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The Efficiency of Educational and Healthcare public expenditures in Kosovo: A Data Envelopment Analysis Technique
Full text linkThis paper evaluates the performance and efficiency of the government public expenditure in the education and health sectors in the emerging economies context, specifically comparing Kosovo with the Western Balkan countries. The indicators of education and health sectors were used to assess a Public Sector Performance Index (PSP) and the Public Sector Efficiency Index (PSE). Also, this study uses the nonparametric method DEA (Data Envelopment Analysis) to evaluate the input-output oriented efficiency. This study finds that education score of performance ranges from 0.43 which is the minimum to 1.48 which is the maximum. And in the health sector, the PSP score ranges from 0.81 which is the minimum to 1.09 which is the maximum. Kosovo ranks 41st out of 42 countries in this sample, in terms of the education sector, with a performance index of 0.67, which is 37% below the average of 1.00, whilst in terms of the health sector it ranks 39th out of 42 countries in the sample.In the analysis of the input output efficiency model in the education sector, the results show that the countries included in the study achieve an efficiency of 76.69 and it means that countries can reduce relevant public expenditure by 23.3% and maintain the same level of PSP in the education sector. Kosovo is assessed in this analysis as an inefficient country. The value of the input-oriented index is 40.24, which means that Kosovo can achieve the same level of performance in the education sector by using 60% less relative public expenditure, whilst, on the other hand, the input-output efficiency results for the health sector show that the efficiency score for countries is 47.64, and denotes that the countries in the sample could reduce 53% in health expenditure to achieve the same performance in the health sector. Thus, Kosovo compared to other countries in the sample is within the limits of production opportunities and uses public expenditure on health and education inefficiently
Financial Inclusion, Poverty, and Income Inequality: Evidence from European Countries
Full text linkThis study contributes to the existing literature on financial inclusion by examining the determinants of financial inclusion and studying the impact of financial inclusion on poverty reduction and income inequality in European countries. We investigate the impact of financial inclusion on poverty and income inequality in 30 European countries during 2004-2019 based on a composite financial inclusion index (FII) constructed by using principal component analysis (PCA). Then we assess the impact of financial inclusion, on poverty and income inequality, by employing the fixed effect method. The estimates reveal that, for the European countries, GNI per capita, population density, inflation, and internet users have a positive and significant impact on financial inclusion across all the regressions. Rule of law has a positive impact on financial inclusion, and the age dependency ratio has a negative impact on financial inclusion. The findings also indicate that financial inclusion is significantly correlated with lower poverty for the full sample. Lastly, the present study supports the role of financial inclusion in reducing income inequality in European countries
Application of Qualitative Characteristics to Evaluate Misstatements in Financial Statements: Evidence from Factual Audit Data
Full text linkThe auditor should use qualitative characteristics, which describe the essence of misstatement, while assessing identified misstatements. Final decision depends on the professional judgment made by the auditor, however, auditors may make erroneous decisions or be biased. Previous theoretical research highlighted problems with the application of qualitative characteristics. However, factual audit data is confidential and usually not available for researchers to examine, therefore previous research mostly relied on surveys or experiments and there is little evidence on how auditors behave during real audits (rather than simulations). One audit company agreed to provide us with factual data for this research. The aim of the research is to examine the application of primary qualitative characteristics based on factual audit data. During the research, the audits performed in one Lithuanian audit company for the financial years 2019–2020 were examined as well as summarized official (publicly available) data about audit companies in Lithuania and audits performed by them for 2018–2020 financial years were examined. Firstly, most important primary qualitative characteristics, as well as secondary commonly used characteristics, were singled out. Our further investigation, based on received 2019–2020 factual audit data revealed that some auditors still do not apply primary qualitative characteristics in all cases. Even though we investigated one company and we cannot directly extrapolate results for the whole audit market, but our results are in line with the official and publicly available information about audit companies in Lithuania. Thus, we conclude that our results partly reflect truthful view of factual behavior of audit companies in Lithuania. These results also confirm theoretical research that qualitative characteristics are not sufficiently appreciated
Business Performance Evaluation Practice in Manufacturing Sector in Latvia
Full text linkThe manufacturing sector plays an important role in promoting Latvia’s economic growth; this sector is one of the largest sectors of the Latvian economy. Performance can be described as one of the most important categories of economic analysis; however, there is no consensus among researchers on the business performance indicators, their measurement and evaluation methods. The research is based on the analysis of special literature and scientific publications, the evaluation of the financial ratios used in the financial analysis of companies by Latvian institutions, the results of an expert survey, and data from the Official Statistics Portal of Latvia. Literature analysis, expert surveys, correlations, multiple linear regression and forecasting methods were used in the research. The aim of the research is to identify and summarize the performance evaluation practices of manufacturing companies in Latvia. As a result of the research, the business performance evaluation practice in the manufacturing sector was analyzed, the significance of the financial ratios used in the financial analysis in the business performance evaluation in the manufacturing sector and the existence of statistically significant correlations between the financial analysis indicators of manufacturing companies and the key business indicators of manufacturing companies were identified and evaluated
