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We study access to banking and how it is related to banks’ rate of return on investments and the distribution of income. We develop our empirical framework through a theoretical supply-side model of bank deposit services with a consumer population heterogeneous in income. We use this model to show how decreases in the interest rate margin and higher income disparities lead to an increase in the proportion of unbanked. Using localized US household data from 2009, 2011, 2013 and 2015 we find strong empirical evidence for the predictions of the model. We then structurally estimate our model to estimate the value of having a checking account relative to alternative financial services and to quantify the effects of actual changes in the interest rate margin and the distribution of income that occurred in the aftermath of the 2008 financial crisis.

The paper justifies the possibility of estimating wage premiums that higher study education graduates may receive based on the administrative data from the Polish Graduate Tracking System. The data on wages in the year preceding the admission to a given study cycle were used, along with the data from the year after graduation. For the first first-cycle full full-time study programme, the average growth in wages in relation to every each subsequent year of education ranged from 20% to 40% depending on the area of study under which a given field of study was classified. For full-time second second-cycle studies, the rate of return was 50%–60%. In the case of part-time studies, these growth rates were considerably lower.

The purpose of the study is to investigate the pricing impact of positive and negative accrual-based earnings management on stock returns. The study considers the moderating role of different cross-sectional effects, namely market effect, size effect, value effect, and momentum effect while examining the association between earnings management and stock return. The pricing impact is examined through univariate, bivariate portfolio methodology, and Fama–MacBeth cross-sectional regression. Based on a sample of 3085 Bombay Stock Exchange-listed stocks, results exhibit that investors perceive positive and negative earnings management differently. It has been found that investors demand a higher premium for stocks with negative earnings management, whereas investors hold stocks with positive earnings management at a lower rate of return. These findings are robust after controlling for cross-sectional effects. The study is among the pioneering attempts to examine the pricing impact of accrual earnings management by taking into account the direction (positive and negative earnings management) as well as the endogeneity nature of earnings management.

Purpose: The purpose of this study is to ascertain which financial factors affect the price-to-earnings ratios of Canadian firms. Methodology: A sample of 578 Canadian firms, across 11 industries, listed on the Toronto Stock Exchange during 2011 to 2018 is examined. Stock prices and financial statements accounts data is collected from S & P Capital IQ. We compute 27 financial factors to use as independent variables to regress on the price-to-earnings ratio dependent variables employing the Statistical Package for Social Sciences (SPSS) utilizing the software program’s forced, forward, and backward selection methods. Robustness tests are conducted using alternative dates (after the fiscal year end) to discover which model of financial factors best explains the forward price-to-earnings ratio as well as other statistical methods such as analysis of variance. Results: We find a unique model for each of the 3 models based on the forward price-to-earnings ratio date. The financial factors that explain each of the dates after the end of the fiscal year (1 month, 2 months, and 3 months) are the 4 variables: net profit margin, return on investment, total asset turnover, and the natural logarithm of the total assets. For model 3 (1 month after fiscal year end), in addition to the previous 4 factors, the dividends per share is part of the regression equation. All 3 models have strong statistically significant results at an alpha level of one percent. Further, industry effects are deduced and presented. Unique contribution to theory, policy, and practice: The results are unique to a Canadian sample of firms post- International Financial Reporting Standards (IFRS) adoption. Companies can utilize the empirical findings to manage their financial performance to maximize their price-to-earnings ratio. A product of a firm’s higher price-to-earnings ratio is a lower cost of capital which expands the corporation’s investment opportunities. Investors can apply this research to develop investment strategies hinged on price-to-earnings ratios to augment investment returns.

While higher effort in research is advocated for agriculture, there continues to be a lack of measurement of its impact in economic terms, at least in Europe. This paper seeks to assess the economic impact of public agricultural R&D investments in Europe. Different panel models are applied on 16 European countries, by employing productivity and investment data. Results show positive impacts with returns on public R&D investments on agricultural productivity of between 6.5% and 15.2%, varying according to model specifications and computation techniques. These values confirm that research expenditure in agriculture is well justified in economic terms. However, the results are highly dependent on the analytical approach and limited by the paucity of expenditure data. Further research is recommended to take into account the role of other important determinants of impact, such as climate, spill overs and the Common Agricultural Policy (CAP). However, a proper consideration of these variables will first require a major improvement of data availability.

PurposeThe purpose of this study is to elaborate the theoretical mechanism of rural credit input affecting the urban–rural income gap from the perspective of labor transfer, and use a dynamic panel mediation model to test the transmission mechanism of rural credit input affecting the urban–rural income gap through labor transfer, so as to provide an empirical basis for narrowing the urban–rural income gap in China.Design/methodology/approachThis paper constructs a mechanism analysis framework for rural credit input affecting the urban–rural income gap. From the perspective of resource allocation and labor transfer, the authors expound the transmission path of rural credit input to the urban–rural income gap and analyze the theoretical mechanism of rural credit input that affects the urban–rural income gap through labor transfer. Based on this, this paper uses the dynamic panel mediation model to test the effect relationship between rural credit input, labor transfer and urban–rural income gap in 31 provinces of China from 2009 to 2018.FindingsIn theory, increasing rural credit input can ease the financial constraints on the development of “agriculture, rural areas and farmers” and provide capital accumulation for the development of rural non-agricultural industries. The development of rural non-agricultural industries can provide more jobs for rural surplus labor, thereby increasing the labor rate of return in rural areas, and ultimately conducive to narrowing the urban–rural income gap. Further, increasing rural credit input can improve the development level of rural non-agricultural industries, thereby promoting the transfer of agricultural labor. At the same time, rural credit input based on the intermediary variable of labor transfer has a significant inhibitory effect on the urban–rural income gap.Research limitations/implicationsThis study mainly focuses on the relationship between rural credit input, labor transfer and urban–rural income gap, so it is impossible to use micro-level data to further verify the impact of rural credit input on labor transfer. At the same time, the collection of indicators of rural credit investment in the China Financial Yearbook only started in 2009, which limited the number of samples to a certain extent.Practical implicationsThis paper assumes that the economy is mainly composed of urban and rural economic sectors. Therefore, labor can flow freely between urban and rural areas. However, in the near future, China's rural secondary and tertiary industries may develop rapidly, especially with the in-depth implementation of rural revitalization strategy, it is very important to pay attention to the current situation of rural industrial structure and incorporate the factors such as rural industrial structure into the existing model.Social implicationsThis study attempts to provide a new perspective and inspiration for rural credit input, the optimal allocation of labor force and narrowing the urban–rural income gap under China's rural revitalization strategy.Originality/valueBased on the analysis framework of neoclassical economic theory, this paper uses the constant elasticity of substitution production function to establish an urban–rural two-sector nested model that includes credit supply variables and analyzes the mechanism of rural credit input affecting the urban–rural income gap through labor transfer.

