regression model. Based on the results of the calculations, and a significant negative correlation between inflation in Indonesia and the acceptance of Direct Foreign Investment from South Korea in Indonesia. This is consistent with Fisher's theory that the decline in inflation Indonesia will be followed by a decline in interest rates Indonesia which ultimately impact the increased investment in Indonesia. Besides these reasons, the negative relationship, emphasizing that the investment climate in Indonesia has improved so trust Foreign investors, especially from South Korea in Indonesia is quite large. Keywords: Foreign direct investment, inflation in Indonesia
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Makun, Keshmeer Kanewar, and T. K. Jayaraman. "SPREAD OF ICT AND ECONOMIC GROWTH IN PACIFIC ISLAND COUNTRIES: A PANEL STUDY." Buletin Ekonomi Moneter dan Perbankan 23 (January 31, 2020): 109–28. http://dx.doi.org/10.21098/bemp.v23i0.1178.
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This paper investigates the impact of information and communications technology(ICT) on economic growth in Pacific Island countries by employing an augmentedproduction function model and panel data analysis from 2002 to 2017. The empiricalfindings reveal that ICT-related indicators have a positive and significant impact on theeconomic growth process, along with the fundamental variable of capital stock. Theeffect of control variables such as foreign direct investment and exports have a positiveeffect on the real gross domestic product per capita, whereas inflation has a negativeeffect. The sensitivity evaluation of ICT indicators with different control variablesproduces consistent evidence of ICT’s effect on economic growth. Policymakersas well as ICT stakeholders should enhance investments for improving ICT-relatedinfrastructure and promoting technology to boost economic growth in Pacific Islandcountries.
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Gries, Thomas, and Alexandra Mitschke. "Extraordinary Times Require Extraordinary Action: Boosting European Demand by Means of Investment Helicopter Money." Credit and Capital Markets – Kredit und Kapital 54, no. 2 (April 1, 2021): 137–72. http://dx.doi.org/10.3790/ccm.54.2.137.
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This theoretical contribution analyzes remaining monetary policy tools and their ability to reestablish sound macroeconomic conditions in the euro area. Motivated by the observation of a lack of investment in the macroeconomy and subdued inflation, we review current monetary policy challenges and emphasize the major failure of traditional transmission channels. While interest rates and asset prices often respond to central bank tools, the effects on the real economy, specifically on investments, are often not observable. We suggest Investment Helicopter Money as a tool to directly strengthen investment and boost aggregate demand. This monetary impulse is found to offer a direct real effect without crowding-out investment or rising debt levels. Most importantly, we discuss necessary institutional arrangements and contrast the suggested tool with a simple monetary or fiscal impulse.
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Doppegieter, J. J., and I. J. Lambrechts. "A financial evaluation of price formulae." South African Journal of Business Management 16, no. 2 (June 30, 1985): 98–102. http://dx.doi.org/10.4102/sajbm.v16i2.1080.
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This is the second in a series of four articles on price formulae/determination. In the first a simulation model was developed and the criterion of evaluating the model, the internal rate of return, was introduced. In this article two price formulae are simulated and analysed in accordance with principles discussed in the first article. Significant differences emerge between the two formulae. The internal rate of return of formula B (which is expressed in terms of replacement values) is continuously more than 100 % higher and more stable than that of formula A (which is expressed in terms of historical values). It also appears that it can be misleading to judge the profitability of a price formula against the allowed rate of profitability. The adequacy of the price formulae for inflation is judged by examining the internal rate of return in a situation with and without inflation and by calculating the ratio between depreciation allowed and replacement investments. Finally, the effect of the formulae on financial structure is analysed by calculating a liquidity (based on cash flow) and a solvability ratio. In conclusion, it appears that formula B is superior to formula A, mainly as a result of differences between the price formulae.
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Ramzi, Trabelsi. "Why Southern Mediterranean Countries Fail to Innovate?" Management and Economics Research Journal 01 (2015): 46. http://dx.doi.org/10.18639/merj.2015.01.197478.
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This article aims to analyze the factors that influence research investment in the Mediterranean region. We used a robust fixed-effect model to analyze a group of 22 countries in the period 20002012. The results showed that foreign direct investment (FDI), high technology export, human capital devoted to research, and intermediate and final production sectors are significant and stimulate the Southern innovative capacity. The private research and development (R&D) is a substitute for public R&D. The private returns exceed the social returns to R&D since Southern governments don’t invest too much like private firms in innovative activities. The role of foreign institutions and international organizations is almost nonexistent in financing the Southern research investments. The salaries don’t motivate the researchers and scientists, and it has a negative effect on R&D. The imports, the active population, the inflation, the technology infrastructure, and the patent production have no effective contributions to the investment in the R&D in the Southern Mediterranean countries.
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Omodero, Cordelia Onyinyechi. "External Debt Financing and Public Capital Investment in Nigeria: A Critical Evaluation." Economics and Business 33, no. 1 (January 1, 2019): 111–26. http://dx.doi.org/10.2478/eb-2019-0008.
