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Research Methodology

Author(s): Martin Jirušek / Language(s): English / Publication Year: 0

Keywords: Russian energy; natural gas; Nuclear sector; environment; energy resources;

To meet the goal of the study a hypothesis has been formulated as follows: „Russian energy companies in natural gas and nuclear sector act in order to maximize their influence on CEE markets and to strengthen Russian geopolitical influence in this region.“ Secondary goal here is to find out whether the determinants of the Russian companies differ according to various environments in the region or compared to Asia.

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Sector of Nuclear Energy in Central and Eastern Europe

Author(s): Tomáš Vlček / Language(s): English / Publication Year: 0

Keywords: Belarus; Bulgaria; Czech Republic; Estonia; Hungary; Latvia; Lithuania; Moldova; Poland; Romania; Slovakia; Ukraine; Nuclear sector; Economic policy;

Belarus is a land locked country bordering with Russian Federation, Ukraine, Poland, Lithuania and Latvia. Belarus declared independence at the end of the WWI just to be occupied by Soviet troops shortly after and eventually incorporated to USSR as Belarusian Soviet Socialist Republic from 1919. After the Russian-Polish war the country was divided between these two states. The USSR has taken back the Polish part in 1939 and Belarus was not an independent state until July 1990 when Republic of Belarus was created. In 1994, Alexander Lukashenko was elected president of Belarus; he was reelected again for the second term (2001-2006), the third term (2006-2011) and also the fourth term (2011-2016). The election process especially for the fourth term had been criticized as flawed by most EU and OSCE countries. As a result, Lukashenko and his associates are forbidden to travel to EU member countries. Belarus is also very well known for his authoritative leadership (sometimes called as Europe's last dictatorship), oppression and corruption.

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Activities of Rosatom in Asia

Author(s): Hedvika Koďousková / Language(s): English / Publication Year: 0

Keywords: China; India; Vietnam; civil nuclear power development; Asian market;

As far as civil nuclear power development is concerned, we identified several diverse groups of players in the Asian market: a) mature countries with their nuclear technology and services export programs (e.g. Japan, South Korea, newly followed by China); b) countries which operate nuclear power plants, but had otherwise limited participation in nuclear sector due to being outside of the Nuclear Non-proliferation Treaty (India until 2008, Pakistan); c) newcomers to the sector, who decided to address their rapidly growing energy demand by developing their nuclear power-generating capacity (e.g. Vietnam, Bangladesh, etc.).

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Summary of findings

Author(s): Tomáš Vlček / Language(s): English / Publication Year: 0

Keywords: Sector of Nuclear Energy; Central and Eastern Europe; Energy sector;

As stated above, the aim of the research was to provide an in depth analysis of Russian operations in the nuclear sector of Central and Eastern Europe. The research sought to unearth whether Rosatom subscribes to specific patterns of conduct with regard to business environment and if so, what are the determining factors of such behaviour. To meet the goals of the study, the following hypothesis was formulated: „Russian state owne denergy companies in the natural gas and nuclear sectors act in order to maximize their influence and market share in CEE markets and strengthen Russian geopolitical leverage and positioning in this region.“

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Factors Influencing Clients in Selection of Insurance Company

Author(s): Elena Šira,Katarina Radvanska,Zuzana Grančaiová / Language(s): English / Publication Year: 0

Keywords: insurance market; importance of selection the insurance company;

The aim of the article is to show, if clients have changed their preferences in selection of insurance company during 5 years. This article compares how the scheme of client’s behaviour has been changed. Our research compares the data from the years 2010 and the years 2015, which show factors influencing clients in selection of insurance company in Slovakia. We have also analysed and compared the factors with the biggest influence on clients in the year 2010 and 2015. In addition to analysis of client’s behaviour, we have also analysed and compared insurance market environment via selected indicators. We have analysed the volume of written premium, density, penetration and others. The level of economic development of the country may also affect clients in their preferences of the insurance company. We have analysed the unemployment, average monthly wage and other factors in the years 2010 and 2015 to gain the adequate findings.

