116 10 3494 https://omeka.ibu.edu.ba/files/original/a2ad36cb2d5d539cdd9c6133e3a610f8.docx f1bb4e34491c0012941761e216052360 https://omeka.ibu.edu.ba/files/original/5d9c52796cfb045e32096e38db323898.pdf 38ddeb4fcf5e3b32605e06783fd16360 PDF Text Text Financial Decisions, Tax Effect and Investment Performance Yasemin Coşkun Kaderli Adnan Menderes University Turkey yascoskunk@hotmail.com Selim Bekçioğlu Adnan Menderes University Turkey sbekcioglu@adu.edu.tr Abstract: The aim of the study is to measure influence of taxation while making financial decisions and predict it with the general application in Turkey. Except for equity returns of financial and negative capital institutions registered in Bursa Istanbul between 2000 and 2012, those of all other businesses were calculated. In order to measure cost of capital, Capital Assets Pricing Model (CAPM) was employed. Businesses were divided into four regions as stated in Tax Incentive Law according to the study. As stated in Tax Incentive Law, the businesses whose costs of capital were divided into six regions where statistical analysis was made to determine whether taxation influenced financial decisions of the related businesses based on Tax Incentive Law or not. Assessment of the findings within the study determined that businesses in 1st, 2nd and 3rd regions were affected by taxation 5,69, 2,75 and 1,39 as means between 2007 and 2012, respectively. Accordingly taxation load of businesses in 1st region provinces was found to be heavier than those of businesses in other regions. Considering the Tax Incentive Law, it was found to be statistically important that taxation load of the related region should be taken into account in making any financial decisions. In this respect, there is an impact of tax when one makes financial decisions. However, other relevant factors should also be considered. Keywords: Financial Decision, the Kinds of Financial Decisions, Tax, Tax Incentive Law, Bursa Istanbul. 108 �108 � Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Extent The size or duration of the resource. 2544 Title A name given to the resource Financial Decisions, Tax Effect and Investment Performance Author Author KADERLI, Yasemin Coskum BEKCIOGLU, Selim Abstract A summary of the resource. The aim of the study is to measure influence of taxation while making financial decisions and predict it with the general application in Turkey. Except for equity returns of financial and negative capital institutions registered in Bursa Istanbul between 2000 and 2012, those of all other businesses were calculated. In order to measure cost of capital, Capital Assets Pricing Model (CAPM) was employed. Businesses were divided into four regions as stated in Tax Incentive Law according to the study. As stated in Tax Incentive Law, the businesses whose costs of capital were divided into six regions where statistical analysis was made to determine whether taxation influenced financial decisions of the related businesses based on Tax Incentive Law or not. Assessment of the findings within the study determined that businesses in 1st, 2nd and 3rd regions were affected by taxation 5,69, 2,75 and 1,39 as means between 2007 and 2012, respectively. Accordingly taxation load of businesses in 1st region provinces was found to be heavier than those of businesses in other regions. Considering the Tax Incentive Law, it was found to be statistically important that taxation load of the related region should be taken into account in making any financial decisions. In this respect, there is an impact of tax when one makes financial decisions. However, other relevant factors should also be considered. Keywords: Financial Decision, the Kinds of Financial Decisions, Tax, Tax Incentive Law, Bursa Istanbul. Variables are transformed and necessary post-selection adjustments will be done. Data and results are checked using Shapiro-Wilk W test for normality, Kernel density estimation, Cameron & Trivedi’s decomposition of IM-test and Breusch-Pagan / Cook-Weisberg test for heteroscedasticity, Variance Inflation Factor for multicollinearity, the model specification link test for single-equation models, and the regression specification error test for omitted variables. Relevant conclusions are drawn based on Spearman and regression analysis. Obtained results show that firms with more net trade credit are more profitable. Firms with higher portion of current assets are bigger firms and invest more in inventory than counterparties. Bigger firms have more inventory than smaller firms. Firms with higher leverage ratios are less able to convert sales into cash. Net trade credit is negatively significant associated with inventory to assets ratio, leverage ratio, and net cash flows from operating activities to sales. Net trade credit is positively significant associated with current assets to total assets ratio. Profitability is found statistically significant determinant, but with beta and standard error equal zero. Results show that net trade credit ratio on average is slightly small, but positive. A positive net trade credit indicates that on average trade receivables are higher than trade payables. With other words, analyzed firms for the analyzed period have sell more than have bought on credit. Keywords: net trade credit, accounts receivable, accounts payable, financial ratios, regression. Publisher An entity responsible for making the resource available International Burch University Date A point or period of time associated with an event in the lifecycle of the resource 2014-04 Keywords Keywords. Article PeerReviewed Identifier An unambiguous reference to the resource within a given context ISSN 2303-4564 H Social Sciences (General) https://omeka.ibu.edu.ba/files/original/222a92feb92bbdb73295eccff7ab3968.pdf 92f662319f5f42d4e534f8ea4f4a1765 PDF Text Text Journal of Economic and Social Studies Financial Determinants of Investment for Turkey Okyay UÇAN Çukurova University, Department of Economics, Adana, Turkey. oucan@cu.edu.tr Özlem ÖZTÜRK Çukurova University, Department of Economics, Adana, Turkey. oozturk@cu.edu.tr ABSTRACT One of the fundamental aims of economic policies is to increase capital accumulation in terms of investment that is necessary to maintain a desirable and sustainable growth rate in the developing countries. The majority of empirical studies show that per capita GDP growth, foreign trade, capital flows, external debt, public sector borrowing requirements, inflation and interest rate are the main determinants of investment rate. Recently, there is an increasing emphasis on the role of the financial sector in this process, since a financial system, in essence, mobilizes saving to investment. In particular, it can be argued that a well-functioning and developed financial system may efficiently mobilize available resources for investment. Therefore, the aim of this study is to investigate whether financial development has contributed to an increase in investment in Turkey. To reach an empirical and firm conclusion, an investment function, including the traditional potential determinants along with financial development, is estimated by utilizing the developments in the time series econometrics in terms of unit root tests that allow structural breaks and co-integration for the period 1970-2009 in Turkey. Keywords: VAR; Unit root; Co-integration; Investment; Financial Development; Turkey. Volume 1 Number 1 January 2011 83 �Okyay UÇAN & Özlem ÖZTÜRK Introduction Analysis of data from a large sample of countries has consistently shown that the rate of accumulation of physical capital is an important determinant of economic growth (Levine and Renelt, 1992). Until 1980, Turkey pursued an industrialization strategy based on state-led import-substitution. Under this strategy the economy enjoyed rapid economic growth up to 1976. As a consequence of the rapid expansion of public demand and an investment boom, imports were, however, growing much more rapidly than exports, and the economy became increasingly dependent on foreign borrowing. From 1977 to 1980, growth collapsed virtually to zero, inflation accelerated, and foreign debt continued to increase. Controls on nominal interest rates caused extreme financial depression in this period. Administratively imposed ceilings on deposit and lending rates, credit rationing, and excessive reliance of corporations on credit rather than equity finance and other direct security issues were common characteristics of the pre-1980 financial regime in Turkey (Atiyas and Ersel, 1995). Investments in the Turkish economy in the period after 1970 have increased consistently. However, during economic crises such as 1980, 1998 and 2001, numerical increase in investment has been observed, but relatively the rate of growth has decreased. In the last 30-year period only in the previous year of 2009 has a decrease in investment occurred. This decline in investment is a matter of concern, given the close connection between the level of investment and the rate of economic growth as documented in recent studies (Ben-David, 1998; Chari, Kehoe & McGrattan, 1997; Barro, 1991; Khan & Reinhart, 1990; Kormendi & Meguire, 1985). It is therefore worthwhile to investigate the factors that determine the level of domestic investment in these countries. This paper investigates the role of financial factors in determining domestic investment and private investment in Turkey. The premise of this study is that financial development facilitates the channeling of resources from savers to the highest-return investment activities, increases the quantity of funds available for investment, and thus mitigates the liquidity constraints faced by entrepreneurs. Thus a large and liquid financial system reduces the overall costs and risks of investment, which stimulates capital accumulation. The analysis is based on a reduced-form investment model that relates a country’s domestic investment to the level of financial development while controlling for other nonfinancial factors. Following a standard practice in time series analysis, the investment equation is specified as a dynamic serial correlation model (see Hsiao, 1986; Anderson & Hsiao, 1982, 1981). To test the effects of financial development on investment, four indicators are used alternatively: credit to the private sector, total liquid liabilities of financial intermediaries, credit provided by banks, and a composite index combining these three indicators. Theoretical Approaches Despite the remarkable attention devoted to investment behavior, the literature has not yet produced a full-fledged model of investment applicable to the context of developing countries. Conventional models such as the flexible accelerator proved quite successful in explaining aggregate investment in industrial countries. The main underlying assumptions of these models, however (such as the assumption of perfect capital markets, absence of liquidity constraints, and abstraction from the role of government), are highly questionable in the context of developing economies. Research in the 84 Journal of Economic and Social Studies �Financial Determinants of Investment for Turkey past decades has shifted attention toward the role of financial factors in explaining investment over time and across countries. Studies that emphasize the role of financial determinants for investment in developing countries have revived the original ideas of Schumpeter (1932) about the importance of the financial system in promoting technological progress. These studies also embed the Keynesian view that the ``state of credit’’ is an important determinant of investment (Keynes, 1937, 1973). Gurley and Shaw (1955) provided vital impetus to the Schumpeterian and Keynesian insights by tying economic growth directly to financial development. Gurley and Shaw suggested that “economic development is retarded if only self-finance and direct finance are accessible, if financial intermediaries do not evolve” (Gurley & Shaw, 1955, pp. 518-519). One key difference between developed and underdeveloped countries, as Gurley and Shaw argued, is the level of organization and sophistication of financial intermediaries, especially because of their role in facilitating the flow of loanable funds between savers and investors. McKinnon (1973) and Shaw (1973) offered a theoretical and empirical foundation for the relationship between monetary factors and investment. These authors advanced the hypothesis that investment in developing countries is positively associated with the accumulation of real money balances. The McKinnon-Shaw hypothesis is based on the assumption that limited access to credit in developing countries forces investors to accumulate enough real balances before they can initiate investment projects. This view establishes a positive relationship between real interest rate and investment. Higher interest rates on deposits attract more real balances, which allow them to finance more investment. This contradicts the neoclassical view that higher interest rates increase the user cost of capital and thus reduce investment. Evidence for this neoclassical interest rate (relative price) effect is mixed at best. Recent studies go beyond the McKinnon- Shaw tradition and relate investment to financial development in general by emphasizing the special services that financial intermediaries provide to investors. The financial system is the key to matching financial resources to investors’ needs both through short-term credit expansion and, through its maturity transformation function, by channeling saving into long-term credit markets. Financial markets play an important role in allocating investment capital to high return activities (Greenwood & Smith, 1997). Financial intermediaries have a special function in alleviating information problems, reducing liquidity risk, reducing monitoring costs, and channeling credit to certain classes of borrowers that cannot access nonintermediated forms of credit (Levine, 1997). This analysis implies that low investment in developing countries may be due to low financial intermediation characterized by a limited range of financial instruments, limited long-term lending, inefficient lending practices (for example, politically motivated lending), direct credit control, and crowding out of private investment by public borrowing for consumption purposes. The emphasis on the role of finance for investment constitutes a major improvement on the traditional view that domestic investment is primarily determined by domestic saving. This traditional view holds that the level of saving determines the interest rate and thus the cost of investment, which in turn influences the demand for new capital. Indeed, a number of studies have documented a close connection between low investment rates in developing economies and low domestic saving (Bayoumi, 1990; Dooley, Frankel & Mathieson, 1987; Feldstein & Horioka, 1980). These studies find that countries with low saving rates also have low investment rates. The positive relationship between domestic saving and domestic investment is often viewed as evidence of imperfect international capital flows Volume 1 Number 1 January 2011 85 �Okyay UÇAN & Özlem ÖZTÜRK and various country-specific institutional and noninstitutional rigidities (see Feldstein & Horioka, 1980). However, this approach, that assumes that saving directly causes investment, has important limitations. First, this view is an equilibrium (static) approach. Second, this view only considers the real side of the saving behavior and regards saving as a residue of income after consumption. As some authors argue, it is more appropriate to consider saving as a financial phenomenon. Under this view, saving is regarded as a mechanism of supply of funds (directly and indirectly) to the capital markets that channel the funds into the investment process. In that sense, the financial sector benefits from positive externalities from the real sector through the volume of saving. This approach implies an important role of the financial system in the determination of the level of investment. Empirical studies have shown that a number of nonfinancial factors also affect domestic investment in developing countries. This paper pays particular attention to three categories of factors: factors hypothesized by conventional investment theory (output growth and interest rate); factors related to government policy (government consumption, government borrowing, and inflation); and openeconomy factors (trade flows, foreign debt, and black market activities). Neoclassical investment theory suggests that the growth rate of real output is positively related to investment because it indicates changes in aggregate demand for output that investors seek to meet. Empirical evidence is consistent with this accelerator effect and shows that high output growth is associated with high investment rates (Fielding, 1997, 1993; Greene & Villanueva, 1991; Wai & Wong, 1982). Empirical tests have been less successful in establishing a robust negative relationship between the interest rate and investment. Neoclassical theory suggests that high interest rates raise the cost of capital, which reduces the investment rate. Government policies affect domestic investment through various channels, too. The first is that government consumption spending may crowd out domestic investment by raising interest rates, by reducing the pool of funds in the markets, and by increasing distortionary taxation on investment activities. It is also possible, however, for government spending to “crowd in” domestic investment through the accelerator channel. The net effect is theoretically unpredictable; it can only be determined empirically. Government borrowing from the domestic financial system is another factor that can reduce investment. Fischer (1993, p. 487) argues that the inflation rate serves as an indicator of the overall ability of the government to manage the economy. Since there are no good arguments for very high rates of inflation, a government that is producing high inflation is a government that has lost control. Evidently, there is little incentive to invest in a country where the government has lost control over the macroeconomic environment. Trade flows, external debt, and black market activities also affect the rate of investment in sub-Saharan African economies. Empirical evidence shows that among the many measures of openness, the flow of trade (imports and exports) appears to have the most consistent relationship with investment. Levine and Renelt (1992) find that a positive relationship between investment and trade holds whether trade flows are measured by imports, exports or total trade (imports plus exports). Studies on developing countries in general in particular find a negative relationship between external debt and domestic investment (Jenkins, 1998; Greene & Villanueva, 1991). High debt can depress investment in various ways. First, high debt implies that a higher proportion of domestic output is used to meet debt obligations. This phenomenon, referred to as “debt overhang” (Krugman, 1988), creates 86 Journal of Economic and Social Studies �Financial Determinants of Investment for Turkey a disincentive effect that discourages domestic investment. Second, high debt obligations adversely affect the country’s position in international credit markets and can even cause credit rationing. The credit rationing effect can be important. Credit rationing thus amplifies the debt overhang effect in reducing domestic investment. Third, high levels of external debt depress investment by making the macroeconomic environment more uncertain. Chronic trade deficits combined with ill-advised monetary and exchange policies have created a shortage of foreign Exchange. This and other factors have caused black market activities to flourish. High black market premia tend to induce domestic investors to substitute foreign currency hoarding for investment in physical capital. In addition, black market premia may simply be a symptom of overvaluation of national currencies. This by itself can depress investment by reducing foreign demand for domestic products. Black market premia can also be a sign of pervasive price distortions in the economy that adversely affect investment. Love and Zicchino (2006) applied vector auto regression (VAR) to firm-level panel data from 36 countries to study the dynamic relationship between firms’ financial conditions and investment by using orthogonalized impulse-response functions in order to separate the ‘fundamental factors’ from the ‘financial factors.’ They found that the impact of financial factors on investment, which indicates the severity of financing constraints, is significantly larger in countries with less developed financial systems. Their finding emphasizes the role of financial development in improving capital allocation and growth and shows that the availability of internal funds is more important in explaining investment in countries with less developed financial systems. Furthermore, the impact of a positive shock to cash flow on investment was significantly higher in countries with a ‘low’ level of financial development than in countries with a ‘high’ level of financial development and they found that positive shock to marginal productivity has less impact on investment of firms in countries with low levels of financial development. Saumitra N. Bhaduri (2005) investigated the impact of financial liberalization on the investment patterns in a developing economy, India. The empirical findings revealed mixed evidence in favor of the hypothesis that the liberalization effort has succeeded in relaxing financial constraint faced by the Indian firms. The sample set consisted of a composite and heterogeneous mix of 362 firms whose annual accounts were reported without any gap for the financial years 1989–1990 to 1994–1995. The small and young firms in the sample experienced a significant increase in financial constraint in the post-liberalization period. Koo and Maeng (2005) found that firstly, financial liberalization significantly reduced the financial constraints confronted by firms. Secondly, the effect of financial liberalization on financial constraints was stronger for small and non-chaebol firms than large and chaebol firms. This suggested that various liberalization policies implemented in financial markets helped firms to get wider access to external finance. This paper investigated whether financial liberalization affected firms’ investments in Korea. They tested for the hypothesis that financial liberalization had an impact on firms’ investment behavior. Scaperlanda and Laurence (1969) studied, by employing the least-squares multiple regression technique, the empirical data from the 1952-66 periods related to U.S. direct investment in the European Economic Community (E.E.C.). While the primary orientation of this study was to evaluate statistically the determinants of direct foreign investment, the findings also have a bearing on the effect of the E.E.C. on the patterns of U.S. direct investment. No statistical evidence was found in Volume 1 Number 1 January 2011 87 �Okyay UÇAN & Özlem ÖZTÜRK support of the tariff-discrimination hypothesis and while the relationship between the size of market variable and U.S. direct investment appeared to have been somewhat affected by the establishment of the E.E.C., the stability of the market-size elasticity between the pre- and post-E.E.C. periods indicated that the E.E.C. has had little impact on the sensitivity of I to changes in Y. Günçavdı and Bleaney (2005) tested for shifts in aggregate private investment functions for Turkey as a consequence of financial liberalization in the early 1980s. Results for a neoclassical model in error correction form suggested that the short-run dynamics of investment were altered by financial liberalization, with reduced sensitivity to the availability of credit, but with no evidence of increased sensitivity to the cost of capital. Estimation of an Euler equation model indicated that credit constraints remained binding after liberalization. They interpreted this as evidence of significant structural change to private investment functions after financial liberalization, but with credit constraints continuing to operate. They attempted to estimate the impact of financial liberalization on the dynamics of private investment in Turkey by using an error correction version of the standard neoclassical model and also by an Euler equation approach based on the first-order conditions for dynamic profit maximization. In both cases, the results were limited by the use of aggregate data but it was important to test to what extent aggregate investment equations were liable to structural change under financial liberalization. In the case of the error-correction model, they were able to find statistically significant evidence of structural change. Credit variables became much less important after liberalization, as expected, although cost variables did not become more important. The Euler equation model, on the other hand, displayed no significant structural break associated with financial liberalization. The results for the Euler equation model suggested that credit constraints were binding both before and after liberalization, which would explain why this model does not display structural instability, since the specification depends only on whether the constraint is binding (Güncavdı, Bleaney, 2005, 445;452). Ndikumana (2006) investigated the effects of financial development on domestic investment in a sample of 30 sub-Saharan African countries. It was based on a dynamic serial-correlation investment model including various indicators of financial development, controlling for country-specific fixed effects and nonfinancial factors of investment. The results indicated a positive relationship between domestic investment (total investment and private investment) and various indicators of financial development. Higher financial development led to higher future levels of investment, implying a potent long-run effect of financial development on domestic investment. The findings implied that financial development could stimulate economic growth through capital accumulation. Ang (2009) suggested that significant directed credit programs favoring certain priority sectors tended to discourage private capital formation in both countries. Interest rate controls appeared to have a positive impact on private investment, with the effect being more pronounced in Malaysia. While high reserve and liquidity requirements exerted a negative influence on private investment in India, the effect was found to be positive in Malaysia. The empirical evidence showed a significant steady-state relationship between private investment and its determinants. The results suggested that financial repressionist policies, in the form of significant directed credit controls, appear to have retarded private investment in both India and Malaysia. However, contrary to the financial liberalization thesis, interest rate restraints appeared to be an effective device in stimulating private investment in both countries. While high reserve and liquidity requirements tended to have an 88 Journal of Economic and Social Studies �Financial Determinants of Investment for Turkey undesirable effect on private investment in India, they were found to be favorable in Malaysia. Malaysia had lower corruption and better law and order compared to India. In sum, their results tended to support the proposition that some form of financial restraint might have stimulated private investment. Jongwanich and Kohpaiboon (2008) examined patterns and determinants of private investment in an attempt to understand why levels of private investment in South East Asia have not yet fully recovered, using Thailand as a case study. The private investment equation was estimated during the period 1960–2005. They found that it was capital fund shortages rather than existing spare capacity that hindered short-run investment recovery. In the long run, policy emphasis should have been on promoting a conducive investment climate. The key finding was that private investment in Thailand had borne the brunt of aggregate demand contraction since the outbreak of the Asian financial crisis