Marina Kudinska, Irina Solovjova and Inna Romānova
Purpose: This chapter analyses the financial sector development indicators of the new European Union (EU) member states, identifying the most important factors affecting their…
Abstract
Purpose: This chapter analyses the financial sector development indicators of the new European Union (EU) member states, identifying the most important factors affecting their development. It focuses on the 13 new member states of the EU that joined the EU from 2004.
Need for study: Financial sector development has a significant impact on any country’s economy, supporting faster growth of its national economy. It is essential to study the general development factors and individual characteristics of the financial sector’s development in the new EU member countries and evaluate their financial policy decisions during the crisis period.
Methodology: The authors examine indicators characterising the development of the financial market, such as assets to gross domestic product (GDP), loans to GDP, market capitalisation to GDP, the number of companies traded in the capital market, and other indicators. Along with the development indicators, the authors analyse those affecting security and resilience, such as bank capital adequacy, non-performing loan (NPL) portfolio, and others. The research methodology comprises content analysis, logical, constructive analysis, synthesis methods, and graphic visualisation.
Findings: This chapter examines development aspects of the financial systems in the new EU member states, concluding that joining the EU contributed to the successful development of the financial markets and that common financial market principles helped the new EU member states cope with the challenges.
Practical implications: Helpful for financial sector experts and policymakers, findings provide insight into the development trends of financial and capital markets in the new EU members.
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Simon Grima, Inna Romānova, Graţiela Georgiana Noja and Tomasz Dorożyński
Inna Šteinbuka, Oļegs Barānovs, Jānis Salmiņš and Irina Skribāne
Purpose: This chapter aims to provide a comparative analysis of productivity and competitiveness in 13 new European Union member states (EU-MS).Need for study: The need for this…
Abstract
Purpose: This chapter aims to provide a comparative analysis of productivity and competitiveness in 13 new European Union member states (EU-MS).
Need for study: The need for this study is determined by the slow growth of productivity in the EU, the necessity of the ‘productivity renaissance’, and the need for considerable acceleration of productivity growth in the new EU-MS at the lower end. The authors examine the reasons for the productivity backlog in these countries. Latvia, where productivity is among the lowest in the EU, has been selected as a case study.
Methodology: A special methodology has been applied to assess the impact of the redistribution of labour resources on the overall productivity dynamics in the Latvian economy. The core methodological approach used in the study is the method of structural changes’ impact analysis, shift-share analysis. The main sources of the statistical data used in the study are the Central Statistical Bureau of Latvia (2024), the Statistical Office of the European Union (Eurostat, 2024), and the Organization for Economic Cooperation and Development (OECD).
Findings: The findings include the identification of the reasons for low-productivity dynamics, an impact assessment of the COVID-19 pandemic and recent geopolitical factors on productivity, a comparative analysis of productivity trends in 13 new EU-MS, especially in the Baltic states in the international context, specific conclusions on Latvia’s productivity development, and future challenges.
Practical implications: The authors have elaborated policy recommendations for policymakers, which can be used to improve productivity and competitiveness in Latvia and other new EU-MS.
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Ramona Rupeika-Apoga, Inna Romānova and Simon Grima
Introduction – Stability of commercial banks is on the back stone of a country’s economy and its development, making bank stability one of the main concerns of financial…
Abstract
Introduction – Stability of commercial banks is on the back stone of a country’s economy and its development, making bank stability one of the main concerns of financial regulators. The bank stability models for large and small economies differ significantly.
Purpose – In this chapter we examine the determinants of bank stability in a small post-transition economy, based on the case of Latvia. Latvia has a well-organized banking system, providing a wide range of services to local and international customers. Besides, the Latvian banking sector is quite unique in Europe as it comprises two sets of banks with radically different target groups of customers and sources of revenue.
Methodology – To carry out this study we analysed panel data of the quarterly financial statements of Latvian banks operating during the period 2012-2017.
Findings – We found evidence of a negative significant relationship between size and bank stability, negative significant impact of liquidity risk on bank stability, a positive significant relationship between capital adequacy and bank stability, as well as a positive significant relationship between credit risk and stability. These results increase the importance of a sufficient level of capital adequacy ratio and liquidity to maintain bank stability. In general, the results of the study confirm the results of other studies on bank stability of small economies, with some exceptions due to the unique situation in term bank business models applied by Latvian banks. The current study provides valuable policy implications to small post-transition economies and stakeholders in general.
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Biruta Sloka, Ilze Buligina, Ginta Tora, Juris Dzelme, Ilze Brante, Anna Angena and Kristīne Liepiņa
Purpose: This chapter analyses the labour market and human capital development in 13 European Union (EU)-adopted countries. It discusses innovative activities for various target…
Abstract
Purpose: This chapter analyses the labour market and human capital development in 13 European Union (EU)-adopted countries. It discusses innovative activities for various target groups, addressing demographic challenges and social issues related to labour market developments, highlighting positive experiences and practical solutions for improved human capital development.
Need for study: Demographic challenges, such as ageing societies and information and communication technology (ICT), are causing further stratification in Europe and increasing pressure on human capital development. Positive experiences reduce economic imbalances and achieve sustainability goals in human capital development, including successful application of the ‘silver economy’.
Methodology: Representative data from randomly selected households implemented in all EU and candidate countries using the same Eurostat methodology, and Household Finance and Consumption Surveys conducted in all Eurozone countries, Hungary, and Poland, implemented by national banks and supervised by the European Central Bank, where representative survey data are available for comparative studies.
Findings: Academic researchers are focusing on human capital development for the elderly population, exploring demographic processes and the silver economy to support their labour market involvement. Increased adult education and internet usage in new EU countries show significant income increases, with the highest increase in countries with larger adult education shares. Health issues are also being studied for elderly labour market retention.
Practical implications: This study suggests policy measures to address human capital development issues, particularly in the context of demographic challenges, investing in all age groups, avoiding economic bottlenecks, and preventing burnout to maximise labour market retention. These solutions could enhance Europe’s competitiveness.