The Asset Management Industry in Asia: Dynamics of Growth,Structure, and Performance

We examine the industrial organization and institutional development of the asset management industry in Asian developing economies—specifically in China, Indonesia, Korea, Malaysia, Singapore, Philippines, and Thailand. We focus on the size and growth of the buy‐side of the respective financial markets, asset allocation, the regulatory environment, and the state of internationalization of the fund management industry in its key components—mutual funds, pension funds, and asset management for high net worth individuals. We link the evolution of professional asset management in these environments to the development of the respective capital markets and to the evolution of corporate governance. We find that the fund management industry occupies a very small niche in domestic financial systems that are dominated by banks. At the same time, we find that its growth has been very rapid in the early 2000s and we suggest that this is likely to persist as the demand for professional management of financial wealth in the region develops and as the pension fund sectors of the respective economies are liberalized to allow larger portions of assets to be invested in collective investment schemes.     

Privatisation and Stock Market Efficiency: The British Experience

We present evidence that with its emphasis on wide-share-ownership the British privatisation program created heavy involvement of small investors in privatised stocks. Using standard market efficiency tests and maximum likelihood estimates of stationary fractional ARIMA models, we show that the pricing of privatised stocks in the London Stock Exchange was indeed inefficient, unlike the rest of the market. Together, these two pieces of evidence suggest that small investors, behaving like noise-traders, may be generating this inefficiency. Yet, we cannot rule out alternative explanations.     

The effect of interfirm dependence structures on governance mechanisms

Despite recent developments regarding the study of interdependence structures, previous research has rarely investigated the simultaneous effect of both interdependence magnitude and interdependence asymmetry on governance mechanisms among exchange parties. A survey of manufacturing companies has been used to test a theory about the interactive effect of buyer dependence and supplier dependence on inter-firm governance. The analysis of the survey supported the proposition that both buyers and suppliers that are highly dependent on each other (high interdependence magnitude and low interdependence asymmetry) may choose to rely on monitoring and the norm of information sharing. However, when a buyer's dependence is low regardless of the supplier's dependence level, the buyer does not rely on the norm of information sharing (buyer's relative interdependence advantage, buyer's relative interdependence disadvantage, and low interdependence magnitude). On the other hand, when the supplier's dependence on the buyer is low, the buyer relies on monitoring regardless of its dependence level (buyer's relative interdependence disadvantage and low interdependence magnitude). However, this study did not empirically measure performance. Further research should be done on the effect of congruence between the governance mechanism and its antecedents on buying performance.     

Law and finance: why does legal origin matter?

This paper assesses empirically two theories of why legal origin influences financial development. The political channel stresses that legal traditions differ in the priority they give to the rights of individual investors vis-à-vis the state and this has repercussions for financial development. The adaptability channel holds that legal traditions differ in their ability to adjust to changing commercial circumstances and legal systems that adapt quickly will foster financial development more effectively. We use historical comparisons and cross-country regressions to assess the validity of these two channels. We find that legal origin matters for financial development because legal traditions differ in their ability to adapt efficiently to evolving economic conditions. Journal of Comparative Economics 31 (4) (2003) 653–675.     

Does too much government spending depress the economic development of transition economies? Evidences from dynamic panel threshold analysis

This paper investigates the relationship between government size and economic growth and determines the optimal level of government spending to maximize economic growth. The paper applies a dynamic panel data analysis based upon a threshold model to test the threshold effect of government spending in 26 transition economies over the period spanning 1993–2016. According to the analysis results, government expenditures have a threshold effect on economic growth, and there is a non-linear relationship depicted as an Armey curve in these transition economies. The findings indicate that a government size above the threshold government spending level adversely affects economic growth, while a government size below the threshold level has a positive effect. Furthermore, there is a statistically significant relationship between the two variables above and below that optimal level, even if we divide the sample into developed and developing countries. Our findings suggest that governments in transition economies should consider optimal government size at around the estimated threshold level to support sustainable economic growth.     

Stock Market Development and Financial Intermediaries: Stylized Facts

World stock markets are booming, and emerging stock marketsaccount for a disproportionate share of this growth. Yet economistslack a common concept or measure of stock market development.This article collects and compares a broad array of indicatorsof stock market and financial intermediary development, usingdata from forty-four developing and industrial countries duringthe period from 1986 to 1993. The empirical results exhibitwide cross-country differences for each indicator as well asintuitively appealing correlations between various indicators.The article constructs aggregate indexes and analyzes them todocument the relationship between the emergence of stock marketsand the growth of financial intermediaries. It produces a setof stylized facts that facilitates and stimulates research intothe links among stock markets, economic development, and corporatefinancing decisions.     

The Chilean Anti-cartel Experience: Accomplishments and Challenges

Review of Industrial Organization - We evaluate the Chilean law and enforcement record in the area of cartels. We identify the high probability of cartel detection, severe sanctions for detected...     

Banks and Microbanks

We combine two datasets to examine whether the presence of banks affects the profitability and outreach of microfinance institutions. We find evidence that competition matters. Greater bank penetration in the overall economy is associated with microbanks pushing toward poorer markets, as reflected in smaller average loans sizes and greater outreach to women. The evidence is particularly strong for microbanks relying on commercial-funding and using traditional bilateral lending contracts (rather than group lending methods favored by microfinance NGOs). We consider plausible alternative explanations for the correlations, including relationships that run through the nature of the regulatory environment and the structure of the banking environment, but we fail to find strong support for these alternative hypotheses.     

Fashionable hospitality: A natural symbiosis for Hong Kong's tourism industry?

Despite the well-accepted synergy between shopping and tourism, co-branding between hotels and retail brands has not been realized by either academia or practitioners. Considering the international recognition of retail brands, hotel and retail co-branding may be a sustainable competitive advantage, especially in shopping destinations such as Hong Kong. Using a one-shot cross-sectional design, this study investigated potential consumer reactions and preferences about likely hotel and retail co-branding in Hong Kong and mainland China. Findings indicated several opportunities as well as threats for hotels and retail brands as well as the need to understand specific markets, especially mainland Chinese before venturing into hotel and retail co-branding. Practical implications and future research suggestions are provided.