International Research Journal of Finance and Economics
 Issue 163
 September, 2017
How Fair Value Regained Its Importance after the Crisis: Empirical Evidence from the European Banking Sector
Andras Takacs and Tamas Szucs

This study investigates the effects of fair valuation on investor decisions, especially concentrating on the differences between fair value accounting and historical cost accounting as well as on the effects of the 2008-2009 financial crisis. Authors examine data of 20 European large banks between 2006 and 2015. Results show that, while no relationship can be found between banks’ financial performance and stock prices in the crisis years, EPS determined with fair valuation is a significant predictor of the share price in the 2010-2015 period. This leads to the conclusion that, after the hard times of 2008-2009, fair value regained its importance in investor decisions.
Keywords: fair valuation, net income, other comprehensive income, earnings per share, net assets per share, European banking sector, stock price.
JEL Classification: G11, G15, G21, M41
Indicator of Islamic Banking Competitiveness In the Asean Economic Community Era: Case Study of Indonesia and Malaysia
Muhamad Nadratuzzaman Hosen and Syafaat Muhari

In facing the financial integration of ASEAN Economic community (AEC) by 2020, Islamic banks in Indonesia must have a high degree of continuity of operations in the future to ensure the existence of business continuity and increase the share of the national banking system in addition to ensuring increased amount of assets. This study is conducted to analyze the level of competition among Islamic banks in Indonesia and Malaysia are judged based on the sound aspects of the bank, efficiency, profitability, productivity and model of the external economic conditions. This study uses data of annual financial statements from 10 Islamic banks in Indonesia and 10 Islamic banks in Malaysia. The results of this study indicate that Islamic banking in Malaysia are relatively better prepared compared to Islamic Banks in Indonesia. Islamic Banks in Malaysia possessed many derivative instruments and liquidities. The regulations of the government tend to fully support development of Islamic finance, low level of non-performing financing (NPF), and Malaysia People interested to makes Islamic banks would be better to compete with overseas Islamic banks in the era of financial integration in the ASEAN Economic Community (AEC) in 2020. Related to performance of Malaysian Islamic Banks, Indonesian Government must imposed new policies in order to create innovation and create new product with more flexible in implementing to customers.
Keywords: Sound level of bank, efficiency, productivity, profitability.
JEL Classification: E50, G21
Motivation and Risky Decision on Quality Achievement of The Technical Contractors in West Sulawesi Province
Herman Callo

This paper attempts to review the literature on the risky decision and working motivation in technical contractor field work, then presents the importance of its delineated dimensions. The research design is based on descriptive and associative method because the worker in contractor field work frequently facing risky job. This research adopted questionnaire method as a mean for data collecting to examine the main factors affecting risky decision. This survey consists of the factors that previous studies stated which might affected on quality achievement, and also the measures that those studies considered as quality achievement measures. This survey was distributed over a random sample of contractor worker and staff who have experience construction in West Sulawesi Province. Sample data collected about 160 personal, as well as respondents from more than 300 population of contractor staff and technician. The technical research based on OLS with operated by Smart PLS with correlated to theories of motivation, risky decision, and, motivation or worker. The result in,that motivation has negatively affect and not associated with risky. Motivation positively affect and associated with with quality achievement, moreover risky decision has positively affect and associated with quality achievement.
Keywords: Motivation, Risky Decision, Quality Achevement, Technical Contractor.
JEL Classification: G32, L14, L15
The Analysis of Optimal Portfolio Forming with Single Index Model on Indonesian Most Trusted Companies
Partono Thomas, Widiyanto, Yulianto Arief and Handika Vidayanto

This study aims to form the optimal portfolio in trusted company in Indonesia. This research is a descriptive research with quantitative approach and purposive sampling technique. The population is the Indonesian Most Trusted Companies with 33 sample companies, while the total sample of 27 companies. The analysis model is Single Index Model. The results of this research there are eight stocks forming the optimal portfolio, and the respective percentage of shares that UNVR by 23%, PGAS by 29%, JSMR by 24%, ADHI by 11%, NISP amounted to 2%, HMSP by 5%, and WEHA by 1%. Portfolios are formed also generate the expected return of 1.6% with 0,1% systematic risk and 0,1% unique risk and for the total risk is 4%. While the stock formed from the overall sample Indonesian Most Trusted Companies provide expected return of -0.4%, with a greater risk of 5%. Rational investors will choose investments into companies that have a single index model analysis on trusted companies.
Keywords: Cut-off, Optimal Portfolio, Return, Risk, Single Index Model.
JEL Classification: G4
Determining and Forecasting Financial Inclusion in Northern Ghana Using Discriminant Analysis
Issahaku Yakubu, Romanus Dinye, Daniel Buor and Wahab A. Iddrisu

Poverty and income inequality remain a serious challenge in Northern Ghana. Given the causal link between financial inclusion and poverty reduction, this paper aims at estimating a discriminant function model to analyze the determinants of financial inclusion in Northern Ghana. The study is mainly based on primary data elicited through survey questionnaires. Even though the minimum sample size was determined to be 385 households, a total of 400 households were selected systematically, out of which 395 households returned their questionnaires for analysis. The estimated discriminant function model was found to be significant at the 1% level of significance. It was also found that, the most significant determinants of financial inclusion in Northern Ghana (in order of importance) are “Age”, “Cost”, “Capability”, “Literacy”, “Distance”, and “Employment”. Overall, 72.4% of the cases were correctly classified by the estimated model. This paper therefore concludes that there is the need for Government and donors to make coordinated efforts towards addressing these determinants so as to broaden financial inclusion, thereby contributing to poverty reduction and lower income inequalities in the area.
Keywords: Financial Inclusion, Discriminant Analysis, Determinants, Northern Ghana.
JEL Classification: G21; C25
The Value Relevance of Accounting Fraud and Discretionary Accruals

