Abstract This study classifies local self-government units (local communities) in the Federation of Bosnia and Herzegovina (FBIH) according to socio-economic characteristics by applying the following multivariate methods: principal component analysis (PCA), regression and cluster analysis. The selection of variables was based on literature and adjusted by FBIH specifics, covering the four hypothetical dimensions of regional differentiation: macroeconomic, demographic, infrastructural and socio-cultural indicators. PCA has identified five components: the productivity component, demographic component, component of economic activity potential, spatial component and employment component. Further analysis showed that all identified factors are significant predictors of local communities’ development, measured by the development index. The cluster analysis resulted with four clusters in the FBIH with significant differences in development level. Considering that FBIH municipalities are administrative units of local government and that the classification is based on socio-economic dimensions, identified clusters correspond to the NUTS principles.

Comparing portfolio performance is complex due to the fact that each model is dominant in its own risk space. Since there is no single dominant performance measure, the research problem is how to incorporate several different measures into a performance evaluation model that allows portfolios to be ranked. In this regard, the objective of this study was to develop a new comprehensive method for comparing portfolio performance based on multiple-criteria decision-making (MCDM). This paper proposes an integrated approach for stock market decision making that combines the Analytic Hierarchy Process (AHP) and the Preference Ranking Organization Method for Enrichment Evaluations (PROMETHEE), which allow hierarchical evaluation of a finite number of alternatives according to different criteria. This hybrid approach is especially advantageous, utilizing the strengths of both individual methods. AHP enables the decomposition of a complex problem into its constituent parts and the determination of weights for criteria, while the PROMETHEE method allows the investor to determine the preference function, complete ranking, and analysis of the robustness of the results. For the MCDM model in this study, different dimensions of performance measures are considered criteria: return measures, risk measures, stability measures, and predictability measures. The methodology has been applied in comparing real portfolios selected on the basis of different risk measures. For this purpose, weekly return data were used for a sample of stocks that are components of the STOXX Europe 600 Index for the period 2000–2020. In addition, a sensitivity analysis is performed to investigate the strength of the results of this method. It suggests that the simultaneous consideration of different performance measures and the investor’s attitude towards the importance of these measures are notably important in the portfolio efficiency estimation process.

In this paper, we compared the models for selecting the optimal portfolio based on different risk measures to identify the periods in which some of the risk measures dominated over others. For decades, the best known return-risk model has been Markowitz’s mean-variance model. Based on the criticism of the classical Markowitz model, a whole series of risk measures and models for selecting the optimal portfolio have been developed, which are divided into two groups: symmetrical and downside risk measures. Based on the tools provided by game theory, we presented a minimax model for selecting the optimal portfolio based on the maximum loss as a measure of risk. Recent research has shown the adequacy of the application of this risk measure and its dominance concerning variance in certain circumstances. Theoretically, the model based on maximum loss as a measure of risk relies on a much smaller number of assumptions that must be satisfied. In the empirical part of the paper, we analyzed the real return performance, structure, correlation, stability, and predictive efficiency of the model based on maximum loss return as a measure of risk and compared it with the other famous models to determine whether the maximum loss-based risk measure model is more suitable for use in certain circumstances than conventional return-risk models. We compared portfolios created based on different models over the period of 2000–2020 from a selected sample of stocks that are components of the STOXX Europe 600 index, which covers 90% of the free market capitalization in the European capital market. The observed period included 3 bear market periods, including the period of market decline during the COVID-19 crisis. Our analysis showed that there was no significant difference in portfolio returns depending on the selected model using the “buy-and-hold” strategy, but there were crisis periods. The results showed a significantly higher stability of portfolios selected on the criterion of minimizing the maximum loss than others. In periods of market decline, this portfolio achieved the best performance and had a shorter recovery period than others. This allowed superior use of the minimax model at least for investors with a pronounced risk aversion.

We analyzed the efficiency of the insurance industry in Bosnia and Herzegovina (BiH) in the period from 2015 to 2019 in order to identify good and bad practices, sources of inefficiency and to propose guidelines for the necessary efficiency improvements based on the results. Efficiency measurement was performed using the nonparametric Data Envelopment Analysis (DEA) technique as the most commonly used tool for efficiency analysis in finance. We used one output and two input variables according to the input-oriented approach assuming a variable return to scale (VRS). Empirical research was conducted on all insurance companies from BiH, which are grouped according to the size of assets, type of insurance, and headquarters in order to determine whether there are differences in the efficiency of insurance companies in terms of their size, type of insurance, or depending on whether it operates in the Federation of Bosnia and Herzegovina (FBiH) or Republic of Srpska (RS). The results of the analysis indicate significant inefficiencies in the insurance sector in BiH, but also differences among the observed groups. The insurance sector is more efficient in FBiH compared to RS, and insurance companies in the composite insurance market are significantly more efficient than companies in the non-life insurance market. Finally, the research has showed a relatively high level of positive correlation between the size of an insurance company and its efficiency. According to all efficiency indicators, there is significant potential for efficiency improvement. Based on the analysis, the main causes of inefficiency were identified and guidelines for improving efficiency were proposed.

The research is devoted to substantiation of measures for improvement of state financial policies and administrative decision-making aimed at enhancement of financial and credit provision of the grain market development.Realizing modernization of the grain market infrastructure requires substantial financial resources. Their mobilization under the modern conditions can be fulfilled exclusively by the state which is capable of leveraging the influence of public administration. The scientific results of the conducted research made it possible to give reasons for the measures, adequate in the current context, to improve financial policy and administrative decision-making designed to optimize the financial and credit provision of the grain market and stimulation of the socio-economic development of the country on the whole. The proposals are recommended for implementation of the monetary, budget, tax, investment, insurance policies; they are oriented to create institutions of development within the framework of application of the program-target method, and are characterized by a rational combination of the state impact and market self-regulation measures.Presently, a pressing need arises for provision of the agro-industrial complex with a sufficient amount of inexpensive credit resources. An important factor of this, with reference to monetary policy implementation, is interaction of the National bank of Ukraine with the government in the course of coordination of monetary tools application, in the first place, interest rates, volumes of target purposes of refinancing, and open-market transactions. One of the measures for stimulation of credit proposals for agricultural producers on behalf of the bank system was supposed to be creation of the State land bank. A significant development factor for the country’s grain market could also be establishment of the State development bank of Ukraine which would become an internal credit issuer and a financial agent of the state.Taking into account that rural investments are of social significance as well, it is necessary to invest both public and private funds. One of state investment policy components is encouragement of private investment growth. The flow of private investments into production, transport, storage, and processing infrastructure also affects the prospects of grain market development. Creating incentives for attraction of private investments can be realized through public-private partnership as one of the systems of interaction between the state and business most common in the economically advanced countries.The issue of raising the efficiency of financial resources allocated by the state for the support of agricultural producers is coming to the forefront. For this purpose, it is essential to carry on improvement of certain components of the insurance process in the agriculture of Ukraine.