Prelims

Half Title Page

Uncertainty and Challenges in Contemporary Economic Behaviour

Title Page

Emerald Studies in Finance, Insurance, and Risk Management

Uncertainty and Challenges in Contemporary Economic Behaviour

Edited By

ERCAN ÖZEN

University of Usak, Turkey

SİMON GRIMA

University of Malta, Malta

United Kingdom – North America – Japan – India – Malaysia – China

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Emerald Publishing Limited

Howard House, Wagon Lane, Bingley BD16 1WA, UK

First edition 2020

Copyright © 2020 Emerald Publishing Limited

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ISBN: 978-1-80043-096-9 (Print)

ISBN: 978-1-80043-095-2 (Online)

ISBN: 978-1-80043-097-6 (Epub)

Contents

List of Contributors

About the Contributors

Gani Asllani holds MA and PhD in Finance from University of Pristina, Kosovo. He teaches public finance, taxation and competition rights. His work in the area of market economy, competition, tax policy, economic development appeared in relevant international journals. He is an Associate Professor at University “Haxhi Zeka,” Peja within the Law Faculty. During his 20 years of experience, he has contributed to the creation of the tax system in Kosovo, making tax analysis and expertise, participating in several working groups at international level (IMF, OECD, and Robert Shuman Center for Advance Studies).

Matthew Attard is currently reading for a Master of Science in Applied Actuarial Science at the University of Kent. He has previously worked as a Client Account Manager with a leading Maltese insurance manager. His focus was assisting insurers in the implementation of the Solvency II requirements primarily their capital requirements and regulatory reporting processes. Prior to this, he was engaged as audit and assurance senior with one of the Big Four audit firms, specialising in the audits of local insurance undertakings.

He is a Certified Public Accountant and a student member of the Institute and Faculty of Actuaries (United Kingdom). He holds a Master’s in Accountancy from the University of Malta and his research interests comprise: corporate financial reporting, enterprise risk management and stochastic risk modelling.

Peter J. Baldacchino is Advisor to Rector – Financial Affairs and Head, Department of Accountancy, F.E.M.A, University of Malta. He holds both a PhD and an MPhil from Loughborough Business School. He is also a Fellow of the Chartered Association of Certified Accountants, a Fellow of the Malta Institute of Accountants and a Certified Public Accountant. He specialises in the corporate governance and financial strategy of listed entities and cooperatives, and also in internal/external/public sector auditing with particular reference to the implications thereon of state smallness. He lectures in postgraduate professional and business programs in these areas and has related publications in various international refereed journals. He is also the Director at the University Group of companies and both the Director and Audit Committee Chairperson at the Central Bank of Malta. He has extensive experience in the governance of large Maltese organisations, including listed groups and cooperatives, with past positions including chairmanships and memberships of audit and risk management committees in large organisations.

Ender Baykut received his BSc in Management (in English) (2011), MSc in Finance (2013), PhD in Finance (2017) from Afyon Kocatepe University. Now he is an Assistant Professor of Finance in the Department of Management (in English) at Economics and Administrative Sciences Faculty of Afyon Kocatepe University. His current research interest includes different aspects of finance especially in Corporate Governance and Financial Econometrics. He has co-authored one book and more than 20 international indexing articles, and more than 20 international conferences participation.

Ahmet Coşkun (June 1, 1976) received his Bachelor’s degree in Finance (1997) from Faculty of Economics and Administrative Sciences, MSc in Management (2008) from Afyon Kocatepe University, Social Science Institute and PhD in Management (2013) from Adnan Menderes University, Social Science İnstitute. He is an Assistant Professor in Banking and Finance and working for Uşak University and he is studying Accounting.

