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Mergers and Acquisitions in European Banking Sector: A Performance Analysis - Case Study: Czech and Slovak Republic
Dullová, Jana ; Hrubý, Zdeněk (advisor) ; Baxa, Jaromír (referee)
The European banking industry has undergone a remarkable wave of consolidation induced by profound changes in technology and regulation over the last two decades. Consequently, the focus from the bank growth has been shifted to the bank efficiency, the bank profitability and the value creation. The preferred strategy to enhance the effectivity has become accomplishing of a merger or an acquisition transaction. The aim of this diploma thesis is to investigate the influence the mergers and acquisitions have on the performance of the Czech and the Slovak banking sector. In order to do so we apply a two-stage approach consisting of a linear programmimg DEA method and a Tobit regression approach. The period under study is 2000 - 2006 and the total number of banks in the sample is 36 or 38. In our analysis we did not succeed in finding the evidence of the positive influence of the mergers and acquisitions on the bank performance. However, we were substantially limited by the unavailability of the bank data. For the future research, it might be interesting to find out whether a new time series cleaned from the post-transformation influences would offer significant results.
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The impact of foreign direct investment on domestic investment in selected countries of Central and Eastern Europe from 2008-2019
He, Ma ; Baxa, Jaromír (advisor) ; Korosteleva, Julia (referee) ; Semerák, Vilém (referee)
This article applies the total investment model and 12-year (2008-2019) panel data of 11 countries in Central and Eastern Europe to examine the crowding-in or crowding- out effect of FDI on domestic investment. Moreover, in the empirical research, this article also tests the specific impact of the formation of FDI domestic capital in different economies and different periods in Central and Eastern Europe. Our research results show that FDI has no obvious crowding-in or crowding-out effect on the domestic investment of the total sample in the long term. In addition, FDI has a long-term crowding-out impact on domestic investment in underdeveloped economies and advanced economies in 11 countries. However, in the short term (2008-2012), FDI has a substantial and apparent crowding-in effect on domestic investment in underdeveloped economies. Furthermore, in the latter stage of the research period (2013-2019), FDI has no obvious crowding-in or crowding-out effect on domestic investment in the two different economies. This article also deeply analyzes the causes of the crowding-in or crowding-out effect of FDI and puts forward reasonable policy recommendations. Keywords: FDI, Crowding in, Domestic investment, underdeveloped economies.
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Credit risk of subsidiaries of foreign banks in CEE countries
Cheng, Jiamin ; Hanzlík, Petr (advisor) ; Silva, Rui (referee) ; Baxa, Jaromír (referee)
This thesis aims to study the banking characteristics of the parent bank of foreign banks and the influence of the economic environment of the home country on the credit risk of subsidiaries. The study collected a data set of 32 foreign banks in eight CEE countries (joining the EU in 2004) from 2009 to 2020 and conducted an empirical analysis using a fixed-effect panel regression model. Credit risk (NPL) is used as the dependent variable, and the explanatory variable is divided into four groups according to the home country and host country, the bank level, and the macroeconomic level. The regression results show that the profitability of the parent bank has a negative impact, while the liquidity, size, capital, and credit risk of the parent bank has a positive impact on the credit risk of the subsidiary. Moreover, the inflation in the country where the parent bank is located has a negative influence on the credit risk of the subsidiary, while the GDP growth and unemployment rate in the country where the parent bank is located leads to an increase in credit risk. These results show that international risk is transferred from the parent country to the host country through a new channel for foreign banks. Key words: credit risk, fixed effects model, CEE countries, banking sytem, foreign bank
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The Impact of Political Determinants on Economic Growth : Analysis of AKP Era
Küçükkayıkcı, Ceren ; Cahlík, Tomáš (advisor) ; Baxa, Jaromír (referee)
1 Master Thesis Proposal Institute of Political Studies, IEPS programme Faculty of Social Sciences Charles University in Prague Date: 16.10.2020 Author: Ceren Küçükkayıkcı Supervisor: doc. Ing. Tomas Cahlik, CSc. E-mail: 91064497@fsv.cuni.cz E-mail: cahlik@fsv.cuni.cz Phone: +420773924728 Phone: Specialisation: IEPS Defense Planned: September 2021 Proposed Topic: The Impact of Political Determinants on Economic Growth : Analysis of AKP Era Registered in SIS: Yes Date of registration: 30.05.2019 (in case of No give an expected date) Topic characteristics / Research Question(s): The general question of this thesis is how the change in political determinants have an impact on economic growth in Turkey during the AKP era between 2002 and 2019. We would like to demonstrate the reason for the economic failure of AKP in line with the political and economic institutions and political and civil rights. AKP era will be analyzed into three sections, which are 2003-2007, 2007-2011, and 2011 and 2019. Economic growth will be measured by GDP per capita. Working hypotheses: 1. Hypothesis #1: There is an indirect relationship between political determinants and economic growth. 2. Hypothesis#2: Economic institutions and political institutions are endogenous and are defined by the collective choice of society. 2 3....
