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1 – 10 of over 6000Sandra Cohen, María-Dolores Guillamón, Irvine Lapsley and Geraldine Robbins
The purpose of this paper is to examine the impact of the Eurozone financial crisis by discussing the experiences of Greece, Ireland and Spain. It particularly examines the…
Abstract
Purpose
The purpose of this paper is to examine the impact of the Eurozone financial crisis by discussing the experiences of Greece, Ireland and Spain. It particularly examines the influence and actions of the Troika in the management of the sovereign debt crisis in the Eurozone.
Design/methodology/approach
The primary source of information for this study has been the documents of the Greek, Irish and Spanish Governments (often only available in their native language) and the reports of EU bodies and the IMF, supplemented by media coverage, as deemed appropriate. This has been analysed on a comparative basis to contrast the experiences of these three countries.
Findings
This study reveals how the Eurozone crisis has impacted on financially weak countries in this currency union. The fiscal conservatism of the Troika (the IMF, the EU and the European Central Bank) has had profound consequences for these economies, which have experienced dramatic cuts in public services.
Research limitations/implications
This study has focused on the experiences of three countries in the Eurozone. There is a case for extending this analysis to other Eurozone countries.
Practical implications
There are two approaches to recession – governments can stimulate demand by infrastructure spending or take the financial conservatism route of reducing public expenditure and public sector borrowing. However, the severity of the crisis undermines the first approach and there are uncertain outcomes with the second approach. This paper shows the effects of adopting financial conservatism as a strategy in this crisis.
Social implications
The austerity programmes pursued by the governments in this study have led to unemployment, migration of skilled workers, collapse in property markets, failing banks and social unrest.
Originality/value
This study takes an accounting perspective on the Eurozone crisis. This offers a distinctive interpretation of events. This study examines the merits of widely used theories in studies of public sector change namely legitimation and resource dependency theory intertwined with power and offers insights into how meaningful they are in explaining the dramatic influence of austerity programmes in the Eurozone.
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Kjell Hausken and Jonathan W. Welburn
The article develops a model to interpret the 2010–2018 financial crisis in Greece, Portugal, Ireland, Spain and Cyprus, and the loan programs from the IL (International Lender;…
Abstract
Purpose
The article develops a model to interpret the 2010–2018 financial crisis in Greece, Portugal, Ireland, Spain and Cyprus, and the loan programs from the IL (International Lender; i.e. the European Union, the European Commission, and the International Monetary Fund).
Design/methodology/approach
For each country, an isoelastic utility with constant relative risk aversion is assumed. For the IL a Cobb Douglas utility is assumed with consumption, the GDP (Gross Domestic Product) to debt ratio, and market stability as inputs, accounting for time discounting. This article applies two methods to assess the empirics. The first method considers the IL's strategy as a whole over the 2010–2018 period. The second method assumes that the IL maximizes its utility in one period to determine its optimal loan, accounting for the empirics in that period, and the debt in the previous period.
Findings
For the first method, when the output elasticity in the IL's Cobb Douglas utility is high favoring consumption, the IL prefers offering a higher loan than its actual loan. Otherwise the IL prefers to offer no loan. The output elasticity at which the IL prefers to offer a loan is lowest for Greece, second lowest for Cyprus, third lowest for Portugal, and highest for Ireland and Spain. A high loan to Greece over a larger range of the output elasticity for Greece's consumption is supported by Greece being prioritized through the loan program. For the second method, the IL prefers to offer no loan to Greece which is too burdened with debt. Thus, the first method seems preferable, considering the entire duration of the crisis holistically.
Originality/value
The article offers a novel perspective of how to assess debt crises, enabling the IL to weigh various factors such as consumption, GDP, loan offered, and each country's debt to credit markets.
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Philipp Klotz, Tsoyu Calvin Lin and Shih-Hsun Hsu
Greece, Ireland, Portugal and Spain have been in the spotlight of the recent economic crisis in Europe. With their economy strongly reliant on the construction industry, these…
Abstract
Purpose
Greece, Ireland, Portugal and Spain have been in the spotlight of the recent economic crisis in Europe. With their economy strongly reliant on the construction industry, these countries have become widely exposed to the downturn in the property sector. This paper aims to examine residential property bubble dynamics in the period from 2003 to 2014 and investigate the role of financing conditions in the formation of these bubbles.
Design/methodology/approach
Building on the present value model in conjunction with the rational bubble assumption, the study applies the discounted cash flow (DCF) approach and applies weighted average cost of capital (WACC) to capture real estate bubble dynamics in the four countries. Reduced form vector autoregression models are used to examine the relationship between financing conditions and the bubble indicator.
Findings
The bubble indicator suggests that Spain and Ireland experienced a large rise in the bubble relative to moderate increases in Portugal and Greece in the period from 2003 up to the collapse in 2008. Our findings from the empirical analysis indicate that central bank policy shifts that impact interest rates and lending volumes on the domestic level have a significant and leading effect on the formation of residential property bubbles.
