Financial Structure Research Articles

Investment Strategies and Financing Approaches in Emerging Enterprises

Investment activities are arguably the most crucial factor in the development and sustenance of an enterprise, especially in emerging markets. While there have been numerous studies on the financing structure, there is a substantial gap in the literature regarding the impact of capital structure and cost of capital on investment efficiency in transitional economies. This research seeks to address this gap, using a mixed-method approach that combines qualitative case studies and quantitative financial analysis. The research involved conducting case studies with five enterprises from the technology, manufacturing, and services sectors. In addition, the researcher used secondary data obtained from the websites of the Bucharest Stock Exchange and the Romanian National Registry of Financial Statements. The data was used to calculate the Return on Investment, debt-to-equity ratio, and cost of capital. The analysis shows that businesses that adopt the optimal capital structure perform better, relative to their counterparts, in the aspect of profitability and market value. They also have a lower cost of capital, as well as greater financial sustainability. On the other hand, businesses with higher leverage perform poorly, with their failing market position forcing them to adopt measures such as providing discounts to customers and investing in motor vehicles to reduce operational costs. This research shows that even in the current state, some of the basic principles that have traditionally applied still have bearing. However, there are some underlying problems, some of which have been highlighted in Nenite-Petrescu et al.’s case study of three Romanian companies. Some of the factors which have been identified as contributing to the negative performance of the three companies include poor return on assets, return on capital employed, and return on investment; low levels of liquidity; low sales and profits; and high cost of Sales, as well as low purchase and employment of personnel. All these factors represent significant inefficiencies in the aspect of capital unproductivity for the businesses. Some of the lessons learnt from the analysis include the non-recognition of business risks and their mitigation. A business should consider the various events and circumstances that may impact negatively on their ability to meet obligations toward obligations taken by such businesses. In conclusion, enterprises need to manage their financing strategies to ensure that they minimize their risk, while maximizing their long-term growth potential. This research will prove important for future researchers and business enterprises in transitional economies.

Level Analysıs of the Relatıonshıp Between Inflatıon, Exchange Rate, Cbrt and Fed Interest Rates of Turkısh Foreıgn Trade

Foreign trade has become one of the important elements of the financial structure of countries. Money transfer mechanisms have the power to determine the direction of trade in the world. In the study; Türkiye's exports acording to the country groups were used. In the period 2013:1-2023:11; Panel cointegration, Autoregressive Distributed Lag (ARDL) and Granger causality analyses were used to determine the relationship levels between the Central Bank of the Republic of Türkiye (CBRT), Federal Reserve System (FED) interest rates, Wholesale Price Index (WPI), Consumer Price Index (CPI) and Türkiye's foreign trade. has been used. As a result of the study; Findings have been obtained that Turkish exports are not affected by the CBRT interest rate decisions and WPI in the short or long term. While the increase in FED interest rates causes a decrease in all of Türkiye's exports in the long term, it reduces exports to the Turkic Republics, OECD, EFTA, BSEC, CIS, OIC and D8G in the short term. It has been concluded that while there is a unidirectional causality relationship between the CBRT and FED interest rates, WPI and CPI and Türkiye's exports, there is a bidirectional causality relationship between the exchange rate and Türkiye's exports.

Sea‐level rise and firms' financial structure decisions

Sea‐level rise and firms' financial structure decisions

The Islamic Financing on Macroeconomic Stability in Indonesia

The objective of this study is to examine the function of Islamic finance in fostering macroeconomic stability in Indonesia. Specifically, it will scrutinize the stability of Islamic banks, its effects on micro, small, and medium enterprises (MSMEs), and its impact on economic growth and inflation. Employing a qualitative research approach, data were gathered by means of document analysis, encompassing books, scholarly publications, and institutional reports. The results demonstrate that Islamic banks, which employ profit-sharing and asset-backed financing structures, have higher levels of stability in comparison to conventional banks, therefore mitigating the likelihood of financial catastrophes. Islamic finance has profoundly facilitated the expansion of MSMEs by offering cost-effective, interest-free lending, therefore augmenting their productivity and economic contributions. Furthermore, Islamic finance promotes consistent economic expansion by prioritizing investments in tangible assets in industry areas such as agriculture and manufacturing. Although it suppresses speculative activity, its effect on inflation is inconclusive, as further growth of micro, small, and medium enterprises (MSMEs) may have upward influence on pricing. In conclusion, the study highlights that Islamic finance contributes to Indonesia's macroeconomic stability by strengthening Islamic banks, promoting MSME development, and fostering balanced economic growth. The data shows a consistent rise in the contribution of MSMEs to Indonesia's GDP from 57.08% in 2017 to 61.90% in 2022, underscoring their increasing significance in the national economy. This upward trend highlights the growing role of MSMEs in economic development.