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The Optimized Indicators of Technical Analysis by Anticyclic Assets

Author(s): Martin Širůček,Karel Šima / Language(s): English / Publication Year: 0

Keywords: technical analysis; optimization; relative strength; moving average; Bollinger bands;

The paper is focused on using the technical analysis and its indicators. It deals with the evaluation of investment strategies based on the optimized parameters of technical analysis indicators. The analysis focuses on using selected indicators of the technical analysis in the period from 11/1/2013 to 10/31/2014. The empirical analysis includes a back-test of optimized indicators, the results of which are compared with the recommended setting of these indicators, held in the period from 11/1/2014 to 10/31/2015. The optimization and the back-test were realized on anticyclical stocks, represented by the index S&P 500 Consumer Staples. The main aim of the paper is to bring to the speculators a higher investment return based on the change of the recommended (default) setting of these indicators.

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Budgetary Gaming Behavior and its Determinants

Author(s): Ladislav Šiška / Language(s): English / Publication Year: 0

Keywords: management accounting; budgeting; budgeting gaming; contingency factors;

Budgetary gaming behavior (such as spending money at year end to avoid losing it, deferring necessary expenditures, accelerating sales near year end to meet the budget, negotiating easier targets) belongs among arguments against using budgets for company management. Especially proponents of Beyond Budgeting movement propose to abandon budgets for this reason. The paper presents results of the survey among 214 companies domiciled in the Czech Republic and Slovakia dealing with budgeting gaming and its context. Descriptive statistics and formal statistical test (Kruskal-Wallis, Mann-Whitney) revealed that the problem of budgetary gaming is more prevalent in larger companies that are subsidiaries. On the contrary, in the small enterprises it is less present problem, but more correspondents with the use of budgets for management purposes. Albeit the occurrence of budgetary gaming behavior, the companies in the sample did not intend to abandon budgeting at all.

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Implications of Low/Negative Interest Rates for Banks’ Asset and Liability Management – An Example

Author(s): Ľudomír Šlahor,Daniela Majerčáková,Mária Barteková / Language(s): English / Publication Year: 0

Keywords: asset and liability management; ultra-low interest rates; bank balance sheet; duration;

Asset and liability management (ALM) in the current low/negative interest rate environment is a major concern for all banks. ALM is defined as the simultaneous planning of all asset and liability positions on the bank’s balance sheet under consideration of the different bank management objectives and legal, managerial and market constraints, for the purpose of mitigating interest rate risk, providing liquidity and enhancing the value of the bank. ALM is heavily dependent on the movement of interest rates in the market. The history of ALM suggests that it is very important for a financial institution to measure, manage and control interest rate risk. The aim of this paper is to show how a sample bank’s balance sheet might have looked like before and after the advent of the persistently low/negative interest rates environment. Further, we will show a duration structure of the example-bank´s balance sheet before the period of low and further falling rates sets in. Also in this paper we will present most important implications for ALM after the period of persistently low interest rates. To attain this goal, we analysed the 2008 and 2015 balance sheets of a medium commercial bank facing conflicting goals such as returns, liquidity, solvency, and expansion of deposits and loans under uncertainty.

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The Recommendation of Safe Haven Interest Rates in the BEPS Context

Author(s): Veronika Solilova,Danuše Nerudova,Hana Bohušová,Patrik Svoboda / Language(s): English / Publication Year: 0

Keywords: loans; safe harbours; arm’s length principle; Base Erosion and Profit Shifting project; thin capitalization rules;

Intercompany financial transactions are subjected to scrutiny by tax authorities as they represent very popular tax planning instrument with results of a significant reduction of the group´s effective tax rate. Tax authorities have limited the use of intercompany debt or the tax-deductibility of interest by the arm’s length principle, thin capitalization rules or/and safe harbour for taxpayers. Moreover, the recent work of the European Union, OECD and G20 members as regards the BEPS project is also scrutinized with a focus on the elimination of profit shifting through intra-group debt financing. The aim of the paper is to recommend transfer pricing approaches for intra-group loans in EU, based on the analysis of experiences from the USA and recommendations of the BEPS project and the proposal of the EU Anti-Tax Avoidance Directive. We recommend to introducing safe haven rates for different compounding periods and amount of loan denominated in EUR altogether with the application of thin capitalization rules in the form of EBITDA ratio with the threshold of 30% or within a corridor of 10% to 30%. Based on it, the transfer pricing simplified measurements for loan can be ensured.

