South East European Journal of Economics and Business
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RISK-RETURN EFFICIENCY AND RISK DETERMINANTS OF THE EUROPEAN BANKS
Full text linkThis study examines risk-return efficiency frontier and risk determinants for 36 banking systems of the European countries. The banks of European developed countries appeared more efficient than the banks of the transition and South East European (SEE) countries. In contrast to other studies, risk was measured as deviation from expected return that we derived through a utility maximization model. We found that volatility of return on assets (ROA) and return on equity (ROE) affects risk positively. In addition, we found that the banking systems of transition countries respond less to changes in volatility of ROA and ROE than the banking systems of European developed countries. Moreover, our robustness check model confirmed that the risk measure that was used can be explained by conventional risk proxies such us Z-score and equity ratio
EXPLORING THE LINKAGE BETWEEN DOMESTIC SAVINGS, INVESTMENT AND ECONOMIC GROWTH: EVIDENCE FROM THE EASTERN EUROPEAN ECONOMIES
Full text linkBeyond the theoretical aspects, the interplay between savings, investment and economic growth has vital importance in designing the proper economic policies for the long-run developmental objectives particularly for developing countries. Accordingly, this present paper aims to investigate the dynamic linkage between domestic savings, investment and economic growth for the Eastern European economies by incorporating the annual panel data spanning over 1995-2021. By revealing the existence of long-run relationship, the paper derives that savings and investment are the key factors of economic growth, which is vindicated by the recently pioneered model so called cross-sectional autoregressive distributed lag (CS-ARDL) method. Furthermore, the results of panel causality tests confirm the validity of causal nexus running from savings and investment to economic growth. In addition, the paper concludes with some policy recommendations that are drawn upon the findings
IS COST COMPETITIVENESS A SUFFICIENT DRIVING FORCE FOR CROATIAN EXPORTS?
Full text linkThis paper examines the extent to which Croatia relies on a cost-based export strategy by analyzing the link between cost competitiveness, measured by unit labor cost (ULC) and exports of manufacturing firms from 2002 to 2022. Using a panel first-differences OLS approach, the study finds that cost competitiveness significantly shapes export activity of firms of all sizes and technological intensities, but with considerable heterogeneity. The results show a non-linear relationship between ULC and exports that is not asymmetrical. The relationship is weaker for firms with lower export intensity and for high‐tech firms. Higher ULC is associated with greater export sensitivity and lower productivity, confirming that export sensitivity is lower for more productive firms. In the future, a further strengthening of the link between costs and exports can be expected, i.e. exports will react more sensitively to cost fluctuations. As a result, price and cost stability will become even more crucial. Overall, this analysis provides the most comprehensive study to date on how cost factors affect Croatian merchandise exports, implying that boosting product quality and productivity can reduce cost pressures and promote long-term competitiveness
LONG-RUN AND SHORT-RUN RELATIONSHIP BETWEEN AGRICULTURAL VALUE ADDED AND ECONOMIC GROWTH: EMPIRICAL EVIDENCE FROM SERBIA
No full textThe aim of this paper is to empirically examine the short-run and long-run relationships between agricultural value added and real GDP growth in Serbia from 1995 to 2023, using the ARDL approach. The results of the empirical analysis based on the ARDL bounds testing procedure indicate the existence of cointegration between the examined variables. The findings reveal that, in the long run, there is a statistically significant and positive relationship between agricultural value added and economic growth, while the short-run relationship is also positive but of lower intensity. The negative and statistically significant error correction coefficient in the ECM model confirms that a substantial portion of short-run deviations in real GDP growth is corrected within one year, indicating the existence of a stable long-run equilibrium among the analyzed variables. These empirical results suggest that designing and implementing policies that stimulate agricultural production could make a significant contribution to achieving long-term sustainable economic growth in Serbia
THE EFFECTS OF ZOMBIE COMPANIES ON THE ECONOMY: AN APPLICATION ON TÜRKİYE
Full text linkZombie companies are defined as the ones that are unable to cover interest payments from current profits and that manage to survive with various supports even though they should have exited the market under normal conditions. By holding scarce resources, these companies hinder the reallocation of resources to healthy companies that can use them more efficiently, thus threatening economic growth. This study aims to examine the existence of zombie companies in Türkiye and their effects on the performance of healthy companies operating in the same industry. In this context, the study describes estimates of zombie companies’ existence using company-level data for the period 2006-2021 obtained from the Enterprise Information System (EIS) database, which contains several datasets of all businesses of Türkiye and analyses their economic effects using a panel model with fixed effects. According to the empirical findings, the prevalence of zombie companies has generally risen since the beginning of the analysis period, and an increase in the share of capital sunk in zombies in an industry reduces investment rate and employment growth of healthy companies in that industry and increases the multi-factor productivity gap between zombie and healthy companies. The results show that zombie companies in Türkiye reduce growth opportunities of the healthy companies. Based on the results, it is recommended that policymakers take measures to reduce the prevalence of zombies for economic growth. This paper is the first study to use the EIS database for the analysis of zombie companies. In addition, a new method not used in the literature in advance was developed and used to identify zombie companies
