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This paper examines whether monetary policy reaction function matters for financial stability. We measure how responsive the Federal Reserve’s policy appears to be to imbalances in the equity, housing and credit markets. We find that changes in these policy sensitivities predict the later development of financial imbalances. When monetary policy appears to respond more countercyclically to market overheating, imbalances tend to decline over time. This effect is distinct from that of current and anticipated interest rate levels – the risk-taking channel. The evidence highlights the importance of a “policy reaction function” channel of monetary policy in shaping the financial cycle.

This paper examines the consequences of international financial integration in a two–sector heterogeneous–agent dynamic general equilibrium model of occupational choice with financial constraints and idiosyncratic risks. We discuss the macroeconomic and distributional effects of financial market integration for small economies which differ only with respect to the tightness of constraints on the domestic credit market. The results contribute to an explanation of the ‘Lucas paradox’, i.e. the empirical observation of capital flowing from poor to rich countries, where lending countries are characterized by tighter domestic constraints and lower capital returns. Capital market liberalization goes along with adjustments towards the world return. Capital–exporting countries experience an increase in GNP, whereas the GDP effect is of ambiguous sign and driven by the tightness of the domestic credit market. Countries with less tight constraints or unlimited access to external business financing loose throughout integration due to a decline in aggregate output and a very unequal distribution of welfare gains and losses in the underlying heterogeneous–agent economy. We find that international integration is only beneficial for economies where financial constraints on entrepreneurial activity are very tight. Here, we observe an accumulation–driven rise in the entrepreneurship rate, overall positive output effects and welfare gains for all members of society.

We extend Kyle's (1985) model of insider trading to the case where liquidity provided by noise traders follows a general stochastic process. Even though the level of noise trading volatility is observable, in equilibrium, measured price impact is stochastic. If noise trading volatility is mean-reverting, then the equilibrium price follows a multivariate 'stochastic bridge' process, which displays stochastic volatility. This is because insiders choose to optimally wait to trade more aggressively when noise trading activity is higher. In equilibrium, market makers anticipate this, and adjust prices accordingly. More private information is revealed when volatility is higher. In time series, insiders trade more aggressively, when measured price impact is lower. Therefore, execution costs to uninformed traders can be higher when price impact is lower.

Distributed ledger technologies rely on consensus protocols confronting traders with random waiting times until the transfer of ownership is accomplished. This time consuming settlement process exposes arbitrageurs to price risk and imposes limits to arbitrage. We derive theoretical arbitrage boundaries under general assumptions and show that they increase with expected latency, latency uncertainty, spot volatility, and risk aversion. Using high-frequency data from the Bitcoin network, we estimate arbitrage boundaries due to settlement latency of on average 124 basis points, covering 88% of the observed cross-exchange price differences. Settlement through decentralized systems thus induces non-trivial frictions affecting market efficiency and price formation.

In our paper, we examined the relationship between non-performing loans, as a measure of stability, and concentration, as a measure of competition, in the Libyan banking sector. We used aggregate quarterly data for the 15 commercial banks in the country during the period 2002-2013. A broad set of tests were conducted to measure the relationship between the two variables, and alternative robustness tests were conducted to verify our core finding that less competition in the banking sector leads to a more resilient banking sector. Thus, our results offer empirical support against the “competition–stability” theory and conform the “competition–fragility” literature. We conclude by recommending the need to inspect in more detail (on a bank by bank level) the relationship between competition and fragility in developing countries in general and in Libya in particular.

We study the effects of two measures of information dissemination on the determination of systemic risk. One measure is print-media consumer sentiment based while the other is volatility based. We find evidence that while the volatility measure (VIX) of future expectations has a more significant direct impact upon systemic risk of financial firms under distress, a consumer sentiment measure based on print-media news does impact upon firm’s financial stress via the externality of other firm’s financial stress. This latter effect is robust even though the VIX and the consumer sentiment have dynamic feedback in the short one and two-day horizon in levels, and contemporaneously in volatility. In reference to the internet bubble of the 1990s, the consumer sentiment measure predicts larger systemic risk in the whole period of exuberance while the VIX predicts a sharp larger systemic risk in the height of the bubble. Our evidence suggests that print-media consumer sentiment might be dominated by the VIX when predicting systemic risk.

