An exploratory study of organizational flexibility in Malaysia: a research note

This note reports on an exploratory study examining the relationships between rules on employee behaviour and on management discretion and other aspects of organizations in Malaysia. Using the data from thirty-five Malaysian organizations, the authors highlight the differences between the implications of the rules for the two groups and their relationships with company performance.     

Macroeconomic Variables and Stock Prices in Malaysia: An Empirical Analysis

The article investigates the dynamic interactions between seven macroeconomic variables and the stock prices for an emerging market, Malaysia, using cointegration and Granger causality tests. The results strongly suggest informational inefficiency in the Malaysian market. The bivariate analysis suggests cointegration between the stock prices and three macroeconomic variables – consumer prices, credit aggregates and official reserves. From bivariate error-correction models, we note the reactions of the stock prices to deviations from the long run equilibrium. These results are further strengthened when we extend the analysis to multivariate settings. We also note some evidence that the stock prices are Granger-caused by changes in the official reserves and exchange rates in the short run.     

Financial Factors and the Empirical Behavior of Money Demand: A Case Study of Malaysia

The paper analyses the roles of financial factors in the behavior of M1 and M2 demands for Malaysia. The focus is on the possible changes in the elasticities of the M1 and M2 money demands in the environment of financial innovations and on the influence of real stock prices on the holdings of monetary assets. Our results reinforce existing studies that find the presence of the long-run M1 and M2 money demands and structural instability in the dynamic specification of the M1 demand. However, we are able to identify stable error-correction model for the post-1986 M1 demand and for the M2 demand. Our results also indicate the reduction in the Long run income and exchange rate elasticities of the money demands. Meanwhile, the interest rate sensitivity of the demands becomes more inelastic. Lastly, we document the significance of real stock prices in influencing the demand behavior, indicating the dominance of the wealth effect over the substitution effect. [E41, E44]     

THE YEN‐DOLLAR EXCHANGE RATE AND MALAYSIAN MACROECONOMIC DYNAMICS

This paper empirically assesses the effect of the yen‐dollar exchange rate on selected macroeconomic variables, namely, real output, price level, and money supply, for Malaysia. The results, which are based on a vector autoregressive framework, suggest that variations in the yen‐dollar rate can have significant influences on Malaysia's macroeconomic variables. More specifically, the yen‐dollar depreciation leads to contraction in real GDP and money supply. These results are fairly robust to alternative model specifications. We believe that, apart from providing important insights into the interactions between the yen‐dollar rate and domestic macroeconomic variables, our results contribute to the debate on choice of exchange rate regimes for Malaysia.     

Sectoral Effects of Monetary Policy: Evidence from Malaysia

The present paper analyzes the effects of monetary policy shocks on aggregate and eight sectoral outputs for Malaysia using vector autoregressive models. In line with many existing studies on Malaysia, the results are supportive of the real effects of monetary policy shocks. More importantly, we find evidence suggesting sector-specific responses to innovations in monetary policy. In response to positive interest rate shocks, we note that the manufacturing, construction, finance, insurance, real estate and business services sectors seem to decline more than aggregate production. By contrast, we observe the relative insensitivities of agriculture, forestry and fishing, mining and quarrying, electricity, gas and water to interest rate changes. The results, therefore, seem to confirm potential disparities in the effect of monetary policy on real sectoral activities.     

Institutional Quality and CO2 Emission–Trade Relations: Evidence from Sub‐Saharan Africa

This paper examines the roles of trade, institutional quality and their interactions in explaining carbon dioxide emissions in a panel sample of 40 Sub‐Sahara African countries using the system generalised method of moments. We find that institutional reforms are unequivocally environmental improving. Meanwhile, the impacts of trade on the environment tend to depend on the institutional setting of a country. More specifically, trade openness is harmful to the environment in countries with low institutional quality and beneficial to the environment in countries with high institutional quality. This means that institutional reforms are a perquisite for the countries with low institutional quality to actualise the beneficial environment effect of trade. As for the countries with adequate institutional quality, trade and institutions are reinforcing each other in bringing down pollution. From these results, we conclude that trade openness implemented in a sound institutional setting potentially brings better trade, more growth and better environment.     

Competitiveness of the Malaysian Food Processing Industry

Competitiveness is the goal sought after by governments and private sectors of many developing countries, including Malaysia. The study used net social profits (NSP) at the production level and the Porter diamond approach at the firms’ level to evaluate the competitiveness of 16 food-processing sectors from 2000 to 2008. The results indicate that processed-food industries have a comparative advantage but at a different magnitude. A time trend was fitted to track the dynamic NSP indices where positive trends indicate improvement in competitiveness. The range of NSP indices is quite wide, from RM 1,707.70 for snacks to RM 35.36 for vegetable and animal oils and fats, reflecting the need to improve resource allocation from low to high comparative advantage sectors. The NSP trend and Porter diamond conditions (demand condition, factor inputs, firm strategy and rivalry, and related supporting industries) suggested that the food processing cluster is gaining competitiveness.     

Dynamics of Islamic Financing in Malaysia: Causality and Innovation Accounting

This article addresses the underresearched issues of marketing challenges and business strategies/models for emerging markets. It suggests that firms need to fundamentally rethink their business models and marketing policies for emerging markets. Although strategies focusing on product affordability and availability are necessary, identification of niche market segments and making clear choices about which segments to pursue, with what value propositions will promote great success. Moreover, strategic flexibility, local sourcing, engagement of nontraditional partners, and local entrepreneurship will be important factors for successful pursuit of the emerging markets.     

Structural changes,competition and bank stability in Malaysia’s dual banking system

This paper assesses Malaysia’s competition landscape and its risk implications subsequent to conventional banking consolidation and Islamic banking penetration in the aftermath of the 1997/1998 Asian financial crisis. Employing a panel sample of conventional and Islamic commercial banks, it arrives at the following conclusions. First, the consolidation exercise, which has led to a significant reduction in the number of domestic commercial banks, has not stifled banking competition. Second, the paper provides empirical support for the competition-stability relationship, particularly for the conventional banking sector. Islamic banking sector risk appears to be neutral to market competition or market power, although there is limited evidence that it increases with overall market concentration. Finally, the analysis uncovers the risk-increasing effect of the Islamic banking market structure on the conventional banking sector. By contrast, conventional banking market concentration tends to reduce the credit risk of Islamic banks.