253 10 3494 https://omeka.ibu.edu.ba/files/original/bd227a14081cc89ee6cce456d54adb8f.pdf 7c8e2d3d8d05722e57400052fb19b91a PDF Text Text Journal of Economic and Social Studies Living and working in retirement, a new paradigm in the US exploring retirees attitudes and beliefs toward working Raymond U. Ogums Associate Director, Investment Operations 13 Christopher Drive Enfield, CT 06082, U.S.A. Email: rogums@babsoncapital.com Abstract This paper investigates the problem that an increasing number of people in the United States are financially unprepared for retirement, leading to a rise in post-retirement employment. The purpose of the study was to explore attitudes and beliefs toward continued or actual employment behaviors among a set of retirees who have chosen to continue working after reaching retirement age. The grounded theory study design was applied in the efforts to explain, at a broad conceptual level, the reasons older workers have chosen to continue working after reaching retirement age. Data gathered from 25 workers age 65 and older were analyzed. The analysis revealed five work motivators, five inhibitors of saving, six methods of saving, four lifestyle accommodations, and four work attitudes. Implications of the research were presented. The results suggest the new retirement funding structures have not been favorable to saving. Suggestions for a more positive retirement outlook are offered. KEYWORDS Retirement, Retirement Living, Post-Retirement Employment, Retirement Funding, Defined Benefit Pension Plans, Defined Contribution Pension Plans, Social Security Benefits ARTICLE HISTORY Submitted: 17 February 2012 Resubmitted: 27 March 2012 Resubmitted: 5 April 2012 Accepted: 10 April 2012 JEL Codes: D14, D19, Z00 Volume 2 Number 1 Spring 2012 21 �Raymond U. Ogums Introduction The post-1960s era was the era of increasing prosperity and conservative retirement programs in American society, which allowed older workers to retire on time. Recently, the major sources supporting these programs, Social Security, defined-benefit plans, and savings, have changed significantly. Specifically, Social Security faces a financial shortage by the middle of 2032 (Cahill, Giandrea and Quinn 2006). This financial shortage condition will result in reduced benefits, lower rates of replacement, later traditional or early retirement age, including eligibility for benefits and increases in social security taxes and other government revenues. Defined-contribution (DC) plans like the 401ks that carry substantial investment risks are fast replacing the traditional pension plans; and the U.S. National Income and Product Accounts recently reported savings have decreased to the lowest levels since the Great Depression of the 1930s (Cahill et al.). As these income sources continue to face reductions and create under funding of retirement, many older workers in America will be faced with two choices: working for more years or enduring a lower standard of living during retirement (Cahill et al.). While a portion of retirees have always chosen to remain in the labor market for a variety of reasons, the changing economics of retirement funding threaten to change both the proportion of working retirees, and the mix of factors that motivate them to work. The existence of retirement underfunding, resulting primarily from the changing structures of the retirement funding vehicles and extravagant lifestyle during the accumulation years by many, and the extent to which the underfunding affects retirees is fast becoming a problem (Cahill et al. 2006; Robertson 2006). In general, the U.S. retirement accounts savings are expected to experience a shortage of about $400 billion between the years 2020 and 2030 (Marquez 2006). Robertson (2006) reported American spending habits and lack of financial planning the primary reasons for this shortage; suggesting baby boomers who are yet to retire will have to make a dramatic change in their savings, spending, and investing habits if they wish to enjoy their retirement. According to U.S. Department of Labor, over 70% of all workers must now rely on their 401(k) rather than a pension plan (Wasik 2004). “As 401(k)s have grown from covering 7.5 million workers in 1984 to more than 42 million today, its counterpart—the guaranteed defined benefit pension—has gone from covering more than half the workforce to only 35 percent” (Wasik 2004, p 6). The continued shift away from guaranteed defined benefit pension toward 401(k) plans has precluded some Americans who could afford to retire from doing so (Baker 2007). Persistent erosion of employer-sponsored health benefits is also likely to 22 Journal of Economic and Social Studies �Living and working in retirement, a new paradigm in the US exploring retirees attitudes and beliefs toward working continue (Mermin, Johnson and Murphy 2006); adding to this problem; and creating a condition for lifestyle adjustment by retirees. Continuing to work has been one method used by people to address this condition (Utkus 2006); but the erosion of Social Security and health benefits have resulted in a complexity of factors that cause retirees to work. These factors undermine how retirees feel about working; further complicating the problem this study researched: that an increasing number of people in the United States are financially unprepared for retirement; resulting primarily from the changing structures of the retirement funding vehicles and extravagant lifestyle during the accumulation or working years. As a result, this study’s purpose was to explore attitudes and beliefs toward continued and actual employment behavior among a set of retirees in Hartford County, Connecticut, who have chosen to continue working after reaching retirement age. For purpose of the study, age 65 was designated the retirement age. Literature Review Retirement has been redefined, particularly as the first phase of the baby boom generation (those born in 1946) has reached traditional retirement age (Cahill et al. 2006). Fundamental changes in retirement funding sources, improved health among older people, and increased longevity have rendered many Americans unable to finance over 25 years of leisure in later years without reducing their living standards by more than 40%. Permanent or one-time retirement in America may have come to an end, as indicated by the trend toward early retirement among older men (Cahill et al. 2006). Historical overview Working to earn money is widely recognized as an important aspect of living in many societies (Herzberg, 1966). As people approach retirement, they may be motivated by other factors to remain employed. Maslow (1954) noted these factors to include belongingness, fulfillment and meaning, happiness, and leisure. According to Maslow, the reason is that satisfying any one need is consequential to that need Volume 2 Number 1 Spring 2012 23 �Raymond U. Ogums becoming submerged and a new need emerging as the higher need. Recently, the changing structure of the retirement funding vehicles has resulted in seniors continuing to work, and a different trend toward retirement (Utkus 2006). During the 20th century, the average retirement age declined dramatically among men: from 74 years in 1910 to 70 years in 1950, 65 years in 1970, and 62 years in 1985 (Cahill et al. 2006). In 1880, over 75% of 64-year-old men worked; 65% worked in 1900; 47% had jobs in 1950; and in 1998, less than 20% of 64-year-old were working (Gustman and Steinmeier 2009). According to Smith (2001), the shift in average retirement age was immediately preceded by the Great Depression and the advent of Social Security; in 1930, 58% of 64-year-old men were employed. The decline predominantly resulted from increased prosperity during the preceding century along with growth in public and private retirement programs. Increased productivity and real wages resulted in workers spending a portion of their wealth on leisure and early retirement. Since the mid-1980s, the average retirement age for American men has stabilized because of changes in the retirement landscape. These changes included the end of mandatory retirement, the displacement of traditional defined-benefit (DB) pension plans by defined-contribution (DC) plans, increased longevity, improvements in general health, and the reduction of rigorous physical requirements in many jobs (Cahill et al. 2006). All these changes have increased incentives for older Americans to remain in the labor force. Prior to President Franklin Roosevelt’s establishment of Social Security in 1935, many Americans participated in the workforce until they could no longer work (Gallagher 2004). The reason was that private employer-funded pension plans were rare before the 1930s. Although employer-sponsored retirement plans date back to the late 19th century (Libecap 2004), during the preindustrial era, few people relied on employers or the government in saving for their retirement. The elderly continued to work as long as they could. As people’s strength or acuity declined, they took on less taxing jobs; and they stopped working only when they were physically unable to continue to work (Munnell and Drucker 2006). Before the 19th century, three of four elderly Americans still worked and often owned property that provided an income (Munnell and Drucker 2006). Some workers accumulated wealth through two natural resources, farms and handicraft businesses, which could be sold or leased to fund retirement needs. Fortunate elderly relied on their children or the local community for economic support (Munnell and Drucker 2006). Most government employees did not need to worry about funding their retirement, 24 Journal of Economic and Social Studies �Living and working in retirement, a new paradigm in the US exploring retirees attitudes and beliefs toward working because as with military pensions, public-sector pension plans date back much further in history (Libecap 2004). Between the era of the Roman Empire and the beginning of the early modern states, rulers and legislatures often provided pensions for public administrators. Prior to the 19th century, and with the exception of the military, plan offerings were specific to individual cases, because few retirement systems existed with well-defined rules for qualification and contribution (Libecap 2004). In particular, military pensions were useful for attracting, retaining, and motivating military personnel. Pensions for retired and disabled military personnel existed before the signing of the U.S. Constitution (Libecap 2004). By 1930, public-sector pension coverage became relatively widespread in the United States; and all federal workers were covered by pension plans. State and local government employees also received pension coverage. In contrast, pension coverage for private employees remained relatively low in the first three decades of the 20th century: Only 10% to 12% of the labor force had pension coverage (Libecap 2004). By the late 1930s, the American labor movement adopted the use of President Roosevelt’s Social Security program as a strategy for winning contracts, including private, employer-funded pensions for unionized workers. Those pension contracts, like Social Security, specified retirees’ benefits at the onset and became generalized for Americans after World War II (Gallagher 2004). Impact of the New Retirement Landscape Up until the 1890s, the labor force participation rate (LFPR) in the United States, which is calculated as the percentage of the male population age 65 and older who are employed or unemployed and looking for work, remained relatively high (Lee 1998). The LFPR aligned with the incentives that had been recently created to motivate workers to remain in the labor force. In 1948, the LFPR for older American males was 70%. By 1993, the LFPR had dropped to 38%, indicating rising wealth allowed older males to retire earlier. Consequently, the average retirement age in America fell to 64 in 1993, from 71 in 1960 (“Older Americans” 2005). Since the postwar period, the U.S. LFPR for people 65 and older has risen modestly but steadily, indicating people continued to work after they have reached retirement age particularly as the baby boom generation began to enter prime working age (“Labor Force” 2007). In contrast, the Volume 2 Number 1 Spring 2012 25 �Raymond U. Ogums youngest group’s LFPR dropped about 5%; in particular, the LFPR for ages 24 to 54 has fallen since the recession in 2000 (“Older Americans” 2005). The rise in the older group’s LFPR resulted primarily due to few Americans having the advantage that the necessity of saving for retirement has been burned into their subconscious by society and circumstance; so that even in unfavorable economic times, or with negative returns in the financial markets, majority of the few continue to make established contributions into their retirement accounts. Such attitude toward saving results when retirement contributions are made with forgotten money, which is money that is not relied upon for daily needs. American seniors who failed to follow the same planning have experienced financial shortages in retirement as they have been forced to rely on Social Security benefits to pay for living expenses (Katz 2003). In December 2001, the Social Security Administration reported the average Social Security retirement benefits payment was $874 per month; and 45.9 million people were paid benefits. Alternate sources, like working, are necessary for the elderly to pay for life’s necessities, particularly as costs of living and inflation rise faster than their Social Security benefits (Katz 2003). Methodology Qualitative, grounded theory research methods were used to explore the attitudes and beliefs toward continued and actual employment behavior among a set of retirees in Hartford County, Connecticut. The process involved development of comprehensive theoretical understanding from the perspectives of the social actors engaged in the phenomenon. Such development and understanding require application of qualitative, grounded theory research methods because they aim to develop a theory, as opposed to test one already in existence (Neuman 2005). Secondly, applying an emergent-grounded theory research design aided the discovery of themes shared by the study participants, as addressed in the research questions. The rationale for choosing qualitative grounded theory method for this study stems from the need to identify and explain the events or occurrences in a social setting, and focus on the true reality of the situation or interaction under investigation (Corbin and Strauss 1998). Grounded theory method served to generate a theory in this study because existing theories did not appropriately address the study’s research problem (Glaser and Strauss 1967). Furthermore, grounding a theory in the 26 Journal of Economic and Social Studies �Living and working in retirement, a new paradigm in the US exploring retirees attitudes and beliefs toward working research data provided better explanation than a borrowed theory because it was fitted for the situation, practical and sensitive to participants in the setting, and accounted for complexities that existed in the process (Creswell 2004). These qualities of the grounded theory method contrast other research methodologies where the purpose is either to test a hypothesis or answer a question at the beginning of the research process. Research Questions The research questions presented in this section are qualitative in nature, and were typically used to narrow the purpose statement into specific questions sought to be answered in the study. Unlike purpose statements, which are characterized by a single statement, researchers often apply multiple research questions to fully explore a topic (Creswell 2004). One justification in case studies is the use of exploratorytype questions. Exploratory questions of how, what, and why are usually concerned with examining a contemporary phenomenon the researcher cannot influence (Yin 2008). The following qualitative research questions were used to complete this study: 1. What factors lead retirees to choose to work or not work after retirement? 2. What factors prevented retirees from accumulating what they believe to be sufficient resources for retirement, and what are the relative frequencies and perceived importance of those factors? 3. What accommodations in lifestyle have retirees had to make as a result of perceived inadequacies in their retirement funding sources? 4. How do retirees feel about the nature and amount of post-retirement employment in which they engage? In the context of this study, “sufficient resources” are those that enable maintenance of pre-retirement or pre-planned lifestyle during retirement. Volume 2 Number 1 Spring 2012 27 �Raymond U. Ogums Population and Sampling Frame The general population of interest for the study comprised all individuals who continue to remain in the labor market after reaching retirement age. The study focused specifically on an accessible set of such individuals who happen to reside in Hartford County, Connecticut. A purposive sample of individuals who have reached retirement age but continue to work was drawn from four Senior Centers in Hartford County, Connecticut. Purposive sampling is a qualitative procedure that involves intentional selection of individuals and sites for the purpose of learning and understanding the central phenomenon (Creswell 2004). The sampling procedure for the study continued until saturation was reached, but was expected to range between 20 and 30. Based on Creswell (2007), Wicks (2004), and other researchers, sample size for qualitative grounded theory studies is typically less than 35. In order to determine if saturation had been reached, the interview data were analyzed as they were collected rather than at the end of the collection process; saturation was reached with a sample of 25.1 The sampling strategy for the study conducted was theoretical. In grounded theory approach, theoretical sampling means that the researcher draws sample from a list of members of the population of study—the sampling frame (Creswell 2004). The sampling frame for the study conducted was generated from a list of workers age 65 and older at four Senior Centers in Bloomfield Connecticut, Enfield Connecticut, and Hartford Connecticut. Data and Analysis The study participants consisted of a pilot group of five, and 25 workers age 65 and older. The two groups are described below. The pilot study participants provided feedback about the interview questions for effectiveness; no comparisons were made between the pilot group and the research participants. The pilot participants comprised 3 females and two males. Of the five pilot participants, four (80%) returned to work after entering retirement, and one (20%) had never retired. Table 1 provides the demographics of the pilot study participants. 