Period Of Economic Turbulence Research Articles

METHODOLOGICAL APPROACHES TO ASSESSING THE EFFICIENCY OF STRATEGIC MANAGEMENT OF INVESTMENT ACTIVITIES OF INDUSTRIAL ENTERPRISES

The article addresses contemporary issues faced by industrial enterprises and their crisis situation since the onset of the war in Ukraine, emphasizing the necessity of investment attraction and implementation of investment activities in a strategic perspective. The scope of reduction of industrial enterprises and their losses is determined. Modern methodological approaches to evaluating the effectiveness of strategic investment management of industrial enterprises are discussed, and new perspectives are developed based on researched scientific foundations. Methodology: A wide range of general scientific and specialized methods of scientific research have been employed to achieve the stated objective: scientific abstraction, scientific fact, deduction, analysis, and synthesis - to determine the current state of industrial enterprises and strategic investment management on them, as a basis for forming methodological approaches to assessing their effectiveness. Results: The article discusses, analyzes, and specifies the amount of losses incurred by industrial enterprises since the beginning of the war initiated by the Russian Federation. Ways to improve the economic situation in industrial enterprises through investment attraction are proposed as a means of obtaining additional opportunities for economic development and stability amid economic turbulence. Views of scientists on this issue are considered, highlighting the necessity of conducting investment activities and strategic management. Modern methodological approaches to evaluating the effectiveness of strategic investment management are formulated as markers of enterprise activity. Scientific novelty: It is theoretically substantiated that the most effective and accessible way to improve the situation in industrial enterprises is through investments. Enterprises engaging in investment activities on a regular basis and strategically managing them have a number of advantages in the economic market due to the mobilization of additional resources into their activities. Formulated and updated methodological approaches to evaluating the effectiveness of strategic management of industrial enterprises allow for successful investment activities by correctly allocating resources. Practical significance: The practical conclusions formulated and proposed in the article emphasize the importance for industrial enterprises, during this period of economic turbulence, to attract investments and engage in investment activities as a means of mobilizing additional resources for development and maintaining market positions. Enterprises that utilize the updated and formulated methodological approaches to evaluating the effectiveness of strategic management presented in this article will be able to manage and sift through inefficient elements of investment activities, freeing up resources for more effective future endeavors.

Reconfiguration of the Regional Economy As a Tool to Overcome the Unbalanced Development of the Economic Entity

Relevance. The relevance of this study is predetermined by the fact that during the period of economic turbulence, the positions of “weak” regions significantly worsen, while at the same time there is a decrease in the pace of their development. Accordingly, it is necessary to stabilize the development of regions of this type based on the use of various economic and managerial tools, including through the use of transformation mechanisms, reconfiguration of economic objects, which in the future, with the rational use of these technologies, may affect both the level of competitiveness of the region and its development potential. The purpose of the study is to study the directions of reconfiguration of the regional economy as a tool to overcome the unbalanced development of an individual economic entity. Objectives. Achieving this goal predetermined the solution of the following tasks: studying the theoretical possibilities of using reconfiguration mechanisms to overcome the negative "rut effect", identifying individual areas of reconfiguration ("soft" reconfiguration and "hard" reconfiguration), research and evaluation of "turning" (control) points of reconfiguration of the regional development in terms of sectoral and territorial development, as well as external and internal factors. Methodology. The basis of the research is the historical-logical and monographic methods, as well as the methods of statistical data analysis, induction, deduction, synthesis, other general scientific methods, as well as semantic analysis. Results. It seems necessary to include the results obtained in the course of the study: the construction of a structural-logical scheme that reflects the directions of the reconfiguration of the region in order to achieve balanced development; systematization of "turning" (control) points of reconfiguration of regional development from the standpoint of both sectoral and territorial development, and endogenous and exogenous impact; assessment of indicators of reconfiguration of an unbalanced region (on the example of the Republic of Buryatia). Conclusions. In conclusion, conclusions are drawn that the reconfiguration of the regional economy is predetermined by both internal and external (including shock) factors. In modern conditions of turbulence and sanctions pressure, the reorientation of economic processes, as well as external factors, can initiate a hard type of reconfiguration, which is rather problematic to implement, in contrast to the “soft” type of reconfiguration, which is especially important for unbalanced regions. With a “soft” reconfiguration, a positive dynamics of particular performance indicators is more likely, characterizing the possibility of a “spurt” and exit of the region from the existing “development track” to the optimal trajectory in the preemptive period.

