This study investigates the relationship between monetary policy and financial stability by examining non-performing loans (NPLs) as a key indicator of credit risk in nine Southeast European countries over the period 2007-2022. The empirical framework is built on an unbalanced panel dataset and employs fixed effects (FE) estimation, feasible generalized least squares (FGLS), and panel-corrected standard errors (PCSE) to address potential econometric challenges and enhance the robustness of results. The findings reveal that lending interest rates are a significant determinant of NPLs, indicating that tighter monetary conditions increase repayment burdens and amplify credit risk. By contrast, the official exchange rate does not show a consistent effect on loan performance, a result that may reflect relative stability in currency markets and the presence of regulatory safeguards in the region. An unexpected but noteworthy outcome is the negative association between unemployment and NPLs, which could be attributed to more cautious borrowing behaviour in periods of economic uncertainty and the role of government support mechanisms. These results highlight the complex transmission channels through which monetary policy interacts with financial stability, while also underscoring the importance of country-specific conditions in shaping these dynamics. The study contributes to the literature by providing evidence from a region marked by transition, crisis episodes, and external vulnerabilities, offering insights into how monetary policy can be calibrated to safeguard the resilience of the banking sector.

This paper explores the effects of monetary policy on economic growth, focusing on key economic indicators—namely, the exchange rate, interest rates, and the broad money supply (M3). To capture a comprehensive view of each country’s economic landscape, additional variables such as inflation and the output gap are included. By examining these variables across a complex period, the study sheds light on the role of monetary policy. Covering the years 2007 to 2022, it analyzes nine Southeast European (SEE) countries— Albania, Bosnia and Herzegovina, Bulgaria, Croatia, Hungary, Montenegro, North Macedonia, Romania, and Serbia. Among these countries, some are members of the EU, while others are in the accession process, suggesting shared approaches to monetary policy. The economic interconnections of these nations are evident in their cooperation through various regional and international organizations. This study applies panel data regression techniques, using fixed effects (FE), feasible generalized least squares (FGLS), and panel-corrected standard errors (PCSE) estimators. By comparing outcomes across these estimators, it highlights how monetary policy variables impact economic growth. To ensure robust results, multiple statistical tests were conducted before estimating the models. The findings reveal that broad money supply growth (M3) is the only monetary policy variable with a positive and statistically significant impact on economic growth. Conversely, interest rates on loans and official exchange rates did not show a statistically significant connection with real GDP growth. The output gap, however, proved to be a critical factor, with a positive, significant impact on economic growth, underscoring its importance for the economic dynamics of the SEE region. These insights provide a basis for further research on the role of monetary policy, specifically the influence of broad money supply growth (M3), in enhancing economic stability. For policy-makers, the results highlight the importance of bolstering liquidity and managing the output gap to promote growth. Practitioners, in turn, can benefit from closely monitoring these indicators for strategic planning purposes. This study’s uniqueness lies in its examination of monetary policy’s impact on economic growth within the SEE countries over a period that spans both the Global Financial Crisis and the COVID-19 pandemic. The main contribution of this paper is its identification of broad money supply growth (M3) as a driver of GDP growth, while interest rates and the exchange rate do not show significant effects. These findings provide valuable guidance for policymakers interested in fostering economic growth in the region.

In this study, the volatility spillovers from the S&P 500 to the precious metals (gold, silver and platinum) are investigated. By using the TGARCH and DCC GARCH model, the evidence is found that there are spillovers between the S&P 500 and these global commodity markets. However, there are some differences in times of crises which have occurred during the observed 15 years (global economic crisis, debt crisis and corona crisis). In the case of gold, despite extreme volatility, there is no clear evidence of the specific influence of the crises. In contrast, silver and platinum showed clearer situations, both demonstrating significant increases in correlation with the S&P 500 index during global economic crises.