28 Journal of Economic and Social Studies �Living and working in retirement, a new paradigm in the US exploring retirees attitudes and beliefs toward working Table 1. Pilot Study Participant Demographics 2010 1 Gender Female Female Female Male Male 2 Age 66 66 70 65 67 3 Retired Retired prior to current employment Retired prior to current employment Did not retire prior to current employment Retired prior to current employment Retired prior to current employment 4 Status Currently employed Currently employed Currently employed Currently employed Currently employed Source: Author’s analysis of the pilot study population. Summary of Pilot Study Feedback All five pilot study participants affirmed their understanding of the interview questions, and agreed that the information contained in the survey questionnaire provided opportunities to explore attitudes and beliefs about post-retirement employment. Participants also expressed they were comfortable with organization and flow of the interview questions. Summary of Study Demographics The final study demographics collected and tracked included participant gender, age, whether the participant officially retired or not, job title before retirement, year returned to work, current job title, and length of time between retirement and current employment. The only requirement for participation was that participants be 65 or older, and employed. Table 2 presents the demographic information of the study participants. Of the 25 participants interviewed, five (20%) had never retired, three (12%) immediately went back to work after they retired, eight (32%) returned to work in less than one year after their retirement, six (24%) went back to work in under three years, and three (12%) returned to work between five and 13 years following their retirement. Volume 2 Number 1 Spring 2012 29 �Raymond U. Ogums Table 2. Study Participant Demographics 2010 1 2 Gender Age Female Female Female Female Female Female Female Female Female Male Male Male Male Male Male Female Male Female Female Female Female Male Male Male Male 69 74 69 81 70 73 77 75 70 65 74 74 68 70 66 73 69 80 70 66 77 71 70 71 67 3 Officially Retired/Job Title 4 Year Returned To Work No NA Administrative Assistant 2005 Cook for State Prison 2004 Nutrition Manager 1980 Handicapped Kids Caring 1992 Payroll Supervisor 1991 High School Teacher 2001 Administrative Assistant 1996 Check Clearing Supervisor 2002 Grade School Teacher 2001 Truck Mechanist 1990 Vice President Imaging/Graphics 1998 Construction Equipment Operator NA Loan Officer NA Jewelry Store Owner NA Toys Manager NA President, Auto Repair Shop NA Machine Operator 1992 Retail Manager 2002 Day Care Provider NA Elevator Operator 1998 Investment Consultant 1989 MBTA Instructor 1996 Train Supervisor 2002 Psychology Professor 2009 5 6 Job Title Years Between Jobs Cashier Clerk 0.5 Senior Center Volunteer 5.0 After School Program Teacher .05 Senior Center Volunteer 0.5 Senior Center Volunteer 0.5 Senior Center Volunteer 0.5 Senior Center Volunteer 2.0 Administrative Clerk 13.0 Senior Center Volunteer 3.0 Senior Citizens Supervisor 8.0 Bowling Alley Manager 0.0 Co-owner Graphics Business 0.0 Construction Equipment Operator 0.0 Loan Officer 0.0 Real Estate Agent 0.0 Grocery Clerk 0.0 Administrator Auto Repair Shop 0.0 Grocery Cashier 0.0 Retail Cashier 0.5 Day Care Provider 0.0 Telephone Operator 1.0 Investment Software Developer 0.5 School Bus Driver 1.0 Supervisor Trolley Museum 1.0 Psychology Professor 0.5 Source: Author’s analysis of the study population Themes As suggested by Neuman (2005), and other research methodology authors, the analysis was done to identify emerging themes that aligned with the experiences lived by the study participants, and focused in five areas: (a) work motivators; (b) inhibitors of saving; (c) method of saving; (d) lifestyle accommodation; and (e) work attitude. The first pass through of the coding process (open coding) produced 625 distinct 30 Journal of Economic and Social Studies �Living and working in retirement, a new paradigm in the US exploring retirees attitudes and beliefs toward working codes for the 25 interviews. Selective coding was used to sort the codes into five categories: work motivators, inhibitors of saving, method of saving, lifestyle accommodation, and work attitudes in development of the theory. Figure 1 presents the procedural analysis for generating the theory. Figure 1. Procedural Analysis for Generating the Theory Theory Generation Open Coding Researcher Participants Literature Validity & Reliability Axial Coding Conditional / Dimensional Matrix Selective Coding Source: Author’s analysis of the theory generation. Figure 2 depicts the 24 themes that emerged in each of the five categories. The themes under each category emerged through analysis of interviews conducted in small groups. The data were transcribed and coded after interviewing each group to discover what new themes were emerging. No new theme emerged after 22 interviews, but the process was extended to 25 interviews to ensure non-emergent of new themes. Volume 2 Number 1 Spring 2012 31 �Raymond U. Ogums Figure 2. Predominant Codes Arranged by Major Areas of Focus Work Motivators Income and savings Healthcare benefits Decreasing benefits Mortgage and household obligations Psychological benefits Spousal issues Loss of job Inhibitors of Saving Children’s education and family Lavish spending Home repairs Method of Saving DB plan and Social Security DC (401k) plan and Social Security Social Security alone Savings, CDs, bonds, or IRA Individual pension plan Other investments Lifestyle Accommodation Maintain planned lifestyle Maintain lifestyle prior to retirement Lifestyle matches funding levels Need to work Work Attitude Enjoy working Work aligns with planning Planned to Work Need or desire to work different from expectations Source: Author’s presentation of the study themes. The category work motivators produced five themes: income and savings with 19 responses, healthcare benefits with 13 responses, decreasing benefits with 14 responses, mortgage and household obligations with three responses, and psychological benefits, such as happiness, healthy lifestyles, leisure and fulfillment, and meaning with 18 responses. Five themes emerged within the inhibitors of saving category: lavish spending generated five responses, children’s education/family produced 16 32 Journal of Economic and Social Studies �Living and working in retirement, a new paradigm in the US exploring retirees attitudes and beliefs toward working responses, home repairs had 14 responses, spousal issues—divorced/separated generated two responses, while loss of job had no response. The method of saving category produced six themes: DB plan and social security with eight responses, DC (401k) plan and social security with 10 responses, social security alone with seven responses, savings/CDs/bonds/IRAs with nine responses, individual pension plan with six responses, and other investments with six responses. The lifestyle accommodation category generated four themes: maintain planned lifestyle had nine responses, maintain lifestyle prior to retirement had 11 responses, lifestyle matches funding level produced 16 responses, and need to work had 18 responses. Lastly, four themes emerged within the work attitude category, namely, enjoy working with 16 responses, work aligns with needs with 14 responses, planned to work with 14 responses, and desire or need to work not to expectations with eight responses. Table 3 provides participants’ responses by themes under each category. Table 3. Participants’ Responses by Themes under Each Category 1 2 Category 1 Themes referenced Work Motivators under each category / by number of number of responses responses Income and saving Healthcare benefits Decreasing benefits 19 13 14 Mortgage and household obligations 3 Psychological benefits Lavish spending 3 4 5 6 Category 2 Inhibitors of Saving / number of responses Category 3 Method of Saving / number of responses Category 4 Lifestyle Accommodation/ number of responses Category 5 Work Attitude / number of responses 18 5 Children’s education and family 16 Home repairs Spousal issues Loss of job 14 2 0 DB Plan and Social Security 8 DC (401k) plan and Social Security 10 Volume 2 Number 1 Spring 2012 33 �Raymond U. Ogums 1 2 Category 1 Themes referenced Work Motivators under each category / by number of number of responses responses 3 4 5 6 Category 2 Inhibitors of Saving / number of responses Category 3 Method of Saving / number of responses Category 4 Lifestyle Accommodation/ number of responses Category 5 Work Attitude / number of responses Social Security alone 7 Savings, CDs, bonds, or IRA 9 Individual pension plan 6 Other investments 6 Maintain planned lifestyle 9 Maintain lifestyle prior to retirement 11 Lifestyle matches funding levels 16 Need to work Enjoy working 18 16 Work aligns with planning 14 Planned to work 14 Need or desire to work different from expectations 8 Source: Author’s analysis of participants’ responses. 34 Journal of Economic and Social Studies �Living and working in retirement, a new paradigm in the US exploring retirees attitudes and beliefs toward working Findings and Interpretations The content analysis involved identification of important structures of the properties of textual and audio-recorded information communicated, that were later organized according to the themes identified in the categories, in alignment with the research questions. The following sub-sections have been organized based on the research questions (RQs), and the sequence of the areas of focus (categories). RQ1—What Factors Lead Retirees to Choose to Work or Not Work After Retirement? In the category work motivators, the major themes of income and saving, healthcare benefits, decreasing benefits, mortgage and household obligations, and psychological benefits were reviewed with the view of evolving a theory of post-retirement employment. The data clearly revealed that income and savings, theme one, rank highly among the reasons seniors commit to various employment engagements after the age of 65. A major emphasis was the changing economics of the retirement funding structures, such as from the defined benefits (DB) to the defined contribution (DC) model. Some participants blamed the underfunding of their retirement accounts and their financial shortfalls to the introduction of, or switch to, the DC structure by their employers. Participants commented on how the devaluing of their retirement accounts, resulting from of the relationship of the DC model to the stock markets, has contributed to their decisions to work. The economic crisis that began in 2008 and spending habits during the accumulation years were also emphasized by participants. The data for themes two and three, health care benefits and decreasing benefits, are consistent with study finding that health insurance is among the major reasons Americans continue to work after reaching retirement age (Block 2008). Between 52% (13) and 56% (14) of the participants interviewed reported they are working for health care benefits or to supplement health care costs, in addition to other reasons. Other studies also reported that many older Americans extend their working years in order to continue receiving employer-offered benefits, such as dental, health, disability, and life insurance (Leyes 2008; Mermin et al. 2006). A new theme emerged in the data: in addition to receiving healthcare and life insurance benefits, rising Medicare costs and deductibles, and decreasing benefits are forcing even more retirees back to work. Theme four, mortgage and household obligations, was also affirmed as a work motivator. Participants commented on real- Volume 2 Number 1 Spring 2012 35 �Raymond U. Ogums izing later in their lives they could have saved more for retirement if they had less mortgage obligations and household expenses. Stein (2007) found that exorbitant mortgage payments and other household obligations distort the wealth accumulation process during the working years. The data coding process also produced a new theme: obtaining a mortgage to purchase a home later in life is causing some Americans to retire with substantial amounts of debt, constraining their cash flow and lifestyle options during retirement. Participants referred to the inability to obtain a mortgage to purchase a house until late in life, rendering certain obligations, like mortgage payments, which would be part of life during the accumulations years, a necessity in retirement. This new theme is centered on the American dream of owning one’s home. Consistent with Hass (2007), a majority of the participants (18) referred to psychological needs, such as happiness, healthy lifestyle, leisure and fulfillment, or meaning as work motivators, in addition to referencing other work motivators. RQ2—What Factors Prevented Retirees from Accumulating What They Believe to Be Sufficient Resources for Retirement and What Are The Relative Frequencies and Perceived Importance of Those Factors? Five themes constituted the category inhibitors of saving: lavish spending, children’s education and family, home repairs, spousal issues, and loss of job. Discussions about the method of saving category with five themes are also presented. Participants were clear about the impact of extravagant lifestyle as unfavorable to savings, while emphasizing indiscriminate spending, theme one, a hindrance to wealth accumulation during the working years. Paying for children’s education and caring for one’s family members, theme two, and theme three—spending to renovate and upgrade homes during working years were also noted by participants to negatively impact savings. Additionally, spousal issues, such as loss of spouse, through death, divorce, or separation, theme four, were reported to inhibit savings, but no reference was made about theme five—job loss in this study under the category inhibitors of saving. Six predominant methods of saving for retirement (themes) exist for people during their working years: DB plan and Social Security; DC plan and Social Security; Social Security alone; Savings, CDs, bonds, or IRA; Pension fund; and other investments. Of the six methods, DC plan, DB plan, and Social Security were mostly relied upon by participants to fund their retirement. The other methods of saving were used as supplements. On the surface, the DB plan appears to be preferred to the DC plan. Participants criticized the voluntary nature of the DC plan and its 36 Journal of Economic and Social Studies �Living and working in retirement, a new paradigm in the US exploring retirees attitudes and beliefs toward working relationship with the stock markets, while commending the DB plan for its guaranteed payments. Nevertheless, more of the participants relied on the DC model to fund their retirement; reflecting statement by Wasik (2008) that the guaranteed defined benefit plan has gone from covering more than half the workforce to only 35 percent. Participants, who saved with the DB plan and social security, theme one, were very appreciative of its guaranteed payment nature. A larger proportion of the participants, 40%, as opposed to 32% with the DB plan model, relied upon the DC or 401k plans and social security, theme two, to fund their retirement. The finding is consistent with report by the U.S. Department of Labor that the DC plans have grown from covering 7.5 million workers in 1984 to more than 42 million in 2004, while the guaranteed defined benefit, or the DB, plan has gone from covering more than half the workforce to less than 35% (Wasik 2004). Participants who had to depend on Social Security, theme three, as the primary source of saving for their retirement, blamed the condition on their employers for not offering retirement plans of any sort. Mermin, Johnson, and Murphy (2006) found that some employers did not have DC plans, such as 401ks and 403bs, because they are not required by law to offer them. Participants commented that reliance on social security alone has led to the employment of alternate sources, such as working, to pay for life’s necessities because social security benefits are not enough, especially when considering out-of-pocket health care expenses. In addition to employer-sponsored retirement savings plans and social security described above, participants noted they used saving accounts, certificate of deposits (CDs), bonds, and contributions to individual retirement accounts (IRAs)—theme four to save for retirement. In many cases, participants used these retirement funding vehicles to supplement their DB plans, DC plans, and Social Security. Some remarked they often fell short keeping up with monetary contribution into these retirement funding vehicles, particularly during difficult financial times. Others commented that trying to save with CDs or savings account required high levels of discipline which they often lacked when their families needed additional funds to pay for non-daily needs, such as a new refrigerator, stove, car, and so on. Individual pension plans—IPPs, theme five, were also used to save for retirement, but mainly as an alternative to employersponsored plans, and to supplement social security. Even after transferring to new jobs that offered 401k plans, few participants left funds to grow in pension accounts established at their prior employments, but the financial crisis that began in 2008 raised concerns about deficits in those accounts. There were complaints about Volume 2 Number 1 Spring 2012 37 �Raymond U. Ogums reduced savings in the pension plan structures as a result of limits placed on the amount of earnings contribution so that participants can earn tax breaks at the Internal Revenue Service (IRS). Participants also used other investment vehicles, such as purchasing stocks, real estate, life insurance, gold, and private business ventures— theme six to save for their retirement. These investment vehicles were reported to have lost values rapidly following the economic and financial events which began in 2008. Working was emphasized as the alternative for alleviating perceived reduction and cuts in the pension accounts. RQ3— What Accommodations in Lifestyle Have Retirees Had to Make as a Result of Perceived Inadequacies in Their Retirement Funding Sources? Four themes were presented for the category lifestyle accommodation: maintain planned lifestyle, maintain lifestyles prior to retirement, lifestyle matches funding levels, and need to work. These themes were extracted from responses to questions about lifestyle adjustments, in relation to funding levels, in retirement. Nine of the participants reported they were able to maintain the lifestyle they planned in retirement—theme one, but five of the nine participants noted they could only partially maintain the lifestyle they planned in retirement. The five participants remarked that unexpected decreases in their income levels created a condition in which they have to work to sustain their income; preventing them to fully achieve the lifestyle they planned in retirement. A majority of the participants could not maintain the lifestyle they planned in retirement due to lack of proper guidance in structuring their retirement planning. Eleven of the 25 participants made references to being able to maintain the same lifestyles as they enjoyed prior to retirement— theme two. Among the 11 are seven who depended on social security, supplemented by working, to fund their retirement. The seven participants reported they had not planned any lifestyle adjustments, but noted that working allowed them to do the type of things they enjoy doing. Grewal, Nazroo, Bajekal, Blane, and Lewis (2004) found that an increasing number of retirees need paid work to improve their pension packages, and, or maintain their pre-retirement living standards. A majority of the participants, including those who have achieved their planned lifestyles, reported living lifestyles that matched their funding levels, theme three. In general, there were remarks about adjusting living standards to suit funding levels, or lifestyle in retirement being a function of funding level. Participants highly praised paid work for enabling them improve their retirement incomes, achieve planned lifestyles, or maintain pre-retirement lifestyles. Achievement and maintenance of lifestyle as mo- 38 Journal of Economic and Social Studies �Living and working in retirement, a new paradigm in the US exploring retirees attitudes and beliefs toward working tivating factors for post-retirement employment were also emphasized. There were many references to working as a necessity. On the surface, participants noted working as a way to mitigate shortages resulting from hard economic and financial times, extend retirement savings, and improve quality of life in retirement. Researchers identified having wealth and income as one of the influences of quality of life in retirement (Grewal, Nazroo, Bajekal, Blane and Lewis 2004).2 RQ4—How Do Retirees Feel About the Nature and Amount of Post-Retirement Employment in which They Engage? Four themes constituted the category of work attitude. The themes were the outcome of