Does US financial crisis influence the relationship between ownership holdings and stock performance? The case of a developing economy

This study investigates the influence of the U.S. financial crisis on the relationship between ownership holdings and stock performance by assessing the asymmetries between the effects of insider and institutional ownership before, during and after the U.S. financial crisis. The study examines NIFTY 500-listed companies over a period of 16 years, from 2002 to 2017, and distinguishes between three economic phases, namely the pre-crisis (2002–2007), the crisis (2008–2009) and the post-crisis (2010–2017) period. To test our hypothesis, we employ the panel-data techniques of feasible generalised least squares and system-generalised methods of moments to control for autocorrelation, heteroscedasticity and endogeneity issues. The findings reveal that insider ownership had significant U-shaped and inverted-U-shaped effects during the pre-crisis and the post-crisis phase, respectively, which confirms the existence of the monitoring and expropriation effects of insiders. The favourable effect of domestic institutions during the crisis phase supports the notion that such owners engage in efficient monitoring during periods of economic turbulence. The adverse effect of foreign institutional ownership during the pre-crisis period implies either a conflict of interest or capital-gain motives that resulted in selling behaviour when the market economy was growing. The time-variant effects of insider and institutional ownership are noted. Our findings have immense significance for investors and executives who wish to understand the varied effects of insider and institutional ownership as they pertain to the management of a crisis that is caused by an exogenous shock.

Economic and statistical analysis of spatial characteristics of the housing market in the period of economic turbulence 2020–2021

Subject. We explore the housing market of Russian regions during the period of economic turbulence in 2020–2021. Objectives. The purpose is to reveal groups of regions (virtual clusters) with similar values of basic parameters of the housing market, enabling to identify its quality and development directions. Methods. The study draws on methods of economic-statistical, cluster and logical analysis of basic parameters of the housing market of Russian regions. Results. The paper presents results of the economic and statistical analysis of the housing market in Russian regions during the period of economic turbulence in 2020–2021 according to its basic parameters, i.e. per capita income of the population, commissioning of residential buildings per person, rate of natural increase, migration growth rate, the volume of mortgage housing loans. Conclusions. In the housing market during the turbulence of 2020–2021, the regions of Russia formed five groups (virtual clusters), differing in number, spatial localization, and values of basic parameters enabling their identification as follows: (1) an active cluster with elements of risky lending; (2) a cluster with significant untapped potential for the housing market development; (3) a cluster with a high need for the housing market development, which is insufficiently realized due to low level of current incomes of the population and credit resources; (4) a cluster with reduced level of housing market activity and underutilized current incomes and mortgage lending opportunities; and (5) one with the largest housing market constrained by lower incomes.

Artificial intelligence-based tokens: Fresh evidence of connectedness with artificial intelligence-based equities

The main focus of this research is to investigate the potential spillover effects between AI-based stocks and tokens by using the quantile connectedness approach developed by Ando et al. (2022). The study aims to investigate both static and dynamic spillovers at the lower and upper tails of the return distribution. AI-based stocks and tokens may have relatively low levels of connectedness, which also varies over time and increases during periods of economic turbulence. In addition, in line with previous work analysing other financial markets and assets, this research finds that the system is more sensitive to the tails of the distribution (i.e., the lower and upper quantiles) than to the median (Q = 0.50). This finding is consistent with expectations, and measures of dynamic connectedness change over time, with the intensity of spillovers increasing at the extremes of the distribution. These results have practical implications for portfolio managers, as they can use the results to adjust their investment portfolios according to the evolution of the dynamic spillovers observed in the system. Overall, this study sheds light on the potential tail spillovers in the AI-based stock and token market and provides valuable insights for investment decisions.

Crisis management of the enterprise: how to control the resources of the enterprise during the period of economic turbulence?

The article presents a methodology with which it is possible to analyze the situation at the enterprise in a short time and take concrete steps to correct the crisis situation. The author notes that this technique can be used for all segments of small and mediumsized businesses.

