Proceedings of International Symposium on Business...

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Proceedings of International Symposium on Business, Economics and Financial Applications

ISSN: 2241-2727

ISSN: 2241-2727

http://www.scienpress.com/conferences/isbefa.html

International Symposium on Business, Economics and Financial Applications (ISBEFA) 2012

ISBEFA/ ISSΝ 2241-2727 xxix

List of Papers /Abstracts

Aleksandar KešeljevičPledge for More Pluralism in Economics

1

Amit Joshi-Saurabh Joshi -Priya Grover-Hitesh PantPotential of tourism in a young Himalayan Indian state

5

Arzu Alvan-Mustafa Hakan GüntürkünIncome distribution and interest rates in Turkey: Their coefficient concentration index

11

Alex A. A. Bruce-Ayuba A. Aminu-Usman A. SaleInterest Rate Liberalization: An Empirical Study of the Effects on Corporate Cash Flows and Profits in Nigeria

15

Engin Demirel-Ahmet Atakişi-SedaAbacıoğluFinancial Ratio Analyzes on Staff Cost: ISE Banking case

23

Amarjit GillThe Relationship between Corporate Governance and the Profitability of American Firms

27

Erjon Nexhipi-Ilir SosoliManaging family businesses in the tourism and hospitality industry. Case study Albania

35

Demosthenes Georgopoulos-Theodore Papadogonas-George Sfakianakis Are private or public debts more closely correlated with the ‘Great recession’; The case of E.U. countries

39

George W. Blazenko-Freda Eddy-Sumeke-Yufen FuModerating the Price Sensitivity of Customers Does Not Increase Business Profit

43

Daniela BuneaProvincial Assessment of Convergence and Migration in Spain

61

Elbir Dorsaf-Goaied MohamedExternal financial liberalization, corruption and economic growth Application to the MENA countries

69

Muhammad Fiaz-Naqvi Najam Abbas-Zeeshan FareedAcademic Institutions towards Entrepreneurship: An Expedition of Collaborative Innovations with Firms

77

Jernej Mencinger-Aleksander AristovnikAre Fiscal Policies Counter-Cyclical in European Monetary Union?

83


ISBEFA / ISSN 2241-2727xxx

Arya Kumar-Suneet Raj Mohapatra-Pranshu KacholiaChanging consumption pattern of residents of Mumbai and its future implications 91

Juan Nicolás Montoya Monsalve-Santiago Gutiérrez Broncano-Alvaro Fernando Niňo Moncada The influence of formal authority in the administration of human talent and its impact on business results

103

Garima Mathur-Navita Nathani-Silky Vigg Kushwah-Shweta SarvateEmotional labor and work stress among nursing staff

111

George Andrew GekasMunicipal bench marking, key performance factors A primer for Greek Municipalities

117

Electra Pitoska-Themistokles Lazarides Development of international entrepreneurship and strategies of Greek enterprises: a case study

127

Irena ŁąckaThe state of linkages between the science and industry in Poland before the reform of the sector of science and research

133

Dimitrios P. Kamsaris-Avraam PapastathopoulosOrganizational culture and the influences it exercises on aspects of change in the construction sector. The human perspective

141

Kolyo Onkov- Maria KashevaModelling and Economic Analysis of Natural Fermentation Process of Varieties of Oriental Tobacco „Basma” in Bulgaria

149

Panagiotis G. Markos The development and role of regional health care services in GreeceThe case of Epirus Health Care Services

153

Kalliopi Chatzizacharia-Christina Beneki -Ioannis Nikolettos-Dimitrios HatziavramidisProduct development and customer needs assessment in Greek pharmaceutical industry

163

L. I. KukaevaInfluence of pricing on the consumer behavior

171

Christos Katsis-Yorgos Goletsis-Paraskevi Boufounou-George Stylios-Evangelos KoumanakosUsing ants to detect fraudulent financial statements

175

Naqvi Najam Abbas-Muhammad Fiaz-Rida Batool-Zeeshan FareedBest Practices in International Education Management: A Perspective of Student Affairs Department

