Abstract Market efficiency can be enhanced by market liquidity if it promotes value creation, leading to increasing stock returns. A positive relation between liquidity and stock returns implies capital movement towards more efficient investment at a low cost for value creation. Existing studies are controversial for the relation being positive, negative, or inconclusive. With such inconsistency, this paper uses data from more than 3,200 company stocks from the UK, the United States, Germany, and China securities markets over a 10-year period to estimate the relation across these four markets, respectively. The framework of estimation is robust to outliers and macro shocks, while eliminating the issues of multicollinearity, autocorrelation, and endogeneity. The study finds some interesting results. We report strong evidence for Germany and the UK of a positive relationship between returns and liquidity. In contrast, China exhibits the opposite result, and the United States provides inconclusive evidence, possibly caused by significant diversification of value perception on liquidity. Our results imply that the German and the UK markets are more efficient than the emerging market of China because liquidity assists capital movement more efficiently. The policy implication of this research is that, for emerging stock markets, the costs of capital movement should be reduced in order to increase the efficiency of funding allocation.
{"title":"Which Market Enhances Market Efficiency by Improving Liquidity? Evidence of Market Liquidity in Relation to Returns of Stocks","authors":"Guy S. Liu, Jinke Li, A. Gregoriou, Y. Bo","doi":"10.1162/asep_a_00860","DOIUrl":"https://doi.org/10.1162/asep_a_00860","url":null,"abstract":"Abstract Market efficiency can be enhanced by market liquidity if it promotes value creation, leading to increasing stock returns. A positive relation between liquidity and stock returns implies capital movement towards more efficient investment at a low cost for value creation. Existing studies are controversial for the relation being positive, negative, or inconclusive. With such inconsistency, this paper uses data from more than 3,200 company stocks from the UK, the United States, Germany, and China securities markets over a 10-year period to estimate the relation across these four markets, respectively. The framework of estimation is robust to outliers and macro shocks, while eliminating the issues of multicollinearity, autocorrelation, and endogeneity. The study finds some interesting results. We report strong evidence for Germany and the UK of a positive relationship between returns and liquidity. In contrast, China exhibits the opposite result, and the United States provides inconclusive evidence, possibly caused by significant diversification of value perception on liquidity. Our results imply that the German and the UK markets are more efficient than the emerging market of China because liquidity assists capital movement more efficiently. The policy implication of this research is that, for emerging stock markets, the costs of capital movement should be reduced in order to increase the efficiency of funding allocation.","PeriodicalId":52020,"journal":{"name":"Asian Economic Papers","volume":null,"pages":null},"PeriodicalIF":9.7,"publicationDate":"2023-02-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"45304500","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract Chinese investment abroad has grown significantly in connection with the Belt and Road Initiative (BRI). This paper tries to answer two questions: First, what considerations gave birth to the BRI? And second, what are the project's economic effects in terms of capital flows and international trade? It is found that the project is above all a way to deal with large surplus capacity in China's capital-intensive industries, to increase growth in relatively poor regions of the country, and to secure a supply of energy and raw materials. For other countries involved in the project, BRI investments are a means to increase production and international trade. International trade and foreign direct investment have been positively affected, although to a limited extent. Finally, there are concerns that lack of transparency in Chinese lending may lead to increased corruption, and that some countries will face financial difficulties.