Beneficiaries in the EU framework programs for research and innovation («Horizon 2020», «Horizon Europe»), European structural and investment funds

Problem setting. Nowadays, the issue of obtaining funding for scientific research, scientific and technical (experimental) developments is increasingly important. This practice is common, for example, in the EU. Many sources are offered: EU Framework Programs for Research and Innovation, European Structural and Investment Funds, etc. However, to understand the financing procedure itself, it is necessary to have some knowledge, including regarding EU legislation. First of all, attention should be focused on the terms, because this is the foundation, the alphabet. One of them is the beneficiary. It is found in many EU legal acts, but does not always have a fixed definition. Analysis of recent researches and publications. The main goal of the program or fund is to receive project funding. Foreign scholars focus their research in this area (for example, Mario J. Al Sayah, Pierre-Antoine Versini, Daniel Schertzer, Olatz Ukar Arrien, Marta Enciso-Santocildes). This situation is due to the fact that they have more modern and updated research infrastructures than Ukraine. Terms remain beyond their attention. However, there are isolated works with only the mention of the term in the issue without any analysis of it (for example, Glybko S., Kokhan V.). Purpose of the research is to clarify the term «beneficiary» in the EU Framework Programs for Research and Innovation, European Structural and Investment Funds. Article’s main body. An attempt is made to conduct a comparative analysis of the considered term in the EU Framework Programs for Research and Innovation («Horizon 2020», «Horizon Europe») and the European Structural and Investment Funds. Each of them has its own EU legal framework. However, only Regulation (EU) № 1303/2013 of the European Parliament and of the Council of 17 December 2013 laying down common provisions on the European Regional Development Fund, the European Social Fund, the Cohesion Fund, the European Agricultural Fund for Rural Development and the European Maritime and Fisheries Fund and laying down general provisions on the European Regional Development Fund, the European Social Fund, the Cohesion Fund and the European Maritime and Fisheries Fund and repealing Council Regulation (EC) № 1083/2006, defines the term «beneficiary». Regulation (EU) 2021/695 of the European Parliament and of the Council of 28 April 2021 establishing Horizon Europe – the Framework Programme for Research and Innovation, laying down its rules for participation and dissemination, and repealing Regulations (EU) № 1290/2013 and (EU) № 1291/2013 refers to Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council of 18 July 2018 on the financial rules applicable to the general budget of the Union, amending Regulations (EU) № 1296/2013, (EU) № 1301/2013, (EU) № 1303/2013, (EU) № 1304/2013, (EU) № 1309/2013, (EU) № 1316/2013, (EU) No 223/2014, (EU) № 283/2014, and Decision № 541/2014/EU and repealing Regulation (EU, Euratom) No 966/2012, which defines the term «beneficiary». The EU Framework Programmes for Research and Innovation («Horizon 2020», «Horizon Europe») contain definitions of the types of beneficiary. It is the target final beneficiary and beneficiary of the Accelerator. The possibility of achieving synergy between the specified programs and the European Structural and Investment Funds is being investigated, if there are already differences regarding the definition of the term «beneficiary». Conclusions and prospects for the development. The author states the following conclusions according to the obtained results: EU legal acts do not contain a single vision for the same term «beneficiary». We believe that it is necessary to review this situation in order to achieve the synergy established in the Regulations (EU).

The Impact of Supply Chain Finance on the Investment Efficiency of Publicly Listed Companies in China Based on Sustainable Development

The development and utilization of supply chain finance play a pivotal role in both enhancing financial structures and delivering substantial support for the sustainable progress of the real economy. This assistance is essential for promoting high-quality economic growth and ensuring stable, long-term development. This study empirically examines the effects of supply chain finance on investment efficiency, exploring the underlying mechanisms involved. Additionally, it assesses whether financing constraints and information asymmetry serve as mediating variables in the relationship between supply chain finance and investment efficiency among enterprises. The analysis is based on data from publicly listed companies in China covering the period from 2013 to 2022. The results indicate that supply chain finance effectively addresses both overinvestment and underinvestment issues, leading to a notable improvement in overall investment efficiency. Utilizing a two-way fixed effects model to analyze the role of financing constraints and information asymmetry as mediating variables, the study demonstrates that both factors significantly mediate the relationship between supply chain finance and investment efficiency within enterprises. Supply chain finance improves investment efficiency by mitigating financing constraints and lessening information asymmetry between enterprises and external stakeholders. The heterogeneity analysis reveals that the positive impact of supply chain finance on investment efficiency is notably greater in non-state-owned enterprises and in regions with more advanced development.

