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PurposeThis study models the effects of the COVID-19 pandemic on the performance of the private health-care sector in the Middle East and North Africa (MENA) countries. This paper aims to address the economic, societal and sustainability of the health-care sector.Design/methodology/approachData were collected from Bloomberg and the sample consists of 534 firm-year observations from 55 firms listed over 2010–2020. The authors apply panel data and control for the country and governance effects.FindingsThe authors found heterogeneous results regarding the three sub-sectors. The pandemic has a negative effect on the accounting and market performances of the "Pharmaceutical companies” and an insignificant impact on "Healthcare Management and Facilities Services.” Moreover, the impact of COVID-19 on health-care firms' performance depends on the country's economic classification and the degree of regulatory and governance frameworks.Research limitations/implicationsFurther studies may consider a larger sample and other regions. It is recommended to address the health-care sector's challenges to invest in new technologies such as "digital twin” and predictive and personalized medicine. It is worth testing model development theory and its effects on speeding up and designing models to ensure the proper functioning and developing mathematics to determine uncertainties in patient data and model predictions.Originality/valueTo the best of the authors' knowledge, this paper is novel as it is unique in modeling the impact of COVID-19 on the health-care public companies in the MENA region. The findings pinpoint firms' and countries' heterogeneous impacts on financial and market performances.
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PurposeCapital structure is an important corporate financing decision, particularly for companies in emerging economies. This paper attempts to understand whether the pandemic had any significant impact on the capital structure of companies in emerging economies. India being a prominent emerging economy is an ideal candidate for the analysis.Design/methodology/approachThe study utilizes three leverage ratios in an extended market index, BSE500, for the period 2015–2021. The ratios considered are short-term leverage ratio (STLR), long-term leverage ratio (LTLR) and total leverage ratio (TLR). A dummy variable differentiates the pre-epidemic (2015–2019) and pandemic (2020–2021) period. Control variables are used to represent firm characteristics such as growth, tangibility, profit, size and liquidity. Dynamic panel data regression is employed to address endogeneity.FindingsThe findings point out that Covid-19 has had a significant, negative effect on LTLR, while the impact on STLR and TLR was insignificant. The findings indicate that companies based in a culturally risk-averse environment, such as India, would reduce the long-term debt to avoid bankruptcy in times of uncertainty.Research limitations/implicationsThe study covers the impact of the pandemic on Indian companies. Hence, generalization of the findings to global context might not be valid.Practical implicationsTo maintain economic growth in the post-crisis period, Indian policymakers should ensure accessibility to low-cost capital. The findings provide impetus to deepen the insignificant corporate bond market in India for future economic revival.Originality/valueDeveloping countries are struggling to revive the economies postpandemic. This is particularly true for Asian economies which are heavily reliant on banks for survival. This research finds evidence to utilize bond market as a source of raising capital for economic revival.
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Financial distress is a research topic in finance that has attracted attention from academia following past financial crises. Although previous studies associate financial distress with several elements, the relationship between distress and ESG has not been broadly explored. This paper investigates these issues by elaborating a Dynamic Network DEA model to address the underlying connections between accounting and financial indicators. Thus, a model that includes profit and loss, balance sheet, and capital and operating expenditures indicators is demonstrated under the dynamic network structure to compute financial-distress efficiency scores. Then, the impact of carryovers is considered for the accurate calculation of efficiency scores for the three substructures. The influence of contextual variables, such as socioeconomic and macroeconomic variables, and whether the firm owns an ESG Risk Score or not, is assessed through a stochastic non-linear model that combines three distinct regression types: Simplex, Tobit, and Beta. The results indicate that firms that hold an ESG Risk Score are less prone to be in financial distress, and Governance Score is negatively associated with financial distress efficiency.
