Bank systemic risk: An analysis of the sovereign rating ceiling policy and rating downgrades

We investigate the impact that the sovereign ceiling policy has on financial stability. In the event of a sovereign rating downgrade, we find that the rating agencies' sovereign ceiling policy leads to a disproportionate downgrade of the most creditworthy financial institutions in the economy and results in increased systemic risk. This asymmetric variation in bank ratings also impairs equity growth that further exacerbates bank insolvency. Our results are robust to several matching techniques, such as propensity score matching and entropy balancing, falsification tests, subsample analyses, alternative empirical proxies and model specifications.     

A sustainable state for urban life in poor societies: Bangladesh

Cities in the Third World do not currently have favourable prospects for the future. Their planning is dedicated primarily to coping with pressures of population and infrastructure needs. Any pale imitation of advanced urbanization that they might employ as minimum standards require many times more consumption of energy, water and human time than is available. The concept of a sustainable state for the long term seems unattainable to their policy makers. This exercise seeks a path to a desirable steady state for one of the world's poorest metropolises—Dhaka. This article shows that the essential knowledge, and some experience, already exist which make this transition to sustainability possible, and outlines the crucial features required. Promotion of family planning is assigned the highest priority during the transition, followed by education.     

Consumer credit and monetary policy in Malaysia

What is the impact of monetary policy on the Malaysian consumer? The study addresses this issue by empirically investigating the consequences of interest rate shocks on consumer credit in Malaysia. The study relies on the impulse response functions and the variance decomposition analysis based on the structural Vector Auto‐regression methodology. Apart from analysing the responses of aggregate consumer loans (ACL) to interest rate changes, further disaggregation is made in efforts to arrive at more detailed findings. In particular, the ACL data are categorized into loans for purchase of residential property, loans for personal uses, loans for credit cards, loans for purchase of consumer durables, loans for purchase of passenger cars and loans for purchase of securities. Through this disaggregation, the study shows the relative sensitivity of the various types of consumer loans to interest rate shocks.     

Compliance Costs of Corporate Income Taxation in Singapore

This study is the second in a series of studies investigating tax compliance costs incurred by public-listed companies. We found evidence of a size effect which is a predominant finding of similar studies. The size effect was more pronounced when absolute measures of costs were used than when a relative measure, cost/sales turnover, was used. Additional evidence was found of limited success relating to the IRAS's moves to simplify the tax system. Specifically, only large companies with sales turnover exceeding $500m benefited and considerably reduced their overall compliance costs. Most of the decrease was a result of the computational component of compliance costs. This resulted in the gap in absolute costs narrowing between Group 3 and any of the other categories of companies. There was also greater reliance on external professionals, the smaller the company. Views elicited indicate that more could be done to increase accessibility to IRAS publications for Group 1 and Group 2 companies.     

Economic uncertainty and growth performance: a macroeconomic modeling analysis for Pakistan

This paper investigates the effects of economic uncertainty on growth performance of Pakistan through developing a small macroeconomic model. The GARCH method has been used for construction of economic uncertainty variables related to macroeconomic policies. The structural outcomes clearly indicate that economic policy uncertainty affects negatively on real and nominal sectors of Pakistan. The forecasting of model and different policy uncertainty simulation shocks also indicated that an adjustment in economic policies due to change of policy objectives create uncertain environment in country, which not only deteriorates the investment climate of country, it also affects the economic growth. Our study concludes that economic uncertainty not only reduces the current investment and economic growth, it also affects the future decision of investment and economic growth. This study suggests that sustainable and steady economic policies always reduce economic uncertainty and promote the confidence of economic agents, which help in achieving the targets of investment, trade and economic growth. Our study also maintains the predictability and reliability of government policies for the accomplishment of macroeconomic goals and economic development of country.     

Persistence and non-linearity in US unemployment: A regime-switching approach

This article examines persistence and nonlinearity in the US unemployment rate in the post-war period by using a regime-switching unit root test. The empirical results indicate that a regime-switching unit root test outperforms conventional unit root tests and describes unemployment behavior better over the business cycle in the sample. While shocks to US unemployment dissipate in expansions, shocks to the unemployment rate seem to be persistent in recessions, supporting the hysteresis hypothesis. This is consistent with the usual explanation of hysteresis that workers may lose valuable job skills in protracted recessions.     

Designing a reverse logistics network for optimal collection, recovery and quality-based product-mix planning

This study proposes an integrated, reverse logistics supply chain planning process with modular product design that produces and markets products at different quality levels. A mixed integer programming (MIP) model formulates the overall planning process required to maximize profit by considering the collection of returned products, the recovery of modules and the proportion of the product mix at different quality levels. This paper proposes the collection of returnables (end-of life, defective, product under warranty) through retail outlets combined with the recovery of modules from the collected products using a network of recovery service providers. The proposed modular product design approach would create a design criterion that provides an improved recovery process at a lower cost. This study uses a total supply chain view that considers the production, transportation and distribution of products to customers, while a numerical problem illustrates the applicability of the models.     

Estimation and evaluation of core inflation measures

This article estimates and evaluates different measures of core inflation for India by employing statistical and econometric approaches. We estimate Wholesale Price Index (WPI) ex-food, WPI ex-food and energy, 20% asymmetric trimmed mean, 63rd percentile and Structural Vector Autoregression (SVAR) measures of core inflation. The trimmed mean, 63rd percentile and SVAR measures are unbiased, less volatile and highly correlated to headline inflation. The predictive accuracy of the different core inflation measures used in this article is assessed. The overall result suggests that a 20% asymmetric trimmed mean and SVAR measures of core inflation can be useful for the policy purposes.     

Effects of Stability and Controllability Attribution on Service Recovery Evaluation in the Context of the Airline Industry

This study examines the relationships between service recovery, stability and controllability attribution, recovery satisfaction, and customer loyalty. We collected data on service recovery, failure attribution, recovery satisfaction, and customer loyalty through a survey of airline passengers in Malaysia. The results indicate significant positive relationships between service recovery dimensions and recovery satisfaction, and between recovery satisfaction and customer loyalty. Both stability and controllability were negatively related to recovery satisfaction. The results provide support for the moderating effects of service failure attribution (stability and controllability) in the recovery process dimension. By recognizing the important role of stability and controllability attribution and its negative effects, service management should become highly involved in facilitating appropriate service recovery to satisfy customers after a failure. The results have important implications and suggest some interesting avenues for future research.