J. Risk Financial Manag., Volume 14, Issue 2 (February 2021) – 48 articles

This paper explores mood anomalies, specifically the seasonal affective disorder (SAD) effect on the Zagreb Stock Exchange (ZSE). SAD is defined as a syndrome of depressive episodes in human behavior due to the changing of the season. Thus, the motive of this research is to gain better insights into the investors’ sentiment regarding SAD effects. The purpose of the research is to observe how investors’ sentiment affects the return and risk series on ZSE and if this could be exploitable. Using daily data on stock market return CROBEX for the period January 2010—February 2021, SAD effects are tested to explore if seasonal changes affect the stock returns and risk. Besides the SAD variable in the model, some control variables are included as well: Monday, tax, and COVID-19 effect. The results indicate that SAD effects exist on ZSE, even with controlling for mentioned effects; and asymmetries around winter solstice exist. Implications of such findings can be found in simulating trading strategies, which could incorporate such information to gain profits. Limitations of the research focus on one market, observing static parameters of the estimated models, and observing simple trading strategies. Thus, future research should focus on international diversification possibilities, time-varying models, and fully exploring the exploitation possibilities of such findings. Full article

Global energy production has been on the rise for many years, and reliance on traditional sources of energy remains strong. The extraction and production of energy can serve as an important avenue of growth, particularly for developing economies. To undertake such capital intensive project requires significant investment, and, intuitively, a well-functioning domestic financial system would be expected to aid in the growth of such industries. We investigate the relationship between financial development and energy production for 15 emerging countries, over the period of 1995–2017. After establishing the presence of a unit root, based upon panel data methods, a cointegrating relationship between financial development and energy production is confirmed. The results of the fully modified ordinary least squares (FMOLS) estimation establish a long run relationship in 11 of 15 countries in the sample. Panel Granger causality results provide a link between energy production and foreign direct investment (FDI), while such a link is absent for domestic credit. Policymakers should understand that development of the energy sector can provide an incentive for foreign firms to invest in emerging economics. Full article

Current research about crowdsourcing covers industries like food systems or logistics, leaving out the possible impact of crowdsourcing on sustainable retail. The debate about the sustainable impact of different industries is ongoing, especially discussing the adaption to the Sustainable Development Goals of the United Nations critically. This paper examines the influence of crowdsourcing on the sustainable aspects of retailing by applying a theoretical derivation as well as an empirical observation. After theoretically discussing the linkage between crowdfunding as a crowdsourcing category and sustainable retail utilizing a literature review, a theoretical framework employing the grounded theory approach is constructed. A total of 24 crowdfunding campaigns aiming at the market introduction of new products or services, each worth over 5 million USD funding volume and run on international crowdfunding platforms, have been taken into consideration. The outcome of the analysis is a theoretical framework presenting three different categories, in which successful crowdfunding campaigns impacting sustainable retail excel: sustainable economic behavior, sustainable community management and sustainable market adaptation. The derived model contributes to the theoretical discussion about the impact of crowdfunding and assists practitioners in reflecting about their approach and goal setting prior to and while crowdfunding. Full article

In the present paper, we investigate the Merton portfolio management problem in the context of non-exponential discounting, a context that gives rise to time-inconsistency of the decision-maker. We consider equilibrium policies within the class of open-loop controls that are characterized, in our context, by means of a variational method which leads to a stochastic system that consists of a flow of forward-backward stochastic differential equations and an equilibrium condition. An explicit representation of the equilibrium policies is provided for the special cases of power, logarithmic and exponential utility functions. Full article

Considering the importance of political economy in implementing Disaster Risk Reduction (DRR), this research investigates the significance of political economy in the distribution of DRR funding in Bangladesh. The study analysed data from self-reported surveys from 133 members of the sub-district level disaster management committee and government officials working with DRR. Employing the Partial Least Squares Structural Equation Modeling (PLS-SEM) method, we find that political economy factors explain 68% of the variance in funding allocations. We also show that four categories of political economy factors—power and authority, interest and incentives, institutions, and values and ideas—are significantly influential over the distribution of DRR funding across subdistricts of Bangladesh. Our findings offer important policy implications to reduce the potential risks surrounding political economy influences in fund allocation and advance climate finance literature. Full article

