Debt Levels Research Articles

The Role of SMEs in the Economy: Analyzing the Financial Performance of Algerian SMEs

Small and medium-sized enterprises (SMEs) represent a major pillar of the Algerian economy, accounting for 99.9% of businesses and employing over 3.3 million people. Despite their importance, these enterprises face complex challenges that affect their financial performance, measured by indicators such as return on assets (ROA). The study explores this performance's internal and external determinants, focusing on factors such as liquidity, debt levels, company size, and macroeconomic variables like GDP growth and inflation. Using the panel data method, we analyzed a sample of 40 SMEs over a five-year period (2018 to 2022). The results show that excessive liquidity, while seemingly prudent, has a negative effect on SME performance, as it limits investment opportunities. Similarly, short-term and long-term debt are associated with reduced profitability, contradicting some economic theories that view debt as a sign of good management. The limited access to credit often forces Algerian SMEs to rely on short-term financing, increasing their financial risks. In contrast, economic growth positively affects SME performance by boosting demand for their products and services. However, inflation has a negative effect, eroding profit margins due to rising operating costs. Thus, improving a company's performance is possible if the entity can create the conditions necessary for its survival and deploy the resources and logistics needed to achieve the desired objectives while aligning strategies across various activities to effectively implement its management policies. These research findings provide valuable insights for business leaders and policymakers, emphasizing the need for tailored strategies to maximize the financial performance of SMEs by considering these various factors.

Artificial Intelligence Based Renewable Energy Solutions to Enhance Sustainability of Ecuador

Ecuador's economy is primarily based on exports of oil, agricultural products and tourism. The country has faced economic challenges, including high levels of external debt and reliance on oil revenues. In recent years, Ecuador been investing in renewable energy sources, such as hydroelectric power and solar energy, to reduce its reliance on fossil fuels and combat climate change. AI-based renewable energy solutions can help enhance the sustainability of Ecuador.

ИССЛЕДОВАНИЯ ПО ПРИМЕНЕНИЮ ИСКУССТВЕННОГО ИНТЕЛЛЕКТА В СФЕРЕ БАНКОВСКИХ ПЛАТЕЖЕЙ

Currently, artificial intelligence is successfully used in online lending, credit reporting, insurance, customer service and other areas in Russia. Thanks to intelligent applications such as electronic acquiring, big data collection and artificial intelligence technologies, the artificial intelligence risk management system is becoming more and more advanced. At the same time, artificial intelligence can effectively improve the accuracy of marketing and forecasting of commercial banks’ assets based on various indicator analysis and create a high-quality risk management model in order to significantly increase the approval level of the credit business, reduce the level of bad debts and, ultimately, achieve productivity growth.

Economic Factors Influencing Homicide Rates: A European Perspective

Intentional homicide rates represent a critical societal issue, impacting public safety and social stability across <st1:place w:st="on">Europe</st1:place>. Understanding the socio-economic factors underlying these crimes is paramount for effective policy intervention. This research aims to investigate the socio-economic determinants of intentional homicides in 15 European countries over the period 2010-2021, providing insights into the complex relationship between economic indicators and violent crime rates. The study hypothesizes that economic prosperity, government debt, and access to financial services significantly influence intentional homicide rates, with countries exhibiting higher levels of economic development and financial inclusion experiencing lower homicide rates. Utilizing robust statistical and econometric techniques, including regression analysis and correlation matrices, the research examines the relationships between various socio-economic indicators and intentional homicide rates. Data spanning from national tax authorities, statistical agencies, and international organizations are meticulously analyzed to uncover meaningful patterns and associations. The findings reveal compelling associations between economic indicators and intentional homicide rates. Higher GDP per capita and greater financial inclusion are correlated with lower homicide rates, while elevated levels of government debt exhibit a negative association with homicide rates. These results underscore the multifaceted nature of crime dynamics and highlight the importance of considering broader socio-economic factors in understanding violent crime patterns. The study contributes to both theoretical knowledge and practical policymaking by offering insights into the socio-economic determinants of intentional homicides. These findings can inform evidence-based policy interventions aimed at promoting social stability and enhancing public safety across <st1:place w:st="on">Europe</st1:place>, emphasizing the importance of addressing underlying economic factors in crime prevention strategies.

