Prague Economic Papers 2024, 33(3):277-318 | DOI: 10.18267/j.pep.862
This paper deals with the problem of how the risk perception among retail customers is affected by the consumer protection regulation on the financial market. Through a questionnaire survey, we have measured the effect of selected consumer protection measures on banking or investment decisions taken by a young (student) population. These measures included the most common elements of financial regulation, such as bank deposit insurance, corporate bond prospectus, licenced fund management and securities broker indemnity insurance. Our results show that protective state intervention represents strong stimuli for customer decision-making with a widely...
Prague Economic Papers 2024, 33(3):319-335 | DOI: 10.18267/j.pep.861
Non-fungible tokens are transferable rights to digital assets such as artwork, videos, in-game items, collectibles or music. Non-fungible tokens relate only to a specific unique item and carry information about the owner. The non-fungible token market has received widespread attention and has grown enormously since the beginning of 2021. Despite significant growth in the market, there needs to be more surveys, especially in the context of the Czech Republic. This article, therefore, aims to evaluate the level of awareness of non-fungible tokens in the Czech Republic. The paper presents the basics of the non-fungible token market, its potential and...
Prague Economic Papers 2024, 33(3):357-379 | DOI: 10.18267/j.pep.858
This study investigates the macroeconomic resilience of the Moroccan economy using a comprehensive analysis of key indicators and policy variables. Utilising data from sources such as the World Bank, we examined GDP per capita, government debt, government final expenditure, agriculture and industry sectors as a percentage of GDP, output gap, and trade openness. Applying the Autoregressive Distributed Lag (ARDL) method, we established both long-run and short-run relationships between these variables and the output gap, which represents the cyclical trend in the economy. Our findings revealed that both government final consumption in % of GDP and government...
Prague Economic Papers 2024, 33(3):336-356 | DOI: 10.18267/j.pep.860
The main objective of this study is to determine the effects of economic and social inequalities on academic success and to test whether the cycle of inequality is active through education. This objective is accomplished using classical and Bayesian discrete choice models for the sample obtained from Türkiye. The results reveal that students' economic and social characteristics affect their academic success and that these characteristics are possible sources of inequality in education. According to the findings obtained from models employed in the study, income, private school education, parental education level, region of residence, neediness to work,...
Prague Economic Papers 2024, 33(3):261-276 | DOI: 10.18267/j.pep.863
Modeling policy effects in the context of high-dimensional data requires a balanced consideration of omitted interaction bias and overfitting problems. This paper investigates the role of machine learning algorithms in stabilizing estimates and demonstrates the possible regularization bias caused by common LASSO methods. To overcome the three problems simultaneously, post-double selection is used to screen for the interaction terms that need to be included in the model, and the variance estimates are expanded to measure the uncertainty of the interaction effects and marginal effects. Monte Carlo simulations analyze the main factors affecting conditional...
Prague Economic Papers 2024, 33(2):244-260 | DOI: 10.18267/j.pep.856
This paper empirically analyses the determining factors of the growth in the migration rate in the countries of the Western Balkans. The analysis is carried out with panel data over 17 years from 2005 to 2021. The purpose of this paper is to analyse social variables such as unemployment and standard of living, and political variables such as corruption, political stability, government effectiveness, rule of law and the level of corruption in the migration of citizens. For this purpose, we employ different econometric models and techniques such as OLS, OLS robust fixed and random effects models, and GMM (generalized method of moments). The study's findings...
Prague Economic Papers 2024, 33(2):220-243 | DOI: 10.18267/j.pep.857
There are studies investigating a country's digital competitiveness; however, there is a lack of research examining digital competitiveness at the enterprise level. Hence, the current study aims at composing an enterprise digital competitiveness index (EDCI), which provides a possibility to assess the level of enterprise digital competitiveness and could be used by policymakers in the development of a strategy for transitioning to the digital economy. The CRITIC and COPRAS approaches are employed for the index construction. The criteria and subcriteria provided by Eurostat (2022) are used as antecedents of the EDCI. The results indicate that Nordic...
Prague Economic Papers 2024, 33(2):187-219 | DOI: 10.18267/j.pep.859
This paper examines the validity of the risk-return trade-off for a sample of Czech banks over the period 2002-2022 by analysing the relationship between the bank risk and risk-adjusted returns. I find evidence of a significant negative association between the regulatory risk measure and risk-adjusted returns, indicating that the risk-return trade-off does not hold. Specifically, a 100 bps increase in the risk is associated with about a 7 bps decrease in the return on risk-adjusted assets (RORWA) and an 11 bps decrease in the risk-adjusted net interest margin (rNIM) in the short run. The long-run effect is about double for RORWA and almost triple for...
