Pub Date : 2016-01-12DOI: 10.35609/GJBSSR.2016.4.1(5)
A. Bahari, Suhernita, Vira Luthan, Efa Yonnedi
Objective – This study is intended to explore the factual information; cost of implementation; general impact of implementation; progress to date; operational and strategic decision taken by management; implementation and impact of individual standards; and general other related to IFRS implementation in Indonesia by comparing before and after IFRS implementation. Methodology/Technique – Data were collected by using content analysis from annual reports of manufacturing companies listed in the Indonesian Stock Exchange and analysed by using SPSS. Findings – Statistical analysis showed that in Indonesia, the average number of pages that reveal category of operational and strategic decision taken by management; implementation and impact of individual standard; and general other differ between before and after the implementation of IFRS, but not for factual information and general impact of information. In addition, there is a significant difference in the average of number of listed manufacturing companies report category of progress to date; operational and strategic decision taken by management; and general other between before and after the implementation of IFRS-based Financial Statements. Novelty – Findings of this research can serve as a guideline for companies in Indonesia and other developing countries in implementing the IFRS. The findings will also contribute to the knowledge and application of Financial Accounting System and Accounting Theory. Type of Paper: Empirical.
{"title":"A Study of International Financial Reporting Standards (IFRS) Implementation in Indonesia: The Preparers’ Perspectives","authors":"A. Bahari, Suhernita, Vira Luthan, Efa Yonnedi","doi":"10.35609/GJBSSR.2016.4.1(5)","DOIUrl":"https://doi.org/10.35609/GJBSSR.2016.4.1(5)","url":null,"abstract":"Objective – This study is intended to explore the factual information; cost of implementation; general impact of implementation; progress to date; operational and strategic decision taken by management; implementation and impact of individual standards; and general other related to IFRS implementation in Indonesia by comparing before and after IFRS implementation. \u0000Methodology/Technique – Data were collected by using content analysis from annual reports of manufacturing companies listed in the Indonesian Stock Exchange and analysed by using SPSS. \u0000Findings – Statistical analysis showed that in Indonesia, the average number of pages that reveal category of operational and strategic decision taken by management; implementation and impact of individual standard; and general other differ between before and after the implementation of IFRS, but not for factual information and general impact of information. In addition, there is a significant difference in the average of number of listed manufacturing companies report category of progress to date; operational and strategic decision taken by management; and general other between before and after the implementation of IFRS-based Financial Statements. \u0000Novelty – Findings of this research can serve as a guideline for companies in Indonesia and other developing countries in implementing the IFRS. The findings will also contribute to the knowledge and application of Financial Accounting System and Accounting Theory. \u0000Type of Paper: Empirical.","PeriodicalId":381709,"journal":{"name":"ERN: International Finance (Topic)","volume":"1986 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2016-01-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"130503562","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 analyzes the relationship between de jure financial openness, and de facto financial openness. I use the Chinn-Ito index to proxy a country's legal arrangements regarding external transactions, and examine its relationship to actual realized international capital flows of various types and direction. I use a long panel, from 1980 until the start of global financial crisis, and include a large group of developed and developing countries. Linear panel data estimation methods, and two other regression models are used to explicitly examine the interaction of country attributes with policy. The first model uses interaction terms between legal financial openness and financial development or institutional quality to gauge whether these development attributes amplify or dampen the effect of legal opening on realized flows. The second model uses dummy variables for country sub-groups to assess whether threshold levels of development are important. I find that in general the relation between legal openness and realized international financial flows is weak. Some assets do respond to policy, others seem unaffected. In particular, the relationship is more powerful for financially developed countries. Using time series econometric methods to further investigate the connection between financial openness, domestic financial development and international financial integration, I look at the bank lending rate for five Asian economies. Rather than parity or convergence, I examine variance decompositions to assess the proportion of outside influence on domestic lending rates. The experience of Japan, South Korea and Indonesia support the conclusions arising from the panel analysis that greater financial development enhances integration.
