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Recently, we hear more and more about disrupting the banking tradition so that banking services can be done from home, office or wherever we are, via computer or mobile phone, without a specific schedule. Information services have become a very important subject for banking systems, causing drastic changes that require banks to adopt these services in addition to survive in this market where technology plays the main role. Nowadays, a good number of commercial banks offer various forms of internet banking, otherwise known as online banking or electronic banking (e-banking). Using electronic banking does not mean changing the habits of using money. On the contrary, with the help of information and communication technologies, it is possible to skip the schedules, bureaucratic aspects of traditional banking, save time, faster and more efficient management of personal finances. Electronic banking is a general term that describes the entire process of making transactions without the need to physically visit a financial institution. Electronic banking has both advantages and disadvantages. It has simplified life for some people, while for others it can seem like a complex and threatening process.
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This paper aims to examine integration of supply chain and demand chain in emerging markets. We present a research model of demand and supply chain integration which responds to customer’s needs through the integrated information flows. Integration of demand and supply chain synchronizes the key processes in terms of frontend development, product planning, product design, procurement, manufacturing, sales and marketing, maintenance activities based on customer needs as process routines
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A company usually has get at least part of financing for investment projects from financial markets. If financial markets are perfect, the choice of the sources of finance does not influence investment decisions. Since financial markets are imperfect, companies find that external finance is costly or rationed. Especially small and medium – sized companies (SMEs) have difficulties in getting external financial sources. As a result, corporate investment is sensitive to the amount of internal funds. The aim of the article is to survey the impact of financial market imperfections on firm investment on the sample of 53 automotive companies in the SR. The survey was carried out during the year 2011. Using augmented accelerator model, we find supportive evidence for the fact that companies which are supposed to be more financially constrained exhibit greater investment – cash flow sensitivity. Our findings support the results of Fazzari et al. (1988) who also find that investment spending of firms with high levels of financial constraints is more sensitive to the availability of cash flow
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Movements on the global financial markets are nowadays interconnected and influenced by both fundamental and behavioural or psychological effects. During the last couple of years, besides of standard corporate results and predictions, the market volatility is significantly trigger by monetary policies of central banks and policy makers. Nevertheless, many investors find stock market indices as an appropriate way for their investments, especially at time of low bond yields. The objective of this paper is to analyse the time-varying nature of selected world stock market indices by using a correlation model as well as to evaluate the influence of behavioural effects of market participants on the volatility. The output from the model confirmed the negative correlation among selected stock indices and volatility, while real effective exchange rates effect differs. The paper highlights key aspect having weight on stock markets mainly the central bank monetary policies, public debts, currency pair fluctuations, as well as inflation levels.
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The aim of this paper is to show non-traditional approach to the causes of foreclosure crisis in 2008. Most often used story is based on idea that the crisis was result of the finance market industry where market insiders betrayed uninformed mortgage borrowers and investors. But non-traditional approach argues that borrowers and investors made decisions that were rational and logical given their ex post overly optimistic beliefs about house prices. They expected situation would have been much different than it was, but they knew theoretical risks. This can show limits of our understanding of asset price bubbles and help to design policies and help us in crisis prediction system.
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The aim of this paper is to empirically investigate the impact of R&D investments on earnings predictability. R&D investments are considered to generate one of the most valuable companies’ assets in the era of knowledge economy. This type of investment is however very different from more traditional forms of capital or financial investments. Firstly, R&D projects create more informational asymmetry between a reporting entity and investors. Information about firm’s innovation activities is confidential and expected to be hidden from competitors and as a result disclosure level of R&D intensive firms is supposedly low. Secondly, technological and market outcomes of R&D are usually associated with uncertainty and it is very difficult to determine market success of invented products, innovative services and other research accomplishments. On the basis of these two assumptions, we hypothesize that earnings of R&D intensive firms are less predictable. On the sample of more than 900 firms listed on US stock exchange, we examine the relation between firm’s R&D intensity and earnings predictability, controlling for firm’s profitability, leverage ratio, size and industry affiliation. For measuring the predictability of earnings, we use accounting based metrics proposed by Francis et al. (2006) and Lipe (1990). Earnings predictability is very desirable property of company required by analysts and investors, our findings can have practical implications for estimating cost of capital and valuation of R&D intensive firms.
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In the period of the financial crisis, the current question is how banks should invest, as interest rates and market yields are low, and capital growth is required as a result of bank regulation requirements. Balancing between risk and return in the banking sector is still sustaining and contributing to the pro-cyclical behavior of banks. This article addresses the question whether it is appropriate to undertake a high risk in the banking sector and whether the risk is adequately compensated by adequate returns. It compares the portfolio risk of traditional loans and portfolio of securities eligible for inclusion into the HTM (Held to Maturity) portfolio.
