Revenue Diversification Research Articles

Combined effort opportunities of aggregated demand response flexibility and energy savings in households

This paper analyses possible synergies between demand response flexibility programmes and energy savings delivered by households. In the framework of the energy transition, European Union (EU) directives are endorsing energy consumers to become full-fledged participants of the energy market, mostly via independent aggregator intermediaries. The flexibility aggregators have a very arduous role in collecting, optimising and settling aggregated flexibility delivered from heterogenous sources on the energy market. Novel business models incorporating both flexibility and energy savings opportunities from households’ consumers could deliver revenue diversification for flexibility aggregators and support them in overcoming technical and motivational challenges for activating consumers in the energy market. This paper discusses the main pillars for a sustainable flexibility aggregator business model which sums up the potential for flexibility placement on energy, ancillary services and energy savings markets. The main challenge identified in this work are the requirements for programme establishment, allowing the recognition and proper interpretation of energy savings triggered by short-term events and obtained by an aggregator via explicit demand response actions. This paper proposes possible solutions for a joint venture of a flexibility and energy savings aggregator, thus alleviating possible data collection problems. Collaborative efforts have been recognised in the establishment and maintenance of information and communication technologies and infrastructure, therefore facilitating continuous monitoring and verification of flexibility programmes which are able to deliver energy savings.

In pursuit of diversification opportunities, efficiency, and revenue diversification: A generalization and extension for social entrepreneurship

AbstractResearch SummaryOur study generalizes and extends a cumulative body of research on diversification into the contexts of social entrepreneurship. We examine the extent to which internationalization and program diversification affect a coveted, yet understudied, outcome for social organizations—revenue diversification—and investigate efficiency as a boundary condition of those relationships. Our longitudinal analyses, based on roughly 53,000 observations of Canadian nonprofits that engage in social entrepreneurship, indicate that program diversification is positively related to nonprofits' revenue diversification, but internationalization is not. Further, we found that efficiency compliments these relationships. Our findings are partially in line with research from the for‐profit literature, but also extend this line of research by suggesting that different types of diversification are associated with revenue diversification in the context of social entrepreneurship.Managerial SummaryFounders, executives, and managers of social organizations often strategically design and implement programs and internationalization strategies to achieve better organizational outcomes. Our results reveal that pursuing program diversification opportunities are related to revenue diversification and that highly efficient nonprofits are more likely to increase their revenue diversification as they pursue more program diversification and internationalization opportunities. Social entrepreneurs and their organizations may therefore learn from, build upon, and to some degree tailor theories and strategies of for‐profit organizations to better serve their social and environmental mission and ensure long‐term financial stability.

Bank risk in uncertain times: Do credit rationing and revenue diversification matter?

AbstractWe show that bank risk rises, particularly for larger banks and those with greater interest‐sensitive liabilities, during times of economic policy uncertainty through two economic channels: “credit rationing” and “revenue diversification.” The credit rationing channel shows that economic policy uncertainty increases aggregate loan spreads, exacerbating both adverse selection and moral hazard problems leading to higher bank risk. The revenue diversification channel suggests that as economic policy uncertainty reduces bank profits from traditional interest‐based products, banks diversify into other non‐traditional activities, thereby increasing their instability. Overall, our findings highlight the impact of economic policy uncertainty on exacerbating bank risk.

Economic and competitive potential of lignin-based thermoplastics using a multicriteria decision-making method

