Charles Harvie

An Analysis of Productivity Changes in the Iranian Banking Industry: a Bootstrapped Malmquist Approach

Amir Arjomandi et al. — Sun, 15 Apr 2012 17:11:04 PDT

This study employs various bootstrapped Malmquist indices and efficiency scores to investigate the effects of government regulation on the performance of the Iranian banking industry over the period 2003-2008. An alternative decomposition of the Malmquist index, introduced by Simar and Wilson (1998a), is also applied to decompose technical changes further into pure technical change and changes in scale efficiency. A combination of these approaches facilitates a robust and comprehensive analysis of Iranian banking industry performance. While this approach is more appropriate than the traditional Malmquist approach, for the case of banking efficiency studies, it has not previously been conducted for any developing country’s banking system. The results obtained show that although, in general, the regulatory changes had different effects on individual banks, the efficiency and productivity of the overall industry declined after regulation. We also find that productivity had positive growth before regulation mainly due to improvements in pure technology, and that government ownership had an adverse impact on the efficiency level of state-owned banks. The bootstrap approach demonstrates that the majority of estimates obtained in this study are statistically significant.

Malmquist indices of productivity change in Botswana's financial institutions

Abbas Valadkhani et al. — Sun, 15 Apr 2012 17:11:02 PDT

The productivity and efficiency of the financial sector is pivotal to the attainment of economic growth and development in developed and developing economies alike, and is of particular interest in the wake of financial sector reform and restructuring. This study applies the Malmquist productivity index to measure and decompose the total factor productivity change of ten financial institutions in Botswana in its post-reform era, covering the period 2001-2006, into a 'catching up' or efficiency change, and a 'frontier shift' or technological change. The robustness and sensitivity of the empirical results presented are assessed by comparing outcomes from different input and output combinations derived from using the value added, intermediation and operating approaches. The empirical results indicate a loss or little productivity gain in Botswana's financial institutions, arising mainly from technological regress. Policy implications from this are highlighted in the paper.

Finance, Ownership, Executive Remuneration, and Technical Efficiency: A Stochastic Frontier Analysis (SFA) of Thai Listed Manufacturing Enterprises

Yot Amornkitvikai et al. — Sun, 15 Apr 2012 17:11:01 PDT

This study employs a stochastic frontier analysis (SFA) to predict the technical efficiency of Thai listed manufacturing enterprises, using unbalanced panel data for 178 enterprises covering the years 2000 to 2008. The empirical findings indicate that these enterprises have been operating under “decreasing returns to scale”, and rely heavily on labour input. Managerial ownership, controlling ownership, type of firm ownership, executive remuneration and firm size are found to have a significant and positive correlation with technical efficiency. Firm leverage is also found to be positively correlated with technical efficiency, but is not statistically significant, and liquidity is found to have a significant negative correlation with firm technical efficiency. Both internal and external financing have a significant negative correlation with technical efficiency, but external financing is less important. The paper also provides evidence-based policy recommendations to enhance the technical efficiency and competitiveness of Thai listed manufacturing enterprises.

Resource price turbulence and macroeconomic adjustment for a resource exporter: a conceptual framework for policy analysis

Charles Harvie et al. — Sun, 15 Apr 2012 17:10:59 PDT

Increased global demand for energy and other resources, particularly from the rapidly developing economies of China and India and the opening up of global resource markets to global investors and speculative activity, has resulted in considerable recent turbulence in resource prices. The recent magnitude of change in resource prices, both positive and negative, and their macroeconomic implications is of considerable contemporary importance to both resource importing and exporting economies. For a resource exporting economy, such as that of Australia, the recent resource price boom has resulted in: increased government taxation revenue, increased employment and wages in the resource and resource related sectors, increased spending in the domestic economy that contributed to buoyant economic growth, increased resource exports to the booming economies of China and India and contributed to a stronger domestic currency with beneficial effects upon inflation. On the other hand these developments have had adverse effects on the nonresource sector by: subjecting it to more intense competition for limited resources, contributing to a loss of international competitiveness and reduced exports arising from a stronger exchange rate, reducing employment in the relatively more labour intensive non-resource sector, and contributing to an eventual slow down in the overall economy. These positive and negative effects, and the overall impact of a resource price boom, require a fundamentally closer analysis of the structure of the economy under scrutiny. In this context the policy response by government is likely to be pivotal in determining the overall macroeconomic outcomes from a resource price boom. The aim of this paper is to develop a generic analytical framework to appraise economic outcomes in the wake of a resource price boom for a resource producing and exporting economy. To this end a dynamic long run macroeconomic model is developed, emphasising the important role and contribution of government fiscal policy in influencing subsequent macroeconomic outcomes. The adjustment process in the model arising from a resource price shock emphasises a spending (or wealth) effect, an income effect, a revenue effect, a current account effect and an exchange rate effect, which facilitate a robust analysis of subsequent macroeconomic outcomes from such a shock as well as related policy responses.

