Non-financial Organizations Research Articles

Gender diversity and earnings management: Evidence from Bangladesh

This study aims to evaluate the impact of Gender-diversity on earnings manipulation using both accrual and real earnings management techniques. All the data has been gathered from yearly reports of recorded non-financial organizations in Bangladesh from 2011 to 2019; after necessary diagnostic checking, this study finally uses the OLS regression model to evaluate the relationship. Findings show that the non-financial organizations of Bangladesh are practicing both forms of earnings management simultaneously. Evidence illustrates that female directors on the board have no significant association with any proxies of accrual earnings management but are significantly positively associated with abnormal discretionary expenses. Moreover, the gender diversity of CEOs is negatively connected with abnormal production costs and positively associated with abnormal cash flow from operating activities, and the relationship is statistically significant. Policymakers and other stakeholders can use these findings to give more concentration on the issue of women's involvement at the corporate level and the development of governance issues. IIUC Business Review Vol. 9, Dec. 2020 pp. 111-133

Theoretical Aspects of Hedge Accounting in Non-Financial Institutions: Problematic Field and Potential Effects

The paper contains the results of a study of problematic aspects and potential effects associated with the use of hedge accounting by non- financial institutions. The relevance of the study is because hedge accounting allows to ensure that income and expenses for the object and hedging instrument match but its use is the choice of the organization. Therefore, the works’s aim is to conduct a comprehensive study of the effects and problems associated with the use of hedge accounting and develop recommendations for assessing the need for usage in non-financial organizations. The author identified the following tasks for this goal achievement: studying the practice of applying hedge accounting by Russian companies; analysis of potential effects from the use of this toolkit; consideration of problematic aspects related to the application of hedge accounting; method development for determining the need for its use in non-fi institutions. The theoretical and methodological basis of the study are the provisions of IFRS and US GAAP in terms of accounting for derivatives and hedging, fair value assessment and disclosure, literature on their practical application, as well as reporting by Russian companies compiled in conformity with IFRS. In the work’s course, the author revealed that only half of the hedger companies from the considered sample apply hedge accounting. For understanding motives of organizations to use this toolkit or abandon it, the author identified the potential positive effects associated with it and problematic aspects. Also, they proposed a methodology for determining the need for its use, which would be useful for consulting companies when they provide services in risk hedging.

Financial dynamics of modern Russia

Subject. The article addresses the financial dynamics of modern Russia. Objectives. The purpose is to determine the financial dynamics of modern Russia. Methods. The study rests on the systems approach, using the methods of statistical, neural network, and cluster analysis. Results. The study defines the basis of modern Russia’s financial dynamics, i.e. claims on government bodies of credit institutions held by funds in escrow accounts of individuals. The general provision specifies claims of credit institutions, in rubles and in foreign currency, on other financial institutions, non-financial organizations, and the population, and claims on non-residents as important for the financial dynamics. Essential elements of the financial dynamics of the banking system are debt securities, included in the broad money supply, funds in escrow accounts of individuals, claims on other financial, non-financial organizations, and the public. Conclusions. The financial dynamics of modern Russia shows the monetary authorities the importance of adequacy of growth rates of claims on government bodies of credit institutions and funds in escrow accounts of individuals, for maintaining the stability of the financial system.

Derivative financial instruments: options in the accounting of non-financial organizations

The problems of accounting for derivative financial instruments, in particular, options, due to their complexity and uncertainty in the legislative and regulatory acts of the Russian Federation for accounting in non-financial organizations, are practically not considered, while a number of regulations are devoted to accounting for derivative financial instruments by non-credit financial organizations. In the article, the authors considered it necessary to raise the issue and determine approaches to solving the problem of reflecting transactions with options in the accounting of non-financial organizations. In solving this issue, the authors proceeded from the concept of accounting for contractual obligations, which requires the reflection of the underlying asset in an unchanged fair value measurement, and when market conditions change, it is reflected through other comprehensive income of a non-financial organization.

