Prague Economic Papers, 2020 (vol. 29), issue 6

Why Cannot Direct Payments Be Capped in Slovakia? A Political Economy Perspective

Jan Pokrivčák, Marián Tóth, Pavel Ciaian, Martin Bušík, Andrej Svorenčík

Prague Economic Papers 2020, 29(6):625-648 | DOI: 10.18267/j.pep.753  

Annually the Common Agricultural Policy (CAP) provides support to the farming sector amounting to more than EUR 50 billion in the EU, of which direct payments (DPs) take around 70%. DPs are often argued to be granted unfairly to large farms. In this paper we analyse implications and the political economy of DP capping in Slovakia in the context of the ongoing negations about the future CAP reform. The simulation results for Slovakia show that if the 2018 Commission proposal was approved it would lead to losses of EUR 190.1 million (68% of total DPs) to large farms when labour costs are not subtracted. These losses would decrease to only EUR 12.2 million...

Assessing the Systemic Risk Between American and European Financial Systems

Ayhan Orhan, Vahit Ferhan Benli, Rui Alexandre Castanho

Prague Economic Papers 2020, 29(6):649-671 | DOI: 10.18267/j.pep.756  

The present study focuses on the analysis of systemic risk in the American and European financial systems for the period from 20 August 2004 to 28 February 2014. The global crisis in 2007 has brought attention to the urgent need to understand the systemic risk issues and the stability of financial systems along with their actors. To assess systemic risk, Adrian and Brunnermeier (2011) advocated the use of conditional value-at-risk (CoVaR) methodology in integrating quantile regression. Instead of the value-at-risk (VaR), which is unable to detect systemic risk, we seek to use the CoVaR methodology to calculate the systemic risk levels of the United...

Do Institutions Influence Economic Growth?

Klára Čermáková, Pavel Procházka, Lucie Kureková, Jiří Rotschedl

Prague Economic Papers 2020, 29(6):672-687 | DOI: 10.18267/j.pep.749  

Economic growth has been the subject of much focus throughout the history of economic thought as it has profound economic, social and political consequences. The sources of economic cycles are surrounded by intense and controversial scientific dispute. In our article, we want to contribute to the institutional economics debate by analysing selected institutional factors and testing their influence on economic growth. On a 2012-2018 dataset, we prove that soft factors such as property rights, freedom of corruption, level of freedom on different markets and other components of the Index of Economic Freedom and legal framework explain the differences...

Cross-Currency Basis Spread and Its Impact on Corporate Lending Rates in the Czech Banking Sector

Dušan Staniek

Prague Economic Papers 2020, 29(6):688-709 | DOI: 10.18267/j.pep.747  

For successful monetary policy implementation, it is crucial to know the pricing behaviour of banks and the determinants of banks' lending rates. With the onset of the global financial crisis, markets in unsecured lending ceased to provide a reliable level of market costs, while markets in cross-currency products gained significance. The aim of this research is to gauge the extent to which the EUR-CZK cross-currency basis spread is reflected in the corporate lending rates provided by Czech banks. We discovered that just over 50% of the changes in the basis pass through to the lending rates. The greater part of this pass-through can be identified in...

Impact of Export of Travel Services on Current Account Balance and Growth in Mediterranean Countries

Maja Bacovic, Danijela Jacimovic, Julija Cerovic Smolovic

Prague Economic Papers 2020, 29(6):710-728 | DOI: 10.18267/j.pep.748  

Observing the expanding and high share of export of travel services in both GDP and total export of services in Mediterranean countries, we focus our research on travel service export in twelve countries from 1998 to 2018. We investigated both short-term and long-term significance of export of travel services for GDP growth in Mediterranean countries using the VAR and VECM model and the fixed-effects panel OLS model. In our analysis of significance of export of travel services on current account balance, we applied an accounting approach. Our application of the fixed-effects OLS model on the panel data with GDP growth rate as the dependent variable...

Factors Affecting Collateralized Borrowing by SMEs: Evidence from Emerging Markets

Aysa Ipek Erdogan

Prague Economic Papers 2020, 29(6):729-749 | DOI: 10.18267/j.pep.759  

This study aims to enhance the empirical evidence on the determinants of collateralized borrowing by small and medium-sized enterprises (SMEs) by presenting new empirical evidence on emerging market countries. Using the data from World Bank Enterprise Surveys from nine emerging markets, we find that older SMEs are less likely to provide collateral for bank loans. The results also reveal that loans received by firms whose top managers are more experienced in the industry and firms with a higher percentage of material inputs and services purchased on account are less likely to be secured. SMEs in the manufacturing industry are more likely to provide...