К ВОПРОСУ ОБ ИСТОЧНИКАХ БЮДЖЕТНОЙ НЕЭФФЕКТИВНОСТИ ГОСУДАРСТВЕННЫХ ЗАКУПОК (НА ПРИМЕРЕ ЗАКУПОК КИРПИЧА)

Improvement of public procurement system is one of the most important government tasks in Russia and its importance increases during periods of economic turbulence. The paper notes two interrelated sources of budget inefficiency in Russian procurement system due to the imperfection of the mechanisms which determine the reserve price (or initial maximum contract price in Russian procurement) as well as the design of procurement procedures. This article highlights some of the problems and distorting incentives associated with the determination of the reserve price for competitive procedures using the example of bricks purchasing. This article also proposes an approach which contributes to adjusting the existent mechanisms and reduce reported negative effects.

Socio-economic aspects of the outpatient care development in times of economic instability

Subject. Primary health care plays a leading role in preserving health, preventing diseases, and ensuring a high level of efficiency of the entire health care system of the country. Objectives. The study aims to determine the main directions in the organization and management of a medical institution to improve social and economic efficiency of outpatient services in extreme situations. Methods. The methodological framework of the study consists of the works of domestic and foreign researchers on organization, management and economics in healthcare, laws and regulations, information and analytical materials of official websites of the Ministry of Health of the Russian Federation and the Sverdlovsk Oblast, statistical and economic data of annual financial statements of the Central City Hospital No. 7 of Yekaterinburg. Results. The economic analysis of financial performance of medical institution unveiled disproportion in healthcare delivery. We developed possible directions of rational use of outpatient clinic’s economic resources to minimize costs during the period of economic turbulence in the industry. Conclusions. It is economically viable to introduce new organizational technologies into the activities of medical institutions subject to available material and technical resources and their rational use.

The Impact of Macroeconomic Indicators on the Share Prices of Dividend Companies – A Comparative Analysis of Polish and US Issuers for the Period 2016–2020

Abstract Research background: The aim of the article is to compare Polish and US dividend companies with potential growth with dividend companies with potential value, including in the period of economic turbulence caused by the pandemic, and to identify macroeconomic determinants that affect changes in the level of share prices of dividend companies with potential value listed on the stock exchange in Poland and the US. An analysis of the literature and international studies conducted allows us to identify inflation, gross domestic product (GDP), interest rate levels, exchange rate changes, and market P/E and P/BV ratios, as well as the PMI index, as the most important macroeconomic factors. Purpose: The aim of the article was to present research on the impact of macroeconomic indicators on the prices of Polish and US shares of dividend companies, divided into shares with potential value and potential growth for the period 2016–2020. The research was enriched by analyzing the return rate on shares and the risk of the share prices of companies with potential value during the turbulence of the economy caused by the COVID-19 pandemic. Research methodology: The study was conducted using the Spearman rank correlation coefficient and significance test for the Spearman rank correlation coefficient. A non-parametric t-test was carried out to check whether the estimated correlation is statistically significant. Results: The research indicates that Polish and US dividend companies with potential value have lower average annual return rates than dividend companies with potential growth. Referring to the determinants of the share prices of US dividend companies with potential value, it was found that they are significantly determined by inflation and moderately determined by industrial production and GDP, as well as the P/BV ratio. Novelty: The added and application value are the recommendations regarding the attractiveness of investing in Polish dividend companies with potential value as compared to companies from the US market.

The Relationship Between "Protect People's Livelihood" and "Promote the Economy:" Provincial Evidence From China.

This study focused on medical care in a single country (China) and in regions with different economic backgrounds and different economic development levels to determine the effect of healthcare expenditure on short- and long-term economic growth. The study supported some interesting conclusions: (1) For most areas of China, increasing healthcare expenditure has a negative impact on economic growth in the short term but promotes growth in the long run; (2) Under different levels of economic development within China, there is significant heterogeneity in the interaction between healthcare expenditure and economic growth; (3) The negative effects of healthcare expenditure on short-term economic growth are greater during periods of economic turbulence than during times of stability; and (4) Healthcare expenditure has a negative effect on underdeveloped areas through the accumulation of material capital, while in economically developed areas, this channel has the opposite effect. To improve the quality of medical and health protection and the quality of life and welfare, China needs to consider the development characteristics of different economic zones and establish a multilevel, systematic and diversified medical and health protection system.

