Exchange-rate policy in East Asia after the fall: how much have things changed?

This paper evaluates the changes in the exchange-rate policies of East Asian economies in the aftermath of the currency crisis and the process in which the exchange-market stability was re-established. The empirical analysis evaluates the changing roles of the yen and the US dollar in the currency baskets, the shifts in the volatility of the underlying macroeconomic fundamentals and their implications on exchange-rate management, the exchange-market perception of credibility and risk of the postcrisis exchange-rate regimes, and the process of reversion to fundamental values after the massive currency depreciation.The analysis shows that after the abandonment of the quasi-dollar peg, the yen had gained a greater weight in the currency baskets and the greater flexibility in which the exchange rates are being managed serve to accommodate the greater volatility in the macroeconomic fundamentals. The improvement in the macroeconomic conditions and the greater credibility that has been acquired by the regional monetary authorities had allowed the exchange market to stabilize and enabled the exchange rates to revert back to their fundamental values.     

CAR associated with SEO share lockups: Real or illusionary?

This paper examines the cumulative abnormal return (CAR) associated with both the expiration and initiation of SEO share lockups. First, we find that the average CAR around the expiration of SEO share lockups is significantly negative, but this result is mainly attributed to inappropriate benchmarking of the CAR. Second, there is also, on average, a significant negative CAR at the initiation of SEO share lockups, but the negative CAR is a temporary phenomenon that reverses itself within a short period of time. Overall, our findings do not support the downward sloping demand curve hypothesis on the lockup expiration effect.     

Interest rate deregulation: Monetary policy efficacy and rate rigidity

This paper examines the effects of interest rate regulation, and subsequent deregulation, on the efficacy of monetary policy and rigidity of retail bank deposit rates in Hong Kong. Using an error-correction model, we find that interest rate deregulation increases the efficacy of monetary policy by improving the correlation between retail bank deposit rates and market interest rates and increasing the degree of long-term pass-through for retail bank deposit rates. Our study also shows that the adjustments in retail bank deposit rates are asymmetric and rigid upwards during the regulated period, but tend to be rigid downwards during the deregulated period. The spreads between retail bank deposit rates and market rates have also tightened sharply after the removal of interest rate controls.     

On the deviations from purchasing power parity: the case of the Ringgit effective exchange rate

The paper investigates the extent to which the Ringgit exchange rate converges on its purchasing power parity level in the long run, using the cointegration and variance ratio tests. The results indicate that shifts in the real exchange rate are dominated by permanent stochastic shocks which prevent it from reverting to its PPP base level. Further analysis indicates that low frequency movements in the relative price of tradable goods and the external terms of trade cannot explain the long-run swing in the real exchange rate.     

Wage Reform in Singapore

Singapore attained self-government in 1959. Her policy of relying on the MNCs to achieve industrialization has proven to be very successful. The Singapore model shows that economic strategy must be flexible to meet the changing needs of the Singapore economy. One such economic strategy is the wage system.
During the period 1959–1990, the wage system in Singapore changed twice, once in 1968, and again in 1985. The purpose of this paper is twofold. First, we examine the need for wage reform, and secondly to discuss various patterns of flexible wage models in Singapore. The main conclusion is that Singapore's flexible wage models can benefit both the worker and the employer.     

Asset Liquidity and Stock Liquidity: International Evidence

This study examines the relationship between asset liquidity and stock liquidity across 47 countries. In support of the valuation uncertainty hypothesis, we find that firms with greater asset liquidity on average have higher stock liquidity. More importantly, our study shows that asset liquidity plays a more significant role in resolving valuation uncertainty in countries with poor information environment. For example, we find that the asset–stock liquidity relationship is stronger in countries with poor accounting standards. We further find evidence that after the adoption of IFRS, the improved accounting information environment results in a weaker asset–stock liquidity relation, but only in countries with a strong legal regime. Finally, our study shows that the positive asset–stock liquidity relationship may be attributed to transparency and/or liquidity reasons.     

Online Shoppers' Perceptions and Use of Comparison-Shopping Sites: An Exploratory Study

Comparison-shopping sites currently offer online shoppers various combinations of free services such as price comparisons, merchant ratings, links to e-tailers’ websites, and/or customer reviews in the search results page(s). The utility and market values of shopping comparison sites have attracted Internet giants such as eBay, Google, and Yahoo to the extent of developing or acquiring such sites. Scholarly research on comparison-shopping sites has focused on (1) trust in online recommendation agents, and (2) methods used by electronic agents to produce the recommendations. Our study explored how online shoppers’ attitudes toward comparison-shopping sites impact perceived credibility and usefulness of these sites. We also examined online shoppers’ merchant selection criteria and their likelihood to continue using comparison-shopping sites. One interesting finding from our study was that merchants need to be strong on site ratings and brand awareness to appeal to a wide online market. The finding dispelled the notion that e-tailers presented by shopping comparison sites need to compete, basically, only on price.