responses to the questions used to explore how retirees feel about the nature and amount of post-retirement employment in which they engage. A summary of the outcomes provide further clarity. A majority of the participants expressed liking working in retirement, theme one; some emphasizing the various work motivators described above. Several comments indicated working for income and savings, leisure or meaning and fulfillment, or some other combination creates a source for enjoyment and mental engagement, and adds to retirement asset base. Participants depending on social security, supplemented by working, to fund their retirement reported they did not like working in retirement. Fourteen participants reported their work aligned with their retirement plan—theme two. A majority noted that working for additional funding, leisure, meaning, and fulfillment were part of their retirement planning; some remarked engaging in their type of work was pre-planned as well. Participants reported being aware prior to retiring that they needed to supplement their incomes doing things they like to do, such as, having an engagement that produced happiness, or making meaningful contributions to the society. Haas (2007) reported that even those in our society who are considered to be better positioned financially perceive continuing to work in retirement as paying substantial dividend. In general, participants noted that their plan to work, theme three, was inspired by the possibility of shortages in their retirement benefits due to general economic conditions, the extent of social security benefits, the availability of health insurance, and the quality and design of employer-sponsored retirement plans. Working for fulfillment and meaning was also reported as part of planning. Working in retirement was perceived as a way to broadened one’s horizon and enrich life through mingling and interacting with people. Eight of those interviewed referenced their need or desire to work has been different from their expectations—theme four, based on work schedules, work structures, need for additional funding, and nature of work. Volume 2 Number 1 Spring 2012 39 �Raymond U. Ogums Analysis of Early Recollections Six participants were able to recall specific memories about the stage in their lives they began to realize their desire and need to work when they retire. Table 4 presents the themes of early recollections—individual beliefs of each participant. Participant 1’s individual beliefs seem to be centered on loss of spouse, the relationship between money and the importance of working. The themes seem to reflect beliefs that losing one’s spouse during the accumulation years lead to distortion in the resource accumulation process, the need for employment in later years, and working as part of retirement planning. Participant 10’s individual beliefs seem that being in a field of work that a person likes can encourage extension of one’s working years, and that can be realized earlier, than later, in that person’s career. Participant 12’s individual beliefs seem about planning retirement engagement, the level of funding, and the relationships of funding level to retirement engagement. Participant 14’s individual beliefs seem that family obligations determine the desire or need to work in retirement. Table 4. Themes of Early Memory Reflection 1 Participant 1 2 Themes of Early Memory Reflection Right after I lost my husband 10 years ago I went into the surviving mode. I knew I will be working through my retirement. Money became the first priority. 10 I realized my desire, not necessarily need, to work early. I liked to maintain contact with the children and their parents. Halfway through my career I knew I will teach much later in life. Working for money came late—when I realized the loss in my investment and retirement accounts. 12 I always planned to do something I enjoy doing in retirement. I love doing this very much; it provides us with extra money. It aligns with my planning. 14 I have always known that I would need to supplement my retirement income, as a result of family obligations. I also knew I can continue to do my type of work as long as I wanted. 15 I knew I would work until my later years because I love what I do; and because I spent lavishly. As long as I have good health, I will always be employed in real estate. 23 I started saving later in my career; so I knew I had to work later. Source: Author’s presentation of early recollections. 40 Journal of Economic and Social Studies �Living and working in retirement, a new paradigm in the US exploring retirees attitudes and beliefs toward working While overlap of themes, such as being in a field of work that a person likes can encourage extension of one’s working years, seem apparent among participants, no predominant theme emerged. Based on the literature on early recollection, at least five early memories are required for effective evaluation of patterns and themes within an individual (Mosak and Di Pietro 2006; Clark 2002). Even though participants’ memories in the study conducted suggested tentative themes, enough data were not collected to fully highlight the cognitive beliefs of each participant individually or to evaluate all of the memories so that associated patterns and themes could be determined. The design of the study allowed participants free expression of their specific examples and any distinct moments. However, asking participants for subsequent explanation about the most vivid part of the examples would have distracted the natural flow of the discussion and inhibited assessment of their cognitive beliefs, hence proved invaluable. Rather, coding the specific examples provided a richer understanding of the need and desire to work in retirement. Questions about the most vivid moments, associated feelings and reasons for the feelings were not answered, but analysis of early recollections proved valuable. Discussion of Results Although questioning participants about content-specific examples and early memories inhibited assessment of their cognitive beliefs, there was value in the information obtained. Fifty-six percent of the participants presented recollections that had substantial impact on their decision to, or not to, work in retirement. Included in the 56% are the 40% whose retirement accounts were based on the DC model and 16% that had their accounts switched from the DB to the DC structure. The recollections included recent past awareness of needs or desire to work, or not work, in retirement based on perceptions about the extent of support from individual retirement accounts; and alignment of those needs, or desire, to participants’ expectations in terms of levels of finances in retirement. The fact that 56% of the participants noted late recollections that had substantial impact on their decisions to remain in the workforce, based on payout expectations of their retirement accounts, suggests there may be implications about the relationship of the DC plan with the financial markets and the changing economics of the retirement funding structures. Purcell (2007) found that participation in the labor force among people age 55 and older has been affected by both the trends toward Volume 2 Number 1 Spring 2012 41 �Raymond U. Ogums the DC plan and away from the DB plan structures. The U.S. Department of Labor reported that the DC plan have grown to cover more workers between 1984 and 2004, while coverage by the DB plan continues to decline (Wasik 2004). Data about the lifestyle accommodation category suggest that a majority of those interviewed could not maintain the lifestyle they planned in retirement, but participants remarked the security offered by the DB model could have facilitated ability to estimate their funding levels at retirement. In general, nine participants noted they were able to maintain their planned lifestyle in retirement. Five of the nine participants reported they could partially maintain the lifestyle they planned in retirement, due to unexpected decreases in their income levels, which led to a condition in which they have to work to sustain their incomes. The finding suggests existence of difficulty in estimating income levels at retirement. Cahill et al. (2006) noted that income levels at retirement could often be estimated prior to replacement of the DB pension plan with the DC structure in 1986. Comments about working to mitigate shortages resulting from hard economic times were mostly associated with participants whose retirement plan structures were based on the DC model, such as the 401k plan. Some participants remarked that the continued shift away from guaranteed defined benefit pension toward 401k plans precluded them from retiring. There were also comments about how the devaluing of participants’ retirement accounts, as a result of the relationship between the DC model and the financial markets, has contributed to their decisions to continue working. The results suggest that the changing economics of the retirement funding structures may have forced retirees back to work to mitigate resulting financial shortages in their retirement accounts; contributing to the increase in the number of employed retirees. The results also suggest that the three attitudinal responses to bridge employment: occupational self-efficacy, retirement attitudes, and job satisfaction may affect (a) how retirees feel about working (Dendinger et al. 2005), and (b) the work-related attitudes of non-retired workers and bridge employees. The changing economics of the retirement funding structures may also be a contributory factor in extending working years by older employees. Daugherty (2007) noted that non-retired older workers who sense the possibility of shortage in their retirement income choose to work longer as a way to boost the average income for calculating their retirement benefits, and ensure entitlement of larger Social Security benefits. Implications of the research findings, significance of the study, and suggestions that may assist interested parties in establishing a more positive outlook of the retirement landscape follow. 42 Journal of Economic and Social Studies �Living and working in retirement, a new paradigm in the US exploring retirees attitudes and beliefs toward working Implications of the Research Findings The current study presented and documented how a set of retirees deal with their mix of saving, spending, income, and working since replacement of the traditional DB pension plan with the DC model in 1986 (Cahill et al. 2006).3 The results showed that retirees are addressing the problem of underfunding, created by the continued reductions in their retirement accounts, by working longer. Based on the structure of the study, retirees cited five motives for engaging in post-retirement employment, in their efforts to cope with the financial shortfall created by the shift to the DC model from the DB plan structure: income and savings, healthcare benefits, decreasing benefits, mortgage and household obligations, and psychological benefits. The new theme of obtaining a mortgage in retirement, which emerged in the data coding process, creates an awareness that can help finance professionals in tailoring retirement income strategy based on a two-step process: (1) understanding the client’s needs and objectives, and (2) obtaining an appropriate strategic fit through matching of those needs and objectives with the most appropriate retirement income streams combinations. Understanding a client’s needs can lead to effective determination of spending needs at retirement, what the size of that client’s portfolio must be at the beginning of his or her retirement in order to fulfill those needs, and how much the client must save and invest between current period and the age he or she plans to retire, in order to achieve those financial goals (Lee 2007). The results indicate that (a) participants who saved under the DB plan structure could support their retirement living better than those whose retirement plan structure was based on the DC model; (b) the voluntary nature of the DC plan model has resulted in severe shortages in retirement savings for many older Americans, as a result of its relationship with the financial markets; (c) the relationship of the DC plans with the financial markets could warrant that prospective retirees seek the services of finance professionals to gain the benefits of money management strategies designed to provide needed cash for retirement living; (d) working was more necessary to retirees who had the DC plans than those with the DB plans; and (e) working in retirement would be more enjoyable if it extends beyond provision of economic means to gaining psychological benefits. Volume 2 Number 1 Spring 2012 43 �Raymond U. Ogums Significance The results are significant for providing employers, financial services providers, educators, and the government with information needed to determine if relationships exist between the changing economics of the retirement funding structures and the mix of factors that motivate retirees to work. Information about the relationships between post-retirement employment and the changing economics of the retirement funding structures be can useful to finance professionals, and others seeking to educate or advise individuals about retirement planning. Such information can also help employers, financial planners, financial services providers, and the government to address the problem of financial shortfall experienced by many retirees in America. Knowledge about the characteristics of factors that cause retirees to work, and their relationships to the changing economics of the retirement funding structures, will also affect future individual retirement planning endeavors and can provide a basis for evaluating the effectiveness of the current retirement funding structures. Additionally, prospective retirees can benefit through realizing that services of finance and investment professionals may be necessary to effectively manage their retirement accounts, based on the relationship with the new (DC) structure and the financial or stock markets. Suggestions for a More Positive Retirement Outlook Suggestions are offered in the areas of minimizing income shortage during retirement, handling healthcare costs, managing mortgage expenses, and to encourage post-retirement employment for psychological and other benefits.4 To minimize income shortages during retirement, financial planning for retirement should start as early as possible. One initiative may be educative programs that teach about retirement investment management in the schools system. Thus, the necessity of saving for retirement can be taught to the younger generation’s subconscious through early education and society. Based on the study’s confirmation that retirement planning is complex and difficult for many, individuals should be encouraged to seek professional advice at the beginning phase of the planning process. Shad (2006) suggested that planning for retirement early with the help of a professional can lead to increased savings, revenue, and disposable income, and help people maintain desired lifestyle in retirement. Employers may offer an option of such services, at subsidized fees, in their retirement packages to employees. 44 Journal of Economic and Social Studies �Living and working in retirement, a new paradigm in the US exploring retirees attitudes and beliefs toward working In an effort to curb rising medical costs and decreasing Medicare benefits for seniors, employers should consider extending medical benefits for retirees and offer that option in the retirement packages they offer to their employees. Additionally, finance professionals should offer advice to their clients about incorporating supplemental medical insurance in their retirement planning. If Medicare could not provide 100% coverage or offer the same services for every retired person, as indicated by the study participants, then a well structured supplemental medical insurance may serve to fill in any resulting gaps in Medicare coverage. The government may also consider regulating physicians’ care and prescription drugs costs for Medicare recipients. The trend of entering retirement with a mortgage, which is expected to continue (Groat, 2005), requires educative initiatives that can help retirees make careful selection of mortgages based on income levels and inclination. Prospective retirees aspiring to own a mortgage should be advised to consider spending ability based on disposable income in retirement. For example, a good budget that incorporates housing costs likely to be forgotten, such as property taxes and homeowner’s insurance, may be helpful. Further, because a retiree’s income is often fixed, use of a fixed-interest mortgage to secure fixed payments for easier cash flow estimates should be sought by retirement advisers for their clients. Individuals can also benefit from directives about reviewing their financial situation to ensure availability of savings needed to pay for any emergencies, such as needed home repairs, accidents, or death in the family. The finding that working in retirement provides for healthier and happier lifestyles, including mental fitness (Hass, 2007; Updegrave and Light 2007) leads to recommendation that post-retirement employment is to be encouraged. Working in retirement should also be encouraged due to certain embedded advantages: First, the economy can be enriched through production of additional goods and services; especially as the labor force participation rate (LFPR) for people aged 24 to 54 has fallen since the recession in 2000 (“Older Americans” 2005). Second, working in retirement can lead to growth in a person’s asset base, and increase in his or her annual social security benefit through withdrawal of funds over a shorter period of time. Increases in individual retirement asset base can help alleviate longevity risk—the possibility of people outliving their retirement savings. Third, working in retirement can help lower social security deficits through delay of benefits payouts. Fourth, working in retirement can create additional employment tax payments which could be used to support other government programs. Volume 2 Number 1 Spring 2012 45 �Raymond U. Ogums Conclusions With respect to minimizing income shortage during retirement, financial planning for retirement should start as early as possible. The necessity of saving should also be taught in schools through educative programs so that the younger generation can subconsciously become accustomed to saving with little regard to financial conditions. Based on the complex and difficult nature of retirement planning, individuals should seek professional advice at the beginning phase of the planning process. With respect to rising medical costs and decreasing Medicare benefits, employers could offer an option for extending medical coverage for retired employees under the retirement packages they offer their employees. Additionally, finance professionals should advice their clients to incorporate supplemental medical insurance in their retirement planning, and government may consider regulating physicians’ care and prescription drugs costs for Medicare recipients. To ease financial burden, retirees who aspire to purchase a home could be advised to do so with due consideration of their spending ability based on disposable income. Post-retirement employment could be encouraged as a strategy for allowing seniors to inherit embedded psychological benefits. Post-retirement employment could also be encouraged for other advantages: production of additional goods and services by retirees while upholding the labor force participation rate (LFPR), growing personal asset base to ease longevity risk, prevention of social security deficit through delay of benefits payouts, and creation of additional government revenue through employment taxes. The Ensuing Grounded Theory Charmaz (2006) noted: “Grounded theory involves taking comparisons from data and reaching up to construct abstractions and simultaneously reaching down to tie these abstractions to data” (p. 181). In the study conducted, the central themes emerged through data coding focused on the category of work motivators. The consistency of the responses to these themes provided a way to examine the processes that made the themes central to the study. The creation of abstract interpretation through the evident themes provided responses to the research questions. Transformation of the data collected into interpretations evidenced as the central themes formed the foundation of the grounded theory (Charmaz 2006). Constructing a grounded theory required the integration of process, action, and abstractions into comprehensive analysis of the data. 46 Journal of Economic and Social Studies �Living and working in retirement, a new paradigm in the US exploring retirees attitudes and beliefs toward working The grounded theory that would have developed from this research study would suggest the importance of influence of the changing economics of the retirement funding structures on post-retirement employment. The post-retirement employment theory would clearly present evidence of the effects of the relationship of the new retirement funding structures, like the DC (401k) plans, with the stock markets on retirement savings, the proportion of working retirees, and the mix of factors that motivate retirees to work. However, the sample of 25 concentrated in the Hartford County Connecticut area may be too small and not a true representative of retirees. Nevertheless, the results of the study proved very useful for further research in order to develop a more generalized theory that can assist leaders, finance professionals, and others seeking to educate or advise individuals about retirement planning in consideration and evaluation of the new retirement landscape. References Baker, J. P. (2007). How much is too much? A primer on the 401k “Feegate” litigation. Benefits Law Journal, 20(2), 93-102. Block, S. (2008, January 15). Early retirees fill gap in health coverage [Electronic version]. USA Today. Cahill, K. E., Giandrea, M. D., & Quinn, J. F. (2006). Are traditional retirements a thing of the past? New evidence on retirement patterns and bridge jobs. Business Perspectives, 18(2), 26-37. Clark, A. J. (2002). Early Recollections: Theory and practice in counseling and psychotherapy. 