About Book

Financial management is a vital activity in any organization. It is the process of planning, organizing, controlling and monitoring financial resources with a view to achieve organizational goals and objectives. It is an ideal practice for controlling the financial activities of an organization such as procurement of funds, utilization of funds, accounting, payments, risk assessment and every other thing related to money. It focuses on all aspects of financial management under the major themes of valuation, financial analysis and planning, capital budgeting, financing capital budgeting, long-term financing, working capital management, dividend decisions, corporate restructuring, risk management, monetary policy, personal and public finance and international finance. This book aims to present the emphasis on the behavioural issues in econometrics, financial management, quality control and optimization. It is concerned with systematic approach, fuzzy logic, financial resources, feasibility analysis, financial distress, perceived benefits, risk management practices and market methods. This book presents the complex subject of finance in the most comprehensible and easy to understand language. Such selected concepts that redefine this field have been presented in it. It will be of immense interest to students, researchers as well as practitioners to deal with the complexities of economic data and to test the predictions of economic theories.

Preface............................................................................................................v

Chapter 1 Different Market Methods for Transferring Financial Risks in Construction.................................................................................................1

Abstract...................................................................................................1

1. Introduction............................................................................................1

2. Transference or retention of the financial consequence of risks

in the construction industry...............................................................2

3. Insurance contracts facilitating risk transfer...................................5

4. Non-insurance risk transfer: contractual transfer embedded

within other contracts........................................................................17

5. Surety bonds for construction projects...........................................22

6. Emerging market technologies affecting construction risk........24

7. Conclusion............................................................................................25

Chapter 2 Managing International Financial Crises: Responses, Lessons

and Prevention...........................................................................................30

Abstract.................................................................................................30

1. Introduction..........................................................................................30

2. Learning from the past and revealing new strategies of

managing crises...................................................................................32

3. When bubbles burst............................................................................33

4. Theories on business cycles..............................................................35

5. Where does credit expansion lead to?............................................36

6. Public expectation from central banks...........................................37

7. Why do financial crises occur?........................................................38

8. Financial innovation and the “new financial architecture”........41

9. The euro area crisis and its lessons................................................43

10. Effective crisis management measures to avoid the worst........46

11. Results and conclusions.....................................................................53

Chapter 3 Antecedents of Satisfaction with Financial Services: Role of

Perceived Benefits.....................................................................................58

Abstract.................................................................................................58

1. Introduction..........................................................................................59

2. Theoretical foundations.....................................................................59

3. Hypotheses...........................................................................................61

4. Methodology........................................................................................64

5. Results...................................................................................................68

6. Conclusions and implications...........................................................72

7. Limitations............................................................................................74

8. Future lines of research.....................................................................74

Conflict of interest..............................................................................74

Chapter 4 Application of Kalman Filtering in Dynamic Prediction for

Corporate Financial Distress..................................................................81

Abstract.................................................................................................81

1. Introduction..........................................................................................81

2. Dynamic prediction models based on Kalman filtering

algorithm...............................................................................................83

3. A whole process of dynamic prediction for corporate financial

distress...................................................................................................86

4. Empirical analysis...............................................................................89

5. Conclusions and future work...........................................................95

Acknowledgements.............................................................................96

Chapter 5 Financial Feasibility Analysis of Natura Rab Business: Case

Study ...........................................................................................................99

Abstract.................................................................................................99

1. Introduction........................................................................................100

2. Materials and methods....................................................................101

3. Methodology of total cost calculation...........................................102

4. Results and discussion.....................................................................104

5. Conclusion..........................................................................................115

Chapter 6 Fractional Brownian Motions in Financial Models and Their Monte

Carlo Simulation.....................................................................................117

1. Introduction........................................................................................117

2. Fractional brownian motions in financial models......................121

3. Simulation with exact methods......................................................124

4. Approximate methods......................................................................134

5. A numerical example: fBm volatility model...............................145

6. Conclusion..........................................................................................148

Acknowledgements...........................................................................149

Chapter 7 Financial Resources in Rural Development – An Analysis of

Relational Capital in Credit Cooperatives ......................................153

1. Introduction........................................................................................153

2. Cooperative banking in the financial crisis context .................155

3. Relational capital...............................................................................157

4. The Delphi analysis .........................................................................160

5. Characterisation of credit cooperatives’ relational capital by

means of the Delphi analysis.........................................................161

6. Analysis of the results ....................................................................164

7. Conclusion .........................................................................................171

Chapter 8 Fuzzy Logic in Financial Management ............................................177

1. Introduction........................................................................................177

2. Methodology of financial forecasting............................................179

3. Consumer credit scoring model.....................................................187

4. Business credit scoring model........................................................198

5. Conclusions .......................................................................................207

Chapter 9 An Innovative Systematic Approach to Financial Portfolio

Management via PID Control ............................................................211

1. Introduction........................................................................................211

2. Strategic and tactical asset allocation ..........................................212

3. The PID controller acting on the experimental portfolio ......215

4. Mechanisms of action of the new asset allocation technique..217

5. Portfolio “A” vs. Portfolio “B” ......................................................221

6. Conclusion .........................................................................................228

Chapter 10 Risk Management Practices Adopted by European Financial Firms

with a Mediterranean Connection......................................................231

Abstract...............................................................................................231

1. Introduction........................................................................................232

2. Literature.............................................................................................234

3. Method................................................................................................238

4. Research questions............................................................................238

5. Results.................................................................................................239

6. Conclusion..........................................................................................245

Citation......................................................................................................249

Index...........................................................................................................251

About Author

Elomar Petritsch obtained his Ph.D. in Econometrics and Statistics from Public University, Valparaíso. He has written research reports and articles on managerial finance, corporate finance, financial management for IT services and risk management. His primary areas of scholarly and research interests lie in the fields of mathematical statistics in econometrics. He is an Associate Professor at State Open University, Quilmes. Petritsch consistently shares his knowledge with the researcher fraternity by organizing lectures and conferences around the globe.