in 1997. Among the short-run investments, credit shortage was the most important constraint on investment recovery following the crisis. In the long run, private investment was mostly determined by business opportunities and investment costs. Spiegel (2000) indicated that financial development positively influenced both rates of investment and total factor productivity growth. In summary, they found that different aspects of financial development had positive influences on total factor productivity growth and rates of factor accumulation. While the ratio of private-sector liabilities to income had a fairly robust impact on total factor productivity growth, it entered with its predicted sign only in the accumulation of physical capital, and even then the performance of that variable was not robust to the inclusion of country fixed effects. The indicator of liquid liabilities as a share of income performs similarly, although it was not as robust to the inclusion of fixed effects as the private liabilities ratio in the growth equations. Morck et al. (1990) tried to question how the stock market affected investment. For their analysis, they investigated the effect of stock returns and the growth in fundamental variables on investment growth in order to see how important the stock market was after controlling for fundamentals. The firm-level regressions showed that movements in relative share prices were associated with fairly large and statistically significant investment changes when fundamentals were held constant, but the incremental R2 from relative stock returns was fairly small. The cross-sectional variability of investment was sufficiently large that relative stock returns could account for only a small part of it. They argued that the explanatory power of relative stock returns for investment was unlikely to be evidence that the stock market provided new information to managers, since managers probably learned little from the market about their own firms’ idiosyncratic prospects. They also provided evidence that the relation between relative stock returns and investment was not driven by the costs of external financing. The explanatory power of relative stock returns for investment might be evidence of the market exerting pressure on managers, although it also seemed likely that the market was picking up the effect of imperfectly measured fundamentals. Gordon (1964) presented the results of empirical work undertaken to test the theory’s ability to explain the annual investment of the firm. 23 large chemical corporations were selected and data was obtained to provide the value of each variable for the years 1954 through 1960, thereby providing 161 observations on each variable. This study’s conclusions might be summarized as follows: First, a large proportion of the scale deflated variation in investment in the sample was explained by the security flow variable, the investment consistent with maintaining a satisfactory level of security made Volume 1 Number 1 January 2011 89 �Okyay UÇAN & Özlem ÖZTÜRK possible by the period’s operations. Second, the correlation with the profitability variable was quite small. While this might be due to lack of influence on the level of investment, it was quite possible that the cause was the limitations of the change in sales as a measure of rate of return on investment. Methodology Let us first define d to be the degree of integration of a time series At. More precisely, if At achieves stationary after being differenced d times, it is said to be integrated of order d, denoted by At ~ I(d). Thus, an I(1) variable is a variable that achieves stationarity after being differenced one. A necessary condition for testing for a long-run relationship between two or more variables is that these variables are I(1), i. e., stationary in first differences. We, therefore, first test for a unit root using the conventional unit root tests such as ADF (see Dickey and Fuller, 1981; Said and Dickey, 1984) and KPSS (Kwiatkowski-Phillips-Schmidt-Shin, 1992) tests. Besides, in order to capture any possible structural shift over the estimation period, we also employ Perron (1997). This test allow for a single break at an unknown time under the alternative hypothesis of trend-stationarity. While it is true that the Perron (1997) test, by virtue of accounting for one structural break, is an advance over standard ADF and KPSS tests, it is argued that the Perron test may lose power when confronted with two or more breaks (see Lee and Strazicich, 2003). To address this problem, there is a procedure devised by LS (2003) which proposes a model that tests endogenously for two or more structural breaks. If the examined series for the given country are deemed to be I(1), the next step is to establish whether they are cointegrated or not. To this end, we relied on the Johansen & Juselius (1990) cointegration test. If the series are not cointegrated we follow with the Vector Autoregressive (VAR) model. The VAR model, recently, is one of the most used time series analysis. The VAR model is flexible, easy to estimate, and it usually gives a good fit to macroeconomic data. However, the possibility of combining long-run and short-run information in the data by exploiting the cointegration property is probably the most important reason why the VAR model continues to receive the interest of both econometricians and applied economists. Since, there is no constraint in the VAR approach and it gives dynamic relations between the variables, it is used more for the time series (Keating, 1990:453-454). One of the advantages of the VAR approach is that variables are endogenously determined. Secondly, the VAR approach allows the variables depending more than white noise terms or lag of variables. Thus VAR model becomes more flexible than AR models and since the VAR approach includes most properties of data, it offers a strong structure. Moreover, every equation may be solved by OLS (Ordinary Least Squares) because there is no simultaneous terms right side of the equation. As Sims (1980) claims, huge scaled structural models fail to forecast out of sample estimation (Brooks, 2008:291; Greene, 1993:553). Simply, as y1t and y2t are the variables, the VAR model can be defined as follows (Brooks, 2008:290): (1) 90 Journal of Economic and Social Studies �Financial Determinants of Investment for Turkey Current values of variables depend on the k lag of the variables and error terms. Here it is white noise error term and while i=1,2 E (uit) =0 ve E (u1tu2t)=0. The assumption of uncorrelated error terms with their lagged values makes no constriction to the VAR model. The reason for this is that by increasing the lag length of the variables autocorrelation problem is achieved (Güloğlu ve Özgen, 2004:96). Lag length is determined by Akaiki Information Criteria (AIC), Schwarz Information Criteria (SIC), Hannan-Quinn Information Criteria (HQ) and Final Prediction Error (FPE). All variables have to be stationary in the VAR approach. But, Sims (1980) and Sims, Stock and Watson (1990) claim that whether variables have unit root or not, differencing procedure needs not to be applied. When differencing procedure is applied, long-run relationship between the variables can be lost (Enders, 2004:270). On the other hand, Fuller (1976) asserts that differencing a series doesn’t show an asymptotic efficiency (Günçavdı et al., 2000: 160). Thus, if the series are not cointegrated, VAR approach is used with differencing I(1) variables. In this paper we use both Sims and Fullers approach, and then we write the best one that explains the economic theory. To interpret the VAR results impulse-response function, variance decomposition and granger causality are used. Data and Formation of Variables All data are gathered from International Financial Statistics online services reported by the International Monetary Fund (IMF). This publication has annual data for Turkey from 1970 to 2009. The variables used in this paper are: Total gross domestic investment as a percentage of gross domestic products (GDP) : It Private domestic investment as a percentage of GDP: PIt Real per capita gross domestic product : PGDPt Growth rate of GDP deflator (Inflation) : Inft Discount rate (real interest rate): r Financial development indicators (see Ndikumana, 2000; Levine, 1997; Demirgüc-Kunt and Maksimovic, 1996; Lynch, 1996 for a discussion of measuring the items of financial development). By following Ndikumana (2000), Total credit to the private sector as a percentage of GDP (FD1) The ratio of broad money to GDP is used as a measure of size of the financial sector (FD2) The relative importance of banks in the supply of credit is measured by total domestic credit provided by the banking sector as a percentage of GDP (FD3) Claims on government as a percentage of GDP (FD4) A composite index of financial development (FDindex) The formula for the FDindex that is developed by Demirgüc-Kunt and Levine (1996) is adapted to our paper as the following: (1) Volume 1 Number 1 January 2011 91 �Okyay UÇAN & Özlem ÖZTÜRK where FDi is an indicator of financial development, is the sample mean of indicator i. Since we have four financial development indicators, we use 4 for the maximum number of total symbol. In this paper, we create two main models dealing with It and PIt. In these models besides real interest rate (r), real per capita gross domestic product (PGDPt), inflation (inf); financial development indicators are changed to each other to see their individual effect on It and PIt, i.e.: Empirical Results Unit root test results To start with the ADF and KPSS tests were applied both on levels and on the first differences of It, PIt, PGDPt, Inft, r, FD1, FD2, FD3, FD4 and FDindex. The results are summarized in Table 1. The tests on the level series (Table 1) unequivocally indicate that all variable are non-stationary for the ADF but KPSS test indicates that PIt, FD1, FD2, FD4 and FDindex are stationary. In first differences, except Inft and FD2 with KPSS test, all variables are stationary. Table 1. ADF and KPSS Unit-root Test Results ADF KPSS First First Level Level Difference Difference Variables tψ tψ tψ tψ -2,028 -6,517(*) 0,157 0,053 It -1,410 -4,592(*) 0,109 0,065 PIt -4,274 -7,519(*) 0,768 0,118 PGDPt -0,021 -5,697(*) 0,175 0,112 r -0,729 -6,141(*) 0,179 0,170 Inft FD1 -2,287 -4,907(*) 0,100 0,133 FD2 -3,337 -8,246(*) 0,135 0,500 FD3 -1,154 -4,800(*) 0,148 0,076 FD4 -2,608 -6,854(*) 0,083 0,053 FDindex -1,699 -5,546(*) 0,120 0,056 %1 -4,211 -4,211 0,216 0,216 Critical %5 -3,529 -3,529 0,146 0,146 Values %10 -3,196 -3,196 0,119 0,119 Note: All regression variables are in logarithm. Asterisks *, **, ***, show significance of 1%, 5% and 10% levels respectively. The critical values are obtained from MacKinnon (1991) for the ADF test and from Kwiatkowski et al. (1992) for the KPSS test. ADF test examines the null hypothesis of a unit root against the stationary alternative. KPSS tests the stationarity null hypothesis against the alternative hypothesis of a unit root. 92 Journal of Economic and Social Studies �Financial Determinants of Investment for Turkey I.e., Since ADF and KPSS tests are in conflict, as we emphasize in the methodology part, there may be structural breaks. So we apply Perron and LS unit root tests to see more accurate results. Perron (1997) and Lee-Strazicich (2003) tests indicate that regime shifts in all the variables. Table 2. Perron and LS Unit-root Test Results Perron(1997) First Difference TB tψ tψ -4,83 2002 -7,54* Level Level Variables It TB 1997 PIt 1991 -5,52** 2002 -5,23 2000D PGDPt 1996 -5,81* 1997 -9,03* 1983DT Inft 1992 -3,57 1980 -6,74* 1999DT TB 1997DT LS(2003) First Difference tψ TB tψ -3,97 2005DT -7,78* 1996DT -6,52* -3,69 2002DT -4,58 1996DT -8,42* 1979DT -7,91* -4,53 1982DT 1981DT -4,04 1978DT -7,32* 2004DT 1998D 1994DT FD1 2006 -5,10 1996 -7,06* -5,91 -5,90* 2005DT 1994D FD2 2007 -4,57 2008 -4,16 1987DT -5,17 1979DT -9,10* 1986DT -4,74 1990D -6,00* FD3 1987 -4,48 2000 -5,20 1992DT 1989D 1987DT -11,39* -4,61 FD4 1989 -4,42 1989 -10,65* 1992DT 1991DT FDindex 1987 -4,52 1989 -6,34* -----4,04 1985D -6,33* %1 -6,32 -6,32 -6,28 -6,28 Critical %5 -5,59 -5,59 -5,62 -5,62 Values %10 -5,29 -5,29 -5,24 -5,24 Note: All regression variables are in logarithm. Asterisks *, **, ***, show significance of 1%, 5% and 10% levels respectively. TB shows the structural break time. D is dummy variable and DT is trend dummy. The critical values are obtained from Perron (1997) for the Perron test and from Lee and Strazicich (2003, 2004) for the LS test. Perron and LS tests examine the null hypothesis of a unit root against the stationary alternative. r 1986 -2,46 1979 -7,58* The results of Perron and LS unit root tests presented in Table 2 provide further evidence of the existence of a unit root when breaks are allowed. The estimated results of unit root tests indicate that all variables are I(1) as the null hypothesis of non-stationary can not be rejected at conventional significance levels. Co-integration test results Since it is agreed that all variables are I(1), we start to investigate whether there is a long run relation between the variables in Model A and B. Table 3 shows the co-integration relation of (total gross domestic investment as a percentage of gross domestic products) It with financial development indicators and a list of control variables consisting of inflation, growth rate of real per capita GDP and real interest rate. Volume 1 Number 1 January 2011 93 �Okyay UÇAN & Özlem ÖZTÜRK Table 3. Johansen Co integration Results Where r=Number of Co-integrating Vectors for Model A   max Variables in Cointegrating Vector Model with FD1 Model with FD2 Model with FD3 Model with FD4 Model with FDindex Alternative 1 lag %95 Critical Value 1 lag %95 Critical Value r 1 r2 r 1 r2 r 1 r2 r 1 r2 r 1 r2 69,98 42,31 69,81 47,85 27,67 24,47 33,87 27,58 62,19 40,19 69,81 47,85 21,99 17,79 33,87 27,58 64,01 39,46 69,81 47,85 24,55 17,84 33,87 27,58 59,99 30,87 69,81 47,85 29,12 12,12 33,87 27,58 60,82 36,99 69,81 47,85 23,83 15,06 33,87 27,58 Trace Null r0 r 1 r0 r 1 r0 r 1 r0 r 1 r0 r 1 Table 4 shows the co-integration relation of (private domestic investment as a percentage of GDP) PIt with financial development indicators and a list of control variables consisting of inflation, growth rate of real per capita GDP and real interest rate. Table 4. Johansen Co-integration Results Where r=Number of Co-integrating Vectors for Model B   max Variables in Cointegrating Vector Model with FD1 Model with FD2 Model with FD3 Model with FD4 Model with FDindex Alternative 1 lag %95 Critical Value 1 lag %95 Critical Value r 1 r2 r 1 r2 r 1 r2 r 1 r2 r 1 r2 65,84 39,63 69,81 47,85 26,21 21,30 33,87 27,58 65,15 39,98 69,81 47,85 25,17 18,68 33,87 27,58 66,41 42,87 69,81 47,85 23,53 21,69 33,87 27,58 57,10 33,53 69,81 47,85 23,56 16,10 33,87 27,58 62,99 41,01 69,81 47,85 21,98 20,26 33,87 27,58 Trace Null r0 r 1 r0 r 1 r0 r 1 r0 r 1 r0 r 1 Thus, since series are not co-integrated in both Table 3 and Table 4, the VAR approach is used with differencing all I(1) variables to make them stationary. 94 Journal of Economic and Social Studies �Financial Determinants of Investment for Turkey Variance Decomposition Results Model A Here, for all models, total gross domestic investment is affected by itself along all 10 periods time. Especially, Model A-FD1 analysis shows that relative to the other models at the end of 10th period effect of total credit to private sector (FD1) is evidently determined (See Appendix-i (Model A)). Model B At the end of the 10th period private domestic investment, for all models, is affected from inflation and real interest rate variables as a percentage of 30% (See Appendix-i (Model B)). Especially, in the model with FD3 (domestic credit provided by the banking sector), relative to other financial development items, at the end of 10th period domestic credit’s effect is higher on private domestic investment (See Appendix-i (Model B-FD3)). Impulse Response Analysis Impulse response functions describe how the economy reacts over time to exogenous impulses, which economists usually call ‘shocks’, and are often modeled in the context of a vector auto-regression. Impulse response functions describe the reaction of endogenous macroeconomic variables at the time of the shock and over subsequent points in time. Impulse Response Analysis results are given in the appendix-ii by graphs. We investigate the dynamic responses of variables against one unit standard error shocks to the other variables. While dotted lines show the significance bounds, straight line gives the estimates. Model A Against the effect of an exogenous shock or innovation in FD1, FD3, and FD4 there exists a positive effect on the total investment in the short term and then at the end of 10th period total investment tends to its mean value. Against the effect of an exogenous shock in FD2 there exists a negative effect on the total domestic investment. As a total effect of financial development items we can analyze the effect of a shock in FDindex. As a result of this a positive effect also occurs on total domestic investment (It) in the short term but It again tends to its mean at the end of the 10th period. On the other hand, as an impact to the effect of an exogenous shock in control variables (inflation, real interest rate and real per capita GDP), a negative effect occurs on the total domestic investment in the short term. Model B Against the effect of an exogenous shock or innovation in FD1,FD2, and FD4 there exists a positive effect on the private investment in the short term and then at the end of the 10th period private investment tends to its mean value. As an impact to the effect of an exogenous shock in FD3 there Volume 1 Number 1 January 2011 95 �Okyay UÇAN & Özlem ÖZTÜRK exists a negative effect on the private domestic investment. As a total effect of financial development items we can analyze the effect of a shock in FDindex. As a result of this a positive effect also occurs on private domestic investment (It) in the short term but It again tends to its mean at the end of 10th period. On the other hand, against to the effect of an exogenous shock in inflation and real interest rate, there exists a negative effect on the private domestic investment. But, after an effect of an exogenous shock in real per capita GDP, there exists a positive effect on private investment. Granger Causality Results The term causality suggests a cause and effect relationship between two sets of variables. Table 5 shows the Granger Causality results of Model A with FD1. Model A Table 5. Model A with FD1 Null Hypothesis: Obs F-Statistic Probability DLNPGDP does not Granger Cause DLNI DLNI does not Granger Cause DLNPGDP 37 1.00114 1.84336 0.37868 0.17470 DR does not Granger Cause DLNI DLNI does not Granger Cause DR 37 0.74486 0.18083 0.48285 0.83542 DLNFD1 does not Granger Cause DLNI DLNI does not Granger Cause DLNFD1 37 4.48833 0.60694 0.01913 0.55117 DLNINF does not Granger Cause DLNI DLNI does not Granger Cause DLNINF 37 0.78625 1.96594 0.46415 0.15657 In the Table 5 it is seen that total credit to the private sector (FD1) may Granger-cause total gross domestic investment. Since no other Granger cause is found, other tables are given in the appendixiii. Model B Here, inflation and real interest rate may Granger-cause private domestic investment for all Granger causality results for model B. On the other hand, there is not any significant Granger cause between the other variables (See appendix-iii (Model B)) 96 Journal of Economic and Social Studies �Financial Determinants of Investment for Turkey Conclusion The study is based on Turkish data from 1970 to 2009. The results mainly indicate a positive relationship between total domestic investment and all four indicators of financial development as we create a composite index of financial development items. The results are qualitatively similar for total domestic investment and private investment, with stronger effects of financial factors on private investment than on total domestic investment. The findings also suggest that high financial development is a predictor of future levels of domestic investment. Higher financial development in the 1980s is associated with higher investment levels in the 1990s and 2000s. The results also confirm stylized facts for other determinants of investment. 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The American Economic Review, 59(4), 558-568 Schiantarelli, F. (1996). Financial constraints and investment methodological issues and international evidence. Oxford Review of Economic Policy, 12(2), 70-89 Schumpeter, J. A. (1932). The theory of economic development, Cambridge: Harvard University Press. Shaw, E. S., (1973). Financial deepening in economic development, New York: Oxford University Press. Wai, T. U., & Wong, C., H. (1982). Determinants of private investment in developing countries. Journal of Development Studies, 19 (1), 19-36. 100 Journal of Economic and Social Studies �Financial Determinants of Investment for Turkey Appendix-i MODEL A Variance Decomposition Tables Variance Decomposition of DLNI:Model A-FD1 Period S.E. DLNI DLNFD1 1 2 3 4 5 6 7 8 9 10 0.108189 0.114674 0.116760 0.117296 0.117427 0.117456 0.117465 0.117468 0.117468 0.117468 100.0000 91.31028 88.10730 87.56561 87.37640 87.34178 87.33265 87.32892 87.32812 87.32794 0.000000 4.141264 4.600590 4.802083 4.845550 4.843689 4.849448 4.850649 4.850598 4.850696 Variance Decomposition of DLNI:Model A-FD2 Period S.E. DLNI DLNINF 1 2 3 4 5 6 7 8 9 10 0.108458 0.115583 0.117364 0.117540 0.117549 0.117552 0.117553 0.117553 0.117553 0.117553 100.0000 90.72336 88.51779 88.43920 88.42730 88.42511 88.42507 88.42506 88.42505 88.42505 0.000000 2.729410 3.847332 3.842494 3.852711 3.854248 3.854273 3.854279 3.854284 3.854284 Variance Decomposition of DLNI: Model A-FD3 Period S.E. DLNI DLNINF 1 2 3 4 5 0.108065 0.115639 0.116991 0.117374 0.117446 100.0000 89.56568 87.60536 87.10785 87.01222 Volume 1 Number 1 January 2011 0.000000 3.279691 4.342173 4.333262 4.388973 DLNINF DLNPGDP DR 0.000000 0.614225 3.056185 3.037059 3.127242 3.160769 3.161032 3.162232 3.163013 3.163040 0.000000 0.982688 0.962059 1.091725 1.091581 1.094995 1.096584 1.096610 1.096644 1.096680 0.000000 2.951546 3.273865 3.503523 3.559228 3.558767 3.560289 3.561588 3.561628 3.561647 DLNPGDP DR DLNFD2 0.000000 3.081509 3.520241 3.530372 3.529824 3.529811 3.529792 3.529793 3.529793 3.529793 0.000000 3.400433 3.662834 3.721340 3.723527 3.723440 3.723418 3.723430 3.723431 3.723431 0.000000 0.065293 0.451802 0.466594 0.466635 0.467393 0.467443 0.467443 0.467444 0.467444 DLNPGDP DR DLNFD3 0.000000 3.311463 3.892787 3.910996 3.910662 0.000000 3.312430 3.398263 3.517622 3.516091 0.000000 0.530732 0.761415 1.130270 1.172049 101 �Okyay UÇAN & Özlem ÖZTÜRK 6 7 8 9 10 0.117453 0.117453 0.117453 0.117453 0.117453 87.00204 87.00186 87.00182 87.00181 87.00181 4.391217 4.391203 4.391203 4.391203 4.391203 3.912851 3.912857 3.912859 3.912859 3.912859 Variance Decomposition of DLNI: Model A-FD4 Period S.E. DLNI DLNINF DLNPGDP 1 2 3 4 5 6 7 8 9 10 0.108420 0.115961 0.117277 0.117396 0.117410 0.117412 0.117412 0.117412 0.117412 0.117412 100.0000 89.84121 88.01535 87.85444 87.83481 87.83338 87.83337 87.83335 87.83335 87.83335 0.000000 3.438107 4.623120 4.616059 4.628621 4.629506 4.629501 4.629511 4.629513 4.629513 0.000000 3.219958 3.656558 3.655720 3.658869 3.659176 3.659171 3.659171 3.659171 3.659171 Variance Decomposition of DLNI: Model A -FDindex Period S.E. DLNI DLNINF DLNPGDP 1 2 3 4 5 6 7 8 9 10 0.107382 0.115634 0.116954 0.117296 0.117336 0.117341 0.117341 0.117341 0.117341 0.117341 100.0000 88.22844 86.28256 85.89115 85.84443 85.83787 85.83779 85.83778 85.83777 85.83777 0.000000 3.415930 4.611005 4.591966 4.617251 4.616976 4.616990 4.616989 4.616989 4.616989 0.000000 3.567548 4.194833 4.224296 4.221599 4.225583 4.225597 4.225599 4.225602 4.225602 3.520461 3.520542 3.520550 3.520550 3.520550 1.173432 1.173535 1.173564 1.173576 1.173580 DR DLNFD4 0.000000 3.360777 3.555080 3.704141 3.708052 3.708235 3.708251 3.708257 3.708257 3.708258 0.000000 0.139953 0.149895 0.169644 0.169644 0.169705 0.169706 0.169706 0.169706 0.169706 DR DLNFDINDEX 0.000000 3.338606 3.307889 3.413893 3.425451 3.428218 3.428222 3.428231 3.428232 3.428232 0.000000 1.449480 1.603709 1.878697 1.891273 1.891353 1.891399 1.891403 1.891406 1.891407 DLNPGDP DR MODEL B Variance Decomposition Tables Variance Decomposition of DLNPI: Model B-FD1 Period S.E. DLNPI DLNFD1 DLNINF 102 Journal of Economic and Social Studies �Financial Determinants of Investment for Turkey 1 2 3 4 5 6 7 8 9 10 0.111704 0.131884 0.137132 0.138684 0.139195 0.139354 0.139404 0.139424 0.139430 0.139432 100.0000 72.90510 68.00580 67.20303 66.76867 66.64278 66.62735 66.61298 66.60742 66.60673 0.000000 0.361952 0.997606 1.899030 2.102646 2.097979 2.116462 2.124081 2.123991 2.124521 0.000000 11.97497 16.18442 15.85363 15.95689 16.05452 16.04905 16.05042 16.05463 16.05470 Variance Decomposition of DLNPI: Model B-FD2 Period S.E. DLNPI DLNINF DLNPGDP 1 0.111371 100.0000 0.000000 0.000000 2 0.134236 70.59143 12.47682 0.038478 3 0.137751 67.04588 15.11256 0.149176 4 0.139147 66.73769 14.82891 0.782973 5 0.139750 66.77630 14.85455 0.790853 6 0.139950 66.64188 14.96127 0.790099 7 0.139992 66.60480 14.98001 0.791385 8 0.140010 66.60431 14.97613 0.794327 9 0.140019 66.60358 14.97733 0.794818 10 0.140022 66.60177 14.97888 0.794796 Variance Decomposition of DLNPI: Model B-FD3 Period S.E. DLNPI DLNINF DLNPGDP 1 2 3 4 5 6 7 8 9 10 0.113117 0.132713 0.137096 0.139309 0.139943 0.140037 0.140066 0.140079 0.140082 0.140083 100.0000 73.91439 69.90781 68.45069 67.95800 67.87165 67.86658 67.85956 67.85689 67.85654 0.000000 8.857569 9.850386 9.871808 10.25433 10.34304 10.33949 10.34367 10.34636 10.34638 0.000000 0.283118 0.284117 0.564892 0.565699 0.572337 0.577291 0.578136 0.578120 0.578234 Variance Decomposition of DLNPI: Model B-FD4 Period S.E. DLNPI DLNINF DLNPGDP Volume 1 Number 1 January 2011 0.000000 0.144374 0.608559 1.005528 1.002418 1.019089 1.030832 1.031342 1.031667 1.032140 0.000000 14.61360 14.20362 14.03878 14.16937 14.18564 14.17631 14.18118 14.18229 14.18191 DR DLNFD2 0.000000 15.53199 15.75905 15.52096 15.38871 15.42208 15.43548 15.43307 15.43141 15.43176 0.000000 1.361280 1.933336 2.129465 2.189593 2.184673 2.188322 2.192163 2.192866 2.192788 DR DLNFD3 0.000000 16.86352 17.15470 16.61792 16.48073 16.47663 16.47040 16.46838 16.46852 16.46845 0.000000 0.081402 2.802990 4.494690 4.741239 4.736345 4.746241 4.750247 4.750106 4.750396 DR DLNFD4 103 �Okyay UÇAN & Özlem ÖZTÜRK 1 2 3 4 5 6 7 8 9 10 0.111575 0.135002 0.139053 0.139725 0.139963 0.140040 0.140055 0.140058 0.140060 0.140060 100.0000 69.47911 65.95623 65.97560 65.89605 65.82322 65.81694 65.81719 65.81617 65.81589 0.000000 12.06639 15.14679 15.04366 15.07943 15.12762 15.13298 15.13232 15.13292 15.13313 0.000000 0.130478 0.157194 0.358112 0.370389 0.370459 0.371933 0.372470 0.372480 0.372491 Variance Decomposition of DLNPI: Model B-FDindex Period S.E. DLNPI DLNINF DLNPGDP 1 2 3 4 5 6 7 8 9 10 104 0.112972 0.133776 0.137682 0.139539 0.140144 0.140245 0.140275 0.140291 0.140296 0.140296 100.0000 72.90162 69.28895 68.46558 68.19073 68.09424 68.08200 68.07689 68.07403 68.07341 0.000000 10.08486 12.04079 11.86915 12.10474 12.19810 12.19796 12.19878 12.20180 12.20225 0.000000 0.190314 0.179788 0.484045 0.483038 0.488077 0.491548 0.492549 0.492521 0.492605 0.000000 16.39682 16.91693 16.75737 16.77625 16.80167 16.80126 16.80084 16.80122 16.80129 0.000000 1.927210 1.822856 1.865255 1.877879 1.877024 1.876882 1.877178 1.877210 1.877201 DR 0.000000 16.60307 16.82740 16.41971 16.27832 16.27891 16.27659 16.27285 16.27223 16.27227 0.000000 0.220144 1.663077 2.761518 2.943173 2.940671 2.951904 2.958937 2.959425 2.959468 Journal of Economic and Social Studies �Financial Determinants of Investment for Turkey Appendix-ii MODEL A Impulse Response Analysis Volume 1 Number 1 January 2011 105 �Okyay UÇAN & Özlem ÖZTÜRK MODEL B Impulse Response Analysis1 1 In this analysis “invy” , “pinvy” , “pery” are used instead of “I”, “PI”, PGDP” respectively. 