Eurozone Countries Research Articles

Analysis of Regional Efficiency in the Use of the European Maritime and Fisheries Fund (FEMP) in the Eurozone Countries

The European Union (EU) launched the Common Fisheries Policy (CFP) in the 1970s. Currently, a large part of the CFP has been financed with the European Maritime and Fisheries Fund (FEMP). This research aims to determine whether there is a high degree of homogeneity in the levels of efficiency achieved by the fishing projects financed by European Funds for the period 2014 to 2020. The Data Envelopment Analysis (DEA) methodology was adopted. The main results showed that there is a high degree of heterogeneity in the level of efficiency achieved by European countries during the analyzed period. Moreover, despite the fact that regional efficiency has been increasing during the years under study, territorial disparities persist over time. This research provides a contribution for policymakers targeting better use of the FEMP funds for the upcoming funding package 2021–2027.

House prices and household credit in the Eurozone: A single monetary policy with dissonant transmission mechanisms

Booms and busts in house prices and household credit highlighted by the recent economic financial crisis, encourage a discussion on how the channels of monetary policy work. This paper studies the role of house prices and household credit in the transmission mechanism of the ECB monetary policy focusing on a panel of 12 Eurozone countries between 2000.Q1 and 2019.Q4. Considering the heterogeneity that characterized the Eurozone housing markets, the analysis distinguishes two groups of countries defined by their average growth of house prices, besides isolating the period that follows 2008.Q3 to capture the impact of the economic crisis. Using panel vector auto-regression models, the estimations indicate nominal money having an asymmetric impact across the Eurozone, being better adjusted to member countries with lower growth rates of house prices. For the whole period, house prices are more effective than credit as a monetary policy transmission channel to output fluctuations. However, the channels of monetary policy altered after the crisis, switching from a strong housing channel to a strong credit channel, especially for countries that experienced lower increase in house prices.

A comparison of international market indices for measuring market efficiency based on price-volume relationship

PurposeThe main purpose of the research is to determine if the relationship between trading volume and price changes is connected to market effectiveness and to use the volume-price relationship to compare the efficiency levels of foreign markets. The degree of the relationship is determined in this study, and the efficiency levels of different countries' capital markets are compared.Design/methodology/approachIn this study, 1,024 observations are used as a data set, which includes daily closing prices and trading volume in the stock market indices of 25 countries between the dates of 01.12.2016 and 31.12.2020. In the first step of the analysis, descriptive statistics of price and volume series are examined. The stationarity of the series is then controlled using the ADF unit root test. Simple linear regression models with the dependent variable of trading volume are generated for all stock market indices after each series has reached stationarity, and the ARCH heteroscedasticity test is used to determine whether these models contain the ARCH effect. Because all models have the ARCH effect, autoregressive models are chosen, and EGARCH models are conducted for all indices to see whether there is an asymmetry in the price-volume relationship.FindingsThe study concludes that the stock market in the United States is the most effective, since it has the strongest relationship between trading volume and price changes. However, because of the financial distress caused by the COVID-19 pandemic, the relationship between price and trading volume is lower in Eurozone countries. The price-volume relationship could not be observed in some shallow markets. Furthermore, whereas the majority of countries have a negative relationship between price changes and transaction volume, China, the United Arab Emirates and Qatar have a positive relationship. When prices rise in these countries, investors buy with the sense of hope provided by the optimistic atmosphere, and when prices fall, they sell with the fear of losing money.Research limitations/implicationsThe study's most significant limitation is that it is difficult to ascertain a definitive conclusion about the subject under investigation. In reality, if the same research is done using data from different countries and time periods, the results are quite likely to vary.Practical implicationsAs a result of the study, investors can decide which market to enter by comparing and analyzing the price-volume relationship of several markets. According to the study's findings, investors are advised to examine the price-volume relationship in a market before beginning to trade in that market. In this way, investors can understand the market's efficiency and whether it is overpriced.Social implicationsThe relationship between price movements and trade volume gives crucial information about a capital market's internal structure. Some concerns can be answered by assessing this relationship, such as whether the market has a speculative pricing problem, how information flows to the market, and whether investment decisions are rational and homogenous. Empirical studies on modeling this relationship, on the other hand, have not reached a definite outcome. The main reason for this is that the price-to-volume relationship fluctuates depending on the market structure. The purpose of this study is to fill a gap in the literature by presenting the reasons why this critical issue in the literature cannot be answered, as well as empirical findings.Originality/valueThe significance and originality of this research are that it examines the price-volume relationship to evaluate the efficiency levels of various markets. This relationship is being investigated in a number of multinational studies. These researches, on the other hand, were conducted to see if there is a relationship between trading volume and market volatility, and if so, how that interaction is formed. The size of the price and volume relationship is emphasized in this study, unlike previous studies in the literature.

