Research

Beng Ann Tee · Siew Yean Tham · Andrew Jia Yi Kam ·Malaysian Journal of Economic Studies ·2020 ·JEL: F1, F14, L8

ICT intensive services were found to contribute to the service export growth in developed countries. However, empirical work on the role of ICT in ASEAN’s services export is sparse due mainly to the scarcity of bilateral services trade data. This study uses mirror data from the ASEAN-5’s trading partners from 2000 to 2012 for examining the impact of ICT on the ASEAN-5’s services export. A set of constructed ICT indicators are found to have significant positive network effect on the ASEAN-5’s services export. Thus, the higher the ICT development level in both trading partner countries, the higher their bilateral services exports with each other. But, the positive impact of ICT on the ASEAN-5’s trade in services can be offset by the presence of trade costs. Therefore, policies enhancing trade facilitation should be used in tandem with the development of ICT in order to promote the ASEAN-5’s services export.

Rahmat Heru Setianto · Rani Septiani Sipayung · W.N.W. Azman-Saini ·Entrepreneurial Business and Economics Review ·2022

The objective of the article is to empirically investigates the role played by financial development in determining the relationship between working capital financing and firms’ performance. Employing data of publicly listed manufacturing firms in five ASEAN countries, namely, Indonesia, Malaysia, Philippines, Singapore, and Thailand spanning from 2009-2018 resulted in 6,183 firm years observation. This study conducts an analysis using the two-steps generalized method of moments (GMM) estimator. The inverted U-shape effect of working capital financing on firm profitability is confirmed, indicating a trade off in utilizing short-term debt to finance working capital requirements. Moreover, new evidence was shown that firms which operate in more financially developed regions have the opportunity to utilise a greater percentage of short-term debt without destroying their profitability.

Rusmawati Said · Ng Kar Yee · Normaz Wana Ismail ·Institutions and Economies ·2019 ·JEL: J81; J83; J61; R15

This paper investigates the impact of foreign labour standards on domestic labour standards in ASEAN countries. The study employs a set of cross-sectional time series data that covers the period from 1995-2008 for its empirical analysis. Three different labour standards indicators, namely numbers of strikes and lockouts, cases of occupational injuries, and trade union density rates–are used as a proxy for labour standards. The results evince a race to the bottom for labour standards, represented by cases of injuries. In contrast, the effect of trade partners’trade union density rate is negative and significant; however, the number of strikes and lockouts has an insignificant effect. The findings of the study suggest that there may be a race to the bottom in terms of working conditions among ASEAN countries, but not on the standards that measure the rights of workers.

Fazelina Sahul Hamid · Muhamed Zulkhibri ·Institutions and Economies ·2019 ·JEL: E44; E52

This paper examines the effectiveness of bank lending channels in ASEAN countries. The main objective of this paper is to identify whether the effectiveness of bank lending channels in ASEAN differs based on the countries’ financial structure, banks’ fundamentals and ownership type. The study makes use of unbalanced panel data of 214 commercial banks in nine ASEAN countries for the period from 2001 to 2015. Analysis using dynamic GMM estimators finds that the bank lending channel is more effective in CLMV countrieswhich have a less-developed financial sector compared to ASEAN-5 countries which have a moredeveloped financial sector. Particularly, we find that smaller banks with less liquidity have a broader scope to expand their financing portfolios when interest rates rise. We also find that foreign banks in ASEAN-5 countries andstate-owned banks in ASEAN countries weaken the effect of monetary policy transmissions. However, local banks are vulnerable to changes in monetary policy. Further analyses confirm that the influence of ownership structure on credit growth is partly driven by the differences in the banks’ specific characteristics.Our findings suggest that theeffectiveness of bank lending channel depends on financial structure, bank fundamentals and ownership structure. The regulators need to take this into account to ensure that the changes in monetary policy achieve the desired objectives.

Chia Lin Chang · Yu-Hui Wang · Kuo-I-Chang ·Emerging Markets Finance and Trade ·2022 ·JEL: F14, F10, F61

This study performs survival analysis to evaluate duration of revived and new machinery import and the hazard ratios (HRs) of covariates related to the global financial crisis (GFC) and COVID-19 pandemic in the Association of Southeast Asian Nations (ASEAN). The results indicate that large tariff margins decreased the possibility of disruption (HR: 0.8024) to Japanese import from ASEAN countries after revived during the COVID-19 pandemic and increased the possibility of disruption (HR: 1.0338) to Chinese import from ASEAN countries of new import during the GFC.

My-Linh Nguyen · Toan Ngoc Bui ·Economies ·2021

This paper focuses on examining the nonlinear impact of trade openness (TO) on economic growth (EG) in the Asean-6 countries (Indonesia, Malaysia, Thailand, Singapore, Philippines, and Vietnam). In order to achieve the set research objectives, the authors estimate the research model through the fixed-effect panel threshold approach. Unlike previous studies, this paper finds that there is a nonlinear impact of TO on EG, whereby TO has two threshold values. Specifically, before the first threshold value, TO plays an important role in boosting EG. However, this impact level decreases gradually when TO exceeds this threshold value. In particular, when exceeding the second threshold value, the impact of TO on EG is still positive but has a relatively low value. The research results show that if TO increases to a high level (beyond the threshold value) without combining with other complementary policies, this does not encourage high-efficiency EG. In addition, this study also shows that EG is positively affected by domestic investment and negatively affected by financial crisis. The findings in this paper are of great importance for the Asean-6 countries as well as researchers.

