Current Balance Sheet Research Articles

Causality Analysis Between Exchange Rate, Current Balance Sheet, Inflation, and Gross Domestic Product in ASEAN-5 1980-2022

This research investigates the causality between exchange rate, current balance sheet, inflation, and gross domestic product in ASEAN 5 from 1980 to 2022. The method employs the Granger causality test. This research finds weak evidence of a J-curve effect on the current account balance in Indonesia because empirical results with several tests and models reject the J-curve hypothesis and do not find evidence of an influence of the rupiah exchange rate on Indonesia's current account balance in the long term so that it can the conclusion is drawn that: (1) There is no causal relationship between the current account balance and the exchange rate in Indonesia from 1996-2022; (2) Changes in exchange rates affect changes in the current account balance in the short and long term; (3) The mechanism for changes in the current account deficit does not affect changes in the exchange rate

Comparison of US Quantitative Easing Monetary Policy Between 2020 and 2008

In March 2020, in response to the negative impact of the COVID-19 pandemic on the US economy and financial markets, the Federal Reserve resumed "unlimited" quantitative easing and launched a new monetary policy tool. This paper compares the difference between this round of QE and the last three rounds of QE in 2008 from the aspects of the current balance sheet of the Federal Reserve, the US fiscal stimulus policy and the Fed's monetary policy tools. Using the VAR model to estimate and compare the effects of the monetary policy tools in the financial market and the previous three rounds of QE. First, The Fed's balance sheet will shrink much bigger and faster than the previous cycle. Second, the Fed will act more urgently than the previous cycle to control inflation quickly to a reasonable range. Third, MBS purchases are positive for the USDX and the DJIA but are negative for the VIX.

Sectoral Credit Portfolio Diversification and Financial Performance of Commercial Banks in Kenya

The current balance sheet being the starting point, this study builds a multi-objective approach to move to an optimal balance sheet while at the same time putting into consideration the constraints that face the banks. Considering the nature of banking and their operations, banks do not have enough deposits to ensure that there is a guarantee of fulfilling requirements by regulatory authorities of liquidity. For this reasons, Banks are exposed to portfolio diversification losses if they fail to effectively and efficiently recover loans advanced to customers. An alarm is therefore, raised by this scenario which is very critical to the role of banks in intermediation. The sectoral credit diversification as a strategy in the context of Kenya was therefore assessed whether it enhances bank profitability. The study adopted correlational research design. The 43 commercial banks licensed by Central Bank of Kenya by December 2017 were the target population of this study. The study analyzed Time Series Cross Sectional unbalanced secondary panel data obtained from Kenya National Bureau of Statistics, World Bank website, Central bank of Kenya, published financial accounts statements of all the 43 commercial banks in Kenya, and the Banking survey publications for fifteen years ranging from 2003 to 2017. Sectoral credit diversification to the four sectors was found to have a significant positive effect on financial performance in Kenya. The study recommended that Commercial banks in Kenya should devise measures geared towards consolidation of credit information and data which would aid in management and provision of credit services amongst different stakeholders and distribution of credit across various sectors of the economy.

How the balance sheet misrepresents shareholder claims and undermines the entity perspective

While the revised conceptual framework issued by the FASB and the IASB states that an entity perspective is appropriate for financial reporting, the framework nevertheless still contains elements that are inconsistent with this perspective. This paper aims to contribute to the discourse around financial reporting perspective by examining the shareholder-centric focus inherent in the traditional balance sheet. We argue that the current balance sheet configuration presents a potentially misleading characterisation of shareholder claims. We suggest that shareholders do not own the corporation, its undistributed profit or the underlying assets.

Bank Stress Testing Under Different Balance Sheet Assumptions

Using unique supervisory survey data on the impact of a hypothetical interest rate shock on German banks, we analyse price and quantity effects on banks' net interest margin components under different balance sheet assumptions. In the first year, the cross-sectional variation of banks' simulated price effect is nearly eight times as large as the one of the simulated quantity effect. After five years, however, the importance of both effects converges. Large banks adjust their balance sheets more strongly than small banks, but they are impacted more strongly by the price effect. The quantity effects are explained better by a bank's current balance sheet composition, the longer the forecast horizon. The opposite holds for banks' price effect.

The speed of adjustment in working capital requirement

This paper analyzes the determinants of working capital requirement (WCR) and examines the speed with which firms adjust toward their target WCR. The findings indicate that firms adjust relatively quickly, which supports the hypothesis that current balance sheet items are easier to manipulate and could be changed quite easily, even in the short run. Moreover, we find that the speed of adjustment is not equal across all firms and varies according to their external finance constraints and their bargaining power. Firms with better access to external capital markets and greater bargaining power adjust faster due to their lower costs of adjustment.