Originality/value
Only little research on real estate bubbles takes financial leverage into account. This paper bridges this gap by applying the WACC in the DCF model to identify real estate bubbles. While using a distinct bubble indicator, this analysis provides new insights into the linkage between financing conditions and real estate bubbles.
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Uses a specially constructed data set to present new evidence on the convergence performance of Ireland among European Union (EU) countries at the aggregate, sectoral and industry…
Abstract
Uses a specially constructed data set to present new evidence on the convergence performance of Ireland among European Union (EU) countries at the aggregate, sectoral and industry levels for the period 1960 to 1990. Overall, aggregate convergence occurred among the EU 12 over the period. Ireland did exhibit catch‐up on the EU average. However, Ireland’s convergence performance becomes distinctly less favourable if adjustments are made for the increase in net factor outflows during the late 1980s. This is especially the case when gross national product is used instead of gross domestic product (GDP) to measure Irish living standards as this results in a divergent trend emerging. For labour productivity the adjustment of Irish GDP to take account of transfer pricing by multinationals leads to the finding that labour productivity convergence performance in Irish manufacturing is substantially overstated if “official” GDP estimates are used. This translates into more muted convergence performance at the aggregate level if the adjustments are made.
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Uses data from 1994 International Social Survey Programme to examine how attitudes to maternal employment at different stages of child rearing vary across and within eight nations…
Abstract
Uses data from 1994 International Social Survey Programme to examine how attitudes to maternal employment at different stages of child rearing vary across and within eight nations in the European Union, UK, Germany, Austria, the Netherlands, Sweden, Ireland, Italy and Spain. Considers whether a mismatch exists between belief in a women’s right to work and the “traditional” family ideology. Highlights a north/south divide in attitude and differing welfare policies and gender‐role beliefs.
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Canh Phuc Nguyen, Thanh Dinh Su, Udomsak Wongchoti and Christophe Schinckus
This study aims to examine the spillover effects of trans-Atlantic macroeconomic uncertainties on the local stock market returns in the USA and eight selected European countries…
Abstract
Purpose
This study aims to examine the spillover effects of trans-Atlantic macroeconomic uncertainties on the local stock market returns in the USA and eight selected European countries, namely, Germany, France, Spain, Italy, Greece, Ireland, Sweden and the UK, during the 2000-2019 period.
Design/methodology/approach
This paper applies the dynamic conditional correlation multivariate GARCH model (i.e. multivariate generalized autoregressive conditional heteroskedasticity model or DCC MGARCH) to examine the potential existence of the spillover from the uncertainty of the USA to EU stock markets and vice versa. To capture different dynamic relationships between multiple time-series variables following different regimes, this paper applies the Markov switching model to the stock returns of both the USA and the eight major stock markets.
Findings
The increases in US uncertainty have significant negative impacts on all EU stock returns, whereas only the increases in the uncertainties of Spain, Ireland, Sweden and the UK have significant negative impacts on US stock returns. Notably, the economic policy uncertainty (EPU) in the USA has a dynamic effect on the European stock markets. In a bear market (State 1), the increases in the EPU of the USA and EU have significant negative impacts on EU stock returns in most cases. However, only the increase in US EPU has significant negative impacts on EU stock returns in bull markets (State 2). Reciprocally, the increases in the EU EPUs of Germany, Spain and the UK have significant impacts on US stock returns in bear market.
Originality/value
The observations challenge the conventional wisdom according to which only larger economies can lead the smaller counterparts. The findings also highlight the stronger dependence of the US stock market on international macroeconomic uncertainty.
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Síle O'Dorchai, Robert Plasman and François Rycx
This paper aims to measure and analyse the wage gap between male part‐ and full‐timers in the private sector of six European countries, i.e. Belgium, Denmark, Ireland, Italy…
Abstract
Purpose
This paper aims to measure and analyse the wage gap between male part‐ and full‐timers in the private sector of six European countries, i.e. Belgium, Denmark, Ireland, Italy, Spain, and the UK.
Design/methodology/approach
Using a unique matched employer‐employee data set providing harmonised information on six European countries (the 1995 European Structure of Earnings Survey), the empirical strategy is based on the estimation of standard Mincer wage equations and the Oaxaca and Ransom wage gap decomposition technique. First, individual gross hourly wages are regressed on a set of human capital variables only and second, a wider range of control variables related to e.g. occupation, sector of activity, firm size, and level of wage bargaining is inserted.
Findings
The study finds that the raw gap in hourly gross pay amounts to 16 per cent of a male part‐timer's wage in Spain, to 24 per cent in Belgium, to 28 per cent in Denmark and Italy, to 67 per cent in the UK and to 149 per cent in Ireland. Human capital differences explain between 31 per cent of the observed wage gap in the UK and 71 per cent in Denmark. When the whole set of explanatory variables is included in the wage regressions, a much larger part of the gap is explained by differences in observed characteristics (except in Italy).
Research limitation/implications
Unfortunately, the paper is not able to correct for workers' potential self‐selection into part‐time and full‐time employment. Results suggest that policy initiatives to promote lifelong learning and training are of great importance to help part‐timers catch up with full‐timers in terms of human capital. Moreover, except for Italy, they point to a persisting problem of occupational and sectoral segregation between men working part‐time and full‐time which requires renewed policy attention.