Background Potential pharmacy students need a financial frame of reference to compare alternative fields of study or even determine if studying is financially worthwhile. Objective Estimate the rate of return to a pharmacy education investment in the U.S. Methods A model is used to estimate the rate of return to a pharmacy education. It is formulated using exclusively present values (i.e., dollars at 2019 prices). Several assumptions are made regarding the individual getting the education, the costs incurred, the amount borrowed, and the benefits derived. The robustness of the model is tested using sensitivity analysis and the rate of return is recalculated each time. Results The estimated real rate of return to a pharmacy education investment in the U.S., devoid of inflation and under the assumptions initially postulated in the model, is 4.89%. The nominal rate of return is 6.44%. Post-estimation sensitivity analysis shows that the real rate of return is relatively inelastic with respect to changes in eight inputs considered, thus indicating robustness in the results of the model. Conclusions The real rate of return estimated here establishes pharmacy as a financially viable occupation for young individuals possessing the aptitude and commitment to pursue a patient-centered career in medication management.

The aim of the article is to prove the positive impact of education on work salary. For this purpose, the main task of the article is toestimate the Mincer rate of return by taking several factors into account. A secondary task of the research is to analyze the results of2010 and 2011 and to find explanations for the significant differences between the two years. The results of research and a detailedanalysis of the labour market indicate a positive return from attainment of education at an individual level, and they strengthen thehypothesis about a correlation among higher education attainment, higher employment levels and welfare. So far, the Mincer rate ofreturn has not been widely used in Latvia. Keywords: rate of return, education, work salary. DOI: http://dx.doi.org/ 10.15181/rfds.v11i3.623

Thomas Piketty isn’t scared to tell a big story. In 2013, he produced Capital in the Twenty-First Century, a 700-page tome about inequality that combined Jane Austen and Honore de Balzac with data from tax returns and national statistics. One idea that captivated many readers was r versus g. When the rate of return on capital (think rental yields and share dividends) exceeds the overall economic growth rate, then inequality rises. When g is bigger than r, inequality falls. The theory didn’t e...

There is an emerging global trend toward more responsible and sustainable investment practices that is creating an increased appetite for forestry investments. This is against a backdrop of a dearth of forestry investment performance data of the kind suitable to aid econometrically significant investment projections. This article uses historical roundwood timber and lumber price data combined with a forestry discount rate to synthetically create historical forestry investment returns for the last two centuries. A Forestry Investment Total Return (FITR) Index is created from these data. A key advantage of the index is not relying on smoothed timber prices, making returns more representative of their reporting period. The FITR Index shows forestry investment outperforming equities over long durations, with a lower standard deviation of returns and a positive, rather than negative, skew of returns. The article suggests that responsible and sustainable investments can produce strong investment performance. TOPICS:Real assets/alternative investments/private equity, mutual funds/passive investing/indexing, performance measurement, ESG investing Key Findings ▪ The study estimates US forestry investment returns averaged 9.24% per annum from 1871 to 2018 with a standard deviation of returns of 12.3% and a positive skew of 88%. Comparable returns on US equities were 8.95% per annum with a higher standard deviation of 17.9% and a negative skew of 13%. ▪ Estimated forestry returns are based on an assumed forestry discount rate and changes in US timber prices over the period. The article shows that changes in timber prices relative to consumer prices have a consistent pattern going back to 1269. ▪ Forestry investment is likely to be a win–win for investors seeking sustainable investments and for policymakers by providing the potential for strong investment returns while also tackling environmental and climate change.

This article considers trends in wealth at the middle and top of the distribution, with a particular focus on the period around the Great Recession. It illustrates that leverage rates of middle class families relative to high‐wealth families were beneficial to relative rates of return of middle class families for most periods since 1983 but was extremely detrimental during the Great Recession. It also considers the savings rates over time among high‐wealth and middle class families, showing that dissaving slowed the recovery in wealth—especially among the middle class. Differential leverage was also a key factor explaining wealth inequality trends.

In this paper, we focus on scientific publications as an innovative output from the research efforts at U.S. federal laboratories. The data used relate to Federally Funded Research and Development Centers (FFRDCs). The relationship between R&D expenditures at these federal laboratories and their peer-reviewed scientific publications allows us to make inferences about the return to public-sector R&D. We examine two complementary statistical models. From the first model, we find that a 10% increase in constant dollar public-sector R&D is associated with between a 15.5 and 21.5% increase in scientific publications. From the second model, we find that the annual rate of return generated by an additional $1 million of R&D-based knowledge stock varies across the FFRDCs, averaging about 93 additional scientific publications, with the statistically significant values ranging from about 1 to as many as about 400 additional scientific publications.

Purpose: The aim of the article is to examine the selected determinants of the expected rate of return on human capital. Methodology: We conducted an anonymous survey of expected salaries among the Accounting and Controlling students at the Cracow University of Economics, which provided a unique setting for the analysis. On the basis of collected data for the cost of living and the cost of professional education for every participant, we used the human capital model developed by Dobija to compute the perceived level of the human capital of each individual. Then, we compared the expected salaries with the perceived levels of human capital and computed expected rates of return on human capital. The following research methods are used: literature review, statistical tests, econometric modeling. Findings: On the sample of 754 respondents, we found that male students expect a higher rate of return on their human capital than female students, while older students expect a lower rate of return on human capital than younger students. Research limitations: Only one field of study was used to measure the determinants of the expected rate of return on human capital. Originality: We contribute to the salary expectations and human capital literature by identifying a significant gender salary expectations gap that holds even after considering individually assessed costs of living and professional education. Our findings are consistent with the well-known observation that women tend to expect lower salaries than men.

