MA Theses 2014

Iurii Berezhnoi: “EXCHANGE RATE RISK AND EXPORT FLOWS: FIRM LEVEL EVIDENCE FROM UKRAINE”

 

The work evaluates the impact of exchange rate fluctuations on the volume and price of export from Ukraine using the data on Ukrainian firms for the period from 2008 to 2011 years. After the careful study of the related literature it was concluded that exchange rate changes influence export volume and prices, once firms import heterogeneity, adjustable price mark-ups and risk-averse behavior is taken into account.

The basic assumption about the importance of the impact of exchange rate changes on Ukrainian firms` export volume and price is confirmed. The empirical evidences that the currency depreciation positively affects the volume and negatively affects the price of exported goods by Ukrainian firms with low portion of imported inputs are founded. On average, the currency depreciation by one unit leads to decrease in export prices by 8,7% and increase in export volumes by 8,9%. According to our estimation the risk-averse hypothesis for Ukrainian exporting companies holds. On average increase in volatility by 1% lead to increasing of price by 0,7% and decreasing of volume by 2,2 %

 

Anton Grui: “THE IMPACT OF INTERNET BANKING ON THE USE OF BANKING SERVICES”

 

The study adds to literature investigating insights from Internet banking diffusion through banking markets. It mainly contributes with referring to individual level data on behavioral variables (particularly number of transactions and amounts of money kept on banking accounts). The data from one Ukrainian large bank are investigated. Analysis reveals that customers who adopt e-banking differ from others on such characteristics as age, income, activity and wealth in bank before the start of usage. After adoption they tend to increase a gap in behavior. Internet banking may be considered as a signal from a customer about being a “good one”.

 

Artur Grygorian: “DISCOUNT PRICING STRATEGIES FOR DURABLE GOODS MONOPOLY”

 

Coase (1972) revealed a problem that a durable goods monopoly faces. When the high-value consumers have bought the good, the monopoly has an incentive to reduce its price. Knowing this, some of the customers may decide to postpone their purchases, thus reducing the potential profit of the monopolist. The rationing strategy as a solution to this problem were proposed by Denicolo and Garella (1999).

The current study presents a modification of Deniclo and Garella’s model. It appears to be a more general one, particulary the rationing strategy is one of the possible cases of this modification. Also the study proposes strategies which allow the monopolist to improve his performance, earning more profit than in rationing and non-rationing cases.

 

Nataliia Iavorska: “DOES INNOVATION INFLUANCE FIRM PERFORMANCE AND IS IT WORTH DOING: CASE OF UKRAINE”

 

This study investigates the relationship between innovation activity and firm performance. The main hypothesis is that a new product introduction has somewhat beneficial effect on the results of its maker. Using the sample of 6.9 thousand Ukrainian firms over 2004-2010 we found that the relationship between lagged innovation activity and firm performance is actually negative for RAO and insignificant for EBIT margin and TFP. However, the reverse relationship is found. Performance variables are positive determinants of ability to implement new products. Also we found that larger firms tend to launch more number of new products, however, less diversified firms are more likely to innovate.

 

Dmytro Ilin: “FIRST PRICE SEALED BID AUCTIONS WITH INTERDEPENDENT VALUATIONS”

 

The focus of this research is on finding conditions for the existing of a pure and mixed strategy Nash equilibrium for the first price sealed bid auctions with interdependent valuations. First, we present a number of the sets of necessary and sufficient conditions under which a pure strategy Nash equilibrium exists in the first price sealed bid auction with complete information in the presence of externalities. Then, we study the conditions under which a mixed strategy Nash equilibrium exists in this type of auctions. In addition, we analyze the first price sealed bid auction with incomplete information and show the conditions in which symmetric mixed strategy Nash equilibrium exists.

 

Oleksandr Izhboldin: “EVOLUTION OF DETERMINANTS OF TRUST IN BAMKS: CROSS-COUNTRY ANALYSIS”

 

Effect of trust as one of the determinants of changes in macroeconomic indicators is widely investigated. In this paper we studied which factors determine trust in banks and their evolution during the financial crisis in 2008-2009 years. We believe that determinants of trust will changes before and after the crisis.

For our study we use two surveys conducted by EBRD. These datasets contain information about sociological, demographical parameters of agents and their economic activities. We use ordered probit regression model as the main instrument for investigation.

