Post Keynesian Money Supply Endogeneity in Malaysia: An Empirical Investigation

The stability, progress and the general welfare of an economy would depend much on the level of its money supply as well as the monetary policy initiated by its monetary authority. The central issue is, does the quantity of money supply determine the levels of economic activities and production, or are economic activities and production that actually determine the level of money supply in an economy? According to Post Keynesian analysis, money supply endogeneity are based on four 'subschool' i.e., Horizontalist, Structuralist, Liquidity Preference View and Circuit Theory of Money. This study attempts to investigate empirically the issue of endogeneity/exogeneity of money supply, based on the Malaysian economic environment and planned to meet two major objectives. First, is to identify whether the supply of money in Malaysia is endogenously or exogenously determined. Secondly, if money supply in Malaysia is endogenously determined, the data will be analyzed further to identify the sub-school of Post Keynesian economics that these data supports. The data are analyzed by utilizing the Johansen (1990/91) cointegration procedure, involving three steps; namely, unit root tests, cointegration tests and vector error correction model (VECM) analysis. The empirical findings are summarized into five major points. First, the Malaysia GDP causes money supply (i.e., M1, M2 and M3). Secondly, bank loan causes monetary aggregate (i.e., MO, M1, M2, and M3). The third finding that policy rate or interbank rate (IBR) causes base lending rate (BLR), T-bill rate (TBR) and the Malaysian government securities for five years rate (MGS5R). Followed by the fourth finding, deposits cause reserves. The last major finding of the study involves the relationships between bank loan and money multipliers: the MI money multiplier(MIMPR), the M2 money multiplier (M2MPR) and the M3 money multiplier (M3MPR). The empirical evidence provided in the present thesis is strongly consistent with the hypothesis that money supply in Malaysia is endogenously determined. Simply put, our evidence strongly points to the fact that money supply in Malaysia is credit-driven and demand determined

Sukuk and economic growth: Evidence from panel data

An active and efficient capital market is crucial in accelerating economic growth in a modern market oriented economy.Capital market provides an alternative funding avenue for firms and government.Capital market instruments provide larger capital amounts as well as liquidity for investors.Sukuk, a relatively new capital market instrument is a certificate which represents the value of an asset.Modern sukuk emerged to fill a gap in the global capital market as an alternative investment.Islamic investors want to balance their equity portfolios with bond-like products.Because sukuk are asset -based securities and not debt instruments, they fit the bill.Presently,Sukuk have been the most active Islamic market instruments in capital markets.There is increasing demand for sukuk instrument in the Islamic countries as well as the rest of the world as an alternative to conventional bonds.Sukuk can promote productive projects through the efficient use of funds and improving the efficiency of resources allocation.At the same time, Sukuk can sustain economic growth, expand employment and reduce poverty. However, the relationship between sukuk and economic growth is still a controversial issue.Therefore,the main motivation of this paper is to investigate the relationship between sukuk and economic growth by employing panel data econometrics technique. Interestingly, the result reveals that sukuk significantly affect and contribute to economic growth.Islamic capital markets in general and sukuk in particular can promote economic growth

The Joint Effects of Oil Price Volatility and Environmental Risks on Non-Performing Loans: Evidence from Panel Data of Organisation of the Petroleum Exporting Countries

This paper analyses the joint effects of oil price volatility and environmental risks on non-performing loans. Using panel data of 12 Organisation of the Petroleum Exporting Countries for 2000-2014, we test hypotheses of joint effects of oil price changes and environmental risks on non-performing loans. Estimates from static panel model highlights the explanatory power of systemic risks theory in linking the effects of oil price volatility and environmental risks on NPLs and underpins their importance for policy implication purposes in OPEC member states. This calls for concerted policy and management response for assessing oil price sensitive and disaster riskiness of borrowing entities. This paper is of particular value to oil dependent countries such as OPEC member states that are net oil exporting countries. From the policy perspectives, there is need for banking regulators to consistently ensure the conduct of both micro-stress and macro-stress tests of loans against the systemic risks of oil price volatility. In addition, policymakers in the banking system should redesign their prudential guidelines to take care of the credit risks vulnerabilities associated with environmental risks and spread their risks across industries and geographical areas that are less prone to disasters. Keywords: Oil Price Volatility, Environmental Risks, Non-Performing Loans, OPEC JEL Classifications: G32, Q43, Q5