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Foreign Exchange Intervention by the Czech National Bank and its Consequences

Author(s): Miroslav Sponer,Martina Sponerová / Language(s): English / Publication Year: 0

Keywords: deflation; exchange rate; foreign exchange interventions; monetary policy; zero lower bound;

The article generally analyses the causes leading up to the foreign exchange intervention by the Czech National Bank in November 2013 and its consequences. The article examines the use of exchange rate by the Czech National Bank as a monetary policy instrument at the zero lower bound on interest rates. It explains the reasons for further easing monetary policy and for choosing the exchange rate instrument and its specific level, and discusses its expected benefits in the case of the Czech Republic.

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Determination of Financial Strategy of Selected Company and its Importance for Other Business Development – Case Study

Author(s): Veronika Svatošová,Zuzana Svobodová / Language(s): English / Publication Year: 0

Keywords: strategy; financial strategy; strategic management; business development;

The current business practice shows that the key factor of business success is the originally created and implemented corporate and business strategy. However, the importance of strategy is underestimated. The consequence is the fact that partial functional strategies in business practice do not often exist. The paper deals with the selected functional strategy – financial strategy with the aim to analyze its importance in business development. The paper focuses on the theoretical framework with emphasis on financial strategy and other related aspects. The literature review discovered that this research field is not deeply developed. Based on the theoretical background, the case study of selected company is elaborated. The main aim of this case study is to analyze and evaluate the financial strategy of the selected company and its importance in further business development. The main research methods of this paper are: case study, the selected methods of financial analysis, personal interview, the selected methods of descriptive statistics and modelling and simulating of financial strategy with the help of Vensim program. The results of the case study discovered that financial strategy of selected company focuses on conservative strategy with emphasis on lower profitability and higher liquidity. This financial strategy does not correspond with corporate investment strategy into the further development of the company. It could be stated the current financial strategy of the selected company does not reflect the whole corporate strategy and goes against other business development. It is recommended to change the financial strategy on aggressive approach with higher profitability that could follow the current corporate investment strategy.

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Algorithmic Trading Using Markov Chains: Comparing Empirical and Theoretical Yields

Author(s): Milan Svoboda,Pavla Říhová / Language(s): English / Publication Year: 0

Keywords: algorithmic trading; stock market predication; Markov chains analysis;

This study is focused on comparing empirical and theoretical yield of business strategies applied to stock markets. We continue in our previous articles in which we deal with the short-term prediction of stock markets and with creating business strategies using Markov Chains analysis. When defining a state space we assume that the stock price moves in three types of trends: primary, secondary and minor. The object of our interest is a minor trend which usually lasts for several days. During this trend the stock price accumulates a certain profit or loss in relation to the price at the beginning of the trend. The state space is defined by the size of the accumulated profit or loss. Business strategies are formed in the way that the states in which the stock price decreases generate buying signals and the states in which the stock price increases generate selling signals. Theoretical profitability of a business strategy is modeled on the basis of a matrix of transition between states probability, a matrix of evaluation of these transitions and the expected number of transactions. We calculate the parameters of this model, as well as empirical profitability, with historical data of CEZ stock during the ten years period from early 2006 to the end of 2015. In some cases empirical and theoretical results were nearly the same, in other cases they differed significantly.

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Comparison of Building Savings Banks on the Czech Market

Author(s): Libuše Svobodová,Martina Hedvičáková / Language(s): English / Publication Year: 0

Keywords: building savings; comparison; deposits; financial market; profitability;

The paper is focused on the specialized financial product on savings and also on the second most used product in the field of own housing financing in the Czech Republic, building savings. These products provides five specialized banks on the Czech market. The aim of the paper is to analyze the situation on the financial market focused on the building savings in years 2014 and 2015. The organization of the paper is as follows. Firstly a theoretical background with a review of the literature is provided, then research methodology is described, the key part brings comparison of the share of individual building societies, market share by volume of loans, according to the proportion of the total amount of deposits and according of profit of building societies. The next part will be devoted to comparison of individual financial institutions in case of savings. Českomoravská stavební spořitelna was on the basis of the results classified as the main player on the market. The article is based on primary and secondary sources. A detailed research together with the analysis and critical assessment of accessible materials will enable to identify the main objectives in the field of study. The analysis of the initial state will consequently enable to identify the key factors and knowledge.