Guohui Chen · Jie Zhang ·Emerging Markets Finance and Trade ·2022

The ASEAN countries are in a golden stage of development, although the uneven regional development remains a prominent challenge to integrated growth. The study tries to investigate regional inequality in ASEAN countries from an outer space perspective. It first estimates the relationship between nighttime light intensity and GDP per capita for the 10 ASEAN countries at the national level, based on which it predicts regional incomes at the subnational level to assess regional inequality and explores the affecting factors. The results indicate that regional inequality in the ASEAN region and economic development present an inverted N-shaped relationship. The overall inequality of the region is largely attributed to the uneven development between countries. It is also found that transportation, urbanization, openness, mineral rents, and tax revenue are all significantly relevant to regional inequality.

Fazelina Sahul Hamid ·Journal of Asian Economics ·2020

We analyze the lending cyclicality of 213 ASEAN commercial banks over the period 2001–2015. The findings indicate that lending by private banks is procyclical while lending by state banks is countercyclical. Long-term liabilities also move countercyclically for state banks whereas funding for non-state banks in the form of deposit and long-term liabilities is procyclical. Greater lending cyclicality is observed for both private and state banks in Cambodia, Myanmar, Laos, and Vietnam (CMLV) compared to Indonesia, Malaysia, the Philippines, Thailand, and Singapore (ASEAN-5). Lending of non-ASEAN based foreign banks shows greater procyclicality than that of domestic banks for the ASEAN-5 countries, although not for the CMLV countries. During the global financial crisis, lending by non-ASEAN based foreign banks contracted sharply even as lending by ASEAN based foreign banks was unaffected. Overall, our results confirm that bank ownership influences lending and funding sensitivity to economic fluctuations.

Dung V. Dinh · Robert J. Powell · Duc H. Vo ·Journal of Asian Economics ·2021 ·JEL: G33, G28

This study is conducted to investigate the prediction of corporate financial distress based on the Merton (1974) market-based Distance to Default (DD) model over the period from 1997 to 2016 which covers a range of economic financial circumstances, including the Asian Financial Crisis (AFC) and Global Financial Crisis (GFC). The study focusses on the six largest countries in the ASEAN Economic Community (AEC), comprising of Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam. Unlike previous studies which focus mainly on bankruptcy, this paper focusses on early warning distress indicators that signal distress well before bankruptcy. This is when firms experience difficulty in servicing debt as measured by interest coverage ratio (ICR) at a firm level and non-performing loans (NPLs) at a country level. Key empirical findings from this paper indicate that the market-based distance-to-default (DD) model is generally a good early warning indicator of financial distress in the following year, particularly for ICR, but that prediction accuracy varies between individual countries in the Southeast Asian region.

Farhad Taghizadeh-Hesary · Han-Phoumin · Ehsan Rasoulinezhad ·Economic Analysis and Policy ·2022 ·JEL: H81, G21

The main objective of this paper is to identify the determining factors of the optimal credit guarantee ratio in four members of the Association of Southeast Asian Nations (ASEAN), namely Indonesia, Singapore, the Philippines, and Malaysia, by employing statistical techniques and the Vector Autoregressive (VAR) approach. The empirical findings prove that the loan default ratio is the optimal credit guarantee ratio’s main determining factor. The empirical findings confirm that the credit guarantee ratio needs to be increased in the ASEAN region to help SMEs survive in the wake of the COVID-19 pandemic and for the post-COVID-19 economic recovery. The results show that the credit guarantee ratio should vary for different countries based on the macroeconomic climate and for each bank or, in other words, for groups of banks with similar financial soundness. The practical policy recommendations are establishing a regional credit guarantee scheme (RCGS) and evaluating banks’ soundness for setting the optimal credit guarantee ratio.

Abdul Rahim Ridzuan · Shahsuzan Zakaria · Bayu Arie Fianto · Nora Yusma Mohamed Yusoff · Nor Fatimah Che Sulaiman · Mohamad Idham Md Razak · Siswantini · Arsiyanti Lestari ·International Journal of Energy Economics and Policy ·2021 ·JEL: G10, F62

This study offers new insights for policymakers to reduce income inequality, thus ensuring economic growth which greatly benefits the poor segment of population and directing financial sector to provide easy access to financial resources for lower income group at cheaper cost. Bound test was applied to examine the long-run and short-run relationships based on the sample period beginning from 1970 until 2016. The results confirmed the existence of a long-run relationship between the variables. Financial development in Malaysia, Indonesia and Thailand had successfully reduced income inequality, however, a different effect was recorded in the Philippines where income distribution was worsened. Furthermore, economic growth brought positive effect to income distribution in Malaysia and Indonesia, but not for Thailand and the Philippines. Inflation, trade openness and foreign direct investment, provided mixed results for all countries. Among the policies recommendation for this paper are there should be more easy accessibility for entrepreneurs to reach the wide range of financial services including conventional and Islamic financial products, the expansion of capital market, as well as giving proper attention to the financial sector. Besides, granting the access to capital markets for low income groups or underprivileged individuals might be helpful to them either by developing entrepreneurial skill or involvement in productive activities and receive better salaries. This policy will give insight to the policymakers to strengthen their financial institutions, especially during the pandemic of Covid-19

Cosimo Magazzino · Marco Mele · Nicolas Schneider ·Journal of Economic Studies ·2021 ·JEL: O41, C32, E10

The purpose of this paper is to empirically test the economic convergence that operate between five selected Asian countries (namely Thailand, Singapore, Malaysia, the Philippines and Indonesia). In particular, it seeks to investigate how increased economic integration has impacted the inter-country income levels among the five founding members of ASEAN.