Pub Date : 2010-08-01DOI: 10.5089/9781455205257.001
Kangni Kpodar, P. Imam
This paper investigates the determinants of the pattern of Islamic bank diffusion around the world using country-level data for 1992 - 2006. The analysis illustrates that income per capita, share of Muslims in the population and status as an oil producer are linked to the development of Islamic banking, as are economic integration with Middle Eastern countries and proximity to Islamic financial centers. Interest rates have a negative impact on Islamic banking, reflecting the implicit benchmark for Islamic banks. The quality of institutions does not matter, probably because the often higher hurdle set by Shariah law trumps the quality of local institutions in most countries. The 9/11 attacks were not important to the diffusion of Islamic banking; but they coincided with rising oil prices, which are a significant factor in the diffusion of Islamic banking. Islamic banks also appear to be complements to, rather than substitutes for, conventional banks.
{"title":"Islamic Banking: How Has it Diffused?","authors":"Kangni Kpodar, P. Imam","doi":"10.5089/9781455205257.001","DOIUrl":"https://doi.org/10.5089/9781455205257.001","url":null,"abstract":"This paper investigates the determinants of the pattern of Islamic bank diffusion around the world using country-level data for 1992 - 2006. The analysis illustrates that income per capita, share of Muslims in the population and status as an oil producer are linked to the development of Islamic banking, as are economic integration with Middle Eastern countries and proximity to Islamic financial centers. Interest rates have a negative impact on Islamic banking, reflecting the implicit benchmark for Islamic banks. The quality of institutions does not matter, probably because the often higher hurdle set by Shariah law trumps the quality of local institutions in most countries. The 9/11 attacks were not important to the diffusion of Islamic banking; but they coincided with rising oil prices, which are a significant factor in the diffusion of Islamic banking. Islamic banks also appear to be complements to, rather than substitutes for, conventional banks.","PeriodicalId":213755,"journal":{"name":"International Environment of Global Business eJournal","volume":"48 4 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2010-08-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"125727845","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2010-08-01DOI: 10.5089/9781455208883.001.A001
Prachi Mishra, P. Montiel, A. Spilimbergo
This paper reviews the monetary transmission mechanism in low income countries (LICs). We use monetary transmission in advanced and emerging markets as a benchmark to identify aspects of the transmission mechanism that may operate differently in LICs. In particular, we focus on the effects of financial market structure on monetary transmission. The weak institutional framework prevalent in LICs drastically reduces the role of securities markets and increases the cost of bank lending to private firms. Coupled with imperfect competition in the banking sector, this means that banks with chronically high excess reserves invest in domestic public bonds or (when possible) in foreign bonds. With the financial system not intermediating funds properly, the traditional monetary transmission channels (interest rate, bank lending, and asset price) are impaired. The exchange rate channel, on the other hand, tends to be undermined by central bank intervention in the foreign exchange market. These conclusions are supported by review of the institutional frameworks, statistical analysis, and previous literature.
{"title":"Monetary Transmission in Low Income Countries","authors":"Prachi Mishra, P. Montiel, A. Spilimbergo","doi":"10.5089/9781455208883.001.A001","DOIUrl":"https://doi.org/10.5089/9781455208883.001.A001","url":null,"abstract":"This paper reviews the monetary transmission mechanism in low income countries (LICs). We use monetary transmission in advanced and emerging markets as a benchmark to identify aspects of the transmission mechanism that may operate differently in LICs. In particular, we focus on the effects of financial market structure on monetary transmission. The weak institutional framework prevalent in LICs drastically reduces the role of securities markets and increases the cost of bank lending to private firms. Coupled with imperfect competition in the banking sector, this means that banks with chronically high excess reserves invest in domestic public bonds or (when possible) in foreign bonds. With the financial system not intermediating funds properly, the traditional monetary transmission channels (interest rate, bank lending, and asset price) are impaired. The exchange rate channel, on the other hand, tends to be undermined by central bank intervention in the foreign exchange market. These conclusions are supported by review of the institutional frameworks, statistical analysis, and previous literature.","PeriodicalId":213755,"journal":{"name":"International Environment of Global Business eJournal","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2010-08-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"130448102","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We find that China’s P/E ratio is comparable to that of the U.S. SP and (ii) historical earnings volatility is considerably higher in China than in the U.S. Higher earnings volatility in China offsets higher growth prospect in setting the P/E ratio, making its P/E ratio much closer to what is observed empirically than otherwise implied by its growth rate.