181


ISBEFA/ ISSΝ 2241-2727 xxxi

N.A. NurseiitThe Impact of Russia’s Accession to the WTO on the Economy of Kazakhstan and Belarus

187

Mohamed Abbas IbrahimThe Determinants of Private Sector Demand for Employment in Egypt: 1990-2007

195

Mohammad Junaid Khalid IqbalP-Rise (Probability of Rise) Calculated From Moving Averages

209

Seyed Mohammad Aghamiri -Mehrabirad Sina-Yazdan Gudarzi FarahaniRelation between Oil Price and Economic Growth in Iran: an ARDL Testing Approach

215

Konstantina PendarakiMutual Fund Performance Evaluation using Data Envelopment Analysis with Higher Moments

223

Spyros E. Polykalas-Spyridon TroumpetasModeling the economic impact of a cruise ship dock Kefalonia’s cruise ship dock case study

229

V. I. TinyakovaAdaptive-rational prognostication models. The new prognostic potentialities

239

Rabia Imran-Abroo RehmanPsychological contract: The impact of HR practices

243

Angela Roman-Alina Camelia ŞarguThe growth of the loans to households and their implications: European experiences

247

George Lymperis-Spyridon TroumpetasShort Term Contrarian Strategy in the Athens Stock Exchange. Does it work?

255

Zaheer Ahmed-Umara NoreenEffect of Financial Literacy and Individual Investor Behavior on Investment Decisions

263

E. G. Popkova-M. K. Romanova-E. S. AkopovaTowards the strategies of regional clustering. The role of SMEs

269

Ilias P. ParginosFDI : Horizontal Vs Vertical form MNEs: Greece’s strategic choice

275

George Sfakianakis-Demosthenes Georgopoulos-Theodore PapadogonasThe recent growth performance of EU-27 countries: the role of indebtedness

299

Leonidas A. Papakonstantinidis- Anastos DimitropoulosThe win-win-win Papakonstantinidis model. A behavioral analysis in dynamical systems The Non Instrumental Rationality Paradox. Case-study: Hellenic Benefactors

305

Meysam Salari, S. Hassan Ghodsypour, Hamed Heidari, Moin HajimaghsoudiLoan Portfolio Risk Prediction Using Mont-Carlo Method (Case Study)

331


ISBEFA / ISSN 2241-2727xxxii

Senka Borovac Zekan - Ivan Peronja - Dragan Mustapić Entering the world of business by becoming a franchisee

337

G.P Reddy- Avtar Singh Rana- S. LavanyaValue Chain Optimization in Agricultural Supply Chain

343

Electra Pitoska-Themistokles LazaridesThe role of tourism in small provincial and non-coastal Greek towns

347

Afsheen Fatima- Muhammad Zahid IqbalImpact of horizontal interpersonal conflicts on organizational commitment

353

Kalaitzoglou Iordanis- Beatrice DurgheuEconomic and Financial Growth in Europe. Is Euro Beneficial for all Countries?

363

Ben K. Agyei-MensahThe impact of contingent factors on performance measures in the rural banks of Ashanti region of Ghana

366

Thanos GeorgeThe performance of Greek Mutual Equity Funds during the Financial Crisis

367

Aymen Ben Rejeb-Ousama Ben SalhaFinancial Crises and Emerging Stock Markets Volatility: Do Internal Factors Matter?

368

Ioanna FaraklouLike shrines without worshippers. Funding and management of Greek State Museums

370

Stavros Degiannakis- George Filis- Christos FlorosThe time-varying relationship between oil and stock prices: Evidence from 10 European industrial sector indices

372

Ioanna Giannoukou-George Anastassopoulos-Christina BenekiFirm Performance: the corporate and the destination competitiveness effect

373

Gogas Periklis- Pragidis Ioannis – ChrysostomosMeasuring the impact of fiscal policy on economic activity: evidence from U.S.A

374

Ioakimidis Marilou-Kiohos ApostolosSubject Well-Being and Selected Demographic, Economic, and Job Factors in OECD Countries

375

Panta Maria-Kapetanios GeorgeStackelberg leadership with product differentiation

376

Konstantinos Kiriakopoulos-Alexandros Koulis-Charalampos BotsarisStructured Products and Behavioral Finance. Lessons for the Greek Market

377


ISBEFA/ ISSΝ 2241-2727 xxxiii

Panayotis Koutsouvelis- Avraam PapastathopoulosThe Effects of Indirect Taxes on Consumer Prices: Empirical Evidence for Greece

378

Vasiliki N. LeventakouOrganizational behavior vs. Bullying at work

379

Vasiliki N. LeventakouAre Preventive Measures Cost-effective?

