Paper summaries 2008

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Full-text archive of the journal Zbornik Ekonomskog fakulteta u Zagrebu is available at the portal of scientific journals of Croatia „Hrčak“:
http://hrcak.srce.hr/zbornik-efz


Mirjana Pejic-Bach
Mirjana Demonja

DATA MINING APPROACH TO DISCOVERING TAX EVASION FROM THE TAXATION OFFICE INFORMATION SYSTEM

ABSTRACT: Tax evasion includes illegal avoidance of paying tax, where tax tributary determines by herself own value system how much tax will she pay to the government. Discovering tax evasion processes are not often efficient, and are based on subjective estimation of the taxation office employees. Data mining approach could be used for more efficient solving of the problems that are traditionally solved based solely on the expert knowledge. Goal of the paper is to develop the model of discovering tax evasion based on the taxation office information system. Linear regression model is developed that could be used for discovering tax evasion based on the data collected from the year 2001 till year 2005. Amount of the tax evaded is used as the dependent variable, while independent variables are: owner income, total revenue, and business and residential real estate bought.

KEYWORDS: tax evasion, data mining, linear regression, information system

JEL: C1, C6, H26


Zdenka Gogala
Gordan Zanic

EVALUATION OF FORECASTING MODELS BY APPLYING DOUBLE EXPONENTIAL SMOOTHING

ABSTRACT: In every economy, it is important for policymakers to create good forecasts that rely on logical methods of manipulating the data that have been generated by historical events. Time-series techniques attempt to account for changes over time by examining patterns, cycles, trends, or using information about previous time periods.
In this paper eleven forecasting models were applied to the time series in producers' price indices 1997-2006, with emphasis on evaluating the efficiency of forecasting models applied.
It was hypothesized that applying Holt's exponential smoothed forecast model to series that exhibit trend should give the best results, but the best results were obtained with the linear trend model. Holt’s double exponential smoothed model proved to be less efficient. Surprisingly, the variants of the Holt’s model with smoothing constants obtained by trials and errors method outperformed the variant with the “equivalent smoothing constant”.

KEYWORDS: Holt's exponentially smoothed forecasting model; linear trend forecasting model; MAPE; MAD.

JEL: C32, C53


Iva Condic-Jurkic
Tajana Dadic

INVESTMENTS FUNDS IN CROATIAN CAPITAL MARKETS:TRADE STRATEGIES AND MARKET TENDENCIES

ABSTRACT:
Throughout last decade, Croatian equity market, experienced rapid development that favored significant growth of mutual funds. Such funds are exclusively actively managed in Croatia. By examining whether any of Croatian mutual funds replicates stock index CROBEX, we intent to explore whether there is a room for pure index fund that would do the same job at lower cost. The baseline idea is that replicating pattern is established if observed variables exhibit a certain long run equilibrium relationship, though deviations in the short run are possible. In order to detect such relationship, bivariate Johansen cointegration approach was used. The empirical analysis suggests that 4 out of 10 observed mutual funds were cointegrated with the CROBEX, implying that these funds spontaneously followed passive investment strategy. Moreover, randomness of prices was tested in order to determine whether employment of technical analysis on Croatian equity market would lead to above-average returns.

KEYWORDS: investment fonds, CROBEX, investment strategy, cointegration, autocorrelation

JEL: G11, G23



Ana Andabaka

INSTITUTIONAL STRUCTURE FOR PUBLIC DEBT MANAGEMENT



ABSTRACT: Institutional infrastructure development presents a precondition for efficient public debt management. The paper emphasizes the significance and the role of public debt management and states public debt management goals. Adequate regulatory framework sets out the limits and the authority to borrow and issue guarantees on behalf of the state. The institution responsible for carrying out the Government's debt management policy is Debt Management Office (DMO). DMO can be organized within the ministry of finance, central bank, but it can be established as separate debt management agency as well. The paper considers institutional, organizational and functional aspect of public debt management.

KEY WORDS: Public (government) debt management, debt management goals, Debt Management Office (DMO), institutional models

JEL: H63



Josip Tica
Damira Djukec


THE IMPACT OF HUMAN CAPITAL ON ECONOMIC GROWTH IN CROATIA

ABSTRACT: This paper examines contribution of labor, capital and human capital in economic growth in Croatia. Human capital is estimated as an weighted index of educational structure of employees weighted with returns on schooling. Estimation of factor shares is based on standard elasticity of production function and typical methodology for the calculation of the Solow residual. Results have indicated that physical capital can explain dominant part of growth rates, only small part is attributed to human capital and labor is mostly insignificant.

