All Research

Joshua Aizenman · Gazi Salah. Uddin · Tianqi Luo · Ranadeva Jayasekera · Donghyun Park ·NBER Working Paper Series ·2022 ·JEL: E52,E58,F42

This paper examines whether prudential policies help to reduce sovereign bond vulnerability to global spillover risk in ASEAN-4 countries (Indonesia, Malaysia, the Philippines, and Thailand). We measure sovereign vulnerability within a risk connectedness network among sovereign bonds. The direct effect is that markets with tighter prudential policies have significantly smaller spillovers from the Treasury yield shocks of other regional and global economies. The sum of indirect and direct effects indicates that prudential policies reduce sovereign spillover risk in the long term. These findings suggest prudential policies have dual efficiency in sovereign risk regulation and Treasury internationalization.

Mohd Azlan Shah Zaidi · Zulkefly Abdul Karim · Noor Amirah Zaidon ·Economies ·2022

Movements in palm oil price give important signals to various stakeholders of the palm oil industry in Malaysia. Thus, understanding external and internal factors that may affect the palm oil price is vital to the industry players for sustainability of their activities. This study investigates relative importance of external and internal shocks on the movement of palm oil price in Malaysia. Employing a structural vector autoregressive (SVAR) model on quarterly data from 1990 to 2019, the findings reveal that external shocks are more dominant in affecting the palm oil price. Shocks to the crude oil price, the prices of substitution goods (soybeans oil, rapeseed oil, and sunflower oil), the world palm oil price, and foreign income significantly affect the palm oil price in the short and medium run. The results also indicate that a shock to soybean oil price has a more profound effect on the palm oil price than a shock to rapeseed oil or sunflower oil prices, respectively. Likewise, shocks to incomes from India as well as from Netherlands create greater impacts on the palm oil price than a shock to income from the other trading partners, respectively. The study has shown the importance of external factors in affecting the palm oil industry.

Chia-Guan Keh · Pei-Tha Gan · Yan-Teng Tan · Fatimah Salwa Binti Abd. Hadi · Norasibah Binti Abdul Jalil ·International Journal of Sustainable Economy ·2022

Determining the relationship between financial development and economic growth is important to make precise projections of economic growth. As most of these studies rely on a symmetric relationship, they can lead to misleading policy implications. To overcome this shortcoming, this paper uses a technique involving an asymmetric relationship. This paper examines the asymmetric relationship between financial development and economic growth in Malaysia from 1980 to 2017 using a nonlinear autoregressive distributed lags model. The banking sector and stock market development have been employed as indicators of financial development. The findings suggest that the asymmetric relationship between banking sector development and economic growth exists in the long-run. Banking sector development shows no asymmetric relationship with economic growth in the short-run, while stock market development does not present any asymmetric relationship with economic growth in the short and long-terms. The study infers that the banking sector development is an essential engine of growth promotion. Policymakers should consider banking and stock market development for better policy decision-making.

Leonard Fong Litt Lam (University Putra Malaysia)) · Siong Hook Law · W. N. W. Azman-Saini · Normaz Wana Ismail ·Millennial Asia ·2022

This article analyses the importance of high-technology trade as a channel of economic growth to ease Malaysia out of the middle-income trap. This study also wonders upon the missing absorptive capabilities that validate the likelihoods of dismal gross domestic product (GDP) growth since the 1990s. Using the autoregressive distributed lag (ARDL) approach and fully modified ordinary least squares (FMOLS) estimator as robustness checks, this study identifies the determinants of high-technology trade and the appropriate absorptive capability in enhancing economic growth. The empirical results from quarterly data from 1990 to 2015 proved that foreign direct investment, financial development and infrastructure are vital to develop a successful high-technology trade. Another important finding is that it validates the presence of trade openness (as absorptive capability) in order to magnify the benefits of research and development (R&D). This explains why, despite spending on R&D, these spending do not project to economic growth.

Sitara Karim · Farah Naz · Muhammad Abubakr Naeem (United Arab Emirates University, South Ural State University)) · Samuel A. Vigne ·Economic Analysis and Policy ·2022

With the continuous boom of FinTech, the similar features of different platforms provide effective solutions for small and medium enterprises. This study examines whether FinTech offers useful business mechanisms for SMEs in selected ASEAN countries. The ASEAN countries included in the study are Indonesia, Malaysia, Philippine, Singapore, and Thailand. The study employed factor analysis and segregated the FinTech-SME nexus into five factors. The responses of 300 SME owners were collected through interview questionnaires and surveys. We find that new FinTech and SMEs ‘collisions’ (our term for new utilization) during COVID-19 are the most important factors in the growth of FinTech and the strength of SMEs. Further, we utilized the Kruskal–Wallis test to validate our results and for ranking the factors alongside the ASEAN countries. We present useful implications for policymakers, regulatory bodies, ASEAN countries, and SMEs for welcoming FinTech solutions to facilitate digital transactions.