Does corporate green innovation unlock financial doors? The mediating role of environmental performance

Purpose This study aims to respond to the latest research calls to precisely revisit the nexus between corporate green innovation (CGI) and financial decisions through deeply investigating the mediating effect of corporate environmental performance measured by the effectiveness of emission reduction. Design/methodology/approach This study analyzes nonfinancial-listed firms on the Australian Securities Exchange from 2002 to 2019 using multiple regression analysis on a panel data set. Initially, different static panel data approaches were used. To account for the potential endogeneity issue and generate robust outcomes, the authors apply the one-step system generalized method of moment, two-stage least squares and lagged model approaches. Findings The results provide a clear indication that the practices of green innovation can favorably contribute to the level of environmental performance, which in turn affect the firm’s ability in opening the new financial doors and shape solid capital structure. In this context, the effective environmental performance fully mediates the nexus between CGI and capital structure of a firm. More importantly, the outcomes are robust and coherent across different estimation techniques. Originality/value The originality of this study lies in its utilization of mediation analysis to explore the relationship between CGI and a firm's financial structure. This approach distinguishes it from previous research by offering a thorough and nuanced understanding of how green innovation practices influence the financing decisions of a firm.

Financial Surplus and Capital Structure Dynamics: Evidence from Indian Firms

Financial Surplus and Capital Structure Dynamics: Evidence from Indian Firms

Fast payment, credit and bank diversification: the impact of Pix adoption on the local credit market structure

PurposeIn this article, the research objective is to empirically investigate the effect of the adoption of the Brazilian instant payment system, Pix, on the local credit market structure and the diversification of the banking system in Brazilian municipalities.Design/methodology/approachBy analyzing the data, in this study, we compile and align data from supervisory and public sources, covering the period from 2019 to 2022 in Brazil. As of 2014, Brazil was comprised of 5568 municipalities distributed across five regions: North (450 municipalities), Northeast (1792), Midwest (467), Southeast (1668) and South (1191), according to the Brazilian Institute of Geography and Statistics (IBGE). Our analysis relies on the volume and quantity of Pix to the outstanding credit operations in Brazil.FindingsThis article provides evidence that the widespread adoption of Pix has impacted the financial structure of municipalities. This analysis of banking concentration in the country and municipalities, based on banking relationships, helped us assess whether the adoption of Pix had any correlation with the increase in credit lines. Overall, the results from the statistical tables suggest that the adoption of Pix may be having a positive impact on the local credit market structure.Originality/valueThe originality contribution of the study is to initiate an investigation into the impact of this instant payment system, Pix, on the Brazilian reality. Pix was launched in 2020, amid the COVID-19 pandemic, and had significant numbers, such as over 61% of the adult population having at least one Pix key registered in a little over a year; about 100 million people made at least one payment with Pix; and more than 1.4 billion transactions per month, with 72% between individuals, as presented by the REB 2021.

The legal foundations and specifics of exercising corporate rights by individuals authorized to perform local self-government

Financial liberalization is a widely adopted policy for countries to enhance growth. Financial liberalization enables financial institutions to proceed with innovative activities by familiarizing themselves with fewer mortgage loans in the financial market. Financial liberalization is a widely adopted policy for countries to enhance growth; however, it is a complex and controversial issue, with different studies providing contrasting perspectives. Financial liberalization is considered an efficient way to measure and change the financial market and structure in order to reach a position to get financial liberalized markets under an efficient and effective guideline. In the case of Vietnam, very few scholars have investigated the issue of financial liberalization-led growth. This endeavor examines the effects of financial liberalization on economic growth in the presence of control variables for Vietnam over the period of 1990 to 2021. This study uses the Autoregressive Distributive Lag Model approach due to its several advantages. The results show that financial liberalization enhances economic growth, which implies that more liberalization results in enhanced growth in Vietnam. Improved access to credit is another positive outcome of financial liberalization, as it can result in greater access to credit for individuals and businesses, enabling them to make investments and expand their operations. Hence, the results support the neo-liberal view of liberalization.