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Bank Indonesia, el banco central de Indonesia, ha realizado ajustes en un instrumento de política macroprudencial llamado índice de intermediación macroprudencial (IIM) para impulsar el crecimiento de los préstamos en el contexto de la recuperación económica nacional debido a la pandemia de COVID-19. En este artículo, se desarrolla un modelo dinámico de préstamo bancario con comportamiento procíclico, y se equipa con el instrumento predecesor del IIM denominado requerimiento de reserva basado en la relación préstamo-depósito (RR-RPD). Examinamos los efectos de los parámetros RR-RPD en la dinámica del préstamo utilizando el análisis de bifurcación de colisión de fronteras para determinar los valores umbral de los parámetros RR-RPD para que se pueda mantener la estabilidad del equilibrio del préstamo. Este modelo se aplica a los datos mensuales de los bancos comerciales de Indonesia antes y durante la pandemia de COVID-19 para evaluar la región de estabilidad de los parámetros del instrumento.Alternate :Bank Indonesia, the central bank of Indonesia, has made adjustment settings in a macroprudential policy instrument called macroprudential intermediation ratio (MIR) to boost loan growth in the context of national economic recovery due to the COVID-19 pandemic. In this paper, a dynamic model of bank loan with procyclicality behavior is developed, and it is equipped with the predecessor of the MIR instrument called loan-to-deposit ratio based reserve requirement (LDR-RR). We examine the effects of LDR-RR parameters on the dynamics of loan using the border collision bifurcation analysis to determine the threshold values of the LDR-RR parameters so that the stability of loan equilibrium can be maintained. This model is applied to monthly data of Indonesian commercial banks before and during the COVID-19 pandemic to assess the stability region of the instrument parameters.
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According to recent articles from assorted periodicals, the Manhattan office market was at a risk of oversupply before the pandemic. [...]of COVID, additional commercial space became abruptly available, and there was over 20 million square feet of NYC sublet space actively looking for tenants. [...]although the current reduction in usage of office space would not automatically cause an impairment charge, for small organizations like PCI, it is imperative to seriously consider this collision of ROU and impairment when preparing their financial statements.
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As a response to the economic crisis caused by the COVID-19 pandemic, the Federal Reserve implemented one of the most expansionary monetary policies in its history, renewing asset purchases under quantitative easing and supporting the economy using a wide range of other tools. In this paper, the authors provide an overview of the changes in the balance sheet of the Federal Reserve from February 26th, 2020 to April 7th, 2021 as well as an overview of the main actions taken by the Federal Reserve over the same period. The authors then analyze the impact of the activity of the Federal Reserve on the economy from the monetary perspective. In particular, the authors examine the expansion of the balance sheet of U.S. commercial banks, analyze credit counterparts of broad money, and conduct the golden growth rate analysis for broad money supply growth. The authors conclude the paper by analyzing changes in inflation expectations and Treasury yields.
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From the ongoing COVID-19 pandemic and its variants, to extreme weather events, geopolitical risk arising from the ongoing war between Russia and Ukraine and severe solar storms, we face constant external threats that have the potential to reap catastrophic damage. [...]they are perceived by banks and the insurance sector, retail, and commercial investors as important but not urgent risks due to their very low likelihood of occurring over the regulatory capital planning horizon. Furthermore, emerging risks pose key challenges to the processes of risk assessment and risk planning because, by their very nature, these events occur only infrequently. [...]effective enterprise risk management frameworks should ensure ongoing review and improvements to existing structures by creating an emerging risk sub-framework. Enterprise-Wide Risk Management The objective of Enterprise-wide risk management (EWRM) is to report on a regular basis the magnitude of selected risks across the entire company under normal and extreme risk scenarios to senior management. [...]EWRM is a process for systematic identification, measurement, reporting and monitoring of different exposures a company faces, across all its geographic operations and businesses.
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Purpose: The aim of the article is to verify a hypothesis stating that financial security of companies has been significantly violated in the scope of economic crisis caused by COVID19 pandemics. It has been assumed that traditional indicators of financial liquidity have declined and establishing the scale of the phenomenon constitutes a scientific problem. Design/Methodology/Approach: The research has been conducted as exemplified by a given sector: consumer goods and retail trade on the basis of data adapted from EMIS database. The research has regarded years 2018-2021. Statistical characteristics of two features have been used: current ratio indicator and quick ratio indicator, determining the location, spread, asymmetry and flattening characteristics. The analysis constructed in such a multidimension way was to enable a proper verification of the hypothesis stated. Findings: The results of the research has not verified the research hypothesis positively: the companies of a given sector had not compounded, and even improved their financial security measured with the use of traditional liquidity indicators. Practical implications: The conducted research regarding the liquidity management in companies in a extraordinary time od crisis emphasizes the multifaceted nature and complexity of issues connected with financial security;simultaneously discussing the statement that the entrepreneurs' concern over the extending period of uncertainty, lead them to a certain mobilization to secure from lack of liquidity and forced more awareness in the topic of liquidity. Originality/value: In the process of data analysis certain characteristic features were observed: the average indicators in the sector are much higher than middle indicators which indicates the need to have a closer look at average data. In a researched sector most of the enterprises does not achieve the results suggested for liquidity indicators.
