Theses supervised by Mustafa Besim
11 theses · Eastern Mediterranean University
Integrated Investment Appraisal and Risk Analysis of an Undeveloped Oil Field Project in Libya
The Murzug region in Libya has an immense potential for oil production. As a result of the perishable nature of raw materials, it imposes a huge effect on the economy. The oil production plant will process high profit and help to the growth of the region. The aim of this study is to evaluate the economic potential of an undeveloped oil field in the Murzug Basin, south of Libya. The thesis aims to provide a financial model to serve as a guide for the future investment in oil field development program in remote area, the southern desert region of Libya. This thesis presents financial analysis study involving financial and sensitivity analyses. The study utilises a financial analysis approach to the problem of identifying and investigating the factors that control and effect the finances of the studied project. Thus, the study uses a financial and sensitivity analyses and draws on data obtained from an existing exploration activity and using it as an adjacent or an analogue to NC101 oil field and development project. This oil field is located south of Libya in the Murzug basin and is called the Al Shararah Field. I have personally made a site visit to the AL Shararah field and have interviewed several geologists, engineers and managers in order to collect accurate information and use them as reference to my thesis. The oil production will generate a positive NPV of 313 million usd dollars and an IRR of 17%, which means the project will generate enough profit from the owner’s perspective. The study also shows that the project will generate enough cash flow to pay its debt obligation. From the cash flow we can observe that the project will generate enough cash to cover its debts as the ADSCR and LLCR average ratio are 3.06 and 3.45 respectively. As for the sensitivity analysis we have identified six risky varaibles which are oil price, foreign inflation (USA) , tariffs per barrell , investment cost overrun, discount rate and the proportion of oil exported . The project was most sensitive to oil price, tariffs per barrel and foreign inflation. As for investment cost overrun the project was not sensitive towards it at all. The project's risks were evaluated using a Monte-Carlo simulation. The distribution of probability is used to show the uncertainty related to the key project variables. The simulation of Monte Carlo analysis was taken for oil prices, tarrif per barrel and foreign inflation .
Determinants of Stock Return in BIST
In this study, we investigated the effect of macroeconomic variables on the volatility of Turkish stock market returns. We examined the effect of growth in gross domestic product, inflation, treasury bills rate, return on oil, exchange rate of major currencies against Turkish Lira, and contagion effect proxied for average of four major stock market returns most especially in United States, United Kingdom, Germany, and Japan. Using quarterly data from the periods 2002-2016, we carried out descriptive, correlation, and classical linear regression analysis. Empirical results show that there are three main determinants of Turkish stock market returns such as; return on oil, exchange rates, and contagion effect. Based on the results, we are of the opinion that, investors should speculate the fluctuations in oil price and monitor Turkish Lira against major currencies. Investors who are seeking international diversification benefits, especially through Turkey Lira should put into consideration impacts of contagion effect and other major stock market variables. Keywords: Turkish stock market, exchange rate, contagion effect
Non-Performing Loans in Jordan
The issue of non-performing loans has been a major area of concern in Jordan. This study was focused on analysing a quantitative study in Jordan on non-performing loans, by deriving data from 12 banks in Jordan. The data used for the analysis were extracted from 2001 to 2019. Several objectives were analysed in this study. These objectives include; investigation of bank specific determinants of non-performing loans, the analysis of macroeconomic variables of non-performing loans and an overall analysis of non-performing loans in Jordan. The data were analysed using e-views, which were later interpreted. Moreover, results from the correlation matrix indicated that CAR, LD, NL, GDP, EMP have a negative relationship with non-performing loans, and ROA, LTOA, INF, CRED, and BUDG have a positive relationship with the dependent variable. In addition, regression results shows that among bank specific variables CAR, ROA, DOA, LD and LTOA were found to be statistically significant and that increases in these banks' variables would affect the non-performing loans negatively. Beyond that, it was determined that only inflation among macroeconomic variables would affect the non-performing loans statistically significantly and positively. Keywords: Non-performing Loans, Jordan Banks, Macroeconomic Factors.
