nep-sea New Economics Papers
on South East Asia
Issue of 2019‒11‒04
ten papers chosen by
Kavita Iyengar
Asian Development Bank

  1. Changes in the Global Financial Environment Surrounding Japan in the 21st Century: Foreign Exchange Policy and International Financial Coordination (Japanese) By IDO Kiyoto
  2. Thailand; Financial Sector Assessment Program-Technical Note-Risk Assessment By International Monetary Fund
  3. THE EURASIAN DIMENSION: DOES EAEU-ASEAN FORMAT HAVE A FUTURE? By Alexander S. Korolev; Hryhorii M. Kalachyhin
  4. Fiscal Disparities in Indonesia under Decentralization: To What Extent Has General Allocation Grant(DAU) Equalized Fiscal Revenues? By Takahiro Akita; Awaludin Aji Riadi; Ali Rizal
  5. Using Poster Presentation with University Students in English Language Classroom By Nopporn Sarobol; Suneeporn Lertkultanon
  6. Thailand; Financial Sector Assessment Program-Detailed Assessment of Observance-Insurance Core Principles By International Monetary Fund
  7. Thailand; Financial Sector Assessment Program-Detailed Assessment of Observance-Basel Core Principles For Effective Banking Supervision By International Monetary Fund
  8. Case Studies on the Water Use of Large Scale Mining in the Philippines By C Magno; J Morillo
  9. Lending to the Unbanked: Relational Contracting with Loan Sharks By Kevin Lang; Kaiwen Leong; Huailu Li; Haibo Xu
  10. Oil Shocks and Stock Market Volatility of the BRICS: A GARCH-MIDAS Approach By Afees A. Salisu; Rangan Gupta

  1. By: IDO Kiyoto
    Abstract: The twenty years from 1990 marked a momentous turning point for the economic and financial system of Japan. This transition is attributable to three shocks. The first shock was the bubble economy triggered by the measures taken in response to the appreciation of the yen triggered by the Plaza Accord, and the burst of the bubble. The second shock was Japan's financial deregulation and the financial crisis which resulted from the collapse of the bubble economy. And the third shock was the Asian currency crisis. This paper focuses particularly on the changes in the international financial environment surrounding Japan and discusses with a historical approach the structural changes consequently demanded of Japan as well as its increased international responsibilities. Section 2 covers the changes in the post-Plaza Accord foreign exchange policy and recent discussions; Section 3 discusses the role played by Japan as well as the collaboration that developed among East Asian economies in overcoming the Asian currency crisis; and Section 4 explains the regional financial coordination in East Asia and the international financial coordination framework that has expanded from the G7 to the G20. And finally, the observations of the current status and challenges are included in conclusion. The dawn of the 21st century was also a significant turning point for international finance. In 1999, the euro was introduced and the global economic leadership expanded from the G7 into the G20 with the development of emerging economies. The Asian currency crisis gave momentum for Asian economies, which had previously been destinations of Japan's exports, to become partners in supply chains and in the global financial system, changing the Japanese economy drastically. The G20, which initially began to address the international financial crisis and foreign exchange policies, is now discussing a wide range of subjects such as sustainable growth of the global economy and structural changes including aging, so Japan should play an increasingly important role.
    Date: 2019–10
  2. By: International Monetary Fund
    Abstract: The Thai banking system shows a substantial resilience to severe shocks. The solvency stress tests indicate that the largest banks can withstand an adverse scenario broadly as severe as the Asian financial crisis. While three banks would deplete their capital conservation buffer (CCB) under the adverse scenario, recapitalization needs would be minimal. A battery of complementary sensitivity stress tests, which allows to cover in more detail certain risk factors, also confirmed the overall picture of a resilient baking system: no particular vulnerability emerged from the analysis of the bond portfolio to an increase in government and corporate spreads, exposure to foreign exchange risk, and concentration risk in the loan portfolio, with the possible exception of one entity with a particular concentration on single-name exposures. From a systemic risk perspective, certain risk concentrations can act as shock amplifiers in case of stress, and hence highlight the importance of improving and expanding the range of analytical tools to detect them. The BoT’s solvency stress test exercise, conducted independently based on the same macro scenarios, showed very similar results despite some fundamental differences of approach, providing a mutual check on the overall robustness of the results.
