WSEAS Transactions on Business and Economics

Print ISSN: 1109-9526
E-ISSN: 2224-2899

Volume 12, 2015

Notice: As of 2014 and for the forthcoming years, the publication frequency/periodicity of WSEAS Journals is adapted to the 'continuously updated' model. What this means is that instead of being separated into issues, new papers will be added on a continuous basis, allowing a more regular flow and shorter publication times. The papers will appear in reverse order, therefore the most recent one will be on top.

Volume 12, 2015

Title of the Paper: Multicriteria Optimization of Interactions Between the Main and Service Subdivisions in Oil Companies

Authors: Michael Geraskin, Olga Mazurmovich

Abstract: Based on the analysis of integrated corporate structures of Russian oil industry and in view of multi-criteria modeling methodology the multi-objective optimization model of intra-corporate pricing of sectors in oil production, petroleum products refining and sales, as well as oil servicing sectors has been developed. Analysis of pricing mechanism optimization by corporation sectors in oil industry was developed and agreed in accordance with maximin principle structure of intra-corporate prices.

Keywords: multi-criteria optimization, transfer price, business process, integrated corporate system, oil servicing activities

WSEAS Transactions on Business and Economics, ISSN / E-ISSN: 1109-9526 / 2224-2899, Volume 12, 2015, Art. #42, pp. 441-452

Title of the Paper: An Empirical Analysis of the Impacts of External Capital Inflows and World Oil Price on Africa's 'Largest' Market

Authors: Christian Nedu Osakwe, Nahanga Verter, Samuel Antwi Darkwah

Abstract: There is a continued debate that external financial resources complement the limited domestic funds for growth, especially in developing countries, while others are of the view that external finances mostly impede economic growth and development. This article is an attempt to analyze the inflows of some external financial capital such as FDI, external debt, migrants’ remittances and ODA, along with world oil price on economic growth (captured by real GDP) in Nigeria. In order to capture both the short run and the long run effects of the variables on the economy, an econometric technique, Nerlove’s Partial Adjustment Model (PAM) was employed using yearly data from 1981 to 2012. Our results suggest that in both the short run and long run, FDI and world oil price will boost economic growth in Nigeria. Not too surprisingly, our findings equally suggest that the relationship between world oil price and economic growth may not be linear after all and we have evidence to show that this relationship is likely concave in nature. In the same vein, further findings show that migrant remittance is likely to have an adverse effect on the nation’s real GDP, while external debt and ODA do not make any significant contribution to the nation’s real GDP. We argue that for Nigeria to fully benefit from the flows of global finances, policy makers should on an ongoing basis weigh the costs and benefits associated with foreign capital inflows to the country. As is often the case, no country can compete favorably on the world market without prudent resource management and sound investment climate. Undoubtedly, with effective and efficient utilization of external financial resources, sound monetary and fiscal policies, institutional reforms in all sectors of the economy, Nigeria can witness not only accelerated but also more inclusive growth in the present era of financial globalization.

Keywords: economic growth, external resources, FDI, ODA, oil price, real GDP, remittances

WSEAS Transactions on Business and Economics, ISSN / E-ISSN: 1109-9526 / 2224-2899, Volume 12, 2015, Art. #41, pp. 433-440

Title of the Paper: Stability in ASEAN+3 Exchange Markets: An EGARCH-M Approach

Authors: Md. Saifur Rahman, Farihana Shahari

Abstract: This paper empirically investigates the advancement of exchange markets’ stability and comovement after the ASEAN+3 financial cooperation agreement. The study employs EGARCH-in-mean approach and uses daily exchange rates. The findings indicate that: 1) the exchange market volatility is resulted from regional markets’ shocks during both of pre and post-agreement periods, 2) the ASEAN+3 exchange markets progressed substantial development during post-agreement, 3) both of high and low income economies are improving the exchange market stability in a cooperative way regardless of income level, and 4) the overall impact of ASEAN+3 financial cooperation leads to stabilize the regional exchange markets.

Keywords: ASEAN+3, financial integration, Exchange market, E-GARCH, exchange markets, market stability

WSEAS Transactions on Business and Economics, ISSN / E-ISSN: 1109-9526 / 2224-2899, Volume 12, 2015, Art. #40, pp. 426-432

Title of the Paper: Alternative Methods to Evaluate the Arbitrage Opportunities

Authors: Noureddine Kouaissah, Sergio Ortobelli Lozza

Abstract: In this paper, we present alternative methods to evaluate the presence of the arbitrage opportunities in the market. In particular, we investigate empirically the well-known put-call parity no-arbitrage relation and the state price density. First, we measure the violation of the put call parity as the difference in implied volatilities between call and put options that have the same strike price, the same maturity and the same underlying asset. Then, we examine the nonnegativity of the state price density since its negative values immediately correspond to the possibility of free-lunch in the market. We evaluate the effectiveness of the proposed approaches by an empirical analysis on S&P 500 index options data. Moreover, we propose different approaches to estimate the state price density under the classical hypothesis of the Black and Scholes model. In this context, we use two different methodologies to evaluate the conditional expectation and its relationship with the state price density. Firstly, we examine the real mean return function using local polynomial smoothing technique. Then, we evaluate the conditional expectation using the real probability density. According to the hypothesis of the Black and Scholes model, we are able to derive a closed formula for approximating the conditional expectation with the risk neutral probability. Finally, we propose a comparison among two estimators of the state price density.

Keywords: arbitrage opportunities, put-call parity, state price density, conditional expectation estimators

WSEAS Transactions on Business and Economics, ISSN / E-ISSN: 1109-9526 / 2224-2899, Volume 12, 2015, Art. #39, pp. 416-425

Title of the Paper: Modelling and Forecasting of the Annual Inflation Rate in the Unstable Economic Conditions

Authors: Josef Arlt, Markéta Arltová

Abstract: The monthly time series of the annual inflation rate is defined as the growth rate of the monthly time series of the consumer price index with respect to the corresponding month of the previous year. The annual inflation rate might not always be the appropriate measure of inflation, mainly due to the fact that it does not provide up-to-date information on the level of inflation. The harmonic analysis shows that the annual inflation rate deforms and delays the information with respect to the monthly inflation rate. This conclusion can be extremely important in the forecasting of the inflation rate, as well as in the process of economic decision making. The non-traditional method for the construction of the annual inflation rate forecasts is proposed. The advantage is that it is able to catch breaks and other instabilities in the future development of the time series.