{"title":"Capital Flows, De Jure vs. De Facto Financial Openness","authors":"G. Bush","doi":"10.2139/ssrn.2688584","DOIUrl":"https://doi.org/10.2139/ssrn.2688584","url":null,"abstract":"This paper analyzes the relationship between de jure financial openness, and de facto financial openness. I use the Chinn-Ito index to proxy a country's legal arrangements regarding external transactions, and examine its relationship to actual realized international capital flows of various types and direction. I use a long panel, from 1980 until the start of global financial crisis, and include a large group of developed and developing countries. Linear panel data estimation methods, and two other regression models are used to explicitly examine the interaction of country attributes with policy. The first model uses interaction terms between legal financial openness and financial development or institutional quality to gauge whether these development attributes amplify or dampen the effect of legal opening on realized flows. The second model uses dummy variables for country sub-groups to assess whether threshold levels of development are important. I find that in general the relation between legal openness and realized international financial flows is weak. Some assets do respond to policy, others seem unaffected. In particular, the relationship is more powerful for financially developed countries. Using time series econometric methods to further investigate the connection between financial openness, domestic financial development and international financial integration, I look at the bank lending rate for five Asian economies. Rather than parity or convergence, I examine variance decompositions to assess the proportion of outside influence on domestic lending rates. The experience of Japan, South Korea and Indonesia support the conclusions arising from the panel analysis that greater financial development enhances integration.","PeriodicalId":381709,"journal":{"name":"ERN: International Finance (Topic)","volume":"10 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2015-11-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"131699664","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}
In an effort to provide a better understanding of the large variation in price levels between countries, we report on a cross-country analysis of national price levels, using Purchasing Power Parity (PPP) data on 168 economies from the most recent 2011 round of the International Comparison Program (ICP). PPPs are used for many purposes, including to set international poverty lines and allocate IMF quotas. The well-known Balassa-Samuelson income effect is not the only factor affecting PPPs, particularly for low- and middle income countries. Structural and policy factors make a difference. Small island states are relatively costly for their income level as are sparsely populated countries. Countries with large subsidy programs – as measured by fuel subsidies – tend to have lower price levels than predicted on the basis of income. More open labor policies – as measured by a higher share of migrants in the labor force – are associated with lower price levels in higher-income countries. The proposition that very poor governance is associated with both low income and high prices receives some modest support. Aid inflows and a negative current account balance are correlated with higher price levels (the latter less strongly), but FDI and remittances are not. We also observe a strong association between inequality and higher price levels, which provides some support for the proposition that the ICP may over-weight globally comparable goods. Our results confirm the tendency for African countries to be more expensive than countries with similar incomes in other parts of the world. We fail to fully explain this phenomenon but offer a number of explanations that together could account for it, including low agricultural productivity. Finally, we confirm the relationship between low PPP price levels and greater competitiveness in manufactures, especially for low and middle-income countries.
{"title":"What Determines Purchasing Power Parity Exchange Rates?","authors":"A. Gelb, Anna Diofasi","doi":"10.2139/ssrn.2671574","DOIUrl":"https://doi.org/10.2139/ssrn.2671574","url":null,"abstract":"In an effort to provide a better understanding of the large variation in price levels between countries, we report on a cross-country analysis of national price levels, using Purchasing Power Parity (PPP) data on 168 economies from the most recent 2011 round of the International Comparison Program (ICP). PPPs are used for many purposes, including to set international poverty lines and allocate IMF quotas. The well-known Balassa-Samuelson income effect is not the only factor affecting PPPs, particularly for low- and middle income countries. Structural and policy factors make a difference. Small island states are relatively costly for their income level as are sparsely populated countries. Countries with large subsidy programs – as measured by fuel subsidies – tend to have lower price levels than predicted on the basis of income. More open labor policies – as measured by a higher share of migrants in the labor force – are associated with lower price levels in higher-income countries. The proposition that very poor governance is associated with both low income and high prices receives some modest support. Aid inflows and a negative current account balance are correlated with higher price levels (the latter less strongly), but FDI and remittances are not. We also observe a strong association between inequality and higher price levels, which provides some support for the proposition that the ICP may over-weight globally comparable goods. Our results confirm the tendency for African countries to be more expensive than countries with similar incomes in other parts of the world. We fail to fully explain this phenomenon but offer a number of explanations that together could account for it, including low agricultural productivity. Finally, we confirm the relationship between low PPP price levels and greater competitiveness in manufactures, especially for low and middle-income countries.","PeriodicalId":381709,"journal":{"name":"ERN: International Finance (Topic)","volume":"80 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2015-09-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"124763761","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}
In this paper, we investigate whether foreign currency accounts help overcome credit constraints in developing countries. We analyze a novel bank-level data set from Nepal, where a steady inflow of remittances has contributed to foreign currency deposits on commercial bank balance sheets. In this data set we find that: (i) Banks hedge their FX exposure by investing in FX assets. (ii) Banks also hedge indirectly via their sectoral lending composition: Banks with a large share of FX deposits primarily lend to firms in traded-goods sectors. They lend only little to the non-traded sectors, as well as deprived sectors of the economy that have been targeted by various support programs. While the direct impact of FX accounts on relaxing credit constraints thus appears small, and biased towards specific sectors, there is also a substantial indirect effect via the additional creation of domestic deposits – that benefits all sectors of the economy.
