revista romÂnĂ de statisticĂ - supliment ......revista română de statistică trim iv/2013-...

Institutul Na ţional Societatea Română de Statistică de Statistică

REVISTA ROMÂN Ă DE STATISTICĂ - SUPLIMENT -

ROMANIAN STATISTICAL REVIEW

- SUPPLEMENT -

• Scientific research Themes/Studies • Papers at the National Seminary “Octav Onicescu”

2013 / Trim. IV

Autorii poart ă întreaga răspundere pentru conţinutul materialelor publicate, revista şi Societatea Română

de Statistică fiind exonerate de orice răspundere.

ISSN 1018-046x

Revista Română de Statistică Trim IV/2013- Supliment 3

Table of Contents

The Gross Domestic Product Evolution by the End of June 2013...........7 Prof. Constantin ANGHELACHE PhD Lecturer Mădălina Gabriela ANGHEL PhD Cristina SACALĂ PhD Student

Dimitrie Cantemir – The First Shaper of Romanian Statistical Thinking ....................................................................................12

Assoc. prof. Gheorghe SĂVOIU, PhD Assoc. prof. Constantin MANEA, PhD

Providing Financial Market Macro Stability ..........................................22 Prof. Vergil VOINEAGU PhD Daniel I. DUMITRESCU PhD Student Diana V. SOARE PhD Student

Evolution of GDP and Foreign Investments............................................34 Prof. Constantin ANGHELACHE PhD Prof. Gabriela Victoria ANGHELACHE PhD Lecturer Mădălina Gabriela ANGHEL PhD Adina Mihaela DINU PhD Student

Model of Portfolios Analysis .....................................................................39 Lecturer Mădălina - Gabriela Anghel PhD

Considerations on the legal regime of the unincorporated business forms in Romania.......................................................................................44

Assoc. prof. Anca POPESCU-CRUCERU PhD The Inflation (Consumer Prices) Evolution.............................................49

Prof. Constantin ANGHELACHE PhD Prof. Constantin MITRUŢ PhD Assoc. prof. Alexandru MANOLE PhD Adina Mihaela DINU PhD Student

The Structure of the Capital Market in Romania ..................................53 Lecturer Mădălina - Gabriela ANGHEL PhD

Legal Personality of Single Member Limited Liability Company ........58 Graduate Ass. Eugenia-Gabriela LEUCIUC Phd Student

The Industrial Production Indices............................................................64 Prof. Constantin ANGHELACHE PhD Alexandru URSACHE PhD Student Georgeta LIXANDRU (BARDAȘU) PhD Student

Revista Română de Statistică Trim. IV/2013 - Supliment 4

From the History of Cooperative Thinking - Professor Ion Răducanu. Cooperative Movement on the Road to Self - Determination.............................................................................................69

Prof. Dan CRUCERU PhD Some Aspects of Entrepreneurial Behavior.............................................74

Prof. Mircea UDRESCU PhD The Evolution of Agriculture Production................................................81

Prof. Constantin ANGHELACHE PhD Prof. Radu Titus MARINESCU PhD Assoc. prof. Alexandru MANOLE PhD Lecturer Mădălina Gabriela ANGHEL PhD

Does Firm Size Affect the Firm Profitability? Empirical Evidence from Romania............................................................................................87

Prof. Georgeta VINTILǍ PhD Floriniţa DUCA PhD Student

Defining Public Debt and External Debt and Revealing Their Statistical Trends and Econometric Models ............................................93

Gheorghe SĂVOIU Luiza APOSTOL

The International Trade by the End of June 2013................................105 Prof. Constantin ANGHELACHE PhD Prof. Gabriela Victoria ANGHELACHE PhD Daniel DUMITRESCU PhD Student Georgeta LIXANDRU (BARDAȘU) PhD Student

Companies' Role in the Evolution of the Romanian Economy in the Period 2011-2013 ...................................................................................... 113

Andreea Gabriela BALTAC, Ph.D Student Zoica DINCĂ (NICOLA), Ph.D Student

The Major Macroeconomic Evolutions..................................................118 Prof. Constantin ANGHELACHE PhD Adina Mihaela DINU PhD Student Bogdan DRAGOMIR PhD Student Andreea Gabriela BALTAC PhD Student

Costs Regarding Quality: Definition and Importance..........................122 Assoc. prof. Sorin Gabriel GRESOI PhD

Fraud and Tax Evasion in Romania VAT............................................. 128 Assoc. prof. Raluca Andreea MIHALACHE PhD


The Justiciability of Economic, Social and Cultural Rights via the Principle of Indivisibility of Human Rights – An Illustration: The Right to Food ............................................................................................133

Assist. Cristina SÂMBOAN PhD Student The Methodology of Elaboration of the Production Account for Financial Activities in Accordance With SNA – 2008...........................140

Olga SÎRBU PhD Student Monetary Policy Transmission Mechanism Using Econometric Models.................................................................................148

Prof. Ion PÂRŢACHI PhD Simion MIJA, PhD. Candidate

Statistical Modeling Methods in Automobile Insurance ......................158 Elena BURLACU PhD Student

The Impact of the Financial World Crisis on Romania’s Tax Burden.......................................................................................................163

Ioana-Laura ŢIBULCĂ PhD Student Prof. Georgeta VINTILĂ PhD

Innovations Financed by Polish Enterprises from SME Sector ..........168 Prof. Janusz GRABARA PhD Paula BAJDOR PhD

Analysis of the Correlation between Investment and SMEs Turnover in Territorial Structure ..........................................................175

Zoica DINCĂ (NICOLA) PhD Student Assoc. prof. Florin Paul Costel LILEA PhD

Considerations on Air Quality in South Dobrogea. Analysis of Climatic Conditions and the Emission of Greenhouse Gases ..............180

Assistant Elena GRIGORE PhD Utilizarea indicatorilor gender în analiza activităţilor socio-economice ........................................................................................184

Conf. univ. dr. Elena CARA ECONODYNAMIC SURVEY – Economic applicative research. INFLATION and DEFLATION – Norms/types (Suggestions, points of view)...........................................................................................194

Vasile V. DUMITRESCU PhD Ioan GÂLCEAVĂ

Marketingul – element esenţial pentru dezvoltarea ulterioară a jurnalismului sportiv ...............................................................................199

Asistent univ. drd. Cristian GHENA


The Gross Domestic Product EvolutionThe Gross Domestic Product EvolutionThe Gross Domestic Product EvolutionThe Gross Domestic Product Evolution by the by the by the by the End of June 2013End of June 2013End of June 2013End of June 2013

Prof. Constantin ANGHELACHE PhD Academy of Economic Studies, Bucharest

“Artifex” University of Bucharest Lecturer M ădălina Gabriela ANGHEL PhD

“Artifex” University of Bucharest Cristina SACALĂ PhD Student

Academy of Economic Studies, Bucharest Abstract In this paper, the research focuses on the evolution of the GDP in recent

years. The data are collected from official sources, mainly the publications of the National Institute of Statistics. The research also emphasizes the role of resources and utilizations as factors that determine the modification of the GDP across a given time period.

Key words: evolution, utilization, factor, resource, influence As to the GDP evolution comparatively with the corresponding periods of

the year 2009, in the case of Romania it is resulting, first of all, that the decrease of -1.3 compared to 2009 was reasonable. In 2012, an increase of GDP by some 1.1% was recorded.

GDP recorded in 2010 a value of 522,561.1 million lei, reaching 578,551.9 million lei in 2011, a value also reached in 2012.

The GDP evolution in 2013, mainly during the first semester, has been in slight increase, reaching 266.539,3 billion lei in the context of the crisis which, on both internal and international plan, continued to affect the economic evolution.

Quarterly GDP evolution in the year 2012 2012 Trim.I Trim.II Trim.III Trim.IV Million lei *) 112,819.0 137,798.4 164,774.8 172,107.2

*) current prices

Data source: National Institute of Statistics, Statistical Bulletin no. 7/2013 Over the period 2001-2008 GDP progressed in leaps, recording positive

evolutions. Starting in 2009, under the influence of the economic-financial crisis, the decrease of the economic growth triggered.


The GDP evolution over the period 2001- 2013 (The corresponding period of the previous year = 100)

92

94

96

98

100

102

104

106

108

110 1.I-30.VI

Total year

*) provisional data, estimate for 2013 Data source: National Institute of Statistics, Statistical Bulletin no. 7/2013

By comparing the Romania GDP increase level in 2012 with some other

countries out of the European Union, we shall see that it counts as almost the lowest. The analysis will get a more significant outline if we follow the way in

which the GDP developed within the quarters I + II of the year 2012, a period affected by the economic and financial crisis.

• The GDP alteration factors by categories of resources

In 2012, as in the six months of 2013, the GDP has been achieved on the account of the activity carried out in the frame of the main branches of the national economy.

The contribution differed from the point of view of the gross added value recorded at the level of each branch.

The net tax on product brought in 2012 a positive contribution, services activity contributed with 0.9%, constructions remained at the same level. Industry increased by 1.1%.

Also, in 2012 the contribution of the agriculture, forestry and fish breeding was reduced, and during the first six months of 2013 they accounted for 0.2% of the increase.


Contributions to the GDP evolution, by categories of resources 2013 / 2012 (first semester)

Net p ro d u ct tax es, -0 .2 %

Ag ric.,silv .,p isc., 0 .2 %

Co n stru ctio n s, -0 .2 %

In d u stry , 1 .1 %

Serv ices, 0 .9 %

Gro ss Do mestic P ro d u ct,

1 .8 %

-1 0 1 1 2 2

Data source: National Institute of Statistics, Statistical Bulletin no. 7/2013

In 2013, on the first six months, the same trends persisted, with the

mention that agriculture marked a serious recoil, as in can compromise at the end of the year the results measured through the evolution of GDP.

The activities carried out by services, industry, constructions and the net taxes on product, together, brought in a decisive contribution to the GDP decrease, which means a negative feature for the Romanian economy which, although restructured gave up a number of industrial sub-branches committing itself on the way of developing the services production, constructions and so on, but failing to cope with the devastating effects of the crisis, correlated also with the non-existence of an appropriate governing plan.

We can consider that all the national economy branches had a negative influence on the GDP decrease, less the agriculture, hunting and forestry, fishing and fish breeding sector.

Contribution of the main categories of resources to GDP increase during the first

six months of 2013 (%) Indicator Sem. I

Gross Domestic Product 1,8

Agriculture, forestry and fish breeding. 6,1

Industry, including energy 3,9

Constructions -3,1

Trade, cars and household appliances repairs; hotels and restaurants, telecommunications 5,0

Financial, real estate, renting and services to companies activities 3,2

Other services activities 2,1

Total gross added value 2,4

Net taxes on product -1,7

Data source: National Institute of Statistics, Statistical Bulletin no. 7/2013 For the first half of the year 2013, there is slight increase to be noted for the

economy evolution, the industry recording a growth of -6.1. The GDP decrease kept on being influenced by the services, constructions and the net taxes on product. The agriculture kept on maintaining within positive parameters of


influence, recording a constant evolution. In 2013, the situation is totally in reverse, agriculture had a good year.

Relevant as regards the GDP forming by categories of resources (as alteration factors) is also the structural evolution during the period 2003-20123 which is described by the following table.

Weight of the main categories of resources to the GDP forming (%) Indicator 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013*

Agriculture, hunting, forestry, fishing and fish breeding.

11.6 12.6 8.4 7.8 5.8 6.7 6.3 6.0 7.3 4.7 4.8

Industry, including energy 24.7 24.9 24.8 24.5 24.3 22.9 23.8 26.4 25.0 25.2 25.1

Constructions 5.7 5.9 6.5 7.4 9.1 10.6 9.8 7.3 7.2 7.3 7.4

Trade, cars and household appliances repairs; hotels and restaurants, telecommunications

20.3 20.6 21.7 22.2 22.7 21.9 21.2 20.9 21.2 20.9 21.0

Financial, real estate, renting and services to companies activities

12.3 12.3 13.2 13.3 13.7 14.0 15.1 16.2 14.1 14.0 13.2

Other services activities 14.3 13.0 13.7 13.1 13.0 13.0 13.8 12.0 12.8 12.8 12.7

Net taxes on product 11.1 10.7 11.7 11.7 11.4 10.9 10.0 11.2 12.4 13.9 10.8

*) provisional, estimate data Data source: National Institute of Statistics, Statistical Bulletin no. 7/2013

The weight of the main categories of resources in the formation of GDP in the

first half of 2013 reveals that industry keeps on the first place, having a slight trend of increase as against the corresponding period of the previous year.

• The GDP evolution by categories of utilizations From the point of view of the utilizations in the GDP forming during the

year 2012, there have contributed: the stocks variation, the net export, the gross forming of fixed capital, the final collective consumption of the public administration, the final individual consumption of the households. When analyzing the data available for 2012, we have to consider as starting point the actual situation being recorded by our country during this year. Thus, for instance, the stocks variations recorded a lower contribution, while the net export, namely the difference between exports and imports, recorded a more reduced effect, following the reduction of the deficit of the foreign trade balance. Under such circumstances, we find out that, from the point of view of the utilizations, the GDP formation has been achieved by the contribution of the following factors: gross forming of the fixed capital, final individual consumption of households with a decrease of -0.4%, which implies the following conclusions:

• From the point of view of utilizations, positive influences on the GDP achievement have been recorded by the final collective consumption of the public administration, stocks variation and net exports;

• Negative influences on the GDP forming have been recorded by the by the final individual consumption of households, and the gross forming of fixed capital.

The analysis of the influence factors of the GDP forming by categories of utilizations may be emphasized by the analysis of rhythm at which, the categories of utilizations considered for the GDP achievement have influenced this


achievement in 2013 comparatively with 2012. Thus, the individual consumption of households and the collective consumption of the public administration, together, have been reduced. A more marked decrease, has been recorded by the net export. Another negative effect has been recorded by the rhythm of increasing of the gross forming of fixed capital. The GDP evolution during 2013 follows line of going on the recovery road from the process of recession. During the first six months of the year 2013, the “un-accounted” negative effects of the year 2010-2013 have been taken over and then continued with a slight increase, maintained.

Thus, the GDP has not yet reached the level recorded in 2009; most of the branches recorded negative contributions, which implies the entrance into a macroeconomic managerial mess; the structure by branches and utilizations has been negative. In 2012, GDP grew by 1.1% as against 2011 and follows an oscillatory course in 2013, recording, during the first six months of the year an increase of 1.8% as against the same period of the previous year.

The weight of the main categories of utilizations in GDP Year Indicator

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Actual individual consumption of the households

75.7 77.5 78.5 77.9 75.3 74.0 72.7 72.6 72.4 72.7

Actual collective consumption of the public administration

9.8 7.9 8.3 7.7 7.6 7.7 8.2 7.1 7.3 7.1

Capital gross forming

21.5 21.8 23.7 25.6 30.2 31.9 25.6 22.5 22.3 22.2

Stocks variations 0.6 1.8 -0.3 0.9 0.8 -0.6 -0.6 3.5 3.9 4.1

Net export -7.6 -9.0 -10.2 -12.1 -13.9 -13.0 -5.9 -5.7 -5.9 -5.7

Data source: National Institute of Statistics

The survey on the economic evolution, considering the modifications of the GDP in the European Union countries, emphasizes the extremely critical situation existing on the European and, at a larger extent, international plan.

Bibliography Anghelache, C-tin (2012). România 2012. Starea economică în criză perpetuă,

Editura Economică, Bucureşti Anghelache, C-tin (2008). Tratat de statistică teoretică şi economică, Editura

Economică, Bucureşti Anghelache, C-tin, Capanu, I. (2003). Indicatori macroeconomici. Calcul şi analiză

economică, Editura Economică, Bucureşti Anghelache, C-tin, Capanu, I. (2004). Statistică macroeconomică, Editura

Economică, Bucureşti Anuarul statistic al României, ediţiile 2002, 2005, 2006, 2007, 2008, 2009, 2010,

2011, 2012 *** Buletinul Statistic nr. 1-12/2002, 1-12/2003, 1-12/2004, 1-12/2005, 1-12/2006,

1-12/2007, 1-12/2008, 1-12/2009, 1-12/2010, 1-12/2011, 1-12/2012 şi 1-7/2013 editat de Institutul Naţional de Statistică


Dimitrie Cantemir Dimitrie Cantemir Dimitrie Cantemir Dimitrie Cantemir –––– The First Shaper The First Shaper The First Shaper The First Shaper of of of of Romanian Statistical ThinkingRomanian Statistical ThinkingRomanian Statistical ThinkingRomanian Statistical Thinking

Assoc. prof. Gheorghe SĂVOIU, PhD Assoc. prof. Constantin MANEA, PhD

University of Piteşti

Abstract This paper is devoted to a spark of genius, a brainwave derived from

Dimitrie Cantemir’s inexhaustible thinking; among numberless other facets of that huge personality endowed with exceptional intellectual ability, also counts his capacity as the first shaper of Romanian statistical thinking, noticeable not so much in his often invoked’Descriptio Moldaviae’, but especially his work, usually considered exclusively a philosophical book,’The Divan or the Argument of the Wise Man with the World’. The paper summarizes, after a short introduction of bibliographic nature, the main features of the great scholar’s personality of a shaper or moulder of a Romanian school of statistical thinking, for all who read and understood him, for several centuries, after the publication, on 30 August 1698, of his aforementioned work, as an exercise in statistical thinking in the main, and only secondarily as an exericse of philosophical thought – a work considered to hold a special wisdom and breathtaking originality even today, in its inimitable depth and its objective and consistent vision.

Key words: statistics, shaper, founder, thinking, statistical thinking, Divan, Dimitrie Cantemir.

JEL Classification: C49, N01, N83, Z13. 1. Introduction In front of such great cultural personalities as Dimitrie Cantemir, on

celebrating 340 years since his birth, any of the readers of his books has to face an effort hard to imagine, a leap in time, an act of miraculous remembrance and reconstruction, combined with the desire to restore, by the act of reading, the huge, if not incredible dimension of his thinking, compared to the stature of of a being that is, after all, human…

The complexity and depth, the objective and coherent character of his thoughts committed to the seemingly white sheet of paper of his books, and of the history of the era when he lived and was moulded, combined with his continually projective trends, based on the principled and ethical ground of the man of true culture, and an erudition unparalleled in his lifetime, concealed for centuries a number of aspects which only emerged when the light of science and the deeper understanding of the contemporaries allowed them to be reassessed, in order to


give a better image of the aura of his changing, manysided brilliance, through an ever growing, steadily brighter work.

Born on 26 October 1673 in the village of Silişteni, part of Fălciu, in the county of Vaslui, a village that today quite naturally bears his name, Dimitrie Cantemir was the son of Constantin and Ana, born Bantaş. He was forced to go to Constantinople, when only 15 years old, where he spent 22 years as a hostage, i.e. a pledge of his father the High Porte, replacing his brother Antioh, who was later to become ruling prince or hospodar of Moldavia. Actually, the Turks would enthrone him too, in Iaşi, in 1710, but the new and erudite scholar-prince would conclude (on 2-13 Aprilie 1711, in Lutsk, Russia), a secret treaty, published exclusively in the German states, which stipulated and alliance with Russia’s Peter the Great, as the young man tirelessly hoped to see Moldavia freed from the Ottomans. His orientation to Russia, in an attempt to gain a Christian Orthodox support opposed to the Islam, confirmed by the treaty, specified and invoked the integrity of the antional borders that were to be defended by the Moldavian army, showing a deep knowledge of political realities, both international and domestic. He was a confirmed opponent of the great boyars, as well as a supporter of the free peasants or răzeşi and the villages and their traditional economic and administrative arrangements. He was defeated by the Turks at Stănileşti on the Prut river, and thus forced to emigrate to Russia, being unable to return to Moldavia; he then became a private adviser of czar Peter I, while conducting scientific activity; as a member of the Berlin Academy he corresponded with Leibniz, trying to establish the founding principles of a Russian Academy.

He died as an exile in 1723, and was buried in Russia, in Dimitrovka’s church of St. Nicholas, built according to his plans, and dedicated similarly to the Princely Church of Iaşi, and since 1935, his mortal remains have been in the church of the Three Hierarchs in Iaşi, through Nicolae Iorga’s fulfilled efforts. An architectural jewel and an unique monument among the churches of the Greek Orthodox faith, they fulfill the ultimate destiny of the fine scholarly mind of one of the wisest scientists and humanists of the European Renaissance, an erudite scholar as evidenced by his exemplary and overwhelming work, a composer full of talent, a musicologist, who entered the music history of Turkey by Kitab-i-musiki (The Book of Music), as the founder of secular music, but also as a scholar of religious music, known by the name of Cantemiroglu, an encyclopedic scholar unrivaled in eighteenth-century Europe, a profound historian, as resulting either from Hronicul vechimei a romano-moldo-vlahilor (The Chronicle of the Antiquity of Moldo-Walachians), in which he partakes Miron Costin’s ideas concerning the common Latin origin of all Romanian dialects, supporting it with arguments from over 150 sources in five languages, or from Historia incrementorum atque decrementorum Aulae Othomanicae, which brings his sanction as an academic, an ethnographer, supported by a geographer and an inexhaustible linguist revealed throughout Europe, by Descriptio Moldaviae, a philosopher who ardently longs to reconcile religion with science, in Sacrosanctae Scientiae Indepingibilis Imago, an authoritarian ruler (a ruling prince), in terms of politics, and a pioneer of Romanian


novel by his Istoria ieroglifică (Hieroglyphic History), and not least a shpaer or moulder of Romanian statistical thinking, restored to the modern reader by his Divan or Argument of the Wise Man with the World.

2. The shaper and founder of statistical thinking hidden between the

pages of the Divan Cantemir’s Divan or Argument of the Wise Man with theWorld (or the

Judgement of the soul with the body, written by the toilsome and labourious love of Ioan Dimitri Constantin the Prince, and also of the patron Ioan Antioh Constantin the Prince, in the year 7206 from Adam, and from the redemption of the world 1698, on 30 August), is regarded, in keeping with the opinion of the majority, as the first Romanian philosophical work, focusing on the idea of a divan (symposium) or an argument or quarrel, in the Socratic and Platonic sense of a dialogue, and bringing together the mediaeval disputes about time, soul, nature and conscience, managing both to suggest man’s superiority over other creatures, and formulating the idea of the superiority of spiritual life over the material one, and sketching drawing the first philosophical concepts and terminology specific to philosophy in the Romanian language. But the message of this book cannot just stop here, at the philosophical or linguistic one, or the message of a "good-doing" wisdom, impacting historically, politically and, why not, in the line of forming a statistical thinking…

When in 1865 B. P. Haşdeu republished the Divan or Argument of the Wise Man with the World in the Historical Archive of Romania, he noticed only that this remarkable work also represented the first writing “of moral philosophy in Romanian” (Cândea, 1972), he basically added a further gnoseological horizon to a work declared exclusively philosophical and formative of the Romanian philosophical language. In less than a decade a moral and cultural fever of reconstructing the whole of Dimitrie Cantemir’s work would integrally seize the Romanian Academic Society. Investigations that would have beem unimaginable decades before, would be undertaken in the libraries and archives of Russia, between 1877 and 1878, in Moscow and St. Petersburg by Grigore Tocilescu, who, in his cultural mission of priceless value today, took advantage of a military alliance that would bring Romania independence, but under the aura and huge dimensions of a new cultural boundary and also a source of Romanian thinking, far more extended, in space and in point of impact over time, than even Romania’s independence, newly gained through so great human sacrifices. The value of a landmark, of a source of living water of traditional religious thought, based on Dimitrie Cantemir’s solid principles of scholarship, had the effect of a national cultural revival, by the recovery of his thinking, whose freshness can be said to be almost equal to that of the word from the beginning of the world.

Cantemir’s work, originally recovered and restored in the eight volumes combined, which were published in Bucharest, between 1872 and 1901, went straight into the treasury Romanian culture; those volumes are associated with a number of resonant names of the period, such as Alexandru Papiu-Ilarian,


Alexandru Odobescu, Grigore Tocilescu or Iosif Hodoş. Very much as the promoters of Romanian national revival in the early 19th century found in D. Cantemir’s work the scientific and moral support for their programme, so at the beginning of the twentieth century, Greater Romania would have also been forged through the spur of the insightful thinking of the same Cantemir.

The emphasis on statistics was incorporated to Cantemir’s work from the very beginning, but it was focused almost exclusively on Descriptio Moldaviae and assimilating it with the German universities, where they had long taught descriptive statistics. Cantemir’s classic work was structured in three parts, which closely follow the specific manner of describing the State as the essence of earlier premodern statistics of the school of polical arithmeticians, in which prevails John Graunt’s bright figure and primarily statistic thinking, which essentialized the law of statistical population, and dislocated the thinking from the individual approach to the overall investigation.

The descriptive phase, or the description of the State is the first manifestation of statistics as a science in the modern sense of the term. The German school, founded by Hermann Conring (1606-1681), author of the first course in descriptive statistics, entitled Notatio rerum publicorum (1660), uses the term statistics as a Latin derivative like status or Italian of the type statista, the meanings of which were: situation, condition or state, or politician versed in State affairs, are metamorphosed in the name of a new science. The descriptive stage is also strongly linked to Gottfried Achenwall (1719-1772), the fecund spirit of the Gottingen school, who, among other things, popularized the concept of statistics, using it in the snense of profound knowledge of the respective and compared situation (status) of each state, those to each state, while his teacher Martin Schmeitzel (1679-1747), a native of Braşov, apparently invented the term; it was A. L. von Schlözer (1735-1809), Achenwall’s most faithful disciple, and his successor to the academic chair, who gave it the academic splendor by his famous aphorism Statistics is history at rest, and history is moving statistics. A. L. von Schlözer is the scientist who found that statistics cannot be conceived or defined outside the realsm of figures, thus consolidating the essence of statistics through numerical determinations ( Săvoiu, 2012).