Keywords: inflation rate, harmonic analysis, linear filtration, forecasting

WSEAS Transactions on Business and Economics, ISSN / E-ISSN: 1109-9526 / 2224-2899, Volume 12, 2015, Art. #38, pp. 410-415

Title of the Paper: Trading of Emission Discharge Permits in a Common Pool Market (A Gross Pool Formulation)

Authors: Keith Willett, Anetta Caplanova

Abstract: The modern-day version of a property right system for environmental quality is the cap and trade policy where the property right traded is an environmental discharge permit (EDP). Trading EDPs can become problematic with the occurrence of “hot spots,” but this is easily resolved by using a trading framework that combines regulatory tiering with a common pool permit trading market. In this paper we design and implement a common pool market trading model with regulatory tiering. This framework is an optimization-based system which is used to compute EDP trading solutions and the actual calculation of permit trades based on a linear programming model. The property right traded is an EDP and the regulatory tiering component is introduced in the common pool market model constraint set as a set of regional pollution constraints. The key feature of the permit trade is modeling system is that all EDP trades are within a common pool and no bilateral trades are allowed to occur. The actual trading model is formulated as a gross pool, where the decision variables are the number of EDPs each market participant desires to hold and the market manager calculates net trades after the market is solved, given participants’ initial EDP holdings. The linear programming model is used to develop a set of numerical simulations demonstrating the functioning of the common pool market model formulated as a gross pool. The numerical exercise also demonstrates the model usefulness for dealing with the specific environmental problems from the policy perspective.

Keywords: environmental pollution policies, air pollution, permit trading, regulatory tiering, common pool market, gross pool market

WSEAS Transactions on Business and Economics, ISSN / E-ISSN: 1109-9526 / 2224-2899, Volume 12, 2015, Art. #37, pp. 400-409

Title of the Paper: Crude Oil Market Dynamics through TVEC-Copula-DCC-GARCH Models: Improving the Variance Reduction of Hedging Strategies.

Authors: Alexander Souza Block, Marcelo Brutti Righi

Abstract: As observed in several studies, crude oil returns are leptokurtic and skewed, thus the traditional assumption of normality may be unrealistic. However Copula functions are perfect to deal with this characteristics and TVEC model is very efficient in capturing market instability. This paper proposes to analyze the applicability of TVEC-Copula-DCC-GARCH methodology to model crude oil volatility. To provide an empirical test, we estimate an out-sample hedge during European Crisis, comparing its results and efficiency with other models analyzed in a previous study. Results show that the Copula-DCC-GARCH presents a superior fit, which promotes a more efficient and accurate hedge.

Keywords: TVEC-Copula-DCC-GARCH, political and economic instability, crude oil regimes, dynamic volatility, improved hedge ratios

WSEAS Transactions on Business and Economics, ISSN / E-ISSN: 1109-9526 / 2224-2899, Volume 12, 2015, Art. #36, pp. 388-399

Title of the Paper: Environmental Pressures, Organizational Relationships and the Wealth Financialization Phenomenon

Authors: Andréia Ribeiro Da Luz

Abstract: This article aims to analyse how the inter-organizational relationships influence the adoption of practices for the allocation of financial resources by manufacturing industries in face of environmental pressures. The wealth financialization phenomenon was chosen using the practices of financial resources allocation to investigate if it is present in organizations. This research is both a qualitative and quantitative study of descriptive-exploratory nature, in which we considered information belonging to 110 Small and Medium processing industries in the State of Parana (southern Brazil) in period of 2013. The study is based on concepts developed in the Sociological Institutional Theory and Economic Sociology. The results suggest that the process of financialization of wealth as recurring phenomenon in the literature, in particular in the Economy, is still incipient in Brazil and is not institutionalized for small and medium-sized enterprises researched in this work, which ended up being shown in "intention to".

Keywords: Economy, Finance, Inter-organizational Relationships, Financialization of wealth

WSEAS Transactions on Business and Economics, ISSN / E-ISSN: 1109-9526 / 2224-2899, Volume 12, 2015, Art. #35, pp. 377-387

Title of the Paper: The ABCD Validation Management Tool for Business Excellence Models

Authors: Sameh M. Saad, Maan N. Al Afifi

Abstract: This paper introduces a new developed validation management tool for business models using ABCD Model Analysis. We define the ABCD Management as “Achievement Because Continuous Development” and the validation tool based on the set of steps i.e. Analyse, Build, Check, and then Decide. The core of the validation tool development is formed by combination of well-known quality management tools: Deming Cycle, RADAR logic and using the application of statistical tools: structural equation modelling, SPSS and AMOS. The approach used in this paper is to extend the well-known quality management methods combined with the available Structural Equation Modelling and AMOS for building and validating the business excellence models. The design of ABCD Model Analysis is based on a new method of direct and/or indirect path valuation that divides relationships paths into categories based on ABCD alphabetical coding, and provide a systematic, sequential manner and logical view based on ABCD rule of thumb that enable the analysing process to take place with ease and accuracy prior to and during the validation process. The study shows that the ABCD Model Analysis is a very useful management tool for validation due to its systematic, simple, easy to remember, implement and to refine. In addition, the Path Analysis in the ABCD Model is a better version of the known Path Analysis techniques.

Keywords: Validation Process, ABCD Model Analysis, Business Excellence Model

WSEAS Transactions on Business and Economics, ISSN / E-ISSN: 1109-9526 / 2224-2899, Volume 12, 2015, Art. #34, pp. 363-376

Title of the Paper: Modeling the Sovereign Spreads via Threshold Cointegration: Evidence from Brazil

Authors: Beatriz Vaz De Melo Mendes, Claudio Cardoso Flores

Abstract: This paper analyses the dynamics of the Brazilian sovereign spread and its statistically significant connection with some selected variables by applying linear and threshold cointegration methods. We statistically test the effects of the recent subprime crisis finding strong equilibrium relations, stable enough to exhibit cointegrated behavior before and after the subprime crisis. The assumption of a threshold, linked to a certain level of market risk aversion, refines the methodology and brings flexibility to the modeling strategy. The final VECM model indicates the External debt and the volatility index VIX as the key drivers of the Brazilian sovereign spread. The findings suggest that, with the onset of the crisis, an automatic mechanism of adjustment between the spread and the VIX came into play while the market experimented an increasing risk aversion feeling. It becomes clear from the results that current beliefs on the economic fundamentals are not sufficient to deal with the market turbulence under a global crisis. We propose a methodology for assessing the robustness of the optimal threshold solution.

