Revenue Volatility Research Articles

Determinants of the choice of exchange rate regime in oil-exporting countries

This study examines the factors that determine exchange rate regime choice in oil-exporting countries. We run ordered logit regressions for an unbalanced panel dataset of 138 countries covering 1974–2021 and confirm that oil-exporting countries are more likely to adopt a fixed exchange rate regime than other countries. The main reason for this is that, given the volatility and uncertainty of oil revenues, traditional monetary policy tools are ineffective, resulting in the exchange rate serving as a nominal anchor. This is supported by our findings on the distinct roles of output volatility, government spending, fiscal cyclicality, and central bank independence in determining exchange rate regimes in oil-exporting countries.

Fiscal Policy and Economic Resilience: The Impact of Government Consumption Alongside Oil and Non-Oil Revenues on Saudi Arabia’s GDP during Crises (1969–2022)

This study investigates the impact of Government Consumption (GC) on Saudi Arabia’s GDP during major economic crises from 1969 to 2022, focusing on periods marked by fluctuations in oil and non-oil revenues. By integrating these revenue streams, the research provides a more comprehensive analysis of fiscal policy effectiveness during economic downturns. Using an Autoregressive Distributed Lag (ARDL) model, the study reveals the complex role of Government Consumption (GC) in stabilizing and stimulating the Saudi economy amidst revenue volatility. Key findings indicate that while GC does not significantly influence GDP in the short term, its long-term effectiveness varies across different crises. Specifically, GC has acted as a buffer against immediate economic shocks during certain crises while providing a stimulus for economic recovery in others. During the 2020 COVID-19 pandemic, timely fiscal measures significantly boosted GDP, underscoring the importance of adaptive and proactive fiscal policies. Conversely, the 2014–2016 oil price collapse demonstrated that GC alone was insufficient to counteract economic downturns, emphasizing the need for diversified revenue strategies. These findings underscore the dual role of GC in economic stabilization and recovery. During the COVID-19 pandemic, GC played a crucial role in both mitigating negative economic impacts and supporting recovery efforts, showcasing its effectiveness in times of global disruptions. This demonstrates GC’s capability as an immediate buffer against economic shocks and a stimulus for economic recovery. In contrast, during the 2014–2016 oil price collapse, GC was less effective, indicating the limitations of relying solely on government spending without broader economic diversification. This highlights the necessity of diversified revenue strategies to complement fiscal measures for long-term economic resilience. The robustness of the findings was ensured through various diagnostic tests, including checks for autocorrelation, heteroskedasticity, and stationarity of residuals. The absence of significant autocorrelation and heteroskedasticity, along with the stationarity of differenced variables, confirms the validity of the econometric models used. The study contributes to the discourse on fiscal policy in oil-dependent economies by illustrating the critical role of diversified revenue strategies and adaptive fiscal measures in enhancing economic resilience. Recommendations are offered for policymakers to optimize fiscal strategies, ensuring robust economic recovery and long-term stability in volatile markets. This research highlights the necessity for Saudi Arabia to refine its fiscal policies towards greater economic diversification and stability.

Healthcare Industries' Capital Structure Determinants: Evident Listed Companies on the Indonesian Stock Exchang

The purpose of this paper is to examine the capital structure and its determinants within the Health Industry in Indonesia. Utilizing a panel data model, this study analyzes the financial data of Healthcare Companies listed on the Indonesia Stock Exchange, covering the period from 2017 to 2023, with data processing conducted using the Evieus Software version 13 application. The findings confirm the dominant role of firm-specific factors, indicating that Company Growth, Profitability, Asset Tangibility, and Revenue Volatility significantly affect Book Leverage (BL), while Company Size has a notable effect of 17%. This research provides a novel contribution by focusing on the capital structure analysis specialized in the Pharmaceutical Industry in Indonesia, an area that has not been extensively explored before

The Role of the Government's Self- Depth in Bearing Financial Pressures in Iraq for the Period (2006-2022)

This study aimed at analyzing the government's self-financing depth in withstanding financial pressures in Iraq during the period (2006-2022). The study assumed that increasing government's financial capacity was having a positive impact on facing financial pressures of public expenditure burdens and economic non-stability in Iraq. The study relied on the inductive and data analysis method to verify the hypothesis of the study and access to results. With reference to the use of the ratio of oil revenues to GDP as deputy for self- financing depth due to the Iraqi government's heavy reliance on oil revenues to finance the general budget. It also used the following indicators as deputy financial pressure: the ratio of public expenditure, consumption, investment, and public debt to gross domestic product, tax effort index, monetary stability coefficient index and exchange rate discipline index. The study found that the financial capacity of the Iraqi government relied heavily on volatile self-financing depending on the volatility of oil revenues in financing current expenditures, which reduced the financial capacity to stand financial pressure. It’s reflected in the government's high financial burden and the existence of economic non-stability (inflation pressure, external debt pressure, foreign currency exchange pressure) in Iraq. Paper type: Research paper.