The introduction of automatic bill payment (ABP) programs in 2005 eliminated the need for consumers to view recurring bills. If those enrolled in ABP programs offered by utilities and other service providers forgo inspection of their recurring bills, then price salience declines, prices perceived by boundedly rational agents fall, and consumption increases. This paper considers the impact of such programs on consumer demand and welfare and empirically tests whether enrollment in such programs increases demand. Results show ABP enrollment increases residential electricity consumption by 4.0% and commercial electricity consumption by as much as 8.1%. Enrollment in programs designed to smooth seasonal variation in monthly utility bills of low-income customers results in 6.7% greater electricity use. © 2015 The President and Fellows of Harvard College and the Massachusetts Institute of Technology

Standard economic models assume that the demand for expert predictions arises only under the conditions in which individuals are uncertain about the underlying process generating the data and there is a strong belief that past performances predict future performances. We set up the strongest possible test of these assumptions. In contrast to the theoretical suggestions made in the literature, people are willing to pay for predictions of truly random outcomes after witnessing only a short streak of accurate predictions live in the lab. We discuss potential explanations and implications of such irrational learning in the contexts of economics and finance. © 2015 The President and Fellows of Harvard College and the Massachusetts Institute of Technology

We propose a methodology for estimating the competition effects from entry when firms sell differentiated products. We first derive precise conditions under which Bresnahan and Reiss' entry threshold ratios (ETRs) can be used to test for the presence and to measure the magnitude of competition effects. We then show how to augment the traditional entry model with a revenue equation. This revenue equation serves to adjust the ETRs by the extent of market expansion from entry, and leads to unbiased estimates of the competition effects from entry. We apply our approach to seven different local service sectors. We find that entry typically leads to significant market expansion, implying that traditional ETRs may substantially underestimate the competition effects from entry. In most sectors, the second entrant reduces markups by at least 30%, whereas the third or subsequent entrants have smaller or insignificant effects. In one sector, we find that even the second entrant does not reduce markups, consistent with a recent decision by the competition authority.

Joining the EMU should not be an end in itself but a logical step after a thorough preparation of the economy. Taking this finding as starting point, the article aims to assess the real convergence process at the UE level. In this sense, based on the GDP per capita index at PPP a comparative, retrospective and prospective analysis has been undertaken, which revealed that Romania, although obtained a number of positive results, must press the accelerator for a healthy economic growth, sustainable and durable designed to reduce the gaps with the developed countries of the EU. In conclusion, it is considered that the objective of adopting the euro on the 1st of January 2019 is feasible, under the condition that the procedures are started urgently, based on a strict schedule and assumed by all political forces regardless of colour, as there are many other goals to be met before initiating this process, otherwise a too early adoption may hinder or even derail the process of convergence.

The financial crisis has brought about a fundamental rethink of both the source and scale of systemic risk in the financial system and the regulatory framework needed to guard against them. The papers by Alter, Craig, and Raupach (this issue) and Kharroubi (this issue) speak to some of the risks and the regulatory response that might be most appropriate to mitigate them. But underlying both is a more fundamental question about the emerging framework for regulatory policy—multi-polar regulation. This commentary considers the impact and cumulative consequences of multiple regulatory constraints on banks’ asset allocation. Using a simple framework, these effects are shown to be complex and interconnected. The impact of this regime shift, on analytical models and real-world behavior, remains largely uncharted territory. This defines a whole new, and exciting, research frontier.

The study on how is Internal Control System developed in public institutions is of a special importance for modalities, forms and the manner of the application of relevant strategies for the functioning of internal control environment in public institutions. In this paper, there is treated the existing situation of internal control system environment of public finances and its implementation in public sector. For internal control system environment in public finances to function effectively, there should exist a coherent control environment which includes responsibilities for financial management from managers of Publicly Owned Enterprises and with complete functioning of internal audit, which exists in the function of development to add value. In Kosovo public institutions, this framework is offered by legislation and by institutional mechanism for the implementation of legislation according to these parameters.