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Co-operative Banks in Poland, Current Issues

Author(s): Łukasz Szewczyk / Language(s): English / Publication Year: 0

Keywords: co-operative banks; global financial crisis; financial system;

The aim of this study is to present current problems that co-operative banks in Poland have to face. These banks play an important role in Polish financial system but they are seen as weak and vulnerable to changes (especially connected with new regulations). It is discussed if new capital requirement regulations and directive CRR/CRD IV will have an impact on capital position of these banks in a long period of time. It is also important that in 2015 one co-operative bank collapsed and it has been the first bankruptcy in Polish banking sector since 2001. This shows that co-operative banking sector should be assessed in terms of capital adequacy and other issues. The main problem that will be discussed in this paper is connected with the adjustment of cooperative banks in Poland to the new market conditions. Capital position and efficiency of these banks will be presented through various figures and ratios. It will also be discussed what are the main barriers for development of these banks. A main research method used in this paper is critical analysis of literature connected with the subject and reports issued by different institutions (e.g. Financial Supervisory Authority). Results of the research will help to understand current problems of co-operative banking sector in Poland in a better way.

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Joint Deterministic and Stochastic Approach to Cash Balance Modelling: a Cash Model Specification and Verification

Author(s): Aleksandra Szpulak,Tomasz Michael / Language(s): English / Publication Year: 0

Keywords: cash balance model; financial modelling; deterministic model; stochastic model;

This paper refers to cash balance modelling at a company level. The goal is to specify a cash balance model that simultaneously satisfy 3 conditions: (1) it captures deterministic nature of cash flows, as cash is controllable variable, (2) it captures random component of cash flows, as cash flows are subjected to risk factors, and (3) it incorporates endogenous random component from real deviations, as typically a stochastic model build with Monte Carlo simulation technique captures exogenous random component. It is assumed in this research that a process generating cash balance can be broken down into two parts: (i) a core of a process giving base case cash balance under the managerial control, and (ii) a stochastic process generating random fluctuations about base case cash balance. It is hypothesized in the paper that separate modelling of a core and stochastic process yields a model that satisfy conditions (1) – (3) and therefore accurately describes the underlying cash balance process. Therefore, the core of a process is described by deterministic model, while a series of random fluctuations is described by compound Poisson stochastic process. In this paper, we derive and next verify a cash balance model under such joint deterministic and stochastic approach to cash balance modelling. Results indicate accurate description of the underlying process and provide promising evidence to support our research hypothesis.

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Sovereign Wealth Fund Ownership and Financial Performance of Companies Listed on the Warsaw Stock Exchange

Author(s): Dariusz Urban / Language(s): English / Publication Year: 0

Keywords: sovereign wealth funds; institutional investor; investing; emerging economies;

Sovereign Wealth Funds are investment vehicles established in order to manage in a profit oriented way pool of national wealth for future generations. Nowadays over 70 funds exist and operate on global financial markets. Similarly to other institutional investors, Sovereign Wealth Funds possess huge amounts of capital. What distinguishes them the most from other financial institutions is the fact that they are owned, managed and controlled by sovereign states, have limited liquidity needs, a lower-than-market-average-level of redemption risk, a long-term, intergenerational investment horizon and relatively high risk tolerance. The aim of this study is to test empirically the impact of Sovereign Wealth Funds’ ownership on the financial performance of targeted companies. Using the data of companies listed on the Warsaw Stock Exchange, we employ regression to analyze the relationship between the funds’ investment and financial performance of the company. The empirical findings of this research suggest that Sovereign Wealth Funds’ ownership has a positive influence on the price to book value of the firm. This article contributes to ongoing research in the field of studies related to financial aspects of SWF’s investment behavior by providing empirical evidence from emerging market.