Prague Economic Papers 2024, 33(2):164-186 | DOI: 10.18267/j.pep.855
The EU Cohesion Policy is one of the European Union’s key policy instruments for reducing economic and social disparities among its regions. The paper evaluates the policy contribution to regional economic growth in V4 (Visegrad Four) countries. The study establishes a significant variation in ESIF (European Structural and Investment Funds) distribution at the NUTS2 (Nomenclature of Territorial Units for Statistics) level within the V4 regions over 2000–2018. It suggests that ESIF absorption was not evenly distributed across regions within the V4 countries. This finding indicates that regional disparities in ESIF distribution may have contributed...
Prague Economic Papers 2024, 33(2):137-163 | DOI: 10.18267/j.pep.854
The study explores a relationship between divergence in ESG scores (measurements of a company's performance in environmental, social and governance issues) and excess stock returns on the European equity market. The sample consists of 851 European stocks in the period from January 2015 to May 2022. It is concluded that, despite previous findings on the US stock market, a similar effect is not observed for equities in Europe. Even though the stock portfolios with the most and the least divergent ESG scores bear excess returns, the effect disappears when it is adjusted for Fama-French factors. The effect is not relevant for any specific industry, nor...
Prague Economic Papers 2024, 33(1):103-136 | DOI: 10.18267/j.pep.851
This study assesses the relationship between the ownership structure and corporate tax avoidance based on annual financial data of Chinese A-share listed firms during 2010-2020. Firstly, the empirical results demonstrate that when a listed firm has multiple large shareholders (MLS), these shareholders are likely to weaken internal monitoring and collude with each other, which will lower its corporate governance level and increase its corporate tax avoidance (CTA) level. The empirical conclusion remains valid after multiple robustness tests. Secondly, the empirical result of the baseline model is significantly influenced by the nature of ownership,...
Prague Economic Papers 2024, 33(1):79-102 | DOI: 10.18267/j.pep.853
Psychological traits have received significant attention in labour market research in recent decades. Unfortunately, empirical evidence remains limited for some psychological traits and their interactions. To address this gap, we conduct a representative survey of employees, assessing competitiveness, persistence, and risk tolerance using single-item scales. This comprehensive study sheds light on the connection between these traits and wages. Our results confirm that individuals possessing these traits tend to earn higher wages, even when we account for indirect factors, such as higher educational attainment and better job positions. It also suggests...
Prague Economic Papers 2024, 33(1):60-78 | DOI: 10.18267/j.pep.850
Using developing countries in Europe for context, this study examines the complex relationship between financial crises and financial integration. We use panel data comprising 37 countries in Europe, including Iceland, Belarus, Ukraine, Turkey, and Russia from 2000-2019 and the general method of moments. Our findings show that there is a positive relationship between financial integration and development and economic growth. In addition, the results suggest that a higher degree of financial integration is not necessarily increasing financial fragility during a financial crisis. Therefore, the results show that it is a self-defeating policy for developing...
Prague Economic Papers 2024, 33(1):36-59 | DOI: 10.18267/j.pep.852
The paper explores the interconnections between foreign capital flows and the exchange rate regime switching in developing countries. We formulate the exchange rate regime switching as annual time series of binary/ordered variables employing de facto classification of exchange rate arrangements and regress them on the financial account capital flows for a panel of 28 developing countries which experienced change in their exchange rate regime during the period 2000-2016. Employing probit and logit regression, we discover the FDI, portfolio flows and changes in reserve assets to precede and/or coincide with switching. Specifically, accumulation of foreign...
Prague Economic Papers 2024, 33(1):1-35 | DOI: 10.18267/j.pep.849
The balanced growth theory and the neoclassical growth model predict that certain macroeconomic variables such as output, consumption, and investment grow at a constant rate. Analytically, it indicates that the consumption-output ratio and the investment-output ratio (termed "great ratios") must be stationary. Moreover, consumption and investment must be cointegrated with output. This paper examines these implications with respect to developed (G7) and emerging (E7) countries using data for the period 1970-2019. The validity of the balanced growth hypothesis (BGH) is tested by using unit root tests (univariate analysis) and cointegration techniques...