Cryptocurrencies and oil price shocks: A NARDL analysis in the COVID-19 pandemic

This study explores potential non-linear and asymmetric interdependencies between oil price shocks and leading cryptocurrency returns. In addition, this research splits changes in crude oil prices into three relevant components: risk, demand, and supply shocks. By applying the NARDL methodology, this paper examines the connection between oil and cryptocurrencies in the period between November 20, 2018 and June 30, 2020, conducting a study of the first wave of the COVID-19 pandemic. Our results confirm that demand shocks show the greatest connection with the returns of the cryptocurrencies analysed. In addition, both short-term and long-term results show a greater interdependence between oil and cryptocurrencies in periods of economic turbulence, such as the SARS-CoV-2 coronavirus crisis.

Populism from the Cold War to Today: Case Studies and Quantification

This paper compares the use of populism to control the middle class during periods of economic turbulence in the Soviet Union, its satellite states during the end of the Cold War, and Deng’s China. These case studies show anecdotal evidence that falling economic expectations coincide with rising populism.We next survey academic literature describing economic and social drivers of populism as well as the relationship between populism and nationalism. This survey is leveraged to construct a critique of existing attempts to quantify the drivers of populism, examining both supply and demand models. We attempt to add to this discussion by constructing a model tracking macroeconomic variables across time series data available from the Global Populism Database. We find meaningful inverse relationships between measures of supply side populism as measured in national leader speeches and Real and Nominal GDP, and direct relationships to GINI coefficients and Unemployment.Post COVID economic forecasts show a step down in global growth. This step down is forecast to be most extreme in India, the Philippines and Thailand, indicating the highest chance for rising populism. China, by contrast, is forecast to see a strong recovery, which when combined with stable middle class share of income trends suggest that populism / nationalism fears in China may be overblown. We leverage our prior case studies to understand the actors that might seek to use nationalism in these countries, and for what purposes.Incremental research questions include the development of fuller populism data sets allowing for deeper statistical analysis, work to understand if economic drivers impact right wing vs. left wing populism differently, as well as work to ascertain a feedback loop between falling economic conditions driving populism, and the economic efficacy of populist policies (and if these vary with left vs. right wing populist policies).

Financial Stability of GCC Banks in the COVID-19 Crisis: A Simulation Approach

Stability and sustainability of the biggest banks in any country are extremely important. When big banks become unstable and vulnerable, they typically stop lending. The resulting credit squeeze pushes the economy into recession or a slow growth path. The present study examines the financial stability and sustainability of the 30 large banks operating in the six Gulf Cooperation Council countries. These banks represent 70% of the GCC banking market. Monte Carlo simulation was attempted assuming that key drivers can vary randomly by twenty percent on either side of the current values. The conclusions are drawn based on 300 simulation trails of the five-year forecast balance and income statement of each bank. Year 2020 is not favorable for the GCC countries because of the COVID-19 pandemic and low oil prices, though the future years may be better. The study identifies several banks, which may become financially unsustainable because the simulations indicate the possibility of negative profitability, unacceptably low capital ratios and potential for heavy credit losses during periods of economic turbulence, which is the current situation due to the COVID-19 pandemic. Through simulation the paper is able to throw light on which factors lead to bank instability and weakness.

Investor ambiguity, systemic banking risk and economic activity: The case of too-big-to-fail

This paper examines the relationship between investors' ambiguity in the financial options market and systemic banks' risk. Eliciting ambiguity information from option pricing data on the twelve major U.S. banks between 2003 and 2010, we show that higher behavioral deviations from risk-neutral and Bayesian valuation (i.e., investor ambiguity) are associated with higher systemic banks' downside, market and credit risks. Consistent with behavioral explanations, we confirm the detrimental effect of ambiguity on financial market outcomes and find strong evidence of ambiguity among call and put option holders. Variance decomposition indicates that such a pattern of behavior explains a significant proportion of U.S. banking risk variance. This effect is more pronounced during periods of economic turbulence and bank stress (i.e., the 2007–2009 crisis), and holds after controlling for size, tail risk, implied volatility, and volatility of volatility dynamics. We also document that ambiguity from the financial market has a depressing impact on real economic activity, including capacity utilization, non-farm payrolls and overall economic performance. Our findings are robust to alternative specifications of ambiguity such as multiple priors and expected utilities with uncertain probabilities.

