Issue #4 (Volume 17 2020)

Foreign direct investment (FDI) inflows to Vietnam have increased significantly in recent years. Theoretically, capital inflows will put pressure on the overvaluation of local currencies in countries, despite different exchange rate mechanisms. So, the problem facing the Vietnamese government is the need to examine the relationship between the exchange rate and FDI in order to develop effective policies. This study examined the relationship between the exchange rate and FDI in Vietnam in the period of 2005–2019 using the VAR (vector autoregression) model based on quarterly frequency data. The new points of this study are: (i) using the real effective exchange rate (REER) of the Vietnamese currency with 143 major trading partners of Vietnam; and (ii) adding two control variables into the VAR model to examine the relationship between the exchange rate and FDI in Vietnam – a case study for developing countries. The findings show that, firstly, there is a positive causal relationship between FDI and Vietnam’s real effective exchange rate. Secondly, trade openness has a positive impact on FDI and REER in Vietnam. Thirdly, economic growth has an impact on REER, but no statistically significant impact on FDI was found. The findings can provide useful information to help policymakers plan and make decisions on future policies and support further research studies.

This study aims to examine the connection between cash level and corporate performance, as well as the cash level determinants for all nonfinancial firms in the Gulf Cooperation Council (GCC) countries. The empirical analysis employs numerous statistical techniques such as panel regression models and the Generalized Methods of Moments (GMM). The main result of the study confirms a positive relationship between the cash level and both the corporate performance and the firm value, which signifies the role of cash in supporting the corporate productive activities in times of rare cash. The results also show that large firms, especially those with less leverage, experience better corporate performance. Additionally, the results demonstrate that when using different levels of cash holdings as well as different levels of firm size, both the magnitude and the significant positive effect of the cash level on corporate performance and firm value are not altered. For the determinants of the cash level, the results confirm that the most important variables are product competition, free cash flow, corporate liquidity, capital expenditures, and financial constraints. The results do not confirm that the amount of dividend paid has a significant influence on the cash level. All results are robust to the various econometric specifications employed in this study.

Acknowledgment
This study is supported by Kuwait University research sector, grant number IF-03/18.

In the context of integration, the capital market has important implications for strengthening economic resources for development. This becomes even more important as the derivative securities market has recently emerged in some countries. It is an opportunity for countries to approach many capital sources, especially foreign capital. The objective of this paper is to identify factors affecting the development of Vietnamese derivative financial markets. The paper uses exploratory factor analysis and ordinary least squares to test the model. A survey sample includes 152 managers and experts of Vietnamese derivative securities companies in 2019. The results show that the International integration factor has the same direction, while the Legal environment factor has an adverse impact on the development of the Vietnamese derivative securities market. Therefore, Vietnamese regulatory bodies should amend some laws to create stability in the legal corridor, and state management agencies in the country need the orientation and the international integration strategy to attract financial resources for the development of Vietnam’s economy.

The topic of gender diversity in the workforce has received an increasing amount of attention and even resulted in developing a new term, sheconomy, which describes an economy in which women are the main economic players. This study examines the relationship between female workforce participation and corporate bond credit ratings. Using an ordered logit regression model and a sample of listed companies on the Korea Exchange, the results show that the higher the number and proportion of women in the workforce (based on female directors and female employees), the higher the credit rating. However, for chaebol companies, where female directors’ positive role is limited by chaebol owners, a negative (–) moderating effect is observed in the relationship between female workforce participation and credit ratings. Besides, female directors who are members of the owner’s family and were appointed as a means of succession negatively affect a company’s value. The findings contribute to accounting and finance research on the relationship between governance and credit ratings in terms of gender diversity. Policy implications regarding the recent system changes in Korea, including introducing a gender quota system, can be derived from the study.

The implementation of tools such as Genetic Algorithms has not been exploited for asset price prediction despite their power, robustness, and potential application in the stock market. This paper aims to fill the gap existing in the literature on the use of Genetic Algorithms for predicting asset pricing of investment strategies into stock markets and investigate its advantages over its peers Buy & Hold and traditional technical analysis. The Genetic Algorithms strategy applied to the MACD was carried out in two different validation periods and sought to optimize the parameters that generate the buy-sell signals. The performance between the machine learning-based approach, technical analysis with the MACD and B&H was compared. The results suggest that it is possible to find optimal values of the technical indicator parameters that result in a higher return on investment through Genetic Algorithms, beating the traditional technical analysis and B&H by around 4%. This study offers a new insight for practitioners, traders, and finance researchers to take advantage of Genetic Algorithms for trading rules application in forecasting financial asset returns under a more efficient and robust methodology based on historical data analysis.