Vietnam: Economy

Charles Harvie — Sun, 15 Apr 2012 17:10:58 PDT

Viet Nam stands at an important crossroads in its transition from a planned to a market-orientated economy. While it has moved considerably from being an inward-looking, stagnant and financially dependent planned economy during the early 1980s to an outward-orientated, globalized and market-orientated economy by the early part of the new millennium, much remained to be done if the status of a middle-income economy was to be achieved by 2010. The initiation of economic reform under the slogan ofdoi moi (renovation) in 1986, supplemented by further reform from 1989, led to rapid and inclusive economic growth during much of the 1990s, resulting in a doubling of gross domestic product (GDP) and a halving of poverty incidence. The financial and economic crisis that afflicted the region in 1997-98, with its related decline in foreign direct investment (FDI) inflows and in exports, however, contributed to a slowdown in Viet Nam's growth in its immediate aftermath, but this was nowhere near as severe as in a number of other regional economies. Subsequently, during 2000-06, economic growth steadily recovered in Viet Nam which achieved an average annual real rate of 7.5%, making it one of the best performing developing countries in the world. This was led by the non-state sector, in particular private sector small and medium-sized enterprises (SMEs) and the sector with foreign investment. These two sectors would be pivotal in sustaining growth into the future according to the Asian Development Bank (ADB) in 2007.

Prospects for an AFTA-CER Free Trade Agreement

Charles Harvie — Sun, 15 Apr 2012 17:10:57 PDT

Since 1990 the global economy has undergone a substantive movement away from nationally segmented markets towards regionally integrated markets. More recently, the ongoing process of globalization has further intensified this process with little likelihood of abatement or reversal. A number of factors are contributing towards this, including: a steady decline in transportation costs; improvements in information and communications technology; substantive progress at the national, regional and international levels in reducing barriers to trade in goods and services as well as in the movement of labour, capital, technology and ideas across national borders; slow and painstaking progress at the multilateral level in bringing about further reductions in trade barriers; and, finally, the need to tackle other barriers to trade and investment that include non-tariff barriers, intellectual property rights, barriers to trade in services, government procurement, and movements in labour and capital. Globalization is intensifying competition in domestic and international markets, requiring a response at the national level for indigenous firms to become globally competitive.

Multiple structural breaks in Korea's macroeconomic data: an application of the Lumsdaine and Papell Test

Mosayeb Pahlavani et al. — Sun, 15 Apr 2012 17:10:56 PDT

The Korean economy has undergone rapid economic growth and structural change since the early 1960s. Over this period of time it has been one of the fastest growing economies in Asia, but, more recently, has been vulnerable to external shocks which have contributed to major volatility in the economy. This paper employs quarterly time series data to endogenously determine the timing of major structural breaks for various macroeconomic variables in the Korean economy. The ADF (Augmented Dickey and Fuller) test and the LP (Lumsdaine and Papell, 1997) test are used to examine the time series properties of the data. The ADF test results provide no evidence against the unit root null hypothesis in all major macroeconomic variables under study. After accounting for the two most significant structural breaks in the data impacting on both the intercept and trend (model CC), results from the LP test indicate that the null of at least one unit root is rejected for some of the variables under investigation at the 10% level or better. The paper also goes further to shed some light on the implications of the Asian financial crisis on the Korean economy, as this is considered to be the most severe external shock to affect the economy in the recent past. Our preliminary empirical findings verify this, indicating that the dates of structural breaks in most cases point to the Asian financial crisis. However, using the LP approach it is shown that a second structural break can be identified, the timing of which depends on key policy changes or other factors contributing to economic turbulence in the Korean economy. The estimated two structural breaks were found to be statistically significant for all of the variables under investigation.