Keywords: Threshold Cointegration, VECM models, Sovereign Risk, Emerging Markets

WSEAS Transactions on Business and Economics, ISSN / E-ISSN: 1109-9526 / 2224-2899, Volume 12, 2015, Art. #33, pp. 354-362

Title of the Paper: Modeling Non-Linear Dependence between Risk and Return in Latin Markets

Authors: Sergio Guilherme Schlender, Marcelo Brutti Righi, Paulo Sergio Ceretta

Abstract: Financial theory is based on the trade-off between risk and return. However there is not a mathematical formulation of this dependence. Therefore, in this paper we estimate the dependence, through copula families, between risk and return in Latin markets, taking into consideration the U.S. market. For that, we use data from S&P500, Ibovespa, merval and IPC daily prices from January 2009 to December 2010, totaling 483 observations. In order to estimate risk we use a copula-based multivariate GARCH model. To test the copulas? fit we use an adaptation of the Cramér-von Mises statistics. Results indicate that although linear correlation is not significant, risk and return are dependent on Latin markets. Further, there is a difference in the relationship between the studied markets.

Keywords: Risk Analysis, Multivariate Volatility Modeling, Non-Linear Dependence, Copula-GARCH Model, Copulas Families, Latin Markets

WSEAS Transactions on Business and Economics, ISSN / E-ISSN: 1109-9526 / 2224-2899, Volume 12, 2015, Art. #32, pp. 340-353

Title of the Paper: Evidence of Dependence Between Volume, Returns and Volatility: A Correlation of Distances Approach, Using Intraday Data for all Ibovespa Stocks

Authors: Alexandre Silva Da Costa, Paulo Sergio Ceretta, Fernanda Maria Müller

Abstract: The relationships between volume, returns and volatility have been vastly explored in finance focusing developed markets. We present our approach to the Brazilian market, investigating the dynamics of sixty seven companies that are included in the portfolio of the Ibovespa index, the most influent index in South and Latin America. We utilize a strong statistical tool to measure association, the correlation of distances and measured volatility using squared returns. We find, for the entire sample, strong evidence of association between their returns and volatility. We also find significant association between volume and returns. We found only moderate interconnections between volume and lagged volatility, an indication of causality. Lastly, our results show some association of volume and returns.

Keywords: Correlation of distances, intraday, volatility, volume, returns, Ibovespa

WSEAS Transactions on Business and Economics, ISSN / E-ISSN: 1109-9526 / 2224-2899, Volume 12, 2015, Art. #31, pp. 330-339

Title of the Paper: Application of ELECTRE II in Brazilian Liquefied Petroleum Gas Distributor

Authors: Marcos Felipe Falcao Sobral

Abstract: The objective of this study is to promote the use of multicriteria decision method ELECTRE II to support the customers ranking in liquefied petroleum gas distributer, located in the Northeast of Brazil. The company has difficulties to rank the customers their factory, causing various problems like the reduction of performance indicators and high costs with overtimes of employees. Finally, is presented a results comparison obtained by the method with the current results, performing a utilization viability analysis of method for this problem.

Keywords: Multicriteria Decision Aid, Electre II, Liquefied Petroleum Gas, Logistics, Supply Chain Management

WSEAS Transactions on Business and Economics, ISSN / E-ISSN: 1109-9526 / 2224-2899, Volume 12, 2015, Art. #30, pp. 325-329

Title of the Paper: Twinning Strategy: Is it a Vehicle for Sustainable Organizational Learning and Institutional Capacity Development?

Authors: Nibedita Saha, Petr Sáha

Abstract: In the era of globalization and internationalization research organizations are lagging behind to enhance their organizational performance and to keep pace with the ever-changing world. This article presents the idea of twinning strategy as a mechanism for sustainable organizational learning and enhancing research performance under globalized in conditions. The development of organizational learning seems to promise one of the answers to the challenges created by increased international competition and the growing importance of innovation in the knowledge economy. Twinning of research organization is an ongoing debate of Horizon 2020 for advancing the policy and practice of capacity building in international development cooperation.The purpose of this article is to assess why twinning is an instrument for building and strengthening institutional capacity?. Twinning approach specifically address networking gaps and deficiencies between the research institutions of the low performing member states and regions that mitigate the stress through collaboration between internationally-leading counterparts at European Union (EU) level. By doing so this study not only indicate that twinning is the unique method for sustaining organizational learning and capacity building but also it shows how the distinctive features of twinning strategy can be the key of institutional development.

Keywords: competitiveness, capacity building, excellence, globalization, institutional development, organizational learning, sustainable, strategy, twinning

WSEAS Transactions on Business and Economics, ISSN / E-ISSN: 1109-9526 / 2224-2899, Volume 12, 2015, Art. #29, pp. 317-324

Title of the Paper: On the Pass-Through of Food Prices to Local Inflation in MENA Countries

Authors: Ansgar Belke, Jouzeph Awad

Abstract: This paper investigates the effects of global food price shocks to consumer prices in Middle East and North African (MENA) countries using a multiple regression model to examine the short- and long-term impact. The paper finds significant relationships between global food price and local inflation and these relationships vary dependent on the studied countries. The effect of GDP growth on CPI inflation is significant with different lags. We find that countries with a similar long-run effect are related with each other through synchronized business cycles. We could find evidence that the pass-through impact is different regarding the country-specific agriculture production level but not the income level.

Keywords: Food price pass-through, Consumer Price Index, MENA region

WSEAS Transactions on Business and Economics, ISSN / E-ISSN: 1109-9526 / 2224-2899, Volume 12, 2015, Art. #28, pp. 307-316

Title of the Paper: Comparative Analysis of Working Capital Management of MSMEs in India

Authors: Viktor Kovelskiy

Abstract: As the world economy develops, those who decide to start or to develop business and those who analyze world trends, have to learn different studies from different countries to make right decision and to be proficient. The BRIC (Brazil, Russia, India and China) countries became strong driving force and it is quite a mistake to underestimate potential of these countries. The study you are reading now was conducted to analyze the working capital management of various micro, small and medium enterprises in Ludhiana, a city and a municipal corporation in Ludhiana district in the Indian state of Punjab. It is the largest city in the state, with an estimated population of more than 3.5 million. We’d like to stress that taking this big industrial city as an example is very revealing, in all BRIC countries such cities with such infrastructure are dominating in economics development, taking a bigger slice of pie and any scholar can analyze tendencies and build forecast on a base of economic development of these cities. To make this study objective, we carried out it in country other than our residential country by taking into consideration 5 samples each from micro, small and medium enterprises from Ludhiana, India. An effort was made in order to analyze and compare their working capital requirements. The study aimed to examine different sources of financing working capital and to suggest effective measures for the effective utilization of the working capital. For achieving the stated objectives, surveys were conducted by visiting the MSMEs personally in order to get the predesigned-structured questionnaires filled. Required information was collected from the respective managers managing the working capital requirements of the MSMEs.