Mirela Cristea is a Professor at the University of Craiova (Romania), Faculty of Economics and Business Administration, Department of Finance, Banking and Economic Analysis, Center for Banking and Financial Research. Her main research directions and teaching activities are insurance and private pension funds, banking administration, interdisciplinary research in economics. She obtained the scientific title of PhD in Economics at the University of Craiova and graduated the Post-Doctoral School in Economics and Applied Sciences in Economics at the Romanian Academy from Bucharest, on the subject of private pension system in Romania. She received two awards from the Faculties on Economics Association from Romania, in 2007 and 2013, for two books on life insurance and pension system subjects. In addition, she is a reviewer and member of the scientific and organisational committees for numerous journals and conferences.

Manwel Debono, PhD (Melit), C.Psychol (UK) is a Chartered Occupational Psychologist and a Senior Lecturer at the University of Malta. He served as the Director of the Centre for Labour Studies for five years. He has been involved in numerous local and European research projects about industrial relations and working conditions. He has contributed to the European Foundation for the Improvement of Living and Working Conditions since 2003, and to the European Employment Policy Observatory for over a decade. His research interests include industrial relations, working conditions, human resources and career development.

Huriye Gonca Diler (March 23, 1976) received a Bachelor’s degree in Economics (2000) from Faculty of Economics and Administrative Sciences, an MSc in Economy (2003) and a PhD in Economy (2011) from Afyon Kocatepe University, Social Science Institute. She is an Assistant Professor in Economy Policy and working for Afyon Kocatepe University. She is studying Econometrics. Her main duties are involved in teaching Economic Growth, Economic History, History of Economy Thought, Mathematical Economics at the Department of Economy. Since 2018, she has been working as an Assistant Director in Afyon Kocatepe University’s Lifelong Education, Application and Research Center.

Deniz Erer was born in Izmir, Turkey, in 1987. She holds a BA in Econometrics from Dokuz Eylul University, Turkey, in 2009, a Master’s degree in Econometrics from Dokuz Eylul University in 2011 and a PhD in Economics from Ege University in 2018. Her areas of research include international capital movements, exchange rates, monetary policy, financial markets and financial instability. She participated in the TUBITAK (The Scientific and Technological Research Council of Turkey) Project and Ege University Scientific Research Project. She has published many studies in international journals and participated in many international conferences and congress on economics and finance.

Elif Erer was born in Izmir, Turkey, in 1987. She holds a BA in Econometrics from Dokuz Eylul University, Turkey, in 2009, a Master’s degree in Econometrics from Dokuz Eylul University in 2011 and a PhD in Economics from Ege University in 2018. Her areas of research include international capital movements, exchange rates, monetary policy, financial markets, financial instability and public finance. She has participated in Ege University Scientific Research Project, published many studies in international journals and also participated in many international conferences and congress on economics and finance.

Konrad Farrugia is an Actuary based in the UK, specialising in Solvency II methodology and valuation, internal model calibration and experience analysis. Previously, he was a Senior Manager with the Malta Financial Services Authority, where he played an active role in the implementation of the Solvency II Directive in Malta. He started his career as a Junior Auditor with one of the Big Four audit firms.

He is a Fellow of the Institute and Faculty of Actuaries (United Kingdom), a Chartered Enterprise Risk Actuary and a Certified Public Accountant. He holds a Master of Science in Applied Actuarial Science with Distinction from the University of Kent, United Kingdom, and a Bachelor of Accountancy (Hons.) from the University of Malta. He is a Visiting Lecturer with the Department of Accountancy at the University of Malta and his main research interests include auditing, risk management and corporate valuation.