Testing for structural breaks in the Korean economy 1980-2005: an application of the innovational outlier and additive outlier models

Charles Harvie et al. — Sun, 15 Apr 2012 17:10:55 PDT

This paper employs quarterly time series data to endogenously determine the timing of structural breaks for various macroeconomic variables in the Korean economy. The Innovational Outlier (IO) as well as Additive Outlier models (Perron, 1997) are then used to test for non-stationarity of the Korean macroeconomic data. After accounting for the single most significant structural break the results from the (AO) model clearly indicate that the null of a unit root cannot be rejected for all of the series under investigation. This finding is consistent with our finding based on the conventional unit root test. However, by applying the IO procedure in the presence of a structural break we find the interesting result that two of the variables under investigation become trend stationary (have no unit roots). The timing of structural breaks for key macroeconomic data under the IO and AO approaches appear to be quite different. Using the IO approach seven of the ten macroeconomic variables focused upon have important structural breaks corresponding with the timing of the Asian financial crisis of 1997. On the other hand, using the AO approach, only one of the ten variables appears to have a structural break related to the Asian financial crisis, while the remaining nine variables have quite diverse structural breaks that depend on key policy changes or other factors contributing to economic turbulence.

The impact of networking of business performance: a case study of Malaysian SMEs

Charles Harvie et al. — Sun, 15 Apr 2012 17:10:54 PDT

Business networking, including the sharing of knowledge and exchange of information and its impact on business performance has received significant recent attention in the literature, but there is scant literature analysing the relationship between business networking and business perfomrance within the context of business constraints. In this paper the authors argue that the impact of business netwrking on business performance should, most appropriately, be examined within such a context.

Numerous measures are developed in the paper aimed at capturing the extent and nature of business networking, business performance, and business constraints in the contex, specifically, of small and medium enterprises. Then, using exploratory factor analysis and multiple regression techniques, data from 150 Malaysian SMEs reveal that networking has a positive and signification impact on business performance, while other perceived business constraints are found to be negatively and significantly linked to business performance. The results presented suggest that measure adopted by policy makers aimed at enhancing business networking and reducing perceived business constraints will have significantly beneficial effects upon the business performance of SMEs.

Size still matters when firms choose business collaborators

Yu Zhang et al. — Sun, 15 Apr 2012 17:10:53 PDT

Collaborate with peer-sized or larger-sized partner helps the firm to enhance its process, product quality, reputation, and market position. Therefore, when choosing collaborator, firms prefer peer-sized or lager-sized partners. Many empirical researches try to link the firm’s size with the performance and result of collaboration. However, there are still many debates. Instead of using the firm’s size, this paper use the compared size or size difference between collaborating firms to examine its influence on the performance of inter-firm collaboration. The results from qualitative case study and quantitative online survey in both Australia and China supported that size matters when firms select their business partners. Size difference also influenced trust level, the quality of communication, risk level, similarity in structure and process, and as a result, the performance of inter-firm collaboration.

The changing face of women managers in small and medium sized enterprises in Vietnam

Charles Harvie et al. — Sun, 15 Apr 2012 17:10:52 PDT

Vietnam stands at an important crossroads in its transition from a planned to a market oriented economy. Since the implementation of economic reform, starting with Doi Moi in 1986, the economy has experienced rapid economic growth.

A factor analysis of international portfolio diversification

Abbas Valadkhani et al. — Sun, 15 Apr 2012 17:10:51 PDT

The purpose of this paper is to investigate the relationships between stock market returns of 13 countries based upon monthly data spanning December 1987 to April 2007. Specifically, the principal component (PC) and maximum likelihood (ML) methods are used to examine any discernable patterns of stock market co-movements. Factor analysis provides evidence that stock returns in a number of Asian countries are highly correlated and, based on the resulting robust factor loadings, they form the first well-defined common factor. The paper also finds consistent results (based on both the PC and ML methods) suggesting that the stock market returns of developed countries are also highly correlated, and constitute our second factor. The paper concludes that, inter alia, geographical proximity and the level of economic development do matter when it comes to co-movements of stock returns and that this has important implications for financial portfolio diversification if the aim is to reduce systematic risks across countries

Measuring technical inefficiency factors for Thai listed manufacturing enterprises: A stochastic frontier (SFA) and data envelopment analysis (DEA)

