Non-financial Organizations Research Articles

Credit Market Development and Prictice Stability of National Economy

In recent years, the growth rate of the national economy does not meet the challenges of social and economic development of the country. An economic breakthrough is needed, accompanied by the achievement of economic growth rates that are faster than those of the world. However, it is important to maintain macroeconomic and price stability. One of the factors that can ensure the achievement of this goal is credit, the value of which, in our opinion, is currently unfairly underestimated. The publications of Russian and foreign economists confirm that credit is a factor contributing to economic growth. At the same time, the loan may be associated with the formation of inflation risks. The purpose of the article is to determine the ratio in which the development of the credit market, characterized, in particular, by an increase in lending to households and non-financial organizations, will not lead to a violation of the price stability of the national economy. The application of the system of econometric models allowed to reveal the ratio between the growth rate of loans to non-financial organizations and the growth rate of real GDP.

Ifrs 9: Initiator of Changes in Management Accounting Processes

From 1st of January 2018 all financial and non-financial organizations (except insurance companies), which have financial instruments, such as cash, receivables, debt or equity securities, in the statements of financial positions, had to replace the accounting under IAS 39 with IFRS 9. The replacement changes and has an impact on accounting processes, accounting routines, accounting policies, decision-making, and financial statements. The impact is also on shareholder value. In research on the case study of the Pension Company in Slovenia, we anticipate the changes because of the replacement. The purpose of the article is to present the changes in processes, decision-making, and accounting. Our contribution is to the growing literature on accounting, particularly on the replacement of IAS 39 with IFRS 9 and management accounting. It is important to understand the changes that the replacement brings to the corporate governance of the organizations.

Financial stability: problems of inter-level and cross-sectoral equilibrium

Research background: As part of the creation of an effective mechanism for managing financial stability, the tasks of providing an inter-level and cross-sectoral financial equilibrium remain unresolved. So far, clear and unambiguous criteria for financial stability have not been formulated, with which monetary and prudential policies could be related, as well as measures to minimize systemic and individual risks. The problem of creating a system of indicators comes to the fore, allowing the creation of new effective instruments for regulation of financial flows that contribute to the prevention of financial crises.
 Purpose of the article: The paper proposes a system of indicators of financial stability, which allows for solving the tasks of inter-level and cross-sectoral equilibrium in the selection of regulatory tools for monetary and prudential policy.
 Methods: We have used real interest rates as a measure of financial stability at the macro level. The real rates have been calculated from time series with nominal interest rate and inflation in the credit market (divided into loans to financial and non-financial organizations and individuals), and in the bond market (divided into corporate, municipal, and federal bonds). The analysis of the market and institutional financial stability of the USA, Russia, Japan, Switzerland, Australia over the period 1984?2014 was done. Then, comprehensive investigation on the financial stability in the Russian Federation in 2014?2017 was conducted.
 The results have been compared against financial stability of individual banks, which was measured using profit to risk ratio. The latter has been calculated from bank?s financial reports using our method, which had been developed earlier.
 Findings & Value added: We have developed criteria for qualitative assessment of financial stability and the risk map, which helps to identify the level of accumulated imbalances in the market and institutional environment, as well as in the levels and sectors of the economy. The criteria for selecting monetary and prudential regulatory instruments have been formulated depending on the amount of accumulated risks. The criteria for forming a portfolio of regulatory instruments with regard to their rigidity are proposed.

Assessment of Influence of the Interest Channel of Monetary Policy of the Bank of Russia on Cash Flows of Enterprises in the Non-Financial Sector of Economy