A PMG Approach to the Joint Effects of Oil Price Changes and Environmental Risks on Non-Performing Loans: Evidence from Organisation of the Petroleum Exporting the Countries

This paper revisits the work of Idris and Nayan (2016a) on the joint effects of oil price volatility and environmental risks on Non-performing loans (NPLs). Therefore, the current paper uses evidence from 13 Organisation of the Petroleum Exporting countries spanning 1996-2015. The present situation of worldwide NPLs is persistent and on the rise which indicates a global deterioration of loans qualities. The NPLs is more pronounced amongst the OPEC countries whose average ratio of NPLs is on the verge of the banking crisis. This directly affects further loan creation, banks' liquidity, investment and productivity. Notwithstanding, the different measures put in place by regulatory authorities in OPEC countries to tackle the situation, the problem persists. The motivation of this paper is to examine the impact of systematic risks factors of oil price changes and environmental risks on NPLs by employing Pooled Mean Group (PMG) methods. The results reveal that oil price changes significantly but inversely affect NPLs while environmental risks factor is found to be significantly and positively affecting NPLs. The policy implications of the findings are that for the OPEC countries to achieve financial stability they should reduce the impact of systematic risks on their financial systems. Therefore, for a continuous minimization of bad loans, the OPEC economies should efficiently increase their earnings from the oil exportation or alternatively through increased diversification of the OPEC economies from the monoculture economic activity of oil exportation. Furthermore, environmental risks should be mitigated through strong legislation for all businesses and economic units in the countries to be covered by adequate insurance covers against these calamities. Finally, OPEC governments should ensure that their prudential guidelines cover lending to business activities that are prone to such systematic risks. Keywords: Non-performing loans, oil price, environmental risks, OPEC countries, pooled mean group methods                                                     JEL Classification: G32, Q43, Q54

The effect of the board of directors characteristics on firm performance of Iraq listed companies: A conceptual framework

Purpose - Economies all over the world need the effective and efficient performance of business units both financial and non-financial firms because they are the engine of economic development of nations. Furthermore, many companies around the world try to improve their performance for the purpose of getting fund from investors in order to expand and grow. On the other hand, investors need to have confidence that the company is being well managed and will continue to be profitable investments. However, the performance of Iraq listed firms is discouraging given the declining nature of its price index performance from 2011 to 2015. The poor performance of listed firms around the world has been attributed to ineffective CG. Therefore, the effect of board of directors’ structure on firm performance is among the corporate governance primary mechanism which drawn the attention of many researchers and scholars for many decades.Despite this, the discussion has given little attention to the influence of salient board characteristics on firm performance. Furthermore, there is a lack of prior studies that examine these relationships in the developing countries such as Iraq.The aim of this paper is to propose a framework that will investigate if the salient board characteristics influence firm performance of Iraqi listed companies.Therefore, this paper offers a preposition on the association between board member gender, board members’ educational level, government link of the board, board meeting, experience of the board, board independence, board size and firm performance. Moreover, the proposed study will contribute in bridging the identified gap and enrich the existing literature.The board of directors, which is one of the most important mechanisms for corporate governance (Fernández-Gago, Cabeza-García, & Nieto, 2016).Importantly, the board of directors is regarded as the principal internal mechanism that can be used to monitor executive decisions (Al Manaseer, Al-Hindawi, Al-Dahiyat, & Sartawi, 2012).Similarly, the board occupies an important position in CG mechanisms through which the shareholders can control the top management (John & Senbet, 1998).Moreover, the board is a mechanism that is used to determine the firm’s strategy, and to ensure that enough measures are in place to protect the value of the shareholder (Keenan, 2004).In this regard, it is theobjective of this study to substantially contribute to corporate governance literature by unveiling and proposing additional characteristics of board of director characteristics such as, the board size, board independence, board meeting, board members educational level, board member gender, government link of the board, as all of these may lead to enhance the performance of the company (Arora & Sharma, 2015; Bhagat, Bolton, & Subramanian, 2010; Bantel & Jackson, 1989; Cheng, 2008; Coles, Daniel, & Naveen, 2008; Gottesman & Morey, 2006; Wiersema & Bantel, 1992) .Even though some of the variables have been discussed by the past scholars, majority of the literature emanated from developed nations and of which their results may not generalizable and applicable to the Middle East countries in general and Iraq in particular.Methodology - This article is conceptual which makes a preposition on an empirical work using a secondary data and analysed using a Dynamic GMM method

