Trade Openness, Capital Flows and Financial Development in Developing Economies

Siong Hook Law 한국국제경제학회 2009 International Economic Journal Vol.23 No.3

This paper examines the impact of trade openness and capital flows on financial development in developing countries using a dynamic panel GMM estimation technique. The empirical results reveal that trade openness and capital flows are statistically significant determinants of financial development. Simultaneous opening of both the trade and capital accounts also appear to have positive impacts on financial development. The evidence also suggests that openness leads to improved financial development through institutional quality and competition channels. However, the institutional channel outperforms competition in ensuring the positive effects of openness on financial market depth in developing countries.

THE ROLE OF FINANCIAL DEVELOPMENT ON INCOME INEQUALITY IN MALAYSIA

SIONG HOOK LAW,HUI BOON TAN 중앙대학교 경제연구소 2009 Journal of Economic Development Vol.34 No.2

This study examines the role of financial development in influencing income inequality in Malaysia over the period of 1980-2000. The empirical results based on ARDL bounds test indicate that financial market development is, at best, very weak and statistically insignificant in reducing income inequality in Malaysia. The evidence is valid for a variety of financial indicators, including the banking sector, the stock market and financial aggregate variables. The evidence also highlights that besides various government’s development programs, efforts should also concentrate on improving institutional quality, economic development and maintaining low inflation in its attempt to combat income inequality.

THE ROLE OF FINANCIAL DEVELOPMENT ON INCOME INEQUALITY IN MALAYSIA

SIONG HOOK LAW;HUI BOON TAN 경제연구소 2009 Journal of Economic Development Vol.34 No.2

This study examines the role of financial development in influencing income inequality in Malaysia over the period of 1980-2000. The empirical results based on ARDL bounds test indicate that financial market development is, at best, very weak and statistically insignificant in reducing income inequality in Malaysia. The evidence is valid for a variety of financial indicators, including the banking sector, the stock market and financial aggregate variables. The evidence also highlights that besides various government’s development programs, efforts should also concentrate on improving institutional quality, economic development and maintaining low inflation in its attempt to combat income inequality.

Resource Curse: New Evidence on the Role of Institutions

Tamat Sarmidi,Siong Hook Law,Yaghoob Jafari 한국국제경제학회 2014 International Economic Journal Vol.28 No.1

This paper attempts to provide a probable answer to a longstanding resource curse puzzle; i.e., why resource-rich nations grow at a slower rate compared with less fortunate ones. Using an innovative threshold estimation technique, the empirical results reveal that there is a threshold effect in the natural resources–economic growth relationship. We find that the impact of natural resources is meaningful to economic growth only after a certain threshold point of institutional quality has been attained. The results also shed light on the fact that the nations that have low institutional quality depend heavily on natural resources while countries with high quality institutions are relatively less dependent on natural resources to generate growth.

Effects of Credit Market Freedom on the Convergence of Chinese Banks’ Profits

Woon Kan Yap,Siong Hook Law,N.A.M. Naseem 연세대학교 동서문제연구원 2018 Global economic review Vol.47 No.2

Using an unbalanced panel of 96 banks that operate in the Chinese banking sector from 2007 to 2014, we first seek to uncover the relation between credit market freedom and bank profit. Thereafter, we further analyse the freedom effects on the convergence of bank profit so as to explain the prevailing persistent fall in the profit growth of Chinese banks. Two types of convergence are considered in this study: beta-convergence and sigma-convergence, which are estimated by using dynamic panel data estimator. Our results suggest that beta-convergence does not take place for all ownership structures until discrepancies on their traits and structural parameters are conditioned out, suggesting that it is the conditional beta-convergence rather than the absolute beta-convergence that transpires in China’s banking sector. While freedom is found to reduce profit growth significantly, its negative impact on the speed of beta-convergence is arguably negligible. This alludes that China has done reasonably well in balancing its liberalization initiatives with stabilization measures so that the fall in profits instigated by freedom does not significantly overshoot its long-run equilibrium path. Credit market freedom is also found to be a significant catalyst for sigma-convergence for all ownership structures but state-owned commercial banks and foreign banks.

Impact of Financial Integration on Economic Development: A Dynamic Panel Quantile Regression Analysis

Abubakar Abdullahi,Saifuzzaman Ibrahim,Law Siong Hook,Wan Azman Saini Wan Ngah 세종대학교 경제통합연구소 2023 Journal of Economic Integration Vol.38 No.4

This paper investigated the impact of financial integration on economic development using the dynamic panel quantile estimator on a sample of 95 countries from 2004-2019. The results showed that the impact of financial integration on economic development varied across income levels. This study found that financial integration impacted economic development negatively in middle and high-income countries. However, financial integration did not significantly affect economic development in low-income countries.

