A Comparative Study of Banking in China and India, Nonperforming Loans and the Level Playing Field

This paper compares the operative performances of the banking institutions in China and India, taking into account the contentious issue of institutional differences in banking sectors in these two economies, reflected in the generation of non-performing loans. The study also examines the issue of the use of banks to provide countervailable subsidies to exporting organizations. Our results show that the efficiency differences between banks in these two countries can be directly related to their institutional differences.Technical efficiency; Non-performing loans; Subsidies.

An SVAR Analysis of Monetary Policy Dynamics and Housing Market Responses in Australia

This paper examines the impact of monetary policy and a range of sector-specific and macroeconomic shocks on the Australian housing market using quarterly data for a period of 1974-2008. The paper develops a structural vector autoregressive (SVAR) model based on contemporaneous restrictions to analyse the dynamics of these shocks. The results indicate that supply of new houses in Australia rises with higher real house prices; and that house prices rise and fall with higher inflation rate and interest rate, respectively. Dynamics of the impulse responses reveal significant effect of monetary policy on new house constructions, real house prices, material costs and inflation. Results also suggest that housing output, real house prices and interest rates respond significantly to shocks to housing supply, housing demand and to a number of other variables. These results are expected to shed some lights on the current policy environment pertaining to the Australian housing sector.Monetary transmission, Housing market, Structural VAR

Oil price volatility and sectoral returns uncertainties: evidence from a threshold based approach for the Australian equity market

This paper examines the existence of a non-linear relationship between oil price volatility andequity market uncertainty. The study specifically analyses the pattern of effects of oil pricevolatility on the broader equity market as well as the sectoral equity returns volatility withinAustralian Economy. We use a logistic transition based autoregressive model (LSTR) developedby Teräsvirta and Anderson (1992) and Teräsvirta, (1994). We find that the hypothesis oflinearity between oil price volatility and equity market uncertainty is rejected for six out of 10sectors of the Australian economy. The retention of LSTR model suggests that the oil returnvolatility has high and low regimes that affect equity markets differently across the sectors. Thetransition functions suggest that switching of oil price volatility from low to high regime isabrupt for consumer discretion, financial and material sectors while such transition is smoothfor consumer staple, energy, and industrial sectors. The results also show that some sectors arequicker in responding to heightened volatility. From the VAR framework, the impulse responsefunctions show that a one period increase or a shock in oil price volatility raises volatility ofequity in consumer discretion, consumer staple, finance, industry, telecom and consumer staplesectors. Of these, equity volatility in industries and financial sectors seem to exhibit a prolongedpositive response following the oil price volatility shock. Also, equity volatility of industriesseems to rise by much larger proportion compared to the equity volatility response of othersectors. These findings are helpful as a guide for sectoral rotation strategies. In view of theincreased volatility of oil prices due to a negative impact of oil price shock and the resultantsurge of uncertainty, Australian firms could formulate their short and long run investment plansbased on volatility threshold level. Firms in consumer discretion, financial and industrial sectorcould consider postponement of investment if the volatility in oil price exceeds certain threshold.Also, firms in the consumer staple, energy and materials industry need to make prudent businessdecisions in situations where oil price volatility falls within the threshold range as identified bythe LSTR2 models. Based on the findings, there is a need for public policy formulation to reducethe adverse impacts of increased oil price uncertainties on the Australian economy duringperiods of unforeseen random events including depressions and crises

Reassessing Grameen Bank\u27s micro credit programme for poverty alleviation in bangladesh : a new perspective

Rural finance has been a mltior policy in alleviating poverty in developing countries. Of specific interest are the micro credit programmes that target the poorest segment of the population. Despite some successes in particular settings, the efficacy of micro credit programmes has been a mltior concern in recent years. This paper evaluates the success of the Grameen Bank, the premier micro credit provider in rural areas in Bangladesh in the context of contemporary development philosophies. Only a few studies have evaluated the performance of the Grameen Bank from a poverty alleviation perspective. Many have evaluated the efficiency of the Grameen Bank\u27s micro credit programmes using attributes such as the repayment rate. In this paper, we add a new dimension to the literature by arguing that if poverty alleviation is the ultimate objective, then the bank\u27s micro credit programme should be assessed from the borrowers\u27 perspective. Rural credit should be conceptualised not as just an input to production but as a mechanism for rural transformation. Our analysis reveals that while Grameen Bank is an efficient provider of micro credit in rural Bangladesh, its programmes fall short of achieving poverty alleviation for a multitude of borrowers and reshaping the process is hence a critical imperative.<br /

Institutional economics approach to irrigation management with special reference to developing countries

Neoclassical economics has failed to address irrigation management issues in developing countries successfully. Institutions are at the heart some of these failures. Many academics in various disciplines in the social sciences now emphasize the need to pay attention to the multitude of informal institutions such as rotational irrigation in developing countries and not to treat them as irrelevant for development. Water user associations have been initiated for irrigation management in many countries. These have shown much promise although many problems still constrain the full adoption of this institutional mode. Water pricing is still at its infancy and significant problems remain in the use of the market system for improved management of irrigation water.<br /

Market based performance : do ownership structures, or firm policy choice matter?

This study examines whether the structure of share ownership or firm\u27s dividend and debt policies provide explanation for firm performances in Malaysia. Firm performance, measured as Tobin\u27s Q is modelled in a dynamic panel framework to estimate effects of director ownership, family ownership, foreign ownership, and firm\u27s dividend and debt policy. The generalised methods of moments (GMM) method is used to estimated the models for 80 CI components companies listed on Main Board of Malaysia observed from 1999 to 2002. The findings reveal strong evidence of positive impact of firm\u27s dividend and debt policy on firm performance. However, ownership structure seems to be less important for market based performance of Malaysian firms: These results are expected to provide guidelines to the investors regarding the significance of firm dividend policy, leverage policy and market to book value ratio as some of the key sources of value creation for Malaysian listed firms.<br /

External monitoring, managerial ownership and form performance in Malaysian capital market: a GMM based panel data approach

This study re-examines whether the structure of share ownership by both directors and institutional ownership provides explanation for firm performances. These relationships are modelled and estimated using GMM based dynamic panel data over a period from 1997 to 2001 with a sample of 100 CI components companies listed on Main Board of Malaysia. The findings provide strong evidence of simultaneity between firm performance and managerial ownership. Although an insignificant relationship between firm performance and institutional ownership is~ observed, the institutional holdings provide strong substitute for managerial ownership with a strong negative relationship between managerial ownership and institutional ownership. This is in line with the managerial incentive hypothesis, which suggests that manager\u27s share in the firm\u27s ownership leads to better performance and the monitoring substitute hypothesis, which suggests that managerial ownership could be effectively replaced by institutional ownership