This research paper investigates the impact of natural resources volatility on economic growth. The paper focused on three resource-rich economies, namely, UAE, Saudi Arabia, and Oman. Using data from 1970 to 2016 and employing the autoregressive distributed lag (ARDL) cointegration approach, we found that both natural resources and their volatility matter from the perspective of growth. The study found strong evidence in favor of a positive and statistically significant relationship between natural resources and economic growth for the economies of UAE and Saudi Arabia. Similarly, for the economy of Oman, a positive but insignificant relationship is observed between natural resources and economic growth. However, we found that the volatility of natural resources has a statistically significant negative impact on the economic growth of all three economies. This study contradicts the traditional concept of the resources curse and provides evidence of the resources curse in the form of a negative impact of volatility on economic growth. Full article

Financial derivatives have been increasingly used by firms to hedge against financial risks. However, it is still not clear what factors at the firm level lead to firms’ derivative use and whether derivative use can generate performance improvement, especially in the context of firms operating in emerging economies. Using the unbalanced panel data consisting of 2529 listed firms from China covering an 11-year period from 2005 to 2015, this study examines these two questions regarding firms’ use of financial derivatives. Based on results from the empirical analysis, this study identified operational cash flow, tax shield, R&D investment, and the possibility of bankruptcy, as the firm-level factors that enable firms’ decision to invest in financial derivatives. More importantly, empirical findings from this study suggest that a firm’s derivative use tends to negatively affect firm performance, rather than improve firm performance. The negative effect of derivative use on firm performance is not consistent between the two groups of the better performer and poorer performer firms. While the poorly performed firms are more likely to use financial derivatives for the purpose of performance improvement, their derivative use tends to further damage, rather than improve, performance. These research findings have theoretical and practical implications. Full article

Basel III regulation intent is to increase the resiliency of banks through effective risk management practices that can reduce significant idiosyncratic operational losses. A systemic risk event that leads to significant losses in a bank holding company (BHC) can expose them to become insolvent and cause significant volatility and unpredictable negative impact on the United States economy. The viral spread of operational losses through global markets by interconnected multinational banks can be compared to viruses spread through interconnected countries and the significant losses incurred; this can be referred to as idiosyncratic viral loss theory. This idiosyncratic viral loss theory discusses systemic operational losses that are evident in human error, fraud, and legal expenses that are aligned to systemic operational risk. The occurrences of significant losses that are idiosyncratic in nature and that are linked to failed internal processes, people, systems, and external events are defined by the Basel Committee on Banking Supervision as operational risk losses; these losses’ idiosyncratic nature makes them comparable to viruses. This study employs the Compliance and Ethics Group’s (OCEG’s) standard that integrates governance, risk management, internal control, assurance, and compliance (GRC capability model) into one functional goal to improve quality and principled performance through measurable tools that may enhance effectiveness and efficiency practices. This study concerns senior manager activities that can be effective towards meeting effective risk management practices posed by the Basel III regulation for BHCs, which may reduce the spread of significant losses in the banks. Through the use of a qualitative e-Delphi study, 10 banking finance experts were convened to build consensus on effective risk management practices. Data were collected from three electronic questionnaires submitted through Qualtrics. Data were analyzed using theoretical triangulation, coding, and thematic analysis. Four important considerations were identified that could bolster effective risk management practices: (a) a comprehensive enterprise-wide risk; (b) controlling fraud; (c) going beyond the minimum risk assessment requirements set forth by the banking regulators; (d) independent risk identification and management. These considerations towards effective risk management practices may help reduce systemic operational losses viral spread in banks. Full article

From the early 1970s to the Global Financial Crisis of 2007–09, U.S. crude oil production followed a declining trend. After the Global Financial Crisis, U.S. crude oil production increased rapidly. This paper addresses the important question “what economic factors have driven U.S. crude oil production since the Global Financial Crisis?”. We propose that factors such as: the price of oil, the one period lagged price of oil, the price of copper, the crude oil price volatility, the Trade Weighted U.S. Dollar Index, and the high yield index spread, are important explanatory variables. Using two modeling approaches, namely, multiple regression, and the random tree methodology, we conclude that the one month lagged price of oil is the most significant explanatory variable, among all considered, for the upward trend of U.S. oil production from 2009 to early 2020. Full article

