Short-term Shocks Research Articles

Analysis on the correlation between credit scale of financial institutions and stock market price data

This paper analyzes the degree of association between credit size of financial institutions and stock market prices in China based on monthly data from November 2006 to November 2016 using impulse response function because of VAR time series model. The results show that there is a two-way Granger causality between the credit size of financial institutions and stock market prices when the lag order is 2. The impact of credit size of financial institutions on stock market price shocks is larger in the short-term, and this effect rapidly decreases to near zero after the med-long term. Conversely, the med-long term shocks to the credit size of financial institutions are larger than the short-term shocks by stock market prices.

What determines unemployment in the long run? Band spectrum regression on ten countries 1913–2016

The rise in unemployment since the 1980s has been predominantly understood as driven by short-term shocks, or long-run conditions in the form of rigid labor market institutions or ‘jobless growth’, mostly based on studies on the period from 1960 onward. Aggregate demand is usually assumed to have no long-run impact on unemployment, but recent contributions call this into question. This paper adopts a long-run view of macroeconomic history to explore the long-run relationship between unemployment and macroeconomic variables. We use wavelet analysis to decompose time series covering ten countries 1913–2016, into short-run, medium-run, and long-run variations, and band spectrum regressions on the relation between unemployment, GDP, investment, interest rates and productivity. Through estimations of cross-country regression models, we find strong indications that unemployment correlates negatively with the long-run components of investment. Taking potential structural breaks into consideration in each of the ten countries and ignoring other variables, our results indicate that short- to long-run components of capital formation explain between 40 percent and 81 percent of variations in unemployment. Our results support the view that economic models of long-run unemployment and labor market policy should take long-run conditions for investment into account.

DAMPAK HEALTH CAPITAL TERHADAP PERTUMBUHAN EKONOMI: PEMBUKTIAN DARI NEGARA TERPILIH DI ASIA TENGGARA DENGAN PENDEKATAN MODEL AUTOREGRESSIVE DISTRIBUTED LAG (ARDL)

The purpose of this study is to analyze the long-term impacts of health capital on economic growth in Southeast Asia from 2000 – 2021. This study employed the autoregressive distributed lag (ARDL) model to estimate the long-run and short-run nexus among the variables. Furthermore, FMOLS, DOLS and CCR were used for a more robust examination of the empirical findings. The results of this study show that health capital (proxy by health expenditure per capita) has a long-run relationship with economic growth (proxy by GDP per capita) and its impact on economic growth is positive and significant, this implies that an increase in the health expenditure per capita will increase GDP per capita. In addition, the error correction term (ECT) estimation result is negative and significant (-1,395) implying disequilibrium of short-term shocks in the previous year will experience a long-term balance adjustment in the current year with average speed of 139,5% per year

Carbon market volatility analysis based on structural breaks: Evidence from EU-ETS and China

In recent years, carbon market transactions have become more active. The number of countries participating in carbon market regulation is increasing, and the carbon market’s overall turnover continues to grow. It is important to study the features of carbon allowance price volatility for the stable development of the carbon market. This paper constructs a modified ICSS-GARCH model to analyze the volatility of carbon price returns and the dynamic characteristics of price fluctuations in the emissions trading system of the European Union (EU-ETS) and the Chinese carbon pilot markets in Hubei. The results show that fluctuations in carbon price returns have a leverage effect and that the impact of negative news on the market is stronger than that of positive news. The international climate and energy conferences, abnormal changes in traditional energy prices, and global public health emergencies all affect volatility and cause shocks to the carbon trading market. The modified ICSS-GARCH model with structural breaks can reduce the pseudovolatility of the return series to a certain extent and can improve the accuracy of the model. This research can give policymakers some implications about how to develop the carbon market and help market participants control the risks of fluctuations in carbon allowances. Regulators should enhance carbon price monitoring and focus on short-term shocks in the carbon market to reduce trading risks. The Chinese carbon market should strengthen the system design and develop carbon financial derivatives.