Ahmet Fidan is an Assistant Professor in Dr Ordu University, graduated from I. U. Faculty of Political Sciences in 1993. He did his Master’s degree in I. U. Human Resources Management Department in 1996. He completed his PhD in M. U. Social Sciences Institute Local Administrations and Decentralization Department. He started his life as a Government Officer in Istanbul Metropolitan Municipality. He worked in IETT General Management between 1997 and 1999. He worked as an Academic in Balikesir University since 2002 to 2011. He was also on duty as Chairman Advisor in Balikesir Municipality with dual assignment. He was transferred to Avrasya University Faulty of Economics and Administrative Sciences Public Management Department as Deputy Dean in 2011. He was transferred to Ordu University Unye FEAS in 2012. He is managing AEF Culture and Research Center for which he is the establisher. He is the Chief Editor of Journal of Urban Academy, Turkey Interactive Columnist Newspaper, and Journal of Environmental and Natural Studies. His Presidentships include Blacksea Poets and Author Association, Blacksea Nature and Environment Association. Has got Turkey Second Prize in its Category by National Productivity Center MPM 2000.

Simon Grima, PhD (Melit.), MSc (Lond), MSc (BCU), BCom (Hons) (Melit.), FFA, FAIA (Acad), is the Head of the Department of Insurance which he set up in 2015 and started and coordinates the MA and MSc Insurance and Risk Management degrees together with the Undergrad degree in Insurance. He served as the President of the Malta Association of Risk Management and the President of the Malta Association of Compliance Officers between 2013 and 2015, and between 2016 and 2018, respectively. Moreover, he is the Chairman of the Scientific Education Committee of the Public Risk Management Organization. His research focus is on governance, regulations and internal controls, and has over 30 years of experience varied between financial services, academia and public entities. He has acted as co-chair and is a member of the scientific program committee on some international conferences and is a chief editor, editor and review editor of some journals and book series. He has been awarded Outstanding Reviewer for Journal of Financial Regulation and Compliance in the 2017 Emerald Literati Awards.

Berna Kaçar was born in Sultandağı/Afyonkarahisar in 1991. Firstly, she went to İshaklı school and Sultandağı high school. In 2016, she graduated from Afyon Kocatepe University, Faculty of Economics and Administrative Sciences, as best student of the Economy Department. She received MSc in Economy (2019) from Afyon Kocatepe University, Social Science Institute. She has got Computer Management, Pedagogical Formation Training and Computer-Aided Accounting Certificates.

Emre Kaplanoğlu (May 21, 1978) received his BSc in 2001, MSc in Business-Finance (2005) and PhD in Business Accounting (2012) from Ege University. Now he is an Associate Professor of Accounting and Coordinator in Program of Accounting and Tax Applications, Bergama Vocational School, Ege University, Turkey. His current research interests include different aspects of accounting and finance. He has (co-)authored 6 book chapters, more than 20 papers, more than 20 conferences participation and taken part in 4 research and 2 regional development projects.

Mehtap Karakoç (September 20, 1980) received her Bachelor’s degree in Business Administration (2004) from Faculty of Economics and Administrative Sciences, Dokuz Eylül University, and an MSc in Management (2008) and a PhD in Management (2012) from Afyon Kocatepe University, Social Science Institute. She is currently an Assistant Professor in Accounting Information System at Uşak University. She is also studying Accounting.

Graţiela Georgiana Noja is an Associate Professor at the West University of Timisoara (Romania), Faculty of Economics and Business Administration, Department of Marketing and International Economic Relations. She is the Director of East European Center for Research in Economics and Business. She completed her studies at West University of Timisoara, respectively, PhD in Economics, Master’s in Management and European Integration and BA in International Economic Relations. In addition, she was a Visiting Researcher at the University of East Anglia, School of Economics, she developed several national and international projects, attended numerous research seminars and has a wide membership in various educational organisations, research networks, scientific and review committees of top tier journals and international conferences. Her main research and teaching activities are developed within the framework of economics and international business area, with a focus on world economy, globalisation and European economic integration.

Letife Özdemir received her BSc in Business (2002), MSc in Business (2005) and PhD in Business Finance (2011) from University of Afyon Kocatepe. Now she is an Associate Professor of Finance in Department of Logistics Management, School of Applied Sciences, University of Afyon Kocatepe, Turkey. Her current research interests include different aspects of Finance. She has authored 19 papers and more than 10 conferences participation. She has been involved in two scientific projects and has awarded the best third prize in the 21st Finance Symposium. She is a member of TEMA (Turkey Combating Soil Erosion, for Reforestation and the Protection of Natural Resources Foundation).