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(2005). Social research methods: Qualitative and quantitative approaches (6th ed.). Boston, MA: Pearson. Older Americans (2005). Older Americans in the workforce Economic Trends, 13. Purcell, P. (2007, September 7). Older workers: Employment and retirement trends. Congressional Research Service, 1-16. Robertson, K. (2006). Baby boomers in retirement: Don’t worry, be happy. 401K Advisor, 13(8), 3-9. Shad, A. (2006). Is a penny saved a penny earned? Employee Benefits New Canada, 3(5), 18. Smith, D. S. (2001). An American economic history: 1880-1990. The Journal of American History, 87(4), 1557-1558. Stein, K. M. (2007). Retirement readiness: Financial strategies for your retirement. Business Journal (Central New York), 21(42), 21. Updegrave, W., & Light, J. (2007). Working in retirement. Money, 36(11), 113123. Utkus, S. P. (2006). Retirement plans: Dynamic changes ahead. Institutional Investor, 40(1), 4-7. Volume 2 Number 1 Spring 2012 49 �Utkus, S. P. (2006). Retirement plans: Dynamic changes ahead. Institutional Investor, 40(1), 4-7. Wasik, J. F. (2004, October 18). Why aren’t 401k-type plans one of the top issues in the U.S. presidential election? [Electronic version]. Los Angeles Business Journal. Retrieved November 11, 2007, from http://goliath.ecnext.com/coms2/ gi_0199-3399352/Retirement-funding-should-be-a.html Wicks, D. (2004). The institution of tenure: freedom or discipline? Management Decision, 42(5/6), 619. Yin, R. K. (2008). Case study research: Design and methods (4th ed.). Thousand Oaks, CA: Sage. NOTES 1. In qualitative research data analysis, saturation is reached when the researcher subjectively determines that new data no longer provides new insights (Creswell 2004). 2. Leyes (2008) fond that even those thought to be able to afford engaging in traditional retirement (retirement without working) in the American society, are often seen using paid work to alleviate post-retirement risks, such as longevity risk—outliving one’s assets or investments, inflation, and rising health care costs. 3. Previous literature comprised documentation about the effect of the underfunding created by the continued reductions in the retirement income sources, but the current study was the first to explore the characteristics of factors that cause retirees to work. The current study was also the first to explore what retirees are doing to cope with the financial shortages experienced in their retirement accounts. 4. The suggestions are offered as recommendations for leadership and individual practices in the areas of minimizing income shortage during retirement, handling healthcare costs, managing mortgage expenses, and encouraging postretirement employment for embedded benefits. � 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. 1064 Title A name given to the resource Living and working in retirement, a new paradigm in the US exploring retirees attitudes and beliefs toward working Author Author Ogums, Raymond U. Abstract A summary of the resource. This paper investigates the problem that an increasing number of people in the United States are financially unprepared for retirement, leading to a rise in post-retirement employment. The purpose of the study was to explore attitudes and beliefs toward continued or actual employment behaviors among a set of retirees who have chosen to continue working after reaching retirement age. The grounded theory study design was applied in the efforts to explain, at a broad conceptual level, the reasons older workers have chosen to continue working after reaching retirement age. Data gathered from 25 workers age 65 and older were analyzed. The analysis revealed five work motivators, five inhibitors of saving, six methods of saving, four lifestyle accommodations, and four work attitudes. Implications of the research were presented. The results suggest the new retirement funding structures have not been favorable to saving. Suggestions for a more positive retirement outlook are offered. 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 2012-01 Keywords Keywords. Article PeerReviewed H Social Sciences (General),HB Economic Theory,HG Finance https://omeka.ibu.edu.ba/files/original/beeba85bdadf8fc0c0353c12c55e77eb.pdf 1c87d89725ec6dedc50745a035250991 PDF Text Text Journal of Economic and Social Studies Participation Banking in European Context Šukrija RAMIĆ Islamic Pedagogical Faculty, University in Zenica, Zenica, Bosnia and Herzegovina sukriramic@hotmail.com Abstract The purpose of this study is to find a common ground for participation KEYWORDS banking in Europe, by explaining a new way of banking practice Participation banking, Usury, which has its roots in the European business tradition of partnership, Sharia, Murabaha, Musharaka, investment, trading and providing services, as well as the status of Mudaraba, Salam, Istisna, Ijara usury in Christian, Jewish and other traditions. It deals with questions related to the openness of European societies to this invention of Islamic culture, the main characteristics of participation banking, its benefits, the chances for building better relations with the Muslim world, and the possibilities of participation banking in non-Muslim environments. It is concluded that participation banking is an opportunity for rather ARTICLE HISTORY Submitted: 21 October 2011 Resubmitted: 4 Spring 2012 Resubmitted: 12 February 2012 Accepted: 25 March 2012 than a threat to, Europe which will open new dimensions for the banking industry, diverse responsibility, bring people together, increase competition and bring better services with more competitive prices and, what is quite important is that it might activate the savings of European Muslims that are currently out of the banking system. JEL Code: G29 Volume 2 Number 1 Spring 2012 91 �Šukrija RAMIĆ Introduction The biggest success of European society is reflected in the fact that it has largely managed to build a pluralistic society that accepts and respects differences among people. This achievement has opened the road to new success in the political and economic fields, so that today we have the European Union in front of which are great opportunities if it succeeds to maintain the direction towards pluralism and respect for diversity among its citizens. The principle of pluralism is consistent with the natural law of Allah Almighty because He has created people different and prescribed to them to meet and know each other: “O mankind! We have created you from a male and a female, and made​​you into nations and tribes, that you may know one another “(Qur’an, Al-Hujurat 13). Whatever is natural, whatever is consistent with the natural law of God, has a chance of success, because it brings to human beings what is in harmony with their nature, what is good and useful for them. Although, as noted, European society is pluralistic, although it respects pluralism, some people within society, sometimes, reluctantly accept when something comes from the Islamic culture. There is prejudice, and even open opposition, at the first glance, just because it comes from Islamic culture. Given the objectives that European society proclaims, it would be fair to give participation banking fair treatment and a chance to participate and compete in the European market. Thus, the revival of the following universal values and ​​ principles on which European society is built is necessary: 1. A universal attitude toward human beings: that all human beings are bloodbrothers and sisters with the same rights and obligations.1 People should be valued according to their actions-how beneficial or harmful their deeds and actions are to themselves, to other people and to the environment, but not based on their ethnic origin or religion. 2. The freedom of expression of ideas should be fully implemented. Restriction should only be on the usage of insulting words and expressions. It will enable people to present their products and ideas freely.2 3. Equal rights and obligations in society and equal rights in front of the law: This principal requires European secular states to revive the original idea of secularism, according to which all citizens are equal in their rights and obligations and equal in front of the law.3 4. Equal opportunity for all human achievements: It can be achieved if the cultural and other achievements of all Europeans are equally treated and given equal opportunity to compete in the field of ideas and products.4 92 Journal of Economic and Social Studies �Participation Banking in European Context Rational Behind Prohibition of Interest The Qur’an and the Sunnah do not provide any detailed rational for the prohibition of interest (riba). However, the implicit meaning of Qur’anic verses and sayings of the Prophet, p.b.u.h., about interest may suggest that the charging of interest is an act of injustice. This is why Muslim scholars, when speaking about reasons why Islam has prohibited interest, say that the main reason behind the prohibition of interest is the prevention of injustice. The injustice in dealing on the basis of interest can be observed at different levels. For example, the fact is that the lender is guaranteed a positive return while the borrower takes all the risks. Therefore, taking interest represents akl amwal an-nas bi-l-batil because the lender and the borrower are in an unequal position. “Such injustice may result based on significant price fluctuations, or any of a number of other considerations. Moreover, there is a very real danger of exploitation of poor debtors by creditors, which Islam strives to eliminate.” (Zuhayli, 2001:1/337) Furthermore, it opens the way for the accumulation of wealth in a few hands. After explaining that as a whole, socio-economic and distributive justice, intergenerational equity, economic instability and ecological destruction are considered the basis of the prohibition of interest, Muhammad Ayub concludes: “Keeping in mind all relevant texts and the principles of Islamic law, the only reason that appears convincing is that of distributive justice, because the prohibition of Riba is intended to prevent the accumulation of wealth in a few hands; that is, it is not to be allowed to “circulate among the rich” (Holy Qur’an, 59: 7). Therefore, the major purpose of Riba prohibition is to block the means that lead to the accumulation of wealth in the hands of a few, whether they are banks or individuals.” (Ayub, 2007:54-55). The way to go out, without stopping economic activities, is partnership financing through products of participation banking. Main Characteristics of Participation Banking The main characteristic of participation banking and finance are: 1. Dealing on non-interest basis. The Qur’an says: “…whereas Allah has permitted trading and forbidden usury” (Qur’an, Al-Baqara: 275). Due to this revelation Volume 2 Number 1 Spring 2012 93 �Šukrija RAMIĆ and some other verses and sayings of the Prophet Muhammad, p.b.u.h., Muslim scholars are unanimous that usury is forbidden in Islam. Zuhayli says: “The Islamic nation is in consensus over the prohibition of riba. In this regard, Al-Mawardi said: “To the point that no legal system (sharia) has ever permitted it”, as evidenced by the verse “That they took riba, thou they ere forbidden to do so” (4:161), meaning in the previous revelations (Zuhayli, 2001:1/311). It is considered to be a way of unjustified taking possessions of others (akl amwal al-nas bi al-baṭil) by receiving monetary advantage in a business transaction without giving a just counter value. “The principal reason why the Qur’an has delivered such a harsh verdict against interest is that Islam wishes to establish an economic system where all forms of exploitation are eliminated, and particularly, the injustice perpetuated in the form of the financier being assured of a positive return without doing any work or sharing in the risk, while the entrepreneur, in spite of his management and hard work, is not assured of such a positive return. Islam wishes to establish justice between the financier and the entrepreneur (Chapra, 1995). 2. Partnership. The Prophet Muhammad, peace be upon him, said that Allah Almighty promised His support to humans who work together in partnership till one of them starts to cheat the other (Abu Dawud, 2000). This is why business in Islam is partnership oriented. Because of the same reason participation banking is partnership oriented on the basis of profit and loss sharing. The main products musharaka and mudaraba are pure partnerships, while all other products like salam, istisna, ijara and, even, murabaha have some elements of partnership. 3. Asset backed financing. Islam does not recognize money and monetary paper as a subject-matter for trade except in the trading of different currencies. “Profit is generated when something having intrinsic utility is sold for money or when different currencies are exchanged one for another. The profit earned through dealing in money (of the same currency) or the papers representing them is interest, hence prohibited. Therefore, unlike conventional financial institutions, financing in Islam is always in illiquid assets which create real assets and inventories (Usmani, 2002). 4. Transparency. There is no hidden costs, no small letters in the contract. Uncertainty (gharar), including deception or ignorance is prohibited. One of conditions for the contract to be valid in Islamic law is clearness, transparency, explicitness and non existence of doubtful and uncertain matters that can cause disagreement in the future. 94 Journal of Economic and Social Studies �Participation Banking in European Context 5. Care for the society. This care is evident in many aspects. Islam prohibits everything that is harmful to human beings like alcohol, tobacco, gambling, prostitution, etc. Islam has prohibited maisir (gains made from speculative activity, or ‘unfairly earned income’) because it harms society. Therefore, participation banks do not finance those products and activities or anything else that is harmful to human beings. Participation banks help poor people through a product called qarḍ ḥasan (benevolent loan). Through special funds they try to find solutions for the micro financing of poor people on terms that are suitable for them. If a partner of a participation bank experiences hardship the bank has the obligation to help because the Qur’an says: “And if the debtor is in hard time, then grant him time till it is easy for him to repay, but if you remit it by a way of charity, that is better for you if you did but know (Qur’an, Al-Baqara: 280). In all cases participation banking is keen for the successes of its clients, because it is the only way that the bank can be successful. 6. Real economic activities. Participation banking is not the mere lending of money, but rather a very large spectrum of economic activities that represents an alternative method to profit making in trade, partnership in project financing and providing all banking services that modern customers require. It is widening the ways of financing and opening new opportunities. These are the main characteristics of participation banking. All of them should be evident in practice if participation banking is implemented according to the teachings of Islam. Expected Standing of Europeans about Participation Banking In Europe Participation banking has a religious dimension for Muslims5, but for non-Muslims it would be, at least, a human product, like other human products. Most Europeans certainly have a positive attitude toward the previously mentioned values and principles and as a result of that they should accept participation banking as a human product and achievement. Sharia is the religious law for Muslims that regulates their daily activities, and for those who don’t believe in Islam as sense of divine source, it should be a cultural achievement of their fellow human beings. That cultural achievement has the right to be treated equally alongside the cultural achievements of others. Therefore, Muslims Volume 2 Number 1 Spring 2012 95 �Šukrija RAMIĆ in Europe and elsewhere are expecting that kind of treatment towards their cultural achievements. Any treatment by which Muslim culture is placed in a second-rate position may be a sign of intolerance, prejudice, or lack of knowledge. All products of human beings have to be judged according to their usefulness or harm to society, not on the cultural background of a certain product. Therefore, when discussing participation banking in Europe what should be discussed is whether it would work properly in a certain European environment, how it can be incorporated in the European legal system, whether it will improve economic activities, bring benefits to the society and so forth. Is Participation Banking for Muslims only? Certainly, it is not. These products can be used by all people, Muslims and nonMuslims6, by participation and conventional banks. Participation banking does not require the introduction of Sharia law on the state level and participation banks can be run by non-Muslims, too.7 Even more, conventional banks can, under certain conditions, have windows which operate in accordance with Sharia standards8. Therefore, correct and impartial relation to the products of participation banking requires a discussion of it in the light of its benefits to society, possibility of its implementation in different environments, not in the sense of imposing Islam and Sharia law on non-Muslims.9 Usury in the Past and Contemporary World The practice of usury - lending money with interest can be traced back 4,000 years10. This activity has always been condemned, restricted or banned by moral, ethical, legal or religious entities. In the Hindu Sutra (700-100 BC), as well as in the Buddhist Jatakas (600-400 BC), the payment of interest is mentioned along with expressions of disdain for the practice. Vasishtha, a prominent lawmaker of the era, drafted a law that banned the high caste Brahmans and Kshatryas from being usurers or money-lenders. 