In July 2018, the Vietnam Commodity Exchange (VNX) was transferred into the Mercantile Exchange of Vietnam (MXV) to hedge price risks through futures on international commodity exchanges. This research aimed to verify the efficiency of futures on ICE EU and ICE US under the perspective of hedging for Vietnamese coffee, determine optimal hedging ratios and the optimal number of each futures contract, and investigate the feasibility of introducing domestic commodity exchanges in Vietnam. Using the Vector Error Correction Model (VECM), the results show that (1) Robusta futures with expiration dates of January, March, May, and July on ICE EU are efficient hedging tools, but the adverse result is justified for Arabica futures on ICE US; (2) Robusta futures with the expiration date of January are the best in terms of risk management for Vietnamese coffee market; (3) optimal hedge ratio of Robusta futures of around 34% is much lower than ratios showed by previous researches; (4) in the short term, introducing coffee futures into the domestic commodity exchanges is still not feasible in the short term, but should be considered in the long term in Vietnam. This is the first study providing empirical evidence about the hedging role of futures contracts on ICE EU and ICE US, contributing to enrich the existing empirical evidence on the hedging role of futures for the agricultural sector.

A firm with proper cash flow management can increase its financial performance, while improper management might lead to financial failure. Therefore, it is significant for a firm to manage cash inflows and outflows properly. The current study investigates the effect of cash flow from operations (CFOs) on the financial performance of insurance and manufacturing companies in Saudi Arabia. The data were extracted from companies’ annual reports by considering Return on Assets (ROA) and Return on Equity (ROE) as dependent variables, CFOs as an explanatory variable, firm size (SIZE) and Leverage (LEV) as control variables, and an industry dummy. The results report a positive and significant association between financial performance (ROA and ROE) and operating cash flows (CFOs), and a negative association for SIZE and LEV. Therefore, the study concludes that the firms’ operating cash flows in the insurance and manufacturing sectors in Saudi Arabia affect financial performance.

Interest in the relationship between credit rating and economic growth is growing as emerging economies increasingly integrate into international financial markets. Without credit ratings, developing economies would not have been able to successfully issue their sovereign bonds to support economic growth. Therefore, this paper examines a causality relationship between Standard & Poor’s long-term foreign currency sovereign credit ratings and economic growth in 19 Sub-Saharan countries over the period from 2003 to 2018. The results of the Granger causality tests show a unidirectional causality from sovereign credit ratings to economic growth, not vice versa. This implies that economic growth is not significant in determining sovereign credit ratings. It can thus be concluded from these findings that sovereign credit ratings are proactive actions by rating agencies that are relevant in determining future economic growth. Thus, investors benefit from utilizing credit ratings to prevent inherent information asymmetry in fundamental economic factors. Therefore, it is important for policy makers to pay attention to sovereign credit ratings when formulating macroeconomic policies.

The influence of corporate diversification on firm value is an important field in strategy research. Studies in strategic management and finance research have analyzed value creation through product and geographic diversification from a shareholder’s perspective. This study completes this picture by analyzing the bondholders’ perspective. It is suggested that product diversification creates value for bondholders, while geographic diversification destroys bondholder value. The hypotheses are tested on a sample of S&P 1,200 firms in 2001–2011 using a fixed-effects panel model. Drawing on prior research, bondholder value creation is measured using the Merton model. The empirical results support the hypothesis that bondholders gain value through product diversification but lose value through geographic diversification. Considering prior research results, these results show that product diversification is preferable for bondholders, while geographic diversification is preferable from a shareholder’s perspective. The opposite effects of both diversification strategies on shareholders, respectively, bondholders offer an important new perspective on corporate diversification. The results show that firms with a high level of corporate debt should struggle to justify a strategy involving geographic dispersion of activities and support a more diversified product portfolio strategy. This study also offers several avenues for investigating the bondholder’s perspective on corporate diversification in more detail.

