November 2014

Zagreb International Review of Economics and Business
Volume XVII, Number 2 (November 2014)

ABSTRACTS

Market Structure and Bank Fragility: Application to the Tunisian Banking System

Abbes-Hamza Raoudha

Abstract:The purpose of this paper is to study the impact of market structure on bank fragility. We take the case of the Tunisian banking system during the period 1990-2012 and we use panel data for 10 Tunisian banks. The main conclusions show that the Tunisian banking sector fragility and risk taking by banks are explained by market structure. This structure is determined in another work where we found that banks in Tunisia operate in monopolistic competition. Indeed, the Tunisian banking system suffers from fragility that refl ects mainly the large share of nonperforming loans and whose principal cause the banking market structure.

Key words: market structure, competition, banking fragility, banking stability, market power
JEL Classification: D40, G21, L11


The Impact of Remittances on Economic Growth in Nigeria: an Error Correction Modeling Approach

Sebil Olalekan Oshota
Abdulazeez Adeniyi Badejo

Abstract: This paper investigated the relationship between remittances and economic growth in Nigeria, using an error correction modeling approach for the period 1981 to 2011. Our result revealed that in the long run, remittances impact positively on the economic growth of Nigeria. However, remittances show a signifi cant negative relationship with output in the short run. Also, while foreign aid as an external source of capital have both short and long term signifi cant infl uence on economic growth in Nigeria, its counterpart FDI can only exert positive impact on RGDP in the short run. Our result also affi rmed the significant positive role of trade in promoting economic growth, suggesting that the more open the economy, the more stimuli it has on RGDP both in short run and long run. A policy implication which may be drawn from this study is that Nigeria can improve its economic
growth performance, not only by investing on the traditional sources of growth such as investment in physical, foreign direct investment and trade, but also by strategically harnessing the contribution of remittances by ensuring their effi cient and reliable transfers.

Key words: Remittance, Economic growth, Error Correction Modeling, Nigeria
JEL Classification: F24, F43


Public Expenditure and Economic Growth in Nigeria: Evidence From Auto-Regressive Distributed Lag Specification 

Tajudeen Egbetunde
Ismail O. Fasanya

Abstract: This paper analyses the impact of public expenditure on economic growth in Nigeria during the period 1970 to 2010 making use of annual time series data. The study employs the bounds testing (ARDL) approach to examine the long run and short run relationships between public expenditure and economic growth in Nigeria. The bounds test suggested that the variables of interest put in the framework are bound together in the long-run. The associated equilibrium correction was also signifi cant confi rming the existence of long-run relationships. Our fi ndings indicate the impact of total public spending on growth to be negative which is consistent with other past studies. Recurrent expenditure however was found to have little signifi cant positive impact on growth. Therefore, government should increase its spending on infrastructure, social and economic activities.

Key words: Public Spending, Economic Growth, ARDL Cointegration, Nigeria 
JEL Classification: C51, H50


Does Governance Impact on the Foreign Direct Investment- Growth Nexus in Sub-Saharan Africa?

Kazeem Ajide
Oluwatosin Adeniyi
Ibrahim Raheem

Abstract: The central question this paper sought to tackle was “does the quality of institutions matter for the relationship between Foreign Direct Investment (FDI) and economic growth?” Using macroeconomic data on 27 Sub Saharan African (SSA) economies and six distinct measures of governance the fi ndings showed that control of corruption, political stability and government effectiveness matter for the infl uence of FDI on economic growth in SSA. This key fi nding was found to be robust even in models where these three governance indicators were interacted with FDI. Furthermore, the results from threshold-type sample splitting showed that in the sample containing countries with a higher level of governance, the positive impact of FDI on growth has larger magnitude vis-à-vis the comparator group with poorer governance indicators. This signifi cant threshold effects remained robust across specifications.

Key words: Economic growth, Direct foreign investment, Institutional quality, Sub-Saharan Africa
JEL Classification: F23, L13, O16, P20


Cognitive Structure, Managers’ Shared Social Understanding: From Psychological and Sociological Concepts to Managerial Strategic Choices

Nikša Alfirević
Jurica Pavičić
Vladimir Gnjidić

Abstract: In this paper, the cognitions of industry participants are explored, by analyzing the shared social understanding of the industry (‘mental models’, ‘industry recipes’) as a factor limiting the pursuit of innovative strategies. It is hypothesized that the managers’ interpretation of Porter’s five industry forces, within a given industry, represent the ‘cognitive’ proxy for performance, since shared cognitions represent the (self) imposed performance limitations. The empirical research has been conducted in the Croatian food & beverage industry, where CEOs of mid-sized and large enterprises have been surveyed. Initial support for this hypothesis is provided, since the perceived industry impact (measured by the INDUSTRUCT construct) has been empirically linked to the managers’ strategic behavior pattern. In addition, the discriminant analysis demonstrated that it is possible to forecast
the specifi c strategic behavior archetype by analyzing the cognition of the industry’s structure. Implications for both theory and managerial practice are discussed.

Key words: cognition, industry, structure, Croatia
JEL Classification: L22


Pre and Post Crisis Performance Measurement of Croatian Stock Market

Tihana Škrinjarić
Bruno Besek

Abstract: Performance evaluation of the stock market has been in investors’ focus for many decades. There exist a lot of models, methods and theories that try to provide answers to investors’ questions about securities, portfolio and risk management, etc. When making decisions on these topics, investors take into account different micro and macro aspects, which contribute to the stock market movements. Croatian capital market has undergone different phases of its development in the past decade. The fi nancial crisis affected the Zagreb Stock Exchange as well as it did other markets. Since then, investors are even more careful when handling and employing their resources. There has been a lack of domestic papers that deal with different aspects of performance measurement on the Croatian stock market. Thus, the aim of this paper is to perform measures of stock market development, liquidity, MPT (Modern Portfolio Theory) performance measurements and volatility in order to quantify the stock market performance in the period before and after the fi nancial crisis. In this way conclusions can be made based on the results in order to identify opportunities and threats
on the Zagreb Stock Exchange.

Key words: performance measurement, Zagreb Stock Exchange, stock market development, risk-adjusted performance
JEL Classification: C61, G11, G12


BOOK REVIEW

Eric Helleiner: 'Forgotten Foundations of Bretton Woods, International Development and the Making of the Postwar Order', Cornell University Press: Ithahka & London, 2014