Foreign Ownership, Listed Status and the Financial System in East Asia: Evidence from Thailand and Malaysia

Existing studies on the financial system in East Asia have emphasized its excessive debt financing, the lack of a bond market and its limited function on corporate governance. Other apparent facts, such as the average low debt ratio, the existence of large but unlisted firms, and the significance of foreign firms in its economy are generally ignored. Based on a uniquely compiled database for the top 1000 firms in Thailand and Malaysia, we examined the distributional feature of listed status and foreign ownership, and then re-estimated the determinants of the capital structures. We confirmed basic facts, such as the fact that unlisted firms occupy a large portion in the distribution, and that the debt financing of major firms is relatively inactive. We also found the significance of foreign ownership and its negative relationship with debt financing and ‘going public’. Finally, we found that certain kinds of foreign firms tend to keep large retained earnings and non-bank debt, suggesting their deep reliance on self-financing and internal capital markets. The characteristics of corporate finance in East Asia can be explained in part by distributional features on listing status and foreign ownership. Our findings raised questions about the conventional view of the current policy framework which emphasized on the shift from financial intermediation to the capital and bond markets.Financial System, Corporate Finance, East Asia, FDI

Impact of Foreign Entry in Banking Sector: Case of Thailand during 1999 - 2014

The paper examines the effect of foreign capital entry on the cost and profit structure of commercial banking in Thailand with using a bank-level panel data in 1999 - 2014. We distinguish the dimensions of the market-level effect and the individual bank-level effect in foreign entry and find that an increase of bank-level foreign ownership results in increase of interest rate spread and improvement of loan quality, but at the same time, increase of operational expenses. On the other hand, the market-level foreign bank entry brings an increase of interest rate spread, non-interest income and reduce of operation expenses, realizing higher ROA as a result. Overall, foreign bank entry improves banking performance

Trade, Foreign Investment and Myanmar\u27s Economic Development during the Transition to an Open Economy

Throughout the 1990s and up to 2005, the adoption of an open-door policy substantially increased the volume of Myanmar\u27s external trade. Imports grew more rapidly than exports in the 1990s owing to the release of pent-up consumer demand during the transition to a market economy. Accordingly, trade deficits expanded. Confronted by a shortage of foreign currency, the government after the late 1990s resorted to rigid controls over the private sector\u27s trade activities. Despite this tightening of policy, Myanmar\u27s external sector has improved since 2000 largely because of the emergence of new export commodities, namely garments and natural gas. Foreign direct investments in Myanmar significantly contributed to the exploration and development of new gas fields. As trade volume grew, Myanmar strengthened its trade relations with neighboring countries such as China, Thailand and India. Although the development of external trade and foreign investment inflows exerted a considerable impact on the Myanmar economy, the external sector has not yet begun to function as a vigorous engine for broad-based and sustainable development

<Articles>Impacts of Savings Groups Programs on Household Welfare in Laos: Case Study of the Vientiane Vicinity during the Mid-2000s

Based on original household survey on the six villages in Vientiane vicinity in 2005, the paper investigates the impact of Savings Groups (SGs) programs on household income, expenditure, and asset, applying the methodology of Coleman’s (1999) study on Thailand to address placement bias and endogeneity problem. The results revealed that SGs programs brought certain changes; SGs boosted educational expenditures implying activation of human capital formation, increased the house asset suggesting villagers’ investment reflected by possible business activation, and brought a possible shift in income sources from traditional agriculture to livestock raising. The paper interprets these different results from Coleman (ibid.) in two possible ways; First the Laotian case is to an extent, free from a bias associated with seed capital allocation, therefore is more suitable to capture the effect than Thailand, and second it is since the stage of financial accessibility in Laos is far less developed than in Thailand

Foreign Ownership, Listed Status and the Financial System in East Asia: Evidence from Thailand and Malaysia

Existing studies on the financial system in East Asia have emphasized its excessive debt financing, the lack of a bond market and its limited function on corporate governance. Other apparent facts, such as the average low debt ratio, the existence of large but unlisted firms, and the significance of foreign firms in its economy are generally ignored. Based on a uniquely compiled database for the top 1000 firms in Thailand and Malaysia, we examined the distributional feature of listed status and foreign ownership, and then re-estimated the determinants of the capital structures. We confirmed basic facts, such as the fact that unlisted firms occupy a large portion in the distribution, and that the debt financing of major firms is relatively inactive. We also found the significance of foreign ownership and its negative relationship with debt financing and ‘going public’. Finally, we found that certain kinds of foreign firms tend to keep large retained earnings and non-bank debt, suggesting their deep reliance on self-financing and internal capital markets. The characteristics of corporate finance in East Asia can be explained in part by distributional features on listing status and foreign ownership. Our findings raised questions about the conventional view of the current policy framework which emphasized on the shift from financial intermediation to the capital and bond markets.32 p

Do Subsidies Enhance or Erode the Cost Efficiency of Microfinance? Evidence from MFI Worldwide Micro Data

A recent issue in the microfinance literature is whether microfinance institutions (MFIs) are financially sustainable without a subsidy as a prerequisite for competition policy or commercialization processes. Although some recent studies have proposed relevant theoretical frameworks, empirical analyses are scarce. Using financial data for MFIs across a panel of 1791 observations for 2003-2006, we estimate a cost function for the MFIs and a measure of inefficiency using the stochastic frontier cost approach, and then examine the effects of subsidies, operating age and other possible factors as determinants of efficiency. We find that subsidies are generally not an impediment to cost efficiency; instead, they are generally utilized to improve cost efficiency. We also find that the effect of a subsidy on efficiency is larger for younger MFIs, suggesting that subsidies for these institutions are effectively utilized for intensifying initial technology investment or hu man resource development. The findings are consistent with the arguments that stress the importance of subsidies for the initial stage of development of MFIs, and partially contradictory to the claims that the subsidies generally erode MFIs’ financial sustainability.基盤研究(S) = Grants-in-Aid for Scientific Research (S)25 p

<Articles>An Analysis on Borrowing Behavior of Rural Households in Vientiane Municipality: Case Study of Four Villages

Since the late 1990s the savings groups have been introduced in the villages of Laos. This movement has offered new borrowing opportunities for the rural people. Based on household survey using a structured questionnaire in four study villages (N=684) in Vientiane Municipality during 2007-08 we analyzed the role and performance of the savings group in rural financial markets, especially focusing on who borrows, from which sources, and for what purposes by comparing the savings group with informal and formal lenders. Two major findings are as follows. First, three types of lenders (savings groups, formal and informal lenders) have their own particular features, and thereby loan purposes differ significantly. Formal banks offer loans exclusively for production purposes, while informal lenders do for coping with emergencies. Savings groups fall between them. Second, though poor households are reluctant to be a savings group member, once they participate in they actively obtain loans from it. In contrast, though rich households actively participate in the group, they obtain loans less from it. Group members claim that the primary purpose of joining the savings group is to cope with emergencies. When the members obtain loans from the savings group, however, nearly 40% of the loans are used for production purposes, mainly in agriculture. There exists a change between saving purposes and borrowing ones. It is assumed that in villages with the higher loan credit for production purposes, the savings groups show favorable performance, and thus a rapid growth