No abstract

This paper examines the role of fi nancial development in promoting innovation-related activity using panel data for seven East Asian countries for the period from 1998-2009. On overall fi nancial development, we fi nd that, fi nancial sector size and the overall activity of banks and stock market exert positive infl uences on patent applications. In particular, our results show that all measures of banking development are positively and signifi cantly related to the number of patent applications after controlling for variables known to affect innovative activities. Interestingly, we fi nd no evidence that variation in patent applications is affected by a country's stock market development. The fi ndings suggest that banking sector plays important roles in supporting innovation activity in East Asian countries.

This paper examines the relation between country-level governance and cross-country differences in equity market risk by employing panel data regressions. For emerging markets, we find consistent evidence that governance quality of various dimensions is negatively related to equity market risk. On the contrary, for developed markets, the results show that there is generally little or no relation between governance quality and equity market risk. The results provide practical implication to policy makers of emerging markets by highlighting the relevant governance dimensions that constitute important drivers of stock market risk. The findings have academic implication in the context of equilibrium pricing of stock market in emerging market.

The study investigates the profitability of contrarian and momentum strategies for short, intermediate and long investment horizons in the Malaysian stock market from 1990-2016. Unlike developed markets, the findings reveal that momentum strategies do not generate profits in Malaysia. Rather, contrarian strategies realise significant returns over short, intermediate and long investment horizons. Contrarian profits are most pronounced among medium-and smallcapitalisation stocks. Moreover, the previously documented February/Chinese New Year effect is evident in contrarian profits. Further, market states are important determinants of contrarian profits. Specifically, contrarian returns are greater following market downturns than market upturns. The findings provide important implications for investors who are considering momentum and contrarian strategies as potential investments.