    Date: 2019–10–24
  3. By: Alexander S. Korolev (National Research University Higher School of Economics); Hryhorii M. Kalachyhin (National Research University Higher School of Economics)
    Abstract: The crisis in relations with the West and the subsequent sanctions hampered the development of Moscow’s cooperation with a number of foreign partners. Under these conditions, the role of the EAEU as an agent for promoting Russia's foreign trade interests has dramatically increased, including the formation of Greater Eurasian Partnership, Moscow’s flagship initiative. Russia’s officials have repeatedly stressed that ASEAN is one of the major pillars of the emerging geostrategic space. The 3rd ASEAN-Russian Federation Summit on Strategic Partnership held in Singapore in November 2018 resulted in signing of Memorandum of Understanding (MOU) between ASEAN and Eurasian Economic Commission (EEC) on Economic Cooperation which aims to unlock the potential of cooperation between two integration blocks. The paper addresses the following question – to what extent can Russia-ASEAN strategic partnership create a positive spillover effect on the EAEU-ASEAN ties and trigger the Greater Eurasian Partnership concept. In doing so, the paper focuses on factors which stand behind ASEAN’s rising interest in Eurasian space, EAEU’s strive to develop relationships with Association and the limits of bilateral cooperation in a broader Greater Eurasian framework. It is concluded that the full engagement of ASEAN member states into Eurasian initiatives (even taking into account their successful implementation) depends on several factors. Firstly, to what extent EAEU member states can eliminate structural problems - institutional imbalances, limited export supplies, internal disagreements between the participants. Secondly, it will depend on whether Russia and ASEAN will be able to back up the status of strategic partnership with economic projects. Finally, will the EAEU partners be able to offer ASEAN an attractive interaction format, for example, the Great Eurasian Partnership, which needs to be conceptually filled and linked with ASEAN key initiatives and plans
    Keywords: EAEU, ASEAN, Russia, Greater Eurasian Partnership, free trade agreement, strategic partnership
    JEL: Z
    Date: 2019
  4. By: Takahiro Akita (Rikkyo University, International University of University); Awaludin Aji Riadi (Directorate General of Taxation, Ministry of Finance, Indonesia); Ali Rizal (Directorate General of Taxation, Ministry of Finance, Indonesia)
    Abstract: This study analyzes the level and trend of fiscal disparity across districts and explores the determinants of fiscal disparity by two inequality decomposition methods. Disparity in per capita shared revenue (DBH) has been the highest since 2003 due to the very unevenspatial distribution of natural resources and tax bases. DBH is unambiguously aninequality-increasing fiscal transfer. While general allocation grant (DAU) has served toequalize fiscal revenue, fiscal disparity is still very high. To further reduce the disparity,it may be necessary to modify the DAU allocation formula. This study proposes a newallocation formula. Though the reduction in fiscal disparity is not substantial under thenew formula, it would encourage resource-poorer districts to raise own source revenue(PAD). This could create a virtuous cycle, since the rise in PAD would enable districtgovernments to promote their economy through further development of human resources and infrastructure and this would in turn raise PAD. Another option to reduce fiscal disparity would be the further expansion of special allocation grant (DAK). If the government allocates the DAK funds effectively across districts, then it could make DAKan inequality-decreasing fiscal transfer.
    Keywords: fiscal disparity, decentralization, general allocation grant, inequality decomposition analysis, Indonesia
    JEL: H71 H77 R51
    Date: 2019–10
  5. By: Nopporn Sarobol (Thammasat University); Suneeporn Lertkultanon (Thammasat University)
    Abstract: This presentation sums up the findings of a study which investigated university students? perceptions on using poster presentation as a form of oral presentation in English language classroom. The participants were 99 students from various majors studying in English for Specific Purposes Courses in a public university in Thailand. The participants were assigned to create posters in groups and present group oral presentations to the audience as speaking assignments. A questionnaire was used to ask their attitudes on using poster presentation in terms of its advantages and disadvantages. With regards to the advantages, the results of the study indicate that the use of poster presentation is very useful for the students. Not only can the students develop their English language skills, especially speaking ability, but also they have more creative skill and collaborative skill. They also agreed that giving presentations in English with posters can be beneficial for their future employment. However, there were some disadvantages of using poster presentation in the classroom. The suggestions given by the participants also revealed what teachers should be aware of when using this type of presentation.
