Contemporary Economics supports GIKA


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Volume 8 Issue 1 (2014)

CEO Emotional Intelligence and Firms’ Financial Policies. Bayesian Network Method original article

pp. 5-24 | First published in 31 March 2014 | DOI:10.5709/ce.1897-9254.128

Mohamed Ali Azouzi, Anis Jarboui


The aim of this paper is to explore the determinants of firms’ financial policies according to the manager’s psychological characteristics. More specifically, it examines the links between emotional intelligence, decision biases and the effectiveness of firms’ financial policies. The article finds that the main cause of an organization’s problems is the CEO’s emotional intelligence level. We introduce an approach based on Bayesian network techniques with a series of semi-directive interviews. The research paper represents an original approach because it characterizes behavioral corporate policy choices in emerging markets. To the best of our knowledge, this is the first study in the Tunisian context to explore this area of research. Our results show that Tunisian leaders adjust their decisions (on investments and distributions) to minimize the risk of loss of compensation or reputation. They opt for decisions that minimize agency costs, transaction costs, and cognitive costs.

Keywords: emotional intelligence; corporate finance; optimism; overconfidence; loss aversion; financial policy; Bayesian network

Age and gender effects of workforce composition on productivity and profits: Evidence from a new type of data for German enterprises original article

pp. 25-46 | First published in 31 March 2014 | DOI:10.5709/ce.1897-9254.129

Christian Pfeifer, Joachim Wagner


This empirical paper documents the relationship between the composition of a firm’s workforce (with a special focus on age and gender) and its performance (productivity and profitability) for a large representative sample of enterprises from manufacturing industries in Germany using newly available, unique data. We find concave age-productivity profiles and a negative correlation of age on firms’ profitability. Moreover, our micro-econometric analysis reveals for the first time that the ceteris paribus lower level of productivity in firms with a higher share of female employees does not go hand in hand with a lower level of profitability in these firms.

Keywords: ageing; firm performance; gender; productivity; profitability; Germany

Advantages and Disadvantages of Fiscal Discipline in Bulgaria in Times of Crisis original article

pp. 47-56 | First published in 31 March 2014 | DOI:10.5709/ce.1897-9254.130

Vasil S. Petkov


The global economic crisis of 2008 has posed serious challenges to the Bulgarian economy and was reflected in worsened macroeconomic indicators. The subsequent sovereign debt crisis in Europe further aggravated the situation and blocked its path to recovery. In line with the overall sentiment in the European Union (the EU), Bulgaria made maintaining fiscal stability a priority that it set out to accomplish by following a policy of austerity. The country managed to achieve the desired effect relatively quickly. It became one of the best performers in terms of budget deficit and government debt as a share of GDP (which are among the lowest in the EU). These accomplishments underlie international institutions’ greater confidence in Bulgaria, which has led to an increase in its credit rating. Nevertheless, the state has not managed to reap the maximum benefits that this type of policy offers. Fiscal sustainability was accomplished at the expense of economic growth, the slow pace of which was accompanied by impoverishment of the population, high unemployment, restricted consumption, and operational difficulties faced by real-sector companies. These problems fueled doubts about the adequacy of strict budget discipline, especially in times of crisis. They provoked the author to examine in greater depth the benefits and the drawbacks that such a policy ultimately offers to Bulgaria. The results show that the strict fiscal measures have put additional pressure on the already fragile economic growth and have a high social cost as well. All this justifies the need for the government to take on a new course to achieve economic recovery by means of more active state support that would stimulate a pickup in consumption and production activity.

Keywords: Bulgaria; fiscal discipline; economic growth

Evaluation of Factors Influencing Job Satisfaction original article

pp. 57-72 | First published in 31 March 2014 | DOI:10.5709/ce.1897-9254.131

Barbara A. Sypniewska


The term “job satisfaction” is derived from the humanities, psychology and sociology. In the field of psychology, it is a state where an employee has an emotional perception of his situation and reacts with feelings of pleasure or pain. In sociology, it is considered a variable in different categories related to how each employee evaluates and thinks about his work. Job satisfaction is closely related to the performance and quality of work performed by an employee and, consequently, translates into the success of an organization, because a satisfied employee builds and participates in the success of any organization. This article presents the results of the research conducted by the author in 2012 on a sample of 215 people. Respondents represented different organizations. The aim of the study was to identify and assess the significance of individual factors influencing satisfaction and dissatisfaction with work and demonstrate their impact on the overall assessment of job satisfaction. The study showed that between the weight attributed to individual factors and overall job satisfaction there are many statistically significant correlations referring mainly to selected on the basis of analysis respondents’ groups. The study confirms the raised thesis concerning the validity of research in the factors affecting the general feeling of satisfaction by the employees.