In the European Union, the concern for sustainability has been legitimized by its politically and ecologically motivated discourse disseminated through recent policies of the European Commission and the local as well as international media. In the article, we question the very meaning of sustainability and examine the European Green Deal, the major political document issued by the EC in 2019. The main question pursued in the study is whether expectations verbalized in the Green Deal’s plans, programs, strategies, and developments hold up to the scrutiny of critical discourse analysis. We compare the Green Deal’s treatment of sustainability to how sustainability is presented in environmental and social science scholarship and point out that research, on the one hand, and the politically motivated discourse, on the other, do not correlate and often actually contradict each other. We conclude that sustainability discourse and its keywords, lexicon, and phraseology have become a channel through which political institutions in the EU such as the European Commission sideline crucial environmental issues and endorse their own presence. The Green Deal discourse shapes political and institutional power of the Commission and the EU. Full article

This paper empirically evidences the role played by board characteristics (skills, diversity, structure, independence) in supporting risk management disclosure and shaping the financial performance of European companies operating in the financial services sector. We exploit data selected from Thomson Reuters Eikon database in 2020 for the last fiscal year 2019 (FY0) on a longitudinal sample of 144 companies with the head offices in Europe (25 countries). Following an original empirical approach based on two modern financial econometric techniques, namely structural equation modelling (SEM) and network analysis through Gaussian graphical models (GGMs), the research endeavor outlines the decisive importance of an optimal board size, enhanced management skills, upward gender diversity (encompassed by women participation on board management), and structure (mainly a two-tier type, one management board, and a distinctive supervisory board) as fundamentals of risk management strategies, leading to improved financial achievements and a higher profitability for the analyzed companies. Full article

Methodological approaches to investing in companies and reducing the negative impact of risks that are formed at the macro and micro levels are considered in the article. The algorithm for expressing investment risks through related risks and conducting an investment risk assessment as a group process is defined. It has been determined that the defining features of investment risks are the environment, duration, and scope of the project, risk position, profile, risk appetite, consequences, capacity, and results of the impact on the investment project. An investment risk accounting system is formed, which is represented by a set of organized structural elements that perform functions related to planning and implementation of a set of measures that identify, assess, monitor, and control risks to minimize negative consequences and enhance opportunities. A method of forming a real portfolio of investment projects considering the dynamic risk factor has been developed. Full article

This paper proposes the sample path generation method for the stochastic volatility version of the CGMY process. We present the Monte-Carlo method for European and American option pricing with the sample path generation and calibrate model parameters to the American style S&P 100 index options market, using the least square regression method. Moreover, we discuss path-dependent options, such as Asian and Barrier options. Full article

The objective of this contribution is to predict the development of the Czech Republic’s (CR) exports to the PRC (People’s Republic of China) using ANN (artificial neural networks). To meet the objective, two research questions are formulated. The questions focus on whether growth in the CR’s exports to the PRC can be expected and whether MLP (Multi-Layer Perceptron) networks are applicable for predicting the future development of the CR’s exports to the PRC. On the basis of previously obtained historical data, ANN with the best explanatory power are generated. For the purpose specified, three experiments are carried out, the results of which are described in detail. For the first, second and third experiments, ANN for predicting the development of exports are generated on the basis of a time series with a 1-month, 5-month and 10-month time delay, respectively. The generated ANN are the MLP and regression time series neural networks. The MLP turn out to be the most efficient in predicting the future development of the CR’s exports to the PRC. They are also able to predict possible extremes. It is also determined that the USA–China trade war has significantly affected the CR’s exports to the PRC. Full article

In numerous Central and Eastern European (CEE) countries, the global financial crisis as well as the unpegging of the foreign exchange rate of the Swiss franc (CHF) against the euro amplified the repayment troubles of households with the outstanding CHF-linked debt. In Croatia, the CHF loans were approved mainly as mortgages to unprotected and subprime household borrowers without sufficient credit capacity for long-term euro-linked loans, which also contained a possibility of an incremental interest rate change, i.e., the so-called administrative interest rate. This article aims to disclose the reasons behind the credit boom of these loans, the unsustainable CHF debt hardship that the household sector consequently faced, and how it was/could have been resolved, with the Croatian banking sector at the center of the research. Although the CHF case of Croatia has some specificities concerning the prudential regulation and government-sponsored loan conversion, the findings about the supply and demand determinants of the CHF credit boom, as well as a critical assessment of the Croatian government and central bank interventions, might be useful for timely noticing universal threats from the exotic currency-linked loans for the systemic risk and financial stability, and for minimizing the negative externalities from probable debt relief measures. Based on the descriptive and univariate statistics conducted on Bloomberg and the Croatian National Bank (CNB) data, it was found that interest rate differentials and carry trading behavior were the main reasons for the rapid CHF credit growth in Croatia. Nevertheless, according to the financial experts’ opinions obtained via a questionnaire survey, and the court verdicts reached since, the financial consumer protection when contracting these loans was severely violated, which implies that the central bank must enhance its consumer protection role. By adopting a single-country and holistic approach, this is the first paper that deals with the socioeconomic dynamic of the CHF credit default issues in Croatia, which might be interesting as a case study or for making comparison with other CEE countries that have been coping with negative consequences of Swiss francization. Full article