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Pandemic risks, such as Covid-19, are difficult to insure as they are characterized by multiple factor risks and losses and involve different types of businesses and people simultaneously. The scarcity of time series and statistical data prevents insurers from developing correct pricing. We propose a model of catastrophe risk with Non-Damage Business Interruption (NDBI) policies to manage the pandemic risk due to the spread of Covid-19. The model employs a Monte Carlo simulation of different lockdown scenarios: the frequency and severity distributions of losses of Italian SMEs. The main results show the importance of a Covid-19 lockdown exposure NDBI policy, which benefits not only SMEs but also the insurer.
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The proximate threats to continued economic growth remain the COVID-19 pandemic and policy error at the U.S. Federal Reserve. 2019 and Pre-COVID When teaching an honors finance course in fall 2019, I told my students that an inverted yield curve probabilistically predicted an economic recession in the next 12 to 18 months. First-time claims for unemployment insurance (UI) skyrocketed, and between early March and early June 2020, over 40 million Americans filed first-time claims.2 The unemployment rate quadrupled between March and May 2020. Focusing on direct cash infusions to support consumption, this response amounted to a quarter of annual U.S. GDP.4 The Federal Reserve lowered its overnight lending rate to zero and more than doubled its balance sheet with asset purchases.
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The aim of the thesis Challenges of cost management during the COVID-19 pandemic on the example of the company Pro kolekt d.o.o. is to present an analysis of the report, focusing on cost management in the observed time period in 2019 and 2020. The analysis is focused on the current crisis caused by the virus pandemic that greatly affected the company's operations and sought rapid adjustment of cost management to keep the company going in the new crisis. The subject of the thesis is to present the application of cost management theory in a crisis situation. The paper provides a detailed insight into the importance of timely response of managers in a crisis situation in which the company finds itself in order to preserve its business and survive in the market in the new conditions. In the first part, a theoretical framework for managing the operating costs of a modern company in the financial industry is set. Afterwards, crisis cost management is presented, with a look at the current crisis caused by the pandemic. In the last part, the analysis refers to the financial sustainability of the company's operations in the observed period, with proposals and other options for setting strategic plans and goals of the company in the future. The main goals of the thesis are: * to analyze available data on the development and changes during the virus pandemic * to collect and analyze available secondary data indicating changes in cost management * to explore the opinions of the company's managers on the success of the adjustment and the future of the company. In preparing this paper, secondary data collected from the professional literature will be used in order to lay the foundations for the analysis of cost management in the real sector during a pandemic. Secondary data will be processed by methods of analysis, comparison and synthesis.
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Purpose>This study contributes to existing literature by investigating bank capital structure dynamics during the Covid-19 pandemic. The role of contemporary bank-specific determinants of capital structure during this period is analyzed.Design/methodology/approach>An independent t-test is carried out to check the response of bank leverage to the crisis. Using fixed effect estimation and difference general method of moments (GMM), the impact of the shock is examined. An unbalanced quarterly data set from 2016q1 to 2020q3 of all commercial banks in Pakistan is used.Findings>The study finds that due to procyclicality of capital, during the Covid-19 crisis, the banks preempted a fall in capital and improved their capital positions. The role of bank specific variables in determining capital structure like profitability, size and competition weakened during this period. Evidence suggests that policy rate intervention by the central bank was a significant factor in capital structure decisions during the Covid-19 period. The study finds that macroeconomic shocks have significant impact on capital structure decision-making of banks which goes beyond the bank-specific factors.Originality/value>It finds evidence of a moderating role of monetary policy in capital structure decision-making which has not been previously highlighted in literature. Monetary policy is found to become an important factor deciding the capital structure of banks during the Covid-19 first 3 quarters. This study also explores the impact of Covid-19 on the bank-specific determinants of capital structure of banks.
