Government expenditure and economic growth in ASEAN-5: long -run tendencies and short-term adjustment.

A question of whether the government should intervene to correct for short-run fluctuations in economic activity has always been an interesting topic for economists. This paper investigates the impact of government expenditure on the economic growth in ASEAN-5 countries during 1980-2006 by using Pooled Mean Group. To examining both short run and long run effects, findings demonstrate that a large government expenditure influences the economic growth of countries negatively. This negative impact may be a sign of the lower productivity of the capital input in ASEAN-5 economies with a large government expenditure

Non-performing loans sensitivity to macro variables: panel evidence from Malaysian commercial banks

Credit risk is one of the most important kinds of risk in banking sector. The relationship between business cycle and banks’ loan losses was one of the hot debates in recent economic literature especially with respect to financial stability analysis. The quality of loans can be one of the factors that limit the banks' loan supply and affect on investment spending. Although banks have a significant role in transmission of monetary policy; in the meantime their performance is strongly influenced by monetary and fiscal policies that are effective in recession and prosperity and thereby affect bank performance; in other words, macroeconomic variables can effect in/directly on banks loans quality and their transitional role. Thus policy makers and bankers are always concerned with the financial stability and are always looking for tools to better manage banks’ credit risk. One of the risk indicators that are used in literature of banks’ credit risk is Non-Performing Loans (NPL). Hence themain objective of thisstudy is to analyze relationship between banks loans quality and macroeconomic variables by using a dynamic panel data model on Malaysian commercial banking system for the 1997-2012 periods. The results show that there is a strong evidence of cyclical sensitivity of loan quality in Malaysia’s commercial banking system. Based on the results lending interest rate and FDI-net outflow (% GDP) are the most effective factors on NPL ratio with simultaneous positive effects and a reverse effect with one-year delay. It can be said that the impact of external shocks on the domestic banking system is more than internal shocks. The result of this study can be helpful to bank supervisory and economists to adjust banking system stability and economic policies

The price-volume relationship of the Malaysian stock index futures market

The objective of this study is to determine the relationship and the causality between the price index and trading volume for both the spot and the next month contracts in the Malaysian stock index futures market and how that relationship changes over time. The daily data of the stock index futures (FKLI) closing price and the daily data of the stock index futures (FKLI) trading volume from December 15, 1995 until December 31, 2003 are used in this study. The data are divided into four sub-periods, a learning period, a crisis period, a recovery period and a stable period, to analyze the variation in activity during the opening of the new market, the Asian financial crisis in 1997-1998, the recovery period after the financial crisis, and a stable period. The findings provide information to allow investors to use the price-volume relationship in both the spot-month and the next-month contracts to speculate or to hedge their portfolios

The Theoretical Impact Of The Listing Of Syariah-Approved Stocks On Stock Price And Trading Volume

The stock price and trading volume reactions of companies to single events, such as public announcements on mergers, dividend payments, or security issue announcements have been studied extensively.  The impact of news about a continuing event such as the news on the inclusion in and exclusion of stocks from the KLSE Syariah Index that occurs twice yearly affects security prices and trading volume.  This paper examines reasons that price and trading volume of Syariah-approved stocks might react to the inclusion-exclusion exercise.  The selection criteria set by the Syariah Advisory Council of Securities Commission of Malaysia in updating the list of the Syariah-approved stocks is not based on the financial soundness alone.  Views from Syariah perspective and from financial theories are discussed to support the behavior of the included and excluded stocks from the Kuala Lumpur Syariah Index

The Relationship Between Price And Volume For The Russian Trading System

The objective of this study is to analyze the relationship between the Russian Trading System Index and trading volume for the Russian Trading System Index. We use daily closing price and trading volume for the data for the RTS Index from September 4, 1995 to November 8, 2011. We find a positive statistically significant relationship between the natural logarithm of price volume changes and changes in the RTS Index and for the natural logarithm of price volume changes relative to a five-day average of price volume changes; thus the impact of trading volume is persistent

The theoretical impact of the listing of syariah-approved stocks on stock price and trading volume.

