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Vol.6 No.3
September 2018

 Page Number

 Article Information


The Cluster Analysis in the Manufacturing Industry with K-Means Method: An Application for Turkey

Zeynep Karaca

DOI: 10.15604/ejef.2018.06.03.001


Clusters are networks of firms and manufacturers that are strongly connected within the production chain, creating value added together. There are some demand and supply-side advantages of being in a cluster, including proximity to the consumer, reduction in the cost of finding customers, reputation, information externality, output competition, knowledge distribution, an expert workforce, and infrastructural utility. With clusters, employees can be prevented from being employed in different places and skilled workers can be attracted. In addition, clustering facilitates access to key inputs and reduces transaction costs through the use of local suppliers, meaning that all market, technology and competitive information accumulates in the cluster. This study investigates data mining in Turkey using cluster analysis techniques to determine how the manufacturing of wood products industry sectors are clustered among the regions of Nace Rev. This is done using the number of local units and the number of employees in the manufacturing industry sectors according to two classifications. Data obtained from this study will be used in the Annual Industry and Service Statistics published by Turkey’s Statistics Institute. Since the most recently published data was provided in 2015, the number of local units and employment figures for 2015 will be used in the study. The algorithm for the k-means method used in this study was written using Microsoft Excel.

Keywords: Cluster, K-Means, Algorithm


On Business Cycles Synchronization – Some Directions for the Eurasia

Jose Manuel Caetano and Antonio Bento Caleiro

DOI: 10.15604/ejef.2018.06.03.002


The synchronization of business cycles is strictly related with the functioning conditions in the currency areas. Being a general requirement for membership in such an area, the synchronization of business cycles was probed by the view that, in any case, it would result from the very operation of the optimal currency zone. For Eurasia as a broad context, the European perspective seems to be important. For instance, the experience of a formal economic union such as the one that has existed in Europe since 1999 could be harnessed to better understand the challenges that a union of this kind might face in Eurasia, just as the one that has recently been constituted. The article considers this approach, through the analysis of the evolution of the synchronization of business cycles, as a relevant element in the (smooth) functioning of any economic and monetary union. Taking this into account, we consider a reasonably long time period (1990-2016) and a large sample of countries (50), i.e. all those integrated into some kind of formal economic union existing in this relevant geopolitical region, namely the European Union (EU) and the Eurasian Economic Union (EAEU), as well as 17 non-integrated countries, as a control group. In what concerns the results, during the 1990-1998 period, the degree of business cycles synchronization was, in general, fairly low, even for countries already integrated in an economic community. The degree of synchronization of business cycles has, generally, fairly increased in the period 1999-2007, notably in European countries (not in the EU alone). Finally, in the period 2008-2016, which includes the recent global financial crisis, there was a broad decline in the synchronization of business cycles, which was not so obvious for the countries integrated in a formal economic union. In fact, it seems to be possible to conclude that belonging to a union of this kind is a crucial prerequisite for the inexistence of evidently idiosyncratic business cycles.

Keywords: Business Cycles, Eurasia, Eurasian Economic Union, European Union


The Impact of the Financial Crisis on Corporate Capital Structure Dynamics in the Nordic Countries

Shab Hundal, Annika Sandstrom, and Assel Uskumbayeva

DOI: 10.15604/ejef.2018.06.03.003


The concept of corporate capital structure is dynamic in nature as the changing economic and business situations influence on it. Financial crisis of 2007-2008, among other things, have led companies to bring important changes in their capital structure. In turn, capital structure has also influenced corporate risks and the weighted average cost of capital of the firms. However, this topic is under-researched in general and in the context of Nordic countries, in particular. This paper examines the determinants that have affected firm-level corporate capital structure across Nordic countries during the financial crisis sub-period (2007-10). In addition, we also study and compare the same phenomenon during the pre (2003-06) and post financial crisis (2011-17) sub-periods. The principal finding of the study underlines that during the pre-financial crisis period, firms producing high accounting- and market returns borrow less, thus rendering their capital structure more towards equity capital as more debt increases fixed cash outflows in the form of debt servicing. However, during and post financial crisis sub-periods firms giving better performance, with reference to the same benchmarks, borrow more. Several factors can be attributed this finding such as high risk premium to the equity investments due to adverse equity investment climate, falling interest rates during the financial crisis and increasing non-performing assets accumulated with banks. The current paper contributes to the body of knowledge, both academic and practitioners, in several ways. First, the study identifies the key determinants affecting capital structure in the pre, during and post financial crisis sub-periods and thus portraying a comprehensive and in-depth picture. Second, the study explores how the capital structure affects the risk and weighted average cost of capital (WACC).

Keywords: Financial Crisis, Capital Structure, Leverage, Risk, Return


From Bilateral Approach to Global Free Trade

Ali Yavuz Polat

DOI: 10.15604/ejef.2018.06.03.004


Previous literature questions whether it is possible to reach global free trade from a bilateral approach, and concludes that bilateral trade negotiations cannot guarantee global free trade. But this result is sensitive to the assumption on the existence of only one large country that has the enforcement power. We develop a model that has two large countries where they may interact/cooperate or compete. Assuming that the two large countries are in a Bertrand competition, bilateral approach still cannot lead to global free trade. On the other hand, we found that the outcome is the efficient allocation. This is due to the fact that all countries that have valuation more than the cost of the free trade are being offered free trade. Moreover, multilateral negotiations are found to be equivalent to bilateral case.

Keywords: Bilateral Approach, Free Trade, Mechanism Design, Principal Agent


Public-Private Wage Gap: The Effort of the Private Sector to Attract, Motivate and Retain Qualified Staff in Kosovo

Ajtene Avdullahi and Qazim Tmava

DOI: 10.15604/ejef.2018.06.03.005


This paper contributes to the understanding of the wages gap from a transition economy. The paper aims to provide an extensive overview of the recent research on the public-private wage gap in Kosovo for the period 2012-2016 and to explore its effect on labor market efficiency and some macroeconomic indicators. As other countries that went through the transition phase, the public-sector wages at the beginning of transition phase were lower compared to the private sector in Kosovo, later this gap shifts in the advantage of the public sector at the maturity stages of transition in Kosovo thus making the public sector the desirable employer. Therefore, recruitment, retention and motivation of highly qualified human resources nowadays represent the toughest challenge for the private sector. Hence, this paper provides the employer’s efforts in the private sector to attract and retain highly professional staff in Kosovo.

Keywords: Wage Gap, Public Sector, Private Sector, Unemployment, Employment 


Behavioral Economics in Banking: Behavioral Factors as Determinants of the Interest Rate Spread

Andrey Gurov, Milena Nikolova, and Elena Stoyanova

DOI: 10.15604/ejef.2018.06.03.006


The paper discusses behavioral factors that affect banks’ clients and examines empirically their influence on banks’ interest rate spreads. We devise a model that combines macroeconomic variables, which have been considered in earlier works, along with variables that indicate behavioral patterns, combined in a single index. Empirical results show that the constructed behavioral index has positive effect on banks’ interest rate spread, suggesting that patterns of customer behavior related to making less rational choices enable banks to extract higher spreads.

Keywords: Interest Rate Spread, Behavioral Economics, Banking

Eurasian Publications
(Esra Barakli)
Aksemsettin Mah. Kocasinan Cad.
Erenoglu Is Merkezi
Fatih – Istanbul, TURKEY
Email: [email protected]
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