{"title":"Is China’s P/E Ratio Too Low? Examining the Role of Earnings Volatility","authors":"T. Wirjanto, A. Huang","doi":"10.2139/ssrn.1632667","DOIUrl":"https://doi.org/10.2139/ssrn.1632667","url":null,"abstract":"We find that China’s P/E ratio is comparable to that of the U.S. SP and (ii) historical earnings volatility is considerably higher in China than in the U.S. Higher earnings volatility in China offsets higher growth prospect in setting the P/E ratio, making its P/E ratio much closer to what is observed empirically than otherwise implied by its growth rate.","PeriodicalId":213755,"journal":{"name":"International Environment of Global Business eJournal","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2010-07-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"129365261","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2010-07-19DOI: 10.1111/j.1467-9361.2010.00564.x
A. Barua, Pavel Chakraborty
This paper examines the impact of economic liberalization on interregional inequality in India. It has been observed in many studies that interregional inequality in India has been steadily increasing over time. This paper is a further confirmation of this result. We have tried to locate the cause of rising interregional inequality within the production structure of the economy and observed that it is positively and systematically related to the cross-regional inequalities in agriculture and manufacturing. This systematic relationship has further been examined from a structuralist viewpoint to unravel the factors determining manufacturing production across regions where we have found that trade openness is the key factor determining the manufacturing share in income across the regions. Our further enquiry into manufacturing and trade patterns has shown that the Herfindahl index of concentration has been increasing over time on both counts. This result, along with the findings of the structuralist model about disproportionate growth of manufacturing across regions, provides an explanation of the cause of rising interregional inequality in India.
{"title":"Does Openness Affect Regional Inequality? A Case Study for India","authors":"A. Barua, Pavel Chakraborty","doi":"10.1111/j.1467-9361.2010.00564.x","DOIUrl":"https://doi.org/10.1111/j.1467-9361.2010.00564.x","url":null,"abstract":"This paper examines the impact of economic liberalization on interregional inequality in India. It has been observed in many studies that interregional inequality in India has been steadily increasing over time. This paper is a further confirmation of this result. We have tried to locate the cause of rising interregional inequality within the production structure of the economy and observed that it is positively and systematically related to the cross-regional inequalities in agriculture and manufacturing. This systematic relationship has further been examined from a structuralist viewpoint to unravel the factors determining manufacturing production across regions where we have found that trade openness is the key factor determining the manufacturing share in income across the regions. Our further enquiry into manufacturing and trade patterns has shown that the Herfindahl index of concentration has been increasing over time on both counts. This result, along with the findings of the structuralist model about disproportionate growth of manufacturing across regions, provides an explanation of the cause of rising interregional inequality in India.","PeriodicalId":213755,"journal":{"name":"International Environment of Global Business eJournal","volume":"135 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2010-07-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"114739032","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2010-07-19DOI: 10.1504/IJBSR.2010.035078
Yifei Sun
This study examines the relationship between industrial output and in-house R&D, technology transfer and spillovers from foreign investment in China using the most recent economic census data (2004) published by the Chinese State Statistical Bureau in 2006. It reveals that none of the three factors - in-house R&D, technology transfer and spillovers from foreign investment - can effectively explain the sectoral differences of output. The study also reveals that capital and state-owned enterprises (SOEs) show consistent and significant impacts on output, where capital demonstrates positive impacts while SOEs show negative impacts. Also interesting is that the impact of export on industrial differences of output is insignificant, though still positive. Such results cast serious doubts on the sustainability of China's strategy of relying on foreign investment, export and its recent innovation drive.
{"title":"What Matters for Industrial Innovation in China: R&D, Technology Transfer or Spillover Impacts from Foreign Investment?","authors":"Yifei Sun","doi":"10.1504/IJBSR.2010.035078","DOIUrl":"https://doi.org/10.1504/IJBSR.2010.035078","url":null,"abstract":"This study examines the relationship between industrial output and in-house R&D, technology transfer and spillovers from foreign investment in China using the most recent economic census data (2004) published by the Chinese State Statistical Bureau in 2006. It reveals that none of the three factors - in-house R&D, technology transfer and spillovers from foreign investment - can effectively explain the sectoral differences of output. The study also reveals that capital and state-owned enterprises (SOEs) show consistent and significant impacts on output, where capital demonstrates positive impacts while SOEs show negative impacts. Also interesting is that the impact of export on industrial differences of output is insignificant, though still positive. Such results cast serious doubts on the sustainability of China's strategy of relying on foreign investment, export and its recent innovation drive.","PeriodicalId":213755,"journal":{"name":"International Environment of Global Business eJournal","volume":"6 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2010-07-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"117155633","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2010-07-19DOI: 10.1111/j.1467-9361.2010.00566.x
R. Dekle, G. Vandenbroucke
We perform a growth-accounting exercise for Chinese economic growth from 1978 to 2003, by decomposing Chinese growth in GDP per labor into the contributions arising from the agricultural, public, and private sectors; and the contribution arising from the reallocations of labor among these three sectors. The greatest contributor to overall labor productivity growth (contributing 30% of the overall) is the growth in total factor productivity in the private nonagricultural sector. The next largest contributor (26% of the overall) is the reallocation of labor from the agricultural sector to the nonagricultural sector.
