Abstract Following the Asian Financial Crisis, South Korea, Hong Kong, and Taiwan experienced card debt crisis in 2001, 2002 and 2005, respectively. Various countries have studied and tried to find the factors that lead to the card debt crisis, hoping that the proposed countermeasures can effectively solve the problem. However, these are only practical operations and observations. Therefore, through information asymmetry, this article constructs a model of card debt crisis from adverse selection and moral hazard, and theoretically provides the government or competent authority with a policy basis. This article employs document analysis, combined with qualitative and quantitative data, to test the research hypotheses. The verification result is supported regardless of hypotheses tests for adverse selection, or moral hazard and confirms that information asymmetry and market failure do exist in the Taiwan credit card market. The policy implication of the article is that the government or competent authority should stop the illusion of free market mechanism and have to be responsible for employing countermeasures to face the crisis. JEL classification numbers: G01,G21,G28. Keywords: Card debt crisis, Information asymmetry, Adverse selection, Moral hazard , Document analysis, Market failure.
{"title":"Information Asymmetry and Card Debt Crisis in Taiwan","authors":"Chih-Hsiung Chang","doi":"10.47260/bae/927","DOIUrl":"https://doi.org/10.47260/bae/927","url":null,"abstract":"Abstract\u0000Following the Asian Financial Crisis, South Korea, Hong Kong, and Taiwan experienced card debt crisis in 2001, 2002 and 2005, respectively. Various countries have studied and tried to find the factors that lead to the card debt crisis, hoping that the proposed countermeasures can effectively solve the problem. However, these are only practical operations and observations. Therefore, through information asymmetry, this article constructs a model of card debt crisis from adverse selection and moral hazard, and theoretically provides the government or competent authority with a policy basis. This article employs document analysis, combined with qualitative and quantitative data, to test the research hypotheses. The verification result is supported regardless of hypotheses tests for adverse selection, or moral hazard and confirms that information asymmetry and market failure do exist in the Taiwan credit card market. The policy implication of the article is that the government or competent authority should stop the illusion of free market mechanism and have to be responsible for employing countermeasures to face the crisis.\u0000\u0000JEL classification numbers: G01,G21,G28.\u0000Keywords: Card debt crisis, Information asymmetry, Adverse selection, Moral hazard , Document analysis, Market failure.","PeriodicalId":344946,"journal":{"name":"Bulletin of Applied Economics","volume":"20 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2022-08-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"132809265","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}
Abstract Previous studies on co-integration focused on whether there is co-integration between variables, and might not explore which variables are caused when co-integration exists. This study is based on a multivariate factor model and apply Quah’s decomposition theorem to derive common factors affecting long-run equilibrium, and use this common factor to explain which variables affect the formation of co-integration. Empirically, five stock markets in the Asian-Pacific Chinese region (Hong Kong, Singapore, Taiwan and China including Shanghai and Shenzhen stock markets) are the objects of analysis. According to the estimated common factor, the existence of the co-integration among the five stock markets is caused by the stock markets in Taiwan and Hong Kong. Therefore, when investing in these five stock markets, investors must incorporate and use the information of the two stock markets as a decisive factor in order to promote correct decision-making. That is, the policy authorities of these countries should promote the effective interaction and operation of the stock market. The decisive influence of stock market information in the two countries cannot be ignored. JEL classification numbers: F30, F65, G10, G15. Keywords: Co-integration, Error Correction Model (ECM), Common Component, Quah’s Decomposition Theorem.