The role of public-private partnership in overcoming poverty in the Kyrgyz Republic

Kyrgyzstan has been experiencing an “infrastructure deficit” for many years. It is expressed in the deplorable condition of roads, hospitals, schools, kindergartens, administrative buildings and other infrastructure facilities. One of the indicators of infrastructure quality is the global competitiveness index of countries. Among 133 countries of the world, Kyrgyzstan ranks 112th in terms of the quality of infrastructure in general. That is, it is included in the 30 countries of the world with the worst quality of infrastructure. This once again shows the country’s need for renewal, modernization and construction of new infrastructure facilities. For many years, the country has resorted to borrowing money from international creditors when it was necessary to build or repair existing infrastructure. As a result, about 90% of all Kyrgyzstan’s external loans today are debts for the construction of roads and energy facilities. However, the country can no longer follow this path today. Thus, at the end of 2021, Kyrgyzstan’s public debt amounted to $5 billion 147.22 million, or 60.33% of GDP. The high level of public debt and the recommendation of international institutions to refrain from increasing it led to the search for new instruments to finance new construction and modernization of existing socially important facilities. The mechanism of public-private partnership has become such a tool for the Kyrgyz Republic.

ІННОВАЦІЙНІ ІНСТРУМЕНТИ ЗЕЛЕНОГО ФІНАНСУВАННЯ ДЛЯ УКРАЇНИ

The expansion of financing sources holds particular importance in the context of implementing the European Green Deal in Ukraine. Given the escalating climate and environmental threats, the pursuit of new green financing mechanisms for countries burdened with high levels of debt persists. Amidst the full-scale war in Ukraine, the options for state financing of environmental projects and programs are significantly restricted. The article examines the formation of additional financing sources aimed at restoring ecosystems and ecological infrastructure damaged by the war in Ukraine. Drawing upon an overview of international practices, this study elucidates innovative approaches to environmental financing, which involve exchanging a part of the state's external debt for commitments to invest in nature conservation programs and achieve climate neutrality. The analysis highlights significant variations in the implementation of green debt swaps across different countries, underscoring the need to assess the feasibility of adopting such mechanisms in Ukraine, especially given its heightened reliance on debt. Utilizing multi-criteria analysis, a comparative evaluation of key "green debt conversion" instruments was conducted, encompassing Bilateral Debt-for-Nature Initiatives, Debt-for-Nature Swaps, and Debt-for-Climate Swaps. A comparative table has been compiled to illustrate the key characteristics of these instruments and to assess the potential impact of their use in Ukraine. The benefits of exchanging debt for investments in environmental recovery, as outlined in Ukraine's National Recovery Plan, are delineated. The primary sources for accumulating funds to meet the state's obligations resulting from the adoption of green debt swaps have been identified. Recommendations for the implementation of green debt swaps in Ukraine have been provided. It has been concluded that green debt swaps could be employed in Ukraine to finance specific environmental or climate-related projects and initiatives, establishing conservation and climate funds through contributions from both domestic and international ESG investors. To protect against “greenwashing”, it is advisable to bolster oversight of financial transactions and to expand the list of key performance indicators (KPI) used to evaluate investment decisions, considering ESG factors.

Leverage and profitability of newspaper publishers: A financial analysis of the portuguese industry (2008-2019)

As is the case with any economic activity, the challenge of guaranteeing the economic and financial sustainability of the newspaper industry is recurrent, and the challenge is redoubled in periods of industry transformation, as has occurred in the media business, where there are various levels of disruption, particularly in terms of the financing model (insufficient traditional sources of revenue: reader revenue and advertiser revenue) and forms of product access and distribution (insufficient physical support and newsstands). The migration to digital media necessarily implies new management strategies and practices in order to optimize costs and diversify the revenues that can be earned by newspaper companies. In this context, this article examines the recent evolution of the financial profitability of the newspaper publishers in Portugal. Financial profitability depends on both the economic profitability and the financial structure (i.e., leverage) of companies. Newspaper companies accumulated very high levels of debt because of the sector crisis. The financial analysis in this article reveals that almost a half of newspaper publishers benefited from positive leverage effects, recording higher financial profitability than economic profitability. Companies that benefited from positive leverage effects were the more leveraged. High leverage was positive for those newspaper companies that made investments whose returns offset their debt costs.

