EURO AREA MEMBERSHIP EFFECTS ON INFLATION
The inflation rates and their convergence within the Euro area were a major concern even before the advent of the single currency. The study attempts to examine the main factors of inflation and differentials in members of the Euro area for the period 2007–2022. The search for the causes of the current high inflation starts with the consequences of the Covid-19 pandemic. The global economy recovered fast once the pandemic ended and the restrictions on consumption and travel were lifted. Then conflict between Russia and Ukraine caused energy and commodity prices, including food prices, to increase. The differences between the inflation rates in the various countries of the Euro area first started to widen in 2020 when the pandemic caused stronger disinflation in countries that have large tourism sectors. As the pandemic faded, inflation picked up most in countries where the economy had declined less and where labor shortages were starting to put pressure on wages.
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TRADE CREDIT AND BANK CREDIT IN CONDITIONS OF INFLATION: EVIDENCES FOR PUBLICLY TRADED NON-FINANCIAL ENTERPRISES IN BULGARIA
The purpose of the article is to examine the relationship between financing with trade credit and bank credit in the conditions of inflation in Bulgaria. The analysis in the article is based on data for 43 non-financial publicly traded enterprises in Bulgaria for the period 2018 - 2022. The results of the study show that with the sharp acceleration of inflation in Bulgaria in 2022, increase sharp also the ratio Trade credit / Total liabilities to banks and non-bank financial institutions. The research show that trade credit and bank credit are complementary sources of financing for publicly traded enterprises in Bulgaria in the period 2018 - 2021. With the acceleration of inflation in 2022, which is accompanied by a serious increase in the interest costs of companies, the nature of the relationship between trade credit and bank credit is changing. For 2021 and 2022, a statistically significant positive correlation is established between the ratio Interest expenses / Total liabilities to banks and other financial institutions and the ratio Trade credit / Credit from banks and non-bank financial institutions. As inflation accelerates, firms are looking to raise more interest-free financing from their suppliers to ease the burden of rising interest costs on bank loans.
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THE IMPACT OF THE FEDERAL OPEN MARKET
COMMITTEE RATE ACTIONS DURING 2022 ON THE
POPULARITY OF DIVIDEND STOCKS AMONGST RETAIL
INVESTORS
The question of the investors’ motivation in the investment decision making process is a topic that is always relevant and subject of research in the field of economics. The turbulence on the stock exchanges observed in the last few years
makes this issue particularly relevant, and the introduction of new scientific knowledge in this direction equally useful.
The question of the influence of dividend policy on the stock market performance
of public companies is a question that has been examined repeatedly in the past, and to this day the companies’ dividend policy is of serious scientific interest. The past few years have been marked by significant stock market uncertainty and substantial inflation in the United States and many of the World’s leading economies. The observed upheavals in recent years have created fertile ground for the conduct of scientific research in the field of investing.
This report examines the impact of the Federal Open Market Committee’s federal
funds rate actions in 2022, and examines the extent to which these actions have had
an impact on the popularity of dividend companies among individual investors
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THE EUROPEAN CENTRAL BANK AT 25: EFFЕCTIVENESS OF THE MONETARY POLICY
25th anniversary of the European Central Bank is the occasion for an assessment of its monetary policy. Maintaining the price stability is the main objective according to the ECB statute. However, changes in economic conditions led to unconventional measures and additional objectives like financial stability.
A set of indicators is used in order to assess the efficiency of the monetary policy medium-term inflation rate, deviation between the actual and the targeted interest rate on the interbank market and the output gap. Data shows that close to 50% of the time ECB failed to meet its inflation target.
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FINANCIAL DEVELOPMENT AND ECONOMIC GROWTH IN CEE COUNTRIES
Given the important financial sector’s role in economies, the study examines whether there is a relationship between the GDP growth and financial development of CEE countries. For this purpose, first the causality is tested by means of Granger-causality test and then an attempt is made to assess the influence of one variable on the other. The GDP growth and financial development’s relationship is examined for the ten countries in CEE, with the period covered being 2010-2022. It is expected that financial development has a great importance for the improved growth in the studied countries. Data on loans, deposits in the banking system, and market capitalization as a share of GDP are used. The results confirmed that financial sector contributes positively to the realization of higher and stable GDP growth in CEE countries.