As a result of new lignin extraction plants hatching and increasing volumes of technical lignin becoming available, a variety of lignin derivatives, including phenolic resins and polyurethane (PU) foams, are reaching the marketplace or being used as intermediate products in many industrial applications. In the spectrum of possible lignin derivatives, thermoplastics appear particularly attractive due to a symbiosis of market, policy, and technology drivers. To assess the preferredness for lignin-based thermoplastics, this paper adapted a risk-oriented methodology formerly applied to assess lignin usage in various applications (phenol-formaldehyde [PF] resins, PU foams, and carbon fiber applications) to the case of lignin-based thermoplastics using hydroxypropylated lignin (HPL) and miscible blends of lignin and polyethylene oxide (PEO). The HPL is considered for garbage bags and agricultural films applications, while lignin-PEO blends are used as replacement for acrylonitrile butadiene styrene (ABS) in applications such as automotive parts. In the methodology, two phased-implementation strategies were defined for each thermoplastic derivative, considering perspectives for profit maximization (90 metric tons/day integrated units) and revenue growth (350 metric tons/day overall capacity), which were considered for implementation within a softwood kraft pulping mill. A set of six criteria representative of the main economic and market competitiveness issues were employed, and their respective importance weights were obtained in a multicriteria decision-making (MCDM) panel. Early-stage techno-economic estimates were done as a basis for the calculation of decision criteria. Compared to product derivatives previously assessed, capital investment for thermoplastic strategies appeared marginally higher due to the required lignin modification steps (on average 30% higher at similar capacity, and 6% for higher-scale revenue diversification strategies). Higher operating costs were also observed due to increased chemical expenses for all thermoplastic strategies, which are ultimately balanced by revenues associated with targeted thermoplastic products, leading to greater annual margins and cash flow generation over the project lifetime for thermoplastic strategies compared to other product applications (58% to 66% higher on average, at similar scale). Benefits of improved economics were reflected in economic criteria, internal rate of return (IRR), and cash flow on capital employed (CFCE), as well as in the price competitiveness criterion, CPC. Overall, the combination of relatively high lignin content in the plastic formulation and the less costly modification method contributed to lignin-PEO strategies, gaining the top two rankings. Based on their overall scores, both strategies defined for HPL would also integrate the group of “preferred” strategies, but are outranked by strategies that consider lignin positioning on PU foam applications.

ASSESSİNG TAX SYSTEMS USİNG A BENCHMARKİNG METHODOLOGY IN AZERBAİJAN

Topicality. The formation of a competitive economic system, which is considered an important factor in the economic development of the country, is possible only through the creation of an effective tax policy, improved legislation and a favorable tax environment. In this regard, the specific weight of direct and indirect taxes in those countries was shown, and in the main part, a comparison was made with Azerbaijan, and information on the development directions and priorities of the tax system were reflected. Development of the tax system based on innovations, active in international projects participation and joining global initiatives, establishment of partnership relations with business entities and further strengthening of corporate compliance are some of the strategic tasks ahead. Currently in the Republic of Azerbaijan, tax policy and budget-tax policy, which are an important form of it, are carried out in accordance with the conditions of the market economy, and its effective research and analysis of principles, methods and mechanisms for organization, as well as preparation of generalized macroeconomic state measures, theoretical and practical importance earns.Aim and tasks. It is to evaluate some potential efficiency indicators by comparing the diversification of Azerbaijan's budget revenues and especially the share of tax revenues in revenues with other countries.Research results. Economic research has been conducted to increase direct and indirect taxes, and for the first time, the definition of key indicators to achieve the goal is put forward in the form of a scientific argument.Conclusion. Suggestions were made for the units under study, and key examples of measurable indicators for adapting to countries with effective experience in three areas were given. Possibility of using key efficiency indicators as a scientific source to increase the share of taxes in budget revenues, as well as as an appropriate alternative source for new research. The number of proposed indicators and objectives is not limited and is open to research areas for innovation.

Noninterest income mix and bank performance: Generalized propensity score fractional dose–response function evidence

This paper investigates the impact of different levels of noninterest income on the risk-adjusted profitability and financial stability of banks in the Middle Eastern and North African banking industry from 1988 to 2020. We apply a program impact evaluation analysis, using the generalized propensity score-fractional dose–response function method, and assess the effect of each level (or dose) of noninterest income mix on bank performance (the dose–response function). Splitting the sample into Gulf Cooperation Council- and non-Gulf Cooperation Council-based banks reveals that while higher levels of revenue diversification are beneficial for the former, a focus on traditional banking activities is preferable for the latter to achieve the best performance. The findings could serve as an early warning flag for bank managers, policy-makers, and regulators in dealing with these strategic shifts.

Which Nonprofits Are More Financially Stable? Organizational Attributes And Revenue Diversification

This paper examines the effects of organizational attributes on nonprofit financial stability measured by revenue diversification. By combining institutional theory, resource dependence theory, and financial portfolio theory literature, this study seeks to provide a systematic understanding of nonprofits’ organizational factors that influence their financial stability and, furthermore, organizational sustainability. A structural equation model was developed for an empirical test, based on survey data of nonprofits in the Washington state. This research finds that nonprofits with higher managerialism or higher collaboration are more likely to have diversified revenue portfolios, controlling for other organizational factors. In contrast, community ties have a negative impact on revenue diversification.