Submitted by Núcleo de Pós-Graduação Administração (npgadm@ufba.br) on 2017-04-18T19:07:28Z No. of bitstreams: 1 Outsourcing Failure and Reintegration - The Influence of Contractual and External Factors.pdf: 208753 bytes, checksum: abf91daa7095e8ee8051155537f637e5 (MD5) Approved for entry into archive by Maria Angela Dortas (dortas@ufba.br) on 2017-04-18T20:08:40Z (GMT) No. of bitstreams: 1 Outsourcing Failure and Reintegration - The Influence of Contractual and External Factors.pdf: 208753 bytes, checksum: abf91daa7095e8ee8051155537f637e5 (MD5) Made available in DSpace on 2017-04-18T20:08:40Z (GMT). No. of bitstreams: 1 Outsourcing Failure and Reintegration - The Influence of Contractual and External Factors.pdf: 208753 bytes, checksum: abf91daa7095e8ee8051155537f637e5 (MD5) Previous issue date: 2014 This paper discusses the reasons that drive organizations to interrupt outsourcing, reverse their previous decision, and then reintegrate activities formerly delegated to providers. Contractual approaches, mainly derived from Transaction Costs Economics, offer some plausible explanations for reintegration originating from outsourcing failure. These explanations are mainly related to asset specificity, poor contractual design, and deficient monitoring. The study of a real case of outsourcing interruption in industrial maintenance illustrates these different factors. However, some other determinants might complement the contractual and strategic background, namely bandwagon behavior and institutional pressure exerted by external actors. Finally, we propose an integrative framework that combines micro- and macro- levels of organizational analysis. We argue that some existing complementarities between the different theories we use here can shed some light on real organizational problems. Besides the implications for theory, our work can help managers to understand the dynamics of organizational boundaries, thus allowing them to make better choices in both outsourcing and reintegration decisions. Long Range Planning

The financial crisis revealed serious imperfections in the integrity of the financial system, exposing major cases of fraud and conflict of interest. This integrity deficitis a cause for con-cern,given the roles of the information in the decision making process and on the financial-market. Further more, the European audit system has been questioned following the fact that the quality of audits has been criticised by the investors. These events have revealed the failure of the auditing system to deliver true independent assurance, being based in many cases by a certain degree of conflict of interests.

The relationship between uncertainty and managerial flexibility is particularly crucial in addressing capital projects. We consider a firm that can invest in a project in either a single (lumpy investment) or multiple stages (stepwise investment) under price uncertainty and has discretion over not only the time of investment but also the size of the project. We confirm that if the capacity of a project is fixed and the investment premium associated with stepwise investment is positive, then lumpy investment becomes more valuable than a stepwise investment strategy under high price uncertainty. By contrast, if a firm has discretion over capacity, then we show that the stepwise investment strategy always dominates that of lumpy investment. In addition, we show that the total amount of installed capacity under a stepwise investment strategy is always greater than that under lumpy investment. © Springer Verlag 2016. The final publication is available at https://link.springer.com/article/10.1007%2Fs00291-016-0460-0. This is the authors' accepted and refereed manuscript to the article.

Since its inception in 2006, the United Nations-backed Principles for Responsible Investment (PRI) have grown to over 1300 signatories representing over $45 trillion. This growth is not slowing down. In this paper, we argue that there is a set of attributes which make the PRI salient as a stakeholder and its claim to sign the six PRI important to institutional investors. We use Mitchell et al.’s (Acad Manag Rev 22:853–886, 1997) theoretical framework of stakeholder salience, as extended by Gifford (J Bus Eth 92:79–97, 2010). We use as evidence confidential data from the annual survey of signatories carried out by the PRI in a 5-year period between 2007 and 2011. The findings highlight pragmatic and organizational legitimacy, normative and utilitarian power, and management values as the attributes that contribute most to the salience of the PRI as a stakeholder.

