Estimating monetary policy rules for Malaysia: an optimal monetary conditions index

Based on the concept of the monetary conditions index (MCI) to underscore the important role of the interest rates parity, the paper attempts to estimate a model of optimal monetary policy for open emerging market economies. It is designed to shed a light of significance of the internal and external equilibrium and provide the basis for the analysis. The paper estimated the relative influence of interest rates and exchange rate on the output gap, the weights of real interest rates and real exchange rate, which are used to estimate the optimal monetary conditions index. The estimated weights are 1.6: 1, which can be used to specify operating target rule for monetary policy.

The Determinants of Investment Rewards: Evidence for Selected Developed and Developing Countries

The empirical studies on investors' investment reward rarely focus on the performance of excess returns across the developing and developed countries: investment in the developing countries has higher risk thus requires higher return compared to developed countries. Therefore, study on investors' investment reward cannot rule out the role of the performance of excess returns simply because of data mining, complex data collection process and misspecification of the model. The objective of this study is to examine the underlying determinants of investors' investment reward on excess stock return such that provide better understanding on the fact that the developing countries has more risk compared to developed countries and the internal factors are important for investors in the investment decision making process. The findings of this study indicate that there is an equilibrium relationship between investors' investment reward and its determinants, namely, risk premium of market, firm size and book-to-market value. In addition, the internal factors are important to the investors in making investment decisions and the relationships of the underlying determinants are prevalent in the developing countries. This study suggests that risk premium of market, firm size and book-to-market value can serve as indicators of the investors' investment reward that provide better understanding that developing countries has more risk than developed countries. This study also suggests that the investors and policy makers should consider the role of the underlying determinants in the investors' investment decision making process. Keywords:  excess stock return, risk premium of market, firm size, book-to-market value JEL Classifications: D46, G3

RISK, CHALLENGES AND OPPORTUNITIES: INSIGHTS FROM SMALL AND MEDIUM ENTERPRISES IN OMAN

This paper provides insights surrounding the challenges and opportunities of small and medium enterprises in Oman. Specifically, it plays up risk evaluation and credit supply as symbiotic players and as tools in propelling business productivity and sustainability. Qualitative approach has been used to elicit information, facts, trends and patterns to establish theories and beliefs as an input to the body of knowledge. Analysis presents that SMEs in Oman have been confronted both with numerous challenges and opportunities for which the author recommends government participation in bringing about financial support, sustainable programs and enabling public policies.  Article visualizations

Monetary Policy and External Factors: Empirical Evidence for Association of Southeast Asian Nations 3

The motivation for this paper is the external factors can be the important objectives of the monetary policy in a small open economy. This study will extend the standard Taylor rule that initially encompassed output and inflation by adding the exchange rate and terms of trade. By using the augmented Taylor rule, this paper examines exchange rates and terms of trade and determines its empirical validity based on a sample of ASEAN-3 countries. Using the technique of unrestricted error correction model, the findings provide some policy implications; the uncertain movements of the exchange rate and terms of trade can be fine-tuned by the central bank's interest rate instrument, and the inflation and output are useful policy indicators for monetary decision making of central bank, which eventually promotes the best economic outcomes. Keywords Exchange rate, Monetary policy, Taylor rule, Terms of trade JEL Classifications: C61, E58, E61, F4

The Link between Gold Price, Oil Price and Islamic Stock Market: Experience from Malaysia

This research will focus on the relationship between strategic commodities (namely oil and gold prices) and the Islamic stock market in Malaysia. The objective of this research is to analyze the dynamic effects of oil price and gold price changes on the Islamic stock market in Malaysia using an estimation of the Vector Auto Regression (VAR) method. The variables involved in this research are Crude Oil Price (COP), Kijang Gold Price (KGP), and FTSE Bursa Malaysia Emas Shariah Index (FBMES). Using data covering the period from January 2007 to December 2011, the study applies the co-integration analysis, Granger causality test, Impulse Response Function (IRF) and Variance Decomposition (VDC) analysis. The findings show that Islamic stock returns were not co-integrated with strategic commodities in the long run. From the Granger causality viewpoint, it was observed that there was a bi-directional causality relationship between Islamic stock returns with oil prices. On the other hand, the FBMES was not affected by the gold prices or vice versa. Therefore, it can be concluded that, among strategic commodities, only oil's price variables will affect the Islamic stock return in the short run in Malaysia. This proves that the Kijang Gold Price is not a valid variable for the purpose of predicting changes in Islamic share prices

The Involvement of B40 entrepreneurs in E-Commerce: experience from Malaysia

The focus of the study was: first; to identify the involvement of B40 entrepreneurs in e-commerce and, second; to analyse the factors influencing their involvement. This quantitative study involved 207 respondents chosen using the snowball sampling technique. All respondents were low-income government sector workers (B40) who were conducting business part-time to increase their income. Information was acquired via questionnaires which had been adapted according to the study’s suitability and adopted from several sources. The finding showed that the respondents were well-informed about the existence of e-commerce. A majority of them only utilised e-commerce for shopping purposes and not for selling purposes even though they had products to be marketed. As for the respondents who sold products online, the most critical factors influencing their involvement were the income increase, broadband facility and knowledge about e-commerce. Regarding the respondents who did not market their products online, the critical factors which influenced them were the satisfaction of doing business in a traditional way, online business safety and lack of knowledge in handling online business were critical factors which hindered their involvement in e-commerce. As such, the B40 entrepreneurs were encouraged to make use of e-commerce to expand the market. They should also attend related courses, become mentee for successful e-commerce mentors, and strive to expand their business network. The huge investment made by the government to provide broadband facility for the community members should be fully utilised especially by the B40 entrepreneurs in their effort to increase their income level

The involvement of B40 entrepreneurs in E-commerce: experience from Malaysia

The focus of the study was: first; to identify the involvement of B40 entrepreneurs in e-commerce and, second; to analyse the factors influencing their involvement. This quantitative study involved 207 respondents chosen using the snowball sampling technique. All respondents were low-income government sector workers (B40) who were conducting business part-time to increase their income. Information was acquired via questionnaires which had been adapted according to the study’s suitability and adopted from several sources. The finding showed that the respondents were wellinformed about the existence of e-commerce. A majority of them only utilised e-commerce for shopping purposes and not for selling purposes even though they had products to be marketed. As for the respondents who sold products online, the most critical factors influencing their involvement were the income increase, broadband facility and knowledge about e-commerce. Regarding the respondents who did not market their products online, the critical factors which influenced them were the satisfaction of doing business in a traditional way, online business safety and lack of knowledge in handling online business were critical factors which hindered their involvement in e-commerce. As such, the B40 entrepreneurs were encouraged to make use of e-commerce to expand the market. They should also attend related courses, become mentee for successful e-commerce mentors, and strive to expand their business network. The huge investment made by the government to provide broadband facility for the community members should be fully utilised especially by the B40 entrepreneurs in their effort to increase their income level