Nonprofit Capital Structure and Financial Determinants of Nonprofit Debt Instruments

Nonprofits that want to finance infrastructure need to design a capital structure - the mix of accumulated funds and external debt - that can raise enough capital while minimizing borrowing costs. Many scholars test two competing capital structure theories - the pecking order and static trade-off theories - in the nonprofit context by examining the determinants of leverage but cannot find results that conclusively support either theory. The inconsistent results raise the question of whether the applicability of two theories vary by debt instruments, due to the varying issuance costs, and default risks associated with debt instruments To answer these questions, I investigate the financial determinants of the use of debt instruments by nonprofits using IRS 990 form data on public charities from 2010 to 2016 and two-step Heckman selection models. I find the pecking order theory can explain the use of tax-exempt bonds better, while the static trade-off theory can interpret the use of mortgages better. When nonprofits have diversified revenue streams, and rely on a predictable source of revenue, nonprofits increase the use of mortgages but reduce the use of tax-exempt bonds. This paper makes theoretical contributions by delineating the applicability of pecking order and static trade-off theories. Keywords: nonprofits, capital structure, mortgages, tax-exempt bonds

Beyond revenue diversification: Service diversification and service costs in nonprofit acute care hospitals

AbstractMany nonprofits are multi‐service organizations that provide a range of services. However, how nonprofits manage their service portfolios has not received much scholarly attention in nonprofit management research. In this research note, informed by studies on product diversification in strategic management research in the business management literature, we explore the effect of a nonprofit's service diversification on its service costs, using nonprofit hospitals as an empirical context. Through a longitudinal study of U.S. nonprofit acute care hospitals, we find that a nonprofit hospital's level of service diversification is associated with a decrease in its average service costs. Further, both related diversification and unrelated diversification are associated with a decrease in average service costs, but the association of related diversification is greater. This research note informs an understudied line of inquiry in nonprofit management research and calls for more research attention to nonprofits' service portfolios.

The contribution of the agricultural sector to the strengthening of Iraq’s economic diversification strategy for the period (2004-2019)

The aim of the research is to identify the importance of policies to diversify the sources of national income in the Iraqi economy and to develop the productive base of the economic sector without relying on the oil sector, as well as to determine the role of agricultural production and its contribution to the process of diversifying sources of income. The Iraqi economy is heavily dependent on oil revenues, making it vulnerable to the volatility surrounding this sector and the fluctuating revenues from it, so it is necessary to adopt strategies and policies to economically diversify the sources of national income in the Iraqi economy, develop the economic base without relying on the oil sector, generating revenues and diversifying sources of national income .The agriculture sector is one of the leading sectors with its relative abundance of agricultural resources, allowing economic policy to successfully implement a policy of developing and achieving diversified revenues outside oil revenues, as the agricultural sector can play a key and effective role in achieving diversification of sources of income through the necessary food products provided by this vital sector to meet the needs of domestic demand, as well as its contribution to foreign trade through the export of surplus agricultural production and its contribution to output. Gross domestic. The research concluded that the structure of Iraqi exports did not diversify, as Iraq was primarily based on crude oil exports in the composition of its exports by more than 99 percent, making the Iraqi economy more vulnerable to global crises that could occur and which would have an impact on oil price changes.

Beyond tithes and offerings: Revolutionising the economics of Pentecostal churches in Zimbabwe

