Financial Methods Research Articles

The benefits of nature-based systems in a changing and uncertain world

Multifunctional nature-based solutions (NBS) can help urban areas become more climate proof and adaptable and provide a range of societal goals. Alongside chronic impacts from climate change, the Covid-19 pandemic has illustrated the disruption that unexpected and acute shocks can bring to society. Measures such as NBS can help reduce the vulnerability of urban areas and increase resilience. Traditional infrastructure planning relies on strong business cases to demonstrate the economic value of a scheme. Numerous approaches assign economic value to the benefits from using NBS. However, this value is more than what can be accounted for by traditional finance methods, as there are many different perspectives on ‘value’. Decision making processes for selection of NBS measures require stronger integration of these value perspectives. This paper considers these perspectives in the business models that are being used in the decision processes regarding use and selection of NBS. Examples are drawn from case studies in the EU Begin project and also from the Living with Water partnership in the UK, which illustrate how value perspectives can be included in business cases for NBS, also signposting the need to account for potential future changes using scenario planning.

The economic burden of treating uncomplicated hypertension in Sub-Saharan Africa: a systematic literature review

Background and ObjectivesHypertension is one of the leading cardiovascular risk factors with high numbers of undiagnosed and untreated patients in Sub Saharan Africa (SSA). The health systems and affected people are often overwhelmed by the social and economic burden that comes with the disease. However, the research on the economic burden and consequences of hypertension treatment remains scare in SSA. The objective of our review was to compare different hypertension treatment costs across the continent and identify major cost drivers.Material and MethodsSystematic literature searches were conducted in multiple databases (e.g., PubMed, Web of Science, Google Scholar) for peer reviewed articles written in English language with a publication date from inception to Jan. 2022. We included studies assessing direct and indirect costs of hypertension therapy in SSA from a provider or user perspective. The search and a quality assessment were independently executed by two researchers. All results were converted to 2021 US Dollar.ResultsOf 3999 results identified in the initial search, 33 were selected for data extraction. Costs differed between countries, costing perspectives and cost categories. Only 25% of the SSA countries were mentioned in the studies, with Nigeria dominating the research with a share of 27% of the studies. We identified 15 results each from a user or provider perspective. Medication costs were accountable for the most part of the expenditures with a range from 1.70$ to 97.06$ from a patient perspective and 0.09$ to 193.55$ from a provider perspective per patient per month. Major cost drivers were multidrug treatment, inpatient or hospital care and having a comorbidity like diabetes.ConclusionHypertension poses a significant economic burden for patients and governments in SSA. Interpreting and comparing the results from different countries and studies is difficult as there are different financing methods and cost items are defined in different ways. However, our results identify medication costs as one of the biggest cost contributors. When fighting the economic burden in SSA, reducing medication costs in form of subsidies or special interventions needs to be considered.Trial registrationRegistration: PROSPERO, ID CRD42020220957.

Sustainable Financing Efficiency and Environmental Value in China’s Energy Conservation and Environmental Protection Industry under the Double Carbon Target

Difficulty in financing and low financing efficiency is one of the bottlenecks that restrict the high-quality development of China’s energy-saving and environmental protection industry and economy. The key to improving financing efficiency is to understand its influencing factors. This paper uses data envelopment analysis (DEA) and the Malmquist index to measure the overall financing efficiency and the efficiency of different financing methods of 205 Chinese energy-saving and environmental protection industries from 2015 to 2020 from static and dynamic perspectives, respectively, as well as the Tobit model to estimate the impact of factors such as the digital transformation and green technological innovation of enterprises on financing efficiency. The study shows the following: (1) Static analysis shows that: the financing efficiency of the comprehensive technical efficiency of China’s energy conservation and environmental protection industry is less than one, 5.8% to 23.41% of enterprises have very effective comprehensive technical financing efficiency, and fewer than 9% enterprises have very effective scale efficiency levels. Enterprises may have more room for improving their financing efficiency in the future. The four types of financing are, namely, internal financing, equity financing, fiscal financing, and debt financing, in descending order of efficiency. (2) Dynamic analysis shows that the financing efficiencies of debt financing and fiscal financing are both on an upward trend, while internal and equity financing efficiencies are on a downward trend. Additionally, the technological progress change index and scale efficiency are two key factors affecting the financing efficiency of different financing methods. (3) In terms of financing methods, the comprehensive technical efficiency and scale efficiency of endogenous financing and equity financing are high, while the comprehensive technical efficiency and scale efficiency of debt financing and fiscal financing are low and flat. (4) Digital transformation, green technology innovation, the asset–liability ratio, profitability, and operational capability have a significant positive impact on the financing efficiency of energy-saving and environmental protection enterprises. This paper studies the financing efficiency of China’s energy conservation and environmental protection industry under different financing methods and the mechanism through which key factors affect the financing efficiency of enterprises. It aims to provide a theoretical basis for managing financing methods scientifically and rationally and improving the financing efficiency of the energy conservation and environmental protection industry, as well as to provide practical reference for the implementation of digital transformation, green technology innovation and diversified financing in China and other developing economies.