Impact of Emotional Intelligence on Financial Effectiveness: Mediating Role of Overconfidence Bias

Emotional intelligence has effects on financial effectiveness of organizations by handling the overconfidence bias, and the objective of our research study is to investigate that statement confirmed from the information getting from executives of financially successful organizations. In methodology, cross-sectional design has been used and questionnaires were used for data collection from the sample of 300 executives from financial and non-financial organizations which were enlisted on SECP. The deductive research approach was used, as the research was based on the theoretical framework of behavioral finance. Hypotheses were tested through correlational & regression analysis. For testing the mediation effect of overconfidence bias, Baron and Kenny method was used. The mediation results has been confirmed through the technique of Structural Equation Modeling (SEM). The results and conclusion of this research suggested that existence of direct and positive relationship between emotional intelligence has been found in executives for achieving financial effectiveness of organizations through mediating role of overconfidence bias. Keywords: Emotional intelligence, financial effectiveness, overconfidence

Rural Financial Decision Support System Based on Database and Genetic Algorithm

With the development of society and economy, the rural financial institution system mainly includes cooperatives and political and commercial rural financial institutions, and they are supplemented by agricultural insurance, guarantee, securities and other nonfinancial organizations to improve their own functions. Rural credit cooperatives have higher investment and operation risks than other financial institutions. New-type rural financial institutions are more sensitive to the market environment, asset quality and profitability, and risk-taking ability. Internal and external risks continue to accumulate, and their potential is low. These risks pose serious obstacles to the development and growth of financial institutions such as rural banks and microfinance companies, and pose major challenges to the security and stability of rural areas and agriculture. Using database and genetic algorithm to study rural credit risk, profitability, and liquidity, in order to track the impact of each explanatory variable in the system on the explained variable, the impulse response function is used to analyze the impact of nonperforming loan ratio on asset profitability. The data are all close to 0, indicating that the influence between the two is more obvious. The intelligent decision-making system support system evaluates the market risk, credit risk, liquidity risk, and risk management and risk acceptance of rural financial institutions and explores effective countermeasures for their sustainable development.

A methodology of accounting for derivative instruments: Challenges and solutions

Subject. This article discusses the problems associated with the methodology of accounting for derivative financial instruments of non-financial organizations. Objectives. The article aims to develop recommendations for solving these problems. Methods. For the study, we used a critical analysis, synthesis, comparison, observation, and the analog approach. Results. The article shows the insufficiency of regulation of accounting for derivative financial instruments of Russian non-financial organizations, and it reveals significant differences in the interpretation of the economic essence of derivative financial instruments and the recommended methodological approaches to their valuation and accounting in the scientific literature. The article offers author-developed recommendations for solving problematic issues of accounting for derivative financial instruments of Russian non-financial organizations. Conclusions and Relevance. The current Russian accounting standards for non-financial organizations do not contain regulations on the accounting for derivative financial instruments. It is necessary to develop appropriate regulatory documents. The interpretation of the economic essence of derivative financial instruments, methodological approaches to their evaluation and accounting, proposed in the scientific literature, differ significantly. The results obtained have both applied and theoretical applications in the field of financial accounting.

Commercial banks as monetary policy impetus conduits: Loans to non-financial organizations and the GDP

Subject. This article simulates the impact of commercial banks as conduits of impetus transmitted by monetary policy to the economy, on economic growth in various countries in 2000–2020. The key task of modeling is to identify the impact of variability in the volume of bank loans provided to non-financial organizations on GDP. Objectives. The article aims to contribute to the discussion on the role of commercial banks and bank loans to non-financial organizations in the implementation of monetary policy and the achievement of the goal of economic growth. Methods. For the study, I used a new mathematical apparatus that differs from the classical econometric approach. Results. The article proposes a model of the impact of bank loans to non-financial organizations on GDP, which helps determine two management scenarios: sustainable unidirectional (positive) impact of growth in indicators of bank lending to non-financial organizations on GDP for a certain period or periods; complete absence of control actions. Conclusions. The article concludes that different countries implement either the first management scenario or the second one to achieve the goals of economic growth.