We analyze a model where irrational and rational informed traders exchange a risky asset with irrational market makers. Irrational traders misperceive the mean of prior information (optimistic/pessimistic bias) and the variance of the noise in their private signal (overconfidence/ underconfidence bias). Irrational market makers misperceive both the mean and the variance of the prior information. We show that moderately underconfident traders can outperform rational ones and that irrational market makers can fare better than rational ones. Lastly, we find that extreme level of confidence implies high trading volume.

For Afghanistan, the dual prospect of declining donor support and high ongoing security spending over the medium term keeps its government budget tight. This paper uses a general equilibrium model to capture the security–development trade-off facing the government in its effort to rehabilitate growth and fiscal sustainability. In particular, it considers strategic policy options for counteracting and minimizing the negative macroeconomic impact of possible aid and revenue shortfalls. We find that the mobilization of domestic revenues through changes in tax policy is the preferred policy response for the Afghan central government. Such a response helps to place its finances on a sustainable path in the near term and preserve most of the growth potential. Cutting expenditures balances public finances but causes the economy to permanently shrink. Debt financing helps to preserve much of the economy size but can quickly put the sustainability of public finances at risk. © 2013 Asian Development Bank and Asian Development Bank Institute.

We introduce the model of asset management developed in Gennaioli, Shleifer, and Vishny (2012) into a Solow-style neoclassical growth model with diminishing returns to capital. Savers rely on trusted intermediaries to manage their wealth (claims on capital stock), who can charge fees above costs to trusting investors. In this model, the size of the financial sector rises with aggregate wealth, and wealth grows relative to GDP. As a consequence, the ratio of financial income to GDP rises over time, even though fees for given financial services decline. Because the size of the financial sector fluctuates with changes in investor trust, the model can account for the sharp decline of finance in the Great Depression, as well as its slow recovery afterwards. Entry by financial intermediaries as wealth increased in recent years may have further deepened investor trust and encouraged growth of financial income.

The global financial crisis of 2007–2009 generated a renewed interest in including personal finance in the secondary curriculum in the United States and in many countries around the world. This paper explains the features of a successful and unique high school personal finance curriculum, Keys to Financial Success , which is offered by a consortium of partners in Delaware, Pennsylvania, and New Jersey, and is available to teachers from the Federal Reserve Bank of Philadelphia. Using the Financial Fitness for Life High School Test ( FFFL-HS Test ), pre- and posttest results are reported for 967 students who participated in a one-semester Keys course during the 2011–2012 and 2012–2013 academic years. The survey results indicate that the training of teachers in the Keys curriculum, and the implementation of a one-semester Keys course, significantly improve the average personal finance knowledge of students in each of the standards and concept areas of the FFFL-HS Test . These results contribute to the growing literature showing the positive effects of a well-designed personal finance course, taught by properly trained teachers, on the financial knowledge of high school students, and should be of interest to an international audience.

To learn problem solving and the development of learning organizations has been added to the agenda; Therefore, organizational learning and ultimately, learning organizations, that meet the needs of current challenges such as environmental change, competition and quality are met. Peter Senge's five commands or discipline research and case study data, the compliance staff of Ardebil University defines these components. A descriptive study - a survey of the Islamic Azad University of Ardabil province were done in 2010. All statistics are community college employees that using stratified sampling 205 employees were selected as examples. Data collected by questionnaire in two parts with the scientific validity and reliability were 82%. By using SPSS research data were analyzed. The average amount of free functionality of the personal staff of employees with 10/18, The mental models with 92/17, the common cause against 87/16, after learning 94/16 and an average rate of systemic thinking employees with 14/17. Due to low compliance with the recommended five dimensions of learning organization mechanisms for universities to be respected by the authorities; to the staff of the University and the observed rate of learning will lead to the optimal level.

The notion that some banks are “too big to fail” builds on the premise that governments will offer support to avoid the adverse consequences of disorderly bank failures. However, this promise of support comes at a cost: Large, complex, or interconnected banks might take on more risk if they expect future rescues. This article studies the effect of potential government support on banks’ appetite for risk. Using balance-sheet data for 224 banks in forty-five countries starting in March 2007, the authors find higher levels of impaired loans after an increase in government support. To measure support, they rely on Fitch Ratings’ support rating floors (SRFs), a new rating that isolates potential sovereign support from other sources of external support. A one-notch rise in the SRF is found to increase the impaired loan ratio by roughly 0.2—an 8 percent increase for the average bank. The authors obtain similar results when they assess the effect of increased support on net charge-offs and when they narrow their sample to U.S. banks only.