A document analysis deep learning regression model for initial coin offerings success prediction

Initial coin offerings (ICOs) provide an early-stage financing method for blockchain-based ventures. During the ICO process, whitepapers are important not only as promotional material through which ventures can demonstrate the technical and financial project details but also as references for investors. Persuasion theory and the related literature suggest that the presentation and order of information have a significant impact on the attitude of the audience. Therefore, in addition to projects’ metadata features, we construct a document analysis deep regression model (DADRM) to innovatively extract deep text and layout features from whitepapers. Based on a real-life dataset, we conduct a comparative study to assess the effectiveness of the proposed framework in predicting ICO success in terms of the funding amount. The empirical results show that our model that both extracts text content and retains the original 2D structure of the document can significantly reduce prediction error. Based on our proposed model, both ICO platforms and investors can prejudge the funding amount of cryptocurrency projects and mitigate information asymmetry. Additionally, this study demonstrates that both what is written in the business document and how the document is presented affect investor decisions.

A triple helix of market failures: Financing the 3Rs of the circular economy in European SMEs

The Circular Economy (CE) shows hope to tackle our unprecedented climate catastrophe. However, there are market failures of double externality related to such environmental innovations (EI). CE market is evolving and has a unique financial circular risk attached to its business model that challenges standard financing instruments. The double externality market failures and the circular risk are termed as three (environmental-knowledge-financial) reinforcing market failures – a triple helix of market failures. The environmental externality, knowledge spillovers, and financial risk, all make a strong case for private and public sector contributions. Financing of CE is crucial, especially, in the case of European SMEs due to their traditional barrier to accessing finance including private costs, industry standards, lack of human and technological capital, limited information, and low market demand. In this paper, working with EU-wide SMEs data we investigate the impact of different sources of finance on a core reduce-reuse-recycle (3R) strategy of CE. The paper contributes to the literature by providing an empirical analysis of the different forms of finances including new instruments i.e., crowdfunding and capital market funding. In addition, the research contributes by assuming and encouraging discussion on embedded socio-institutional differences among countries. The study groups European countries into leaders, performers, and catchers, using the EI index that proxy measures underlying regional heterogeneity – EI frontiers – to support CE-related activities. The Probit estimates support this heterogeneity amongst the EU countries in utilizing financial instruments and assess the impact of a cohesive financing policy in terms of adopting 3Rs in SMEs. Under a cohesive policy, the adoption level is estimated at 61% for leaders, 65% for performers, and 49% for catchers. The results also show self-financing to be the most effective method of internal financing, which implies that the problem of double externality does not discourage internal financing. Moreover, alternative financing is the most effective method of external financing, which shows that the financial sector is offering innovative solutions to the circular risk of CE. The results of this study are relevant for a smart, sustainable, and inclusive global transitional CE policy.