Keywords: Working capital management, MSMEs, Working capital finance, capital budgeting, pay-back period, accounting rate of return

WSEAS Transactions on Business and Economics, ISSN / E-ISSN: 1109-9526 / 2224-2899, Volume 12, 2015, Art. #27, pp. 289-306

Title of the Paper: Impacts of Local Planning to Competitiveness Index Change – Using Approximate Initial Analysis of the Czech Regions

Authors: Viktor Prokop, Jan Stejskal

Abstract: Strategic planning must help to increase the competitiveness of the region. This relation becomes more important at the regional level in recent years. The aim of this article is usage of approximate initial analysis in Czech regions and to analyze the impact of the municipal strategic planning on their competitiveness. The approximate initial analysis uses the free available data from websites of the municipalities and allows doing the initial and fast analyses in some selected fields. Analysis was performed on all Czech regions of NUTS 3 size. The paper demonstrates the methodology of the initial analysis in practice. It compares the results with the index of competitiveness of the regions. The results demonstrate the applicability of this initial analysis in practice - the results showed that the present situation is unfavorable and the Czech Republic and most of its regions are falling in evaluation of competitiveness.

Keywords: competitiveness index, economic development, local planning, region, strategic planning

WSEAS Transactions on Business and Economics, ISSN / E-ISSN: 1109-9526 / 2224-2899, Volume 12, 2015, Art. #26, pp. 279-288

Title of the Paper: The Relationship Between Oil and Corn Prices: Break-Time Versus Regime-Switching Analysis

Authors: Paulo Sérgio Ceretta, Ani Caroline Grigion Potrich, Pâmela Amado Tristão

Abstract: The objective of this work is to study the long-run relationship between corn and oil prices. It is based on the study of Elmarzougui and Larue [6], who studied the breaks in the regimes of these products. However, our research not only uses more data but also analyzes temporal breaks according to Markov regimes of Cointegration and breaks along the period. Both approaches identified a stable relation between prices due to the stationarity of the error; however, the Markov approach showed greater accuracy in the short-run, which represents a gain of information in this model.

Keywords: Corn, Oil, Markov regimes, Cointegration, Temporal breaks, Commodities

WSEAS Transactions on Business and Economics, ISSN / E-ISSN: 1109-9526 / 2224-2899, Volume 12, 2015, Art. #25, pp. 271-278

Title of the Paper: Deviation from Covered Interest Parity and the Influence of Arbitragers and Speculators in Asian Currency Markets

Authors: Suresh Ramanathan, Kwek Kian-Teng

Abstract: Covered interest parity occurs when the no-arbitrage condition is satisfied with the use of a foreign exchange forward contract to hedge against exposure to foreign exchange rate risk when interest rate parity is covered. Agents in the foreign exchange market will be indifferent to the available interest rates in the two currencies because the forward exchange rate achieves equilibrium, thereby eliminating the potential to realize covered interest arbitrage profits. Covered interest rate parity holds when there is open capital mobility. In this paper we identify deviation from covered interest parity that incorporates the onshore and offshore foreign exchange forward market of Emerging Asia. The model is able to identify the behavioural pattern of arbitragers and speculators in foreign exchange forward markets. This exercise provides fresh insights for central banks and financial regulators in managing capital mobility in a prudent and effective manner.

Keywords: Capital Mobility Covered Interest Parity Model, Arbitragers, Speculators, Onshore and Offshore Foreign Exchange Forward Market, Arbitrage Profit and Loss, Emerging Asia

WSEAS Transactions on Business and Economics, ISSN / E-ISSN: 1109-9526 / 2224-2899, Volume 12, 2015, Art. #24, pp. 261-270

Title of the Paper: Investment Grade, Defined by an Economic and Financial Indicator

Authors: Sergio Cavagnoli Guth, Maria Emilia Camargo, António Jorge Fernandes, Maria Elizabeth Pereira Teixeira Rocha

Abstract: Regarding the goal, the scope of this study was the development of an economic and financial indicator aiming to delimit the investment grade that companies present in their corporate structures, through a set of economic and financial indexes linked to liquidity, profitability, debt, and yield, from economic and financial demonstrations of the corporations studied. This study is featured in the context of applied typology, of descriptive goal with bibliographic outlining, in the extent of the issue it is features as quantitative, comprising the population of 70 Brazilian corporations recognized by the international certifying agents Standard & Poor’s, Moody’s and Fitch Ratings, which held the corporate investment grade in the year of 2008. The conclusions of the study were based in the results presented by the evolution of the statistical treatment, which were shown to be consistent for the model developed. The reliability of the model of corporate investment grade from the factorial analysis was testified by the Cronbach’s Alpha coefficient that presented value of 0.768, therefore indicating satisfactory consistence to the study.

Keywords: Investment Grade, Indicator, Corporations

WSEAS Transactions on Business and Economics, ISSN / E-ISSN: 1109-9526 / 2224-2899, Volume 12, 2015, Art. #23, pp. 249-260

Title of the Paper: Increasing Foreign Banks’ Presence through M&As: The Case of Turkey

Authors: Eda Orhun

Abstract: Turkey had been a closed economy until the beginning of 1980s. However, this changed once the government adopted liberalization and de-regulation programs at that time. Decreasing entry barriers and approved foreign ownership in the banking sector naturally triggered more foreign bank entry in the coming years. This trend got changed in nature especially after the currency crisis of 2001. Recovering from the crisis stronger with a growing economy, Turkish banking sector with its technologically advanced banks evoked the appetite of foreign counterparts that mostly chose the entry method of M&As. This created the empirical fact that while the number of foreign banks have been increasing, the number of (local) private banks have been decreasing due to these acquisitions in the decade of 2000s. This paper presents data for the mentioned result together with the review of Turkish banking sector starting from 1980s. The paper also examines the major deals that were realized in the last decade and tries to understand the reasons of increased foreign bank presence by outlining the ‘pull factors’ of the Turkish economy.

Keywords: acquisitions, de-regulation, foreign bank entry, globalization, pull factors

WSEAS Transactions on Business and Economics, ISSN / E-ISSN: 1109-9526 / 2224-2899, Volume 12, 2015, Art. #22, pp. 243-248

Title of the Paper: Maximum Likelihood Approach to Markov Switching Models

Authors: Luca Di Persio, Matteo Frigo

Abstract: The present paper concerns a Maximum Likelihood analysis for the Markov switching approach to the forecasting problem of financial time series. In particular we model the volatility parameter characterizing time series of interest as a state variable of a suitable Markov chain. Latter formulation is based on the idea of describing abrupt changes in the behaviour of studied financial quantities due to, e.g., social or political factors able to substantially change the economic scenarios we are interested in. A case study for the NASDAQ IXIC index in the period 3rd Jan 2007 - 30th Dec 2013 is also provided.