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Implementation of new impairment model of IFRS-9 needs to estimate Expected Credit Loss (ECL) for valuation of financial instruments. The whole process of estimating credit risk and calculating of impairment requires in developing of the internal IFRS-9 model and methodology. According to IFRS-9, reporting value of the financial instruments must be presented on the balance sheet only after considering the ECL. Under the general approach, ECL considers the forward looking scenario, along with the past and present records, which entails macro economic factors. The recent Corona Virus Disease-19 (COVID-19) pandemic has significantly affected the economy at the macro level in general and the individual business entities at the micro level in particular. Thus post impact of COVID-19 on ECL is unavoidable. The paper attempts to explore how in accounting the ECL deals with the impact of COVID-19 in respect of valuation of the financial instruments at the date of reporting and disclosure of a business entity. The study incorporates qualitative as well as quantitative analysis. The novelty of the study infers some major findings. The study suggests that the COVID-19 outbreak has a significant impact on the calculation of 'Expected Credit Loss' (ECL).
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[...]the latest Master Circular chooses continuity over radical change in capital regulations. Even Indian banks which were brought under the Prompt Corrective Action (PCA) framework exhibited a chronic deficiency of Tier I capital. [...]the stated goal of the Basel III regulations was to increase bank reliance on Tier I Capital, under normal and stressed conditions. [...]the credit risk capital requirements in India are at least as high as the global benchmarks. Under this approach, Operational Risk Capital Charges are equal to 15 per cent of Average Gross Income over the last three years (provided gross income is positive each year). [...]for regulatory capital charge estimation, banks will continue to assume that the size of operational losses increases with the scale of business (i.e. gross income) and there are no diversification benefits across business lines.
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Monetary coordination and macroeconomic stability are increasingly critical for domestic and fiscal policy in the aftermath of the global financial crisis. This research investigates the impact of monetary policy on financial and economic stability following the COVID-19 pandemic's economic lockdown. This article utilized a V.A.R. (Vector Autoregressive Models) estimator for time series data models. Quarterly statistics are gathered from the first quarter of 2004 to the first quarter of 2018. Using a V.A.R. model, the study investigates the causal connections between monetary policy instruments and economic stability. The findings suggest that Iraq's monetary policy is most efficient at maintaining a target growth rate for the money supply while simultaneously controlling inflation through an equalization cap (1.8 percent). Due to the rentier structure of the Iraqi economy, the money supply had a negligible influence. Monetary authorities must monetize oil earnings in order to finance public spending. Finally, an appropriate framework for monetary management must be created that ensures monetary independence and supremacy remain unimpaired. The findings give a thorough knowledge of the links between national monetary policies and economic stability, which can eventually aid in developing nations' formulation of good monetary and fiscal policies.
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Purpose>The study aims to empirically examine the effect of bank liquidity creation on non-performing loans (NPLs) in the Middle East and North Africa (MENA) region.Design/methodology/approach>Berger and Bouwman's (2009) three-step methodology was employed to calculate the level of liquidity creation of a selected sample of 111 commercial banks in ten MENA countries from 2010–2017. Next, the two-step system generalized method of moments (GMM) estimator was used to investigate the linkage between bank liquidity creation and NPLs.Findings>The results demonstrated a significant negative effect of bank liquidity creation on NPLs in the short and long term, implying that liquidity creation through both on- and off-balance sheet activities decreases NPLs. These findings accord with the “economic-enhancing” view. Furthermore, regression analysis investigated whether this relationship remained similar for Islamic and conventional banks. The results showed that liquidity creation diminishes Islamic and conventional bank NPLs.Research limitations/implications>The empirical findings raise several significant policy implications. Bank liquidity creation may decrease rather than increase NPLs, although the process of liquidity creation is viewed as risky by rendering banks more illiquid. Therefore, policy-makers should encourage bank liquidity creation to stimulate the economy. In a robust economy, borrowers are more likely to repay their debts, consequently diminishing banks' NPLs.Originality/value>To the best of the author's knowledge, the current study is the first to provide empirical evidence on the effect of bank liquidity creation on NPLs in MENA countries.
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This paper aims to explain some current considerations and approaches about the credit activity in Albania compared to the other countries in the Western Balkan's region in terms of bank-specific indicators. During 2020 and in the first half of 2021, the evolution of bank credit in the Western Balkan countries continued to be positive, influenced by monetary easing, support for credit risk reduction and other support policies offered by central banks. The balance sheet of banks in the region has improved over the period, and the non-performing loan rate has declined compared to a year ago in most countries. Among the various lending measures, the study of credit activity will be focused on bank credit (loans and advances) to the private sector, one of the most important indicators of bank development. Using a qualitative and quantitative analysis, the main objective of this paper is to generate and explain through a descriptive and graphical analysis, the evolution of the bank credit to the private sector for the six countries of the Western Balkans, Albania, Bosnia and Herzegovina, Kosovo, Montenegro, North Macedonia and Serbia. Countries in the region have benefited from a substantial inflow of foreign funds and cross-border loans before the crisis. When the financial crisis broke out, credit growth declined dramatically and did not begin to recover, in part due to the banking sector's reversal in external financing. The COVID-19 pandemic also brought a sudden negative revision of expectations.