Effects of Economic Freedom on Bank Profit Beta-Convergence in ASEAN-5 Banking Sectors

Woon Kan Yap,Siong Hook Law,Judhiana Abdul-Ghani 세종대학교 경제통합연구소 2020 Journal of Economic Integration Vol.35 No.3

This study examines the beta-convergence of bank profitability to the long-run equilibrium, which is the level at which all incumbent banks tend toward when behaving competitively.T his study also considers the role of economic freedom in bank profitability convergence, which is a necessary development if banking sectors are to integrate.T he results show that ASEAN-5 banking sectors are generally competitive because bank profits and return on average assets are found to beta-converge to their respective competitive levels. Although no evidence exists that the pace of convergence is significantly determined by the prevailing level of economic freedom, freedom in the credit markets and the size of governments are required to satisfy certain thresholds if bank profitability beta-converges significantly.

Roles of Formal Institutions and Social Capital in Innovation Activities: A Cross-Country Analysis

Weng Chang Lee,Siong Hook Law 연세대학교 동서문제연구원 2017 Global economic review Vol.46 No.3

This paper investigates the roles of formal institutions and social capital in countries’ innovation activities. The sample consists of 62 developed and developing countries, using the ordinary least squares robust standard error estimations, instrumental variable (IV) estimators, and quantile regression. The empirical results indicate that formal institutions and social capital complement one another in influencing countries’ innovations level. In terms of the relative importance of both in promoting innovation activities, the social capital has greater role compared to formal institutions. Furthermore, the empirical result suggests that innovation level tends to be higher in countries with higher social capital. We also use the quantile regression to estimate whether the relationship among formal institutions, social capital, and innovation differs at different points in the conditional distribution of innovation. The results demonstrate that formal institutions yield a significant positive impact only after exceeding in 50th quantile, whereas social capital do so at lower 10th quantile. Therefore, in addition to a policy focus on improving the formal institutions, countries with a low level of innovation should enrich social capital in their promotion of innovation activity.

Effect of Human Capital on Foreign Direct In-vestment Inflows

( Mohammad Sharif Karimi ),( Zulkornain Yusop ),( Law Siong Hook ),( Chin Lee ) 한양대학교 경제연구소 2013 JOURNAL OF ECONOMIC RESEARCH Vol.18 No.1

The purpose of this study is to assess whether and to what extent HC contributes to national economies, and the influence it has on subsequent FDI owing into those economies. A systematic empir- ical study based on the Generalized Method of Moments (GMM) for 50 developed and developing countries has been undertaken by this study; in order to evaluate the role of HC on FDI inflows using all indicators previously used as a HC proxy in previous studies. We have utilized a newly developed index that is focused on weighted HC stock to examine the effects of HC on FDI inflows. The results clearly indicate that HC is important for attracting FDI in developing and developed countries. It demonstrates that the general educational attainment of a country is of importance in the FDI context. It would appear that HC formation should be emphasized in developing countries if FDI attraction is to be considered as a valid policy objective.

The Effect of Gender Imbalance on Housing Price in China

Xinping HAN,W,N,W,AZMAN-SAINI,Anitha ROSLAND,Yasmin BANI,Siong Hook LAW 한국유통과학회 2021 The Journal of Asian Finance, Economics and Busine Vol.8 No.7

House ownership is considered as one of the important pre-conditions for marriage in China. Given that gender imbalance is a prominent issue in the country, competition for marriage partners might motivate males to look for a house and probably bigger and more expensive house. This is believed to have caused house price hikes in recent years. This study aims to investigate the impact of gender imbalance on house prices using data from 30 provinces in China for the 2000–2017 period. The results based on the generalized method of moments (GMM) estimations show that house price is strongly influenced by gender imbalance. However, there is no evidence to support differential effects across eastern and mid-western regions. One potential reason is that pre-marriage house ownership has become a common culture for the whole community and therefore it does not vary significantly across regions. There are several important policy implications. Firstly, the issues should be addressed by the policymakers at national level and not regional level. Secondly, the government should intervene to bring back gender ratio to its normal level. Finally, the government should limit the number of houses people can buy and increase the supply of houses in the market.