nep-sea New Economics Papers
on South East Asia
Issue of 2017‒09‒10
twelve papers chosen by
Kavita Iyengar
Asian Development Bank

  1. Bank consolidation and financial stability revisited: Evidence from Indonesia By Inka Yusgiantoro; Wahyoe Soedarmono; Amine Tarazi
  2. Optimal rice land protection in a command economy By Long Chu; Hoa-Thi-Minh Nguyen; Tom Kompas; Khoi Dang; Trinh Bui
  3. Two scenarios for carbon capture and storage in Vietnam By Minh Ha-Duong; Hoang Anh Nguyen Trinh
  4. Are free land arrangement really free? An exploration into land arrangements made by rural-urban migrants in the Northeast of Thailand By Gwendoline Promsopha
  5. Malaysia-Japan Commodity Trade and Asymmetric Effects of Exchange Rate Changes By BAHMANI-OSKOOEE, Mohsen; Aftab, Muhammad
  6. Malaysia's GLC Transformation Programme in the Context of the Bumiputera Policy (Japanese) By KUMAGAI Satoru
  7. Can household food security predict individual undernutrition? Evidence from Cambodia and Lao PDR By Bühler, Dorothee; Hartje, Rebecca; Ulrike Grote
  8. Regional Economic Agglomeration and Openness: The Economic Development of the North Eastern Region (NER) By Loitongbam, Bishwanjit Singh
  9. Financial Sector Development and Economic Growth in India: Some Reflections By Joshi, Seema
  10. Gender differences and the effect of facing harder competition By John, June
  11. Quality of Growth Empirics: Comparative Gaps, Benchmarking and Policy Syndromes By Simplice Asongu; Jacinta C. Nwachukwu
  12. Diversification benefits under multivariate second order regular variation By Bikramjit Das; Marie Kratz

  1. By: Inka Yusgiantoro (Otoritas Jasa Keuangan (Indonesia Financial Services Authority)); Wahyoe Soedarmono (Faculty of Business - Sampoerna University); Amine Tarazi (LAPE - Laboratoire d'Analyse et de Prospective Economique - UNILIM - Université de Limoges - IR SHS UNILIM - Institut Sciences de l'Homme et de la Société)
    Abstract: This paper extends prior literature on the link between consolidation and stability in banking using a single country setting. From a sample of Indonesian commercial banks over the 2010-2015 time span, we construct the Lerner index as a measure of bank market power due to consolidation. Our empirical results document that higher bank market power tends to reduce insolvency risk and increase capital ratios. A deeper analysis however reveals that higher market power is detrimental for financial stability in state-owned banks and small private-owned banks. We therefore highlight that although consolidation among state-owned banks reduces cost inefficiency as in Hadad et al. (2013), further efforts to reduce state-owned banks' market power are necessary after consolidation. This paper also suggests that strengthening market power in large private-owned banks, but encouraging competition in small private-owned banks to reduce market power, are of particular importance for financial stability.
    Keywords: Indonesian banking,size,financial stability,Consolidation,ownership type
    Date: 2017
  2. By: Long Chu; Hoa-Thi-Minh Nguyen; Tom Kompas; Khoi Dang; Trinh Bui
    Abstract: Agricultural land protection (ALP) is a standard policy response to growing food security concerns driven by urbanisation, population growth and uncertainty over climate change. However, if not supported by rigorous analysis, at least in terms of the correct scale of protection, ALP may result in a misallocation of resources, hampering economic efficiency and prosperity. Examining rice land policy in Vietnam, this paper aims to determine the optimal level of rice land protected against other crops and evaluates the impact of adopting the optimal policy. With a stochastic optimization model built on top of a computable general equilibrium framework and microsimulation techniques, applied to Vietnam's social accounting matrix and household survey data, we find that converting part of protected rice land into other crops enhances economic efficiency. While the efficiency gain could amount to billions of dollars, income inequality only improves slightly. Overall, the policy is relatively pro-rich, implying a trade-off between poverty reduction and economic efficiency for Vietnam, making some households in already poor areas worse off. Though calibrated to a specific case, our approach can be applied in land-use planning generally, highlighting the relevant tradeoffs and the search for needed optimal land-use policies.
    Keywords: farmland preservation; general equilibrium; inequality; rice; Vietnam; welfare
    JEL: Q18 Q15 Q24
    Date: 2017–08
  3. By: Minh Ha-Duong (CIRED - Centre International de Recherche sur l'Environnement et le Développement - CIRAD - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - EHESS - École des hautes études en sciences sociales - AgroParisTech - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique); Hoang Anh Nguyen Trinh (CleanED - Clean Energy and Sustainable Development Lab - USTH - University of sciences and technologies of hanoi)
    Abstract: Vietnam plans to develop dozens of new coal-fired power generation units over the next 20 years. If they are indeed build, in order to avoid a dangerous level of global warming, it may appear necessary to dispose of these plants' CO2 by burying it in deep underground geological formations instead of releasing it into the atmosphere, using Carbon Capture and Storage (CCS) technology. We show that CCS has a technical potential in Vietnam, according to the geology and the industrial geography. To discuss under which economics conditions this potential could actualize, we examine two scenarios for 2050. In the first scenario, CO2 is used in Enhanced Oil Recovery (EOR) only. EOR technology makes CCS cheaper by injecting CO2 in partially depleted oil field, aiming to recover more oil. The second scenario considers CCS deployment in coal-based power plants, on top of using it for EOR. This happens after 2035, since according to a survey of 15 national experts, CCS would not be a priority for the next 20 years in Vietnam. That scenario assumes international financial supports to initiate demonstration projects after 2025, that Vietnam develops an affluent economy, that China paves the technology way, and that capture-ready is given some attention in the near term.