Effect of Foreign Direct Investment on Economic Growth: The Role of Natural Resources and Trade Openness in Ghana.

This study examined the determinants of foreign direct investment in Ghana over the period 1980 – 2017 to highlight the need for FDI to reduce our growing debt levels by reducing replacing public loans. To estimate the empirical model, the study controlled for exchange rate and inflation rate as measures of macroeconomic instability, as well as the growth rate of citizen’s income. The study employed time series analysis considering the nature the variables be annual series. Using the Augmented Dickey-Fuller (ADF) approach, the study tested for the presence of unit root adopted the Johansen Cointegration test for long run associations among the variables. The VAR and VECM models were finally estimated to achieve the objective of the study. Outcome indicated a positive relationship between natural resource availability and FDI inflows in the short-run and long-run in Ghana. Trade openness was also revealed to have a positive impact on FDI inflows in the country in both time periods. Measures of macroeconomic uncertainties such as exchange rate and inflation rate exert negative impacts on FDI inflows. Results of the study holds several policy implications including the need to achieve a sustainable economic outlook thus achieving and sustaining lower levels of inflation that will less deterrence to foreign investors. Also, the exchange rate needs to be managed in order to achieve an appreciation of the Ghana-Cedi against the US-dollar to encourage foreign direct investment and trade amongst Ghana’s trade partners. Again, further trade restrictions that are deemed unproductive can be reviewed to allow free trade, especially the Africa Continental Free Trade Area (AfCFTA).

CAPITAL STRUCTURE AND PROFITABILITY OF COMMERCIAL STATE-OWNED ENTERPRISES IN NAMIBIA

This study investigates the impact of capital structure on the performance of commercial stateowned enterprises (SOEs) in Namibia using panel data modelling techniques on data from 2011 to 2020. The research extends performance measures and leverage measures employed by previous studies, utilizing total liabilities to total assets (TLTA) and total equity to total assets (TETA) to examine the effects of debt structures on corporate finance. The study employs return on equity (ROE) and return on assets (ROA) as performance measures. The findings reveal no significant relationship between capital structure and profitability of commercial SOEs in Namibia, thus supporting the irrelevance theory. Additionally, a unidirectional causality is found between capital structure and profitability measures. The study's implications suggest that high debt levels should be reduced to optimize capital structure and that policies should be implemented to enhance SOE performance through innovation and best practices. The findings contribute to the ongoing debate on public sector reforms and provide a basis for further research in this area.

How does society satisfaction affect the capital structure of firms? A two-part fractional regression approach

<abstract> <p>This paper examined the influence of society satisfaction on the capital structure decisions of small and medium–sized enterprises (SMEs). Applying data from an online questionnaire, we captured the well-being and perceptions that individuals hold about their own quality of life through a latent variable measuring satisfaction with life. In addition, the study used a sample of SMEs from Portugal for the pandemic year of 2020. Using fractional regression models, our findings revealed a statistically significant relationship between society satisfaction and SMEs' leverage. Specifically, we showed that higher levels of satisfaction decrease debt levels among SMEs. However, further investigation, employing a two-part fractional regression model, showed that the overall negative effect is, in fact, only explained by the increasing propensity for firms to remain debt-free in the presence of greater levels of society satisfaction. Consequently, while society satisfaction appears to influence the decision to engage in debt financing, this does not significantly impact the amount of debt taken on by SMEs. In summary, this paper highlights the importance of society satisfaction to SME capital structure decision-making and contributes to a deeper understanding of the mechanisms driving SME financing decisions amidst socio-economic dynamics.</p> </abstract>

A Statistical Analysis of Greece’s Recovery From The 2008 Financial Crisis and Their Progress in SDG Goal 8

The 2008 Financial Crisis heavily impacted the Greek economy due to economic mismanagement, poor bailout measures, structural weaknesses already present in the economic system of the Greek economy, and government failing to accurately report debt levels in the country. This resulted in a large amount of poverty following 2009, and a large recession in the country. However, in 2015 Greece also committed to achieving the Sustainable Development Goals by 2030, which was set by the United Nations, and Goal 8 was achieving Decent Work and Economic Growth. Utilising the 10 sub-goals set by the United Nations, it was found that Greece was on track to achieve 7 of the goals, however still needed to do more action regarding 3 of the goals, for them to be met.