Dimitrie Cantemir, in Descriptio Moldaviae, written in Latin (1714-1716), when the scholar and prince had already left Moldavia and was living in Russia, therefore follows the German descriptive approach at to request of the Berlin Academy; it devotes the first part to the geography of Moldavia – its mountains, watercourses, plains, developing practically the first map of Moldavia, simultaneously describing the flora, fauna, the fairs and towns, even Moldavia’s capitals over time, while the second part is devoted to the political and administrative organization, the form of government, the election of the ruling princes or their desposing from the throne, as well as to various customs of a wide variety, ranking from wedding to funeral, and moving only in the third part to the spoken language, and the Latin-descended speech of the Moldavians, which was still identifiable in the toponymy of the places, and in customs, despite the Slavic


pressure. In that Dimitrie Cantemir follows the classic approach, but is creative, becoming the first Romanian scholar who studied a population in an ethnographic and folklore manner.

The German descriptive statistical knowledge, barely emerged from a long dark age, had become a staged process of understanding, coordination and adaptation of the variation of the external world by describing the State, but also by understanding its past, through formal and less profound correlation, through the adaptation of past events to the present time. Descriptive statistical knowledge or the scientific classic German approach aimed at the target of knowing the variation of a changing world, which was finite in point of time, space and organization (in the economic life, the social living, the political concreteness, the prosaic data or the ephemerality of the customs, be they traditional) and pondered less or next to naught on the amazing internal laws hidden under the cloak of apparent numbers.

Then and there, in the same Moldavia, in the city of Iaşi, in the year 1698, before knowing the German approach of descriptive statistics, as it is revealed to us now after several centuries, through the genius of Dimitrie Cantemir, the leap of statistical knowledge had already been done, approaching and anticipating forecast and its purposes; the questioning thinking of modern statistics can be detected in another of his outstanding books, i.e. between the pages and thoughts in the “Divan”, which was apparently declared exclusively philosophical.

Therefore, a synthetic contemporary insight into the historical pages of the book is required to reveal the secondary substrate, scientific in nature, essentially related to scientific research, of the book, in anticipation of the deeply statistical thinking of the Anglo-Saxon school, and inclining to a negative answer to the question whether Dimitrie Cantemir ever read John Graunt’s (1620-1674) "Bills of Mortality", who was, and is still considered by today’s encyclopedias, as the first modern statistician of the scientific world, the initiator of scientific exploration of the real world, in a quantitative and methodological manner, primarily and exemplarily focused on a fertile variation field, as chosen by Graunt, namely the demographic field, which had previously been only recorded, not confronted, in order to draw relevant qualitative conclusions, not only descriptive or only spatial, but especially perennial, or even permanent along the temporal axis.

Very much as the the title of Dimitrie Cantemir’s “Divan”, the full title of John Graunt’s book, published in 1662, is very long: “Natural and political observations upon the bills of mortality chiefly with reference to the government, religion, trade, growth, air, diseases etc. of the City of London”. The impact of the two books, in point of time interval and and number of republications, is however massively different: John Graunt’s book was reprinted five times in the short remaining period of his life journey, being printed in German as late as 1702, while Dimtrie Cantemir’s is only reprinted posthumously, as late as 1865, and only in the space of Romanian culture.

A comparison of the two memorable works can also occur only from the profound dedication to the Chairman of the British Royal Society, thus stressing the importance of statistical thinking and the originality of Graunt’s findings : “I


think it is beneath the dignity of a member of the House of Lords, to know how unreasonable and inefficient those proposals are, and how they also contradict religion, to increase the population by introducing polygamy, that the population depletion in the cities caused by the fiercest outbreaks of epidemics are quickly and entirely filled by the population of the villages, that the loss of men in wars and colonies does not change the necessary ratio between the number of men and women, that London, the metropolis of England, is perhaps too big and too strong a head for the country’s body, that this head is growing three times faster than the body to which it belongs, that the professions and even the commercial center of London moves west…" (Săvoiu, 2006) and the erudite dedication of a young Cantemir, only 25 years of age, addressed to the ruling prince, his brother Antioh Constantin, where the position of the two brothers is likened to that of the stars, the polus arcticus and the polus antarticus, “one rightly matching the other, and one resting and taking firm support on the other”… “As, like two wheels which are connected through an axle, similarly those by a mind’s axle (which is called an axon) to each other is joined, through such a centre parting” (Cantemir, 1974).

Both ways of prefacing the books remain deeply impressive, and as today the accuracy appears as unmatched, of the statistical thinking with which Graunt was the first to discover the regularities and laws of a scientific nature, still today, we do not think anyone could better think in the area of statistics than Cantemir did in his Divan, placing it as a solution of two-way association or correlation of two brothers, one a ruler and the other a hostage to the Sublime Porte of the Ottoman Empire, transforming the book into a median, as an axis of the opposed polar values, discovered through localization. Both works are uplifting and transform, the first one almost single, and the second followed by many other such shining gems, the two academics, the first in the British Royal Society, and the second in the Berlin Academy.

In one of the most recent and echo-producing approaches, the content of the complete approach of statistical research includes four cycles or dimensions, temporally overlapping and in distinct phases, as formulated by teachers Maxine Pfannkuch and Chris Wild of the University of Auckland, New Zealand, based on the structure of the thinking that currently characterizes statistics as a science: a) the investigational cycle (problem definition → investigative programme → resulting data → analysis and interpretation of results → conclusions); b) the interrogative cycle (generation of alternatives or solutions → search and selection of alternatives or optimized solutions → interpretation and ranking alternatives or solutions → commenting on variants or alternative solution opted for, in the final); c) the cycle of the typology of the ways of thinking considers that statistics brings together appropriate ways of human thinking, and includes, with the general types of strategic thinking, the research of the explanations, the modelling and practical-technical thinking, plus other five types of thinking, which are: recognizing the need for data, transnumeration, or transformation from non-numeric to numeric, identification and analysis of variance, the recourse to the ability to reason through the statistical models as expressions of aggregation, contextual-statistic reciprocity,


i.e. statistical thinking on variation obtained using modelled data will tell their own story about the real / contextual, mathematically justified; d) the cycle of psychological parts of investigations through the concept of personal provisions (the originality of statistical thought being given by the statistician’s psychology / personal disposition).

An enumeration of the main arguments and/or argumented justifications, mainly or apparently exclusively philosophical, and secondarily or deeply statistical, could explain why the pages of the Divan formed, over time, the statistical thinking of many generations of gifted Romanians who generated a school of Romanian statistics, by the depth of the thinking inserted in the texts, by the echo of the rigor of the emerging researcher, through its principles of wisdom as a methodological support, and through the statistical methods of investigation of the later academician whose name, Dimitrie Cantemir, enters the national cultural heritage, no less than that of Europe and the world, as a shaper and founder of statistical thinking:

a) Knowledge is transformed into light with Cantemir: “he who walks in the light of the law will not stumble because the law is light”, and eternal wisdom is like the sun (the investigational cycle with Cantemir).

b) Life itself is a process of knowledge: “the right or wise man shall not perish for ever”. Each world has, and finds its laws in a higher world, each microcosmos (man) has his model in a macrocosm (the human population), the ruler being the advocate of Leibniz’s theroy of monads, while also anticipating the upward cyclical nature of the investigation.

c) Knowledge is based on numbers: “right account is the foundation of life”; methodology and quantification become priorities in Cantemir’s thinking.

d) The statistical thinking approach with Cantemir has three phases needed to achieve equilibrium, described as reconciliation through knowledge: an interrogative cycle of self forming, a social integrative one, and one with future anticipation aspirations, or reconciliation with God (which practically foreshadows interrogation, the typologies of the forms of thinking and integrating the states of the wisdom aspirant, the researcher or the one who develops a statistical methodology oriented thinking ).

e) The concept of cycle of shaping or forming the wise man or of wisdom as perfection of a way of thinking, is focused on observation and causality, but originally leads to thinking of the future things (the purpose of the approach is also projective).

f) “The sign of wisdom is to flair, from all the seen or heard, the unseen and unheard things, and to reckon the future things froms those of the past”.

g) The real conflict of the Divan or “dispute” is not between perceptions and illusions, but rather between right and wrong practical images, or between “right and wrong creations”, virtually anticipating all the scientific instruments, from methods to models exploited in the correct perception and the interpretation of reality (the range of issues concerning error or sin takes precedence with


Cantemir and leads to shaping a statistical type thinking in the spirit of cohabitation with the error ).

h) The fact that the children of Cantemir’s age failed to see the things future narrows their horizon (“they consider the things of the future as nonexistent, and deny they may occur sometime”) explains the deadlock of research without projective thinking or the extrapolation needed for statistical thinking, the lack of a correct interpretation only to immediacy and the ephemeral.

i) Alternative thinking: “Man must ponder both on the dignity and the indignity of his nature”; the completeness of the investigation extends the concept of statistical thinking itself to the alternatives, or transforms the apparently simple variant into one of a complex type.

j) Age grouping, or age theory in the eighty years of human existence, identifies with Cantemir seven ages or period of life, disaggregated and reagregated in the human being: infancy, childhood, adolescence, youth, adulthood or manhood, the age of hoariness, and old or ancient age, represents another method of structural investigation of population, from the statistic unit or from the individual).

k) The cyclicity of world evolution and the chronological and prospective knowledge through causal thinking of a statistical type (“the course and the luck of the world are like the spinning wheel”) become with Cantemir a “wise soul” who “balances itself in three periods: from the future ones he should protect himself strictly, the present ones he should manage well (reality being subject to variability: “nothing steadfast and unwavering exists”), and “the past ones he should often remember”, which virtually describes the complexity of the modelling process in the statistical thinking of time series..

l) The complete cycle of statistical thinking formation with Cantemir is synthesized in his Divan as: “I wonder and keep trying to know what is courteous and true, and I keep striving to accomplish it. So in this way I want to draw the others close to me…”, being detailed in the third book “Blessing at the conclusion of blessed peace”, where knowledge brings peace or “salvation”, which begins by the quite natural “know thyself “ continues by “know God” and “the vanity of this world”, and ends with “understanding the beauty of virtue” as the true wealth and leisure that leads to “good conscience”, avoiding “the wide gate, and going through the narrow one”, and finally turning good words into good works (the final praxis expands the impact of Cantemir’s thinking).

m) The salvation by statistical thinking cannot occur “until you make your body into a vessel, your soul into gold, and this world into fire”, boiling “the body and soul together in the flame of this life” by solving the issues raised by daily life, with the ultimate goal “harmony, peace and order.”

Dimitrie Cantemir sensed, in a causal manner, but a complex causality like his own erudition, “the fundamental moment of change of all mentalities of Europe, which allowed him a new approach to the relation of each to the other” (Ţarălungă, 2004), based on the principle of systemic balance of power that is provided by the values of a civilization rather than the quantity, numerically


considered, of those belonging to that civilization, well beyond the spirit of the German descriptive statistics school and clearly approaching the classical statistics of the Anglo-Saxon type, and even the cyclic investigative concept of today’s approach by statistical thinking.

It suffices to prove this at the end of the paper, by resuming and arguing the view, of a classic Anglo-Saxon type, on statistical thinking: “Statistical thinking is the matrix of any experimental science” (Kendal and Yule, 1969).

3.Conclusions The beginnings of Dimitrie Cantemir as an academician, both in terms of

publishing and shaping – declaredly philosophic, Orthodox Christian, linguistic – are today revealed as predominantly statistic, through his meditations, his character of an already formed researcher, at only 25 years of age, as he may have been on publishin the first edition of his memorable book the Divan.

Dimitrie Cantemir and his Descriptio Modaviae become the practical proof that was to fulfill the desire of German descriptive statistics, as a new favourite science, by its object of study, considered by E. A. Zimmermann as “favourite” in German universities at the end of the 18th century; Cantemir became, not accidentally to say the least, the intimate adviser of Peter I, as Gottfried Achenwall would notice, arguing that the mission of the one who has acquired the “skill of statistics” should be fulfilled, and “in case of need they are to be, and will be used, with advice or actions in matters of State” (Trebici, 1985); A. L. Schlözer expressed the essence of the State by vires unitae agunt (where vires designated the understanding of the natural forces and the assets acquired by the State – people, territory, natural advantages –; unitae delimited the form and structure of governance, and agunt defined governance and management), and the essence of the statistician through the essential support given to materialize the principle of the trinity thus stated (in his recognized capacity as a faithful disciple of the same Achenwall).

But Dimitrie Cantemir’s inimitable statistical thinking and the statistic applied wisdom in his Divan are historically confirmed after more than three centuries, and today reveal evidence of his major contribution, and within the Romanian statistical school, as the first shaper of statistical thinking, of an apparently philosophical, and in fact predominantly methodological thinking, of the young humanist scholar, who became a member of the Berlin Academy when only forty-one years old…

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est et au Proche-Orient, Revue des études sud-est européennes, vol 10(2), pp. 355-359.

Kendal, M. G. şi Yule, G.U. (1969), Introducere în teoria statistică, Ed. ştiinţifică, Bucureşti.


Korka, M., Begu, L., Tuşa, E. (2002), Bazele statisticii pentru economişti, Ed. Tribuna Economică, Bucureşti, pp. 16-20

Kreager, P. (1988), New Light on Graunt, Population Studies. A Journal of Demography, vol. 42 (l), March, pp. 120-140.

Săvoiu, G. (2012), Statistică generală cu aplicaţii în contabilitate, Ed. Universitară, Bucureşti.

Banu, I., Bănşoiu, I. Boboc, A., Cazan, G.A. (1984), Istoria filosofiei moderne şi contemporane, Editura Academiei, Bucureşti.

Săvoiu, G. (2006), Populaţia lumii între explozie şi implozie demografică, Editura International University Press, Bucureşti, pp. 37 – 40.

Trebici, V. (coord.), (1985), Mică enciclopedie de statistică, Editura ştiinţifică şi enciclopedică, Bucureşti, pp. 17-29, 563-590.

Trebici, V. (coord.), (1975), Mică enciclopedie de demografie, Editura ştiinţifică şi enciclopedică, Bucureşti, pp.

Ţarălungă, E. (2004), Dimitrie Cantemir. Contribuţii documentare la un portret, Editura Minerva, 1989; ed. a II-a - Editura Litera Internaţional, Bucureşti, Chişinău.

Petculescu, C. (1973), Aniversarea a 300 de ani de la naşterea lui Dimitrie Cantemir în ţară şi peste hotare, Anale de istorie, Vol. 19.(6), pp. 144-154.

Wild, C. J., & Pfannkuch, M. (1999), Statistical thinking in empirical enquiry, International Statistical Review, 67(3), 223-265.


Providing Financial Market Macro StabilityProviding Financial Market Macro StabilityProviding Financial Market Macro StabilityProviding Financial Market Macro Stability

Prof. Vergil VOINEAGU PhD Daniel I. DUMITRESCU PhD Student

Diana V. SOARE PhD Student The Bucharest University of Economic Studies

Abstract After the financial crisis began in 2007, an important role for the stability

of the financial system, independently of the degree of development of national economies, was undertaken by the states which adopted policies for qualified intervention in the financial market.

Key words: banking, capital, crisis, market, finance 1. General considerations The State’s role in the economy can have beneficial or negative influences

according to many factors and especially depending on the quality and proper orientation of its policies. After analyzing various official interventions that it may have for economic recovery, we identified at least the following lines of action which the State may undertake to ensure stability and growth:

� Regulation and supervision of banking system; � Ownership of shares in the capital of financial institutions; � Development of banking infrastructure.

2. Financial market regulation and supervision Supervision and regulation of financial system usually exercised by the State through autonomous or semi-autonomous agencies can improve the welfare and development of the financial system. Due to the recent crisis, for the future, a more emphasis was put on regulation and supervision of systemic risk1. This is due to the existing weaknesses in the earlier regulatory and supervisory area. Thus, a major syncope for the period before the crisis, in terms of financial regulation and supervision, is that it was put too much emphasis on the risk of financial institutions taken individually, no taking into account the implications that confluence of risks may have on the entire system. It was observed that a micro prudential approach that regulates and coordinates surveillance in order to reduce the risk of individual institutions does not automatically limit the risk to spread to the entire financial system. Prudential supervision of financial institutions was done so far separately according to the category to which they belonged, because there are differentiated

1 Anghel M.G. (2013). Modele de gestiune şi analiză a portofoliilor, Editura Economică, Bucureşti


approach on the regulation and supervision of banks, insurance companies, guarantee funds, capital market actors, and because there is no a complementary over- supervision of the entire financial group institutions (where applicable), or of the entire financial system in its integrality. National Committee for Financial Stability Recent years developments in the Romanian financial system imposed to the authorities responsible for the licensing, regulation, supervision and control of financial markets system components to work together in order to ensure its transparency, its integrity, compliance with applicable legal framework and the broadening of national framework for financial stability2. On 31 July 2007 the Agreement for cooperation on financial stability and financial crisis management was signed, under which was established the National Committee for Financial Stability. The main objective of the Committee is to ensure financial stability by promoting a permanent and efficient exchange of information between member authorities and by undertaking the assessment, prevention and, where appropriate, financial crisis management of individual financial institutions, financial groups or financial market as a whole. It should be noted that co-operation is carried out under the Agreement without prejudice to the powers and responsibilities of the parties arising from the provisions of the legislation under which they operate. At the time, the National Committee for Financial Stability (CNSF) was composed of the Minister of Finance, the Governor of the National Bank of Romania, National Securities Committee President, Chairman of the Insurance Supervisory Commission and the President of Private Pension System Supervisory Committee with coordination role tasks related to financial stability and financial crisis management in Romania. As of November 10, 2011 the Deposit Guarantee Fund in the Banking System was co-opted as a member institution in the National Committee for Financial Stability. This collaboration aims to strengthen the institutional framework for ensuring financial stability in Romania, DGFBS is one of the institutions, by purpose and activity contributes to maintaining and increasing the confidence of depositors in the financial system. 3. Economic and Financial Policies undertaken by Romania in font of international financial institutions According to the Letter of Intent dated 12 September 2013 passed by Romania to the International Monetary Fund, and the attached Memorandum of Economic and Financial Policies, bank parent funding fell by 10 percent in euro by the end of 2011. During this period, capital injections and robust growth of 27 percent of deposits resulted in a 23 percent increase in total gross assets of the banking sector. Since the middle of 2012, however, banks' assets began to drop,

2 Anghel M.G. (2008). Utilizarea modelului de regresie în analiza situaţiei pieţei de capital, Revista Română de Statistică – Supliment „România în procesul integrării europene”


increasing of domestic liabilities were unable to compensate the declined external financing by 24 and ¾ percent between Q4 2011 and July 2013. In 2013, at the level of financial market in Romania it is noticeable an acceleration of the decrease rhythm of deleveraging of foreign banks, bank parent funding dropped at the end of 2011 by 26%. These developments are due to the following factors: - In 16 March 2009 the Vienna Agreement according to which the major banks present in Romania committed to maintain exposure to the Romanian market until March 2011; - Increased coverage of bank deposits up to $ 100,000 since 1 January 2011; - Massive withdrawals of bank parent financing in Romania beginning with March 2013 until the present. As shown in the chart below, although there was a trend for the withdrawal of funding by parent banks to credit institutions in Romania, due to the Vienna Agreement, for two years (2009 - 2011), financing has remained to an acceptable level, but decreased dramatically in the years 2012-2013. Withdrawal of parent bank funding still represents a high risk that can exert further pressure to prevent credit growth. The balance between loans / deposits in the entire system was maintained at around 114 percent at end- June 2013, down from 117 percent at the end of 2012 and end of 2011. Under the present circumstances, it clear that bank fundraising increasingly rely on deposits population. In these circumstances, the Romanian state intervention by strengthening the Bank Deposit Guarantee Fund in order to increase confidence in the Romanian banking system is an essential element of financial stability.

Although parent banks maintained their exposure to Romania for the years 2009 - 2011, is seen as lending rate has declined dramatically since 2009. Loans to the private sector fell by 2 percent in real terms (increase of 15 percent in nominal terms between Q3 : 2008 and Q4 : 2011, decreasing thereafter at a rate even faster to 7 percent (plus 0, 5 percent in nominal terms) until June 2013. Note that in 2013, private credit growth turned negative.


The main causes of decline in lending: - Tightening of credit standards; - Lower indebtedness of foreign banks; - Changes in the funding strategy of banking groups in the direction of a greater emphasis on domestic deposits at the branches.

As resulted from the Letter of Intent to the IMF, in order to resolve the difficulties that viable SMEs encounter in access to credit, the IMF proposed that a solution is that the Romanian authorities reform the Guarantee Fund for SMEs "which was insufficient used". The State will increase the efficiency and operability of the Guarantee Fund for SMEs especially regarding maturity, price and secured refinance loans, as well as the implementation of the execution of guarantees process. Notice, that after the financial crisis of 2008, the State agreed to intervene in financial markets through two financial institutions that provide macro-financial stability3: Bank Deposit Guarantee Fund (to ensure household deposits), Credit Guarantee Fund for Small and Medium Enterprises (to improve access to finance for SMEs). Given that banking resources is depending more and more on household deposits, it is important that both CGFSME and BDGF function properly in order to ensure a fair allocation of the available funds to the most profitable projects seeking lending. Note that in the case of BDGF, the Memorandum of Economic and Financial Policies states that "to avoid any perceived conflict of interest as among its top management, corporate governance principles of BDGF will meet international best practices." 4. The role of deposit guarantee schemes in supporting financial market stability Deposit guarantee concept is to ensure the value of deposits held at banks (and possibly accumulated interest), and to refund, partially or totally, these

3 Anghel M.G. (2011). The analysis on the Evolution of Capital Market basically in Romania during 1995 – November 2011, International Journal of Academic Research in Accounting, Finance and Management Sciences, Volume 1, Issue 2


financial assets no matter what happens to the institution at which they were deposited. Deposit guarantee is an element of the financial security that protects depositors against the loss of value of their investments, to avoid widespread withdrawals of funds generated by panic and that could erode the stability of the financial and the economic system. According to specialized literature, "the financial safety net" is a set of institutions, laws and procedures that strengthen the financial system's ability to cope with systemic shocks. A safety net consists of the following complementary and interdependent elements: - Financial and banking supervision; - Guaranteeing deposits; - Exit policies from the banking system; - Lender of last resort. However, deposit guarantee schemes, as any assurance mechanisms have negative effects, as it may lead to "moral hazard". Moral hazard in this case refers to creating incentives for excessive risk-taking resulting from the following: - Guaranteed depositors have little incentive to monitor the performance of banks; - Funds are available for weak banks and risky activities at a lower cost than would otherwise be the case. Moral hazard created by the existence of deposit insurance schemes can lead to weakening of market discipline and can create the premises for financial instability in the future. Thus, besides the three main methods of reducing moral hazard: Good governance of the enterprise and efficient management; Promotion of market discipline; Regulation and supervision. We see another way to reduce moral hazard by using bank Credit Guarantee Funds take some of the credit risk. From this perspective, the guarantee fund provides financial institutions the "safety net" especially appreciated in the context of economic and financial crisis by guaranteeing expressly irrevocable and unconditional obligation to repay the loans to entrepreneurs who do not have sufficient equity guarantees. Ensuring balance between bank deposits and bank loans should be made with utmost responsibility so as to avoid systemic risk in the financial market in Romania. The systemic event is considered strong when affected financial intermediaries can’t continue to work or when relevant markets are not functional. One can distinguish two directions of propagation of systemic risk: - Horizontal: the effects are limited to the financial system and; - Vertical: in which one must consider the effects on both financial and economical systems. Comparative Study between Credit Guarantee Funds and Deposits Guarantee Funds: According to the 2008 World Bank study, titled "The typology of Partial Credit Guarantee Fund Around The World" - (Policy Research Working Paper 4771) (The World Bank Development Research Group Finance and Private Sector Team) (Authors : Thorsen Beck Leora F. Klapper, Juan Carlos Mendoza, there is an important correlation between credit guarantee funds and deposits guarantee funds.


