International Research Journal of Finance and Economics
 Issue 177
 January, 2020
The Strengthening of Industrial Competitiveness through Industrial Fundamental Factors and Information Technology
Sumarsih, Djabir Hamzah, Haris Maupa and Rahman Kadir

This research is descriptive and quantitative that aims to determine the effect of the direct relationship of antecedent variables to the consequence variable and this study tests the hypothesis and provides an objective explanation, justification, and evaluation of a fact or event that is happening and examines the relationship between different variables to seek influence and explain causality relationships between factor condition variables, industrial value chains, firm strategy, structure, and rivalry, business opportunities, demand conditions, and information technology affect industry competitiveness. By using Path Analysis, where Ghozali and Fuad (2005) recommend the estimation of the model equation through the Maximum Likelihood method to be effective, the number of samples will be 200. The results of the study show that almost all latent variables such as factor conditions, industrial value chains, firm strategies, structures, and rivalry, business opportunities, and information technology affect industry competitiveness, except demand conditions.< /br>
Keywords: Factor Condition, Industrial Value Chain, Firm Strategy, Structure, and Rivalry, Business Opportunities, Demand Conditions, Teknologi Informasi, Daya Saing
Determinants of Chief Executive Officer Stock Options Compensation
Hwei Cheng Wang, CPA, Yung-I Lou, CPA, Nicole A. Buzzetto-Hollywood and Ladda Vatjanasaregagul

This study examines the determinants of CEO Stock Options compensation. Stock options are defined as the aggregate value of all options granted to the executive during the year as valued by the company. The sample was carried out on 2,448 CEO’s from 1,622 firms spanning a range from 1997-2002. The determinants of CEO Stock Options compensation are international diversification, industry diversification, firm performance, investment opportunities, firm size, and stock ownership.
This study employs the concept of corporate diversification as identified by Duru and Reeb (2002) and Kim, et al. (2001) that divides corporate diversification into international diversification and industrial diversification.
This study is the first study to examine whether industrial diversification is negatively associated with stock options compensation. Our findings show that there is a negative significant relationship between industrial diversification and stock options compensation.
The results also show that the higher the degree of international diversification, investment opportunities, and firm size, the more CEOs receive in stock options. In contrast, the higher the degree of industrial diversification, the lesser CEOs receive in stock options. CEOs that have greater outstanding stock ownership make less use of CEOs stock options.
Keywords: CEO Compensation; Corporate Diversification; International Diversification; Industrial Diversification; Firm Performance; Investment Opportunity; Stock Ownership
The Impact of the Bank Deposit Structure on the Profitability of the Middle East Commercial Bank of Iraq
Abbas Khudair Al – Janabi and Amal Mansour Hassan (MA)

The aim of the research is to identify the structure of bank deposits and profitability of the Middle East Commercial Bank of Iraq, and to estimate and analyze the correlation and impact of the structure of bank deposits on the profitability of the Middle East Commercial Bank represented by the rate of return on assets and the rate of return on the right of ownership.
The research used the descriptive and quantitative method, guided by some statistical methods. The research found a number of results, the most important of which are: The correlation and impact of the structure of bank deposits has a significant statistical significance in the rate of return on assets and the right of ownership. The most linked deposits and the impact of savings deposits followed by fixed deposits in the profitability of the bank. The need for the Bank's management to focus on the structure of the deposits and improve them by introducing new methods, employing them and investing them, and using various investment instruments such as stocks, bonds and real estate. This includes a diversified investment portfolio that enables the bank to create an increase in returns and reduce risks, in addition to using modern mechanization in the work of the bank and its daily activities, and to expand the scope of bank branches inside and outside Iraq in proportion to international standards in the provision of banking services.
Transaction Information Transparency and Market Quality: The Effect of Pre-market Information Disclosure
Po-Ching Chou, Tzu-Pu Chang and You-Lin Cyue

In order to improve pre-market information disclosure transparency, Taiwan Futures Exchange and Taiwan Stock Exchange have implemented “information disclosure prior to opening” policies that disclose simulated transaction price, trading volume, five best bid/ask prices, and bid/ask volumes in 2014 and 2015, respectively. This paper aims to examine whether the improvement of pre-market information disclosure transparency can enhance market quality measures, such as trading volume, liquidity and volatility. We collect intraday data within the opening five minutes or one minute by November 2013 to December 2014 and December 2014 to December 2015. The empirical results show that three market quality measures are significantly impacted after the improvement of pre-market information disclosure transparency.
Keywords: Futures Markets, Market Transparency, Pre-market Transparency, Volume, Liquidity, Volatility
Competition and Performance in the Tunisian Banking System as Part of the Foreign Bank Entry Process
Naziha Kasraoui