Synchronization without similarity. The effects of COVID-19 pandemic on GDP growth and inflation in the Eurozone

ABSTRACT As the European Central Bank implements a common monetary policy for all member states, the effectiveness of the policy hinges upon the synchronization and similarity of inflation and GDP growth between them. We examine the consequences of COVID-19 outbreak for GDP growth and inflation of the Eurozone countries. We find that business cycles have been diverging since the aftermath of the Financial Crisis; however, the outbreak of COVID-19 brought about synchronization on a record scale. However, this increase in comovement is accompanied by an increase in the dissimilarity in the rates of GDP growth. Ergo, synchronization without similarity.

Eurozone Stock Market Reaction to Monetary Policy Interventions and Other Covariates

The joint effect of the global economic and sovereign debt crisis forced the European Central Bank (ECB) to apply conventional and non-standard expansionary monetary policy interventions in order to stabilize eurozone economies. We conducted a panel regression econometric analysis to study the influence of euro area monetary authority policy interventions, along with two main macroeconomic variables and a sentiment indicator, on market equity returns of eurozone countries for the period January 2007 to December 2017. Our findings suggest that conventional and non-standard monetary policy innovations had a positive lagged impact on equity returns of euro area monetary markets. More specifically, interest rate cuts evenly influenced market indices while non-conventional actions mainly affected core eurozone countries that were less affected by the crisis. We also document a strong negative relationship between inflation rates and market returns. In addition, the sentiment indicator produces positive effects on returns because it contains information that is not incorporated into other macro variables.

Is the ECB’s conventional monetary policy state‐dependent? An event study approach

AbstractWe investigate the impact of ECB conventional (CMP) on national banking indices of 10 Eurozone countries and a Eurozone‐wide banking index using the event study technique. We find that announcements of unexpected increases in interest rates benefit French, German, Greek and Italian banks when interest rates are low, while in other periods, the effect is muted. A plausible explanation is that bank profits are squeezed when interest rates are low because banks are reluctant to push deposit rates to zero. Our results are robust to potentially confounding events related to unconventional monetary policy announcements, volatility clustering and volatility expectations.

A technical efficiency analysis of intra-central bank settlement mechanism in Eurozone

ABSTRACT This work employs the stochastic frontier method to explore the efficiency of the TARGET2 (T2) balances mechanism across the Eurozone countries. An index is introduced to support the estimation strategy and derives meaningful results from better capturing the mechanism’s efficiency. The analysis spans the period 2005–2017 and documents the significant role or inefficiencies influencing the role of T2 from unemployment and labor costs. The absence of T2 would have endangered the viability of the Eurozone to promote trade. There is enormous country heterogeneity on efficiency and inefficiency of the error terms in our model, which indicate persistent structural issues and temporary issues; to ensure its uninterrupted operation, the enhancement of the export orientation of the manufacturing base of countries with the least efficiency (high unemployment and labor costs) is essential.