THE IMPACT OF LEAGUE DESIGN IN EUROPEAN FOOTBALL FROM SMALL LEAGUES’ PERSPECTIVE
Full text linkThe effects of league design have not been a major area of interest in the European football literature primarily due to the standardization of league structures in major leagues of Europe. This study investigates how league design affects the likelihood of qualifying for UEFA competitions in six smaller European leagues over a 10-year period from 2013/2014 to 2022/2023. Using market values as the primary independent variable to proxy talent, a logistic model is estimated. Prize money from UEFA competitions serves as a significant income source for all teams, particularly crucial for smaller league teams due to its relative size when compared to aggregate revenues. Evidence suggests that the existence of playoffs provides an advantage for the stronger teams in the league in terms of qualifying for UEFA competitions and potentially leading to persistent domination of these teams. Domestic policymakers face a tradeoff between maintaining domestic competitive balance and probable future competitiveness in inter-European competitions
PRODUCT-LINE DIVERSIFICATION AND FINANCIAL PERFORMANCE: THE CASE OF THE MACEDONIAN NON-LIFE INSURANCE MARKET
Full text linkThis study investigates the relationship between product-line diversification and financial performance among non-life insurers in North Macedonia over the period 2013–2022. Drawing on firm-level data and applying fixed and random effects two-stage least squares (IV-2SLS) models, we examine whether diversification improves profitability in a market characterized by low insurance culture and heavy reliance on the regulated motor third-party liability (MTPL) segment. We use two diversification measures: the Herfindahl-Hirschman Index (HHI) of insurers’ product portfolios and a weighted HHI adjusted for market competition across lines of business. Our findings reveal a nonlinear relationship between diversification and profitability, supporting the coexistence of both diversified and specialized insurers. While initial diversification appears beneficial, excessive diversification may reduce returns, and evidence linking diversification away from competitive lines (e.g., MTPL) to higher profitability is weak. These insights carry important policy implications, suggesting that a measured liberalization of the MTPL market could support healthier diversification dynamics, while highlighting the need for careful monitoring of risk underpricing and solvency risks in evolving product strategies
TWIN DEFICIT HYPOTHESIS IN THE SOUTH EAST EUROPEAN AND CENTRAL EAST EUROPEAN UNION COUNTRIES IN THE COURSE OF MACROECONOMIC, INSTITUTIONAL AND DIFFERENT CRISIS FACTORS
Full text linkThis paper aims to provide an empirical assessment of the twin deficit hypothesis in 6 South East European countries and 11 Central East European Union countries, using yearly data for the 2000-2022 period. The empirical model using Fixed Effects with Driscoll and Krey standard errors with time and country fixed effects confirm the twin deficit hypothesis with a flow of causation from fiscal to current account deficit in both groups of countries. The research also controls for the impact of other macroeconomic factors (GDP growth, real effective exchange rate, output gap, inflation, FDI), financial factors (monetary credit to the private sector), and institutional factors (transition progress, economic freedom, legal and property rights and governance indicators) on to current account deficit. The interaction between fiscal deficit and COVID-19 dummy outlines a current account deficit-widening effect, whereas when interacting with the Eurozone debt crisis dummy, fiscal deficit appears with an undistinguished effect on to current account deficit. The findings also outline narrowing (widening) effect of fiscal deficit on to current account deficit during the presence (absence) of the financial crisis. System GMM estimates confirm persistent effects of the current account deficit
THE FUTURE OF WORK IN TRANSITION ECONOMIES: INTEGRATING AI, DIGITAL SKILLS, AND EMPLOYABILITY IN HIGHER EDUCATION
No full textThis study examines the incorporation of soft skills, digital competencies, and artificial intelligence (AI) tools in higher education to improve student employability in Bosnia and Herzegovina, with broader relevance for the South East Europe region, where similar transition economies face parallel challenges in aligning education with the demands of digitally transformed labor markets. The research utilizes a mixed-methods approach, integrating quantitative survey data from University of Sarajevo students with qualitative insights from industry professionals. Research indicates that the concurrent enhancement of soft skills (such as communication and critical thinking) and digital competencies, in conjunction with the utilization of AI tools, markedly enhances students’ preparedness for the contemporary labor market. The study emphasizes the essential role of autonomy in converting AI tool utilization into academic achievement and provides practical recommendations for educators, policymakers, and employers to address the skills gap in the digital economy