Stock market integration: Malaysia and its major trading partners

This study examines the stock market integration among Malaysia and its major trading partners by employing Johansen (1988) and Johansen and Juselius (1990) cointegration tests and VECM approach in investigating the dynamic linkages between markets. By using a weekly data, the results indicate that Malaysia stock market is significantly influenced by the stock market development from the major trading partners. The empirical findings are consistent with the view that stronger the bilateral trade ties between two countries, the higher the degree of comovements (Masih and Masih, 1999; Bracker et al., 1999). Since the markets move towards a greater integration, there are no opportunities for international portfolio diversification. In addition, any development in the stock market from major trading partners can not be ignored and should be taken into consideration by the Malaysian government in designing an appropriate policy in the domestic stock market.Cointegration; VECM; major trading partners; stock market integration

Financial Integration between Indonesia and Its Major Trading Partners

This study examines stock market integration among the emerging stock market of Indonesia and its major trading partners (Japan, the US, Singapore and China). We employ the newly proposed autoregressive distributed lag (ARDL) approach to cointegration and recent weekly stock market data spanning from July 1998 to December 2007. The results indicate the Indonesian stock market is cointegrated with the stock markets of the US, Japan, Singapore and China. Thus, this implies that the opportunities for international investors to gain benefits from international portfolio diversification in those markets are limited. In addition, any development in Japan, the US, Singapore and China markets should be considered by the Indonesian government in making policies regarding to the stock market of Indonesia.Stock Market Integration; Portfolio Diversification; Trading Partners

Inhibiting factors affecting teachers’ implementation of the KBSM (revised) English language curriculum

This paper aims to discuss teachers’ degree of implementation of the KBSM (Revised) English Language Curriculum, introduced in 2003. It also sets to highlight the inhibiting factors that had impeded teachers’ implementation of the Skills Specifications or activities suggested in the Huraian Sukatan Pelajaran (HSP) Bahasa Inggeris Tingkatan Empat of the new curriculum. Firstly, the author finds that about 60 percent of the teachers obtained only a medium degree of implementation for 18 out of the 22 Skills Specifications. Secondly, the author concludes that among the prominent factors that had inhibited teachers’ implementation of the KBSM (Revised) English language curriculum in Malaysian classrooms were too many components of the new curriculum, hence leading to lack of understanding of the curriculum, lack of in-service training, time constraints and finally inadequate and irrelevant teaching materials

Monetary policy and firms’ investment: Dynamic panel data evidence from Malaysia

This study examines the effects of monetary policy on firms’ balance sheet, with a particular focus on the effects upon the firms’ fixed-investment spending. It uses a dynamic panel system GMM estimation proposed by Blundell and Bond (1998). The focal point has given to the two main channels of monetary policy transmission mechanism such as interest rates and broad credit channel in transmitting to firm investment spending. By estimating the firms’ investment model using a dynamic neo-classical framework, the empirical results tend to support the relevance of interest rates and broad credit channel in transmitting to the firm balance sheet condition that is firm’s investment spending. The results also reveal that the effect of monetary policy channels to the firms’ investment are heterogeneous fashioned, which is the small firms who faced financial constraint are responded more due to monetary tightening as compared to the large firm (less constraint firms). Thus, the monetary authority has to concern the microeconomic aspects of the firm in formulation their monetary policy.Monetary policy, Financial Constraint, Firm Investment, Dynamic Panel Data

Microfinance and Mechanism Design: The Role of Joint Liability and Cross-Reporting

Since the establishment of Grameen Bank in 1976 by Professor Muhammad Yunus , many economists have studied extensively, either theoretically or empirically, the success of the Grameen Bank in eradicating the poverty problem in Bangladesh. Therefore, this paper aims to apply the mechanism design theory in microfinance by examining the role of joint liability and cross-reporting mechanism in the loan contract which designing by microfinance lender. In doing so, this study simplified the joint liability mechanism proposed by Ghatak (1999, 2000) and cross-reporting mechanism by Rai and Sjostrom (2004). Based on the joint-liability mechanism, it is clearly stated that the microfinance lender can minimize or avoid the adverse selection problem in the credit market through peer selection and peer screening. In the meantime, the joint liability mechanism is better than individual lending in terms of increasing the social welfare among the poor borrower, charging lower interest rates and generating high repayment rates. In contrast, Rai and Sjostrom (2004) argue that joint liability alone is not enough to efficiently induce borrowers to help each other. Indeed, the cross-reporting mechanism is also important for lenders in order to minimize the problem of asymmetric information in the credit market. The cross-reporting mechanism is also efficient because it can influence the borrower to be truthful-telling about the state of the project and subsequently can minimize the deadweight loss (punishment) among the borrowers. In comparison, without cross-reporting, the lending mechanism is inefficient because the borrower will be imposed harsh punishment from the bank and the bank can undertake auditing or verify the state of the project and punish accordingly.Microfinance; mechanism design; joint liability; cross-reporting