The impact of green credit policy on enterprises' financing behavior: Evidence from Chinese heavily-polluting listed companies

The enterprise's financing response to the green credit policy is of great significance. It is related to whether green finance can successfully accelerate enterprises' technological upgrading and transformation. Based on Propensity Score Matching-Difference in Difference (PSM-DID) model, this paper studies the impact of green credit policy on financing behavior of the heavily-polluting listed companies in China from 2008 to 2020. The results show that the illiquid debt financing behavior of heavily-polluting enterprises has a clear downward trend since China's "Green Credit Guidelines" were implemented, while liquid debt and commercial credit, as alternative financing methods for enterprises, have increased significantly. Through further analysis, we found that state-owned enterprises (SOE) are more affected by green credit policy than non-state-owned enterprises (NSOE), and companies in regions with a lower green development index are more affected by green credit policy than companies in higher green developing regions. Although China's green credit policy has a certain inhibitory effect on the illiquid debts financing behavior of heavily-polluting enterprises, it has failed to allocate the capital flow effectively due to the firm-level alternative financing response to the green credit policy. From the managerial significance of the policy, the signal guidance of green finance needs to be strengthened for enterprises. • Explore the impact on financing behavior of green credit policy. • Green credit policy is effective in reducing the illiquid debt of heavily-polluting enterprises. • Green credit policy has led to an increase in alternative financing for enterprises. • Explore the impact of green credit policies on different green development index regions.

INVESTIGATION OF FINANCING METHODS OF URBAN TRANSFORMATION PROJECTS IN TERMS OF SUSTAINABILITY

Purpose- In Turkey, despite the support of governmental institutions, a substantial part of the contractor companies that carry out urban transformation activities have experienced financial problems due to uncertainties in the markets, exchange rate changes and raw material price increases, and bankruptcy and concordat situations have arisen. The transformation of most of the risky houses in earthquake zones has not been completed yet. In this study, alternative financing methods that can help contractor companies involved in urban transformation projects to provide sustainable cash flow are analyzed. Methodology- Within the scope of the study, the financing methods applied in urban transformation projects and suggested in the literature were examined and compared. In addition, the potential of these methods to provide financial sustainability in markets with high uncertainty has been examined. Findings- It is seen that the most important reason for the companies to come to the point of bankruptcy are the cost increase related cash flow imbalance. In the same period, the profitability of the financial institutions that financed the projects increased. Conclusion- It has been concluded that urban transformation projects can be successful by financing with the methods that enable financial institutions to become partners in commercial risk when environmental uncertainties are high. Keywords: Financial sustainability, financing methods, urban transformation. JEL Codes: D25, M21, R58

Traditional Financing Methods and Solidarity Finance: Perceptions of SMEs in the Fisheries Sector in the Region of Laayoune Sakia Elhamra

The financing decision is one of the most important financial decisions of a company. This decision involves various financing methods among which companies in general and small and medium-sized enterprises (SMEs) in particular can make a choice for their financial needs. Our article aims to analyze the financing methods of Moroccan SMEs. To do this, a qualitative study through semi-structured interviews was conducted with a sample of thirty enterprises. We focused on SMEs in the fishing sector in the region of Laayoune Sakia Elhamra. We used the Nvivo analysis software to analyze our quotes. The results of our study allowed us to deduce the perceptions of the managers towards the different traditional financing methods and in particular the solidarity finance.

Monetary policy and cross-border acquisitions

This study investigates the impact of monetary policy on cross-border acquisitions involving US target firms. The results show that US target firms receive significantly lower acquisition premia and cumulative abnormal returns (CARs) when the US Fed and the acquirer country's monetary policies are both restrictive compared to when they are expansive. The cumulative abnormal returns to the target around the merger announcement are roughly 11–13% lower when the Fed is restrictive, relative to when both the acquirer and target countries have expansive monetary policies. Additionally, deals conducted during periods when the monetary policy of the acquirer's country is restrictive are less likely to be financed in cash. The results suggest that monetary policy has a significant impact on target acquisition outcomes and method of financing in cross-border acquisitions.

The Impact of Retained Earnings on the Financial Growth of Pension Fund Administrator (PFA) Companies in Nigeria.