Yot Amornkitvikai et al. — Sun, 15 Apr 2012 17:10:50 PDT

This study employs stochastic frontier analysis (SFA) and two-stage DEA approaches to predict firm technical efficiency and analyse an inefficiency effects model for overall Thai listed manufacturing sector enterprises including sub-listed manufacturing sector enterprises using an unbalanced panel data for 178 Thai listed manufacturing enterprises over the period 2000 to 2008. Both estimation approaches are found to produce consistent results for overall Thai listed manufacturing sector enterprises. For sub-listed manufacturing sector enterprises both approaches empirically find quite consistent results in coefficient signs, but significance results from both estimation approaches may be different. Focusing on overall Thai listed enterprises both approaches suggest that leverage (financial constraints), executive remuneration, managerial ownership, exports, some types of listed firms (i.e., family-owned firm, foreign-owned firm, and hybrid-owned firm), and firm size have a negative (positive) and significant effect on technical inefficiency (technical efficiency).The empirical results obtained from both approaches also suggest that liquidity, external financing, and research & development (R&D) have a significantly positive (negative) effect on technical inefficiency (technical efficiency)”

Analysing Productivity Changes Using the Bootstrapped Malmquist Approach: The Case of the Iranian Banking Industry

Amir Arjomandi et al. — Sun, 15 Apr 2012 17:10:49 PDT

This study employs various bootstrapped Malmquist indices and efficiency scores to investigate the effects of government regulation on the performance of the Iranian banking industry over the period 2003-2008. An alternative decomposition of the Malmquist index, introduced by Simar and Wilson (1998a), is also applied to further decompose technical changes into pure technical change and changes in scale efficiency. A combination of these approaches facilitates a robust and comprehensive analysis of Iranian banking industry performance. While this approach is more appropriate than the traditional Malmquist approach for banking efficiency studies, it has not previously been applied to any developing country’s banking system. The results show that although, in general, the regulatory changes had different effects on individual banks, the efficiency and productivity of the overall industry declined after regulation. We also find that productivity had positive growth before regulation, mainly due to improvements in pure technology, and that government ownership had an adverse impact on the efficiency level of state-owned banks. The bootstrap approach demonstrates that the majority of estimates obtained in this study are statistically significant.

Identifying and measuring technical inefficiency factors: evidence from unbalanced panel data for Thai listed manufacturing enterprises

Yot Amornkitvikai et al. — Sun, 15 Apr 2012 17:10:48 PDT

This study employs stochastic frontier analysis (SFA) and two-stage DEA approaches to predict firm technical efficiency and analyse an inefficiency effects model. Aggregate translog stochastic frontier production functions are estimated under the SFA approach using an unbalanced panel data of 178 Thai manufacturing enterprises listed in the Stock Exchange of Thailand (SET), covering the period 2000 to 2008. The maximum-likelihood Tobit model is used to conduct the second-stage of the two-stage DEA model to investigate the relationship between technical inefficiency and environmental variables. Both parametric and nonparametric approaches are found to produce consistent results. The empirical evidence from both approaches highlight that Thai listed manufacturing firms had been operating under decreasing returns to scale over the period 2000 to 2008. The SFA approach reports that technical progress decreased over time, and relied on labour input. Both estimation approaches suggest that leverage (financial constraints), executive remuneration, managerial ownership, exports, some types of listed firms (i.e., family-owned firm and foreign-owned firm), and firm size have a negative (positive) and significant effect on technical inefficiency (technical efficiency). The empirical results obtained from both approaches also suggest that liquidity, external financing, and research & development (R&D) have a significantly positive (negative) effect on technical inefficiency (technical efficiency)

An Examination of the Driving Forces Behind ICT Adoption in Australian Rural and Regional Medical Practices

R. MacGregor et al. — Sun, 15 Apr 2012 17:10:47 PDT

The use of information and communication technology (ICT) within the Australian general practice sector has been widely researched and is well documented. This paper adds to the knowledge by using data collected from 122 regional medical practitioners to show that the driving forces behind the adoption and use of ICTs can be grouped according to three factors: improvement to business and medical care, external pressure exerted by other practices, patients and medical authorities and the need to communicate with other businesses as well as medical groups.