106 Journal of Economic and Social Studies �Financial Determinants of Investment for Turkey Appendix-iii MODEL A Granger Causality Results Model A – FD2 Null Hypothesis: Obs F-Statistic Probability DLNINF does not Granger Cause DLNI DLNI does not Granger Cause DLNINF 38 0.84739 4.02848 0.36359 0.05251 DLNFD2 does not Granger Cause DLNI 38 0.66461 0.42045 1.04756 0.31309 DLNI does not Granger Cause DLNFD2 DR does not Granger Cause DLNI DLNI does not Granger Cause DR 38 1.48965 0.10038 0.23043 0.75326 DLNPGDP does not Granger Cause DLNI 38 1.44872 0.23681 0.43703 0.51289 Obs F-Statistic Probability DLNINF does not Granger Cause DLNI DLNI does not Granger Cause DLNINF 38 0.84739 4.02848 0.36359 0.05251 DR does not Granger Cause DLNI DLNI does not Granger Cause DR 38 1.48965 0.10038 0.23043 0.75326 DLNPGDP does not Granger Cause DLNI DLNI does not Granger Cause DLNPGDP 38 1.44872 0.43703 0.23681 0.51289 DLNFD3 does not Granger Cause DLNI DLNI does not Granger Cause DLNFD3 38 1.41139 0.35330 0.24282 0.55608 Obs F-Statistic Probability 38 0.84739 0.36359 DLNI does not Granger Cause DLNPGDP Model A – FD3 Null Hypothesis: Model A – FD4 Null Hypothesis: DLNINF does not Granger Cause DLNI Volume 1 Number 1 January 2011 107 �Okyay UÇAN & Özlem ÖZTÜRK DLNI does not Granger Cause DLNINF 4.02848 0.05251 DR does not Granger Cause DLNI DLNI does not Granger Cause DR 38 1.48965 0.10038 0.23043 0.75326 DLNPGDP does not Granger Cause DLNI 38 1.44872 0.23681 0.43703 0.51289 38 0.10555 0.59435 0.74720 0.44591 Obs F-Statistic Probability DLNINF does not Granger Cause DLNI DLNI does not Granger Cause DLNINF 38 0.84739 4.02848 0.36359 0.05251 DR does not Granger Cause DLNI DLNI does not Granger Cause DR 38 1.48965 0.10038 0.23043 0.75326 DLNPGDP does not Granger Cause DLNI DLNI does not Granger Cause DLNPGDP 38 1.44872 0.43703 0.23681 0.51289 DLNFDINDEX does not Granger Cause DLNI DLNI does not Granger Cause DLNFDINDEX 38 2.10028 0.51455 0.15617 0.47793 Obs F-Statistic Probability DLNFD1 does not Granger Cause DLNPI DLNPI does not Granger Cause DLNFD1 38 0.04863 0.52332 0.82674 0.47424 DLNINF does not Granger Cause DLNPI DLNPI does not Granger Cause DLNINF 38 4.31446 3.04715 0.04519 0.08965 DLNI does not Granger Cause DLNPGDP DLNFD4 does not Granger Cause DLNI DLNI does not Granger Cause DLNFD4 Model A – FDindex Null Hypothesis: MODEL B Granger Causality Results Model B– FD1 Null Hypothesis: 108 Journal of Economic and Social Studies �Financial Determinants of Investment for Turkey DLNPGDP does not Granger Cause DLNPI DLNPI does not Granger Cause DLNPGDP 38 0.64549 2.09254 0.42715 0.15692 DR does not Granger Cause DLNPI DLNPI does not Granger Cause DR 38 13.4414 0.63531 0.00081 0.43079 Obs F-Statistic Probability 38 4.31446 0.04519 3.04715 0.08965 Model B – FD2 Null Hypothesis: DLNINF does not Granger Cause DLNPI DLNPI does not Granger Cause DLNINF DLNPGDP does not Granger Cause DLNPI DLNPI does not Granger Cause DLNPGDP 38 0.64549 2.09254 0.42715 0.15692 DR does not Granger Cause DLNPI 38 13.4414 0.00081 0.63531 0.43079 38 0.99414 0.00598 0.32558 0.93880 Obs F-Statistic Probability DLNINF does not Granger Cause DLNPI DLNPI does not Granger Cause DLNINF 38 4.31446 3.04715 0.04519 0.08965 DLNPGDP does not Granger Cause DLNPI DLNPI does not Granger Cause DLNPGDP 38 0.64549 2.09254 0.42715 0.15692 DR does not Granger Cause DLNPI DLNPI does not Granger Cause DR 38 13.4414 0.63531 0.00081 0.43079 DLNFD3 does not Granger Cause DLNPI DLNPI does not Granger Cause DLNFD3 38 0.00060 1.32403 0.98052 0.25767 Obs F-Statistic Probability DLNPI does not Granger Cause DR DLNFD2 does not Granger Cause DLNPI DLNPI does not Granger Cause DLNFD2 Model B – FD3 Null Hypothesis: Model B– FD4 Null Hypothesis: Volume 1 Number 1 January 2011 109 �DLNINF does not Granger Cause DLNPI 38 DLNPI does not Granger Cause DLNINF 4.31446 0.04519 3.04715 0.08965 DLNPGDP does not Granger Cause DLNPI DLNPI does not Granger Cause DLNPGDP 38 0.64549 2.09254 0.42715 0.15692 DR does not Granger Cause DLNPI DLNPI does not Granger Cause DR 38 13.4414 0.63531 0.00081 0.43079 DLNFD4 does not Granger Cause DLNPI DLNPI does not Granger Cause DLNFD4 38 0.04707 0.03570 0.82950 0.85122 Obs F-Statistic Probability DLNINF does not Granger Cause DLNPI DLNPI does not Granger Cause DLNINF 38 4.31446 3.04715 0.04519 0.08965 DLNPGDP does not Granger Cause DLNPI DLNPI does not Granger Cause DLNPGDP 38 0.64549 2.09254 0.42715 0.15692 DR does not Granger Cause DLNPI DLNPI does not Granger Cause DR 38 13.4414 0.63531 0.00081 0.43079 DLNFDINDEX does not Granger Cause DLNPI DLNPI does not Granger Cause DLNFDINDEX 38 0.04343 0.88874 0.83612 0.35228 Model B– FDindex Null Hypothesis: � Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Extent The size or duration of the resource. 1060 Title A name given to the resource Financial Determinants of Investment for Turkey Author Author UÇAN, Okyay ÖZTÜRK, Özlem Abstract A summary of the resource. One of the fundamental aims of economic policies is to increase capital accumulation in terms of investment that is necessary to maintain a desirable and sustainable growth rate in the developing countries. The majority of empirical studies show that per capita GDP growth, foreign trade, capital flows, external debt, public sector borrowing requirements, inflation and interest rate are the main determinants of investment rate. Recently, there is an increasing emphasis on the role of the financial sector in this process, since a financial system, in essence, mobilizes saving to investment. In particular, it can be argued that a well-functioning and developed financial system may efficiently mobilize available resources for investment. Therefore, the aim of this study is to investigate whether financial development has contributed to an increase in investment in Turkey. To reach an empirical and firm conclusion, an investment function, including the traditional potential determinants along with financial development, is estimated by utilizing the developments in the time series econometrics in terms of unit root tests that allow structural breaks and co-integration for the period 1970-2009 in Turkey. Publisher An entity responsible for making the resource available International Burch University Date A point or period of time associated with an event in the lifecycle of the resource 2011-01 Keywords Keywords. Article PeerReviewed H Social Sciences (General),HB Economic Theory,HG Finance https://omeka.ibu.edu.ba/files/original/040844b6690044e0c92783ab83bbbe56.pdf 32259e39096d3050477aa67d378f449a PDF Text Text 1. International Symposium on Sustainable Development, June 9-10 2009, Sarajevo Financial Development and Economic Growth: Time Series Evidence from Turkey Burcu KIRAN Faculty of Economics, Istanbul University, 34452, Beyazit, Istanbul, Turkey kburcu@istanbul.edu.tr Nilgün Çil YAVUZ Faculty of Economics, Istanbul University, 34452, Beyazit, Istanbul, Turkey yavuznc@istanbul.edu.tr Burak GÜRĐŞ Faculty of Economics, Istanbul University, 34452, Beyazit, Istanbul, Turkey bguris@istanbul.edu.tr Abstract: This paper attempts to explore the relationship between financial development and economic growth for Turkey over the period 1968-2007. For this purpose, we used an endogenous break unit root test as suggested by Zivot and Andrews (1992) and the GregoryHansen (1996) cointegration technique. The empirical results showed that there is a long-run relationship between financial development and economic growth. 1. Introduction The relationship between financial development and economic growth has been debated quite extensively by economists and policymakers since the studies of Bagehot (1873), Schumpeter (1911) and, more recently, Mckinnon (1973) and Shaw (1973). The debate has focused on whether financial development causes economic growth or vice versa or whether a two-way relationship exists. Four different views on the theoretical link between financial development and economic growth exist (see Apergis et al. 2007): (i) supply-leading view (ii) demand-following view (iii) mutual impact of finance and growth (iv) no relationship between finance and growth The supply-leading view supports the belief that financial development has a positive impact on economic growth (Schumpeter 1911, Gurley & Shaw 1955). Patrick (1966) explains this view as follows: “to transfer resources from the traditional, low-growth sectors to the modern, high-growth sectors and stimulate an entrepreneurial response in these modern sectors.” The demand-following view states that finance actually responds to changes that happen in the real sector (see Friedman & Schwartz 1963, Jung 1986, Ireland 1994). Economic growth creates a demand for developed financial institutions and services. The third view supports a bidirectional relationship between financial development and economic growth (see Demetriades & Hussein 1996, Greenwood & Smith 1997). Finally, the last view rejects the existence of a finance-growth relationship (see Lucas 1988). The purpose of this paper is to investigate empirically the existence of a long-run relationship between financial development and economic growth in Turkey by including savings as a third important variable that affects both financial development and economic growth. For this analysis, we took into account structural breaks because Turkey started to liberalize its financial system in 1980, opening a new path in terms of financial liberalization applications and structural adjustment programs. Therefore, on the econometrics front, we applied the Zivot and Andrews (1992) unit root test and the Gregory and Hansen (1996) cointegration test in the presence of potential structural breaks. The remainder of the paper is organized as follows. Section II describes the data and model specification. Section III outlines the methodology used in this paper and reports on the empirical results. Finally, Section IV gives the conclusion. 81 �1. International Symposium on Sustainable Development, June 9-10 2009, Sarajevo 2. Data and Model Specification To investigate the relationship between economic growth, savings, and financial development in Turkey, we used the following model specification: Yit = β 0i + β1i Fit + β 2i Sit + uit (1) Yit is GDP per capita, Fit is the measure of financial development, Sit is the share of savings in GDP (a third important variable affecting finance-growth relationship), and uit is the error term. We used the liquid liabilities of the financial system ( LL ) , which is the broadest measure of financial development defined as where currency plus demand and interest-bearing liabilities of bank and non-bank financial intermediaries divided by GDP (M3/GDP) as a measure of financial development. The present study was based on annual data covering the period from 1968 through 2007. All the variables used were in natural logarithms. The data on savings were obtained from Undersecretariat of State Planning Organization and the data on other variables have been taken from the World Bank World Development Indicators database. 3. Methodology and Empirical Results The main objective of this paper is to investigate the long-run relationship between financial development, savings, and economic growth in Turkey. First, we analyzed the time-series properties of the data using Augmented Dickey Fuller ([ADF] 1981) and Philips Perron (1988) procedures. We also implemented the endogenous break unit root test suggested by Zivot and Andrews (1992). Second, the Gregory-Hansen (1996) cointegration technique, allowing for the presence of potential structural breaks in the data, was applied. 3.1. Unit Root Tests with and without Structural Break The ADF test suggested by Dickey and Fuller (1981) is the most widely used unit root test. Perron’s (1989) criticism of the ADF unit root test is related to a concern that the presence of structural change can reduce the power of these tests. Assuming that the time of the breaks is an exogenous phenomenon, Perron (1989) extended the ADF test to allow for a structural break in the time trend, showing that the ADF test is not able to reject a null hypothesis of the presence of a unit root when the true model is trend-stationary and there is structural change. A better test was proposed by Zivot and Andrews (ZA) (1992). This test allows for one structural break and suggests determining the break point “endogenously.” To test for a unit root against the alternative of a trend-stationary process with a structural break, we employed three versions of the ZA unit root test. Model A allows for a structural break in the intercept, model B allows for a structural break in the slope of the trend, and model C combines both structural breaks in the intercept and the slope of the trend. These models are expressed as follows: k Model A: yt = µˆ A + αˆ A yt −1 + βˆ At + θˆ A DU t (λ ) + ∑ dˆ jA ∆yt − j + eˆt (2) j =1 k B B B B B Model B: yt = µˆ + αˆ yt −1 + βˆ t + γˆ DTt (λ ) + ∑ d j ∆yt − j + eˆt (3) j =1 k Model C: yt = µˆ C + αˆ C yt −1 + βˆ C t + θˆC DU t (λ ) + γˆ C DTt (λ ) + ∑ d Cj ∆yt − j + eˆt (4) j =1 where λ operator, is the break fraction calculated as TB T , TB denotes the break date, ∆ is the first difference et is a white noise disturbance term with variance σ 2 , k is the number of augmented lags, and t = 1,....T is an index of time. The incorporated ∆yt − j terms on the right hand side of equations (2), (3) and (4) aim to remove the serial correlation if any. intercept and in the trend, respectively, where 82 DU t and DTt are dummy variables for structural breaks in the �1. International Symposium on Sustainable Development, June 9-10 2009, Sarajevo 1 if t > T λ DU t (λ ) =  0 otherwise t − T λ if t > T λ DTt (λ ) =  otherwise. 0 and The break point in the ZA test was selected where the test statistic of the null of a unit root is the most negative for the t-statistic of the coefficient of the autoregressive variable. We first tested for the presence of unit roots in our variables by using ADF and PP unit root tests. The test results are shown in Table 1. Table 1: The results of ADF and PP unit root tests ADF-test Variable Level Y -2.244 (0) PP-test First Difference -6.128 (0) a -2.392 (1) First Difference -6.129 (0) a a -1.831 (3) -7.061 (2) a -2.188 (6) -7.536 (3) a LL -1.729 (0) -7.099 (0) S -2.788 (1) -5.249 (0) a Level The numbers in parentheses indicate the number of lags in the augmented term of the ADF regression and are determined by using AIC information criteria. The number of truncation lags for PP test is chosen based on the Newey-West method. The unit root tests include a constant and time trend. a, represents the significance at 1% level. The results suggest that the time series, including Y , LL and S were not stationary in their levels. They were stationary at the 1% level of significance after first differencing. However, since the conventional unit root tests favor the null of unit root when a structural break exists, this study implemented the ZA (1992) unit root test to determine whether any possible break point in the series changes the stationarity results. The results of the ZA unit root test are reported in Table 2. Table 2: The results of ZA unit root test Variable TB tαˆ γ θ k c -0.044 1981 -4.475 (A) 3 Y (-1.886) b b 0.259 0.038 1997 -4.382 (C) 3 LL (2.470) (2.284) 0.289 a S 1985 -4.236 (A) 1 (4.398) b b -0.066 0.013 1998 -6.936 (C) a 0 ∆Y (-2.046) (2.497) b b -7.693 (C) -0.326 0.087 2002 0 ∆LL a (-2.248) (2.157) b -6.084 (A) 0.118 ∆S 1980 1 a (2.202) a, b c and represent the significance at 1%, 5% and 10% levels respectively. The critical values for (1% , 5% and 10%) levels are (-5.34, -4.80 and -4.58) for Model A, (-5.57, -5.08 and -4.82) for Model C from Zivot and Andrews (1992). The numbers in parentheses are t-statistics and the letters in parentheses indicate the appropriate model based on the results. The results show that all the variables examined in this study were not stationary in their levels. Nevertheless, they were stationary at the 1% level of significance after first differencing. The test identified the break points as 1981 for Y , 1985 for S in years also marked by financial liberalization in Turkey, and 1997 for LL in the year when a great financial crisis occurred. In all, the unit root tests indicated one order of integration for the Y , LL and S variables. 83 �1. International Symposium on Sustainable Development, June 9-10 2009, Sarajevo Since the series has one order of integration and contains structural breaks, we also used the Gregory and Hansen (1996) test to accommodate a single unknown structural break in the cointegration analysis. 3.2. Cointegration Analysis with a Structural Break Gregory and Hansen (1996) proposed a cointegration procedure that allows for an endogenously determined break in the cointegrating relationship. They provided three alternative forms of structural break: level shift (model C), level shift with trend (model C/T), and regime shift (model C/S). Their specifications for our application are as follows: Model C: level shift Yt = α 0 + α1 Dt + β1 Ft + λ1St + et (5) Model C/T: level shift with trend Yt = α 0 + α1 Dt + γ t + β1 Ft + λ1St + et (6) Model C/S: regime shift Yt = α 0 + α1 Dt + γ t + β1 Ft + β 2 ( Dt * Ft ) + λ1St + λ2 ( Dt * St ) + et where (7) Dt is a dummy variable equal to 0 if t ≤ θ and 1 if t > θ . The unknown parameter θ denotes the timing of the change, α1 denotes the change in the intercept coefficient at the time of the shift, and t is the time trend. β 2 and λ2 represent the change in slope of the cointegrating equation. Given that the timing of structural break is unknown a priori, Gregory and Hansen (1996) computed the cointegration test statistic, ADF*, for each possible break and took the minimum test statistic across all possible break points. We selected a break date where the test statistic is the minimum�in other words, the absolute ADF test statistic is at its maximum. The null hypothesis of no cointegration with structural breaks is tested against the alternative of cointegration. Table 3 reports the results of the Gregory-Hansen cointegration procedure for a level shift, a level shift with trend, and a regime shift. Table 3: Tests for Gregory Hansen cointegration procedure LL Models Break Date ADF * Model C 1986 -4.942 (0)b Model C/T 1984 -4.432 (3) Model C/S 1986 -4.947 (0)c The numbers in parentheses show the number of lags in the augmented term. ADF * = inf ADFt (τ ) . τ ∈T b and c represent the significance at 5% and 10% levels respectively. Gregory-Hansen (1996) ADF* critical values are as follows: Level shift; a (1%) -5.13, b (5%) -4.61, and c (10%) -4.34, Level shift with trend; a (1%) -5.45, b (5%) -4.99, and c (10%) -4.72, and Regime shift; a (1%) -5.47, b (5%) -4.95, and c (10%) -4.68. The results of the Gregory-Hansen cointegration procedure show that the ADF* statistics for LL was statistically significant in models C and C/S, thereby rejecting the null hypothesis of no cointegration with an endogenous break date of 1986. The Gregory-Hansen cointegration tests point to the existence of a long-run relationship between economic growth, savings, and financial development. Conclusions In this paper, we examine the long-run relationship between financial development and economic growth in Turkey by including savings as a third important variable affecting both financial development and economic growth. On the econometrics front, the endogenous break unit root test suggested by Zivot and Andrews (1992) and the Gregory-Hansen (1996) cointegration technique, which allows for the presence of 84 �1. International Symposium on Sustainable Development, June 9-10 2009, Sarajevo potential structural breaks, are employed. The empirical results show a long-run relationship between financial development, savings, and economic growth. References Apergis, N., Filippidis, I., & Economidou, C. (2007). Financial Deeping and Economic Growth Linkages: A Panel Data Analysis. Review of World Economics, 143, 179-198. Bagehot, W. (1873). Lombard Street, Homewood, IL: Richard D. Irwin. Demetriades, P.O., & Hussein, K. (1996). Does Financial Development Cause Economic Growth? Time Series Evidence from Sixteen Countries. Journal of Development Economics , 51, 387-411. Dickey, D., & Fuller, W. (1981). Likelihood Ratio Statistics for Autoregressive Time Series with a Unit Root. Econometrica, 49, 1057-1072. Friedman, M., & Schwartz, A.J. (1963). A Monetary History of the United States, Princeton, N.J.: Princeton University Press. Greenwood, J., & Smith, B. (1997). Financial Markets in Development and the Development of Financial Market. Journal of Economic Dynamic and Control, 21, 145-181. Gregory, A., & Hansen, B. (1996). Residual Based Tests for Cointegration in Models with Regime Shifts. Journal of Econometrics , 70, 99-126. Gurley, J.G., & Shaw, E.S. (1955). Financial Aspects of Economic Development. American Economic Review , 45, 515-538. Ireland, P.N. (1994). Money and Growth: An Alternative Approach. American Economic Review , 84, 47-65. Jung, W.S. (1986). Financial Development and Economic Growth: International Evidence. Economic Development and Cultural Change , 34, 333-346. Lucas, R.E. (1988). On the Mechanics of Economic Development. Journal of Monetary Economics , 22, 3-42. McKinnon, R.I. (1973). Money and Capital in Economic Development. Brooking Institution, Washington, D.C. Patrick, H.T. (1966). Financial Development and Economic Growth in Underdeveloped Countries. Economic Development and Cultural Change, 14, 174-189. Perron, P. (1989). The Great Crash, The Oil Price Shock, and The Unit Root Hypothesis. Econometrica, 57, 1361-1401. Philips, P.C.B., & Perron, P. (1988). Testing for a Unit Root in Time Series Regressions. Biometrica , 75, 335-346. Schumpeter, J.A. (1911). The Theory of Economic Development. Cambridge, Mass: Harvard University Press. Shaw, E.S. (1973). Financial Deeping in Economic Development. Oxford University Press, Newyork. Zivot, E., & Andrews, D. (1992). Further Evidence on the Great Crash, the Oil Price Shock and the Unit Root Hypothesis. Journal of Business Economic Statististics, 10, 251-270. 85 � Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Extent The size or duration of the resource. 146 Title A name given to the resource Financial Development and Economic Growth: Time Series Evidence from Turkey Author Author KIRAN, Burcu YAVUZ, Nilgün Çil GÜRİS, Burak Abstract A summary of the resource. This paper attempts to explore the relationship between financial development and economic growth for Turkey over the period 1968-2007. For this purpose, we used an endogenous break unit root test as suggested by Zivot and Andrews (1992) and the Gregory- Hansen (1996) cointegration technique. The empirical results showed that there is a long-run relationship between financial development and economic growth. Date A point or period of time associated with an event in the lifecycle of the resource 2009 Keywords Keywords. Conference or Workshop Item PeerReviewed HB Economic Theory https://omeka.ibu.edu.ba/files/original/f519bd7c615b1d5c885f89432d53e708.docx aa0f01969848479889bce44335bafb24 https://omeka.ibu.edu.ba/files/original/4a2b65d2b70d3fd36faef6ea248f2877.pdf 5d449813996572fd45c636365c42f508 PDF Text Text Financial Markets Development and Macroeconomic Stability in SubSahara Africa: Issues and Policy Options UyiKizitoEhigiamusoe National Institute for Legislative Studies Nigeria ehiuyikizexcel@yahoo.com Abstract: The paper examines the link between financial markets development and macroeconomic stability in Sub-Sahara Africa. The major objective of the paper is to examine the impact of financial markets development on economic growth using secondary data covering the period 1980-2012. It also examines the relationship between financial markets indicators (such as the ratios of broad money supply to GDP, private sector credit to GDP, total bank credit to GDP and market capitalization to GDP) and macroeconomic variables (such as the growth rates of inflation, employment, and poverty and real interest rate) in the region. The paper adopts both analytical and econometric techniques such as ordinary least squares method, granger causality analysis, Johansson’s co-integration techniques and vector error correction model to investigate the relationship. Evidence from the study reveals that a long-run relationship exists between financial markets indicators and macroeconomic variables. It was also discovered that financial markets indicators have positive and significant impact on economic growth in countries with largely developed financial markets, while financial markets indicators have insignificant impact on economic growth in countries with minimally developed financial markets. It was also revealed that causality runs from financial markets indicators to macroeconomic variables (inflation, employment, poverty and real interest rates). The ratios of domestic private sector credit and bank credit were found to have negative impact on economic growth but changes in these variables cause changes in inflation, employment and poverty rates. Furthermore, the ratio of market capitalization also has significant impact on economic growth. If policymakers want to promote economic growth and stabilize macroeconomic variables, they have to focus attention on long-run policies that will accelerate the development of the financial markets through innovations and effective supervision. Also, the governments should take it as a policy options to create the enabling environment for the growth and development of financial markets with a view to use them to achieve macroeconomic stability in Sub-Sahara Africa. Keywords: Financial Markets Development, Macroeconomic Stability, Economic Growth, Inflation Rate, Real Interest Rate, Poverty Rate, Employment Rate 57 � Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Extent The size or duration of the resource. 