The aim of this paper was to analyse the relationship between market concentration and market interest rate. Taking into thought the relationship between the level of concentration within a market and the level of competition, it can be deduced that an increment in concentration results in a decrease in competition. In order to test the above mentioned relationship, the authors used a panel dataset covering the period 2010Q1-2019Q4. The set includes quarterly data of all banks that operated in the Republic of Serbia. First of all, a correlation analysis was applied to determine whether there is a quantitative agreement between interest rates and concentration measures, and also a regression analysis i.e., econometric evaluation of panel regression models. In order to test the hypothesis, a total of 12 regression equations were applied. Results indicate that that the concentration indicators have a statistically significant and negative impact on the overall active interest rate in only two regression models, which is inadequate to support the hypothesis that there exists a systematic influence of concentration in the banking industry on interest rates. As a conclusion, the regression analysis imposes that the variations of the total loan interest rate can be explained to the greatest extent by the systematic and robust influences of the key policy rate of the NBS and the interannual inflation rate for the given quarter, as well as by the robust tendency of a linear decline over time.

This study first investigates the short and long-run effects of exchange rate, output gap and output gap volatility on inflation volatility in Turkey by using the ARDL bounds testing approach. Second, we also examine the causal relationship among these variables by using Toda-Yamamoto and frequency domain causality tests developed by Breitung and Candelon. The results of the ARDL estimates indicate that the exchange rate, output gap and output gap volatility have statistically significant effects on inflation volatility. Also, causality tests results indicate that changes in the exchange rate, output gap volatility, and output gap will have permanent and temporary causal effects on inflation volatility. The policymakers should carefully consider these results to implement appropriate policies to reduce inflation volatility. The finding that the shocks are of temporary nature will have particularly important implications on the policies fighting against the inflation.This study contributes to the empirical inflation literature by identifying both short run and long run effects of the exchange rate and output gap volatility and output gap together, as well as by providing evidence about the structure of the shocks created by these variables on inflation volatility. This study also identifies the sources of temporary and permanent shocks of inflation volatility.

Abstract This study investigates the relationship between profitability and market power in the banking sector using data from the financial reports of the banks that operated in Serbia and Montenegro, covering the period from the first quarter of 2010 to the last quarter of 2019. In order to investigate this relationship, determinants of bank profitability are split between internal and external. As the external determinants, selected ratios of concentration were calculated and used in order to measure market power. The total of sixteen panel regression models were applied, eight for each country. The results indicate that variations of return on assets and return on equity in Serbia can be explained by the variations of the ratios of concentration. On the other hand, results of the panel regression model applied for the banking sector of Montenegro does not give enough argument to support such explanation, and bank profitability can be explained by bank efficiency to some extent.

The present study analyses BRICS (Brazil, Russia, India, China, South Africa) capital markets in both time and frequency domain using wavelets. We used artificial neural network techniques to forecast the co-movement among BRICS capital markets. Wavelet coherence and clustering estimates uncover the interesting dynamics among the BRICS capital markets co-movement. A wavelet coherence diagram shows a clear contagion effect among BRICS nations, and it favors short period investments over longer period investments. Overall study estimates indicate that co-movement among BRICS nations significantly differs statistically at different levels. Except for China during the great financial crisis period, significant levels of co-movement were observed between other BRICS nations and that lasted for a longer period of time. A wavelet clustering diagram demonstrates that investors would not get any substantial benefits of diversification by investing only in the ‘Russia and China’ or ‘India and South Africa’ capital markets. Lastly, the study attempts to forecast the BRICS capital market co-movement using two different types of neural networks. Further, RMSE (Root Mean Square Error) values confirm the correctness of the forecasting model. The present study answers the key question, “What kind of integration and globalization framework do we need for sustainable development?”.

The present study investigated whether the crypto market is a safe haven. The study argues that during the first wave of the COVID-19 crisis, gold and oil, as typical global commodities, could have been diversifiers. The study developed a unique COVID-19 global composite index that measures COVID-19 pandemic time-variant movements on each day. The study used OLS (ordinary least squares), quantile, and robust regressions to check whether the COVID-19 crisis has had any significant direct influence on the crypto market. The OLS, quantile, and robust regressions estimates confirmed that there was no statistically significant direct influence of the COVID-19 crisis on the crypto market in the first wave period. However, the study found spillovers from risky assets (S&P 500) on the crypto market, with Tether as an exception. Due to this special characteristic, Tether might present a safe haven within the crypto market.