This study analyzes the relationships and dynamics between material production, foreign direct investment (FDI), economic activity, carbon productivity, the stock market, and green tech, both in a global and European context, using panel vector autoregressive methodology (PVAR). The empirical evidence obtained for the Global Group reveals four significant and positive unidirectional causality relationships, where aggregate material production is the prominent variable. For the EU-15 group, six significant causality relationships were detected, among them three negative and three positive unidirectional relationships. The stock markets shock reveals to be the most dominant variable, despite FDI standing out as causing the greatest shock effect. Nevertheless, in the European context, limited evidence of dematerialization is detected. Economic recessions show a generally negative effect, which contrasts with the economic Kitchin cycles, which reveal the effect of a generally positive relationship. Full article

One of the controversies of diversification is that it may not be beneficial to banks, as it tends to increase systemic risk. Recent theoretical and empirical work have addressed this problem. We argue, from a theoretical perspective, that this controversy ultimately depends on how risk is assessed or measured. In particular, we observe that when one talks about random losses (risk) there are two intertwined approaches. On the one hand, one can fix the loss level and ask with what probability does that occur. On the other, one can fix a confidence level (or probability of loss) and ask, for example, what is the smallest loss with that probability. In a banking system, a systemic crisis occurs when all banks default simultaneously. Using the theoretical work of Wagner, where he proposed a simple model of a banking system in which a systemic crisis increases with diversification, we extend his analysis to show that if one allows for short positions; then the probability of default decreases, but the risk, measured by the value at risk (a non-coherent risk measure) increases. This brings up an interesting methodological question for risk management: Should we consider the probability of a given (acceptable) loss or, should we consider the minimum loss with an acceptable probability? We show that, within Wagner’s model and depending on which question is asked, a different answer can be obtained. This, in turn, lead us to discuss some implications of these results for risk managers and regulators. Full article

This study examines whether financial analysts consider or incorporate the environmental, social and governance disclosures (thereafter ESG) in their recommendations. We then test whether royal family directors affect this relation. Using a dataset from six Gulf Cooperation Council (GCC) countries, we find evidence that analysts’ recommendations are influenced by ESG information. Further, we find the political connection negatively moderates the relationship between sell-side analysts’ recommendations and ESG. This suggests that financial analysts may assess the ESG disclosure in those firms with the political connection of royalty, in GCC countries, as superficial compliance rather than a genuine commitment. Our results are robust when subjected to endogeneity tests. Full article

The sudden and abrupt rise of COVID-19 became a challenge for the world economy. In this paper, we investigate the changes in a trend of mutual trade between the EU-15 countries and China during the demanding times of the COVID-19 crisis. We use monthly data for Chinese exports to the E.U. (2018:01–2020:05) and imports from the E.U. (2018:01–2020:07) relying on the data from the open-source TradeMap developed by the International Trade Centre UNCTAD/WTO (ITC). Overall, there is an obvious decline of 13–32 percent in worldwide trade as predicted by the WTO. This affected China as the main trading partner of electronic devices and medical supplies. The trade between the E.U. and China has decreased, but the major change in demand brought an alteration in commodities structures and the reorientation of Chinese export production. In the first five months of 2020, we witnessed the strong engagement of the Chinese economy in the production of goods newly in high demand—mainly articles strongly related to healthcare and medical equipment. Thus, we have observed that the Chinese were very flexible in changing the structure of their exports triggered by the COVID-19 crisis. This flexibility is worth further exploration, especially because the COVID-19 crisis is still not over and new data and changing results can be expected. Full article