The study examined the relationship between retained earnings and growth of companies in Nigeria. There is a gap in investors’ knowledge as to the relationship between retained earnings and the growth of corporate organisations. The model of retained earnings of some Companies in Nigeria does not follow the pattern of a growth inclined strategy; this has always impacted negatively on growth and expansion as well as the operational efficiency (operating expenses) and value of some companies in Nigeria because they fail to reflect their intrinsic value. For organisation to grow well it must be able to leverage on the advantage of the cheapest source of financing from the available alternatives such as retained earnings. The population for the study is 20 registered and licensed Pension Fund Administrators (PFAs) in Nigeria. Sample of the top four (4) PFAs in terms of their Asset Under Management (AUM) was taken from the population and examined. Data were collected through panel secondary source from the websites of the various PFAs from 2016 to 2020 and these were analysed using panel regression analysis to establish the effect of Retained Earnings (RE) and Operating Expenses (OPEX) on Gross Earnings in these companies. The results revealed that fixed effect panel is plausible and it establishes a significant positive relationship between retained earnings and the gross earning or growth of these companies in Nigeria. The study therefore concludes that retained earnings are an essential method of financing for PFAs’ operations. It is recommended that the PFAs in Nigeria need to improve design strategies that can be used to increase their earnings, to prevent future shocks, and operating expenses (OPEX) which is the lubricant for growth in these companies should be used wisely. Keywords: Dividend pay-out, Dividend Policy, operating expenses, Gross earnings, Retained earnings, Strategies.

Traditional Financing Methods and Solidarity Finance: Perceptions of SMEs in the Fisheries Sector in the Region of Laayoune Sakia Elhamra

Traditional Financing Methods and Solidarity Finance: Perceptions of SMEs in the Fisheries Sector in the Region of Laayoune Sakia Elhamra

Environmental behaviour under credit constraints – Evidence from panel of Indian manufacturing firms

Firms play a major role in facilitating green growth in developing nations by promoting environmental protection investment to control pollution caused during the manufacturing process. The paper explores whether the financial vulnerability of firms curbs their investment towards environmental practices that eliminate the creation of wastes or pollutants and hence acts as a deterrent towards green economy. Using firm-level data for manufacturing firms from 2010 to 2019, it is confirmed that financial barrier is an encumbrance for eco-investment by firms. We also focus on the environmental behavior of firms classified according to their ownership structure observing that government-owned firms (GOFs) tend to rely less on their internal and debt capital to finance their environmental investment, whereas private-owned firms (POFs) rely mainly on their internal capital. However, internal financing methods have generally no significant impact on the eco-investment decision of foreign-owned firms (FOFs).

Fractal Theory and Its Financial Applications for Improving the Quality of Professional Training at The Higher School of Economics

The article presents the didactic potential of modern fractal theory and its financial applications related to modeling and forecasting of financial performance. The purpose of the study is to identify the main content and methodological features of the disclosure of fractal theory and its financial applications in the practice of professional training of students of economic universities. The results of the analysis of popular science and scientific literature on fractal theory and its applications allowed us to clarify its didactic potential in the system of higher economic education. The use of elements of the technological approach at the Higher School of Economics made it possible to construct the educational process on fractal theory and its financial applications in the form of a system of micro-goals of the basic level, which serves as a guideline for organizing and planning the results of educational and cognitive activity of students of the Bachelor of Economics. Involvement of various techniques and methods of the theory of pedagogical technologies based on the establishment and study of the laws of the educational process as the results of scientific knowledge of the process of human education, as well as financial faculties of the Plekhanov Russian University of Economics and the Financial University under the Government of the Russian Federation as the basis of experimental work allowed to identify the attitude of students to fractal theory and its applications, to conduct primary testing of fractal theory as a new element of the content of mathematical training, as well as directions for improving the educational process in applied mathematical disciplines. Special attention is paid to the mechanisms of development of students’ competencies in the field of decision-making in conditions of risk and uncertainty, a meaningful choice of methods for studying financial situations that require optimal decisions. A system of micro-goals of the basic level is presented, consisting of thirteen micro-goals and allowing a teacher of mathematical disciplines to design invariant content in the field of fractal theory and its applications for higher economic school. Attention is also focused on the need to update the methodological work of teachers of mathematical disciplines on the design and construction of the educational process. Including the base level set by the system of micro-goals presented in this article, which regulates the educational process in the language of educational and cognitive activity of a student of an economic bachelor’s degree. It is noted that the complex transformations taking place in modern society affect various aspects of social, financial and economic relations, increase the requirements for the methodological, design and technological culture of a teacher of mathematical disciplines. The prospects of the study include the development of criteria for the selection of digital tools to support fractal theory and its financial applications as an element of the content of professional training, as well as the development and subsequent implementation of a program of additional professional education on alternative approaches to decision-making in the financial sector. The content of the article can be useful for the implementation of applied, professional strengthening of the teaching of compulsory mathematical disciplines for students studying in the direction of “Economics” of various directions (Mathematical methods in economics, World Economy, Finance and Credit, etc.), and for the formulation of new academic disciplines of students’ choice, as well as improving the content of programs of additional professional education related to the quantitative justification of decisions.