PurposeThis paper presents a model for determining the optimal capital structure for cooperatives and explores the relationship between financial leverage and the ability of cooperatives to retire member equity.Design/methodology/approachA model is developed to determine the optimal capital structure and explore the relationship between capital structure and the rate at which a cooperative can retire member equity. Using data from cooperative financial statements, ordinary least-squares regressions are conducted to test two hypotheses on capital structure and equity retirement.FindingsThe model shows that the optimal capital structure is determined by the ratio of the rate of return on capital employed to the interest rate on borrowed capital and the required level of interest coverage. The regressions suggest that cooperatives choose their capital structure largely according to the rate of return on capital employed and the interest rate in a manner consistent with maximizing the rate of return on equity and that the rate at which cooperatives can retire member equity is directly related to leverage.Research limitations/implicationsThe model does not consider unallocated earnings. Analysis of the relationship between leverage and equity retirement yields results contrary to the assumptions of earlier studies.Practical implicationsCooperatives can use the model because the necessary parameters are easily understood and readily available from financial statements, lenders and industry sources.Originality/valueThe model is developed specifically for determining the capital structure of cooperatives and differs substantially from the corporate model. A theoretical basis is provided for the relationship between leverage and equity retirement.

In Latin America, default assumptions and borrowed templates and methodologies are often used in energy modeling, resulting in models that might not represent their cultural context and leading to policies awkwardly fit to local practices. Policy-driving low-income housing studies in Mexico, for example, activated both heating and cooling in energy models even though less than 5% of the homes in the country have heating systems. This paper illustrates the importance of modeling local sociocultural habits and practices, and how this can affect design outcomes. Here, we modeled low-income housing representative of typical residences in two desert climates—Hermosillo, Mexico, and Copiapo, Chile—using EnergyPlus. Settings representing local practices in each region were tested against default values, including occupancy settings, regional construction systems, and importantly, HVAC settings related to partial conditioning. Their impacts were measured via variation in energy use, comfort conditions, and the payback period of design upgrades. Results demonstrated how certain assumptions can have a high “design significance”, a term we propose for inputs that completely change optimal design decisions, as well as the importance of considering thermal comfort in such decisions. Including partial conditioning, for example, resulted in at least double the payback period and discomfort degrees for design upgrades in 16 of 24 instances.

Bu araştırma üniversite de çeşitli bölümlerde yapılan sosyal ve bireysel eğitim yatırımlarının getiri oranlarını hesaplamayı amaçlamaktadır. Araştırmada tarama modeli kullanılmıştır. Çalışma gurubunu, on beş farklı yükseköğretim bölümünden mezun olup İstanbul’da özel sektörde ücretli olarak çalışan 795 kişi oluşturmaktadır. Maliyetlere ilişkin veriler YÖK’ün 1997 yılında yaptığı araştırmadan, kazançlara ilişkin verilerse araştırmacı tarafından geliştirilen anket aracılığıyla elde edilmiştir. Araştırmada sosyal ve bireysel getiriler kısa-yol yöntemiyle hesaplanmıştır. Ayrıca maliyet-fayda analizinde kullanılan yöntemlerden olan fayda-maliyet oranı ile üniversite yatırımının sosyal ve bireysel açıdan verimliliği test edilmiştir. Araştırmada şu bulgulara ulaşılmıştır: Tüm bölümlerde sosyal getiri oranları %5 -%14,8; bireysel getiriler %12,3 -%18,5 arasında değişmektedir. Üniversite eğitiminin sosyal getiri oranı %8,9, fayda-maliyet oranı 11,93; bireysel getiri oranı %16,6, fayda-maliyet oranı 15,17’dir. Cinsiyetler açısından anlamlı farklılık görülmemiştir. Bireysel getiri oranı kadınlar için %16,3, erkekler için %16,6 bulunmuştur. Bu hesaplamalar tüm Türkiye çapında ve bütün eğitim tür ve düzeylerinde daha geniş bir örneklem üzerinde yapılmalıdır.

This paper estimates rates of return across the gross wealth distribution in eight European countries. Like differential saving rates, differential rates of return matter for post Keynesian theory,...

Economics-based tax research in accounting draws heavily on the Scholes-Wolfson framework. The framework develops a global approach to tax planning where all parties, all taxes, and all costs are to be considered in effective tax planning. Effective tax planning is distinct from tax minimization as the goal of the former is to maximize the after-tax rate of return. The first empirical applications of the framework followed the passage of the Tax Reform Act of 1986. Taxation of multinationals has long been of interest to accounting (and other) researchers and continues to be of interest. The Tax Cuts and Jobs Act of 2017 changed many tax laws including how the U.S. taxes U.S. multinationals. Research examining the ramifications of this latest Tax Act is already well under way.

Zvi Griliches’ seminal analysis of hybrid corn spawned a large literature seeking to quantify and demonstrate the value of agricultural research and development (R&D) investments. The most important metric for quantifying the rate of return to R&D emerging from this literature is the internal rate of return (IRR), even though Griliches was sceptical of its usefulness as a metric in this context. An alternative metric, also reported by Griliches but not as commonly used in the subsequent returns‐to‐research literature, is the benefit–cost ratio (BCR). We assess how the implications of the returns to agricultural R&D literature may have differed if the BCR had become the standard rather than the IRR. We reveal that the IRR and BCR produce substantially different rankings of agricultural R&D projects, differences that persist even under various commodity and geographical aggregations of the BCR and IRR estimates. The median across 2,627 reported IRRs is 37.5 per cent per year. Using data gleaned from 492 research evaluation studies, we developed and deployed a methodology to impute 2,126 BCRs (median of 5.4) and modified internal rates of returns (MIRRs, median of 16.4 per cent per year) assuming a uniform 10 per cent per year discount rate and a 30 year research timeline.