{"title":"On Remittances, Foreign Currency Exposure and Credit Constraints: Evidence from Nepal","authors":"N. Maskay, Sven Steinkamp, F. Westermann","doi":"10.2139/ssrn.2529862","DOIUrl":"https://doi.org/10.2139/ssrn.2529862","url":null,"abstract":"In this paper, we investigate whether foreign currency accounts help overcome credit constraints in developing countries. We analyze a novel bank-level data set from Nepal, where a steady inflow of remittances has contributed to foreign currency deposits on commercial bank balance sheets. In this data set we find that: (i) Banks hedge their FX exposure by investing in FX assets. (ii) Banks also hedge indirectly via their sectoral lending composition: Banks with a large share of FX deposits primarily lend to firms in traded-goods sectors. They lend only little to the non-traded sectors, as well as deprived sectors of the economy that have been targeted by various support programs. While the direct impact of FX accounts on relaxing credit constraints thus appears small, and biased towards specific sectors, there is also a substantial indirect effect via the additional creation of domestic deposits – that benefits all sectors of the economy.","PeriodicalId":381709,"journal":{"name":"ERN: International Finance (Topic)","volume":"5 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2014-11-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"132252482","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}
I study whether or not countries' macroeconomic characteristics are systematically related to their currencies' exposure to the downside market risk. I find that the currency downside risk is strongly associated with the local inflation rate, real interest rate and net foreign asset position. Currencies of countries with high inflation and real interest rates and negative net foreign asset position (debtor countries) are more exposed to the downside risk whereas currencies of countries with low inflation and real interest rates and positive net foreign asset position (creditor countries) exhibit “safe haven” properties. The local real interest rate has the highest explanatory power in accounting for the cross-section of currency exposure to the downside risk. This suggests that the high currency exposure to the downside risk is a consequence of investments in high-yield risky countries and flight from them in “hard times”.
{"title":"Currency Exposure to Downside Risk: Which Fundamentals Matter?","authors":"V. Dobrynskaya","doi":"10.1111/roie.12174","DOIUrl":"https://doi.org/10.1111/roie.12174","url":null,"abstract":"I study whether or not countries' macroeconomic characteristics are systematically related to their currencies' exposure to the downside market risk. I find that the currency downside risk is strongly associated with the local inflation rate, real interest rate and net foreign asset position. Currencies of countries with high inflation and real interest rates and negative net foreign asset position (debtor countries) are more exposed to the downside risk whereas currencies of countries with low inflation and real interest rates and positive net foreign asset position (creditor countries) exhibit “safe haven” properties. The local real interest rate has the highest explanatory power in accounting for the cross-section of currency exposure to the downside risk. This suggests that the high currency exposure to the downside risk is a consequence of investments in high-yield risky countries and flight from them in “hard times”.","PeriodicalId":381709,"journal":{"name":"ERN: International Finance (Topic)","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2014-11-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"129574988","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}
In several industrial countries, the government is responsible for foreign exchange intervention while the central bank is given operational independence in conducting domestic monetary policy. We model the interaction between the two agencies when their views differ and generate empirical implications using lattice-theoretic techniques. Japanese data from 2001–2004 support the model's predictions with respect to central bank behavior. The evidence is less conclusive as to whether the massive intervention of 2001–2004 by the Ministry of Finance caused the Bank of Japan to raise the monetary target.
{"title":"Foreign Exchange Intervention and Monetary Policy: A Tale of Two Agencies with Conflicting Objectives","authors":"Val E. Lambson, S. Takagi, Issei Kozuru","doi":"10.1111/roie.12153","DOIUrl":"https://doi.org/10.1111/roie.12153","url":null,"abstract":"In several industrial countries, the government is responsible for foreign exchange intervention while the central bank is given operational independence in conducting domestic monetary policy. We model the interaction between the two agencies when their views differ and generate empirical implications using lattice-theoretic techniques. Japanese data from 2001–2004 support the model's predictions with respect to central bank behavior. The evidence is less conclusive as to whether the massive intervention of 2001–2004 by the Ministry of Finance caused the Bank of Japan to raise the monetary target.","PeriodicalId":381709,"journal":{"name":"ERN: International Finance (Topic)","volume":"357 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2014-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"114658615","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 analyzes whether foreign direct investment (FDI) has contributed to the wide income gaps in Latin America. Panel cointegration techniques as well as regression analysis are performed to assess the impact of inward FDI stocks on income inequality among households in Latin American host countries. The panel cointegration analysis typically reveals a significant and positive effect on income inequality. There is no evidence for reverse causality. The findings are fairly robust to the choice of different estimation methods, sample selection and the period of observation.