2487 Title A name given to the resource Financial Markets Development and Macroeconomic Stability in Sub-Sahara Africa: Issues and Policy Options Author Author KIZITO EHIGIAMUSOE, Uyi Abstract A summary of the resource. The paper examines the link between financial markets development and macroeconomic stability in Sub-Sahara Africa. The major objective of the paper is to examine the impact of financial markets development on economic growth using secondary data covering the period 1980-2012. It also examines the relationship between financial markets indicators (such as the ratios of broad money supply to GDP, private sector credit to GDP, total bank credit to GDP and market capitalization to GDP) and macroeconomic variables (such as the growth rates of inflation, employment, and poverty and real interest rate) in the region. The paper adopts both analytical and econometric techniques such as ordinary least squares method, granger causality analysis, Johansson’s co-integration techniques and vector error correction model to investigate the relationship. Evidence from the study reveals that a long-run relationship exists between financial markets indicators and macroeconomic variables. It was also discovered that financial markets indicators have positive and significant impact on economic growth in countries with largely developed financial markets, while financial markets indicators have insignificant impact on economic growth in countries with minimally developed financial markets. It was also revealed that causality runs from financial markets indicators to macroeconomic variables (inflation, employment, poverty and real interest rates). The ratios of domestic private sector credit and bank credit were found to have negative impact on economic growth but changes in these variables cause changes in inflation, employment and poverty rates. Furthermore, the ratio of market capitalization also has significant impact on economic growth. If policymakers want to promote economic growth and stabilize macroeconomic variables, they have to focus attention on long-run policies that will accelerate the development of the financial markets through innovations and effective supervision. Also, the governments should take it as a policy options to create the enabling environment for the growth and development of financial markets with a view to use them to achieve macroeconomic stability in Sub-Sahara Africa. Keywords: Financial Markets Development, Macroeconomic Stability, Economic Growth, Inflation Rate, Real Interest Rate, Poverty Rate, Employment Rate Publisher An entity responsible for making the resource available International Burch University Date A point or period of time associated with an event in the lifecycle of the resource 2014-04-24 Keywords Keywords. Article PeerReviewed Identifier An unambiguous reference to the resource within a given context ISSN 2303-4564 H Social Sciences (General) https://omeka.ibu.edu.ba/files/original/f8472b8b7b1881fbcbaea21b956f811e.pdf aae69327bc5a08977748904d45d4e79d PDF Text Text     Journal of Economic and Social Studies Financial Monitoring of Medication Consumption in Bosnia and Herzegovina Emira Kozarević, PhD Faculty of Economics, University of Tuzla Bosnia and Herzegovina emira.kozarevic@untz.ba Sabina Đonlagić Alibegović, PhD Faculty of Economics, University of Tuzla Bosnia and Herzegovina sabina.djonlagic@untz.ba   Tatjana Krdžalić, MA Institute for Public Health of Tuzla Canton Bosnia and Herzegovina tatjana.krdzalic@zjztk.ba   Abstract: Healthcare spending is nowadays one of the key issues of healthcare system practice as its share in GDP has constantly increased during past decades, which is now above 10% of GDP in developed countries. However, very often it is more of an issue related to the current political and socio-economic situation in a country rather than the one managed by experts. Although one might expect that the increase in healthcare spending contributes to better health of the population, relevant indicators show that high healthcare spending in Bosnia and Herzegovina (BiH) does not result in better health of its population. Due to this reason, special attention needs to be paid to the economic analysis of healthcare spending. Irrational use of medications is just one of many problems associated with an inefficient health system, but one that heavily impacts on the health economics. In situations where it may not be easy to change the existing financing models, we should explore how to be more effective in spending within the existing structure. Better control of medication consumption could be one of the actions that helps improve the effectiveness of the available budget. Therefore, the general aim of the paper is to determine the effect that financial monitoring of medication consumption has on the control of increase in healthcare spending, which in turn might help establishing a financially sustainable healthcare system. Bearing in mind that irrational usage of medications influences the access to healthcare services, destabilizes country’s budget, and endangers the margin of social sustainability (endurance), the constant financial monitoring of medication consumption is important as it can help us recognize those segments where consumption deviates from standard and where prevention activities are needed. All this can result in the limitation of further increase in medication consumption.   Volume 7 | Issue 1 | Keywords:  healthcare spending, healthcare spending control, (irrational) medication consumption, financial monitoring JEL Classification: I-11, I-15, I-18 Article History Submitted:  22.1.2018 Resubmitted: 12.2.2018 Accepted: 26.2.2018 http://dx.doi.org/10.14706/JE COSS17718 5 �Emira Kozarević, Tatjana Krdžalić and Sabina Đonlagić Alibegović   Introduction Health is an economic potential, a segment of human capital that increases productivity and reduces treatment costs. However, in no way is health a free resource and it cannot be maintained without incurring costs. High quality healthcare protection is the most cost effective investment into human capital. The need for healthcare is unpredictable, sudden and unexpected, and it is in society’s interest to recognize the real need for healthcare services. The characteristic of healthcare spending is that the consumer of healthcare goods, as a rule, is incapable of assessing their value. Unlike other goods, healthcare protection is specific, primarily due to the basic economic laws acting in the field of healthcare. The laws of demand and supply of healthcare services function in a specific market that includes several mutually related markets such as the market for various types of insurance (compulsory, additional) or different levels of treatment (outpatient clinics, polyclinics, hospitals), labor market for healthcare workers, market for medications, medical equipment, and so on. On the demand side, there are indicators of population health while on the supply side there are indicators of healthcare resources. When establishing the efficiency of healthcare market aimed at providing efficient healthcare protection for every citizen, the key role is given to the economic effects of deciding on the rational usage of ever limited financial resources. From the macroeconomic point of view, the healthcare system creates a significant burden on any economy – rich or poor, so limiting the increase in healthcare spending is very important for everyone. Growing costs, irrational behavior, and dissatisfaction in the healthcare system are self-evident, with the main reasons for increased spending being: increased share of the elderly persons in the entire population, increased number of patients with chronic diseases, introduction of new medications (which, as a rule, are more expensive), influence of the pharmaceutical industry, growing pressure exerted by patients, and easy access to medications. Establishing the financial sustainability of healthcare system is by no means an easy task, which is why the healthcare system needs to be perceived from the economic perspective (the so called health economics). On the one side, some authors believe that the financing of healthcare needs to be changed so that the system becomes sustainable in the long run, while others think that the reduction of healthcare costs is needed. When it comes to the efficient functioning of the healthcare system, the economic analysis is given prominence over other types of analysis specific for the market of healthcare services. 6 Journal of Economic and Social Studies �Financial Monitoring of Medication Consumption in Bosnia and Herzegovina     Health economics always starts with the assumption that healthcare services can be analyzed as any other market activity. However, the process often ends in the explanation why the market activity fails to lead to the efficient resource allocation in healthcare. Economic analyses of healthcare spending in BiH are poorly represented partly due to the lack of full scale data and their transparency and partly due to a relative lack of economic experts’ interest in the research on health economics. The increase of financial resources in the healthcare sector cannot be expected and the room for savings which will not negatively affect the quality of healthcare protection needs to be identified. The starting point of discussion in BiH is the aspiration that the access to healthcare is universal, just, equal for all, and basically “free”. However, healthcare costs are constantly on the increase and in the last ten years they have been growing at an unsustainable rate. For example, in 2003, the total per capita healthcare spending in BiH Federation was BAM 345 while the amount per an insured person was BAM 417.1 According to the latest available data, in 2012 the total per capita healthcare spending reached the level of BAM 714 while the amount per an insured person was BAM 825 (Health Insurance and Reinsurance Fund of BiH Federation, 2013). The average spending per an insured person in Republic of Srpska in 2012 was BAM 714 (Health Insurance Fund of Republika Srpska, 2013). The problem of monitoring healthcare spending in BiH is rather serious as there is no centralized system of monitoring spending on the state level. Monitoring is additionally complicated by the current administrative organization of the healthcare system. The data on healthcare are scarce and they are not systematized and unified. This is supported by the fact that BiH was first included in the European Health Consumer Index in 2014 and was positioned last due to an enormous lack of data on its healthcare protection, receiving 420 out of 1,000 points, less than Albania, Serbia, and Montenegro (Björnberg, 2015). Medications are one of important items in the total healthcare spending. With limited financial resources, increasing medication consumption directly influences the access to healthcare services, destabilizes country’s budget, and endangers the margin of social sustainability (endurance). Medication consumption in world’s total healthcare spending is placed third, with 17%. This paper brings the analysis of potential control of medication consumption and the financial aspect of medication consumption monitoring aimed at the reduction of healthcare spending. The main research hypothesis is postulated as follows: “Financial monitoring of medication consumption can contribute to the                                                                                                                         1 The International Banking Code for BiH currency is BAM. Volume 7 | Issue 1 | 7 �Emira Kozarević, Tatjana Krdžalić and Sabina Đonlagić Alibegović   rationalization of medication consumption, reduction of healthcare spending, and the efficiency of the entire healthcare system.” Although the paper focuses on the healthcare system in BiH, some results and recommendations can be generalized and are potentially universal, taking into consideration the recent global socio-economic events (increased share of the elderly persons in the entire population, increased number of patients with chronic diseases, increased public expenditure following the crisis in 2008, slow economic growth, and so on). Review of Previous Research on Health-Related Spending Medications are third most common cause of mortality in the USA and Europe, following heart diseases and cancer. Patients trust their physicians and physicians trust the pharmaceutical industry although these relations are not free from difficulties (medication testing is sometimes inadequately conducted, for example). It is expected that medication allocations are to increase in the comming years. The USA data indicate that direct costs of cardiovascular diseases would triple between 2010 and 2030, from USD 273 billion to 818 billion, while indirect costs would increase in the same period by 61%, from USD 172 billion to 276 billion (Vitezić, 2013, p. 246-251). The annual number of deaths in the European Union (EU) resulting from patients’ not taking medication correctly or not cooperating with their physicians was 194,500, which costs the EU the amount of EUR 125 billion a year (Pharmaceutical Group of the European Union, 2012). Decreased spending in healthcare requires the checks and controls of executed interventions and diagnostic and therapeutic services as well as the checks of whether they are really needed. That is why a unified system of expense list needs to be made that would include five important categories: hospitals, prescription-only medicines, diagnostic procedures, treatment costs, and home treatment costs (Ott et al., 2000). Polić-Vižintin, Tripković, Štrban-Štok, Štimac, and Čulig (2006) analyzed healthcare indicators and non-hospital medication consumption by using the data gathered from the vital statistics and healthcare-statistics research. They concluded that in order to rationalize medication consumption, treatment should be focused on primary healthcare protection, which is why constant education of family doctors needs to be made regarding proper therapy based on professional guidelines. As specified by the EU/WHO Working Group (2008), the primary healthcare protection, as a rule, should be able to solve at least 80% of all health problems. Gajski (2009), for example, stated that most medications prescribed for the treatment of cardiovascular diseases in Croatia are actually unnecessary and serve for the medicalization of the society and the profit of pharmaceutical company with 8 Journal of Economic and Social Studies �Financial Monitoring of Medication Consumption in Bosnia and Herzegovina     pharmaceutical therapy costs in Croatia amounting to some HRK 7 billion, which is a waste of money. Vlahović-Palčevski (2000) stated that the analysis of medication consumption gives us the data on the rationality of their use, indicates the segments where efforts should be made so as to improve the current situation, and tells us about therapy tradition, irrationalities, and abuse. Monitoring and analyzing medication consumption was the main reason for the development of the so called ATC (Anatomical, Therapeutic, and Chemical)/DDD (Defined Daily Dose) methodology. It was proved useful for the comparison of medication consumption at a national and international level as well as for long-term evaluation of consumption. A study conducted some 20 years ago by the Drug Utilization Research Group (DURG) showed the lack of universal methodology of medication consumption monitoring, which preceded the establishment of a unique Anatomical Therapeutic Chemical (ATC) classification system. This resulted in the introduction of defined daily dose as a statistical unit for medication consumption monitoring instead of packages, prescriptions, and financial units, which allowed for a detailed analysis of medication consumption (Čulig, 2004). Polypragmasy (i.e. parallel application of three or more medications) is recognized as an increasingly serious problem in the existing systems of healthcare protection. It can increase the complexity of healthcare protection and its costs. Apart from the elderly persons, some groups of patients have a higher risk of polypragmasy, such as psychiatric patients and patients who constantly take five or more types of medications, patients treated by several physicians, recently hospitalized patients, patients with concurrent comorbidity, patients with lower education, visually impaired patients or those with decreased physical activity and ability in daily activities. Polypragmasy is indicated as one of the main problems in modern world pharmacotherapy and its solutions require the education of both physicians and patients.2 Regular analysis of prescription issuance practice proved to be efficient in reducing unnecessary medications. A study in which the patients brought all the medications they use, with their physicians being given directions on polypragmasy, resulted in 42% of the patients being under the risk of polypragmasy, for 20% of them the medication use was suspended and for 30% of them the medication dose was changed. In addition, pharmacists sent the list of medications to the physicians whose patients use potentially harmful medications, which reduced the issuance of prescriptions by 12.5%. Furthermore, consulting a clinical pharmacologist reduced                                                                                                                         2 http://www.genera.hr/hr/36/propisivanje-lijekova/#.VbN3Z8vsZdg Volume 7 | Issue 1 | 9 �Emira Kozarević, Tatjana Krdžalić and Sabina Đonlagić Alibegović   polypragmasy and the number of medications from 7.9 to 4.1/1000 cases (Kašuba Lazić, 2015). Monitoring and control of medication consumption is also important from the aspect of environment protection as medication residues are often found in the environment in small concentrations. During the procedure of authorization of a medication, most regulatory agencies specify the assessment of potential risk that a medication can make on the environment (Čogelja Čajo et al., 2010). The amount pharmaceutical companies spend on physicians is still not precisely known. However, according to the financial reports of nine leading US medication manufacturers, this amount is estimated to be dozens of billions of US dollars a year. This actually means that the pharmaceutical industry strictly regulates the ways their medications are prescribed and this includes not only physicians but also university professors that affect research results, medical practices, and even disease definition (Angell, 2009). The research conducted by Consumers International, the international organization for consumer protection, showed that pharmaceutical companies spend twice as much on persuading physicians to prescribe their medications than on researching new medications (Republic of Serbia AntiCorruption Agency, 2012). In 2011, with the assistance of the World Bank (WB), aimed at increasing transparent prices of medications in BiH, a survey was made into the retail sale prices at pharmacies for 36 frequently used medications. The selected medications included essential medications used for frequent diseases (cardiovascular diseases, nerve diseases, diabetes, and respiratory diseases). The data were collected from 82 pharmacies randomly selected in eight cantons/regions in the entire BiH. It became evident that brand name medications are not common in BiH as they were registered in only 27% of the cases, which is why the data refer primarily to generic medications (WB, 2012). Good practice in creating and managing sustainable healthcare system is evidenced by Singapore with excellent results in high quality of its healthcare system and in control of healthcare protection costs. The per capita cost of healthcare protection in that country or the cost of healthcare protection presented as the GDP percentage is lower than in all high income countries in the world. There are three crucial reasons for achieving available excellence − first of all, long-term political unity, then the ability to recognize and establish national priorities, and finally constant aspiration for collective welfare and social harmony in the country (Haseltine, 2013). 10 Journal of Economic and Social Studies �Financial Monitoring of Medication Consumption in Bosnia and Herzegovina     The importance of reliable data and information is confirmed by Benković (2009), who aimed at checking whether the results of the research conducted by the Croatian Health Interview Survey (CHIS) were used in planning the resources at the level of country’s public health institutes. The usage of reliable data and information that serve as the basis for making fiscal and strategic decisions is the main support in healthcare management. It is also the key to strategic management that uses necessary information needed for setting the focus, selecting priorities, and establishing good “macro policy at the micro level”. The results showed that only 32% of the subjects used the results of the CHIS in their plans, which led to the conclusion that such a percentage would make efficient local level planning and planned budget savings difficult to achieve. Recognizing the importance of using data such as those collected by the CHIS is an extremely important factor in local and national healthcare planning and the factor that enables significant budget savings in healthcare. Ott, Kesner-Škreb, Bajo, Bejaković, and Bubaš (2000) underlined that even though healthcare and health insurance reform is not easy to implement, potential changes aimed at the improvement of health and healthcare are multiple while costs would be significantly lower than potential savings. The reform of the existing health insurance system directed towards higher reliance on private insurance and strengthening market elements is required for the long-term sustainability of the system. Consequently, it might reduce the excessive role of the state, limit its paternal behavior, and create the conditions for income increase. Theoretical Framework of Medication Consumption Monitoring and its Financial Aspect, with the Focus on Bosnia and Herzegovina Healthcare is one of the most complex systems in every country and it is a sub system of the entire socio-economic system. Its organization functionally consists of (Salihbašić, 2009): • Primary healthcare that includes outpatient clinics; • Polyclinics, general and specialized hospitals, specialized institutes, medical centers; • Other institutions including public health institutes, emergency rescue teams, and pharmacies. The main problem in this field is financing. Several models of financing are used in the world, the most known being (Salihbašić, 2009): • The Bismarck model, which functions on the principle of solidarity and reciprocity, as is the case with BiH; Volume 7 | Issue 1 | 11 �Emira Kozarević, Tatjana Krdžalić and Sabina Đonlagić Alibegović   • The Beveridge model by which healthcare is financed through taxes paid by citizens (for example, Great Britain, Norway, Sweden, Ireland); • The Semaškov model emerged in the Soviet Union and was provided for the entire population. Insurance is financed from the central state budget whereby the government is responsible for making decision on the rights and obligations of the insured persons. As a rule, this means that healthcare protection is free although there is the problem of users having excessive expectations without additional payments. Nowadays, this model is present is some Asian countries (China, Mongolia, North Korea, Vietnam) and in Cuba; • Private financing that includes the basic insurance with the payment of additional insurance according to individual needs and purchasing power. The cost assocated with the healthcare sector is significant from the macroeconomic point of view, so the limitation of increase in healthcare spending is particularly important as the increasing healthcare spending is a burden to both developing and developed countries. Growing costs, irrational behaviour, and dissatisfaction within the healthcare system are self-evident and the main reasons for increased spending are: increased share of the elderly persons in the entire population, increased number of patients with chronic diseases, introduction of new medications (which, as a rule, are more expensive), influence of the pharmaceutical industry, growing pressure exerted by patients and easy access to medications. It is important to note that, while medication consumption is one of the main generators of healthcare spending, it is also the item that could be more easily controlled and rationalized. The increase in pharmaceutical costs raises the issue of possibile need for financing healthcare systems in the future. Every country should be be interested in protecting itself against uncontrolled increase of medication spending, aiming to reduce it and make it more rational. Providing the population with high quality, safe, and efficient medications that would be rationally used is only one of the basic goals of every healthcare system. Hence, one of the measures for rational spending on medications is a systematic (national) policy of medication consumption monitoring as well as creation of a unique information system that would integrate all the data relevant for medication consumption, from both hospitals and non-hospital institutions, including the data on individual medication consumption. However, BiH has a fragmented internal organization with centralized Republic of Srpska (RS), decentralized BiH Federation (F BiH), and Brčko District, which further complicates successful conduct of fiscal policy. This leads to an unsatisfactory level of efficiency in improving country’s economic growth. As reported by the WB 12 Journal of Economic and Social Studies �Financial Monitoring of Medication Consumption in Bosnia and Herzegovina     (2014), the potentials of BiH economy for mid-term growth are limited by poor business environment that still requires essential reforms and prevents investment and growth, with the fiscal policy still focused on the distribution of revenue rather than growth. Healthcare and health insurance system in F BiH is, pursuant to the Constitution and legal regulations, based on the principles of shared competence between the federal and cantonal authorities. Pursuant to the provisions of Law on Healthcare3, Law on Health Insurance 4 , and other acts based on these laws, the federal government is in charge of creating the policy and adopting laws while the cantonal government implements laws and establishes and adapts cantonal healthcare policy with the policy at the level of F BiH. Cantonal public health institutes function with difficulties, healthcare spending increases while the structure of the insured persons is unfavorable. Similar to other South East European countries, BiH has the model of social insurance with employees and employers paying contributions to the public health funds which finance the majority of healthcare services. That is why healthcare financing heavily relies on salary taxation and the capacities of tax authorities to collect payments5. The existing model of healthcare financing in BiH is based on the past times as the remnants of the Bismarck model. Healthcare insurance contributions were never a part of the state budget but were directly paid to health insurance funds. The contributions for compulsory health insurance are based on the taxation of the amounts registered in the pay sheet rather than by health insurance premium or general taxation. The healthcare sector in BiH does not function on economic prices but on the solidarity system that implies that the rich show their solidarity with the poor, the young with the old, the healthy with the sick, and individuals with the family. This is what makes the total income of the Health Insurance and Reinsurance Funds which stand for the main source of funding for healthcare protection in both BiH entities. What is evident in the healthcare system is a rather non-transparent flow of resources between different non-budget funds that are supposed to pay contributions on behalf of their users (pensioners, registered unemployed persons) and the limited government contributions on behalf of some users exempt from paying contributions. Consequently, the state invests, or is supposed to invest, extreme efforts to provide as efficient healthcare protection as possible for its users with the                                                                                                                         3 Official Gazette of BiH Federation No. 46/10 Official Gazette of BiH Federation No. 30/97, 07/02, and 70/08 5 http://www.fmoh.gov.ba/index.php/projekt-jacanja-zdravstvenog-sektora 4 Volume 7 | Issue 1 | 13 �Emira Kozarević, Tatjana Krdžalić and Sabina Đonlagić Alibegović   available resources. Even though it sounds easy, it is very difficult to implement this in practice. Looking at the data on some financial indicators in BiH, one can notice a very high share of healthcare spending in GDP when observed in the context of the economic development of the state. Healthcare-related public spending is constantly on the increase; in 2002 it was 62.5% while in 2012 it was 71.1% of the total healthcare spending. On the other hand, social health insurance has a downward trend while private health insurance, present since 2009, has a very low percentage of 0.8% to 1% of the total health insurance. The very fact that some ten years ago, per capita spending was USD 122 and that the number increased to USD 447 in 2012 indicates that healthcare system becomes more expensive year after year. From the traditional aspect of efficiency, safety, and quality as well as from the aspect of financial cost effectiveness, medication consumption monitoring in developed countries started 40 years ago, mainly due to the fact that the funds for these purposes are always limited and the needs are increasingly higher. A constant lack in financial resources is registered in all spheres of life and in the healthcare protection system in particular. New medications, development of medical technology, new methods of treatment, constant education and training of healthcare workers, introduction of information systems, and so on, all require additional resources that are almost always limited. The country is given a serious task – to provide additional resources when the current ones are insufficient even for the present costs of healthcare protection. In addition, increased number of patients suffering from various diseases of modern times (such as cardiovascular diseases, cancer, diabetes) results in increased need for medications. Medication consumption has been rapidly growing for years, which is a problem threatening sustainable and stable financing of the healthcare system. A systemic approach to this problem is not evident in practice since mentioning finances in the context of health and treatment is considered inappropriate and unethical. Besides, the issue of pharmacotherapy has escalated recently, when it reached the level the society cannot bear. Moreover, medication manufacturers that are highly influential in the medical science, education, politics along with the media have no interest in putting this topic in the discussion focus (Gajski, 2009). Prescribed medications cover 10% to 20% of the total healthcare costs and are the fastest growing segment of the total spending, which raises concerns over medication consumption. In order to resolve this issue, we must first discuss the potential causes of the increase in medication consumption. 