Fiscal risks are short-term and medium-term deviations of fiscal variables about the values foreseen in the budget, financial or other reports or projections of public finances. Fiscal risks, therefore, represent the exposure of public finances to certain circumstances that may cause deviations from the projected fiscal framework. Deviations can occur in revenues, expenditures, fiscal results, as well as in the assets and liabilities of the state, in planned and expected. External risks, such as natural disasters or global financial crises, cannot be affected by the government, but it is possible to define exit strategies that would mitigate their effects. From a social point of view, the research should contribute to 1) a better understanding of the impact of fiscal risks on the budget 2) an introduction to the types of fiscal risks in the national economy, 3) a better understanding of methodologies for monitoring fiscal risks. The paper points out various fiscal risks that affect the budget of the national economy, as well as ways to monitor and reduce fiscal risks

The authors would like to make the following corrections to the published paper [...]

Abstract Central banks often use certain concentration indices in their official reports to determine the degree of intensity of competition, of which the most common are the concentration ratio and the Herfindahl-Hirschman index. It is important to emphasize that when calculating the value of these indices, the National Bank of Serbia most often uses the absolute value of assets. In addition to the mentioned indices, the values of the Gini coefficient, Entropy coefficient, Rosenblatt index and graphical representation of the Lorenz curve in the period 2015–2019 are presented in this paper, using the balance sheet position loans and receivables from customers, but not including loans and receivables from banks and other financial organizations. The results of the static and dynamic analysis of concentration indicate that, compared to Montenegro, the banking sector of Serbia is characterized by a larger number of banks, less concentration on the market, and stronger intensity of competition. Although market changes are reflected in a reduced number of banks while a change in the dispersion of market shares affected the change in the market structures of the banking sectors, instability and uncertainty of the analysed sector remained unchanged in the case of both countries.

Abstract In this study the return spillovers and volatility spillovers between South-East European (SEE) stock markets are investigated as well as vis-à-vis regional and global stock markets (e.g. Europe, Japan, China and the US). By using Frequency Domain Causality approach, the evidence is found of significant spillover effects between markets. The results of study indicate both short-and long-run intra- and inter-regional return and volatility spillovers detected between South-East European (SEE) stock markets and the emerging and the mature markets around the globe, implying limited diversification benefits for international investor portfolios allocated to these markets. Thus, these results should be taken into account by portfolio managers, investors and policy makers before making any investment decision into region’s stock markets. The policy makers and regulators of these markets should consider the nature and frequency of regional and global integration of their stock markets.

The paper presents an indicator created to reflect the long-term stability in the trend of real growth of the global economy, based on the current market data through a basket of currencies with a government bond yields based premium. The results suggest that the indicator is adequate to be considered as a benchmark for widespread indexation, with a potential hedging for diverse types of contracts and assets against price level volatility and currency risk on an international scale.

The present study is on the five cryptocurrency daily mean return time series linearity dynamics during the Covid-19 period. These cryptocurrencies were chosen based on their influence on the market, primarily driven by its market capitalisation. Tether is included as the most important stable coin on the market, nominally pegged to the U.S. dollar (USD). The reason to investigate it is that there are some inconsistencies in its behaviour as opposed to the other four cryptocurrencies. This study found that the behaviour of Tether cryptocurrency daily average return time series pattern is highly nonlinear and chaotic in nature, whereas the other four cryptocurrencies (namely Bitcoin, Ethereum, XRP and Bitcoin Cash) daily average return time series were found to be linear in nature. To further study Tether’s nonlinear time series rich dynamics, this study deployed one category of the regime switching models popularly known as the threshold regressions. The study estimates fairly suggest that both the threshold autoregression (TAR) and smooth transition autoregressive (STAR) models with lag 1 are adequate to capture the rich nonlinear and chaotic dynamics of Tether’s daily average return time series.

Mutual differences between modern tax systems are conditioned by, first of all, the political and economic organizations of the state. Taking into account not only economic, but also social and political specifics of southern and northern Europe, and having in mind three main objects of taxation in the tax system of the country (consumption, income and assets), this paper analyses how structured are tax systems of different European regions. The countries of the north and south of Europe, despite the harmonization of taxes within the EU, are still characterized by numerous specificities in tax systems. Differences arise from combinations of direct and indirect taxes, with the aim of achieving optimal economic growth, macroeconomic stability and more even distribution of income that tax authorities of Scandinavian and Mediterranean countries want to achieve. The share of the collected income tax in GDP, which is higher in the countries of the north of Europe, including corporate income taxes, offset the Mediterranean countries by a higher share of social contributions to income and collecting property taxes. The Scandinavian countries, known as the generous welfare states, show that they are not among the countries with the highest tax burden on labour.