Ercan Özen received his BSc in Public Finance (1994), MSc in Business-Accounting (1997), PhD in Business Finance (2008) from University of Afyon Kocatepe. Now he is Associate Professor of Finance in the Department of Banking and Finance, School of Applied Sciences, University of Uşak, Turkey. His current research interests include different aspects of Finance. He has co-authored three book chapters and more than 40 papers, more than 30 conferences participation, is a member in International Program Committee of three conferences and workshops. He is the Chair of International Applied Social Sciences Congress. He is a certificated Accountant, a member of Aegon Finance Association and a member of TEMA (Turkey Combating Soil Erosion for Reforestation and the Protection of Natural Resources Foundation).

Peterson K Ozili is an established author. He has published research in a wide range of outlets such as journal articles and book series in the finance and economics discipline. His research focuses mainly on financial sector issues particularly in five areas: financial stability, financial development, financial inclusion, banking and forensic accounting. He has previously published in the British Accounting Review, the International Journal of Managerial Finance, Review of Accounting and Finance and International Finance Review, among others. He currently works as an Economist at the Economic Policy Directorate of the Central Bank of Nigeria.

Ciprian Panzaru is an Associate Professor at the West University of Timisoara (Romania), Sociology Department. He coordinates disciplines such as Sociology of Migration, Labour Economics, Social Mobility and Economic Sociology. His areas of interest include agent-based modelling, computational sociology, international migration, labour market issues and population forecasting. He attended the postdoctoral program in Economics, financed from European Social Fund, studying the effect of demographic changes on social security system. He was a Visiting Researcher at the Department of Applied Economics of the Free University of Brussels. Currently, he is a PhD Supervisor and leads at the West University of Timisoara, a research group on social and economic complexity.

Yeşim Şendur, upon graduating, started her career as a Banker in SME’s banking. She is a Professor of the International Trade and Finance Department at the Adana Alpaslan Türkeş Science and Technology University now. She earned her PhD in Finance from Çukurova University. Her fields of study are corporate governance and dividend policy in general.

Sharon Seychell, BA (Melit.), MA (Melit.), is a Visiting Lecturer at the University of Malta, in Research Method Techniques for Risk Management, Sociology of Risk, as well as Governance, Compliance and Risk Management. She has over 15 years’ experience working in financial services and other service industry firms, working in the areas of financial management, operations, internal audit, compliance and risk management. She is a member of the Malta Association of Compliance Officers and holds a Bachelor’s and Master’s degree in Sociology specialising in Risk Management and Internal Controls. Her current research interests include sociology of financial services, anomie, risk management and business ethics.

Petru Ştefea is the Dean of the Faculty of Economics and Business Administration within the West University of Timisoara (Romania). As Professor and PhD Supervisor at the same faculty, he pursues research and teaching activities on topics related to financial analysis, economic analysis, financial output analysis, structural funding, investment finance and efficiency. During his academic career, he was also the Vice-Rector of the West University of Timisoara (between 2008 and 2016), a member of CECCAR as expert accountant since 2001 and a member of ANEVAR as company assessor since 1997. He has a wide expertise in national and international projects, and comprehensive membership in various educational and professional organisations and research centres.

Mario Thomas Vassallo, PhD (Sheffield), MA(European Studies), BA (Hons) (Melit) is a Senior Lecturer at the Department of Public Policy, University of Malta. He is the Rector’s Delegate to the Institute for Public Services and his research interests include multi-level governance, politics in arts and literature, and evidence-based policy. He is the editor of the book series Public Life in Malta, and a regular contributor on Campus FM, the official radio station of the University of Malta. He serves as a board member of the Islands and Small States Institute and the Foundation for Social Welfare Services. For over a decade, he worked as an HR professional in the telecommunication sector.