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Abstract This study considers the consequences of external loan on capital investment in Nigeria. Data for the study have been collected from the World Bank and Central Bank of Nigeria Statistical Bulletin, 2018 edition. The variables on which data are sourced include government capital expenditure, external debt accumulation, debt servicing cost, inflation rate, and exchange rate. Government capital expenditure is the dependent variable, while external debt accumulation and debt servicing cost are the key independent variables. Inflation and exchange rates are used as the moderating variables. The scope of the study covers the period from 1996 to 2018 and the data are analysed using the ordinary least squares multiple regression method. The regression results indicate that external debt has a significant negative impact on capital investment while debt servicing cost has a strong and significant positive effect on capital investment. Under this circumstance, the controlling variables are not significant in influencing capital investment. Hence, the study suggests more focus on profitable capital investments if external borrowing must be embarked upon. The need for the development of untapped natural resources, establishment of industries and revival of abandoned industries to boost debt repayment has been emphasized. The study also strongly recommends that the existing governments (state and federal) should endeavour to complete capital projects of past administrations in order to drive the economy and to avoid wastage of financial resources including the borrowed funds.
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Pasztor, Szabolcs. "The New Wave of Currency Devaluations in Africa – Will the Devalued Birr Help the Coffee Exports?" Afrika Tanulmányok / Hungarian Journal of African Studies 12, no. 4. (May 22, 2019): 101–18. http://dx.doi.org/10.15170/at.2018.12.4.7.
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Despite the fact that currency devaluations are likely to have a negative effect on the economy in the long run, Ethiopia devalued its national currency, the birr (ETB), by 15 percent in 2017. They turned to this option in the hope of attracting more investments from abroad, decreasing import bills, improving the current account deficit and giving a boost to the exports of the coffee sector. A couple of months later, the impact seems to be promising because the export has been revived in some areas. However, it has to be stressed that the imported commodities may experience a price increase, there can be a widening balance of payments deficit and rising inflation. The paper aims to shed more light on the short- and long-term impacts of currency devaluations in the developing countries with a special emphasis on Ethiopia. Also, the recent Ethiopian measure is to be analyzed in greater detail highlighting the impacts on export earnings, import bills, the balance of payments, and on the overall competitiveness of the coffee sector.
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Mansour Khalaf Alkhazaleh, Ayman. "Factors may drive the commercial banks lending: evidence from Jordan." Banks and Bank Systems 12, no. 2 (June 23, 2017): 31–38. http://dx.doi.org/10.21511/bbs.12(2).2017.03.
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In an attempt to shed more light on the behavior of lending in banks, especially in the environment of developing countries, this study aims at explaining the impact of some factors proposed as determinants of bank lending in Jordanian commercial banks by benefiting from the financial reports of thirteen banks during the period 2010-2016. The study, in order to achieve the objectives and to test the main hypotheses has adopted Ordinary least square model (OLS). The most important results of the study are a statistically significant adverse effect of both credit risk and liquidity on bank lending, while there is a significant positive effect of the return on assets, size of the bank measured by assets, inflation, money supply and growth in gross domestic product in determining the level of lending. In addition, the study does not show a significant statistical effect between investments, the volume of deposits and bank lending in the same time frame. The review points out that because of the negative impact of liquidity and credit risk factors, commercial banks need to focus more on reducing their impact because presence of this impact at the end will decrease the ability of these banks to provide loans and stay in the banking market.
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Toader, Elena, Bogdan Firtescu, Angela Roman, and Sorin Anton. "Impact of Information and Communication Technology Infrastructure on Economic Growth: An Empirical Assessment for the EU Countries." Sustainability 10, no. 10 (October 17, 2018): 3750. http://dx.doi.org/10.3390/su10103750.
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The accelerated development of information and communication technology (ICT) over the past two decades has encouraged an increasing number of researchers to examine and measure the impact of this technology on economic growth. Our study aims to identify and evaluate the effect of using ICT infrastructure on economic growth in European Union (EU) countries for a period of 18 years (2000–2017). Using panel-data estimation techniques, we investigate empirically how various indicators of ICT infrastructure affect economic growth, proxied in our study by GDP per capita. Within the estimates, we have included some macroeconomic control variables. Our results indicate a positive and strongly effect of using ICT infrastructure on economic growth in the EU member states, but the magnitude of the effect differs depending on the type of technology examined. Regarding the impact of macroeconomic factors, our estimates indicate that inflation rate, unemployment rate, the degree of trade openness, government expenditures, and foreign direct investments would significantly affect GDP per capita at EU level. The findings are broadly similar to the theoretical predictions, but also to the findings of some relevant empirical studies. Our research reveals that ICT infrastructure, along with other macroeconomic factors, is an important driver of economic growth in EU countries.
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Sukharev, O. S. "Structural Policy: Towards a New Investment Model of Economic Growth." Finance: Theory and Practice 23, no. 2 (May 4, 2019): 84–104. http://dx.doi.org/10.26794/2587-5671-2019-23-2-84-104.
