Tax, maternity leave, economic resilience and the euro area are the four areas of focus in the autumn edition of the Bank of Valletta Review.
Now in its 44th edition, the publication features four papers of discussion penned by experts in their field.
Monique Micallef undertakes a study on ‘The potential for tax influence on unconsolidated financial reporting in Malta – the similarity to the UK’. The article examines any change in tax influence with the onset of the national financial reporting standard for SMEs under General Accounting Principles for Smaller Entities (GAPSE).
The study finds that different taxation and financial reporting requirements are followed for their different purposes and this has remained so with the recent onset of GAPSE. Consequently, Malta’s degree of disconnection is close to that of the UK and it appears taxation has not influenced accounting in Malta. Other academics and policy-makers will find the results interesting when predicting and explaining the accounting requirements of Malta and other countries.
In another paper, Svetlana Borg delves into ‘The implications in maternity leave on micro enterprise: the views of employers’. Her study examines the proposals made in the Estrela Report. As the majority of enterprises in Malta are micro enterprises, this study is intended to assess the direct and indirect costs associated with this proposal.
A questionnaire was drawn up to better assess the effects of this proposal on micro enterprises and the findings suggest that throughout the period of maternity leave, employers incur costs associated with the payment to the employee on leave, the engagement of a substitute, using overtime work, advertising the vacant job, training the substitute employee and loss of production due to the fact that the new employee would not be as productive as the employee on leave.
In his paper entitled ‘The nexus between economic resilience and corruption’, Philip D. Osei discusses the definition and the effects of corruption, emphasising the theoretical link between economic resilience and corruption, and, ultimately, economic growth and development. Evidence on the link between economic resilience and corruption indicate that they are negatively related, leading to the conclusion that countries that wish to improve their economic governance should develop appropriate policies and institutions to fight corruption.
Stephen Piccinino’s article themed ‘Testing the Fisher Hypothesis in the euro area’ tackles a highly contested topic in monetary economics. The Fisher hypothesis embodies a one-for-one relationship between (nominal) interest rates and inflation.
Throughout the years it was extensively tested by numerous authors using varying techniques. This paper seeks to investigate the existence of the Fisher effect in the euro area from 1999 to 2011, using the European interbank offered rate as a measure for interest rates, and the six-month maturing German Federal Securities as a measure of expected inflation.
The results of tests used in this study indicate that the Fisher hypothesis held when the entire data set was considered. However, evidence could not be provided for a unitary relationship between the two variables for the September 2008 – March 2011 period.
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