Investment evaluation in renewable projects under uncertainty, using real options analysis: the case of wind power industry

The purpose of the current paper is to elaborate the model for assessing cumulative synergetic effect in M&A (Mergers and Acquisitions) deals on the basis of a real options approach. The majority of papers on the synergetic effects of M&A deals typically focus on a particular type of synergy, while the current paper proposes a model that accounts for the cumulative simultaneous effect of different types of operating and financial synergies. The methodology of our research is loosely based on Datar-Mathews real option valuation model, which is flexible and intuitive for practitioners. Formulae for assessing eight types of synergy typically arising from M&A deals are developed. They are integrated into a single model to assess their cumulative effect on the M&A deal using a simulation modelling approach. The method was used ex post to find synergy values in two recent M&A deals in the pharmaceutical industry, and produced sound results. The proposed approach to value target companies could be used by firms before an M&A deal in the due diligence process. Using this tool a company can build a bidding strategy and define the maximum premium it can pay for the target.

VUСA is a chaotic and rapidly changing business environment that, based on the variability, uncertainty, complexity and ambiguity of the modern world, transforms the approach of banks to the analysis of financial stability. The aim of the paper is to improve tools for monitoring the impact of VUCA-world conditions on the financial stability of banks, namely a model for studying and analyzing the impact of the modern business space “VUCA” on the financial stability of the country's banks. To test the model, the method of constructing regression equations in multifactor regression analysis is used. For this study, data from some Eastern European countries (Ukraine, Belarus, Latvia, Lithuania, Moldova) were used, and time series data were used for 10 years from 2010 to 2019.
Having considered the definition of “VUCA-world conditions”, the model of modern business space “VUCA” was developed when analyzing the activity of banks in the studied countries. Drivers, consequences, requirements and macroeconomic indicators of the countries’ activities in the VUСA-world conditions are determined. The VUCA-world conditions also consider the study of key macroeconomic indicators that allow building long-term relationships throughout the value chain. The analysis of the studied Eastern European countries showed that with the increase of factors of GDP growth, GNI per capita growth, research and development costs, foreign direct investment, and net inflow of 1%, the effective ratio of bank capital and assets also increases. The assessment, in contrast to the existing ones, makes it possible to consider the impact of the macroeconomic environment of banks on their financial stability.

The world’s economic growth has decreased due to the COVID-19 pandemic. Many companies are experiencing financial distress, so they cannot pay off their maturing debts. Banks as lenders face the risk of non-performing loans. The increasing number of unpaid loans will reduce a bank’s operating income and gain. The contingency approach is used as a conditional factor that can increase the effectiveness of firm performance. The relevance of this study is how banking strategies overcome the problem of uncertainty regarding risk and return during a pandemic. Contingency theory describes organizational success as influenced by contextual factors and established strategies. The purpose of this study is to systematically review the literature related to loan restructuring as a solution to non-performing loans in banking companies in Indonesia. The research method is a review of 40 articles from Scopus and a descriptive analysis of company financial statement notes to see what strategies banks are using during the COVID-19 pandemic. Based on contingency theory, the results of the study explain organizational success which is influenced by contextual factors and the established strategy. The more appropriate the strategy chosen in a given situation, the higher the achievement of organizational performance. A qualitative analysis provides a solution for a bank to overcome the problem of unpaid loans at maturity through a restructuring model strategy with modified loan terms.