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The article examines structural policy as a tool for developing a new economic growth model in Russia. The author considers the conditions of economic growth based on increased investment. The purpose of the article is to determine the current characteristics of the Russian economy structural dynamics by the components of GDP and basic sectors. The basic sectors of the current investment structure have been assessed — processing sector and transactional and raw materials sector — and the directions for further development have been specified. The research methodology consists of: structural analysis of GDP and sectoral dynamics; the received and applied “structural formula” of assessing the contribution of the system elements to economic growth; formulated simple optimization models and a numerical optimization method (gradient projection method). The method of empirical and statistical estimates has also been used. Optimization models have made it possible to demonstrate the solution to the problem of distributing investments between the sectors with a target function for maximum profit and minimum risk. The analysis of growth and the conditions for economic growth obtained by the model-analytical method — in terms of the rate of change in oil prices and the exchange rate — allowed us to empirically show periods of growth and recession in the economy. They depend on the growth rate of oil prices and the devaluation of the rouble. This approach, with further use of econometric models linking macroparameters, will make it possible to evaluate the effect of changes in structural parameters on economic growth. The overall result of the study is as follows: the intensification of investments is insufficient to organize the investment model of economic growth in Russia. The stimulation of gross consumption and a change in the structure of investments are required. It is necessary to reduce the gap between the sectors by risk mitigation. External factors affecting the economic growth in Russia (oil prices, currency inflows) must be eliminated by changing the structure, including the sensitivity increase of its elements to macroeconomic policy instruments, and differentiating sectoral policy measures considering the positive impact on the contribution of GDP components and sectors of money growth and inflation.
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Petrică, Andreea-Cristina, and Stelian Stancu. "The determinants of exchange rates and the movements of EUR/RON exchange rate via non-linear stochastic processes." Proceedings of the International Conference on Business Excellence 11, no. 1 (July 1, 2017): 937–48. http://dx.doi.org/10.1515/picbe-2017-0099.
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Abstract Modeling exchange rate volatility became an important topic for research debate starting with 1973, when many countries switched to floating exchange rate system. In this paper, we focus on the EUR/RON exchange rate both as an economic measure and present the implied economic links, and also as a financial investment and analyze its movements and fluctuations through two volatility stochastic processes: the Standard Generalized Autoregressive Conditionally Heteroscedastic Model (GARCH) and the Exponential Generalized Autoregressive Conditionally Heteroscedastic Model (EGARCH). The objective of the conditional variance processes is to capture dependency in the return series of the EUR/RON exchange rate. On this account, analyzing exchange rates could be seen as the input for economic decisions regarding Romanian macroeconomics - the exchange rates being influenced by many factors such as: interest rates, inflation, trading relationships with other countries (imports and exports), or investments - portfolio optimization, risk management, asset pricing. Therefore, we talk about political stability and economic performance of a country that represents a link between the two types of inputs mentioned above and influences both the macroeconomics and the investments. Based on time-varying volatility, we examine implied volatility of daily returns of EUR/RON exchange rate using the standard GARCH model and the asymmetric EGARCH model, whose parameters are estimated through the maximum likelihood method and the error terms follow two distributions (Normal and Student’s t). The empirical results show EGARCH(2,1) with Asymmetric order 2 and Student’s t error terms distribution performs better than all the estimated standard GARCH models (GARCH(1,1), GARCH(1,2), GARCH(2,1) and GARCH(2,2)). This conclusion is supported by the major advantage of the EGARCH model compared to the GARCH model which consists in allowing good and bad news having different impact on the volatility. The EGARCH model is able to model volatility clustering, persistence, as well as the leverage effect.
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Kanjumba, Faith Wambui, Amos Njuguna, and George Achoki. "Economic Factors Influence on Funding of the Supply-Side of Housing in Kenya: Case Study Nairobi." International Journal of Business and Management 11, no. 10 (September 18, 2016): 194. http://dx.doi.org/10.5539/ijbm.v11n10p194.
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Housing plays a very important role in the social economic development of any nation. One set of factors that impacts on the funding of the supply-side of housing are economic factors comprising market forces, cost of inputs, the macro economy and the cost of funding. This paper sets to establish the relationship between economic factors and funding of the supply-side of housing in Kenya and also the effect of the major stakeholders on such a relationship if it exists. Using an explanatory form of approach in research design a survey was conducted where primary data was collected by self-administered questionnaires from a random sample of 212 branches in Nairobi of financial institutions drawn from a population of 43 commercial banks, 9 deposit-taking MFIs and three major financiers of housing development. Factor analysis, correlation analysis and ordinal logit regression were used to determine the relationship between funding of housing and economic factors. Results indicated a negative relationship between economic factors and funding of housing development. It was also established that there exists a positive moderating effect of stakeholders on the relationship between economic factors and funding of housing development. The implication being the government and policy makers should ensure that interest rates and inflation rates are kept at a level that will encourage investments in housing, with the government acting then more as an enabler.
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Smaoui, Houcem, Karim Mimouni, and Ines Ben Salah. "Do sukuk spur infrastructure development?" International Journal of Islamic and Middle Eastern Finance and Management 14, no. 4 (February 8, 2021): 655–70. http://dx.doi.org/10.1108/imefm-06-2020-0301.