A SURVEY ON ORGANIZATIONAL RESILIENCE IN IRANIAN RESTAURANTS DURING COVID-19

Purpose- The COVID-19 Pandemic influenced and damaged many small and medium businesses. Business resilience in any organization represents the strength and tolerance of that organization in times of crisis. In this study, a general picture of the quality of restaurant management in Iran is examined from the lens of business resilience related constructs adopted from Organizational Resilience HealthCheck, a free self-assessment tool from the Organizational Resilience web site of Dept. of Home Affairs of Australian government. Methodology- HealthCheck examines and provides benchmarks about the flexibility of the organization and the business to adapt and evolve in global markets to contain and address short-term shocks and long-term crises or challenges. The SMEs covered in this research include 52 restaurants in three major cities in Iran. The organizational resilience and the experiences accumulated from the COVID-19 outbreak have been investigated against independent variables, such as: leadership and decision making, network and social capital, situational awareness, and the employee’s engagements within the organization. These questions examine and review the components of leadership in the organization under critical conditions and organizational experiences in the crisis. Findings- The data and findings have shown that decision making related indicators, are correlated with indicators of business resilience. In the issue of Employee Engagement that represents the lack of employee’s engagement, there is a mild correlation with the problems of the organization and business. In other words, the lack of empathic environment. The existence of an administrative system helps to better prepare a business to identify crises and to behavioral readiness to face them. This approach in the administrative system will lead to more coherent decisions to allocate resources to face crises. There is a relatively strong correlation between familiarity with risk management and the ability to predict crises. Conclusion- The findings illustrate that management skills, knowledge, and awareness lead to the ability of anticipating crises before the occur. It has also been observed that familiarity with crisis management and risk will lead to the creation of guidelines and protocols to face risks. A strong parallel between behavioral readiness for crises in business and the ability to respond to the crisis means that by raising the awareness and pre-awareness of the crisis, the response is much faster in the event of a crisis. Behavioral readiness in the organization for crises is capable of identifying crises. In Iran, due to the lack of governmental support for this business, there were more severe problems, and the situation even forced many activists and investors in the field to invest in other markets and industries. The lack of governmental and businesses readiness for such crises can also be another reason for failing to succeed. Keywords: Organizational resilience, resilience, hospitality industry, restaurant industry, SMEs, crisis, Covid-19 JEL Codes: G12, G14, C22

Robust governance for the long term and the heat of the moment: Temporal strategies for coping with dual crises

AbstractToday the world is confronted with dual crises: creeping and acute threats unfolding at the same time—for example, the manifestation of extreme weather events such as drought and flooding and the creeping crisis of climate change. To cope with dual crises, this article develops a novel temporal perspective that offers policy actors a repertoire of interrelated strategies for enhancing the robustness of institutional efforts. The repertoire consists of five temporal strategies that policy actors can use to navigate the twin challenges of immediate and latent threats in conjunction: strategic coupling of short‐term shocks and creeping crises, crafting time horizons, molding the pace of public problem‐solving, mobilizing anticipatory capacity through futuring techniques, and adaptive iteration of policy decisions. We illustrate the practical application of these strategies in an exploratory case study of adaptive water management in the Netherlands.SamenvattingDe wereld wordt geconfronteerd met duale crises: sluipende en acute dreigingen op hetzelfde moment, zoals extreme weersgebeurtenissen als droogte of watersnood tegelijkertijd met de sluipende crisis van klimaatverandering. Om te reageren op duale crises, ontwikkelt dit artikel een nieuw repertoire van vijf temporele strategieën voor beleidsmakers om de robuustheid van overheidssystemen te vergroten. Dit repertoire bestaat uit de volgende strategieën: strategische koppeling van onverwachte korte termijn schokken en sluipende crises, tijdshorizonnen creëren, het tempo aanpassen van implementatie, het mobiliseren van anticiperende capaciteit door middel van scenariotechnieken, en de adaptieve iteratie van beleidsbeslissingen. We illustreren de werking van deze vijf strategieën aan de hand van een uitgewerkt voorbeeld van adaptief watermanagement in Nederland: de invoering van het programma Ruimte voor de Rivier.

