Okulov Vitaly L., Khafizova Karina R.
The goal of the paper is to find out how significant can be the impact of the project features (such as term structure of payments or degree of operating leverage) on risk premium size in investment decision making. To calculate a fair risk premium for specific risks of the project we use a decision-making criterion on the basis of value-at-risk (VaR). The size of premium is estimated by Monte-Carlo simulation methods for a number of contingent projects that differ from each other either by term structure of payments or operating leverage. The results of our calculations show that the size of a specific risk premium is largely determined by the degree of operating leverage, but practically does not depend on term structure of payments. The results obtained in this paper are based on the assumption that managers act in accordance with the criterion of equality of VaR for the project future payments and for the future value of the best alternative investments. The paper discusses the possibility of using the VaR criterion and Monte-Carlo simulations in corporate practice for evaluating investment decisions. Unlike the traditional NPV method when market risk is set exogenously via the project beta, the simulation modeling allows to find out the market alternative with risk that equals to the risk of the project. The originality of the research lies in the application of a new criterion for investment decision making, which takes into account the company's tolerance to risk. Based on this criterion, it is possible to justify the use of markups to a discount rate, which is often done by companies in practice.
LILIAN W OLLOWS, MORO ANDREA, MUGO-WAWERU FRESHIA, Ollows Lilian W., Moro Andrea, Mugo-Waweru Freshia
A review of research on bank financing reveals that there are mutual benefits to be gained by both borrowers and lenders when they engage in small and medium enterprise (SME) lending. However, most studies emphasize the demand side, or the borrower, benefits and largely ignore lender benefits. Therefore, with the increased commercial banks’ interest in the SME sector, it is important to determine the supply side, or the lender, benefits if lenders are to continue serving these firms. The main objective of this study is to determine the benefits that commercial banks gain when they finance small and medium enterprises. Data is collected through semi structured interviews, conducted with SME bank managers who work closely with SMEs, and analyzed using content analysis. The study yields fourteen benefits that commercial banks in Kenya enjoy from engaging in SME lending.
GHOSH SHARMISTHA, CHAKRABORTY TANUPA, Ghosh Sharmistha, Chakraborty Tanupa
The stock market fluctuations sometimes perplex investors regarding their investment as it may lead to loss of their hard earned money. The different phases the market goes through is a matter of great concern for an investor. Portfolio management is a dynamic concept as it requires periodic review due to frequent changes in information flows, money flows, and economic and non-economic forces operating in the country on the securities markets. This means that the portfolio created during a particular market situation may not prove to be beneficial in other market situations. Hence a proper risk return analysis in every situation is required in order to maintain the flow of positive return from the portfolio. In this regard, the paper aims at constructing portfolios during different market phases. It also depicts how it is possible to earn a positive return from the portfolio during any phase of the market.
Skaletckii Egor V., Shirokova Galina V., Gafforova Elena B.
An economic crisis significantly affects market conditions by decreasing effective demand that forces firms to fit their strategies into changing environment. The purpose of this article is to theoretically and empirically assess the relationship between competitive strategies of Russian small and medium enterprises (SMEs) and their performance during an economic crisis. Data for testing was collected via the survey of managers of private Russian SMEs in 2015-2016. Then data was supplemented by the indicators exported from financial statements from SPARK-Interfax database. The final sample of the study includes 456 firms representing all the federal districts of the country. The regression analysis demonstrated contradictory results. While the direct links between competitive strategies and firm performance are insignificant, the combination of innovative differentiation and marketing differentiation as well as of marketing differentiation and cost leadership are positively related to SMEs' performance, whereas the combination of innovative differentiation and cost leadership has a negative relationship with SMEs performance. The revealed nature of the relationship between combinations of competitive strategies and the firms' performance can be used by managers to adapt their firm strategies to the conditions of an economic crisis. Overall, the main value of this research is the contextualization of the concept of generic competitive strategies for the market in the conditions of an economic crisis. The findings of this study contribute to the ongoing debate between proponents and opponents of combining competitive strategies. Along with that, taking into account the fact that the use of cross-sectional data does not allow to track development of indicators in time, the authors acknowledge the importance of longitudinal research of the efficiency of competitive strategies as a perspective venue for the further studies.
Baryshnikov Mikhail N.
Family business presented a major economic factor in the Russian Empire. The article illustrates its importance and problems associated with the efficiency of the family firms on the basis of the empirical data on the Bogdanovs’ and E. N. Shaposhnikova’s tobacco factories (the XIX and early XX centuries). In practice, family firms were distinguished from nonfamily firms by their pursuit of group (family-related) interests and goals. This study analyzes the relationship between family preferences and future family company performance. The author demonstrates that in a certain market situation a set of institutional regulators (both formal and informal) stimulated development of family businesses and their subsequent transformation into large corporations. The findings show that interests and goals, relationships between family members, management styles and practical experience significantly influenced family business performance levels.