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TL;DR: In this paper, the authors studied the capital structure dynamics of central and eastern European firms to understand the quantitative and qualitative development of financial systems in this region and found that firms prefer internal finance over bank debt and adjust leverage only slowly.
Abstract: This paper studies the capital structure dynamics of central and eastern European firms to better understand the quantitative and qualitative development of financial systems in this region. The dynamic model used endogenises the target leverage as well as the adjustment speed towards these targets. It is applied to microeconomic data for 10 countries. We find that during the transition process firms generally increased their leverage, lowering the gap between actual and target leverage. Profitability and age of firms are the most robust determinants of their capital structure targets. Older firms attract more bank debt, whereas profitability decreases firms’ leverage targets. While banking system development has in general enabled firms to get closer to their leverage targets, information asymmetries between firms and banks are still important. As a result, firms prefer internal finance above bank debt (pecking order behaviour) and adjust leverage only slowly.
172 citations
TL;DR: In this paper, the authors used co-word analysis on extant literature to map the intellectual structure of research addressing the impact of economic transition on Central and Eastern European enterprises during the 1989-2013 period.
31 citations
TL;DR: In this paper, the impact of bank concentration on the likelihood of a country suffering systemic bank fragility was investigated using on-site bank balance sheet information to construct a proxy that represent each bank stability condition and use a variety of internal and external factors to estimate a balance panel dynamic two-step General Method of Moments (GMM) approach.
Abstract: Motivated by the debate on concentration-stability nexus, this paper studies the impact of bank concentration on the likelihood of a country suffering systemic bank fragility. For this reason, we followed a new approach using on-site bank balance sheet information to construct our proxy that represent each bank stability condition and use a variety of internal and external factors to estimate a balance panel dynamic two-step General Method of Moments (GMM) approach for the period 2008 – 2015. First, results provide supportive evidence consistent with the concentration-fragility view. Second, macroeconomic variables seem to have a significant effect on bank stability, which is not found for the sovereignty primary risk. By contrast, the bank-specific variables have also a significant effect on bank stability conditions. Finally, non-systemic banks are found to be more sensitive to macroeconomic condition and market concentration, while the better capitalised banks are less sensitive to fragility at the expense of lower operation efficiency.
22 citations
TL;DR: In this article, the authors examined the relation between official and free-market exchange rates in Albania and found that the free market is more efficient than the official market in the sense that one cannot use exchange rate movements denominated in one currency to predict movements in another currency.
20 citations
TL;DR: In this paper, a nonlinear adjustment mechanism within an ARDL model was used to test the short and long-run effects of currency fluctuations on money demand in Albania, a small open economy without deep financial markets.
Abstract: A good part of the empirical literature on money demand focuses on searching for a stable long-run money demand function, an essential part of a successful monetary policy. Beyond the typical money demand specification, which includes income and interest rates, Mundell (Can J Econ Polit Sci 29:475–485, 1963) made a case for the exchange rate as an important determinant of money demand working through currency substitution. This paper contributes a new approach to test the short- and long-run effects of currency fluctuations on money demand in Albania, a small open economy without deep financial markets. More specifically, we examine the case for asymmetric effects of exchange rate fluctuations on money demand by using a nonlinear adjustment mechanism within an ARDL model. Using data for 1996–2016 from Albania, we show that the money demand is stable in both the linear and nonlinear specifications. The nonlinear model reveals an asymmetric effect of exchange rates on money demand, with depreciations reducing money demand, likely due to a substitution effect amplified by a relatively dollarized economy.
8 citations
Authors
Showing all 11 results
| Name | H-index | Papers | Citations |
|---|---|---|---|
| Marga Peeters | 12 | 93 | 745 |
| Marta Muço | 5 | 8 | 84 |
| Altin Tanku | 4 | 6 | 146 |
| Gerti Shijaku | 3 | 3 | 30 |
| Ilir Vika | 1 | 2 | 1 |
| Margarita Topalli | 1 | 2 | 26 |
| Brizejda Kreshpa | 1 | 1 | 2 |
| Erjona Rebi Suljoti | 1 | 1 | 1 |
| Klodion Shehu | 1 | 1 | 2 |
| Vasilika Kota | 1 | 3 | 5 |
| Sonila Meka | 1 | 1 | 1 |