The Impact of Turkish Monetary Policy on North Cyprus Banking Sector
Turkish Lira is the legal tender in the Turkish Republic of Northern Cyprus. This makes the Turkish Republic of Northern Cyprus be in the Turkish lira zone. The monetary policy decisions of Turkey’s central bank, to a great extent, determines the monetary policy in the Turkish Republic of Northern Cyprus. Even though the Turkish Republic of Northern Cyprus has its own central bank, the impact on the policy change is very minimal and so the monetary policy in the Turkish Republic of Northern Cyprus has to be in parallel with Turkey's central bank. This thesis aims to investigate the impact of the monetary policy changes and the instability in Turkey on the banking sector of the Turkish Republic of Northern Cyprus. This panel data study will cover the period of 2004-2019. The findings show that interest rates have a significant and positive impact on return on equity and return on the asset on banks, implying that an increase in interest rates improves the financial performance of financial intermediaries in the Turkish Republic of Northern Cyprus. An increase in total loans to total deposits has also been found to have a positive and significant impact on return on equity and return on assets. Inflation, on the other hand, has a negative impact on the return on equity. Changes in exchange rates are estimated to have no significant effect on the bank's return on equity and return on asset in the Turkish Republic of Northern Cyprus. However, this is not the case for nonperforming loans where this study finds that fluctuations in exchange rates worsen the asset quality of the banking sector. As expected, instability in Turkey proxied by the instability index also has a deteriorating significant impact on the non-performing loans. An increase in total deposits and the ratio of total loans to total deposits both have a significant and positive impact on total loans. This study also finds that an increase in interest rates leads to a decrease in total loans. Finally, gross national product growth which has been used as a control variable in the model has been found to have a positive association with the size of banks in the Turkish Republic of Northern Cyprus. Exchange rates, total loans to total deposits, and total deposits were also found to have a positive impact on the size of the sector. However, interest rates indicate a negative impact on the total asset size of the banking sector in the Turkish Republic of Northern Cyprus. The findings of this study highlight the need for policymakers to keep a close eye on Turkey's monetary policy due to its high involvement in the Turkish Republic of Northern Cyprus banking activities. In addition, policymakers should also try to develop measures for mitigating the negative impact of inflation and instability that originates from Turkey.
Financial Inclusion and Islamic Banking in the Middle East and North Africa
In this thesis, we investigated the impact of Islamic banking on financial inclusion in 14 Middle Eastern and North African (MENA) countries. For this purpose, we employed a probit estimation method on the 2014 World Bank Global Findex database, analysing the association between individual characteristics and the impact of Islamic banking among MENA countries with different levels of development. We found that financial inclusion, particularly among the middle-income countries of MENA, is relatively worse than the world average. Our estimation model indicates that financial inclusion in MENA is positively affected by the characteristics of being male, wealthier, and older. Interestingly, we found that education is not positively associated with the use of formal banking accounts in the middle-income countries, but it is, as expected, in the high-income countries. We found that, in general, Islamic banking share has a negative impact on financial inclusion. But we also documented with empirical evidence that Islamic banking helps individuals with a high degree of religious affiliation to be financially included. Furthermore, estimates show that the effect of Islamic banking on financial inclusion is greater in middle-income countries than in high-income countries within MENA. Keywords: financial inclusion, financial intermediaries, financial services, Islamic banking, MENA.
The Impact of Capital Structure on Non-Financial Firms Performance: Evidence from South Africa
This research studies the impact of capital structure on firms’ performance, based on a sample of 30 South African firms listed on the Johannesburg stock exchange market during the period 2009-2014. The performance measures used are; return on equity (ROE), return on asset (ROA), and Tobin’s Q ratio which are the dependent variables. Total debt ratio (TDR), long term debt ratio (LTDR), short term debt ratio (STDR), debt to equity ratio (D/E) and size have been used as measures of capital structure. By using the random effect panel data regression method, we found that ROE is significantly negatively related to TDR and D.E ratio. Also, Tobin’s Q is positively related to STDR and negatively related to size. However, there is no statistical significant relation between ROA and capital structure of firms. Aside from the positive relationship between Tobin’s Q and STDR, we can conclude that capital structure has a negative impact on firms’ performance. Keywords: Capital structure, Firm performance, Return on Equity, Return on Asset, Tobin’s Q.
Enabling the Disabled: The Case of a Social Project
Most young adults or adolescents with Down syndrome stay at home after the age of 18. Educational centers and rehabilitation centers in Jordan do not accept individuals with Down syndrome above 18 years. The objective of the study is to conduct a finan-cial analysis using capital budgeting techniques to understand if the project is finan-cially feasible and profitable or not. The project is an educational center that is aimed to help young adults with Down syndrome some skills that help them engage in the real life and make them feel included. The methods used in the study were Net Present Value (NPV), Discounted Payback Period, Internal Rate of Return (IRR), and Sensi-tivity analysis. The data used in the study was gathered from sources such as the World Bank, educational center in the same field in Jordan, and the water and electricity min-istries. The projected resulted with an NPV of 47,861.03 JD and an IRR of 16%. The sensitivity analysis tests the financial feasibility of the project under different scenarios to give a glimpse of what the future holds and a chance to take precaution may. The project was able to show good indications of financial feasibility. However, the risks may be high if some circumstances change. For the risk, a sensitivity analysis was done on the most effective parameters, which were the number of students, the fees charged, the salaries paid, and the rent paid. A change in these parameters whether negative or positive impacted the financial feasibility of the project. Keywords: Down Syndrome, Capital Budgeting, Net Present Value (NPV), Internal Rate of Return (IRR), Discounted Payback Period, Sensitivity Analysis.