In this study, we investigate the relationship between environmental, social, and governance (ESG) disclosures and stock price crash risk. A stock price crash is a dreadful event for market participants. Thus, exploring stock price crash determinants is helpful for investment decisions and risk management. In this study, we use samples of major market index components in Europe, the United States, and Japan to perform regression analyses, after controlling for other potential stock price crash determinants. We estimate static two-way fixed-effect models and dynamic GMM models. We find that coefficients of firm-level ESG disclosures are not statistically significant in the static model. ESG disclosure coefficients in the dynamic model are not statistically significant in the U.S. market sample. On the other hand, coefficients of ESG disclosure scores in the dynamic model are statistically significant and negative in the European and Japanese marker sample. Our findings suggest that ESG disclosures lower future stock price crash risk; however, the effect and predictive power of ESG disclosures differ among regions. Full article

Acquisition-based dynamic capabilities have become well established as a new imperative for organizing mergers and acquisitions (M&A) processes. However, understanding the full benefits and possible limits of real options applications to measure a dynamic capability-based synergy in M&A deals remains a challenge. This paper draws on real options theory to explore some of these benefits and limits to value a synergy in two highly strategic M&A deals. More specifically, the author develops the proposition that justifies the role of dynamic capabilities as antecedents of the success of M&A deals in the information and communications technology industry and demonstrates real options application to measure M&A synergies. Full article

Unprecedented opportunities have been brought by advancements in machine learning in the prediction of the economic success of movies. The analysis of movie title keywords is one promising but rarely investigated direction of study. To address this gap, we performed a text mining and exploratory factor analysis (EFA) of the relationships between movie titles and their corresponding movies’ levels of success. Specifically, intragroup and intergroup analyses of 217 top hit movies in the United States and 245 top hit movies in China showed that successful movies in these two major movie markets with outstanding total lifetime grosses featured titles with similar and different patterns of most frequently used words, revealing useful information about viewers’ preferences in these countries. The findings of this study will serve to better inform the movie industry in giving more economically promising names to their products from a machine-learning perspective and inspire further studies. Full article

The study provides solutions for the scientific task related to the improvement of theoretical and development of methodological and applied principles, and the identification and evaluation of risks and threats as factors of anti-crisis management of the enterprises. Based on the developed concept of quantitative risk analysis, we constructed a fuzzy hierarchical model, which gives the possibility to get the estimates: risk factors; specific types of threats in the framework of a process; risk processes, identified in the anti-crisis management; and the integrative risk of anti-crisis management. Furthermore, the proposed model makes it possible to identify the threats that are the risks of the highest (catastrophe) layer. The fuzzy hierarchical model construction process includes the determination of linguistic variables, term-varieties, and universal sets for quantitative evaluation of figures and risks, the establishment of parameters of the membership functions for indicators and risks, the formation of fuzzy knowledge bases, the construction of a fuzzy hierarchical model in the MATLAB environment, the evaluation of adequacy of model based on the learning sample, the correction of a model, and the adoption of a resolution regarding its final variant. The use of the model in the anti-crisis enterprise management will provide the anti-crisis team with the possibility to give early warning of all negative factors, give their quantitative evaluation, and take them into account in the course of making managerial decisions. Full article

The aim of this paper is to identify the risks that need to be addressed when holding fine art, determine which are perceived as being the most important, and whether the risk perception is influenced by demographic variables such as age, educational background, and field of occupation. To identify the risks and evaluate the risk perception, we used a purposely designed questionnaire and sent it via various sources of communication systems and applications to individuals knowledgeable on fine arts. Findings revealed that, generally, art deterioration, art fraud, and art theft are the three main highlighted risks, with art deterioration considered in the high-risk range. In terms of risk perception, forgery is the biggest concern. On the other hand, considerations of the investment value of art lessened perceived risk exposure. Furthermore, the study has shown that certain risk perceptions were influenced by the participants’ demographic variables. Both the identified risks and risk perception considerations analyzed within this study provide us with insights as to what needs to be considered when offering fine art insurance, particularly when it comes to which risks that are perceived as being the most pressing by potential policyholders, and how these perceptions vary according to individual demographics variables as noted above. Full article

The inventory carrying cost has been assumed uniform for all products in an organization or a warehouse. This assumption is not valid for a diversified range of items in an organization or warehouse. This paper tested this hypothesis of variations in inventory holding costs in a warehouse in two industries based on the physical nature and the price of products. It is found that organizations with a wide variety of products need to calculate the inventory holding cost for each item (SKU) rather than using an average percentage cost of inventory. Inventory holding costs of items in two different organizations were calculated based on the various factors, including the actual cost of space due to the voluminous nature of the items with their existing inventory policies. A variation in inventory holding costs for each item was observed. The variation was small for an organization with homogeneous input costs, and it was large for a multi-product organization. The overall savings in the inventory holding cost due to adjusting the inventory policies through this methodology was found to be about 3%, which is significant for a big organization. This analysis will affect the decision the determining inventory carrying cost, inventory policies (e.g., stocking levels), and pricing policies (e.g., quantity discounts) for retail organizations. Full article