Keywords: Maximum Likelihood, Markov Switching, State Space Model

WSEAS Transactions on Business and Economics, ISSN / E-ISSN: 1109-9526 / 2224-2899, Volume 12, 2015, Art. #21, pp. 239-242

Title of the Paper: The Dynamics of the Italian Electricity Generation System: an Empirical Assessment

Authors: António Cardoso Marques, José Alberto Fuinhas, Tiago Lopes Afonso

Abstract: This article focuses on how electricity generation sources interact with each other and with economic activity in Italy. This country has gone through a period of instability in its economic activity. It is very dependent on the importation of electricity and of raw materials for electricity generation. These factors make the analysis of the dynamics of interaction between the various sources in Italy particularly interesting. Monthly data is used, employing an ARDL approach. This approach allows the use of variables I(0) and I(1) at the same time, as well as allowing an understanding of the difference in the short- and long-run effects. The Toda-Yamamoto causality test was used to determine causal relationships. In general, the results show empirical evidence for the substitution effect between hydropower and fossil fuels. The hydropower generation source has a positive impact in the short-run, and a negative one in the long-run, given that, the possibility of expanding capacity in this generation source has almost been exhausted. In the long-run, economic activity encourages renewable energy generation, but the opposite is not verified. This result is consistent with the fact that the contribution of renewables is a result of the goals outlined by the European Union. Thus policy makers should stimulate the endogenous production of electricity. The target set by the European Union should take into account the degree of wealth of the countries. This work also contains a detailed discussion about energy policies to make the accommodation of generation sources within the system more flexible.

Keywords: ARDL approach, Toda-Yamamoto causality test, economic growth, renewable and non-renewable electricity, Italy

WSEAS Transactions on Business and Economics, ISSN / E-ISSN: 1109-9526 / 2224-2899, Volume 12, 2015, Art. #20, pp. 229-238

Title of the Paper: An Extension Proposition for the Agent-Based Language Modeling Ontology for the Representation of Supply Chain Integrated Business Processes

Authors: Arnaud Avédissian, Raul Valverde, Sherif Barrad

Abstract: The recent introduction of supply chain systems has redefined the way organizations perceive collaboration. Although characterized as a human driven process by which people communicate, share knowledge, and cooperate internally; collaboration also extends outside the organization and across the supply chain by interacting with both suppliers and customers. While human driven collaboration is fundamental in operating certain business processes, they are usually depicted in models such as high-level abstracts or implicitly integrated in exception related mechanisms. This creates the need for an ontology capable of representing human-driven collaboration. The Agent Lab Language (TALL) ontology was selected as a possible solution to the research problem given its emphasis on agent/ business collaborations. A Bunge-Wand-Weber ontological representation analysis was further used to evaluate the ontological completeness of the Agent Language Lab (TALL). From this analysis, a set of propositions were elaborated in accordance with human-driven collaboration requirements. Following these propositions and the results of the analysis, additional constructs were proposed to the TALL ontology as a solution to the research problem.

Keywords: Ontologies, Business Models, Business Process Modeling, Supply Chain Modeling, TALL, The agent language lab

WSEAS Transactions on Business and Economics, ISSN / E-ISSN: 1109-9526 / 2224-2899, Volume 12, 2015, Art. #19, pp. 211-228

Title of the Paper: Discussing the Usefulness of Fair Value from the Lenders’ Perspective

Authors: Francesca Manes Rossi, Alessandra Allini, Riccardo Macchioni, Joshua Ronen

Abstract: Fair value measures in financial reporting have been at the center of recent debates, with many scholars considering the issue increasingly relevant and useful. This paper discusses the appropriateness of these measure in countries, like Italy, wherein lenders are the major source of financing and are therefore the ‘primary users of financial reporting. Specifically, we argue that fair valuation – while potentially useful in countries that boast advanced capital markets with diffused equity ownership – is not as useful, and even potentially misleading in countries like Italy. The discussion is based on a review of the literature on the prediction of creditworthiness. In the literature, the main informational inputs largely ignore fair values, whether measured as exit values or otherwise. Basically, the idea that fair values are suitable for all countries and entities, regardless of differences in ownership structure and modes of financing, may need to be re-examined. Possibly, disclosure of fair values instead of recognition is more likely to satisfy the criterion of decision usefulness when lenders are the main users of financial reporting.

Keywords: Fair-value, usefulness, creditworthiness, disclosure, financial reporting, lenders

WSEAS Transactions on Business and Economics, ISSN / E-ISSN: 1109-9526 / 2224-2899, Volume 12, 2015, Art. #18, pp. 198-210

Title of the Paper: Customer Segmentation Using Data Warehouse and Neural Networks

Authors: Dajana Ćorić, Katarina Ćurko, Zvonko Merkaš

Abstract: The success of a company depends on its effective customer management. An intelligent company can achieve this goal by using modern information technology. This paper shows how data warehouse and neural networks can be useful in the process of predicting customer segments. The aim of this paper is to determine how neural networks, as a data mining method, are able to predict the belonging of each customer to a specific segment based on data from data warehouse. This paper presents a research on analysing data set of customers of the company which take care of production and distribution of nuts, grains and dried fruit. As a result there will be three groups of customers: a group containing the most profitable customers, a group of customers with a profit close to zero, and a group of the least profitable customers. Depending on where a specific customer belongs, a company will use different marketing activities in order to retain them, move them to a more profitable segment or ultimately reject them. The customer activity in the first quarter will be used to predict a segment in which a customer belongs at the end of the year. This will show the predictive ability of neural networks and how reliable they are in the process of customer segmentation using data from data warehouse.

Keywords: customer, profitability, data warehouse, data mining, neural networks

WSEAS Transactions on Business and Economics, ISSN / E-ISSN: 1109-9526 / 2224-2899, Volume 12, 2015, Art. #17, pp. 186-197

Title of the Paper: Economic Forecast on the Basis of Linear Trend Analysis and “Bottom-up” Approach

Authors: Ingrid Majerová, Tomáš Pražák

Abstract: Prediction of economic development is very important for every country. Over time, the estimations are becoming more sophisticated and they are based on serious data supported by statistical methods. Time series analysis is often used for estimations of economic development of countries. The prediction based on development of macroeconomic indicators might be analyzed by various models. For our purpose two models– linear trend analysis and “Bottom-up” approach of the International Monetary Fund – have been chosen. We estimate economic development of Papua New Guinea using the indicators such as gross domestic product, the growth of gross domestic product, inflation, current account and budgetary balance as a percentage of gross domestic products. The aim of this article is to verify the hypothesis of differences in predictions using the model of linear trend analysis and bottom-up approach. It was found out that these two types of analyses considerably diverge in their results.