We examine whether cross-firm return predictability is associated with accounting quality (AQ), and find that stock returns of good AQ firms significantly positively predict one-month-ahead stock returns to industry- and size- matched poor AQ firms. In testing a delayed-information-processing mechanism behind the cross-firm return predictability, we find that: (i) Analyst earnings forecast revisions (FR) mimic the return patterns, as FR of good AQ firms significantly positively predict one-month-ahead FR of matched poor AQ firms; (ii) Cross-firm return predictability is concentrated in months with substantial news arrival, but not in no-news months; (iii) Cross-firm return predictability is stronger when the good AQ predictor firms have a richer information environment than poor AQ firms as proxied by analyst following and institutional ownership. Collectively the results uncover a new relation between accounting quality and stock return dynamics.

Purpose: The objective of this paper is to determine the movements (long-term trend) of the exchange rate by forecasting the rate of return and risk (return to variability ratio, RVR) that financial assets have in two economies and for four different investments. Design/Methodology/Approach: Risk averse speculators will try to maximize their return and minimize their risk by investing domestically or abroad, but these capital flows will affect the value of the two currencies (their exchange rate). Findings: The empirical results show that before 2001 the return in the U.S. was high and the dollar was appreciated; after 2001, the same return became negative and the dollar was depreciated, but after 2004 the returns have growing positively for the U.S., and the returns for the Euro-zone are falling. Practical Implications: We can say that the dollar may appreciate with respect to euro, except if we will have any other domestic or external shocks on the two economies. Still the results of this analysis are not very conclusive. Originality/value: International investors are investing in countries with higher return and lower risk. This increase in demand for these assets, increases the demand for currency in that country and its currency is appreciated., peer-reviewed

Since 2006 there have been significant changes in the labour market for university graduates, most notably the Global Financial Crisis of 2007 and the subsequent downturn in gross domestic product growth, and a huge expansion in university places. This article presents estimates of the monetary returns in Australia associated with the completion of bachelor degrees in 2016 for a range of fields of study and compares them to the estimates for 2006. The results show that for the median person, there are still good monetary incentives to complete these degrees and the private rate of return compares favourably with the long-term real bond rate. However, the article also concludes that the return to an individual investing in bachelor education had mostly declined in the period 2006–2016. There is, again, considerable variation between disciplines and for some, completion of a bachelor degree does not yield positive returns. The key factors determining the monetary rate of return are the discipline of the degree and the graduates’ subsequent labour force status. Graduates in full-time employment in most disciplines avoided being among those with low (or negative) rates of return. In addition, there is some evidence of skills mismatch and over skilling among the lowest paid university graduates.

In this article, we evaluate the rate of return to government efforts to promote broadband. Specifically, we estimate the impact of USDA's broadband loan and grant programs on the average payroll per worker using zip code level data from the Zip Code Business Patterns for the period from 1997 to 2007. Our results indicate that two of the smaller broadband programs (the Pilot loan program and the broadband grants program) likely had no effect on local payroll per workers. On the other hand, the largest program in terms of funding and coverage (the current broadband loan program) likely had a positive impact. Our estimate implies that a $1 per capita increase in a particular zip code's one‐time receipt of the current program broadband loan results in a $0.92 increase in payroll per worker annually. Our calculated point estimates of the benefit: cost ratios for this broadband program range from 1.98 to 2.99, depending on assumptions about the time frame over which benefits accrue. However, the confidence intervals are wide enough to include the possibility that the costs outweigh the benefits.(JEL L86, J30, O18)

In this paper, we explore the underlying explanations for the under financing of the U.S. Social Security pension system that has persisted since the late 1980s despite repeated calls for reform by the program’s trustees and various advisory groups. Both micro and macro estimates of the cost shifting from older to younger generations because of the delay in financing reform are provided. The analysis shows that recent proposals that call for balancing financing reform adjustments between benefits and revenues would result in most of the cost being shifted to future generations of participants. Because reforms have been delayed and many current proposals call for greater welfare transfers in the program from high to low career earners, the case is made that the costs of reform should be imposed on the basis of participants’ ability to pay rather than on the basis of the year in which they were born.

We develop a model of investment with financial constraints and use it to investigate the relation between investment and Tobin’s  .A firm is financed partly by insiders, who control its assets, and partly by outside investors. When their wealth is scarce, insiders earn a rate of return higher than the market rate of return, i.e., they receive a quasi-rent on invested capital. This rent is priced into the value of the firm, so Tobin’s  is driven by two forces: changes in the value of invested capital, and changes in the value of the insiders’ future rents per unit of capital. This weakens the correlation between  and investment, relative to the frictionless benchmark. We present a calibrated version of the model, which, due to this effect, generates realistic correlations between investment,  ,a nd cashflow.

We analyze the relation between investment returns and performance fees for 218 Dutch occupational pension funds with an average total of 985 billion euro in assets under management from 2012 to 2015. Our dataset is free from self-reporting biases and includes total return, excess return and performance fees for six major asset classes. We find no statistical evidence that the returns of pension funds that pay performance fees to asset managers for active investing are significantly higher or lower than the returns of pension funds that do not pay performance fees. This is true for most asset classes and robust if we correct for risk and persistence in asset class returns. We also document that large and more specialized pension funds pay less performance fees for a given level of excess return in alternative asset classes such as hedge funds and private equity. This is possibly the result of better negotiation power due to their larger scale or higher level of expertise.

There is reason to suspect that return migrants can reduce social violence in migrant-prone regions of the world. Taking into account that recent research shows positive effects of return migration, we consider that returners may reduce violence by contributing to social renewal and economic growth in their home communities. We estimate the direct effects of return migration in the context of Mexico, a traditionally migrant country that has suffered record levels of violence in the past decade. Using data on homicide rates from 2456 municipalities for the 2011–2013 period and an instrumental variable bivariate Tobit maximum likelihood approach, we find that higher rates of return migration lead to a decline in local homicide rates. We also show, with a censored quantile instrumental variable (CQIV) model, that municipalities in the bottom quartile of the homicide rate distribution benefit the most from return migration. Our work has important implications for crime reduction policies in developing countries, and specifically in Mexico, where social violence has wreaked havoc on society in recent years.

