Influence factor of Chinese elders' wealth management behaviour: an empirical study

The main purpose of this paper is to discuss the influential demographic variables of elders’ wealth management behaviour. Purpose sampling for 122 older consumers (aged over 65) who participate in wealth management programme with instrument, was conducted in April 2007 in China (Taiwan area). Regression was performed for the data analysis. The results showed gender, educational background, and living location being key factors affecting elder consumers’ wealth-management behaviours, including consumers’ familiarity with financial products/services, sources of professional information, sources of word-of-mouth information, investment intention, and investment confidence. The main contributions of this not only include enhancing existing literature concerning wealth management, marketing, and elder behaviours (especially for clarifying how the controversial factors work), but unveiling elders’ behaviour tendency in such a blooming emerging market. Practical implications to bank marketers are also given

The Rise of the Current Banking System in Japan, 1868-1936

Learning by doing convinced the Japanese government to create in 1882 a relatively transparent and credible central bank, Bank of Japan, and adopted the gold standard in 1898 to prove it. Unfortunately, the government did not see it fit to enforce transparency on other financial and non financial institutions in an effort to maximize the supply of capital and reduce its cost. To remedy for this deficiency, the government imposed on Bank of Japan to offer implicit deposit insurance. For a long period, this arrangement helped the government of Japan to place the Japanese economy on a fast development track but it also created a serious moral hazard problem. Through various subterfuges, the government was able to escape the necessity to enforce a minimum amount of transparency. World War I brought about golden opportunities that the Japanese economy exploited full at the cost of high rates of inflation thanks to the exit of most developed countries, including Japan, out of the gold standard. The return of the US to the gold standard soon after the end of the war at the old parity forced Japan to reconsider moving to a flexible exchange rate regime or returning to the gold standard either at the old parity at the cost of a depression or at a new parity with a devaluation. For ten years, the government of Japan did not make up its mind. Instead, it instructed Bank of Japan to continue offering free implicit deposit insurance. The moral hazard problem became acute dragging the Japanese economy into many financial crises but the government refused to impose transparency. After falling initially for two decades following the creation of Bank of Japan, real and nominal interest rates meandered without any clear direction and remained on average relatively high. Finally, the government decided to return to the gold standard at the old parity to clean up the weaker and inefficient institutions and reduce the cost of capital. We demonstrate that the government walked into this trap knowing well the economic consequences. Thanks to the naivete? of an otherwise brilliant economist and a former governor of Bank of Japan, the return ended up in a disaster and the government still refused to enforce transparency, preferring instead to impose financial repression out of which the current banking system was born.

Is It a Heavy Log that Broke the Camel’s Back? Evidence of the Credit Channel in Taiwan’s Construction Industry

Since the 1997 Asian financial crisis, the monetary authority of Taiwan decreased the interest rate nine times and had every intention to maintain a loose monetary policy. However, the lending amounts to the construction industry decreased much more sharply in spite of an increased monetary supply. Hence, the loose monetary policy has not reduced the financial constraints of the construction firms in Taiwan. In this paper, we investigate that the credit channel of monetary policy how to works at the Taiwan’s construction industry. We explain the reasons for financial constraints in the construction industry in Taiwan. Construction firms whose information is considerably opaque, are likely to be viewed as “lemons,” which accounts for the credit crunch policy of banking lending to these construction firms. Two strands of evidence support this view. First, the borrowing terms for the construction industry have been more restrictive than those for other industries firms during the same period of financial difficulty. Second, we determine that such financial constraints vary systematically within different industry groups. The results substantiate that construction firms retain more internal funds for future investment, and the sign of the liquidity coefficient is significant in their investment function. The evidence shows construction firms bear most of the reductions in bank loan supply, and that they are more bank-dependent.REIT; return predictability; REIT characteristics; risk and return; portfolio

Living with Macro-financial Linkages: Policy Perspectives and Challenges for SEACEN Countries

The deepening financial liberalisation and the tightening of financial integration globally have made it more challenging to manage macroeconomic policies in general, and to contain the spread of financial turbulence in particular. The financial sector has been shown to be inherently pro-cyclical and capable of amplifying macroeconomic volatilities, making management of monetary policy increasingly complex. In these ever changing financial landscapes, the success of monetary policy and macroeconomic policies, in general, hinges on the ability of policy makers to design policies that explicitly take into account macro-financial channels, and to interpret more cautiously the potential risk in financial system disruptions that can rapidly destabilise macroeconomic stability. The objective of this study is to take stock and examine the impact of linkages between macroeconomic development and financial market condition with a special focus on the SEACEN economies.