Рассматривается влияние процентного канала трансмиссионного механизма на деятельность нефинансовых организаций в России. Для оценки деятельности организаций были рассмотрены денежные потоки по трем видам деятельности: производственной, инвестиционной и финансовой. В результате анализа было выявлено, что на динамику денежных потоков оказывает влияние не только ключевая ставка, но и другие звенья процентного канала. Исходя из этого сформирован перечень наиболее важных объясняющих динамику денежных потоков факторов: - ставка кредитования коммерческими банками; - ставка по депозитам; - объемы кредитов организациям; - объемы депозитов организаций в банках. Поскольку звенья процентного канала могут оказывать свое влияние с некоторым запозданием, в работе рассмотрены коэффициенты корреляции на основе лаговых значений факторов. При формировании списка объясняющих переменных выбирались факторы (в том числе лаговые), имеющие наибольшую связь с зависимой переменной. В качестве зависимой переменной выбраны чистые значения денежных потоков. В работе приведены эконометрические модели, на основании которых можно провести оценку влияния процентного канала денежно-кредитной политики Банка России на денежные потоки нефинансового сектора экономики. Все модели значимы с уровнем значимости, не превышающим 1 %. Результаты исследования могут являться аналитической базой для построения моделей с использованием данных мониторинга предприятий на регулярной основе.

МИРОВОЙ РЫНОК КЛИМАТИЧЕСКИХ ОБЛИГАЦИЙ: ТЕНДЕНЦИИ РАЗВИТИЯ

The purpose of this work is to expand theoretical positions and identify trends in the development for climate and green bonds market based on the systematization of domestic and foreign research on “green” financial instruments. The authors analyzed the existing work in the field of climate and green bonds as “green” financial instruments. The absence of a single theoretical approach to the correlation of such bonds and their types is revealed. Based on the analysis of the CBI (Climate Bonds Initiative) data, systematization of existing theoretical provisions and international practice, the author’s approach to the classification of climatic and green bonds, which served as the basis for the analysis of relevant statistical data, was substantiated. The authors distinguish between climatic and “green” bonds with a description of their classification. It was revealed that “green” bonds are an integral part of climate bonds with certain principles of marking and certification. Based on the analysis of CBI data, statistical information is provided on the distribution of the climate bond market, depending on the presence of marking, loan currency, maturity, credit rating of issuers, sources of debt bond redemption, issuer category, and “green” bonds by countries and areas of use of borrowed funds. Conducted in accordance with the author’s authoritative classification, the analysis of current practice has shown that the market for climate and “green” bonds is expanding; the market is dominated by bonds with terms over 10 years, with a nominal value in yuan, euro and US dollars. Depending on the issuer’s category, bonds issued by the executive authorities and municipalities, as well as by the Development banks, prevailed in 2016–2017. There is a tendency for a significant increase in bonds issued by non-financial organizations. The largest amount of funds raised through the issuance of “green” bonds is channeled to energy efficiency and renewable energy.

А Quantitative Assessment of the Impact of Credit on Economic Growth in Russia

The Russian credit market reflects the significant range of problems faced by the national economy. Among them are structural and regional imbalances; restrictions that prevent the free movement of funds in the interbank market; uncertainty that leads to a slowdown in the rates of attraction and placement of credit resources. As a result, the question arises as to how effective the credit market in Russia is and whether it has a stimulating effect on the national economy. The purpose of this article is to assess the impact of credit on economic growth as one of the criteria for the effectiveness of the credit market in the national economy. Growth rates of real quarterly GDP levels cleared of seasonality as well as quarterly growth rates of real household consumption in Russia cleared of seasonality are viewed as indicators of economic growth. Indicators of the credit market include quarterly growth rates of real loans to households and quarterly growth rates of real loans to non-financial organizations. In addition, such events as the global economic crisis of 2008 – 2009 and its impact, Western sanctions and the increase of crude oil prices were taken into account. As a result of the study conducted by the authors using an open econometric model of vector autoregression, the conclusion was drawn that loans to households and non-financial organizations in the long term have a stimulating effect on the Russian economy.