The Impact of Financial Literacy on Saving Habits among Malaysian Youth: A Gender-Based Analysis

This study examines the financial literacy and saving habits of Malaysia’s youth, with a particular focus on gender-based disparities and their implications. Recent reports highlighted a lot of young Malaysian’s struggles in terms of financial management, including high debt levels and inadequate savings among youth due to low financial literacy. Gender differences in financial literacy have been well documented, with men typically demonstrating higher levels of confidence and understanding in this area. Hence, this study aims to evaluate the saving habits and financial literacy levels of young Malaysians by looking at these factors via a gender lens. The research utilises a quantitative approach, using an online survey to gather information from 332 participants who are under 30 years old. SPSS was used to analyse the data, and descriptive statistics were used to discuss and summarise the results. The respondents’ saving habits and financial literacy were assessed using Likert-scale questions. A regression and correlation analysis were conducted to investigate the relationship between saving habits and financial literacy. The findings suggest that young people in Malaysia are usually quite financially literate; however, there are still gaps in their knowledge of advanced financial instruments. The majority of respondents have good saving habits; nonetheless, there are clear gender disparities, with males rating their financial literacy higher than women, especially when it comes to budgeting and investing. Regression analysis reveals a moderately positive correlation between financial literacy and saving habits, with financial literacy accounting for approximately 26.5% of the variance in saving habits. It appears that while financial literacy influences saving behaviour, there were fewer obvious gender variations in saving behaviours, suggesting that both genders engage in similar saving practices. These findings highlight the need for improved financial education to address identified gaps and promote better financial management for Malaysia’s youth.

The Effect of Debt Level, Liquidity and Company Size Against Profitability

The purpose of this research is to analyse the effect of debt level, liquidity, and company size on profitability. There are independent variables including debt level using Debt to Asset Ratio, liquidity using Loan to Deposit Ratio, company size using the natural logarithm of total assets and the dependent variable is profitability using Return on Equity. The sample in this research is the financial sector service entities in the bank sub-sector listed on the Indonesia Stock Exchange for the period 2018-2021 using purposive sampling method. In this research there are 26 entities that support the research sample criteria, so that 104 financial statement data are obtained. This research method uses classical assumption tests such as normality, multicollinearity, heteroscedasticity and autocorrelation used in this research. Furthermore, the hypothesis is tested with F test, t test and coefficient of determination. The research test uses multiple regression analysis with multiple regression equation models. Based on the test findings, it is known that simultaneously shows that the level of debt, liquidity, and company size have a simultaneous impact on profitability in financial sector service entities in the bank sub-sector listed on the Indonesia Stock Exchange in 2018-2021. Partial test findings show that the level of debt has no impact on profitability, liquidity and company size have a positive impact on profitability.

ANALYSIS OF TOTAL DEBT TO ASSET RATIO AND PROFIT MARGIN AS A MEASURE OF COMPANY FINANCIAL PERFORMANCE

This research aims to analyze the Total Debt to Asset Ratio (TDTAR) and Profit margin as a measure of a company's financial performance. TDTAR is used to measure a company's debt level in relation to its total assets, while Profit margin is used to measure a company's efficiency in generating net profit from its operating income. These two ratios provide valuable insight into a company's financial condition and profitability. This research identifies that the relationship between TDTAR and Profit margin has important implications in company decision making. A high TDTAR can indicate greater financial risk, especially if it is not balanced with a healthy Profit margin. Conversely, a low Profit margin can indicate operational efficiency problems that need to be corrected. In addition, this research highlights the importance of good financial risk management in managing the relationship between TDTAR and Profit margin. Companies need to understand the impact of these two ratios on their profitability, financial stability and financial decisions. Clear communication with stakeholders is also a key factor in building trust and support. In conclusion, TDTAR and Profit margin analysis are important tools in measuring a company's financial performance. Wise use of these two ratios can help companies plan, manage risks and achieve their financial goals well. This research provides a deeper understanding of the relationship between these two ratios and their implications in the context of corporate decision making.