СРАВНИТЕЛЬНЫЙ АНАЛИЗ УРОВНЯ ИНФОРМАТИЗАЦИИ СЕЛЬСКИХ ТЕРРИТОРИЙ РФ И СТРАН ЕВРОЗОНЫ

In the article, based on the materials of the Federal Statistical Observation on the use of information technologies and information and telecommunication networks by the population of Rosstat and data from the Statistical Service of the European Union (Eurostat), a comparative analysis of the achievement of sustainable development goals in solving the problems of access of the rural population of the Russian Federation and Eurozone countries to information communication technologies (ICT). The comparative dynamics of the level of access of rural households to the Internet, including broadband access, the reasons for refusing to use ICT tools, the level of information inequality in the urban-rural area and the activity of rural users are analyzed. Significant differences have been established in the level of provision and use of information and communication technologies by the rural population of the Russian Federation and the Eurozone countries, which are determined not only by the availability of access, but also by the quality of the human capital of the village. It was revealed that the main problems of using the Internet in European households are the cost of equipment and connection, as well as the lack of skills in using ICT tools, while in rural households of the Russian Federation the main reason for not connecting to the Internet is the lack of motivation. At the same time, in terms of the provision of the rural population of the Russian Federation with ICT tools, the Russian village significantly exceeds the European rural areas as a whole, which suggests a high probability of achieving digital transformation indicators for rural areas of Russia by 2030. The insufficiency of the Eurostat information base, which characterizes the level of informatization of rural areas of the Eurozone countries, is noted, which makes it difficult to make a deep comparative assessment of the level of development of this process. The study showed that both for rural areas of the Russian Federation and rural areas of the Eurozone countries, raising the level of education and information literacy of the rural population are currently the most important priorities for the development of the informatization process.

Tax benefits determinants and earnings management: results from the eurozone countries

Tax benefits determinants and earnings management: results from the eurozone countries

Tax benefits determinants and earnings management: results from the eurozone countries

Tax benefits determinants and earnings management: results from the eurozone countries

The Fiscal Policy of Germany and France. From the Creation of the Euro up to the Pandemic

The aim of this article is to demonstrate the development of general government debt and general government balance in two Eurozone countries, Germany and France, in order to investigate the extent of the fulfilment of the convergence criteria. The article is divided into two periods: from the creation of the Euro currency to the period before the global financial crisis, and after it to the time of the pandemic. France and Germany notoriously violated the rules of the Stability and Growth Pact. The beginning of the financial crisis saw a sharp rise in the deficit and debt-to-GDP ratio to over 80% in both countries followed by a fiscal consolidation period. As a result, Germany managed to reduce its debt to 60% of GDP, while in France this indicator achieved a level close to 100% in 2019. The methodology is based on an analytical approach and a literature review of the subject (see Escolano, 2010). Following this methodology, the debt sustainability analysis of the public debt was carried out. According to the author, France should have carried out the necessary structural reforms. Otherwise, if interest rates of ECB continue to rise, France may face a critical situation.

Трансформация денежно-кредитной политики ЕС в условиях финансовой нестабильности

Challenges the European economy began to face 12 years ago raised the question about actions European Central Bank (ECB) have to undertake to maintain the financial sustainability, considering its objective to ensure price stability while coping with a changed economic environment. Provision that the ECB is obliged to take efforts to ensure financial stability as well as potentially serious consequences of crisis’ impact on the banking system and industrial production, led to an expansion of its role beyond standard monetary policy measures, with the unconventional steps being taken in addition to conventional to combat the adverse impact of the financial crisis. While reducing the interest rate, ECB also provided a cheap financial capital for banks via fixed-rate “Long Term Refinancing Operations” (LTROs), and three “Covered Bond Purchase Programmes” (CBPP). Purchases of debt securities were also conducted via “Securities Market Programme” (SMP) and, later, with then ECB’s President Mario Draghi declaring that ECB will do “whatever it takes to preserve the euro”, possibility of their increase was announced with the start of “Outright Monetary Transactions” (OMT) Programme. A mere announcement of the OMT was enough to calm financial markets, as none of the eurozone countries applied for financial support within this programme’s framework. Then ECB proceeded with a full-fledged quantitative easing, starting to buy sovereign bonds under its Public Sector Purchase Programme (PSPP), having spent 2.6 trillion € on its implementation. Understanding that a monetary union without an efficient banking union is unacceptably dangerous, the European Banking Union, under which supervision of largest eurozone banks has transferred directly to the ECB, was progressively established. While ECB’s anti-crisis policies achieved their goals, prolongation of the strategy it adopted may create new risks for the financial stability of the euro area, such as excessive dependence of credit institutions on monetary support and excessive inflationary risks under a zero interest-rate policy. Still, EU institutions’ coordinated financial management played an important role in overcoming the existing turbulence, with fiscal and monetary policy measures reinforcing each other.