Paths and strategies for a resilient megacity based on the water-energy-food nexus

• Summarize the economic and social characteristics of megacities. • Present a roadmap of disaster impacting on resilience of megacities. • Consider water-energy-food nexus into resilience of megacity. • Problems brought by water-energy-food significantly affect resilience of megacities. • Infrastructure construction was key to zhengzhou's resilience. Megacities are more vulnerable to disasters because of their large population and high external dependence on basic resources. To deal with short-term shocks and long-term pressures, there is an urgent need for megacities to enhance their resilience. As the basic resources for production and living, water, energy, and food show a relationship called “nexus,” which affects the ability of megacities to address the impact of disasters. Hence, an evaluation index system of a resilient megacity based on water–energy–food nexus (WEFN) was established to assess the resilience level of megacities. The entropy weight-TOPSIS method and obstacle degree model were used, and Zhengzhou was selected as an example to study the paths and strategies for its resilience. It was found that infrastructure construction was key to Zhengzhou's resilience; problems caused by production, allocation, and consumption of water, energy, and food had great impacts on it. To improve its resilience, Zhengzhou should optimize its industrial structure, strengthen its social security, improve infrastructure investment, and strengthen the supply chain. The resilience framework of megacities accounting for WEFN can more comprehensively review the deficiencies in resilience construction and then provide decision-making tools for resilience construction planning of megacities.

Modelling systemic COVID-19 impacts in cities

The COVID-19 pandemic has impacted public health, the economy and society—both directly and indirectly. Few approaches exist to understand these complex impacts in a way that (1) acknowledges cross-sectoral interdependencies; (2) models how short-term shocks translate into impacts on longer-term outcomes; (3) builds in local, contextual variation; and (4) recognises a wide set of priorities. The Urban Systems ion Hierarchy (USAH) is proposed as an approach with these capabilities, and applied to Edinburgh (UK) between March-October 2020 to identify city-level impacts of the pandemic and associated policy responses. Results show changing priorities in the system and suggest areas which should be targeted for future urban resilience planning in Edinburgh for both short-term shocks and long-term recovery. This makes both methodological contributions (in the form of testing a new complex systems approach) and practical contributions (in the form of city-specific results which inform different aspects of resilience) to urban science.

Volatility in Live Calf, Live Sheep, and Feed Wheat Return Markets: A Threat to Food Price Stability in Turkey

The volatility of meat prices affects the accessibility and even food security of some consumers in Turkey. This study analyses the prices of selected livestock and a major feed component, wheat, as well as the exchange rate of the domestic currency in Turkey because imports augmented the domestic live calf and sheep supply. The analysis applies 470 price observations from January 2005 to October 2019 for each of the following price series: live calf, live sheep, feed wheat, and exchange rate of Turkish lira to US dollar. The series are analyzed by using the VAR-Asymmetric BEKK-GARCH technique. The results show that the elicited conditional variances of the return series were significantly affected by both short-term shocks and shocks across the return series. The uncertainties in the live calf, live sheep, and feed wheat markets were affected by both long-term volatilities and long-term swings in their own and the other markets, but their own market-induced effects were stronger. Similarly, the conditional variances of the returns of live calves, live sheep, and feed wheat were significantly affected by the rapid price ascent in the exchange rate and the periods of livestock imports as compared to the periods when imports were absent. The unfavorable news exerted particularly negative effects on persistent volatility in markets. Additionally, the live sheep market faced greater risks than the live calf or wheat markets and was greatly affected by the limited domestic sheep supply. Results provide knowledge useful in augmenting policy, assuring sustained accessibility to animal protein in Turkey and eliminating food insecurity.

Comovement across BRICS and the US Stock Markets: A Multitime Scale Wavelet Analysis

During the past two decades, financial markets across the globe have experienced sporadic waves of crashes. Such waves raise concerns about the vulnerability of global financial markets and the transmission mechanisms of shocks beyond borders. The current study examines the co-movement of stock markets in BRICS (Brazil, Russia, India, China and South Africa) countries and the United States of America (US). It unfolds their exposure to contagion effects during the major financial crises, which have flared up since 2000. Daily close price indices of selected stock markets were used in this endeavour. These data spanned from 5 January 2000 to 10 March 2021. A wavelet decomposition on stock return series was performed on these data to determine the multihorizon nature of comovement (pure contagion or interdependence) and the dynamics of market integration. It emerges that before the 2006-US-housing-bubble and after the 2011/13-EU-sovereign-debt crises, some shocks caused pure contagion. Such transmission generated short-term shocks. Most of the earlier shocks, particularly the US subprime and the EU Sovereign Debt crises, were spread via interdependence. Trade linkages and economic integration improvements enhanced such interdependence. In addition, when analysing the episodes of market integration, it arises that, in general, the short- and long-term integration strengthened and deepened comovement among equity markets. From the portfolio diversification and risk management perspectives, these results indicate that the market in China provided lucrative grounds for short-run investors from the other countries covered in the current study. These results can be helpful for investors interested in portfolio diversification in the BRICS region. They might also help policymakers in the region mitigate the exposure to external shocks of markets.