Keywords: Linear trend analysis, “Bottom-up” approach, Comparison, Forecast, Development, Gross domestic product, Inflation rate, Budget balance, Balance of payment

WSEAS Transactions on Business and Economics, ISSN / E-ISSN: 1109-9526 / 2224-2899, Volume 12, 2015, Art. #16, pp. 173-185

Title of the Paper: Large-Scale Assembly Job Shop Scheduling Problems with Bill of Materials: Models and Algorithms

Authors: Gianpaolo Ghiani, Antonio Grieco, Antonio Guerrieri, Andrea Manni, Emanuele Manni

Abstract: In this paper, we study an assembly job shop scheduling problem with tree-structured precedence constraints and jobs characterized by specific bills of materials. We propose a mathematical model to deal with a simplified version of the problem, as well as a fast and efficient constructive heuristic that is able to easily face real-world-sized instances. The production schedule takes into account the actual availability of materials in stock as well as the supply times and the capacity constraints, with the goal to minimize the average delay with respect to the due dates associated to the customers’ orders. Computational results on data related to real-life instances show that the mathematical model is able to solve (not always to optimality) small-sized instances only. On the other hand, our heuristic approach is able to solve efficiently very large problems. Moreover, the proposed heuristic turns out to be scalable as the instance size grows.

Keywords: Assembly job shop, Bill of materials, Operations scheduling, Heuristics

WSEAS Transactions on Business and Economics, ISSN / E-ISSN: 1109-9526 / 2224-2899, Volume 12, 2015, Art. #15, pp. 161-172

Title of the Paper: An Empirical Analysis Using Private Investments Cross Analyses Method (PICAM) and Monte Carlo Simulation to Evaluate Economic Sector Performance

Authors: Hugo Ferreira Braga Tadeu, Jersone Tasso Moreira Silva

Abstract: Empirical studies regarding the elements of private investments in developing countries, including Brazil, have demonstrated the negative impact of high inflation rates on investments, with great impacts on the innovation policies. However, the recent Brazilian experience clearly shows that stabilization, in and of itself, is not capable of recovering the investment rates and innovation strategies. Therefore, the objective of this study is to analyse the elements of the long term private investment in Brazil. The used method was an econometric cross section data model and Monte Carlo simulation, called PICAM (Private Investments Cross Analyses Methodology). This method was developed by the authors in order to contribute for a better business economic analysis. The PICAM was tested to evaluate an economic sector performance in Brazil’s economy. The chosen sector was the Plastic Products Manufacturing Industry. The results have shown evidences of crowding-in effect of public investments in infrastructure over private investments stimulating growth. All the signs of the analyzed variables were obtained as presented in the therory, with the exception of the real interest rates variable (r), in which it was observed that the coefficient is positive and insignificant in the estimated equation. The results also indicated that the operating costs impacts negatively the investment decision on the studied industry, as well as a future trend of declining margins with a period of market consolidation.

Keywords: PICAM, Panel Data, Monte Carlo Simulation, Crowding in, Crowding out, Econometrics

WSEAS Transactions on Business and Economics, ISSN / E-ISSN: 1109-9526 / 2224-2899, Volume 12, 2015, Art. #14, pp. 138-160

Title of the Paper: The Effect of the Interaction between US Dollar and Euro Exchange Rates on Indonesia’s National Income

Authors: Ld Saidi, M. Kamaluddin, Rostin, P. Adam, E. Cahyono

Abstract: Globalization has caused Indonesia's national income, calculated in Indonesian Rupiah (IDR), cannot be separated from the strong exchange rate of the US dollar (USD) and euro (EUR). This study discussed the effect of the interaction between the USA currency exchange rate (IDR / USD) and the European exchange rate (IDR / EUR) on the Indonesia’s national income from 2004 to 2013. The data of national income were available in the form of quarterly time series (every 3 months). As for the US and European currencies exchange rates, the data were available, in the form of daily time series, except Saturdays, Sundays and national holidays. Data analysis used was causal model lagged variable auto-regression (LVAR). The results showed that there was a negative effect of IDR/USD exchange rate on the national income, there was a positive effect of IDR/EUR exchange rate on the national income, and there was a negative effect of the interaction of both exchange rate IDR/USD and IDR/EUR against the national income. This information is important for the government to consider in its economic policy decision making.

Keywords: exchange rate, national income, auto-regression, time-series

WSEAS Transactions on Business and Economics, ISSN / E-ISSN: 1109-9526 / 2224-2899, Volume 12, 2015, Art. #13, pp. 131-137

Title of the Paper: Evaluation of Institutional Factors of Self-Employment: Comparative Analysis of Lithuania and Latvia

Authors: Rita Remeikiene, Ligita Gaspareniene

Abstract: the article is aimed at the analysis of the main differences between the institutional factors of self-employment in Lithuania and Latvia. In order to fulfil the raised aim, the first section has been designed for the analysis of the experience of entrepreneurship promotion from governmental positions in different geographical areas (Europe and the USA). The second section introduces the methodology of the empirical research and the course of the expert evaluation. 5 experts from Latvia and 9 experts from Lithuania were involved in the research. The results of the empirical research propose the following conclusions: the number of the self-employed in Latvia could be increased by focusing on the financial measures of self-employment while in Lithuania it could be increased by focusing on tax incentives; the opportunity to receive a preferential credit is an influential factor of self-employment promotion in both Latvia and Lithuania; business expansion while becoming an employer could be promoted by facilitation of tax administration, less intensive regulation of the labour market and financial support provided for small and medium business.