The Joint Effects of Oil Price Volatility and Environmental Risks on Non-performing Loans: Evidence from Panel Data of Organization of the Petroleum Exporting Countries

This paper analyses the joint effects of oil price volatility and environmental risks on non-performing loans (NPLs).Using panel data of 12 Organization of the Petroleum Exporting Countries (OPEC) for 2000-2014, we test hypotheses of joint effects of oil price changes and environmental risks on NPLs.Estimates from static panel model highlights the explanatory power of systemic risks theory in linking the effects of oil price volatility and environmental risks on NPLs and underpins their importance for policy implication purposes in OPEC member states.This calls for concerted policy and management response for assessing oil price sensitive and disaster riskiness of borrowing entities.This paper is of particular value to oil dependent countries such as OPEC member states that are net oil exporting countries.From the policy perspectives, there is need for banking regulators to consistently ensure the conduct of both micro-stress and macro-stress tests of loans against the systemic risks of oil price volatility.In addition, policymakers in the banking system should redesign their prudential guidelines to take care of the credit risks vulnerabilities associated with environmental risks and spread their risks across industries and geographical areas that are less prone to disasters

Carbon Dioxide (CO2) emission, energy consumption and economic growth: Evidence from selected Southeast Asia countries / Nur Hafizah Ismail … [et al.]

Southeast Asia countries have experienced rapid economic growth within the past decades with a significant increase in energy dependency and carbon dioxide (CO2) emissions. Continuous development in the urban area has stimulated a rise in energy consumption in many Southeast Asia countries, which resulted in an improvement of citizen's lifestyles and living standards due to increasing income and population. Understanding the relationship between economic growth, energy consumption, and carbon dioxide emissions help economies in formulating energy policies, enhancing energy security and developing a sustainable energy resource. Therefore, this study focuses on the economic growth, energy consumption and carbon dioxide emissions evolved in Southeast Asia by using Environment Kuznets Curve theory. This paper could be useful and beneficial for the Southeast Asia countries to form appropriate environmental policies to maintain the balance of energy demand and supply and to deal with environmental quality issues

Factors affecting demand for money in Japan / Norhidayu Rosli, Norsiah Kadir, Sabri Nayan and Norasyikin Abdullah Fahami

Demand for money is considered as an important function of stabilization and structural adjustment policies where such policies depend on the ability to adjust the money supply to its demand in order to prevent monetary disturbances from affecting real output. Monthly data from 2005 to 2012 for various monetary aggregates, consumer price index, industrial production index, and Bond are analysed. Global economic crisis and natural disaster as additional variables have been included in this study. The Pearson correlation tests, Unit root tests, Ordinary Least Square method and Granger Causality tests have been tested for empirical analysis. The results show the existence of the relationship among variables. Bidirectional causality found from CPI and Bond to monetary. All the five variables are significantly affecting the money demand in Japa