Irena Palić

The Regression Analysis of Individual Financial Performance: Evidence from Croatia

Abstract Background: A large body of empirical literature indicates that gender and financial literacy are significant determinants of individual financial performance. Objectives: The purpose of this paper is to recognize the impact of the variable financial literacy and the variable gender on the variation of the financial performance using the regression analysis. Methods/Approach: The survey was conducted using the systematically chosen random sample of Croatian financial consumers. The cross section linear regression model is estimated in order to assess how gender as a dummy variable and financial literacy as an ordinal categorical variable impact financial performance. Results: The results indicate that the average value of financial performance for men is higher than the average value of financial performance for women at the same financial literacy level. Furthermore, a higher level of financially literacy is related to a higher level of financial performance. Conclusions: Both gender and financial literacy have a statistically significant impact on individual financial performance. Increasing financial literacy and understanding gender differences in terms of financial literacy and financial well-being should be of interest to financial educators in their struggles to improve financial situation of citizens and for educators to create financial education programs intended for men and women.

Multivariate analysis of determinants of Internet banking use in European Union countries

The main objective of the paper is to analyse the determinants of Internet banking use in European Union countries based on EUROSTAT data for 2011. The considered determinants of Internet banking use are selected in line with relevant theoretical and empirical research and submitted to factor analysis which yielded two factors. The first extracted factor comprises Information and Communication Technology (ICT) infrastructure, i.e. broadband penetration rate and level of Internet access. The second factor comprises individuals’ level of Internet skills and GDP per capita. On the basis of the two mentioned factors, European Union countries are grouped into two clusters using cluster analysis. In order to analyse the impact of selected variables, a multiple regression analysis of Internet banking use is performed using extracted factors as independent variables. The regression analysis shows that an increase in ICT infrastructure leads to an increase in Internet banking use.

The empirical evaluation of monetary policy shock in dynamic stochastic general equilibrium model with financial frictions: Case of Croatia

Large body of empirical literature points to the tight integration of financial and credit markets with real economic activity as well as the need for inclusion of financial frictions into macroeconomic modelling. After the recent mortgage loan crisis which spilled over into the global financial crisis, the assessment of relationship of monetary policy and house prices gained in importance. The aim of this article is to test the compliance of monetary policy shock in calibrated dynamic stochastic general equilibrium (DSGE) model which includes financial frictions with the empirical impact of monetary policy shock in Croatia estimated using vector autoregression (VAR) model. After the DSGE model is calibrated, the VAR model is estimated for Croatia. The comparative analysis of impulse response functions of DSGE and VAR model is conducted. In both models, monetary policy shock has positive initial impact on interest rate and negative initial impact on house prices and output gap. Results indicate that empirical impact of the monetary policy shock adequately reflects the impact of monetary shock in DSGE model with financial frictions.

Analysis of Personal Income Taxation Determinants in Croatia in Long Run: Evidence from Cointegration Analysis

Abstract Personal income taxation remains an ongoing issue in Croatia. It is used as an important instrument of income redistribution. Moreover, it directly affects purchasing power of the working population. Numerous changes have been made in this type of taxation since the establishment of Croatian tax system. The aim of this paper is to analyse possible determinants of personal income taxation in Croatia. After offering brief insight into public finance theory regarding personal income taxation, the structure of personal income taxation in Croatia is explained. The empirical analysis of the determinants of personal income taxation in Croatia is conducted using cointegration analysis. Economic conditions, average monthly wage, and number of taxpayers are used as determinants of personal income tax used in this research. The cointegration analysis is conducted using monthly data from January 2008 to February 2016. The results of the research show a statistically significant negative impact of economic conditions and statistically significant positive impact of average monthly wage and number of taxpayers on personal income taxation in long run, what is in line with economic and public finance theory.

The long-run impact of personal income taxation on economic development: Evidence from Croatia

Abstract Since the endogenous growth model appeared in the economic theory, taxation has been considered as one of the key determinants of the economic growth. In the public finance theory, taxation is considered to have a negative impact on economic growth, which is explained by implications of tax revenues distortions on the economic activity. This assumption has been investigated by many empirical studies. The aim of this paper is to analyse the impact of personal income taxation on economic conditions in Croatia in the long-run. After providing a brief insight into the economic and the public finance theory regarding taxation and economic growth, previous relevant research is presented. The empirical analysis of the impact of personal income taxation on economic conditions in Croatia is conducted using the Johansen cointegration approach. The existence of cointegration is examined and the error correction model is estimated using monthly data from January 2000 to March 2016. The results of the research show that personal income taxation in Croatia has a significant negative impact on the economic growth in the long-run, which is in line with the economic theory and relevant empirical research.

The short-run and long-run behaviour of personal consumption in Croatia

In this paper cointegration and error correction models are used to explore the long run and short run behavior of personal consumption in Croatia as a function of income, house prices and total credit to households. The results of the analysis showed that income (approximated by net real wage), house price and total credits to households play an important role in determining personal consumption. Also, lagged values of house prices showed significant impact on consumption, suggesting house price persistence. The most likely factors driving the house price persistence may include expectations and idiosyncratic institutional characteristics like illiquid real estate markets, inadequate property rights protection, high transaction costs, and underdeveloped financial instruments.