The Zimbabwean economic crisis has exposed the unsustainability of traditional sources of Church finances. Churches that depend on tithes, freewill offerings and donations have been facing incapacitation, a disturbing predicament that has been further worsened by the coronavirus disease 2019 (COVID-19) in the context of abject poverty and perennial price hikes of basic commodities. While attention has been given to the exploitative commercialisation of the gospel by charismatic churches, scholarship on the economics of classical Pentecostal churches is scanty. Observing fluctuating, unsustainable and unreliable incomes, this study explored the vulnerability of operating without diversified revenue and fundamentality of economising ecclesiology. Applying a theonomic reciprocity concept and using a literature-based approach, this article overviewed the nexus between ecclesiology and economics, reviewed and problematised traditional sources of ecclesial finances. Resultantly, it proposed diversification of revenue through business, interrogated problems and panaceas of doing business as churches. Conclusively, the study argued that when churches establish investments, they will not only sustain themselves, but also missionise their businesses and advance the gospel in the marketplace, hence the rationality of revolutionising their economics.Contribution: This article debunks the interplay of ecclesiology and economics by reviewing contextual realities and financial sources of classical Pentecostal churches in Zimbabwe. It calls for scholarly and clerical attention to a theology of stewardship and investment towards economic sustainability, effective operationalisation and realisation of missio Ecclesiae in volatile contexts.

The impact of the integration of ERP and e-government systems in increasing Government Revenue - A Suggested Model

The study aimed to identify the ”impact of integration between resource planning systems and e-government as an independent variable on the increase in government revenues in Iraq as a dependent variable by application on a sample of government departments operating in the Kurdistan Region of Iraq. In light of the statistical analytical method, by applying a questionnaire to a sample of )٤٠( individuals. From the administrative experts and accountants at the Ministry of Finance and some ministries and other government institutions.The researcher relied on the outputs of the )SPSS( program for statistical analysis, where the study reached several results, the most important of which are: The average degree of reality of the application of resource planning systems in government institutions in the Kurdistan Region of Iraq was )٣.٧٠( out of )٥(. And the average application of e-government was )٣.٦٦(. The average degree of the reality of integration of resource planning and e-government applications in government institutions in the Kurdistan Region was ٣.٥٧.The average degree of estimation of the reality of the increase in government revenues in government institutions in the Kurdistan Region of Iraq was )٣.٦٨(. It was found that there is a positive direct relationship between )the independent variable Xab: integration of the application of resource planning systems and the application of e-government( and )the dependent variable Y: government revenues( in the Kurdistan Region, with an effect size of ٪٦٢.It was found that the effect of the variable )Xab: the integration of resource planning and e-government systems( on the variable )Y: the increase in government revenues( in the Kurdistan Region of Iraq; It is determined according to a linear mathematical relationship that has been estimated statistically in the standard model: ]Y = )٠.٧٩٧( * Xab + ٠.٩٧] It means that the level of increase in government revenues can be measured through the product of multiplying the degree of integration level between the E-Government and ERP systems by the value )٠.٧٨٩(, which is The value of the coefficients in the model, in addition to the stability value )٠.٩٧(. The study recommended several recommendations, including the need to expedite the provision of integrated technological equipment on the ground to be able to switch to the actual e-government model, attract experts specialized in the field of information technology, apply modern electronic management, and establish units and centers A specialized and expert institution in achieving effective and comprehensive integration between the e-government model and resource planning systems, in a way that supports the development, diversification and rationalization of government revenues.

How does local autonomy shape the revenues of small municipalities? Evidence from Illinois home rule municipalities

Although long governed by “Dillon’s Rule” that makes localities a “creature” of the state, the U.S. municipalities have always desired some degree of local autonomy. One of the ways in which states grant autonomy to local governments is through a designation of “home rule.” Most prior studies of the effects of home rule on local governance have focused on relating large municipalities. This article explores the effect of adopting home rule on small municipalities by looking at municipalities’ revenues. Focusing on Illinois municipalities, this article conducts a fuzzy regression discontinuity design to provide causal evidence. The empirical evidence shows that the adoption of home rule has a positive and statistically significant impact on the level of total own-source revenue, especially for local sales taxes and other taxes, but it has limited influence on property taxes. In addition, while home rule significantly increases revenue diversification for small municipalities, it has little influence on revenue stability.