We found that regular determinants as age, gender, settlement type, region which were discussed in previous papers decline their power as determinants of complete or some level of trust. However these standard variables and change in their level clearly define levels of some distrust and complete distrust. General level of trust is the most important factor which determine high level of trust in banks in both periods.

 

Sergii Kravets: “THE EFFECT OF IN-STORE PROMOTION CAMPAIGNS ON CONSUMERS’ BEHAVIOR: EVIDENCE FROM UKRAINIAN RETAIL”

 

The retail sector of Ukraine has shown significant growth during the last years. The high competition on the market, however, induces stores to run effective promotion campaigns in to order to gain profits. In this paper the impact of characteristics of promotions on sales and revenues is estimated using data about 634 promotions that were run in a store located in Kyiv. The estimation technic is robust OLS regressions.

We find that the most effective promotion is a promotion that decreases price. The higher the discount the higher the increase of the sales and the revenues. In the case of the promotions without any price changes, the promotion of the bread and buns, milk products lead to the sales and the revenues growth. If the promotion goes together with an increase of price, then longer duration improves sales and revenues. We find no influence of the day when the promotion is run.

 

Ivan Liashenko: “WHAT ASPECTS OF BUSINESS ENVIRONMENT FAVOR INNOVATIVE ENTREPRENEURSHIP?”

 

In our work, we explore what aspects of business environment favor the innovativeness of entrepreneurship. In the first part of the analysis, we use Global Entrepreneurship Monitor data, in particular the Adult Population Survey, as a source of information regarding innovativeness of entrepreneurship and the National Expert Survey as a source of information about the business environment. We found that access to physical infrastructure and services, entrepreneurial education at primary and secondary school, higher internal market dynamics and higher level of market burdens are associated with higher level of innovativeness. Effects of government policies and programs varies. In the second part, we used a 2SLS approach proposed by Acemogly and Johnson (2005) to determine what type of institutions are more important for innovativeness: those institutions which regulate relationship between ordinary citizens or those which protect citizens against government and elites. We found that second type of institutions is significantly important.

 

Oleksii Marchenko: “IMPACT OF POLITICAL COURSE SHIFT IN UKRAINE ON STOCK RETURNS”

 

Since achieving its independence from the Soviet Union, Ukraine has faced the problem which regional block to integrate in. In this paper an event study is used to investigate investors` expectations about winners and losers from two possible integration options: the Free Trade Agreement as a part of the Association Agreement with the European Union and the Custom Union of Russia, Belarus and Kazakhstan. The impact of these two sudden shifts in the political course on stock returns is analyzed to determine the companies which benefit from each integration decisions. No statistically significant impact on stock returns could be detected. However, our findings suggest a large positive reaction of companies` stock prices to the dismissal of Yanukovych regime regardless of company`s trade orientation and political affiliation.

 

Viacheslav Matskov: “DETERMINANTS OF FIRMS’ BANKRUPTCY: THE CASE OF UKRAINE”

 

Bellovary et al. concluded that return on assets explained the most variation in firms’ bankruptcy. Obviously, the decline of profitability should signal as a threat of bankruptcy. But we see a bunch of current papers that do not agree with this. For example, Lizal L. finds that for The Czech Republic it is not the case. This variable is insignificant. Janer J. finds this variable only marginally significant for France data. Having appropriate data for Ukraine, the goal of this paper is to confirm or refute findings of current papers.

 

Kseniia Oush: “INTERNATIONAL LABOR MIGRATION IN UKRAINE: EVIDENCE FROM INDIVIDUAL LEVEL DATA”

 

This study drawn the portrait of internal labor migrants in Ukraine based on 2012 LFS data. Results show that interregional labor migrants in Ukraine are more likely to be young men from rural area with complete secondary education. Regional disparities were found to determine most of the intragerional movement of internal labor migrants. We observe that internal labor migrants face negative selection in employment conditions. They are 5.9% less probable to be employed with written contract rather than oral contract and work on average for 4.6 hours more than nonmigrant. Moreover, their chances to be permanently employed are less by 10.6% comparing to nonmigrants. Therefore, internal labor migrants face the risk of “bottom trap” due to rigidity of labor market and policy aimed at programs targeting less skilled workers and improving government labor market institutions and liberalization of employment legislation is needed.