{"title":"Whither Chinese Growth? A Sectoral Growth Accounting Approach","authors":"R. Dekle, G. Vandenbroucke","doi":"10.1111/j.1467-9361.2010.00566.x","DOIUrl":"https://doi.org/10.1111/j.1467-9361.2010.00566.x","url":null,"abstract":"We perform a growth-accounting exercise for Chinese economic growth from 1978 to 2003, by decomposing Chinese growth in GDP per labor into the contributions arising from the agricultural, public, and private sectors; and the contribution arising from the reallocations of labor among these three sectors. The greatest contributor to overall labor productivity growth (contributing 30% of the overall) is the growth in total factor productivity in the private nonagricultural sector. The next largest contributor (26% of the overall) is the reallocation of labor from the agricultural sector to the nonagricultural sector.","PeriodicalId":213755,"journal":{"name":"International Environment of Global Business eJournal","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2010-07-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"129855377","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The Brazilian Development Bank (BNDES) is the main financing agent for long term investments in Brazil. Given its relevance, deriving from its large disbursements at subsidized interest rates, the bank could positively influence the corporate governance landscape among large Brazilian companies. This essay qualitatively analyzes the hypothesis that BNDES promotes higher governance standards in its investee companies, by focusing on the 2009 operations of the bank. The results do not support this view. The analysis of both BNDES loans and investments as shareholder and bondholder does not corroborate the argument that the bank requires higher corporate governance standards when makes its investments, nor that it promotes it afterward. On the contrary, anecdotal evidence is found of companies with recent corporate governance problems that have received large inflows from the bank, as well as of several companies extremely opaque in their governance model which are among the main loan operations of the bank in 2009. The essay also proposes some measures that BNDES could adopt in order to explicitly take into account governance issues in its disbursements decisions. Such measures could encourage firms to invest more in better governance practices, as well as convince the market that corporate governance is a key issue for BNDES.
{"title":"The Role of the BNDES (Brazilian Development Bank) on the Corporate Governance of Large Companies in Brazil","authors":"Alexandre Di Miceli da Silveira","doi":"10.2139/ssrn.1639097","DOIUrl":"https://doi.org/10.2139/ssrn.1639097","url":null,"abstract":"The Brazilian Development Bank (BNDES) is the main financing agent for long term investments in Brazil. Given its relevance, deriving from its large disbursements at subsidized interest rates, the bank could positively influence the corporate governance landscape among large Brazilian companies. This essay qualitatively analyzes the hypothesis that BNDES promotes higher governance standards in its investee companies, by focusing on the 2009 operations of the bank. The results do not support this view. The analysis of both BNDES loans and investments as shareholder and bondholder does not corroborate the argument that the bank requires higher corporate governance standards when makes its investments, nor that it promotes it afterward. On the contrary, anecdotal evidence is found of companies with recent corporate governance problems that have received large inflows from the bank, as well as of several companies extremely opaque in their governance model which are among the main loan operations of the bank in 2009. The essay also proposes some measures that BNDES could adopt in order to explicitly take into account governance issues in its disbursements decisions. Such measures could encourage firms to invest more in better governance practices, as well as convince the market that corporate governance is a key issue for BNDES.","PeriodicalId":213755,"journal":{"name":"International Environment of Global Business eJournal","volume":"29 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2010-07-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"123472163","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Can standard business-cycle methodology be applied to China? In this chapter, we address this question by examining the macroeconomic time series and identifying dimensions in which China differs from economies (such as Canada and the U.S.) that are typically the subject of business-cycle research. We show that naively applying the standard business-cycle tools to China is no more ridiculous than applying it to Canada, although the dimensions along which the model struggles is different. For China, the model cannot account for the low level of consumption (or high saving) as a proportion of income observed in the data. An examination of provincial level consumption data suggests that the absence of channels for intranational consumption risk sharing may be an important reason why the business-cycle model has trouble accounting for Chinese consumption and saving behavior.