    Keywords: power generation,Vietnam,capture ready,Carbon capture and storage,scenario 1
    Date: 2017–06–18
  4. By: Gwendoline Promsopha (LEST - Laboratoire d'économie et de sociologie du travail - AMU - Aix Marseille Université - CNRS - Centre National de la Recherche Scientifique)
    Abstract: This paper contributes to an emerging literature on free land arrangements in developing countries. We argue that in-depth empirical analysis is crucial to understand the specific terms of land arrangements. Using mixed quantitative and qualitative data collected among rural-urban migrants in Thailand, we categorize land arrangements along four dimensions: self-reported categories by the actors, the nature of the relationship between the parties involved, the nature of the payment made, and how explicit or binding are the contractual terms. The economic motivations in each of the consequent categories of land arrangement are then analyzed with simple econometrics. Our main results suggest that while free land arrangements are allegedly common practice in Thailand, only a small number of these free arrangements are really free. Many appear to be a `disguised form of rental contract', similar to sharecropping except for the fact that they are reported as free arrangements. Disguised rental is often found among households who rely heavily on the safety net function of land. Or results also suggest that the arrangements which do not involve any direct repayment or compensation are often parts of complex inter-vivo bequests, and involve incomplete transfers of property rights.
    Keywords: Land arrangement, property rights, migration, Thailand, land markets, land title
    Date: 2017
  5. By: BAHMANI-OSKOOEE, Mohsen; Aftab, Muhammad
    Abstract: Asymmetry analysis is a new norm in applied research and the link between the trade balance and the exchange rate is no exception. In this paper we investigate the asymmetric response of the trade balance of each of the 60 industries that trade between Malaysia and Japan. We find short-run asymmetric effects of exchange rate changes on the trade balance of 50 industries (including the two largest industries), short-run adjustment asymmetry in 47 industry, and short-run impact asymmetry in 30 industries. However, short-run asymmetric effects lasted into the long run only in limited number of industries. Results were industry-specific at best.
    Keywords: Nonlinear ARDL, Asymmetry, 60 Industries, Malaysia, Japan
    JEL: F31
    Date: 2017–01–16
  6. By: KUMAGAI Satoru
    Abstract: This paper tries to understand the reason why government-linked corporations (GLCs) have been chosen as a method to achieve the 30% Bumiputera equity target set by the New Economic Policy (NEP), from the viewpoint of corporate governance. The Malaysian government has clearly stated that it will protect the Bumputera Affirmative Action during the negotiations on the Trans-Pacific Partnership Agreement (TPP) and actually succeeded to make the Bumiputera policy exempted from the final agreement. To understand the behavior of the Malaysian government in the trade negotiation, we need to understand the history and the backdrop of the Bumiputera policy, which is stated in the Federal Constitution of Malaysia. We also need to consider that the GLCs are the solution to the various management issues that the government actually faced in the past. A kind of "soft budget constraint" for the public enterprises is inevitable under the Bumiputera policy, and the current form of GLCs, where capital is held by the government while managed by professionals, is a solution. Thus, space for compromising in the fields related to the Bumiputera policy and GLC for the Malaysian government are both very much limited in future trade negotiations.
    Date: 2017–08
  7. By: Bühler, Dorothee; Hartje, Rebecca; Ulrike Grote
    Abstract: This paper uses a novel data set of marginalized households from Cambodia and Lao PDR to better understand different food security concepts. The multitude of indicators available raises the question how these indicators relate to each other and whether they are suitable to detect undernutrition of individuals. In the analysis we identify the causes of food insecurity in relation to a number of different food security concepts and examine the links between the food security status of households and individuals using anthropometric data of children under five. The regression results show that the different indicators of food security at the household level capture fundamentally different aspects of food security. In addition, household food insecurity only explains a small share of child undernutrition. We call for more research on intra-household allocation of food and stress the implications of our research for the design and targeting of food and nutrition support programs.
    Keywords: Food Security, Undernutrition, Human Development, Poverty, Southeast Asia
    JEL: Q18 I15 O15
    Date: 2017–05
  8. By: Loitongbam, Bishwanjit Singh
    Abstract: In what ways NER should look forward to achieve faster economic growth? The paper proposes two suggestions. First, for NER to keep making progress and to transform into a new economic powerhouse, it needs to improve utilization of scarce resources, improvements in technologies, and the exploitation of scale economies. A finer production fragmentation will make it possible to better explore the comparative advantage within the diverse NER. Trade liberalization and production fragmentation has the potential to eradicate poverty. Second, the regional economic integration will provide a better solution for these problems. Regional agglomeration will help NER in achieving faster economic growth through increasing returns, monopolistic competition, transaction costs and the occurrence of external economies and in turn shape firms’ and labors’ location behavior. Besides, the government should promote export sectors, intensively employing unskilled labor, which will create more job opportunities in the cities for rural surplus labors. A good relationship with Indo-Myanmar depends on Indo-China Relation. Transforming NER into a new economic powerhouse will help India becoming an economic superpower sooner than expected.