The Hidden Cost of Trustworthiness

The theory of the nonprofit institutional form developed by Henry Hansmann emphasizes the importance of organizational trustworthiness in a sector defined by hard-to-measure outputs. This body of theory effectually rationalizes a normative approach to nonprofit financial management focused on maintaining organizational trustworthiness through fiscal probity signaling. Such signals include measurable indicators of overhead minimization, fiscal leanness, revenue diversification, and debt avoidance, among others. Appropriate signaling behavior may increase organizational trustworthiness as intended, but the effects on mission impact are not well understood. Thus, this article assesses how adherence to common fiscal probity norms affects mission impact, using total spending as a proxy. Based on a panel of donative public charities spanning 1982 to 2019, analysis suggests that norm-adhering nonprofits sacrifice about half of their mission impact over a 10-year period compared with norm-busting nonprofits. This forgone mission impact is the hidden cost of trustworthiness.

Off-balance sheet activities and scope economies in U.S. banking

Propelled by the recent financial product innovations involving derivatives, securitization and mortgages, commercial banks are becoming more complex, branching out into many “nontraditional” banking operations beyond issuance of loans. This broadening of operational scope in a pursuit of revenue diversification may be beneficial if banks exhibit scope economies. The existing (two-decade-old) empirical evidence lends no support for such product-scope-driven cost economies in banking, but it is greatly outdated and, surprisingly, there has been little (if any) research on this subject despite the drastic transformations that the U.S. banking industry has undergone over the past two decades in the wake of technological advancements and regulatory changes. Commercial banks have significantly shifted towards nontraditional operations, making the portfolio of products offered by present-day banks very different from that two decades ago. In this paper, we provide new and more robust evidence about scope economies in U.S. commercial banking. We improve upon the prior literature not only by analyzing the most recent data and accounting for banks’ nontraditional off-balance sheet operations, but also in multiple methodological ways. To test for scope economies, we estimate a flexible time-varying-coefficient panel-data quantile regression model which accommodates three-way heterogeneity across banks. Our results provide strong evidence in support of significantly positive scope economies across banks of virtually all sizes. Contrary to earlier studies, we find no empirical corroboration for scope diseconomies.

INDIRECT TAXES AND ECONOMIC GROWTH OF NIGERIA - THE REVENUE DIVERSIFICATION AGENDA

Achieving sound economic growth is one of the major priorities of economic regulators. Nigeria economy majorly built on oil revenue in which unpredictability nature of the oil sector might adversely affected economic growth. Indirect taxes serve as the diversification means of generating revenue for an economy, but Nigeria economy has been characterized with challenges of high level of tax gap, mono-dependent oil revenue generation and weak tax system. These challenges have created problem of poor indirect tax revenue generation and deterioration in Nigeria economic growth rate. The objective of the study is to examine the effect of indirect taxes (VAT) and (CED) as economic revenue diversification on Nigeria economic growth in Nigeria. The study used expost facto research design with focused on RGDP, VAT, CED, interest rate and exchange rate in Nigeria within the period of 1995-2019. Autoregressive Distributed Lag (ARDL) method of analysis was employed, while unit root test was carried out among study variables and results shown that there were mixed levels of stationarity. Finding revealed that the short-run model indicated that CED, INT and EXR were major short-run determinants of Nigeria economic growth, while VAT was not short-run determinants of economic growth. Also, finding established that long run estimates established that, VAT, CED and INT show positive signs, indicating they influence RGDP positively while EXR has negative effect on GDP . The study concludes that both in the short and long runs VAT, CED, INT and EXR affect Nigeria economic growth. The study recommends that for an economy to achieve growth government should ensure that VAT, CED and INT are not highly charged on investors and consumers when buying products and services, acquiring raw materials from other countries, and seeking loan in the bank.

Bank liquidity creation under micro uncertainty: The conditioning role of income structure

This paper analyzes how uncertainty affects bank liquidity creation, particularly highlighting the conditioning role of income structures. Overall, there is limited research linking banks’ strategic activities with how they respond to uncertainty. We proxy micro uncertainty for the banking sector via the dispersion of bank-level shocks and measure liquidity creation by classifying and weighting all on- and off-balance sheet items. Using a panel of Vietnamese banks for 2007–2019, we find that uncertainty restrains banks from extending their liquidity creation. Further investigation reveals that the adverse impact of uncertainty on bank liquidity creation is alleviated when banks increase non-interest income or gain higher levels of income diversification. Besides, the effect of uncertainty and the role of income structures still hold when we replace liquidity creation with bank lending. Therefore, our results imply that revenue diversification could be encouraged to limit the detrimental impacts of uncertainty on bank output.