The objective of this study is to analyze the value relevance of accounting fraud and discretionary accruals (positive and negative discretionary accruals) in French context during the period 2006-2010. Using the model of Ohlson (1995) which test the price and return model, we note that the price model provides a more significant result on the value relevance than the return model. In addition, fraud has a more significant and negative effect than discretionary accruals and even dilutes its existence in the price and return model. This finding proves the signals theory that bad information transferred quickly in the stock market.
Keywords: Value relevance, Fraud, Discretionary Accruals.
JEL Classification: M48; G15, G38
The Analysis of Exchange Rate Fluctuation on Nigeria’s Balance of Payments
Babatunde Afolabi and Adekunle Sherif .O

Exchange rate volatility is a widely discussed topic amongst economist and finance experts as it is a very important phenomenon in every economy, especially amongst developing nations. This research sets out to investigate the relationship between exchange rate volatility and Nigeria’s balance of payment. The data employed was sourced from the Central Bank of Nigeria’s statistical bulletin (2015) and the National Bureau of Statistics (NBS). The sample size employed for the study covered a period of 30years (1985-2015). The estimation techniques employed in this research are; the Johansen co-integration test for long-run relationships, while both ARCH and GARCH were also employed to test for volatility of the Exchange Rates. The result showed there was no long-run relationship between Exchange Rate and the Balance of Payment position of the Nigerian Economy during the period under review, while the coefficient of the ARCH effect is found to be statistically significant at 10%, the GARCH effect however was found to be statistically insignificant. Therefore it was recommended amongst other things that exchange rate liberalization should be adopted by the monetary authorities in order to promote fairness and attract foreign investment which will ultimately lead to a favorable balance of payment in the Nigerian Economy.
Keywords: Exchange Rate, Balance of payment, Interest rate, Volatility, ARCH and GARCH.
JEL Classification: E42, F31
How Different Terrorist Attacks Affect Stock Returns Evidence from Pakistan Stock Exchange
Hashmat Ali, Wang Qingshi, Zulfiqar Ali Memon, Khan Baz and Imad Ali

The global financial markets have responded in an extremely steady pattern after the United States 9/11 event, 2002 Bali's night clubs blast suicide, the train bombing in 2004-2005 in London and Madrid and similarly the suicide attacks by a terrorist in Pakistan. In this paper, we studied the return in Karachi stock market which is occurred due to the terrorist attack news. We applied the model which lets bad and good news to have changed effects on volatility. The finding is carried out applying the event study methodology. Our finding shows the news of terrorist attacks has an adverse effect on stock return. Though the KSE 100 index volatility increased by these events Pakistan stock exchange negatively affected by terrorist attacks. The effect of attack depends on attack type, Locations, and target type. The most severe the attack, the more number of people killed the more adverse effects on KSE 100 index return. Very interestingly, capital market covers news regarding future attacks. In total, diverse strategies of terrorists have a different effect on the capital market, it is turn can forecast the attacks of terrorist.
Keywords: Stock Exchange, Terrorism, Event study.
JEL Classification: G10, G14, G15, C22
The Effects of Sectoral Trade Composition on Female Labor Market - Evidence from Emerging Economies
Farha Fatema, Zhaohua Li and Mohammad Monirul Islam

The study empirically identifies the effect of sectoral trade composition on gender inequality in labor force participation and wage in the emerging economies. We divide export and import into four broad sectors namely labor-intensive manufacturing, capital-intensive manufacturing, agriculture, and service. The results of the study suggest that growing export and comparative advantage in capital-intensive manufacturing sector reduce gender inequality in labor force participation whereas labor force participation inequality increases with higher export and comparative advantage in all other three sectors. Higher export and comparative advantage in labor-intensive and capital-intensive sectors increase gender wage inequality whereas this inequality decreases with growing export and comparative advantage in agriculture and service sectors. Technological advancement significantly reduces labor force participation of both male and female but increases labor force participation gap between them whereas gender wage inequality significantly falls with technological advancement.
Keywords: Sectoral trade composition; gender inequality; labor market.
JEL Classification: O50; F63; F14
The Influence of Internal Control System on the Effectiveness of Risk Management in Tourism Companies of Khanh Hoa Province
Ha Xuan Thach and Nguyen Thi Lan Phuong

This paper assesses the impact of level of internal control system on the effectiveness of risk management in tourism companies of Khanh Hoa province. The author mainly uses quantitative research method, conducting a survey of 182 subjects as company leaders or accounting officers in 76 Khanh Hoa tourism companies. The research result indicates four out of eight factors that constitute internal control system affecting the effectiveness of risk management in Khanh Hoa tourism businesses with the impacting level in descending order as follows: internal environment, information and communication, control activities and risk responses. The internal control system by COSO 2004 explained 44.4% of variation to the effectiveness of risk management in Khanh Hoa tourism enterprises.
Keywords: internal control system of risk management; risk management in tourism companies; risk control
JEL Classification: G32