The tail behavior of randomly weighted sums has become an increasingly interesting topic in applied probability and this study has played an important role in a few problems in insurance, finance, and risk management. In this paper, we extend the study to the case of non-standard bivariate regular variation and, as applications, we interpret the study in terms of bivariate processes of aggregate claims (without interest rate, with a constant force of interest, or with stochastic investment returns).

Based on the data of CGSS database and Mincer income equation, this paper estimates the educational return to higher education groups in China by selecting sample data in accordance with the content of the study. The study found that the rate of return to education is different among different educational groups, and the income of wages increases with the improvement of education level. The rate of return to education is obviously different between men and women, and the rate of return on education of women is generally higher than that of men. It is suggested that the education level of the people should be improved by increasing the multi-level investment in education; Promoting gender equality in employment through strengthening the legal system; Enhancing the sense of Corporate Social responsibility to make the Employment Market develop harmoniously; Women increase their social competitiveness by upgrading their human capital to further improve existing problems.

The major challenge for filling the financing gaps of green energy is lower rate of return of green projects comparing to fossil fuels. Electricity tariffs are often regulated by governments; It has to be kept in low price to serve for every households as a necessary goods. Sources of revenue from green energy comes only from user charges. Hence it is not so much attractive for private investors. The paper is proposing a model for utilization of the tax revenue spillover of green energy supply by returning the portion of it to green energy projects in order to increase their rate of return. In addition, the paper is proposing a social community based funding scheme for smaller scale green projects (e.g. solar and wind). The paper theoretically and empirically shows that utilizing spillover effect in form of tax return for funding green energy projects will increase the rate of return and make them feasible and interesting for the private investors.

Gold is a precious metal that plays an important role in asset management. The purpose of the article is to assess investments in gold as an asset that hedges investors against inflation in selected five countries (USA, Great Britain, Switzerland, Japan and Canada) and the Eurozone. Analyzed countries are leading investors on the gold market and its producers (US, Canada). To implement this objective, a graphic illustration was made showing the relationship between the nominal gold price and the price of gold hedging against inflation, as well as a regression model was constructed presenting the elasticity of gold returns relative to inflation (parameter β). Models for analyzed countries were verified with a use of R‑square, standard errors for residuals and Durbin‑Watson statistics (autocorrelation) and by applying Doornik‑Hansen Test of Normality, White’s test for heteroskedasticity and test for nonlinearity. The studies were conducted based on the data published at the end of month regarding gold prices and the Consumer Price Index, which expresses changes in the inflation level between 1990 and 2016. The studies have shown that, apart from very few cases, inflation had a small impact on the evolution of gold prices expressed in national currencies. Except for Japan, the price of gold which hedged against inflation showed a rising trend despite diverse fluctuations of nominal gold prices. Investors had a chance to achieve rates of return exceeding the inflation rate by purchasing gold when its nominal price went below fair value. Gold turned out to be an excellent hedge against inflation for investors from Canada, both during the whole analyzed period, as well as during the bull and bear market. This is also true in the case of US during the bear market. The beta parameter for those countries assumed positive values, exceeding unity. A partial hedge against inflation was achieved by investors from US (the whole analyzed period, bull market) and from Great Britain (bull market). However, in most cases beta parameter showed negative values which means that the price of gold did not keep up with inflation and investment in gold did not provide a hedge against inflation. Results were not always statistically significant at given levels of significance. Złoto jest metalem szlachetnym, który pełni ważną funkcję w zarządzaniu aktywami. Celem artykułu jest ocena inwestycji w złoto jako aktywów zabezpieczających inwestorów przed inflacją w wybranych pięciu krajach (USA, Wielka Brytania, Szwajcaria, Japonia, Kanada) i strefie euro. Analizowane kraje są ważnymi inwestorami na rynku złota oraz jego producentami (USA, Kanada). Dla realizacji tego celu dokonano ilustracji graficznej zależności między nominalną ceną złota i ceną złota zabezpieczającą przed inflacją, a także zbudowano model liniowy, obrazujący elastyczność stopy zwrotu ze złota względem inflacji (parametr β). Modele dla poszczególnych krajów poddano także weryfikacji, uwzględniając współczynniki determinacji i błędy standardowe reszt oraz stosując statystykę Durbina‑Watsona (autokorelacja), test na normalność rozkładu reszt (Doornika‑Hansena), test White’a na heteroskedastyczność reszt oraz test na nieliniowość (kwadraty zmiennych). Badania przeprowadzono na podstawie publikowanych na koniec miesiąca danych na temat cen złota i indeksu ogólnego poziomu cen (Consumer Price Index), wyrażającego zmiany poziomu inflacji w latach 1990–2016. Badania dowiodły, że inflacja, abstrahując od nielicznych przypadków, miała niewielki wpływ na kształtowaniem się ceny złota w walutach narodowych poszczególnych krajów. Cena złota zabezpieczająca przed inflacją wykazała, z wyjątkiem Japonii, trend rosnący, mimo różnych wahań nominalnych cen złota. Inwestorzy mieli szansę osiągania stóp zwrotu przewyższających inflację, nabywając złoto w okresie, gdy jego cena nominalna kształtowała się poniżej fair value. Złoto okazało się doskonałym zabezpieczeniem przed inflacją dla inwestorów z Kanady, biorąc pod uwagę zarówno cały okres analizy, jak i okres hossy oraz bessy. Dotyczy to również USA w okresie bessy. Parametr β przyjmował poziom przekraczający jedność. Niepełne zabezpieczenie przed inflacją osiągnęli inwestorzy z USA (cały okres analizy, okres hossy) oraz Wielkiej Brytanii (okres hossy). W większości przypadków parametr β przyjmował jednak wartości ujemne, co oznacza, że cena złota nie podążała za zmianami inflacji, a inwestycje w złoto nie dawały zabezpieczenia przed nią. Otrzymane wyniki nie były zawsze istotne statystycznie przy przyjętych poziomach istotności. Maria Curie-Sklodowska University in Lublin Uniwersytet Marii Curie-Skłodowskiej w Lublinie

Мethods and Are an example of economic investment expertise in the construction and operation of "Apartment dwelling house" during the first 17 years. Use classic methods and indicators for assessing the effectiveness of investment jekonoicheskoj, namely: the payback period, the average rate of return, net present value, internal rate of return.