KEYWORDS: Human capital, growth, factor shares, education

JEL: J24, O47


Mislav Josic

FOREIGN DIRECT INVESTMENTS IN AN EXPORT FUNCTION: THE CASE OF CROATIA


ABSTRACT: Foreign direct investments are of great importance for any nation but it is also good to know what effects on foreign trade they produce and under what circumstances. This paper analyses the effects of foreign direct investments on exports of goods in the Republic of Croatia and presents new findings that emerge from the investment structure. High inelasticity of export with regard to individual components of foreign direct investments is the result of unfavourable investment structure which is dominated by services sector which leaves no space for export growth.

KEY WORDS: export, foreign direct investments, FDI, production structure, elasticity, Republic of Croatia

JEL: F23


Tomislav Coric

THE RESEARCH OF CREDIT CHANNEL IN CROATIA

ABSTRACT: Recent researches of credit channel proved it's unequal intensity across different financial systems. There are several potentially constraining factors influencing the channel: size, capital, liquidity, and ownership of the bank; depth and structure of the financial system; and accessibility of non banking financial sources. The regression analysis of credit channel in Croatia is made on two data sets; group of small banks (regression 1) and two large banks (regression 2). Bank size has the constraining effect on the credit channel in Croatia. The second potentially constraining factor, but not evidenced in the paper, is the ownership.

KEYWORDS: monetary policy, credit channel

JEL: E5, E52



Fran Galetic
Visnja Golac



SURVEY RESEARCH ABOUT FOREIGN LANGUAGES KNOWLEDGE AND PERCEPTION BY STUDENTS OF FACULTY OF ECONOMICS AND BUSINESS ZAGREB

ABSTRACT: This paper is based on the research about foreign languages knowledge of the students of Faculty of economics and business University of Zagreb. The aim of the research is to analyze how many foreign languages students speak, and what is their opinion about the importance of learning languages. The research shows that the majority of students speak English, followed by German and French. The participants of the research think that the average Croatian citizen should speak two foreign languages, and the average Croatian economist three. They say, the most important languages for Croatian economists are English, German and Italian. The majority of students have plans to learn some new language in the future, and the most popular are Italian, Spanish, French and German.


KEYWORDS: foreign languages, economists, students, research, Faculty of economics and business Zagreb

JEL: A12, A22


Ivan Novak

ANALYSIS OF FOREIGN DEBT WITH THE MULTIPLE REGRESSION MODEL

ABSTRACT: The main goal of this thesis is to identify influences of certain variables on the amount of the foreign debt. Model is based on the data considered as a sample of these variables. Dependent variable in this model is foreign debt and independent variables are: interest rates with and without exchange rate clause, amount of credits, euribor-interest rate used between banks in Euro zone money market, minimum bid rate used in auctions of European central bank and exchange rate of kune for euro. Models of multiple regressions are formed and diagnostics are being done. Depending on the results of the previous models new models are being created with variables that are significant and those who are not are being left out. First model contains six independent variables and foreign debt as a dependent variable. Final model contains only three independent variables: exchange rate of kuna for euro with the shift of two periods, amount of credits and foreign debt with the shift of one period.

KEYWORDS: Foreign debt, multiple regression model, interest rates, amount of credit, exchange rate

JEL: F34, C25


Sanja Franc

COMPARATIVE ANALYSIS OF FOREIGN DIRECT INVESTMENT DETERMINANTS IN CROATIA AND SELECTED EU COUNTRIES

ABSTRACT: The last two decades were undoubtedly characterized by an increase in foreign direct investment flows on a global level. This was partly a result of an increased market liberalization and stabilization of transition countries. Consequently, the competition among countries in attracting foreign capital is also becoming fiercer, making countries create special incentives to attract foreign investors. A comparative analysis of foreign direct investment determinants was made in this paper. Croatia and twelve other EU countries were included in the analysis in order to compare certain indicators of economic development, and to notice certain advantages and weak points of the Croatian economy.

KEY WORDS: Foreign direct investments, European Union, determinants, comparative analysis.