14 Journal of Economic and Social Studies �Financial Monitoring of Medication Consumption in Bosnia and Herzegovina     One of the reasons of increased medication consumption is definitely medication abuse which can cause various side effects, resulting in the need for additional treatment and reflecting on the increase in healthcare spending. According to the World Health Organization (WHO, 2008), in some countries the costs of medication side effects, including hospitalization, surgeries, and lost productivity, are higher than medication costs. Also, the studies conducted on the territory of the EU showed that some 200,000 people die every year due to nonadherence (not taking the prescribed therapy or taking it inappropriately). Annual nonadherence costs in the EU amount to EUR 125 billion and they include the treatment of chronic disease complications as a consequence of not taking medications. Low adherence for the patients suffering from hypertension correlates to the increased risk of vascular diseases, hospitalization, and increased costs of healthcare protection, while a higher level of adherence for the patients suffering from hypertension results in better health of individuals and net economic profit (Dragomir, 2010). Adherence reduces the total annual healthcare spending for the patients with chronic vascular diseases by the lower number of hospital days and lower hospital costs. The effects of adherence are more evident for the patients over the age of 65 (Roebuck et al., 2011). Very often, influenced by marketing activities of the pharmaceutical industry, patients purchase medications on their own and increasingly use alternative medicine. Consequently, medication becomes a merchandise article and medication prescription becomes a routine activity made in silence with very little written or oral information provided (Stević et al., 2011). Besides, inappropriate package of certain medications can result in increased financial spending, mainly due to the package content which does not correlate with the length of treatment. This could be easily overcome if physicians prescribed the exact quantity needed for therapy treatment and if pharmacies would supply medications per piece. One of the specific features of BiH medication market is related to the conditions under which pharmacies function. The legal regulations, among other things, cover pharmacy margins – maximum up to 8% for wholesale and up to 25% in retail sale6. Very often, retail sale margins go above the highest limit and are as much as 30%. It seems that this is still not enough for pharmacists as they mainly dealt with this issue at the meeting held at the beginning of 2016. One of the suggestions was that the margin increases to the record high 40%, which is not in accordance to the legal regulations.                                                                                                                         6 Rulebook on Medication Wholesale and Retail Sale Margin, Official Gazette of BiH Federation No. 40/02, 50/02, 15/06, and 9/08 Volume 7 | Issue 1 | 15 �Emira Kozarević, Tatjana Krdžalić and Sabina Đonlagić Alibegović   The Rulebook on Price Monitoring, Calculating Medication Prices and Reporting on Medication Prices in BiH 7 would be an excellent instrument for monitoring medications in BiH, which seems to be inoperative in practice. As recommended by the WB, the new rulebook on regulating medication prices is under preparation, which, if strictly followed, could lead to significant savings. Medications are cheaper in RS than in F BiH, mainly due to the centralized system of medication procurement, which allows for lower prices. Although the F BiH Government is under pressure to reduce medication costs, pharmacists are of the opinion that the government should “cut the costs” in other segments, such as waiving the valueadded tax (VAT) on medications instead of reducing pharmacy margins. It was stated that some reductions would amount from 25% to 30%, which, as claimed by the pharmaceutical chambers, pharmacies would not be able to bear. Major dissatisfaction was expressed as the representatives of professional associations were not given the opportunity to comment the proposed wording of the rulebook. They clearly rejected to support the proposal that Serbia be the reference country for establishing the prices of pharmaceutical services as the prices in that country are specified through administrative procedures. The representatives of professional pharmaceutical associations agree that the medication market needs to be regulated but not by replicating the experiences of other countries without taking into consideration the specific characteristics of the medication market in BiH.8 Many European countries introduced a series of measures to combat the growth of pharmaceutical spending. Some of these measures include reduction of prices of pharmaceutical products, which can be achieved through negotiations with pharmaceutical manufacturers, reduction of pharmaceutical margins, introduction of quotation price, application of obligatory discount, reduction of VAT on pharmaceutical products, centralized public procurement of pharmaceutical products, promotion of usage of generic medications, increase of obligatory contribution for households, and so on. For example, as of 2010 Spain has introduced a general discount applicable to all the medications prescribed, after which it introduced the mandate for the reduction of generic medication prices, which is certainly one of the factors that explains the increase in the consumption of generic medications in that country. In Germany, the obligatory discounts for manufacturers were raised in 2011 and the prices were frozen until 2013. As of 2011, pharmaceutical companies are obliged to negotiate with health insurance                                                                                                                         7 Official Gazette of BiH No. 82/11 The minutes of the meeting of the presidents of cantonal pharmaceutical chambers, the Pharmaceutical Association in BiH Federation, and general managers of larger pharmaceutical healthcare institutions in BiH Federation. Retrieved from http://www.farmaceutisarajevo.ba/index.php/25-obavijesti/89-sastanak-farmaceuta-usarajevu dan posjete 8 16 Journal of Economic and Social Studies �Financial Monitoring of Medication Consumption in Bosnia and Herzegovina     funds about innovative medications, which ended the former free pricing regime. The reduction of consumption in Italy can be attributed to a rather reduced budget for pharmaceutical products per Italian regions as well as to the reduced pharmaceutical wholesale margins and lower prices of generic medications based on quotation prices. The introduction of new obligatory public offer procedures for medication procurement in Hungary resulted in reduced costs, while in Denmark, as in many other countries, the negative trend can be explained partly due to the expiration of patents for large scale protected medications and very expensive medications (OECD & the European Commission, 2014). Methodology of the Empirical Research: The Case of Tuzla Canton, Bosnia and Herzegovina The sources used for this paper include the publications and statistical data of the relevant international and domestic organizations (WHO, WB, EUROSTAT, OECD, Agency for Medicinal Products and Medical Devices of BiH, Agency for Statistics of BiH, Health Insurance and Reinsurance Fund of F BiH, Health Insurance Fund of RS, Health Insurance Fund of Brčko District, Institute for Public Health of F BiH, Institute for Public Health of RS, and Health Insurance Fund of Tuzla Canton). Based on these sources, the paper presents selective and relevant macroeconomic and healthcare indicators for BiH as well as the basic indicators of healthcare financing and healthcare spending in BiH. More specifically, the focus is made on the elaboration of detailed parameters of medication related spending in the most populated BiH canton – Tuzla Canton – so as to obtain a clear view of medication consumption and its potentially influential factors. In order to achieve this, we opted for using the ten year period data (2004-2013), which allowed for the summary of the data and their comparison with the previous periods. Results and Discussion The medication market in BiH is worth over BAM 500 million, out of which 18% belongs to domestic medication manufacturers. The data on the leading medications in the total turnover cannot be regarded as relevant as it is known that medication consumption in BiH is not monitored by the standardized ATC/DDD methodology. Since medication prices vary and are rather different when compared to the neighboring countries, we do not have the appropriate data on the actual consumption of medications but rather the amount specified in the budget. Medication consumption in RS is monitored by the ATC/DDD methodology, which is not the case in F BiH. For example, “Pantoprazol” is the leading medication in the total turnover in BiH (some BAM 11 million) and its price in F BiH is Volume 7 | Issue 1 | 17 �Emira Kozarević, Tatjana Krdžalić and Sabina Đonlagić Alibegović   around BAM 15 while at the same time its price in the neighboring Serbia is BAM 3.5. The similar situation is with the frequently prescribed medications such as those for the treatment of cardiovascular diseases. The WB (2014) also pointed to the unbalanced prices of medications in BiH in comparison to the neighboring countries, which is particularly evident for the medications for frequent diseases (see Table 1). For example, the medications for cardiovascular diseases are up to 200% more expensive than in Croatia and even more than in Serbia. The main reasons for such situation are the inefficient system of pricing and purchasing medications, a non-transparent system of pricing for individual medications as well as rather fragmented system of medication procurement which results in different prices in cantons. As stated in the report, the Ministry of Health of F BiH is not able to force the cantons to follow the regulations when they create the positive lists of medications.   Table 1. Prices of Sampled Medications in FBiH and Serbia in 2016 Price in BAM Ordinal number Medication Manufacturer Package 1 Vesicare - symptomatic treatment of immediate incontinence Astelles Pharma Europe B.V Holland 2 Nimulid – painkiller 3 Letrox -thyroid hormone 4 5 6 7 8 9 10 Atoris -cholesterol lowering medicine Pantoprazol - gastric distress treatment Tritace - ACE inhibitor Lorista – hypertension treatment Roswera - cholesterol lowering medicine Truspot eye drops - ocular hypertension treatment Plavix – prevention of atherothrombotic events 9 10 Price higher by % Serbia F BiH 5 g (30 pills) 59 79 33.90 100 mg (20 pcs) 3.3 7 112.12 100 mg (100 pcs) 5.2 8.5 63.46 20 mg (30 pills) 8.5 14.6 71.76 40 mg (28 pcs) 3.6 15.5 330.56 5 mg (28 pills) 3.4 10.5 208.82 KRKA dd Slovenia 50 mg (28 pills) 5 11 120.00 KRKA dd Slovenia 40 mg (28 pills) 16 35 118,75 2% (5 ml) 12 20 66.67 75 mg (28 pills) 10.5 32.5 209.52 PANACEA BIOTEC LTD. India BERLIN-CHEMIE AG Germany KRKA dd Slovenia Hemofarm doo Banjaluka Sanofi-Aventis S.p.A. Italy Laboratories Merck Sharp&Dohme-France Sanofi Winthrop Industrie France                                                                                                                         9 Prices as indicated in the price list of the pharmacy “Zdravlje 2ˮ, Mali Zvornik, Serbia, May 15-June 15, 2016 Prices as indicated in the price list of the pharmacy “Ibn Sinaˮ, Tuzla, on June 16, 2016 10 18 Journal of Economic and Social Studies �Financial Monitoring of Medication Consumption in Bosnia and Herzegovina     11 Trimetakor –prevention of angina pectoris attacks Cipla Limited India 35 mg (60 pcs) 4.5 19.8 340.00 12 Byol – hypertension treatment Lek dd Slovenia 5 mg (30 pills) 3.5 13.2 277.14 Source: Authors' research based on selected BiH and Serbian pharmacies price lists There is no unique, state-level system of medication consumption monitoring (including commercial medications as well as those prescribed in the compulsory health insurance), except for the health spending data created by the national health accounts methodology. It is known that in 2013, the costs of medicinal devices for non-hospital patients (including medications) were BAM 711,221 million, of which public expenses amount to 43.2% and private expenses amount to 56.68%, which indicates rather high payments made by citizens for this type of medicinal devices. Analytically speaking, it is not known how much of this amount is spent on medications charged to health insurance, be they commercial or those given on prescription. Healthcare spending of F BiH makes 10.2% of GDP, out of which a quarter, somewhat over BAM 416 million, is used for medications. Over BAM 182 million was spent on medications charged to health insurance, which makes around 11% of the total healthcare spending. On average, a citizen of F BiH spends around BAM 178, while the insured person spends BAM 90 on prescribed medications, somewhat less than in RS where an insured person spends BAM 99. The average consumption of prescribed medications per cantons in F BiH in 2013 ranged from BAM 46 in Posavina Canton to BAM 167 in Sarajevo Canton, which implies huge cantonal differences in the rights of insured persons to prescribed medications. The average consumption of prescribed medications is a relative indicator for F BiH as it is highly influenced by a huge average consumption in Sarajevo and Tuzla Cantons. Although the prices of most prescribed medications show a downward trend, the increased consumption of prescribed medications is partly caused by the facts that cantonal medication lists are harmonized with the federal essential list of medications and that some cantons have more medications on their lists than on the one made by F BiH. Although Sarajevo Canton has by 78% higher consumption of medications per insured person than Tuzla Canton, when the total healthcare spending per cantons is observed, consumption of medications as a part of healthcare spending is the highest in Tuzla Canton as it is the most populated one. The leading cause of death in Tuzla Canton is essential hypertension (86/100,000 people). Stroke, cardiomyopathy, acute myocardial infarction, essential hypertension, cardiac arrest, and chronic heart ischemic disease make 71% of the ten leading causes of death in Tuzla Canton. In total, the population in 2013 suffered Volume 7 | Issue 1 | 19 �Emira Kozarević, Tatjana Krdžalić and Sabina Đonlagić Alibegović   from acute infections of upper respiratory tract, hypertension, acute bronchitis and bronchiolitis, diabetes, and spinal diseases. Diseases in the primary healthcare follow hospital treatment data in Tuzla Canton, where five leading diseases make for 56.79% of the total number of hospital days. Some of the most often prescribed medications by the ATC classification are those for cardiovascular diseases, digestive tract and metabolism, nervous system, and medications for the treatment of system infections and respiratory system, which indicates that cardiovascular diseases, metabolic disorders, and respiratory diseases are the major health problems in Tuzla Canton. In the last ten years, there has been an increase in the number of patients suffering from circulatory system diseases, diabetes, cancer, and mental disorders (Table 2). This increased number of patients causes higher healthcare costs and consequently increased medication consumption. The treatment of these diseases, except for cardiovascular diseases, requires the medications that belong to a group of more expensive medications, which is why the growth of financial spending does not come as a surprise. Table 2. Types of Diseases and Number of Patients in Tuzla Canton Year Number of patients in Tuzla Canton since Increase in % 2004 2013 Circulatory system diseases 47,705 75,234 57.7 Diabetes 7,488 16,952 126.4 Malignant neoplasms 1,947 4,194 115.4 Mental disorders 11,552 19,207 66.3 Source: Authors' research based on Institute for Public Health of Tuzla Canton database Generally speaking, medication consumption increases year after year, including both commercial as well as prescribed medications charged to health insurance. The increased costs of commercial medications point to the fact that citizens invest more of their personal resources to purchase medications, even though essential lists of medications for cantons have been expanded. Medication consumption monitoring in Tuzla Canton is administered by the Health Insurance Fund and it includes the data basis that includes the information on insured person (national ID number), medication, authorized physician, outpatient clinic where the prescription was issued, prescription, contracting pharmacy where medication was taken, date of prescription issuance and individual invoice for 20 Journal of Economic and Social Studies �Financial Monitoring of Medication Consumption in Bosnia and Herzegovina     medication/prescription issued by the number and date of invoice,11 but not the ATC/DDD methodology, as recommended by the WHO. In the period 2004-2013, health insurance expenditures constantly increased. By analogy, expenditures grew in all segments of healthcare protection, especially for the program of medications charged to the Health Insurance Fund of Tuzla Canton (HIF TC), as it is shown in Table 3. The total health insurance expenditures grew over the period of ten years by 85.55%, from BAM 244 to BAM 439 per insured person. Table 3. Review of Financial Expenditures for the Program of Medications in Compulsory Health Insurance in the Period 2004-2013 Year Total expenditures of HIF TC Number of prescriptions Expenditures for the Program of medications charged to the HIF TC Expenditures for the Program of other medications 12 Expenditures for the Program of prescribed medications (positive list+other medications) Total medication expenditures (including those paid by citizens) 2004 105,790,488 1,731,657 13,393,726 355,890 13,749,616 16,664,912 2005 112,669,255 1,852,401 15,095,216 309,165 15,404,381 18,924,608 2006 126,318,607 2,328,082 22,212,764 476,627 22,689,391 28,292,882 2007 148,000,043 2,389,473 24,524,035 789,677 25,313,712 31,712,336 2008 174,941,709 2,521,478 28,227,413 955,415 29,182,828 36,078,863 2009 178,171,804 2,226,677 32,888,217 1,339,930 34,228,146 35,663,778 2010 184,048,334 2,363,402 32,881,082 1,219,381 34,100,463 37,650,112 2011 192,099,520 2,556,079 37,137,026 633,554 37,770,580 44,845,199 2012 195,954,753 2,359,443 37,863,086 869,901 38,732,987 42,403,147 2013 196,299,420 2,377,010 38,768,888 1,109,749 39,878,637 40,150,397 Source: Authors’ research based on HIF TC database Over the ten year period observed, it is evident that the largest financial expenditures refer to the medications for cardiovascular diseases (35%), digestive tract and metabolism medications (26%), and medications affecting the nervous system (16%). As specified by the second level of the ATC classification, almost 84% of the                                                                                                                         11 Report on the Realization of Medication Program for the period January-June 2015 (p. 4), Health Insurance Fund of Tuzla Canton 12 Program of other medications includes: medications applied within or under the control of hospital, ampoule medications, special food for children, and priority medication program for pain relief therapy. Volume 7 | Issue 1 | 21 �Emira Kozarević, Tatjana Krdžalić and Sabina Đonlagić Alibegović   total expenditures on medications cover the ten leading groups of medications (Table 4), including those for the treatment of hypertension, diabetes, asthma, and so on. Table 4. Financial Costs for Medications in the 10 Leading Groups by ATC Classification in 2013 Year 2013 ATC Group of medications C09 A10 R03 N06 A02 Agents acting on the rennin-angiotensin system Drugs used in diabetes Drugs for obstructive airway diseases Psychoanaleptics Drugs for acid related disorders J01 C07 N05 C08 N03 Antibacterial drugs Beta blocking agents Psycholeptics Calcium channel blockers Antiepileptics Ten leading groups of medications in total Year total Amount in BAM % 8,766,544 7,328,994 3,407,972 3,051,384 2,209,906 22.61 18.90 8.79 7.87 5.70 2,178,272 2,091,092 1,326,363 1,118,142 1,053,397 32,532,066 38,768,888 5.62 5.39 3.42 2.88 2.72 83.91 100.00 Source: Authors' research based on HIF TC database The ten leading medications in terms of the resources charged to HIF TC make 42% of the total value and 27% of the total number of prescriptions. The most frequent medication prescribed by family doctors in Tuzla Canton is “Enalapril” for hypertension treatment with the average value per prescription of BAM 18 (Table 5). Out of ten leading medications in terms of financial expenditure, the most expensive is “Insulin glargin” (BAM 126 per prescription), which is prescribed for all types of diabetes. Within all the medications in the positive list, the medication with the highest financial value per prescription is “Ciklosporin”, prescribed to patients for the prevention of transplant rejection (BAM 283 per prescription on average). These facts depend primarily on medication prices which is why the real consumption cannot be specified.             22 Journal of Economic and Social Studies �Financial Monitoring of Medication Consumption in Bosnia and Herzegovina     Table 5. Ten Leading Medications in 2013 Per Their Total Value Charged to HIF TC Group C09 C10 R03 Medication Enalaprilhidrohlortiazid Lizinoprilhidrohlortiazid Salmeterol+flutika zon Disease BAM charged to HIF TC % Number of prescriptions % BAM /prescription Hypertension 2,574,774 6.64 140,153 5.90 18 Hypertension 2,076,581 5.36 112,219 4.72 19 1,842,592 4.75 21,715 0.91 85 1,822,633 4.70 18,286 0.77 100 1,402,931 3.62 60,428 2.54 23 1,382,965 3.57 11,011 0.46 126 Obstructive airway diseases All types of diabetes Gastric and duodenal ulcers All types of diabetes A10 Inzulin aspart A02 Pantoprazol A10 Inzulin glargin N06 Paroksetin Depression 1,346,954 3.47 46,563 1.96 29 C07 Karvedilol Hypertension 1,295,488 3.34 100,546 4.23 13 A10 Inzulin humani All types of diabetes 1,214,310 3.13 18,606 0.78 65 A10 Metformin Diabetes 1,176,392 3.03 119,034 5.01 10 16,135,618 41.62 648,561 27.28 25 38,768,888 100.00 2,377,010 100.00 16 Ten leading medications TOTAL Source: Authors' research based on HIF TC database In 2013, the medications for the cardiovascular system made somewhat less than a half (46.81%) of all the prescriptions issued during that year and they cost almost BAM 14 million. The increased consumption is further confirmed by the fact that the expenditures for these medications in 2013 were by BAM 400,000 higher that the expenditures for the entire program of medications charged to HIF TC ten years ago. Among the ten most often prescribed medications there are seven of them for the treatment of hypertension. Some 40% of all the prescriptions realized in 2013 were for these medications, which makes 34% of the total value charged to HIF TC. Medications for the treatment of diabetes are also an important segment of the financial consumption of medications charged to HIF TC. This is confirmed by the fact that the value of these medications grew on average by 15.5% in the period 2004-2013. These medications make 10% of the total amount charged to HIF TC and 19% of the total number of prescriptions realized in 2013. On average, every patient uses 15 prescriptions a year, with the average value of BAM 470 per patient, which is significantly higher than in 2004 when this amount was BAM 267 per patient. On the whole, medication consumption matches the morbidity data for the territory of Tuzla Canton. Volume 7 | Issue 1 | 23 �Emira Kozarević, Tatjana Krdžalić and Sabina Đonlagić Alibegović   Concluding Remarks Besides a number of problems evident in the inefficient healthcare system and public spending control, irrational use of medications that directly reflects on the financial burden of healthcare system economy is one of the burning issues if not the most important one. When health spending reaches a certain level, it is difficult to return it to the previous values as it increases year after year. It is difficult to reduce health spending but it can be constantly monitored and gradually controlled. The analysis of the data presented in the paper leads to the conclusion that the key problem of the healthcare sector in BiH is its sustainable financing which is primarily evident in the lack of appropriate system of collection of financial resources and in the lack of a transparent system for monitoring health spending. The core of the problem might be found in the way BiH is organized as a state and in its fragmentation to centralized RS, decentralized F BiH, and Brčko District, with various legal regulations that complicate successful conduct of fiscal policy. The situation is even more complicated by the fact that every entity has its own health insurance fund that operates with difficulties due to the finance-related problems but also due to accumulated arrears. In addition, serious problems of BiH healthcare system are certain inequalities in terms of exercising the right to healthcare. In the long term, the healthcare system organized in this way shall not survive; the collected resources are almost always limited while the demand for healthcare services surpasses the available funds. There are no new sources of financing and the collection of regular revenue is problematic, which means that the time has come to implement whole scale reforms aimed at improving the conditions under which the healthcare system functions. It is not yet known when these changes might happen but something can be done regardless of the fact that there is no political will at the moment for any changes. In the situations when we cannot change the existing financing models, we can start with a better control of the ways in which the collected resources are spent and medication consumption is precisely the segment of health spending which can be controlled and rationalized in a simple way. The rational consumption of medications means giving a patient the appropriate medication in the dosage defined by the clinical and individual needs so that the patient and the society as a whole pay the lowest possible price. It is not known to what extent these principles are followed in terms of dosage specification based on patient’s clinical and individual needs but the research results indicate that in BiH both the society and the patients pay medications at a too high price. Sometimes, the state itself contributes to over consumption of medications through its inactive and bad decisions in legislation and executive power. Instead of serving solely to limit the 24 Journal of Economic and Social Studies �Financial Monitoring of Medication Consumption in Bosnia and Herzegovina     unnecessary consumption, the laws regulating manufacture, trade and price of medications, their additions on health insurance lists, sales regime, patients’ participation in the price, and marketing often stimulate consumption. The pharmaceutical industry might be seen as one of the main drives of medication consumption and its constant growth. The role of pharmaceutical industry has changed over history − while in the past the cure was sought for as many diseases as possible, it seems as if today the goal is to find as many diseases as possible for the cure. Primary