Solar power has achieved great development in the last decade, and it should continue to play a central role in the face of climate change and sustainable development challenges. This paper builds a real options model that provides a microeconomic analytical framework with the Least Squares Monte Carlo (LSM) method to assess the investment choices of a typical solar panel producer in China facing trade and domestic supply- and demand-side policy uncertainties. It builds a baseline scenario and three policy scenarios with decreasing anti-dumping and countervailing charges, constant feed-in tariff (FIT) level and reduced investment cost. A typical producer will have to make an investment decision on building a new production line in five years based on a decision impact analysis within 20 years. The result shows an immediate investment decision for all scenarios. The producer will have higher return from investment in building a solar power plant with a constant FIT. Export is the optimal choice in other scenarios where investment return is lower. After sensitivity analysis, the paper concludes and can be used as a toolkit for solar panel producers and a reference for policy makers to evaluate the impact of policy uncertainties.

The study of income distribution, education input and education return rate has always been a hot topic in the theoretical circle. Most of the existing researches have drawn a conclusion that there is a significant positive correlation between the years of education and the income level. There is a two-way causal relationship between income distribution and education. In addition, the distribution of education and the rate of return on education will also have an impact on education. This paper aims to focus on the impact of gender differences in income distribution on education based on previous research, while focusing on the distribution of education and the rate of return on education in different genders. Based on the specific quantitative indicators of the differences, some theoretical support and policy recommendations on education and education reform are given.

This paper reinterprets the non-neutrality of financial liquidity under a general equilibrium model with multiple financial liquidities, but without price stickiness. Non-neutrality opens the possibility of effective monetary or financial policy on the crisis-prone real economy and thus revisiting its nature is worthwhile. We find that models with only one asset and money limit our perspectives to see the nature of financial liquidities interacting with real economy. Departing from abstracting an economy with only one interest rate allows us to see the underlying reason of non-neutrality of financial liquidities, that is, industry-specific rates of return distinguishable from the representative rate of return. Without the assumption of price stickiness but with a wider frame of multiple liquidities, this paper offers another reason for non-neutrality of financial liquidity and naturally clarifies the meaning of money neutrality. We incorporate complicated reality of multiple financial liquidities in a theoretical model, which is a way of deepening our understanding of the nature of the financial market. Key words: financial liquidity, non-neutrality, dichotomy.JEL: E44, E51. Jos jedan razlog za ne-neutralnost finansijske likvidnostiU radu je reinterpretirana ne-neutralnost finansijske likvidnosti u okviru modela opste ravnoteže sa visestrukim finansijskim likvidnostima, ali bez lepljivih cena. Ne-neutralnost otvara mogucnost efektivne monetarne ili finansijske politike u realnoj ekonomiji podložnoj krizama, te je na taj nacin ponovno razmatranje njene prirode korisno. Smatramo da modeli sa samo jednom imovinom i novcem ogranicavaju nasu perspektivu u razumevanju prirode finansijskih likvidnosti u interakciji sa realnom ekonomijom. Polazeci od apstrahovanja ekonomije sa samo jednom kamatnom stopom, možemo da uocimo osnovni razlog ne-neutralnosti finansijskih likvidnosti, odnosno, specificne industrijske stope prinosa koje se razlikuju od reprezentativne stope prinosa. Bez pretpostavke o lepljivosti cena, ali sa sirim okvirom visestrukih likvidnosti, ovaj rad nudi jos jedan razlog u korist ne-neutralnosti finansijske likvidnosti i prirodno pojasnjava znacenje neutralnosti novca. U teorijski model inkorporiramo kompleksnu realnost visestrukih finansijskih likvidnosti, sto predstavlja nacin da se produbi nase razumevanje finansijskog tržista.Kljucne reci: Finansijska likvidnost, ne-neutralnost, dihotomija.

The concept of uncertainty in investment returns, as an additional consideration to the traditional mean-variance framework, is receiving increased attention in the finance literature. This article examines the financial market relationship between uncertainty and hedge fund returns, finding that a readily available proxy for uncertainty (the CBOE® VVIX index) is a useful indicator of next-month hedge fund returns. Hedge funds in the highest quintile of VVIX index sensitivity outperform those in the lowest quintile of uncertainty by 5.97% annually, on average. The results of the study indicate that the use of this parsimonious measure of uncertainty compares favorably to more complex measures of uncertainty that have previously been analyzed.

In this article, the author reminds us again that return mean and variance are not enough. Appropriate investment risk-bearing scales with surplus over future withdrawal commitments, as well as with investment return characteristics. This framework provides for the integration of financial planning and investment decision-making. Its time-varying risk aversion with the ratio of investments to surplus also provides an opportunity for use of dynamic strategies, though speculative bubbles require compensating inputs to avoid excessive allocation extremes. Appropriate risk-bearing can also scale with functions of shortfall probability to deal with time-specific funding requirements. The probability of avoiding shortfall from an initial surplus over longer time horizons may scale close to the square root of time, creating an illusion of time diversification. In contrast, from an initial surplus deficit, minimizing shortfall probability is akin to playing Russian roulette. Allocations based on minimized shortfall probability can be usefully blended with mean–variance allocations, especially for 5- to 15-year time horizons. TOPICS:Statistical methods, risk management, performance measurement