Debatable Aspects of the Concept of Tax Expenditures: Taxes
Full text linkDespite the implementation of the concept of tax expenditures in the budgetary practice of many countries, theoretical studies of tax expenditures as a basis for their identification and quantification are still relevant. The emergence and development of the concept is accompanied by heated discussions about definition of normativе (benchmark) structure of tax and tax expenditures, as well as the classification of their individual elements. As a result, there is no uniform approach to defining the conceptual model of benchmark structure. This complicates the introduction of the concept of tax expenditures in those countries that set such a task for themselves, as well as their comparative qualitative and quantitative analysis in different countries. The purpose of this article is to generalize and further develop scientific approaches to determining the benchmark structure of the tax and its individual elements, as well as tax benefits and tax expenditures. The main results of this study are the classification of the main elements of the basic structure of the tax into groups and justification of their role in the identification of tax expenditures; defining “structural benefits” and “basic tax structure”; analysis of the report on other tax benefits in Ukraine and determination of the place and role of “structural benefits” in it
Do Gender and Age Matter in Employment – Sectoral Growth Relationship Over the Recession and Expansion
Full text linkThis paper examines age- and gender-specific employment sensitivity to growth across different economic sectors. By applying a non-linear panel specification of Okun’s first-difference equation on EU-28 countries for 1995-2019, we estimate age-, gender-, and sector-specific employment intensities to growth. Our study examines the ability of growth in different sectors to generate total employment opportunities. Results show that regardless of gender or age, the employment growth is mainly driven by the services sector growth. Still, if we consider the share of a sector in the economy, the construction sector is found to be the most employment-intensive. Our estimates show that the male and female employment intensities of growth in services are quite equal. Considering the employment opportunities by gender, the main differences were found in the construction sector. Expansion and recession were confirmed to have a significantly different effect on the employment rate only in the construction sector regardless of age and gender
Economic Performance and Political Choice in Ukraine
Full text linkIn this article the economic performance as a factor that determined the political choice of Ukrainians has been analyzed. It is proven by a panel model that, unlike the countries with developed democracies, a retrospective economic vote in presidential elections was not observed in Ukraine; it turned out to be prospective instead with regard to the last (year 2019) presidential election. The authors presented a set of reasons which could explain such situation: lack of democratic experience, relying on heuristics and emotions, low public mood among the others. It has been demonstrated that Ukrainians’ political choice in 2019 has some consequences for the economy, which may contribute to the loss of a nation’s development guidelines for a certain period of time and subsequent social disappointment
Foreign Exchange Volatility and the Bubble Formation in Financial Markets: Evidence From The COVID-19 Pandemic
Full text linkThis paper applies recursive right-tailed unit root tests to detect bubble activity for Turkish Lira against financially most-traded five currencies (i.e., the US Dollar (USD/TRY), the British pound (GBP/TRY), the Euro (EUR/TRY), the Chinese Yuan (CNY/TRY) and the Russian Ruble (RUB/TRY)) over January 2, 2015 to February 12, 2021. It can be identified from the Supremum Augmented Dickey–Fuller (SADF) and the Generalized Supremum Augmented Dickey-Fuller (GSADF) tests statistics that there is a high degree of evidence of bubble activity which characterizes all five exchange rates both in the full-sample period and in the sub-periods, including the pre-COVID-19 era (January 2, 2015 to November 15, 2019) and the COVID-19 era (November 18, 2019 to February 12, 2021). The empirical results also indicate that positive bubbles are common for each selected exchange rate and the multiple bubbles were intensified during the COVID-19 period, referring that forex markets became relatively more inefficient compared to the pre-COVID-19 period
Dynamics of Exchange Rate Fluctuations in Turkey: Evidence from Symmetric and Asymmetric Causality Analysis
Full text linkThis study examines the factors affecting exchange rate fluctuations in Turkey by employing the quarterly data from 2008 to 2020. In this context, linear and nonlinear unit root tests were used to determine the stationarity levels of the variables. Then, symmetric and asymmetric causality analysis was preferred to ascertain the relationship between the variables. Symmetric causality analysis results indicated a causality relationship from the exchange rate to the long-term debt stock, from the credit default swap (CDS) to the exchange rate, and from the exchange rate to the uncertainty index. The asymmetric causality analysis showed a causality relationship from positive shocks in the short-term debt stock to negative shocks in the exchange rate. Also, it was proven that there exists a causality relationship from negative shocks in the short-term external debt stock to positive and negative shocks in the exchange rate. Another result demonstrated a causality relationship between positive shocks in the exchange rate to negative shocks in the long-term debt stock. In addition, it was found that negative shocks in net capital investment were the cause of negative shocks in the exchange rate, while it was determined that there was a causality relationship from positive shocks in the net reserves to positive shocks in the exchange rate. In conclusion, the asymmetric causality relationship from positive shocks in CDS to positive shocks in exchange rates was detected