96 Journal of Economic and Social Studies �Participation Banking in European Context Western philosophers such as Plato, Aristotle, Cato, Cicero, Seneca and Plutarch were critics of usury. Judaism, Christianity and Islam all forbid usury. The Torah discusses the prohibition against taking interest in many places: Exodus 22:24; Leviticus 25:36-37; and Deuteronomy 23:20-21. The verses in Deuteronomy says: “You must not make your brother pay interest, interest on money, interest on food, interest on anything on which one may claim interest. You may make a foreigner pay interest, but your brother you must not make pay interest” (Deuteronomy, 23:19-20)11. The Qur’an states: “That is because they say: “Trading is like usury,” whereas Allah has permitted trading and forbidden usury” (Qur’an, Al-Baqara : 275). Despite these facts, only Muslims, and some non-Muslim individuals and smaller groups and organizations stand firmly against interest, and try to avoid it in their everyday life. On other side churches like the Catholic, Protestant and Orthodox churches do not object anymore to the interest charged by conventional banks12. However, after the last prime mortgage crisis in America which affected most countries worldwide it seems that the Catholic Church has started opening its doors to the idea of participation banking. One article in the Brussels Journal on this subject is clear about the changes which can be expected in the future. The Journal states: In yet another act of conciliation on the part of Western religions towards Islam, the Vatican newspaper L’Osservatore Romano has voiced its approval of Islamic finance. The Vatican paper wrote that banks should look at the rules of Islamic finance to restore confidence amongst their clients at a time of global economic crisis. “The ethical principles on which Islamic finance is based may bring banks closer to their clients and to the true spirit which should mark every financial service,” the L’Osservatore Romano said. “Western banks could use tools such as Islamic bonds, known as sukuk, as collateral”. Sukuk may be used to fund the “‘car industry or the next Olympic Games in London,” the article says. The Vatican article is only one of many articles that have recently appeared on the acceptance by Western governments and bankers of an Islamic financing system. More than accepting it, they seem to be welcoming it, though they are certainly being pressured into this by unnamed forces bowing to the dictates of Islam (Tiberge, 2009). France, which has opposed Paricipation banking for a long time, has eliminated legal hurdles, particularly levies, for Islamic financial services and products and enabled listing companies on the Paris Stock Exchange. French Finance Minister Christine Lagarde announced in 2009 France’s intention to make Paris “the capital of Islamic finance” and said that several Islamic banks would open branches in the French capital in 2009 (Aki, 2011). Volume 2 Number 1 Spring 2012 97 �Šukrija RAMIĆ On 17.01.2011, The Bloomberg news has quoted the statement of State Secretary for Foreign Trade Pierre Lellouche that France is going to develop Islamic finance and attract investment from the Gulf to its economy: “We’ve had some delay, compared to the British particularly,” Lellouche said in an interview in Abu Dhabi today, “The legal mechanisms are getting in place and French banks are very capable and they are at it.” The Bloomberg reported that the first Islamic bond from France could be sold in early 2011 after the government introduced guidelines for sukuk offerings, Thierry Dissaux, chief executive officer of the French Deposit Guarantee Fund said in an interview Dec.15. Reuters reported on 27 October 2011 that French lender Credit Agricola (CAGR. PA) is considering either issuing an Islamic bond or creating a wider sukuk program that could lead to several issues, as European banks seek to diversify funding, a senior executive said on Thursday. “It’s something that we’re always looking at but it’s probably more on the agenda today than yesterday because banks need to diversify funding,” Simon Eedle, managing director and global head of Islamic banking, told the Reuters Middle East Investment Summit. “I believe it’s something that we will do. It’s only a question of time,” he said. “If Credit Agricole were to issue a sukuk, it would be an ijara structure with real Islamic assets to justify to the investors that we are using the financing to divide the liabilities to match the Islamic assets we have,” he said (Pasha& Uppal, 2011). Despite the fact that the preparation of the legal framework and the introduction of the instruments of Islamic banking seem slow, these developments in Europe are a good sign which Muslims worldwide applaud and encourage. Participation Banking Products Participation banking is enjoining permanent development. It comes with new products and improves existing ones. Today, the most popular products of participation banking are the following: 98 Journal of Economic and Social Studies �Participation Banking in European Context 1. Murabaha “Murabaha is a particular kind of sale where the seller expressly mentions the cost of the sold commodity he/she has incurred, and sells it to another person by adding some profit thereon” (Usmani, 2002)13. The murabaha transaction exists between three parties: the financier (the bank), the vendor from whom the bank purchased the goods, and the client of the bank who will buy the goods on deferred payment basis. More than eighty percent of participation banking financing is done through this product and due to this fact murabaha is known as a method of banking operations, while in the essence it is a kind of trade with a disclosed profit margin. 2. Musharaka Musharaka means a joint enterprise formed for conducting some business activities in which all partners share the profit according to a specific ratio, while the loss is shared according to the ratio of the contribution (Usmani, 2002). This mode is represented in the contribution of partners of equal or unequal ratios of capital to establish a new or to take part in an existing project, whereby each participant owns a share in the capital and deserves his share of the profit. The partnership originally is intended to continue up to the dissolution of the company. It is possible, though, for one of the partners to sell his share in the capital and to withdraw from the project one for reason or another,. The participation banks use this mode in different projects. They finance their customers with part of the capital in exchange for a share of the output that they agree upon. Mostly, they leave the responsibility of management to the customer partner and retain the right of supervision and follow up. 3. Musharaka Mutanaqisa “According to this concept, a financier and his client participate either in the joint ownership of property, or equipment, or in a joint commercial enterprise. The share of the financier is further divided into a number of units. It is understood that the client will purchase the units of the share of the financier one by one periodically. Volume 2 Number 1 Spring 2012 99 �Šukrija RAMIĆ By doing that, the client is increasing his own share, till all the units of the financier are purchased by him so as to make him the sole owner of the property, or the commercial enterprise, as the case may be” (Usmani, 2002). Decreasing or diminishing partnership differs from permanent partnership in terms of continuity. In the decreasing partnership the bank intends, from the beginning, to remain associated with the client for a defined period of time, not indefinitely. According to this concept, the bank has all the rights and obligations of the ordinary partner. The client uses the shared property or the equipment and pays rent for the part owned by the bank. The collected rent is what the participation bank earns from this kind of partnership. 4. Mudaraba “This is a kind of partnership where one partner gives money to another one for investing in a commercial enterprise. The investment comes from the first partner who is called rabb al-mal whiles the management and work is an exclusive responsibility of the other, who is called mudarib and the profit generated are shared in a predetermined ratio” (Usmani, 2002). Mudaraba in the banking industry is a finance process whereby the participation bank contributes funds and a client contributes expertise and works to execute a potentially successful project. Profits are distributed in a percentage agreed upon beforehand. The bank shall bear any loss if the client is not negligent or in violation of the terms. Mudaraba can cover one deal, several deals, or a specified period of time up to a specified ceiling (Archer & Karim, R: 2002). 5. Salam “In salam, the seller undertakes to supply specific goods to the buyer at a future date in exchange for an advanced price fully paid at spot” (Usmani, 2002). Therefore, salam is a financial transaction in which price is advanced in cash to the seller who abides the delivery of commodity of determined specification on a definite due date and place. The bank can, on parallel salam, sell a commodity of the same kind as it has previously purchased with the first salam, without making one contract depend on the other. The bank also has the option of waiting to receive the commodity and then selingl it for cash or deferred payment.14 100 Journal of Economic and Social Studies �Participation Banking in European Context 6. Istisna It is a contract with a manufacturer who is to make something for the purchaser, for a defined price, which can be paid in advance or later. Therefore, istisna is a sale transaction where a commodity is transacted before it comes into existence. In this kind of transaction the price and all necessary specifications of the commodity and other terms must be fixed and fully settled. Participation banks frequently use istisna to finance building and constructing projects. The majority of the jurists consider istisna to be one of the divisions of salam. 7. Ijara (Operating Lease) “In leasing an owner transfers its usufruct to another person for an agreed period, at an agreed consideration (Usmani, 2002). Leased subject must have usufruct, must be identified and quantified. It remains in the ownership of the lesser. According to this mode, the participation bank maintains a number of various assets as its property to respond to the needs of different customers. These assets usually have a high degree of marketability. The bank lends these assets to any party and after the end of the lease period the assets are returned to the bank, which looks for a new lessee. The collected rent is what the participation bank earns from this activity. 8. Ijara wa iqtina’ (Lease purchase) Lease purchase, or lease that ends with possession, is a new mode tailored by participation banks. The bank purchases an asset on behalf of a customer who is interested in owning it by means of lease that ends with possession. At the end of the lease period, ownership is transferred to the lessee. Generally, the bank calculates total rentals on the basis of the cost of asset plus the profit. Rentals are paid over a period of time as agreed between the bank and the customer (Usmani, Archer & Kerim, 2002). 9. Qard hasan (Benevolent loan) “Qarḍ ḥasan is a loan which is returned at the end of the agreed period without any interest or share in the profit or loss of the business.” (Chapra,1995:68). Every participation bank has a special account for the qard hasan fund. They normally put Volume 2 Number 1 Spring 2012 101 �Šukrija RAMIĆ some of their annual profit in that fund and channel to that account all income that is forbidden in Sharia, like penalties etc. These funds are limited. Therefore, qard hasan financing is available to a limited extent. It is provided for financing of small businesses or to help those people who face personal hardships and need financial help. Participation Banking in the European Tradition and Opposition to it The above mentioned products may be traced and found in the European tradition, as well as in temporary practice15. Europeans have long traded with known and unknown profit margins; they have been establishing joint ventures, investing in different businesses, leasing properties etc. Europeans had and they still have co-operative, interest-free banks. A well known bank of this type is the JAK bank in Sweden. JAK has been operating an interest-free savings and loan system since 1970. It was licensed in 1997. It has 36,300 members and annual growth of 7 percent16 (Jak, 2011). Despite the fact that the products of participation banking are widely practiced in the everyday lives of Europeans, it still faces some opposition, sometimes because of prejudice and mostly due to ignorance regarding the intentions of Shariah which are reflected primarily in the protection of the five core values: protection of life, religion, wealth, honour, and offspring. It can be said that the great majority of Europeans support these values as Muslims which practise Islam do. Therefore, they can, for certain, find common ground when participation banking is in question. The best proof for such a claim are European banks, many of which are trying to benefit from participation banking system by opening windows for participation banking. This trend is supposed to continue more vividly in the future. If it becomes a success story, it will remove some suspicions that still circle in Europe about participation banking. European Experience in Participation Banking The UK has the most and the longest experience in participation banking amongst European countries, despite the fact that it does not have the biggest Muslim population. The UK has 1.8 million, while France has 5 million Muslims. Participation banking in the UK started a quarter of a century ago, and France actively started preparations for the introduction of participation banking in 2009. 102 Journal of Economic and Social Studies �Participation Banking in European Context The UK has become a centre for participation banking because London, as the most influential financial centre in Europe, has became the centre for Islamic finance. The beginning was with Al-Baraka International Bank in 1982, then United Bank of Kuwait, which later became Al-Ahli United Bank. This bank still operates. The first dedicated participation bank in the UK is the Islamic Bank of Britain, which was licensed in 2004. The first participation investment bank, the European Islamic Investment Bank, was opened in UK as well. Participation banks in the eighties had an excessive liquidity and London took advantage of this to channel money into its market and businesses. The excessive liquidity is obvious nowadays, and, maybe it is the main reason why Gordon Brown, while speaking in the conference on participation banking and finance held in London in 2006, said: “It is the vibrancy and dynamism of Britain’s Muslims, combined with Britain’s openness to the world and our historic ties with Muslim countries, that means the ambition you have set for yourselves - to make Britain the gateway to Islamic finance and trade - is one I believe Britain is well placed to achieve” (Adfero, 2006). In his speech related to this subject Financial Services Authority (FSA) Chairman Sir Callum McCarthy laid out the UK position, saying, “It is important that we showed we were able to accommodate Islamic banking practices alongside traditional non-Islamic banking, for reasons both of principle and of practical importance” (McCarthy, 2006). There is a need to emphasize a great potential in liquid money owned by European Muslims, who are out of the banking system due to the fact that they are trying to avoid dealing in interest. If a ḥalal system is provided, they will invest, especially if they know that keeping liquid money as kanz (unused money) is blame worthy in Islam. When Turkey becomes a full member of the European Union, the participation banking which is growing rapidly in this Euro-Asian state will gain new dimensions. The Participation Banking Experience in Bosnia & Herzegovina Vakufska banka d.d. Sarajevo, founded in 1992, was the first bank in Bosnia & Herzegovina that was established to work according to the participation banking principles. However, it never introduced that practice and their business has included interest from the beginning, due to a lack of skilful professionals in participation banking. Volume 2 Number 1 Spring 2012 103 �Šukrija RAMIĆ Orient banka d.d. Sarajevo – founded in 1996, was the very first bank that provided loans on a non-interest basis. In January 2000, this bank was forced to merge with the conventional ABS banka d.d. Sarajevo and, accordingly, lost its identity as a participation bank. In October 2000 Bosna Bank International d.d. Sarajevo was founded. It is the only bank in Bosnia and Herzegovina that operates under the principles of participation banking. The founders of BBI are: the Islamic Development Bank 45, 46%, the Dubai Islamic Bank 27,27%, and the Abu Dhabi Islamic Bank 27,27%. BBI provides all banking services, but it faces limitations because of the local legal system, which does not recognize “interest-free” business models. Therefore, the main products of participation banking like murābaha, mushāraka and ijāra cannot be used in their “classical” forms. There are some other difficulties that the bank is facing, like double taxation due to tax on profit obligations at the end of the business year (participation in sharing of profit represents income for the bank, while interest represents costs charged as expenses). Since 2006, BBI is trying to amend the Law on Banking. The amendment past successfully through the House of Representatives, but it did not go to the House of People because there was not enough support from Croat representatives. In order to remove some doubts about participation banking, BBI is organizing seminars and promoting the idea of participation banking in different ways. One seminar was organised in 2006 for the Federal Government and the Banking Agency. The speakers were Professor Rodney Wilson from Durham University, UK, Dr. Murad W. Hofmann from Germany and Sheikh Nizam Ya’qubi from Bahrain. Their presentations were well received by the Prime Minister and his cabinet ministers at that time, but the law remains unchanged until now. The last effort was made on 19.12.2011. The Association of Banks of Bosnia and Herzegovina drafted some amendments to the Draft Law on Amendments to the Banking Act proposed by the Government of the Federation of Bosnia and Herzegovina. One of amendments is: “Banks can in its business use products based on partnership and the sale with profit margin, but only for the purpose of lendingfinancing banks customers.” Participation Banking in the Global Finance Industry Participation banking is relatively small in the global finance industry. Alexander Lis, managing director at Oliver Wyman, the consultancy, calculates that there is 104 Journal of Economic and Social Studies �Participation Banking in European Context $300bn of assets managed according to participation principles, and more than 280 institutions providing participation products (Khalaf, & Tett 2007). Other experts estimate these numbers to be much higher. The Future of Participation Banking in Europe Participation banking today shares only 1% of the global banking industry. However, keeping in mind the great potential of Muslim countries and the annual growth of the participation banking industry by 15%, there is no doubt that it is going to play a greater role in the future. In last two decades participation