{"title":"FDI and Income Inequality - Evidence from Latin American Economies","authors":"D. Herzer, P. Hühne, Peter Nunnenkamp","doi":"10.1111/rode.12118","DOIUrl":"https://doi.org/10.1111/rode.12118","url":null,"abstract":"This paper analyzes whether foreign direct investment (FDI) has contributed to the wide income gaps in Latin America. Panel cointegration techniques as well as regression analysis are performed to assess the impact of inward FDI stocks on income inequality among households in Latin American host countries. The panel cointegration analysis typically reveals a significant and positive effect on income inequality. There is no evidence for reverse causality. The findings are fairly robust to the choice of different estimation methods, sample selection and the period of observation.","PeriodicalId":381709,"journal":{"name":"ERN: International Finance (Topic)","volume":"110 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2014-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"125141901","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 obtain ex ante estimates of risk premia for G10 currency pairs using cross-sectional data on exchange rate options. Option prices are well-matched by a non-Gaussian, two-factor model, consistent with evidence from realized currency returns. We find that option-implied currency risk premia provide an unbiased forecast of monthly currency excess returns, and achieve cross-sectional forecasting R^2s of up to 44%. Despite prominent non-normalities in option data, less than 20% of the model HML-FX risk premium, or roughly 70bps per annum, is due to the asymmetries and higher-moments of global risks.
{"title":"Option-Implied Currency Risk Premia","authors":"Jakub W. Jurek, Zhikai Xu","doi":"10.2139/ssrn.2338585","DOIUrl":"https://doi.org/10.2139/ssrn.2338585","url":null,"abstract":"We obtain ex ante estimates of risk premia for G10 currency pairs using cross-sectional data on exchange rate options. Option prices are well-matched by a non-Gaussian, two-factor model, consistent with evidence from realized currency returns. We find that option-implied currency risk premia provide an unbiased forecast of monthly currency excess returns, and achieve cross-sectional forecasting R^2s of up to 44%. Despite prominent non-normalities in option data, less than 20% of the model HML-FX risk premium, or roughly 70bps per annum, is due to the asymmetries and higher-moments of global risks.","PeriodicalId":381709,"journal":{"name":"ERN: International Finance (Topic)","volume":"115 17 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2014-10-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"126367928","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 analyze the differential impact of domestic and foreign monetary policy on the local supply of bank credit in domestic and foreign currencies. We analyze a novel, supervisory dataset from Hungary that records all bank lending to firms including its currency denomination. Accounting for time-varying firm-specific heterogeneity in loan demand, we find that a lower domestic interest rate expands the supply of credit in the domestic but not in the foreign currency. A lower foreign interest rate on the other hand expands lending by lowly versus highly capitalized banks relatively more in the foreign than in the domestic currency.
{"title":"In Lands of Foreign Currency Credit, Bank Lending Channels Run Through?","authors":"S. Ongena, I. Schindele, Dzsamila Vonnák","doi":"10.2139/ssrn.2507688","DOIUrl":"https://doi.org/10.2139/ssrn.2507688","url":null,"abstract":"We analyze the differential impact of domestic and foreign monetary policy on the local supply of bank credit in domestic and foreign currencies. We analyze a novel, supervisory dataset from Hungary that records all bank lending to firms including its currency denomination. Accounting for time-varying firm-specific heterogeneity in loan demand, we find that a lower domestic interest rate expands the supply of credit in the domestic but not in the foreign currency. A lower foreign interest rate on the other hand expands lending by lowly versus highly capitalized banks relatively more in the foreign than in the domestic currency.","PeriodicalId":381709,"journal":{"name":"ERN: International Finance (Topic)","volume":"4 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2014-10-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"128820500","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 ratio, Penn effect and behavioral equilibrium exchange rate (BEER) are used to assess the level of the bilateral real exchange rate of the Chinese RMB against the US dollar in 1980–2012. The statistical indexes and economic meaning indicate that the findings from the BEER and ratio models are more reasonable. Based on the two models, the RMB was overvalued by about 10–20% in 2011–2012. Given the already overvalued currency and the not-ideal economic situation, China should (1) control its excessive money supply to suppress the purchasing power parity rate appreciation and (2) keep the level of the nominal exchange rate stable.
{"title":"A New Assessment of the Chinese RMB Exchange Rate","authors":"Zhibai Zhang, Langnan Chen","doi":"10.2139/ssrn.2316082","DOIUrl":"https://doi.org/10.2139/ssrn.2316082","url":null,"abstract":"The ratio, Penn effect and behavioral equilibrium exchange rate (BEER) are used to assess the level of the bilateral real exchange rate of the Chinese RMB against the US dollar in 1980–2012. The statistical indexes and economic meaning indicate that the findings from the BEER and ratio models are more reasonable. Based on the two models, the RMB was overvalued by about 10–20% in 2011–2012. Given the already overvalued currency and the not-ideal economic situation, China should (1) control its excessive money supply to suppress the purchasing power parity rate appreciation and (2) keep the level of the nominal exchange rate stable.","PeriodicalId":381709,"journal":{"name":"ERN: International Finance (Topic)","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2014-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"123483429","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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