Issue 1, 2023

The purpose of the article is to reveal the scientific approach that substantiates the impact of the creation of strategic alliances (SA) on the digital transformation of business and the development of their innovative power based on identified success factors. The aim was achieved using the following methods: abstract logic and typification (for classification of SA’s success factors), generalisation (to determine the peculiarities of SA’s influence on their innovation development), analytical and ranking method (to determine the relationship between the dynamics creating of SA and the degree of acceleration of digital transformation), expert evaluation (to determine the degree of influence of SA success factors by business areas). Implementing a business-integrated approach to understanding digital transformation will accelerate the implementation of innovation and organisational change, identifies future prospects for market, customer and business relationships, highlighting the importance of researching the factors that ensure their success. An alternative vision of SA’s success factors is suggested, which are determined by the possibilities of the organisation of partnerships and organisational culture, integration of business sectors, compatibility of management goals, external relevance, obtaining synergies. Innovation is considered by the authors as an integration factor that reconciles all groups of SA success factors, giving them the necessary focus to solve business problems. The results of the study show that the creation of SA has a significant impact on accelerating and changes the priority of digital transformation of business areas involved in strategic partnerships, and the impact of SA on the development of their innovation power is crucial.
Keywords: digital transformation; innovation; strategic alliances; success factors of SA; business development
JEL: C83; D74; F23; L2; M16; O3

This paper studies the different modes of operation of European stock markets. Using data on 24 European indices over a period of 15 years, we show that these can be well represented by a Hidden Markov Model with two regimes that roughly correspond to bull and bear markets. We further estimate regime parameters and show that the alternate regimes have very different risk-return tradeoffs with clear implications for portfolio management. Corresponding transition probability matrices show the remarkable persistence of states and give a possible quantitative estimate of the degree of inertia in financial markets. Regime-switching coordination across markets is further examined, showing that moments of correlations are followed by idiosyncratic episodes and thus, risk diversification through regime arbitrage is possible.
Keywords: market returns; Markov switching model; regime change; European stocks
JEL: G11

The main objective of the study was to examine the determinants of the capital structure of Kosovo companies reporting to the Kosovo Council for Financial Reporting (KCFR). The data is collected from the financial statements of 50 non-listed companies and covers the time period of 2013-2018. The data is pannel and three different models: fixed, random effects, and pooled OLS, were estimated in order to test for the best-fitted model of the determinants of the capital structure of Kosovo companies. The size of the company, liquidity, profitability, assets structure, growth, effective tax rate, financial flexibility, and risk were used as explanatory variables for the capital structure of a company measured by the total debt rate. Several theories of capital structure have been developed to explain company-based capital structure. This study is based on the selection of trade-off and pecking order theory. The results of the study suggest that variables such as the size of a company, assets structure, growth, and financial flexibility influence the measurement of the capital structure of a company in Kosovo, and they are supported by the trade-off and pecking order theory. From the results, we can conclude the negative relationship between the size of a company, liquidity, profitability, assets structure, financial flexibility, risk, and capital structure, affects the management of the company when making borrowing choices. The findings of the study demonstrated the importance of capital structure compounds for the decision on the financial sources of a company in Kosovo.
Keywords: Kosovo; determinants of capital structure; trade-off; pecking order; company
JEL: D25; G3; G3

After reaching the completion point of the Heavily Indebted Poor Countries (HIPC) initiative and the subsequent debt relief, Côte d’Ivoire decided to take the necessary measures to avoid a new public debt crisis. Ten years later, the country is at a crossroads with a rapidly growing debt. Given this situation, it is important to question the effectiveness of the methods of financing the budget deficit in Côte d’Ivoire. This article aims to develop a credit scoring model in order to analyse the efficiency of budget deficit financing modes using a sample of 3222 loan lines from the database of the Department of Public Debt and Grants of Ivory Coast. The results show that loans from bilateral and commercial banks can be considered as “risky” financing. This mode of financing has a less important impact on the probability of default. On the other hand, the results obtained with the estimation of the Logit model show that the probability of default is strongly reduced when the government is financed by bondholders and other debt instruments and multilateral institutions.
Keywords: Public debt; budget deficit; credit scoring; logistic regression; probability of default
JEL: H63; C25

This study aims to analyze the political connections, controlling shareholders, and financial report quality of affiliated companies in Indonesia. The research sample used 884 observations from group companies, and data analysis was performed using moderating regression analysis with panel data. The result showed that political connection weakens the financial report quality of the companies which are controlled by the family, but the role of independent commissioners can reduce the expropriation carried out by family-controlled toward minority shareholders. State-controlled firms have lower financial report quality than those which are family-controlled at all cut-off levels. The existence of political connections in the state companies weakens the effectiveness of the commissioners as a mechanism for the company’s internal control.
Keywords: Family block-holder; state block-holder; political connection; financial reporting quality; Indonesia
JEL: M21; M41; G32

