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RELATIONS BETWEEN GOVERNMENT DEBT
AND INVESTMENT ACTIVITY,
A PARALLEL ANALYSIS OF THE PROCESSES
IN BULGARIA AND GREECE
The present study aims at a parallel analysis of investment, and in particular stock exchange activity and government debt, as well as finding a dependency between the dynamics of these processes and highlighting those stock indicators, for which the relationship with the debt dynamics is of greater significance. The study is based on the thesis ...
The present study aims at a parallel analysis of investment, and in particular stock exchange activity and government debt, as well as finding a dependency between the dynamics of these processes and highlighting those stock indicators, for which the relationship with the debt dynamics is of greater significance. The study is based on the thesis of presence of a strong influence with inverse dependence of the debt burden on the investment activity. We also maintain the hypothesis that the sensitivity of capital markets to the dynamics of government debt is stronger than that of the real-sector investments, driven by the nature of indirect investments and the rapid transfer of capital through liquid stock markets. As a theoretical basis of the survey we have set up a systemic methodology for government debt management and highlighted dependencies on key macroeconomic factors. The methodology of the survey includes a selection of the main measures for the structure and burden of government debt and specific indicators, and indicators for analyzing the investment activity. In order to investigate the dependencies between the two processes, we apply specific comparisons between debt and investment indicators, as well as correlation analysis. We analyze in parallel the debt dynamics and the investment activity in the real sector and the stock exchanges in Bulgaria and Greece for the period 2007- 2017. The results show that the activity of both stock exchanges have had a pronounced negative trend since the beginning of the global recession, which has been going on for ten years now. We have established a strong reverse relationship between the Athens Stock Exchange activity indicators and the Greek debt in its structural components. As far as Bulgarian capital market is concerned, these dependencies are less expressed. We have found arguments for a critical negative impact of the debt burden on investment activity in the real sector, expressed by the correlation between debt dynamics and direct investments in the national economy and foreign direct investments. Our hypothesis for a stronger impact of the debt burden on stock exchange transactions than on real sector investments has been confirmed.
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LEASE AGREEMENTS IN LESSEES’ FINANCIAL STATEMENTS ACCORDING TO IFRS 16 LEASES
A main requirement in financial statements is to faithfully present the information about their elements. This also applies to financial information regarding a lease. After the adoption of IFRS 16 Leases and its entry into force on January 1, 2019, it is of paramount importance to know and apply its requirements. The changes in this Standard ...
A main requirement in financial statements is to faithfully present the information about their elements. This also applies to financial information regarding a lease. After the adoption of IFRS 16 Leases and its entry into force on January 1, 2019, it is of paramount importance to know and apply its requirements. The changes in this Standard primarily concern the reporting of lease agreements and their presentation in the lessee’s financial statements.
The research objective is to present the main points when applying the IFRS 16 Leases in the lessee’s statements. To achieve the objective the following tasks have been set in the study: Clarifying the need for a new lease accounting standard, outlining the purpose and scope of the standard, establishing the right to lease agreement and distinguishing it from services, and its accounting and presentation in the lessee’s financial statements.
Studying and clarifying the main points of IFRS 16 Leases is related to the assumption that knowing them well is a prerequisite for their proper accounting and presentation in the financial statements and hence raising their credibility.
The results achieved in the course of the study are mainly of a practical nature and can be used when applying this new accounting standard in Bulgarian accounting practice.
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INFLUENCE OF THE LEGAL FRAMEWORK
IN DETERMINING THE REQUIRED AMOUNT
OF TECHNICAL RESERVES FOR MOTOR THIRD PARTY LIABILITY INSURANCE
The problems arising from the recent global financial and economic crisis have led to a rethinking of many texts both in local laws and at Community level. New rules and regulations have gradually been introduced concerning all economic agents operating within the European Union. The introduction of these regulations in the field of insurance is ...
The problems arising from the recent global financial and economic crisis have led to a rethinking of many texts both in local laws and at Community level. New rules and regulations have gradually been introduced concerning all economic agents operating within the European Union. The introduction of these regulations in the field of insurance is associated with the adoption of Solvency II Directive. The implementation of the Directive in the Bulgarian legislation was realized with the adoption of a new Insurance Code, effective as of 1 January 2016 and Financial Supervision Commission’s Ordinance No 53 of 19 January 2017, which determines the order and method of allocation of technical reserves by the insurers working on the Bulgarian insurance market.
The study assesses the impact of the regulatory framework on the technical reserves of insurance companies offering Motor Third Party Liability Insurance. It outlines the problems that insurers have to deal with and the effect that the methods, used for calculating the required amount of technical reserves, have on the insurance company’s balance sheet.
The study has shown that there are differences in the methodologies described in the Solvency II Directive and Ordinance No 53 of Financial Supervision Commission. They concern the valuation of insurance companies’ assets and liabilities, the recognition of cash flows and the treatment of insurance income and expenses. Therefore, legislative changes are needed to synchronize the requirements of Bulgarian legislation with the European Directive Solvency II, with a view to optimizing the amount of technical reserves for Motor Third Party Liability Insurance.