    Keywords: Economic agglomeration, openness, economic development
    Date: 2015–09–08
  9. By: Joshi, Seema
    Abstract: Financial systems play a crucial role in the economic development of a country. There is sufficient economic literature which reveals that a well functioning financial system increases economic efficiency, investment and growth. This paper provides a snapshot of the evolution of Indian financial system along with its progress and performance by making use of various proxy variables of financial development. It also attempts to examine the the relationship between the financial development and growth in Indian context. By using time series data from1991-91 to2012-13 period and using three proxy variables viz.GDP per capita for economic growth of India, M2 to GDP ratio and ratio of stock market capitalization to GDP for measuring the extent of financial deepening in India and utilizing regression technique, the empirical findings very clearly point towards the existence of strong relationship between financial deepening(FD) and EG. The paper also shows the extent of financial deepening of markets in India vis-a vis other Asia Pacific economies. The analysis reveals that the Indian financial sector has undergone far reaching changes over three and half decades as a result of financial sector reforms. Consequently, the widening and deepening of financial system has allowed greater and more productive investment to occur. Financial intermediation has increased over time, which in turn is leading to a virtuous cycle of higher savings, improved investment efficiency and higher real economic growth. However, there are several challenges in the financial sector in the form of increasing non-performing assets (or bad loans) of the banks and underdeveloped corporate bond market. These challenges need attention and require policy intervention.
    Keywords: G00,G1, G2
    JEL: G1 G2
    Date: 2016–12
  10. By: John, June
    Abstract: Gender differences in competition have been demonstrated in a variety of contexts, yet it remains unclear how people respond to competitors they perceive to be hard or easy, and whether gender differences exist in this response. I run an experiment in eighteen public high school classrooms to study the effect of competing in a math task against different levels of competitors. I exploit natural sorting within grade levels in Malaysian public schools to randomly assign competitors of different perceived difficulty levels. Using a standard competition measure, males are significantly more competitive than females. However, when students face harder competitors, males respond by lowering performance while the performance of females does not vary significantly by level of competition.
    Keywords: gender differences; competition; gender performance; tournament; piece-rate; information
    JEL: I20 J16 J24
    Date: 2017–08–22
  11. By: Simplice Asongu (Yaoundé/Cameroun); Jacinta C. Nwachukwu (Coventry University, UK)
    Abstract: This study uses a new dataset to provide comparative gaps, benchmarking with best performers and policy syndromes of growth quality in 93 developing countries with data for the period 1990-2011. Sigma and Beta estimation strategies are used to provide between and within cross-country dispersions. The empirical evidence is based on: time, regions, income levels, resource-wealth, state fragility and time-consistent growth quality (GQ) performance. First, for ‘within dispersions’ the following outcomes are established: (1) GQ dispersions within fundamental characteristics have been decreasing over time, (2) From a time-dynamic view, countries within Asia and the Pacific have experienced the highest reduction in GQ differences while nations in the Middle East and North Africa (Central and Eastern European) region have witnessed the highest (lowest) differences, (3) From an income perspective, upper-middle-income (Low-income) countries have the lowest (highest) differences in GQ. (4) Resource-rich and Non-fragile countries have higher differences relative to their Resource-poor and Fragile counterparts respectively. Second, for ‘between dispersions’ and policy syndromes, we found two time-consistent extremities. (1) In decreasing need of policy intervention, the following are apparent for the Policy syndrome extreme: Hopeful, Fragile, Sub-Saharan African, Low-income and Resource-rich countries. (2) In the same line of policy inference, the following are apparent for the Syndrome-free extreme: Central and Eastern European, Asia and the Pacific, Latin American, Best Performing and Upper-middle-income countries. Their predispositions are clarified and policy implications discussed.
    Keywords: Quality of growth; Development; Catch-up
    JEL: O40 O57 I10 I20 I32
    Date: 2017–01
  12. By: Bikramjit Das (Singapore University of Technology and Design - parent); Marie Kratz (ESSEC Business School - Essec Business School)
    Abstract: We analyze risk diversifi cation in a portfolio of heavy-tailed risk factors under the assumption of second order multivariate regular variation. Asymptotic limits for a measure of diversifi cation benefi t are obtained when considering, for instance, the value-at-risk . The asymptotic limits are computed in a few examples exhibiting a variety of different assumptions made on marginal or joint distributions. This study ties up existing related results available in the literature under a broader umbrella.
    Keywords: asymptotic theory,diversi cation bene t,heavy tail,risk concentration,second order regular variation,value-at-risk
    Date: 2017–04

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