Currently, when preparing substantiating materials for investment projects to be included into governmental programs of the Russian Federation, no assessment is performed of the project’s impact on social and economic indicators of constituent entities of the Russian Federation, where the investment project is implemented, such as the GRP, the volume of export and shipment of products of own production, reducing the social inequality and unemployment, increasing the total factor-based productivity. Our research hypothesis is the assumption of the positive impact of implementing governmental investment projects on the indicators of social and economic development in constituent entities of the Russian Federation. Therefore, the purpose of our research is to assess the impact of implementing investment projects for the development of inland waterway transport infrastructure, that are financed from the federal budget, on the social and economic development indicators in constituent entities of the Russian Federation. In our study, we assessed the impact of implementing investment projects for the development of inland waterway transport infrastructure on the social and economic indicators of constituent entities of the Russian Federation using the Difference-in-Differences method and the probabilistic and quantitative assessment of the impact of implementing investment projects on social and economic indicators of constituent entities of the Russian Federation using the Bayesian modelling. The calculations presented in this paper showed that the use of the Bayesian modelling method to assess the probability of the investment projects impact on the indicators of social and economic development in constituent entities of the Russian Federation will allow, before making a decision to launch an investment project, to have an idea about its economic effects for the region. The suggested methodological approach to assessing the impact of investment projects on the social and economic development of regions can be used in the practical activities of public authorities at the stage of selecting investment projects and assessing capital investments.
Keywords: governmental investment projects; regional economy; impact on regional social and economic indicators; quantitative assessment; Difference-in-Differences method; Bayesian modelling
JEL: C11; C15; C51; E15; H54

This study examined the direct and indirect impact of foreign direct investment (FDI) on poverty reduction in Nigeria using the Autoregressive Distributed Lag (ARDL) framework for the period 1981-2019. The results of the study revealed that foreign direct investment exerted a significant positive effect on economic growth and economic growth, in turn, significantly contributes to poverty reduction within the period of review 1981-2019. This implies that FDI indirectly contributes to poverty reduction via economic growth. Regarding the direct impact of FDI on poverty reduction, the study shows that FDI significantly exerted an adverse effect on poverty via relatively low income and loss of jobs. Similarly, the study shows that wage and private-sector credit contribute to poverty reduction.
Keywords: Foreign Direct Investment; Poverty Reduction; Economic Growth; Nigeria; ARDL Framework
JEL: F21; F23; O10; O50

This study examines the effect of international migrant remittances on the employment patterns of individuals receiving them. To do that we use a nationally representative labor force survey conducted in Kosovo by Millennium Challenge Corporation. To address endogeneity issues, we employ propensity score-weighted Probit models by weighting every individual in the sample by the probability of receiving remittances based on their observed characteristics. The findings suggest that remittances decrease the employment probability of individuals who receive them, while at the same time increasing the probability of inactivity and being a family worker. The impacts are stronger for individuals from urban areas, workers over the age of 55, and individuals from non-Albanian ethnicities.
Keywords: remittances; employment; inactivity; propensity score weighting; Kosovo
JEL: J22; F22; F24; C39

The system of higher education has always been socially responsible to any society. Currently applied in Ukraine, martial law complicates the conditions of delivering higher education services. According to the analysis results, universities should choose alternative systems of providing educational services depending on the proximity of military operations. Factor analysis revealed significant indicators of quality and social responsibility in higher education provision; the cluster analysis classified the territories according to their actual level of social responsibility according to the location of the universities; the game theory has optimised the social responsibility system of service provision. The study developed two models: clustering the quality of higher education services under martial law and optimising higher education services according to the level of social responsibility. The identified 6 clusters differ in terms of the standard of quality and safety/social responsibility of higher education services. Based on Ukrainian universities, implementing the developed methodology was achieved as of the spring 2022. As revealed by monitoring of the situation, 32 percent of universities are able to provide higher education services at a sufficiently high level. The aim of the study is to optimise the provision of high quality and socially responsible higher education under martial law. The potential beneficiaries of the research results are students and teachers of Ukrainian higher education institutions located in territories under various degrees of military threats. Optimising the social responsibility system of service provision will improve the quality and reliability by 10 per cent and identify points of growth and stabilisation of at least 15-20 percent.
Keywords: driver indicators; on-line education; Internet sources; war
JEL: С 31; I 23; H53

The aim of the study is to identify needed support for increasing the productivity of private forestry, focusing on the decision-making process in the case of women – private forestry owners in countries of the Danube region. The data used is from a survey in the frame of the project “Forest in Women’s Hands”.
The methods applied are Regression Ordinary Least Squires (OLS) model and logistic regressions. Statistical correlations are measured to check the impact of some factors affecting female management decisions in turn to outline the needed support.
The results, along with others, show that women involve friends, family members, and spouses in the forest to support them in decision-making, but the requested support is not directed explicitly to increasing productivity. The support provided by the forest associations and government institutions is not effective enough for forest utilisation and productivity. The conclusion that could be drawn is that the needed support is training the private female owners. On the other hand, the study identifies some differences between countries with prevailing private ownership and others.
Keywords: Female forest owners; questionnaire; forest management; decision-making
JEL: M11; Q23

This article examines the effects of government expenditures, regional GDP, regional minimum wages, employment rate, and poverty severity on income inequality by applying the system Generalized Method of Moments panel model to overcome the dynamic endogeneity problem from 2007 to 2020. The results show that government expenditure and an increase in the regional minimum wage for low-wage workers can reduce income inequality in both the short run and long run. Furthermore, high regional GDP and high levels of employment rate for workers with low skills can exacerbate the level of income inequality in the long run. However, reducing the severity of poverty has no effect on reducing inequality. This study provides policy recommendations to the government to improve basic public services and make various training skill programs, including ICT, in order to increase creativity and job opportunities for low-income people.
Keywords: income inequality; government expenditures; regional GDP; regional minimum wages; employment rate; poverty severity index
JEL:E01; E24; I30; H50; O15