The South East European Journal of Economics and Business

BEYOND LINEAR MODELS: FACTORS DRIVING ENVIRONMENTAL ACTION AND CIRCULAR ECONOMY TRANSITION IN WESTERN BALKAN BUSINESSES

Nora Jusufi — 2024-07-26

This article employs a probit model to analyze the determinants influencing businesses in the Western Balkans to mitigate their environmental impact and assess the feasibility of transitioning to a circular business model. It relies on primary survey data gathered in all Western Balkan countries by professional research agencies in 2022, with a representative sample of approximately 200 businesses per country. The findings reveal that factors such as being an exporting, foreign, innovative, and loan-receiving company increase the likelihood of businesses in the Western Balkans taking measures to reduce their environmental impact. Moreover, being an exporting and loan-receiving company emerges as influential in fostering the belief that a shift to a circular business model is attainable. These insights have profound implications for policymakers and businesses aiming to promote sustainable practices and circular economy initiatives within the Western Balkans. Additionally, this article contributes to policy development and knowledge on environmental and circular practices in developing economies.

SHADOW BANKING IN CENTRAL AND EASTERN EUROPE: SPECIFICITIES AND DRIVERS

András Bethlendi — 2024-07-31

he paper analyses the specificities and drivers of the shadow banking (SB) system in eleven Central and Eastern European (CEE) EU member states for 2004-2019. It contributes to the understanding of the CEE SB in terms of how the structural features of the financial and banking system determine its development. The SB system of the region is much smaller, and its structure is less complex and significantly different from that of developed European countries: the role of capital market intermediaries is smaller, while the role of nonbank lenders is larger. Specific features of the CEE financial system include the dominance of banks, the relative underdevelopment of capital markets, the dominance of foreign ownership, and, until the mid-2010s, the reliance on foreign interbank funding in several countries. Indeed, as the results of our panel regression show, regional specificities in the structural characteristics of financial systems are key for the development of the SB.

IMPACT OF IN-WORK BENEFITS ON WORK INCENTIVES IN CROATIA: A MICROSIMULATION ANALYSIS

Slavko Bezeredi — 2024-09-10

Generous social benefit systems reduce work incentives, which has prompted more than half of the EU countries to introduce some sort of make work pay policies. Previous research for Croatia has shown that certain types of households have very low work incentives. Therefore, this paper aims to analyse the impact of in-work benefits on work incentives of non-employed persons and the poverty rate in Croatia. Using the tax-benefit microsimulation model EUROMOD, which is based on the EU-SILC 2020 data, three hypothetical types of in-work benefits are simulated. The results show that the characteristics and the design of in-work benefits are essential, and the choice of the appropriate type of benefit depends on the policy objectives. This paper is the first to analyze the impact of in-work benefits on the work incentives of all non-employed persons in Croatia.

THE ROLE OF CONSUMER KNOWLEDGE IN THE PRIVACY PARADOX OF PERSONALISED ADVERTISING

Miralem Zahirović — 2024-09-10

Current literature on the privacy paradox in personalised advertising lacks insight into how consumers’ knowledge of the data types used shapes their responses to these ads. Building on privacy calculus theory, theory of reasoned action, and signalling theory, this research explores how consumers’ knowledge of data types in personalised advertising influences their reactions. Multigroup path analysis examines differences in established relationships based on consumers’ data knowledge. The moderating effect of this knowledge in the relationship between perceived invasiveness and purchase intentions is also tested. Findings from a sample of millennials indicate that privacy concerns increase perceived invasiveness. However, multigroup and moderation analyses reveal that perceived invasiveness’ impact on purchase intentions varies with consumers’ data knowledge. Specifically, in the search history group, perceived intrusiveness negatively affects purchase intentions. These results underscore the situation-specific nature of the privacy calculus and assist advertisers in understanding consumer behaviour in response to personalised ads.

THE NEXUS BETWEEN ECONOMIC POLICY UNCERTAINTY AND STOCK MARKET VOLATILITY IN THE CEE-3 COUNTRIES

Arifenur Güngör — 2024-09-18

A stock market plays a pivotal role in a financial system and is monitored as a yardstick of a healthy economy. It is a stylized fact that there is a positive and significant relationship between financial development and economic growth. However, emerging markets often exhibit more volatile returns than developed markets, and extreme volatility might prevent financial stability. The literature underlines the role of uncertainty in predicting volatility and suggests a strong positive association between economic policy uncertainty and stock market volatility. Against this backdrop, this study examines the dynamic nature of relationships between economic policy uncertainty (in Germany and the US) and long-run stock market volatility of CEE-3 (Central and Eastern European: the Czech Republic, Hungary, and Poland) countries. This study follows two steps in empirical analysis. First, it obtains long-run stock market volatility and then estimates dynamic regression models. The evidence shows a positive and significant one-period lagged impact of economic policy uncertainty on long-run stock market volatility.