JEL: F21, D73, J24


Ana Oluic

QUALITY OF ACCOUNTING INFORMATION SYSTEMS IN THE REPUBLIC OF CROATIA

ABSTRACT: Accounting information system represents a part of the whole information system within which information needed for business decisions are produced. Therefore, ensuring quality of the accounting information system is of high importance to management and can be assured by implementing an adequate internal control system. This paper outlines the importance of the internal control system and its contribution to the quality of accounting information. Moreover, it presents the basic determinants and factors of quality of accounting information systems, as well as the most significant results of the empirical research into the quality and quantity of control procedures within accounting information systems of Croatian companies, and recommendations for possible improvements of the quality of accounting information system in these conditions.

KEY WORDS: quality, accounting information, accounting information system, internal control system
JEL: M41


Mirna Valdevit
Irena Cibaric
Berislav Zmuk



COMPARATIVE ANALYSIS OF INEQUALITY INDUSTRY INDEX OF OPEN INVESTMENT FUNDS IN CROATIA FROM 1999 TO 2007

ABSTRACT: This paper discusses the inequality indices of open-end investment funds industry net assets in Croatia from 1999 untill 2007. Concentration of open-end investment funds' net assets is analysed through following inequality indices: concentration ratios (C4, C8 i C15), Herfindahl-Hirchman index, Theil entropy indeks, Hall-Tideman and Rosenbluht index, Gini coefficient and normalized Gini coeffcient, as well as Lorenz curve. Research shows that all the mentioned measures, except the Gini coefficient, decrease in the observed period, mainly due to the increased number of open-end investment funds in Croatia. The equality of distribution of open-end investment funds' net assets itself is not quite noticeable in reality, which is supported by the Gini coefficient values for the observed period.

KEY WORDS: inequality indices, Lorenz curve, open-end investment funds.

JEL: G23, D3, D63


Dubravka Sincic Coric
Iva Vorkapic



RESEARCH OF LINKS BETWEEN SATISFACTION WITH THE OFFER, LOYALTY AND REPUTATION IN THE BUSINESS MARKET

ABSTRACT: Customer satisfaction, loyalty, and reputation of an industrial source are in the focus of many researches. It is known that loyalty affects profitability, and therefore motivates enterprises to develop long-term customers' relationships. Moreover, when choosing the supply source, customers find product mix and reputation to be important decision making criteria. The research results presented in this paper confirm theoretical assumptions regarding correlations between the variables. All three pairs of variables (relation between customer satisfaction and loyalty; customer satisfaction and reputation; and reputation and loyalty) proved positive and statistically significant correlations.

KEY WORDS: Customer satisfaction, loyalty, reputation, business-to-business markets

JEL: M31


Ilko Vrankic

EXTENDED UTILITY FUNCTION AND INVERSE DEMAND FUNCTIONS

ABSTRACT: Quasiconcavity of the direct utility function and quasiconvexity of indirect utility function are mutually dual properties, whereby it is much harder to justify quasiconcavity. In this paper we start from the indirect utility function and demonstrate in an original way that the derived direct utility function must be quasiconcave. Hereby the key role is played by the normalized variables which make the basis for the definition of the extended utility function. This new concept significantly simplifies Hotelling-Wold identity in an original way. Such simplification has so far been unknown to scientific community.

KEY WORDS: quasiconcavity, quasiconvexity, duality, extended utility function, inverse demand functions.

JEL: D11


Natasa Kurnoga Zivadinovic
Petar Soric


CLUSTER ANALYSIS OF CROATIAN COUNTIES DEPENDING ON EUROPEAN UNION PRE-ACCESSION FUNDINGS

ABSTRACT: Croatia exhibits high disparities in regional development, particularly due to areas devastated by war and facing demographic, social and economic difficulties. Therefore in this paper Croatian counties are classified by their absorption capacity of European Union pre-accession programs. Namely, from the beginning of its Euro-integration route until today, Croatia has had CARDS, PHARE, ISPA, SAPARD and IPA programs at its disposal. Each county is assigned the amount of founds that has been obtained by its legal persons from the mentioned EU sources. The analysis has additionally been extended by two related variables: GDP per capita and the number of registered legal persons by counties. That way an effort was made to clarify the EU pre-accession funds’ true contribution to the reduction of economic disparities among Croatian counties. For the purposes of counties classification cluster analysis was applied. It was shown that counties can be classified in four clusters, where The City of Zagreb is sorted out as a separate cluster with the highest absorption power.

