Research purpose. The aim of the research is to assess the transparency of financial performance of public benefit organisations (PBOs). Methodology. To achieve the aim and to accomplish the tasks set, general-scientific methods were used: the monographic method, the method of document analysis and the graphical method. A statistical analysis method – descriptive statistics – and a sociological research method – surveying – were used as well. Findings. Since 1 October 2014 when the Public Benefit Organisation Law came into force in Latvia, the number of PBOs has been increasing every year. On 1 January 2018, the number of organisations with valid PBO status had reached 2,775. To get an insight into the opinions of Latvian PBOs on the disclosure of financial information, a questionnaire was developed. The survey was attended by 201 respondents. The questionnaires revealed that 64.68 percent of the respondent organisations had a website or a web page on a social network, although only 21.89 percent of these respondents' websites contained some sort of financial information. In parallel with the PBO survey, a society survey was conducted to get an overview of the public opinions about the need to make PBO financial information freely available. The survey was attended by 116 respondents. The results indicated that although the PBO attitude to the disclosure of financial information was considered to be reserved, the public saw the need for such information. In view of the insufficient availability of financial information in the country and the low activity of PBOs themselves in voluntarily disclosing their financial information on their websites, it is necessary to carry out activities that supplement free-access information resources and/or motivate the organisations themselves to provide free access to such information. Practical implications. Based on the experience of other European countries, the Ministry of Finance has to consider amending the PBO Law to oblige PBOs to publish their annual financial and performance reports on their websites or in an equivalent way, thereby contributing to the transparency and accountability of the PBOs towards the society.
Competition among banks is stiff in this field (mortgage loans), where everyone wants to offer clients more favourable terms and conditions, thus gaining the largest market share. However, the credit terms and conditions can vary considerably, given the purpose of credit and the collateral. The world uses different assessment methods for a borrower’s evaluation. Particular attention is paid to the borrower's credibility and additional creditworthiness by collecting, processing and evaluating important information on the credit applicant. This research work is based on theoretical knowledge in economics, legal documents and statistical data analyses to investigate mortgage lending by Latvian commercial banks, the potential risks, the solvency assessment models, including the scoring system (the system’s role in mortgage lending practised by Latvian commercial banks), and to develop proposals for the system improvement. In the paper, the authors give insight into the creditworthiness analysis model – Credit Scoring –, the Latvian mortgage credit market, different loan terms and conditions provided by Latvian commercial banks and lending development impacts and describe the essence of the scoring system and the way how Latvian commercial banks use the system. The new provisions of 2016 in the Consumer Rights Protection Law regarding requesting complete information allow considerably enhancing the loan scoring system of commercial banks in compliance with Directive 2014/17/EU of the European Parliament and of the Council of 4 February on credit agreements for consumers relating to residential immovable property.
The research aim is to analyse the use of EU project funding in the agricultural industry in Latvia in the period 2007-2016 and assess the effect of investment projects implemented by agricultural holdings in Zemgale region on the financial performance of the holdings. The research analysed the legal acts regulating the implementation of support measures under the Rural Development Programme in the programming periods 2007-2013 and 2014-2020 and calculated the financial performance and competitiveness indicators (average profit margins, solvency and financial dependence) of agricultural holdings in Zemgale region, which were compared with the national averages, based on FADN statistical data. Methods of research: monographic, graphic, analysis, synthesis, statistical analysis. The analysed indicators were grouped by planning region in Latvia (the regional division of the Rural Support Service (RSS)-the Regional Agricultural Departments-was taken into account). Based on the research findings, the authors conclude that in the programming period 2014-2020 a solution is sought to retain the existing farm structure, strengthening small farms and reducing the influence of large farms on the agricultural industry. Even though public funding is focused on investment in tangible assets in the programming period 2014-2020, it is intended not only for agricultural holdings but also for forestry and food processing enterprises. The research has found that if other circumstances remain unchanged, there is no causal association between net value added and the amount of investment subsidiesthe reason of a decrease in both variables was the consequence of the 2008 crisis. The average financial dependence of farms in Zemgale region in the period 2007-2013 exceeded the maximum level, and the farms were considerably dependent on borrowed capital. The research developed recommendations for the Ministry of Agriculture of the Republic of Latvia with regard to criteria for the evaluation of support project submitters, proposing excluding enterprises with high financial dependence from participation and contributing to the competitiveness of agricultural holdings and their financial independence.
