Article

 

Editorial (p.11-13)

by

Aristidis Bitzenis, University of Macedonia, Thessaloniki, Greece

John Marangos, University of Crete, Greece

 

 

Financial recession, credit crunch and Islamic banks: A case study of Al Rajhi Bank in th Kingdom of Saudi Arabia (p.15-36)

by

Abdulmonem Alzalabani , Yanbu Industrial College, Saudi Arabia

Reji D. Nair, Yanbu Industrial College, Saudi Arabia

Keywords : Al Rajhi Bank, Islamic Banking, Financial recession, Saudi Arabia, Risk Management, Profitability

JEL classification : G21, G32, G29, G39

Abstract

The paper discusses how Islamic Banks are able to withstand the severity of financial recession, with special emphasis on Al Rajhi Bank in the Kingdom of Saudi Arabia. Al Rajhi is among the most profitable banks in the Middle East; its robust profitability has been largely driven by increasing business volumes, higher margins, and low labor costs. The financial recession has its impact on all banks in the middle east along with western counterparts, but its severity was not heavy for Islamic Banks compared to the latter and the paper concludes that there can be no doubt that Islamic finance has an exciting future; the quest for a financial system based on moral values rather than greed and fear, is bound to enhance its position in the global system.

 

 

Performance benchmarking of non-banking financial institutions by means of self-organising map algorithm (p.37-58)

by

Adrian Costea, Department of Statistics and Econometrics, Bucharest University of Economics, Romania

Keywords : Benchmarking, Non-banking financial institutions, Self-organising map, Financial performance

JEL classification : C38, C81, G23

Abstract

We construct a benchmarking model in the form of a twodimensional self-organising map (SOM) to compare the performance of nonbanking financial institutions (NFIs) in Romania. The NFIs are characterized by a number of performance dimensions such as capital adequacy, assets’ quality and profitability. First, we apply Kohonen’ SOM algorithm (an unsupervised neural network algorithm) to group the NFIs in clusters with similar characteristics. Then, we use the U-matrix method to build maps that facilitate the visualization of SOM results and select the best map in terms of quantisation error and ease of readability. The best map is used to analyze the companies over time by studying the cluster where each company was positioned for each period. We conclude that there are benefits in using SOM for interpreting large and complex financial data by identifying and visualizing clusters.

 

 

The new improved process of securitization (p.59-72)

by

Elena Makrevska, University American College Skopje, FUROM

Keywords : Securitization, Regulation, Financial crisis

JEL classification : G21, G28

Abstract

Even through the global financial crisis started with defaults on USA mortgages, USA and international banks suffered about equally. The most mentioned reason for international spreading out the effects of the crisis is the process of securitization. It brought many advantages for the banks at the beginning, but as it become more popular it grew more complex and opaque. It needs to be re-regulated with several structural changes in the future in order to reestablish the investors’ confidence.

 

 

Determinants of Foreign Direct Investment (FDI) in Bulgaria: An econometric analysis using panel data (p.73-97)

by

Christina Sakali, University of Macedonia, Thessaloniki, Greece

Keywords : FDI determinants, Bulgaria, Transition, Panel data

JEL classification : F21, P33, C23

Abstract

The objective of this paper is to analyse the determinants of FDI in Bulgaria, using panel data and an extended time-span, from the late-1990s until the late-2000s, in order to explore FDI motivations during the most important phase of the Bulgarian transition, until recently. Results indicate that FDI in Bulgaria has been motivated by both market and efficiency reasons, as well as the high quality of the Bulgarian workforce. The progress in transition reforms and integration into the European Union, have also provided an important stimulus for the establishment of FDI in the Bulgarian market.

 

 

Ethics and international development: The development ethics paradigm (p.99-117)

by

Nikos Astroulakis, University of Crete, Greece

Keywords : Development ethics, Louis Joseph Lebret, Denis Goulet, International development, Political economy, Ethical theory

JEL classification : B00, B29, B49, B59

Abstract

The author argues that development ethics, and its subject matter which is international development, may be accurately interpreted within a political economy context in relation with the ethical theory’s reflections to international development. Development ethics came at the stage in the middle of 20th century by Louis Joseph Lebret and became widely known by his student Denis Goulet. In contrary to economic positivism, for development ethicists the issue of international development is viewed not as growth in a narrow sense of material expansion of wellbeing, but as the qualitative enrichment of human beings in all relevant aspects of human life.