nep-sea New Economics Papers
on South East Asia
Issue of 2008‒05‒10
five papers chosen by
Kavita Iyengar
Asian Development Bank

  1. Financial developments and the rate of growth of output: An alternative approach By Rao, B. Bhaskara; Tamazian, Artur; Singh, Rup; Vadlamannati, Krishna Chaitanya
  2. Tick Size Change on the Stock Exchange of Thailand By Pantisa Pavabutra; Sukanya Prangwattananon
  3. Rapid International Expansion Strategy of Emerging Market Enterprises: The Interplay between Speed and Competitive Risks on International Performance By Sea-Jin Chang; Jay Hyuk Rhee
  4. Ialamic finance education at graduate level: Current position and challenges By Hasan, Zubair
  5. Product Market Competition, Regulation and Dividend Payout Policy of Malaysian Banks By Ameer, Rashid/R

  1. By: Rao, B. Bhaskara; Tamazian, Artur; Singh, Rup; Vadlamannati, Krishna Chaitanya
    Abstract: This paper uses a new specification and approach to estimate the effects of financial developments on the steady state rate of growth of output in India, Malaysia, Korea, Thailand and the Philippines for the period 1970 to 2006. These growth effects, though small, are found to be significant except for the Philippines. The trend rate of growth of total factor productivity (TFP), which is due to the omitted but trended variables, is the highest for Malaysia and moderate for India and Thailand. However, TFP is insignificant or negative in the Philippines and Korea.
    Keywords: Growth Rates. Financial developments; Solow Model; Country Specific Steady State
    JEL: N01 O10 O43 O16 O33
    Date: 2008–05–07
  2. By: Pantisa Pavabutra; Sukanya Prangwattananon
    Abstract: This paper explores the impact of exogenous tick size reduction on bid-ask spreads, depths, and trading volume on the Stock Exchange of Thailand (SET). On November 5, 2001, the SET implemented tick size reduction on stocks below THB 25. Even though trading on the Thai Exchange is largely dominated by retail investors, the tick reduction produces similar empirical results found in markets where institutional investors are more dominant. Tick reduction on the SET is associated with declines in spreads, quoted and accumulated market depths. The study finds no significant change in trading volume of the affected stock group.
    Keywords: Tick size, Market microstructure, Transaction costs
    JEL: G14 G18
    Date: 2008–01
  3. By: Sea-Jin Chang; Jay Hyuk Rhee
    Abstract: Firms that internationalize relatively late may pursue rapid internationalization by entering multiple markets simultaneously to reach global scale faster and to capture early mover advantages. These trends run counter to the theory of incremental internationalization. With data on Korean firms’ early international expansion experiences, we found evidence that a rapid international expansion strategy enhances firm performance in industries where globalization pressures are high, by firms with less lead-time of their home-country rivals, and in countries where they could be early movers.
    Keywords: incremental internationalization, rapid international expansion strategy, emerging markets, foreign subsidiary survival, foreign direct investment
    Date: 2007–11
  4. By: Hasan, Zubair
    Abstract: Over the past few decades Islamic finance has been the fastest growing segment of the global system. The fast growing market has necessitated corresponding expansion of education and training facilities to increase appropriately the supply of skilled manpower. This called for a stock taking of the adequacy and suitability of the existing educational and training facilities in several directions. IRTI has launched a project to accomplish this work. The present working paper looks at the range, sufficiency and quality of education in Islamic finance at the graduate level. It uses Malaysia as an illustrative case because the country is in the forefront of this development and has made several innovations and pioneering efforts in the field. This work finds that the graduate level finance education is not currently in a very satisfactory state. This is partly reflected in the increasing departure of financing expedients from the major goals of the Islamic system. The difference between the legality of transactions and their permissibility is usually ignored giving rise to perilous divisions at the juridical level. Validation of mixed banking opened the doors for convergence with the mainstream presumably to the disadvantage of Islamic finance long run, in education also. Some other points of significance that emanate from the foregoing discussion are in brief as under. 1. The unidirectional convergence of Islamic finance with the mainstream in practice is directing its educational approach and structure as well. In both cases it has some immediate advantages but has also potential to promote divisive and deviant tendencies in the area of Islamic finance. There already is some evidence on the point and has to be guarded against. 2. There is much diversity in the academic programmes and course structures in the area of Islamic finance within and between public institutions. Some degree of standardization with flexibility margins is desirable, feasible as well. Establishment of layered mutual consultation bodies and sharing of information may help. 3. Creation of research environment, foundational infrastructures based on positive filtering approach, sharing of knowledge and experience, cooperative teaching and ample funding may help build the critical mass to speed up research and build skills in the area of education. 4. Since the total number of students seeking doctoral degrees is not very large, their admission may be restricted to selected institutions where faculty and facilities could be strengthened to promote excellence. This will also allow pooling of teachers coupled with stricter screening of the students. The final product could thus be improved at reduced cost. 5. Academic administration must in general synchronize with academic hierarchy. Contribution to knowledge, research and supervision ought to be recognize and appropriately rewarded strictly on merit. 6. There should be arrangement for preparing reading material integrating mainstream positions and Islamic requirements. Classificatory approach that has mostly been followed so far has to go. Teachers should invariably be associated, rather lead such projects. The effort would produce Shari’ah literate economists. Advisory boards are today exclusively loaded with Shari’ah scholars who are often poor economists. Having both fuqha and economists on the boards would improve compliance. . This could have helped to avoid the controversy and confusion as is found today in the case of Sukuk markets.
    Keywords: Education; Islamic finance; Convergence consequences; Supervision; Curricula structures; Course designs; Private sector role; Critical mass; Western dominance
    JEL: A23 F30
    Date: 2008
  5. By: Ameer, Rashid/R
    Abstract: This paper investigates the impact of the product market competition, regulations on the dividend policies of We find significant differences in the payout of the banks categorized as selling a non-interest based banking products and mix of both interest and non-interest based banking products. We find that the decision to increase dividends is significantly related to earnings, and the decision to cut dividend is significantly related to the changes in the non-performing loans, corporate and real estate sectors loans ratio and earnings loses. Research findings have implication for the regulators of the banks. The research provides a clear link between banks' portfolio choice and earnings that have implications for the dividends in the emerging markets.
    Keywords: Dividends; Banks; Non-performing loans; Ordered Probit Model; Malaysia
    JEL: D21
    Date: 2007

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