Business start-ups, small and medium sized companies face financial difficulties to finance their innovative activities, which hinders innovative products from commercialization. This mainly results from the high risks and information asymmetries involved in such projects. Standard debt financers are reluctant to take these risks, besides the young enterprises lack collateral to receive the credit. However, the risk tolerance for investors differs as well. One of the alternatives for bank loans is venture capitalists, who rather become partners than creditors of young, innovative companies with growth potential. Particularly venture capital or the so-called “smart money” is what financially supports such business ventures, provides funding for technological transfer and commercialization. The authors of the present paper have chosen to examine and compare the venture capital attraction possibilities in the Baltic States using Venture Capital and Private Equity Country Attractiveness Index (by Groh et al.) data for 2012-2018. Venture capital market development is currently a very topical issue for the Latvian government, taking into consideration the critical importance of venture capital for financing innovation. Becoming the leader in the venture capital sector and No. 1 choice of start-up companies in the Baltics are now the objectives of the government of Latvia. It was therefore relevant and important to compare venture capital attraction possibilities in Latvia, Estonia and Lithuania to see and analyse in which aspects Latvia lags behind its neighbouring countries and in which it succeeds. The paper compares the six main factors or key drivers which determine the attractiveness of venture capital markets. According to Groh et al. (2016), these factors are: 1) Economic Activity; 2) Depth of Capital Market; 3) Taxation; 4) Investor Protection & Corporate Governance; 5) Human & Social Environment and 6) Entrepreneurial Culture & Deal Opportunities. However, the results of the research reveal that the main problems for international investor attraction in the Baltic States are underdeveloped capital markets and low economic activity. Latvia, unfortunately, is the most unattractive for international venture capital investors. Nevertheless, it has experienced the fastest growth during six years, which means that there is potential for becoming a leader in the venture capital sector. The present paper reveals the aspects to be improved for becoming more attractive for venture capital investments.
Tax revenues are the key source of finance for the government's budget. The state administration redistributes and allocates tax revenues for performing the state's basic functions in order to ensure the overall development of the country and its population's wellbeing. The availability of credit resources declined owing to the global crisis [2007][2008][2009], which negatively affected the growth of Latvia's national economy, and the total tax revenue decreased by 26.80% in 2009 compared with 2008. Latvia's government, to secure the financing of its budget, stabilise Latvia's financial system, raise the country's competitiveness, borrowed in foreign financial markets EUR 4.5 billion. The present research examined Latvia's economic development and tax collection dynamics after Latvia's restoration of independence and its accession to the European Union and assessed the effects of the global crisis on the solvency of enterprises and tax revenues and how Latvia contributed to the foundation of new enterprises and the improvement of the business environment. Research methods employed: the monographic method was used to examine, assess and analyse literatures and legal acts, describing findings and interpretations; statistical observation, compilation and grouping of information, calculation of statistical data, analysis of causal relationships and data generalisation; logical analysis and synthesis. The graphic method was employed to show the relationships identified and their nature and form. The logical and constructive methods were used in analysing results and making judgements. The present research found that the insolvency of companies significantly affects the tax collection process and reduces total tax revenues. In 2013, a tax debt of EUR 267.59 mln was written off in Latvia because tax payers were liquidated, while in 2014 taxes totalling EUR 1 263.63 will not be potentially collected. The authors presume that research on the effects of company insolvency on tax revenues has to be continued in order to improve tax collection and design tax policy instruments aimed at restoring the solvency of enterprises facing problems.
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