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Purpose This paper aims to examine the effect do Sukuk Spur Infrastructure Development of Sukuk market expansion on infrastructure development for a sample of 15 emerging countries over the period 1997–2018. The paper also compares the role of Sukuk in infrastructure development to that of the size of the banking system, bond market development and stock market development. Design/methodology/approach A novel index of infrastructure development is constructed via principal component analysis. This index is regressed on Sukuk market development and other macroeconomic and institutional variables. To tackle the problems of heteroscedasticity and the existence of serial correlation in the residuals, the panel model is estimated using the generalized least squares (GLS) procedure with random effects and robust standard errors. Findings The evidence shows that a well-developed Sukuk market contributes to the expansion of the country’s infrastructure, whereas a larger banking system and a better capitalized stock market do not have any significant effect on infrastructure development. Surprisingly, well-developed bond markets jeopardize infrastructure expansion, thereby pointing to a potential crowding-out effect between Sukuk and bonds in financing infrastructure investments. Additionally, per capita GDP and education are positively related to infrastructure development, whereas inflation has a negative effect on the country’s proliferation of infrastructure. Originality/value This study uses a novel infrastructure index via principal component analysis and shows that Sukuk markets fill an important gap in the financing of large-scale and long-term projects. This result is novel and has not been documented in previous research.
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Ozekhome, Hassan O. "IS HUMAN CAPITAL ACCUMULATION A GROWTH DRIVER IN NIGERIA? AN EMPIRICAL INVESTIGATION." Oradea Journal of Business and Economics 3, no. 2 (September 2018): 66–77. http://dx.doi.org/10.47535/1991ojbe052.
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Accumulation of human capital is critical to sustained economic growth in the long run, since it facilitates the efficient absorption of new capital developments, improves the speed of adaptation of entrepreneurs and generates innovation necessary for sustained economic growth. It is against this premise this study investigate the human-capital accumulation growth-nexus in Nigeria. Employing a dynamic approach, involving test for unit roots, and cointegration, and finally, the Generalized Method of Moments (GMM) estimation techniques on annual time series data, covering the period 1981 to 2016, sourced from the World Bank Development Indicators (WDI) and Central Bank of Nigeria (CBN) Statistical Bulletin, the empirical findings reveal that human and physical capital accumulation significantly induce rapid and sustained economic growth in the long-run. The other variables- infrastructural development (measured by ICT infrastructure) and industrial output (a measure of industrialization) have positive but weak impacts on economic growth, on account of the weak infrastructural development, and low level of industrialization in Nigeria. Inflation rate (a measure of macroeconomic policy environment) on the other hand, is found to have a militating effect on economic growth. We recommend amongst others; sustained investments in human and physical capital accumulation, stable and coherent macroeconomic policies, particularly with respect to taming of domestic inflationary pressures, supportive institutional structures and aggressive industrialization-enhancing policies, in order to enhance sustained economic growth in Nigeria.
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Stetsko, Mykola. "ENTERPRISE FINANCING BY MEANS OF CORPORATE BONDS TOOLKIT." Economic Analysis, no. 27(2) (2017): 57–67. http://dx.doi.org/10.35774/econa2017.02.057.
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Introduction. In contrast to the markets of developed countries, forming characteristic risk premium investment bonds in emerging markets, is that the greatest effect on the risk premium on bonds in countries such factor provides market liquidity in general and specific securities in particular. The second most significant factor influencing the risk premium is the risk of changing interest rates. The risk of default of issuers in such countries is also quite high, but the component of creditworthiness is less significant factor in the combination of systematic risks. Due to low sovereign ratings of Ukraine, the credit ratings of bonds of all domestic issuers have a speculative level. Owing to this fact, all of them can be classified as highly risky and, accordingly, highly profitable (HighYield Bonds). Purpose. The aim of the article is to reduce deficits in the scientific and methodological provision of the use of corporate bonds instruments on the basis of determining the determinants of the premium for the risk of investing in them. Method (methodology). To achieve the goal and solve the problems, the following methods have been used: method of analysis and synthesis, method of comparison and generalization; method of empirical research and factor analysis; method of system approach and strategy. Results. The research of the determinants of the risk premium is important, first of all, from the point of view of substantiating the technologies of reducing the cost of enterprises to capital. The key causes of underdevelopment of the domestic corporate bond market have been determined. We have identified factors that influence the spread of profitability and the value of bonds. They are the risk of default of the issuer and the potential of the enterprise development (credit component); base interest rate and long-term interest rates on the financial market (interest rate component); liquidity of the capital market (component of liquidity); the level of inflation and the development of economic conditions; information risks. It has been determined that in order to reduce the risk of investments in corporate bonds, it is necessary to implement at the regulatory level a set of measures to reduce overhead costs and increase the reliability of investments. The introduction of a safety covenant system can be defrined as one of such measures.
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Ullah, Atta, Zhao Kui, Saif Ullah, Chen Pinglu, and Saba Khan. "Sustainable Utilization of Financial and Institutional Resources in Reducing Income Inequality and Poverty." Sustainability 13, no. 3 (January 20, 2021): 1038. http://dx.doi.org/10.3390/su13031038.