"To better understand the implications of various features of the Credit Guarantee Fund and guarantee products, we will continue to draw a parallel between bank deposit insurance and credit guarantee schemes. Both need to manage the tradeoff between public policies aim to ensure financial stability (bank deposit guarantee schemes) and improving access to finance (credit guarantee schemes), on the one hand and the risk of moral hazard that may result from the assumption of excessive risk by credit institutions, on the other hand." It follows that both deposits guarantee funds and credit guarantee funds ensure financial market stability by influencing the proper functioning of the two core activities of credit institutions (deposits and loans). On one hand, deposit guarantee schemes offer to depositors the necessary comfort to "invest" (submit) surplus cash funds, on the other hand, credit guarantee funds assumes with the lender, after proper analysis, risks for granting loans. This correlation is especially evident in the case of India, where in 1978, following a regional financial crisis, the following two institutions: Deposit Insurance Corporation and Credit Guarantee Corporation of India have been merged into the Deposit Insurance Corporation and Credit Guarantee Corporation Limited (DICGC). This new institution, under the administration of Reserve Bank of India (as an agent of the Government of India) aimed at integrating the following related functions: - Insurance of bank deposits; - Guaranteeing loans. In Romania, the Deposit Guarantee Fund in the Banking System (DGFBS) was established in 1996, and is the only deposit guarantee scheme in Romania4. By law, all Romanian credit institutions and branches of non-EU foreign banks, authorized by Romanian central bank are required to attend DGFBS. In 2012, DGFBS guarantee deposits totaling 144.8 billion, representing 45.7 % of total deposits at credit institutions participating in DGFBS. From 1 January 2011, DGFBS guarantees all deposits held by natural or legal persons (including SMEs) to participating credit institutions up to EUR 100,000 equivalent in Romanian currency. The National Credit Guarantee Fund for Small and Medium Enterprises (CGFSME) is a joint stock company, organized as a non-banking financial institution, operating under the supervision of the National Bank of Romania and having the Romanian state as sole shareholder represented by the Ministry of Finance. CGFSME was founded in 2001 in order to support the activities of entrepreneurs (SMEs, cooperative societies and individuals authorized to do business according to the law). Between 2008 and 2012 CGFSME granted approximately 36,000 guarantees, totaling 1.5 billion euro (about 6.7 billion ROL), and sustained access to credits in the amount of about 3.1 billion euro (about 13,9 billion ROL).

4 Anghel M.G. şi alţii (2008). Unele modele de prezentare a circuitului de ansamblu al economiei naţionale, Revista Română de Statistică – Supliment „România şi economia europeană”


Table: Comparison DGFBS and CGFSME partners: No DGFBS CGFSME 1 Alpha Bank România - S.A Alpha Bank România - S.A 2 Ate Bank România - S.A. Ate Bank România - S.A. 3 Banca Comerciala Carpatica -

Banca Comerciala Carpatica - S.A.

4 Banca Comercială Intesa Sanpaolo

Banca Comercială Intesa Sanpaolo

5 Banca Comercială Feroviara Banca Comercială Feroviara

6 Banca Comercială Română -

Banca Comercială Română - S.A.

7 Banca de Export Import a Romaniei

Banca de Export Import a Romaniei

8 Bancpost - S.A. Bancpost - S.A. 9 Bank Leumi România - S.A Bank Leumi România - S.A

10 Banca Millennium - S.A. Banca Millennium - S.A. 11 Banca Românească - S.A. Banca Românească - S.A. 12 Banca Transilvania - S.A. Banca Transilvania - S.A. 13 Brd - Groupe Société Générale -

Brd - Groupe Société Générale - S.A.

14 Cec Bank - S.A. Cec Bank - S.A. 15 Credit Europe Bank (România) -

Credit Europe Bank (România) - S.A.

16 Credit Agricole Bank România -

Credit Agricole Bank România - S.A.

17 Garanti Bank - S.A. Garanti Bank - S.A. 18 Libra Internet Bank - S.A. Libra Internet Bank - S.A. 19 Nextebank - S.A. Nextebank - S.A. 20 Otp Bank România - S.A. Otp Bank România - S.A. 21 Piraeus Bank România - S.A. Piraeus Bank România - S.A. 22 Procredit Bank - S.A. Procredit Bank - S.A. 23 Raiffeisen Bank – S.A. Raiffeisen Bank – S.A. 23 Romanian International Bank -

S.A. Romanian International Bank - S.A.

25 Unicredit Ţiriac Bank - S.A. Unicredit Ţiriac Bank - S.A. 26 Volksbank România -

Volksbank România - S.A.

27 Marfin Bank (România) - S.A.

28 Porsche Bank România - S.A. 29 BCR Banca Pentru Locuinţe -


Thus, considering the correlation expressed by the World Bank experts between the two institutions we believe that there must be a balance between the two institutions that insure/ guarantee the two core activities of banks. Both the Bank Deposit Guarantee Fund and Credit Guarantee Funds must operate in the financial market in respect of the same values. DGFBS CGFSME Mission Mission DGFBS is the only institution with the mission to guarantee the deposits of population and businesses, especially small and medium enterprises settled at the credit institutions participating in the Fund and to pay compensation to guaranteed depositors, in the guarantee limits and other requirements set by law when deposits become unavailable.

CGFSME mission is to improve access to finance for SMEs. To achieve its mission, CGFSME will act in accordance with the legal provisions in force, strategy, risk policy, prudential norms and requirements of work, respecting the principle of diligent management of financial resources.

Vision Vision DGFBS help maintain soundness and stability of the banking system in Romania and public confidence in it.

CGFSME help maintain soundness banking system in Romania.

Values: Values: Safety Safety

30 Raiffeisen Banca Pentru

Locuinţe S.A.

31 ING Bank 32 Bank of Cyprus 33 Banca Italo Romena 34 Banca Centrală Cooperatistă

Creditcoop

Source: www.DGFBS.ro

Source: “CGFSME guarantee - a tool to facilitate access EU structural funds” Daniel Dumitrescu 2011

Observations : � Both institutions serve 26 commercial banks registered in Romania. � There are two commercial banks registered in Romania who have not partnered

with CGFSME. � There are 2 specialized banks "domestic banks" that have partnered with

CGFSME. � The three foreign banks to open branches in Romania have signed conventions

with CGFSME but have deposits insured by DGFBS, provision being made in the country of registration of their head office.


DGFBS provides security deposits of individuals and legal Romanian credit institutions, helping to increase the saving process.

CGFSME provides security to loans granted by Romanian banks, contributing to facilitating and expanding the lending process.

Professionalism Professionalism DGFBS use all our knowledge and skills to fulfill our mission. We treat each situation, each institution participating in the Fund and each depositor with respect, reliability and with the professionalism they deserve.

CGFSME use all our knowledge and skills to fulfill our mission. We treat each situation, each financial institution and each final beneficiary partner with respect, reliability and professionalism they deserve.

Integrity Integrity DGFBS is an apolitical and independent institution. Employees of the Fund treats with responsibility and integrity the management of its resources in accordance with the law.

CGFSME must be an apolitical and independent institution. Employees of the Fund treats with responsibility and integrity the management of its resources in accordance with the law.

Good governance Good governance DGFBS conduct is consistent with the principles of good governance approved by the G20 Financial Stability Board. The Board of DGFBS consists of renowned experts with extensive experience in banking and financial market designated by the National Bank of Romania, Romanian Banking Association, the Ministry of Finance and Ministry of Justice).

CGFSME conduct is consistent with the principles of good governance approved by the G20 Financial Stability Board. Board of CGFSME should be formed only from reputable specialists with extensive experience in banking and financial market and designated by the shareholder.

Confidence Confidence DGFBS guarantee deposits with the Romanian credit institutions, increasing the confidence in them. Duties on recovery distressed banks make DGFBS a pillar of the Romanian financial system safety net.

CGFSME guarantee loans for Romanian credit institutions, and thus increasing the confidence in the final beneficiaries of the loans. By taking partial credit risk from banks, CGFSME stands out as a pillar of the Romanian financial system safety net

Committee for Macro-prudential Oversight: According to Regulation (EU) No. 1092/2010 of the European Parliament

and of the Council of 24 November 2010 on European Union macro-prudential oversight of the financial system and establishing a European Systemic Risk Board" a European Systemic Risk Board (ESRB) was established. It is based in Frankfurt am Main. ESRB is part of the European System of Financial Supervision (ESFS), the purpose of which is to provide oversight of the financial system."


In Romania, the macro-prudential supervision will be established after almost two years since the European Systemic Risk Committee recommendation (December 2011). The Committee will be responsible for macro-prudential financial crisis management and prudential supervision. The new committee will not seek nor accept instructions from any authority, institution, public or private. The Committee for Macro-prudential Oversight will consist of a General Board, a Technical Committee on systemic risk, a technical committee on financial crisis management and secretary desk.

The primary objective of the Committee "is to contribute to the safeguarding of financial stability, including by strengthening the capacity of the financial system to withstand shocks and by reducing the accumulation of systemic risk, in this way ensuring a sustainable contribution of the financial sector to economic growth," according to a project emergency ordinance initiated by the Ministry of Finance.

After performance of analyses, the Committee will identify potential risks to financial stability, make recommendations and warnings to national micro-prudential financial supervisory authorities on the directions to be followed and will make recommendations to Government to initiate laws in order to maintain financial stability.

The management of the Committee for Macro-prudential Oversight will be provided by National Bank of Romania Governor, First National Bank Deputy Governor and the Chief Economist with the Financial Supervision Authority President and the First Vice-President of that authority, and three representatives of the Ministry of Finance - Minister of Finance, Minister for the Budget, and Secretary of State. The President of the Committee will be NBR Governor.

Conclusion In the letters of intent signed at the evaluation missions of the IMF and the

European Commission made under the funding agreements, Romania has committed to strengthen financial safety net and develop the range of tools to cope with problem banks, in partnership with the central bank, the deposit guarantee fund - DGFBS and government. Under Ordinance 39/1996, in exceptional circumstances, if the Fund's financial resources should not be sufficient to cover compensation payments to finance stabilization measures decided by the central bank, the government, through the Ministry of Public Finance should provides to the DGFBS with the necessary amounts on the form of a loan, in within 5 working days of their request by the DGFBS. The source of funds is the privatization fund registered in the State Treasury. General terms and conditions for granting and repayment of the loan granted by the Government are set by decision of the government and the amounts shall be made available upon request of the DGFBS, based on agreement between parties. Bank Deposit Guarantee Funds and Credit Guarantee Funds, besides the role of deposit insurers on the one hand and loans insurer on the other hand may have an important role in terms of providing relevant information on financial market stability in its entirety. Centralizing this data in


real time and correlating them can lead to early identification of possible bank failures in the financial system, which can improve macro-prudential oversight by correcting them as early as possible.

As national financial stability remains to the Member States, the responsibility of solving the crisis and its cost recovery leads to the necessity of maintaining appropriate intervention tools. Having regard to Regulation (EU) No. 1092/2010 of the European Parliament and of the Council of 24 November 2010 " (15) (... ) The ESRB should be established as a new independent body covering all financial sectors and guarantee schemes. (...) ", and in the context of strengthening financial and banking system in Romania, we believe that the future Committee for Macro-prudential Oversight should take into account two important basic financial institutions: the Deposit Guarantee Fund in the Banking System and the Guarantee Fund Credit for Small and Medium Enterprises. Both institutions can mitigate informational asymmetry in financial markets and have the technical capacity to identify risks before the onset of the financial market effects. Through a seamless coordination of key financial verification, and by linking relevant information on bank deposits on the one hand and bank loans on the other, The Committee may gain the ability to identify earlier systemic risks and correct them through improving mechanisms that strengthen the financial market.

Bibliography

Anghel M.G. (2013). „Modele de gestiune şi analiză a portofoliilor”, Editura Economică, Bucureşti;

Anghel M.G. (2011). „The analysis on the Evolution of Capital Market basically in Romania during 1995 – November 2011”, International Journal of Academic Research in Accounting, Finance and Management Sciences, Volume 1, Issue 2;

Anghel M.G. (2008). „Utilizarea modelului de regresie în analiza situaţiei pieţei de capital”, Revista Română de Statistică – Supliment „România în procesul integrării europene”, nr. 12;

Anghel M.G. şi alţii (2008). „Unele modele de prezentare a circuitului de ansamblu al economiei naţionale”, Revista Română de Statistică – Supliment „România şi economia europeană”;

Regulation (EU) No. 1092/2010 of the European Parliament and of the Council of 24 November 2010 on European Union macro-prudential oversight of the financial system and establishing a European Systemic Risk Board;

The Deposit Insurance and Credit Guarantee Corporation General Regulations 1961 (as modified up to September 2006);

Government Ordinance no. 36/1996 on the establishment and functioning of Deposit Guarantee Fund in the Banking System;

Government Decision no. 1211 / 27.11.2011 on the National Credit Guarantee Fund for Small and Medium Enterprises;

The World Bank study from 2008, titled "The typology of Partial Credit Guarantee Fund Around The World" - ( Policy Research Working Paper 4771 ) (The World


Bank Development Research Group Finance and Private Sector Team) ( Authors : Beck Thorsen, Leora F. Klapper, Juan Carlos Mendoza );

Introduction to Banking - Vijayaragavan Iyengar; Insurance Law and Practice - C.L. Tyagi & Madhu Tyagi ; 8. Financial Stability Report – National Bank of Romania 2012; Financial Stability Report – National Bank of Romania 2013; Romania Letter of Intent to the IMF - 09.12.2013 (including Annex I - Romania:

Memorandum of Economic and Financial Policies); Study: 'The guarantee of the National Credit Guarantee Fund for Small and

Medium Enterprises - tool to facilitate access to EU structural funds" Daniel Dumitrescu 2011;

Article: www.finantistii.ro "FNGCIMM issued guarantees of 1.5 billion euro in the period 2008-2012, supporting the granting of credit volume of about 3.1 billion euro";

Article www.zf.ro: "Romania will have a macro-prudential oversight committee, two years after the recommendation of the European Union ';

www.Fgdb.ro; www.Fngcimm.ro; www.bnr.ro.


Evolution Evolution Evolution Evolution of of of of GDPGDPGDPGDP and Foreign Investments and Foreign Investments and Foreign Investments and Foreign Investments


“Artifex” University of Bucharest Prof. Gabriela Victoria ANGHELACHE PhD

Academy of Economic Studies, Bucharest Lecturer M ădălina Gabriela ANGHEL PhD

“Artifex” University of Bucharest Adina Mihaela DINU PhD Student

Academy of Economic Studies, Bucharest Abstract One of the main aspects analyzed in this paper is the quarterly evolution of the

seasonally adjusted GDP comparatively with the corresponding quarter of the previous year. As for the impact of foreign investments, year 2012 was a year when a series of sectors of activity kept on getting privatized while those already privatized kept on increasing their patrimony (capitals) by attracting new autochthonous and foreign investments which, from the point of view of the effects on the national economy structure is an important aspect to consider.

Key words: recovery, decrease, uncertainty, growth, impact As from the III quarter 2008, the seasonally adjusted Gross Domestic Product

recorded a constant decrease from one to another quarter. The biggest decrease has been recorded during the I quarter 2009 as against the IV quarter 2008 (-4.1%).then, the GDP evolution, seasonally adjusted on the number of working days, constantly until 4th quarter, 2010.

It can be stated out that the biggest decrease has been recorded during the II quarter of 2010 while the smallest one occurred during the fourth quarter. The same positive rhythm was also observed in 2011. During Quarter IV, 2011 and Quarter I, 2012, GDP decreases were recorded again. During the third and fourth quarters of 2012, and also during the first and second trimesters of 2012, GDP increased in a slow rhythm.

In connection with the other European Union member countries, Romania recorded for the IV quarter 2010 as against the previous quarter, an economic decrease while a significant number of countries have recorded increases (Belgium, Denmark, France, Lithuania, Austria, Poland, Slovenia, Great Britain), or recorded decreases bellow 0.5%. Meantime, the overall GDP of the EU increased by 0.1%.

Comparatively with the IV quarter 2008, in 2009, 2010, 2011 and 2012, the EU member countries have recorded reduced volumes of the GDP, the biggest ones being recorded Latvia (-17.9%) and Lithuania (-13.2%), followed by Romania (-6.9%),


Slovenia (-5.8%) and Hungary (-5.3%). The overall decrease at the EU level counted for -2.3%. In 2009, it has maintained an accelerated decrease rhythm. In 2010, fourth quarter and 2011, some recovery, but uncertain, due to the crisis within the Euro union. In 2012, the unconvincing evolution of GDP continues, and in 2013 the first signs that show the beginning of a growth have occurred, a growth that is to manifest in the following period too.

Significant contributions to the negative evolution of the GDP during 2010, 2011 and 2012 comparatively with 2009 are given by the constructions, which recorded a decrease as well as by the section trade, cars and households appliances repair, hotels and restaurants, transports and telecommunications recording a decrease. The other branches have recorded small decreases of activity volumes.

The previously mentioned branches had the highest negative impact on the GDP volume decrease during the period 2009- 2012 comparatively to 2008, as they have recorded decreases.

As far as the utilization is concerned, the highest impact on the GDP decrease during the period 2009- 2012 comparatively with 2008, went to the gross forming of fix capital, the individual consumption of the population households, the collective consumption of the public administrations.

The increase of the exports of goods and services had a positive impact. According to the seasonally adjusted data, the gross forming of fix capital

had the biggest negative contribution. These reductions have been partially compensated by the increase of the volume of the exports of goods and services, and the collective consumption of the public administration.

GDP structure by categories of utilizations,

in 2012 Indicator Romania

Gross Domestic Product 578551.9 Final consumption 441657.1 Gross forming of fix capital 166675.7 Export of goods and services 221841.1 Import of goods and services 251623.1 Net export of goods -29780.9

Data source: National Institute of Statistics

Based of a comparison between the GDP structure by categories of utilizations in Romania as against the EU, there is a superior weight of the gross forming of fix capital and a lower weight of the exports of goods and services in Romania comparatively with the European Union.

• The achievement of the Gross Domestic Product by ownership

forms Out of the performed analysis, it results that for the period 2009-2012, for

which there are provisional data, the private sector contributed with 72.4%-75.4% to the GDP forming. The weight of the private sector, still low, has been generated


mainly by the gross added value in the agriculture. Such an influence is a normal one if to consider that the agriculture has to face negative natural conditions.

If comparing the weight of the private sector in the GDP achievement with the figures recorded for the previous periods, we find out that this weight is superior to all the periods being analyzed as from the year 2000, even as from the year 1990, up to date.

In 2010-2012, for which we are actually performing a complete analysis, we find that the weight of the private sector in the gross added value increased as for the constructions field.

What is really important is the fact that the weight of the private sector in the achievement of the gross added value by branches of the national economy and, eventually, to the GDP forming, kept on maintaining at a high level.

Gross Domestic Product

weight of the private sector in 2004 – 2012

68,0 69,4 67,771,5 69,9 69,8 70,2 73,2 72,4 72,8 73,5 75,4

0

10

20

30

40

50

60

70

80

20012002200320042005200620072008200920102011*2012**

- in % -

*1) Semi-final data. **) Estimate data.

Data source: National Institute of Statistics, Statistical Bulletin no. 7/2013 It is obvious that the privatization of other administrations or extending the

privatization at the level of branches already privatized will have the targeted effect. Here we have to underline the fact that such an analysis is not always pertinent

since there will be and remain sectors of activity absolutely important for the national economy for which the state must keep its attributes of sole owner.

• Direct foreign investments Under the circumstances, according to the data provided by the NBR, it is

resulting that in 2010 the total value of the direct foreign investment in Romania reached the level of 3,914 and for 2011, it had the value of 3,329,432.4 thousand euro, in 2012 it was 2,856,416.6 thousand euro and recorded a value of 1,066,398.4 thousand euro for the first seven months of 2013.


The value of the foreign direct investment flows - million euro-

Indicator 2008 2009 2010 2011 2012 2013*)

Total 9496 3488 2220 1920 1204 2315

Capital share 4873 1729 1824 1817 916 1805

Intra-group credits 4623 1759 396 594 288 510

Data source: National Bank of Romania *) Provisional data, on six months

In the year 2010, 1,824 million euro of the direct foreign investment has been placed in the sector of “participations to capital” and 396 million euro represented intra-group credits.

The value of the foreign direct investment flows

– million euro-

5213

90617250

9496

2220 19201204

23154899*)

2005 2006 2007 2008 2009 2010* 2011** 2012***2013***

*) semi-definitive data, **) revised data, ***) provisional data, 30.06.2013 Data source: National Bank of Romania.

Meantime, by the end of 2010, the direct investment of the Romanian residents abroad counted for 1,675 million euro, this being the contribution evaluated by the documentary system available in the country. The year 2012 reveals a situation hard to figure. The foreign direct investment counted for 1,240 million euro only. Out of this amount, 69.3% have represented capital shares and 30.7% intra-group credits. The structure of the foreign capital flows invested in the Romania economy is shown in the following table.

Value of the foreign direct investment flow in 2012

- million euro - Indicator 2012 *)

Total 1204

Capital share 916

Re-invested profits 73

Intra-group credits 215 *) Provisional data. Data source: National Bank of Romania.


Bibliography Anghelache, C-tin (2012). România 2012. Starea economică în criză perpetuă,

Editura Economică, Bucureşti Anghelache, C-tin (2009). România 2009. Starea economică în criză profundă,

Editura Economică, Bucureşti Anghelache, C-tin (2010). România 2010. Starea economică sub impactul crizei,

Editura Economică, Bucureşti Anghelache, C-tin (2011). România 2011. Starea economică în malaxorul crizeii,

Editura Economică, Bucureşti Anghelache, C-tin (2008). Tratat de statistică teoretică şi economică, Editura

Economică, Bucureşti Anuarul statistic al României, ediţiile 2002, 2005, 2006, 2007, 2008, 2009, 2010,

2011, 2012 *** Buletinul Statistic nr. 1-12/2002, 1-12/2003, 1-12/2004, 1-12/2005, 1-12/2006,

1-12/2007, 1-12/2008, 1-12/2009, 1-12/2010, 1-12/2011, 1-12/2012 şi 1-7/2013 editat de Institutul Naţional de Statistică


Model of Portfolios Analysis Model of Portfolios Analysis Model of Portfolios Analysis Model of Portfolios Analysis

Lecturer M ădălina - Gabriela Anghel PhD

The Bucharest University of Economic Studies/ „ARTIFEX” University of Bucharest

[email protected]

Abstract The valuation of the transactions on financial instruments implies a

thorough analysis of the ratio between the potential gains and the joint risks to a capital investment emphasizing thus the maximization of the profit function under the conditions of minimizing the risks connected to the analyzed transactions. The activity of the portfolio management aims to optimize the holding of financial instruments. But, the optimum has a different significance depending on each and every investor given as known the fact that these ones bear different degrees of tolerance and adversity as regards the exposure to risk. The investor is the one deciding on that particular combination to be considered as optimum, taking into account the attitude he has as regards the risk.

Key words: portfolio investment, yield, adversity against risk, portfolio management, optimum portfolio.

General aspects concerning the financial instruments portfolio The portfolio represents the combination of financial instruments achieved

depending on the investor’s behavior against risk as well as on the capital which he is willing to invest over a certain interval of time. The construction of portfolio aims to diversify the made investments so that the final outcome consists of diminishing the related overall risk. Thus, in the case of a mixed portfolio consisting of shares and bonds – when there is a decrease of the price for the shares being held- the loss being recorded can be partially or totally compensated by the gain achieved through the interest cashed on the bonds making part of the portfolio..

The construction of any portfolio implies as a first stage the identification of the financial instruments meant for transaction, as well as the proper moment for entering the capital market (respectively, the optimum moment for transacting). This is the stage where the market analysis is accomplished with the purpose to gather the necessary information for the process to take the investment decision. In this respect it is recommended that the investment activity is based on a profound valuation for both the individual performances of the instruments to be acquired and the general evolution of the capital market on which the investment is going to be made.

The decision on fixing the number of the composing financial equities is taken by the investor but it is recommended to take into consideration also the


opinion of the specialists in the domain who declare that this number has to be minimum 7 in order to compensate the opposite variations of the yield of these equities and maximum 14 – 15 equities in order to have lasting results out of the applied models. Based on these aspects, it has been decided that the portfolio to be analyzed is composed of 10 equities.

Table nr. 1 – The selected companies which shares are considered as components of the portfolio

Crt. nr.

Company’s name Activity domain Symbol Category

1. AEROSTAR Aircraft and spacecraft manufacturing

ARS II

2. ALRO Aluminum metallurgy ALR I

3. Antibiotice Basic pharmaceutical products manufacturing

ATB I

4. Banca Comercială Carpatica S.A.

Monetary intermediation activities

BCC I

5. Boromir Prod Buzau (Spicul)

Bread, fresh cakes and pastry products manufacturing

SPCU II

6. BRD - Groupe Societe Generale

Monetary intermediation activities

BRD I

7. Calipso Oradea Pubs and other beverage serving activities

CAOR II

8. Farmaceutica Remedia Wholesale trade with pharmaceutical products

RMAH II

9. Prodplast Plastic material items production

PPL II

10. SIF Banat Crişana Other financial c.a. intermediations

SIF 1 I

Source: self-systematization

The analysis of the yield and risk of the portfolio built up by ten equities issued by companies listed on the București Stock Exchange market.

Once the financial instrument matching with the investors’ requirements are identified and acquired, the need to continuously administrate the portfolio thus built up becomes a must. In this respect it is to underline the fact that the portfolios management is in fact an extremely complex activity, grounded on a series of scientific models through which it is possible to permanently evaluate the financial performances of the assets as well as the risks at which the investors are exposed.

Farther on, we shall calculate the yield and risk relating to the portfolio composed by the equities issued by the 10 considered companies.

The yield of the portfolio built up by the 10 equities is the weighted average of the equities composing it and is established on the basis of the following formula:


where:

Ei represents the average yields of the equities X i represents the weights allocated to the equities

In order to establish the portfolio risk we must consider both the risk relating to each equity belonging to the portfolio and the interdependence degree of the equities variations between each other. The risk of the 10 equities portfolio is given by the sum of the possible combinations between the profitableness variations of the component equities (including their own dispersions) as against the participation weights of the equities to the portfolio construction.

The portfolio risk comes out the matrix of the dispersions and

profitableness covariance of the component equities.