The resource-based view theory suggests that as firms’ resource bases differ along the corporate life cycle, even corporate policies such as cash holdings vary along the life cycle. This study seeks to understand the effect of firm’s life cycle on corporate cash holding behavior. Previous literature has sought to investigate the firm and institutional determinants of corporate cash holdings. Using the resource-based view theory, this study investigates whether corporate life cycle can be another determinant of corporate cash holdings. A panel data analysis of a sample of 112 Johannesburg Stock Exchange (JSE) listed firms from 2011 to 2018 is utilized to determine if firm’s life cycle does influence cash holding behavior. Dickinson’s cash flow analysis is used to proxy life cycle stages and control other known determinants of corporate cash holdings such as firm size, leverage, profitability, dividend payments, and growth opportunities. Contrary to other studies, this study finds no significant relationship between life cycle stages and corporate cash holdings, suggesting that corporate cash holdings for South African firms are driven by other factors other than life cycle resource allocations. However, it is found that prior year cash balances, firm size, and profitability have significant positive relationships with cash holdings. It is also found that liquid asset substitutes, leverage, and investment opportunities exert a significant and negative influence on corporate cash holdings.

The study aimed to find out the relationship between the application of international financial reporting standards (IFRS) and the accounting information quality (AIQ) in Jordan. The research data was collected from 59 industrial companies listed on the Amman Stock Exchange (ASE) between 2010 and 2018. Panel data was used to measure an independent variable (the application of IFRS), and a questionnaire (a 5-point Likert scale) was applied to measure a dependent variable (AIQ). Multiple regression was used to test hypotheses. The study concluded that the application of IFRS in terms of earnings management and trading volume had a positive relationship with AIQ. Finally, the study recommended validating the transparency of financial reporting to improve the efficiency of the Jordanian financial market.

This paper discusses the volatility spillovers between the Greek debt crisis and the Cypriot financial crisis. Cyprus was in the spotlight of financial markets due to significant problems stemming from the banking sector, which were dealt with by EU regulators with a bail-in on bank deposits. The current analysis aims to shed light on the reasons behind implementing this novel approach to bank distress. The study uses a Dynamic Conditional Correlation model on the returns of the stock markets of the two countries, which shows strong spillover effects during the period leading up to the 2013 Cypriot crisis, but a significant decrease of these effects from then on. The results confirm the close interdependence of the Greek and Cypriot economies before 2013 and show that this interdependence was limited from that point onwards. This would indicate that since the risk of contagion to the Eurozone had diminished, regulators could test the bail-in solution in Cyprus in 2015. The current work contributes to the discussion on the interdependence of European economies. The paper’s findings can also be applied to other emerging European economies.

Personal financial management is important, given uncertainties in both financial and economic environment. However, published research on African Generation Y students’ personal finance behavior and knowledge is limited. This study aimed to evaluate African Generation Y students’ personal finance behavior in terms of their attitudes towards financial planning and whether this cohort believes that they have the skills to manage their finances successfully. In addition, this study sought to evaluate African Generation Y students’ knowledge regarding personal finance. A convenience sample of 500 African students across the campuses of two South African public higher education institutions situated in the Gauteng province was surveyed using structured, self-administered questionnaires. The t-test results indicate that the sample deems the process of planning personal finances and managing credit, insurance, investment, and estate, as important. Moreover, the students scored low in the broad personal finance knowledge areas of basic finance, saving, spending, and debt, suggesting that this cohort is financially illiterate. The results also indicated that the students think they have the financial skillset to manage their personal finances. A high Pearson’s correlation coefficient was noted between sampled participants’ personal finance behavior and their observed personal finance management skillset regarding the relationship between the constructs. However, an insignificant relationship was found between attitudes towards personal finance and financial knowledge and between financial knowledge and African Generation Y students’ apparent finance skills. Understanding African Generation Y students’ personal finance behavior and knowledge, universities and financial institutions can more effectively identify gaps and deficiencies in students’ personal finance endeavors.

The study examines the association between the disclosure quality and cost stickiness in the Saudi Arabian context. The influence of accounting information on the decisions of different stakeholders gives a clear idea of the importance of this accounting information and its reporting. Annual accounting reports form the final stage of the disclosure process. Moreover, the recognition of different types of costs is an important issue in cost and management accounting. Submitting quality annual reports has always been an interesting concern to different stakeholders of a company. The study sample consists of 102 companies listed on the Saudi Stock Exchange Tadawul between 2009 and 2018. The study uses pooled OLS to investigate the association between financial disclosure and cost stickiness. The relationship of financial reporting quality with the cost of goods sold is negative, positive with the sales cost, and positive and insignificant with administrative costs. The study concludes that variables related to sticky costs affect financial quality disclosures. The impact of sticky cost variables on the quality of disclosures is different due to the transition policies adopted by the Saudi Arabian economy.