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Okun's Law and Social Expenditure
Batíková, Marta ; Hanus, Luboš (advisor) ; Baxa, Jaromír (referee)
This thesis analyses Okun's law and its cross-country differences based on social expenditures. To estimate the law in time, Nadaraya-Watson kernel estimation is employed, which has not been applied to Okun's law in any previous study. Thus, to assess the robustness of the model, the statistical testing of hypotheses is used to evaluate the time-varying coefficients. The analysis is executed on OECD countries between 1995 and 2019, and the results are mainly in line with the previous literature. Periods with higher GDP growth and lower unemployment rates, on average, tend to have higher Okun's coefficients. Moreover, cross-country comparison reports the tendency of countries with, on average lower unemployment spending and higher GDP per capita to exhibit higher Okun's coefficients.
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Buybacks to Bailouts: Firm Behavior and Implications for Financial Instability
Curran, Kevin ; Baxa, Jaromír (advisor) ; Dědek, Oldřich (referee)
Share repurchases reached a decade-high level in 2019, just as US equity indices reached a historical zenith, a move in tandem that supports more than merely a correlative relation. However, this relationship moves beyond that of just a close tandem move in indices alongside share repurchases, but to the behavior of firms which began to leverage themselves in order to promote the evermore profitable strategy of large buyback programs. Those repurchases indicate an idiosyncratic and procyclical leveraging that, while much smaller in scope and less combustible by lack of derivative amplification, led to the gorging on unsustainable debt described by Hyman Minsky and experienced in the Great Financial Crisis in the banking industry. In this case, the 'Minsky moment' that may have inevitably popped the self-promotion bubble came in the form of the 'black swan' event of the coronavirus outbreak. This paper aims to historically frame the issues, with delimitation of the effect of buybacks from 2009 to early 2020 with scant reference to historical factors influencing the increased usage of share repurchase programs. The analysis within this historical scope will reflect empirical measures on the market-wide level of share buybacks and debt levels alongside the concurrent equity index acceleration....
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Relation of Debt Relief to Social and Military Expenditures: Empirical Evidence
Nykl, Jan ; Baxa, Jaromír (advisor) ; Pleticha, Petr (referee)
This work focuses on the relationship between sovereign debt relief on one side and government expenditure on healthcare, education, and armed forces on the other side. Each effect is estimated separately using two dynamic panel data methods: Arellano-Bond Difference GMM and Arellano-Bover/Blundell-Bond System GMM. I use three subsets of a dataframe that contains 114 recipients of post-1991 debt relief. The health spending analysis was performed on 110 countries observed in the period of 1995 to 2017; the education expenditure equation was estimated using data on 104 countries from the period 1991 to 2018; and the military spending subset contains data on 103 countries also observed between 1991 and 2018. I found a statistically significant negative effect of debt relief on military expen- diture and a significant positive effect of debt relief on education spending. The latter was, however, sensitive to the choice of estimation method. The effect on health expenditure is unclear. 1
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The Czech exchange rate floor: Depreciation without inflation?
Baxa, Jaromír ; Šestořád, Tomáš
After the introduction of an exchange rate commitment and an immediate 7% depreciation of the Czech koruna of in 2013, output growth resumed but inflation remained low. Consequently, the Czech National Bank did not return policy to normal for more than three years. Using a time-varying parameter VAR model with stochastic volatility, we show that this was not surprising. The exchange rate pass-through to prices had been rather low and gradually decreasing since the early 2000s, suggesting limited potential effects of the exchange rate commitment on inflation. On the other hand, the pass-through to output growth increased. These results hold even when the period of the exchange rate floor and the zero lower bound is excluded from the sample, and they are robust to other sensitivity checks. Our results are consistent either with a flattened Phillips curve, or rising quality of the Czech exports and participation in global value chains, or a small effect of the exchange rate commitment on inflation expectations when not paired with temporary price-level targeting. Moreover, we highlight the usefulness of models accounting for time variation of parameters for policy analysis.
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Behavior and institutional change
Baxa, Jaromír ; Kouba, Karel (advisor)
The main aim is to explain, why we can observe strong persistence in human or firm behavior despite substantial change of economic environment and why persistence of informal institutions occurs. During recent two decades there were various trials to provide explanation of persistence of behavior based on presumption of existence of path dependency and increasing returns, reflecting findings of experimental economics with methodological background in bounded rationality or using simulations of interactions or networks. My practice is slightly different as I'm trying to incorporate findings of cognitive psychology and social cognitive learning into economics. Cognitive psychology implies that behavioral regularities, routines, are based on subjective mental models. Evolution of behavior can be now understood as evolution of routines and mental models, and thanks to their nature routines have high propensity to long persistence despite changing environment. This approach is applicable to evolution of informal institutions and it allows to explain persistence of them using shared mental models. Then informal institutions are seemed as behavioral regularities used by decisive part of the society and their evolution can be now described as diffusion of new behavioral regularity in the society and modeled using...
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