Problems of Harmonizing Investment Property Accounting Аccording to Russian and International Standards

The purpose of this article is to study the problems of convergence of investment property accounting in Russian and international financial reporting standards. The relevance of the question is due to the increasing role of such objects in the activities of Russian organizations. The research methodology includes the critical analysis of regulating modern investment property accounting in Russian and international financial reporting standards. This article uses such methods as analysis and synthesis, comparison, method of analogies, method of groupings, systems approach and logical approach. The study reveals discrepancies in the conceptual apparatus connected to investment property accounting; in various Russian regulatory documents; in interpretation of the notion of investment property in Russian GAAP and IFRS along with the differences in the investment property valuation methodology in Russian and international fi reporting standards.This article investigated the regulation of all Russian and International financial reporting standards subsystems. Russian accounting standards subsystems are the regulatory documents of organizations belonging to public and private sectors. The latter includes the normative documents of financial and nonfinancial organizations. When analyzing the regulatory documents on accounting in financial organizations the documents of credit and non-credit institutions were considered separately. As international standards subsystems were considered International Public Sector Accounting Standards (IPSAS) and International Financial Reporting Standards for private sector. The authors give the critical analysis of the validity of the investment property accounting regulations in Russian and international financial reporting standards. The authors substantiate the prospects of the further convergence of the investment property accounting rules in Russian and international financial reporting standards.

Влияние процессов цифровизации экономики на деятельность нефинансовых организаций

The driver of the modern global economy is digital technologies under the influence of which not only new kinds of professions, goods and services are formed, but also challenges for enterprises and the organization of various fields of activity. Digitalization affected the IT-sphere, the activities of financial organizations, production, marketing, healthcare. In the Russian Federation the development of digital technologies in various fields of activity is of great importance, which is reflected in official documents, targeted government programs, business analysts and business practices. All this actualizes the study of the problem of management transformation in non-financial organizations under the influence of the spread of digital technologies.The article examines the strategic challenges facing non-financial organizations of Russia in the digital economy. In the course of solving the tasks set, the formation and development of the digital economy, its essence and content, as well as the prospects for its development in our country, were studied; the program documents and directions of the state program for the development of the digital economy are analyzed. It is proved that involvement in the digitalization processes of not only financial but also non-financial organizations carries a huge potential in terms of improving the value environment of Russian business, since it makes transactions in the shadow economy, corruption schemes, etc. transparent. The authors have proved that the revival of traditional values of Russian entrepreneurship on a new modern basis will increase the level of trust in society, will promote the development of innovations in industry, energy, agro-industrial complex, education and sustainable development of the economy as a whole. The authors structured the challenges of the digital economy for non-financial organizations in our country and formulated proposals for improving the ecosystem of the digital economy.

Effect of Institutional Investor Participation on Price Lead Earnings and Earnings Quality: International Evidence

ABSTRACTIn this study we evaluated the effects of institutional investor participation on two aspects of capital market efficiency, namely price lead earnings and earnings quality, measured according to the theoretical framework proposed by Jiambalvo, Rajgopal, and Venkatachalam (2002) and Dechow and Dichev (2002) and modified by Jones, Krishnan, and Melendrez (2008). The sample consists of nonfinancial organizations listed on stock markets in France, Germany, Italy, The Netherlands, Spain, Switzerland, the U.K., and the U.S. between 2004 and 2013. The results indicate that the effect of institutional investor participation on price lead earnings and earnings quality is market specific. In civil law and low anti-director rights index countries, institutional investors have an information advantage over individual investors, and institutional investor participation is associated with higher earnings quality.

PERCEPÇÃO SOBRE A SOCIOMATERIALIDADE DAS PRÁTICAS DE CONTABILIDADE GERENCIAL

RESUMO No contexto de gestão organizacional e visando o aprofundamento do conhecimento no campo da Contabilidade Gerencial, esta pesquisa propôs um constructo que contribui com a compreensão sobre a percepção dos gestores sobre a sociomaterialidade de práticas de contabilidade gerencial (PCG) com base na lógica institucional cerimonial (uso baseado em ritos) versus a instrumental (uso baseado na resolução de problemas) valendo-se da Nova Sociologia Institucional (NIS) e das digressões de Bush (1983, 1987). Por meio de um levantamento em 102 organizações não financeiras de grande porte que operam no Brasil, identificou-se que, dependendo do arranjo de forças isomórficas e de difusão a que as PCG estão submetidas, elas são levadas a assumir comportamentos cerimonial (5%), instrumental (61%) ou misto (26%). Pode-se inferir que nessas organizações as PCG estão sendo usadas prioritariamente como tecnologias para a resolução de problemas e contribuem com alteração do contexto onde estão inseridas.