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The aim of this paper is to analyze the impact of the financial crisis on insurance markets in different regions of the global insurance market and to evaluate changes in global approaches to insurance regulation depending on the effects of the financial crisis. The financial crisis has triggered an identified banking crisis and has shifted through the contagion channels from the US mortgage market to other financial sectors and regions of the world. With regard to the integration of financial institutions and the globalization of financial markets, a number of regulatory proposals has emerged in recent years to address the impact of the crisis, to eliminate the trigger of the crisis and to prevent recurrence of the causes of the crisis. This paper builds on the contribution of the authors (Vávrová, Nečas, 2016) published at the international scientific conference European Financial System 2016, whose main objective was to assess the development of financial health of insurers within the global insurance market in the period of lingering financial crisis and to draw conclusions based on the analysis of the insurance sector.
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Computers have overtaken the most of tasks in intraday trading on modern exchanges. From stock picking to deal timing, optimized algorithms are crucial in trading process. This phenomenon is apparent on the spot as well as on derivative markets. In this paper, we consider the effects of high frequency trading on the short term volatility. The aim of the paper is to investigate the links between high frequency trading (HFT) and spot volatility. High frequency with presence of market microstructure noise and also low frequency data from German stock market are considered. We employ Markov switching models to estimate the relationship of dynamics in stock returns and changes in the activities of high frequency traders. Activity of algorithmic traders is estimated by proxy variables based on the average size of trades. The problem of optimal sampling biases is avoided by incorporating Bundi-Russell (2008) test and test of Lagrangian multipliers. Market microstructure noise can cause biasness in the estimates of the empirical volatility measures and models based on such variables.
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Financial exclusion is defined by the European Committee as a situation in which a person encounters difficulties in both access to as well as the usage of financial products and services at the level required to meet his/her needs. The idea beyond is also to enable them to lead a normal social life. It is necessary to point out that the access to financial products is understood as a possibility to use them under reasonable economic conditions. Among those most endangered by financial exclusion are, inter alia, elderly people because their reluctance to accept new technologies and opportunities provided by financial markets is much bigger than that one of younger generations. There is much evidence for that statement, some of it being the ratio of underbanked elderly people which in Poland for the aged 55-64 and over 65 is 32% and 57% respectively, with the average for the whole country population - approx. 23%. The question arises as for the reasons for such a situation and that is why the aim of this paper is to analyse the existence of barriers in the access to financial products and to verify their influence on the diagnosed higher level of financial exclusion of the generation 50+. To analyse the factors influencing behaviours of senior citizens on the financial markets, the research in the form of questionnaire sent to the group of approx. 380 citizens of the Lublin region in Poland was conducted. The results indicate that, while cooperating with financial institution, elderly people are aware of the barriers they meet such as modern technology, a professional and incomprehensible language, extensive or scarce range of banking services ,etc.
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In the insurance market, either internal or external sales method can be selected to distribute an insurance coverage. The external distribution channel (also called the intermediary channel) is represented by insurance intermediaries; the internal distribution channel (also called the employee channel) by employees of insurance companies. The new/forthcoming regulation of insurance distribution brings several changes, and alters a number of important fundamentals of the regulation of insurance distribution, in consequence insurance intermediaries, too. One of the goals of a comprehensive amendment, the introduction of a new categorization of insurance intermediaries and removal of differences in the external and internal distribution of insurance. This article is focused on the analysis of insurance distribution aiming insurance intermediaries in the context of insurance market development as well as the changes in regulation of insurance distribution as it comes to both the Czech and European law. The aim is to analyze the groups with the impact of the new regulation.
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The importance of agricultural commodities markets is growing and their dynamics have changed substantially recently, especially in the period after the financial crisis of 2008. The aim of the paper is to explain agricultural commodities price movements by assessing an impact of multiple economic and financial factors. We study 6 agricultural commodities, 3 representatives of the grain market and 3 soft commodities, in a time span of 20 years ranging from 01/01/1997 to 31/12/2016. We identify 9 macroeconomic and financial drivers. The data are collected from Bloomberg. We use mixed-data-sampling methodology that enables us to study drivers of various frequencies (daily, weekly and monthly) simultaneously in a single linear model. We do not find a link between energy market and agricultural commodities markets suggested by previous papers and thus we conclude that the link is not linear. In addition, results show prevailing impact of the financial variables over the impact of the macroeconomic factors, which is in line with the hypothesis of the commodity market financialization. We also break down the studied period into two fractions divided by the 2008 crisis and we find that the financialization occurred after the crisis of 2008.