Saudi Arabia is a petroleum resource-rich country, and half of the GDP of Saudi Arabia is based on the Oil Sector Revenue (OSR). The OSR is governed by the Oil Prices (OP), while GDP is also affected by the OSR in petroleum exporting companies. The volatility of OP governs the OSR and GDP positively and perfectly as the oil sector contributes approximately half of the GDP of Saudi Arabia. The study analyzes the governance of the Public Spending Avenues (PSA) by the OP, OSR, and GDP in the long and short run and based on the secondary data taken from the website of the Saudi Arabian Monetary Authority (SAMA). Coefficient of Variations (CV), Chain-based Index (CBI) numbers, Fixed-based Index (FBI) numbers, and Analysis of Variances (ANOVA) of OP and other dependent variables calculated to get the normality, sensitivity, trend, and significance difference among the sensitivity and trend of variables, while Pearson’s correlations establish the cause-effect relationship among the variables. The study reveals that oil price volatility does not affect the OSR, GDP, and ultimately public spending in the long run. However, there is governance of volatility of OP that can be seen on OSR, GDP, and ultimately on PSA in the short run. Saudi Arabian government enhances its spending on PSA and especially on education while lowering the OP. There is a need to diversify the income resources to minimize the reliability of oil prices and budget deficit and consider the sensitivity of oil prices on the economy by the policymakers to formulate the policies to minimize the impact of volatility of OP on the economy.

Acknowledgment
The author would like to thank the Deanship of Scientific Research, Prince Sattam Bin Abdulaziz University, Saudi Arabia.

This study aims to determine whether the loan granted factor can affect peer-to-peer lending in Indonesia. The factors investigated in this research are the loan amount, loan period, interest rate, gender, and loan history using the data from registered and licensed peer-to-peer lending by the Financial Services Authority or Otoritas Jasa Keuangan (OJK) on November 2019. By examining 1,006 loans, the analytical method used is binary logistic regression with a significance level of alpha 0.05. The results of this research are loan amount, loan period, and loan history have the strongest impact on borrowers’ loan funding decision, suggesting that these loan characteristics can signal information that standard measures are used for loan funding. However, interest rate and gender have no significant effect on loan granted. Overall, loan funding decisions are based on proper and relevant signals given by loan characteristics.

Modern insurance business, including in developing countries, is associated with the introduction of innovations. The purpose of this paper is to clarify the features of the insurance market’s innovation in Ukraine by reviewing the literature and analytical data on the market as a whole and its individual participants. The results show that innovations implemented in the insurance market can be classified according to certain characteristics, which provides opportunities for its empirical study. The analysis reveals that the peculiarities of the innovative development of the Ukrainian insurance market are determined by many factors, among which digitalization and increased risks due to the COVID-19 pandemic are the main ones today. Based on the analysis of leading insurance companies’ practice, it is concluded that they implement only a limited amount of innovations, mainly of incremental and combinatorial types, and do not actively use modern communication channels with consumers. The results highlight the need for insurance and FinTech companies to cooperate in the innovation ecosystem, which is still being formed in the Ukrainian insurance market. The study also considers the possibility of using a system of indicators to assess the innovativeness of insurance companies.

This study contributes to the intellectual capital (IC) area of literature by investigating the impact of IC on the firm’s financial performance of two main sectors in the Bahrain Bourse, financial and service sectors, during five years, 2013–2017. The study employs canonical correlation analysis as a unique statistical method to analyze data gathered from 29 sampled companies, representing 145 firm-year observations over the five years. Two groups of variables are employed. The first represents the firm’s financial performance with two variables (return on equity – ROE and return on assets – ROA), while the second includes three intellectual capital components, namely human, customer, and structural capital. Findings related to the financial sector reveal that all IC components (human capital, customer capital, and structural capital) have positive correlations with firm performance except for the labor costs variable (the sub-variable of human capital), which has a negative correlation with firm’s performance. Human capital is also found to be the most significant component of the IC, while structural capital is reported as the lowest effect on the firm’s performance, consistent with some previous research findings. Furthermore, the services sector results revealed that IC is significantly associated with the firm’s performance. Moreover, two sub-variables of human capital (number of Bahraini employees and labor costs) have the most significant impact on the firm’s performance.

