Eurasian Journal of Business and Economics

1-11

Authors: Yu HSING

This paper examines the relationship between Hungary’s stock market index and relevant macroeconomic variables. The GARCH model is applied in empirical work. It finds that Hungary’s stock market index has a positive relationship with real GDP, the ratio of the government debt to GDP, the nominal effective exchange rate and the German stock market index, a negative relationship with the real interest rate, the expected inflation rate and the government bond yield in the euro area, and a quadratic relationship with real M2 money supply. It indicates that there is a positive (negative) relationship if real M2 money supply is less (greater) than the critical value of 9,563 billion forints. If the quadratic relationship is not specified and tested, the positive coefficient of real M2 will be insignificant at the 10% level, and we may reach a misleading conclusion that the stock market index is not affected by real M2.

25-51

Authors: Ziyodullo PARPIEV & Kakhramon YUSUPOV

This paper investigates empirically the relationship between household economies of scale and consumption in Uzbekistan. Particular attention is paid to the so-called “zero consumption problem” and Tobit estimator is utilized to deal with the problem. Using the household survey dataset made available recently, we test presence (or lack) of household economies of scale in seven different consumption categories (food, meals out, clothing, education, health, transportation and shelter). We find evidence of strong and positive household economies of scale in consumption of meals out, clothing, education, health, transportation and shelter, while consumption of food fails to indicate this pattern. We also estimate food Engel curve using non-parametric kernel estimates and fail to find the existence of household economies of scale through food consumption data.

53-67

Authors: Ravi KIRAN & Sunita MISHRA

The Pharmaceutical Industry witnessed a change after the formation of World Trade Organization (WTO) in 1995 when India, being a signatory member of WTO, adopted Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement. Indian pharmaceutical industry, being a highly fragmented one and dominated mostly by a large number of smaller enterprises, was also apprehensive when TRIPS was included in WTO. In the above backdrop, this paper examines the Impact of TRIPS on Research and Development, Exports and Patenting activity of The Pharmaceutical Industry of India. The results of the study highlight an increase in R & D Expenses, and R& D Intensity of leading Pharmaceutical companies in the Post- TRIPs period. Moreover, the Indian companies have been at the forefront, both in terms of Drug Master Filings (DMF) and abbreviated New Drug Applications (ANDA) filings in post TRIPS period.

81-97

Authors: M.Ozgur GUNGOR & F. Zeynep BILGIN

Organizations of today are aware of the necessity to communicate with customers beyond learning about their satisfaction, loyalty or complaints. The closest way is focusing on customer involvement, a general term used for capturing the responses, advises and ideas of customers in order to better proceed with innovation ideas for product and service development in a competitive market environment. This flow, which is named as “customer’s advisory” by the authors, necessitates openness and capability. Openness requires technological focus along with responsiveness and empathy in organizational culture, creating a positive communication environment. The two variables of the capability construct are frequent and bilateral information sharing. This study was conducted to detect the level of use of these two constructs by various organizations operating in Turkey. The aim was to understand the interest in customer involvement to remain competitive, how “customer’s advisory” was used to collect customer views and responses in order to nurture creativity in innovation processes. Results reflect that organizations proved to be open; responsive to meet expectations, willing to understand the customers, and reflected empathy to encourage creative ideas. Also both variables of the capability construct proved to be strong where well-educated and trained employees help most for understanding the comments of customers. Turkish organizations’ following the customer’s advisory with openness and capability brings a new focus into Customer Relationship Management via feeding a creative process leadership focus to remain competitive.

1-26

Authors: Kiran M. ISMAIL, David L. FORD, Orlando C. RICHARD

This paper undertakes a comparative examination of contextual and individual-level antecedents to network building behaviors of leaders. Taking insights from social network and motivation theories, the proposed model suggests that while the institutional environment plays an important role in shaping individuals’ network building behaviors, there are certain individual attributes — such as individuals’ volitional tendencies and networking efficacy levels — that moderate the relationship between institutional backgrounds and networking behaviors of individuals. Using hierarchical regression models to test the hypotheses on a sample of ninety leaders from the Post Soviet countries and the United States, the results obtained highlight the roles of context and individual attributes in network building behaviors of leaders.

41-55

Authors: Erkan ILGUN , Karl-Josef KOCH & Mehmet ORHAN

This paper empirically investigates the relation between growth and Foreign Direct Investment (FDI) in Turkey. There are mixed conclusions about the impact of FDI on growth and the literature includes many studies where FDI has negative, positive and no significant effects on growth. Turkey serves like an open lab for such empirical studies since the country has experienced high and persistent levels of inflation for about thirty years as well as several economic crises in the last decade after which the inflation is taken under control and high growth rates are attained. Furthermore, Turkey has managed to start receiving considerable FDI recently. We establish a VAR Model with 5 variables to examine the FDI-Growth relation and consequently the impulse-response analysis are carried out to see the impact of shocks on the variables entering the VAR equations. We also included the variance decomposition to work out the sources of variance in both growth and FDI. Our model provides empirical support to bi-directional causality between FDI and growth.

