Islamic banking: Interest-free or interest-based?

A unique feature of Islamic banking, in theory, is its profit-and-loss sharing (PLS) paradigm. In practice, however, we find that Islamic banking is not very different from conventional banking. Our study on Malaysia shows that only a negligible portion of Islamic bank financing is strictly PLS based and that Islamic deposits are not interest-free, but are closely pegged to conventional deposits. Our findings suggest that the rapid growth in Islamic banking is largely driven by the Islamic resurgence worldwide rather than by the advantages of the PLS paradigm and that Islamic banks should be subject to regulations similar to those of their western counterparts.     

Conjoint and WTP analyses of future mobile phones for digital convergence

Digital convergence for mobile phones is a hot issue. This study considers future development of mobile phones with a view toward consumers' usage and the amount they are willing to pay. In order to select preferable convergence technology, we utilize convergence concepts such as absorption, blending, and combination. The result of conjoint analysis shows that a preference for convergence technology will involve computing, media, navigation, and imaging. However, only the computing attribute increases consumers' willingness to pay. Our study results contribute to product planning and commercialization of innovative mobile phones.     

SOME SALIENT ISSUES RAISED BY THE GLOBAL FINANCIAL CRISIS

The recent global financial crisis has raised a number of important issues. This paper discusses five specific issues: first, macroprudential regulation, an issue related to the cause of the crisis; second, management of economic openness, an issue especially relevant for emerging market economies; third, diverse measures for coping with instability due to capital outflows, for example self-protection through foreign exchange reserve accumulation as well as international and regional cooperation; fourth, the future of the international monetary system, in particular the dollar-centred system; and fifth, the implications of the crisis for the economics profession.     

Bootstrap ARDL on energy-growth relationship for 22 OECD countries

Applying a recent bootstrap autoregressive distributed lag method, this article re-examines the energy-growth relationship for 22 OECD countries over the period 1966–2013. The empirical results suggest degenerate cases for eight countries. Only Japan is truly cointegrated. Some causality patterns are identified.     

Risks and returns of acquiring and acquired firms in Singapore: An empirical analysis

This paper investigates the risk profiles of target and acquiring firms and the impact of the takeover process on them. It was found that corporate takeovers generally increased the systematic risk of the acquiring firms after the event while lowering the systematic risk of the target firms. There were large and statistically significant returns obtained by the shareholders of the target firms due to the takeover event. The shareholders of the acquiring firms did not suffer any negative returns.The authors benefitted from the discussions at the Academy of International Business South-east Asia Regional Conference, 26–28 June 1986, where an earlier version of this paper was presented. The authors also like to acknowledge the financial support from the National University of Singapore.     

Licensing as an Alternative to Foreign Direct Investment

This article addresses issues linked to the sales of manufacturing technology and know-how through licensing by British companies to unaffilated firms located overseas. It identifies a number of characteristics that make these companies more likely to license abroad. The authors test a model of foreign licensing on data gathered from 145 firms based in the United Kingdom. Many companies do evaluate licensing to unaffilated firms as an alternative to foreign direct investment when they consider manufacturing in foreign markets. These firms tend to be relatively large in their industry, highly diversified, spend a relatively higher proportion of their value-added on research and development, and have less foreign experience.     

Burgernomics: the economics of the Big Mac standard

In the course of PPP research, much of the debate over the validity has been over the choice of an appropriate ‘basket’ for making purchasing power comparisons. The different compositions of goods and services in these baskets across countries have resulted in arguments against their usefulness for PPP purposes. This problem is augmented by the existence of productivity differentials in traded and non-traded goods across countries. Therefore we consider the use of the Big Mac as the international monetary standard as being a more palatable alternative: It is produced locally in over 80 countries around the world, with only minor changes in recipe and thus has the flavour of ‘the perfect universal commodity’. Our results indicate that the Big Mac Index is surprisingly accurate in tracking exchange rates over the long-term, which is consistent with previous PPP research findings. We subsequently enhance our PPP comparisons by taking into account the productivity differentials between countries and excluding non-traded goods from the Big Mac Index to derive the No-Frills Index.     

How responsive are trade flows between Malaysia and China to the exchange rate? Evidence from industry data

This paper investigates the impact of currency depreciation on bilateral trade between Malaysia and China, especially how a real depreciation of ringgit against the yuan on each industry’s inpayments and outpayments affect the trade balance. We employ disaggregated quarterly data on import and export for 52 industries over the period 1993Q1 to 2012Q4. The results from the bounds testing approach to the cointegration and error-correction model reveal that the real bilateral exchange rate has short and long-run effects on the inpayments and outpayments of the industries. However, the short-run effects shift into the long run in 14 out of 35 industries in the inpayment models and 17 out of 44 industries in the outpayments models. Most of these are small industries producing intermediate goods. According to the ML condition, the depreciation of ringgit against yuan improves Malaysia’s trade balance with China in these industries.