{"title":"The Belt and Road Initiative: Economic Causes and Effects*","authors":"F. Sjöholm","doi":"10.1162/asep_a_00861","DOIUrl":"https://doi.org/10.1162/asep_a_00861","url":null,"abstract":"Abstract Chinese investment abroad has grown significantly in connection with the Belt and Road Initiative (BRI). This paper tries to answer two questions: First, what considerations gave birth to the BRI? And second, what are the project's economic effects in terms of capital flows and international trade? It is found that the project is above all a way to deal with large surplus capacity in China's capital-intensive industries, to increase growth in relatively poor regions of the country, and to secure a supply of energy and raw materials. For other countries involved in the project, BRI investments are a means to increase production and international trade. International trade and foreign direct investment have been positively affected, although to a limited extent. Finally, there are concerns that lack of transparency in Chinese lending may lead to increased corruption, and that some countries will face financial difficulties.","PeriodicalId":52020,"journal":{"name":"Asian Economic Papers","volume":null,"pages":null},"PeriodicalIF":9.7,"publicationDate":"2023-02-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"46337687","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract Russia's invasion in Ukraine has led to substantial restrictions on exports to Russia, which some East Asian economies have joined. We review the importance of East Asian economies as providers of technology imports for Russia and present a preliminary analysis on the development of Russian imports from East Asia after the invasion. We find that East Asian economies have been important suppliers of technology goods for Russia. After February 2022, exports of most East Asian countries to Russia have dropped substantially. Chinese exports to Russia have increased, especially in the category of vehicles.
{"title":"Russia's Technology Imports from East Asia*","authors":"H. Simola, Aino Röyskö","doi":"10.1162/asep_a_00858","DOIUrl":"https://doi.org/10.1162/asep_a_00858","url":null,"abstract":"Abstract Russia's invasion in Ukraine has led to substantial restrictions on exports to Russia, which some East Asian economies have joined. We review the importance of East Asian economies as providers of technology imports for Russia and present a preliminary analysis on the development of Russian imports from East Asia after the invasion. We find that East Asian economies have been important suppliers of technology goods for Russia. After February 2022, exports of most East Asian countries to Russia have dropped substantially. Chinese exports to Russia have increased, especially in the category of vehicles.","PeriodicalId":52020,"journal":{"name":"Asian Economic Papers","volume":null,"pages":null},"PeriodicalIF":9.7,"publicationDate":"2023-02-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"42741053","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract International collaboration is considered to exert a positive effect on research performance. However, the impact of international collaboration on the performance of research institutions is under-documented. This paper fills the void in the literature by utilizing InCites data of 1,067 Chinese research organizations. The main results show that international collaboration promotes the performance of research organizations in general, but the effect varies according to the types of institutions. The organizations in less-developed regions are more affected by international collaborations than those in developed regions. The empirical results also demonstrate that the United States is the most important scientific collaborator of China.
{"title":"International Collaboration and Research Organization Performance: Evidence from China*","authors":"Hui-yan Geng, Yanrui Wu, Xing Shi","doi":"10.1162/asep_a_00856","DOIUrl":"https://doi.org/10.1162/asep_a_00856","url":null,"abstract":"Abstract International collaboration is considered to exert a positive effect on research performance. However, the impact of international collaboration on the performance of research institutions is under-documented. This paper fills the void in the literature by utilizing InCites data of 1,067 Chinese research organizations. The main results show that international collaboration promotes the performance of research organizations in general, but the effect varies according to the types of institutions. The organizations in less-developed regions are more affected by international collaborations than those in developed regions. The empirical results also demonstrate that the United States is the most important scientific collaborator of China.","PeriodicalId":52020,"journal":{"name":"Asian Economic Papers","volume":null,"pages":null},"PeriodicalIF":9.7,"publicationDate":"2022-08-26","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"64482988","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract Minority communities frequently draw upon voluntary donations to support their unique needs and giving prominent recognition to donors is a widely used strategy, although anonymous donors are not uncommon. Studies in the West suggest that consequentialists (those concerned with the overall benefit from the outcomes, including to themselves) value the recognition gained by engaging in pro-social behavior. Deontologists, or those holding to values that stress right conduct, would engage in pro-social behavior even without recognition. The latter values parallel principles espoused in Eastern thought. What would be the optimal strategy to maximize donations from both groups? Using the methods of experimental economics, we examined the effect of observability on pro-sociality, and the interaction of moral judgment and observability on the cooperative behavior of participants in a Public Good game. The finding shows that participants who felt they were being observed made significantly higher contributions to the public pool as compared to those who felt anonymous, regardless of the values they professed. This validates the strategy of promising recognition to donors used by Asian immigrant communities because it motivates those who value recognition to donate, and prods those who give without recognition to donate more than they otherwise would.