Living with Macro-financial Linkages: Policy Perspectives and Challenges for SEACEN Countries

The deepening financial liberalisation and the tightening of financial integration globally have made it more challenging to manage macroeconomic policies in general, and to contain the spread of financial turbulence in particular. The financial sector has been shown to be inherently pro-cyclical and capable of amplifying macroeconomic volatilities, making management of monetary policy increasingly complex. In these ever changing financial landscapes, the success of monetary policy and macroeconomic policies, in general, hinges on the ability of policy makers to design policies that explicitly take into account macro-financial channels, and to interpret more cautiously the potential risk in financial system disruptions that can rapidly destabilise macroeconomic stability. The objective of this study is to take stock and examine the impact of linkages between macroeconomic development and financial market condition with a special focus on the SEACEN economies.Macro-financial linkages, Macro-prudential, Stress-testing, Cross-border supervision, Basel III

Financial Liberalization: Commercial Bank's Blessing or Curse?

The purpose of the paper is to evaluate and measure the effect of financial liberalization (FL) on bank risk exposure. We pursue these questions by assessing the changes in market-based asset values and risk exposure measures for commercial banks (CB) before and during a FL program. We do this for a sample of three countries: Malaysia, Taiwan and Thailand. We use a model based on the options pricing theory. We obtain estimates of the first and second moment of bank returns using an asset pricing model in which these two moments are a linear projection of a set of conditioning variables. This model was estimated using a GMM statistical procedure. Then we perform regressions explaining the evolution of bank risk measure around the FL event. The analysis and statistical test indicate that risk exposure of banks increases following a FL program, and this as a result of macroeconomic policy as well as changes in management controlled variables. This is so even for banks operating in countries that have undertaken very cautious FL processes such as Thailand and Malaysia. The results tend to support the proposition that moral hazard and bank risk taking may increase following FL. The results also suggest that banking crisis that often have followed FL may be more due to the behavior of banks managers than previously reported in the FL literature.

The regulation and supervision of banks around the world - a new database

International consultants on bank regulation, and supervision for developing countries, often base their advice on how their home country does things, for lack of information on practice in other countries. Recommendations for reform have tended to be shaped by bias rather than facts. To better inform advice about bank regulation, and supervision, and to lower the marginal cost of empirical research, the authors present, and discuss a new, and comprehensive database on the regulation, and supervisionof banks in a hundred and seven countries. The data, based on surveys sent to national bank regulatory, supervisory authorities, are now available to researchers, and policymakers around the world. The data cover such aspects of banking as entry requirements, ownership restrictions, capital requirements, activity restrictions, external auditing requirements, characteristics of deposit insurance schemes, loan classification and provisioning requirements, accounting and disclosure requirements, troubled bank resolution actions, and (uniquely) the quality of supervisory personnel, and their actions. The database permits users to learn how banks are currently regulated, and supervised, and about bank structures, and deposit insurance schemes, for a broad cross-section of countries. In addition to describing the data, the authors show how variables ay be grouped, and aggregated. They also show some simple correlations among selected variables. In a comparison paper ("Bank regulation and supervision: What works best") studying the relationship between differences in bank regulation and supervision, and bank performance and stability, they conclude that: 1) Countries with policies that promote private monitoring of banks, have better bank performance, and more stability. Countries with more generous deposit insurance schemes tend to have poorer bank performance, and more bank fragility. 2) Diversification of income streams, and loan portfolios - by not restricting bank activities - also tends to improve performance, and stability. (This works best when an active securities market exists). Countries in which banks are encouraged to diversify their portfolios, domestically and internationally, suffer fewer crisis.Banks&Banking Reform,Economic Theory&Research,Payment Systems&Infrastructure,Financial Intermediation,Financial Crisis Management&Restructuring,Banks&Banking Reform,Financial Intermediation,Financial Crisis Management&Restructuring,Economic Theory&Research,Insurance&Risk Mitigation