banking has developed rapidly. This quick and sudden development is an un-believable phenomenon. One of pioneers in the industry and a renowned expert in participation banking Hussein Hassan from the Dubai Islamic Bank says: “What has happened has been extraordinary – no one would have believed this growth was possible a decade or two ago” (Khalaf & Tett, 2007). This is a growth that is supposed to continue even faster in the foreseeable future and it will affect the development of the participation banking industry in Europe. European banks will continue to introduce participation banking17 and more institutions will be involved in this sector. Participation banks from the Gulf will continue coming to European countries, especially if these countries adapt their laws by skipping double taxation and allowing banks to trade in commodities. European countries will move in that direction because the market seems to be heading that way. Because of the huge interest in participation banking, European universities will open new courses on the subject and postgraduate studies in participation banking will become very popular.18 New centres for participation banking will emerge outside London, like Luxemburg, Sarajevo, Paris and Vienna. As the money flows, some existing opposition to participation banking will die away. The European continent will host new conferences on participation banking and finance. The liquid savings of Muslims, which are outside of the banking system at the moment, will be invested through European participation banks and it will give new incentive to the European economy. In order to meet the expectations of Muslims and others who support participation banking, participation banks have to develop more transparency, educate their employees and clients, harmonize their Volume 2 Number 1 Spring 2012 105 �Šukrija RAMIĆ products, and improve mechanisms of internal and external control etc. They have to work on the development of new products, which will meet modern human needs, like insurance, pension schemes, investment funds etc. Conclusion Participation banking is an opportunity rather than a threat to Europe. It revives European traditions of partnership and cooperation. It opens new dimensions for the banking industry, diverse responsibility and brings people together. Participation banking will increase competition and bring better services with more competitive prices. Participation banking in Europe will open new opportunities for cooperation with the Muslim world and enable European banks to enter new markets. The cooperation is the best way for preventing hostilities that are, unfortunately, still floating in the air between some European countries and the Muslim world. Participation banking is a big opportunity for European banks to activate the savings of European Muslims that are currently outside of banking system. All that has been mentioned gives us the right to predict a bright future for the participation banking industry in Europe. References Abu Dawud, S. (2000). Sunan Abu Dawud, Hadith Encyclopedia (on compact disc), Version 2,1 Harf Information Tecnology, Egipat. Accounting and Auditing Organization for Participation Financial Institutions (AAOIFI) (2002). Sharia Standards, Manama, Bahrain. Adfero, L. (2006). Brown pledges support for Islamic finance, http://www.viewlondon.co.uk/news/brown-pledges-support-for-islamic-finance-17160286.html. Archer, S. & Abdel Karim, R. (2002). Participation Finance Innovation and Growth, Euromoney Books and AAOIFI. Ayub, M. (2007). Understanding Islamic Finance, John Wiley & Sons Ltd, Chichester, England. 106 Journal of Economic and Social Studies �Business Times, (2008). More non-Muslims trying Islamic banking: OCBC. The New Straits Times Press Malaysia. http://www.btimes.com.my/Current_News/ BTIMES/arti cles/20081201152232/Article/. Chapra, M. (1992). Islam and the Economic Challenge, The Islamic Foundation, Nairobi, Kenya. Chapra, M. (1995). Towards a Just Monetary System, the Islamic Foundation, Leicester, UK. Doi, A. (1984). Shariah: The Islamic Law, Ta-ha Publishers Ltd. London, United Kingdom. Fahey, C. (2011). Churches Came to Terms with Money Lending, Dossier, Volume 14, 5. http://gvanv.com/compass/arch/v1405/fahey.html. Gamal, M. A. (2006). Islamic Finance Law, Economics, and Practice, Cambrige University Press, Cambrige, UK. Guia, M. (2011). The morals of money-lending, World Guide. http://www.henciclopedia. org.uy/autores/Laguiadelmundo/Usury.htm. Hassan, M. K. & Mervyn K. L. (2007). Handbook of Islamic Banking,Published byEdward Elgar Publishing Limited, UK. Iqbal, M. & Llewellyn, D. T. (2002). Islamic Banking and Finance - New Perspectives on Profit-Sharing and Risk,Published byEdward Elgar Publishing Limited, UK. Izzi Dien, M. (2004). Islamic Law From Historic Foundations to Contemporary Practice, Edinburgh University Press, United Kingdom. Khalaf, R. & Tett G. (2007). Backwater sector moves into global mainstream, Financial Times, Special Report. McCarthy, C. (2006). Regulation and Islamic finance, MCBIF and Trade Conference. http://www.fsa.gov.uk/pages/Library/Communication/Speeches/2006/0613_ cm.shtml. Nairobi, Kenya and the International Institute of Islamic Thought, Hemdon, USA. Qudama, A. (1367. H). Al-Mugni, Daru-l-Manar, Cairo.Thrd edition. Volume 2 Number 1 Spring 2012 107 �Ramic, S. (2003). Language and the Interpretation of Islamic Law, Islamic Texts Society, Cambridge, United Kingdom. Sarakhsi, M. (1324. H). Al-Mabsut, Matbaatus-saadah, Cairo, First edition. Taylor, P. (2005). Freedom of Religion, Cambridge University Press, UK. Thomas, A. (2006). Interest in Islamic Economics-Understanding riba, simultaneously published 2006 in the USA and Canada by Routledge. Usmani, M. I. (2002). Meezanbank’s Guide to Islamic Banking, Darul Ishaat, Karachi, Pakistan, First edition. Usmani, M. T. (2002). An Introduction to Islamic Finance, Maktaba Ma’ariful Qur’an, Karachi, Pakistan. Watch Tower Bible and Tract Society of Pennsylvania (1984). New World Translation of the Holy Scriptures, Brooklyn, New York, U.S.A. Zuhayli, W. (2001). Financial Transactions in Islamic Jurisprudence, Daru-l-fikr, Damascus, Syria. (Endnotes) 1 First article of Universal Declaration of Human Rights says: “All human beings are born free and equal in dignity and rights. They are endowed with reason and conscience and should act towards one another in a spirit of brotherhood.” (Taylor, 2005:353) The Qur’an says: “O mankind! We have created you from a male and a female, and made you into nations and tribes, that you may know one another.” (Qur’an, Al-Hujurat: 13) 2 This principal will allow the best ideas to be recognized pursuant to the rule, “The essence of the things is recognized through their opposites.” 3 The fact is that in secular states of Europe, frequently, on the scene are atheistic, religious or nationalistic secularisms, where a group has privileges because of its beliefs or national belonging. The culture and products of that privileged group have advantage and that group is better protected and enjoys certain privileges in front of the law. All this is done in the name of secularism. The main condition for having people live in love and peace is to give them equal opportunity in everyday life and make them feel equal in front of the law. Practices of European courts do not give us impression that people are always equal and that they have always equal treatment. This assertion is obvious from examples provided by Taylor in his book Freedom of Religion - UN and European Human Rights Law and Practice. 4 The products of human beings should be judged according to their usefulness or harm to the society, not on the cultural background of the product. Therefore, the idea of participation banking should be discussed on the basis whether it will be working properly in a certain European environment, whether it will improve economic activities, bring benefits to the society and so forth. 108 Journal of Economic and Social Studies �5 Because, according to Islam, everyday life is not separated from Sharia. Sharia provides rulings for every human activity. 6 “Non-Muslims now make up half of the OCBC Al-Amin Bank’s Islamic banking customers, says its chief executive. ISLAMIC banking is gaining ground with non-Muslims worldwide due to its strict lending principles, Singapore’s third-largest lender OCBC said today, reflecting industry efforts to transcend religious beliefs to gain market share.” (http://www.btimes.com.my/Current_News/BTIMES/articles/20081201152232/Article/ Accesed: 30. 12. 2011.) 7 The CEO of Islamic Bank of Britain was Christian Michael Hanlon, and CEO of Bosna Bank International in Bosnia & Herzegovina for a period of time was Mr. Andre van Howe, who is Christian too. 8 Many European banks have such windows: HSBC, Barclays Capital, ANZ Grindlays, Lloyds TSB, BNP Paribas, Societe Generale, Commerzbank, Deutsche Bank, ABN Amro, Mežkobank, UBS, etc. 9 In my free assessment eighty to ninety percent of European laws are in spirit of Sharia. In other words, all European laws that aim to establish and upheld justice, protect human lives, dignity, property, religion and offspring, have the very same goals that Sharia wants to achieve. Indeed, some of these laws do not always reach the high standards of Sharia, so that they do not protect enough these categories, but, nonetheless, they represent wonderful efforts on the part of human beings. These efforts deserve to be praised, because they protect mentioned categories in a great manner. It can be noticed that recently the European legislature on alcohol, prostitution, tobacco, is coming closer to Sharia standards, but that process is moving slowly due to the fact that it was not preceded by spiritual preparation and superstructure, and the fact that the groups behind alcohol, tobacco and prostitution are very powerful. 10 See: http://www.henciclopedia.org.uy/autores/Laguiadelmundo/Usury.htm, http://gvanv.com/compass/arch/v1405/fahey.html Accessed: 23. 09. 2011.) 11 See also: Ezekiel 18:8-17; 22:12; Psalms 15:5; and Proverbs 28:8. 12 An extensive article on this subject entitled In the Shadow of Deuteronomy - Approaches to interest and usury in Judaism and Christianity by Vincent J. Cornell, can be found in the book Interest in Islamic Economics - Understanding riba p. 13-25 edited by Abdulkader Thomas, simultaneously published 2006 in the USA and Canada by Routledge. Another article ComparingIslamic and Christian attitudes to usury by Mervyn K. Lewis can be found in the book Handbook of Islamic Banking p. 64-81, published by Edward Elgar Publishing Limited, UK & USA. 13 See also: Archer, S. & Abdel Karim, R. (2002:90-97) 14 Due to the fact that banks are normally not interested in those commodities they use parallel salam very much. 15 Professor Rodney Wilson wrote an interesting article on The interface between Islamic and conventional banking, published in the book Islamic Banking and Finance - New Perspectives on Profit-Sharing and Risk, p.196-214. He concludes that: “Islamic banks and conventional banks should not regard each other as a threat. They of course compete with each other, but not usually by the pricing of their services. Instead Islamic banks compete by offering differentiated products that they believe will appeal to Muslim clients given their Shariah compliance.” (Iqbal, 2002:211) 16 In 2005 I was invited by JAK bank to attend a seminar on their operations. In two days they presented how the Bank operates. I did not have any remarks from the Sharia point of view, as far as no-interest loans were in question. Volume 2 Number 1 Spring 2012 109 �17 They will do it because it is a world trend. Many leading banks in the world introduced participation banking like American: Citibank, JP Morgan/Chase,Goldman Sache i UBS Warburg, British: HSBC, Barclays Capital, ANZ Grindlays, Lloyds TSB, French: BNP Paribas, Societe Generale, German: Germany’s Commerzbank i Deutsche Bank, Dutch ABN Amro, Russian Mežkobank, Japanese Nomura Securities, Swiss UBS, etc. 18 The biggest problem which participation banks are facing is lack of employees skilful in this industry. It is a problem for the banks that are in the industry for quarter of a century, like Abu Dhabi Islamic bank. In 2002 I visited UAE. The CEO of Abu Dhabi Islamic bank Mr. Abdurrahman Abdulmalik, raḥmetullahi alayhi, mentioned to me the lack of skilful employees as a big problem for the Bank. We can imagine the situation of the conventional banks which have been transformed into participation in the past few years, or transforming itself these days. They are in dear need for people knowledgeable in participation banking. 110 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. 1069 Title A name given to the resource Participation Banking in European Context Author Author Ramic, Sukrija Abstract A summary of the resource. The purpose of this study is to find a common ground for participation banking in Europe, by explaining a new way of banking practice which has its roots in the European business tradition of partnership, investment, trading and providing services, as well as the status of usury in Christian, Jewish and other traditions. It deals with questions related to the openness of European societies to this invention of Islamic culture, the main characteristics of participation banking, its benefits, the chances for building better relations with the Muslim world, and the possibilities of participation banking in non-Muslim environments. It is concluded that participation banking is an opportunity for rather than a threat to, Europe which will open new dimensions for the banking industry, diverse responsibility, bring people together, increase competition and bring better services with more competitive prices and, what is quite important is that it might activate the savings of European Muslims that are currently out of the banking system. 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 2012-01 Keywords Keywords. Article PeerReviewed H Social Sciences (General),HB Economic Theory,HG Finance 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. 954 Title A name given to the resource Enhancing Students’ Understanding of a Japanese Language Lesson through a Classroom Quiz: the Improvised Approach & the Witty Way Author Author Bin Mohd Noor, Petani Abstract A summary of the resource. Classroom quizzes come in many forms of practices. They are performed generally as a testing method or as a closure of a certain lesson. From the perspectives of many Malaysian students, a classroom quiz often involves a one way interaction from a teacher to students in transmitting any tested questions or problems to be answered by them. It is scarce to see a classroom quiz integrates some psychomotor or a two-way interaction between a student and a teacher. Due to that matter, some students might find it a bit bored or unattractive. A study had been carried out in order to investigate whether the new approach and the witty way of a classroom quiz would enhance students’ understanding in the learning of Japanese language. The study involved 20 form two candidates of Dato’ Ahmad Maher Secondary School for two months. Data were collected by using a pre-test and a post-test. The results showed that the new approach and the witty way of the classroom quiz would enhance students’ understanding in the learning of Japanese language. Date A point or period of time associated with an event in the lifecycle of the resource 2012 Keywords Keywords. Conference or Workshop Item PeerReviewed P Philology. Linguistics 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. 980 Title A name given to the resource Development of the Intercultural Competence in the Initial Foreign Language Teacher Education Author Author Mardesic, Sandra Abstract A summary of the resource. The contemporary research in initial teacher education is oriented towards development of student - teacher teaching competences through the reflective approach and experiential learning. In 2008 in Croatia, in the context of changes in teacher education at the university level within the 'Bologna reform process', a new competence-development curricula was introduced in initial foreign language teacher education. The development of foreign language teacher competence and its components within the new university curricula were examined through the application of the reflective approach and a new instrument, the European portfolio for foreign language teachers. The participants in this study were 66 student- teachers of English, French, and Italian from three Croatian universities. Research was conducted during the practical part of their education in Croatian schools. A mixed research method was applied. It included a quantitative analysis of students’ self- evaluations of gained competences according to the descriptors in the portfolio and a qualitative analysis of a semi - structured interview with the participants about their experiences in working with a portfolio. The results of this research show that new foreign language teacher education programs do not sufficiently develop certain components of teacher competence such as the intercultural competence. Even though that component is stressed in the ministerial programs for foreign language teaching in public schools and it is formally included in the university curricula, the students seem to fail to recognize the connection between language and culture and are more oriented towards teaching methodology of reading, listening, speaking and writing. Date A point or period of time associated with an event in the lifecycle of the resource 2012 Keywords Keywords. Conference or Workshop Item PeerReviewed P Philology. Linguistics 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. 946 Title A name given to the resource L'Académie française (the French Academy) and the Encumen-i Danis Author Author Sarıkaya, Orhan Abstract A summary of the resource. The Hatt-ı Sherif of Gülhâne (Imperial Decree of the Rose Chamber) is the confirmation of the impact of Western influence in social and political realms to the Ottomans. The influence of French culture and literature on Turkish culture and literature up to the present has been analyzed and studied from various perspectives. However, the Encumen-i Danis has not drawn the attention of researches perhaps due to its short existence. In this study L'Académie française or the French Academy that acted as an official authority on the French language, and the Encumen-i Danis is juxtaposed, their emphasis on mother tongue is analyzed. Date A point or period of time associated with an event in the lifecycle of the resource 2012 Keywords Keywords. Conference or Workshop Item PeerReviewed P Philology. Linguistics 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. 968 Title A name given to the resource Effect of Collaborative Strategic Reading on Omani EFL Students’ Reading Performance Author Author Al Mashrafi, Said Abstract A summary of the resource. Intending to talk about a study that aimed at studying the effect of Collaborative Strategic Reading(CSR) on EFL students’ reading performance. CSR is a teaching technique that was originally developed by Klingner and Vaughn and which aims at improving the learners' reading skill. CSR is defined by many educators as an instructional program in which students work in pairs or in small groups to help one another master the academic content. It consists of four main strategies: preview, click and clunk, get the gist and wrap-up. The study population consisted of grade seven students studying the English language course in Omani basic Education schools during the academic year 2009-2010. Two grade seven basic education classes of a total of thirty-four students from a male school in Sharqiyah South educational district represented the sample of the study. A class of seventeen students represented the experimental group, which was taught the reading texts using Collaborative Strategic Reading. The other class represented the control group, which received traditional classroom instruction. A reading comprehension test was used to explore the research question. The major results of the reading test revealed a statistically significant difference between the students’ achievement of the experimental group and the students’ achievement of the control group using t-test that favored the experimental group that was taught using Collaborative Strategic Reading Date A point or period of time associated with an event in the lifecycle of the resource 2012 Keywords Keywords. Conference or Workshop Item PeerReviewed P Philology. Linguistics https://omeka.ibu.edu.ba/files/original/38387530f976dd190727cd4d0162915c.pdf 4f6217ff9e9d2381fe824aa39014d214 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. 