The industrial sector of the Republic of Croatia is subject to deindustrialization, which was globally recognized as early as in the 1960s. Such a situation is a challenge in terms of implementing new sources of economic growth and industrial production, with a particular emphasis on investing in research and development, education and their products. Since 2011, special emphasis has been placed on the need to implement the concept of Industry 4.0. The problem surveyed in this research derives from insufficient readiness of the Republic of Croatia to implement Industry 4.0, mainly resulting from its major orientation towards traditional industrial sectors and a low share of high value added activities, which is particularly visible through the share of high technology products in total exports. However, the Republic of Croatia is characterized by low levels of scientific research and innovative activities, which greatly slows down this process. The aim of the conducted research is to present the theoretical aspects of the process of deindustrialization and Industry 4.0, to make projections of the key indicators of deindustrialization and Industry 4.0 until 2025, and to propose scientifically based measures to be taken in the direction of securing digital transformation of the Croatian industry. The purpose of the conducted research is to analyse trends in the industrial sector in the Republic of Croatia and to determine the current state of the (de)industrialization process and the level of implementation of Industry 4.0. The research has showed that the process of deindustrialization in the Republic of Croatia is characterized by a reduction in the share of employment in the primary sector, by a growing employment in the secondary sector, and by a relative increase in industrial production and labour productivity. However, since 2015 there has been an increase in employment in the secondary sector, which is in contrast to the theoretical concepts of deindustrialization and indicates a new trend in the industrial sector. This situation is a challenge concerning the implementation of Industry 4.0, which requires increased investment in research and development and the improvement of knowledge and the ability of the population and their implementation in the economic sector. By analysing this segment of the Croatian economy, some progress has been made. Also, it has also been found that in some segments it significantly lags behind the EU levels.

Abstract Deindustrialization is a dynamic process that began to attract the attention of economic theorists in the 60s of the 20th century, which is characterized by a reduction in the share of the industrial sector in GDP and employment. A descriptive analysis of the deindustrialization process in Montenegro was carried out. It was established that throughout the observed period, the process of deindustrialization in Montenegro has characteristics present in developed countries. However, a deeper analysis and taking into account the key indicators showed that deindustrialization in Montenegro did not just arise as a sole consequence of positive economic trends. In addition, the entire process took place under the influence of various non-economic indicators. Moreover, the global economic crisis had a significant economic impact on Montenegro's industrial sector. In the process of accession to the EU and in addressing global challenges, the country's industrial sector, in line with key development strategies, is heading towards reindustrialization, i.e. development and progress under changing conditions.

The key goal of this research is to empirically determine whether the fiscal policy and the choice of exchange rate regime played significant role in current account determination in 16 CEE countries, with respect to large cyclical fluctuations of economic activity in the period 1999 – 2012. The methodology is based on the panel estimation of the impact of exchange rate regimes and government balance, being the key explanatory variables, on current account balance. The main results show that contrary to the “twin deficit” hypothesis government balance had nonsignificant and negative association with current account. On the other hand, fixed exchange rate regime contributed to the accumulation of current deficits, especially during the boom years. The results of the estimation are robust to the different model specifications and estimation methods applied. It is indicated that divergence between current and government balance is associated with the fluctuations of the economic activity, since the increase in government revenues during the good years reduced deficits despite pro-cyclical fiscal policy. Also, it has been argued that in the period prior to the crisis, in the countries pursuing fixed regimes current deficit was accumulated at higher pace when compared to countries with floating regimes, despite appreciation pressures deriving from the large inflow of foreign capital. Based on the results of empirical analysis, the recommendations on benefits of floating regimes are given to policy makers in CEE countries.

As OPEC could not recently find an agreement to contain the dramatic oil prices drop, the US, but also worldwide, stock markets have experienced a new decline, limited not only to energy sectors. In this paper we examine the statistical correlation of oil prices (Brent) and US energy sector stocks for the past five years (2011-2015). The analysis is carried out on public available data, such as FRED database (Federal Reserve Bank of St. Louis), with a weekly granularity. The output highlights which companies have the highest degree of resistance to oil price volatility. It puts then in comparison those resilient companies with their degree of integration along the energy operations. As falling oil prices may have impact in different manner on the sub-sectors, some companies may eventually benefit from their positioning along the value chain (downstream vs. upstream segments).