COVID-19 has impacted the world economy in an unprecedented manner; the financial markets indicate the same. This spontaneous event landed most of the stock markets into extreme volatility. Large capital outflow and extreme rapid fall were seen among almost all the world financial markets. Though similar trend prevailed everywhere during this pandemic, the impact could not be accumulated in absolute terms. Using the data of five stock markets, the current study endeavored to draw an impact of COVID-19 on major stock exchanges. The study uses wavelet coherency analysis on one-year daily data from June 2019 to May 2020 of five stock markets: Bombay Stock Exchange (BSE), London Stock Exchange (LSE), NASDAQ, Tokyo Stock Exchange (Nikkei), and Shanghai Stock Exchange. It is observed that there are time-variation and scale-variation in co-movements between the studied markets. During the crisis, the co-movement concentrates on a short time scale, even for two days. These results have significant implications for international investors, which will help them in portfolio diversification with time elements. All the stock markets under study have indicated co-movement at different time scales and frequencies with varying cross-power levels. However, the concentration of co-movement is found the most between the UK and the US stock markets. It is the least between Japan and the UK. In BSE, co-movement at shorter time scales started late. NASDAQ is leading only in one case, i.e., Shanghai Stock Exchange. BSE is not leading any stock index. LSE is in the leading position in all four cases. It has also been observed that co-movement started to concentrate at a shorter time scale as soon as the impact of the crisis increased.

The attempt to predict stock price movements has occupied investors ever since. Reliable forecasts are a basis for investment management, and improved forecasting results lead to enhanced portfolio performance and sound risk management. While forecasting using the Wiener process has received great attention in the literature, spectral time series analysis has been disregarded in this respect. The paper’s main objective is to evaluate whether spectral time series analysis can produce reliable forecasts of the Aurubis stock price. Aurubis poses a suitable candidate for an investor’s portfolio due to its sound economic and financial situation and the steady dividend policy. Additionally, reliable management contributes to making Aurubis an investment opportunity. To judge if the achieved forecast results can be considered satisfactory, they are compared against the simulation results of a Wiener process. After de-trending the time series using an Augmented Dickey-Fuller test, the residuals were compartmentalized into sine and cosine functions. The frequencies, amplitude, and phase were obtained using the Fast Fourier transform. The mean absolute percentage error measured the accuracy of the stock price prediction, and the results showed that the spectral analysis was able to deliver superior results when comparing the simulation using a Wiener process. Hence, spectral time series can enhance stock price forecasts and consequently improve risk management.

The paper examines entrepreneurs’ attitudes towards chosen problems of managing financial risk in the V4 countries’ small and medium-sized enterprises. Financial risk has a significant effect on SMEs’ operations and their sustainability in the market. Entrepreneurs’ attitudes were quantified in terms of the defined aim, and a comparison of the differences in the intensity of these perceptions was made. An empirical investigation was accomplished in the V4 countries via an online questionnaire in 2020 (before the onset of the corona-crisis). A total of 1,585 valid questionnaires were obtained. The results were compared using Chi-squared and Z-score. Entrepreneurs in all V4 countries perceive financial risk correctly as an everyday part of their business activities. Their perceptions are very similar in all V4 countries. SMEs in the V4 countries evaluated the financial performance of their companies quite positively. Entrepreneurs in this research have a relatively high opinion of their financial risk management knowledge, which they presented accordingly. The research also revealed that Hungarian entrepreneurs, instead of those from the other three V4 countries, have a higher opinion of their financial risk capabilities. They highly evaluated their financial risk management knowledge and showed a higher self-confidence in managing financial risk.

The banking sector is at risk of worsening loan quality, which is a major threat to the financial system’s stability. The impact of foreign direct investment (FDI) inflows on nonperforming loans (NPLs) in the United Arab Emirates (UAE) is empirically investigated in this study. The data from 2008 to 2017 are collected and analyzed through the ordinary least squares (OLS) technique. The findings reveal that FDI inflows reduced the size of NPLs during the economic crisis. Also, the combined effect of higher FDI inflows and bank efficiency reduced the size of NPLs for banks, while the combined effect of FDI inflows and better institutions, such as strong regulatory quality, did not reduce the size of NPLs but rather increased the size of NPLs. The findings have implications and contribute to the literature to establish a relationship between FDI inflows and NPLs by examining the relationship between FDI inflows and NPLs in the context of banks in the UAE.