Extreme events, loss, and grief—an evaluation of the evolving management of climate change threats on the Great Barrier Reef

Coral reefs across the world have demonstrated an incredible resilience to disturbance, having persisted for over 200 million years withstanding local, short-term shocks such as cyclones and bleaching events, as well as large-scale, long-term global changes such as sea-level fluctuations. However, there are now many persistent and growing threats to the health and productivity of global reef systems such as the Great Barrier Reef (GBR), including water temperature change and subsequent coral bleaching, invasive species, severe weather events, and water quality degradation. Among these, it is widely acknowledged that climate change is the greatest threat to the GBR, with the GBR Marine Park Authority (GBRMPA) releasing a position statement on climate change in 2019, compellingly arguing the urgent need for climate change action for the GBR. For the past two decades, researchers have strongly emphasized the need for vigorous implementation of management strategies that support global reef resilience. This study provides a critical review of the response to this call to action and the barriers and opportunities for implementing transformative resilience actions across a range of social-ecological and natural resource management contexts. Bringing the concepts of environmental grief and resilience thinking together, this study reflects on how back-to-back coral bleaching events in 2016–2017 have changed the framing of GBR management. However, there is more work to be done to ensure that all actors responsible for GBR management accept and embrace change in order to enable transformative resilience, which, for an environment feeling the heat of climate and non-climate pressures, will maintain at least some of their critical environmental, social, and economic values.

Effective guide for behaviour of farmers in the withdrawal of rural homesteads: An evolutionary game-based study.

In this study, we determined how farmers can be effectively encouraged to withdraw from their idle homesteads, in addition to revitalising the rural construction land stock and realising the market-oriented allocation of land resources. We constructed an evolutionary game model under three scenarios: without penalty mechanism; with a static penalty mechanism; and with a dynamic penalty mechanism. Further, we explicitly describe the strategic behaviours and dynamic evolution processes of local governments and farmers during withdrawal from their rural homesteads. According to the results of the evolutionary stable strategy, under effect of the dynamic penalty mechanism, the strategy systems formed by local governments as well as farmers can gradually converge and stabilise after short-term shocks, compared with that under the no penalty and static penalty mechanisms. Overall, the penalty mechanism mitigates the instability in the game process during participants' incremental changes and strategy choices, while the dynamic mechanism is optimal. Both static and dynamic penalty mechanisms influence the binary equilibrium strategies of local governments as well as farmers, and farmers' strategies evolve towards this state of withdrawal from their homesteads with increasing penalty. When the model is dynamically improved, the probability of farmers' withdrawal of their homesteads increases with increasing penalty. Thus, clearly, the establishment of a penalty mechanism can promote stability of the participants' system; higher penalty implies higher motivation for farmers to withdraw their idle homesteads, enabling revitalisation of the rural stock of construction land and promotion of the optimal allocation of land resource elements.

HOW DID COVID-19 PANDEMIC AFFECT THE TOURISM INDEX IN BORSA ISTANBUL?

This study aims to determine how and to what extent the Covid-19 pandemic impacted the Turkish tourism sector index in Borsa İstanbul. Daily data for the period from March 27th 2020 to December 31st 2020 were used to find the relationship between the dependent variable (BIST tourism stock index) and the independent variables (Covid-19 cases and deaths in Turkey). The cointegration relationship between the Covid-19 pandemic and the BIST tourism index was investigated with the ARDL bound test. In addition, the effect of the Covid-19 pandemic on the BIST tourism index was tested with the Cointegrating Regression Models. As a result of the ARDL bound test, it was determined that there is a long-term cointegration relationship between the Covid-19 pandemic and the BIST tourism index. In addition, it has been determined that the impact of the short-term shocks caused by Covid-19 on the BIST tourism index will disappear in the long term and will balance again in about a week. According to the Cointegrating Regression Models (FMOLS, DOLS and CCR) results, it is seen that the deaths from Covid-19 significantly affect the tourism index. According to the models, a 1% increase in the number of deaths causes the BIST tourism index to decrease by 0.08%, 0.06% and 0.08%, respectively. The coefficient of the number of Covid-19 cases is not significant, showing that the number of cases does not have a sufficient effect on the tourism index. The findings of the paper have some implications for stock investors, policy makers, academicians and the company owners in the tourism index of Borsa Istanbul.

