Bank of Valletta has just published the Autumn 2011 edition of the BOV Review. This 44th Edition of this popular publication features four informative papers and is available for download from Bank of Valletta’s website www.bov.com.

The first paper in this edition is entitled ‘The potential for Tax Influence on unconsolidated Financial Reporting in Malta – The Similarity to the UK’ and authored by Monique Micallef. This study examines the influence of taxation on the

unconsolidated financial reporting of Maltese companies as compared to the UK, and any change in such influence with the onset of the national financial reporting standard for SMEs General Accounting Principles for Smaller Entities (GAPSE) It results that different taxation and financial reporting requirements are followed for their different purposes and this has remained so with the recent onset of GAPSE. Consequently, it has resulted that Malta’s degree of disconnection is close to that of the UK. It can therefore be concluded that taxation has not influenced accounting in Malta. This conclusion could be of interest to other academics and policy-makers, in predicting and explaining the accounting requirements of Malta and other countries.

Svetlana Borg delves into ‘The Implications in Maternity Leave on Micro Enterprise: The Views of Employers’. This paper investigates the implications of the extension in maternity leave as proposed in the Estrela Report, with special reference to Maltese micro enterprises, taking the point of view of employers. Given that the majority of enterprises in Malta are chiefly micro enterprises, this study is intended to assess the direct and indirect costs associated with this proposal. A questionnaire was drawn up in order to better assess the effects of this proposal on micro enterprises and the findings suggest that throughout the period of maternity leave, employers incur costs associated with the payment to the employee on leave, the engagement of a substitute, using overtime work, advertising the vacant job, training the substitute employee and loss of production due to the fact that the new employee would not be as productive as the employee on leave.

Philip D Osei tackles ‘The Nexus between Economic Resilience and Corruption’. This study attempts to explore the possible nexus between corruption and economic resilience, or lack of it. the paper discusses the definition and the effects of corruption, emphasising the theoretical link between economic resilience and corruption, and, ultimately, economic growth and development. Evidence on the link between economic resilience and corruption, presented in the paper, indicate that they are negatively related, leading to the conclusion that countries that wish to improve their economic governance should develop appropriate policies and institutions to fight corruption.

The last paper in this edition of the BOV Review is entitled ‘Testing the Fisher Hypothesis in the Euro Area’ and written by Stephen Piccinino. The Fisher hypothesis embodies a one-for-one relationship between (nominal) interest rates and inflation. The subject has been a hotly contested topic in monetary economics. Throughout the years it was extensively tested by numerous authors and using varying techniques. This paper seeks to investigate the existence of the Fisher effect in the Euro Area from 1999 to 2011, using the European interbank offered rate as a measure for interest rates, and the six-month maturing German Federal Securities as a measure of expected inflation. The results of tests used in this study indicate that the Fisher hypothesis held when the entire data set was considered. However, evidence could not be provided for a unitary relationship between the two variables for the September 2008 – March 2011 period, possibly because the Fisher effect came under strain during times of stringent monetary policy stances by the relevant authorities.