This paper examines whether mutual fund managers incorporate environmental, social, and governance (ESG) factors when deciding which sector to invest on behalf of their trustees. In doing this, the top 20 South African mutual fund companies (asset managers) listed on the Johannesburg Stock Exchange (JSE) were selected. The paper identified the top 30 JSE listed companies (in the large industrial, equipment, and machinery sectors, excluding unlisted and service-oriented companies) where trustees’ funds were invested (with a total of 28 companies between 2007 and 2017) from the mutual fund companies’ Equity Fund Fact Sheets 2017 (representing recent investment focus). ESG data were collected from the integrated and sustainability reports at the sampled companies’ websites, and financial data were sourced from the IRESS database. This study adopted the panel data analysis. The results show an insignificant negative relationship between the ESG proxies (water usage, employee health and safety cost [number of work-related fatalities], percentage of women on corporate board) and return on equity (ROE). This means that the sampled companies disregard the United Nations Principle of Responsible Investment (UN PRI) guideline, suggesting that asset managers focus on increasing returns on shareholders’ investment without considering ESG issues. The paper concludes that the disregard for responsible investment guidelines does not encourage companies to improve their unsustainable business practices.

Traditional methods used for real estate project valuation, such as the static Net Present Value, have some limitations, as these methods do not consider the possibility of a change in the initial conditions of the project or during its development. On the other hand, the real options approach allows for flexibility in evaluating a real estate project, improving the decision-making process as it helps identify the optimal strategy and timing for the construction phases. The paper deals with evaluating an actual real estate project in La Rioja (Spain) using different options to estimate its final Net Present Value. The results show that the real estate project would be profitable under several scenarios, although the valuations can vary significantly among the different types of options. This is because some options add more value to the project than others, depending on their cost and the uncertainty they eliminate. In contrast, the results obtained using the traditional static method would have led a real estate developer to discard the project completely, as its Net Present Value would have been negative. This confirms that the introduction of flexibility in real estate developments creates additional value by allowing developers and investors to dynamically react to changes in the market, thus making better investment decisions and finding real estate investment opportunities that otherwise would not be considered at all.

As the world has been struck with a global financial crisis, Middle Eastern countries have been affected as well. Thus, Islamic banks have expanded, and the competitive advantage has become intensive with the increased number of conventional banks in the global banking system. This manuscript is aimed to examine the impact of macroeconomic and bank-specific factors on Islamic bank financing in the Middle Eastern countries. Therefore, the Vector Error Correction Model and the Granger causality test were run from 2009 to 2018 to detect the long- and short-run relationship between the explanatory variables and Islamic bank financing. The results suggest that both inflation and profitability negatively impact Islamic bank financing in the long run. The paper also revealed bidirectional causality between the variables GDP and bank size and Islamic bank financing. It shows that GDP and bank size are highly dominant factors of Islamic bank financing in the short run. Thus, this paper provides evidence that any short-run shock in the variables of GDP, inflation, and bank size will cause a long-term relationship with Islamic bank financing. This article’s novelty is to ensure resilience within the Islamic banking system during and after the financial crisis. It provides evidence that Islamic banks can cushion their financial activities from economic volatility during the crisis. The results found can be used to predict the growth of Islamic bank financing in upcoming years in the Middle East and all emerging countries.

Socio-economic development of a region is based on its production capacity. However, most regions in Russia are characterized by financial instability of local enterprises and the lack of a balanced structure of the regional economy. Insurance is an instrument of financial protection against risks, and its effective functioning is important for the development of the manufacturing sector, especially in depressed regions.
This paper aims to highlight the mechanisms for increasing the production capacity of a region and reducing business risks with the help of insurance instruments and to provide appropriate recommendations for the development of the insurance market. This is planned to be achieved on the basis of analysis and processing of existing scientific research in this field and statistical materials.
For this, a typology of regions was developed, which reflects the level of production in the region and is important in terms of developing the regional insurance market. This allows assessing the impact of insurance coverage in the region on the development of its production capacity. The proposed typology allows determining the causes of production inefficiency. The conformity of the development of the regional insurance market to the needs for insurance coverage of the production sector in the region was assessed. The identified imbalance between the provision of insurance coverage and the need for it allowed demonstrating an additional need for insurance, as well as working out a program for its development.
The obtained results are illustrated using the example of the Republic of Khakassia, a constituent entity of the Siberian Federal District of the Russian Federation. To implement risk management in the manufacturing sector, schemes of interaction between insurance market participants using commercial and non-commercial insurance are proposed.