Keywords: job satisfaction; job contentment

Parametric Meta-Technology Frameworks to Study Technical Efficiency and Macro-Economic Effects in the European Banking System original article

pp. 73-88 | First published in 31 March 2014 | DOI:10.5709/ce.1897-9254.132

Bilel Jarraya


Bank efficiency scores usually serve as a tool for comparing institutions with each other while allowing us to quantify sub-optimal decision-making unit choices. In the case of inter-country comparisons, such differences can also arise because of macro-economic heterogeneity between countries. Previous studies estimated a common technology limit for a sample of banking institutions in different countries. The contribution of our paper is that we employ a parametric approach to specify meta-frontiers and to study the effect of macro-economic heterogeneity on banking technology development. First, we use a parametric directional distance function to specify the appropriate technology frontier for each nation and the meta-technology frontier that includes all country-specific frontiers. Then, we define the directional technology gap ratio referring to the inefficiency scores evaluated from meta-technology and country-specific technology frontiers. The estimated parameters are more significant in our model than in the general model, also called the common frontier model. Comparing the results of our model to those of common frontiers, we find a substantial variation not only in inefficiency scores but also in countries’ rankings. While resorting to a pooled linear regression model, we demonstrate that the assessed technology gap ratio exhibits a significant association with inflation rates and per capita GDP. This result proves the influence of macro-economic heterogeneity on banks’ efficiency and technological development.

Keywords: directional meta-technology; directional technology-gap ratio; directional distance functions; banking efficiency; macroeconomic heterogeneity

Determinants and perceptions of social mobility in Poland, 1992-2008 original article

pp. 89-102 | First published in 31 March 2014 | DOI:10.5709/ce.1897-9254.133

Katarzyna Sokołowska


The purpose of this article is to analyse the factors affecting social mobility in Poland, based on results obtained from the estimation of logit models for the years 1992-2008 as well as from interviews asking about the necessary conditions to achieve success in life. Data used in this work come from the Polish General Social Survey carried out by the Institute of Social Studies of the University of Warsaw on a representative sample of adult household members. This set contains interviews conducted in the years 1992-2008 and includes 16,234 respondents. Studies using logit models to answer the question posed in the present study show that the probability of success in life in Poland is determined by both ability and level of education; interview responses to the same question, however, show that family origins, parents’ level of education and connections are just as important. Most interestingly, the percentage of people indicating the importance of these factors was higher in 2002 than it was in 1992.

Keywords: intergenerational mobility; life success factors; logit model

Influence of quality of life on the state and development of human capital in Latvia original article

pp. 103-112 | First published in 31 March 2014 | DOI:10.5709/ce.1897-9254.134

Zhanna Tsaurkubule


Currently, the essence and forms of interrelation between human capital and quality of life are still insufficiently studied. Therefore, there is a need for defining general components of these categories and areas, where human capital interacts with quality of life. Today, Latvia has been developing in difficult conditions: the population is decreasing, emigration is growing, possibilities of employment are limited, and the income of residents is decreasing. All these factors reduce quality of life for the population and lead to the loss of human resources in the country. The existence of a problem stemming from the relationship between quality of life and human capital establishes the relevance of the research and determines its aim. The main contradiction is between the external positioning of the state as a country successfully overcoming crisis and the growth of internal crisis in the state, leading to the further impoverishment of the population, leading to an increased emigration of the working population of Latvia. The main research question is as follows: how to preserve human resources in the state? Based on an analysis of post-crisis socio-economic processes taking place in the society, recommendations are made to improve the socio-economic policy in ways that improve the welfare of the population of Latvia.

Keywords: human capital; quality of life; welfare; poverty

Implications of financial transaction costs on the real economy: A note original article

pp. 113-118 | First published in 31 March 2014 | DOI:10.5709/ce.1897-9254.135

Matthias Pelster


This note studies the influence of a financial transaction tax and transaction costs on the optimal production and hedging strategies of a duopoly. Firms are exposed to demand uncertainty that leads to price risk and can hedge their risk exposure on a forward market. However, the forward position is subject to transaction costs. We investigate two settings: first, we explore the Cournot duopoly with a simultaneous hedging opportunity; second, we analyze the case with a sequential forward market. We show that in both settings transaction costs lead to a less competitive market and that prices increase as the producers limit their output.

Keywords: price risk; hedging; transaction cost; financial transaction tax; duopoly