Prague Economic Papers 2023, 32(6):699-723 | DOI: 10.18267/j.pep.845
There is no consensus on the key drivers of financial inclusion due to variation in the socioeconomic features of countries, use of indicators and research methods. The main objective of this study is, therefore, to empirically examine the key drivers of financial inclusion across 26 selected Sub-Saharan African (SSA) economies for the period between 2000 and 2019, using a system generalized method of moments (GMM). A principal component analysis (PCA) is applied to construct a composite index of financial inclusion to address the multi-dimensional nature of the variable. The findings of the study indicate that both the macroeconomic and microeconomic...
Prague Economic Papers 2023, 32(6):659-698 | DOI: 10.18267/j.pep.847
We Examine the Comovement between China's Commodity Futures and World Crude Oil Prices Based on Their Daily Return Series. Using a Dynamic Time-Varying Approach, We Combine the Generalized Autoregressive Score (Gas) Model with the Copula Approach, Allowing for Asymmetry and Tail Dependence. Our Results Demonstrate a Significant Nonlinear Causal Impact of World Crude Oil Prices on Each of China's Commodities. The Comovement between China's Commodity Futures and Crude Oil Prices Is Positive, with Varying Degrees of Significance across Different Commodity Types. Notably, Non-Ferrous Metal and Chemical Commodity Futures Are More Vulnerable to Rising Crude...
Prague Economic Papers 2023, 32(6):628-658 | DOI: 10.18267/j.pep.848
Based on data for cities and enterprises in China from 2009 to 2020, we examine the effect of urban greening construction on corporate technological innovation. Urban greening con-struction has a pronounced promoting effect on the technological innovation of enterprises, which is more significant among enterprises in the Eastern Region, enterprises in heavily polluting industries and state-owned enterprises. However, urban greening construction only has a significant promoting effect on enterprise invention and green patent applications and has no significant promoting effect on utility models and design patent applications. In addition, urban greening...
Prague Economic Papers 2023, 32(6):608-627 | DOI: 10.18267/j.pep.844
Catastrophic natural events in the Czech Republic have always caused a considerable burden on public finance. However, this risk can be transferred to capital market investors through CAT bonds, which have never been used for this purpose in the Czech Republic. The paper deals with the theoretical background of CAT bonds, resulting in a back test simulation of a hypothetical CAT bond issued for the period 1999-2003. As a result, by transferring the risk to the capital market, investors could save a significant part of the Czech Republic's public funds.
Prague Economic Papers 2023, 32(6):589-607 | DOI: 10.18267/j.pep.846
The changing population dynamics have substantial impact on economy. This paper investigates the effects of demographic change on economic growth. The share of working age population, child dependency ratio, old-age dependency ratio and age dependency ratio are used as demographic variables. The effects of these variables on the gross domestic product per capita growth rate are examined for the OECD countries covering the period 1970-2021. Four different models are estimated by using panel ARDL estimation method. The findings derived from the estimated models point out that the old-age dependency ratio and age dependency ratio have negative effects...
Prague Economic Papers 2023, 32(5):569-588 | DOI: 10.18267/j.pep.839
The objective of the paper is to investigate the relationship between education and employment level in 27 member countries of OECD over the period 1998-2019. To achieve this, the paper first analyses the effect of the number of graduates from upper secondary, post-secondary and tertiary education programmes. Additionally, the paper constructs an education index which covers graduates from upper secondary, post-secondary and tertiary education programmes. After calculating distribution of graduates using the standard deviation method, the paper employs two-step system GMM developed by Arellano and Bover (1995) and Blundell and Bond (1998). The findings...
Prague Economic Papers 2023, 32(5):550-568 | DOI: 10.18267/j.pep.843
Using a macro-level dataset covering 173 countries from 2000 to 2020, this study is the first attempt to examine how income diversification and market concentration are related to bank stability. Firstly, we document that bank stability is positively related to revenue diversification, suggesting that banks are more stable when they are more engaged in non-traditional activities. Secondly, market concentration is positively associated with bank stability, in line with the concentration-stability hypothesis that banks in a highly concentrated banking system are more likely to be more stable. Thirdly, we show that market concentration modifies the link...