Acknowledgment
The paper was written under the grant from the Russian Foundation for Basic Research – Development of a Methodology for Green and Infrastructure Investment by Institutional Investors in the Context of Pension Reforms.

The pension system’s construction is an important element of the public finance system and the state budget policy. It is a relevant and important topic from the perspective of the level of cash benefits for future retirees after they finish their professional careers.
The aim of the paper is to present and analyze the evolution of solutions in the construction of the pension system in Poland since its first reform in 1999. The paper analyzes various options of investing for future pensions allowed by law in Poland. Simulations of the levels of future pension benefits are based on different variations, including membership or non-membership in an Employee Capital Plan and membership or non-membership in an Individual Retirement Account after the liquidation of Open Pension Funds.
According to the calculations, the future pensioner can count on the total payment from the commercial pillars, assuming the average life expectancy in Poland is reached: PLN 230,100 (Option I), PLN 346,698 (Option II), PLN 187,643 (Option III), and PLN 304,240 (Option IV), respectively.
It is an emphasized fact that ensuring the living standard’s expected level after reaching retirement age is strictly dependent on voluntary investments for future benefits during professional activity.

The stronger the level of economic integration between countries, the greater the need to study the formation patterns of the stock market reaction to the financial information signals. This concerns the Ukrainian stock market, which is now in its infancy, and which reaction to financial information signals is sometimes ambiguous. The research aims to identify the formation patterns of return and volatility indicators of the Ukrainian stock market reaction to the US financial information signals. To assess the direct nature of US financial information signals effect on the PFTS stock index, the GARCH econometric modeling toolkit was applied. The research information base is the PFTS stock index and the Federal Reserve System financial information signals at the discount rate for 2000–2019. The fetch is divided into intervals corresponded to the ascent and decline phases of the financial cycle. It was found that an unforeseen increase in the discount rate at the financial cycle decline phase by 25 basis points decreases the PFTS stock index return, on average by 2.9%. Besides, the hypothesis about the general change stabilizing effect in the discount rate on the Ukrainian stock market volatility at the financial cycle growth phase was confirmed. Nevertheless, for investors, the most essential is the regulator’s monetary signals in the discount rate at the financial cycle decline phases rather than at the ascent phases because there is a more significant increase in the volatility level.

The selection of financing is a top priority for businesses, particularly in short- and long-term investment decisions. Mixing debt and equity leads to decisions on the financial structure for businesses. This research analyzes the moderate position of company size and the interest rate in the capital structure over six years (2013–2018) for 29 listed Pakistani enterprises operating in the sugar market. This research employed static panel analysis and dynamic panel analysis on linear and nonlinear regression methods. The capital structure included debt to capital ratio, non-current liabilities, plus current liabilities to capital as a dependent variable. Independent variables were profitability, firm size, tangibility, Non-Debt Tax Shield, liquidity, and macroeconomic variables were exchange rates and interest rates. The investigation reported that profitability, firm size, and Non-Debt Tax Shield were significant and negative, while tangibility and interest rates significantly and positively affected debt to capital ratio. This means the sugar sector has greater financial leverage to manage the funding obligations for the better performance of firms. Therefore, the outcomes revealed that the moderators have an important influence on capital structure.

Investors invest in a foreign market to reap the benefits of currency differences. The change in the value of underlying assets affects these hedged funds and, at the same time, restricts investors from higher return possible in unhedged funds. This study aims to examine the performance of most actively traded shares in Exchange Traded Fund and any influence, along with tracking the information from the index. This study also analyzes the currency fluctuation and its impact on returns and volatility of ETF and index. The equity ETF, which tracks NASDAQ (NDX 100), is chosen for the study, and the data analysis is carried out using statistical methods such as correlation, regression, and GARCH model. The study utilizes the currency rate data from 2013 to 2018 of USD, GBP, and INR and examines its effect on the NDX (NASDAQ). The study emphasizes whether the ETF as a basket of securities is insensitive to currency rate fluctuations. It is found that the response of ETF to the currency movements is likely due to its underlying index. The study concludes that Motilal Oswal shares in NASDAQ 100 ETF are highly sensitive to the NDX 100 movements; thus, there is no direct impact between ETF and index performance through exchange rate fluctuation.