Determinants of blockchain adoption as decentralized business model by Spanish firms – an innovation theory perspective

PurposeLarge attention surrounds identifying the meaningful blockchain business model on financial services, while a little focus about non-financial organizations and solutions in terms of how the blockchain business model can affect the organization and bring more value. To address the complex structure of businesses that have public goods, it is important to develop sustainable blockchain-based business models.Design/methodology/approachThis study offers the first qualitative research that uses an integrated technological, environmental and organizational (TOE) framework with technology acceptance theory (TAM) to study the adoption of blockchain technology by Spanish firms.FindingsThe results of the paper discuss how that competitive pressure, competence, top management support and relative advantage have a positive impact on intention to adopt blockchain technology while complexity affects the intention to adopt the technology negatively. Contrary to many adoption studies, the findings show that intention to adopt negatively impacts adoption and outline the effect of blockchain on business model elements on the macroeconomic level.Originality/valueThe key contribution of this study lies in providing a comprehensive understanding of the environmental, technological and organizational factors that impact the intention to adopt blockchain that eventually affects adoption.

Business lending: trends and results

Credit activity is the main type of active operations of banks and should ensure the transformation of savings into investments and capital. The provision of business with credit resources of the subjects of the banking sector is an important factor in its development. The macroeconomic analysis of the functioning of the banking system shows that the Bank of Russia continues to regulate the lending activities of banks, without stimulating it to increase the volume of lending to non-financial organizations, while the volume of lending to the population is still growing. Thus, the Central Bank of the Russian Federation contributes to the development of negative social trends (property stratification, unemployment growth, etc.) and weakens the competitiveness of national business entities. Moreover, such regulation creates prerequisites for the emergence of crisis situations in the country.

The Influence of Risk Committee Board Attributes on Modified Audit Opinion in Malaysia

The presence of a separate risk management committee (SRMC) in non-financial organizations is viewed as crucial. It is an important part of the risk management process as well as a vehicle for corporate governance. The relationship between RMC attributes and amended audit opinion is described in this research using a conceptual framework. It emphasizes the importance of separating roles and obligations between an audit committee (AC) and an RMC. Furthermore, there must be no relationships between RMC and auditors for all risk management (RM) functions to be evaluated fairly. Following the Malaysian Corporate Governance Code of 2017, the board should establish an RMC with a majority of independent members to supervise the company's RM structure and policies, as well as their execution.

Banking Ecosystems: Development Specifics

The topic of the research is the phenomenon of ecosystems created by banks, as well as related technological innovations introduced by credit institutions in order to increase their efficiency and obtain new opportunities for cooperation with non-financial organizations. One of the strategically important management decisions which affect the bank's business model is to determine the specifics of ecosystem growth. The study's goal is to figure the optimal balance between traditional activities and non-banking services of credit institutions. This suppose to strengthen their position in the face of penetration of digital competitors into banking operations (Internet banks, financial and large technology companies, telecoms). The theoretical and methodological basis of the research was formed by the scientific works of foreign scientists and experts on improving the efficiency of banking institutions. There were used methods of qualitative and quantitative analysis of scientific publications, analytical materials of well-known consulting companies, statistical data. As a result, the author found a technological transformation is required using such approaches to customer service (retail and corporate) that reflect their needs in banking with the intensive use of relevant competencies in cash management, means and risks. That will cause to protect the banking business from digital competitors and increase its market capitalization. All these measures will be able to induce clients to use more extensively the banks opportunities and help them to increase investments in their core business, thereby contributing to its growth. The author concludes that being developed ecosystems, it is advisable for banks to focus on services close to their core work, as well as on increasing the efficiency of their own activities and providing new services. Meanwhile, the marketplaces development within the banking ecosystems does not give the latter advantages in the competition in the banking services market.

Hedge effectiveness assesment in non-financial organizations: economic approach

The existing approaches to assessing the effectiveness of risk hedging with derivatives according to various criteria have been considered. As a result it was found that in economic literature it is not paid enough attention to the development of assessment methodology, which take into account the impact of risk hedging on the overall performance of the organization. In this regard, an economic approach to assessing the effectiveness of hedging has been proposed; it is based on the comparison two basic categories of the efficiency theory – the achieved effects and the associated costs. Within the framework of this approach the effects of hedging that affect the overallresult of the organization’s activities were proposed. Also the costs associated with hedging were systematized into external and internal. The essential content of the proposed economic approach is presented in comparison with other approaches, which contributes to understanding the criteria for assessment hedge effectiveness in each specific case. The application of the proposed economic approach in non-financial organizations will contribute to improving the quality of risk hedging by using performance assessment criteria that meet the current goals of the organization and the requirements of senior management.