 

Denys Percheklii: “COMPARISON BETWEEN IMPLIED AND HISTORICAL VOKATILITY FORECAST: EVIDENCE FROM THE RUSSIAN STOCK MARKET”

 

In this study we analyze which instrument provides a better volatility estimate on the Russian stock market: implied volatility or historical volatility. Using standard OLS regression we conclude that the results of early studies of developed markets can be extrapolated to the emerging markets like Russia. We find that implied volatility is an inefficient and biased predictor of realized volatility on the Russian stock market. Dividing out data set into three maturity buckets we found that historical volatility outperforms implied volatility in terms of predicting realized volatility for both call and put options and for all three groups of options. The analysis of three maturity buckets shows that for relatively longer-term options neither implied volatility nor historical volatility is useful for predicting realized volatility. This can be explained by two reasons. First, the longer-term options are traded more seldom. Second, when predicting on long horizon the errors of our prediction increase.

 

Mihail Pogorletchi: “TRANSPORTATION INFRASTRUCTURE AND ECONOMIC GROWTH: THE CASE OF ROMANIA”

 

This thesis analyze the impact of transportation infrastructure which differs in terms of quality and administrative status in Romania on economic growth, using panel data on the county level for the period from 1995 to 2010. The general model is built on the basis of Cobb-Douglass production function, adding extra infrastructure variables. Model with lagged values of infrastructure variables is used in order to get the results, which are robust to endogeneity.

The results of models with different specifications show convincing evidence that Gross Regional Product is more sensitive to roads with national administrative status. At the same time, lower quality roads are an important driver for economic growth having county status. Also stock of roads makes larger distribution to economic growth in counties with lower quality of government, while overall stock of capital has larger impact on growth in counties with better local government.

 

Oleksii Ushanov: “INDUSTRIAL AGGLOMERATION AND FOREIGN DIRECT INVESTMENTS. UKRAINIAN DISTRICTS EXAMPLE”

 

In this thesis work, the investigation of influence of key determinants on foreign direct investments inflow to the Ukrainian district level is presented. Moreover, we reveal the pattern of the relationship between foreign direct investments and investments in fixed assets made by local entrepreneurs. Then we explore the impact of industrial agglomeration, presented by accumulated investments, on FDI attraction and additionally we present the spatial spillover effect of agglomeration and FDI.

 

Valeriia Zalizniak: “PATTERNS OF RURAL PATIENTS’ APPLICATIONS TO KYIV REGIONAL HOSPITAL: IMPLICATIONS FOR HEALTH CARE REFORM”

 

Health care reform in Ukraine, which has been recently unfolding, aims at moving from an emphasis on hospital services toward more primary care. It is a reasonable approach given that quality hospital days are costly, and assuming that no socio-demographic group of the population suffers from access barriers which would prevent them from receiving hospital care in case of a pressing need. However, the latter assumption may be a very strong one, as global experience has shown. In our research we consider one of the most sizeable and socially vulnerable parts of the population – rural residents. Taking advantage of Kyiv Oblast Clinical Hospital application data, we follow an objective to explore, whether rural inhabitance of patients accounts for deteriorated access to high quality hospital facilities. Using fixed-effects regression approach, we found that rural residents’ demand for hospital services is elastic with respect to worsened weather conditions, presumably translated into higher travel burden. For the control group – cohort of urban inhabitants of the same region, the pattern does not hold. Our findings suggest that there is a possibility to even further deepen the already present disparities in health care access for village inhabitants, in case Ukrainian health care reform proceeds with one of its main projected goals. Relative policy advice does not imply a complete abandonment of the vector, but in contrast suggests including extensions to the reform agenda, which would serve to eliminate the existing disparities and ensure equal access to health care for all major social groups.

 

Sergii Zaskaleta: “EFFECT OF MARKET CONCENTRATION IN VIRTUAL ECONOMIES”

 

Virtual worlds are attracting lots of academic interest nowadays both because of the detailed data they offer for analysis and because they present a controlled environment and thus are better suited to test theoretical hypotheses. This thesis looks at the virtual economy of Guild Wars 2 and attempts to check whether the widely studied relationship between the degree of market concentration and producers’ profits can be observed in a virtual economy. Previous research has studied either markets for highly concentrated goods or competitive markets. By making use of a novel high-detail dataset, we can study markets with different degrees of competitiveness. I find that there is at least 16% difference in profits between firms in weakly concentrated and strongly concentrated marketplaces making the behavior of a virtual economy is very much in line with its real counterpart.