Institution and foreign direct investment (FDI) : survey of the literature

In this paper, I survey the current literature relating to the relationship between the institution and foreign direct investment (FDI). In doing so, I have comprehensively analyzed two most recent paper written by Busse and Hefeker (2007) and Daude and Stein (2007). Both articles have used a difference econometric methodology, explanatory variables and institutions measurement in order to link whether institution variables matter or not in influencing the behaviour of foreign investors, in particular from Multinational Enterprise (MNE’s). Based on these papers, they found that a better institution in term of government stability, investment profile, internal and external conflicts, law and order, democratic accountability and bureaucratic quality are pre-requisite for promoting the investment from MNE’s. Therefore, the policy makers have to maintain a sound institution in order to take advantage the inflow of foreign investment. However, I argued that a sound institution is an inadequately in explaining the behaviour of MNE’s. A good interaction between institutional variables and other macro variables such as a well-developed financial system, favourable growth performance, high trade openness, excellent infrastructure development, low country risk as well as an attractive fiscal and monetary incentive are also vital in stimulating the inflow of FDI to the host countries.Institution; Foreign Direct Investment (FDI); Econometric Modelling

Bank lending channel of monetary policy: dynamic panel data evidence from Malaysia

This paper aims to investigate the relevance of bank-lending channel (BLC) of monetary policy in a small-open economy, i.e. Malaysia by using disaggregated bank-level data set. A dynamic panel data method namely GMM framework proposed by Arellano and Bond (1991), Arellano and Bover (1995), and Blundell and Bond (1998) have been used in estimating the dynamic of banks’ loan supply function. The empirical evidence has stated that monetary policy shocks is significantly and negatively influenced the banks’ loan supply, and therefore has supported the existence of BLC in Malaysia. In addition, several bank-characteristics variables namely bank liquidity and bank capitalization (capital adequacy ratio) are also statistically significant in influencing the banks’ loan supply. Therefore, the implementation of monetary policy is effective in influencing economic activity via bank balance sheet position, in particular bank loans.Bank-lending channel, monetary policy, dynamic panel data

Learners’ motivation and learning strategies in english foreign language (EFI) in Indonesian context

This paper focuses on the field of individual differences in English Foreign Language (EFL) teaching and learning. Both motivation and language learning strategies in individual differences of students are emphasized among other factors. Motivation and language learning strategies are important to be understood as parts of student differences in English Foreign Language (EFL) learning in the context of learner-centered instruction. The issue of individual differences becomes important to develop the quality of EFL teaching and learning process. It summarizes the concept of motivation and language learning strategies, constraints in current English curriculum implementation, the importance of understanding motivation and language learning strategies in EFL teaching and learning, and poses those issues for further research on motivation and language learning strategies

Foreign Shocks, Monetary Policy, and Macroeconomic Fluctuations in a Small Open Economy: A SVAR Study of Malaysia

This paper investigates the effect of foreign shocks upon domestic macroeconomic fluctuations and monetary policy, and examines the effectiveness of domestic monetary policy as a stabilization policy in Malaysia.  Monetary policy variables (interest rate and money supply) have been measured through a non-recursive structural VAR (SVAR) identification scheme, which allows the monetary authority to set the interest rate and money supply after observing the current value of foreign variables, domestic output and inflation. The results show the important role of foreign shocks in influencing Malaysian monetary policy and macroeconomic variables. There is a real effect of monetary policy, that is, a positive shock in money supply increases domestic output. In contrast, a positive interest rates shock has a negative effect on domestic output growth and inflation. The effects of money supply and interest rate shocks on the exchange rate and stock prices are also consistent with standard economic theory. In addition, domestic monetary policy is able to mitigate the negative effect of external shocks upon domestic economy