Firm Performance and Market Behavior during First Wave of COVID-19 in Egypt: Panel Data Analysis

The purpose of this paper is to identify the impact of market capital MC and net profit NP on stock price SP and trade volume (TV) in the developing Egyptian business context. This study collects data from 29 non-financial organizations registered on the EGX 30 during the 6 month, 1/1/2020 to 30/6/2020, lockdown in Egypt due to the first wave of COVID-19. Data for the monthly confirmed cases and death cases of COVID-19 are collected for the 6 months of the study and compared to the monthly records of closing prices and trade volume in Egyptian poundsEGP. The study population represents 174 firm year observations. The firms studied operate in cash, have annual financial reports during the period 1/1 to 31/12, obtain complete financial data, and have not been eliminated all throughout the study. In this work the pooled model, the fixed effects model, and the random effects model are used.SPSSis applied to achieve the required statistical analysis. The study is a panel data analysis. Outcomes demonstrate existing substantial effects between market capital MC and stock price SP during the first wave of COVID-19. However, no significant effect is evident of the market capital MC and net profit NP with the trade volume TV during the first wave of this pandemic. This literature is advantageous for external and internal stakeholders and regulatory bodies. The study is a modest contribution that may help boost the business processes to reach better financial performance in times of unexpected catastrophes.

The Mechanism for Recording and Analyzing Information about the Risks Contained in the Reports of Suspicious Transactions: Foreign Experience

The article considers the foreign experience of functioning and application of the mechanism for accounting and analysis of information about risks contained in reports on suspicious transactions for the purpose of its further application in Russian conditions. The relevance is due to the need to improve the system for recording and analyzing information about risks contained in reports on suspicious transactions transmitted to in Rosfinmonitoring. Due to the involvement of noncredit nonfinancial organizations in the process of countering the proceeds of crime, the financing of ter- rorism and the financing of the proliferation of weapons of mass destruction, the number of incoming reports to the Federal financial monitoring service is only increasing. All messages received are evaluated to determine whether they are suspicious or not. However, as the number of messages increases, the existing mechanism becomes less effective, and it needs to be updated and refined.The analysis of foreign experience was carried out on the basis of methods of theoretical and practical analysis, system analysis, comparison and classification methods. The methodology combines a review of the literature, analysis of research results of scientific specialists to comprehensively cover the goal.The study revealed that the analysis of suspicious transaction reports is used to assess the application of the Anti-Money Laundering/Combating the Financing of Terrorism regime, the level of risk awareness and compliance with risk management strategies. Under Anti-Money Laundering / Combating the Financing of Terrorism, it is useful to consider best practices to develop a mechanism for recording and analyzing risk information contained in suspicious transaction reports submitted to the Federal financial monitoring service.

ХЕДЖИРОВАНИЕ ФИНАНСОВЫХ РИСКОВ ОТЕЧЕСТВЕННЫХ КОМПАНИЙ РЕАЛЬНОГО СЕКТОРА ЭКОНОМИКИ НА НАЦИОНАЛЬНЫХ БИРЖЕВЫХ ПЛОЩАДКАХ

The article discusses the financial risks of industrial companies, which can be managed using derivative financial instruments. Their separation from other risk factors inherent in the economic activity of non-financial organizations has been substantiated. Approaches for assessing stock exchanges and their tools are proposed in the context of constructing the most cost-effective hedging strategies for the above risks. Criteria were formulated and substantiated to be met by the indicated exchanges and circulating derivatives for their more active use by the management of non-financial companies.