Economic Sanctions and Russia’s Financial System

Topic. The problem of functioning of the financial system in the face of uncertainty is complicated by the entered by Western countries anti-Russian economic sanctions. We discussed the peculiarities of functioning of the financial system in a “new normality” from the point of view of systemic and institutional approaches. We analyse sources of financial resources and financial instruments, the practical application of which allows overcoming the negative effects from the introduction of anti-Russian economic sanctions. Purpose. Author’s study of the national financial system under conditions of new economic reality and the existing approaches to its build up. Grounding the benefits of forming the structure of the financial system using the sectoral approach based on the methodology of the national accounts system. Methodology. The study is based on the dialectical method. In the study were applied the system and institutional approaches, analytical, expert and statistical methods. Results. The passivity of the financial institutions, nonfinancial organizations and population complicates the development of financial relations of economic agents. Russia’s financial system as a whole and its structural elements are experiencing a shortage of financial resources, which hampers the functioning of the national economy and the fulfillment of national obligations. Actualization of tasks of financial policy and the adoption of non-standard management decisions should be aimed at mobilizing financial resources and upgrading the stability of the financial system. Conclusions. Despite the difficult economic situation, it is necessary to rebuild the financial system of Russia based on the needs of innovation-oriented market economy, in the direction of overcoming the consequences associated with the introduction of anti-Russian economic sanctions. Strategic vectors for increasing the financial resources should be investment in innovations and creation of new technological order. A balanced financial policy, efficient management and coordination of all stakeholders will contribute to improving institutions’ performance of the national financial system and meeting the needs in the financial resources of all economic agents.

Uncovering Key Performance Indicators for Private Sector Banks in Pakistan: An Application of Exploratory Factor Analysis

Efficiency of banking system leads to efficient allocation of scarce resources by the financial system of a country. Bank’s efficiency is ascertained through different mechanisms. One of the mechanisms uses the aspect of Key Performance Indicators (KPIs). Considerable literature exists on KPIs for non-financial organizations. However, for the financial sector, deliberation on KPIs is uncommon. This research paper endeavors to fill this gap especially for Pakistani Commercial Banks belonging to the private sector. A total of 25 Pakistani commercial banks are listed with the State Bank of Pakistan, out which five are owned and controlled by the Government of Pakistan. The remaining 20 belong to the private sector. Out of these 20, secondary data of top 10 private sector banks selected on the basis of asset size was analyzed for the five year period from 2011 to 2015. Statistical technique of Exploratory Factor Analysis (EFA) was applied on 28 different financial ratios to uncover four categories of possible KPIs.

REGIONAL BANKS OF RUSSIA: PROBLEMS OF GROWTH AND DEVELOPMENT PROSPECTS

By the spatial location of credit institutions, the banking system of Russia includes two large groups of banks: regional banks and banks registered in Moscow and the Moscow Region. The activities of banks of the two groups are characterized by certain specifics. In view of the above, the purpose of this study was to identify, systematize and critically evaluate the current trends in the development of regional banks in Russia. The methods used include analysis and synthesis, induction and deduction, comparison, system analysis, selective observation. The analysis of official data of the Russian Central Bank for 2007–2016 showed that the trends of active credit institutions to shrink in number are common to both regional and Moscow credit organizations. The profits received by regional banks are incommensurably small compared to the profits of Moscow-based banks but are subject to much less volatility. The gap between amounts of ruble loans provided by credit institutions of the two groups under analysis is dramatically widening: to non-financial organizations in 2007–2016 and to individuals since 2011. After 2012, the amount of ruble loans extended to non-financial organizations by regional banks stabilized at about 2000 RUR billion, while the corresponding indicator for credit institutions in the capital region slowed down its growth in 2015–2016. Starting with 2009, the gap between investments in debt securities made by regional banks and credit institutions of Moscow and the Moscow Region has sharply widened; such bank investments in the capital region are noted to be highly volatile. Credit institutions of the Volga and North-Western federal districts dominate in the field of debt securities investment. Regional banks are running the conventional banking business primarily by lending and placing limited funds in securities of third-party issuers. The indicators of regional banks differ significantly by federal districts.