In order to set up the yield and risk relating to the portfolio built up by the

10 equities, it is necessary to know the yield and volatility of each equity as well as the covariance between the yields of the equities making subject of the analysis.

The daily yields of the equities issued by the analyzed companies have been established on the basis of the daily prices recorded on their account, excepting the week-end days and legal holidays.

Table nr. 2 – The average daily yield and volatility for he analyzed equities

Equity Daily yield Volatility

ARS -0.0024556 0.0007868

ALR 0.0023366 0.0003094

ATB 0.0033516 0.0012908

BCC 0.0000098 0.0002674

SPCU 0.0005964 0.0014504

BRD 0.0016464 0.0003598

CAOR 0.0018732 0.0004438

RMAH -0.0016492 0.000329

PPL 0.0005488 0.0003416

SIF1 0.0027062 0.0004648

Source: self-calculations


The covariance between the equity „i” and the equity „j” () is

established on the basis of the relation:

t = 1...T (number of observations over the time on the raRMAHor Rit = the yield of the equity “i” by the moment “t” = the average yield of the equity “i” Rjt = the yield of the equity “j” by the moment “t” = the average yield of the equity “j”

Table nr. 3 – The matrix of covariance between the yields of the analyzed equities

Source: self-calculation

Based on these elements, the portfolio yield and risk are calculated, considering that the ten financial assets hold various weights of participation in the portfolio frame and simulating thus more variants of them. The results are submitted in the following table:

Table nr. 4 – The profitableness and risk for the portfolio built of 10 equities (holding different weights of

participation)

Source: self-calculations


Out of the out coming data, it is obvious that diversifying the portfolio by including into its structure more equities generates an increase of its yield simultaneously with the decrease of the corresponding risk.

Conclusions The portfolio yield is directly proportional with the individual yields of the

assets but also with the weight allocated to each one within its structure. Thus, in order to increase the portfolio profitableness it is necessary only to increase the weight of the equities of the highest profitableness in the frame of portfolio structure. Meanwhile, it must be underlined that any increase of the portfolio profitableness is generating an increase of the relating risk. The portfolio structure bears a particular significance since anytime the equities hold a weight relatively equal within its composition, the relating risk is smaller as comparatively with the case when an equity holds 90% of the portfolio while the rest of them are holding the balance of 10% only.

Bibliography

Anghel, M.G. (2013). Modele de gestiune şi analiză a portofoliilor, Editura Economică, Bucureşti, ISBN 978-973-709-677-7

Anghelache, G.V.; Marinescu, R.T., Anghel, M.G. (2013). Specific concept for the financial instruments portfolios, Revista Română de Statistică – Supliment, Trim. III, pg. 68 – 72, ISSN 1018 – 046x CNCSIS, Categoria B+

Dragotă, V. (coordonator) (2009). Gestiunea portofoliului de valori mobiliare - ediţia a doua, Editura Economică, Bucureşti

Roman, M (2003) – Statistica financiar - bancară şi bursieră”, Editura ASE, Bucureşti

Stancu, I. (2007). „Finanţe. Vol I. Pieţe financiare şi gestiunea portofoliului”, Editura Economică, Bucureşti


ConsiderConsiderConsiderConsiderations on the legal regime of the ations on the legal regime of the ations on the legal regime of the ations on the legal regime of the unincorporated business forms in Romaniaunincorporated business forms in Romaniaunincorporated business forms in Romaniaunincorporated business forms in Romania

Assoc. prof. Anca POPESCU-CRUCERU PhD

“Artifex” University of Bucharest

Abstract The analysis of the legal status of the companies aims to unify, in an

approach for the comparative and historical method, the trends in relation to theories of legal status of the companies, more so as the rules made by the new Romanian Civil Code amended the institution of the company and partnership and thus its legal status. The methodology considers the logical and teleological analyze of the rules in relation to companies, both those of common law and those belonging to special laws, in the Romanian and comparative law.

Key words: company, partnership, legal status Introduction

The French law is one that has shaped the idea of company establishment, which impose the administrative and judicial formalism to the mutual consent characteristic to contractual theory, the company having a predominantly legal organization, so the partnership agreement being built around the supremacy of the law that will govern the social will by enforcing provisions. The contractual theory was statutary of the European Court of Justice of 90-thies, in the grounds of judgement in Powel Duffryn plc c. Wolgang Petereit (CEJ, cauza C-214/89, JO C 109 29.04.1992), being stated that the legal nature of the incorporated companies is a contractual one – the articles of incorporation shall be deemed to be a contract. The doctrine has made the a distinction between different types of companies based on their character, considering that the intuitu personae companies’ contractual legal nature is stronger than the intuitu pecuniae’s.

The contractual nature of unincorporated companies According to art. 1998 al. 2, the companies with legal personality can be incorporated in the form and conditions of the special law, but, until the aquisition of the legal personality, the relations between the members are governed by the rules applicable to the simple partnership.

So far, the rule, expressly stated in art. 1892 NCC, is the lack of legal personality of the simple partnership, exception being the situation in which the members agree (unanimously), throughout the life of the company, changing its shape, by conferring legal personality in an institutional procedure.


The preeminence of the contractual nature of the companies results mainly from the regulations of the unincorporated partnerships.

The Romanian law is granting legal remedies in case of non-registration formalities (specific of the institutional phase), without considering the agreement of the partners in order to register a company as inefficiency.

The doctrine does not insisted on the unincorporated forms, although the former associations of civil society (the previous regulation), simple society (in Romanian current regulation may notice a similarity with simple society regulations (societa semplice) contained in the Civil Code, Italian law system is also a tier system, as the current Romanian law), but especially of the joint venture, represented and representing, in determined historical periods, alternatives justified by clear economic interests.

Is growing interest in analyzing these forms, as much as there are assimilated to the simple partnership also the companies which remained unregistered and also the so-called companies in fact, the latter forms, which are not legally defined, gaining regulatory framework applicable.

In this latter situation, the law itself takes over, using the doctrinal terminology, the distinction made by the doctrine between the companies in fact (which is created by the members as such) and other illegitimate forms, referring to simulated or fictitious companies.

Companies can "become" in fact, if the company with legal personality is declared nule or the lifetime expired. These cases, which are not operated retroactively, transformes the company with legal personality in a company in fact starting with the intervening cause to the removal from the Trade registry.

Moreover, there are included into the regime of the simple partnership the companies whose purpose is an economic activity but, for various reasons, have not gained or lost the legal personality, remaining companies in fact.

The simple partnership, with its express contractual nature, shall be established by the mere agreement of the parties, expressed, ad probationem, in writing. The simple partnership has all the company’s specific elemets, as they were revealed by the doctrine: input, affectio societatis (which entails the prohibition of competition stated in art. 1903 NCC) and implementation and benefit sharing, simple partnership falling into the category of professionals, as that term is defined in art. 3 NCC.

The effects of the conclusion of a simple partnership are analyzed in terms of the new regulations, being notable that the doctrine, so far, has not insisted in the analysys, although there are signalized issues of new aspets to be treated.

So far, the transfer of the shares (which has the effect of losses of the member quality, according to the art. 1925 NCC) can only occur with the principle of the unanimity, when the cession (in writting or in autheintic form, when the cession is free of charge) is to a third party, the provision existing also in the special law, in the case of the intuitu personae legal entities.

However, the sanction violation of the principle of unanimity is mitigated in the case of simple partnership, as the law is giving the possibility of any member


to redeem from the third party the alienated shares, without the express consent of all members, to a value determined either by an expert approved by the parties of the cession contract or judicially determined. If this right is exercised by several associates, the shares shall be allocated in proportion to the share of profits (art. 1901 of. 2, second sentence).

It is noteworthy option legislature to relate to profit sharing and not to participation in social capital formation, usually likely to be different, which, consequently, would lead to a modification of the allocation of equity and thus the exercise of voting, as far as the memorandum of association contains a conventional determinism of the voting right in relation to the held shares.

It is reported that the enforcement of the personal assets of a partner by a personal creditor may have as an object also the shares of a simple partnership, the effect being the loss, ope legis, of the very quality of the member, according to art. 1925 NCC. The text of the law is objectionable both de jure and the facto, since the law does not show which are the legal consequences associated.

By contract or by decision of the general meeting of shareholders, they may establish different criteria for participation in profits and losses, including different percentages of participation in these, leaving as a condition of legality in determination the criteria of reasonability (art. 1902 al. 3 NCC).

Of course, the question arises is who can claim the unreasonable difference in assessing the different participation in profits and losses, since the company does not constitute a legal entity (such as the decision would have erga omnes effects) and as the quotas are fixed by the agreement of the members – i.e. who would have standing to bring an potential action in the annulment of such clause (as far as the interpretation of the law, this occurs to be the penalty applicable to the infringements of the criteria of reasonableness).

The simple partnership, although it is not a legal entity, enters into relationships with third parties through its representatives, being a quasi-legal subject; lack of legal personality (strictly speaking) is balanced by its ability to stand on their own in court, under its own name and also by the fact that it my be liable to third parties with the joint assets of the members.

The law does not require the appointment of an administrator, recognizing the right of administration and representation of the simple partnership on any member, as they usually have a mandate to manage each one to another for the benefit of the society (art. 1913 al. 2 NCC).

Here, therefore, the recognition of a self-interest of the simple partnership, which is distinct from the interest of members, which, within certain limits, outlines an early form of free will, which does not express, stricto sensu, the specific will of the incorporated.

The subject of the interpretation is the exercise of the right of administration and representation of the members, in which case the law does not expressly provide the presentation by the third party of the empowerment and its limits, inducing the idea of the mandate without representation governed by the provisions of art. 2039 et seq. NCC.


Thus, the partner acts versus third proprio nomine, and the liability being of the simple partenship in principal and of the member, in particular. In this situation occurs the personal liability of such member for any damage caused to the simple partneship by the concluded operation. In respect to the third party creditor, he will enforce the members common assets and, in the alternative, the shareholder’s own goods of the contracting member, in the proportion to its contribution to the social heritage, according to art. 1920 NCC (in our opinion, the meaning is the limitation of liability to capital contribution).

The Romanian legislation contains provisions correlative with the laws of other countries in terms of the loss of the membership and the effects onto the simple partnership. According to the art. 1925 NCC, the loss of it occurs by cession of the shares, by enforcement, by the loss of the legal body or by the loss of legal capacity, by withdrawing or exclusion.

The classical doctrine revealed that the joint venture is simply a contract whereby one party (commercial or not, in dualistic) gives the other party a share in the profits and losses arising from the conduct of an activity (in the dualistic, mandatory commercial). This form is also revealed by French law, similarly, as societes en participation, without legal personality, but personality tax (Chapter III, Art. 1871-1873 French C.civ.)

In the German law, is common a similar form of joint venture, Stille Gesellschaft (German Commercial Code, art. 230-7), which is defined as the contract by which a person acquires an interest in a commercial transaction carried out by another persoan, as a contribution of capital, goods belonging to the person providing the share.

This form remains occult, as in Romanian law, not subject to any registration formalities. What distinguishes subbstantially the german regulation is the possibility to stipulate an exemption to pariticipate in loss of a partner, not being possible the exemption from benefit-sharing – such a clause is considered, in Romanian law, being leonine.

The New Civil code restores a natural legal order of the termination of the unincorporated bussiness form of the joint venture, being assimilated to the dissolution followed by liquidation (in the literal interpretation of art. 1954 NCC).

In the national regulations, unincorporated bussines take various forms, but built on the same contractual foundations obvious of which is distinguished as form partnership's legislative option. Traditionally, the main feature of the partnership's (and fundamentally distinguishes this form of conducting business) is the nature of relations between its members. This reflects as strongest the contractual nature, consisting of a mix of goods and skills of members acting for a common purpose.

The economic benefits of the regulations are that their taxation occurs only once to each of the members, while the companies with legal personality requires an initial charge of profit and dividend distribution. A long time, no recording of these forms has had a tax advantage can not be neglected, especially in Germany since 1990, however, the Council Directive of 8 November 1990 amending Directive 78/660/EEC on the annual accounts and Directive 83/349/EEC on


consolidated accounts as regards their scope encompassed within advertising and partnership tax liabilities sites.

Thus, both for Germany and for Great Britain and the U.S., the partnership there are two forms: that of the partnership's limited and unlimited liability partnership's. In the Romanian law, the simple partnership is characterized by limited liability of shareholders to the obligations contracted, and subsidiary liability under art. 1920 NCC; in terms of the joint venture, subsists the personal liability under art. 1953 al. 1 NCC, which is a main unlimited responsability.

Conclusions: Besides traditional forms of the legal personality incorporations, special legislation regulates the Societas Europea, the European Cooperative Company or the Cooperative company, these two forms justifying the confluence of the contractual and institutional theories. Irrespective of the doctrinal classification, all the incorporated or unincorporated business forms have a contractual nature which dilutes the concept of the legal personality, so a breakdown of the business forms according to such criteria seems to appea as obsolete.

Bibliography Cărpenaru, S. D., Tratat de drept comercial român, Editura Universul Juridic,

Bucureşti, 2012 Lefter C., Societatea cu răspundere limitată în dreptul comparat, Ed. Didactică şi

pedagogică, RA, Bucureşti, 1993 Militaru I.N., Reglementări de drept uniform şi de drept comunitar privind

societăţile comerciale, Revista Română de Statistică nr. 9/2009, p. 51-55 Militaru I. N., Dreptul afacerilor. Introducere în dreptul afacerilor. Raportul juridic

de afaceri. Contractul, Universul Juridic Publishing House, 2013


The Inflation (Consumer Prices) EvolutionThe Inflation (Consumer Prices) EvolutionThe Inflation (Consumer Prices) EvolutionThe Inflation (Consumer Prices) Evolution


“Artifex” University of Bucharest Prof. Constantin MITRUŢ PhD

Academy of Economic Studies, Bucharest Assoc. prof. Alexandru MANOLE PhD

“Artifex” University of Bucharest Adina Mihaela DINU PhD Student

Academy of Economic Studies, Bucharest

Abstract An important element to consider when evaluating the economic evolution

of a country over a period of time consists of the way the consumer prices developed, both on an overall basis and by groups of goods and services, as well as of the dual comparison with the planned, forecasted target and the outcomes of the previous year.

Key words: inflation, income, price, product, service In the context of the steady concern as regards the adjustment of the

system of the income collecting, based on the unique quota of taxation, as well as bringing the Fiscal Code to the level of correlative terms, in line with the actual situation of the country, in 2010-2013 there are a number of events occurring and worth to be outlined.

First of all, the discussions between the Romanian Government and the I.M.F., have been finalized and the installments out of the granted credit were allocated. Practically, all of them, over 20 billion euro, were integrally transferred. There have been a number of elements which the I.M.F., intransigent and willing to see a market economy in action, did not agree with. Thus, for instance, there have been many concerns in respect of how to convince the I.M.F. to agree with a higher deficit of GDP or to keep on accepting the situation of having certain subsidies at the level of the national economy. The second essential phenomenon of the years 2010-2013 is given by the divergent evolution between the consumer price index, as an overall and in structure, in comparison with the evolution and appreciation of the national currency, the new leu, against the two currencies which are forming the foreign exchange basket, respectively Euro and USD.

Since a couple of years, as a consequence of the policy run by the National Bank of Romania, which undertook the responsibility of targeting and fixing the inflation at certain levels, the foreign exchange evolution of the national currency followed a trajectory which, from a economic and financial point of view, proved


to be a positive one but, meantime, generated a negative effect on the Romanian exports, or for those working abroad and those living in the country, being meantime non-conform with the actual economical situation of the country1.

On this background, in 2010-2012 we are facing periods showing a slight appreciation of the national currency, in contrast with the increase recorded by the inflation rate, on the overall basis and in its structure by goods and services. In 2012 it was recorded, on the background of political instability, the most serious deprecation of the national currency.

Without economic support, this negative trend will continue2. The theory teaches us that an important factor as regards the evaluation of the way the inflation is developing consists of the monetary mass in circulation.

There are two contradictory evolutions which we could identify from this point of view. On the one side, the increase of the consumption propensity of the population and, hence, the imperative requirement for steps meant to stop this tendency. Thus, at a first stage, the interests for the population deposits have been reduced after which, in order to improve the attractiveness of saving, they have been increased again aiming a sole purpose, respectively tempering the population propensity to consumption. The austerity steps being taken have stopped, in a natural way, the population consumption with immediate effect on the economic growth and deterioration of the standard of life. The revival measures of salaries and pensions, but also other social attempts, did not succeeded to improve, upon expectations, the incomes and subsequently the quality of life.

On the other hand, in its concern as to targeting the inflation, the National Bank aimed to implement and control, permanently, the evolution of the foreign exchange rate, consequently the position of the national currency against the two foreign currencies – euro and dollar.

Price increase in July 2013 – percents –

Increase of consumption prices in July 2012, against:

Average increase of consumption prices during

the period Indicators

June 2013 December 2012 1.I- 31.VII. 2012

1.I- 31.VII. 2013

Total -0,3 1,7 0,3 0,2

Foodstuff *) -1,6 -0,1 0,3 0,3

Non-foodstuff 0,5 3,2 0,3 0,5

Services 0,3 1,9 0,4 0,3

*) Including drinks. Data source: National Institute of Statistics, Statistical Bulletin no. 7/2013

Another typical element is given by the steady concern of the Executive

and, mainly, of the National Bank, to observe the goals declared as regards the inflation targeting. Despite all steps being taken targeting slipped out of an actual

1 Anghel M.G. şi alţii (2008). „Unele modele de prezentare a circuitului de ansamblu al economiei naţionale”, Revista Română de Statistică – Supliment „România şi economia europeană” 2 Anghel M.G. (2013). „Modele de gestiune şi analiză a portofoliilor”, Editura Economică, Bucureşti


control, lining up outside the forecasts, from 2010 until June 2012. Among the non-foodstuffs recording a high average increase there are the natural gas, the thermo energy, tobacco and cigarettes, electric energy, water – sewage – sanitation, hygiene and cosmetics, postal services, inter-urban transport. Another possible analysis on the increase of the consumer price index might take into consideration the influences of the administrated prices which recorded an average increase of over 2,9%3.

Consumption price indexes, 2001-2013 - December previous year= 100 -

130,3

106,6107,9

104,7

109

104,2105,33104,5

104,9

117,8

114,1

108,6

109,3

103

108

113

118

123

128

133

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

*

- % -

*) Provisional data.

Data source: National Institute of Statistics, Statistical Bulletin no. 7/2013 A comparative survey on the annual average inflation in the EU member

countries during the period 2010-2013 shows that, along with Hungary, Romania was recording a high level of the inflation annual average level. If proceeding to a careful analysis, we should note also that there are only three-four groups of goods which recorded a particular increase and generated the impossibility of hitting the forecasted target.

Thus, for instance, the consumer taxes (taxes on vice), respectively the excises on alcohol and tobacco products, as well as luxury goods or products such as natural gas or thermo-energy, have been extremely high, having a major influence on the rhythm of increase of the consumer price index (inflation).

3 Anghel M.G. (coautor) (2010). „Utilizarea seriilor cronologice în analiza rentabilităţii activelor financiare”, Revista Română de Statistică - Supliment


The annual average rate of inflation at the EU level,

in 2012* measured on the harmonized indices basis (IAPC)

1,4

4,2

-3,0

-2,0

-1,0

0,0

1,0

2,0

3,0

4,0

5,0

6,0

Irela

ndLa

tvia

Portugal

Eston

ia

Slova

kia

Czech

Rep

ublic

Hollan

d

Germany

Spain

Lituan

ia

Belgium

Malt

a

Franc

eIta

ly

Austria

Cypru

s

Finlan

d

EU-27

Denmark

Slove

nia

Bulgaria

Luxe

mbo

urg

Sweden

Great B

ritain

Greece

Poland

Roman

ia

Hunga

ry

%<=2 >2 - <=4 >4

*) Provisional data, Data source Eurostat, calculations INS

At this point, there are a lot of other comments to be done but for a synthetic picture of the consumer price index we are holding present analysis only.

Bibliography

Anghel M.G. (2013). Modele de gestiune şi analiză a portofoliilor, Editura Economică, Bucureşti

Anghel M.G. (coautor) (2010). Utilizarea seriilor cronologice în analiza rentabilităţii activelor financiare, Revista Română de Statistică – Supliment

Anghel M.G. şi alţii (2008). Unele modele de prezentare a circuitului de ansamblu al economiei naţionale, Revista Română de Statistică – Supliment „România şi economia europeană”

Anghelache, C-tin (2009). România 2009. Starea economică în criză profundă, Editura Economică, Bucureşti

Anghelache, C-tin (2010). România 2010. Starea economică sub impactul crizei, Editura Economică, Bucureşti

Anghelache, C-tin (2011). România 2011. Starea economică în malaxorul crizeii, Editura Economică, Bucureşti

Anghelache, C-tin (2012). România 2012. Starea economică în criză perpetuă, Editura Economică, Bucureşti

Anghelache, C-tin (2008). Tratat de statistică teoretică şi economică, Editura Economică, Bucureşti

*** Buletinul Statistic nr. 1-12/2007, 1-12/2008, 1-12/2009, 1-12/2010, 1-12/2011, 1-12/2012 şi 1-7/2013 editat de Institutul Naţional de Statistică

*** Buletin Statistic de Preţuri nr. 1-12/2007 1-12/2008, 1-12/2009 1-12/2010, 1-12/2011, 1-12/2012 şi 1-7/2013 editat de Institutul Naţional de Statistică


The Structure of the Capital Market inThe Structure of the Capital Market inThe Structure of the Capital Market inThe Structure of the Capital Market in RomaniaRomaniaRomaniaRomania

Lecturer M ădălina - Gabriela ANGHEL PhD The Bucharest University of Economic Studies/

„Artifex” University of Bucharest [email protected]

Abstract Under the circumstances of the present stage of development of the

economy, having as specific feature the steady development of the activities carried on by the economic agents both on the national and international plan, the capital has an essential role as to achieving a competitive position as good as possible. In this context, the activity on the capital market – as intermediary of the exchange between the holders and those in need of capital at a certain moment – became extremely important.

Key words: the capital market, assets, Bucureşti Stock Exchange, Sibiu Stock Exchange, Rasdaq

• Introduction „The capital market represent the assemble of the relations and

mechanisms through which the available dispersed capitals of the economy are directed towards any public and private entities requiring funds. ”.

The capital market is representing the meeting point of the capital demand and offer. The capital demand arises from economic entities (commercial public and private companies, financial, banking and insurances institutions, other categories of commercial agents etc.) and public authorities. These ones are willing to cover a necessity of financial resources, generated by the financing of specific economic activities or for covering certain situations of budgetary deficit and they are determined under the circumstances to issue and to put on sale, through the specific mechanisms of the capital market, a series of financial instruments. The capital offer results out of the saving achieved by the capital holders (commercial companies, insurance companies, banking and financial investment companies, saving houses, individuals etc.). They are willing to invest on the capital market their temporary free availabilities and are looking for identifying an as good as possible placement.

Generally speaking, on the capital market the connection between the demand and the offer is achieved through specialized companies (companies for financial investments services), as entities playing the role of intermediaries between the issuers of financial instruments and the holders of financial resource.

As for our country, it is considered that the capital market represents, along with the monetary and insurances markets, a component of the financial


market. The first forms of organization of the capital market in our country are dated back to the middle of the XIX century (the establishment of the Bucureşti Stock Exchange), but they have been afterwards abandoned after the year 1948. In its modern form the Romanian capital market has been re-organized after the year 1990, having as main point of reference the re-organization of the Bucureşti Stock Exchange, in the year 1995.

• Financial instruments dealt on the capital market in Romania Through the capital market of our country one can deal with financial

instruments such as: capital equities (shares), credit assets (bonds) or derivative financial instruments (futures contracts having as support the exchange indices, equities issued by economic entities, the exchange rate).

1. Financial instruments dealt on the Bucureşti Stock Exchange market

1.1. Transactions on capital equities In order to have an economic entity shares listed on the stock exchange

market possible the following basic conditions must be cumulatively observed: • The economic agent must be organized as shareholding company • The considered entity has to hold the status of open company (the sale of a

certain percentage of its shares must be achieved) The shares being quoted presently at the Bucureşti Stock Exchange are divided into four large categories, taking into account a series of specific indicators.

According to the data published by the Bucureşti Stock Exchange, the situation of the shares quoted on the regulated market in November 2013 is the following:

Table nr. 1 – The analysis of the shares quoted on the regulated market in November 2013

Category Number of shares Category I 28

Category II 52

Category III 1

Category International 1 (Erste Group Bank AG)

1.2. Transactions on credit assets The corporative bonds issued by the economic entities from our country

can be framed on the BVB regulated market, in the following three categories: • category 1 → including the bonds being distributed to a number of

minimum 1,000 persons, counting for a minimum total value of 200,000 Euro;

• category 2 → including those obligator loans with a minimum value of 200,000 Euro and which have been distributed to at least 100 persons;

• Category 3 → including the obligator loans over 200,000 Euro, without additional specifications as regards the number of persons to which the credit assets have been distributed. During the month of November 2013, on the capital market from pur

country the following types of bonds are admitted for transactions:


Table nr. 2 – The analysis of the bonds transacted on the regulated

market in November month 2013 Categorye Number of bonds

Corporative bonds issued by entities from Romania

3

Category I 0

Category II 0

Category III 3 (Bonds GDF Suez Energy Romania

SA, RAIFFEISEN BANK Bonds, UNICREDIT ŢIRIAC BANK S.A.)