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Connection between Exchange Rate and Balance of Payments Accounts: The Case of the Czech Republic

Author(s): Tomáš Urbanovský / Language(s): English / Publication Year: 0

Keywords: Exchange rate; balance of payments; cointegration; VECM;

Relationships between nominal exchange rate, current account and financial account of balance of payments in the Czech Republic have been investigated in presented paper. Implemented cointegration analysis and vector error correction model suggest one pair of Granger causality. It has been discovered that change in current account balance Granger-causes change in financial account balance. This relationship has nature of two-way Granger causality, which means that reversed relationship holds as well. Other relationships implying Granger causality were not found. Error terms were significant only in regressions with both accounts as dependent variables, which imply that only these variables return to their long-term equilibria. Because increase in financial account surplus leads to decrease in current account surplus (or deepening the current account deficit), excessive liberalization of Czech financial system can lead to large capital inflow, jeopardizes current account sustainability and results in currency crisis in the Czech economy.

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Comparing Financial Performance of Slovak Excellent Companies

Author(s): Lukáš Vartiak / Language(s): English / Publication Year: 0

Keywords: Business Excellence; quality; financial performance; financial indicator;

Every company tries to achieve financial prosperity and overall success which leads to an achievement of the Business Excellence status. In Slovakia, Business Excellence is being assessed annually in the National Quality Award (NQA). The EFQM Excellence Model serves as an assessment tool in the NQA. Based on the results of selfassessment, companies can be awarded as winners, finalists, performance improvers and participants. NQA’s winners gain the highest possible degree of recognition which empowers them to differentiate themselves from the competitors in the field of quality management and performance. The aim of the paper is to compare financial performance of the Slovak NQA winners within a specified time frame. To achieve the aim of the paper, financial performance of the Slovak NQA winners in the year before winning, in the year of winning and in the year after winning the Slovak NQA is being compared. These financial indicators were selected for a comparison of the Slovak NQA winners’ financial performance: sales revenue (T), earnings after taxes (EAT), return on assets (ROA), gross margin (GM) and total indebtedness (TI). A comparison is being performed with an assumption that achievement of the Business Excellence status improves financial performance of a company. Methods of analysis, comparison, selection and mathematics are being used. As a main finding may be considered that our assumption was not confirmed among all of the analyzed companies. There can be various reasons of non-improved financial performance of the Slovak NQA winners which obliges us to future research aimed at finding these reasons.

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The Evaluation of Financial Health of the Insurance Sector in the World's Insurance Centers

Author(s): Eva Vávrová,Svatopluk Nečas / Language(s): English / Publication Year: 0

Keywords: financial crisis; insurance market; insurance company; premiums written; return on assets; return on equity;

Within the world insurance market the processes associated with the globalization of markets and the integration of financial institutions concur. These processes have been affected by the outbreak, continuance and subsequent lingering of the global financial crisis. The financial crisis has manifested itself in various regions of the world insurance market in varying extent. The main objective of this paper is to assess the development of the financial health of the global insurance market during the lingering financial crisis and to adopt conclusions driven based on the analysis of the insurance sector.

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Expenses and Revenue Classifications for Managerial Purposes in the Czech State Administration Units

Author(s): Jana Vodáková,Nela Sglundová / Language(s): English / Publication Year: 0

Keywords: expense; revenue; expenses classification; cost allocation; state administration;

This paper deals with classification of expenses and revenue mainly for managerial purposes in the area of the Czech state administration. From 2011 the Czech public sector units prepare accounting data under the accrual basis obligatorily. This means among others that they record and release expenses and revenue data to external users in accordance with mandatory regulations. The main aim of the paper it to examine obligatory rules of expenses and revenue classification used by the state administration units and possibilities of their utilization for managerial purposes. Further the paper concentrates on a current state of internal cost classifications and allocation especially in the context of financial management and 3E concept monitoring. As main data sources the paper uses the Ministry of Finance of the Czech Republic standardized data, the Ministry of Defence of the Czech Republic internal data, relating legal regulations and scientific papers. Description, analysis, comparison, and synthesis of main findings were used in the paper as basic scientific methods.

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