Stock market as a nowcasting indicator for real investment

AbstractThe paper proposes a novel method to assess whether real investment can be nowcasted based on information that is available on the stock market. The stock market index on a daily sampling frequency is assessed as a predictor of gross fixed capital formation on a quarterly sampling frequency. For France, Germany, Greece, and Spain (four representative countries of eurozone), we find significant empirical evidence that the information from the stock market does produce accurate nowcasting values of gross fixed capital formation.

Negative Interest Rates, COVID-19, and the Finances of Listed Euro Firms

Aim: The paper measures the impact of negative interest rates on listed firms in the original euro zone countries. It also measures the impact of the first COVID-19 year.
 Design / research methods: The paper uses panel data to measure the influence of the short-term ECB deposit rate and the 10-years German bond yield on short-term and long-term firm variables. Cross section fixed effects are applied to first differences and dummy variables. For liquidity and non-liquid assets the effects are also measured for small and large companies, for sectors, and for countries.
 Conclusions / findings: Corporate liquidity ratios and creditor ratios decline when short-term ECB-rates fall. If ECB rates are negative, liquidity ratios are further reduced by 0.6 percentage points. Declining long-term German government bond yields increase non-liquid assets, while negative yields boost these assets by 4.5% extra. In the first COVID-19 year, the investments in non-liquid assets were 7.6% smaller, while liquidity ratios increased by 2.3 percentage points.
 Originality / value of the article: Papers on the influence of negative interest rates and of COVID-19 on European firms are unavailable. This makes the paper relevant for firm managers and policy makers and a benchmark for future research.
 Implications of the research: Because the issues addressed are new, further research is valuable. One may think of comparable studies for different countries. Many other suggestions for further research are given in the conclusions.

Demand Shocks for Public Debt in the Eurozone

AbstractIn this paper we use intraday government bond futures price changes around German and Italian Treasury auctions to identify unexpected shifts in the demand for public debt. Estimates show that positive demand shocks lead to large negative movements in Treasury yields. Evidence shows significant spillover effects into Treasury bond, equity, and corporate bond markets of other eurozone countries. We find interesting differences in the effects of demand shocks between the two countries, consistent with the “safe‐haven” status of German bonds versus the “high‐debt” status of Italian Treasuries. Results suggest that these effects are stronger during periods of high financial stress.

Institutional Convergence of Bulgaria to the Eurozone Countries

Institutions are one of the main factors for the economic growth and development of any economy. And insofar as development is defined as a set of economic and institutional factors, the reduction of differences in the development of individual countries and regions naturally leads us to the institutional convergence, which is the object of study. When researching the convergence of Bulgaria to the EU countries and more closely to the Eurozone, many questions arise about whether there is institutional convergence and how it can be revealed. This is the subject of analysis presented in the study. The thesis presented here is that it is possible to consider institutional convergence for Bulgaria with the countries of the Euro zone, represented by qualitative and quantitative indicators, which, however, is unstable. The methodology is based on the understanding of institutional convergence as the converging of economic and political institutions, and given the fact that they are different for each of the economies; a comparative analysis is used to study the convergence as a whole. For this purpose, the analysis of institutional quality and comparative analysis uses the main indicators of the World Bank – Worldwide Governance Indicators (WGI) and Ease of Doing Business Indicator. The results of the pre-selected criteria give grounds to find those of the observed indicators, which reveal improvement and respectively converging in the direction of institutional convergence of Bulgaria with the countries from the EU area.