KEYWORDS: pre-accession programs, multivariate analysis, cluster analysis, Ward’s method, K-means method

JEL: C2, F15


Sasa Jaksic

IMPACT OF MONETARY AGGREGATE M4 AND INTEREST RATES ON CROBEX INDEKS

ABSTRACT: In economic literature one can find different opinions on the direction and magnitude of relationship between macroeconomic variables and variables that proxy for financial markets. More recent research has shown statistically significant impact of macroeconomic variables and variables that proxy for financial markets in developed countries as well as in developing countries. We are interested if relationship between these variables exists in Croatian economy as well. Johansen’s cointegration approach is applied to study relationship between variables of interest in the long run and in the short run. Results are compared with similar studies and economic theory.

KEYWORDS: CROBEX, cointegration, Johansen.
JEL: E5, C32


Boris Tusek
Davor Filipovic
Ivana Pokrovac


THE ROLE OD AUDITING COMMITTEE IN INCREASING THE EFFICIENCY OF EXTERNAL AND INTERNAL MECHANISMS

ABSTRACT:
External auditing work quality and also the supervisory board work quality are essential for the good corporate governance practice. A relationship between external auditing and the supervisory board increasingly depends on the audit committee. Therefore, this paper analyses the impact of the audit committee on higher efficiency of external auditing and the supervisory board. Based on the conducted empirical research, by way of surveying, the developed hypothesis, which states that the audit committee, as a subcommittee of the supervisory board, has a direct impact on higher efficiency of both external auditing and the supervisory board, is being tested. Before the analysis of the audit committee impact on higher efficiency of external auditing and the supervisory board, analysis and synthesis methods, as well as induction and deduction methods are used in order to examine the supervisory board role and the role of the audit committee in the corporate governance process. Additionally, theoretically relevant and methodological aspects of external auditing are also being analyzed.

KEY WORDS: external auditing, supervisory board, audit committee.

JEL: M41

Maja Vidovic

THE DEVELOPMENT LEVEL OF KNOWLEDGE MANAGEMENT PRACTICE IN CROATIA


ABSTRACT: In contemporary business environment knowledge retains key position as the only resource capable of providing competitive advantage. This makes knowledge management one of the basic techniques of modern management that ensures optimal use of this valuable resource as well as building success based on knowledge. Therefore, the purpose of this paper was to explore the development of knowledge management practice in Croatia. Analysis of knowledge management practice is based on the data collected from research conducted in large Croatian companies, which provided 41 knowledge management indicators. Research proves that large Croatian companies have started to manage their knowledge. However it also indicates relatively undeveloped systematic knowledge management practice. Likewise, collected indicators specify that out of five key factors influencing the success of knowledge management, information technology is the most developed factor in large Croatian companies while knowledge management measurement is the least developed factor.
KEY WORDS: knowledge management, knowledge management indicators, Croatia
JEL: M1


Hrvoje Josic

COMPARATIVE ANALYSIS OF CROATIAN EXTERNAL DEBT INDICATORS AND TRANSITIONAL COUNTRIES

ABSTRACT: The goal of this paper is to access and evaluate Croatian external debt indicators through comparative analysis with transitional countries in the region. The definition of external debt and debt indicators are given in theoretical part of the work and in the analitical part external debt indicators are explained and calculated in the observed period (1999.-2006). External debt of Croatia is accessed and compared with transitional countries throughout basic structural indicators.

KEY WORDS: external debt, debt indicators, Croatia
JEL: F34


Vesna Brcic Stipcevic
Sanda Renko



WHAT IS THE EXTENT OF STUDENT POPULATION CONSUMER AWARENESS?


ABSTRACT: Due to intense competition in every segment of economy, growing number of products and services on the market and various forms of business, consumers face with the violation of their basic consumer rights. The problem is much bigger in the case that consumers are not interested for effective involvement in the protection of their consumer rights. A survey carried out on the sample of Croatian respondents by the research agency GfK confirmed that fact. Those findings inspired the authors of this paper to investigate whether the sample of higher educated respondents also characterise low level of consumer interest for the consumer protection and the low level of knowledge of the legal basis of consumer protection in Croatia. Therefore, the study on the sample of students of the Faculty of the Economics and Business was conducted. The findings showed the low level of satisfaction with the actual consumer protection in Croatia and low level of interest for the actions in the area of consumer protection. However, majority of respondents were familiar with the legal framework for the consumer protection in Croatia and with the Consumer protection Act.