Category International

2 (European Bank for Reconstruction and Development, European

Investment Bank) Meantime, on the credit assets market in the frame of Bucureşti Stock

Exchange, a total number of 37 municipality bonds as well as 28 assets from the category of the state bonds are also accepted for transactions.

1.3. The Collective Placement Organisms According to the legislation in force, the category of collective placement

organisms includes the investment open funds and the financial investment companies which are complying, cumulatively, with the following conditions:

• They have as a unique purpose the carrying out of collective investments, by placing the money resources into liquid financial instruments and operating on the principle of the risk diversification and prudential management;

• „the participation assets are, upon the holders’ request, continuously re-purchasable out of the assets of the respective organisms”. Presently, at the Bucureşti Stock Exchange there is a total number of 3

fund units admitted for transactions. 1.4. The transactions on structured products The structured products are those instruments which present a financial

liability of an issuer (“debt” ) including a derivative component of the nature to amend the risk profile and the yield of the respective instrument. These financial instruments are grounded on a support asset, which can be another financial instrument, stock exchange or foreign exchange index, interest rate, commodity, panels or combinations built up of these instruments or values, as well as any other asset, indicator or measurement unit.

In July 2010, at the Bucureşti Stock Exchange the first structured products have been listed: index certificates and turbo certificates issued by the Austrian group Erste Bank, with support asset the gold and the oil. Since then up to now, Erste Bank along with another Austrian group – Raiffeisen, have brought in other


such certificates which they have listed on the stock exchange market allowing thus the local investors to invest in foreign stock exchange indices (DAX- Germany, S&P500-USA), as well as in precious metals such as gold and silver. Nowadays on the Bucureşti Stock Exchange market there are 10 Index certificates, 80 Turbo certificates and 3 Bonus Certificates admitted for transactions.

1.5. Transactions on derivative financial instruments By the end of 2007, the Bucureşti Stock Exchange received from the part

of the Assets National Commission the authorization required for transacting on this market of derivative financial instruments. In November 2013, the Bucureşti Stock Exchange admitted for transactions a total number of 20 futures contracts. Table nr. 3 – The analysis of the futures contracts admitted for transactions at

BVB in November 2013 Support asset Number of futures contracts

Stock exchange indices 2 contracts having as support

the indices BET and BET-FI)

Equities issued by certain economic entities

12 contracts

Foreign exchange rate

2 contracts having as support the foreign exchange rates euro

– leu and American dollar – leu

Commodities 4

Total 20

2. Financial instruments dealt on the electronic market RASDAQ In the frame of the electronic market RASDAQ (component of the

Bucureşti Stock Exchange) a total number of 1,001 financial instruments are presently transacted, out of the category spot assets (equities), which are divided by three categories as follows:

Table nr. 4 – The analysis of the equities quoted on the electronic market

RASDAQ in November 2013 Category Number of equities Category I-R 4

Category II-R 7

Category III-R 990

Total 1.001

3. Financial instruments transacted through the Sibiu Stock Exchange Sibiu Stock Exchange (SIBEX) has been established in 1994 and

authorized as a stock exchange company in 2003. This is the market where the first derivative financial instruments have been issued, namely the contracts at term of


futures type (1997) and the options contracts (1998). During the year 2004, the market of the derivative financial instruments in the frame of SIBEX has been officially authorized by the Decision of the Assets National Commission. Presently, there are 33 futures contracts being transacted through Sibiu Stock Exchange, which can be classified as follows:

Table nr. 5 – Support assets admitted by Sibiu Stock Exchange

Equities issued by economic entities (19)

DEBRD, DEBRK, DERRC, DESIF1, DESIF2, DESIF3, DESIF4, DESIF5, DESNP, DETLV, DEEBS, DESBX, DEBVB, DEFPR, DEAPL, DEGGL, DEMCD, DEFCB, DEVSA

Indices (2) DEDJIA_RON, DEDJIA_USD Foreign currencies (9) USD/RON, EUR/RON, EUR/USD_RON,

EUR/CHF_RON, USD/CHF_RON, GBP/USD_RON, EUR/GBP_RON, EUR/JPY_RON, USD/JPY_RON

Commodities (3) SIBGOLD_RON, DEOIL_LSC, SIBGOLD Meantime, in the frame of Sibiu Stock Exchange there are 28 options

contracts in transactions, having as support assets the futures contracts transacted on this market. According to the SIBEX regulations, the maturity term for the options contracts is quarterly, respectively the months March, June, September and December.

Conclusions The capital market from our country did not reached yet an optimum level

of ripeness, as it is still, quite strongly, the subject of the external factors. However, to note that there are substantial efforts made in order to secure the accommodation of the Romanian capital market to the requirements of the modern economy as well as to make it compatible with the similar structures of the European Union countries.

Bibliography

Anghel, M.G. (2013). Modele de gestiune şi analiză a portofoliilor, Editura Economică, Bucureşti

Anghelache, G. (2009). Piaţa de capital în context european, Editura Economică, Bucureşti

Anghelache, G.V. (2008). Perspectivele pieţei Organismelor de Plasament Colectiv, Revista Economie teoretică şi aplicată nr.3

Hurduzeu, G. (2009). Pieţe şi burse internaţionale de valori, Editura Prouniversitaria, Bucureşti

www.bvb.ro www.sibex.ro


Legal Personality of Single Member Limited Legal Personality of Single Member Limited Legal Personality of Single Member Limited Legal Personality of Single Member Limited Liability CompanyLiability CompanyLiability CompanyLiability Company

Graduate Ass. Eugenia-Gabriela LEUCIUC Phd Student

“ Ştefan cel Mare” University of Suceava

Abstract

The single member limited liability company, invested with legal personality, manifests as a subject of law on the grounds of its own will, independently from the members forming it, assuming its own liabilities which it grants with its patrimony, in view of accomplishing its function of achieving the purpose established by the memorandum of association. Any legal person acquires legal personality if it accomplishes cumulatively the conditions imposed by the law for the incorporation and its valid existence, that is: it has a self-standing organization, its own patrimony, affected to the accomplishment of the purpose for which it was incorporated.

Key words: legal personality, patrimony, social capital, benefits, self-standing organization Introductive considerations The limited liability company, as any other form of company regulated by the Law no.31/1990, acquires legal personality since the moment of its incorporation with the observance of the conditions established by the law1, being a new legal person with proper will2. Having a subjectivity of its own, the single member limited liability company manifest on their own behalf in what legal relationships are concerned, being owner of rights and own liabilities, distinct of those of the single shareholder. The limited liability regime is conferred by means of the provisions of the Law no.31/1990 and completed under the aspect of the regulation of the legal personality with the provisions of the new civil code3.

The single member limited liability company acquires legal personality if its cumulatively fulfill the conditions demanded by the law for the constitution and its authentic existence, such as: it has a self-standing organization, its own patrimony, affected to the accomplishment of the purpose for which it was incorporated4. As a consequence, the absence of any of the three premises of the legal entity's existence leads to the disappearance of this subject of law.

1 According to art.1 para. (2) corroborated with art.41, para. (1) of the Cl. 2 D.D. Gerota, Curs de societăţi comerciale, Fundaţia culturală „Regele Mihai I” Publishing House, Bucharest, 1928 p.19. 3 The legal person is regulated in Book I, Title IV, art.187-257 Civ.C. 4 Art.25, para. (3) Civ.C.


The effects of acquiring the legal entity by the single member limited

liability company The single member limited liability company, invested with legal

personality, manifests as a subject of law on the grounds of its own self-standing will, which differs from the will of the single member. Being a legal entity with limited liability, it does not have a physical or organic existence, and its will is neither natural nor intrinsic. The company's will forms within the self-standing organization, of its intern and functional structure which encompasses its leading, management and control authorities. The internal organization is established by means of the memorandum of association, in which are also mentioned the way of functioning and of relating with the third parties, the single member included.

The defining element of the legal entity is constituted by its own patrimony, distinct from the patrimony of its founder, consisting of masses of rights, goods and debts affected to a well determined purpose and reflected in its memorandum of association.

Initially, the social patrimony5 is constituted by affecting certain masses of goods by the single shareholder at the incorporation of the limited liability company, in other words, the social capital is formed6. Indeed, in the moment of the company's incorporation, the social capital provided in the memorandum of association has the same value as the company's patrimony. Ulteriourly, the company's patrimony will encompass all the rights and liabilities of economic value pertaining to the limited liability company, as well as the goods they refer to7; consequently, by conducting an economic activity, the patrimony enlarges if the company obtains profit8, or diminishes, if the company registers losses.

According to general principles, the company's patrimony comprises the assets and liabilities, outlined in the annual balance sheet9, with the observance of the accountability legal provisions10. The assets (also known as social fund) comprises the patrimonial rights – real and of claim – regarding the goods considered as contribution to the company and those acquired all along the company's activity. The liabilities refer to the company's obligations, no matter their nature, also called social obligations11.

5 The patrimony of the company is also known as the social patrimony, in order to emphasize its autonomous particularity; see St.D.Cărpenaru, Tratat de drept comercial român, VIIIth edition revised and expanded, Universul Juridic Publishing House, Bucharest, 2009, p.195 6 C.Lefter, Societatea cu răspundere limitată în dreptul comparat, Didactic and Pedagogic Publishing House, RA, Bucharest, 1993 p.71 7 C.Lefter, op.cit., p.71. 8 Term introduced by the provisions of the Law no. 161/2003 replacing the notion of 'benefit'. 9 Term introduced by the provisions of the Law no. 161/2003. 10 St.D.Cărpenaru, op.cit., p.195. 11 C.Stoica, S.Cristea, Drept societar pentru învăţământ economic, University Publishing House, Bucharest, 2008, p.112; S.L.Cristea, Dreptul afacerilor, University Publishing House, Bucharest, 2012 p.135.


Although the role of the social capital is that of constituting the general forfeits of the company's creditors, in fact the veritable guaranty is represented by its patrimonial asset; social creditors shall follow the goods in the company's patrimony in the case in which the company cannot fulfill its obligations.

The conclusion also establishes on the grounds of the provisions of the Law no. 31/1990 republished, which states that social obligations are granted once with the social patrimony. In consequence, personal creditors of the single shareholder will not be able to follow the goods brought as contribution in the company, but only the part of the benefits proper to the debtor, according the balance sheet, or only the part that would be considered appropriate as a consequence of the dissolution, envisaging the fact that social obligations are distinct from the personal obligations of the single partner12. Even so, personal creditors of the shareholder have at their disposal other means to defend either from their debtor fraud, or the impossibility of exercising its debt. Yet, they can sequester the shares proper to the shareholder by liquidation, since they are elements of his/her patrimony which do not belong to the company's patrimony.

As a consequence of accomplishing the obligation to contribute with an immovable good, the shareholder looses his/her right of property over it and acquires a right of cashing the dividends, a right of debt specific to the relationships between the company and its single member13.

As well, one of the effects of the company's patrimony autonomy of the limited liability company as against it single member consists in the fact that the company's liabilities against the third parties cannot be compensated by the third parties' liabilities against the shareholder, since the company is a legal subject distinct of the single shareholder14. Company's creditors will trigger the concursual procedure against the limited liability company in insolvency, leaving aside the single member's patrimony.

On the other side, the absence or disappearance of the limited liability company's patrimony, by means of a confusion with the single member patrimony, attracts after it the disappearance of the company as legal subject, or, as the doctrine supports15, we are in the presence of a legal personality false or unreal, circumstance which can be appealed either by action or exception.

Lastly, it is unconceivable the incorporation of a legal person without a purpose, or having a licit, immoral purpose, in disagreement with the general interest. This circumstance constitutes a cause of nullity of the company, according to the provisions of the art.196 of the Civ.c.

12 According to art.66 Cl; see also C. Lefter, op. cit., p.71. 13 I.L.Georgescu, Drept comercial român, vol. II – Societăţile comerciale, Socec&Co. Publishing House, SAR, Bucharest, 1948 p.116. 14 St.D.Cărpenaru, op.cit., p.196. 15 Gh.Piperea, Drept comercial. Întreprinderea în reglementarea NCC,.CH Beck Publishing House, Bucharest, 2012, p.88.


By definition, the limited liability company has a lucrative purpose, the single shareholder aiming at obtaining benefits as a consequence of its incorporation and by exploiting an economic enterprise16.

The followed purpose represents the criterion of distinction between companies and shareholders, respectively foundations, that is: the company is incorporated in order to accomplish and share benefits, the partnership follows an ideal, moral, cultural, sports purpose etc. Since the economic activity could register losses instead of benefits, and due to the social relationship which binds them, shareholders must participate to losses too.

In general, by profit it is understood the gain which can be evaluated in money17. For a long time, it has been considered in doctrine that the benefit represents a material gain augmenting the shareholders' patrimony. Consequently, the advantages were not recognized as benefit, even if they could be evaluated in money, which did not contribute to the increase of the shareholders' wealth, but would allow only making economy or reducing the expenses18.

In the modern times, this conception has evolves, thus registering an enlargement trend of the notion of benefit: were also considered benefit the services and the goods purchased by the company under much more advantageous circumstances than those when they could be obtained individually. In addition, the companies of mutual insurance were recognized as commercial corporations since the benefit resides from the avoidance of certain expenses. After this trend, by means of a law from 1978, in the French law there was consecrated the conception according to which a company may have as purpose not only the accomplishment and the distribution of benefits, but also the achievement of an economy. Such conception is found consecrated also by the provisions of the art. 1881, para.(1) of the New Civil Code. The law forbids a shareholder to perceive all the gains accomplished and to be acquitted for participation to losses (leonine clause); hence, each shareholder participate to the company's benefits and losses proportionally with their quota of participation to the social capital (the proportionality principle).

The limited liability company's purpose must accomplish certain conditions, such as: be licit, moral and in agreement with the general interest of the company. On the contrary, the existence of the company is endangered, any interest individual being able to introduce an action towards the nullity of the legal person, with the consequence of its dissolution. Additionally, the purpose of the company must be expressly provided by the memorandum of association, by mentioning the purpose of the company, according to the law.

Generically speaking, the legal entity confers the limited liability company the possibility to manifest itself in pursuance to its legal capacity, its aptitude recognized by the law of having rights and liabilities.

16 The quota of participation from the benefits is paid to each of the shareholders and is known under the term of dividend. 17 For more details, see S. Angheni, M.Volonciu, C.Stoica, Drept comercial, CH Beck Publishing House, Bucharest, 2008 pp.92 – 93. 18 It is the case presented by mutual insurances.


In what concerns the content of the using capacity of the limited liability company, this is a generic one consisting in the possibility to have any right or liability, except for those which, by their nature of according to the law, may belong only to natural persons19. Such content completes organically with the content of each limited liability company apart, stipulated in the articles of incorporation and circumscribed to the domain of the economic activity20.

Obviously, this circumstantiation cannot equate with the principle of specialty of the legal person's capacity of use, consecrated by the art.34 of the Decree no.31/1954, presently abrogated, because of at least two reasons: on one side, any restraint of the person's capacity of use must be expressly provided by the law, and on the other side the law should sanction any operation exceeding the framework established by the object of activity with the absolute nullity, sanction absent from the new regulation. Consequently, according to the generic content of the capacity of use established by the New Civil Code, the limited liability company has the right to detain in property a series of goods, to participate to the legal circuit as a professional, by exploiting an economic enterprise.

Usually, the capacity of use of the limited liability company is acquired since the date of the registration at the Trade Register, according to the art.41 para.(1) Cl corroborated with the art.205 para.(1) Civ.C. The law acknowledges the limited liability company an anticipated capacity (of use, restrained) since the date of the signing of the memorandum of association, this being able to achieve rights and assume liabilities in order to validate its incorporation21. Even so, in the purpose of protecting the third parties, the persons who claimed in justice in the company's name in the process of incorporation are kept unrestrictedly and solidarily liable for the legal instruments drafted and signed by breaching the provisions regarding its restraint capacity of use, except for the case in which the newly incorporated company appropriated them, after acquiring legal entity. The instruments belong to the legal person since the date of their signing and produce complete effects22. It must not be omitted the company's liability to obtain the necessary authorizations for the development of the activities for which the law imposes the competent authorities' authorization23.

The limited liability company, as any other legal person, exercises its rights and accomplishes its obligations by means of its administration authorities, starting with the date of their designation, according to the art.209, para.(1) Civ.C. To continue with, the New Civil Code stipulates that the legal instruments drafted by the administration organs of the legal person, within the limits of their conferred powers, are the legal instruments of the legal person itself. Consequently as against the third parties, the limited liability company is engaged by means of its organs'

19 Art.206, para.(1) Civ.C. 20 See O.Căpăţînă, Societăţile comerciale, IInd edition, Lumina Lex Publishing House, Bucharest, 1996 p.279. 21 Art.205, para.(3) Civ.C. See O.Căpăţînă, op.cit., p.216, St.D.Cărpenaru, op.cit., p.176. 22 Art.205, para.(4) Civ.C. 23 Art.207, para.(1) Civ.C.


acts, even if these acts overpass the power of representation conferred by the memorandum of association, except for the situation in which it is proven that the third parties has conscience about the nonobservance of the mandate's limits with which they were invested. Nevertheless, it cannot constitute solid evidence the simple disclosure of the memorandum of association in the Official Journal.

Conclusions The autonomy of the limited liability company, as subject of law, manifests

on multiple level and consists of its own self-standing will. As provided in the doctrine, obviously, it is not a natural will but a will resulting according to the law from the prerogative conferred by the legal capacity of the company24. The social will manifests concretely, within the legal relationships, by means of the representatives of the company, authorized to sign legal acts, on behalf of the limited liability company. The limited liability company, on the grounds of its subjectivity, immediately participated to the social life, establishing legal relationships with the third parties, by exercising rights and assuming obligations.

Consequently, the absence of a self-sanding organization practically constitutes dependence between the company and its members, not being able to really manifest its own will in relation with the thirds nor in the relation with the single shareholder. A structure without own organization cannot be anything but a technical means of accomplishment of the owner's right, consequently, either by means of action or exception, it can be appealed the absence of its legal subjectivity.

Bibliography

Angheni, S., Volonciu, M., Stoica, C., Drept comercial, CH Beck Publishing House, Bucharest, 2008

Căpăţînă, O., Societăţile comerciale, ed.a-II-a, Lumina Lex Publishing House, Bucharest, 1996

Cărpenaru, S. D., Tratat de drept comercial român, VIIIth edition revised and expanded, Universul Juridic Publishing House, Bucharest, 2009

Cristea, S.-L., Dreptul afacerilor, University Publishing House, Bucharest, 2012 Georgescu, I.L., Drept comercial român, vol. II – Societăţile comerciale,

Socec&Co. Publishing House, SAR, Bucharest, 1948 Gerota, D.D., Curs de societăţi comerciale, Fundaţia culturală „Regele Mihai I”

Publishing House, Bucharest, 1928 Lefter, C., Societatea cu răspundere limitată în dreptul comparat, Didactic and

Pedagogic Publishing House, RA, Bucharest, 1993 Piperea, Gh. Drept comercial. Întreprinderea în reglementarea NCC, CH Beck

Publishing House, Bucharest, 2012. Stoica, C., Cristea, S., Drept societar pentru învăţământ economic, University

Publishing House, Bucharest, 2008

24 C.Lefter, op.cit., p.72.


The Industrial Production IndicesThe Industrial Production IndicesThe Industrial Production IndicesThe Industrial Production Indices


“Artifex” University of Bucharest Alexandru URSACHE PhD Student

Academy of Economic Studies, Bucharest Georgeta LIXANDRU (BARDAȘU) PhD Student

Academy of Economic Studies, Bucharest

Abstract This paper analyzes the evolution of the industrial production indices. One

of the most valuable insights is the fact that in 2010-2013 the industrial production indices are reflecting a slight increase as comparatively to the similar periods of the previous year, being largely influenced by the restructuring of the extractive sector, as well as by the decrease recorded at the level of the lohn production, which generated a slower rhythm of development at the level of the manufacturing industry.

Key words: manufacturing, lohn, energy, branch, durable goods The rhythms of increase in the industrial field diminished and were

different so that as against the increase recorded by the manufacturing industry, the decreases recorded by the extractive industry and the electric and thermo-energy, gas and water sector should be underlined; however, there have been increases for certain categories, such as the industry of durable goods, recording an increase of the industry of capital goods with, the industry of current usage goods with increase.

The fact that these other activities or branches had small weights within the total industrial activity from our country is to be noted. However, there are several other branches which recorded diminished indices, such as: textile production, clothes, shoes and leather articles production, rubber and plastics products, production of building materials and other non-metallic minerals and production of equipments and machinery.

The first three categories, i.e. textile production, clothes, shoes and leather articles carried out their activity in the form of lohn production and recorded a tempering rhythm which might generate effects during the periods to come as well.

On an overall basis, the industry kept on remaining on a positive position, meaning that it recorded a slight increase of the contribution to the GDP achievement in 2011 and 20121.

The privatization process could lead within the forthcoming periods to new decreases, both for the rhythm and the volume of the production of certain 1 Anghel M.G. şi alţii (2012). Evoluţia produsului intern brut şi a investiţiilor străine directe în ultimul deceniu, Revista Română de Statistică – Supliment


branches, but also of the total contribution which the industry might bring to the GDP achievement, by the obtained gross added value.

The labor productivity by an employee in the industrial field followed a slow increase trend over the period 2010-2013.

In the first seven months of 2013, the total of the resources of prime energy amounted 17,405.1 thousand tons equivalent crude oil (out of which from the domestic production 12,297.6 thousand tons equivalent crude oil) decreasing as against the previous year as a result of a diminished production and import.

The evolution of the industrial production represents the sectors which have positively marked the evolution process during the period 2009-2013.

This characteristic is specific to the manufacturing industry which, by the over-helming weight hold in the total industry production generated the same trajectory to the entire industrial production. This is significant, despite the fact that the production of electric and thermo energy, is following a practically opposite trend while the trend of the extractive industry is recording a flat evolution.

The data show a fluctuating evolution of the production volume, compared to previous periods. The decrease is stronger in the extractive industry as well, the manufacturing industry and electric and thermo energy, recording decreases.

The decreases have been stronger at the level of the large industrial groups, structured upon the goods destination. Here we have to mention the marked decrease of the production of capital goods and by almost a quarter for the production of intermediary goods. The decreases recorded by the import and the export of intermediary goods are going to jeopardize this sector production which is already a confirmed fact by the recorded decreases.

The biggest decreases being recorded during the first seven months of 2013, comparatively with the corresponding months of the previous year are shown up by the metallurgical industry

A similar trend of a significant magnitude is stated out in the case of the production of auto-vehicles for road transportation from a relatively slight reduction in October to a marked decrease December.

A similar trend of a significant magnitude is stated out in the case of the production of auto-vehicles for road transportation from a relatively slight reduction in October to a marked decrease December.

In July 2013, the prices of the industrial production increased by 1.56% as comparatively to the corresponding month of the previous year, on an overall basis.

The industrial production is one of the few sectors which are marking a certain recovery at the EU level and that of the EU member states. The evolution of the Romania industrial production is also included in this allegation.

At the level of EU 27, increases have been recorded for four consecutive months, even if fluctuant, counting for 0.4% in October and December, as against the previous months, reaching the level of 0.3% in January 2012, as against December 2011.


Certainly, the positive evolution at the EU level is marked by the evolution of the industrial production in Germany, France, Italy and other countries, among which Ireland, Hungary, Denmark, Holland, with a relatively smaller weight.

For 2011 and 2012, Romania recorded increases of the industrial production computed as seasonally adjusted series, atrend which was maintained in the first seven months of 2013 also.

From the point of the industrial production, although recording a relatively small increase, Romania occupied the 18th place among the EU countries, namely by the middle of the classification.

If considering the distribution by large groups, the increase of the industrial production in Romania has been more marked for the group of the capital goods industry and significantly lower for the group of the current usage goods2.

From the point of view of the industrial production increase recorded by Romania in 2010 and 2011, it can be seen that the production has been significantly higher as against the corresponding period of the previous year3. During the first seven months of 2013, overall, industry recorded a growth by 6.4%.

It is worthy to note that the increase recorded by Romania in September 2010 is higher comparatively with all the other European states which, most of them, excepting Poland, Slovenia and Holland, recorded decreases, in same cases quite significant.

The situation keeps on being more or less the same in January 2011, comparatively with 2010 when the increase recorded by Romania is exceeded by Poland and Czech Republic only.

However, these increases by groups have been counter-weighted the decreases recorded by the groups of current usage goods and durable goods.

The indices of the industrial production, in 2010-2012 comparatively with 2009 and 2008, are showing, both on the overall and for the extractive and manufacturing industries branches, for all quarters as far as the first one is concerned while the manufacturing industry recorded decreases over the first three quarters followed by a strong recovery during the IV quarter. The indices for the first half of 2013 have manifested increases in all months.

The evolution of the industrial production, both on the overall and the main sub-branches, in 2012 as against 2011, is positive, even if fluctuating.

The manufacturing industry, electric energy, gas and water, as major sections, on one side and the capital goods industry, the intermediary goods industry and the power industry on the other side, with important increases are responsible for the mentioned increases at the industry level.