What do foreign flows tell us about stock market movements in the presence of permanent and transitory shocks?

PurposeThere is no research on understanding the difference in the nature of volatility and what it entails for the underlying relationship between foreign institutional investors (FII) flows and stock market movements. The purpose of this paper is to explore how permanent and transitory shocks dominate the common movement between FII flows and the stock market returns. As emerging markets are a major destination of international portfolio investments, the author uses India as a perfect case study to this end.Design/methodology/approachThe paper uses the permanent-transitory as well as a trend-cycle decomposition approach to gain further insights into the common movement between foreign institutional investors (FII) flows and the stock market.FindingsWhen the author identifies innovations based on their degree of persistence, transitory shocks dominate stock returns, whereas permanent shocks explain movements in foreign institutional investors (FII) flows. Also, stock returns have a larger cyclical component compared to cycles in foreign flows. The authors find the sharp downward (upward) movement in the stock market (FII flows) cycle in the initial period of the COIVD-19 pandemic was quickly reversed and currently, the stock market (FII flows) is historically above (below) the long-term trend, hinting at a correction in months ahead. The authors find strikingly similar stock market cycles during the global financial crisis and COVID-19 period.Research limitations/implicationsEvidence suggests the presence of long stock market cycles – substantial and persistent deviations of actual price from its fundamental (trend) value determined by the shared relationship with foreign flows. This refutes the efficient market hypothesis and makes a case favoring diversification gains from investing in India. Further, transitory shocks dominate the forecast error of stock market movements. Thus, the Indian market provides profit opportunities to foreign investors who use a momentum-based strategy. The author also finds support for the positive feedback trading strategy used by foreign investors.Practical implicationsThere is a need for policymakers to account for the foreign undercurrents while formulating economic policies, given the findings that it is the permanent shocks that mostly explain movements in foreign institutional flows. Further, the author finds only stock markets error-correct in response to any short-term shocks to the shared long-term relationship, highlighting the disruptive (though transitory) role of FII flows.Originality/valueUnlike existing studies, the author models the relationship between stock market returns and foreign institutional investors (FII) flows by distinguishing between the permanent and transitory movements in these two variables. Ignoring this distinction, as done in existing literature, can affect the soundness of the estimated parameter that captures the nexus between these two variables. In addition, while it may be common to find that stock market returns and FII flows move together, the paper further contributes by decomposing each variable into a trend and a cycle using this shared relationship. The paper also contributes to understanding the impact of COVID-19 on this relationship.

An Empirical Relationship Between Real Effective Exchange Rate Volatility and Current Account Balances in Kenya

Deficits in the current account balances have been a common phenomenon in Kenya. Some scholars have attributed this trend to the volatility of the Kenyan shilling. Previous literatures on this issue have generated mixed results on the relationship between Kenya’s real effective exchange rate (REER) volatility and current account balances, and as such this study sought to resolve this controversy. This study investigated and mapped out the profile of Kenya’s REER volatility for the period 1972 to 2015 and interrogated its impact on current account balances (CAB) to fill the gap. The study was guided by Mundell-Fleming-Dornbusch model to measure REER volatility and the elasticity approach to assess the relationship between REER volatility and CAB. The study employed GARCH technique to measure REER volatility and Vector Autoregressive (VAR) model to examine the impact of REER on Current Account Balances. The study adopted Quantitative Research Design.  It relied on secondary data sourced from World Bank and International Monetary Fund. Unit root tests reported stationarity when variables were first differenced, while Cointegration test results based on Johansen’s maximum-likelihood procedure indicated that there is no evidence of cointegration among variables under consideration. The results of GARCH revealed that REER was indeed volatile (t-statistic 32.90 > 1.96). The results of multivariate VAR model analysis indicated that REER (-1) volatility impacted positively and insignificantly on CAB, while REER(-2) had a negative and insignificant effect on CAB for the sampled period. Findings of this study will help in the formulation of fiscal and monetary policies to address macro-economic shocks associated with REER volatility in the Kenyan economy. In light of these results, there is need to apply appropriate macroeconomic policy mix in the short run to mitigate the cyclical and short-term shocks that arise from REER volatility and correct the country’s unsustainable external imbalances in the long run.  