Prague Economic Papers 2023, 32(5):520-549 | DOI: 10.18267/j.pep.842
This paper uses symmetric and asymmetric testing procedures to examine the issue of the relationship between the output gap and inflation for the Turkish economy using data from 2002:01 to 2021:09. First, it analyses the cointegration by applying different cointegration tests taking into account structural breaks and asymmetric behaviour to reveal whether the relation varies between sub-periods. Afterwards, it examines the asymmetric causality between different shocks. Our empirical results indicate that there is a long-run relationship between series in the existence of two structural breaks and asymmetry. The results also show asymmetric causality...
Prague Economic Papers 2023, 32(5):488-519 | DOI: 10.18267/j.pep.840
We study convergence and club formation of housing prices in European countries using several measures of housing prices. We employ correlations, innovative trend and gap approaches, and cointegration analysis to study the long-term development of housing prices and their reactions to crises. We find that housing prices in European countries do not converge and their development since the creation of the monetary union has differed. The most prominent examples are the differences between Southern European countries heavily affected by the Global Financial Crisis and the rest of the countries. Our analysis reveals several country clubs with similar...
Prague Economic Papers 2023, 32(5):473-487 | DOI: 10.18267/j.pep.841
This study accounts for the nexus between financial development and intra-trade relationships using nine Regional Comprehensive Economic Partnership (RCEP) countries with the extraction of data from secondary sources spanning between 1990 and 2021. The following are the con- clusions drawn from the study: exchange rate, interest rate and inflation rate, which are criti- cal macroeconomic variables, represent unfavourable factors that suppress the intra-trade rela- tionships within the RCEP region. In light of the above, this study recommends that any time the policymakers in RCEP countries desire better intra-trade relationships within RCEP countries,...
Prague Economic Papers 2023, 32(4):446-472 | DOI: 10.18267/j.pep.836
Motivated by the persistent fall in oil prices due to incessant uncertainty-inducing events in recent years, this study empirically examined if economic growth in Africa's top five oil exporters (Algeria, Angola, Egypt, Libya, and Nigeria) is responding asymmetrically to changes in global economic uncertainty as well as uncertainties from U.S., Europe and China using nonlinear ARDL framework from 1997Q1 to 2021Q4. We find that rising global uncertainty hampers economic growth in these economies, while declining global uncertainty significantly enhances growth in Nigeria, Angola and Libya in the short run, but becomes growth-retarding in the long run....
Prague Economic Papers 2023, 32(4):411-445 | DOI: 10.18267/j.pep.838
This paper investigates current budgeting practices of Czech companies. The article aims to provide recent empirical evidence on the impact of business complexity on budgeting in the Czech Republic, with the main focus on modern budgeting methods. Despite the plethora of critical voices against traditional budgeting, budgeting remains an essential part of most companies' corporate governance. The empirical investigation is based on a questionnaire survey and its statistical evaluation using tests of goodness of fit and cluster analysis. Fundamental research questions of the paper include the influence of business complexity on Czech companies' budgeting...
Prague Economic Papers 2023, 32(4):389-410 | DOI: 10.18267/j.pep.837
From the general perspective, municipalities are economic organisations like private companies with their legal subjectivity, own revenues, and property. To better understand their financial management, it is desirable to conduct relevant empirical research, which lacks in the case of the Czech municipal sector and Czech municipalities. This paper aims to analyse and identify the financial behaviour of Czech municipalities within the post-crisis period focusing on the influence of internal and external vulnerability factors. The panel data and linear regression model (fixed-effect model) were used to evaluate how an external crisis affected...
Prague Economic Papers 2023, 32(4):367-388 | DOI: 10.18267/j.pep.835
The current situation of slower economic growth is leading to a more difficult access to funds and unpredictable payment behaviour of customers, which predetermines growing importance of working capital management. The aim of the present article is to examine the effects of working capital investment and its components (inventories, accounts receivable, accounts payable and cash) on the firm's performance in the case of non-cyclical and cyclical industries in the Czech Republic. The underlying dataset comprises corporate data of 293 firms from 2010 to 2018. The calculations reveal that both industries applied over the period a very similar conservative...
Prague Economic Papers 2023, 32(4):350-366 | DOI: 10.18267/j.pep.834
Government debt has increased not only in times of economic stress, but it has become a com- mon manifestation of government expenditure funding. The aim of the paper is to inspect the effect of government debt on economic freedom in ten CEE countries between 1995 and 2020 using a panel model approach. Selected quantitative and qualitative variables were examined to validate the hypothesis, including public governance indicators, besides the economic ones. Based on a robust panel setting, we conclude that government debt has a negative impact on economic freedom. A causality from government debt to economic freedom is detected to- gether with a long-term...