1397 Title A name given to the resource The Channels of Contagion in the Global Crisis: The Case of the Southeastern Europe (SEE-7) Countries Author Author Ali , Sen Huseyin, ALTAY Abstract A summary of the resource. Prior to the global crisis, the SEE-7 had a strong growth performance through increasing in exports and capital inflows. However, they also, just like developing countries, suffered from the global economic crisis. The purpose of this paper is to analyze through what channels the global crisis had an impact on economic activity of the SEE-7. Initially, we reviewed literature about contagion, including its definitions and its channels. We used panel data regression to analyze the impacts of external variables on GDP. According to empirical findings obtaining from the panel regression results, until the global crisis, the external variables significantly promoted the abilities of their growth. However, the contributions of external variables on their growth rate reduced sharply with the global crisis. 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 2012 Keywords Keywords. Article PeerReviewed H Social Sciences (General),HB Economic Theory,HG Finance https://omeka.ibu.edu.ba/files/original/abe64c1576495e2c05427e6b3cbdcd70.pdf db0443009bffa567e421a3914fcb932c PDF Text Text Journal of Economic and Social Studies Utilizing Information Systems for Measuring Impact on Social Sustainability: Survey of Microcredit Organizations in Bosnia and Herzegovina Alica PANDZO Department of Information Systems Sarajevo School of Science and Technology Sarajevo, Bosnia and Herzegovina alica.pandzo@ssst.edu.ba Kemal TALJANOVIC Department of Information Systems Sarajevo School of Science and Technology Sarajevo, Bosnia and Herzegovina kemal.taljanovic@ssst.edu.ba Selma JAHIC Microcredit Foundation Partner Tuzla, Bosnia and Herzegovina Abstract: Microfinance has been used selma@partner.ba as a tool for social sustainability and development since the 1970s. In microfinance, assessment of social sustainability is often conducted through client impact monitoring. This study explores the impact measurement practices of microcredit organizations in Bosnia and Herzegovina and their use of information systems in this process. We draw on the latest trends of using shared measurement systems for impact monitoring, to point out the potential of using such systems to achieve sustainable impact on wider social issues in Bosnia and Herzegovina. This paper outlines the roles and responsibilities that different stakeholders should play in the system development process. KEYWORDS: Microfinance, Microcredit, Bosnia and Herzegovina, Social Impact, Information Systems, ICT, Shared Measurement Systems. ARTICLE HISTORY Submitted: 4 July 2012 Resubmitted: 17 October 2012 Accepted: 5 November 2012 JEL codes: O32, G21 219 �Alica PANDZO, Kemal TALJANOVIĆ & Selma JAHIĆ Introduction Since its conception, microfinance has been promoted as an essential economic tool for social sustainability and poverty alleviation. Microfinance is based on a premise that providing financial services (most commonly in form of credit) to the most vulnerable populations, who would otherwise not have access to standard bank financing, would empower people to get out of poverty by capitalizing on their own skills and ideas. In developing and post-conflict countries, such as Bosnia and Herzegovina (BiH), microfinance has been used as a tool to raise employment and revive economic activity by targeting micro-business by microcredit organizations (MCOs). This ‘bottom up’ approach has received popularity as an alternative to the traditional top-down approach used by international aid organizations to stimulate economic growth and development through various projects and funds delivered to governments of developing countries.1 Even though microfinance has been around since the 1970, there is still no agreement on the real impact of microfinance. While many studies have shown results of positive economic and social impact of microfinance (Dunn, 2005) the appropriateness of different tools and methods applied is often questionable and makes them impossible to compare. This has contributed to growing criticism of microfinance in recent years (Bateman 2007, 2010, 2011). A recent study assessing the use of microfinance in BiH (Welle-Strand et al., 2010) concludes that microfinance is a better tool for improving individual economic performance of micro finance institutions (MFI) and their individual clients, than for achieving broader social goals. What is clear is that amidst such hard times and controversy, having a clear social mission and the ability to track and measure organizations realization of that mission and goals, is of increasing importance for individual MCO and the microfinance sector as a whole. It is also clear that major social issues such as poverty or equality cannot be solved by any single institution or type of organization. Collaborative efforts and sharing of information and knowledge are needed. Journal of Economic and Social Studies 220 �Utilizing Information Systems for Measuring Impact on Social Sustainablity: Survey of Microcredit Organizations in Bosnia and Herzegovina The increasing capability and availability of Information and Communication Technologies (ICTs), is allowing innovative solutions to be applied in this field supporting collaboration and resulting in resource and cost savings, while maximising outputs. The latest trends in impact measurement systems are the development of web-based systems which coordinate efforts of impact monitoring by many different organizations who share the same social goals. The goal of this study is to assess the current practices and potentials of using information systems to support realisation of social mission and goals of microfinance organizations in Bosnia and Herzegovina. In order to do this, we focus on answering the following research questions: 1. Do MCOs have a systematic approach to measuring their social performance and impact? 2. Do MCOs have the necessary ICT infrastructure and capabilities to support impact monitoring? 3. How can information systems be used to more accurately and efficiently measure social impact of microcredit at the level of BiH? We first provide an overview of microfinance as a tool of social sustainability and development and introduce the innovative ways in which ICTs are being used to facilitate/enhance the process of social performance and impact measurement. We then present the findings of an empirical study of social impact measurement practices among MCOs in BiH. Recommendations are given for strengthening social performance and impact monitoring practices of the microfinance sector in BiH by applying the most innovative ICT trends in the field. Overview of Microfinance Social sustainability and microfinance Social sustainability is an element of sustainable development which “occurs when the formal and informal processes, systems, structures and relationships actively support the capacity of current and future generations to create healthy and livable communities. Socially sustainable communities are equitable, diverse, connected and democratic and provide a good quality of life” (Barron and Gauntlett, 2002, pp.18). At a practical level, social sustainability assessment is often conducted through social impact assessment by focusing on principles such as income and employment, education, skills, consumption or participation (Oman and Spangerberg in Colantonio, 2009). 221 �Alica PANDZO, Kemal TALJANOVIĆ & Selma JAHIĆ Modern microfinance was pioneered in the late 1970’s by a Bangladeshi banker and economist, Muhammed Yunus, who used small credits as a way to provide self employment to people (primarily women) who had talent but no money. Such people could not access regular loan facilities through banks as they had no collateral, were unemployed or worked in the informal sector hence could not prove income generation. Hence, they would often fall prey to loan sharks charging huge interest rates (Kumar, 2010). The social objective most MCOs today is poverty alleviation, while many also focus on small business start-ups, employment generation, empowerment of women, increasing level of education among children and youth, etc. Poverty eradication is also the no.1 Millennium Development Goal (MDG) with a target of cutting extreme poverty in the world by half by the year 2015. To help achieve this goal, the UN designated 2005 as the International Year or Microcredit, with a goal of promoting access to finance to the poor. It is now estimated that 160 million people in developing countries are today served by microfinance through MFIs which range from small nonprofit organizations to large commercial banks. In addition to microcredit, some offer other services such as deposit, saving accounts, financial and business advice or marketing and technology services. The average interest rate charged by MFIs is 27%, which is significantly higher than what is charged by the banks (CGAP, 2006). High interest rates are justified by higher risk profile of this client category and high administrative costs of serving clients in remote areas Even though the terms 'social performance' and 'social impact' are often used interchangeably, it is important to stress the difference between the two. The Social Performance Taskforce defines social performance as “the effective translation of an institution’s mission into practice in line with accepted social values” so it is concerned with effectiveness of internal organisational processes in order to achieve the organisational mission. Social impact, is the improvement in the lives of people that can be directly linked to organizations activities (SPT, n.d.). Social impact is therefore just one element of social performance. Journal of Economic and Social Studies 222 �Utilizing Information Systems for Measuring Impact on Social Sustainablity: Survey of Microcredit Organizations in Bosnia and Herzegovina Microfinance in Bosnia and Herzegovina BiH has a population of 3.8 million (BiH Agency for Statistics, n.d.). Microfinance was first introduced to BiH in 1996, shortly after the war ended, through a Local Initiatives Microfinance Project (LIP I) financed by the World Bank and a number of donor countries. First MCOs issued loans to micro-businesses (both formal and informal), who were affected by the war and otherwise had no access to regular credit lines. Currently there are 23 MCOs registered in BiH, of which 19 are non-profit microcredit foundations (MCF) and 4 are profit microcredit companies (MCC). Both types of institutions are limited to providing credit services, while deposit taking is reserved only for banks. The Association of Microfinance Institutions (AMFI) was formally set up in 2003 as a network which promotes synergies and allows knowledge sharing and transparency between its members. Today, the 12 largest MCOs in BiH are members of AMFI and together they cover more than 98% of the market share in the country. After 10 years of flourishing growth, end of 2008 marked the start of a crisis for the microfinance sector in BiH. The downturn closely followed the 2008 economic crisis. The most quoted reason for it by industry experts is the over-indebtedness of clients. The over-indebtedness was caused by concentrated market competition and erosion of MFI lending discipline (Chen, Rasmussen, and Reille, 2010). At the end of 2011 the total portfolio of the microfinance sector in BiH was at EUR 308 million, which is drastically down from its peak of EUR 699 million at the end of 2008.The sector is now showing signs of improvement and recovery. Total MCO sector has recorded a profit in 2011 (EUR 6.9 million), after two years of significant sector losses (Banking Agency of FBiH and Banking Agency of RS, 2012). ICT Enabled Trends and Innovation There is quite a lot of guidance and information about tools and methods used for social performance monitoring (SIM Pilot project, 2008, pp.6), however there is very little about the use, effects and role of ICTs in supporting this process. As majority of MCOs operate in developing countries and remote areas they commonly have a problem with a lack of basic reliable ICT infrastructure and lack of local knowledge (Blantz, 2010). 223 �Alica PANDZO, Kemal TALJANOVIĆ & Selma JAHIĆ Another common problem of effective outcome measurement is that it is made up of isolated efforts, using non standardised methods and indicators, producing results which cannot be compared. Major social issues such as poverty or child education cannot be solved by efforts of any single program or type of organization. There is also a lot of duplication of effort, time and resources as organizations with the same objectives try to measure and evaluate their outcomes. Such issues, combined with the advancements in ICT have led many organizations to develop innovative webbased systems for coordinating efforts in measuring performance and outcomes of hundreds or thousands of social enterprises within a field (Kramer, Parkhurst, and Vaidyanathan, 2009). A report produced by FSG (Kramer et al, 2009) provides details of 20 such systems and groups them into three different categories, characteristics and benefits of which are summarised in the Table 1. Table 1. Characteristics and benefits of shared measurement systems Source: adapted from FSG report Journal of Economic and Social Studies 224 �Utilizing Information Systems for Measuring Impact on Social Sustainablity: Survey of Microcredit Organizations in Bosnia and Herzegovina Such systems can provide numerous advantages to all organizations with a social mission and a need to measure performance and outcomes, including MFIs. Setting up such systems requires strong leadership and engagement of different organizations in the design phase. It also requires substantial funding through a multi – layer development period (Kramer et al, 2009). Participating organizations often pay a fee to have access to data a report generation, while they also input their own data into the system. Research Methodology Current ICT capability and impact measurement practices of MCOs in BiH were studied using a survey questionnaire and follow-up interviews. The data was collected during March and April, 2012. The survey was sent to the person in charge of ICT (IT managers) in all 23 registered MCOs, however for most organizations marketing manager and IT managers both took part in completing the survey. The survey questions can be grouped in the following main areas: Organisational goals and services; ICT infrastructure, ICT use and management; Impact measurement process; Perceptions. Analysis of Results We received a total of 10 survey responses of which 6 were followed up with phone interviews. The survey response rate of 43% is considered satisfactory as the survey was sent to all existing BiH MCOs and the 10 institutions that have responded cover 75% percent of the microcredit market in BiH. One of the respondents is registered as a microcredit company, while the others are microcredit foundations. Figure 1 shows the distribution of surveyed MCOs. 225 �Alica PANDZO, Kemal TALJANOVIĆ & Selma JAHIĆ Figure 1. Size of MCOs according to portfolio size (left) and number of active loans (right) Organisational Goals The prime target market for 60% of respondents is the low income population and hence their primary development goals are poverty reduction and employment generation. Second highly ranked target market are women, followed by microbusinesses. On average, 68% of clients are from rural areas. Average loan amount issued is EUR 1,123. ICT Infrastructure and Spending Our results show that MCOs in BiH are overall well equipped with reliable ICT infrastructure. All credit officers and office staff have PCs and use PCs them in everyday tasks. 40% of organizations also supply their field credit officers with laptops and 30% with mobile or smart phones. All credit officers have e-mail accounts which they use daily and have access to internet at their offices. These are pleasing results considering that a survey of internet usage in BiH conducted by GFK in 2009, (UNDP, 2010, pp. 175) showed that only 30% of BiH companies have internet connections. 50% of MCOs have their offices linked via a VPN, while all offices have their PCs linked in a local network. MCOs employing over 50 staff, have IT/IS departments, whereas the smaller ones usually have one person in charge of all ICT in the organisation. Very little attention is paid to strategic use of information systems which is reflected by non existence of IT strategy in 70% of surveyed MCOs. Use of Journal of Economic and Social Studies 226 �Utilizing Information Systems for Measuring Impact on Social Sustainablity: Survey of Microcredit Organizations in Bosnia and Herzegovina cross functional information systems is also low. Enterprise Resource Planning system is implemented in one and Management Information Systems are used in 50% of the surveyed MCOs. None of the MCOs indicated use of CRM, GIS, DSS, KMS or Experts Systems. Impact Measurement Practices Only two of the survey participants, collect information which is used in social impact measurement. MCF EKI (EKI) was found to have a systematic approach to measuring impact of microcredit on poverty – their primary development goal. EKI’s strategic goal is to service 40% of poor clients, and at least 5% of these clients to achieve a significant improvement within 12 months of taking out a loan. In order to measure achievement of this end statement, EKI has developed its own poverty assessment method, which is used to categorise all clients at the time they first take out a loan. Indicators used in this categorization are: income, education, housing, formal employment, no. of children, place of residence and physical ability. A point scale is applied, and all client scoring over 6 points are categorized as poor. Twelve months later, a sample of 300 clients from the poor category are followed up in focus groups to assess whether there has been any significant improvement in their quality of life. To assess quality of life EKI uses a second set of indicators which include: monthly household income, possession of a car / PC / LCD, internet access, level of competed education, preventative healthcare, travel outside of place of residence, etc. EKI holds about 8 – 10 focus groups every year at different locations. The results are a combination of qualitative and quantitative data (MKF EKI, 2009). Field staff collects information from clients in paper form. Back at the office, the data is inputted into a web-based, in-house developed system for collecting and analyzing impact data. MCF Partner (Partner) was founded by Mercy Corps in late 2000. Partner is focused on creation of jobs, increased income and creating a more stable environment. Partner's target population is rural (84.91% of active clients) and women (42.62 % of active clients) (Partner, n.d). Partner has initiated the incorporation of social performance management (SPM) into all business processes, which include: strategic planning, client relationships (loyalty and adjusting our service and product offer to clients' needs), financial management, human resources, information systems and organisational culture. Poverty measurement tools used by Partner are per capita household expenditure and per capita household income. 