THE INTERACTIONS AND TRADE-OFFS OF SOVEREIGN CREDIT DEFAULT SWAP (CDS) AND BOND SPREADS IN A DYNAMIC CONTEXT

This study provides a dynamic analysis of the lead-lag relationship between sovereign Credit Default Swap (CDS) and bond spreads of the highly indebted southern European countries, considering an extensive time sample from the period before the global financial crisis to the latest developments of the sovereign indebtedness in the euro area. We employ an integrated price discovery methodology on a rolling sample, with the intention to shed light on whether the CDS spreads can trigger rises in bond spreads, and the relative efficiency of credit risk pricing in the CDS and bond markets. In addition, we attempt to depict the evolution of the price discovery process regarding the direction of influence from one market to the other. The rolling window analysis verifies that the price discovery process evolves over time, presenting frequent alternations concerning the leading market. We find that during periods of economic turbulence the CDS market leads the bond market in price discovery, incorporating the new information about sovereign credit risk faster and more efficiently than the bond market does. This regularity should be seriously considered by private and public participants as they make investment and funding decisions. Therefore, the motivation of our paper is to identify the dominant market in terms of price discovery during a period of economic turmoil and, thus, to provide insights for decision making to investment bodies and central governments.

Determinants of technological and non-technological Innovation in SMEs: the case of Crete

The purpose of this study is to investigate the drivers of both technological and non-technological innovation on evidence from a sample of manufacturing SMEs in the region of Crete (Greece) during a period of economic turbulence. Using probit models the drivers of innovation, both technological and non-technological, are examined. The empirical results of the study indicate that SMEs' innovation activity is driven primarily by firm-specific features such as marketing, financial performance, exporting activity and R&D. The contribution of this study rests on the investigation of determinants for both technological and no-technological innovation in contrast to the majority of published research that focuses primarily on technological innovation. In addition, to the extent that innovation is unanimously, considered significant for firms' overall performance, findings of the study provide implications for practitioners, managers and policy makers to become appropriately equipped for addressing the challenges of the unstable market environment that enterprises operate in.

Financial crisis, legal origin, economic status and multi-bank performance indicators