Management and Enforcement Theories for Compliance with the Rule of Law

Abstract Following the contemporary debate surrounding two alternative perspectives on compliance – enforcement and management – this article suggests an analysis through the lens of the rule of law crisis. Specifically, the financial and techno-managerial strategy developed by the EU for the indirect protection of the rule of law relies on mechanisms that combine characteristics from both the enforcement and management approaches. This article will identify these mechanisms, namely the European Semester, the Conditionality regulation, the European Structural Investment Funds and the Recovery and Resilience Facility, in order to determine their nature, features, and tools for ensuring compliance with the rule of law. The hypothesis of this article relies on the idea that the EU’s tools are characterised by a mismatch between the causes of the identified problems and the chosen solutions. Considering that the deployment of the above measures has not re-established compliance, the EU strategy toes between inducing rule conformity on the one hand and deterring rule of law violations on the other. However, it seems that only the former can restore the rule of law, as the latter is considered ill-equipped to reverse or at least halt instances of backsliding. This mismatch explains why the Justice Scoreboard, the Framework, and the Review Cycle with its Annual Report have not made any difference, and more generally, why management strategies are unfit for dealing with deliberate backsliding.1

Impact of Cohesion Funds on Convergence Club's Economic Growth

ABSTRACTThis paper empirically estimates the impact of the European Structural and Investment Funds (ESIF) on economic growth across European regions. The narrative of this paper is based on the convergence club hypothesis. In this context, we implement the data‐driven Phillips and Sul test to classify European regions into endogenously identified convergence clubs that tend to converge to different steady‐state equilibria. We find three substantially different convergence clubs in terms of both per capita output and spatial location: capital cities and metropolitan areas (along the so‐called “Blue Banana”), core countries, and the periphery. We observe a persistent core‐periphery pattern in terms of output per capita among European regions with different rates of convergence. The convergence club comprising capital cities and metropolitan areas converges almost four times faster than the rest of the EU. Subsequently, we estimate club‐specific growth regressions to investigate the impact of ESIF expenditures on short‐run economic growth. Our main identification strategy relies on two instrumental variables, namely the spatial lag of EFSI expenditures‐to‐GDP and the air distance to Brussels, to address a strong endogeneity problem in strongly biased relationship between ESIF expenditures‐to‐GDP and short‐run economic growth. Our results indicate a positive impact of ESIF expenditures‐to‐GDP on short‐run economic growth in the second (core) and third (periphery) convergence clubs, with the impact being twice as large in the latter compared to the former. These results remain robust when adjusting the growth regressions to use ESIF expenditures‐to‐population instead of ESIF expenditures‐to‐GDP, although the pronounced difference in effect magnitude among convergence clubs diminishes.

Empirical Study on the Development of Digital Inclusive Finance on Narrowing the Consumption Gap between Urban and Rural Areas--Taking Shanxi Province as an Example

Based on the panel data of 11 cities and regions in Shanxi Province from 2011 to 2020, the study empirically investigates the impact of digital financial inclusion on the urban-rural consumption gap in Shanxi Province from the perspective of the overall effect and regional effect of digital financial inclusion development. The study finds that, in general, digital inclusive finance has narrowed the consumption gap between urban and rural residents through the high-quality features of low threshold and accessibility, from the perspective of regional heterogeneity, the uneven development of digital inclusive finance has led to significant differences in its effect on the consumption gap between urban and rural residents among regions, showing the characteristics of a ladder with a high level in the south and a low level in the north, and from the perspective of structural heterogeneity, the structure of digital inclusive finance development also has a significant impact on the consumption gap between urban and rural residents in Shanxi Province. From the perspective of structural heterogeneity, the impact of the development structure of digital inclusive finance on the consumption gap between urban and rural residents in Shanxi Province also varies, with the breadth of coverage bringing better bridging effects than the depth of use, while the degree of digitization creates the problem of digital divide and widens the consumption gap, finally, relevant suggestions are put forward with a view to narrowing the consumption gap between urban and rural areas and promoting the coordinated development of urban and rural areas.

Cultural Evolution of Finance: A Study on Monetary Incentives and Financial Innovation

This study explores the cultural evolution of finance through the analysis of monetary incentives and their impact on financial innovation. Through an interdisciplinary approach, it investigates how financial practices have changed due to economic and cultural pressures, and how these changes have driven new forms of innovation in global financial markets. The results reveal that monetary incentives play a crucial role in the evolution of financial structures, promoting the adoption of new technologies and financial products that have transformed the global economy. This article highlights the importance of understanding the interplay between culture and finance in order to anticipate future trends in the industry.