380

Savvas Makridis- Efpraxia PollatouThe Effect of The Relationship Of Organizational Climate And Communication on Student Satisfaction: A Case Study of The Dpt. of Public Relations & Communication of The Technological Education Institute (TEI) of The Ionian Islands, on Cephalonia Island, Greece

381

George Malindretos-Konstantinos Siassiakos-Ioannis SklavakisFork to farm: agro-food chain trends and the portray of the food consumer in Greece with regard to sustainability

383

Ousama BEN SALHALabor Market Outcomes of Economic Globalization in Tunisia: An Introduction

384

Periklis Tagkas-Grigorios GikasIntercultural communication and regional development

385

Panta Maria- Vrysagotis Vassilios-George KaimakamisExploring the impact of variables revenues and cost on the profit function for a distribution channel with 3 members manufacturer, wholesaler, retailer

386

Costas Ant. PetrakisCorporate Social Responsibility (CSR) from 2000 to the present and the role of Institutional Organizations in the European Union

387

Thanos John-Thanos GeorgeExploring the economic impact of the transition of large and mid-cap publicly traded companies from Hellenic Generally Accepted Accounting Principles (HGAAP) to International Financial Reporting Standards (IFRS)

388

Michail Tsagris-Christina BenekiA more detailed examination of the folded normal distribution

389

Thanos George-Thanos JohnThe impact of the financial crisis on the viability of Greek businesses –An empirical approach to large and mid-cap publicly traded companies, based on the Altman’s Z-Score model

391

Thanos AthanasiosStudy on the municipal and household waste in the EU countries and a proposal for their optimal financial management system

392


ISBEFA / ISSN 2241-2727xxxiv

Aravou-Papadatou S.- Kostarelou G.Experimental Investigation of Influence and Opinion Change. A case study in Nutrition and Health Education for the Prevention of Coronary Heart Disease

393

Aravou-Papadatou S.- Bazati J.Opinion Representation in different forms of Alternative Tourism. Research in 362 Greek Students of TEI -Technological Educational Institutes, in Greece

395

Thanos AthanasiosProposal of an integrated system of sludge and solid waste alternative management forms and their cost minimization

397

Ejiofor Ozioma MichaelInnovative approach to business in risk management

Maria Adam-Georgios KaimakamisGolden section, Fibonacci sequence and the time invariant Kalman and Lainiotis filters

Junsoo Lee-Ming Meng-Mark C. StrazicichTwo-Step LM Unit Root Tests with Trend-Breaks

Sebastian Ofumbia Uremadu- Ben-Caleb Egbide- Patrick E. Enyi Working capital management, liquidity and corporate profitability among quoted firms in Nigeria: Evidence from the productive sector

398

400

402

405


ISBEFA / International Scientific Press, 2012

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The growth of the loans to households and their

implications: European experiences

Angela ROMAN and Alina Camelia ȘARGU

Department of Business Administration, Faculty of Economics and Business Administration

Alexandru Ioan Cuza University

Iasi, Romania

[email protected], [email protected]

