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Vol.9 No.4
December 2021

 Page Number

 Article Information

205-216

Accounting Analysis on Eurasian Countries by Applying the Edgeworth’s Box

Miguel Angel Pérez-Benedito

DOI: 10.15604/ejef.2021.09.04.001

Abstract

Accounting systems record transactions of goods, services, and products exchanged between units of activities in an economy. The exchanges made are also exchanges of valuations between the accounts as parts and counterparts of their accounting record. The national accounts systems report the activity carried out by a nation in a period, and the financial statements are a synthesis of the decision-making adopted. The paper analyzes the Eurasian economies by showing their accounting equilibria in an Edgeworth box. The measurement of their positions explains the level of risk adopted in a period, which can be transmitted visually to those who participate in the development of a common project. The analysis justifies that the financing of an economy must maintain a productive capacity to obtain a monetary saving greater than the economic result of the period. This criterion indicates whether the activity carried out is a position of growth, risk, or migration. According to the explanatory level of the economic and financial behavior of analyzed economies, the Edgeworth box has become the laboratory of the research developed in the paper, and accounting is considered a positive science of the social sciences.

Keywords: Accounting Methodology, Edgeworth’s Box, Eurasian Economy, Abstraction-Reality

217-234

Analyzing the Relationship between Derivative Usage and Systemic Risk in South Africa

Sheunesu Zhou 

DOI: 10.15604/ejef.2021.09.04.002 

Abstract

This paper analyzes the relationship between derivative usage and systemic risk in South Africa. We employ expected shortfall as a measure of systemic risk for the banking sector. The more flexible Toda-Yamamoto Granger non-causality test is used to find the direction of causality between the variables, and the ARDL estimation technique is employed to estimate the specified model. We also test for the existence of a long-run relationship amongst the variables using the Bounds test approach. We find that credit derivatives and bank credit extensions increase systemic risk in the long run. Moreover, the systemic risk decreases in bank liquidity and usage of equity derivatives. However, in the short run, we find that increases in bank liquidity tend to increase systemic risk. We interpret this to imply that improvements in liquidity cause banks to undertake riskier transactions. Furthermore, the market can also perceive central bank interventions to increase liquidity as a sign of worsening financial conditions. On the backdrop of these results, we recommend continuous monitoring of derivatives markets to avoid risk excesses that could pose threat to the whole financial system. 

Keywords: Systemic Risk, Derivative Usage, Bank Liquidity, Expected Shortfall, ARDL 

235-244

The Impact of Covid-19 on Market Efficiency: A Comparative Market Analysis

Samuel Tabot Enow

DOI: 10.15604/ejef.2021.09.04.003

Abstract

Covid-19 has had severe consequences on the financial systems of many countries and has altered the manner in which most businesses operate. This adverse situation has a spill-over effect on financial markets where the market efficiency may have been altered, hence using pre-Covid-19 strategies for investment purposes may no longer be applicable. Market efficiency, which is closely linked to informational efficiency, depicts the extent to which financial markets adjust quickly and correctly to new information. It is instrumental for fundamental analysis. The aim of this study is to analyze the market efficiency during the pandemic in five major financial markets around the world. Using the runs tests, the results indicate that the market efficiency in the JSE and JPX-Nikkei 400 has been altered significantly, while the Nasdaq Index, DAX, and CAC 40 have not changed from what it used to be. This was evident in the significant difference between the expected number of runs and the total number of runs, as indicated by the runs test. The implication of this study is that investment professionals in the JSE and JPX-Nikkei 400 should alter their investment strategies, without which they may incur severe losses. 

Keywords: Market Efficiency, Random Walk, Runs Test, Financial Markets 

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