Reforming State-Owned Enterprises (SOES) to Facilitate the Economic Recovery of Sri Lanka

The economic downturn and escalating debt levels prompted Sri Lanka to seek assistance from the International Monetary Fund (IMF), resulting in the formulation of the 17th IMF program. This program, aimed at fiscal consolidation and restructuring, designates SOEs as a pivotal element in the nation's economic recovery strategy. This policy brief addresses the imperative need for reforming State-Owned Enterprises (SOEs) in Sri Lanka. A historical overview reveals the evolution of Sri Lanka's SOEs, from their establishment during World War II to a surge in numbers in the 1980s. Despite their vital role in the economy, SOEs have faced operational inefficiencies, financial struggles, and governance issues, leading to a privatization policy in 1988. The document explores international experiences in SOE reform, drawing insights from successful models in Singapore, China, and India. Current policy measures in Sri Lanka encompass various reform strategies, such as corporatization, restructuring, and commercialization, focusing on enhancing financial transparency and accountability. The establishment of the State-Owned Enterprise Restructuring Unit (SRU) reflects a commitment to effective implementation, with international support from entities like the International Finance Corporation (IFC). In conclusion, the path to economic recovery in Sri Lanka hinges on the successful transformation of SOEs, ensuring financial viability, transparency, and sustainable growth.

Влияние санкционных ограничений на структуру и динамику экономики Северного Кавказа

Growing geopolitical tensions and sanctions imposed against our country have determined the need for structural changes in the domestic economy. In this regard, the task of ensuring sustainable development of regional economic systems begins to play a special role. The article analyzes the impact of sanctions restrictions on the structure and dynamics of the economy of the North Caucasus Federal District (NCFD) in order to assess the potential and prospects for the development of the region’s economy in the current conditions, as well as to identify possible directions for adjusting regional strategic planning documents. The work focuses on the analysis of the gross regional product (GRP), whose sectoral composition and dynamics characterize the structure and dynamics of the regional economy, as well as the level of regional investment in fixed capital, as an indicator that determines the potential for financing projects for the development of the regional economic system. The study identified the most significant industries for the economy of the North Caucasus Federal District, assessed their current state and made a forecast of their development under sanctions. It is concluded that the current economic dynamics of the North Caucasus Federal District are insufficient to bring the region to the level of sustainable economic development. A study of the region’s financial condition was conducted and its potential for financing economic development projects was assessed. It is shown that the region is subsidized, while the level of debt in the region for both business and the population is constantly growing. Key ways to solve the existing problems of insufficient funding have been outlined. In particular, it was proposed to create a special regional development fund that would finance the most promising projects in priority sectors of the economy, as well as expand the existing practice of public-private partnerships. The forecast for the volume of investments in fixed assets showed their expected growth in the near future (if current trends continue).

Impact of Capital Structure on Firm Performance: Empirical Evidence from Indian Manufacturing Sector

The present study has been carried out to investigate empirically the impact of capital structure on a firm’s performance in the Indian manufacturing sector from the year 2013 to 2022 and a comparative analysis of its findings with the results of previous studies. A sample of 51 firms from the Nifty India Manufacturing Index is selected for the study. The data are analyzed by employing the panel data technique and the random effect model is found to be consistent as per the results of Hausman test. The capital structure is proxied by debt-equity ratio, whereas return on equity (ROE) and return on assets (ROA) are used as firm performance indicators. Apart from these, some control variables such as firm size, liquidity, tangibility and growth are also included in the study. The results exhibit that the debt-equity ratio has a detrimental effect on the performance of the Indian manufacturing firms. This negative association is substantial when performance is measured using ROA as opposed to ROE. Among the control variables, only size revealed a negative relationship with firm performance. The comparative analysis highlighted that for the time being, the negative association between capital structure and performance is consistent over time for the developing nations. The outcomes of the study will have ramifications for the managers and policymakers responsible for decision making to enhance performance and will drive them to consider the influence of debt financing on performance before deciding the debt level. It also provides updated insights that can guide the strategic and financial decisions of the manufacturing firms in India.