This paper models the price and income elasticity of retail finance in Australia using aggregate quarterly data and an autoregressive distributed lag (ARDL) approach. We particularly focus on the impact of the global financial crisis (GFC) from 2007 onwards on retail finance demand and analyse four submarkets (period analysed in brackets): owneroccupied housing loans (Sep 1985–June 2010), term loans (for motor vehicles, household goods and debt consolidation, etc.) (Dec 1988–Jun 2010), credit card loans (Mar 1990–Jun 2010), and margin loans (Sep 2000–Jun 2010). Other than the indicator lending rates and annual full-time earnings respectively used as proxies for the price and income effects, we specify a large number of other variables as demand factors, particularly reflecting the value of the asset for which retail finance demand is derived. These variously include the yield on indexed bonds as a proxy for inflation expectations, median housing prices, consumer sentiment indices as measures of consumer confidence, motor vehicle and retail trade sales, housing debt-to-housing assets as a measure of leverage, the proportion of protected margin lending, the available credit limit on credit cards, and the All Ordinaries Index. In the long run, we find significant price elasticities only for term loans and margin loans, and significant income elasticities of demand for housing loans, term loans and margin loans. We also find that the GFC only significantly affected the longrun demand for term loans and margin loans. In the short run, we find that the GFC has had a significant effect on the price elasticity of demand for term loans and margin loans. Expected inflation is also a key factor affecting retail finance demand. Overall, most of the submarkets in the analysis indicate that retail finance demand is certainly price inelastic but more income elastic than conventionally thought.

The purpose of this study is to determine whether or not the option agreements are used in an effective manner by the central banks, as an alternative tool of intervention in their intervention in the foreign exchange markets. In that respect, the interventions of the central banks in the foreign exchange markets, and their use of the option agreements have been dealt theoretically; and the intervention program applied by the Colombia Central Bank on the option agreement has been examined. In this paper, we will test the effectiveness of the intervention of the Colombia Central Bank Banco de la Republica Colombia on the foreign exchange market by using the option agreements, on the level of exchange rate and the volatility. For this purpose, in order for the quantities of tender for the four types of option agreements used by the bank, to represent the capital movements effecting the exchange rate level as control variable, the Libor rate representing the international interest rates, and the rate of interest in Colombia are taken into consideration, and a test will be applied to determine whether there is a downward or upward sudden movements in the level of exchange rate. Based on the results to be achieved, we will attempt to form an opinion regarding the effectiveness of the option intervention program.

SMEs will continue to represent, in the following decades, the most active, dynamic and performant part of a country’s economy. In this respect we have tried an approach of some aspects of extreme importance for the role of the SMEs in Romania in the present economic context of the knowledge-based economy, and we have started by presenting the main advantages and disadvantages of the SMEs in Romania as compared with large enterprises, and later we have analyzed the institutional framework which shall ensure the development and growth of the SMEs, as well as the main factors which influence competitiveness in the current economy.

Using a dynamic (stochastic-factor) portfolio model, we devise a method to estimate the impact of the oil price on the stock market. We apply our approach to the Jamaican financial market. Our result indicates a negative weak relationship between the oil price and the stock index. - Attraverso l’utilizzo di un modello dinamico stocastico, in questo studio viene elaborato un metodo per stimare l’impatto del prezzo del petrolio sul mercato azionario. Applicando il modello al mercato azionario giamaicano otteniamo una debole relazione negativa tra prezzo del petrolio e indice azionario.

Financial flows represent a reasonable basis for estimating the capacity of firms to generate cash and cash equivalents necessary to meet debt chargeability. If cash means actual monetary liquidity held in company’s cashier or in its bank accounts, cash equivalents represent "short-term investments, highly liquid, which are readily convertible to known amounts of cash and which are subject to an insignificant risk of exchange. Over time, in an attempt to systematize the information regarding the structure, the origin and destination of the funds used by enterprise, liquidity setters concluded that variation can be explained by the action of three types of activities based on a functional classification, namely operating activities, financing activities and investing activities. The present paper aims to determine the importance and evolution of financial flows in an economic entity using the indirect method.