227 �Alica PANDZO, Kemal TALJANOVIĆ & Selma JAHIĆ Another MCO, not included in our results, who has been actively managing its social performance and impact is MCF Prizma (Prizma). With 67,742 active borrowers, and employing over 250 staff, Prizma is also amongst the largest MCOs in BiH (Prizma MKF, n.d). Prizma explicitly targets poor entrepreneurs (primarily women). Like EKI, Prizma has developed its own poverty assessment scorecard which is used in poverty monitoring by assessing clients on entry and every time they take out a new loan. The following indicators are included as part of the poverty scorecard: education level of woman partner or household head, residence, employment status, family size, the frequency of the consumption of luxury foods (sweets and meat) and the ownership of a television, stereo and motor vehicle (IFAD, 2009, pp.35). Prizma also conducts exit monitoring twice a year, using semistructured interviews. The third component of Prizma’s social performance monitoring system are focus groups, used to obtain information on reaching, serving and impacting the target market (Crnkic, 2010). The Social Performance Management information system at Prizma is developed internally and consists of five core components: monitoring poverty outreach, monitoring the change of poverty status, exit monitoring, client satisfaction monitoring and focus group discussions. Perceptions The final section of the questionnaire looks at participants perceptions regarding the effectiveness of the outcome measurement process within their organisation, the use of ICT by staff in general and use of ICT to support the outcome measurement process. Table 2 show the average answers to those questions. Scale: 1- strongly disagree, 5 – strongly agree. Journal of Economic and Social Studies 228 �Utilizing Information Systems for Measuring Impact on Social Sustainablity: Survey of Microcredit Organizations in Bosnia and Herzegovina Table 2. Perceptions category averages Question a) The results of measuring the impact of microcredit are of great importance to strategic planning in our organisation b) The process of measuring impact is of crucial importance to our organisation c) My organisation has effective, systematic approach to measuring social impact on customers. d) My organisation is using ICT to support the process of social impact measurement in the best possible way e) Employees of my organisation are highly capable in conducting their everyday work tasks using a computer. f) Employees within my organisation are willing to accept new technologies and adjust to the new ways of carrying out their work. g) MIS in my organisation is highly effective for collecting, analysing and reporting on our social impact. h) The existing system for measuring impact of microcredit allows us for effective monitoring of the realisation of our strategic goals. i) The existing system for measuring impact of microcredit allows us to effectively evaluate our existing products and develop new products. j) Government of BiH should work more on setting up a system of social performance monitoring. k) Having access to a central database of social performance measures at the level of Bosnia and Herzegovina would be of great value to our organisation. l) We are willing to share the results of our measurements with other organizations for mutual benefits. Average 3.8 3.7 2.1 2 4 3.8 3.3 2.5 2.5 4.5 4.5 4.2 Some MCOs who in the previous section answered that they do not collect data that can be used for social impact measurement rated the effectiveness of their process and MIS in supporting the impact measurement process, fairly highly. We interpret this inconsistency as an indication of a lack of understanding of the social impact measurement process. A large majority of the MCOs agrees that a central database of social performance measures at the state level is needed (questions j. and k. in table 2). There is also a very high level of willingness to share the results of measurements with other organizations for mutual benefits (4.2). MCOs appear to have highly skilled IT staff and employees who are willing to embrace new technologies. Respondents were asked to rate which of the given issues pose the biggest obstacle to the optimisation of the social impact measurement process for their organisation. Table 3 shows the total points awarded to each issue. Scale: 1 – smallest issue, 5 – biggest issue. 229 �Alica PANDZO, Kemal TALJANOVIĆ & Selma JAHIĆ Table 3. Perceived obstacles for optimisation of the impact measurement process Stated issue Lack of coordination at the level of the sector Lack or inconsistency of legislation Lack of human resources for conducting field studies Lack of knowledge about impact measurement methods Lack of accurate information received from clients Lack of information about the benefits of impact studies for MCOs Lack of awareness about the need to measure impact Lack of financial resources Lack of skilled IT staff Lack of management support Total Points 44 42 38 36 34 32 30 30 26 20 Highest ranking issue was the lack of coordination at the level of the sector (44). This indicates that there is an agreement amongst MCOs about the need to pool efforts and minimise duplication. Lack of financial resources and field staff was rated as an issue by smaller MCOs. Lack of skilled IT staff and management support was consistently rated as a low issue across all MCOs. Discussion Our results show that MCOs in BiH are overall well equipped with reliable ICT infrastructure. MCOs also appear to have (based on their perceptions) highly skilled IT staff and employees capable of using ICT to perform their business tasks and willing to embrace new technologies. However, very little attention is paid to strategic use of information systems which is reflected by non existence of IT policy in 70% of surveyed MCOs. ICTs should be viewed as one of key organizational resources and not just as a support function or a cost. This means that ICT can play a crucial role in realisation of organizational goals. Organizational goals (social and financial) have to be aligned with IT goals and applications must be developed and implemented according to those plans in order to ensure that goals are achieved most efficiently. Overall, MCOs in BiH show a low commitment to systematically managing their social performance and measuring social impact. Majority do not have systems in place for assessing and tracking the realisation of their social mission. Reports and data presented on MCOs websites is focused on financial indicators, with social indicators being obviously neglected. MCOs need to put more effort into showing equal commitment to both elements of the double-bottom-line. This study found only three MCOs who have placed considerable Journal amountofofEconomic effort inand systematically Social Studies 230 �Utilizing Information Systems for Measuring Impact on Social Sustainablity: Survey of Microcredit Organizations in Bosnia and Herzegovina managing their social performance. All three are funded by international aid agencies for whom social performance is a key issue These MCOs have built notable internal expertise in managing social performance and two have developed their own measurement tools and methods such as the poverty assessment scorecard developed by MCF Prizma (IFAD, 2006 and Crnkic, 2010,) and MCF EKI (MKF EKI, 2009). During phone interviews 4 MCOs said that they had to put in a lot of time and effort into conducting assessment of market potential studies, as no statistical data was readily available. Availability of measure such as (household income, average pay, level of education, etc.) would have cut down on time and duplication of effort across MCOs. BiH has undergone many changes over the last 20 years, especially after the war in early 1990s .The last census was conducted just before the war broke out in 1992. Many people have migrated since then or have been displaced. Because of this lack of centrally managed data, there is a lot of duplication of effort and resources in the MCO and NGO sector in general. Centralised data is currently available through AMFI and the Central Bank of BiH. AMFI members quarterly report on financial data which is distributed to all members. The Central Credit Registry of Central Bank of BiH is a database off all individuals and legal entities in the country indebted with commercial banks, microcredit organizations, savings - credit organizations and Leasing. This registry is used for checking client credit history by the same institutions and the registry is updated daily since April 2012 (Public relations of CBBH, 2012). Conclusion and Recommendations The goal of this research was to assess the current practices of using information systems to support realisation of social mission and strategic goals of microfinance organizations in Bosnia and Herzegovina. Our findings show that the existing ICT infrastructure capabilities are at a pleasing level but they are not being effectively used by MCOs for monitoring and evaluating their social mission. We recommend that the best way to achieve better results in this field is by developing a shared measurement system for impact monitoring at the level of microcredit sector in BiH. Use of such system would enable the coordination of efforts within the microcredit 231 �Alica PANDZO, Kemal TALJANOVIĆ & Selma JAHIĆ sector which is necessary in order to achieve broader social goals. Further research is needed to investigate the most appropriate type of shared measurement system, impact measurement methodologies and measures that should be reported on. Implementation of such systems is not an easy task and relies on commitment from various stakeholders. We will try to briefly outline the possible responsibilities of those different stakeholders. Donors and creditors can play a big part by funding different phases of shared system development. They can also influence MCOs to pay more attention to achieving their social mission, by putting more weight on evidence of social performance management practices when providing future financing to MCOs. The association of microfinance institutions in BiH – AMFI has a big role to play in promoting, educating and raising awareness about social performance management practices among its members. They should further promote the achievements that some of their members have made in this field and encourage collaboration. AMFI could also be the central coordinator for the planning and development of the shared system of impact measurement at the sector level. Another possible coordinating body could be the Central Bank of BiH. Whoever decides to take on this complex task needs to show good leadership and coordination ability. A possible limitation could be the willingness of MCOs to provide social data on their clients and the regulatory limitations regarding privacy of information. Even though participants in our study indicated high level of willingness to share data, this should be further explored. Accuracy of data provided by clients may also be an issue, as indicated by participants of our study. Use of shared systems for impact measurement should be further explored by the microfinance sector in BiH as it has potential to play a key role in solving major social problems. Further research is needed to investigate the most appropriate type of shared measurement system, impact measurement methodologies and measures that should be reported on. Journal of Economic and Social Studies 232 �Utilizing Information Systems for Measuring Impact on Social Sustainablity: Survey of Microcredit Organizations in Bosnia and Herzegovina References Banking Agency of Federation of BiH. (2012). 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Impact of microcredit on clients in Bosnia and Herzegovina, Final report, Sarajevo and Banja Luka: LIP II. Retrieved from http://www.europeanmicrofinance.org/data/file/benchmark/Impacts_of_microcredit_on_clients_in_BiH. pdf BiH Agency for statistics. (n.d). Retrieved from http://www.bhas.ba/ Blantz, E. (2010). Accelerating microfinance impact with ICT: Learning from Democratic Republic of Congo (DRC) and Sierra Leone. San Francisco, CA: Inveneo. Retrieved from http://www.inveneo.org/download/accelerating_microfinance_impact_with_ict_03_ 2010.pdf 233 �Alica PANDZO, Kemal TALJANOVIĆ & Selma JAHIĆ CGAP. (2006). Why do MFIs charge high interest rates? http://www.cgap.org/p/site/c/template.rc/1.26.1309/ Retrieved from Chen, G., Rasmussen, S., & Reille, X. (2010). Growth and Vulnerabilities of Microfinance. Washington,DC: CGAP. Retrieved from http://www.microfinancegateway.org/gm/document-1.9.42432/Growth and Vulnerabilities.pdf Colantonio, A. (2009). Social sustainability. Linking research to policy and practice. Paper presented at the conference “Sustainable development: A challenge for European research”, Brussels, 26- 26th May 2009. Crnkic, K. (2010). Managing social performance through integrated approach – Prizma case study. Collection of monographs No.13. Madrid, Spain: Foro nantik lum de microfinanzas. ISBN: 978-84-693-2691-6. IFAD, (2006). Assesing and managing social performance in microfinance. Rome, Italy: IFAD. Retrieved from http://www.ifad.org/ruralfinance/pub/performance.pdf Kramer, M., Parkhurst, M., & Vaidyanathan L. (2009). Breakthroughs in shared measurement and social impact. FSG Social Impact Advisors. Retrieved from www.fsg.org Kumar, V. (2010, April 15). Need to draw a line between microfinance and loan sharking: Prof Yunus. Microfinance focus. Retrieved from http://www.microfinancefocus.com/news/2010/04/15/need-to-draw-a-line-betweenmicrofinance-and-loan-sharking-prof-yunus/ MKF EKI. (2009). Changes in poverty lines. Retrieved from http://www.mixmarket.org/sites/default/files/EKI_Changes_in_poverty_lines_for_ MIX.doc Partner MKF, (n.d) http://www.partner.ba Partner Microcredit Foundation. Retrieved from Prizma MKF. (n.d). Welcome to the Microcredit Foundation Prizma. Retrieved from http://www.prizma.ba/index.php?lang=en Journal of Economic and Social Studies 234 �Utilizing Information Systems for Measuring Impact on Social Sustainablity: Survey of Microcredit Organizations in Bosnia and Herzegovina Public relations of CBBiH. (2012). Daily updating of the Central credits registry. Central Bank of Bosnia and Herzegovina. Sarajevo 26.04.2012. Retrieved from http://www.cbbh.ba/index.php?id=809&lang=en Social Performance Taskforce (SPT). (n.d) What is social performance? Retrieved from http://www.sptf.info/what-is-social-performance SIM pilot project. (2008). Social impact measurement: Project document. Results of a pilot project to develop a tool for measuring social impact of microfinance. Dakar Fann, Senegal: INAFI International Foundation. United Nations Development Programme (UNDP). (2010) eGovernanace and ICT Usage Report for South East Europe - 2nd Edition, Sarajevo: UNDP Welle-Strand, A., Kjollesdal, K. & Sitter, N. (2010). Assesing microfinance: The Bosnia and Herzegovina case. Journal Managing global transitions, 8 (2) 145 – 166. University of Primorska, Faculty of Management. Retrieved from http://www.bi.edu/OsloFiles/MICRO/2010/Assessing%20Microfinance.pdf (Endnotes) 1 The traditional top-down approach provides large sums of aid to governments of developing countries, with benefits expected to trickle down to citizens. However a large percentage of the aid is lost in costly logistics, political interference and corrupt practices. The bottom-up approach consists of issuing aid (in form or loans) directly to individual citizens. 235 � 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. 1395 Title A name given to the resource Utilizing Information Systems for Measuring Impact on Social Sustainability: Survey of Microcredit Organizations in Bosnia and Herzegovina Author Author Alica , Pandzo Kemal, TALJANOVIC Selma, JAHIC Abstract A summary of the resource. Microfinance has been used as a tool for social sustainability and development since the 1970s. In microfinance, assessment of social sustainability is often conducted through client impact monitoring. This study explores the impact measurement practices of microcredit organizations in Bosnia and Herzegovina and their use of information systems in this process. We draw on the latest trends of using shared measurement systems for impact monitoring, to point out the potential of using such systems to achieve sustainable impact on wider social issues in Bosnia and Herzegovina. This paper outlines the roles and responsibilities that different stakeholders should play in the system development process. 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 2012 Keywords Keywords. Article PeerReviewed H Social Sciences (General),HB Economic Theory,HG Finance 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. 1305 Title A name given to the resource Ethno-Linguistical and Dynamic Transformation Process of Bosnia and Herzegovina Author Author Azamat, Akbarov Ulku, Ayhan Abstract A summary of the resource. Language and identity are two items impossible to ignore in a `nation` defined by following different elements within it and with language indicating feelings of group belonging. Bosnia and Herzegovina has a very distinguished place in the world with its history and mosaic-like unity, and has included three ethnicities over recent centuries. fromt time to time, similarities have bounded in contrast to the differences seperating and deepening the `otherness feeling`. Governing rules in the Bosnia and Herzegovina territories have had the leading effect of shaping the characterisitics of those areas. The most distinct turning points writing the fate of those territories were the Ottoman Empire and the former Yugoslavia. In our study, we aim to study that process in terms of ethnical and linguistic perspectives. Key Words: Ethnicity, Language, Boshnjak, Serbian, Croatian, Transformation Date A point or period of time associated with an event in the lifecycle of the resource 2012 Keywords Keywords. Article PeerReviewed P Philology. Linguistics,PE English,PR English literature https://omeka.ibu.edu.ba/files/original/59946c2880a65b856ec96837b21dee3d.pdf f9d751befef4ce4106edb27eca86a198 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. 1391 Title A name given to the resource The Efficiency of Banking Sector in Bosnia and Herzegovina in Comparison to Slovenia: Comparative Analysis Author Author Azra, Bičo Mehmed, Ganić Abstract A summary of the resource. This paper analyzes the banking sector's performance of the two former Yugoslavian republics, Slovenia and Bosnia and Herzegovina. This study is the first study examining the efficiency of banking sector of two countries. Countries have formed their banking systems, with their central banks as central and main monetary institutions. Performance of the banking sector of the two countries is being examined, taking into account that one country is a post war country, while other succeeds to join to European Union. It is determined using the data on return on assets (ROA) as indicator of profit, and return on equity (ROE) as an expression of rentability of banking sector, then compared to nonperforming loans (NPL) in order to foreseethe affect on future lending. Foreign direct investment is also being examined due to the large portion of it was initially made into banking sector. Financial health of the banking sector is analyzed by comparing deposits to loans figures, in several structural aspects. Based on data Slovenia’s banking sector has higher return on equity throughoutyears, therefore it is more profitable.On the other hand Bosnia and Herzegovina’s banking sector is more risk protected, since banks have higher adequate capital that offers protection against risk. 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 2012 Keywords Keywords. Article PeerReviewed H Social Sciences (General),HB Economic Theory,HG Finance