THE CONSEQUENCES OF A FORCED MIGRATION SHOCK FOR THE ECONOMY OF A COUNTRY AT WAR: THE CASE OF UKRAINE

The full-scale war in Ukraine, which started with the Russian invasion in February 2022, has led to an unprecedented forced migration crisis not seen in Europe since the Second World War. The current Ukrainian forced displacement, which has no analogues in terms of its scale, geographical coverage, quantitative indicators and timeframe, represents an exceptional case to study in terms of its impact on the economic environment of the country of origin. The purpose of this paper is to identify and analyse the short- and long-term effects of the forced migration shock on the economy of a combatant country in the context of a full-scale war in Ukraine. Methodology. To address the task of classifying the economic consequences of a forced migration shock from the perspective of the country of origin, the publication uses the matrix diagram method. The matrix developed is based on two key characteristics that indicate the durability of the impact (short-term or long-term) and the nature of the impact (explicit or implicit). The analysis of the short-term and long-term effects of forced migration on the Ukrainian economy is based on macroeconomic statistics (key macroeconomic indicators, labour market indicators, public finance indicators, external sector statistics) in the pre-war period, the war period since 2022, and forecasts for 2024-2025. Results. Unlike regular labour migration, forced migration has a predominantly negative impact on the economy of a country of origin, both in the short and long term. The explicit effect of forced migration on the economic system of the country of origin is to damage the labour market. The implicit effects include a decrease in remittances, a reduction in production facilities, an increase in the budget deficit and regional budget imbalances, an increase in the level of external and internal debt, increased dependence on international aid, a decrease in consumption, investment and GDP growth rates. Practical implications. The practical results provide a basis for further research into policy measures to address the negative aspects of increasing migration processes in Ukraine, particularly with a view to the country's future post-war reconstruction. Value/Originality. The matrix developed to assess the impact of the forced migration shock provides a deeper understanding of the multifaceted effects of this phenomenon on the socio-economic system of a country at war.

Debt Crises, Fast and Slow

Abstract We build a dynamic model where the economy is vulnerable to belief-driven slow-moving debt crises at intermediate debt levels, and rollover crises at both low and high debt levels. Vis-à-vis the threat of slow-moving crises, countercyclical deficits generally welfare-dominate debt reduction policies. In a recession, optimizing governments only deleverage if debt is close to the threshold below which belief-driven slow-moving crises can no longer occur. The welfare benefits from deleveraging instead dominate if governments are concerned with losing market access even at low debt levels. Long bond maturities may fully eliminate belief-driven rollover crises but not slow-moving ones.

Factors Influencing Thai Muslims' Willingness to Donate Cash Waqf to Religious Projects

Purpose — Muslim communities in Thailand have lately used cash waqf as a creative strategy to raise seed money from Muslim contributors to implement religious projects such as building religious institutions like mosques and Islamic schools. The factors influencing this unique kind of giving have, to date, rarely been studied. This research attempts to examine the motivational and economic elements that impact people’s willingness to donate (WTD) cash waqf to such religious projects. Design/Methodology/Approach — The study utilised a Contingent Valuation Method (CVM) and an ordinal logistic regression method to examine the effects of various independent variables on the WTD. A validated structured questionnaire was utilised to collect primary data from 404 cash waqf donors in the southernmost provinces of Thailand. Findings — When comparing donors with medium income levels to those with higher salary levels, the findings show that donors in the higher salary category were more likely to generate a higher WTD propensity. The probability of donors’ WTD was positively influenced by any reductions in debt levels. Furthermore, factors such as belief in the afterlife, the salience of one’s Muslim identity, and the experience of a warm glow were found to have a positive impact on individuals’ WTD cash waqf to religious projects. Originality/Value — This study utilised the Contingent Valuation Method (CVM) to examine the cash waqf practices, which has received limited attention in previous scholarly works. Furthermore, the variables employed in this research serve to broaden the scope of understanding in the realm of Islamic philanthropy, surpassing the confines of the attitude-intention framework. Research Limitations/Implications — The factors used in this study encompass the internal drives of potential donors. In reality, a number of external circumstances, such as the validity of the waqf project and the donor’s accessibility to other options, may have an impact on the donor’s choice. Additionally, the scope of this study was restricted to the southern border provinces of Thailand. It would be of interest to conduct additional research that broadens the sample size and geographical scope to include other regions within the country or even other countries with diverse cultural and socioeconomic contexts. This would enable the generalisation of the findings obtained from this study. Practical Implications — Waqf fundraising organisations should focus on boosting awareness among high-income, low-debt people. This population group donates more than middle- and lower-class people. Mosques and religious organisations can use a strategy to help donors reassess the spiritual benefits of waqf giving in relation to the afterlife, the reinforcement of their Muslim identity, and the emotional satisfaction of giving. These motivators will increase the likelihood of mosque donations.