Originality/value
Economic theory advances a number of reasons for the existence of a wage gap between part‐time and full‐time workers. Empirical work has concentrated on the wage effects of part‐time work for women. For men, much less empirical evidence exists, mainly because of lacking data. This paper therefore makes a valuable contribution. The more so given that (to the best of our knowledge) there exists no cross‐national evidence with respect to men's part‐time wage penalty.
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This paper aims to test the finite sample properties of the automatic variance ratio (AVR) test and suggest suitable measure to improve its small sample properties under…
Abstract
Purpose
This paper aims to test the finite sample properties of the automatic variance ratio (AVR) test and suggest suitable measure to improve its small sample properties under conditional heteroskedasticity and apply it to test the martingale hypothesis in the stock prices of the Portugal, Ireland, Italy, Greece and Spain (PIIGS economies) markets. This paper also seeks to investigate that “If the time series is not martingale, then what else?”
Design/methodology/approach
Monte Carlo experiments have been undertaken to test the small sample properties of automatic variance ratio (AVR) test. The study uses AVR test on daily and weekly data of the indices to investigate their martingale behaviour. It uses detrended fluctuation analysis (DFA) and BDS test statistics to answer, “If not martingale, then what else?”. The study also applies moving subsample approach to examine the dynamic behavior of stock prices and to obtain inferential findings robust to possible structural changes and presence of influential outliers.
Findings
The author finds that weighted bootstrap procedure significantly improves the small sample properties of AVR tests under conditional heteroskedasticity. The results provide evidence in support of the weak‐form efficiency of Italy and Spain. But Portugal, Ireland and Greece exhibit signs of long memory in the stock prices. All indices also exhibit chaotic characteristics.
Originality/value
This paper has both methodological and empirical originality. On the methodological aspect, the author proposes weighted bootstrap procedure on AVR test to improve its small sample properties. On the empirical side, the study finds that all stocks exhibit dynamic behavioral characteristics which change over time.
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Geeta Rani Duppati, Frank Scrimgeour and Albert Sune
This paper aims to examine the relevance of boards in driving firm level performance. For this purpose, it considers firms listed on Ireland and Spain stock exchanges for the…
Abstract
Purpose
This paper aims to examine the relevance of boards in driving firm level performance. For this purpose, it considers firms listed on Ireland and Spain stock exchanges for the period 2005 to 2014, over a period that includes the global financial crisis.
Design/methodology/approach
This study uses panel data regression analysis to analyse the effects of board characteristics on performance and also uses alternate model specifications to test the significance of robustness of relationships.
Findings
The impact of board size on performance is negative and significant for Irish and Spanish firms for the study period. In general, the board independence has a positive effect on the performance of Spanish firms for the complete study period and suggests consistency with the resource dependency theory.
Research limitations/implications
The analysis suggests that in general, the non-executive and the board size do not affect the corporate performance of Irish and Spanish firms during the financial crisis. The fixed effects model suggests positive effects of gender diversity on performance for Spanish firms, while the random effects indicates negative relationship between gender diversity and performance for Irish companies.
Practical implications
The evidence on the Spanish firms suggests that female representation on the boards may be critical during the financial crisis
Social implications
The quota legislation on female board representation in Spain is yielding superior results over the soft law approach by Irish firms during the times of financial crisis period.
Originality/value
This study contributes to the literature on the corporate governance practices and performance of two countries that were strongly affected by the crisis in the European Union. As governments increasingly contemplate board gender diversity policies, this study offers useful empirical insights on Spanish and Irish firms.
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This paper aims to investigate the yield spread determinants for a sample of European markets in the light of the recent financial crisis. It utilises findings from two different…
Abstract
Purpose
This paper aims to investigate the yield spread determinants for a sample of European markets in the light of the recent financial crisis. It utilises findings from two different strands in the literature: findings on bond spread determinants and findings on the effect of investor sentiment on equity returns.
Design/methodology/approach
The explanatory variables in the regression models proxy not only for economic fundamentals (e.g. economic activity, default risk, liquidity risk, general market conditions) but also for investor sentiment. A vector autoregressive approach is employed.
Findings
The results indicate that fundamental variables are significant for the determination of the level of yield spreads, as suggested by previous studies. Local and international investor sentiment, however, both current and past, is also a statistically significant determinant for both the level and monthly changes of yield, especially during the crisis period 2007-2011.
Research limitations/implications
The implication of this finding is significant for all parties involved: government officials, private lenders, EU/ECB/IMF officials, and market participants.
Practical implications
Focusing solely on quantitative economic performance indicators may not have the desirable effect of reducing borrowing rates and facilitating the return to economic stability. Perhaps, reassuring and/or sending strong qualitative signals to financial markets may be as important. Involved agents may have to address not only technical financial issues but also the perception that market participants have about the proposed solutions to the crisis and eventually affect market sentiment.
Originality/value
The issue of the effect of investor sentiment on government yield spreads during a crisis has not been investigated before.
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