PurposeThe purpose of this paper is to investigate the performance of Islamic banks in developing countries from 2007 to 2010 which includes the period of the financial crisis by empirically examining the way in which the macroeconomy affected Islamic banking performance (IBP) in developing countries. The empirical examination involves two approaches of measuring performance: Sharia-based and conventional-based performance measurement.Design/methodology/approachFor this paper, the authors have utilized a Data Stream/Bank Scope database and data from the Bank Negara Malaysia (Malaysian Central Bank) to collect a panel set of annual financial information for Islamic banking from the year 2007-2010. The initial sample covers 34 Islamic banks from developing countries that are listed on the International Islamic Service Board. Furthermore, the authors adopted only those listed Islamic banks to tackle the data availability issue. The authors’ final sample comprised 136 observations with complete data as the numbers of Islamic banks in developing countries are low in comparison to their conventional peers. The financial crisis dummy follows America’s commonly used National Bureau of Economic Research timeline for the financial crisis. The authors also used the method of a generalized least square (GLS) method of pooled panel data analysis regression model. The rationale for employing the GLS technique was made on the basis of the ability of GLS to give less weight to the error term that is closely clustered around the mean, to improve the goodness of fit and to remove autocorrelation compared with normal, random, and fixed effect models.FindingsThe authors of this paper found that the macroeconomic factors reflected in gross domestic product, gross domestic product growth, and inflation rate have a significant positive relationship with the return on assets. In addition, a significant negative relationship was found between the financial dummy and IBP in developing countries. On the other hand, it failed to find evidence of a relationship between the macroeconomic factors and performance including the legal system and the financial crisis dummy, when the performance is reflected by the Zakat ratio. The result embedded that the financial crisis had an impact on the performance of Islamic banks in developing countries when viewed from the conventional banking perspective. The financial crisis played a role in reducing the profitability of Islamic banks which is consistent with a previous study by Hasan and Dridi (2011). However, in the view of Sharia, the financial crisis did not have any effect on IBP; even the macro factors did not have any effect on the level of performance.Research limitations/implicationsThere are possible explanations for these contradictory coefficient signs. First, the contradictory signs of the coefficient for the same independent variable that was regressed with different dependent variables show that researchers would need to take caution in using the right indicators when measuring IBP. Conventional indicators bring different results in comparison to Islamic indicators (Badreldin, 2009; Mudiarasan. Kuppusamy, 2010; Zahra and Pearce, 1989). Second, Richard et al. (2009), having reviewed performance measurement-related publications in five of the leading management journals (722 articles between 2005 and 2007), suggested that the past studies reveal a multidimensional conceptualization of organizational performance with limited effectiveness of commonly accepted measurement practices. Accordingly, these studies call for more theoretically grounded research and debate for establishing which measures are appropriate in a given research context. Today, there is a general consensus that the old financial measures are still valid and relevant (Yip et al., 2009). However, these need to be balanced with more contemporary, intangible, and externally oriented measures. It has been argued that various researchers working in their own disciplines using functional performance measures (such as market share in marketing, schedule adherence in operations and so on) ought to link their discipline to focused performance measures of overall organizational performance.Practical implicationsIslamic banking has unique characteristics in comparison to conventional banking and this paper examines the differences between the two and also investigates the resilience of Islamic banks during a period of economic turbulence. Furthermore, due to these unique characteristics, a comparison cannot be made by using the conventional performance measures alone. In addition, amid the in-depth studies examining the resilience of Islamic banks during periods of economic crises, there are instances of theoretical disagreement in the extant empirical literature examining finance and economics. In that regard, the majority of the existing literature is either based on advanced markets or countries where the majority of the population practices the faith of Islam, and little is known about the performance of Islamic banking from the pooled emerging markets; particularly in developing countries.Originality/valueIntroducing Zakat as a performance measurement in Islamic banking context relating it to macroeconomic factors enhances the thinking of new research in Islamic theory about bank performance.

Managing the Cash Flow Gap

We are still in an extended period of economic turbulence, writes author and veteran business advisor Jim Edwards. And there is no new evidence that things are changing for the better. The U.S. gross domestic product fell by 2.9% during the first quarter of 2014. That is not a good signal for business cash inflows. And it possibly forecasts a gap in cash receipts from customers in the near term. So what strategy should treasurers adopt to manage the cash flow gap?

The innovation practices of manufacturing companies in a period of economic turbulence: the Greek case

The purpose of the study is to validate the factorial structure of innovation practices identified in the literature and evaluate their implementation level in manufacturing companies operating in circumstances of economic downturn and financial crisis. A research study was carried out in a sample of 233 Greek manufacturing companies operating in a business environment where a financial crisis has dominated for at least four years now. Data were obtained from the Chief Executive Officer of the companies through a structured questionnaire. Exploratory Factor Analysis is applied in order to extract the latent factors of innovation practices, while their validity is confirmed through Confirmatory Factor Analysis. The level of the innovation practices implemented by the companies is determined through descriptive statistics. The analysis of the empirical data from small and medium-sized manufacturing enterprises strongly confirms the conceptual structure of company innovation which consists of four dimensions, namely product, process, marketing and organisational innovation. The level of adoption of the four dimensions of innovation by the sample companies is deemed high, though not, however, excellent. Thus, the sample companies can put additional emphasis on innovation. In doing so, innovation may be a key factor in a company's efforts to overcome the negative effects of the current economic downturn and financial crisis.

Cost Management: When Is It Safe to Spend Again?

We are still in a period of economic turbulence, and many are asking, “When will it be safe to spend again?” But economic uncertainty happens from time to time, consultant James B. Edwards reminds us. And it will likely happen again in the future. It is called “business cycles,” and costs must be managed straight through these reoccurring swings, regardless of duration. The key is that cutting all costs during a downturn is not always the correct strategy.