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The research is aimed at analyzing influence of various personal characteristics of young students along with financial literacy on their expected financial behavior. Besides financial literacy, we singled out such personal characteristics as prodigality, credulity, risk preference and propensity for offence or unethical behavior. Our research is based on the data obtained by sample questionnaire survey of full-time students learning economics at Lobachevsky State University of Nizhni Novgorord, Russia. For evaluation of each personal characteristic we asked respondents to answer twelve direct and indirect questions, which enabled us to both outline distribution of the estimated features among students and calculate their average values. For the whole sample we found medium positive correlation between prodigality, risk preference and propensity for offence or unethical behavior, while other pairs demonstrated weak correlations. Further clustering of the whole sample into six approximately equal groups with use of the Ward’s method allowed us to receive more pronounced dependencies between characteristics within these groups, albeit different by sign. We found out that combining various characteristics with different level of financial literacy ensured quite opposite types of expected financial behavior. This emphasizes the role of personality development as a complex task even more important for students just entering the financial market.
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Since starting its business in 1947, the IMF also began to support member countries with balance of payments problems by giving them credits. This process was accompanying by design of the respective stabilization (financial) program. In the early 50th, a specific approach in the form of a simple model as well as accompanying set of conditions for ensuring financial stability was developed as the base of the IMF´s approach. Afterwards, the methodology of the program design has been changing in accordance with changing conditions. The aim of the paper is by method of historic analysis to find out how the IMF has been changing the way of construction of its stabilization programs from the side of theory and methodology and how it complies with stabilization mandate of the IMF. There are some criticisms that claim the IMF fails to fulfill its aims also for unsound methodological framework of stabilization programs. Our analysis shows that thanks to the flexibility of the IMF´s approach that allows to prepare country tailored programs, this institution have succeeded in the course of time in creating of the reliable framework for preparing of the stabilization programs.
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The aim of the paper is to examine “anomalies” of instantaneous demand and supply in the stock exchange that was detected as alarm signals of a financial crisis in authors’ investigations. The authors proposed to record and to analyze online information on bid-ask quotations in the stock exchange to monitor how the large investors’ sentiment varies in real time. The original theoretical model of share pricing developed in the previous authors’ papers plays a key role for such analysis. The model is based on the concept of time-varying Walrasian equilibrium under exchange processes in the stock exchange. Many observations for emerging stock market in Russia between 2008 and 2017 show that if capital holdings of traders on the side of demand is systematically higher than the ones on the side of supply, in most cases the uptrend will take place for share price later on; similar statement is also valid for downtrend forecasting. However, this regularity is violated in rare conditions that may be specified as “anomalies” of demand and supply. The result of the analysis carried out is that the anomalies are the specific features of drastic and protracted crises, such as stock market crash in Russia in 2008-2009. The hypothesis that investigating the anomalies of demand and supply one can foresee the beginning of protracted crisis as well as its finish was successfully verified: an investment strategy based on the idea has shown a statistically significant “abnormal” return over the period of the crisis.
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The duration analysis as a dynamic method can constitute an effective tool in the internal system of measurement and control of interest rate risk in bank book. In this article, the author outlines the practical application of the duration analysis in the management of the bank balance when it comes to the interest rate risk. The key objective of this article is to show the use of duration method in estimating internal capital budget to cover the interest rate risk by the bank. Duration analysis is a sophisticated method of measuring interest rate risk used by Polish banks, with traditional banking practice, for single financial instruments. The originality of the article stems from its author’s proposition to use the duration method to manage the entire portfolio of fixed income instruments in the banks’ balance. The study of interest rate risk was conducted based on financial reports from a selected cooperative bank.
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This empirical study deals with stochastic modelling of a short-term share price development. We use Markov chain analysis (MCA) to predict the share price development. When defining a state space we assume that the share price moves in three types of trends: primary, secondary and minor. The subject of our interest is a minor trend, which usually lasts for several days. During this trend the share 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 amount of the accumulated profit or loss. The aim of this study is to compare two approaches to modelling the state space. In the first approach, we assume homogeneous Markov chains, i.e. approximately the same volatility, and MCA is performed with unvarying state space. In the second approach, we assume non-homogeneous Markov chains, i.e. a changing volatility, and MCA is performed with varying state space. We create trading strategies for automatic generation of buying and selling orders based on these models. Three business systems have been created for each approach. The profitability of each business system is calculated and compared. The study was performed using historical daily prices (opening and closing) of CEZ shares from the beginning of 2006 until the end of 2016. This study has proved that trading models with varying state space, on the average, outperform trading models with unvarying state space.
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Nowadays online auctions become more and more popular. There are many participants, who buy different kinds of products every day. They have information of products and historical prices thanks to new technology and wide access to Internet. The main aim of this work is to check if on-line auction markets are still inefficient (like traditional auctions characterized by geographical fragmentation and limited access to information) and it is possible to gain abnormal profit. Data used in the researches come from one of the Polish biggest and oldest online auction market – Allegro.pl. The category Mobile Phones in Electronics was chosen for the researches. The on-line auction market efficiency was checked by two tests: a unit roots test and variance ratio test. Both tests showed that auctions during the examined period were inefficient. It could mean that it is possible to gain abnormal return with on–line auctions in Poland. Of course, individually participants of on–line auctions usually do not possess a significant amount of money but commonly pose very important market, that’s why it seems to be the important problem.
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