Nigeria’s Volatile Oil Revenue: Is There a Cause for Concern?

This study, unlike previous studies, investigates the impact of volatile oil revenue on economic growth in Nigeria from 1986-2020. The study adopted the Auto-Regressive Distributed Lag technique (ARDL) to analyze the data. The results show that in the short-run, oil revenue volatility significantly depressed economic growth. In the long-run, however, oil revenue volatility improves economic growth in the country. The study therefore recommends that governments and policymakers in Nigeria should vigorously pursue policies that will reduce the reliance on oil revenue through greater economic diversification; otherwise economic growth may worsen in the short-run.

Determinants of the Polish State Budget Stability

The problem of the stability of budget revenue and expenditure has been the subject of research for many years. However, there is still a need to monitor this phenomenon to achieve a correct balance in the budget because of the instability of different factors in the economic surroundings that affect the budget. This is especially important in developing countries undergoing economic transformation, and Poland is still in that process. The study aims to assess changes in the Polish state budget’s size and revenue and expenditure structure between 2000 and 2022. The method of comparative analysis over time is used with the actual value of the money concept, measures of dynamics, structure, GDP ratios, statistical description and coefficients of dissimilarity of structures. Analyses have shown a permanent imbalance in the Polish budget. However, the budget’s primary result oscillates around zero and both revenues and expenditures have gradually increased. The volatility of budget revenue and spending is moderate. Only the use of EU funds is characterised by high volatility. The emerging crises (e.g. Russia’s war against Ukraine and the coronavirus pandemic) have a negligible impact on the budget structure, but they influence its level of expenditure. The changes in Polish budget size are generally due to inflation, economic growth rates, and the inflow of funds from the European Union budget.

Несырьевые поступления в консолидированный бюджет: анализ по видам экономической деятельности

This paper presents an analysis of non-resource revenues of the consolidated budget of Russia by types of economic activity. The purpose of this study was to identify which sectors are the most sensitive to shocks form the fiscal point of view, and to answer the questions: how long it takes for the revenues of different sectors recover from “local lows” and how the sectoral structure of budget revenues affects the volatility of payments. In accordance with the set objectives, we examined the dynamics of consolidated budget revenues in real terms for the period 2008–2022 as a whole and by sector. In addition, a sectoral analysis was provided for CIT. The calculations were based on the data of the Federal Tax Service prepared by excluding payments on natural rent. The analysis showed that revenue fluctuations are largely determined by the dynamics of payments from the extractive sector (especially oil production), and an increase in the sector’s share is likely to increase the overall volatility of revenues. In fiscal terms, the processing sector is the most sustainable for total revenues but provides a source of volatility in CIT dynamics. Revenues from financial activities show the fastest recovery from the crises. Trade and finance have a stabilizing effect on both total revenues and CIT dynamics. The results of the study can be used at the stage of budget planning.

Does Revenue Concentration Really Bring Organizational Efficiency? Evidence From Habitat for Humanity

Past empirical studies demonstrate a positive connection between revenue concentration and organizational efficiency. This supports the idea that concentrating revenue helps minimize transaction costs of nonprofit organizations, resulting in greater efficiency. However, this finding contradicts the belief that revenue concentration increases the risk of revenue volatility, leading to service delivery disruptions and reduced efficiency in nonprofits. Moreover, these studies have used an efficiency measure that might not be suitable. To address this, our study examines the relationship between revenue concentration and organizational efficiency using a more appropriate measure. Analyzing data from Habitat for Humanity, we discover a U-shaped relationship: nonprofits are most efficient when fully diverse or fully concentrated in revenue. These findings contribute to the ongoing debate on nonprofit revenue diversification, with significant implications for nonprofits. They also highlight the importance of using more appropriate efficiency measures in future scholarly research.