Traditional approach to analyze the determinants of Chonsei deposit to housing sales price ratio is based on asset market equilibrium condition. However, this approach does not fully account for complexity involved in Korean rental housing market, where Chonsei, Monthly-rent-with-variable deposit, and pure monthly rental contracts coexist. In this paper, we utilize each rental type’s different rate of return structure and examine the determinants of Chonsei deposit to housing sales price ratio based on rental housing market equilibrium condition. We further incorporate housing price volatility into the analysis as a critical variable related to housing investment risks, which has been ignored in previous studies. Our empirical analysis using a sample of the apartment sales price and rent in Seoul confirm our theoretical predictions: Chonsei deposit to housing sales price ratio is positively linked to the rent-to-price ratio and housing price volatility, and the ratio is negatively affected by the expected housing price appreciation rate. The relationship between the Chonsei deposit to housing sales price ratio and housing price volatility was robust to different measures of housing price volatility. The long-run elasticity of Chonsei deposit to housing sales price ratio with respect to rentto- price ratio was estimated to be 1.04~1.22 and the long-run elasticity of the ratio with respect to housing price volatility was estimated to be 0.15~0.53. which is about 50 to 100 percent of the long-run elasticity with respect to expected housing price appreciation rate. These results show that previously ignored housing price volatility is one of important variables to affect Chonsei deposit to housing sales price ratio and risk factors are needed to be considered to better understand Korean housing market.

Purpose The purpose of this paper is to find applicable Islamic pricing benchmarks (IPBs) instead of the market interest rates which are currently used in Islamic finance as benchmark. Design/methodology/approach The suggested model (Islamic pricing benchmark model (IPBM)) obviously reveals the feasibility and practical effectiveness of a substitute to London Interbank Offered Rate (LIBOR) and as an evaluator tool to suggested investment projects. The model is a suggested mechanism which could be used as an alternative choice to the conventional borrowing based on the forbidden Riba or on interest. The suggested IPBM depends on estimating the rate of return for any project on consideration of the cash flows in future which is expected to be relative to the invested capital. Findings The IPBM approach might be applied to financial tools, where the fund owner bears the loss since it is not because of negligence. An instrument to help identify the investment for target rates of return (as an alternative choice to LIBOR) to identify a breakeven point based on expected cash flows for the project to be financed instead of based on seeking the indicators of interest or Riba (as LIBOR). This feature of the IPBM model as an Islamic benchmark renders it as a Shariah pricing mechanism for the Islamic financial products. Practical implications The IPBM could be used as a financial instrument to assist in identifying the investment for the target return rates to determine a breakeven point based on expected cash flows for the project to be funded instead of being based on seeking the interest indicators or Riba (as LIBOR). This feature as an Islamic benchmark is considered as a Shariah pricing mechanism for the Islamic financial products. In particular, the proposed model incorporates the Shariah parameters. In that, it is hoped that the Islamic financial instruments will be more comprehensive in their Shariah compliance and thereby may bring more credibility to the Islamic financial system in general. Originality/value This paper highlights several important issues related to the IPBMs in Islamic financial institutions which are not widely discussed among researchers. This study contributes to finding an alternative IPB for the Islamic financial products which is currently using the conventional interest rate (LIBOR) as its benchmark. The current study provides empirical evidence for the possibility of relying on the IPBM as an Islamic benchmark to price Islamic financial transactions.

Purpose This paper aims to contribute to formulating the methodological framework for a paradigm of Islamic economics, using the development of the conventional economics, theoretical and mathematical methods. Design/methodology/approach The study based on the inductive and mathematical methods to contribute to economic theory within the methodological framework for Islamic Economics, by using the return rate of Musharakah rather than the interest rate in influence the economic activity and monetary policy. Findings Via replacement, the concept of the interest rate by the return rates of Musharakah. It concludes that the central bank can control the monetary policy, economic activity and the efficient allocation of resources by using the return rates of Musharakah through the framework of Islamic economy. Practical/implications The study is a contribution to formulate the methodological framework for a paradigm of Islamic economics, where it investigates the impact of return rates of Musharakah on the money market and monetary policy, by the mathematical methods used in the conventional economy. Also, the study illustrates the importance of further studies that examine the methodological framework for Islamic Economics. Originality/value The study aims to contribute to formulating the Islamic economic theory, through the return rate of Musharakah financing instead of the interest rate, and its effectiveness of the monetary policy. As well as reformulating the concepts of the investment function, the present value and the marginal efficiency rate of investment according to the Islamic economy approach.

Various types of recent research point out the fact that Georgia’s energy sector (the hydro energy one, in particular) is one of the most attractive ones when it comes to investment opportunities. Hydro power remains the cheapest and the most “eco-friendly” source of power for Georgia. An essential part of Georgia’s hydro energy potential is still untapped (in fact, the current electricity generation represents just about 40% of Georgia’s estimated annual hydropower output potential). At the same time, it is worth mentioning that for the last 6 years, generation capacities are falling short of growing consumption and this fact increases the attractiveness of investing in this sector. Currently, more than 20 hydro power plants are under construction/reconstruction orlicensing stage and, in addition to this, the Ministry of Energy of Georgia has more than 60 HPP projects available for investment. For every potential investor, it is of vital importance to have a general knowledge about what to expect from the desired sector, what are the risks that could hurt the success of the investment and if the expected rate of return equals or exceeds his or her required rate of return. This article, based on various official data, offers introductory issues of investment analysis of small hydro power plants in Georgia and based on well known methods of Modern Portfolio Theory offers the suitable model for investments evaluation and analysis in Georgia’s Energy sector.Keywords: CAPM, energy sector, investment, statisticsJEL: C13

The pattern of economic rates of return to investments in education can help us to understand the benefits of schooling. It was common knowledge that the returns to education were highest for the primary level of education and lower for subsequent levels. Recent evidence suggests that the pattern has changed. Since the 1980s, the returns to schooling overall have increased. The returns to higher education have increased the most. The fact that the more educated have improved their position, despite an increase in their numbers, must mean that the demand for more educated workers has increased more than supply over time, causing an increase in the overall returns to schooling. Possible reasons include technological change favoring higher-order skills, increased coverage at lower levels of schooling, and the quality of schooling.