The industrial production indices, as adjusted series, are also indicating a positive trend, although is circumscribed within increase levels relatively modest as

2 Anghel M.G. (coautor). (2009). The hypotheses of the simple linear regression model, Metalurgia International, Vol. XIV, special issue no. 12 3 Anghel M.G. (2013). Modele de gestiune şi analiză a portofoliilor, Editura Economică, Bucureşti


to the overall industry, but nevertheless significant for the sub-branch electric and thermo energy, gas and water and, respectively, the capital goods industry.

The value indices of the new orders marked decreases in 2009, 2010, 2011 and 2012.

In 2012 comparatively with 2011, the situation changed in respect of the new orders within the manufacturing industry from Romania, mainly in the situation of the manufacturing industry working on orders basis.

Significant increases have been recorded in the case of orders value index for the manufacturing of chemical substances and products group, metallurgical industry, and manufacturing of road conveyance auto-vehicles, out of which absolutely remarkable was the increase recorded for the external market, as a consequence of the well known evolution of the Dacia cars exports to west-European countries, mainly to Germany.

The actual supplies of goods established on the basis of the turnover indices are reflecting an uncertainty tendency as regards the producers’ capability to capitalize the achieved production, on one hand and the payment difficulties of the buyers, on the other hand. Thus, in 2011 as against 2010, the deliveries decreased on an overall basis, the domestic and foreign market, these decreases outrunning those recorded in connection with the achieved production4. For the period June 2012 – July 2013, we observe that during seven months (July, October, November and December of 2012, and also in May, June and July 2013) the orders have recorded important decreases, being under the production capacity.

The labor productivity increased yearly over the period 2002 – July 2013, simultaneously with the decrease of the occupied population, so during the first seven months of 2013, the productivity of labor grew by 5.5% per total industry.

Bibliography

Anghel M.G. (2013). Modele de gestiune şi analiză a portofoliilor, Editura Economică, Bucureşti

Anghel M.G. (coautor). (2009) The hypotheses of the simple linear regression model, Metalurgia International, Vol. XIV, special issue no. 12

Anghel M.G. şi alţii (2012). Production and Trade of Goods, Revista Română de Statistică – Supliment

Anghel M.G. şi alţii (2012). Evoluţia produsului intern brut şi a investiţiilor străine directe în ultimul deceniu, Revista Română de Statistică – Supliment




4 Anghel M.G. şi alţii (2012). Production and Trade of Goods, Revista Română de Statistică – Supliment


Anghelache, C-tin, Capanu, I. (2003). Indicatori macroeconomici. Calcul şi analiză economică, Editura Economică, Bucureşti

Anghelache, C-tin, Capanu, I. (2004). Statistică macroeconomică, Editura Economică, Bucureşti

*** Anuarul statistic al României, ediţiile 2007, 2008, 2009, 2010, 2011, 2012 *** Buletinul Statistic nr. 1-12/2007, 1-12/2008, 1-12/2009, 1-12/2010, 1-12/2011,

1-12/2012 şi 1-7/2013 editat de Institutul Naţional de Statistică *** Buletin Statistic de Industrie nr. 1-12/2007, 1-12/2008, 1-12/2009, 1-12/2010,

1-12/2011, 1-12/2012 şi 1-7/2013 editat de Institutul Naţional de Statistică


From the History of Cooperative Thinking From the History of Cooperative Thinking From the History of Cooperative Thinking From the History of Cooperative Thinking ---- Professor Ion Răducanu. Cooperative Movement on Professor Ion Răducanu. Cooperative Movement on Professor Ion Răducanu. Cooperative Movement on Professor Ion Răducanu. Cooperative Movement on

the Road to Self the Road to Self the Road to Self the Road to Self ---- Determination Determination Determination Determination

Prof. Dan CRUCERU PhD

“Artifex” University of Bucharest Abstract Inter-bellum cooperative thinkers have evaluated and re-evaluated the cooperative phenomenon in our country in concordance with the historical stages the national economy evolved through until the Second World War. On such principle basis, they sought to formulate adequate measures of revival and lead the cooperative movement on the trajectory of social progress. Key words: cooperatives, economy, solution, profit, current The rich economic literature of the inter-war period, and also the preoccupation of rome economists of European fame for the cooperative problem have generated a series of ideas and actions meant to promote and develop this economic-social movement. Meanwhile, it is worth to emphasize the policy of the main parties of the time (National Peasant Party and the National Liberal Party), which reflected the organization and function of the cooperative companies, as they represented a potential electoral segment in the quest to achieve and exercise power. Concrete proof of these preoccupations are the numerous laws regarding the organization and the operation of the cooperation, along with its subordination to the state, both as institutional system and economic - social action and purpose. Within the confrontations that take place during this period regarding the nature and perspective of the cooperation in our country the ideas of Ion Răducanu begin to affirm, as he was during the inter-war period, upon the opinion of Dimitrie Gusti, one of the most authorized specialists of the cooperative doctrine in Romania. In is youth works, as "Două chestiuni privitoare la mişcarea noastră cooperatistă" ("Two issues regarding our cooperative movement") in 1907, "Prezentul şi viitorul cooperaţiei săteşti" ("Present and future of rural cooperatives", 1914) and "Fapte şi idei în cooperaţie românească” ("Facts and ideas in Romanian cooperation", 1916), he emphasized and sustained a series of valences of cooperation regarding the development of initiative spirit and defense of cooperator's interests and the fight against excesses of exploitation. Prominent economic personality, illustrious teacher at the Academy of Commercial and Industrial Sciences, Ion Răducanu is one of the first Romanian economists which commits with his full being to the active life of the cooperative movement. After his studies abroad, but also driven by an inner impulse, he enters in


1907 in the Central of People's Banks, following with special interest the cultural action and moral education of the cooperative members. He established, on this line, the first cooperative class at Dumbrăveni, in Botoşani and he is preoccupied with the organization and direction of the first federations. He is one of the initiators and organizers of cooperative statistic on scientific bases, publishing yearbooks, which were issued regularly before the First World War. By such works, it was attempted to bring more light upon the structure and activity that developed in our country during that period. After 1909, through studies and articles published in newspapers, he continued to propagate the idea of federalizing the cooperatives and especially of their autonomy. Meanwhile, he contributes, together with Nicolae Iorga, to the organization and development of cooperative lectures at the free University of Vălenii de Munte. Under the new social economic conditions, determined by the foundation of Great Romania, after 1918 he joins the current which was preparing the independence of the cooperative movement that was rallying around the review "Viaţa Cooperativă" ("Cooperative Life") and the Central Office of the Federations. In the federations assembly, that was held at Roman in autumn 1918, he is elected leader of the cultural section of this office and, in this position, he participates at the assemblies of the federations, organized by this autonomous organization in Bucharest, in 1918 and 1919. In the first days of 1919, following the application of the Decree - Law promulgated on January the 3rd, of the same year, from his initiative and with the help of the Central Office of the Federations, he inaugurates the Central School of Cooperative Studies in Bucharest, in the presence of minister I. G. Duca, school that transforms, in December 1919, in the Academy of Cooperative Sciences. In May 1919 he is elected by the Congress of delegates of popular banks as member in the Council of its Central. In this position, together with A. Galan and priest Grigoraş he further upholds the idea of autonomy of the cooperative movement through the organization of free federations. In the days following the Congress of Federations, he publishes the article “Starea de spirit în cooperaţie”, in the review "Independenţa economică", revealing the dominant ideas that stirred the Romanian cooperative movement. There are few fundamental questions included in the articles, by which he pursues to establish the place, role and value of this economic and social institution in the life of the community. "The unanimous desire is that a unitary driving and mobilization would lead, that is the solidarity of forces within the movement. Before the socialist movement had proven the unity of action in the reunified Romania, the cooperative movement tried to gather together all the units, all powers conscientious in joint cooperation, from all over the country. So we can remember: The Central Committee of Romanian Cooperation made of cooperators from the Old Kingdom, Ardeal and Bucovina, following which we had a unitary representation activity towards similar foreign organization and the propaganda of cooperative culture. At the Congress of the International Cooperative Alliance, in Hamburg, Romanian cooperators presented themselves in a unitary group, even if political degrees were separating us; also at the elaboration of the "Calendar of Village


Companionships", the said Commitee of the Central gave its oblation of work, bringing data and facts on the Romanian cooperation from everywhere. So the trend of joint and unification of cooperative work to us is older than it might be believed... However, a great deal of labor is to be done in this direction ". In the article "Starea de spirit în cooperaţie" Ion Răducanu makes a synthesis of the currents existing in the cooperative movement, both from the principle and organizational viewpoint. "A trend with general character - the author outlined - is that the cooperative movement to be lead on the real cooperative regime: self-determination and, thus, removal of the state tutelage." To the question, in fact asked by many economists of the tine, what should be the role of the state in cooperation? Ion Răducanu writes: "in the debates within the council of federations, two currents manifested: 1) An extremist current, that demands the removal of the state, at once and fully, from the role of collaborator in the central organization of the cooperation; 2) The second current - we could name it reformist - thinks that the Decree - Law that gives birth to more centrals, as mixed institutions, was a kind step, necessary, on the road to emancipate the cooperation from the state tutelage. This current, far from seeing the new central organization a perfect and permanent arrangement, thinks that it is proper for the transition from state centrals to fully free centrals.

Both currents pursued the liberation of the cooperation from the state. The solution proposed by most cooperative doctrinars envisioned the organization of a central institution made only of cooperative forces and led by cooperators, elected by the organizations component of the central. But, the methods and ways to achieve these desiderates are different in the conception of various authors. "At the beginning - Ion Răducanu outlined - some of the actual extremists did not see the federations with favorable eyes, - they were then extremists... bureaucrats - and only later they have seen the importance of the educational problem for the technical and soul preparation of the leading personnel. When the reformatory current attempts a constructive work, fighting for the strengthening of the federations and propagation of cooperatives' ideas, - the extremist current is satisfied with a negative opera in the struggle between facts and words - of course, the blagomania will not prevail." Professor Ion Răducanu distinguishes two different currents also in the trends of the cooperative movement: the materialist current and, on the other hand, the social-idealist current. "In the mad pursuit for dividend, - let's not hide behind the finger: the danger of the Trojan horse, the American profit spirit, in popular banks is not a fiction! - it is long forgotten the ideal of cooperation: removal of profit under any form!" The materialism from cooperation has generated a weak preoccupation from the banks, cooperatives, federations, for cultural activity and education. The reaction towards such state of facts of cooperators is synthesized by the social-idealist current, which leads, from a principle point of view, the reformatory trends in cooperative organization. "The fight between the social - idealist current and the materialist one is the conflict between the real cooperation and the fake one. The social-idealist current wants to end the run after dividend, it strives to give soul to the cooperative body and, by a more and livelier action - through propaganda and school, he is to achieve significant roots. The


first cooperative classes, and the federations - schools of cooperative education, propaganda books, calendars and cooperator's libraries, the central school of cooperative studies, the print office of Romanian cooperation, as well as the "Fotin Enescu" Cultural Fund – are the fruits of the social-idealist current, which knew how to realize them by fighting with the bureaucracy of some and the negative attitude of others." Professor Ion Răducanu, of which Ion N. Angelescu wrote in his admirable book "Cooperaţia şi socialismul în Europa" (“Cooperation and Socialism in Europe”) that he is the enthusiast promoter of cooperative ideas, fervently pursued to remove bureaucracy and negative attitude in the development of cooperatives in Great Romania. This is what he wrote in the article "Starea de spirit în cooperaţie" (“State of Mind in Cooperation”, published in "Independenţa economică" (“Economic Independence”, in May 1919: ”Cooperative life can not be lead by bureaucracy, or by the clean negative attitude of extremists, but by a single force, the cooperative spirit. Let us not wait the true reform in cooperation from others, but let’s seed it, by ourselves, fulfilling the inner organization of the institution. Only by this shall we pave the road to victory. Cooperation is the democracy realized in the social and economic field. But any democracy without education and discipline leads to anarchy. That’s why, by education and learning, we hope to strengthen the Romanian cooperative movement”. The same ideas, this time, in a more concrete manner, can be found in his report on cooperation, which he presented and sustained in the Congress of the peasant’s party. The principles exposed in this report are based on his older ideas, but they are formulated also in the light of the new experiences achieved during the three years in the Central of popular banks, in its new post-war form, by the state organization having a mixed council made of named members and elected members. There are, upon time newspapers, the general lines of his report:

"A cooperative reform must start from some fundamental considerations: 1) An establishment of the legal and statutory regime and also of cooperative policy, on sound and wide bases, to allow unhindered development, pursuing an economic-social regime based on the principle of interest in labor. 2) A cooperative organization, that is to take into account the consolidation and blossoming of small and medium households, created through the agrarian reform, that are to give the small exploitation all the advantages of big exploitations. 3) To introduce cooperative learning in the education of all stages and organize, on sound bases, the special cooperative education. To hold periodic courses in various centres: to offer a greater development to the Academy of Cooperative Studies. 4) To establish the social product on the basis of cooperative principle. The capital of cooperative should not be limited (as it is today: 200.000 lei for one year). 5) To tend to the concentration of cooperative forces. Institutions with commercial cooperative character are to enjoy full autonomy. A credit central is to be established for cooperation 6) Cooperative enterprises to be always preferred by the State to the capitalist enterprises. Associate labor in labor cooperatives to be recognized as equal to the capital. 7) In cooperative legislation, it is to be taken into account the spirit that dominated the cooperative organization for each region. 8) The peasant party does not want to discredit


the cooperation, but wishes to distinguish the form from the foundation of cooperation, to not transform some consumption cooperatives in tools of specula and exploitation”. Ideas exposed by Professor Ion Răducanu in his scientific papers1, as well as in the lectures presented at the Academy of Cooperative Studies, were materialized all over his activity of organizer and promoter of cooperative movement, that recorded him between the marking personalities of the period between the two world wars. The vast literature on cooperation2 has reflected in a pregnant manner the dispute between various parties, faction of parties and cooperative organization, titled as independent, dispute ran to conquer the cooperative movement.

Bibliography

Cruceru, D. (2012) - „Cooperaţia în România. Istorie şi actualitate”, Artifex Publishing House, Bucharest

Răducanu, I. (1940) – “Regimul legal al cooperaţiei” , in Problema cooperaţiei române, Independenţa economică Publishing House, Bucharest, 1940

1 See Ion Răducanu, Regimul legal al cooperaţiei, in Problema cooperaţiei române, Independenţa economică Publishing House, Bucharest, 1940, p. 208-222 2 Among the most important studies we outline: Cooperaţia şi clasa muncitoare în anul 1920, Istoria gândirii cooperatiste (1931), Tratat general de cooperaţie (1935), Cooperaţia şi economia agricolă (1935), Gândirea cooperatistă în România (1938), Socialismul şi cooperaţia (1945-1946), etc. by Gr. Mladenatz; Dinamica economiei cooperatiste (1941) by V. Jinga; Cooperaţia în Ardeal (1933) by Gh. Dragoş; Reforma cooperaţiei by V. Madgearu; Problema cooperaţiei române (1940) by I. Mihalache, M. Gormsen and I. Răducanu; Capitalismul român şi cooperaţia by Gh. Pascu; Cooperaţia română (1925) by Ştefan Zeletin; Cooperaţia: fapte, idee, doctrină (1927) by H. Ghiulea; Cooperativele agricole (1924) by Cerchez Grigorici; Problemele cooperaţiei române (1925); Monografia cooperaţiei de credit din România (1935) by A. G. Galan etc.


Some Aspects of EntreprenSome Aspects of EntreprenSome Aspects of EntreprenSome Aspects of Entrepreneueueueurial Berial Berial Berial Behaviorhaviorhaviorhavior

Prof. Mircea UDRESCU PhD “Artifex” University of Bucharest

Abstract Positioning the minimum level of supply to the customer requires clear

differentiation of the product or service that is the subject business. This differentiation announces market segment that will become the client of the contractor. In fact, from here start your business. Since the identification of problems of business that will target consumers to resolve. Therefore, realistic initial position makes good business starts and characterized by market success. In other circumstances, the contractor may have a difficult road, and many large losses business end shortly after they started.

Key words: entrepreneur, quality, product positioning, quality, success, loss

About entrepreneurs who have succeeded in business that they have passed

there are numerous reference works. Since they are either „who create opportunities and ownership of anything. Their mission in life is to create things and sell them. They are the ones that create jobs and build businesses. Their practice is actually a true business driver of prosperity " 1, whether they meant "... to create unique value for the customer, to make things better than competitors and to be rewarded for success " 2, surpassing many obstacles, the most important consisting the "... lack of initial capital, the possibility of financial losses, occupational hazards, lack of confidence, pressure from family, health and stress, lack of " big ideas " minimum tolerance towards risk or a simple blockage. "3

In most cases, beginners business secrets hit the road to what they can do better. Gardeners think of a business based on flowers, civil engineers think of a construction company, maintenance services etc.., Drivers are thinking about repair and maintenance workshops, kitchens contemplating canteens, restaurants etc.. It incipient use professional knowledge. But even those with little experience in the field, recognize that an entrepreneur is much more than specialist Beyond having a vision of sketching a strategy, the entrepreneur must be a good manager of men, of money, of time, a good creative organizational culture, enthusiasm generator etc..

The Romanian market, and not only are many examples of businesses started only on professional knowledge. Of these, most remain at the stage of good intentions, some have very little experience and become business fleeting

1Larry C. Farrell, How to become an entrepreneur. Develop your own business, Curtea Veche, Bucharest, 2011, p.22 2Michael E. Gordon, Entrepreneurship, Curtea Veche Publishing House, Bucharest, 2012, page 12 3 Idem, p.12-13


reference. In all cases, it recognizes the role of knowledge and management skills in the success or failure of the business. Generally available statistics show that business chances are not too great, because after some 49% of new businesses close their doors within the first five years of life and only 31% of them fail to exceed the age of seven4, after others, to develop a new business is a failure rate of about 20% in the first year, 30% in the first three years and 40-50 % in the first five years5, however, people believe in their ability to pass obstacles, go ahead despite questionable chances for success.

Assessments of those who were successful in entrepreneurship are extremely diverse, but all are focused on the characteristics of temperament, character and personality. Entrepreneurship is explained, as applicable, by: curiosity, tenacity, a willingness to explore new areas gained experience in related fields, professional, exploratory attitude, the right combination of passion and courage, risk appetite, market opportunities, appreciation right direction, keeping the focus correctly, a serious introspection about personal values , courage, optimism and vision, coupled with the responsibility that you must take, money, passion, knowledge, communication skills, involvement in the requirements of all links carrying value, seriousness and responsibility that you start getting involved, referral to social need and understanding the source of profit, flexibility in money management, responsibility for managing time and people management skills, high standards and respect for the profession, acceptance of error and opportunity to learn from it how to become better growing reputation with customers, clear vision, strategy etc attractive.

We believe that the contractor was, is and will be that person or group of people who open new businesses or developed on the foregoing, put, put or will put in work opportunities where others see only problems insurmountable, provided offer and provide the same products and services or market products or services characterized by novelty, everything in terms of competitiveness.

The success enjoyed by only those who offer products or services that are demanded by the market in terms of profitability. Achieving success is systematized differently but motivational literature suggests that any reasonable systematization tends to success only if it is implemented in practice.

Thus: Napoleon Hill, deemed necessary following tips imperishable: wanting specific purpose in life, self-confidence, initiative, imagination, enthusiasm, action, self-control, used to work more than you paid, agreeable personality, to think properly concentration, persistence, ability to learn from failures and tolerance6; Zig Ziglar link real success by: developing a plan, setting goals, consider failure as an opportunity to redefine life7, the cultivation of excellent habits, strength of character to achieve a reliable definition of purpose in

4 See Calin Cavaleru, difficult road to survival of the entrepreneur, Article Manager Express, October. 2013, p 28 5See Lucia Lazarus from employee to entrepreneur, Article, Press Manager, October. 2013, p 23 6 In general, Napoleon Hill, road to success, Ed Vache Court Publishing, Bucharest, 2011 7 Broadly, Zig Ziglar, From good to excellent, Vache Court Publishing Publishing, Bucharest, 2008


life, and mission of discovery in life, and for self-improvement is needed : to establish order, knowing that overall success requires the right attitude, specific skills and character to understand that the responsibility is yours, change for the better image, to work better for less, motivate you continually have in mind a program of goals, to be free from involvement, courage and discipline etc8.

Because successful entrepreneur Michael Gordon to tie the following exhortation : Give free rein to your entrepreneurial power, even if you're afraid, operate anyway, start with safe beliefs, find ideas in a hectic world, choose only an opportunity to capitalize on opportunities difficult economic times, building your success as tehnoprenor, prepare for war with competitors, design your own money making machine, virtualize and globalized focus on competitive advantage, build a winning strategy, design your growth and profitability, urgently mobilized significant resources, developed a business plan simply and effectively transform yourself into a negotiator using the win-win principle, raise money, focus on the client, start businesses face the future challenges with a smile etc. Entrepreneurship is directly linked to innovation. And when it comes to innovation9, Apple chairman Steve Jobs is a legend.10 Its company slogan "Think different " is more than a marketing tool. It is a way of life - a strong and positive approach that redefines innovation that anyone can apply in any area where conquered by the following principles : 1. do what you love. Think different about your career. February. Put your mark on the universe. Think different about your vision. Three. Put your mind to it. Think differently to the way you think. April. Sell dreams, not products. Think differently to your customers. May. Say no to a thousand things. Think different in design. June. Create great experiences. Think differently to the experience offered by your brand. July. Be masters of the message you send. Think different about your story. Following the example of the lu visionary Steve Jobs, it considers that it is available to all discovering new interesting ways to unleash the creative potential of each.

The leap from regular employment status to the successful contractor considers that it is essential behavioral following ten principles, as follows11:

▪ Entrepreneurs educate a much greater extent than do employees. During training, the entrepreneurs choose for themselves what to learn and ask any questions without fear that they will be ridiculeand, admonish or correct. But most importantly, think about what they would really like to do in life, then asks those in their field of interest as they managed to reach success.

▪ Entrepreneurs assumes the risk of failure. Employees perceive risk as something very serious. Successful entrepreneurs believe that failure is

8Broadly, Zig Ziglar, Beyond Peak Publishing Vache Court Publishing, Bucharest, 2006 9Broadly, Michael E. Gordon, Entrepreneurship, Curtea Veche Publishing, Bucharest, 2012 10 Broadly, Carmine Gallo, Steve Jobs. Secrets innovation, Curtea Veche, Bucharest, 2011 11 Apud, Lucia Lazarus from employee to entrepreneur, Article Manager Express, October 22. 2013, p.25-26


inevitable, and that if it occurs, has an educational purpose. In other words, it is a way to learn to correct and increase. Mistakes are part of life and therefore must be assumed and seen as valuable opportunities to take it over again, in a better way.

▪ Entrepreneurs looking for solutions. Employees solve problems. When there is a problem in the workplace, employees believe that it is their responsibility to resolve. Instead, entrepreneurs take responsibility to solve long-term problems to avoid in the future to consume other resources with them.

▪ Entrepreneurs know a little about a lot of things. Employees know little about. If you want to stay just work for life, then you only have to stick to your job tasks and not deposit any effort to learn anything. However, if you want to become a successful entrepreneur, then you must develop a new vision : to look at it as a whole and to discover how they work.

▪ Entrepreneurs know and appreciate, and correct. Employees do not usually do these things. An old adage says that a spoonful of sugar helps to swallow the bitter medicine. Praise is sugar and the drug is correct. Adults like to be praised as much as the children, which means that the assessment is actually the key to achieve success. True entrepreneurs have learned to praise and praise before correcting again when you see improvements.

▪ Entrepreneurs take responsibility. Employees say it is not their fault. The chance to become a great entrepreneur begins to come alive once you learn to take responsibility, in terms of personal life. Every day you have a choice : either take responsibility or you " shirk " complain and defend yourself. These are only excuses for what you can do, be or have. It is impossible to become responsible as long as you blame someone or something else for their own failure as lament and try to find explanations.

▪ Entrepreneurs make a fortune. Employees make money. Basically, thinking little difference can make the difference between a major raise a fortune equivalent to win your financial freedom and making money.

▪ Entrepreneurs around successful people. Employees are satisfied with the ordinary. People who spend time have no immediate effect on you, but in time they will affect your life either positively or negatively. Choosing to invest time wise people who know success, you will learn to be like them.

▪ Entrepreneurs look to the future. Employees relate to the past. We must recognize that there are very few people who have vision. That is why there are so many employees, not entrepreneurs. Vision makes things move, is what draws wisdom and guide your life. Doing something every day for your vision, your dream begins to take shape.


▪ Entrepreneurs take risks because of trust. Employees prefer stability because they are afraid. When you eliminate the risks of life actually remove opportunities. Many employees say they would like to have your own business but are afraid of the risks and have confidence that they will succeed, which means that their chances of cutting yourself known success. Instead, true entrepreneurs have unshakable confidence, allowing them to discover opportunities and take risks.

From the above it follows that the entrepreneur is a complex personality, which necessarily have to say when he sees opportunities where others must cling to excuses and obstacles; takes calculated risks and take brave decisions, find innovative solutions to problems knead assistance, is responsible for the vision, strategy and planning, it depends on the actions, creates lasting relationships, is distinguished by its exuberant energy and manages to mobilize others in the direction shown, creates working relationships appropriate to the situation, is flexible and acts quickly, focus on profit.