The present study has attempted to discuss the association between corporate hedging theories and the usage of foreign currency loans by companies listed in India. A total of 349 non-financial companies were selected, and the data for the financial year ending 31st March, 2018 were considered for the analysis. The descriptive statistics indicate that 55% of the sample companies had borrowed funds in foreign currency. The companies were highly levered and maintained adequate short-term assets to honor short-term obligations. A logit model was employed for analyzing the cross-sectional data. The dependent variable being binary (‘0’ for non-user of foreign currency loans and ‘1’ for foreign currency loan user), the study found the variable ‘industry type’ to have a significant association with usage of foreign currency loans. Companies from the manufacturing sector were likely to use foreign currency loans than companies from the services sector. Debt to net worth, export to sales, revenue (log of revenue) were the variables that significantly influenced the likelihood of companies raising foreign currency loans. Interest coverage ratio had a negative influence on the likelihood of companies opting for foreign currency loans. Hosmer and Lemeshow test showed that the model is a good fit indicating 73% accuracy in predicting the users of foreign currency loans as ‘foreign currency loan users’. Theories such as financial distress, size, and extent of international operations explain why companies raise foreign currency loans.

This paper examines the intricate link between unobservable characteristics of directors on the corporate board and firm performance. It aims to extend the literature on corporate governance and firm strategic performance from the perspective of emerging African economies. A mix of performance measures were used (Tobin Q, return on assets, and share price) and unobservable characteristics were captured as a stochastic element or heterogeneity of observable board characteristics (board activity, gender diversity, size, and independence). The study applied non-linear generalized auto-regressive conditional heteroscedasticity model to examine the data set consisting of 299 firm-year observations from 23 financial firms listed on the Nigerian Stock Exchange from 2006 to 2018. Positive skewness and leptokurtic distribution were found for all the variables. Correlation matrix revealed no multicollinearity, as the highest value was 0.2386. Empirical results suggest that unobservable characteristics significantly and positively influence firm performance as measured by return on assets and share price. This is because the coefficient of the lagged-value of the variance scaling parameter is positive and significant at the 1% level. However, with respect to Tobin Q measure, the result was positive but not significant at the 5% level. Implicitly, the result is sensitive to performance proxies. Accordingly, this study concludes that unobservable characteristics drive firm performance. It is recommended that boards and regulators should pay attention to unobservable characteristics.

The risk of distortion of financial statements has been growing. Following the 2008 crisis, recipients of financial information are increasingly focusing on the likelihood of financial statements being distorted through fraudulent presentation of financial information. Therefore, scientific research pays more attention to models capable of detecting financial statement manipulation.
The paper aims to present the principles of functioning and the possibility of using the Beneish M-score model in Polish realities. It analyzes the history of more than 30 companies listed on the Warsaw Stock Exchange to select those whose history indicates that they can be classified as manipulators, and to select the same number of companies from the control group that are considered as non-manipulators.
The research method involves the analysis of empirical data on companies listed on the Warsaw Stock Exchange.
The analysis showed the 8-factor Beneish model identified manipulators with 100% accuracy and succeeded in identifying non-manipulators. The effectiveness of the 5-factor model was much lower.
To serve the purpose of the study, the effectiveness of the Beneish model was tested on a small sample of Polish listed companies as an introduction to a planned larger scale research. The results obtained are consistent with the results of numerous studies by authors from various countries and confirm the effectiveness of the Beneish model in detecting financial statement manipulation.

Acknowledgment
The publication is sponsored by funds from the Cracow University of Economics for the maintenance and development of research potential.

The public finance management system is an important lever for equalizing financial and budgetary disproportions in the context of institutional changes. The paper aims to substantiate the directions of development of the public financial management system. Economic and statistical methods and correlation-regression analysis methods are used to determine the relationship between the GDP deflator and the share of revenues, expenditures, the general government budget deficit, and public debt in GDP, assessing the features of the public financial management system in Ukraine and EU countries. This study reveals that one of the main restraining factors in the public finance system development is a significant level of uncertainty in economic processes, which intensifies macroeconomic fluctuations, significant indicators of the share of public debt and budget deficit of the state administration sector pose risks to financial and economic stability; their potential negative impact on socio-economic processes is much more destructive than the pro-cyclical nature of fiscal policy. From this point of view, the public finance management system should be directed at optimizing financial and budgetary tools to prevent the growth of public debt and budget deficit in gross domestic product, which determines the importance of substantiating further development directions of the public financial management system. It is concluded that the mechanism of public financial management in recent years is quite rigid and restrictive, in the context of institutional change expands the tools of public financial management and increases its impact on socio-economic processes.