The interest rate on government debt is significantly lower than the rates of return on other assets. From the perspective of standard models of optimal taxation, this empirical fact is puzzling: typically, the government should finance expenditures either through contingent taxes, or by previously-issued state-contingent debt, or by labor taxes, with only minor effects arising from intertemporal distortions on interest rates. We study how this answer changes in an economy with financial frictions, where the government cannot directly redistribute towards the agents in need of liquidity, but has otherwise access to a complete set of linear tax instruments. We establish a stark result. Provided this is feasible, optimal policy calls for the government to increase its debt, up to the point at which it provides sufficient liquidity to avoid financial constraints. In this case, capital-income taxes are zero in the long run, and the returns on government debt and capital are equalized. However, if the fiscal space is insufficient, a wedge opens between the rate of return on government debt and capital. In this case, optimal long-run tax policy is driven by a trade-off between the desire to mitigate financial frictions by subsidizing capital and the incentive to exploit the quasi-rents accruing to producers of capital by taxing capital instead. This latter incentive magnifies the wedge between rates of return on publicly and privately-issued assets.

This paper estimates private and social returns to investment in education in Azerbaijan, using the 2015 Azerbaijan Monitoring Survey for Social Welfare. The private rate of return to education is 6 percent; this is the first estimate of returns to schooling in Azerbaijan since 1995. The returns to schooling are 6 percent for men and 8 percent for women, even controlling for selection. In addition, the paper estimates the returns for higher education; for this level, the rate of return is 9 percent. Finally, using the full discount method, the private rate of return to tertiary education is 9 percent, and the social rate of return is 8 percent. One policy implication is to re-examine the funding of higher education and for its expansion.

This paper empirically investigates whether profit-sharing rates in Islamic banks follow rates of the conventional banks in Turkey over the sample period March 2001 to June 2019 through employing both standard econometric and wavelet approaches. We identify both unidirectional and bidirectional causality between the monthly observations at different time scales. Moreover, the direction of the relationship considerably varies and displays coefficient sign reversal over wavelet scales. Overall, our findings suggest that the rates of return in both banking sectors are not independent of each other and, therefore, have important implications regarding financial stability and risk management., Bu çalışmada, 2001 Mart ve 2019 Haziran dönemine ait verileri kullanarak Türkiye’deki kâr payı oranlarının mevduat faiz oranlarını takip edip etmedikleri, standart ekonometrik ve dalgacıklar analizi aracılığıyla, araştırılmıştır. Aylık gözlemlerin kullanıldığı bu çalışmada, değişkenler arasında faklı zaman ölçeklerinde geçerli hem tek hem de çift yönlü nedensellik ilişkisi bulgusuna rastlanmıştır. Ayrıca, değişkenler arasındaki korelasyon ilişki derecesinin ve yönünün dalgacık ölçeklerine göre önemli derecede değiştiği sonucuna ulaşılmıştır. Bu sonuçlar, her iki bankacılık sektörü getiri oranlarının birbirinden bağımsız olmadığını ve dolayısıyla finansal istikrarı ve risk yönetimine yönelik alınacak kararlar açısından dikkate alınması gerektiğini göstermektedir

This contribution evokes Orio Giarini’s courage to think ‘outside the box’. It proposes a practical way to bridge the gap between risk (where probabilities of occurrence are fully known) and uncertainty (where these probabilities are unknown). However, in the context of insurance, neither extreme applies: the risk type of a newly enrolled customer is not fully known, loss distributions (especially their tails) are difficult to estimate with sufficient precision, the diversification properties of a block of policies acquired from another company can be assessed only to an approximation, and rates of return on investment depend on decisions of central banks that cannot be predicted too well. This contribution revolves around the launch of an innovative insurance product, where the company has a notion of whether a favourable market reception is more likely than an unfavourable one, of the chance of obtaining approval from the regulatory authority and the risk of a competitor launching a similar innovation. Linear partial information theory is proposed and applied as a particular practical way to systematically exploit the imprecise information that may exist for all of these aspects. The decision-making criterion is maxEmin, an intuitive modification of the maximin rule known from games against nature.

This paper revises the standard interpretation of the book rate of return as a measure of profitability. Rather, due to conservative accounting, the book rate of return informs about risk and the expected return to the investor. In contrast to asset pricing research, where the book rate of return is viewed as positively associated with risk and expected stock returns, the paper demonstrates the opposite: with the effect of conservative accounting, the book rate of return is negatively associated with risk and expected return. The empirical analysis indicates that the market prices equities accordingly. It also shows how the previously documented positive correlation is due to a misunderstanding of accounting and how the book rate of return enters into asset pricing in a way that is consistent with the accounting.

Overwhelming evidence suggests that a “culture of cooperation,” which is the implicit reward from cooperating in any economic activity, represents one of the most successful humanly devised social structures. Yet, our understanding of its determinants and impact is still limited. To clarify these issues, we propose a time inconsistency theory of state-building and we document that, in the world's most agricultural countries, adverse climate shocks push the nonelites to accumulate strong norms of cooperation. To illustrate, a strong culture signals the nonelites’ commitment to cooperate with the elites in joint investment activities despite the small expected payoff and encourages the elites to reciprocate by granting a more inclusive political process. These reforms, in turn, help convince the nonelites that a sufficient part of the investment returns will be shared via public good provision. Our estimates imply that the severity of droughts has two short run effects on agricultural output, a negative impact due to worse farming conditions and a positive effect due to stronger norms of trust and respect. Accordingly, policymakers should consider the direct and indirect impacts of climate change and favor endogenous cultural formation. Moreover, environmental policies should be designed through a more credible interdisciplinary approach.

We outline a framework in which accounting “valuation anchors" could be connected to expected stock returns. Under two general conditions, expected log returns is a log- linear function of a valuation (market value-to-accounting) multiple and the expected growth in the valuation anchor. We show that the framework can: 1) allow for expected enterprise returns, 2) correct for the use of stale accounting data in estimation, and 3) accommodate differences in information quality. This analytical formulation is tractable and flexible, and provides building blocks for further innovations in accounting valuation research.