Forex Market in Turkey
Foreign exchange market (FOREX) is the biggest volume financial market in the world. Through FOREX, one currency of a country is exchanged for another country’s currency. Since it is the world’s largest financial market, overall estimated daily average turnover of upwards is about $5.1 trillion. With the extend of globalization, both developing and developed countries have started to use similar policies among which financial liberalization is one of them. Financial liberalization is opening up economies to international capital flows, in particular by restructuring regulation of developing countries where controls and restrictions are either reduced or removed in order to attract international financial activities of developed countries to their own countries. In this study, analysis was done for Turkey’s position in the world; specifically, for the period before and after Capital Market Boards regulation. The new regulation creates authority to brokers. In order to compare the effect of changing legal structure on the participants of forex market, the groups of years were separated as the selected values of the year of 2012 before and after. The results of independent test were carried out. In conclusion, after the comparison of the parameters, the change in legal structure has significantly led to expansion in forex transactions. Test results for transactions in forex market shows that EUR/USD transactions have significantly increased after the regulation. In addition, the increase in the participation of both local and foreign investors after the regulation has also found to be statistically significant. Keywords: Forex, Forex Markets, Regulation and Legal Changes, Turkey.
Determinants of Capital Structure: Textile Firms in Two Different Groups of Economies
The objective of this study is to unveil the effects of determinants of capital structure of textiles firms in two different groups of economies, one being developed (Italy, Spain) and the other developing (Pakistan, India). The study consists of 120 textile sector firms’ data from two economies at different stages of development. Data has been gathered from 30 companies of each country’s textile sector for the period of 2012 to 2017; it is balanced panel data with 720 observations. The study enlightens us on the differences of capital structure decision making in countries with different level of income. The dependent variables includes total debt, long term debt and short term debt while tangibility, age, size, profitability, liquidity, non-debt tax shield and income level are independent variables. Here we use the pooled least square and fixed effect techniques on the regression model for the capital structure. The relationship of independent variables and debts of the firm is discussed. We found that, there is negative relation between profitability and leverage of a firm. Tangibility and liquidity is negatively related to total debt and short term debt but positively to long term debt. Non debt tax shield, size has positive relationship with leverage. income level is positively associated to firm’s debts ratios. Furthermore, in group of developed economies size, liquidity, profitability and NDTS are more influential while on the other hand in group of developing economies size and profitability and NDTS play more significant role on capital structure decisions. Keywords: capital structure, profitability, developing economies, leverage
A Comprehensive Analysis on Interest Rate Spread in North Cyprus: Panel Method, 2002-2012
This study aims to measure and analyze determinants of interest rate spread in North Cyprus. In this respect, firstly spread is calculated. Then, analysis made to determine whether IRS is at high or reasonable rates for different types of spreads. In literature review, many studies select various independent variables for empirical analysis to understand the determinants of IRS. In the light of this information North Cyprus case studied. In this respect, 18 banks selected from the banking system of North Cyprus and categorized into 3 groups; privately owned local banks, publicly owned banks and privately owned foreign branch banks. With the help of EViews 8 software program, descriptive statistics analysis performed and general statistics of three separate bank group and all banks obtained successfully. In the analysis Panel Data Method has been employed. Sample period started from 2002 and ended 2012. Firstly, unit root tests performed and founded that all dependent and independent variables are stationary. Then, Ordinary Least Squares Method used to get final outcomes of this study. For different spread models, three different equation models were created. Hausman Test showed that in all of the models Random Effect Model is most appropriate effect model. Results of the different panel estimations give the detailed information about robust estimations of different spread models. In section 4.3, outcomes of this study were compared with other study results. In addition to this, critical points of this study underlined and make overall analysis on IRS. It was concluded that main determinants of the IRS in North Cyprus are Credit Risk, Liquidity Risk and Non-Performing Loans. Keywords: IRS, North Cyprus, Credit Risk, Non-Performing Loans, Liquidity Risk
Exchange Rate Pass-Through in Turkish Republic of Northern Cyprus
Advancements in transportation and technology coupled with the liberalization of the trade policies across nations have led to significant growth in the volume of trade worldwide in the last several decades. Exchange rate fluctuations, which directly affect the prices of goods traded between countries, are important for the exporting and importing countries. The exchange rate pass through, which is the main focus of this study, shows how import and export goods’ prices change due to exchange rate fluctuations. The collapse of the Bretton Wood, increase in the share of the developing economies trade globally, have made the topic of exchange rate pass through to become more important in the globalized world. This research is conducted in a very small economy, Turkish Republic of North Cyprus (TRNC), who has limited trade and financial integration with the world. The thesis analyses and determines the degree of pass through in TRNC using VAR method. In this respect, monthly inflation rate, electricity price changes, and exchange rate changes from January 2000 to September 2019 was used. The study attempts to measure the impact of foreign exchange rate (Euro) changes on consumer price index (CPI) in TRNC. The result of the research finds that changes in exchange rates have significant pass through effect on the consumer price index and the ERPT effect disappears only by the fifth month. The accumulated ERPT effect on CPI was estimated to be around 35% by the fifth month. The research also found that electricity price changes affect the CPI significantly.