{"title":"Common Components in Co-integrated System and Its Estimation and Application: Evidence from Five Stock Markets in Asia-Pacific Chinese Region","authors":"Hsiang-Hsi Liu, Chien-Kuo Tseng","doi":"10.47260/bae/926","DOIUrl":"https://doi.org/10.47260/bae/926","url":null,"abstract":"Abstract Previous studies on co-integration focused on whether there is co-integration between variables, and might not explore which variables are caused when co-integration exists. This study is based on a multivariate factor model and apply Quah’s decomposition theorem to derive common factors affecting long-run equilibrium, and use this common factor to explain which variables affect the formation of co-integration. Empirically, five stock markets in the Asian-Pacific Chinese region (Hong Kong, Singapore, Taiwan and China including Shanghai and Shenzhen stock markets) are the objects of analysis. According to the estimated common factor, the existence of the co-integration among the five stock markets is caused by the stock markets in Taiwan and Hong Kong. Therefore, when investing in these five stock markets, investors must incorporate and use the information of the two stock markets as a decisive factor in order to promote correct decision-making. That is, the policy authorities of these countries should promote the effective interaction and operation of the stock market. The decisive influence of stock market information in the two countries cannot be ignored. JEL classification numbers: F30, F65, G10, G15. Keywords: Co-integration, Error Correction Model (ECM), Common Component, Quah’s Decomposition Theorem.","PeriodicalId":344946,"journal":{"name":"Bulletin of Applied Economics","volume":"405 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2022-07-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"125300038","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}
Abstract The рurрose of this research was to examine cointegration relationships among the stock market indices before and after the global financial crisis. The cointegration effects were analysed also in the context of the COVID-19 pandemic. The sample included 20 years of data at daily, weekly, and monthly frequencies for stock рrice indices in the United States (S&Р 500), Europe (STXE 600), Japan (Nikkei 225), China (SSE composite), Australia (S&P/ASX 200), and Brazil (IBOVESPA). Two interesting empirical facts were documented. First, the global financial crisis does not seem to have played a significant and uniform role in influencing the cointegration relationship, as only for the monthly sample the number of cointegrating relationships changed after the crisis. Second, the daily sample allowed to explore the period during the COVID-19 pandemic. The findings suggest that this event increased the number of cointegrating relationships, perhaps due to the global nature of such phenomenon which affects both developed and emerging economies contemporaneously. On the other hand, the financial crisis affected mainly developed economies, and the spillovers to emerging markets took place at a later stage as a second-round effect. In line with the previous findings in the existing literature, the results of the study have shown that cointegration stock market indices is dependent on the period of analysis and the frequency of the data. JEL classification numbers: C0, C4, G1, F6. Keywords: Cointegration analysis, stock markets, financial crisis, COVID-19.
{"title":"Cointegration Analysis of Financial Market Indices During Financial Shocks\u0000\u0000Focus on Global Financial Crisis and COVID-19 Рandemic Crisis","authors":"Roko Pedisic","doi":"10.47260/bae/924","DOIUrl":"https://doi.org/10.47260/bae/924","url":null,"abstract":"Abstract\u0000The рurрose of this research was to examine cointegration relationships among the stock market indices before and after the global financial crisis. The cointegration effects were analysed also in the context of the COVID-19 pandemic. The sample included 20 years of data at daily, weekly, and monthly frequencies for stock рrice indices in the United States (S&Р 500), Europe (STXE 600), Japan (Nikkei 225), China (SSE composite), Australia (S&P/ASX 200), and Brazil (IBOVESPA). \u0000Two interesting empirical facts were documented. First, the global financial crisis does not seem to have played a significant and uniform role in influencing the cointegration relationship, as only for the monthly sample the number of cointegrating relationships changed after the crisis. Second, the daily sample allowed to explore the period during the COVID-19 pandemic. The findings suggest that this event increased the number of cointegrating relationships, perhaps due to the global nature of such phenomenon which affects both developed and emerging economies contemporaneously. On the other hand, the financial crisis affected mainly developed economies, and the spillovers to emerging markets took place at a later stage as a second-round effect. \u0000In line with the previous findings in the existing literature, the results of the study have shown that cointegration stock market indices is dependent on the period of analysis and the frequency of the data.\u0000\u0000JEL classification numbers: C0, C4, G1, F6.\u0000Keywords: Cointegration analysis, stock markets, financial crisis, COVID-19.","PeriodicalId":344946,"journal":{"name":"Bulletin of Applied Economics","volume":"16 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2022-07-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"115697547","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}