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THE ROLE OF BANKS IN BULGARIA IN INCREASING FINANCIAL LITERACY
The paper investigates the implementation of a national strategy for increasing financial literacy in Bulgaria and the types of activities performed by the financial sector contributing to financial literacy. Some key elements of the financial literacy strategy are discussed in the paper as well as the role of the financial sector for the realization of the goals of the national strategy. The paper stresses on the role of the banking sector and the types of activities it performs for increasing the financial literacy. The paper argues that despite the number of activities performed by the financial sector the necessity of creating a national strategy is inevitable as it guarantees the involvement of the different social groups, coverage of large scope of topics and sustainability on a long-term basis.
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INFLATION AND DEFINED CONTRIBUTION PENSION SCHEMES IN CENTRAL AND EASTERN EUROPEAN (CEE) COUNTRIES
Pension systems in most of the CEE countries were significantly reformed at the beginning of 21st century. The introduction of fully funded components in addition to the traditional pay-as-you-go ones marked the beginning of a completely new age in the development of the pension systems in the region. The basic goal of the current paper is to research the investment performance of the defined contribution pension schemes in several CEE countries – Estonia, Slovakia, Romania and Bulgaria. The thesis defended throughout the article is that conservative types of investment portfolios for long term investors such as pension funds are not appropriate especially under scenario of significant inflation rate. The results of the research show that those countries where pension fund managers were allowed to structure portfolios with different risk profile have much higher chance to protect the savings of insured individuals in real terms in prolong period.
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THE EUROZONE VS. THE OPTIMAL CURRENCY AREA THEORY - SURVEY OF THEIR THEORETICAL FRAMEWORKS AND POLITICAL BACKGROUNDS
The paper surveys the development of the Optimal Currency Area theory and the Economic and Monetary Union. After a close examination of how Robert Mundell arrived at the former theoretical framework and its further elaboration by several economists, the paper draws the attempts at European economic and monetary unification. Based on the report One Market, One Money (1990), the author concludes that the economists of the European Commission did not follow the OCA theory, but used several contemporary monetary and macroeconomic findings to construct the theoretical framework behind the EMU.
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“NUDGE” IN BEHAVIORAL ECONOMICS– A POSSIBLE RESPONSE TO THE CHALLENGES OF HIGH INFLATION FOR 'BETTER' ECONOMIC DECISIONS OF THE INDIVIDUALS
The behavioral economics upgrades the psychological characteristics of the economic agent, homo economicus, when analyzing an individual's decisions, emphasizing their biases. The nudge approach developed by Richard Thaler is a good tool for improving economic decisions made by the individual. The nudging policies, with their flexibility to different conditions, low financial burden, and low instrumental complexity, are widely applicable. The current high levels of inflation amplify the potential for nudges to improve the quality of people's economic decisions. This paper focuses on the possibilities of behavioral economics in the inequalities and promoting savings behavior provoked by current reality using smart disclosure and choice drivers, pre-commitment with setting consumption limits, and promoting the setting of aims.
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DIGITAL ECONOMY AND FINANCIAL RISK MANAGEMENT
The purpose of this paper is to analyse and systematize the key challenges to understand the role of digital economy and the relationship with financial risk management. The author put forward the provision on the valuation and measurement of financial risk in contexts of digital economy in Bulgaria. The paper mainly aims to examine the influence of digital finance on enterprise financial risk and its mechanism. The results of the study are presented in Figure 2. Moreover, it attempts to analyze whether digital finance corrects the distortion of traditional financial elements and whether it can effectively improve enterprise financial risk and further verify the inclusion and transmission mechanism of digital finance.
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