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This study aims to determine the role of globalization, electronic government, financial development, concerning the moderation of institutional quality in reducing income inequality and poverty in One Belt One Road countries. The electronic government and regional integration of the economies of the One Belt One Road countries has increased globalization and can play a vital role in reducing income inequality and poverty. However, this globalization and digital transformation of government systems can only be beneficial in the presence of good institutional quality. The sample includes 64 One Belt One Road countries from 2003 to 2018. We employed a two-step system generalized method of moment (Sys-GMM) and a robustness check through Driscoll–Kraay standard errors regression. Our findings show that globalization, economic growth, e-government development, government expenditure, and inflation have a statistically significant and negative impact on income inequality and are key to eradicating income inequality and poverty. On the other hand, financial development, gross capital formation, and population size positively influence income inequality, which causes an increase in poverty and income inequality as financial development and population levels increase. Moderating variable institutional quality also positively impacts income inequality, which means that institutional quality in Belt and Road Countries is weak, as they are mostly developing countries that need to improve their systems. Moreover, the marginal effect also revealed that institutional quality has a corrective effect on the factors’ relationship with income inequality. Our findings endorse and conclude that globalization and e-government development improve economic growth and eradicate poverty and income inequality by boosting digitalization, investments, job creation, and wage increases for semi-skilled and unskilled human capital in Belt and Road countries. The sustainable utilization of financial and institutional resources plays a vital role in reducing income inequality and poverty in Belt and Road countries.
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Muguchu, Jane, Nelson H. Wawire, and Anthony Wambugu. "Taxable capacity and effort of value-added tax in Kenya." African Multidisciplinary Tax Journal 2021, no. 1 (February 2021): 189–210. http://dx.doi.org/10.47348/amtj/2021/i1a11.
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Domestic tax revenue mobilisation has received great focus among developing countries in order to achieve the development objectives with less reliance on foreign aid. The effort to mobilise revenue in developing countries has been undermined by some challenges such as high levels of non-compliance, low taxable capacity and effort averaging 10 to 20 per cent compared to Organisation for Economic Cooperation and Development (OECD) countries, which collect 30 to 40 per cent of their gross domestic product (GDP). To achieve Kenya’s Vision 2030 development objectives, the tax administration is expected to collect over 20.7 per cent of GDP and ensure revenue growth of 10 per cent per annum (Republic of Kenya, 2007). This called for establishing how far the country is from reaching its maximum tax potential and the effect of various factors that determine the taxable capacity of the country. Emphasis was placed on value-added tax (VAT) due to its high revenueraising potential. Using the Ordinary Least Squares (OLS) estimation technique and maximum likelihood for stochastic frontier approach, the study estimated the taxable capacity and effort of value-added tax (VAT). The results indicated that capital investment, manufacturing and private credit as a per cent of GDP impacted positively on taxable capacity while inflation, exports and agriculture negatively affected taxable capacity. The tax effort estimation results indicated that the average tax effort between 2011 and 2015 was 0.5, thus classifying the country under low collection, high effort category. Therefore, broadening the tax base through increased investments, manufacturing and improving on the efficiency of tax administration is fundamental in enhancing revenue mobilisation.
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Yıldırım, Seda, Durmus Cagri Yildirim, and Hande Calıskan. "The influence of health on economic growth from the perspective of sustainable development: a case of OECD countries." World Journal of Entrepreneurship, Management and Sustainable Development 16, no. 3 (April 17, 2020): 181–94. http://dx.doi.org/10.1108/wjemsd-09-2019-0071.
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PurposeThis study aims to explain the role of health on economic growth for OECD countries in the context of sustainable development. Accordingly, the study investigates the relationship between health and economic growth in OECD countries.Design/methodology/approachThis study employed cluster analysis and econometric methods. By cluster analysis, 12 OECD countries (France, Germany, Finland, Slovenia, Belgium, Portugal, Estonia, Czech Republic, Hungary, South Korea, Poland and Slovakia) were classified into two clusters as high and low health status through health indicators. For panel threshold analysis, the data included growth rates, life expectancy at birth, export rates, population data, fixed capital investments, inflation and foreign direct investment for the period of 1999–2016.FindingsThe study determined two main clusters as countries with high health status (level) and low health status (level), but there was no threshold effect in clusters. It was concluded that an increase in the life expectancy at birth of countries with higher health status had no significant impact on economic growth. However, the increase in the life expectancy at birth of countries with lower health status influenced economic growth positively.Research limitations/implicationsThis study used data that including period of 1999–2016 for OECD countries. In addition, the study used cluster analysis to determine health status of countries, and then panel threshold analysis was preferred to explain significant relations.Originality/valueThis study showed that the role of health on economic growth can change toward country groups as higher and lower health status. It was proved that higher life expectancy can influence economic growth positively in countries with worse or low health status. In this context, developing countries, which try to achieve sustainable development, should improve their health status to achieve economic and social development at the same time.
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Dergachova, V., M. Kravchenko, O. Vynogradova, V. Holiuk, and K. Kuznietsova. "DETERMINANT MANAGEMENT OF COMPETITIVE DEVALUATION: THEORETICAL AND PRACTICAL ASPECTS." Financial and credit activity: problems of theory and practice 1, no. 36 (February 17, 2021): 281–92. http://dx.doi.org/10.18371/fcaptp.v1i36.227884.
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The paper is devoted to the study of theoretical and practical aspects of determinant management of competitive devaluation, which are the essence of competitive devaluation, instruments of its implementation, as well as the positive and negative consequences of its impact on the economy of the country, which is implementing it and its trading partners. The authors have found that competitive devaluation is a deliberate devaluation of currency initiated (both officially and informally) by the central bank to reduce the value of exported goods, thereby facilitating domestic production, solving the unemployment problem, and reducing the balance of payments deficit.