Nonprofit Revenue Strategy and Downside Risk: Applying Portfolio Theory and Extreme Value Theory

The risk of revenue instability is a concern for any nonprofit. Existing research leads to the well-known strategy of equalizing revenues across sources to reduce revenue volatility. This study offers several expansions to this strategy. First, rather than focusing solely on deviations from mean revenue, I incorporate extreme revenue loss, or downside risk, as it threatens organizational survival and occurs more frequently than expected. Second, while revenue equalization is indifferent to the type of revenue source, I incorporate portfolio diversification that seeks a negative correlation between sources to avoid simultaneous losses. Using 2008 to 2012 financial data, results of fixed-effects regression suggest that portfolio diversification can reduce revenue volatility and downside risk. Moreover, the relationships between financial flexibility, growth potential, and revenue risk are more nuanced compared to existing research focused solely on deviation risk. The results can help nonprofits consider incorporating downside risk in revenue portfolio management to enhance financial security.

Price volatility of revenue managed goods: Implications for demand and price elasticity

Revenue management practices are widely employed in various sectors. These mechanisms dynamically adjust prices observed by consumers typically through the control of price classes and their availability. As such, these pricing environments tend to exhibit some predictable behaviors as the product approaches the expiration or consumption date but may also result in varying degrees of price volatility. Such price paths may ultimately alter consumer behavior, e.g., via delayed purchase timing (i.e., strategic behavior) or different willingness to pay. Accordingly, we assess consumers’ responses to the realized price changes induced by revenue management mechanisms, using fare and sales data from aviation markets. Our empirical analyses reveal that price elasticity decreases (in absolute terms) in the degree of price volatility, whereas the realized demand is lower when price volatility is higher. This suggests that as prices become more volatile, consumers become more oblivious to these price fluctuations and may end up paying more for the products—thereby confirming and generalizing a behavior previously documented for consumer packaged goods (CPGs), which follow dramatically different pricing regimes. While this may suggest support for higher and more volatile prices, we find that given the higher prices, the overall demand decreases, highlighting a delicate trade-off firms face. To distill the insights from the empirical analyses, we formulate two hypotheses, which we test in a laboratory setting by means of an ad hoc experiment.

Accounting for the Effects of Oil Prices on Exchange Rate in Nigeria: Empirical Evidence from Linear and Non-Linear ARDL Models

This study empirically examines the impact oil prices on the exchange rate in Nigeria. Time series annual dataset spanning 1980 to 2018 was estimated using the linear and nonlinear ARDL model developed by Pesaran and Shin, (1998) & Pesaran, et al. (2001) and Shin, et al. (2014); where oil prices, nominal exchange rate, interest rate, and oil revenue serves as the variables for analysis. From the result of the linear-ARDL models both the long run and short-run revealed that oil price has positive and significant impact on exchange rate. Similarly, the nonlinear model also revealed that, both in the long run and short-run, the depreciating effect of a fall in oil price is stronger than an appreciating effect of a arise in oil price of an equal magnitude. This, we argue, reflects the dependency of the economy on oil. One policy implication of this finding is that stability of oil prices and oil revenue is critical for the stability of the domestic currency and, hence, prices. It is, therefore, recommended that authorities should focus on resolving the production difficulties in the Nigeria’s oil industry as a means of reducing the current revenue volatility.

The COVID-19 state sales tax windfall.

Policymakers were surprised to find increases in sales tax revenues in 2020 due to expectations that they would drop 8-20%. We investigate this puzzle and provide novel insights into consumption taxes based on this experience. Using a case study from the State of Utah, we document that shifts in the structure of consumption played a significant role in the robustness of sales tax revenue. Two factors stand out in our results. The first factor is the structure of the tax base for sales taxes in the USA. This tax base covers only a subset of personal consumption, excluding, for example, many services. During the pandemic, when services were restricted or shut down, this caused a shift in spending toward goods that are more likely to be in the sales tax base. The second factor is the boom in e-commerce during the pandemic, which boosted sales tax collections. This was catalyzed by recent legal changes that made the collection of sales taxes in e-commerce easier. Interestingly, this e-commerce boost also shifted the point of sale and related sales tax revenues away from urban areas toward suburban areas. Our case study of the pandemic's effect on sales taxes in the USA generally, and Utah's experience specifically, provides lessons for consumption taxes, such as the VAT more broadly, and lessons on the role of consumption taxes for tax revenue volatility.