A Sequential Sustainability Transformation Model for Financial Institutions

This study configures a sustainability transformation model for financial institutions considering the EU and German sustainability perspectives. The study zooms in on sustainability transformation issues deploying Stouten, Rousseau, & Cremer’s Model of ten key evidence-based steps in managing planned organizational change as an anchor in developing a sequential sustainability transformation model (STM) and classifying transformation steps in terms of E, S, and G factors. In building step-by-step an avenue for financial institutions towards sustainability, it becomes clearer that the governance factor plays the most significant and dominant role among ESG factors. The model (STM) itself, organizational change steps, transformation steps, and the findings address key takeaways not only for financial institutions but also non-financial organizations planning a full-fledged sustainability transformation and striving for a quantum leap in their markets. This study also connects the relevant literature and industry practices on sustainability transformation and addresses future research topics in the same avenue.

Affordable Credit Resources to Implement Investment Projects in Industry of Russia

Raising loan finance by industrial enterprises for the development of their investment projects is an important factor for economic growth in Russia. Due to this the problem of credit resource affordability for Russian business becomes more and more topical. The article analyzes possibilities of credit affordability regulation for industrial enterprises by tools of monetary policy of the Central Bank of the Russian Federation. The author aims at indentifying the current problems of the credit system for industrial enterprises and finding the key lines in its improvement. Within the frames of the research the author estimates the impact of high and low interest rates on the volume of industry crediting, analyzes the structure of giving credits to non-financial organizations and studies the problem of long cash affordability for realizing investment projects in industry. The article also investigates the asset concentration in the banking sector and shows the higher role of state and the diminishing number of commercial banks and their branches. Certain important lines of development were identified, which in the future could determine the situation in industry crediting in Russia. Finding of the research can be used for devising the state strategy of developing the system of industry crediting in Russia.

FEATURES OF THE CURRENT STATE OF THE BANKING SECTOR OF THE RUSSIAN FEDERATION AND THE MAIN TRENDS OF ITS DEVELOPMENT

Reduction of the number of credit organizations in the banking sector of the Russian Federation has been considered. The paper has been based on the data of Statistical Bulletin of the Bank of Russia for 2015-2017 years. Attention has been paid to some problems of creating banks resources potential especially because of declining external financing. The problems of small and medium-sized banks, including the availability of state budget funds have been designated. The main characteristics of the dynamics of lending to non-financial organizations and individuals have been considered. A discrepancy between the high financial results of the banking sector and a very modest contribution to the investment activities of non-financial organizations has been noted. Particular attention has been paid to the difference in interest rates on loans and deposits for different categories of borrowers and depositors.

Development of banking ecosystems: risks and prospects

Purpose. The aim of the article is determination of peculiarities of development of financial (banking) ecosystems, and first of all, assessment of threats and opportunities of their creation in domestic practice in the conditions of rapid development of financial technologies. Methodology of research. The theoretical basis of the research is the scientific works of foreign and domestic scientists on the problem under study. The following methods are used in the writing of the article: analysis and synthesis – in the study of foreign and domestic experience of creating ecosystems in banks; settlement and analytical – in the analysis of investments in financial technology; abstract and logical – in substantiation of theoretical generalizations and conclusions. Findings. The problems of banks' activities in the form of ecosystems are investigated, because today the banks are faced with the choice to work according to the traditional scheme or to choose a new way of functioning as an ecosystem, the effectiveness of which depends on the correct choice of innovative business model and platform. The concepts of “portal”, “platform” and “ecosystem” have been delineated and the main components on which the bank's ecosystem should be based are characterized, which will enable the bank to be competitive among other financial and non-financial organizations. The risks and opportunities of banking ecosystems functioning, as well as new key tasks and skills in the field of ecosystem organization, are identified. Originality. It is substantiated that the key competitive advantage of banks is the development of digital ecosystems and the proper positioning of themselves in them, with banks focusing on their three strengths: the use of know-how to present even complex financial products and processes; offers new services in the field of safe storage of money (personal and behavioural data); use of considerable experience in the field of regulation. Practical value. The results of the study can be taken into account by banking institutions, as the new ecosystem puts the end consumer at the first place, which necessitates a redevelopment of their internal processes and services to be more customer-centric in the digital ecosystem. Key words: bank; ecosystem; financial technologies; financial supermarket; FinTech (Financial technology) of the company; bank ecosystem; business model; portal; platform.