{"title":"The Effect of Observability on Professed Moral Values and Pro-social Behavior in an Asian Context: An Experimental Study*","authors":"K. Ch’ng, S. Narayanan","doi":"10.1162/asep_a_00854","DOIUrl":"https://doi.org/10.1162/asep_a_00854","url":null,"abstract":"Abstract Minority communities frequently draw upon voluntary donations to support their unique needs and giving prominent recognition to donors is a widely used strategy, although anonymous donors are not uncommon. Studies in the West suggest that consequentialists (those concerned with the overall benefit from the outcomes, including to themselves) value the recognition gained by engaging in pro-social behavior. Deontologists, or those holding to values that stress right conduct, would engage in pro-social behavior even without recognition. The latter values parallel principles espoused in Eastern thought. What would be the optimal strategy to maximize donations from both groups? Using the methods of experimental economics, we examined the effect of observability on pro-sociality, and the interaction of moral judgment and observability on the cooperative behavior of participants in a Public Good game. The finding shows that participants who felt they were being observed made significantly higher contributions to the public pool as compared to those who felt anonymous, regardless of the values they professed. This validates the strategy of promising recognition to donors used by Asian immigrant communities because it motivates those who value recognition to donate, and prods those who give without recognition to donate more than they otherwise would.","PeriodicalId":52020,"journal":{"name":"Asian Economic Papers","volume":null,"pages":null},"PeriodicalIF":9.7,"publicationDate":"2022-08-26","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"42317544","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract The world will experience dramatic demographic change over this century. This paper examines the impacts of the global demographic change on the Australian economy at both aggregate and sectoral levels in a global multi-region and multi-sector general equilibrium model. Using a detailed structural model, we simulate demographic shocks of six regions in the world economy as well as Australia's own demographic shock to investigate their impacts on Australian macroeconomic conditions, economic structure, and trade patterns. The results suggest that demographic change in different regions of the world economy will have different impacts on sectors in Australia depending on trade patterns between Australia and other regions. The energy, mining, and durable manufacturing sectors in Australia are the most affected. Demographic change in China, Japan, and Korea has significant negative impacts on Australia, but partly offsetting these shocks are positive demographic shocks from emerging Asia. The overall impact of the rest of the world on Australian GDP is quantitatively negligible, but the impacts on the real interest rate and trade balances are significant. Global demographic change increases Australian real interest rates in the next two decades on the assumption that emerging countries can access global capital markets and take advantage of their demographic dividends.
{"title":"Macroeconomic Impacts of Global Demographic Change: The Case of Australia*","authors":"Weifeng Liu, Warwick McKibbin","doi":"10.1162/asep_a_00857","DOIUrl":"https://doi.org/10.1162/asep_a_00857","url":null,"abstract":"Abstract The world will experience dramatic demographic change over this century. This paper examines the impacts of the global demographic change on the Australian economy at both aggregate and sectoral levels in a global multi-region and multi-sector general equilibrium model. Using a detailed structural model, we simulate demographic shocks of six regions in the world economy as well as Australia's own demographic shock to investigate their impacts on Australian macroeconomic conditions, economic structure, and trade patterns. The results suggest that demographic change in different regions of the world economy will have different impacts on sectors in Australia depending on trade patterns between Australia and other regions. The energy, mining, and durable manufacturing sectors in Australia are the most affected. Demographic change in China, Japan, and Korea has significant negative impacts on Australia, but partly offsetting these shocks are positive demographic shocks from emerging Asia. The overall impact of the rest of the world on Australian GDP is quantitatively negligible, but the impacts on the real interest rate and trade balances are significant. Global demographic change increases Australian real interest rates in the next two decades on the assumption that emerging countries can access global capital markets and take advantage of their demographic dividends.","PeriodicalId":52020,"journal":{"name":"Asian Economic Papers","volume":null,"pages":null},"PeriodicalIF":9.7,"publicationDate":"2022-08-26","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"43619701","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract This paper studies the impact of digital transformation on the ex post risk differentiation of large and small banks, measured by nonperforming loan (NPL) ratios. It uses the Digital Transformation Index of Commercial Banks compiled by the Institute of Digital Finance of Peking University, which contains data on three dimensions—cognition, organization and products—for 97 banks from 2011 to 2018. The three main findings are: (1) the digital transformation of cognition and organization only affects the NPL ratio through the digital transformation of products; (2) the digital transformation of products only increases the NPL ratio of small banks, but not large banks; and (3) the reason for the above results is that, in fulfillment of the mandatory requirement of lending to the micro-, small, and medium-sized enterprises (MSMEs), digital transformation makes it easier for large banks to discount commercial bills held by MSMEs, thereby pushing small banks to extend corporate loans to MSMEs, which have higher risks.
