Financial Liberalization and the Economic Crisis in Asia

Chin, Kok Fay; Jomo, K. S.

doi:10.4324/9780203218150

Cited by 8 publications

(3 citation statements)

References 15 publications

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“…Previous papers that discussed the cause and effect of the 1997 financial crisis to the Malaysian economy areWang (2000),Barro and Lee (2003),Lee (2003) andSelim (2005).…”

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confidence: 99%

Modeling the Interactions of Stock Price and Exchange Rate in Malaysia

Ismail

Isa

2009

Singapore Econ. Rev.

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After the East Asian crisis in 1997, the issue of whether stock prices and exchange rates are related or not have received much attention. This is due to realization that during the crisis the countries affected saw turmoil in both their currencies and stock markets. This paper studies the non-linear interactions between stock price and exchange rate in Malaysia using a two regimes multivariate Markov switching vector autoregression (MS-VAR) model with regime shifts in both the mean and the variance. In the study, the Kuala Lumpur Composite Index (KLCI) and the exchange rates of Malaysia ringgit against four other countries namely the Singapore dollar, the Japanese yen, the British pound sterling and the Australian dollar between 1990 and 2005 are used. The empirical results show that all the series are not cointegrated but the MS-VAR model with two regimes manage to detect common regime shifts behavior in all the series. The estimated MS-VAR model reveals that as the stock price index falls the exchange rates depreciate and when the stock price index gains the exchange rates appreciate. In addition, the MS-VAR model fitted the data better than the linear vector autoregressive model (VAR).

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“…Previous papers that discussed the cause and effect of the 1997 financial crisis to the Malaysian economy areWang (2000),Barro and Lee (2003),Lee (2003) andSelim (2005).…”

mentioning

confidence: 99%

Modeling the Interactions of Stock Price and Exchange Rate in Malaysia

Ismail

Isa

2009

Singapore Econ. Rev.

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“…12 'Institutional preconditions' for pension funds to have positive effects on capital markets correspond to the 'institutional precondition for financial development' suggested in the literature on financial liberalization. According to Lee (2001), it includes 'the establishment of financial infrastructure such as legal/accounting system, credit ratings system and information circulation channel (Villanueva and Mirakhor 1990)'and 'establishing contract enforcement system and fostering dynamic borrower base (Gertler and Rose 1994)'or 'the securing appropriate capital adequacy ratio, human capital in financial sector, information capital stock and governance structure (Caprio, et al 1994). 13 Germany implemented measures such as regulation on insider trading, reinforcement of duty of disclosure and enhancement of punishment on market manipulation during the period 1994 to 2002.…”

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confidence: 99%

Spillover Effects of Pension Funds on Capital Markets: The Mechanism and Preconditions

Kim

2008

SSRN Journal

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“…The Asian Financial Crisis (AFC) is one of the most scrutinized episodes in the history of the international financial system. Most retrospective analyses have attempted to identify the determinants of the AFC in the quest for lessons that national policymakers should learn in order to avoid future crises (e.g., Jackson, 1999; Lee, 2003; Lukauskas & Rivera‐Batiz, 2001; MacIntyre, 2001; Noble & Ravenhill, 2000; Pempel, 1999; Tsurumi, 2001; Van Hoa & Harvie, 2000). This paper does not seek to revisit the causes of the AFC or its consequences, but rather focuses on how the crisis was managed by East Asian regional actors and institutions.…”

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confidence: 99%

The Conceptual Complexity of Central Bankers and the Asian Financial Crisis

Thies¹

2009

Political Psychology

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This paper examines the impact of the conceptual complexity of central bankers on exchange rate volatility during the Asian Financial Crisis of the late 1990s. Theoretically, this paper develops a framework to study the cognitive style of individual central bankers in conjunction with the institutional features of the central banks they head. The paper also controls for a variety of other common explanations for exchange rate volatility during this time period, including the number of veto players representing the political system and underlying structural features of the Asian economies. Empirically, the cross-sectional time-series analysis finds that more conceptually complex central bankers were able to reduce exchange rate volatility during the crisis years, especially when they inhabited highly independent central banks. This paper concludes that linking the study of key individuals to macroeconomic outcomes in the global political economy is a promising area of research.

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Financial Liberalization and the Economic Crisis in Asia

Cited by 8 publications

References 15 publications

Modeling the Interactions of Stock Price and Exchange Rate in Malaysia

Modeling the Interactions of Stock Price and Exchange Rate in Malaysia

Spillover Effects of Pension Funds on Capital Markets: The Mechanism and Preconditions

The Conceptual Complexity of Central Bankers and the Asian Financial Crisis

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