In this paper, we analyze differences in financial management practices between family and non-family Small and Medium Enterprises (SMEs) in the textile industry. We hypothesize that family SMEs use different sources of funding for new investments, tend to have less debt, are more profitable and use less financial and accounting information for decision making than non-family SMEs. We survey 24 textile SMEs located in Yucatan, Mexico. The results show that family SMEs rely more heavily on internal sources are more profitable and use less accounting and financial information for decision making than non-family SMEs.

We present a model of the nonprofit organization that leads to an allocation in the economy that is Pareto Optimal. This is in contrast to the usual assumption that an economy in which individuals exhibit altruism will not lead to a Pareto Optimal outcome. The presence of nonprofit organizations that function according to this model leads to an outcome in the economy that is Pareto Optimal. The result of Pareto Optimality is based on several assumptions, including the assumption that nonprofit organizations believe that they will not be earning any profit that may be brought forward to the following year. This result suggests an additional reason for the tradition in the United States of absolving nonprofit organizations and donors to such organizations from paying income taxes on such donations. The nonprofit organizations, by acting according to this model, are performing an important economic role in the economy by restoring Pareto Optimality to the economy.

This note presents a brief summary of the recent literature, both theoretical and empirical, on the effects of financial development on growth and growth volatility. We attempt to contribute to the analysis of the possible channels of interaction between these processes which is key for policies aimed to promote growth and reduce growth volatility.

This paper documents the major trends in debt (bank and bond) markets in emerging economies since the early 1990s, when these markets started expanding. The paper shows that banks have increased in size in most emerging economies though from low bases. But bond markets have expanded even more, gaining importance relative to banks. The nature of financing has also changed. Local currency bond financing has expanded, the extent of dollarization of loans and bonds has declined, and the maturity of public and private sector bonds has typically increased. However, not all regions have moved in the same direction. Eastern Europe for instance increased its foreign currency debt before the global financial crisis. Relative to developed countries, emerging countries’ financial systems still remain in many aspects underdeveloped. Except in a few cases, liquidity in secondary bond markets has been declining. And the public sector captures a significant share of bond markets.

À fin 2013, la France occupe la quatrième place dans la zone euro pour la valeur de ses organismes de placement collectif (OPC), derrière le Luxembourg, l’Irlande et l’Allemagne. Sur l’année, l’actif net des OPC non monétaires français enregistre une progression, les effets de valorisation excédant les rachats. Les OPC non monétaires français consacrent près de la moitié de leurs placements au financement de l’économie nationale.

We study the relation between compensation practices, incentives, and performance in private equity using new data that connect ownership structures, management contracts, and quarterly cash flows for a large sample of buyout and venture capital funds from 1984-2010. Although many critics of private equity argue that PE firms earn excessive compensation and have muted performance incentives, we find no evidence that higher compensation or lower managerial ownership are associated with worse net-of-fee performance, in stark contrast to other asset management settings. Instead, compensation is largely unrelated to net-of-fee cash flow performance. Nevertheless, market conditions during fundraising are an important driver of compensation, as pay rises and shifts to fixed components during fundraising booms. In addition, the behavior of distributions around contractual triggers for fees and carried interest is consistent with an underlying agency conflict between investors and general partners. Our evidence is most consistent with an equilibrium in which compensation terms reflect agency concerns and the productivity of manager skills, and in which managers with higher compensation earn back their pay by delivering higher gross performance.

In the context of present day economy characterized by continuous change, enterprises are forced to make a series of modernizations in order to improve technology, to access various market niches, to satisfy clients’ demands. Consequently, enterprises invest annually substantial financial capital in fixed assets. These investments influence the situation of a firm over many years. A good decision may lead to a tremendous rise in profit and, as a consequence, to an increase in share price on the market. However, a bad decision may lead to bankruptcy. Thus, making decisions in the process of budget allocation, cost control and realist forecasting is vital for the future of an enterprise. Establishing investment budgets implies engaging funds in projects that will determine generating and increasing cash flow, estimated over a longer period of time. The essence of a good process of establishing a budget is to estimate correctly the cash inflows generated by the project. Thus, the present paper analyses the basic principles of deciding on investment budgets, the modalities of estimating cash flows, making decisions for development and making decisions for replacement within investment processes.