Of course, no one denies the necessity of these motivational traits of personality of the entrepreneur, but everyday reality out of sight of the most diverse behaviors. Up to recognition contractor status, we believe that everyone should be aware of a minimum level of knowledge and managerial skills, and a minimum market competitive positioning.

a) Minimum level of knowledge and managerial skills. We will include

this knowledge of management functions, management styles, shapes, staff motivation and so on, which teaches any bachelor or master dedicated to the business world.

Minimum level of knowledge and managerial skills must be the one who has identified an opportunity to answer the question "what is the competitive context ?"

To base a competent answer, showing that the decision or the decision to risk seeking another opportunity the interested and responsible necessarily will have to estimate as truthful : current levels and trends in demand in the field, the competitive situation of the moment and estimating future developments, the nature of the current competition reactions to the announcement of its entry into the market; estimate to be new conditions competitors on the market, the current situation of suppliers and estimates about future behavior, the current situation and the possible development of substitute products or services. Based on these measurements we can estimate a certain level of profitability, and only it can tip the balance toward hiring decision on the waiver entrepreneurial effort or business.

Schematically, the minimum level of knowledge and managerial skills generate conclusions arising from the context of the competitive system structures shown in Fig.1.


Figure no. 1: The structure underlying the business decision. ( Processing

by Michael E. Porter, Competitive Strategy : tehniques for Analizig Industries and Competitors, New York Free Press, 1998, p 4 )

Market that craves any potential entrepreneur may or may not be favorable.

Therefore it is desirable to determine the minimum level of favorable market as a result of the knowledge and managerial skills.

b) Minimum level of competitive position in the market. In any event, talks about succeeding in business is mainly put on products or services. As such, one who wants to become an entrepreneur must necessarily define quality in terms of product or service that will compete with winning buyers. Life demonstrates that the market is suffering in terms of quality perception. Thus, " When the people at Bain & Company asked 362 companies if they offer superior customer experience, have found that 80% think it is. But only when they asked customers about their perceptions of these companies have heard a different story. Only 8% of them said that they received higher type experiences. "This situation resembles that someone actually gives promises cake and gingerbread 12. The 72% of the tested product dissatisfied try other experiences from other manufacturers. Should be directed to them who wants to win the market needs.

Positioning the minimum level of supply requires clear differentiation in the product or service to customers that is the subject business. This differentiation

12 Elena Calin, Caviar or marmalade?, Article Manager Express, October. 2013, p.14-15


announces market segment that will become the client of the contractor. In fact, from here start your business. Since the identification of problems of business that will target consumers to resolve.

Realistic initial positioning makes good business starts and characterized by market success. In other circumstances, the contractor may have a difficult road. Therefore, many business end losses shortly after they started.

Bibliography Carmine Gallo, Steve Jobs. Secrets innovation, Curtea Veche, Bucharest, 2011 Larry C. Farrell, How to become an entrepreneur, Curtea Veche Publishing House

Bucharest, 2011 Michael C. Gordon, Entrepreneurship, Curtea Veche Publishing House, Bucharest,

2012 Napoleon Hill, The path to success, Curtea Veche, Bucharest, 2011 Zig Ziglar, From good to excellent, Curtea Veche, Bucharest, 2011 *** Manager Express, October, 2013


The The The The Evolution of Evolution of Evolution of Evolution of Agriculture Production Agriculture Production Agriculture Production Agriculture Production


“Artifex” University of Bucharest Prof. Radu Titus MARINESCU PhD

“Artifex” University of Bucharest Assoc. prof. Alexandru MANOLE PhD

“Artifex” University of Bucharest Lecturer M ădălina Gabriela ANGHEL PhD

“Artifex” University of Bucharest

Abstract As well known, Romania is one of countries of the most pronounced

agrarian profile from the European Union. Unfortunately, this character does not mean implicitly neither a corresponding contribution of the agriculture to the GDP forming, as already mentioned previously, nor a high level of efficiency as productivity level resulting both out of the comparison of this sector with other sectors of our economy and, mainly, with the yields for various cultures and animal species recorded by the other European countries.

Key words: agriculture, potential, cultivation, production, harvest The same situation, if not even more underlined, is stated out when

considering the yields for potatoes and rape, as well as for sun-flower, although the last one is not a significant culture for the other EU member states.

Extremely significant are the statistics regarding the agricultural potential of the greatest agricultural producers from the EU, among which Romania is placed as well, considered from the point of view of the place and weight held within the total EU, as cultivated surfaces and production. Thus, for wheat, Romania is holding the 4th place from the point of view of the cultivated surface, with a weight of 8% in total, accounting together with France, Germany and Poland, almost 50% of the total cultivated surface of the total EU. But as far as the wheat production is concerned, Romania is holding the 7th place only, by three places lower that in the case of the surface, respectively with a weight of 3.7% of the total production of wheat of the EU. Together with France, Germany, Great Britain, Poland, Italy and Denmark, the weight in the production counts for over 75%. The corn production is by far more interesting, as Romania holds as surface, the 1st place with a weight of over a quarter (27.4%) in the total surface cultivated by the EU member states. From the point of view of the corn production, we are holding the 2nd place only, after France, with 13.8%, whereof a gap as against the weight of over 50% in the cultivated surface. In 2011 and 2012, we record two different moments. In 2011 we achieved harvests, maybe the highest after 2000,


while in 2012 the harvests have recorded low, record, levels. As an example, for wheat, in 2011, the average production per hectare was 3594 kg., and in 2012 it was 2597 kg. The year 2013 was a good one for agriculture.

Surface and harvested production for straw cereals and oilseed rape, July 31st, 2013

Harvested production -th. Tons-

2012 2013

Wheat, rye and triticale 5097.0 7662.5

Autumn barley 500.2 939.9

Autumn hordeum (barley) 201.9 320.4

Spring hordeum (barley) 270.1 348.9

Oatmeal 300.9 356.1

Oilseed rape 148.7 657.3

Data source: National Institute of Statistics, Statistical Bulletin no. 7/2013 A similar situation is stated out in respect of the animal effectives.

Contrary to the situation in the past, when Romania counted among the first countries from Europe from the point of view of the effectives of bovines, porcine, ovine and goats, presently, with its 2 million five hundred thousand bovine heads, Romania is slightly outrun by Belgium and in a significant manner, by France, Germany, Great Britain, Italy, Spain, Ireland, Poland and Holland. As to the porcine effectives, Romania is holding the 9th place only, after Germany, Spain and France. We manage to maintain ourselves on the 4th position of the top for ovine and goats only, after Spain, Great Britain and Greece. The evolution of the agricultural branch in 2013 comparatively with 2012, is showing a slight increase, as a result of the increase of the same value recorded by the vegetal production, a little lower increase of the animal production and an increase of 3.2% of the agricultural services which, however, are not holding a significant weight.

Animal effectives recorded by certain EU states, in 2012

- thousand heads - Country Bovines Porcines Sheeps + Goats

Romania 2479.0 5439.0 9375.0

Austria 2026.3 3137.0 412.9

Belgium 2538.3 6207.6 -

Bulgaria 547.9 729.8 1761.1

Czech Republic 1355.6 1913.7 199.8

Denmark 1621.0 12873.0 -

France 19199.3 14552.0 8846.2

Germany 12897.2 26604.4 2071.7

Greece 675.0 1073.0 13795.0

Ireland 5934.7 1604.6 3430.7

Italy 6446.7 9157.1 8973.6

Holland 3998.0 12108.0 1506.0

Poland 5590.2 14252.5 342.8

Portugal 1396.1 2332.6 3385.1

Great Britain 9984.0 4610.0 21033.0

Spain 6000.9 25286.8 22475.5

Sweden 1482.0 1615.8 540.5

Hungary 700.0 3247.0 1026.0

Data source: Eurostat, processed with current data regarding Romania, for 2012


The weight of the vegetal production in 2013, counting for 54.3%, is

noticeably lower than the average of the years 2006 – 2011. The fact that the weight of the animal production is however low, as comparatively with the potential of our country in this respect, has to be emphasized.

On the other hand, splitting the land into small parcels and lack of any crop rotation whatsoever, lack of a proper quality seed as a general feature, are the factors counting as determinants for both the poor crops and their poor quality.

Out of the approximately 4 million of exploitations (4.3 million in 2005 and 3.87 million in 2013), over 98% are representing exploitations characterized, according to the EU standards, as small and very small. They are utilizing, as ownership or other forms, over 60% of the agricultural surface of the country, with a production estimated as average per exploitation to less than 8 ESU. For those who, maybe, are not familiar with, I recall that ESU represents a unit o stable economic size at European level, through a relatively complex process of estimating the value of different agricultural products (both vegetal and animal), namely an ESU equals to 1200 euro.

The evolution of the agricultural branch production until June 2013 (the average of the years 2002-2005 = 100)

-30

-20

-10

0

10

20

30

2005 2006 2007 2008 2009 2010 2011 2012 2013

AgriculturalproductionVegetal production

Animal production

%

Data source: Statistical researches *) Provisional data MADR

Counting for a very low number, of 0.1% only, the large agricultural exploitations of over 40 ESU per unit, generally agricultural exploitations with legal personality, are holding and utilizing over a quarter of the agricultural surface.

The average economic size of an agricultural exploitation in Romania levels up to approximate 1 ESU which, from this point of view, is placing us behind all the other member states, this implying also the structure resulting out of grouping the agricultural exploitations in accordance with their size (see the following tables).


Economic size of the agricultural exploitations for the years 2005 and 2012 Structure of the agricultural exploitations (%)

2005 2012**

ESU classes

Number Surface Number Surface

< 2 ESU 91.0 45.2 94.0 49.0

≥ 2 and < 4 ESU

Very small 6.8 11.4 4.3 8.8

≥ 4 end <8 ESU Small 1.5 4.7 1.1 4.5

≥ 8ndi < 16 ESU Medium small 0.4 3.9 0.3 4.0

≥ 16 end <40 ESU Medium large 0.2 7.2 0.2 7.1

≥ 40 Large, very large

0.1 27.6 0.1 26.6

TOTAL 100.0 100.0 100.0 100.0 *) Economic size unit; 1 ESU = 1200 Euro, **) Data are estimated by the author Data source: National Institute of Statistics.

The typology of the Romanian agricultural exploitation shows the number of the agricultural exploitations specialized for field cultures and mixed cultures is prevailing, as they are amounting 36-37% in the frame of the generic term of the vegetal production, as well as the 40% specialized in the animal breeding. Another feature of the Romanian agricultural exploitations is given by carrying on combined activities of vegetal culture and animal breeding, their weight counting for about 20%. Taking into account the effects of the economic and financial crisis, I shall try also an analysis on the development of the agriculture situation during the first half of the year 2012. Approaching the agriculture situation from the point of view of the evolution of the agricultural production and other relevant elements in this respect allows me to stress again the fact that we anticipated in a way that the agricultural year 2012 will offer us a nice surprise, placing it among the most performing of the last years. This is mainly significant if to consider that, from the point of view of the vegetal production, the year 2012 followed a not too good agricultural year.

Typology and economic size of the agricultural exploitations for the years 2005 and 2012**

Structure of the agricultural exploitations (%)

2005 2011

Type of agricultural activity (typology of agricultural exploitations Number Surface ESU*) Number Surface ESU*)

Specialized in field cultures 18.6 32.8 20.6 16.4 33.3 25.9

Specialized in horticulture 0.7 0.5 2.8 0.6 0.3 2.2

Specialized in permanent cultures

3.5 2.9 8.5 1.6 1.7 2.7

Specialized in herbivorous animal breeding

9.2 22.3 11.6 8.0 22.7 12.6

Specialized in grain feeding animals

8.6 0.7 5.9 7.9 0.9 7.7

Mixed cultures 18.3 15.0 16.8 19.3 14.3 15.0

Mixed animals effectives 23.0 12.3 19.8 23.9 12.3 18.6

Mixed agricultural exploitations (animal effectives and vegetal cultures)

17.3 12.7 14.0 21.8 13.8 15.3

Unclassified agricultural exploitations

0.8 0.8 - 0.5 0.7 -

TOTAL 100.0 100.0 100.0 100.0 100.0 100.0 *) (Economic Size Unit); 1 ESU = 1200 Euro, **) Data are estimated by the author Data source: National Institute of Statistics.


In 2012 there have been climacteric conditions good and proper for the

agriculture. The climacteric relatively moderate conditions during the first half of the year have been more favorable as comparatively with the previous year, in which context, the vegetal production exceeded the production of the fall cropping (corn, sun-flower, sugar beet, potatoes, grapes, fruit etc.). But in 2012, atmospheric conditions were the most difficult (drought without precedent in the last 23 years).

The agricultural services recorded an increase in the 2012 as a result of the fact that in 2011 we have faced a decrease in the frame of the agricultural services.

Up to now, the financial support has been not granted either for the vegetal sector or for the animal sector, the forecast indicating expectations of accomplishment by the end of the year 2012, provided that the authorities in charge will find the necessary funds. There is a temporary solution considered, respectively credits drawn by the farmers, who are supposed to get reimbursements of the credits, less the due interests. The subsidy for agriculture granted by the European Union is not functioning perfectly, as the access to the funds keeps on being adverse.

Structure of the agricultural branch value in the first half 2013

3 0,7 %

66 ,8 %

2,5 %

Ve getal p ro du ction An ima l prod uct io nAg ricu ltural se rvice s

Data source: National Institute of Statistics Statistical Bulletin no. 7/2013

The structure of the agricultural production in 2013, depending on usage,

has shown that 12.85% has been left un-seeded. In 2012, the un-seeded surface had a size not encountered yet. For 2013, we do not have confirmed data at hand.

Bibliography

*** Anuarul statistic al României, ediţiile 2002, 2005, 2006, 2007, 2008, 2009, 2010, 2011, 2012

*** Buletinul Statistic nr. 1-12/2002, 1-12/2003, 1-12/2004, 1-12/2005, 1-12/2006, 1-12/2007, 1-12/2008, 1-12/2009, 1-12/2010, 1-12/2011, 1-12/2012 şi 1-7/2013 editat de Institutul Naţional de Statistică

Anghelache, C-tin (2010). România 2010. Starea economică sub impactul crizei, Editura Economică, Bucureşti





Anghelache, C-tin, Capanu, I. (2004). Statistică macroeconomică, Editura Economică, Bucureşti


Does Firm Size Affect the Firm Profitability? Does Firm Size Affect the Firm Profitability? Does Firm Size Affect the Firm Profitability? Does Firm Size Affect the Firm Profitability? Empirical Evidence from RomaniaEmpirical Evidence from RomaniaEmpirical Evidence from RomaniaEmpirical Evidence from Romania

Prof. Georgeta VINTILǍ PhD Florini ţa DUCA PhD Student

The Bucharest University of Economic Studies [email protected] [email protected]

Abstract This study advances the understanding of the relationship between firm

size and profitability, motivated by the question whether larger firms are more profitable. The nature of the relationship between firm size and firm profitability is examined by on data for 100 firms listed in 2010 at the Bucharest Stock Exchange. The results revealed that firm size has a significant negative influence on firm profitability. Additionally, results showed that leverage is statistically significantly, while liquidity didn’t prove to be an important explanatory variable of firms’ profitability.

Key word: firm size, return on equity, leverage, liquidity J.E.L. Classification: C10, G10, G30.

Introduction

Many researchers in accounting and finance have attempted to identify the sources of variation of firm-level profitability. In this research we focus our attention on firm size and evaluate its influence on firm profitability. Return on equity, along with return on assets, is one of the favourites and perhaps most widely used overall measure of corporate financial performance. Return on equity is perhaps the most important ratio an investor should consider( Monteiro, 2006). An important aspect of a research into a business activity must include the firm size. The variable firm size, will reflect the reasoning of structural model.

Literature Review The relationship between firm size and profitability occupy a substantial

portion of economic literature. Existing empirical evidence has not been unambiguous, lending support to both a positive and a negative impact of firm size on performance.

Pervan and Višić( 2012) have studied the affect of firm size on profitability on the firms. The analysis was conducted for the 2002-2010 period and the results revealed that firm size has a significant positive (although weak) influence on firm profitability. Additionally, results showed that debt ratio also statistically significantly influence firms’ performance.


Papadognas (2007) conducted analysis on a sample of 3035 Greek manufacturing firms for the period 1995-1999. Tn his study, he revealed that for all size classes, firms’ profitability is positively influenced by firm size.

Khatab et al. (2011) have studied the relation between performances and corporate governances of 20 firms which have been listed in Karachi Stock Exchange. The results of the study using the data of the period between the years 2005-2009 have showed a positive relation between total assets and return on assets, but a negative and statistically not significant relation has been found between return on equity and total assets.

Becchetti and Trovato (2002) shows an empirical analysis of the determinants of growth for a sample of Italian small and medium sized firms. We show that, when investigating a sample which includes firms between 10 and 50 employees and a set of variables larger than those usually considered in the literature, growth – net of industry characteristics and ex ante market power – turns out to be significantly affected not only by size and age, but also by state subsidies, export capacity and credit rationing. They identified a negative relationship between growth and size of firm.

In another study, Banchuenvijit (2012) investigated the relationship between firm size and performance of Vietnam Listed Companies for the period 2004 to 2010. Their results indicate that there is a positive relation has been found between total sales and profitability of the firms but on the contrary a negative relation has been found between profitability and total assets.

Data and Variables Data The aim of this study is to investigate the affect of firm size on

profitability. The data were sourced from the Annual Reports and Accounts of the random sample of 100 firms listed in 2010 at the Bucharest Stock Exchange. Analysis does not include the companies operating in financial sector due to their different financial structures. Multiple regression and correlation methods have been used in empirical analyses.

Variables Return on equity One of the most important profitability metrics is return on equity (ROE).

Return on equity reveals how much profit a company earned in comparison to the total amount of shareholder equity found on the balance sheet. A business that has a high return on equity is more likely to be one that is capable of generating cash internally. For the most part, the higher a company's return on equity compared to its industry, the better. Return on equity will be calculated by dividing net income with equity.

Size Size is considered a key factor that can influence the financial structure of

the firm. Firm size has been suggested to be an important variable related to the leverage ratios of the firm. While there are many different proxies for size, in this


study, two of these measures, namely, logarithm of total assets (Size_ta) and logarithm of total sales (Size_ts) are used as the proxies of size.

Leverage As it can be seen in the literature, various definitions of leverage exist. All

these characterizations of leverage revolve around some form of debt ratio. The definitions depend on whether market value or book values are used. In addition, definitions also depend on whether short term debt, long-term debt or total debt is used. Firms have several types of assets and liabilities and there can be further adjustments made to the definition. Leverage: Represents the value of debt divided by book value of total asset.

Liquidity Firms prefer internal financing to external financing. Therefore, firms are

likely to create liquid reserves from retained earnings. If the liquid assets are sufficient to finance the investments, firms will have no need to raise external funds. Hence, liquidity is expected to be negatively related to leverage. Here we use the current ratio (calculated as current assets over current liabilities) as a proxy of liquidity.

The model The dependent variable, profitability is measured by using return on equity

and size constitutes the principal independent variable of the study. In this study, logarithm of total assets and logarithm of total sales are used as the proxies of size. The control variables include leverage and liquidity.

Size indicators have not been assessed in a single model instead have been analyzed by developing two models in order to prevent multicollinearity and autocorrelation problems in the study.

Model I: ROE = β0 + β1 Size_ta + β2 Leverage + β3 Liquidity + µ Model II: ROE = β0 + β1 Size_ts + β2 Leverage + β3 Liquidity + µ Empirical Results Descriptive Statistics

Table 1. Descriptive Statistics

Roe Size_ta Leverage Liquidity Size_ts

Mean 0.2663 17.9428 0.2908 4.1125 17.2691

Median 0.0426 18.0965 0.2232 1.9966 17.4434

Maximum 17.5491 24.1899 1.2630 24.8758 23.3590

Minimum -0.1152 13.8661 0.0001 -5.2861 11.0559

Std. Dev. 1.7554 1.6090 0.2352 5.4886 1.9484

Table 1 shows the results of descriptive statistics concerning dependent and independent variables. As shown in Table 1, average asset profitability (Return on equity) of the firms listed in Bucharest Stock Exchange and reviewed in scope


of the analysis is 26.63%. The size indicators of total assets and total sales are found to be 17.94 and 17.26.

Examination of correlation

Table 2. Correlation Matrix

Roe Size_ta Leverage Liquidity Size_ts

Roe 1.0000

Size_ta -0.2137 1.0000

Leverage 0.2697 0.1368 1.0000

Liquidity -0.0427 -0.1318 0.1154 1.0000

Size_ts -0.1422 0.8775 0.2841 -0.1033 1.0000

Table 2 reports the correlation between the variables used in this study. It is clear that the correlations between ROA and other variables are statistically significant. According to the results, size both in terms of total assets and total sales and liquidity are negatively correlated with ROA, while leverage is positively correlated.

Regression Model Results

Table 3: Results of Regression Analysis (Size_ta) Dependent Variable: ROE

Variable Coefficient Std. Error t-Statistic Prob.

Size_ta -0.2976 0.1048 -2.8389 0.0055

Leverage 2.3908 0.7157 3.3404 0.0012

Liquidity -0.0370 0.0307 -1.2060 0.2308

C 5.0636 1.8889 2.6807 0.0086

Table 3 presents the results of pooled regression analysis, in which OLS method. The model explains almost 15 % of variation in profitability, with significant F-statistic.

When Model 1(Table 3) is analyzed, independent variables of Size_ta, Leverage and Liquidity are observed to influence firms’ profitability (Return on equity). The empirical evidence obtained here for romanians companies contribute to confirmation of a negative relationship between growth and firm size, that was already identified by Becchetti and Trovato (2002), for Italian SMEs. A positive relation between leverage ratio and and return on equity but a negative relation between liquidity ratio and return on equity have been found. The companies may enhance their financial performance and can play their role for the growth of the economy while improving at their optimal capital structures. Leverage may translate into profitability and value maximization of the firms in long term. The


employment of debt in the capital structure of the companies may make a positive impact on the performance.

Table 4: Results of Regression Analysis (Size_ts)

Dependent Variable: ROE


Size_ts -0.229077 0.090048 -2.543946 0.0126

Leverage 2.646342 0.746899 3.543105 0.0006

Liquidity -0.035131 0.030854 -1.138616 0.2577

C 3.597243 1.534441 2.344334 0.0211

Table 3 presents the results of pooled regression analysis, in which OLS method. The model explains almost 14 % of variation in profitability.

When Model 2(Table 4) is analyzed, independent variables of Size_ts, Leverage and Liquidity are observed to influence firms’ profitability (Return on equity). There is a negative relation between total sales which is another size indicator and return on equity. The coefficients are significant at p<0.5. The results suggest that if net sales increased 1%, return on equity tends to decrease by 0.2290%. Liquidity measured by current ratio turned out to have a statistically insignificant impact on profitability.

Conclusion Aim of this research was to explore the impact of firm size on its

profitability (return on equity). This research observed a 100 firms listed in 2010 at the Bucharest Stock Exchange. Beside size variable(total assets and total sales) the analysis included some other variables such as leverage and liquidity.

When the results of the study are analyzed, one can observe a negative relation between size indicators (total assets and total sales) and profitability of the firms in all two models. Overall, our results indicate that profitability of firms as measured by return on equity increases at a decreasing rate to size measured by the total assets and total sales. In other words, the firms listed in Bucharest Stock Exchange have higher profitability when their size is less. The study’s results are in the same direction with Becchetti and Trovato(2002). But results are different from the ones found in the studies of Papadognas (2007) and Pervan and Višić ( 2012). Depending on available data, future studies on firm profitability may include additional explanatory variables.

Bibliography

Akhtar, S., Javed,., Maryam, A., Sadia, H., (2012), “Relationship between Financial Leverage and Financial Performance: Evidence from Fuel & Energy Sector of Pakistan”, Vol 4, No.11.

Banchuenvijit, W. (2012), “Determinants of Firm Performance of Vietnam Listed Companies”, Academic and Business Research Instıtute. http://aabri.com/SA12Manuscripts/SA12078.pdf.


Becchetti, L. and Trovato, G. (2002), ´The Determinants of Growth for Small and Medium Sized Firms`, Small Business Economics, 19.

Khatab, H., Masood, M., Zaman, K., Saleem S. and Saeed B.,(2011), “Corporate Governance and Firm Performance: A Case study of Karachi Stock Market”, International Journal of Trade, Economics and Finance, Vol.2, No.1.

Papadogonas, T.A. (2007), “The financial performance of large and small firms: evidence from Greece”, Int. J. Financial Services Management, Vol. 2.

Pervan, M., Višić, J., ( 2012), „Influence of firm size on its business success”, Croatian Operational Research Review (CRORR), Vol. 3, 201.

Monteiro, A. (2006), „A quick guide to financial ratios’. The Citizen, Moneyweb Business Insert, 6, 3.


Defining Public Debt and External Debt and Defining Public Debt and External Debt and Defining Public Debt and External Debt and Defining Public Debt and External Debt and Revealing Their Statistical Trends and Econometric Revealing Their Statistical Trends and Econometric Revealing Their Statistical Trends and Econometric Revealing Their Statistical Trends and Econometric

Models Models Models Models

Gheorghe SĂVOIU Luiza APOSTOL

University of Piteşti, Faculty of Economic Sciences

Abstract The reminder of this paper is the following: the first section of the paper

defines public and external debt, and underlines the significances of these basic concepts in modern and global economy, describing some specific and distinct conceptual areas for the both notions, revealing statistical trends and using statistical indices or relative indicators during the second section, and finallz proposuing some mathematical solutions statisticallz tested in the complex notions of debts’ econometric models. Some final remarks highlight the value of the two concepts in contemporary economy of Romania as exogenous variables in the two central sections. The paper remains an original one originality, and its originality consists of its precisely manner in addressing Romania’s public and external debt in a simultaneously aggregated and transdisciplinary and conceptual way or research and thinking.