The stock price and trading volume reactions of companies to single events, such as public announcements on mergers, dividend payments, or security issue announcements have been studied extensively. The impact of news about a continuing event such as the news on the inclusion in and exclusion of stocks from the KLSE Syariah Index that occurs twice yearly affects security prices and trading volume. This paper examines reasons that price and trading volume of Syariah-approved stocks might react to the inclusion-exclusion exercise. The selection criteria set by the Syariah Advisory Council of Securities Commission of Malaysia in updating the list of the Syariah-approved stocks is not based on the financial soundness alone. Views from Syariah perspective and from financial theories are discussed to support the behavior of the included and excluded stocks from the Kuala Lumpur Syariah Index

Factors Influencing Customer’s Acceptance of Islamic Banking Products and Services

The emergence of Islamic banking system has had a huge impact on the financial industry. This research attempts to identify the influential factors that are associated with Islamic banking adoption between the Muslim and non-Muslim populations in Sarawak, Malaysia. With the “adoption of Islamic banking” as the dependent variable, this study studies its relationship with seven independent variables. They are, four attributes of innovation, namely; 1) relative advantage, 2) compatibility, 3) observability and 4) complexity, and three additional variables namely; 5) perceived risk, 6) perceived trust and 7) customer innovativeness. A convenient sampling method is used whereby a questionnaire is administered to 436 respondents in Sarawak, Malaysia. Using the logistic regression method, three factors; 1) compatibility, 2) relative advantage/observability and 3) complexity are found to have significant relationship with customers’ adoption of Islamic banking products and services

Macroeconomics shocks and stability in Malaysian banking system; a structural VAR model

Negative effects of 1997 financial crisis in Malaysia, such as other emerging countries, led to the development and restructuring of financial system in this country. Hence many big firms and corporations to provide their required funds shift towards newly established markets like stock and bond markets. Under these conditions, many banks maintained their profitability by attracting new customers especially Small and Medium size Entrepreneurs (SMEs) and increased their loans and credits to the household sector. Now a significant share of loans has been given to the household sector and SMEs and this feature caused the banking system to become more vulnerable against external and internal shock. So, increasing unemployment and reducing income for any reason will be a threat for banks by Default risk. Thus, anticipated effects of macro-economic shocks on banks’ operation are more important to policy makers and bankers. Hence in this study, a Structural Vector Autoregressive (SVAR) model is employed to show how a macroeconomic shock effects on Non-Performing Loan changes (NLP) as a credit risk indictor in Malaysian commercial banking system for period of 1997-2012. The designed Model is called AB model that is limited based on IS-LM theory. According to results the demand and supply shock have negative and monetary shock has positive effects on NPL ratio. Mean while simultaneous effects of monetary and demand shocks are more than supply shocks effects but the supply shocks’ impact is more persistent. Comparison response of NPL ratio with capital ratio shows that the commercial banks against domestic shocks are safe and adequate capital to deal with the risks arising from internal shocks in the economy are considered. The results of this study can help policy makers to pursue suitable monetary policies and decrease banks failing in front of any macroeconomic shocks

Long run relationship between Malaysian stock market and agriculture sector

Since independence, agriculture has been Malaysia’s primary economic activity and has been the major source of national income (Danilah et.al, 2004). However, in 1987, the manufacturing sector takes over as the premier sector in the economy growth (BNM, 1989). Recently, in the ninth Malaysia plan period, the government has given a new emphasis to agriculture sector. Thus, this paper is to investigate the long-run relationship between Malaysian stock market and agriculture sector performances during 15 years period from 1990 to 2005. The results suggest that Malaysian stock market and agriculture sector have a positive long- run relationship

Derivatives trading and volatility spill-over: evidence from a developing derivatives market

The objective of the paper is to ascertain the influence of shares derivatives trading on the Malaysian stock market. Johansen-Juselius’ co-integration test reveals signs of increasing integration between these cash and futures markets over time. The Granger causality test indicates that the stock index futures Granger causes the cash index with no feedback in the reverse direction during periods of financial crisis and recovery. Significantly observable during the period was high participation of foreign investors in the futures market. The increase in the number of foreign investors in the futures market dramatically increases the herding activities in futures market trading. The findings suggest that the transmission of information from the futures market to the cash market could, to a certain extent, during a period of “bad economy”, be due to herding by foreign investors