{"title":"Business Cycles, Consumption and Risk-Sharing: How Different is China?","authors":"C. Curtis, Nelson C. Mark","doi":"10.3386/W16154","DOIUrl":"https://doi.org/10.3386/W16154","url":null,"abstract":"Can standard business-cycle methodology be applied to China? In this chapter, we address this question by examining the macroeconomic time series and identifying dimensions in which China differs from economies (such as Canada and the U.S.) that are typically the subject of business-cycle research. We show that naively applying the standard business-cycle tools to China is no more ridiculous than applying it to Canada, although the dimensions along which the model struggles is different. For China, the model cannot account for the low level of consumption (or high saving) as a proportion of income observed in the data. An examination of provincial level consumption data suggests that the absence of channels for intranational consumption risk sharing may be an important reason why the business-cycle model has trouble accounting for Chinese consumption and saving behavior.","PeriodicalId":213755,"journal":{"name":"International Environment of Global Business eJournal","volume":"7 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2010-07-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"128595155","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2010-07-01DOI: 10.1111/j.1749-124X.2010.01204.x
Liping He, G. Fan, Panpan Yang
In responding to a view that attributes sharp downturns in the Chinese economy in late 2008 and early 2009 to the “collapse of external demand,” the present paper scrutinizes three relevant issues: How have large Chinese importers behaved in a demand-price setting? How have Chinese commodity imports and exports interacted in recent years? Did the downturns in China's export growth come earlier and were they deeper than those in Chinese import growth? All answers appear to suggest a conclusion contrary to the abovementioned view: sharp downturns in China's trade and economy during the recent global financial crisis were, to a large extent, caused by certain domestic factors, or by factors that should not be regarded as entirely “external.” Insomuch as globalization has advanced, a large economy like China's today faces new potential sources of macroeconomic disturbances, from inside and outside.
{"title":"What Caused the Sharp Downturn in the Chinese Economy During the Global Financial Crisis? A Critical Note on Causality in Trade Linkage","authors":"Liping He, G. Fan, Panpan Yang","doi":"10.1111/j.1749-124X.2010.01204.x","DOIUrl":"https://doi.org/10.1111/j.1749-124X.2010.01204.x","url":null,"abstract":"In responding to a view that attributes sharp downturns in the Chinese economy in late 2008 and early 2009 to the “collapse of external demand,” the present paper scrutinizes three relevant issues: How have large Chinese importers behaved in a demand-price setting? How have Chinese commodity imports and exports interacted in recent years? Did the downturns in China's export growth come earlier and were they deeper than those in Chinese import growth? All answers appear to suggest a conclusion contrary to the abovementioned view: sharp downturns in China's trade and economy during the recent global financial crisis were, to a large extent, caused by certain domestic factors, or by factors that should not be regarded as entirely “external.” Insomuch as globalization has advanced, a large economy like China's today faces new potential sources of macroeconomic disturbances, from inside and outside.","PeriodicalId":213755,"journal":{"name":"International Environment of Global Business eJournal","volume":"215 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2010-07-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"118711688","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper analyses the volatility behaviour of Tehran Stock Exchange returns. Since volatility is an important factor in portfolio selection, asset pricing, and risk management, the main purpose of our study is to model and forecast the returns volatility of the Tehran Stock Exchange (TSE). The main contribution of this study as the very first attempt is to enhance the knowledge on the behaviour of volatility of TSE. Using primary index data of TSE for 2003-2008, we investigate the appropriateness of several potential models of autoregressive (AR), moving averages (MA), and autoregressive moving averages (ARMA). The ARMA (2, 1) has been chosen as the best process for modelling the conditional mean. We used EGARCH and TGARCH models to capture asymmetries in terms of negative and positive shocks and the leverage effect. The ARMA (2, 1)-TGARCH (1, 1) model was the best process to fit the data. We find no evidence of the presence of the leverage in the news; nor does the bad news have a larger effect on the volatility of returns than the good news. Of the three forecast performance measures, the TGARCH (1, 1) was the best model to forecast the volatility.
{"title":"An Analysis of Emerging Markets Returns Volatility: Case of Tehran Stock Exchange","authors":"Mehdi Parchehbaf Shoghi, Abdolreza Talaneh","doi":"10.2139/ssrn.1633203","DOIUrl":"https://doi.org/10.2139/ssrn.1633203","url":null,"abstract":"This paper analyses the volatility behaviour of Tehran Stock Exchange returns. Since volatility is an important factor in portfolio selection, asset pricing, and risk management, the main purpose of our study is to model and forecast the returns volatility of the Tehran Stock Exchange (TSE). The main contribution of this study as the very first attempt is to enhance the knowledge on the behaviour of volatility of TSE. Using primary index data of TSE for 2003-2008, we investigate the appropriateness of several potential models of autoregressive (AR), moving averages (MA), and autoregressive moving averages (ARMA). The ARMA (2, 1) has been chosen as the best process for modelling the conditional mean. We used EGARCH and TGARCH models to capture asymmetries in terms of negative and positive shocks and the leverage effect. The ARMA (2, 1)-TGARCH (1, 1) model was the best process to fit the data. We find no evidence of the presence of the leverage in the news; nor does the bad news have a larger effect on the volatility of returns than the good news. Of the three forecast performance measures, the TGARCH (1, 1) was the best model to forecast the volatility.","PeriodicalId":213755,"journal":{"name":"International Environment of Global Business eJournal","volume":"96 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2010-06-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"116542223","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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