{"title":"Digital Transformation and Risk Differentiation in the Banking Industry: Evidence from Chinese Commercial Banks","authors":"Xinran Cao, Boyu Han, Yiping Huang, Xuanli Xie","doi":"10.1162/asep_a_00853","DOIUrl":"https://doi.org/10.1162/asep_a_00853","url":null,"abstract":"Abstract This paper studies the impact of digital transformation on the ex post risk differentiation of large and small banks, measured by nonperforming loan (NPL) ratios. It uses the Digital Transformation Index of Commercial Banks compiled by the Institute of Digital Finance of Peking University, which contains data on three dimensions—cognition, organization and products—for 97 banks from 2011 to 2018. The three main findings are: (1) the digital transformation of cognition and organization only affects the NPL ratio through the digital transformation of products; (2) the digital transformation of products only increases the NPL ratio of small banks, but not large banks; and (3) the reason for the above results is that, in fulfillment of the mandatory requirement of lending to the micro-, small, and medium-sized enterprises (MSMEs), digital transformation makes it easier for large banks to discount commercial bills held by MSMEs, thereby pushing small banks to extend corporate loans to MSMEs, which have higher risks.","PeriodicalId":52020,"journal":{"name":"Asian Economic Papers","volume":null,"pages":null},"PeriodicalIF":9.7,"publicationDate":"2022-08-26","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"44353476","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract Although entrepreneurship plays a key role in economic development, its precise effect remains largely unknown. This is because it is challenging to objectively measure entrepreneurship and identify its determinants. In this paper, we analyze the effect of a particular feature of the institutional landscape, namely, corruption, on entrepreneurship. It is expected that corruption discourages entrepreneurship because it undermines fair competition. We use two proxies for entrepreneurship that are widely used in the literature: (1) nascent entrepreneurship collected from Global Entrepreneurship Monitor, and (2) entry rate defined as the number of new firms divided by the total number of previous year's registered businesses, collected from World Bank Group Entrepreneurship Survey. We find that better control of corruption promotes entrepreneurship. Our evidence is stronger when we use entry rate as a proxy of entrepreneurship. Our findings are preserved when we add other determinants of entrepreneurship drawn from the literature. When we use legal origins as instruments for corruption, our results remain essentially the same. The size of population, a proxy for market size, is positively associated with entrepreneurship while corporate taxes are negatively associated.