Abstract — Over the last decade, in the context of a favorable

international and national economic environment, most of the

European countries, and especially the new EU member states,

have known an accelerated expansion of the banking loans. The

significant foreign capital inflows to the banking sector, the

increase of the foreign banks position on the national banking

markets, have led to an intensified competition, the diversification

of the range of banking products and services as well as to the

orientation of the banks activity towards new market segments,

respectively the households loans market, which has experienced an

accelerated dynamic growth. The extremely accelerated dynamic

growth of the loans to households and the increased rate of the

loans denominated in foreign currency have determinate a

significant increase of the households indebtedness and has

triggered major macroeconomic and financial imbalances. These

vulnerabilities have amplified in the light of the global economic

crisis, that through its extremely serious effects hit strongly the

households credit market and moreover has add new

vulnerabilities, such as the alarming increase of the nonperforming

loans rate. In this context, our paper aims to comparatively analyze

the main characteristics of the loans to households in a series of

new EU member states (Bulgaria, Czech Republic, Estonia,

Hungary, Latvia, Lithuania, Poland, Romania), the vulnerabilities

posed by the extremely rapid growth rate of these loans and the

implications of the current crisis.

Through the content of the paper, our aim is to underline the

central importance of the households loans market for the

economic and financial stability and to signal the indispensable

need for the policy makers to focus their concerns towards finding

new tools that are capable to prevent the excessive growth of loans

and are able to insure the consolidation of the financial system

resistance to shocks.

Keywords-loans to households, European Union,

vulnerabilities, global economic crisis, challenges

I. INTRODUCTION

One of the most significant developments of the financial environment in most of the EU countries, especially in the case of the new member states, over the last 3-4 years previous to the start of the global crisis in September 2008, were given by the extremely rapid growth of bank loans to economy and particularly of those granted to households. Such a development has been considered on the one hand as a progress regarding the convergence process, while on the other hand has

had major negative implications in the financial and macroeconomic stability.

In this context, our paper aims to comparatively analyze the main characteristics of the developments recorded by the loans to households in 8 of the new EU member countries (Bulgaria, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania), as well as the vulnerabilities posed by the pronounced increase of households bank indebtedness and last but not least the implications of the current crisis.

Our paper is structured as follows: the first part includes introductory remarks on the importance and relevance of the approached topic; the second part is dedicated to the literature review; the third part highlights the characteristics of the financial intermediation process in the new EU member states considered by our research, especially from the point of view of loans to households; the fourth part of the paper reflects the effects of the rapid growth of the loan to households and measures adopted by authorities. The last part is dedicated to the concluding remarks.

The methodology used in our research starts with the literature review, in order to point out the importance of the topic approached by our paper. The analysis conducted in this paper is based on official statistics from the ECB, other central banks, the IMF and different reports and researches.

Using this methodology, the paper highlights the central importance of the market of bank loans to households for a country’s economic and financial stability as well as the essential need for the policy makers to focus their concerns towards finding new tools that are capable to prevent the excessive growth of loans and are able to insure the consolidation of the financial system resistance to shocks.

II. LITERATURE REVIEW

The rapid growth of the banking loans to households in most of the Central and Eastern European countries, in the years previous to the financial crisis has caught the attention of many researchers, which were preoccupied both with the identification of the determinant factors for this evolution and also with the answer to the question if these evolutions underline progresses made in the convergence process or it represents just an unsustainable growth, that leads to macroeconomic and financial vulnerabilities. The large number

mailto:[email protected]

mailto:[email protected]


ISBEFA / International Scientific Press, 2012

252

of Financial Supervision, which has as the major goal the macro-prudential supervision of the financial EU system.

* BG, CZ, LV, PL, RO - June; EE, HU, LT – March. Source: [15]

Figure 6. The evolution of the non-performing loans between 2008-2011*

Under the present circumstances, we may state that the central banks and supervisory authorities are currently faced with new challenges related to the credit market, especially as concerns household loans. From this point of view, one of the challenges is related to the high share of foreign currency-denominated loans, given the limited domestic savings level. Thus, the authorities should channel their efforts towards designing and implementing solutions meant to develop national currency markets, to strengthen the cooperation with the authorities in the countries of origin of foreign banks, and also to thoroughly promote awareness raising campaigns among households on the risk of foreign currency over-indebtedness. Another challenge is related to mortgage loan market, which, unlike consumer loan market, has not been regulated yet by specific European regulations.