In this paper, we address the mathematical analysis and numerical solution of a model for pricing a defined benefit pension plan. More precisely, the benefits received by the member of the plan depend on the average salary and early retirement is allowed. Thus, we formulate the mathematical model in terms of an obstacle problem associated to a Kolmogorov equation in the time region where the salary is being averaged. Previously to the initial averaging date, we pose a nonhomogeneous one factor Black--Scholes equation. After stating the model, we study the existence and regularity of solutions. Moreover, we propose appropriate numerical methods based on a Lagrange--Galerkin discretization and an augmented Lagrangian active set method. Finally, some numerical examples illustrate the performance of the numerical techniques and the properties of the solution and the free boundary.

Analysing the relationships between elements of an enterprise's financial statements, especially between elements from the balance sheet and those from the profit and loss account, the rates of return adds greater utility to the consumers of financial information, offering the possibility to make comparisons over time and space as well as to make reference to internal and external rates. Considering the companies listed on Bucharest Stock Exchange among the best performing, due to the high requirements imposed by a stock market, in this paper has been analyzed the way the financial crisis affected the financial performance in Mining and Quarrying Domain.

The paper discusses the influence of foreign direct investment on the economic situation of Poland with a special attention to: GDP, export, import, research and development expenditure and unemployment. In order to fulfill objectives of this research this paper uses the VECM methodology. The research based on data from The Organization for Economic Co-operation and Development and The International Monetary Fund for the period 1996–2010.

The application of options pricing theory to value irreversible investment decisions has witnessed a marked increase over the last decade. For instructional and simplified applications, the Black-Scholes model is commonly demonstrated due to its tractability and acceptance in the finance community. This paper provides a detailed mathematical exposition of the Black-Scholes model. The main contribution of this paper is the step-by-step instructional account of the Black-Scholes model that can be used directly in the classroom to introduce stochastic calculus, arbitrage-free valuation, and option-pricing theory. In contrast with most Black-Scholes derivations found in the pedagogical literature, this paper develops the fair option price from an economic equilibrium perspective. Through this approach, it is hoped the reader will comprehend both the mathematics and economics underlying option pricing theory, as both are equally important.

The global financial and economic crisis put the banking sector to the test in countries all over the world. The negative impact of the crisis transferred itself also into the real economy, and thence onto the commercial portfolios of banks. Bulgarian banks, being part of this globa system, reported negative changes in their performance indicators, but not in all of those. Despite the crisis, banks preserved their efficiency and the reason for the balancing effect of the negative external influences can be found in a more profound analysis and assessment of the very determinants of efficiency.

Profit is the general index summing up the outcomes of company industrial and economic activity and evaluating its efficiency. To reveal the point of profit one should consider its formation and evolution as well as contemporary scientists' insight into the concept. The article covers the formation of profit in the context of economic historical development. Approaches to the interpretation of its essence by major political economy schools and current understanding of the category of profit have been observed. It has been proved that the term 'profit' has carried different values depending on the purpose of its determining, owners-employees relations, level of economic development, economic and political views on production and sales, financial information user demands. Research into category of profit, its nature and sources of origin gives the author opportunity to define profit as the company's positive financial performance in doing business over production costs and other deductions.

At end-2012, net assets held by French investment funds stood at a slightly higher level than at end-2008: France remained in second place for investment funds in the euro area.