Does Livelihood and Asset Diversification Contribute to Pastoralist Resilience?: the Case of Il Chamus, Baringo County, Kenya, 1980-2018

Abstract In studies of pastoralism, the concept of resilience has normally been applied to the analyses of post-shock recoveries ('bounce backs') within an ecological framework and and limited time and spatial perspectives. When temporal and spatial parameters are relaxed to span multiple decades and geographies with widespread social changes and numerous shocks and recovery periods, understanding what resilience for pastoralists should look like is exceedingly complex and challenging. This article examines livelihood and asset diversification among Il Chamus of Baringo County, Kenya over a 35+ year period (1980-2018) in the context of significant changes. It suggests that 'successful resilience' among pastoralists involves much more than the continuity of a pastoralist livelihood in a particular place. By addressing diversification trends among households both in towns and rural spaces, the study shows that both better-off and poor households pursue non-pastoral strategies and assets, and that livestock remains an important real and symbolic form of capital even for those who work in towns. Finally, the article concludes that studies of pastoralist resilience should consider long-term continuities and changes associated with market expansion and the strengthening of rural-town linkages, in order to understand how pastoral livelihoods evolve not just in response to short-term shocks but also to challenges and opportunities that wider socio-economic changes present.

Resilience capacities as perceived by European farmers

CONTEXTThe ability of a farm to cope with challenges is often conceptualised as resilience. Although improving resilience of farms is a major policy goal in the European Union, the current state of resilience is often unknown. Previous resilience assessments have been based either on pre-defined indicators or on perceptions. In particular, empirical research of perceived resilience is still limited and usually restricted to one specific resilience capacity, one challenge, or one function. OBJECTIVEWe investigate how European farmers perceive resilience capacities of their farms. Extending beyond previous research, we cover all three resilience capacities (robustness, adaptability, and transformability), consider a broad range of short-term shocks and long-term stresses, and include multiple functions. Furthermore, we analyse farms from diverse farming systems across Europe and investigate whether farms and farmers with similar perceived resilience capacities share characteristics. METHODSWe address the complex nature of resilience capacities by accounting for multiple scales formulated as analytical steps of a resilience assessment framework. More specifically, these are ‘resilience of what’ (farms and farming systems), ‘resilience to what’ (challenges), ‘resilience for what purpose’ (functions), and ‘what enhances resilience’ (resilience attributes). These steps guided the development of a survey with farmers across eleven European farming systems. Based on three indices for each farmer indicating perceived robustness, adaptability, and transformability of their farms, we identified two classes of farmers with particularly strong and weak resilience profiles respectively. Using nonparametric Mann-Whitney U tests, we furthermore compared other parameters collected via the survey across the identified classes. RESULTS AND CONCLUSIONSOur data sample outputs two classes of similar size characterised by all three perceived resilience capacities being above (below) regional average. This finding suggests that the perceptions of robustness, adaptability, and transformability are mutually dependent. Furthermore, we found that farmers who perceive their resilience above the regional averages are characterised by lower risk aversion, greater focus on providing public goods, a higher number of implemented risk management strategies, more active involvement in networks, and greater openness to innovation. SIGNIFICANCEThe revealed links between particular characteristics of farms and farmers and different levels of perceived resilience capacities can support policy-makers in developing more targeted resilience-enhancing strategies, as well as in understanding farmers' responses to challenges. Finally, our results can serve as a basis for further research, e.g., for formulating and testing hypotheses on causal effects between perceived resilience and its components, and on links between perception- and indicator-based resilience assessments.

