Danel Tuusis’s research while affiliated with University of Tartu and other places

The paper examines determinants of investment decisions of Estonian companies. Within investment decision determinants the influence of interest rates and cost of capital get special attention as well as the analysis of liquidity constraints. The study is based on answers of questionnaires received from 44 companies of Estonia. Results of the study show that most important determinants of investments are related to risk and uncertainty followed by liquidity constraints and business confidence determinants. Interest rate determinant and cost of capital consideration has small influence to investment decisions as well as have a low profile in overall management focus. Liquidity constraints on other hand should be considered an important decision factor behind investment decisions

Estonia is one of the leading countries in terms of indebtedness in Central and Eastern Europe. Even though the public sector debt is surprisingly low, the private sector indebtedness has risen very quickly in recent years. In current paper the indebtedness of the private sector of Estonia in 2000-2007 has been analyzed. Our study shows that indebtedness in Estonia in that period has been determined by low interest rate as well as high growth of income. We also proved that those determinants alone cannot be enough to explain the credit growth. Determinants of credit growth are indicating that the credit growth in Estonia could be explained by permanent income hypothesis.

Reconstruction of Estonian banking system started twenty years ago. Estonia built up for the market economy a banking oriented financial sector, which is centred on commercial banks. During the two decades less than ten banks remained from more than 50 licensed commercial banks, the rest were not able to continue independently, they merged or have failed. The bad result of such kind of development was also the excessive concentration of banking. Banking sector in Estonia during the transition period was opened to the invasion of foreign banks due to the openness of the economy and excessive risks taken. Two banking crises, selected quickly the very limited number of prosperous banks, and the major commercial banks went into the ownership of Scandinavian banks. The qualitative effects of foreign banks’ entry into the Estonian banking market were new features of competition in banking market and transfer of various knowhow from foreign banks. Better liquidity risk management techniques, information systems, credit policy and personnel policy transfer from foreign banks supported banks to have high profitability and low credit losses rates. These directions are noticeable also by quantitative analyses of banking market development. The takeover of main commercial banks by the large Swedish and Finnish banks was one of important factors in the gradual increase of the social orientation of Estonian banks however the ideas of social responsibility of enterprises are especially popular in Scandinavia. In our paper we analyse also Estonian banks’ practices of supporting the social development of Estonia.

Doktoriväitekiri uurib intressimäärade mõju majandussubjektide käitumisele. Majandussubjektide kõikvõimalikest käitumissituatsioonidest hinnatakse käesolevas töös ainult neid käitumissituatsioone, mis on eelnevate uuringute põhjal enim mõjutatavad intressimäärade muutustest ning omavad mõju majandusele rahapoliitika mõjukanalite mõttes. Doktoriväitekiri on jagatud kolmeks uurimusülesandeks. Esimene uurimisülesanne on analüüsida eraisikute laenamist ja leida laenamist mõjutavad tegurid. Tegurite osas on olulisemad tarbimisega seotud tegurid; laenu intressiga seotud tegurid on pigem väheolulised. Töös on vaadeldud ka laenuturu riskigruppide käitumist ning kirjeldatud riskigruppi identifitseerivaid parameetreid. Teine uurimisülesanne on leida Eesti ettevõtete investeerimisotsuseid mõjutavad muutujad. Olulisteks käitumisteguriteks Eesti ettevõtete investeerimisotsuste tegemisel on investeerimisprojekti riskidega seonduvad aspektid, samuti ka ettevõtte likviidsuspiirangud ning ettevõtete üldise majandususaldusega seotud probleemistik. Intressimäärad ettevõtete investeerimisotsustuses on pigem ebaolulised. Kolmas uurimisülesanne on seotud ettevõtete hinnakujundusega ja erinevate muutujatega hinnakujundusel. Ettevõtete hinnakujunduses on keskendutud kulupõhisele hinnakujundusele (ingl. cost-plus pricing) kui enamlevinud hinnakujundusmeetodile nii Eestis kui ka mitmetes teistes riikides. Kulupõhise hinnakujunduse laia rakendatavuse tingib mitmetasemeline hinnakujundus, mis selgitab vastuolu kulupõhise hinnakujundusmeetodi rakendatavuse ja kasumi maksimeerimise printsiibi vahel. Mitmetasemeline hinnakujundus selgitab muuhulgas ka kulupõhise hinnakujunduse erineva rakendatavuse tööstusharuti, valuutakursside erineva mõju eri tööstusharude hinnakujundusele ning intressimäärade vähese mõju kulupõhise hinnakujundusmeetodi rakendusel. Töö kokkuvõtvas osas vaadeldakse saadud ettevõtete ja eraisikute käitumisaspektide tulemusi monetaarpoliitika mõjukanalite kontekstis. Eraisikute finantskäitumise analüüs viitab otsese rahapoliitika siirdemehhanismi ja vahetuskursikanali olulisusele; samuti on pigem oluline majandususalduse kanal. Ettevõtete finantskäitumine osundab vahetuskursside kanali ja krediidikanali olulisusele; samuti on pigem oluline majandususalduse kanal. The dissertation studies the interest rate influence on the behaviour of economic subjects – companies and private persons – analyzing in detail the motivations behind those different behavioural aspects, and discuss the results of the analysis in the efficiency context of different channels of monetary transmission mechanisms. Whereas different activities of economic subjects have different influences on the overall economic activity, the most influential activities of economic subjects were chosen for detailed study in the current dissertation. The three distinct empirical studies presented in separate chapters of the empirical part represent three research tasks discussed below. The first research task is to find determinants of borrowing behaviour of private persons in Estonia. The most influential determinants of borrowing activity are related with the consumption motives whereas the interest rates play rather modest role determining borrowing activity. The study includes also the behaviour of risk-group people where the determinants of risk groups are analysed. The second research task is to find determinants of investment activity of Estonian companies. The most important determinants are related with the uncertainty issues as well as liquidity constraints and business confidence determinants. Cost-of-capital determinants are rather unimportant on deciding investments. The third research task is to investigate the price setting motives and mechanisms in companies, and analyze the interest rate influence on pricing. On the focus of the study is the cost-plus pricing method as the most popular pricing method within companies. The frequent usage of the cost-plus pricing could be explained through the multilevel price management which could explain the low influence of the cost-plus pricing on final price settings. Multilevel price management would also explain the different usage of cost-plus pricing methods in different industries, the industry-dependency of the exchange rate influence to prices as well as the low influence of interest costs to prices despite the high implementation rate of cost-plus pricing method. On conclusion part of the dissertation the interest rate influence on the behaviour of economic subjects is discussed beside their possible influence on the monetary transmission mechanisms. On behaviour of households the direct monetary transmission channel and exchange rate channel are significant as well as risk-taking channel is rather significant. On behaviour of companies exchange rate channel and balance sheet channel are significant as well as risk-taking channel is rather significant.