This paper gives main theories related to competition and performance and highlights the mechanism of entry of foreign banks and their ways of rooting. Two basic theories are presented: competition-efficiency and competition-inefficiency accompanied by underlying theories showing the entry processes of foreign banks and their ability to realize performance. Empirically, we used a sample of Tunisian banks comprising 11 banks during the period from 2004 to 2014. The econometric results show that there’s an important impact of the presence of foreign banks on the performance of banks in particular on competition through concentration. Namely, foreign banks can concentrate by specialization, diversification, in the banking market, in parallel with domestic banks. In addition, the entry of foreign banks and their capacities foster competition to increase banking performance. Keywords: Conventional banks, Islamic banks, Solvency, Comparative study, Financial stable period, Heterogeneous contexts
Keywords: Foreign bank, domestic bank, performance, efficiency, concentration, Tunisia
A Study on the Bursting of the Stock Market Bubble and the Mean Reversion: Evidence from the Southeast Asia
Chung-Hsiang Tung and Szu-Lang Liao

This paper uses technical indicators to capture the stock market bubbles in seven regions of Southeast Asia, and observes the time required for the bursting of the captured bubble and the mean reversion after the bubble burst. It can be seen from the empirical results that the bubbles captured by the technical indicators will generally rupture within 10 weeks, and will return to the 13-week moving average after the bursting. Hong Kong, South Korea, Japan and Singapore have a shorter time to return to the 13-week moving average, while the times of the mean reversion in Malaysia, Thailand and China are longer and different. Therefore, the phenomenon of the mean reversion in the mature markets are more obvious, and the emerging stock markets are unstable, so the mean reversion time is difficult to determine.
Keywords: Technical Indicators; the Mean Reversion; Stock Market Bubbles
JEL Classification: G15
IS-LM-BP Model for Lebanon: A Simple Empirical Analysis
Samih Antoine Azar, Ali Bolbol and Alexandre Mouradian

The paper develops a Mundell-Fleming IS-LM-BP model that is specific for the Lebanese economy. It is the first short-run macro model in the post-civil-war period that we know of that is run on a monthly basis, over the period from 2008 to 2018. The model is estimated using the Robust Least Squares methodology, and arrives at fairly interesting conclusions. On the fiscal side, government spending and taxation yield positive output results and are aligned with the model. So are changes in the pegged exchange rate that contribute positively to output but marginally to the balance of payments. On the other hand, monetary policy has interesting implications as far as its compressed effects on output and the balance of payments whereas remittances seem to have hardly any impact on the same. Also crucial are governance and structural reforms that are important in them selves and in making macro policies more effective.
JEL Classifications:C3; F10; O53
Institutional Quality and Capital-Systemic Risk Relationship in MENA Region Banks
Mohamad Kassem

This paper examines the relationship between capital and bank stability conditioning on the specific socio-political factors of different countries. The sample under study includes 13 banking systems operating in the MENA region for the period 2000 till 2017. It was revealed that bank’s capital is associated with a reduction in the systemic risk. It was also found that capital contributes more in the stability of countries that are less transparent, experience higher information asymmetry, and face lower efficiency in monitoring their financial institution. Overall, our findings suggest that additional capital requirements for MENA countries that are facing unfavorable institutional factors can act as a substitute in augmenting systematic banking sector stability.
Keywords: Systematic risk; Bank capital; MENA region
JEL Classification: G01; G21; G28
Sectoral Integration and Dynamic Linkages; Evidence from Pakistani Stock Market
Ifrah Younas, Maqsood Ur Rehman and Muhammad Niaz Khan

This study investigates the sectoral integration in daily return indices of six sectors of Pakistani market. The study examined a seven years data from January, 2011 to January, 2018. Multivariate Co-integration test, Vector Error Correction Model (VECM), Impulse Response Function (IRF) and Variance Decomposition Analysis (VDA) were used for analyzing short- and long-run association among the sectors. The results indicated the presence of one long-run co-integrating vector. Results from VECM indicated a short-run relationship between some of the sectors influencing others. These results are further confirmed by Impulse Response Function and variance decomposition analysis. Commercial Banking and Media sectors dominated the selected sectors of KSE whereas other sectors were relatively independent. The results have implications for portfolio diversification in KSE as most of the sectors are least integrated with other sectors in Pakistani market. The current paper will help investors in domestic diversification to understand the sectoral linkages in the Pakistani market.
Keywords: Sectoral Integration, Portfolio diversification, Karachi Stock Exchange
The Impact of Taxation on Transfer Pricing in Nigeria Economy
Osho, Augustine E., Efuntade, Alani Olusegun and Jemiseye-Dav, Regina Ayodeji

This study aimed to examine the impact of taxation on transfer pricing in Nigeria economy. To achieve this objective, the study used Augmented Dickey Fuller (ADF) Unit root test and Johansen co integration econometric tools to determine the order integration and the long run relationship among the variables. This time period was considered long enough to establish a causality relationship between the study variables, whereas, the availability of data relevant for the study was also a justification for determining this time period. The data were sourced from the of Central Bank of Nigeria (CBN), Statistical Bulletin Office of the Federal Inland Revenue Services (FIRS), Federal Inland Revenue Service (FIRS), World Bank Statistical Bulletin and Annual Abstract of Statistics from the National Bureau of Statistics (NBS). Findings revealed that company income tax and personal income tax have negative impact on transfer pricing in Nigeria. In addition to this, the result provides attention (warning) for the government to be more careful in every tax policy that affects the tax expense of companies in Nigeria. It was recommended that, the tangible benefits should be greater than the risk received given that any slight increase/decrease in tax expense could have a considerable effect on the decline/increase in transfer pricing rates in Nigeria.