The Budget Deficit and Economic Performance: A Survey

Ali Salman Saleh et al. — Sun, 15 Apr 2012 17:10:45 PDT

The relationship between budget deficits and macroeconomic variables (such as growth, interest rates, trade deficit, exchange rate, among others) represents one of the most widely debated topics among economists and policy makers in both developed and developing countries. However, the purpose of this paper is to review the extensive literature to such a relationship, concentrating on theoretical debates and empirical studies, in order to derive substantive conclusions, which can be beneficial in the macroeconomics area; policy analysis; or in terms of constructing or developing a macroeconomic model for analyzing the impact of budget deficits on macroeconomic variables. The majority of these studies regress a macroeconomic variable on the deficit variable. These studies are cross-country and utilize time series data. In general the key outcomes from the studies presented in this paper indicated that both the method of financing and the components of government expenditures could have different effects. Therefore, it is crucial for the government to distinguish between consumption and investment expenditures especially when the government is in the process of evaluating the impact of fiscal policy on private investment and output growth or in the process of cutting expenditures to reduce the fiscal imbalances in the country. Even though the overall results from the empirical literature with respect to the impact of public investment on private investment and growth are ambiguous, the bulk of the empirical studies find a significantly negative effect of public consumption expenditure on growth, while the effects of public investment expenditure (such as on education, healthcare) are found to be positive although less robust. The key findings from these studies is important in particular for developing countries to be aware of the importance of government investment expenditures in the area of education, healthcare, infrastructure to long-term economic growth and the benefits from which are an important contributor to welfare and well-being. The key outcome from all of the studies presented in this paper while investigating the relationship between the budget deficit and current account deficit showed strong evidence in both developed and developing countries towards supporting the Keynesian proposition (conventional view) which suggests that an increase in the budget deficit would induce domestic absorption and, hence import expansion, causing a current account deficit. The key findings from the empirical studies investigating the relationship between the budget deficit and interest rates indicated strong evidence towards supporting the Keynesian model of a significant and positive relationship between budget deficits and interest rates. The major outcomes from the empirical studies examining the relationship between budget deficits and inflation showed strong evidence that the budget deficit financed through monetization and a rising money supply could lead to inflation.

Export-led industrialisation and growth: Korea's economic miracle, 1962-89

Charles Harvie et al. — Sun, 15 Apr 2012 17:10:44 PDT

During 1962–1989, South Korea underwent a remarkable economic transformation from being poverty-ridden to attaining the status of newly industrialised nation. This transformation was achieved through the adoption of an outward-oriented, industry-led strategy. It was based, particularly during the 1970s, upon the development of large-scale industrial conglomerates and the attainment of economies of scale and technology to achieve international competitiveness. By the early 1980s, this strategy had resulted in major structural imbalances, a weakened financial sector, heavy concentration in domestic markets, and a repressed development of small and medium enterprises. By the end of the 1980s, despite attempts at economic reform, the structural and financial problems remained and became the country’s undoing during the crisis of 1997–1998. This article reviews the question whether Korea’s performance during this period can be described as an economic miracle. The empirical evidence is mixed and inconclusive, although the achievements of the Korean economy should not be underestimated.

Associations between driving forces to adopt ICT and benefits derived from that adoption in medical practices in Australia

R. C. MacGregor et al. — Sun, 15 Apr 2012 17:10:43 PDT

Information and Communication Technolology (ICT) is today seen as a catalyst for change in the way work is carried out. Over the past decade there have been a number of studies examining both the decision making behind ICT adoption (the driving forces for adoption) as well as the perceived benefits from that adoption. However, no studies have attempted todetermine, or indeed map whether emphasis given to specific driving forces have manifested in differing perceptions of perceived benefits. The purpose of this chapter is toexamine whether emphasis on particular driving forces for ICT adoption are associated with the perception of parlicular benefits.

Do organisational characteristics explain the differences between drivers of ICT adoption in rural and urban general practices in Australia

Peter N. Hyland et al. — Sun, 15 Apr 2012 17:10:42 PDT

A number of studies have compared general medical practices in rural locations with those in urban locations. Some of these studies have concentrated on the reasons why a GP might choose to work in a rural or urban setting. Others have examined the type of work required to be undertaken by medical professionals. Increasing use of information and communications technology (ICT) in medical practices has led to some studies examining their use in rural as well as urban settings. However, little if any research has examined whether ICT adoption drivers differ between rural and urban GPs based on their organisational characteristics. This paper presents a study of 198 GPs (122 rural, 76 urban) in Australia. The results show that organisational characteristics are associated with the importance of the drivers for ICT adoption and that these characteristics differ between rural and urban GPs. These findings have important practical and theoretical contributions because it shows that ICT adoption decisions must be contextualised and that it is unlikely that universal adoption drivers will apply to all general practices.