Synergistic relationship between green finance and industrial structure upgrade in the yangtze river economic belt

Synergistic relationship between green finance and industrial structure upgrade in the yangtze river economic belt

Financial resilience, growth and risk sharing in the EU

We build a financial resilience index capturing the structure and stability features of financial systems and benchmark EU financial systems against their ability to enhance stable growth and international risk sharing. The index comprises financial openness, market orientation, equity deepening, maturity structure, and institutional soundness. Our results show that: (i) EU financial systems are highly heterogeneous and converge to a clustered pattern; (ii) the index is highly significant in growth regressions, suggesting that financial structure and institutional soundness are key to enduring growth; (iii) the heterogeneity of EU financial systems has implications for the vulnerability to domestic output shocks: the risk-sharing mechanism is more effective in the market-based and institutionally sound economies that group in the top financial clusters, whereas unsmoothed consumption is higher in economies belonging to the low-resilience clusters, especially in the aftermath of the global financial crisis, when the credit channel is significantly downsized.

The Impact of Financing Structure on Innovation: Empirical Evidence from Chinese Firms

Selecting an appropriate financing structure is vital to support corporate R&D activities, which is crucial for firms competitive advantages. So how does financing structure affect innovation? This paper investigates the impact of external financing ratios on corporate R&D. The study finds that a high proportion of external financing suppresses R&D investment. Internal financing and equity financing significantly promote corporate R&D investment, whereas debt financing and government subsidies have a notable inhibitory effect. The presence of equity concentration and financing constraints weakens the suppressive impact of external financing on R&D investment. The inhibitory effect of external financing on R&D intensity is more pronounced in state-owned, small-scale, and traditional enterprises. This paper delves into the optimal financing structure for corporate innovation, providing new perspectives on the relationship between financing structures and corporate R&D, and offering empirical evidence to support the improvement of the equity financing market in the country.

Project finance or corporate finance for renewable energy? an agent-based insight

State-of-the-art macroeconomic agent-based models (ABMs) include an increasing level of detail in the energy sector. However, the possible financing mechanisms of renewable energy are rarely considered. In this study, an investment model for power plants is conceptualized, in which energy investors interact in an imperfect and decentralized market network for credits, deposits and project equity. Agents engage in new power plant investments either through a special purpose vehicle in a project finance (PF) structure or via standard corporate finance (CF). The model portrays the growth of new power generation capacity, taking into account technological differences and investment risks associated with the power market. Different scenarios are contrasted to investigate the influence of PF investments on the transition. Further, the effectiveness of a simple green credit easing (GCE) mechanism is discussed. The results show that varying the composition of the PF and CF strategies significantly influences the transition speed. GCE can recover the pace of the transition, even under drastic reductions in PF. The model serves as a foundational framework for more in-depth policy analysis within larger agent-based integrated assessment models.

THE IMPACT OF TAXATION ON INTERNATIONAL COMMERCE AND EXCHANGE RATE ON IMPORTS

The globalization of capital markets has accelerated capital movements, turning the world into one large marketplace. International trade has become an important tool in shaping the financial structure of countries. However, elements such as customs duties and import quotas play a decisive role in trade between countries. Taxes, which are a financial policy tool of countries, are used to influence foreign trade, particularly imports. One of the determining factors in foreign trade activities is the exchange rate. The purpose of this study is to examine the effect of taxes on imports and the change in the nominal exchange rate on the import volume of goods and services. In this study, which examined 20 Organization for Economic Co-Operation and Development (OECD) countries with data for the period 1999-2021 taken from the World Bank official website, the model was analyzed with the help of AR (1) Residual Random Effects Generalized Least Squares Regression Model Estimator. The analysis revealed that increases in international trade taxes and exchange rate increases reduce the import volume. This result empirically supports the conclusion that taxes on international trade and reductions in exchange rates increase import volume.

The Relationship between the Return of Energy Companies Listed on the Kazakhstan Stock Exchange and the Exchange Rate, KASE Index, and Gold Return: ARDL Bounds Value Approach

In a free market economy, stock market indices are influenced not only by national economic developments, but also by economic indicators such as gold, exchange rates, and oil. It is important to consider these indicators when analyzing the returns of companies traded on the stock exchange. Internal factors that impact stock market returns include the company's estimated earnings and changes in the company's financial structure. External factors include macroeconomic variables such as exchange rates, interest rates, gold prices, and Gross Domestic Product (GDP). A study analyzed the relationship between the returns of energy companies traded on KASE and the KASE index, exchange rate, and gold return during the period of 01.01.2023-01.04.2024 (328 trading days) using the ARDL Bounds Value Approach. The research findings indicate that the stock market composite index, foreign exchange, and gold returns have a long-term effect on the returns of energy companies. Particularly, the long-term effect of the stock market composite index return is found to be significant and positive for all three assets. Additionally, the effect of companies' past values has been observed as negative. According to the error correction model analysis, a key finding is that shocks to company returns will reach equilibrium in a short time, approximately one trading day. These results can provide decision support, especially for investors, when investing in energy companies.