The article determines that the most significant impact of competitive devaluation takes place in the following sectors of the country’s economy: foreign trade, industrial, agricultural, financial and services. The study has found that the degree of effectiveness of competitive devaluation to stimulate economic growth of a country is determined by the following factors: structure of foreign trade, share of imported raw materials and components in the cost of goods, foreign trade barriers, growth rates of other countries’ economies, elasticity of demand for exported goods, use of fixed commodity contracts and risk hedging instruments, J-curve effect.
The authors highlight the positive and negative consequences of competitive devaluation for the country implementing it and its trading partners. Expected positive results for the country which is devaluing its currency is an increase in exports and an increase in domestic demand, which should contribute to higher employment and economic growth. Among the negative effects of competitive devaluation are the following: a decrease of the purchasing power of the population, a rise of prices of imports and a decrease of their volumes, an increase of the inflation rate; more expensive repayment of foreign currency denominated debt; reduction of foreign investments; restriction of scientific and technological development and the outflow of professional labor.
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Marekha, I., and V. Myrhorodska. "MACROECONOMIC ANALYSIS OF THE EFFECTIVENESS OF TAX ECONOMIC REFORMS IN EU COUNTRIES." Vìsnik Sumsʹkogo deržavnogo unìversitetu, no. 2 (2019): 36–45. http://dx.doi.org/10.21272/1817-9215.2019.2-5.
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The article substantiates the necessity to introduce systematic and effective tax eco-reforms in the context of resource-oriented economic development by the European Union countries. The performance and effectiveness of the reforms are estimated in relation to the main four groups of environmental taxes: energy taxes, pollution taxes, resource taxes and transport taxes. The macroecological policy of the European Union countries is the object of the undertaken analysis. The article examines the impact of macroeconomic factors on environmental taxes across the EU, using a correlation analysis toolkit. Four groups of macroeconomic parameters were selected for analysis: internal macroeconomic factors (nominal GDP, real GDP, inflation, business cycle stage, budget deficit, energy consumption level); external macroeconomic factors (government debt, exports, foreign direct investments); institutional macroparameters (environmental culture, shadow economy, trust in government) and fiscal macroparameters (tax culture and fiscal freedom). The economic interpretation of the obtained correlates is given. Based on the correlation analysis, stimulators and de-stimulators of tax environmental reforms across the EU were identified. It is established that the factors that positively influence on the tax environmental reforms are the overwhelming majority of the analyzed factors. The formation of indicators of the effectiveness of tax environmental reforms is undertaken for six countries of the Community. In particular, the analysis covers three economic leaders (Germany, the United Kingdom and France) and three leading EU countries in the field of environmental tax collection (Latvia, Greece and Slovenia). The article presents approaches to improving the assessment of the effectiveness of tax environmental reforms based on the consideration of fiscal (budget-filling) and reproductive (multiplicative) functions of environmental taxes. In this regard, the environmental tax multiplier and accelerator, as well as the GDP elasticity coefficient for environmental taxes, were calculated for the analyzed group of countries. The criteria of economic efficiency of tax eco-reforms are proposed. Keywords: environmental taxes, macroeconomic effect, macro-environmental policy, multiplier, accelerator, elasticity
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Lotto, Josephat, and Catherine T. Mmari. "Domestic Debt and Economic Growth in Tanzania." Journal of Economics and Management Sciences 1, no. 1 (June 26, 2018): p207. http://dx.doi.org/10.30560/jems.v1n1p207.
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The main objective of this paper was to examine the impact of domestic debt on economic growth in Tanzania for the period 1990 to 2015 using Ordinary Least Square (OLS) regression method to estimate the effects. The study finds that there is an inverse but insignificant relationship between domestic debt and the economic growth of Tanzania as measured by GDP annual growth. The inverse relationship between domestic debt and GDP may be caused by different factors such as; increased trend in domestic borrowing, government lenders’ profile dominated by commercial banks and non-bank financial institutions which promotes the “crowding out” effect; the nature of the instruments used by the government ; the improper use of the domestic borrowed funds which may include funding budgetary deficits, paying up principal and matured obligations on debt, developing financial markets as well as fund other government operations.
Other control variables relate with the GDP as predicted. For example, Inflation (INF) has a negative effect on the GDP growth rate, but the relationship is not statistically significant, while gross capital formation (GCF) has a positive statistically significant effect on GDP growth rate. Furthermore, foreign direct investment (FDI) showed a positive effect on the GDP growth rate and export (X) has a positive effect on GDP growth rate, and the relationship is statistically significant explaining that if a country applied an export-led growth economic strategy it enjoys the gains of participating in the world market. This means that an increase in export stimulates demand for goods which leads to increase in output, and as a country’s output increases, the economic performance also takes a similar trend. Finally, government expenditure (GE) had a negative effect on the GDP growth rate which may be explained by the increased government expenditures which are funded by either tax or borrowing.