N. Serap Vurur received her BSc in Economy (2002), MSc in Business-Accounting (2004), PhD in Business Finance (2009) from University of Afyon Kocatepe. Now she is an Assistant Professor of Finance in Department of Accounting, School of Applied Sciences, University of Afyon Kocatepe, Turkey. Her current research interests include different aspects of finance. She has co-authored more than 15 papers, more than 20 conferences participation. She is a member of TEMA (Turkey Combating Soil Erosion, for Reforestation and the Protection of Natural Resources Foundation).

Eser Yeşildağ was born in Hatay City (Turkey) in 1983. In 2005, he graduated from Adnan Menderes University, Faculty of Economics and Administrative Sciences, Department of Business Administration. He holds a Master’s degree in 2008 and a PhD degree in Business Administration in 2013. He wrote his thesis on finance. Between 2006 and 2010, he worked as an investment expert in Evgin Securities, Şeker Investment and Anadolu Investment Brokerage Houses. Between 2010 and 2013, he worked as a lecturer in Çivril Vocational School of Pamukkale University. In 2013 he started to work with the title of Assistant Professor in the School of Applied Sciences of Uşak University. In 2014, he was appointed as the Deputy Director of the School of Applied Sciences. He teaches finance courses such as Financial Mathematics, Financial Management, Derivative Markets and Financial Literacy.

Canan Yükçü (September 17, 1965) received her BSc in (1986), MSc in Business-Finance (2006) from Dokuz Eylül University. Now she is a Lecturer and Coordinator for Program of Accounting and Tax Applications, Ege Vocational School, Ege University, Turkey. Her current research interests include different aspects of accounting and finance. She has co-authored 10 book chapters, more than 10 papers, and participated in over 20 conferences.

ESFIRM Editorial Board

Marta Borda

Wroclaw University of Economics and Business, Poland

Christophe Courbage

University of Applied Sciences Western Switzerland (HES-SO), Switzerland

Tomasz Dorożyński

University of Lodz, Poland

Joseph Falzon

University of Malta, Malta

Simon Grima

University of Malta, Malta

Pierpaolo Marano

Catholic University of the Sacred Heart – Milan, Italy

Ibish Mazreku

University Haxhi Zeka, Kosovo; University of Tetova, North Macedonia; University of Malta, Malta

Ercan Özen

University of Uşak, Turkey

Inna Romānova

University of Latvia, Latvia

Ramona Rupeika-Apoga

University of Latvia, Latvia

Darko Tipurić

University of Zagreb, Croatia

Eleftherios I. Thalassinos

University of Piraeus, Greece

Series Editors’ Introduction

The Emerald book series: Emerald Studies in Finance Insurance and Risk Management Volume 1 includes studies on Uncertainty and Challenges in Contemporary Economic Behaviour contributed mainly by authors invited from participants in the 3rd International Applied Social Science Congress (C-IASOS2019) held in Çeşme, İzmir, Turkey, between April 4–6, 2019, and the University of Malta’s Department of Insurance.

A study of the challenges and perspectives of international migration in Europe within the Brexit framework is carried out in Chapter 1. The study shows that during 2000–2019, among EU-10, the main destination country for immigrants and asylum seekers in terms of welfare and living standards is Germany (both for economic and humanitarian migration), along with the United Kingdom (in the case of economic migration). This situation tends to remain unchanged for the following years even in the Brexit context, as reflected by the 2020–2025 forecast scenarios.

The authors of Chapter 2 evaluated the impact of US economic policy uncertainty on developing countries under different economic cycles: a nonlinear approach. According to the results of the study, the macroeconomic variables in Turkey’s economy significantly and strongly respond to the changes in the EPU index during the periods in which global risk perception is low; nonetheless, so-called responses weaken due to be adopted policy of “wait and watch” by investors during the periods in which global risk perception is high.

