Issue #2 (Volume 13 2024)

Russia’s open aggression against Ukraine has resulted in significant changes across all sectors of the Ukrainian economy and its financial sphere, including financial security. The paper aims to identify the impact of the primary macroeconomic determinants, i.e., military defense spending, non-performing bank loans, exchange rate, foreign debt, and state (total) reserves, on the financial security of Ukraine under martial law. The canonical correlation analysis is employed to assess the strength of the relationship between the above macroeconomic indicators and the level of the state’s financial security. It was found that the reduction of the state’s financial security level in 2022 was 63.9%, explained exactly by the changes in the above macroeconomic determinants after the start of a full-scale invasion. The study determined the degree of influence of each indicator on Ukraine’s financial security level. An increase in the level of military defense spending, non-performing bank loans, hryvnia’s devaluation, and external debt growth had a direct negative impact on Ukraine’s financial security. At the same time, an upsurge in total reserves had an indirect negative impact (through the external debt growth). The research findings confirm the necessity for effective monitoring and management of the macroeconomic indicators to maintain both Ukraine’s financial security and macro-financial stability in order to ensure its’ sustainable economic development during the postwar recovery period.

Acknowledgment
This research is financially supported by the NATO SPS Program “Security of territorial communities: evidence from the Eastern European countries”.

This study aims to investigate the relationship between government revenue and capital expenditures in Jordan from 2003 to 2022, with public debt as the moderating variable. Utilizing data from the Jordanian Ministry of Finance’s final accounts and the Central Bank of Jordan’s reports, the study employed regression analysis techniques in the statistical software E-Views to test the study’s hypotheses. The findings reveal a positive relationship between revenue and capital expenditures, indicating the significance of revenue in determining the level of capital expenditures. Additionally, a positive relationship is observed between public debt and the magnitude of capital expenditures, suggesting that a portion of capital expenditures is covered by government revenues while the remaining portion is financed by public debt. Upon introducing the moderating variable (public debt) into the analysis, the impact of public debt on the relationship between revenue and capital expenditures becomes evident, indicating that public debt strengthens the relationship between revenue and capital expenditures. In light of the study’s findings, the government should focus on enhancing and increasing revenue and financing sources while rationalizing expenditures. Moreover, it should strive to improve its services and infrastructure to attract more investments and reduce public debt.

Fraud is rampant in Indonesia, especially in the public sector, including regional governments. Fraud cases have touched both the central and the lowest levels in the villages, which ensnare many people in the village. This study aims to analyze the influence of the village financial system (Siskeudes application), transparency, and internal control on fraud prevention in village governance in Pinrang District, South Sulawesi Province, Indonesia. The sample includes village heads, treasurers, and village representative bodies, and it has a total of 51 people. The primary data are obtained from questionnaires using a quantitative approach and a multiple linear regression with the Statistical Product and Service Solution (SPSS) application. The research results show that the coefficient of determination (R2) is 0.657. Thus, the magnitude of the influence of village financial system, transparency, and internal government control on fraud prevention amounts to 65.7%. The results of the study show that the village financial system has a significant positive effect on fraud prevention (p-value = 0.025 < 0.05), transparency has a significant positive effect on fraud prevention (p-value = 0.031 < 0.05), and internal control has a significant positive effect on fraud prevention (p-value = 0.035 < 0.05).

This study aims to analyze how two different types of investments (local domestic and foreign direct investments at the provincial level) and revenues (booked by the provincial governments, general allocation funds, special allocation funds, local taxes, and retribution) affect investment loan decisions by local government banks in Indonesia. The study uses panel data applying ordinary least squares and multiple linear regression. Thus, 144 data were sampled from 2013 to 2021 from 16 local government banks out of Java Island in 21 provinces in Indonesia. The study found that local domestic investment at the provincial level affects investment loan decisions by local government banks. In contrast, foreign direct investment did not affect lending decisions, indicating that local domestic investment contributes to the real local economy at the provincial level. Different results were found in provincial revenues in the form of general and special allocation funds, which negatively affected loan investment decisions, possibly due to provincial revenues utilized to cover the financial deficit and capital expenditure spent chiefly on imported goods. Additionally, local taxes at the provincial level also negatively affect investment loan decisions, possibly due to fluctuations in local tax collection during COVID-19. However, the study found that local retribution contributes to predicting loan investment decisions, suggesting revenue collection by the governments considering local economic conditions. The study findings suggest that provincial governments should direct investments that can impact the local economy and spend their revenues on goods and services that can drive local economic growth.

Acknowledgment
The investment loan made by local government banks, which is associated with local investment and revenue, is part of a research grant project from the Economics and Business Faculty of Hasanuddin University. This project is a result of collaboration with national and international researchers. In carrying out this research, some inputs from people working in local government banks, financial service authorities, and provincial and regency governments are addressed.
Thanks to Ahmadi Usman for secondary data and Syahidah Ulhaq for some application programs enabling mapping literature, as well as Israa Natiq Jabar for supervising the result and applied some inputs in the section of research method.

The impact of research and development (R&D) expenditure is crucial for understanding contemporary economic development strategies. This study investigates the relationship between R&D spending as a percentage of GDP and economic growth, focusing on the South Caucasus countries (Azerbaijan, Georgia, and Armenia) and Israel, which is notable for its substantial R&D expenditure (5.71% of GDP in 2020). The objective is to evaluate the impact of R&D expenditure on economic development through the application of rigorous empirical methods. By employing a quantitative approach, this study aims to offer a detailed analysis of the impact of R&D investment on economic growth across various countries. Ordinary least squares (OLS) regression analyzes the association between R&D expenditure and GDP levels. Granger causality tests are utilized to investigate the causal relationships. The results demonstrate a significant positive relationship between R&D expenditure and GDP across all studied countries. Furthermore, the analysis reveals that GDP growth stimulates increased R&D investments in Azerbaijan and Armenia, as evidenced by Granger causality tests. To sum up, this paper underscores the critical role of R&D spending in driving economic development and highlights the necessity for policy initiatives focused on strengthening R&D frameworks.

The total fixed capital formation is one of the main and influential determinants of production function through its impact on production costs, competitiveness, and profits. The Iraqi gross domestic product depends on one sector (the oil sector) in financing the government budget, which may lead to crises in case of oil price collapse. Therefore, the study aims to clarify the imbalance in the production function and the real output of the Iraqi economy and to indicate the role of the total fixed capital formation in this imbalance. The econometric methods were used to measure the degree of influence of the total fixed capital formation (independent variable) on the gross domestic product (dependent variable) from 2004 to 2020. The results showed a robust relationship between fixed capital formation and gross domestic product, where the independent variable affects the dependent variable by 4.5%, while the oil sector dominated the total value added by its acquisition of the total fixed capital formation by 47.45%, and the productive sectors of agriculture and industry achieved value added of 3.8%. The study concluded that the distribution of total capital formation by sector has an impact on the gross domestic product. Therefore, it is necessary to distribute the total fixed capital formation to the productive and production-supporting sectors to achieve economic growth and diversify the structure of the gross domestic product.