Costs of financial instability, household-sector balance sheets and consumption

Extant work on costs of financial instability focuses on fiscal costs and declines in aggregate GDP following banking crises. We estimate effects of banking and currency crises on consumption in 19 OECD countries, showing consumption plays an important role in the adjustment following a crisis, and effects are not captured solely by the impact of crises on standard consumption determinants, income and wealth. Additional effects, attributable to factors such as time-varying confidence, uncertainty and credit rationing, are aggravated by high and rising leverage, despite financial liberalisation easing liquidity constraints. High leverage implies that banking crises taking place now could have greater incidence than in the past.     

金融发展、资本账户开放与金融不稳定——来自中国的证据

文章建立一个由金融发展程度、资本账户开放与金融不稳定指标组成的向量自回归(VAR)模型,利用中国1982~2005年的年度数据对这些变量的长期协整关系和短期的调整动力学进行相关的时间序列分析。模型的估计结果显示,对于中国来说,金融发展程度、资本账户开放和金融不稳定之间存在着长期的协整关系,但三者之间的影响程度和方向各不相同。所有结果均显示,无论从短期和长期看,金融发展程度对一国的金融稳定具有显著影响,对资本账户开放的进程也具有重要的影响。     

Financial crisis in Southeast Asia: dispelling illusion the Minskyan way

This paper extends Minsky's financial instability hypothesisto the case of the open, ‘liberalised’, economy,making it possible to put forward a specifically Minskyan accountof the road to the financial crisis in Southeast Asia (1997/1998).The analysis suggests that the threats to growth and employmentemanating from the financial sector which Minsky identifiedin the closed economy setting are much intensified in open,liberalised, developing economies. Financial liberalisationis an important key factor in this process. Rival explanationsof the crisis are examined and rejected in favour of the extendedMinskyan explanation. The policy implications are derived anddiscussed.     

合资企业不稳定性研究的综述

本文对现有合资企业不稳定性研究文献进行了系统分析、归纳。综合分析了引起合资企业不稳定性的几种因素的结论,即合资企业所在国的经济政治体制背景、合资企业成员资产的相互依赖和竞争性、合资企业的文化冲突、合资企业的组织结构、合资企业的效益等等。根据现有的研究结论,本文提出了我国如何正确对待和利用合资企业不稳定性、调整利用外资战略的建议。     

Global sourcing strategy and sustainable competitive advantage

Global sourcing strategy has been one of the most hotly debated management trends in the last 20 years. In its early years, global sourcing was examined mostly from “in-house” development and procurement perspectives; and in the last several years, research focus has shifted to “outsourcing” activities. Along with this shift from internal to external focus on global sourcing, many researchers and business practitioners have applied a core competency argument to justify increased levels of outsourcing activities on a global basis. Although the beneficial aspects of outsourcing are assumed in most cases, no consensus exists in reality as to the effect of outsourcing. Furthermore, the increased instability of the exchange rate environment in the last several years has also led to increased difficulties in managing globally scattered operations that were once fashionable in the 1980s-90s under the rubric of global strategy. In this article, the authors explore potential limitations and negative consequences of outsourcing strategy on a global scale.     

WTO financial services commitments: Determinants and impact on financial stability

The paper investigates the factors that have influenced WTO members to take on their chosen level of liberalization commitments in the framework of liberalization of trade in financial services and the impact of such commitments on financial sector stability. The most important factors are economic growth, current account, trends in banking sector development, policy restrictiveness, and peer-group effects. The econometric evidence suggests that more liberal commitments may be associated with greater vulnerability to currency and banking crises—most likely a short-term effect, which should be mitigated with time through increased market efficiency and better resource allocation.     

The legal theory of finance and the financial instability hypothesis: Convergences and possible integration

This article presents the legal theory of finance (LTF) and compares it with the financial instability hypothesis (FIH), identifying points of convergence and divergence. The study aims to contribute to the literature by connecting these theories and provides the following main conclusions. First, the LTF incorporates aspects of the FIH, as the theories share several key elements, particularly the presence of fundamental uncertainty, the constraint of liquidity, and the necessity for governments to act as lenders of last resort. Second, the liquidity concept used in the LTF can be better comprehended with the use of Keynesian and post Keynesian literature on the topic. Third, the LTF aims to advance and update certain aspects of Minsky’s theory, particularly with regard to the globalization of markets, power relations, and the interdependencies of the political economy of finance. The study concludes that the theories are more complementary than divergent and future studies should create an analytical framework that integrates the theories’ most insightful aspects.     

Reassessing the risk conditions for political instability in the light of the Arab Spring

In today’s globalized world, multinational firms contend with a diverse set of risk factors in their worldwide operations. The recent regime changes in northern African countries, also called the Arab Spring, have highlighted that political instability is one of these factors. As researchers and existing indices of political instability largely failed to predict those developments, firms had not incorporated them into their risk calculations and hence incurred losses while having to adapt their operations. This paper examines the conditions that contributed to the recent instability in North Africa using Tunisia and Egypt as case studies. It evaluates the extent to which existing measures of political instability incorporate those conditions. The analysis reveals that the main conditions contributing to the political turmoil can be seen in socio-economic factors, namely inequality, poverty, youth unemployment, a growing youth population, and especially in the case of Egypt an independent military. These findings reveal gaps in current measures of political instability, whose dominant focus is on factors describing violence and changes in the political system while neglecting the influence of a country’s socio-economic environment.     

Revisiting the finance–growth nexus: the Turkish case, 1980–2010

In Turkey, the empirical results on the link between financial development and economic growth are mixed. The existing studies do not take into account the fact that Turkey has experienced endemic political and economic instabilities over extended periods. This study aims to analyse the role of macroeconomic instability and public borrowing on the finance–growth nexus in Turkey by using time series econometric techniques over the 1980–2010 period. In doing so, we attempt to extend the existing literature by taking into account the role of macroeconomic instability as well as public borrowing. Our results reveal that there are additional – albeit indirect – channels between finance and growth via the effects of macro instability and public borrowing on financial development and economic growth. After taking into account the effects of overall instability and public borrowing, we found that growth–financial development relationship is bidirectional and permanent. In other words, in Turkish case, economic growth and financial development are jointly determined. Thus, our results shed some light on the ambiguity of the evidence on the link between financial development and economic growth for Turkey.     

Technology interdependence and entry modes of the Taiwanese technological multinational companies: moderating effects of political instability,technological uncertainty,and Confucian dynamism

This study aims to examine how technology interdependence and three environmental variables, namely political instability, technological uncertainty and Confucian dynamism, in the host country collectively influence Taiwanese technological multinational company’s (MNC) entry mode choice between joint venture (JV) and wholly owned subsidiary (WOS). Grounded on theories of transaction cost economies and organisational design, this study hypothesises a positive technology interdependence–WOS relationship that can be explained by appropriation and coordination concerns. Moreover, the aforementioned relationship can be positively moderated by technological uncertainty while negatively moderated by political instability and Confucian dynamism. These hypotheses were examined and supported using logistic regressions in the analysis of 195 foreign entries undertaken by Taiwanese information and electronic MNCs.