healthcare is also the segment where increased medication consumption emerges. Although the concept of primary healthcare is as a rule devised so as to unburden secondary healthcare, this seems not to be the case. Physicians in primary healthcare face crowd at their practices, work under pressure, and so on. Also, consulting clinical pharmacologists reduces over issuance of medication prescription, which consequently results in reduced expenditure for medications. Drug abuse seems to be one of the reasons for the increased medication consumption. Nowadays every home obviously has certain medications in stock, which are used at one’s own opinion. Increased financial expenditure on medication is affected by medication selling prices. While some of the surrounding countries have zero VAT rate on medications, with 17% VAT rate BiH is one of the most expensive countries in terms of medication prices. This is caused by a small market, many levies, rigid law on medicinal products and medical devices, and high pharmacy margins which directly affect patients’ budgets. The Rulebook on Price Monitoring, Calculating Medication Prices and Reporting on Medication Prices in BiH would be an excellent instrument of medication control in BiH. The VAT rate is not the only reason for expensive medications in the country as medication prices generally vary in the entities, which is probably caused by the decentralized system of medication procurement. However, some medications are as much as 400% more expensive than in the neighboring Serbia, where many BiH citizens buy medications, which confirms the allocation of financial resources outside BiH borders and the potential grey market (medication smuggling). What is equally important is the need for the establishment of the unique system of medication consumption monitoring on a state level based on the ATC/DDD methodology, with the aim of gaining the real insight into medication consumption so as to identify the causes and consequences of irrational consumption. Also, constant education in the field of health economics is needed as raising awareness of the budget limitations in the healthcare system is an extremely long and difficult process for both patients and healthcare workers. This can only be Volume 7 | Issue 1 | 25 �Emira Kozarević, Tatjana Krdžalić and Sabina Đonlagić Alibegović   done by appropriate education of the general public, healthcare workers, creators of healthcare policies, and so on. The presented theoretical elaboration of the problem as well as the empirical research conducted in BiH and Tuzla Canton, as the most populated BiH canton, indicate that the central research hypothesis is accepted. Future research interest might focus of monitoring medication consumption within hospital capacities, since it is not monitored analytically, in order to establish the real consumption and define potential causes of (non)increase in the use of medications charged to health insurance. Besides, it would be interesting to conduct a research into the usage of medications from the aspect of physician habits related to medication prescription, with a particular emphasis on the problems they face in their practice. One might find useful to investigate the perception and habits of the patients as those who consume medications, in order to detect important factors that influence increased demand for medications and establish the actual financial burden imposed on citizens by healthcare costs, and so on. References Agencija za borbu protiv korupcije Republike Srbije. (2012). Izveštaj o oblicima, uzrocima i rizicima korupcije u sistemu zdravstva. Retrieved from http://www.pravonazdravlje.com/documents/dokumenta/Izvestaj_o_zdravstvu.pdf Angell, M. (2009). Drug Companies & Doctors: A Story of Corruption. New York Review of Books. Retrieved from http://www.nybooks.com/articles/2009/01/15/drug-companies-doctorsa-story-ofcorruption/ Benković, V. (2009). Informiranost prestavnika lokalne vlasti o instrumentima kvalitetnog upravljanja javnim zdravstvom i socijalnom skrbi. Soc. ekol. Zagreb, 18(2), 157-168 Björnberg, A. (2015). Euro Health Consumer Index 2015. Report, Health Consumer Powerhouse. Retrieved from http://www.healthpowerhouse.com/files/EHCI_2015/EHCI_2015_report.pdf Čogelja Čajo, G., Osrečki, V. & Tomić, S. (2010). Uticaj lijekova na okoliš. Kem. Ind., 59(7-8), 351-354 Čulig, J. (2004). Racionalna farmakoterapija. Medix, 53, 126-128 26 Journal of Economic and Social Studies �Financial Monitoring of Medication Consumption in Bosnia and Herzegovina     Dragomir, A., Côté, R., Roy, L., Blais, L., Lalonde, L., Bérard, A. & Perreault, S. (2010). Impact of adherence to antihypertensive agents on clinical outcomes and hospitalization costs. Med Care, 48(5), 418-425. DOI: 10.1097/MLR.0b013e3181d567bd Farmaceutska grupacija Evropske unije. 2012. 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Štrban-Štok, Z., Štimac, D., & Čulig, J. (2006). Analiza indikatora morbiditeta, mortaliteta i potrošnje lijekova u Zagrebu. Med Jad, 36(1-2), 31-40 Radna grupa projekta EU/WHO. 2008. Podrška reformi zdravstvene zaštite u Bosni i Hercegovini 2004-2006. Strategija primarne zdravstvene zaštite. Banja Luka: Ministarstvo zdravlja i socijalne zaštite Republike Srpske Roebuck, M. C., Liberman, J. N., Gemmill-Toyama, M., & Brennan, T. A. (2011). Medication adherence leads to lower health care use and costs despite increased drug spending. Health Affairs, 30(1), 91-99. DOI: 10.1377/hlthaff.2009.1087 Salihbašić, Š. (2009). Sistem finansiranja zdravstvene zaštite. Gračanica: Grin Volume 7 | Issue 1 | 27 �Emira Kozarević, Tatjana Krdžalić and Sabina Đonlagić Alibegović   Stević, E., Jatić, Z., Salihefendić, E., & Kadić, A. (2011). Dobra praksa propisivanja i izdavanja lijekova. Terapijski vodič, Sarajevo: Ministarstvo zdravstva Kantona Sarajevo. 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Retrieved from: http://www.wiredhealthresources.net/resources/NA/WHOFS_MedicinesSafetyAdverseReactions.pdf   28 Journal of Economic and Social Studies � Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Extent The size or duration of the resource. 3725 Title A name given to the resource Financial Monitoring of Medication Consumption in Bosnia and Herzegovina Author Author KOZAREVIĆ, Emira Đonlagić Alibegović, Sabina Krdzalic, Tatjana Abstract A summary of the resource. healthcare system practice as its share in GDP has constantly increased during past decades, which is now above 10% of GDP in developed countries. However, very often it is more of an issue related to the current political and socio-economic situation in a country rather than the one managed by experts. Although one might expect that the increase in healthcare spending contributes to better health of the population, relevant indicators show that high healthcare spending in Bosnia and Herzegovina (BiH) does not result in better health of its population. Due to this reason, special attention needs to be paid to the economic analysis of healthcare spending. Irrational use of medications is just one of many problems associated with an inefficient health system, but one that heavily impacts on the health economics. In situations where it may not be easy to change the existing financing models, we should explore how to be more effective in spending within the existing structure. Better control of medication consumption could be one of the actions that helps improve the effectiveness of the available budget. Therefore, the general aim of the paper is to determine the effect that financial monitoring of medication consumption has on the control of increase in healthcare spending, which in turn might help establishing a financially sustainable healthcare system. Bearing in mind that irrational usage of medications influences the access to healthcare services, destabilizes country’s budget, and endangers the margin of social sustainability (endurance), the constant financial monitoring of medication consumption is important as it can help us recognize those segments where consumption deviates from standard and where prevention activities are needed. All this can result in the limitation of further increase in medication consumption. Publisher An entity responsible for making the resource available International Burch University Date A point or period of time associated with an event in the lifecycle of the resource 2017 Keywords Keywords. Article PeerReviewed HB Economic Theory https://omeka.ibu.edu.ba/files/original/82d5adb58198abe3bcb6320973ea6a5c.docx a86c988638d4961584d5a6ad7b4e4ff6 https://omeka.ibu.edu.ba/files/original/6bb616d2cc90f0779a01e26103347e6f.pdf c872aa24b0e6d33d82788ee714288536 PDF Text Text Financial Stability: Albanian Case Jonada Tafa Epoka University Albania jtafa11@epoka.edu.al Ditmir Sufaj Epoka University Albania ditmir1993@hotmail.it Jonida Balliu Epoka University Albania nidaballiu@hotmail.com Rebani Balliu Epoka University Albania rebani16@hotmail.com Urmat Ryskulov Epoka University Albania uryskulov@epoka.edu.al Abstract: Defining financial stability is very difficult, and it is even harder to measure it. Generally speaking, a financial system can be characterized as stable in the absence of excessive volatility, stress or crises. This paper tries to give a clearer definition of financial stability and its importance in the economy of a country. An efficient and stable financial system is very important, as it is one of the main factors that promote economic development and growth. It also focuses on financial stability progress in which Albania has undergone during the last two years (2012-2013). All statistical data and information are collected from both national and international sources, including Central Bank of Albania, Ministry of Finance, as well as IMF and World Bank. In order to measure and understand the financial state of Albania, it was necessary to make an analysis of the real sector (GDP growth), behavior of financial markets, performance of banking sector and corporate sector’s riskiness. Banks play an important role in the global financial system and have become more important during liberalization and technological progress. This phenomenon is quite obvious even in Albania. Empirical studies show that banking sector should be more careful with non-performing loans, even though lending procedures have been tightened. The ratio of non-performing loans to total loans reached up to 24.2% in June 2013. Credit risk remains the main threat of Albanian banking sector, due to low economic growth and political instability. Based on the collected data we may conclude that the performance of financial system and banking sector in Albania has been quite stable. Keywords: financial Stability; Banks; Monetary Policy. 128 � Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Extent The size or duration of the resource. 2591 Title A name given to the resource Financial Stability: Albanian Case Author Author TAFA, Jonada SUFAJ, Ditmir BALLIU, Jonida BALLIU, Rebani RYSKULOV, Urmat Abstract A summary of the resource. Defining financial stability is very difficult, and it is even harder to measure it. Generally speaking, a financial system can be characterized as stable in the absence of excessive volatility, stress or crises. This paper tries to give a clearer definition of financial stability and its importance in the economy of a country. An efficient and stable financial system is very important, as it is one of the main factors that promote economic development and growth. It also focuses on financial stability progress in which Albania has undergone during the last two years (2012-2013). All statistical data and information are collected from both national and international sources, including Central Bank of Albania, Ministry of Finance, as well as IMF and World Bank. In order to measure and understand the financial state of Albania, it was necessary to make an analysis of the real sector (GDP growth), behavior of financial markets, performance of banking sector and corporate sector’s riskiness. Banks play an important role in the global financial system and have become more important during liberalization and technological progress. This phenomenon is quite obvious even in Albania. Empirical studies show that banking sector should be more careful with non-performing loans, even though lending procedures have been tightened. The ratio of non-performing loans to total loans reached up to 24.2% in June 2013. Credit risk remains the main threat of Albanian banking sector, due to low economic growth and political instability. Based on the collected data we may conclude that the performance of financial system and banking sector in Albania has been quite stable. Keywords: financial Stability; Banks; Monetary Policy. Publisher An entity responsible for making the resource available International Burch University Date A point or period of time associated with an event in the lifecycle of the resource 2014-04 Keywords Keywords. Article PeerReviewed Identifier An unambiguous reference to the resource within a given context ISSN 2303-4564 H Social Sciences (General) https://omeka.ibu.edu.ba/files/original/8a4fcb5b9b5ccfc8e8eb2ec45dad4dca.docx 3489e61166c53b74ba29fb8eb30496ca https://omeka.ibu.edu.ba/files/original/be06beaa86ef78001a745c1f4baf655b.pdf 599f39209c27fd5ca80984eb6aedfa53 PDF Text Text Autor: Dr. sc. Aida Mulalić Institucija: Pravni fakultet Univerziteta u Zenici E-mail: aidadz1@gmail.com FINANSIJSKO-PRAVNI ASPEKTI TRETIRANJA PROBLEMA KORISNIKA FINANSIJSKIH USLUGA U KONTEKSTU ODRŽAVANJA KVANTUMA NOVČANIH POTRAŽIVANJA Sažetak Problemi korisnika finansijskih usluga su izuzetno kompleksni, te potencijalno mogu izazvati niz kauzalno povezanih implikacija kako privatno-pravne, tako i javno-pravne prirode. Posmatrani u kontekstu pozitivnog pravnog i privrednog ambijenta u Bosni i Hercegovini problemi se dodatno usloţnjavaju. Stoga ih se treba analizirati iz različitih perspektiva kako bi se iznašla prihvatljiva rješenja. Ovo utoliko više ako se uzmu u obzir nedovoljno razvijeno finasijsko trţište u Bosni i Hercegovini, specifičan aranţman u kojem djeluje njena centralna monetarna institucija, te izazovi adaptiranja legislativnog sistema pravnim tekovinama Europske unije. Stoga se u radu fokusiramo na aktuelna normativna rješenja u domenu kreditnih proizvoda plasiranih u stranoj valuti, te ţelimo pokazati nedostatnost sporadičnih rješenja i naglasiti potrebu iznalaţenja obuhvatnijih pravnih i ekonomsko-političkih mjera. Ključne riječi: finansijsko trţište, finansijske usluge, monetarna politika, valuta �1. Uvod U radu se daje pregled i analiza pravnih instrumenata zaštite korisnika finansijskih usluga kako bi se ukazalo na nedostatnost određenih rješenja iz pravnog domena. Pri tome ne ţelimo dovesti u pitanje cilj koji se određenim normativnim aktima ţeli postići, već nastojimo istaći nuţnost koordiniranog pristupa problemu u pitanju. Na početku rezimiramo pravne oblike zaštite koji su uobičajeni za odrţavanje kvantuma potraţivanja odnosno duga i njihovu modifikaciju u poslovnoj praksi subjekata finansijskog trţišta. Jedan vid pravne zaštite korisnika finansijskih usluga jesu zaštitne klauzule. Zaštitna klauzula je sporazum između ugovornih strana po kome se visina novčane obaveze mijenja u direktnoj srazmjeri sa cijenom nekog dobra, kursom neke valute ili kretanjem određenog indeksa cijena. S obzirom na navedeno Meichsner (1962) daje sljedeću klasifikaciju zaštitnih klauzula: robne, valutne i indeksne zaštitne klauzule. Pojava zaštitnih klauzula imanentna je čestim promjenama u realnoj vrijednosti novca, manipulacijama novcem, a njihovoj široj primjeni doprinijela je pojava fiducijarnog novca. Takav slučaj zabiljeţen je, kako navodi Krulj (1973) u Francuskoj za vrijeme kratkotrajnog eksperimenta sa emisijom novčanica J. Law-a (1716-1720.), a naročito kako navode White (1933) ili Murphy (1997) za vrijeme francuske revolucije, kad su opticaju bili asignati.i Međutim, njihova primjena u praksi ne prolazi bez izvjesnih teškoća. Tako, na primjer, primjena indeksne klauzule zahtijeva niz praktičnih postupaka kao što su praćenje i objavljivanje indeksa potrošačkih cijena i usklađivanje sa rastom istih, prilagođavanje eventualnim denominacijama valute, i slično. Postoji i problem određenja adekvatnog kursa po kojem će se pratiti strana valuta koja se primjenjuje kao obračunska jedinica. To moţe biti zvanični kurs, kurs neke zvanične liste, kurs po kojem valutu određena banka otkupljuje u mjestu plaćanja, i slično. Na ovo pitanje je moţda, kako konstatuje Delibašić (1993) i najteţe odgovoriti, jer praktično se ne moţe unaprijed sa sigurnošću znati kako će se kurs strane valute formirati. Problem naročito dolazi do izraţaja u uslovima koji rezultiraju smanjenjem ili povećanjem vrijednosti novca kada je u momentu zaključenja ugovora ili drugog pravnog posla sasvim neizvjesno da li će se izabrani način obračuna moći primijeniti i u trenutku dospijeća obaveze. U takvim slučajevima u obzir dolazi kombinovanje primjene nekih zaštitnih klauzula, najčešće valutne i indeksne klauzule, gdje se prva tretira kao osnovni, a druga kao pomoćni pravni mehanizam zaštite novčanog potraţivanja. Prvobitno je moguće predvidjeti obavezu vraćanja duga uz primjenu strane valute kao valute obaveze. Ukoliko u momentu ispunjenja postoji jednakost prestacija među ugovornim stranama po ovom mehanizmu, onda se obaveze po tom osnovu i ispunjavaju. Ukoliko se u vrijeme dospjelosti obaveze ustanovi da postoji narušavanje principa jednakih prestacija po osnovu valute obaveze, bilo bi praktično prema Klepiću (1994) kao rezervni princip ustanoviti princip obračuna duga prema rastu ili padu cijene određene robe, a opet u odnosu na neku stranu valutu. Svaki ugovor treba da sadrţi tačno određene elemente koji će pomoći lakšem i jednostavnijem definisanju visine duga, odnosno potraţivanja, i u tom smislu dug i potraţivanje moraju biti potkrijepljeni odgovarajućim dokazima o njihovoj visini. Pravilno uređenje ovih pitanja naročito je značajno s aspekta funkcionisanja bankarskog sektora, odnosno aspekta očuvanja novčane mase koja cirkuliše kroz kredite. Vaţno je i da ugovore sa zaštitnim klauzulama prate i Asignati su bili hartije od vrijednosti puštene u opticaj 19.11.1789. kao povlaštena novčanica kojoj su podlogu činila drţavna ili kraljevska dobra. Asignat je predstavljao pravo potraţivanja Eskontne banke od drţave koje je nosilo kamatu po stopi od 5% (kasnije 3%), a isplaćivao se u dobrima umjesto u gotovom novcu. 1790. propisano je da asignati imaju vaţnost novca za sve građane na čitavom prostoru kraljevine, te da će se primati kao sitni kvani novac na svim javnim i privatnim blagajnama. U početku su asignati postojali samo u obliku krupnih novčanica od 1000 livri, dok su zlato i srebro bili neophodni za popunjavanje isplata i nabavke manjih razmjera. Skupština je podsticala trgovanje kovanim novcem na račun asignata, jer joj je kovani novac bio potreban za finansiranje vojnih potreba. Također je i drţavna blagajna kupovala kovani novac za asignate, svjesno dopuštajući da tako izgubi na vrijednosti novca. Pretpostavljeni gubitak je, međutim, postajao sve ozbiljniji, ali je trgovina kovanim novcem na račun papirnog bila ozakonjena. Zlatnik i asignat su kotirali na berzi, a srebrni novac smatrao se robom promjenjive vrijednosti. Na ovaj način ojačalo je nepovjerenje u papirni novac i nastala je pukotina u finansijskom sistemu koja se neizbjeţno počela širiti. Sa aspekta duţničko-povjerilačkih odnosa, a prema stanovištima protivnika asignata, isplata duga papirnim novcem značila je djlomično bankrotstvo. Dug se nije mogao isplatiti asignatima budući da bi to pretpostavljalo isplatu unaprijed sumom novca koja će se tek dobiti od prodaje dobara koja su činila osnovu asignata. U vremenu od nastanka obaveze do isplate, asignat gubi na vrijednosti, prema Gresham-ovom pravilu da bolji (kovani) novac istiskuje slabiji (papirni). Povjerioci, prema ovim argumentima, izgubili bi na razlici između kursa papirnog i kovanog novca, dok bi duţnici kojima je pozajmljen srebrni novac, od iste profitirali. Prema A. Mathiez, preveo Ţ. Ristić, Francuska revolucija, Prosveta, Beograd, 1948., 101-114. i �drugi oblici obezbjeđenja potraţivanja (hipoteka ili ručni zalog) i da sudske odluke kojima se vrši obezbjeđenje potraţivanja uzimaju u obzir tzv. „valorizacioni faktor duga.“, kako navodi Klepić (1994).ii Sudovi u određenim situacijama, oslanjajući se na osnovna načela obligacionog prava uvode valorizaciju novčanih obaveza (Maljković, 1994).iii Ukoliko zaštitne kaluzule nisu ugovorene sud moţe da koristi ponder koji u određenom trenutku izraţava realnu vrijednost potraţivanja/duga. Sporno je prema Maljkoviću (1994) određenje vremenskog intervala u kojem povjeriocu treba priznati pravo na valorizovano potraţivanje, a s obzirom na efekte opadanja realne vrijednosti novca, s jedne i postojanje pravne zaštite povjerioca kroz institut naknade štete, s druge strane. Utoliko je značaj zaštitnih klauzula veći, budući da one obezbjeđuju automatsku valorizaciju obaveze duţnika. Njihova daljnja bitna karakteristika je ta što se posredstvom ovih klauzula moţe na nesumnjiv način utvrditi predmet novčane obaveze, bez obzira što se za utvrđivanje koriste strane valute, dobra, robe ili usluge, ili promjene cijena materijala i rada u određeno vrijeme i na određenom trţištu.iv U vrijeme administrativnog reguliranja materije novčanih obaveza, a time i pitanja dopuštenosti zaštitnih klauzula, iste su smatrane direkno suprotnim monetarnoj politici drţave i prinudnom kursu tadašnjeg zakonskog sredstva plaćanja, te se smatralo da njihova neograničena upotreba ubrzava i podstiče inflaciju. U tom je smislu kako navodi Korhecz (1985) i ranija sudska praksa sve zaštitne klauzule, sa izuzetkom klizne skale proglasila ništavnim.v I vaţeći Zakon o obligacionim odnosima FBiH, nesumnjivo jedino dozvoljava ugovaranje klizne skale, dok zlatne i valutne klauzule priznaje sa pravnim posljedicama prikrivenih klauzula za plaćanje u domaćoj valuti, dok punovaţnost indeksne klauzule zavisi od postojanja posebnih uslova.vi 2. Valutne klauzule Primjeni ove vrste ugovornih zaštitnih klauzula najčešće ima mjesta u međunarodnim plaćanjima, ali i u uslovima značajnijih poremećaja vrijednosti domaćeg novca. Valuta koja će se u konkretnom ugovornom odnosu stipulirati, moţe biti prema Meichsneru (1980) ili valuta zemlje iz koje se roba nabavlja ili isporučuje, ili valuta neke treće zemlje koja među ugovornim stranama zbog svoje stabilnosti ili široke primjene u međunarodnim plaćanjima, uţiva povjerenje. U većini pravnih sistema ne postoji izričita zabrana ugovaranja valutnih klauzula, što je rezultiralo raširenom njihovom primjenom u ugovorima, naročito u bankarskom sektoru, kada se iznos obaveze valorizira prema vaţećem kursu strane valute u momentu dospijeća obaveze. Osim toga, kako navodi Kapor (2011) kod dugoročnih kredita (naročito hipotekarnih kredita stanovništvu), ali i investicionih i drugih namjenskih kredita privrednim društvima, ugovaraju se kamatne stope prema stranim referentnim kamatnim stopama, prije svega Euribor-u ili Libor-u (kod stambanih kredita u švicarskim francima), koje mogu biti uvećane za 3-7% ili čak 12-13%, na ime marţe banke. Koristi od ugovaranja valutne klauzule uglavnom imaju banke čija je bilansna pozicija zaštićena, s obzirom da je veći dio izvora njihovih sredstava (osnivački kapital, krediti i depoziti matičnih banaka, devizna štednja), deviznog porijekla. Time rizik deviznog kursa i kamatne stope snose korisnici kredita. Riziku revalorizacije novčane obaveze na bazi indeksacije u eurima ili švicarskim francima doprinose i prihodi koje duţnici ostvaruju u domaćoj valuti, budući da nemaju adekvatnu zaštitu kroz upotrebu instituta finansijskih derivata (poput hedţinga, valutnog swap-a, i sl.). Ovo stoga što su isti dostupni privrednim pravnim subjektima u prvom redu, a manje fizičkim, kao i zbog slabe razvijenosti regionalnih finansijskih trţišta u pogledu njihovog korištenja (Kapor 2011). U postupku obezbjeđenja potraţivanja u ovakvim slučajevima mora se voditi računa o stvarnoj izvršnosti sudskih odluka, kada će pravni poslovi sluţiti svom cilju i funkciji, a njihovi sudionici to i omogućavati, a ne biti prepreka u pravnom prometu. iii Tako je Rješenjem Vrhovnog suda Srbije br. Rev 1663/92 od 12.5.1992. u slučaju restitucije zbog ništavosti ugovora o prodaji, određeno da je prodavac duţan kupcu isplatiti iznos trţišne cijene u vrijeme donošenja sudske odluke, sa zakonskom kamatom od donošenja sudske odluke do isplate. Ili, u Rješenju istog suda br. Rev 2283/92 od 10.9.1992., u slučaju deeksproprijacije vrijeme donošenja sudske odluke, sa zakonskom kamatom od donošenja sudske odluke do isplate. iv Prema odredbi člana 50. Zakona o obligacionim odnosima FBiH, "Sluţbeni list SFRJ", br. 29/78, 39/85, 45/89, 57/89, "Sluţbeni list RBiH", br. 2/92, 13/93, 13/94, "Sluţbene novine Federacije BiH", br. 29/03, 42/11 predmet obaveze je odrediv ako ugovor sadrţi podatke pomoću kojih se moţe odrediti. v Tako prema presudi Okruţnog suda u Subotici br. Gţ. 695/77: „Ništavi su pravni poslovi u kojima je određena kupoprodajna cena na taj način što se dinarska vrednost izračunava na osnovu cene zlata ili kursa stranih valuta i predviđena isplata kupoprodajne cene u stranoj valuti.“ vi Vid. članove 394.-397. Zakona o obligacionim odnosima FBiH ii �Navedeno statistički potvrđuje, na primjer, analiza Narodne banke Srbije (NBS) (2008).,vii gdje je utvrđeno da kod ugovora sa valutnom klauzulom najčešće nije definisan kurs koji se primjenjuje pri obračunu visine kredita i anuiteta. Analiza je dalje pokazala da čak 48% korisnika kredita nije bila upoznata sa značenjem valutne klauzule, a 58% njih nije znala za posljedice vezivanja kredita valutnom klauzulom za neke druge valute. S obzirom na ovakovo stanje, NBS je donijela Preporuku po kojoj bi krediti indeksirani u stranoj valuti trebalo da sadrţe precizno određenje vrste kursa valute koji se koristi za izračunavanje iznosa kredita u dinarskoj protuvrijednosti, iznos anuiteta izraţen u valuti ili u dinarskoj protuvrijednosti, kao i precizno određenje kursa koji se koristi za izračunavanje dinarske protuvrijednosti na dan dospijeća.viiiix 3. Valutna struktura kredita u bosni i Hercegovini S obzirom na razmjere konkretnog problema, osvrnućemo se na valutnu strukturu kredita i u našoj zemlji. Prema Izvještaju Centralne banke Bosne i Hercegovine (2011), 66,7% ukupnih kredita bilo je vezano za valutnu klauzulu. Prema strukturi potraţivanja, 51,5% kredita odnosi se na nefinansijka privredna društva, 43,8% na stanovništvo, a tek 4,1% na vladin sektor. Potraţivanja od nefinansijskih javnih i privatnih privrednih društava na kraju 2011. iznosila su 7,89 milijard KM, a godišnja stopa rasta iznosila je 7,5%. U strukturi kredita plasiranih ovim privrednim subjektima, dugoročni krediti učestvuju sa 61,8%, ali sa nešto niţim godišnjim stopama rasta u odnosu na kratkoročne kredite (Centralna banka BiH 2011). Potraţivanja od stanovništva iznosila su 6,71 milijardi KM, a godišnja stopa rasta iznosila je 2,8%. U ovom sektoru, međutim, naglašeno je učešće dugoročnih kredita od 87,2% u odnosu na njihova ukupna potraţivanja. Niske godišnje stope rasta indikator su restriktivnije politike kreditiranja stanovništva, ali i manje potraţnje stanovništva za kreditima s obzirom na trenutnu zaduţenost. U strukturi plasiranih kredita stanovništvu, najveći dio (78,6%) odnosi se na nenamjenske potrošačke kredite, 3,2% na kupovinu ili izgradnju novih stambenih jedinica, 4,9% na kupovinu postojećih stambenih jedinica (Centralna banka BiH 2011). Kamatne stope na kredite vezane valutnom klauzulom u 2011. godini bile su izuzetno stabilne. U sektoru nefinansijskih privatnih privrednih društava, udio kratkoročnih kredita u KM sa valutnom klauzulom iznosio je 10% u ukupno plasiranim kreditima. Kamatna stopa u decembru 2011. iznosila je 7,56%, što je najniţa vrijednost od januara 2007. godine. Oko 80% od ukupno plasiranih dugoročnih kredita, indeksirano je valutnom klauzulom. Kamatna stopa za ovu vrstu kredita u pomenutom sektoru iznosila je također 7,56% u decembru 2011., što je umanjenje za 28 baznih poena u odnosu na isti period 2010. godine. Kamatna stopa za ovu vrstu kredita u sektoru stanovništva smanjena je za 19 baznih poena, na 8,51%.x Tabela 1:Valutna struktura kredita u BiH Godina Mjesec KM Euro 1 10.646,4 13.062,1 2 526,3 679,8 2007 2008 Ostale strane valute 3 678,6 767,6 Ukupno milijardama KM u 4=1+2+3 11.851,4 14.509,5 Preporuke istog cilja, ex ante karaktera, donešene su i u Republici Hrvatskoj. Vid. Hrvatska narodna banka, Smjernice za upravljanje kreditno induciranim valutnim rizikom, http://www.hnb.hr/supervizija/h-smjernice-za-upravljanje-valutno-induciranim-kreditnim-rizikom.pdf,( 4. januar 2013.) viii NBS, Preporuka BAN u vezi sa ugovorom o kreditu sa valutnom klauzulom: http://www.nbs.rs/export/sites/default/internet/latinica/63/preporuke_skinuto/BAN-003-08.pdf,( 5. januar 2013.) Slična situacija je i Hrvatskoj, gdje je aprecijacija švicarskog franka u 2011. godini imala razarajuće efekte na raspoloţivi dohodak stanovništva, usljed čega je pokrenuta javna kampanja i institucionalizirani nastup korisnika kredita sa valutnom klauzulom u cilju zaštite duţnika, što je predmet posebne analize u našem istraţivanju. ix Za RH upor. M. Ivanov, „Financijski sustav i makroekonomska stabilnost,“ u V. Leko/B.Lovre/I. Lovrinović (ur.), Novac, bankarstvo i financijska tržišta, Adverta d.o.o., Zagreb, 2005., 85-86. x Napomena: izvještaj za 2012. godinu nije bio dostupan u vrijeme kada su podaci konsultovani. vii �2009 2010 2011 2011 2012 732,4 325,3 355,5 299,4 325,8 701,9 718,2 372,7 357,1 344,8 14.050,1 14.543,4 15.311,1 15.123,7 15.177,5 11. 