A total of 60 incidents, of which 29 were additions to and 31 were exclusions from the index have been analyzed during the 23 index periods of ÝMKB 30 between the years 2005-2011. General conclusion is that announcements of change and the days of change do not have a significant impact on stock returns and transaction volumes during the period of analysis. It has been observed that additions to the index increase the transaction volume more than exclusions from it. It is believed that the investors predict the stocks that would be added to (excluded from) the index and adjust the prices accordingly before the change occurs. Besides, the effects of institutional investors that make transactions based on the index, including exchange traded funds, are limited. Effects of a change in index composition have been observed to be limited on the days of announcement and actual change and it is believed that the market has semi-strong form of efficiency. No proof could be identified on the validity of Price Pressure Hypothesis, Imperfect Substitutes Hypothesis or other hypotheses.

Fin 2012, l’actif net des OPCVM français repasse légèrement au-dessus de son niveau de fin 2008 : la gestion collective française reste la deuxième de la zone euro.

Due to the crises we all go through, crises which was felt simultaneously in all the States of The European Union, the globalization being even more present, a possible improvement of the economy could not be but a unitary solution, as well as the adoption of the Euro as a unique currency. Though, the solution is to create a Fiscal Union within the member states, taking into account the economical characteristics of each country, in general and according to their resources and expenses available on every economical branch. The purpose of this article is to analyse the issues concerned with the Fiscal Union for the Euro zone.

All legal dispositions in matters of public procurement shall be complied with in order to successfully implement the projects and reach its objectives, both in the planning stage and in the stage of actual development of the assignment procedures. The increase of the level of fund absorption requires measures for the improvement of the public procurement process, both with regard to the efficiency and with regard to the duration of development.

There are many analytical papers and researches done in the field of examining and analyzing consequences of the Sarbanes Oxley Act (2002) and some done in the corporate governance in some Latin American countries. This paper chooses a different approach. First, it selects The US, Brazil and Chile, which represents for Latin American countries, as three (3) American countries to analyze their best suitable policies and corporate governance practices, in consideration of factors after crisis and scandals. Second, it aims to build a selected comparative set of standards for corporate governance system in the US and representative Latin American countries. Last but not least, this paper illustrates corporate governance standards that it might give proper recommendations to relevant governments and institutions in re-evaluating their current ones.

The winds of globalization have yielded rich dividends to the social and economic growth of India. The boom in Indian market has widened the horizons for the customers to be selective while purchasing any product. On the other hand, the sellers are more proactive in facilitating their customers’ quality services and cater to their growing demands. There is a paradigm shift in the customer’s perception and purchasing tendencies. The traditional shops and shopkeepers are now being slowly but gradually replaced by big/mini retail stores (shopping malls) and retailers (top corporate houses). Indian consumers are evolving and accepting modern retail formats. In the context of Indian retail sectors, Big Bazaar, More, Pantaloon Retail India Ltd, ITC's e-choupal Reliance Retail Ltd, Vishal Mega Mart, Titan Industries, Archies, Bata India Ltd etc. are dominating the scene and have a wide spread network to execute their operation. The present paper is an attempt to study impediment and opportunities related to organized retailing in India.

How many and which firms issue equity and bonds in domestic and international markets, how do these firms grow relative to non-issuing firms, and how does firm performance vary along the firm size distribution (FSD)? To evaluate these questions, we construct a new dataset by matching data on firm-level capital raising activity with balance sheet data for 45,527 listed firms in 51 countries. Three main patterns emerge from the analysis. (1) Only a few large firms issue equity or bonds, and among them a small subset has raised a large proportion of the funds raised during the 1990s and 2000s. (2) Issuers grow faster than non-issuers in terms of assets, sales, and employment, that is, firms do not simply use securities markets to adjust their financial accounts. (3) The FSD of issuers evolves differently from that of non-issuers, tightening among issuers and widening among non-issuers.

I derive a lower bound on the equity premium in terms of a volatility index, SVIX, that can be calculated from index option prices. The bound implies that the equity premium is extremely volatile and that it rose above 20% at the height of the crisis in 2008. The time-series average of the lower bound is about 5%, suggesting that the bound may be approximately tight. I run predictive regressions and find that this hypothesis is not rejected by the data, so I use the SVIX index as a proxy for the equity premium and argue that the high equity premia available at times of stress largely reflect high expected returns over the very short run. I also provide a measure of the probability of a market crash, and introduce simple variance swaps, tradable contracts based on SVIX that are robust alternatives to variance swaps.