In Chapter 3, the authors aim to find out the existence of zombie firms in the Borsa Istanbul manufacturing industry. The authors stated that 62 of 109 firms which traded on Borsa İstanbul Manufacturing Industry between 2008 and 2018 were classified as zombie firms because they had interest coverage ratios below 1, for three or more consecutive years.

The author of Chapter 4 clarifies the forensic accounting theory and explains why and how the choice of methods or techniques is used to detect creative accounting or manipulations in financial and non-financial reporting, and shows that the outcome of using such methods or techniques depends on the accounting and non-accounting decisions taken into consideration by the forensic accountant or investigator.

In Chapter 5, the authors aim to determine the effects of monetary policy practitioners in Turkey, CBT (Central Bank of Turkey), on macroeconomic variables via the interest channel of monetary transmission mechanism. The results of the study manifest that the interest channel directly affects fixed capital investment and real gross domestic product.

The authors of Chapter 6 analyze the theoretical bases and extent of behavioral accounting, which focuses on the human behavior factors being observed while creating or using financial reports.

In Chapter 7, the author presents theories that can be used in financial inclusion research and policy debates. The study shows that financial inclusion theories are explanations for observed financial inclusion practices. It also shows that the ideas and perspectives on financial inclusion can be grouped into theories to facilitate meaningful discussions in the literature.

The author of Chapter 8 aims to investigate the concept of shareholder activism by carrying out a literature review. The study shows that shareholder activism has a significant influence on corporate governance policy that a firm adopted in recent years. Shareholder activism increases levels of shareholder engagement in firm decisions and fosters a long-term corporate governance culture.

In Chapter 9, the author analyzes the relationship between interest rates, the exchange rate and investor sentiment in Turkey. The results of the study show that foreign exchange and commercial credit interest rate variables are carefully monitored by market players and are effective and influential in the formation of future expectations.

The author of Chapter 10 focused on a discussion of the fact that (a) climate change is emerging as an important issue, increasing uncertainty in the business circle, and (b) financial institutions through their inaction seem to be unmoved by climate change risk despite the potential for climate change events to affect the financial institutions and the financial system.

In Chapter 11, the author tests the asymmetric causality between developed and emerging markets. Results of the tests show that there is a weak correlation between developed and emerging markets. Moreover, results show that there is a long-term relationship between the MSCI Emerging market index and the DJIA index.

In Chapter 12, the authors measure the financial performance of commercial banks listed on Borsa Istanbul by the Multiple Criteria Decision-Making and investigate the relationship between financial performance and market return. Findings show that there is no generally significant correlation detected between financial ratios and market returns.

The author of Chapter 13, with the use of 100 quotes, presents some thoughts, in the form of quotes, on what caused the financial crisis, why it was severe and what can be done to prevent another crisis in the future.

In Chapter 14, the authors seek to explore the grounded realities of live-in care workers in Malta. They conclude with brief policy suggestions to trigger improvements in the wellbeing and dignity of migrant carers.

In Chapter 15, the authors delve into the determinants and praxis of the derivative hedging instrument usage (DHIs) of Malta, a small island state. Empirical evidence is also provided in relation to the impact of DHI usage and the adoption of a hedge accounting model in entities’ financial statements.

Chapter 16 highlights the effect of micro entrepreneur arrangements to city culture in terms of urban aesthetics and street peace in the urbanization process.

Finally, in Chapter 17, the authors address the key issues of the fiscal policies and tax system in Kosovo, in order to align with the contemporary tax principles and requirements of the European Standards. Results of the study confirm the need for tax reforms in order to have an adequate tax system oriented to indirect tax; changing the structure of tax collection for border tax into domestic tax, simplification of the legal procedures, improvement of management and audit systems, reducing the informal grey economy and to have a gradual growth-friendly fiscal policy.