12. 12.615,7 13.499,9 14.582,9 14.467,2 14.507,0 14.562,6 14.582,9 329,0 355,5 361,9 372,7 15.253,5 15.311,1 01. 14.673,8 313,0 15.355,1 02. 03. 04. 05. 14.720,4 14.780,9 14.871,4 14.968,0 305,4 308,5 313,9 321,8 06. 07. 08. 09. 10. 11. 14.977,9 15.036,1 15.200,5 15.248,6 15.272,7 15.282,5 318,1 303,0 292,1 294,1 300,3 300,4 368,2 357,2 360,5 363,4 384,8 380,4 390,1 381,1 371,1 368,3 365,6 09. 10. 15.382,9 15.449,9 15.548,6 15.674,6 15.676,3 15.729,2 15.873,8 15.913,7 15.941,3 15.948,6 Izvor: Statistički podaci za monetarni sektor CBBiH, prilagođeni samo za kreditni sektor od strane autora: http://www.cbbh.ba/index.php?id=33&lang=hr&sub=mon&table=valutna_struktura_depozita_i_kreditaa Iz podataka je vidljivo da je do novembra 2012. došlo do povećanje svih kreditnih potraţivanja za 4,2% u odnosu na decembar 2011. godine. Međutim, biljeţi se smanjenje potraţivanja po osnovu kredita indeksiranih valutnom klauzulom, što je naročito indikativno za kredite vezane za euro valutnu klauzulu (posebno od 8. do 11. mjeseca 2012.), a nešto manje za druge strane valute. Razlog ovome mogli bi smo pripisati blagom padu povjerenja u euro,xi s obzirom na nedavnu krizu finansijskog sektora EU, te postojećoj zaduţenosti privrednih subjekata. Na ovom mjestu primjereno se zadrţati na sadrţajnoj razlici između pojma valute obaveze i valute plaćanja, s obzirom da prva vrši funkciju vrednovanja obaveze (obima, iznosa), dok druga sluţi kao instrument, sredstvo pomoću kojeg se dug izmiruje. Utvrđivanjem valute obaveze utvrđuje se kako konstatuje Krulj(1973) šta je in obligacione, a utvrđivanjem valute plaćanja određuje se šta je in solutione.xii U slučaju da je novčana obaveza nastala u unutrašnjem prometu, prema Vizneru (1978) i glasi na plaćanje u stranoj valuti, tada je potrebno razlikovati valutu obaveze, kao određenu novčanu vrijednost dugovanja ili Na temelju iznesenog moglo bi se pogrešno implicirati postojanje rastućeg nepovjerenja i u bankarski sektor u Bosni i Hercegovini, što nije tačno jer kako ističe Jović (2012): „Udjel neindeksiranih kredita u ukupnim kreditima, ne može sam po sebi biti mjera povjerenja u bankarski sektor BiH, tj. mjera straha od devalvacije. Razlog za ovakav stav je domaći regulatorni okvir. Jedan dio kredita ima deviznu klauzulu, ne samo zbog rizika od devalvacije, već zbog zahtjeva za usklađivanjem bankarskih deviznih aktiva i deviznih pasiva. Naime, bankama se krediti sa deviznom klauzulom priznaju kao devizni krediti / aktiva, tj. kao protustavka stvarnoj, realnoj, deviznoj pasivi. Ukoliko bismo povjerenje mjerili prema činjenici da je svega 1/3 kredita bez devizne klauzule njena ocjena bi bila uvijek negativna. Povjerenje, krediti neindeksirani nije samo mjera povjerenja banaka u monetarne vlasti, već i u ukupni ekonomsko-politički sistem. U krajnjoj liniji … pokazuje koliko banke vjeruju centralnoj banci.”D. Jović, “Razvijanje metodoligije za ocjenu povjerenja u bankarstvo Bosne i Hercegovine,” Časopis za ekonomiju i tržišne komunikacije/ Economy and Market Communication Review, 2/2012, 216. xii Suština valute obaveze i valute plaćanja je jasna i nedvojbena kada su klauzule ove vrste stipulirane u ugovoru, ali se treba zadrţati na situaciji u kojoj se stranke nisu izričito očitovale u tom pravcu, kada se postavlja pitanje koja valuta će obavljati funkciju izraţavanja duga, a koja funkciju plaćanja kada ugovorni odnos ima elemente inostranosti. Prema članu 20. Zakona o rješavanju sukoba zakona sa propisima drugih zemalja u određenim odnosima („Sluţbeni list SFRJ,“ br. 43/082; 72/82-1645; „Sluţbeni list RBiH,“ br. 2/92-5; 13/94-189), ako nije izabrano mjerodavno pravo i ako posebne okolnosti slučaja ne upućuju na drugo pravo, mjerodavnim pravom smatra se ono sa kojim pravni posao u pitanju ima karakterističnu vezu. To će kod ugovora o prodaji pokretnih stvari biti prebivalište (boravište) prodavca, kod ugovora o djelu i ugovora o građenju-prebivalište (boravište) uposlenika (preduzimača), kod ugovora o zajmu-prebivalište (boravište) zajmodavca u vrijeme prijema ponude, za berzanske poslove-sjedište berze, za ugovor o samostalnim bankarskim garancijama-sjedište davaoca garancije u vrijeme zaključenja ugovora, i slično. Prema ovim pravilima posredno bi se cijenilo onda i gornje pitanje, što ne isključuje primjenu monetarnog nominalizma mjerodavnog prava, s obzirom na nepostojanje ugovorenog mehanizma za njegovu derogaciju u ovakvom slučaju. xi �potraţivanja, koje glasi na plaćanje u domaćem novcu, te valutu plaćanja u kojoj se postojeća obaveza treba ispuniti. Pošto se valutom obaveze utvrđuje obim (vrijednost) obaveze, to sva pitanja o toj valuti treba tretirati sa aspekta prava mjerodavnog za novčanu obavezu izraţenu kroz valutu obaveze. S druge strane, pošto se valuta plaćanja odnosi na način kojim se dug izmiruje, mjerodavan je zakon mjesta plaćanja po pitanjima utvrđivanja valute plaćanja i modaliteta izmirenja obaveze uopće. Na distinkciji između valute obaveze i valute plaćanja zasniva i podpodjela valutnih klauzula na: klauzule strane valute, klauzule fiksnog kursa, klauzule označavanja duga u nekoliko valuta, klauzule izbora valuta, klauzule izbora mjesta plaćanja, klauzule kombinacije valuta, klauzule na osnovu „košare valuta“, o kojem terminu širu raspravu daju Baird, Eisenberg and Jackson (2004).“xiii 3.1. Klauzula strane valute Ovom klauzulom se prema Vukmiru (2009) dug se određuje u nekoj stabilnoj stranoj valuti, obično valuti zemlje povjerioca, ili valuti neke treće zemlje u koju povjerilac ima povjerenje. Denominiranje duga u stranoj valuti najčešći je način zaobilaţenja posljedica promjene u vrijednosti valuta.xiv U takvoj klauzuli su valuta obaveze i valuta plaćanja ekvivalentne, jer vjerovnik izborom iste izbjegava rizik konverzije iz jedne valute u drugu i prebacuje ga u cjelosti na duţnika. 3.2. Klauzula fiksnog kursa Ugovaranjem ove vrste valutne klauzule konstatuje Vukmir (2009) fiksira se odnos vrijednosti među valutama, bez obzira na kasnije kursne razlike. Moţe se ugovoriti tako da se klauzula aktivira tek nakon što je promjena kursa dostigla određenu visinu, ili bez obzira na visinu promjene referentne valute. I ovdje su valuta obaveze i valuta plaćanja iste, ali se zbog nepovjerenja u stabilnost valute fiksira njezin kurs prema drugoj valuti. Terminološki izraz ove posljednje vrste klauzula moţda i nije najadekvatniji jer su klauzule na osnovu košare valuta zapravo klauzule kojima se novčana obaveza izraţava ili izvršava na temelju jedinice obračuna čija se vrijednost izvodi iz prosjeka vrijednosti konstituirajućih valuta. U savremenim uslovima ovu ulogu imaju Specijalna prava vučenje, dok je prije uvođenja eura u monetarni sistem EU tu funkciju imao ecu. Kako jedinice obračuna ove vrste imaju međunarodno priznati status valute (na primjer Uniform Commercial Code u paragrafu §1-202 tačka 24. pod pojam novca sublimira i monetarnu jedinicu obračuna koju je uspostavila neka međuvladina organizacija ili je ista rezultat sporazuma dvaju ili više drţava. Dakle, odbačena je uţa definicija novca koja obuhvata samo zakonsko sredstvo plaćanja (vid. §1-201 Općih definicija UCC, D.G. Baird/T. Eisenberg/T.H. Jackson, Commercial and Debtor-Creditor Law Selected Statutes, Foundation Press, New York, 2004., 16. i 21.) ali ne i definicija zakonskog sredstva plaćanja. Odredbom člana 123. st. 4. TFEU obezbijeđena je istovremena konverzija košare valuta i nacionalnih valuta jedinstvenom valutom. Još je vaţnije za status eura kao jedinstvene valute činjenica da je pomenuti član konstruiran tako da direktno referira na načelo nominalizma, ako tu odredbu shvatimo kao logičnu nadogradnju različitih definicija ecu koje su i same podrazumijevale primjenu nominalizma i pored toga što se radilo o netipičnoj valuti sa pravnog stanovišta. Status valute ecu je dobio uspostavljanjem fiksnog kursa po kojem je zamijenio nacionalne valute. Slijedom ove postavke, a shodno onome što je propisano članom 123. st. 4. proizilazi da čin uvođenja eura kao valute koja će po fiksnom kursu također, zamijeniti nacionalne valute ne mijenja automatski vanjsku realnu vrijednost ranije valute, već se stopa konverzije stare za novu valutu determinira na osnovu njihove trţišne vrijednosti. Princip nominalizma čvrsto je integriran u monetarnu konstrukciju Unije koja je osmišljena tako da pravo u potpunosti korespondira ekonomskim faktima. Posljedično, usvajanjem eura kao jedinstvene valute nije se zadiralo u ekonomsku snagu ekonomskih subjekata, već upravo zbog dejstva nominalizma efekti ovog čina po njih su bili neutralni. Vid. J.C. Cabotte/A.M. Moulin, „The Legal Status of the Single Currency,“ Banque de France Bulletin Digest, 107/2002, 104. dalje. U pogledu navedene podjele vid. i H. Konjhodţić (2009.), 252-253. xiv Klauzula strane valute tipičan je primjer ekskludiranja valutnog rizika koja se naročito koristi u poslovima tzv. projektnog finansiranja. Valutni rizik obuhvata: rizik revalorizacije, rizik konvertibilnosti i rizik transferzabilnosti. Rizik revalorizacije dolazi do izraţaja kada je dobit izraţena u jednoj valuti, a troškovi (uključujići i otplatu anuiteta i kamata) u drugoj. Relativna vrijednost troškova se povećava, ukoliko vrijednost valute aprecira, ili se dobit smanjuje ukoliko vrijednost valute deprecira. Valutni rizik suspreţe se neminovno mjerama devizne politike, ali na dugi rok ne moţe se izbjeći uticaj sila koje djeluju na finansijskim trţištima, ili hedţingom, što opet ne garantira potupno izbjegavanje ove vrste rizika zbog troškova koje hedţiranje moţe izazvati, pogotovo ako se valutom u pitanju slabo trguje na deviznom trţištu. Rizik konvertibilnosi dolazi do izraţaja kada su na snazi eventualne vladine restrikcije slobodne i neograničene konverzije jednih valuta u druge, u cilju zaštite domaćeg monetarnog sistema. Rizik transferzibilnosti povezan je sa ograničenjem izvoza strane valute. Kako bi izbjegli ovu vrstu rizika, finansijeri najčešće ugovaraju isplatu dospjelog duga na svoje offshore račune u velikm finansijskim centrima poput Londona ili New York-a. Šire u J. Dewar (ed.), International Project Finance, Law and Practice, Oxford University Press Inc., New York, 2011., 91-93. xiii �3.3. Klauzule izražavanja duga u više valuta Ovom vrstom klauzula se ravnomjerno raspoređuje rizik eventualne inflacije jer je ugovornim stranama omogućeno da plaćanje ugovore u onim valutama u kojima kalkulišu troškove koji će nastati u vezi sa obavljanjem pojedinih faza nekog pravnog posla.xv 3.4. Klauzula kombinacije valuta Kao kompleksna klauzula podrazumijeva primjenu sloţenog mehanizma izračunavanja prosjeka vrijednosti nekoliko valuta, odnosno primjenu aritimetičkog prosjeka kupovnih i prodajnih kurseva ugovorenih valuta. Određivanjem vrijednosti novčane obaveze kako navode Konjhodţić i drugi, na ovaj način izbjegava se eventualni nepovoljan uticaj promjene vrijednosti samo jedne valute, ali se problem javlja kod primjene metode izračunavanja aritimetičkog prosjeka, naročito na strani duţnika. 3.5. Klauzula izbora valuta i izbora mjesta plaćanja Prva u ovoj kategoriji valutnih klauzula obezbjeđuje izraţavanje duga u dvije ili više valuta, s tim da pravo izbora valute u kojoj će dug biti izmiren pripada povjeriocu. Ovdje su obaveze, prema Konjhodţiću i drugima (2009) izraţene u pojedinim valutama nezavisne jedna od druge, a povjerilac je zaštićen od promjene vrijednosti novca, budući da ima pravo izabrati onu valutu koja je u momentu plaćanja za njega najpovoljnija. Ugovaranjem ove vrste valutnih klauzula dopušteno je ugovaranje fiksnog kursa u odnosu na neku od izabranih valuta u koju se ima povjerenje. Klauzule izbora mjesta plaćanja daju pravo povjeriocu izbora mjesta u kojem će se ispuniti novčana obaveza, te se isplata duga se vrši u valuti mjesta plaćanja po kursu koji u mjestu plaćanja vaţi za valutu obaveze. Kako različite kombinacije u osnovi jednog zaštitnog mehanizma nemaju svoje uporište u zakonu, već su rezultat poslovne prakse, to onda ostavlja prostor za jačanje, odnosno slabljenje ugovorne pozicije jedne od ugovornih strana. Ovo je naročito imanentno valutnim klauzulama plaćanja prema vrijednosti strane valute koje imaju funkciju obračuna ili monetarnog izjednačavanja vrijednosti novčane obaveze u vremenu od njenog nastanka do ispunjenja. Jasno je da konstrukcija ove vrste preferira poloţaj povjerioca, budući da je malo vjerovatno da će povjerilac optirati za valutu za čiju se vrijednost očekuje da deprecira. Drugo je pitanje ozakonjenja valutnih klauzula jednom inkorporiranih u konkretan ugovor, u situacijama kada se njihovi negativni efekti počnu ispoljavati. Zato smo opredjeljeni ka stavu koji korespondira našoj tezi da je rizik anticipacije eventualne promjene realne vrijednosti valute u kojoj se obaveza izraţava, obračunava ili izvršava, na ugovornim stranama. Time nikako ne ţelimo umanjiti odgovornost ugovorne strane povlašćenijeg poloţaja u dotičnom pravnom odnosu, već ţelimo akcentirati vaţnost prihvatanja budućeg i neizvjesnog kao neminovnosti kojoj treba prilagođavati vlastita djelovanja, makar to značilo i uzdrţavanje od istih. Kako se tretiraju dileme u pitanju, predmet je našeg daljnjeg izlaganja, koje za svoj cilj ima da potvrdi dijametralno suprotno pravno poimanje manifestacija poremećene novčane vrijednosti u odnosu na ono koje prevladava u ekonomskom domenu. 4. Pozicija korisnika kredita indeksiranog u stranoj valuti-empirijska analiza Pretpostavimo da je klijent uzeo stambeni hipotekarni kredit odobren dana 1.10.2007. u CHF u iznosu od 63.000 KM, kamatna stopa fiksnih 5% plus šestomjesečni LIBOR, na period otplate od 25 godina. Srednji kurs CHF/BAM na dan zaključenja ugovora o kreditu bio je 1.175053, što znači da je iznos od 63.000 KM iznosio zaokruţeno 50.480 CHF. Istovremeno će se analizirati i situacija da je klijent uzeo stambeni hipotekarni kredit odobren u EUR-ima u protuvrijednosti od 63.000 KM, kamatna stopa 3,5 plus šestomjesečni EURIBOR period otplate 25 godina. Srednji kurs EUR/BAM iznosio je 1.955830 što znači da iznos od 63.000 KM jeste 32.211 EUR. Ove klauzule po svojim efektima pandam su indeksnoj klauzuli, čije je ugovaranje naročito svrsishodno kako ćemo vidjeti, u cilju zaštite ekonomski slabije ugovorne strane. xv �Iz analize smo isključili naknade za obračun, a time efektivnu kamatnu stopu (Centralna banka BiH 2014),xvi radi pojednostavljenja izračuna. Kamatna stopa je promjenjiva i računa se na osnovu šestomjesečnog LIBORA plus fiksni dio kamatne stope. Izabran je model otplate stambenog kredita sa nominalno jednakim anuitetima uz promjenjivu kamatnu stopu, pri čemu su anuiteti mjesečni. Anuitet se sastoji od otplatne kvote i kamata. Otplatnom kvotom otplaćuje se iznos kredita, a kamatama naknada za posuđeni novac. Kako bi se dobio pregled navedenih elemenata, sastavlja se otplatna tablica (plan otplate, plan amortizacije). U njoj se vodi otplaćivanje kredita prema rokovimai za svaki rok se izračunava nominalni iznos anuiteta, kamate, otplatna kvota i ostatak duga. Obračun kamata u ovom slučaju je sloţen i dekurzivan. Za potrebe studije pretpostavlja se da svaki mjesec ima 30 dana i to čini duţinu razdoblja ukamaćivanja. Budući da je konverzija zajma, kako tvrde Đeno, Lukač i Šego (2009) svaka promjena ugovorenih uslova ili (i) modela otplate zajma između vjerovnika i duţnika u toku amortizacije zajma, iz navedenog proizlazi da tokom otplate kredita moţe doći do više konverzija izazvanih različitim promjenama. Za našu analizu pretpostavit ćemo da moţe doći samo do promjene kamatne stope, a da ostali uvjeti ostaju nepromijenjeni. Tabela 1: Srednji devizni kurs konvertibilne marke prema CHF Datum BAM/CHF Datum BAM/CHF Datum BAM/CHF Datum BAM/CHF 02.10.2007. 1,177998 01.11.2008. 1,331765 01.12.2009. 1,297744 01.01.2011. 1,564163 01.11.2007. 1,166824 01.12.2008. 1,281503 01.01.2010. 1,318300 01.02.2011. 1,517206 01.12.2007. 1,182413 01.01.2009. 1,317057 01.02.2010. 1,328238 01.03.2011. 1,523232 01.01.2008. 1,181985 03.02.2009. 1,315109 01.03.2010. 1,337045 01.04.2011. 1,503906 01.02.2008. 1,218510 04.03.2009. 1,319189 01.04.2010. 1,370013 01.05.2011. 1,524895 01.03.2008. 1,231243 01.04.2009. 1,290806 01.05.2010. 1,363803 01.06.2011. 1,593344 01.04.2008. 1,242744 01.05.2009. 1,298175 01.06.2010. 1,374441 01.07.2011. 1,620272 01.05.2008. 1,211265 02.06.2009. 1,291830 01.07.2010. 1,472431 01.08.2011. 1,735430 03.06.2008. 1,208645 01.07.2009. 1,281251 01.08.2010. 1,431794 01.09.2011. 1,713086 01.07.2008. 1,218130 01.08.2009. 1,276901 01.09.2010. 1,512045 01.10.2011. 1,607091 01.08.2008. 1,195934 01.09.2009. 1,289445 01.10.2010. 1,471988 01.11.2011. 1,604323 01.09.2008. 1,217524 01.10.2009. 1,297142 01.11.2010. 1,421801 01.12.2011. 1,505643 01.10.2008. 1,239907 03.11.2009. 1,295852 01.12.2010. 1,505643 01.01.2011. 1,564163 Izvor: Izrada autora na temelju dnevnih kurseva CBBiH Na sljedećem grafikonu prikazano je kretanje promjene kursa BAM/CHF u razdoblju od 01.10.2007.01.12.2011. godine. Prikaz odnosa BAM/EUR neće biti prikazan jer je valuta fiksno vezana za isti Komparacija EKS za ovu vrstu kredita, za razliku od kredita u istoj valuti, iznimno je sloţena. Vid. http://www.cbbh.ba/print.php?id=888, (10. februar 2014.) xvi �Slika 1: Prikaz kretanja promjene kursa BAM/CHF Izvor: Izrada autora Za potrebe analize potrebno je također izvršiti prikaz kretanja EURIBORA i LIBORA za razmatrani period. Slika 2: Kretanje šestomjesečnog EURIBORA u posmatranom periodu vidimo na sljedećem grafiku. Izvor: Izrada autora uz podatke preuzete sa http://www.global-rates.com/interestrates/euribor/2009.aspx (23.02.2014.) �Slika 3: Kretanje šestomjesečnog LIBOR-a u posmatrom periodu vidimo na sljedećem grafiku. Izvor: Izrada autora uz podatke preuzete sa http://www.global-rates.com/interest-rates/libor/swissfranc/2007.aspx, (23. februar 2014.) Za izračunavanje otplatnog plana, kao što je već ranije navedeno koristi se fiksni dio 5% plus šestomjesečni LIBOR. Na prethodnom grafiku se vidi kretanje šestomjesečnog LIBORA vezan za CHF za posmatrani period, te kretanje šestomjesešnog EURIBORA. Za izračunavanje kamatne stope za kredite u EUR koristi se formula 3,5% plus šestomjesečni EURIBOR. Za potrebe izračunavanja otplatnog plana kamatne stope su korigovane pri većim odstupanjima euribora i libora, koja se mogu vidjeti na grafiku. Promjena kamatne stope u tekućem mjesecu se odraţava da iznos rate u sljedećem obračunskom periodu.xvii Nakon izračunavanja anuiteta prema promjenama libora i eurobora i time i kamatnih stopa, anutiteti se prema navedenim kursnim stopama pretvaraju u konvertibilne marke, da bi se mogli porediti, pa tako vidimo kretanje anuiteta na sljedećem grafiku Slika 3. Promjene anutiteta na stambene kredite u periodu 1.11.2007.-1.12.2011. Izvor: Izrada autora Formule korištene za izračun otplatnog plana vidjeti u Đeno, Lukač i Šego, 3. Korištena je relativna kamatna stopa, jer se konformna sve manje koristi u praksi. xvii �Anuiteti stambenih kredita s valutnom klauzulom variraju s jedne strane pod uticajem kursa, a s druge strane pod uticajem promjenljive kamatne stope. Najmanji anuitet za kredit sa valutnom klazulom u EUR iznosi 338,66 KM, dok je najveći 511,06 KM. Kod kredita sa valutnom klauzulom u CHF najmanji anuitet iznosi 383,93 KM, a najveći 516,02 KM. Postoji znatna razlika između anuiteta izračunanih u EUR i onih uCHF, ali plaćenih u konvertibilnim markama po srednjem kursu CBBiH.Ta razlika je u rasponu između 5,06 KM do 143,88 KM. U prosjeku u posmatranom periodu klijent koji je uzeo stambeni kredit sa valutnom klauzulom u CHF bi plaćao 41,62 KM više nego klijent koji je uzeo stambeni kredit sa valutnom klauzulom u EUR, a razlog u tome se moţe naći u kretanju kursa BAM/CHF što se vidi na grafiku 1. Kada se saberu sve mjesečne razlike u anuitetima kroz 50 mjeseci razmatranog razdoblja, dobije se 2081,14 KM,što znači da je klijent koji je uzeo stambeni kredit 01.10.2007. godine na 25 godina s valutnom klauzulomu CHF u razmatranom periodu platio 2081,14 KM više od onog koji je uzeo kredit u EUR. Na grafiku moţemo uočiti da su anuiteti na kredite s valutnom klauzulomu EUR varirali između 492,93 KM (novembar 2007) i 511,06 KM (novembar 2008.)., dok od decembra 2008. godine dolazi do konstantnog pada iznosa anuiteta do čak 345,10 KM (novembar 2009.), zbog pada šestomjesečnog EURIBORA i samim tim dolazi do pada kamatne stope. Tokom 2010, i 2011. godine, anuiteti su varirali od 338, 67 KM do 352, 02 KM, ali bez velikih oscilacija tokom mjeseci. Kurs nije imao posebnog utjecaja na iznos anuiteta jer je konvertibilna marka fiksno vezana za EUR po srednjem kursu od 1,955830. Najintenzivniji trend povećanja pokazuju anuiteti na kredite u CHF i to od aprila 2008. godine sve do danas, te doţivljavaju svoj vrhunac u novembru 2008. godine, od kada se biljeţi pad anuiteta. Prema navedenom grafiku vidi se da do novembra 2008 godine, klijenti koji su uzeli kredit sa valutnom klauzulom u EUR su u prosjeku plaćali veće anuitete kredita i to 30,23 KM više nego klijent koji je uzeo stambeni kredit na isti period vezan za CHF. Međutim padom euribora i libora u novembru 2008. godine, anuiteti stambenih kredita vezanih za EUR postaju u prosjeku manji za 25,25 KM, što se moţe pripisati činjenici da je srednji devizni kurs BAM/CHF bio u prosjeku veći za 0,09 u odnosu na posmatrani period prije novembra 2008. godine, a da je kurs BAM/EUR ostao isti jer je fiksno vezan. Anutiteti kredita vezanih za CHF od marta 2009. godine postaju znatno veći nego onih vezanih za EUR, iako je LIBOR bio značajnije manji nego EURIBOR, međutim nestabilno kretanje kursa BAM/CHF dovelo je do velikih razlika i oscilacija u anuitetima kod kredita vezanih za CHF. Od decembra 2009. godine anuiteti kontstantno rastu, a glavni razlog jeste kretanje kursa koji je od decembra 2009. godine sa 1,29 porastao na 1,73 u augustu 2011. godine, dok je kamata padala sa 5,36% na 5,11%. Na kraju se moţe zaključiti da u posmatranom periodu od 50 mjeseci u razdoblju od 01.11.2007.01.12.2011. godine, u prvih 25 mjeseci najpovoljnije je bilo uzeti kredit u CHF u ovom posmatranom periodu prema zvaničnim kretanjima LIBORA, koji osim jednog naglog rasta ima manje oscilacije u odnosu na EURIBOR. Međutim gledano u ukupnom posmatranom periodu povoljnije je bilo uzeti kredit vezan za EUR jer je BAM fiksno vezan za EUR i ne podlijeţe tako velikim rizicima oscilacija deviznog kursa kao CHF. Pad kamatnih stopa usljed pada LIBORA nije bio dovoljan za smanjenje anuiteta kredita vezanih za CHF u odnosu na anuitete kredita vezanih za EUR, jer je devizni kurs BAM/CHF imao jako velike oscilacije koje su se odrazile na visinu anuiteta. Stambeni kredit vezan za EUR ima veću sigurnost, barem u BiH zbog fiksne vezanosti valute za EUR i nepostojanja rizika deviznog kursa.xviii 5. Zaključna razmatranja kroz osvrt na nova normativna rješenja Kako je nagli rast valute švicarskog franka izazvao višestruko povećanje kvantuma duga u kreditnim aranţmanima duţnika koji su se opredijelili za iste, prišlo se rješavanju problema ove vrste zakonodavnim putem. Naše istraţivanje djelomično ima uporište i sa aspekta predvidljivosti ponašanja korisnika kredita, te u tom smislu referiramo na studiju M. Banović/B. Vujnović-Gligorić, „Bankarska analiza predviđanja ponašanja klijenata,“ Časopis za ekonomiju i tržišne komunikacije/ Economy and Market Communication Review, 2/2011, 265-277. xviii �Rješenja sadrţana u Zakonu o zaštiti korisnika finansijskih usluga u FBiH gotovo su identična onima iz Zakona o zaštiti korisnika finansijskih usluga Republike Srbije.xix xx Različito se tretira, međutim polje njegove primjene. Tako su od primjene ovog zakona, između ostalih, izuzeti ugovori o kreditu kod kojih je potraţivanje osigurano hipotekom na nekretnini ili drugim uporedivim sredstvom osiguranja na nekretnini ili nekim drugim pravom na nekretnini, te izuzeće ugovora o kreditu kada je kredit namijenjen za sticanje ili zadrţavanje prava vlasništva na postojećoj ili planiranoj nekretnini.xxi Nešto širi obim zaštite povjerioca predviđa se kod definiranja elemenata koji su od uticaja za određenost/odredivost novčane obaveze. Zakonom se predviđa da jednostrana volja ugovornih strana ne moţe uticati na pomenute elemente, osim ako se radi o obavješenju davaoca finansijske usluge korisniku o izmjeni promjenjivih ugovorenih elemenata na koje davalac usluge ove vrste ne moţe uticati.xxii Jedna od razlika u odnosu na propise iz ove oblasti u regionu jeste i ta što odredbe Zakona ne bi imale retroaktivno dejstvo. Ostaje nejasno međutim, kako su predlagači konkretnih akata u oba entiteta propustili precizno definirati vrstu kamatne stope kao promjenjivog elementa ugovora. U oba akta koristi se pojam referentne kamatne stope,xxiii koju pozitivni pravni sistem ne poznaje zbog posebnog monetarnog aranţmana naše zemlje i ograničenih ovlasti Centralne banke BiH u ovom domenu. Također je izvršena dopuna Zakona o zaštiti potrošača Bosne i Hercegovine („Sluţbene novine BiH“, br. 88/15, član 52.a) prema kojoj ugovori o kreditu ne smiju sadrţavati odredbu o indeksiranoj valutnoj klauzuli u stranoj valuti osim u eurima. Prvo što se moţe konstatirati na osnovu nove zakonske odredbe jeste činjenica da istom nisu obuhvaćeni svi ugovori o kreditu koji su predmet reguliranja konkretnog Zakona, odnosno ugovori kojima se zasniva zaloţno pravo na nekretninama. Upravo su ovi ugovori zbog duţine svog trajanja najpodloţniji promjenama vrijednosti potraţivanja odnosno duga usljed promjena deviznog kursa valute izabrane kao valute obračuna. Drugo, ostaje nejasno kako i na koji način eventualno zaštiti korisnike kredita kojima se stipulira indeksirana valutna klauzula u valuti euro, budući da u monetarnom sistemu Bosne i Hercegovine i ova valuta ima status strane valute za čiju je vrijednost vezana vrijednost domaće valute po fiksnom kursu.xxiv U proceduri je i Prijedlog Zakona o konverziji kredita u švicarskim francima u konvertibilne marke od 16.9.2015. prema kojem se utvrđuje obaveza komercijalnih banaka na konverziju svih kredita ugovorenih u švicarskim francima u konvertibilne marke i koji propis ima retroaktivno dejstvo. Za potrebe ovog rada referiramo na Mišljenje Europske centralne banke dato po pitanju izmjena i dopuna Zakona o potrošačkom kreditiranju i Zakona o kreditnim institucijama (Mišljenje Europske središnje banke, 2015), s obzirom na posljedice usvajanja sličnih prijedloga u BiH. ECB dala je mišljenje po pitanju efekata na privredu, povratno djelovanje propisa, kriterij podobnosti, efekata po bankarski sektor i finansijsku stabilnost. Ni nadleţna tijela u Bosni i Hercegovini nisu provela podrobnu analizu navedenih efekata, kao što to nije uradila ni Republika Hrvatska, te smatramo da bi istu trebalo provesti u cilju izbjegavanja mogućih problema po principu povratne sprege. Naime, finansijska trţišta predstavljaju osjetljiv mehanizam kojeg je teško regulirati, a također su najčešći izvor finansijskih disturbcija. S druge strane, treba imati u vidu karakater pravnih odnosa u pitanju, jer interveniranje drţave u sferi privatno-pravnih odnosa ne bi trebalo derivirati iz odnosa jedne specificirane kategorije subjekata, isključujući sve ostale potencijalne subjekte koji bi po sličnom pravnom osnovu ostali prikraćeni za pomoć drţave i na određen način diskriminirani. „Sluţbene novine FBiH,“ br. 31/14; „Sluţbeni list Republike Srbije,“ br. 36/2011 U Republici Srpskoj, materija zaštite korisnika finansijskih usluga regulirana je Zakonom o bankama Republike Srpske. xxi Odredba člana 3. stav 9. i 10. Zakona o zaštiti korisnika finansijskih usluga FBiH. xxii Ibid., odredba člana 8. st. 4. Naš zakonodavac ima jedan fleksibilniji pristup ovoj osjetljivoj materiji, uvaţavajući nepredvidljivu prirodu mehanizma novčanog trţišta. Moţemo reći da ovakvo postupanje jeste primjerenije, barem sa aspekta liberalistiĉkog diskursa savremenih privrednih okolnosti u kojima su subjekti privrednih aktivnosti ravnomjerno izloţeni rizicima svojih ekonomskih poduhvata. Ma koliko nepopularna bila praksa finansijskih institucija, ne smije se zanemariti činjenica da određene odnose jednostavno nije moguće staviti pod normativnu stegu ili unaprijed predvidjeti njihov ishod. Ono što se pokazalo kao neminovnost je da trţište, u svim svojim oblicima, efikasno funkcionira samo ako je ostvarena prava mjera regulacije u korekciji njegovih nesavršenosti. xxiii U postojećim okolnostima za pretpostaviti je da predlagači referiraju na EURIBOR, međubankarsku kamatnu stopu.Vid. odredbu ĉl. 8 st. 2. Zakona o zaštiti korisnika finansijskih usluga. xix xx xxiv �6. Literatura i izvori: Banović, M.