71-84

Authors: Muzaffer AYDEMIR & Ozum EGILMEZ

In This study, we aimed to explore the relationship between religiosity and business ethics. Two dimensions of religiosity – intrinsic and extrinsic- were studied. We have tested two hypotheses related to the relationship between religiosity and ethical attitudes. In our study, we surveyed 510 managers from 6 different organizations in Turkey. Our survey instruments have three parts. First part included 24-vignette ethics scale of Barnett and Brown (1994). Second part included 11-item religiosity scale of Allport and Ross (1967). Third part contained various demographic measures. Findings of the study show that intrinsic religiosity is partly and positively related with ethical attitudes and extrinsic religiosity is partly and negatively related to the ethical attitudes. In other words, intrinsically motivated people are more prone to behave ethically than extrinsically motivated people are.

113-125

Authors: Ali UYAR

The purpose of this study is to explore cost and management accounting practices utilized by manufacturing companies operating in Istanbul, Turkey. The sample of the study consists of 61 companies, containing both small and medium-sized enterprises, and large companies. The data collection methodology of the study is questionnaire survey. The content of the questionnaire survey is based on several previous studies. The major findings of the study are as follows: the most widely used product costing method is job costing; the complexity in production poses as the highest ranking difficulty in product costing; the most widely used three overhead allocation bases are prime costs, units produced, and direct labor cost; pricing decisions is the most important area where costing information is used; overall mean of the ratio of overhead to total cost is 34.48 percent for all industries; and the most important three management accounting practices are budgeting, planning and control, and cost-volume-profit analysis. Furthermore, decreasing profitability, increasing costs and competition, and economic crises are the factors, which increase the perceived importance of cost accounting. The findings indicate that companies perceive traditional management accounting tools still important. However, new management accounting practices such as strategic planning, and transfer pricing are perceived less important than traditional ones. Therefore, companies need to improve themselves in this aspect.

139-149

Authors: Ruchika GAHLOT, Saroj K. DATTA & Sheeba KAPIL

The Purpose of the study is to examine the impact of derivative trading on stock market volatility. The sample data consist of closing prices of S&P CNX Nifty as well as closing prices of five derivative stocks and five non derivative stocks from April 1, 2002 to March 31, 2005. The study uses GARCH model to capture nature of volatility over time and volatility clustering phenomenon of data. The evidences suggest that there is no significant change in the volatility of S &P CNX Nifty, but the structure of volatility has changed to some extent. However, results show mixed effect in case of 10 individual stocks. These results can assist investors in making investment decision. It also helps to identify need for regulation.

1-25

Authors: Asror NIGMONOV

The development of financial system in Uzbekistan over the last decade puts lots of challenging tasks for the managers of this financial institutions and regulatory bodies. These tasks on its turn demand application of new innovative approaches into the banking system. As a reflection from these issues this paper seeks to apply relatively new method of performance measurement for this country called Data Envelopment Analysis (DEA).For measuring the efficiency it uses two basic DEA models under the assumptions of constant and variable returns to scale. By using these analyses it seeks to measure and break down the efficiency levels of Uzbek banks during 2004-2006. The results have shown that the overall efficiency levels of banks on average decreased during this period. Additionally, it breaks down overall efficiency level of the banks into that originating from the technical efficiency and scale efficiency. The study found that the main source of inefficiency was due to the technical efficiency. By going further the DEA analysis was able to investigate the reasons for inefficiency for each individual bank. It then compared the relative performance between the private, joint-stock and foreign banks for which no significant divergence were found. The investigation of differences between the small, medium and large banks lead to the observation of significant difference between the small and medium sized banks.

51-75

Authors: Bas van AARLE & Robert SOSOIAN

This paper develops a small macroeconomic model of the Armenian economy. After setting up the model and its estimation, a number of macroeconomic scenarios is analyzed in the form of out-of-sample simulations. We analyze the transmissions in the model of a number of macroeconomic shocks and policy scenarios to obtain a better understanding of their possible effects on the internal and external balance of the Armenian economy. A special focus is put on the role of exchange rate and monetary management and the inflow of remittances in the Armenian economy.

93-110

Authors: Michael P. BARRY

Russia has ratified the UN Convention Against Corruption but has not successfully enforced it. This paper uses updated GTAP data to reconstruct a computable general equilibrium (CGE) model to quantify the macroeconomic effects of corruption in Russia. Corruption is found to cost the Russian economy billions of dollars a year. A conclusion of the paper is that implementing and enforcing the UNCAC would be of significant economic benefit to Russia and its people.

127-134

Authors: Takamitsu KURITA

This note aims to achieve a parsimonious fractionally-integrated autoregressive and moving average (ARFIMA) model for recent time series data of Japan's unemployment rate. A brief review of the ARFIMA model is provided, leading to econometric modeling of the data in the ARFIMA framework. It is demonstrated that the preferred ARFIMA model is a satisfactory representation of the data and is useful as a forecasting device.