Світ після COVID-19: демократія VS авторитаризм

Розглянуто проблему розвитку світового порядку, становлення політичного ладу суспільств після COVID-19. Доведено, що кризи в Європі ХХ ст. спричиняли появу як авторитарних, так і відновлення альтернативних демократичних режимів. Визначено, що COVID-19 може стати поворотним моментом епохи глобалізації, втрати довіри до демократії та зміцнення авторитаризму.

Integration in banking efficiency: a comparative analysis of the European Union, the Eurozone, and the United States banks

PurposeThis paper investigates the development of efficiency and the progress of banking integration in the European Union by checking for convergence among banks of European and Eurozone countries as well as contrasting the results with those of United States banks.Design/methodology/approachInitially, we employ the two-stage semi-parametric double bootstrap DEA method, which absorbs the effects of possible integration barriers in the measurement of efficiency. Afterwards, we apply a panel data model, in order to investigate the process of banking integration by testing for convergence and for convergent clusters in banking efficiency.FindingsOur main findings show that the bank efficiency of the US is considerably higher than that of the Eurozone and the European Union. Although there is no evidence of convergence across the banking groups, our results indicate the presence of club convergence. We also conclude that the US banking system is closer to convergence than the Eurozone and the European Union banks. Nevertheless, this outcome is subject to change in the future due to the fact that Eurozone and European Union banks' speed of convergence is higher than that of US banks.Originality/valueOur survey is unique in trying to check for convergence while controlling for country-specific and bank-specific factors that affect the efficiency of European and Eurozone banks. Moreover, recent literature does not compare the convergence of efficiency of Eurozone, European and US banking. Finally, in our paper special consideration was given to the comparison of commercial, cooperative and savings banks, as subsets of our banking groups.

Disintegration challenge of reforming the Eurozone

The main objective of this study is to analyze endogenous destabilizing and disintegration tendencies within the framework of the crisis of the European Monetary Union, which grew into a crisis in the real economy. This involved several EU members states at the same time. Achieving this goal requires addressing several theoretical and historical lessons, that point to an important dilemma for the survival of the European project in the future. Research methods include: systematic, procedural, and situational approaches to the study of Eurozone countries and participants in the integration project and disintegration influences and an institutional approach to the detection and analysis of dysfunctional institutional configuration within the framework of the European Monetary Union. Of significant importance for the study of the problems of economic integration and disintegration was the use of the principles of universal scientific methodology. This included an integrated approach to problem-solving, which envisaged a general vision of the movement of capital in the context of the European integration project. Also, the application of methods of logical models, induction, and deduction. The unity of logic and history in the development of a research object confirms the synergistic effect of historical and theoretical lessons.

Gender issue in modern education: Theory and practice

So far, gender inequality in education has been considered in the context of inequality in women’s access to technical specialties, the impact of education on the fertility rate and wages of women, the impact of religious, cultural, social-economic values on women’s education level. However, this concept does little to explain the gender imbalance and low quality of human capital in an environment where women have the opportunity to be educated in any field of knowledge through a feminization in the European countries. The research methodology is based on the correlation analysis of indicators of gender equality in education in Germany, France, Poland, and Ukraine for 1991-2018. The purpose of the study is to identify the trends and dynamics of gender changes in education, the level of gender inequality and establish the causes and effects of gender asymmetry in some European countries. To evaluate gender equality in education, we used the Gender Parity Index. The results of correlation analysis prove the presence of a direct connection between the level of fertility and the Gender Parity Index in the field of primary and higher education, while in the field of secondary education-reverse. Such tendencies are inherent in almost all countries of Europe. The analysis of indicators characterizing the level of education of women within the Eurozone countries shows the decisive role of the structure of the economy and the needs of the labor market in specialists with digital skills and mental abilities. The structure of the economy and the efficiency of various sectors ensure the reduction of gender inequality in education, contributing to overall economic growth and GDP per capita. Political institutions and national policies indirectly influence gender inequality in education by regulating the development of sectors of the economy with different levels of female employment. The proposed paradigm of gender inequality is based on the crucial role of skills, competencies, and abilities regardless of gender. The gender imbalance has been overcome in countries with a high level of women’s competence. Competence is a new paradigm in overcoming gender inequality.