Financial constraints and financing sources in mergers and acquisitions

We study the effects of financing sources and financial constraints in mergers and acquisitions. We explicitly distinguish between methods of payment and financing used in takeovers and find that financial constraints have a strong influence on choices of both payment and financing methods. Financially constrained firms are less likely to pay for acquisitions in cash. Greater financial constraints are associated with greater use of equity financing, followed by internal funds, with debt as the least preferred financing alternative. Consistent with agency theory, more constrained bidders experience higher takeover announcement returns. However, we find financing sources to have little impact on abnormal returns.

ANALYSIS OF THE MOST COMMON CALCULATION METHODS “VALUE AT RISK, VAR”

The Regulation of the National Bank of Ukraine on Risk Management in Ukrainian Banks stipulates that this Regulation obliges banks to use the VaR methodology to assess market risk. The article shows that VaR is the absolute maximum amount of losses of the market investment portfolio due to fluctuations in prices for financial instruments during a certain fixed period of time (VaR horizon) in normal market conditions at a given level of confidence level (confidence level). A study of the Value at Risk methodology as the absolute maximum size of market investment portfolio losses due to price fluctuations in financial instruments during a certain fixed period of time (VaR horizon) in normal market conditions for a given level of confidence level (confidence level). It was found that there are three main methods of VaR: parametric VaR, or delta normal VaR, historical method, or historical simulation, Monte Carlo, or simulation and other methods and models. The parametric VaR method, or the delta-normal VaR method, is based on the assumption of a normal distribution of a random variable. This means that the data are distributed according to the normal distribution law, ie you can calculate the mean and standard deviation. It is proved that these two indicators are the basis of VaR by the parametric method. It is shown that nonparametric VaR methods do not require the hypothesis of normal distribution. Therefore, the form of distribution is determined by empirical data, and percentiles are stored as empirical percentiles of the historical distribution of profitability. The article considers the nonparametric VaR method in comparison with the parametric one on a practical example. It is proved that in the domestic scientific literature there is little research on the practical application of the VaR method in finance and in particular in banking. Therefore, the practical aspects of applying different VaR models to the NBU exchange rate data are demonstrated and conclusions are drawn. It is shown that the practical application of methods is a modern tool for assessing market risks, but with the expansion of the database, the parameters of the models should be refined in combination with the economic method. This requires monitoring and back-testing.

The Choice and Innovative Development of Enterprise Financing Methods in the Big Data Environment

<p>With the trend of innovation and entrepreneurship and the support of national policies, small and medium-sized enterprises have sprung up in recent years, and in this process, financing problems have always existed with the birth of enterprises. Capital is the blood of the enterprise, is the necessary condition for the enterprise to carry out and maintain business activities, there is not enough funds, the survival and development of the enterprise is difficult to be guaranteed, in this process, financing is an indispensable and important link of each enterprise. In the financing process, this paper is mainly based on external financing, whether it is for the demand side of funds or the supply side, it is necessary to grasp a certain amount of data and information to make decisions, in the big data environment, this is undoubtedly both an opportunity and a challenge, big data analysis to obtain a full range of multi-level data to more systematically analyze the cost-effectiveness of enterprises, company value, etc. At the same time, how to rationally use big data and how to reasonably choose financing methods to help enterprises successfully raise funds is a problem that every enterprise needs to pay attention to. Based on this, this paper gives relevant analysis and suggestions on the choice of financing methods in the modern enterprise big data environment in view of the problems faced by the development of the enterprise financing model.</p>

Determining the Impact of Entrepreneurship Financing Methods on Collective Participation in Knowledge-Based Businesses