PENERAPAN METODE BALANCE SCORECARD SEBAGAI TOLOK UKUR PENILAIAN KINERJA PADA ORGANISASI SEKTOR PUBLIK (Studi Pada Dinas Pajak Daerah dan Pengelolaan Keuangan Kota Yogyakarta)

Regional Tax Agency and Financial Management ( DPDPK ) Yogyakarta is one of responsibility center in the structure organizations of local government that have an important role in budget planning and controlling. This study aims to assess the performance of DPDPK during 2009-2012 by using balanced scorecard . Balance scorecard is a
 performance measurement which is translated into four perspectives of performance, namely: the financial perspective, the perspective of local taxpayers, internal business process perspective and learning and growth perspectives. 
 
 Data analysis method used is quantitative and qualitative descriptive's analytics. Basedon the analysis of performance measurement DPDPK Yogyakarta used the balanced scorecard method can be concluded that the DPPDK performance during the years of 2009-2012 considered quite good. Thereby the balance scorecard is suitable to be applied to the DPDPK Yogyakarta because it can provide a more structured and comprehensive in all aspects of the performance of both financial and non-financial organizations.
 
 Keywords : Performance Measurement, Balanced Scorecard, Public Sector, DPDPK

Arguments for the Ruble Exchange Rate Management

The paper discusses the target guides and the Bank of Russia’s monetary policy operational instruments. Events of 2014-2015 showed that the inflation targeting regime is not an effective target guide of the Bank of Russia’s monetary policy. The key interest rate fails to reflect the proper price of holding and using of financial resources of households, financial and non-financial organizations. The floating exchange rate regime has not become an automatic mechanism of external shocks absorption, but intensifies the exchange rate volatility instead. The exchange rate management is the only effective regime for the current Bank of Russia’s monetary policy.

Too Important to Fail: Bankruptcy Versus Bailout of Socially Important Non-Financial Institutions

Systemically important financial institutions are broadly considered to impose a risk to the entire economy upon failure; thus taxpayers act upon their failure, providing them with an implied insurance policy for ongoing liquidity. Yet taxpayers frequently provide de-facto liquidity insurance for non-financial institutions as well. For example, recently in the U.K., hospital trusts were sharing millions in bailouts. A decade earlier, a federal court approved California's multibillion-dollar bailout of Pacific Gas & Electric Corporation. The Russian government continuously subsidizes corporations exclusively providing employment and social amenities in Monotowns. After 9/11, the U.S. Congress passed the Air Transportation Safety and System Stabilization Act, which provided the airline industry with financial aid. In all of these cases, taxpayer money was used to rescue non-financial organizations. The article defines a new category of socially important non-financial institutions (SINFIs) and proposes a method for their ex-ante identification. SINFIs are corporations exclusively providing an essential social function, and the article offers guidelines for defining essential industries and essential social functions as well as for assessing the monopolistic position assumed by the SINFI for provision of the essential service or social function.The case for bailouts of socially important non-financial institutions is discussed. Liquidity distress for a SINFI is unlikely to be resolved efficiently through bankruptcy, as the risk of an operating default for the socially important institution imposes an immediate crisis of confidence. The provision of service by a socially important institution imposes positive externalities on the general public, rendering the main features of bankruptcy, namely, debtor-in-possession rules and the ability to sell assets free and clear of all liens, sub-optimally efficient. Private investors are unlikely to capture the full value of their investment in the socially important firm on the edge of illiquidity. Thus, in a financially distressed SINFI, both the likelihood of new investment opportunities and their potential terms are expected to be suboptimal, and public finance is likely to be required: socially-important non-financial institutions are too important to fail. The article further analyses the structural characteristics and distorted corporate governance of socially important non-financial institutions. The elevated probability of rescue in case of failure makes the socially important non-financial institution prone to unwarranted expansion, and distorts its corporate governance well before failure occurs. The resulting moral hazard creates both enhanced incentives for excessive leverage and risk-taking, and elevated incentives for empire building due to the weaker corporate governance mechanisms available.