South African bonds as an alternative diversification asset for developed bond markets

Orientation: Globalisation of financial markets has made it progressively more difficult for effective diversification to exist, and as a result portfolio managers are in need of alternative diversification opportunities.Research purpose: Developed financial markets are more likely to be integrated with one another, and better diversification opportunities may be found in emerging markets.Research motivation: Limited research focuses on bond market diversification, and most research does not include South Africa as a diversification destination. This research examines whether developed bond market investors could use South African bonds to diversify their portfolios.Research design, approach and method: This article follows a quantitative research design with a causal-comparative or quasi-experimental approach. The econometric method used was primarily co-integration analysis establishing whether diversification opportunities exist between the South African bond market and five developed bond markets.Main findings: Overall, the findings showed that there was no co-integrating relationship between the South African bond market and developed bond markets, indicating that diversification may be possible in the long term. Furthermore, it was found that the South African bonds were less affected by short-term shocks compared with the developed market bonds.Practical/managerial implications: The results of this study indicated that South African bonds can be used to diversify a developed bond market investors portfolio. Developed bond market traders and fund managers should therefore consider holding South African bonds as a means of reducing their portfolio’s overall risk.Contribution/value-add: Holding South African bonds can be used to preserve a portfolio’s long-term wealth. Additionally, the resistance of South African bonds to short-run shocks also provides investors with a cushion against sudden and unexpected crises.

Al Junaid industrial group: exploring business development strategies during COVID-19 pandemic

Learning outcomes Expected learning outcomes are as follows: to understand the nature of heating, ventilation and air conditioning (HVAC) manufacturing industries based on Al Junaid Industrial group when considering entering such businesses. To understand how unexpected short-term shocks such as a global pandemic may require long-term changes in a company’s outlook and planning. Discuss the marketing mix strategy that the Al Junaid Industrial group business products and services elements follow. To understand the competitiveness of Al Junaid group’s business environment and to identify the potential for business growth. To gain skills at developing a marketing strategy using the products, price, place and promotion model. Case overview/synopsis Al Junaid Industrial group is a small to medium-sized HVAC manufacturing company created over 12 years ago, in the United Arab Emirates. It has a production line company in the Sharjah industrial area with a capacity of 5,000 ft. The company not only manufactures air conditioning and its accessories but also provides installation and maintenance services. As for its international connections, it imports raw materials such as aluminum and exports air conditioning grills and accessories, offering installation services to many destinations, including Kazakhstan, Afghanistan, Uzbekistan and the Gulf Cooperation Council. The company has recently suffered a setback due to the COVID-19 pandemic. In March 2020 its net revenue and profits decreased by an average of 40%. As a result, Al Junaid Industrial group currently faces several internal and external challenges affecting its business performance such as high operating expenses, low market demand and stiff competition. Due to these challenges, this case study argues that Mr. Obaid Al Junaid, the Chief Executive Officer, should develop a new marketing strategy aimed at raising revenues to levels closer to those observed before the onset of the epidemic. Complexity academic level This case could be used in undergraduate and graduate classes of the business management field, as well as in development programs for managers in small to medium-sized enterprises (SME). Students (final year students of an undergraduate program for a bachelor’s degree) are expected to have a basic knowledge of Strategic management and business in general. It is preferred that the students have basic knowledge about small-to-medium businesses. Additionally, the managers in SME should be familiar with operational management, business management and marketing strategy and some of the challenges faced by managers in industrial businesses. Supplementary materials Teaching Notes are available for educators only. Subject code CSS 11: Strategy.

Macroeconomic Determinants Affecting Credit Risk in Central and Eastern Europe

Abstract Research background: A number of microeconomic and macroeconomic variables affect credit risk. Macroeconomic factors are particularly significant for credit risk volatility. Purpose: The purpose of this study is to identify significant macroeconomic determinants influencing credit risk in the banking sector of Central and Eastern Europe. This goal was achieved as a result of a statistical and econometric analysis. Research methodology: The empirical part includes a statistical study based on an analysis of primary statistics and Pearson’s correlation coefficients between selected variables and the credit risk measure. Afterwards, on the basis of aggregated panel data at the country level, an econometric model was made through the GMM system. Novelty: A statistical and econometric analysis was conducted that showed the occurrence of long-term shocks for credit risk for Central and Eastern European countries, which is in opposition to short-term shocks based on global credit risk studies. The stability of results for the impact of economic growth, unemployment rate and inflation rate on credit risk was confirmed. The occurrence of “moral hazard” in the banking sector of some of the examined countries was also proved. A comparison was made of the impact of macroeconomic variables on credit risk in particular examined countries. A considerable diversity of countries was demonstrated in terms of “moral hazard” in the banking sector.