KEY WORDS: Consumer protection, the Consumer protection Act, Croatia
JEL: D18


Vinko Baric
Sime Smolic

HEALTH CARE EXPENDITURE PERSPECTIVES – CASE OF CROATIA


ABSTRACT: Health care expenditure control becomes more relevant issue in modern world. There are few reasons why health care spending expansion appears as a heavy problem for one country. Health insurance makes possible for population to have health care at lower then production costs. Hence moral hazard issue takes place. Individuals consume more health care, now having lower marginal utility on their health status.
Aftermath an increase in social health insurance contribution rate, state budget payments or increase in co-payments can arise. Finally all that measures might increase the number of individuals having less health care than before the change in health sector.
The most common measures concerning that is in reducing resources not having relevant, or having minor contribution in health care production and introducing some changes through health care reforms.
In this paper health care expenditure in transition economies will be analyzed with special reference on Croatia.

KEY WORDS: health expenditure, health insurance, transition economies, health care, income.
JEL: I18


Boris Sisek


QUALITY-SATISFACTION OF ALL STAKEHOLDERS

ABSTRACT: The paper analyzes the evolution of quality management system resulting, above all, from changes in the external environment of companies. The new circumstances have brought about the issue of corporate social responsibility and the need to respect interests (stakes) of other stakeholders apart from owners. This has led to the development of stakeholder approach to quality management which aims to achieve business excellence and satisfy the expectations of all stakeholders, that is, delivering stakeholder value. However, it is not possible to achieve business excellence as a distinct competitive advantage, if a company is not entrepreneurially oriented. That means meeting prerequisites necessary for continuous innovation which is the source of competitive advantage. The support and development of innovation presupposes favourable work environment, adequate human resources management, an entrepreneurially oriented organizational culture and a balance between individual initiative and cooperative behaviour.

KEY WORDS: quality management, business excellence, stakeholder approach, corporate entrepreneurship, organizational culture
JEL: M1


Vladimir Cavrak
Tomislav Gelo
Dominik Pripuzic


MODELS OF SUPPORT FOR UNDERPRIVILEGED HOUSEHOLDS WITH THE EXAMPLE OF ENERGY SPENDING IN THE EUROPEAN UNION


ABSTRACT:
Campaign against poverty is one of the main priority of the EU and their members. The Lisbon Strategy, as an action and development plan for the EU was set out by the European Council in Lisbon in 2000. Its aim is to make the EU "the most dynamic and competitive knowledge-based economy in the world capable of sustainable economic growth with more and better jobs and greater social cohesion, and respect for the environment by 2010". Increase of energy prices have negative effect on energy expenditure what deteriorate prosperity of nation. All countries around the world, reach and pour, have problem with poorness. Different development programs and strategies adopted by government improve social status. Problem of poorness is especially actual in transition countries like Croatia.
This article analysis most used models like lifeline tariffs, subvention for energy expenditures, energy efficiency measures and others models used to decrease energy poorness in EU and transition countries.

KEY WORDS: energy, models, measures, social aspects, poverty
JEL: Q4, I3


Vlasta Bahovec
Ksenija Dumicic
Anita Ceh Casni

MODELLING CROATIAN TOURISM DEMAND USING MULTIPLE LINEAR REGRESSION ANALYSIS


ABSTRACT: The purpose of this paper is to present an econometric model of Croatian tourism demand for the period between first quarter 1998 and fourth quarter 2007, and to investigate which factors have the most influence on tourism demand approximated by total tourist nights. In order to achieve that, Multiple Regression analysis was applied. Due to heteroskedasticity, tourism demand was modeled using GARCH (1;0). The results of the analysis suggest that the most important determinants of tourism demand in Croatia are real tourist revenues and seasonal factors.

KEY WORDS: tourism demand, multiple linear regression, Augmented Dickey Fuller test (ADF), multicolinearity, heteroscedasticity
JEL: C2, L83


Sanja Broz Tominac

Book review: Drury, Colin: “Management and cost accounting“

JEL:Y3
 


Alka Obadic

Book review: Müller, Walter: "Transitions from Education to Work in Europe" – The Integration of Youth into EU Labour Markets

JEL:Y3


Hrvoje Simovic

Book review: Greenspan, Alan: „Age of the Turbulence“

JEL:Y3