Jelena Ćirić’s research while affiliated with University of Novi Sad and other places

Insurance companies, investment funds, pension funds as institutional investors, as well as other financial intermediaries have great importance in stimulating economic activity and fostering economic dynamism. Among all the financial intermediaries, we highlighted insurance, given their dominant role in the EU and Serbia. As the aim of this paper, we set up the research of the significance of insurance companies as a key factor of economic dynamism’s promotion. In this context, the research object of the paper is the phenomenology of economic dynamism and the role of financial intermediaries, primarily through the accumulation and then the efficient allocation of financial savings. The conclusion of our study is that insurance companies have a huge impact in fostering economic dynamism in developed economies and that their potential is not used enough in Serbia.

Hedge funds invest capital of a limited number of wealthy individuals and institutional investors’ in high-risk and high-return investments. English origin of the word hedge means to protect, enclose, fence and initially word hedge corresponded to the characteristics of these funds. In modern business conditions, word hedge has different interpretation because they usually take highly speculative position, which in combination with large amount of capital can be very risky. By investing in hedge funds, capital owners can achieve positive absolute returns as well as enhanced portfolio diversification. The aim of this paper is to explain the concept, basic characteristics and essence of the hedge funds and to point out the connection between insurance companies and other institutional investors and hedge funds from the different aspects, through the convergence of capital markets and insurance markets.

Optimization of a diversified portfolio has been realized through the changes in the allocation of existing and new types of financial assets or changing the investment manager, which affects exposure to the systematic and non-systematic risk, well known as beta and alpha coefficients, with the ultimate goal of achieving a better relationship between portfolio risk and return. In the recent years one of the most significant developments in the field of risk management and insurance is risk securitization which means the transfer of insurance risk by creating financial instruments such as catastrophe bonds. Portfolio diversification can be achieved by investing in catastrophe bonds, because investors have the possibility of gaining higher return in comparison to investing in corporate bonds of the same credit rating. The risk and return of catastrophe bonds depend only on insurance market fluctuations and by investing in these bonds additional effects of risk diversification can be realized accompanied with avoidance of negative risks interdependence effects of securities related to their issuers’ business performances and financial markets trends.

The ability to respond swiftly and effectively to a major incident caused by realisation of risks which can be influenced by factors that might come from almost all fields of insurance and reinsurance business, presents conditio sine qua non of insurance and reinsurance companies' survival and profitable continuity of business. Having that in mind and within the context of capital adequacy and imposed constraints of risk interconnectedness, the aim of our research has been to identify potential benefits and weaknesses of risk modeling. We conclude that over-reliance on risk modeling is not desirable, due to particular limitations of models. They can be powerful risk management tool only if their results are combined with expert estimates.

The users of financial services generally do not have the required expertise that they need to process the available financial information when they make financial and investment decisions, and as such they represent a sensitive category of financial market participants, which may intentionally or unintentionally be exposed to manipulation. If the beneficiaries do not have relevant and accurate information, the relationship between the provider and the service user is characterized with information asymmetry, and because of these reasons adequate regulatory instruments are necessary in order to protect the interests of financial services users. In the financial services sector, the development of a long-term successful relationship between providers and users of services should be based on mutual trust and users' feel that they have received a value for the price paid. The aim of the paper is to highlight the modern ways of improving the protection of the interests of consumers of financial services provided by insurance companies and investment funds. The paper analyses the reasons for protection of consumers of financial services, specifics of insurance as financial service, the importance of trust as a key factor for the attraction of service users and the basic principles of operation of investment funds in the developed and the domestic financial market are compared. The particular attention is given to insurance companies and investment funds in terms of regulatory and other mechanisms of governments that are related to the protection of insureds and investment funds investors.

Entrepreneurship and innovations are capital-intensive activities, and they usually cause above-average exposures to risks. Financial systems of developed economies facilitate financial savings transfers to the most profitable investments, among which special place belongs to entrepreneurship and innovation. Previous experience in Serbia and other regions had demonstrated orientation primarily to foreign financial sources, either through donations, foreign direct investments, or foreign banks' loans. However, without mobilizing of domicile financial savings, it is impossible to achieve long-term and sustainable ability to realize entrepreneurship and innovation ideas and thus economic development. This paper analyses the role of institutional investors, investment funds, and insurance companies as sources of long-term financial resources of entrepreneurship and innovations.

Zemlje Istočne Evrope, uključujući i zemlje regiona bivše Jugoslavije, poslednjih godina beležile su stope ekonomskog rasta znatno veće nego razvijene zemlje. Dosadašnji razvoj je prvenstveno bio baziran na stranim sredstvima plasiranim bilo kroz donacije, strane direktne investicije, kredite inostranih banaka. Međutim, obezbeđenje održivog ekonomskog razvoja nije moguće bez mobilizacije domaće finansijske štednje koju ostvaruju institucionalni investitori. Iako se pojavljuju kasnije u odnosu na banke, institucionalni investitori kao finansijske institucije značajno doprinose produbljivanju tržišta kapitala i njegovom razvoju a time i ukupnom ekonomskom razvoju. U radu analiziramo ulogu institucionalnih investitora, investicionih fondova i osiguravajućih društava, kao izvora dugoročnih sredstava finansiranja održivog ekonomskog razvoja. Ukazujemo na njihovu poziciju u strukturi finansijskog sistema, paralele njihovog značaja u razvijenim i zemljama regiona bivše Jugoslavije, različitost uticaja svetske ekonomske krize na osiguravajuća društva i investicione fondove, njihove specifične karakteristike i strukturu investicionih portfelja. Ključne reči: ekonomski razvoj, institucionalni investitori, osiguravajuća društva, investicioni fondovi Abstract: Eastern European countries, including countries of the region of ex-Yugoslavia, have marked economic development rates much higher than they were in developed countries. Former development was primarily based on foreign resources that were secured through donations, foreign direct investments or foreign banks' loans. However, the achievement of sustainable economic growth cannot be feasible without the mobilisation of domestic financial savings that is done by institutional investors. Although they appeared later than banks, institutional investors as financial institutions considerably contribute to capital market deepening and development and by that they also facilitate economic development. We analyse the role of institutional investors, investment funds and insurance companies, as sources of long-term financial resources for sustainable economic development. We denote their position in the financial system structure, parallels of their development in developed and countries of the region of ex-Yugoslavia, diverse impact of world economic crisis on insurance companies and investment funds, their specific characteristics and investment portfolio structure. 1. UVOD Institucionalni investitori su relativno novi finansijski posrednici koji su obogatili strukturu bankarskog i finansijskog sektora i produbili tržište kapitala, prevazilazeći ograničenja i smetnje za razvoj tržišta kapitala koja je nametao nefleksibilan i konzervativno organizovan bankarski sektor. Osnovni razlog pojave institucionalnih investitora je proizišao iz potrebe za uspešnijim tretmanom rizika i neizvesnosti, kao pratećih pojava u transakcijama sa kapitalom. Poslednjih nekoliko decenija na tržištima kapitala širom sveta zabeležen je drastičan porast institucionalnih investitora, a naročito u ekonomijama sa

Companies are constantly asked to improve performances in order to get the chance to retain or to improve own market position and financial situation. Encouragement to join companies into clusters is an effective instrument for strengthening of competitiveness of companies and regions. Major advantages of clusters lies in the multidimensional closeness of all participants- it is not just a matter of geographical but also of cultural institutional closeness and harmony. Clusters have possibility of developing their own specific mixture of competitive advantages which is created on the basis of locally-developed knowledge as a result of mutual relations, cultural heritage and local characteristics.