Therefore, what is required for countries like Tanzania is to have better debt management strategies as well as prudential financial management while maintaining to remain within the internationally acceptable debt level of 45% of GDP and maintain a GDP growth rate of not less than 5%. It is important for the country to realize from where to borrow from, the tenure, the risks involved and limitations to borrowing and thus set the right balance of combination of both kinds of debt. Another requirement is to properly utilize the borrowed funds. The central government’s objective should be to use the funds in more development-oriented projects that bring positive returns to the economic development. The government should not only create a right environment and policies for investment to attract investment from domestic and foreign sources but also be cautious about the kind of investments that the foreign investors make.
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Ochieng, Eric Oduor, Destaings Nyongesa, and Nelson Obange. "Effect of Foreign Direct Investment, Inflation, Real Exchange Rate and Transfer Payments on Trade Deficit in Kenya." Asian Journal of Economics, Business and Accounting, September 21, 2020, 24–40. http://dx.doi.org/10.9734/ajeba/2020/v17i430267.
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Across all the countries, the balance of trade has remained a key indicator of economic activities as it shows a country’s level of competitiveness in the world market. Economists are divided on whether a persistent trade deficit is good or bad for a developing country like Kenya. Contrary to most of the similar previous studies, this study included trade in services as well as some of the key factors affecting trade balance such as inflation and transfer payments and sought to establish the nature and strength of their connection with the trade deficit in Kenya as well as their respective impulse responses. This study adapted a reduced form of the balance of trade model by hypothesizing that balance of trade is a function of FDI, inflation, real exchange rate and transfer payments. The study embraced an ex post facto correlational research design to gauge the elements and earnestness of synergy between the variables and used time series data obtained from the World Bank ranging from the year 1978 up to the year 2014 with annual frequency. This study also employed use of descriptive statistics, Cointegration, Vector Error Correction Model, Granger causality, impulse response function tests as well as a range of other diagnostics tests. This study concluded that in the long-run, only inflation and transfer payments have positive and negative significant effects respectively on both trade deficit and also foreign direct investments through there is no respective causality. This study also established that trade deficit has positive significant short-run effects on transfer payments while real exchange rate has positive significant short-run effects on inflation though there is also no respective causality. This study found that any shocks need to be addressed within the shortest possible timeframe as the impulse response functions indicate the effects being adverse within the first few years as effects only begin to die out from the fourth year. The study therefore concluded that trade deficit is not really bad for Kenya as measures that should reduce it actually reduces foreign direct investments which are really important for a growing economy like Kenya.
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Dierks, Leef H., and Lars E. Spreng. "Effects of Monetary Asset- Price Transmission on Investment and Inflation in the Euro Area." REVISTA PROCESOS DE MERCADO, May 1, 2019, 279–300. http://dx.doi.org/10.52195/pm.v16i1.43.
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Since the onset of the financial markets’ crisis in late 2008, the Eurozone has been subject to rather volatile headline inflation, occasionally even turning into (an admittedly modest) deflation. As eventually, conventional monetary policy seemed to be exhausted, the European Central Bank (ECB) resorted to unprece- dented unconventional measures. In 2010, it launched a first gov- ernment bond purchasing programme, which was followed by a series of different programmes, swelling its balance sheet to c. €4.7tn as per May 2019. The induced asset-price-inflation in con- junction with a continuous and persistently low HICP inflation rates inevitably raises the question how effective monetary trans- mission – particularly via asset-prices – (still) is.
This contribution will investigate the effects of monetary asset- price transmission on investments and inflation. First, it analyses the reliability of stock markets as an indicator for firms’ investment, while emphasising the importance of uncertainty. Sec- ond, the paper examines how rising stock prices affected firms’ balance sheet and lending. Further, it provides an explanation as to why monetary policy failed to amplify lending in peripheral mem- ber states and why it had a comparatively low effect on borrowing costs in these regions. Third, it scrutinises the implication of an output gap, which monetary policy seeks to create, on different inflation parameters. Thus, the paper illustrates why the effects on HICP-inflation are less pronounced compared to other inflation measures.
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Patoli, Abdul Qadir. "IMPACT OF INFLATION ON TAXES IN PAKISTAN: AN EMPIRICAL STUDY OF 2000-2010 PERIOD." IBT Journal of Business Studies 12, no. 1 (2012). http://dx.doi.org/10.46745/ilma.jbs.2012.08.02.04.
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Purpose- Aim of this study is to examine the relationship between tax revenue and inflation in Pakistan. It is further measuring the rate of change in a stochastic variable of the taxes, i.e. direct, indirect, and total taxes, with a unit change in inflation in Pakistan with an assumption of other factors remaining constant. Methodology/sample- For this research secondary data for the period of 2000 - 2010 was used. The relationship among the variables is examined at annual effect of same period. The analysis is followed by some statistical tools like correlation, regression and significance test for error factor to test the hypothesis and infer some conclusion. Findings- Findings of the study suggest that inflation and taxes are positively correlated and any change in inflation cause taxes to increase in Pakistan. The inflation in the country explains the behavior of taxes positively, but less than 1. Practical implications-This study can guide the fiscal policy planners to look at this critical position of taxes which are inflation-oriented, rather production or investment oriented. This study also proposes the further study of the relationships of taxes with change in investments and production within the country and also for all fiscal variables in compliance to the change in inflation. Research limitations-The results are based on secondary data, so the reliability is subject to the accuracy of the source. It also encounters the impact of inflation on taxes, which is not only the factor, so the results are based on assumption that other factors are held constant.