Keywords: Institutional Factors Of Self-Employment, Self-Employed, Employers, Lithuania And Latvia, Self-Employment

WSEAS Transactions on Business and Economics, ISSN / E-ISSN: 1109-9526 / 2224-2899, Volume 12, 2015, Art. #12, pp. 124-130

Title of the Paper: Empirical Examination of Enterprise Risk Management’s Value Creation Mechanism

Authors: Fong-Woon Lai

Abstract: This paper espouses an enterprise risk management (ERM) implementation framework which encompasses 3 dimensions that comprised of 7 areas, which in turn, made up of 14 elements. This paper also empirically examines the value creation transmission mechanism of ERM implementation. Unlike the neo-classical finance theory, the espoused ERM framework underscores the idea of managing firms’ unsystematic (specific) risk that leads to the enhancement of shareholders’ value. The mechanism through which the firms’ value enhancement takes place is theorized by a strategic conceptualization of risk premium model. The model cites managing the firm’s four classes of risks, namely macroeconomic, tactical, strategic, and normative risks. Hence, this paper investigates the validity of the theorized value creation transmission mechanism of the proposed ERM framework via the strategic conceptualization of risk premium model.

Keywords: CAPM, enterprise risk management, value creation mechanism, strategic risk premium

WSEAS Transactions on Business and Economics, ISSN / E-ISSN: 1109-9526 / 2224-2899, Volume 12, 2015, Art. #11, pp. 111-123

Title of the Paper: Potency of Natural Sweetener: Brown Sugar

Authors: Weka Gusmiarty Abdullah, Usman Rianse, Raden Marsuki Iswandi, Sitti Aida Adha Taridala, Ilma Sarimustaqiyma Rianse, , Zulfikar La Zulfikar, La Rianda Baka, Abdi La Abdi, Edi Cahyono, Weka Widayati, Wa Kuasa Baka

Abstract: This research about the substitutes of sugar cane that have the characteristics of a natural, valuable health, and have many functions for the preservation of nature. Brown sugar is a sugar substitute derived from palm plants, such as aren (Arenga pinnata (Wurmb) Merrill), kelapa (cocos nucivera), siwalan (Borassus flabellifer L.). This research aims to investigate the potential of resource, social and economic of brown sugar as a natural sweetener that can substitute sugar cane. The study shows that the aren trees which is the raw material of brown sugar is available in abundance, especially in mainland Southeast Asia, has high adaptability, it also serves as a forestry crop. Furthermore, brown sugar business can be done by people with low education, and in all age groups but predominantly in the range of productive age. Brown sugar is a natural sweetener because of its natural raw materials and the way of processing so valuable health. Economically, brown sugar has proven to be a source of livelihood and feasible to be developed. The implication of this study is about information to explore the potential of resources, social, and economics of brown sugar as a natural sweetener internationally.

Keywords: natural sweetener, brown sugar, potential, aren tree, sap, feasibility

WSEAS Transactions on Business and Economics, ISSN / E-ISSN: 1109-9526 / 2224-2899, Volume 12, 2015, Art. #10, pp. 99-110

Title of the Paper: Asset-Based Determinants of Poverty Intensity: A Meso-Level Application in the Philippines

Authors: Catherine Roween C. Almaden

Abstract: This study aimed to determine relationship between poverty intensity and livelihood assets classified as natural capital, human capital, physical capital, financial capital and social capital in Barangay Lumbia, Cagayn de Oro City, Philippines. A total of 629 households were surveyed using the Community-based Monitoring System (CBMS) instrument. The poverty intensity was based on the official poverty line measurement in the country. This served as the basis for estimation of the poverty intensity. The assets were indicated by selected factors from the household survey. Scoring was developed for each component of assets. The generated scores were illustrated into the asset pentagon to show the overall situation for each type of asset in a given community. The study then proceeded to determine the relationship between poverty intensity and livelihood assets by applying the multivariate analysis. The multivariate results showed that the higher the human, financial and social capital, the lower the poverty intensity.

Keywords: Livelihood assets, poverty intensity, poverty line

WSEAS Transactions on Business and Economics, ISSN / E-ISSN: 1109-9526 / 2224-2899, Volume 12, 2015, Art. #9, pp. 88-98

Title of the Paper: Data Envelopment Analysis and Fuzzy Theory: Efficiency Evaluation under Uncertainty in Portfolio Optimization

Authors: Paulo Rotela Junior, Edson de Oliveira Pamplona, Aneirson Francisco da Silva, Fernando Luiz Riera Salomon, Victor Eduardo de Mello Valerio, Leonardo Alves de Carvalho

Abstract: This article aims to analyze the behavior of a portfolio selected through Data Envelopment Analysis (DEA) associated with fuzzy logic and optimized using the Sharpe approach. As a basis for comparison, two other portfolios were used, one obtained through only the Sharpe approach. In this research study, a fuzzy DEA model was used to evaluate efficiency under uncertainty of the Brazilian Stock Exchange - Bovespa, by means of input and output indicators such as return, variance, earnings per share and price-earnings. The study reliably identified which efficient stocks and which were most sensitive to the effect of uncertainty. Through the comparison of portfolios, it was observed that the resulting combination of the fuzzy DEA models in which the stocks were considered efficient in both scenarios presented the best results.

Keywords: Stock selection, Data Envelopment Analysis, Fuzzy Logic, Efficiency, Sharpe approach

WSEAS Transactions on Business and Economics, ISSN / E-ISSN: 1109-9526 / 2224-2899, Volume 12, 2015, Art. #8, pp. 74-87

Title of the Paper: Strategic Management of Small and Medium-Sized Enterprises

Authors: Darja Holátová, Monika Brezinová, Libena Kantnerová

Abstract: Using principles of process management within SMEs has its limitations caused mainly by size of the enterprise and the related focus on operational management. Other specificities are function accumulation, informal leadership, preference for oral communication before written, etc. Nevertheless, implementation of strategic management can increase competitiveness, reduce costs, improve decision-making, facilitate implementation of the employee motivation system, shorten delivery times, higher quality of customer satisfaction, etc. The aim of this article is to find how much SME includes principals of the strategic management. In the research project was used secondary data (financial statements of SMEs who took part in the research) and primary data which were obtained primarily through quantitative methods questionnaire supplemented by qualitative method of in-depth interviews. Majority of examined small and medium enterprises had formulated strategy. They are aimed mainly at stability, further at quality, development and profit.

Keywords: management, enterprise, SME, strategy, stability, development

WSEAS Transactions on Business and Economics, ISSN / E-ISSN: 1109-9526 / 2224-2899, Volume 12, 2015, Art. #7, pp. 65-73

Title of the Paper: Moderating Role of Competitive Intensity on Market and Entrepreneurial Orientation

Authors: Nursel Selver Ruzgar, Akin Kocak, Bahadtin Ruzgar

Abstract: The aim of the paper is to develop and test a structural equitation model for the relationship between entrepreneurial orientation and market orientation. The model includes both moderator and mediator factors. In this paper, it is argued that entrepreneurial orientation is antecedent of both type of market orientation, so the market orientation is considered as a mediator factor. It is also stated that the relationship between entrepreneurial orientation and market orientation is affected by high level competition in the market, means the competition level moderate the relationship. Then, market orientation is used in two construct; responsive and proactive market orientation. To discuss all above, this study was conducted with 720 Small and Medium Sized Enterprises. The results indicated that entrepreneurial orientation and responsive market orientation have positive and significant impact on performance, whereas proactive market orientation has negative effect. In addition, environmental competition moderate the relations in the model.