The necessity for finance during the start-up phase of new firms as well as advancements in information technology have led to a rapid global expansion of the crowd funding method. There have been a number of financing platforms built in Iran to date, some of which have been successful and others of which have not. Therefore, it is important to examine the elements affecting this strategy in order to aid in its development. Given that mass finance is a relatively new phenomena, it is important to appropriately raise public awareness of it while identifying the variables that influence this approach. Their most important characteristics are technology, skilled labour, and advanced management; they are connected to global networks and production chains; thus, the development of knowledge-based companies appears to be the key to the next decade's economic development. As a result, the primary goal of this article is to look into the impact of entrepreneurial financing methods on collective participation in knowledge-based businesses. The current article's research method is practical, and the data collection method is a survey.

Assessing Key performance indicators in Blockchain-Based Supply Chain Financing: Case Study of Chain Stores

In recent years, due to the growth and development of financing tools and methods, financial institutions are always looking for new, efficient, and low-cost methods. In carrying out their daily production operations, companies are faced with different and diverse financial input and output flows from purchasing orders and inventory to receiving the price of sold goods, which are not the same in terms of time. Therefore, they will inevitably look for the financing of these processes, which is referred to as working capital financing. However, in the conditions of recession and lack of bank loans and considering the problems caused by the unilateral management of this issue, there is a need for innovative financial tools such as supply chain financing (SCF). In recent years, with the introduction and evolution of blockchain technology, this opportunity has also arisen in financial fields to make the most of this new technology. Considering the growth of this technology and the importance of supply chain financing, in this research, it was first tried to fully investigate the dimensions and key components of blockchain-based supply chain financing. chain stores were considered as a case study and the importance of supply chain financing was analyzed in them and the SCF framework was presented in these applied enterprises. In addition, the most important key performance indicators in a blockchain-based supply chain financing system are identified and evaluated with an emphasis on chain store processes. To evaluate the data, a non-linear hierarchical analysis method was used. The results show that transferring and reducing risks in different types is one of the most important performance indicators of the blockchain-based supply chain financing system.

Critical Review of Residential Development Project Financing in India

Financing of Residential Real Estate Development (RRED) projects has not received due attention in India beyond affordable (social) housing. RRED projects continue to finance themselves through customer advances, which has been disrupted because of recessionary market conditions, supply glut, and the tough stance of the Reserve Bank of India. This has resulted in thousands of stalled RRED projects across the country for which developers cannot raise finance through any source. This paper extensively examines options of RRED project financing, across developed and emerging markets, in principle and practice. An extensive review of traditional and innovative methods of financing for RRED projects has been undertaken, and gaps have been identified in the Indian context. Authors have validated identified gaps through primary research using relative importance index and principal component analysis.

УПРАВЛІННЯ ФІНАНСОВИМ ЗАБЕЗПЕЧЕННЯМ ПІДПРИЄМСТВ В СУЧАСНИХ УМОВАХ

Domestic enterprises in modern conditions are faced with the question of the effectiveness of forming the necessary volume of financial support. The purpose of the article is to generalize the features of financial support in the conditions of martial law.
 The work examines the essence of financial support of enterprises. The constituent elements of the system of financial support of economic activity are analyzed.
 The components and types of financial support are considered. The main components of the system of financial support of innovative activity are: subjects, objects, methods of financing, forms of financing, levers of influence on economic activity, monitoring and control over the financing of economic activity. According to the form of ownership, private and state financing are distinguished. Depending on the form of provision, financial support of industrial enterprises can be provided in the following forms: self-financing, lending, investment, state financing. Quite often, in order to maximize profit and ensure the optimal ratio, enterprises simultaneously use various forms of financial support.
 The dynamics of such a source of self-financing as net profit is analyzed. Тhe share of enterprises that during 2016-2020 earned a profit, exceeded 70% and practically did not change.More than 25% of enterprises of all sizes operated at a loss, which indicates that they lack their own sources of financial resources. The use of such a source as depreciation deductions, which is explained by outdated fixed assets, is problematic for many enterprises.
 In connection with the insufficient volume of such a source as self-financing, it is proposed to use loans from international financial organizations.