Key words: debt, public debt, gross or net external debt, the clock of the global public debt, uni and multi factorial econometric model, E-Views.

1. Introduction or how to define the public and the external debt A basic principle of business indebtedness remains related to the fact that it

makes sense to turn to debt as financial resources only to the extent where the increased revenues generated by their use is greater than the cost of debt as such. Things get complicated when the principles of some public debt are theorized, as expectations cover a lot of other issues beyond standard economic efficiency of the utilization of financial resources, related to specific promises of the government, and the implementation of policies of a number of parties that make it up, objectives that are diversifying and targets that multiply, from minimal infrastructure (highways, railways, airports, sewage, etc.) to the specific public services (national defence, education, health, etc.), services that are absolutely necessary and that the private sector cannot achieve in certain historical periods, not being profitable, or being inaccessible in point of investment or timeframe.

In terms of economic and financial any debt defines an obligation assumed by a natural or legal person (the debtor) to another person (the creditor), who has a counterpart claim a legally attested in a juridical relationship, concerning paying back, within a certain time, a sum of money or economic goods, according to a contractual relationship or a law (Săvoiu, 2010).


The dictionary definitions show that “public debt represents the obligations of governments, particularly those evidenced by securities, to pay certain sums to the holders at some future time, being distinguished from private debt, which consists of the obligations of individuals, business firms, and nongovernmental organizations” (Encyclopaedia Britannica), or circumscribe all obligations assumed by the State when making internal and / or external loans to finance the economy when it is facing budget deficits, with insufficiency reserves and other phenomena of imbalance (Dictionary of Economics).

The forms of public debt are varied, ranging from internal to external (or foreign) debt, according to its place in relation to the jurisdiction of the issuer of debt securities, from short-term (usually infra-annual) debt, to medium term debt, which generally includes debts with a maturity of less than five years, or unconsolidated (floating debt), and especially long-term debt, the extreme time horizon defining periods from five to 99 years, or more, being dominated by periods between two and three decades, and the debt is renamed funded or consolidated debt.

In relation to the issuer, public debt is government debt (through securities issued directly by the state government or the central government), and local government debt, (including other public organizations, which are in local government subordination, or even autonomous). New concepts or subclasses of public debt continue to emerge, which deepen its original meanings, i.e. implicit public debt, as the promise of a government to provide future social benefits from the State, including pensions, health and education spending, which is a revealing example in this context. A global public debt clock, compiled from data provided by the Economist Intelligence Units and available on http://www.economist.com/content/global_debt_clock evaluated, on 6 November 2013 at 2:39 p.m., an overall public debt of 51,935,518,937,774 U.S. dollars, and five minutes later the public debt grew to 51,935,543,228,397 U.S. dollars, i.e. 24,623,290 US dollars more, or an average of $ 4,858,000 per minute; for the Romanian economy, at the end of 2013, it estimates a level of public debt of 61,857 billion U.S. dollars (representing approximately 35.8 % of GDP, and per capita about U.S. $ 2,900).

External debt, through its recognized importance and its remarkable impact, is defined distinctly in dictionaries as “a loan that one country owes to another country or institutions within that country” (Investopedia Dictionary), or “the total amount of money that a country owes to other countries” (Cambridge Dictionary), including international institutions such as the International Monetary Fund (IMF), a loan delimited by taxes on goods and services taxes or outstanding loans, and caused by a negative balance trade. External debt, in a general sense, brings together, in a single amount, the debts payable on a short and average term and long-term debts, ensuring the risk of default by establishing a level of foreign exchange reserves in the debtor country as a limiting threshold, which can never be exceeded by the level of outstanding short-term external debt.


Figure 1. Distribution of global public debt at the end of 2013 and the estimated level for the Romanian economy

Source: Economist Intelligence Unit şi http://debtclock.s3.amazonaws.com/index.html#debt+2013+o+ro+xx+xx

This causes the short-term external debt not to be usually aggregated in the

pragmatic and methodological concept of total external debt or gross external debt, and when this concept covers all the types of loans incurred by residents of an economy in relation with the rest of the world, regardless of whether or not there is State guarantee, a special mention of the type "including short-term debt" is usually made (Korka and Tuşa, 2004, p. 192), in the specific financial analysis papers, which also include short-term debt amounts. If gross external debt is reduced by loans given and not yet repaid in the relations between residents of an economy and the world, considering, as a rule, only the liquid and easily movable claims (claims for which there is a clear prospect of repayment by the external borrowers are not aggregated). Net external debt forms a concept specific to the vast majority of countries around the world, which appear in their relationship with the rest of the world in a double aspect, being simultaneously both a debtor for a foreign country, and offering loans to non-residents, which are repayable in the future.

Following the first investigative and interrogative cycle of the modern demarche (Wild & Pfannkuch, 1999) specific to the statistical thinking reasoning applied in a post - Keynesian contemporary manner, from the broad concept of aggregate demand and from the general finding Revenues - Expenses = Net Savings, if one tries to rearrange all these aspects in a new type of relationship can fiind an original solution:

Expenses = Income - (net savings) (1) initially introducing relation to expenditure and substituting the concept of net savings limit coverage to increase net debt (D1-D0), and thus transforming the left part into the right one will finally get: Expenses = Income - (net savings) = net income + Increase Debt (2)


Another, more pragmatic signification is that of a methodological type, specific to the main international institutions busy in assessing economic activities focused on significant statistical indicators. Table 1. Major statistical features captured in the methodological definitions

of public debt - (PD) and (gross) external debt - (G)ED Public debt-PD (Gross) external debt - (G)ED Eurostat/OECD-PD are the external obligations of the government and public sector agencies. http://stats.oecd.org/glossary/search.asp)

Eurostat/OECD-(G)ED is the outstanding amount of those current, and not contingent liabilities owed to non-residents by residents of an economy that require payment(s) either of principal and/or interest by the debtor in the future. (http://stats.oecd.org/glossary/search.asp)

IMF-PD consists of all debt liabilities of resident public sector units to other residents and non- residents. (http://www.tffs.org/edsguide.htm)

IMF -(G)ED is the outstanding amount of those actual current, and not contingent, liabilities that require payment(s) of interest and/or principal by the debtor at some point(s) in the future and that are owed to nonresidents by residents of an economy. (http://www.tffs.org/edsguide.htm)

The typology of debt is in a continuous expansion today, and includes – in

addition to the concepts of public or private debts, arising from the form of ownership the debtor entity belongs to, and external and internal debt in relation to a well-defined economic space, through the concept of national economy – more and more new classes of debt, from sovereign debt in relation to the convertible nature of the currency, to the active and passive debt in relation to the presence or absence of interest, from repayable or perpetual debt in keeping with its cessation, and implicitly having recourse to a new loan, to sovereign debt, or more recently, in the delicate case of Greece: an "odious" debt, etc.

The term external debt, confronted with public debt, is and will remain the dominant concept in the context of current global, no less than GDP as compared to GNP (gross national product), both in the economic literature, and in the statistical analyses or econometric modelling for their expanded coverage level and ability to extensively illustrate NCC economies, thus characterizing the overwhelming majority of the world’s nations. By its complexity, external debt becomes a more important barometer, especially when it covers, in significant proportions, both public or government debt, and the liabilities of companies and private firms, and to the extent that it is compared with the major macroeconomic the result, i.e. the gross domestic product of an economy, it turns into a major signal of exceeding the sustainability threshold admitted in macroeconomic theory.


2. The public and external debt in Romania-A statistical analysis based on classical indices and relative indicators during the last seven years

Assessing the trends of public debt (PD) and external debt (ED) is done following a set of analyses focused on specific statistical indicators, aimed at assessing or accurately estimating, first of all, their level, drawing on absolute indicators of PD or ED volume, but also relative indicators in relation to the final results of the economy, expressed as GDP or GNP (ED/GDP or ED/ GNP, and PD/GDP or PD/ GDP) compared to the population (ED/capita and PD/capita), or export volume (ED/capita or PD/capita) in euros or U.S. dollars.

Table 2. Absolute values and relative indicators of the public debt and external debt of Romania

2005 2006 2007 2008 2009 2010 2011 2012 External debt-ED-mil. € **

30914 41196 58628 72354 81205 92458 98724 99 209

Public debt - PD – U.S. mil. USD

15789 20845 30818 36904 43730 46244 52955 57668

Gross domestic product-GDP-mil.€

79747 97787 124654 139762 118269 124396 131364 131747

Exports of goods/services, X-mil. €

26359 31438 36434 42479 36148 43982 52528 52 560

ED/GDP (%) 38.8 42.1 47.0 51.8 68.7 74.3 75.2 75.3 PD/GDP (%) * 17.3 16.3 18.7 20.5 25.4 28.2 30.8 33.3 ED/Population - € / person *

1427.91 1906.85 2722.35 3368.86 3778.14 4309.28 4605.49 4631.61

PD/Population - USD / capita

729.29 964.88 1431.01 1718.28 2034.58 2155.34 2470.36 2692.25

ED/X (%) 117.3 131.0 160.9 170.3 224.6 210.2 187.9 188.8 Source: Balanţa de plăţi şi poziţia investiţională internaţională a României, Raport annual, 2012 [Balance of payments and international investment position, Annual report 2012] (http://www.bnr.ro/ PublicationDocuments.aspx?icid=6843) and Economist Intelligence Unit (http://www.economist.com/content/ global_debt_clock). *Note: The calculations were made by the authors for these indicators to ensure comparability of measurements either in dollars or in euros, in relation to the international evaluation indicators **Note: Also contains short-term debt (http://www.bnro.ro/page.aspx?prid=7436).

When the amount of external debt also appears as a relative indicator, then it shows the intensity of external indebtedness and thus serves to nuancing international comparisons concerning the external indebtedness of the various countries or the severity of their external indebtedness rate (the rate of external debt as a ratio of GDP to ED, or the external indebtedness of the state, established as a ratio of GDP to PD). The ED / GDP ratio’s critical threshold is the value of "one" (1), already exceeded by the most heavily indebted countries in Europe, and the PD/GDP ratio is limited in the EU to 60% of GDP for all the member countries of the community. The indicator most frequently evoked in specialized statistical analyzes remains ED/capita or PD/capita, along with another relevant indicator in terms of the effort to repay the loans engaged by opening the economy towards exports, is the ratio of external indebtedness, calculated as the ratio of external debt to exports of goods and services of the country analyzed (ED/X).


The result can also be interpreted as the number of years-exports needed for repaying external debt / arrears (if analyzed as a simple multiplier, so as a coefficient). Obviously, the higher the result, the more consistent the risk for the resident entrepreneur, or in general the businessman who continues to transact in such an economy. The ED/X ratio denotes (with the rare exceptions of the post-recession years) continued deterioration in the purchasing power of exports by the fact that their value flows and export receipts are affected (they are ever lower compared to the value of foreign ore external debt), for repayment of both the debt and the interest incurred on loans repaid. A debt that approached a multiplier that exceeded even 200%, as shown by the indicator for Romania in 2009 and 2010, describes the galloping trend of export deterioration realtive to the indebtedness of the national economy, which requires over two years’ export to cover the external debt. Among the many possibilities for structural analysis of external debt and public debt, which comprise presentations and analyses focused on the distribution of foreign debt by the year of repayment in an economy, the distribution by the contracting currency, the interest rate, the form of repayment, the distribution by type of creditor (public / private sources), or by the institutional types of the creditors, the distribution of external debt in keeping with the purpose to which it was engaged: investment in the economy or infrastructure, to cover a temporary deficit in the supply of consumption goods, or to balance the current account of the balance of payments (BEP), or the distribution of foreign debt incurred by sector (private / public), in Table 3 below in the present contribution the value of the multilaterals in the external debt (multilateral / ED) is exemplified for its expressive structural dynamics, then the rate of the dynamics of interest per export (INT / X), and the structural dynamics of short-term debt out of the medium- and long-term debt (ST/MLT).

Table 3. A dynamic analysis of the relative level of the external debt’s indicators in Romania

2005 2006 2007 2008 2009 2010 2011 2012 External debt-ED 30914 41196 58628 72354 81205 92458 98724 99 209

- medium-and long-term debt-MLT 24642 28622 38 711 51 762 65 616 72 909 75 929 78 742 - short-term-ST 6 272 12 574 19 917 20 592 15 589 19 549 22 795 20 467 Exports of goods and services-X 26359 31438 36434 42479 36148 43982 52528 52560

Interest rates-INT 1 163 1 610 2 298 3 237 2 786 3 014 3 601 *** Multilaterals/ED 18.4 13.8 9.3 9.0 12.3 25.9 25.9 *** INT/X 4.4 5.1 6.3 7.6 7.7 6.9 6.9 *** ST/MLT 25.4 43.9 51.5 39.8 23.8 26.8 30.0 26.0 Source: Balanţa de plăţi şi poziţia investiţională internaţională a României, Raport annual, 2012 [Balance of payments and international investment position, Annual report 2012] (http://www.bnr.ro/ PublicationDocuments. aspx?icid=6843) and Economist Intelligence Unit (http://www.economist.com/content/ global_debt_clock). *Note: The calculations were made by the authors for these indicators to ensure comparability of measurements only in euros, in relation to the international evaluation indicators **Note: Also contains short-term debt (http://www.bnro.ro/page.aspx?prid=7436). ***Note: the data are not available.


Any of the static or dynamic analyses of the interest rate structure of public or foreign / external debt on a long or medium term shows that loans with variable interest rates have, and will continue to have, a majority for Romania (around ¾ of the total). Weight gain of multilaterals of ED can also describe some positive aspects, but certainly the dynamics of export interest rates and short-term debt ratio of the medium and long-term debt identify aggravating trends.

The dynamic analysis of public and external indebtedness is measured by the three indicators of statistical analysis of the variation of public and external debt : the absolute rate of public and external debt (RED şi RPD), deduced from the specific index (IED and IPD) points, in Table 4, to an upward trend, with rare absolute, and especially relative involutions of the amount of public and external indebtedness.

The major economic and financial effects of public and external debt emphasize, through the analysis of debt annuity, a quite aggravating reality in Romania: both types of debt engaged that must be repaid, both as principle amount borrowed (the principal of the debt delimiting the annual installment due - AID), and also combined with the payment of the interest on loans still outstanding (annual interest mass - AIM). The annuity or external debt service (EDS) practically defines this aggregate, or it is defined by the welknown relation: EDS = AID + AIM.

Table 4. A statistical confrontation of Romania’s public and external foreign

debt

2005 2006 2007 2008 2009 2010 2011 2012

External debt-ED - € mil. 30914 41196 58628 72354 81205 92458 98724 99 209 Public debt – PD – $ mil. 15789 20845 30818 36904 43730 46244 52955 57668 Index of external debt- IED 143.8 133.3 142.3 123.4 112.2 113.9 106.8 100.5 Index of public debt – IPD 78.6 132.0 147.8 119.7 118.5 105.7 114.5 108.9 Rate of external debt- RED 43.8 33.3 42.3 23.4 12.2 13.9 6.8 0.5 Rate of public debt - RPD - 21.4 32.0 47.8 19.7 18.5 5.7 14.5 8.9

Table 5 emphasizes how great the payment effort is, in both economic and

financial terms; we used four relatively significant indicators, i.e. the share of external debt in GDP and exports (EDS / GDP), along with the percentage quota of external debt service to the total value of exports (EDS /X), and the ratio of external debt service and the official reserves, along with the ratio of short-term debt and the official reserves, underlines severity of the failure of observing the theoretical limiting threshold for the future of an economy, implicitly of Romania.


Table 5. Qualitative indicators of the economic and financial external debt of Romania

2005 2006 2007 2008 2009 2010 2011 2012

External debt service- EDS 13578 19801 29925 45575 49038 43759 46232 50538 External debt on short term – ST

6272 12574

19917 20592 15589 19549 22795 20467

Gross Domestic Product – GDP

79747 97787

124654 139762 118269 124396 131364 131747

Exports of goods and services-X

26359 31438

36434 42479 36148 43982 52528 52560

Official reserve-OR 18259 22935

27187 28270 30 858 35 951 37 252 ***

EDS / GDP 17.0 20.2

24.0 32.6 41.5 35.2 35.2 38.4

EDS/X 51.5 63.0

82.1 107.3 135.7 99.5 88.0 96.2

EDS/OR 74.4 86.3

110.1 161.2 158.9 121.7 124.1 ***

ST/OR 34.4 54.8 73.3 72.8 50.5 54.4 61.2 *** Source: Balanţa de plăţi şi poziţia investiţională internaţională a României, Raport annual, 2012 [Balance of payments and international investment position, Annual report 2012] (http://www.bnr.ro/ PublicationDocuments.aspx?icid=6843) and Economist Intelligence Unit (http://www.economist.com/content/ global_debt_clock). *Note: The calculations were made by the authors for these indicators to ensure comparability of measurements only in euros, in relation to the international evaluation indicators **Note: Also contains short-term debt (http://www.bnro.ro/page.aspx?prid=7436). ***Note: the data are not available.

It is theoretically estimated that a share of EDS / X up to 15 % would not

affect the purchasing power of a country on the international market and would not disrupt its economic balance, and the dramatic character contained in the values in the table requires the central bank’s intervention to restore the purchasing power, and emphasizes the constant care for the relocation of its official reserves within the new parameters of short-term debt.

3. Some econometric models of public debt and external debt in Romania

Based on the concepts and data describing certain trends in the evolution of public debt and external debt in Romania, a number of simple econometric models of public debt and external debt in Romania, as endogenous variables have been drawn. After identifying a set of exogenous variables selected according to previous analyzes, the uniformity, asymmetry (skewness), flatness (kurtosis) and normalcy of the data distributions were evaluated for the last 15 years, by descriptive statistics before the modelling stage.


Once the exogenous variables were analyzed, a correlation matrix was generated in Table 6, which allowed the formulation of the first modelling assumptions, and led to parameterizing some simple econometric models exploiting the software package Eviews.

Table 6. Matrix of corelation between twelVe distributed variables used in the

modelling stage SER01

ED/GDP SER02

PD/GDP SER03

FDI/GDP SER04

Economic Growth

SER05 Budget Deficit

SER06 World EG

SER07 EU EG

SER08 World FCF

SER09 EU FCF

SER10 World

Savings

SER11 EU

Savings

SER12 EU FDI

SER01 1.000000 0.584919 -0.341186 -0.256215 -0.505704 -0.167638 -0.562604 -0.795987 -0.764400 -0.610621 -0.687262 -0.541491SER02 0.584919 1.000000 -0.834730 -0.358934 -0.295402 -0.033419 -0.307548 -0.847309 -0.796640 -0.632636 -0.794766 -0.308499SER03 -0.341186 -0.834730 1.000000 0.549446 0.433080 0.205762 0.288124 0.637479 0.511340 0.615396 0.679268 0.001661SER04 -0.256215 -0.358934 0.549446 1.000000 0.591408 0.439890 0.411926 0.351672 0.380130 0.457935 0.560259 0.063033SER05 -0.505704 -0.295402 0.433080 0.591408 1.000000 0.523228 0.512644 0.344295 0.220446 0.544646 0.546465 0.011319SER06 -0.167638 -0.033419 0.205762 0.439890 0.523228 1.000000 0.853176 0.235289 0.163093 0.584069 0.413843 0.220483SER07 -0.562604 -0.307548 0.288124 0.411926 0.512644 0.853176 1.000000 0.606086 0.557256 0.781200 0.688062 0.444942SER08 -0.795987 -0.847309 0.637479 0.351672 0.344295 0.235289 0.606086 1.000000 0.962491 0.854462 0.903892 0.631056SER09 -0.764400 -0.796640 0.511340 0.380130 0.220446 0.163093 0.557256 0.962491 1.000000 0.759100 0.872504 0.702497SER10 -0.610621 -0.632636 0.615396 0.457935 0.544646 0.584069 0.781200 0.854462 0.759100 1.000000 0.903668 0.501837SER11 -0.687262 -0.794766 0.679268 0.560259 0.546465 0.413843 0.688062 0.903892 0.872504 0.903668 1.000000 0.451796SER12 -0.541491 -0.308499 0.001661 0.063033 0.011319 0.220483 0.444942 0.631056 0.702497 0.501837 0.451796 1.000000

Abbreviation note: Foreign Direct Investment as % of GDP = FDI/GDPi; World Fixed Capital Formation as % of World GDP = W FCFi. European Union Fixed Capital Formation as % of EU GDP = EU FCFi. Economic Growth = EG Software used Eviews.

Table 7 and 8 below summarise four specified econometric models,

parameterized and validated for the Romanian economy, with public debt and external debt as endogenous variables.

Table 7. Two unifactorial models of external debt (ED) based on World Fixed Capital Formation (WCFC) and of public debt (PD) based on FDI in Romania

(FDI /GDP) Dependent Variable: SER01 Method: Least Squares Sample:1998 2012


C 366.3205 67.64873 5.415038 0.0001

SER08 -15.46431 3.261624 -4.741291 0.0004

R-squared 0.633595 Mean dependent var 45.90000

Adjusted R-squared 0.605410 S.D. dependent var 18.68078

S.E. of regression 11.73460 Akaike info criterion 7.886526

Sum squared resid 1790.110 Schwarz criterion 7.980932

Log likelihood -57.14894 F-statistic 22.47984

Durbin-Watson stat 0.424373 Prob(F-statistic) 0.000385

Dependent Variable: SER02 Method: Least Squares Sample:1998 2012


C 32.82515 2.261776 14.51300 0.0000

SER03 -2.490300 0.455635 -5.465554 0.0001








The correlation between external debt and global investment together with the correlation between public debt and FDI in Romania are relevant and significant in the unifactorial econometric models from table 7.

Table 8. Two multifactorial models of external debt (ED) and of public debt (PD)



C 797.2071 177.0163 4.503579 0.0015

SER02 -2.510380 0.987555 -2.542016 0.0316

SER08 -69.62142 22.48245 -3.096701 0.0128

SER09 32.27294 16.30818 1.978942 0.0792

SER10 23.72393 9.578653 2.476750 0.0352

SER11 -19.18521 10.50066 -1.827049 0.1010









C 122.7447 20.12595 6.098830 0.0002

SER03 -1.402389 0.442198 -3.171403 0.0113

SER08 -8.184838 4.445053 -1.841337 0.0987

SER09 1.890210 3.946742 0.478929 0.6434

SER10 4.570925 1.719121 2.658874 0.0261

SER11 -2.920790 2.237087 -1.305622 0.2241






Durbin-Watson stat 2.336646 Prob(F-statistic) 0.000035 Software used Eviews.

Table 9. The final econometric models of external debt (ED) and of public debt (PD)

Sample: 1998 - 2012

Dependent Variable: ED or PD Method: Least Squares

Specified models for the 15– term series

R-squared F-statistic

SER01 - ED EDi = 366.32 + (- 15.46) × W FCFi + εi 0.633595 22.47984 SER02 - PD PDi = 32.83 + (- 2.49) × FDI/GDPi + εi

0.696774

29.87228 SER01- ED EDi = 797.21 + (-2.51) × PD/GDPi + (-69.62) ×

WFCFi + (32.27) × EUFCFi + (23.72) × World Savingsi + (-19.19)×EU Savingsi + εi

0.801183 7.253548

SER02 - PD PDi = 122.74 + (- 1.40) × FDI/GDPi + (-8.18) × WFCFi + (1.89) × EUFCFi + (4.57) × World Savingsi

+ (-2.92)×EU Savingsi + εi

0.938091

27.27484

Abbreviation note: Foreign Direct Investment as % of GDP = FDI/GDPi; World Fixed Capital Formation as % of World GDP = W FCFi. European Union Fixed Capital Formation as % of EU GDP = EU FCFi. Economic Growth = EG Software used Eviews.


The key conclusion of the whole paper contribution shows that uni and

multifactorial econometric models can be made to simulate and estimate or predict the dynamics of both public and external debt, as well as some aspects of the most important exogenous variables that contribute to an optimized and efficient debt service applied to various periods or horizons, equivalent to 15 or even more than 15 years.

3. Some final remarks

The European economic world, in just two or three decades, based on budget deficits has left behind an avalanche of public and external debts. Today, almost all Europe felt the crisis of the public and external debts, based on a perennial manner of maintaining the illusion of “welfare state” for the developed countries or “surviving state” for the Eatern economies. This paper argues that emphasizing the importance of public debt, or the excessive detailing of the overall impact can be misleading or illusory aspects, external debt virtually remaining the keystone of the knowledge of turbulence and the medium- and long-term trends of developments in the Romanian economy, no less than in the European economies in general. Some prognosis estimate that Romania's public debt cuantified as % from GDP will exceed 50 percent by 2020, while the average growth expansion could be no more than 1.2%. Payment of interest on this debt at the horizon of 2020 will require government spending cuts severe that no elected government could not survive in the context of forecasts and current dynamics of development of Romania.The external debt could be more than 100 billion euros till the end of the next year, and the public debt will be around U.S.$ 66 billion, and all this estimations require analyses, solutions and policies focusing on new econometric modelling and simulations. During the last seven years, the external debt per capita has multiplied itself more than three times, and the public debt per capita nearby four times.

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