    Keywords: Poster presentation, group oral presentation, speaking skill, university students, English language classroom
    Date: 2019–07
  6. By: International Monetary Fund
    Abstract: The Thai insurance sector is a relatively small but growing part of the country’s financial services industry. Insurance sector assets have grown from 10 percent of gross domestic product (GDP) in 2006 to over 22 percent of GDP in 2016, constituting 9 percent of total financial industry assets. Similarly, between 2008 and 2017, gross premiums written have grown at an average annual rate of approximately 16.9 percent, substantially above nominal GDP growth of 9.9 percent during the same period. As a result, the insurance penetration ratio (the ratio of premiums written to GDP) has gradually increased from 3.63 percent in 2008 to 5.39 percent in 2017.
    Date: 2019–10–24
  7. By: International Monetary Fund
    Abstract: There have been significant enhancements to the legal framework and the supervisory process since the last Basel Core Principles (BCP) review, resulting in high compliance. The Financial Institutions Business Act (FIBA) was adopted in 2008 and establishes the Bank of Thailand (BOT) as the sole supervisor of commercial banks with powers of enforcement and narrowing the role of the Ministry of Finance (MOF) in supervision. The MOF grants and revokes licenses based on BOT recommendations; when BOT implements prompt preventive actions (PPA), the MOF must be notified ex-post.
    Date: 2019–10–24
  8. By: C Magno (School of Economics, University of the Philippines Diliman); J Morillo (National Institute of Geological Sciences, University of the Philippines Diliman)
    Abstract: Water use is one of the most critical sustainability issues of the mining sector. It is important in each stage of the mining life cycle. The water use of the mine can introduce significant ecological changes. It can compete with the water use of households living in the community and other economic activities in the area. We look at the water use of two large scale mining companies and communities in Didipio, Nueva Viscaya and Taganito, Surigao del Norte. We compare water extraction with various factors such as mineral production, land use, rehabilitation, mine development, and environmental concerns. Based on our initial findings, the rate of water extraction of the two mines is significantly correlated with the level of mine development, rehabilitation and pollution control. In both cases, household consumption plays a minimal role in driving the demand for water.
    Keywords: mining; water use; water extraction; Philippines
    JEL: Q56 Q58 Q59
    Date: 2019–10
  9. By: Kevin Lang; Kaiwen Leong; Huailu Li; Haibo Xu
    Abstract: We study roughly 11,000 loans from unlicensed moneylenders to over 1,000 borrowers in Singapore and provide basic information about this understudied market. Borrowers frequently expect to repay late. While lenders do rely on additional punishments to enforce loans, the primary cost of not repaying on time is compounding of a very high interest rate. We develop a very simple model of the relational contract between loan sharks and borrowers and use it to predict the effect of a crackdown on illegal moneylending. Consistent with our model, the crackdown raised the interest rate and lowered the size of loans.
    JEL: I28 I3 K42
    Date: 2019–10
  10. By: Afees A. Salisu (Department for Management of Science and Technology Development, Ton Duc Thang University, Ho Chi Minh City, Vietnam and Faculty of Business Administration, Ton Duc Thang University, Ho Chi Minh City, Vietnam); Rangan Gupta (Department of Economics, University of Pretoria, Pretoria, 0002, South Africa)
    Abstract: In this study, we employ the GARCH-MIDAS model to investigate the response of stock market volatility of the BRICS to oil shocks. We utilize the recent datasets of Baumeister & Hamilton (2019) where oil shocks are decomposed into four variants - oil supply shocks, economic activity shocks, oil consumption shocks, and oil inventory shocks. We further decomposed each of these shocks into positive and negative shocks, and our findings show heterogeneous response of stock market volatility of the BRICS countries to the alternative oil shocks including the positive and negative shocks. The differing responses across the BRICS countries could be attributed to the difference in the economic size, oil production and consumption profile, market share distribution across firms, as well as financial system and regulation efficiency.
    Keywords: Oil shocks, Stock market volatility, BRICS, GARCH-MIDAS
    JEL: C32 G12 G15 Q02
    Date: 2019–10

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