&Vujnović-Gligorić B. (2011). Bankarska analiza predviđanja ponašanja klijenata. Časopis za ekonomiju i trţišne komunikacije/ Economy and Market Communication Review, 2/2011, 265-277 Cabotte J.T.&Moulin, A.M. (2002). The Legal Status of the Single Currency. Banque de France Bulletin Digest, 107/2002, 252-253 Delibašić, T. (1993). Monetarni nominalizam i revalorizacija- Naplata potraţivanja i protivpravna imovinska korist u uslovima inflacije, Sluţbeni glasnik, Beograd Dewar, J.C. (ed.) (2011). International Project Finance, Law and Practice, Oxford University Press Inc., New York Đeno, S.&Lukač, Z.& Šego, B. (2009). Usporedba kredita s valutnom klauzulom. Računovodstvo i financije, 1/2009, 4 Godišnji izvještaj Centralne banke Bosne i Hercegovine (2011) http://www.cbbh.ba/files/godisnji_izvjestaji/2011/GI_2011_hr.pdf, Klepić, D. (1994). Kombinovanje načela monetarnog nominalizma i indeksne klauzule. Izbor sudske prakse 5/1994, 56 Konjhodţić, H. et al. (2009). Monetarna znanost. Pravni fakultet Sveučilišta u Mostaru, Mostar Korhecz, T. (1985). Indeksna klauzula u funkciji zaštite ţivotnog standarda ugovorne stranke. Pravo:teorija i praksa, časopis udruţenja pravnika Vojvodine, 5/1985, 56 Krulj, V. (1973). Novac i novčane obaveze u unutrašnjem i meĎunarodnom pravu, Savremena administracija, Beograd Maljković, B. (1994). Nominalizam-valorizam i naknada štete. Sudska praksa- jugoslovenski stručnoinformativni časopis, 1-2/1994, 9 Meichsner, V. (1962). Pravni aspekt novca, Ekonomski fakultet Univerziteta u Skoplju, Skoplje Mathiez, A. preveo Ristić, Ţ. (1948). Francuska revolucija, Prosveta, Beograd Meichsner, V. (1980). Problem međunarodnih plaćanja, Informator, Zagreb Mišljenje Europske središnje banke od 18. rujna 2015. o konverziji kredita u švicarskim francima (2015) (CON/2015/32) https://www.ecb.europa.eu/ecb/legal/pdf/hr_con_2015_32_f__sign.pdf Murphy, A.E. (1997). John Law, Economic Theorist and Policy-Maker, Clarendon Press, Oxford Narodna banka Srbije (2008) Preporuka BAN u vezi sa ugovorom o kreditu sa valutnom klauzulom:http://www.nbs.rs/export/sites/default/internet/latinica/63/preporuke_skinuto/BAN-00308.pdf, Vizner, B. (1978). Komentar Zakona o obveznim (obligacionim) odnosima 2, Zagreb Vukmir, B. (2009). Ugovori o građenju i uslugama savjetodavnih inţenjera, RRIF Plus, Zagreb White, D. (1933). Fiat Money Inflation in France, How It Come, What It Brought and How It Edned, D. Appleton-Cenury Company, New York-London Zakon o rješavanju sukoba zakona sa propisima drugih zemalja u određenim odnosima „Sluţbeni list SFRJ,“ br. 43/082; 72/82-1645; „Sluţbeni list RBiH,“ br. 2/92-5; 13/94-189 �Zakon o zaštiti korisnika finansijskih usluga, „sluţbene novine FBiH,“ br. 31/14 Zakon o zaštiti korisnika finansijskih usluga, „Sluţbeni list Republike Srbije“, br. 36/11 �Author: Aida Mulalić, PhD Institution: Faculty of Law, University of Zenica E-mail: aidadz1@gmail.com FINANCIAL AND LAGAL ASPECTS ON HOW TO TREAT ISSUES OF THE USERS OF FINANCIAL SERVICES FOR PROTECTION OF MONETARY CLAIMS Abstract Issuess that users of financial services combat are extremely complex and potentially can cause a number of implications. In the positive legal and economic environment in Bosnia and Herzegovina those problems are more complicated. Therefore, those issues can be analyzed from different perspectives in order to achieve an acceptable solution furthermore if we take into account the underdeveloped financial market in Bosnia and Herzegovina, a specific arrangement in which operates its central monetary institution and the challenges regarding to harmonization with the EU acquis. In this paper we focus on the current provisions in the field of loan products placed in foreign currency and we want to show the inadequacy of recent legal solutions and emphasize the need for more comprehensive legal and economicpolicy measures. Keywords: financial market, financial services, monetary policy, currency � Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Extent The size or duration of the resource. 3179 Title A name given to the resource FINANSIJSKO-PRAVNI ASPEKTI TRETIRANJA PROBLEMA KORISNIKA FINANSIJSKIH USLUGA U KONTEKSTU ODRŽAVANJA KVANTUMA NOVČANIH POTRAŽIVANJA Author Author Mulalić, Aida Abstract A summary of the resource. Problemi korisnika finansijskih usluga su izuzetno kompleksni, te potencijalno mogu izazvati niz kauzalno povezanih implikacija kako privatno-pravne, tako i javno-pravne prirode. Posmatrani u kontekstu pozitivnog pravnog i privrednog ambijenta u Bosni i Hercegovini problemi se dodatno usložnjavaju. Stoga ih se treba analizirati iz različitih perspektiva kako bi se iznašla prihvatljiva rješenja. Ovo utoliko više ako se uzmu u obzir nedovoljno razvijeno finasijsko tržište u Bosni i Hercegovini, specifičan aranžman u kojem djeluje njena centralna monetarna institucija, te izazovi adaptiranja legislativnog sistema pravnim tekovinama Europske unije. Stoga se u radu fokusiramo na aktuelna normativna rješenja u domenu kreditnih proizvoda plasiranih u stranoj valuti, te želimo pokazati nedostatnost sporadičnih rješenja i naglasiti potrebu iznalaženja obuhvatnijih pravnih i ekonomsko-političkih mjera. Ključne riječi: finansijsko tržište, finansijske usluge, monetarna politika, valuta Publisher An entity responsible for making the resource available Centar za društvena istraživanja Internacionalnog Burč univerziteta Date A point or period of time associated with an event in the lifecycle of the resource 2015-12-16 Keywords Keywords. Article PeerReviewed Identifier An unambiguous reference to the resource within a given context ISSN 978-9958-834-50-9 K Law (General) https://omeka.ibu.edu.ba/files/original/6064bd3bd4b7d6c6cf732b87811065cc.docx 3b83a367c1f7e93ab52d528c9617ab9e https://omeka.ibu.edu.ba/files/original/c4e92cfeacb0de9d51da0d54caf963f9.pdf da4177b00cae982d2df27c82800818db PDF Text Text First Language Use in the Second Language Classroom Semir Teskeredžić & Minela Kerla University of Zenica/ Zenica, Bosnia and Herzegovina Keywords: First Language(L1), Second Language (L2), Second Language Acquisition (SLA), Classroom management, Affective filters, Language anxiety ABSTRACT The subject of the research is the use of first language in the process of learning second language in the second language classroom. In this research, two usages will be considered: teachers’ use, and students’ use. Several teaching methods are used by the teachers in the second language classroom: the holistic approach (including visual, auditory and kinesthetic learning style), the silent way, and total physical response. In this paper two methods will be considered: analytic and comparison. Implications of this research will be used in the classroom to improve classroom management making the input comprehensible and easy to follow, to lower affective filters allowing deeper and more profound input of the second language, to reduce the levels of language anxiety thus improving communication and comprehension of the second language, and also for psychological and pedagogical teaching improvements. � Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Extent The size or duration of the resource. 1963 Title A name given to the resource First Language Use in the Second Language Classroom Author Author TESKEREDZIC, Semir KERLA, Minela Abstract A summary of the resource. Keywords: First Language(L1), Second Language (L2), Second Language Acquisition (SLA), Classroom management, Affective filters, Language anxiety ABSTRACT The subject of the research is the use of first language in the process of learning second language in the second language classroom. In this research, two usages will be considered: teachers’ use, and students’ use. Several teaching methods are used by the teachers in the second language classroom: the holistic approach (including visual, auditory and kinesthetic learning style), the silent way, and total physical response. In this paper two methods will be considered: analytic and comparison. Implications of this research will be used in the classroom to improve classroom management making the input comprehensible and easy to follow, to lower affective filters allowing deeper and more profound input of the second language, to reduce the levels of language anxiety thus improving communication and comprehension of the second language, and also for psychological and pedagogical teaching improvements. Publisher An entity responsible for making the resource available IBU Publishing Date A point or period of time associated with an event in the lifecycle of the resource 2013-05-03 Keywords Keywords. Article PeerReviewed https://omeka.ibu.edu.ba/files/original/1665f16a37926391aed80748e23260d4.docx d76c36b71ff4eb26836665b8eaddbe24 https://omeka.ibu.edu.ba/files/original/3f074fd22c83465c635abb4e6fc2ba1d.pdf 2234dc1b6d547db88726c47d449549e1 PDF Text Text Fiscal Evasion and Corruption in Albania Risilda Djaka Epoka University Albania rdjala11@epoka.edu.al Armanda Keqi Epoka University Albania akeqi@epoka.edu.al Abstract: Corruption is an area of vulnerability in the international arena, which is clearly shown in several reports. People of Albania agree with this, because the corruption issue in Albania is the second most problematic one after unemployment. It affects the daily lives of ordinary people and it also has a huge impact on the public administration. Despite corruption, fiscal evasion, or as called tax evasion is among the categories of delicate issues that need attention. Tax evasion in Albania is attributed to institutions that are not able to collect adequate tax; also auditing level is very low. Distinction according to the development level of a country is crucial in order to understand better tax evasion, especially in Albania, that is a country in transition. Secondly, studying the matter of tax evasion gives the opportunity of studying the process of decision making that is related to the informal sector at an individual level. Albania was among the countries that were the most isolated, and the last country that entered democratic and economic reforms in the Eastern Europe, that’s why it may go through many obstacles. Also corruption keeps being one of the most problematic issues for every single country in the world. Social and cultural norms, economic development, institutional setting, political setting, are all matters that can be shaped in various ways, but corruption is an issue from which no country can be exempt. For the western Balkans countries, including here Albania, it is considered to be an area of vulnerability. Keywords: Corruption, tax, fiscal, evasion, impact, bribe, Albania. 124 �124 � Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Extent The size or duration of the resource. 2584 Title A name given to the resource Fiscal Evasion and Corruption in Albania Author Author DJAKA, Risilda KEQI, Armanda Abstract A summary of the resource. Corruption is an area of vulnerability in the international arena, which is clearly shown in several reports. People of Albania agree with this, because the corruption issue in Albania is the second most problematic one after unemployment. It affects the daily lives of ordinary people and it also has a huge impact on the public administration. Despite corruption, fiscal evasion, or as called tax evasion is among the categories of delicate issues that need attention. Tax evasion in Albania is attributed to institutions that are not able to collect adequate tax; also auditing level is very low. Distinction according to the development level of a country is crucial in order to understand better tax evasion, especially in Albania, that is a country in transition. Secondly, studying the matter of tax evasion gives the opportunity of studying the process of decision making that is related to the informal sector at an individual level. Albania was among the countries that were the most isolated, and the last country that entered democratic and economic reforms in the Eastern Europe, that’s why it may go through many obstacles. Also corruption keeps being one of the most problematic issues for every single country in the world. Social and cultural norms, economic development, institutional setting, political setting, are all matters that can be shaped in various ways, but corruption is an issue from which no country can be exempt. For the western Balkans countries, including here Albania, it is considered to be an area of vulnerability. Keywords: Corruption, tax, fiscal, evasion, impact, bribe, Albania. Publisher An entity responsible for making the resource available International Burch University Date A point or period of time associated with an event in the lifecycle of the resource 2014-04 Keywords Keywords. Article PeerReviewed Identifier An unambiguous reference to the resource within a given context ISSN 2303-4564 H Social Sciences (General) https://omeka.ibu.edu.ba/files/original/e85d667c9fa6742fe0ab3990fcd52f4b.pdf f5d9c1eeb35cb7c0960313940e365fc4 PDF Text Text 1. International Symposium on Sustainable Development, June 9-10 2009, Sarajevo Fiscal Framework of Sustainable Development Abdulkadir IŞIK Pamukkale University Abstract : The achievement of sustainable development—combining economic development, social development, and environmental protection—is a key challenge facing the international community. To this end, progress will beneeded in a number of different policy areas, with the right mix of policies varying from country to country. The purpose of this paper is to explore the relationships between fiscal policy—the range of the government’s taxing and spending decisions—and the economic, social, and environmental aspects of sustainable development.. Fiscal policy is central to the work of the all fiscal institutions, whose mandate is to promote international monetary cooperation, the balanced growth of international trade, exchange stability, and orderly exchange arrangements. Fulfilling this mandate is the insititutions primary contribution to sustainable development. Finaly this paper discussed fiscal activities of any economic system effect on the sustainable development. Keywords: Sustainable development, Fiscal Framework, and Institutions 1. The Terms of Sustainable Development The concept of sustainable development is about ensuring that the costs of one generation’s activities do not compromise the opportunities of future generations. It stresses the long term compatibility of the economic, social and environmental dimensions of human well-being. There are tax aspects of various significances in these three dimensions, some of which are under the primary responsibility of developing countries. Part of economic growth in some country is achieved through policies that allow and sometimes even encourage businesses and people not to think and act in a sustainable way. The current debate often centres on specific fiscal remedies to address sustainable development issues. From the perspective of developing counties, such measures would typically include the use of targeted taxes or tax incentives to encourage / discourage specific behaviour that affect economic, environmental or social sustainability, such as the adoption of environmental taxes; or tax incentives to attract Foreign Direct Investment; or tax incentives for continuing education. From the perspective of OECD countries, there is also a recurrent debate concerning the possible creation of new taxes in wealthy countries to collect funds that would be allocated to development projects in less developed countries (e.g. the Tobin tax) Sustainable development has three pillars—economic development, social development, and environmental protection.1 It entails “. . . balancing the economic, social, and environmental objectives of society . . . integrating them wherever possible through mutually supportive policies and practices and making trade-offs where (this) is not possible. This includes, in particular, taking into account the impact of present decisions on the options of future generations.”2 In September 2000, the member states of the United Nations underscored the importance of sustainable development by re-affirming the Millennium Development Goals (MDGs), a set of time-bound targets for improving human development along several important dimensions. Fiscal policy—the range of the government’s taxing and spending decisions—has important effects on all aspects of sustainable development: economic, social, and environmental. Fiscal policy affects sustainable development through its effects on growth, the environment, and human resource development. These effects operate at both a macroeconomic level and through the myriad ways in which governments’ tax and spending decisions affect incentives to work, spend, save, and invest. Fiscal policy is central to the work of the lot of fiscal institutions. 2. Revenue Composition and Growth An efficient and fair tax system is an important component of a growth strategy. While foreign aid can make an important contribution, the main source of finance for a country’s public expenditure must be its own tax revenue. This requires an effective tax administration and a tax policy that minimizes distortions to ensure that the best use is made of resources across the economy. To minimize distortions, tax systems should avoid excessive complexity, focusing on taxing a broad range of goods and services at relatively uniform rates. Income taxation also has a role to play, although weak administrative capacity limits revenue from this source in many 401 �1. International Symposium on Sustainable Development, June 9-10 2009, Sarajevo developing countries. Tax systems should also be sensitive to the possibility of market failure, not least in relation to the use of the environment and natural resources, and be administered in a manner that is transparent, impartial, and rules-based. 3. Expenditure Composition and Growth Allocating a higher share of public spending to physical and human capital formation can also promote growth. Investments in physical capital, such as roads and other infrastructure, can increase the economy’s productive capacity.23 Although the efficacy of such investment varies across projects and countries, recent research indicates that it may have a significant impact on economic growth. One study finds, for instance, that an increase in public investment in transportation and communication of percent of GDP is associated, on average, with an increase in annual per capita GDP growth of as much as 0.6 percentage points. A better-educated and healthier population contributes to growth. Beyond their direct effects on wellbeing, improvements in the education and health status of the population also increase worker productivity. Reductions in communicable diseases such as malaria have positive spillover effects on growth by promoting tourism and foreign direct investment. Indeed, it has been estimated that each 10 percent improvement in life expectancy at birth can raise the per capita GDP growth rate by 0.4 percentage points. Although it has been difficult for economic research to quantify the magnitude of the effect of education on growth, there is nonetheless evidence that it can be significant. Economic growth, in turn, has beneficial effects on education attainment and health status, contributing to a virtuous cycle of stronger education, health, and growth. Physical and human capital spending should also be protected during fiscal adjustments. Fiscal consolidations that protect capital expenditure tend to be both more sustainable and better for growth. This finding reinforces the notion that reorienting public expenditures away from less productive spending, such as untargeted subsidies, and toward more productive spending, such as investments in physical and human capital, facilitates growth in many countries in both the short and long runs. 4. Fiscal Policy for a Sustainable Environment In both developed and developing countries, fiscal policy has an important role to play in assuring sustainable use of natural resources and safe guarding the environment. This applies to both the tax and spending sides of the government’s budget. On the former, Taxes can be used to ensure that prices reflect the full social costs of producing goods and services. This type of pricing is most conducive for growth over the long term. The prices charged for petroleum products, for instance, need to reflect not only the cost of buying or selling them on the world market but also the social costs of the airborne pollution their usage can create and—in the absence of better-targeted instruments, such as toll charges—the congestion associated with motor vehicle use. 5. Sustainable Development and Governance Poor governance poses a number of obstacles to human development. Corruption results in the allocation of budgetary resources for unproductive programs and inefficiencies in public spending, which reduces the effectiveness of outlays on social and poverty-reducing programs in fostering social development. Poor governance results in budgetary allocations tilted in favor of less-productive investment projects and defense-related spending and against nonwage operations and maintenance expenditures, which reduces the quality and productivity of existing infrastructure. Corruption also reduces revenue and therefore the ability of the government to mobilize the resources needed to finance critical poverty-reducing programs. Corruption results in the poor capturing a smaller share of the benefits from public spending and, more generally, in higher poverty and income inequality. Good governance is essential to ensuring that higher social spending translates into better social outcomes. Even if spending is allocated to propoor activities, public funds must be used for their intended purposes to ensure that these outlays have a positive impact on human development. As such, a sound public expenditure management (PEM) system and transparency in government operations are pivotal not only for good macroeconomic management but also for good governance. Good governance is also essential for promoting environmental sustainability. Progress in alleviating environmental problems in developing countries has been slow, often owing to ill-defined property rights regimes, corruption, and a general lack of capacity and political will at the national level.53 The IMF’s general emphasis on improving the quality and transparency of spending decisions has improved the effectiveness of developing countries’ environmental and other spending. In Brazil, for example, federal spending on environmental protection programs grew during an IMF-supported program. 402 �1. International Symposium on Sustainable Development, June 9-10 2009, Sarajevo Conclusions The international financial institutions (IFIs) need to continue to provide financial support to countries pursuing sustainable growth and poverty-reduction strategies. In this regard, IFIs need to ensure that such support is used to promote strategies that are country-owned and developed with input from PSIA. In countries where the institutional capacity to develop and implement such strategies is weak, it is essential for IFIs to provide technical assistance, including in public expenditure management, Finally, international financial institutions should foster more extensive dialogue with member country governments and civil society to improve communication and better explain the rationale for their policies. Also National budgets are at the heart of the macroeconomic policy. They reflect choices that government have made, but more fundamentally they reflect the values and the claims made on resources by various social groups, i.e. the balance of power within a society. References Abed, George, Liam Ebrill, Sanjeev Gupta, Benedict Clements, Ronald McMorran, Anthony Pellechio, Jerald Schiff, and Marijn Verhoeven, 1998, Fiscal Reforms in Low-Income Countries: Experience Under IMF-Supported Programs, IMF Occasional Paper No. 160 (Washington: International Monetary Fund). Aghion, P. and Howitt, P., editors (1998). Endogenous Growth Theory. MIT Press, Cambridge, MA. Alesina, Alberto, and Roberto Perotti, 1996, “Fiscal Adjustments in OECD Countries: Composition and Macroeconomic Effects,” IMF Working Paper 96/70 (Washington: International Monetary Fund). Barbier, E. B. and Markandya, A. (1990). The Conditions for Achieving Environmentally Sustainable Development. European Economic Review, 34:659{669. Basar, T. and Olsder, G. (1982). Dynamic Noncooperative Game Theory. Academic Press, New York. Becker, G. S. (1991). A note on restaurant pricing and other examples of social inuences on price. Journal of Political Economy, 99:1109{1116. Becker, R. A. (1982). Intergenerational Equity: the Capital-Environment Trade- O_. Journal of Environmental Economics and Management, 9:165{185. Bell, F. and Leeworthy, V. (1990). Recreational Demand by Tourists for Saltwater Beach Days. Journal of Environmental Economics and Management, 18:189. Chichilnisky, G. (1997). What is Sustainable Development. Land Economics, 73:467{491. Sanjeev Gupta,Michael Keen, Benedict Clements, Kevin Fletcher Luiz de Mello Muthukumara Mani, Sustainable Development and Macro economic Policy Pamphlet Series No:54, IMF Washington, D.C.2002 Sarma, E.A.S. and Sarma, J. V. M.,Financing Government Expenditure for Sustainable Development in India. Available at SSRN: http://ssrn.com/abstract=321461 403 � Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Extent The size or duration of the resource. 282 Title A name given to the resource Fiscal Framework of Sustainable Development Author Author ISIK, Abdulkadir Abstract A summary of the resource. The achievement of sustainable development—combining economic development, social development, and environmental protection—is a key challenge facing the international community. To this end, progress will beneeded in a number of different policy areas, with the right mix of policies varying from country to country. The purpose of this paper is to explore the relationships between fiscal policy—the range of the government’s taxing and spending decisions—and the economic, social, and environmental aspects of sustainable development.. Fiscal policy is central to the work of the all fiscal institutions, whose mandate is to promote international monetary cooperation, the balanced growth of international trade, exchange stability, and orderly exchange arrangements. Fulfilling this mandate is the insititutions primary contribution to sustainable development. Finaly this paper discussed fiscal activities of any economic system effect on the sustainable development. Date A point or period of time associated with an event in the lifecycle of the resource 2009-06 Keywords Keywords. Conference or Workshop Item PeerReviewed HB Economic Theory