European Financial and Accounting Journal, 2010 (vol. 5), issue 3

Introduction

What to Expect from Basel III?

Petr Dvořák

European Financial and Accounting Journal 2010, 5(3):4-6 | DOI: 10.18267/j.efaj.51  

Dear readers, I would like to dedicate the third edition of European Financial and Accounting Journal to contemplate what could be anticipated from Basel III. The development and global impact of financial crisis have been so intense that it could not remain without politic and regulatory response. Thus the officials come up with the new proposals for more strict regulations that would prevent the financial crisis of comparable size from recurring. What changes will the enforcement of Basel III bring to the banks and what might be expected from them? In short, the equity capital should increase and its quality should improve. This should become evident...

Articles

Theoretical Economics Faces a Serious Challenge

Jaroslav Daňhel, Eva Ducháčková, Jarmila Radová

European Financial and Accounting Journal 2010, 5(3):7-14 | DOI: 10.18267/j.efaj.52  

The authors of the article point out that the theory of economics has failed to yield a solid theoretical background in such critical situations as the transformational period of post-communist economies and the period of the current financial and economic crisis. While classical liberal or Keynesian concepts are failing, theorists cannot look to mathematical modeling for help. The challenge for today's theoretical economists is to find a new concept for today's global era.

Monetary Policy Implementation and Liquidity Management of the Czech Banking System

Karel Brůna

European Financial and Accounting Journal 2010, 5(3):15-41 | DOI: 10.18267/j.efaj.53  

Implementation of monetary policy assumes that monetary policy instruments stabilize O/N interest rates to the proximity of main policy rate to archive monetary targets. The function of stabilizing mechanism is based on simple rule that the volume of liquidity in the banking system is held in line with the demand of banks for reserves. In this paper main factors of banking system liquidity are analyzed in the context of bank's imperfect intertemporal substitution of reserves and with respect to predictibility of O/N interest rates volatility. Analysis of O/N PRIBOR and CZEONIA reference interest rates prove Czech National Bank's ability to stabilise...

How Related are Interbank and Lending Interest Rates? Evidence on Selected European Union Countries

Tomáš Heryán, Daniel Stavárek

European Financial and Accounting Journal 2010, 5(3):42-55 | DOI: 10.18267/j.efaj.54  

This paper investigates the nature of the causal relationships among interbank market interest rates and corporate loans interest rates in four countries from the euro area (Austria, Belgium, France and Italy), and in the Czech Republic. The paper also estimates a development of bank credit margin in banking industries of these countries in period from January 2004 to March 2010. Using Johansen cointegration and Granger causality tests on monthly data we investigate long-term as well as short-term causalities between the interest rates. The results suggest that interest rate relationships differ in all selected countries, and also that foreign majority...

Can Profit-shifting be Resolved by Penalization?

Tomáš Buus, Jaroslav Brada

European Financial and Accounting Journal 2010, 5(3):56-74 | DOI: 10.18267/j.efaj.55  

We examine contemporary practice of transfer pricing rules enforcement in this paper. We have used neoclassical microeconomic framework with transfer price estimated via comparable uncontrolled price method. We have found that if vertically integrated multinational enterprise (MNE) has possibility to evade tax through transfer pricing, then it produces higher quantity of final product, than it would if no possibility of tax evasion existed. Secondly we have found that although nowadays' transfer pricing rules require use of enforcement instruments (penalty), there is no penalty high enough to extinguish tax evasive transfer pricing totally, and if...

Structural Determinants of the Total Loans Volume in the Czech Republic

Iveta Řepková

European Financial and Accounting Journal 2010, 5(3):75-83 | DOI: 10.18267/j.efaj.56  

The aim of this paper is to analyze the structural determinants of the total loans volume in the Czech banking sector. Analysis of five selected characteristics is realized in period 2000-2008. It used the OLS regression analysis for estimate of model. The regression analysis showed that the concentration of the credit market and the profitability calculated as the return on assets (ROA) has positive impact to total loans and the quality of portfolio has negative impact to total loans. If the share of classified loans to total loans is decreasing, total loans volume is rising and if concentration ratio of the credit market and return of assets are...

ROE and Value Creation under IAS/IFRS: Evidence of Discordance from French Firms

Mohamed El Hedi Arouri, Aldo Lévy, Duc Khuong Nguyen

European Financial and Accounting Journal 2010, 5(3):84-112 | DOI: 10.18267/j.efaj.57  

This paper re-examines the effects that adoption of the International Financial Reporting Standards (IFRS) has had on financial reporting of French listed firms. By analysing the 2004 financial statements of CAC 40 companies, we show that the transition to the IAS/IFRS has a significant impact on the return on equity (ROE) of considered firms by increasing it by 25 basis points on average, compared to the French GAAP. This finding thus suggests an amplified degree of discordance between the ROE, as a crucial measure of firm performance, and the value creation process following the IFRS adoption. From a theoretical viewpoint, Merton (1987)'s capital...

Timeliness of Financial Reporting in Emerging Capital Markets: Evidence from Turkey

Asli Gunduzay Türel

European Financial and Accounting Journal 2010, 5(3):113-133 | DOI: 10.18267/j.efaj.58  

Timely financial reporting is an essential ingredient for a well-functioning capital market. The objectives of this study are two-fold. First, to measure the extend of timeliness in a developing country, Turkey. Second, to establish the impact of both company specific and audit related factors on timeliness of financial reporting in Turkey. This study reports on the results of an empirical investigation of the timeliness of financial reports by 211 non-financial companies listed on the Istanbul Stock Exchange. The descriptive analysis indicates that 59% of the companies that prepares separate financial statements and 66% of the companies that prepares...