Bringing inequality back in: The economic inequality footprint of management and organizational practices

In this article, I argue for ‘bringing inequality back in’ to organizational research in order to investigate the role of management and organizational practices in macro-level economic inequality. To set an agenda in this area, I suggest considering three loci where the links between organizations and inequality may be observed: the organizational locus comprising the producer/employee, investor and consumer dimensions; the inter-organizational locus to help disentangle issues related to the distribution of economic rewards across value chains, large financial versus non-financial organizations, and across occupations and organizations in general; and socio-political system as a locus where issues related to social change, political influence and the institutional system may be unpacked. In addition, I suggest considering the link between organizations and inequality from other important vantage points: elites, demographics, global inequality and debt. I also briefly highlight issues related to data and analyses. Throughout, I discuss the contributions of the five articles in the special issue and how they push us towards this agenda. Finally, I suggest that it may be helpful to think of an ‘inequality footprint’ of management and organizational practices, potentially leading organizations to reduce and reverse this footprint and ensure that economic benefits reach wider society.

Методический подход к развитию розничного банковского бизнеса на основе корреляционно-регрессивного анализа

The crisis of financial globalization increases uncertainty, contributes to the emergence of new risks, so the strategy of development banks in the Russian regions, focused on domestic resources, should be formed on the basis of pre-calculable scenarios of socio-economic development for certain conditions. In banking activities are widely used various models based on the mathematical apparatus. The study shows the absence of works using econometric techniques to develop a methodical approach to the development of the retail banking business. The aim of the study is to assess the relationship between loans granted to non-financial organizations and individuals, and the amount of bank deposits / deposits volume / volume of deposits. The study used annual values of the variables for the period 01.01.2007-01.01.2013, for analysis were available 79 observations of official statistics of the Bank of Russia for each year. The article presents the methodological proposals to improve the retail banking business on the basis of regression analysis where identified are the relationships between the primary source of bank resources and the volume of lending in regional banking markets. The resulting form of relation of the retail banking business in the form of regression equations with multiple variables can be used as a banking methodology to evaluate the potential of credit institutions in the event of a recession or boom in the economy, as well as to predict and develop a strategy. Knowing the form of communication, it is possible to predict at what value will be raised lending activity, if the amount of deposits, for example, increases by only 1%, and to assess the potential of credit institutions in the event of a recession or boom in the economy.

Tailoring Compliance Risk and the Compliance Function for Non-Financial Organizations (a Step Further and Beyond the Basel's Proposal for Banks)

This paper contends that compliance risk and the compliance function are powerful devices to enhance corporate governance not only in banks but in any other organization as well. Firstly, it reviews the contribution made by the Bank for International Settlements (BIS), which pertains to financial institutions only. Next, it upholds that compliance risk actually matters in any corporate governance environment. Afterwards, it deals with how the compliance function can be shaped so as to grant, on the one hand, its own independence and, on the other, clear-cut patterns of accountability behavior. Subsequently, it points out that there are some drawbacks in the BIS' choice of governance principles. Lastly, it brings forth a set of governance principles for both compliance risk and the compliance function in financial and non-financial organizations alike.

Compliance risk and the compliance function could enhance corporate governance not only in banks but in other kind of organizations as well

This paper sets forth that compliance risk and the compliance function are powerful devices to enhance corporate governance. Firstly, it reviews the contribution made to the subject by the Bank for International Settlements (BIS). Next it argues that compliance risk matters not only in financial but in any other organization. Afterwards, it deals with how the compliance function can be shaped so as to grant independence and accountability to such managerial endeavors. Later, it shows some shortcomings in the BIS’ choice of governance principles. Lastly, it brings forth a set of governance principles related to compliance risk and the compliance function on behalf of financial as well as non-financial organizations