Although the European business environment induces important premises and assures conditions in determining economic growth and social well-being, the determinant and existent connections between the evolution of small and medium-sized enterprises (SMEs), business demography characteristics and the European socio-economic model have been scarcely studied in recent years. The dimensions of the European socio-economic model design a very specific framework in developing business demography and assuring a favorable environment for future SME development. The main aim of the manuscript is to investigate the evolution of the European SMEs sector and the perspective of business demography evolution to converge with exigencies of the European socio-economic model. In order to argue the research objective, eight specific and representative business demography variables were employed, from 12 European Union member states (EU-MS), during 2009–2017. Further, the SMEs’ performances, determined by changing the economic functional paradigm, were assessed. For proving this, an econometric model was designed considering labor productivity as an endogenous variable. Our preliminary analysis shows considerable differences in business demography indicators and SMEs development among all five socio-economic sub-models of the main European socio-economic model, proving a tight connection between European socio-economic models and SMEs’ performance and arguing the necessity of a paradigm convergence. Within some sub-models, there is clear evidence of clustering and convergence in terms of business demography and SMEs future development. Full article

The purpose of this paper is to investigate the causality between good public governance captured through six World Bank governance indicators and unemployment rate (unemployment as % of the total labour force) as a clear indicator of labour market performance. Although some previous papers have empirically demonstrated the casual nexus between country-level governance and economic development, this study investigates the relation of causality between public governance and the labour market. By employing Granger non-causality tests, we tested two hypotheses with regard to this nexus. We argue that bidirectional Granger causality is predominant for the relation of country-level governance and unemployment. Finally, our paper offers a complex quantitative analysis of the causal nexus between public governance quality and one of the most known labour market activity indicators for an extended panel dataset of countries worldwide for 10 years. Full article

The yield curve is an important tool to assess the economic progress of a country. In this study, we examine the strength of the relationship between term spread and economic activity, and between the components of the yield curve and economic activity in the G7 countries using monthly data on yield rates and seasonally adjusted data on the industrial production index (IPI). After matching the start and end date of the IPI with the yield rates, the data used and respective time period are as follows: Canada: March-1994 to December-2018, France: January-1999 to December-2018, Germany: October-2005 to December-2018, Italy: July-2009 to December-2018, Japan: July-1994 to January-2019, the UK: January-1994 to December-2018, and the US: February-1990 to January-2019. The results show positive associations between term spread and economic activity for Canada, France, Germany, Japan, the UK, and the US. For Italy, a negative association is noted. All three empirical factors could predict economic activity for France and Germany at the 12-month horizon only. For all other horizons, the factors’ ability to predict economic activity varies. We observe that by including additional macro-finance variables such as the current economic growth rate and the 3-month yield rate to capture the term structure level effects, the relationship between term spread and economic activity becomes stronger. This implies that the usefulness of yield curve and its decomposed components for the purpose of predicting economic activity should be cautiously modelled and employed for policy. Full article

Beyond financial stability as the European Banking Union’s primary objective, the European capital market integration provides an impetus for deepening bank integration and greater financial market efficiency. This article proposes an empirical framework to assess the dynamics of euro area banks’ business networking. We use banks’ foreign claims across Europe, particularly the euro area, to see how banks react to various macroeconomic signals. Banks’ foreign claims are particularly interesting due to their sensitivity. One of the main conclusions is that the euro area has seen a reallocation of capital in the aftermath of the 2008 crisis. The financial picture of Europe is different after the recent financial crisis. Although we observe a re-concentration of capital from the periphery to the core countries, we also observe some signs of recovered confidence within the European banking framework for macro-prudential reasons. Full article

The paper examines tax progressivity and income inequality using Census Bureau Current Population Survey (CPS) personal income data. The Kakwani index is used to derive tax progressivity for All, Male, Female, White and African American personal wage income of CPS respondents, respectively. The tax progressivity results show a tax system that is partly progressive and mostly regressive. Due to its regressive nature, the tax system did not display tax progressivity for the entire period under analysis for personal wage income respondents as well as when broken-down by race and gender in the United States for years 1996 to 2011. Full article