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Sabaydash, Marina Vladislavovna. "FORMATION OF MEHTODOLOGICAL PRINCIPLES FOR ASSESSING ECONOMIC EFFICIENCY OF INVESTMENT PROJECTS FOR CREATION AND DEVELOPMENT OF SEAPORTS AND TERMINALS." Vestnik of Astrakhan State Technical University. Series: Economics, September 25, 2019, 125–32. http://dx.doi.org/10.24143/2073-5537-2019-3-125-132.
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The article presents the methods for evaluating the effectiveness of investment projects developed by foreign, Soviet and later Russian scientists that made it possible to formulate principles for evaluating the effectiveness of projects of creating and developing seaports and terminals. The basic economic law of socialism in 1952 has been analyzed, according to which the development of the command economy was exhausted by planned extensive and intensive economic growth in the absence of inflation and risks. There has been studied the typical methodology for determining the effectiveness of capital investments and new equipment developed in 1960 and proposing to use two groups of indicators: general and comparative efficiency. It has been stated that the main drawback of this and later methods is to reject the indicator of absolute economic effect. There are given formulas for calculating the payback period and the effect of increasing operation of sea transport due to capital investments. There has been defined the principle of alternativeness based on accounting for the opportunity costs of neoclassical economics. Modern computer technologies make it possible to accurately simulate the technological processes of the port terminal and, using the results, to calculate the technical and economic indicators of their activities. The principle of alternativeness consists in considering all possible options for organizing technological processes at the terminal and choosing the option with best values of performance. The principle of alternativeness should be used to assess the effectiveness of the project as a whole and to evaluate the effectiveness of each participant. Projects of building and development of seaports and terminals are characterized by a complex composition of participants; they always impact the state interests and are a form of public-private partnership. The main infrastructure of seaports and land plots are in federal ownership. The implementation of the principle of alternativeness becomes possible when using the capital investment budget method.
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"EU Regionalförderung: Reformen für die nächste Finanzperiode." Zeitschrift für Wirtschaftspolitik 62, no. 1 (January 1, 2013). http://dx.doi.org/10.1515/zfwp-2013-0104.
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AbstractIn their paper Peter Egger and Maximilian von Ehrlich summarize recent research on the effects of European regional policy. Results point to a positive effect of this policy on average. One Euro spent even tends to generate more than one Euro in return in terms of GDP. However, the response varies drastically across recipient regions. First of all, there is evidence of existence of an optimum funding ratio (funds allocated relative to recipient GDP) where one Euro invested generates one Euro of return. About 36 percent of the regions receive higher funding than that, where one Euro generates less than one Euro of return (and, eventually, no return at all). Second, there is evidence of a bigger return on investment in regions with higher absorptive capacity level - measured by human capital endowments and the quality of recipient institutions. Insufficient levels of absorptive capacity lead to a wash of the Union’s transfers. About 70 percent of the regions exhibit such an insufficient level of absorptive capacity.Friedrich Heinemann analyzes both, the reform needs and reform obstacles of EU cohesion spending. Although the empirical evidence is unable to substantiate an European added value, structural funds continue to absorb an increasing amount of resources. The analysis reveals several shortcomings of this policy: First, EU regional programs have neglected institutional constraints on the side of recipient countries and regions. Second, an inflation of policy objectives makes a clear performance measurement increasingly impossible. And third, through the inclusion of rich regions into its programs, cohesion spending has lost its focus. To tackle these shortcomings, a comprehensive reform package is recommended which includes new incentives on the financing side of the EU budget. Only increasing regional co-financing or other financing innovations can reduce disincentives from common pool-financing and overcome reform resistance. Without any such financing side reforms, merely some incremental reforms are consistent with political-economic constraints, he states.Werner Hoyer and Markus Brandt point out, that all in all, EU Cohesion policy has been a success. It has facilitated growth and jobs in less developed areas, contributing to their prosperity. However, convergence has slowed down significantly during the crisis. This puts even more pressure on safeguarding that cohesion policy generates optimal results to ensure lasting economic and social cohesion. Room for improvement has been identified. The delivery mechanisms can be improved; its territorial dimension strengthened; and its focus more firmly directed at supporting a resourceefficient economy, research, development and innovation.Even more important, the economic crisis in the EU has underscored the need for creating pan-European institutions, like the banking union, to complete the integration of financial markets. The recent substantial reforms of the EU’s economic architecture are aimed at creating an unprecedented level of integration that will allow private capital to flow more easily and more responsibly to the most productive and growth-enhancing investments in convergence regions. The unleashing of these market forces, combined with a reformed cohesion policy to efficiently address market failures where they exist, carries the potential to initiate a new success story in the convergence of living conditions in the EU.They emphasize that the EIB is committed to play an important role in this effort. It has already integrated the new smart and sustainable orientations of the Structural Funds and will strive to facilitate better alignment between its sector and regional objectives. Expanding and deepening the nature and scope of financial and non-financial instruments developed jointly with the European Commission will further improve the leverage effect of EU funding and help attract private investors.