Revenue Diversity and Revenue Volatility

급속한 인구고령화로 인한 복지재정의 증가와 지속적인 저성장으로 인해 지방정부의 재정건전 성과 비효율적인 재원배분에 대한 우려가 높아지고 있다. 기존의 선행연구들은 안정적인 세입 확보를 위해 개별 세목의 세율 인상, 신규 세목 설치 등의 절대적인 규모를 늘리는 세수확보정책 방안과 효과성을 논의해왔다. 본 연구는 Modern Portfolio Theory에 의해 제시된 세입구조 다양화(revenue diversification)의 재정관리가 안정적인 세입확보로 연결될 수 있는지에 초점을 맞추고자 한다. 2008-2019년까지 지방정부의 패널자료를 활용한 경험적인 분석 결과, 세입 재원의 다양성을 갖춘 지방정부는 세입을 안정적으로 확보할 수 있음을 발견하였다. 이는 경직된 정부 간 재정관계에서 지방정부가 안정적인 세입을 유지할 수 있는 방안으로서의 정책적 시사점을 제공해준다.

Achieving Financial Sustainability through Revenue Diversification: A Green Pathway for Financial Institutions in Asia

Establishing balanced and sustainable development is critical for improving banks’ capability and performance. Financial development has enormous significance in an environment of increasingly contestable international markets, and can be achieved by enhancing banking efficiency and performance. The bank efficiency is estimated through data envelopment analysis (DEA). By applying the quantile regression technique, this research examines the impact of revenue diversification (RD) on the bank efficiency (BE) of seven Asian emerging economies over 2008–2019. In this regard, non-performing loans (NPLs), non-interest income, capitalization, and gross domestic product (GDP) are taken as control variables. The empirical findings indicate that RD, market capitalization, non-interest income, and GDP have a significant positive impact on BE, whereas NPLs have a significant negative relationship with BE. These results have significant strategic implications for managers, regulators, and policymakers, who share a common interest in boosting financial sustainability and performance.

Intergovernmental Fiscal Transfers and Decentralization Initiatives in Sub-Saharan Africa: A Case Study of SNGs in Kenya

<p>Intergovernmental fiscal transfer is a pillar of fiscal decentralization initiatives in developing and transition economies. These transfers serve several functions that include: correcting the vertical and the horizontal fiscal balances, compensating or offsetting for the spill-overs or externalities between different jurisdictions, funding national priorities and administrative priorities and capacities of the national. However, SNGs in developing countries particularly in Sub-saharan Africa is struggling with fiscal decentralization initiatives due to the lowered potential of local revenue generation. Due to these gaps in studies on Intergovernmental Fiscal Transfers (IGFT) in devolved government structures, the study evaluated how IGFT is organized and structured in Kenya. The study adopted a descriptive design and undertook a review of publicly available data which was supported by interviews of selected directors from the budget, finance and planning departments in three county governments of Baringo, Kiambu and Vihiga. The study established that intergovernmental fiscal transfers make up 87 per cent of SNG revenues, equalization fund is about 2 per cent while own source revenues make up 10 per cent. Other revenue sources are conditional transfers in form of ad hoc and cost-reimbursement approaches from both the national government and development partners. Regarding intergovernmental fiscal transfers, the national government should disburse funds in a timely and efficient manner to enable county governments to fulfil their mandates. The study makes the following conclusions; there is an overreliance on intergovernmental fiscal transfers by SNGs and this might constrain their capacity to provide services and impede devolution initiatives; the formula-based unconditional grant in Kenya offers great prospects for devolution and the rise in unconditional transfers portends well for SNGs. The study recommends that SNGs speed up the legal mechanism for identifying and classifying and assigning local revenues, the national government should consider introducing or substituting fiscal transfers with the tax-sharing arrangement to incentivize revenue diversification among SNGs and lastly, SNGs should consider pooling of resources to incorporate special purpose vehicles for sub-national government borrowing. The study contributes to the existing knowledge by delving more into the elements of fiscal decentralization and in particular intergovernmental fiscal transfers. Recommendations for further studies include studies on how other elements of decentralization impact the performance of the counties, how decentralization is improving governance at the local level and how the East African Community may affect governance and service delivery at the sub-national levels.</p>