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Access to credit can provide a path out of poverty. Improvidently granted, however, credit also can lead to financial ruin for the borrower. Unfortunately, the various regulatory approaches to consumer lending do not effectively distinguish between these two effects of the lending process. This Article develops a framework, based on the household balance sheet, that effectively distinguishes between lending that is welfare-enhancing for the borrower and lending that is potentially (indeed likely) ruinous and argues that the two types of lending should be regulated in vastly different ways. From a balance sheet perspective, various kinds of personal loans impact borrowers in vastly different ways. This difference depends on whether the loan proceeds are being used: (a) to make an investment (where the borrower hopes to earn a spread between the cost of the borrowing and the returns on the investment);(b) to fund capital expenditures (homes, cars, etc.);or (c) to fund current consumption (medical care, food, etc.). From a balance sheet perspective, this third type of lending is distinct. Such loans reduce wealth and are correlated with significant physical and mental health problems among borrowers. Payday loans are the paradigmatic example of the use of credit to fund current consumption. Loans to fund current consumption reduce the wealth of the borrower because they create a liability on the "personal balance sheet" of the borrower without creating any corresponding asset. The general category of loans to fund current consumption includes both loans used to fund unforeseen contingencies, like emergency medical care or emergency car repairs, and those used to make routine purchases. Consistent with the stated justification for creating these lending facilities, which is serving households and communities, the emergency lending facilities of the U.S. Federal Reserve should be made accessible to individuals facing emergency liquidity needs in a partnership with the nation's commercial banks. Loans that are taken out for current consumption but are not used for emergencies also should be afforded special regulatory treatment. Lenders who make nonemergency loans for current consumption should owe fiduciary duties to their borrowers. Compliance with such duties would require not only much greater disclosure than is currently mandated but also would impose a duty of suitability on lenders, which would require lenders to provide borrowers with the most appropriate loan for their needs-among other protections discussed here. These heightened duties also should be extended to borrowers when they take out a loan that increases the debt on a borrower 's balance sheet by more than 25%.
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If they do not make up the shortfalls, plan obligations exceed available assets, and pension plans become increasingly underfunded. [...]ROI is an important factor in assessing pension plan health. According to the National Association of State Budget Officers, state revenues in fiscal year (FY) 2020 fell 1.6% and were 3.4% lower than projected before the pandemic.4 The Returns Dilemma Public pension plan trustees often overstate expected ROI.5 The result is an understatement of the unfunded liability and postponement of future cash contributions to the plan. Since these future contributions are generally postponed indefinitely, the funding gap worsens over time and must be covered by increasing tax collections, decreasing benefit payments, or a combination of the two. According to the Wilshire Trust Universe Comparison Service, public pension plans lost a median of 13.2% in the three months ended March 31, 2020.8 State budgets are also certain to suffer from unemployment, business shutdowns, and other pandemic related revenue shortfalls and unexpected costs. The amount of deferred outflows and inflows of resources recognized in pension expense, preferably by major category, is also useful in tracing the effects of smoothed items, such as the effect of differences between expected and actual experience, changes in assumptions, and the difference between actual and expected net ROI, through the balance sheet and to pension expense in the operating statement. [...]both items are important in understanding any pension plan and can easily be incorporated into the schedule of changes in the net pension liability.
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The purpose of this study is to highlight the opportunity to develop the economic operators, to optimize the activities of central and local public institutions using the innovative Agile method and the components of integrated management on specific criteria in public institutions and economic operators. This approach starts from the following working question: how can the affected stakeholders influence the agenda of public institutions for the development of an efficient integrated management within local public organizations in order to facilitate the activities of private economic operators. This question is not an one, it appears periodically in public debates inside Romanian private companies. This research is the result of connecting the generic aspects of integrated management with the Agile Method and their applicability in private companies after highlighting the organization and operation of local public institutions;knowing that all these are the most important factors for the relationship between the private economic operator and the public institutions. In turn, these criteria become important to emphasize the role of integrated management in the current context of our lives, of all, whether we are employers, public or private employees, or whether we depend on public institutions when we are entrepreneurs.