Basem Ertim · Tamat Sarmidi · Norlin Khalid · Mohd Helmi Ali ·Asian Economics Letters ·2022

In an attempt to mitigate the effects of COVID-19, the Malaysian government imposed the Movement Control Order (MCO). To address the adverse impacts of the MCO policy, the Malaysian government initiated a series of recovery plans for both fiscal and monetary measures. This study aims to assess the government’s various policy measures on Malaysia’s leading macroeconomic indicators. Regardless of the differences in the gross domestic product (GDP) components, the real impacts on GDP growth are almost identical between Malaysia and a control group. This result is partly explained by the increase in total and domestic investment and private consumption.

Muhammad Hafiz Abd Rashid · Muhammad Iskandar Hamzah · Amirul Afif Muhamat · Aida Azlina Mansor · Rahayu hasanordin ·Journal of Asian Finance, Economics and Business ·2022 ·JEL: M10, M30, M31

Studies examining the interplay between brand transgression and brand forgiveness is notably sparse especially in the context of Southeast Asian banking customers. The purpose of this research is to add to the existing literature by examining the impact of brand transgression, which is represented by negative past experience image incongruence, and corporate wrongdoing on brand forgiveness among Islamic banking customers in Malaysia. The increasing surge in interest in unfavorable brand relationships has sparked concerns about its impact on brand forgiveness. As a result, this theoretical argument, which lacks empirical proof, has to be statistically tested. The current study was conducted utilizing a non-probability purposive sampling technique among clients in the Klang Valley who had poor experiences with Islamic banking services. Data analysis included descriptive statistics, exploratory factor analysis, and multiple regression on a total of 211 valid replies. The findings show that two elements of brand transgression, image inconsistency, and corporate wrongdoing, have a major impact on brand forgiveness. However, the other dimension namely negative past experience was found to be non-significant to brand forgiveness. Research implications and directions for future studies are also discussed in this paper.

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.

Abdul Rahim Ridzuan · Vikniswari Vija Kumaran · Bayu Arie Fianto · Mohd Shahidan Shaari · Miguel Ange Esquivias · Aliashim Albani ·International Journal of Energy Economics and Policy ·2022

Over the past forty years, Malaysia has achieved tremendous economic growth because of higher investment from foreigner such as from China, Japan, and US. Many multinational companies (MNC) have allocated their factories especially in more developed state such as Selangor, Penang and Johor to focused on their operation. The country able to receive various benefits from this investment in the form of job creation, advancement in technology, better income distribution and at same time, some negative externalities such as environmental degradation can also take place from those operation. Given this situation, it is interesting to investigate the current state of sustainable development for Malaysia by considering the impacts of FDI. This paper focused on investigating the presence of Environmental Kuznets Curve (EKC) as well as Pollution Haven Hypothesis (PHH) for Malaysia using a latest annual dataset for the period 1971 until 2019. The study used Bound test to determine the impact of FDI and other selected macroeconomic variables on environmental quality proxied by Carbon emission (CO2). The outcomes shows that the country showcased the U shaped of EKC and higher FDI inflows has worsening the country’s environmental pollution. These outcomes posit a bad alarm for the policymakers of the country to be more aware on the consequences of development that cause higher carbon emissions release and how MNC in the country contribute more emissions with make the scenario worsen. Heavy environmental rules should be imposed to foreign investors and the country need to be directing their economic development by following the principles set out by United Nation in pursing sustainable development.

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.

Arif Imam Suroso ·Economies ·2022

Palm oil is one of the most traded vegetable oils in the global market due to its versatile usage and having a lower price than competitor products. Trade is related to logistics performance as it connects the exporter and importer countries; thus, improving the indicators of logistics also improves the performance of trade, especially in agricultural export. Currently, no study has revealed the effect of logistics performance on palm oil export by considering all the indicators. This study investigates the impact of all the indicators of the logistics performance index on palm oil and palm-based products. Using a panel data regression approach, the extended gravity model is applied in this study to examine Indonesia and Malaysia as the leading exporters of palm oil and palmbased products. The results reveal that all the Logistics Performance Index indicators affect palm oil and palm-based products export in Indonesia and Malaysia. The critical indicators of the Logistics Performance Index in Indonesia are timeliness and tracking and tracing. However, competence and quality of trade infrastructure are the main indicators of Malaysia’s palm oil and palm-based products. The future direction of this research is to explore other agricultural commodities and extend the period of the analysis.