Mark‐to‐market and house asset valuation

Purpose – Downward movements in house prices can exacerbate bank crises if mark‐to‐market methods of asset valuation are used by lenders to assess their current balance sheet exposure. There is an imperative to find methods of house price index calculation that reflect equilibrium prices rather than temporary undershoots. The purpose of this paper is to propose a new methodology in order to evaluate whether market house prices are different from their fundamental asset prices.Design/methodology/approach – This paper proposes a method for house asset valuation that incorporates expected house price appreciation as an endogenous variable. This avoids the necessity to make conjectures about expected future house price appreciation when applying Poterba's user‐cost method of house asset valuation. The methodological extension to Poterba's user‐cost method of house asset valuation endogenises expected house price appreciation as the no‐arbitrage expected price appreciation consistent with the term structure of...

Global interests in the Arab Gulf

List of Tables and Figures Preface Note on Transliteration Part One: The Mercantile Attraction in History 1. Siraf and Hormuz between East and West: Merchants and Merchandise in the Gulf, V. Fiorani Piacentini 2. Britain, Trade and Piracy: The British Expeditions against Ras al-Khaima of 1809-10 and 1819-20, Charles E. Davies Part Two: Core Issues 3. Oil in the Gulf - Internal and External Interaction: Past, Present and Future, Peter A. Davies and Paul J. Stevens 4. Repatriation, Remittances and Reunions: What is Really at Stake for Arab Countries Supplying Labour to the Gulf Co-operation Council States?, J.S. Birks and C.A. Sinclair Part Three: The Third World 5. The Indian Subcontinent and the Gulf, K. Subrahmanyam 6. The Rise and Convergence of the 'Middle' in the World Economy: The Case of the NICs and the Gulf States, Anoushiravan Ehteshami Part Four: Other OECD Countries 7. The Western European Union, European Security Interests and the Gulf, Willem Van Eekelen 8. Japan's Oil Strategy in the Gulf Without Arms Deals, Susumu Ishida Part Five: The Superpowers 9. The USSR and the Arab Gulf: A Current Balance Sheet and Future Assessment, Vitaly Naumkin 10. The USSR's State Interests in the Red Sea Basin and the Horn of Africa in Connection with the Gulf Zone, Alexei Vassiliev 11. United States Power-Projection Capabilities in the Gulf and South-West Asia: Changing Forces for a Changing World, Anthony H. Cordesman 12. US Interests in the Gulf: Implications for America's Regional Policy, Richard W. Murphy Part Six: Internal Change 13. External Interests and Internal Processes of Militarisation in the Gulf Region, Rolf Muller-Syring 14. The Inevitability of Change: The Under-tow of Political Tides in the Gulf, John Townsend Glossary List of Abbreviations List of Contributors Index

EXCHANGE RATE CHANGES, INFLATION, AND THE VALUE OF THE MULTINATIONAL CORPORATION

THE EFFECTS of differing national rates of inflation and exchange rate changes on the profitability and hence the risk of multinational corporations is currently receiving much attention from both the management of these firms and the accounting profession. In addition, the relationships between changes in currency values, both internal and external, and the international investing, trading, production, and marketing decisions of multinational firms are clearly of great interest to the national governments involved. This paper, with the aid of a two-country model, first focuses on the profitability issue. It then characterizes and analyzes an oligopolistic firm's binational profit-maximizing strategy under inflation and devaluation. The latter work draws heavily on Horst's [14] detailed examination of the effects of differing national tax and tariff rates on the profit-maximizing strategy of a firm selling to two national markets simultaneously. The unit of analysis here is the overseas subsidiary of an oligopolistic multinational corporation' which sells its (the subsidiary's) output both locally (country 1) and abroad (country 2). Country 1 is subject to both inflation and devaluation while country 2's price level and exchange rate are assumed to remain constant throughout this paper. Initially, production will be limited to country 1. The effects of relaxing this restriction to permit production in both countries will be analyzed later on. The results arrived at for a devaluation would be reversed for a revaluation. Accounting practice and economic theory are shown to diverge widely in their implications regarding the effects of these exchange rate changes. Most accountants and firms take a approach in defining their exposure to exchange rate changes. This approach assumes that only financial items on the current balance sheet whose dollar (or some other base currency) value will be adversely affected by a devaluation are