THE CAPITAL STRUCTURE DYNAMICS OF SMES IN KOSOVO: EVIDENCE USING PANEL DATA

Argjentë Qerimi — 2024-09-20

This paper evaluates the applicability of capital structure theories in assessing the financial choices made by SMEs in Kosovo. Additionally, it examines whether previously studied determinants of capital structure, such as firm age and size, liquidity, profitability, firm growth, asset structure, effective tax rate, and non-debt tax shield, can explain the capital structure choices of SMEs in Kosovo. Utilizing annual firm-level data, a panel data methodology is employed to test empirical hypotheses on a sample of 90 SMEs in Kosovo from 2013 to 2018. Dynamic panel model findings reveal that the financial behavior of Kosovo’s SMEs is influenced not only by internally generated funds but also by various specific firm characteristics, including liquidity, effective tax rate, non-debt tax shield, size, asset structure and growth. Finding aligns with the pecking order theory, which suggests that more profitable SMEs tend to rely less on debt financing. The study offers implications and recommendations for both firms’ managers and policymakers.

THE RELATIONSHIP BETWEEN WORKPLACE ROBOTS, EMPLOYEE EXHAUSTION, AND TURNOVER INTENTIONS IN THE AGE OF INDUSTRY 5.0: RESEARCH FROM FOUR SOUTHEASTERN EUROPEAN COUNTRIES

Jelena Lukić Nikolić — 2024-10-13

This paper examines and analyzes the relationship between workplace robots, employee emotional exhaustion, and turnover intentions within the context of Industry 5.0. Empirical research was conducted from January to May 2024. During this period, a total of 582 respondents from four Southeastern European countries (Serbia, Croatia, Montenegro, Bosnia and Herzegovina) participated in the research. The proposed relationships between variables were tested by using the partial least squares method for structural equation modeling (PLS-SEM, SmartPLS software). The research results confirmed that the emotional exhaustion of employees had a positive relationship with turnover intentions, while workplace robots’ effects were negatively related to employee emotional exhaustion and turnover intentions. Leaders, managers, and human resource professionals may benefit from the findings presented in this paper, especially during the decision-making process on how to reduce the emotional exhaustion of employees by using workplace robots, which, in the end, will result in employee retention.

THE IMPACT OF BUDGET TRANSPARENCY ON BUDGET CREDIBILITY: EVIDENCE FROM CROATIAN CITIES

María-Dolores Guillamón — 2024-11-24

This paper examines how budget transparency affects budget credibility, i.e., how it affects budget current revenue/expenditure deviations. Specifically, the first objective is to describe how budget transparency affects budget credibility or accuracy of the enacted budget at the local level. The second is to examine if and in which direction budget deviations are systematically biased. The third is to link the accuracy of enacted budgets with political budget cycles’ literature. Budget transparency is measured by the number of published key budget documents on the City’s official websites. Budget credibility is measured by the difference between the planned amount minus the actual amount divided by the actual amount. Our sample comprises balanced panel data for 120 Croatian cities during the period 2016-2021 and system GMM method was used. The findings indicate that cities with greater budget transparency typically underestimate their revenues and overestimate their expenditures. Less transparent cities, on the other hand, frequently overestimate their revenues and underestimate their expenditures, yet ultimately spend more than intended.

PORTER-TYPE REGIONAL AGGLOMERATIONS, EXPORT PERFORMANCE, AND INCLUSIVE REGIONAL POLICY: AN EMPIRICAL ASSESSMENT OF TURKISH MANUFACTURING SECTOR

Abdullah Erkul — 2024-12-01

This study aims to evaluate the medium-term impact of regional agglomerations in the manufacturing sector of Turkey on export performance. To this end, we identified Porter-type agglomerations in ISIC two-digit manufacturing sectors for 58 NUTS-3 regions and the 2008-2019 period. In the empirical analysis section, we used a two-way fixed effects panel data model to analyze the effects of these agglomerations on sectoral export performance. The findings indicate that the advantages of Porter-type agglomeration are limited to
certain mid-tech sectors. Also, labor-intensive low-tech manufacturing sectors are found to have no agglomeration advantages in export performance compared to mid-tech sectors. The findings indicate a technology policy need and an inclusive smart specialization strategy (3S) to enhance productivity and export competitiveness.