V. CONCLUSIONS

Over the last years, previous to the burst of the recent global crisis, one of the most significant characteristics that has marked the banking lending process in the analyzed countries is the extreme rapid growth, expressed through two digits rates, of the households banking loans, that have represented the main engine of the accelerated dynamic of the banking loans to economy. As a result of such developments, in most of the analyzed countries have been recorded significant macroeconomic and financial imbalances. Macro-economically speaking, some countries had higher inflation rates, higher current account balance deficits and higher external debt levels. Financially speaking, the significant mortgage loan levels increase, and, among them, the foreign currency-denominated or variable interest rate loans, led to a significant increase of house prices, to higher foreign exchange and interest rate risk exposure of households, to higher lending risk for banks and to their exposure to the real estate market evolution.

The current crisis stopped this rapid growth of the bank loan and aggravated the financial status of many households in the EU. Economic recession, the cash availability problems encountered by international financial markets, the more restrictive lending standards and terms, the depreciation of some national currencies and the exchange rate volatility, as

well as the negative economic growth and unemployment rate perspectives, slowed down the rate of loans granted to households in all the analyzed countries, yet with certain differences. Therefore, the countries that suffered the most severe macroeconomic and financial imbalances were the most affected by the crisis.

The serious imbalances suffered by some countries due to extremely fast, and often unsustainable bank loan levels increases, and also the extremely negative effects of the current crisis on those countries, underline the major role played by the household loan market in ensuring economic and financial stability. From this point of view, the central banks and supervisory authorities are facing new challenges related to risk management improvement and to the enforcement of stability-enhancing supervision regulations.

REFERENCES

[1] A. Aisen, and M. Franken, Bank Credit During the 2008 Financial Crisis: A Cross- Country Comparison, IMF Working Paper WP/10/47, (2010).

[2] P. Backé, B. Égert and Z. Walko, Credit Growth in Central and Eastern Europe Revisited, in Focus on European Economic Integration Q2, OeNB, (2007).

[3] P. Backé and C. Wójcik, Catching-up and Credit Booms in Central and Eastern European EU Member States and Acceding Countries: An Interpretation within the New Neoclassical Synthesis Framework, CESifo Working Paper Series 1836, CESifo Group Munich, (2006).

[4] Basel Committee on Banking Supervision, Consultative Document, Countercyclical capital buffer proposal, (July 2010).

[5] M. Brzoza-Brzezina, Lending booms in the New EU Member States will euro adoption matter?, Working Paper series No. 543, (2005).

[6] ECB, EU Banking structures, (September 2010).

[7] ECB, Financial development in emerging economies – stock-taking and policy Implications, in the October 2009 issue of the ECB’s Monthly Bulletin, (2009).

[8] ECB, Housing finance in the euro area, Occasional Paper series No. 101, (March 2009).

[9] ECB, EU Banking structures, (October 2008).

[10] European Commission, European Economic Forecast, Spring, European Economy, No. 1, (2011).

[11] ECRI (European Credit Research Institute), Consumer Credit in Europe (1995-2009), Statistical Package 2010, Brussels, (2010).

[12] A. Fiorante, Foreign currency indebtedness: A potential systemic risk in emerging Europe, ECRI Commentary No. 8, (December 2011).

[13] P. Hilbers, O.R. Inci, C. Pazarbasioglu and J. Gudrun, Assessing and Managing Rapid Credit Growth and the Role of Supervisory and Prudential Policies, IMF Working Paper, WP/05/151, (2005).

[14] IMF, Country Reports.

[15] IMF, http://fsi.imf.org/

[16] G. Kai, S. Vahram, Determinants of Bank Credit in Emerging Market Economies, IMF Working Paper, WP/11/51, (2011).

[17] D. Nakornthab, Household Indebtedness and Its Implications for Financial Stability, Published by The South East Asian Central Banks (SEACEN) Research and Training Centre, Kuala Lumpur, 2010.

[18] National Bank of Hungary, Report on Financial Stability, (April 2011).

[19] Raiffeisen Research Group, CEE Banking Sector Report, (2010).

[20] S. Sirtaine and I. Skamnelos, Credit growth in emerging Europe : a cause for stability concerns?, Policy Research Working Paper Series 4281, The World Bank, (2007).

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