Building responsive and resilient supply chains: Lessons from the COVID‐19 disruption

Building responsive and resilient supply chains: Lessons from the <scp>COVID</scp>‐19 disruption

A proposed hedge-based energy market model to manage renewable intermittency

Renewable energy power producers are exposed to significant volatility in revenue due to intermittency associated with wind and solar energy. Moreover, higher penetration of variable renewable energy in the electric grids is significantly increasing the cost associated with procuring reserves, resulting in higher electricity costs to consumers. Hence, a market that can appropriately distribute the cost of procuring reserves whilst ensuring revenue stability for renewable energy producers is crucial. In this work, the authors propose a novel hedge-based energy market model that allows renewable generators to secure hedge contracts from flexible generating technologies as insurance against weather-driven energy deficits. The proposed model supplements a representative day-ahead market model and maximizes the revenue of market participants whilst diminishing the costs of procuring reserves and generating investment signals for green projects. A mathematical model is formulated to determine market equilibrium based on the Karush Kuhn Tucker (KKT) optimality conditions. Simulation studies are carried out to demonstrate the efficacy of the proposed model on a test network using MATLAB. The theoretical results are verified by simulation results and provide a feasible region in which mutually acceptable hedge contracts result in higher overall revenues. The results show that a hedge-based energy market model can be deployed to manage renewable intermittency in a day-ahead energy market model to address the risk management needs of renewable power producers.

Prospects for weather-indexed insurance for blueberry growers

PurposeThe authors investigate whether an index-based weather insurance (WII) product can complement or replace existing traditional crop yield insurance for mitigating farmers' financial risks, with an application to blueberry growers in British Columbia (BC).Design/methodology/approachA hybrid model combining expected utility (EU) and prospect values is developed to analyse farmers' demand for WII.FindingsWhile weather data are used to investigate supply elements, a hybrid model combining EU theory and prospect theory (PT) is developed to analyse farmers' demand for WII. On the supply side, a quality index is constructed and the relationship between the quality index and key weather parameters is quantified using a partial least squares structural model. The authors then model weather parameters via time-series analysis and statistical distributions to provide reasonable estimates for calculating actuarially sound insurance premiums for a rainfall indexed, insurance product. This model indicates that decreases in the proportion of a blueberry grower's total revenue and revenue volatility will decrease the possibility that they participate in WII. At the same time, an increase in the value loss aversion coefficient and WII's basis risk further leads to less demand for WII. In short, a grower may decide not to participate in WII at an actuarially fair premium due to the combined effects of the above factors. Overall, while the supply analysis enables us to demonstrate that WII can potentially help in mitigating farmers' financial risks, it turns out that, on the demand side, blueberry growers are unwilling to pay for such a product without large government subsidies.Originality/valueThe authors argue that the demand for insurance may be affected by the level and the volatility of a berry grower's total revenue. Hence, the authors propose a hybrid expression that assumes a farmer seeks to maximize the total utility function to capture the rational and intuitive parts of a farmer's decision-making process. The EU represents rationality and the prospect value represents the intuitive component. Meanwhile, the authors investigate the possibility of using key weather parameters to construct a berry quality index – one that could be applied to other agricultural areas for studying the relationship between weather conditions and product quality.

The energy transition and export diversification in oil-dependent countries: The role of structural factors

The energy transition toward decarbonization is expected to impact producers of fossil fuels. However, oil-exporting countries are currently key players in the modern economy. Thus, the energy transition will not be successful if state revenues in these countries are not stably maintained. These countries can protect themselves against revenue volatility and mitigate carbon risk by diversifying their economies. However, export diversification appears to be particularly challenging for many oil-producing countries. It is natural to ask why some oil-exporting countries have managed to diversify their economies whereas others have not. We hypothesize that the differences in oil producers' diversification patterns may be associated with differences in their structural characteristics. Such differences may cause countries' diversification trends to diverge. To investigate this hypothesis, we examine whether all countries converge toward the same diversification level. We also check whether their diversification efforts diverge overall but create separate convergence clubs. The results show that structural and institutional factors play a central role in the diversification process. In particular, countries with higher quality infrastructure, human capital and research and development efforts are more likely to converge toward high diversification. Thus, these factors provide greater economic stability in turbulent times and promote a successful energy transition.