{"title":"Does Corruption Discourage Entrepreneurship?*","authors":"Donghyun Park, Kwanho Shin","doi":"10.1162/asep_a_00855","DOIUrl":"https://doi.org/10.1162/asep_a_00855","url":null,"abstract":"Abstract Although entrepreneurship plays a key role in economic development, its precise effect remains largely unknown. This is because it is challenging to objectively measure entrepreneurship and identify its determinants. In this paper, we analyze the effect of a particular feature of the institutional landscape, namely, corruption, on entrepreneurship. It is expected that corruption discourages entrepreneurship because it undermines fair competition. We use two proxies for entrepreneurship that are widely used in the literature: (1) nascent entrepreneurship collected from Global Entrepreneurship Monitor, and (2) entry rate defined as the number of new firms divided by the total number of previous year's registered businesses, collected from World Bank Group Entrepreneurship Survey. We find that better control of corruption promotes entrepreneurship. Our evidence is stronger when we use entry rate as a proxy of entrepreneurship. Our findings are preserved when we add other determinants of entrepreneurship drawn from the literature. When we use legal origins as instruments for corruption, our results remain essentially the same. The size of population, a proxy for market size, is positively associated with entrepreneurship while corporate taxes are negatively associated.","PeriodicalId":52020,"journal":{"name":"Asian Economic Papers","volume":null,"pages":null},"PeriodicalIF":9.7,"publicationDate":"2022-08-26","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"49635398","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract In this note, we review recent data concerning Russia's economic integration with other countries. We first analyze the general picture of Russia's economic integration with the rest of the world and the importance of foreign economic relations for the country. We then turn to China, an increasingly significant economic partner for Russia. The European Union remains Russia's most important trading partner and is by far the most important source of foreign direct investment to Russia as well as source of other financing. China's importance to Russia has also increased, especially with respect to merchandise trade.
{"title":"How Important Are Russia's External Economic Links?","authors":"I. Korhonen, H. Simola","doi":"10.1162/asep_a_00848","DOIUrl":"https://doi.org/10.1162/asep_a_00848","url":null,"abstract":"Abstract In this note, we review recent data concerning Russia's economic integration with other countries. We first analyze the general picture of Russia's economic integration with the rest of the world and the importance of foreign economic relations for the country. We then turn to China, an increasingly significant economic partner for Russia. The European Union remains Russia's most important trading partner and is by far the most important source of foreign direct investment to Russia as well as source of other financing. China's importance to Russia has also increased, especially with respect to merchandise trade.","PeriodicalId":52020,"journal":{"name":"Asian Economic Papers","volume":null,"pages":null},"PeriodicalIF":9.7,"publicationDate":"2022-05-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"45664500","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract The purpose of this paper is to contribute to the contemporary policy debate on the industrialization strategy in developing countries by analyzing policy regime shifts and outcomes in Sri Lanka during the post-independence era. The analysis is guided by the received body of knowledge relating to the challenges faced by a small economy that takes world prices as given and is unable to affect world demand and supply in designing national industrialization strategy in this era of economic globalization. The findings demonstrate that the backlash against liberalization reforms in the contemporary Sri Lankan policy debate is largely based on ideological predilections rather than factual analysis. The comparative analysis of Sri Lanka's industrialization experience during the state-led import-substitution era and that of the post-reform era (in particular during the first two decades) makes a strong case for reconsidering the merit of the emerging emphasis on combining import substitution with export orientation with a sector specific focus. Selective policies to promote import substitution essentially impose a “tax” on export producers.
{"title":"Rethinking Sri Lanka's Industrialization Strategy: Achievements, Lost Opportunities and Prospects","authors":"P. Athukorala","doi":"10.1162/asep_a_00849","DOIUrl":"https://doi.org/10.1162/asep_a_00849","url":null,"abstract":"Abstract The purpose of this paper is to contribute to the contemporary policy debate on the industrialization strategy in developing countries by analyzing policy regime shifts and outcomes in Sri Lanka during the post-independence era. The analysis is guided by the received body of knowledge relating to the challenges faced by a small economy that takes world prices as given and is unable to affect world demand and supply in designing national industrialization strategy in this era of economic globalization. The findings demonstrate that the backlash against liberalization reforms in the contemporary Sri Lankan policy debate is largely based on ideological predilections rather than factual analysis. The comparative analysis of Sri Lanka's industrialization experience during the state-led import-substitution era and that of the post-reform era (in particular during the first two decades) makes a strong case for reconsidering the merit of the emerging emphasis on combining import substitution with export orientation with a sector specific focus. Selective policies to promote import substitution essentially impose a “tax” on export producers.","PeriodicalId":52020,"journal":{"name":"Asian Economic Papers","volume":null,"pages":null},"PeriodicalIF":9.7,"publicationDate":"2022-05-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"41910216","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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