Keywords: Entrepreneurial orientation, Responsive market orientation, Proactive market orientation, Mediator effect test, Moderator Effect, Multiple regression, SMEs

WSEAS Transactions on Business and Economics, ISSN / E-ISSN: 1109-9526 / 2224-2899, Volume 12, 2015, Art. #6, pp. 55-64

Title of the Paper: The Impact of FDI on Lithuanian Economics

Authors: Ligita Gaspareniene, Rita Remeikiene

Abstract: The scientific literature emphasizes that FDI can cause not only economic growth, but also economic suppression. This article is aimed at the research of the impact of FDI on Lithuanian economics by analysing the changes of three main macroeconomic indicators – GDP, unemployment rate and export. The methods of the research include systematic analysis of the scientific literature, statistical data analysis and correlation regression analysis. The results of the research have revealed that, in Lithuanian case, there exists strong correlation between FDI and GDP as well as between FDI and export. The correlation between FDI and unemployment rate is very weak, although there is a tendency that increasing income from FDI contributes to unemployment rate decrease since FDI determines creation of work places and development of industrial processes.

Keywords: Foreign direct investment, FDI impact, economics, macroeconomic indicators, Lithuania

WSEAS Transactions on Business and Economics, ISSN / E-ISSN: 1109-9526 / 2224-2899, Volume 12, 2015, Art. #5, pp. 48-54

Title of the Paper: Globalization and its Impact on Contemporary Banking in Transition Countries

Authors: Ranka Mitrovic, Marijana Ljubic

Abstract: The aim of this paper is to show the influence of contemporary globalization and its elements on the performance of banks. Key factors of globalization, such as deregulation and financial liberalization led to growth in economies around the world, including countries in transition. In such an environment, a temporary economic growth is a result of the inflow of foreign capital, which attracts investors, with the aim of rapidly increasing capital. In such an environment, with the support of liberalization and deregulation, banks seeking a greater profit, grant more loans. The minimization of risk is a key factor that has feedback. Inadequate control lending escalated the collapse of the finance market, which inevitably spilled over to real sector. This mechanism of communicating vessels destroys itself. In regard to the settlement of the new situation, it is necessary to better supervision and monitoring of financial institutions, especially banks.

Keywords: Banks, capital adequacy, liquidity, economic crisis, financial performance, globalization

WSEAS Transactions on Business and Economics, ISSN / E-ISSN: 1109-9526 / 2224-2899, Volume 12, 2015, Art. #4, pp. 36-47

Title of the Paper: Collateral and Relationship Lending in Loan Pricing: Evidence from UK SMEs

Authors: Ana Paula Matias Gama, Fábio Dias Duarte

Abstract: This study investigates how the use of collateral affects incentives for borrowers and lenders and the resulting loan pricing relationship. With data from the UK Survey of Small and Medium-Sized Enterprises 2008, a simultaneous equation approach reveals that high quality borrowers choose contracts with more collateral and lower interest rates, which suggests that collateral acts as an incentive in credit markets. By distinguishing business from personal collateral, the present study also reveals that personal collateral seems more effective as a sorting device, in line with screening models. Regarding the nature of the borrower–lender relationship, a substitution effect arises between relationship length and collateral requirements, but a primary bank uses an explicit loan interest rate as a loss leader to secure long-term rents on relationship business, suggesting the possibility of intertemporal shifting rents.

Keywords: credit rationing, loan pricing, collateral, relationship lending, small and medium-sized enterprises

WSEAS Transactions on Business and Economics, ISSN / E-ISSN: 1109-9526 / 2224-2899, Volume 12, 2015, Art. #3, pp. 21-35

Title of the Paper: The Effect of Macroeconomic Variables on Non-performing Loan Ratio of Publicly Traded Banks in Turkey

Authors: Mehmet Islamoglu

Abstract: There are various studies analyzing the correlation between non-performing loan ratios of banks and macroeconomic variables. The main motivation behind these studies is to reveal whether macroeconomic factors have an impact on non-performing loan ratio of banks and to determine lag length in cases in which these factors have an impact. This study examines the effect of macroeconomic variables (commercial loan interest rates and public debt stock/GDP ratios) on the consolidated non-performing loan ratio of banks involved in Borsa Istanbul (BIST) XBANK index in quarterly basis during 2002-2013 period. The result of econometric analysis revealed that changes in non-performing loan ratio can be explained by above mentioned macroeconomic variables.

Keywords: Non performing Loan Ratio, Interest Rates, Public Debt, GDP

WSEAS Transactions on Business and Economics, ISSN / E-ISSN: 1109-9526 / 2224-2899, Volume 12, 2015, Art. #2, pp. 10-20

Title of the Paper: How to be a Succesful Graduate? Results of a Comparative Analysis of the Demand and Supply on the Labour Market

Authors: Iva Stavjanícková

Abstract: EU countries have been experiencing a difficult period of time in recent years. New trends have been appearing due to the economic crisis and growing competitive environment. These trends influence the labour market and human resource management in organizations. One of the endangered groups in the labour market are university graduates. Cluster analysis was used to investigate the development of the unemployment rate of young people. The results show that the Czech Republic does not have a similar development of unemployment as its neighbouring countries; however, its development is similar to Slovenia and Malta. Quantitative research among employers was used to research the demand in the labour market in the Czech Republic. The results summarise opinions of 1 046 employers. As the key criteria for employers, the research identified flexibility and adaptability, willingness to learn and loyalty. These are required by employers when they are hiring a new employee from among graduates. Factors regarded as necessary if a graduated wants to succeed in the labour market were selected for the detailed analysis. These criteria include flexibility and adaptability, foreign language skills or abroad stays. It was identified that there are differences between preferences of the given criteria among individual company types. The research of the supply in the labour market was conducted among 491 last year university students. Contrary to employers, students consider as the most important factors foreign language skills, communication skills, and willingness to learn.

Keywords: Human resources, graduates, competitiveness, labour market, unemployment, soft skills, labour market in the Czech Republic

WSEAS Transactions on Business and Economics, ISSN / E-ISSN: 1109-9526 / 2224-2899, Volume 12, 2015, Art. #1, pp. 1-9


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