TAX REVENUE VOLATILITY AND ITS IMPLICATION ON THE NIGERIA ECONOMIC GROWTH

The study examined the analysis of the impact of tax revenue (TR) volatility on economic growth (EG) in Nigeria between the periods of 1994-2021, which is a period of 28years. This was done using the measures TR volatility, namely; Petroleum Profit Tax Volatility (PPTV), Value Added Tax Volatility (VATV), Company Income Tax Volatility (CITV) and Custom and Excise Duties Volatility (CEDV) in relation to economic growth proxied with Gross Domestic Product (GDP). The data was sourced from the CBN Statistical Bulletin and Annual Report and analyzed with descriptive statistics, correlation matrix, unit root test, Auto-regressive Distributed Lag (ARDL) Bound Co-integration test, and ARDL Co-integrating and Long form. The findings showed that PPTV has a p-value of 0.0089 and a p-value of 0.0051 on the short and long run (S&amp;LR) respectively. Hence, PPTV had a considerable effect on GDP in the S&amp;LR; VATV has a p-value of 0.0067 and 0.0001 both on the S&amp;LR. Thus, VATV had a considerable effect on GDP in the S&amp;LR; CITV has a p-value of 0.1838 and a p-value of 0.1892 in the S&amp;LR respectively. Thus, CITV had an inconsequential effect on GDP in the S&amp;LR and CEDV has p-values of 0.0253 and 0.0021 both on the S&amp;LR. Hence, CEDV has a considerable effect on GDP in the L&amp;SR. It is evident that measures of tax revenue volatility used have mixed effects of RGDP. It is only PPTV, VATV and CEDV that have considerable effects on GDP in S&amp;LR while CITV exerts inconsequential effect on RGDP in S&amp;LR. Hence, the study concluded that TR volatility had considerable effects on EG. It is advised that government should restructure the country's petroleum industry by stepping up efforts to process crude oil and solely exporting processed oil to the global market.&#x0D; Keywords: Tax, Revenue, Volatility, Inconsequential Effect, Considerable Effects.

Simmer Down Now! A Study of Revenue Volatility and Dissolution in Nonprofit Organizations

Many nonprofit organizations operate under immense financial pressure. Revenue volatility is a common target for managers to minimize under the assumption that maintaining consistent revenue enhances the viability of the organization while high revenue volatility may disrupt planning. However, the relationship between revenue volatility and the viability of nonprofit organizations is poorly understood. This article presents the first empirical test of the link between volatility and dissolution in U.S. public charities from 2010 to 2018 ( N = 2,126,894) using discrete time survival models. The results show that a 10% increase in revenue volatility predicts an increase in dissolution risk between 7% and 14%. In addition, the effect of revenue volatility varies by the age of the organization, suggesting volatility may be a greater threat to older organizations than to those newly formed. Implications for managers and future research are discussed.

Working from home and firm resilience to the COVID‐19 pandemic

The COVID‐19 pandemic has disrupted firms' operations. To cope with the crisis, many firms have allowed their employees to work from home (WFH). We examine whether a firm's WFH capacity has increased its resilience during the pandemic. We test the hypotheses using a unique data set that combines listed firms' financial statements, supply chain partners, and job postings on a leading online platform that provides hiring services. We find that imposing COVID‐19 anti‐contagion policies on firms and their suppliers or customers significantly increases their operating revenue volatility, slows their recovery, and has repercussions on their supply chains. WFH enhances firms' resistance capacity by reducing the effect of COVID‐19 on their operating revenue volatility and disruptions to their supply chain partners; however, it also decreases their recovery capacity by extending the time taken to return to normal. Firm attributes, along with workers' occupations, education, and experience, have an impact on the effect of WFH on firm resilience. This study enhances our understanding of shock transmission across supply chains and WFH as a source of firm resilience.

French amateur football clubs’ finance and revenue volatility: the determinants of demand shocks

ABSTRACT The article addresses financial troubles in French amateur football clubs and their origins. Previous literature has demonstrated that – in particular in French football – club bankruptcies are triggered by demand shocks. The present research intends highlighting the determinants of demand shocks on those clubs playing French amateur football top two tiers with a longitudinal analysis (2009/2010-2019/2020). Various exogenous elements that influence club demand (i.e. revenues) are taken on board, namely, macroeconomic variables, such as the variation of GDP growth rate between two football seasons, a dummy for the Covid-19 sanitary crisis, and a sport dummy for the effect of the French national team winning the 2018 male football World Cup. The latter is used to check a potential trickle-down effect on amateur elite football. None of these variables do explain demand shocks except if the heterogeneity of clubs’ economic models is taken into account. The determinants of shock demands appear to be clubs’ strategic orientations (towards win maximization vs. a stable economic organization).