1-26

Authors: Sunil KUMAR & Nitin ARORA

Using time series data spanning over the period 1974/75 to 2004/05, this paper provides the trends of capacity utilization (CU) levels in Indian sugar industry from regional perspectives. The results reveal that: i) on an average, the sugar industry in India is operating with the excess capacity in tune to 13 percent in each sampled year; ii) substantial variations in CU levels appear in the sugar industry of 12 major sugar producing states under consideration; iii) a precipitous decline in CU levels is noted in the post-reforms years relative to what has been observed in the prereforms period; iv) except the state of Rajasthan, the sugar industry in the remaining 11 states observed a significant decline in CU levels during the postreforms period relative to the pre-reforms period; and v) availability of raw material is most significant variable explaining the CU in Indian sugar industry.

43-62

Authors: Pooja MALHOTRA & Balwinder SINGH

The paper describes the current state of Internet banking in India and discusses its implications for the Indian banking industry. Particularly, it seeks to examine the impact of Internet banking on banks’ performance and risk. Using information drawn from the survey of 85 scheduled commercial bank’s websites, during the period of June 2007, the results show that nearly 57 percent of the Indian commercial banks are providing transactional Internet banking services. The univariate analysis indicates that Internet banks are larger banks and have better operating efficiency ratios and profitability as compared to non-Internet banks. Internet banks rely more heavily on core deposits for funding than non-Internet banks do. However, the multiple regression results reveal that the profitability and offering of Internet banking does not have any significant association, on the other hand, Internet banking has a significant and negative association with risk profile of the banks.

77-94

Authors: Sinan ASLAN & Hatice ELCI

Basel II settlements have a strong influence on the SMEs that are of great importance to countries’ economies. Conditions to become an SME have changed and rating of SMEs has become very important with this new settlement. In this study, in order to be awarded high credit ratings SMEs will be evaluated by analyzing this period in accordance with Basel II. The following were studied; the rating period and its requirements under the framework of Basel II, rating of SMEs and the criteria used during this period, credit rating analysis methods under the scope of the rating procedure and principles.

113-137

Authors: Sarika MAHAJAN & Balwinder SINGH

This paper examines the empirical relationship between return, volume and volatility dynamics of stock market by using daily data of the Sensitive Index (SENSEX) during the period from October 1996 to March 2006. The empirical analysis provides evidence of positive and significant correlation between volume and return volatility that is indicative of the both mixture of distribution and sequential arrival hypothesis of information flow. Causality from volatility to volume can be seen as some evidence that new information arrival might follow a sequential rather than a simultaneous process. In addition, GARCH (1,1) documents the small declines in persistence of variance over time if one includes trading volume as a proxy for information arrivals in the equation of conditional volatility and ARCH and GARCH effects remain significant, which highlights the inefficiency in the market. This finding supports the proposition that volume provides information on the precision and dispersion of information signals, rather than serving as a proxy for the information signal itself.

1-14

Authors: Simon W. TAI &Jung Wan LEE

This study debates the roles of trade liberalization and regional economic cooperation for the sustainable economic growth of the Central Asian countries. An economic research paradigm was used to obtain a macro view from the perspectives of Kazakhstan and neighboring countries. In general, factors that enhance regional trade development and regional economic integration include improving business environment, increasing trade policy coordination, accelerating trade liberalization, and increasing economic cooperation. Selected policies and practical implications are identified, which facilitate enhancing free trade agreements and regional economic cooperation, coordinating WTO accession, and creating a systematic monitoring organization.

15-34

Authors: Maria ROSARIA ALFANO

The public economic literature of the past century is characterized by a traditional paradigm that ascribes little attention to the spatial dimension. However, contemporary globalization requires that researchers and economists expand their perspectives to consider space conceptualization. What is required in the 21st century is a richer and more realistic framework that broadens existing concepts of socio-economic analysis while overcoming narrow national borders. Although national governments will remain prominent performers in the global market, regional and local governments cannot be ignored because citizens worldwide are exerting greater self-determination in influencing governmental decisions. This paper is focused on the opportunity to analyze the governance of decentralization by the new optimizing procedures provided by complex system theory. The first section of the paper explores the positive and normative issues related to centralization and decentralization in a globalized framework as well as the increased interdependence in power sharing among different jurisdictional level. In the second section, Kauffman’s (1993) contributions are examined as a means of determining if the fitness landscape allows combining the institutional evolution. Finally, this paper concludes highlighting that complex system theory is one of the possible tools useful to redesign the map of institutional sharing power in an era of globalization, considering that it allows catching Pareto improving in the level of welfare.

55-71

Authors: Mutascu Mihai IOAN

The corruption is a complex and generalized phenomenon all over the world, with cultural, social, psychological, political and economical dimensions. The defining and the studying of the phenomenon are going through the most different thinking filters known in the specialized literature: social-cultural, political, administrative and economic. The article’s aim is to quantify and analyze the relationship between corruption and political, administrative and economic determinants factors, through a regressive "pool data" model. The sample includes 135 countries of the world, from all continents, with different degrees of economic development and political-administrative structures, for the period 1996-2008. What is interesting is that, the study shows the distortion into the government intervention function in the economy, seen as a significant proliferation factor for the corruption phenomenon. This connection has different intensity, as the state is developed, developing or in transition. Moreover, there is a number of unobserved factors, which emphasizes or temperate in temporal approach the relationship between corruption - political, administrative and economic determinants factors.