Browsing by Subject "Aasia"

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  • Lainela, Seija; Ollus, Simon-Erik; Rautava, Jouko; Simola, Heli; Sutela, Pekka; Tekoniemi, Merja (2007)
    BOFIT Online 7/2007
  • Mehrotra, Aaron (2013)
    BOFIT Discussion Papers 1/2013
    We document recent developments in the use of sterilisation bonds by six central banks in emerging Asia, and discuss the implications for monetary policy and the financial sector. An important development in the sterilisation of foreign exchange interventions in past years has been the frequent use of central banks' own paper. There has been an attempt to lengthen the maturity structure of sterilisation bills, and maturities have risen, especially in 2010-11. The choice of sterilisation instrument is likely to depend partly on their relative costs. In particular, as the yield on central bank securities has fallen relative to the rate of remuneration of required reserves, some central banks in Asia have increasingly used central bank securities for sterilisation. Keywords: sterilisation bond, central bank bonds and bills, foreign exchange reserves, emerging Asia JEL classification: E43, E50, E52, E58
  • Distinguin, Isabelle; Hasan, Iftekhar; Tarazi, Amine (2012)
    Bank of Finland Research Discussion Papers 15/2012
    Published in Annals of Finance, Volume 9, Issue 3, August 2013, pp 471-500
    We aim to assess how accurately accounting and stock market indicators predict rating changes for Asian banks. We conduct a stepwise process to determine the optimal set of early indicators by tracing upgrades and downgrades from rating agencies, as well as other relevant factors. Our results indicate that both accounting and market indicators are useful leading indicators but are more effective in predicting upgrades than downgrades, especially for large banks. Moreover, early indicators are only significant in predicting rating changes for banks that are more focused on traditional banking activities such as deposit and loan activities. Finally, a higher reliance of banks on subordinated debt is associated with better accuracy of early indicators. Keywords: Bank Failure, Bank Risk, Ratings, Emerging Market JEL classification: G21, G28
  • Filardo, Andrew J.; Siklos, Pierre L. (2013)
    BOFIT Discussion Papers 5/2013
    Published in Emerging Markets Finance and Trade, Volume 52, Issue 2, 2016: 364-381.
    This paper examines past evidence of prolonged periods of reserve accumulation in Asian emerging market economies and the direct and indirect implications for monetary stability through the potential impact of such episodes on financial stability. The empirical research focuses on identifying periods of prolonged interventions and correlations with key macro-financial aggregates. Related changes in central bank balance sheets are also examined, especially in periods when the interventions are linked to strong capital inflows. In particular, we consider whether changes in the central bank's balance sheet from prolonged intervention lead to spillovers to the balance sheet of the private sector. We explore the possible forms of the spillovers and the consequences on asset prices (e.g., housing prices, equity prices, the growth in domestic credit). Policy implications are drawn. Finally, we propose a new indicator of reserves adequacy and excessive foreign exchange reserves accumulation based on a factor model. Two broad conclusions emerge from the stylized facts and the econometric evidence. First, the best protection against costly reserves accumulation is a more flexible exchange rate. Second, the necessity to accumulate reserves as a bulwark against goods price inflation is misplaced. Instead, there is a strong link between asset price movements and the likelihood of accumulating foreign exchange reserves that are costly. Keywords: foreign exchange reserves accumulation, monetary and financial stability JEL Classification system: F41, F32, E44, D52
  • Rautava, Jouko (2008)
    Bofit. Focus/Opinion. Expert view 2/2008
  • Herrmann, Sabine; Mihaljek, Dubravko (2011)
    BOFIT Discussion Papers 3/2011
    Published in Economics of Transition, Volume 21, Issue 3, July 2013, Pages 479-508.
    This paper studies the nature of spillover effects in bank lending flows from advanced to the emerging market economies and identifies specific channels through which such effects occur. We examine a panel data set of cross-border bank flows from 17 advanced to 28 emerging market economies in Asia, Latin America and central and eastern Europe from 1993 to 2008. Our empirical framework is based on a gravity model of financial flows. We augment this model with global, lender and borrower country risk factors, as well as financial and monetary integration variables. The empirical analysis suggests that global as well as country specific factors are significant determinants of cross-border bank flows. Greater global risk aversion and expected financial market volatility have been the most important factors behind the decrease in cross-border bank flows during the crisis of 2007 08. The decrease in cross-border loans to central and eastern Europe was more limited compared to Asia and Latin America, in large measure because of the higher degree of financial and monetary integration in Europe, and relatively sound banking systems in the region. These results are robust to various specification, sub-samples and econometric methodologies
  • Chen, Hongyi; Funke, Michael; Tsang, Andrew (2016)
    BOFIT Discussion Papers 11/2016
    ​Persistent producer price deflation in China and other Asian economies has become a genuine concern for policymakers. In June 2016, China’s producer prices were down 12.7 percent from their peak in 2011, following a 52-month stretch of consecutive negative producer price readings (March 2012 to June 2016). Given problems with overcapacity and heavy corporate debt burdens, the incessant decline in producer prices has eroded corporate profitability, dampened fixed in-vestment and depressed growth overall. This paper analyzes the determinants of producer price declines across eleven Asian economies, finding that the recent synchronous and protracted pro-ducer price deflation has been driven by weak production growth, low commodity prices, spill-over effects from China, and, to a lesser extent, exchange rate pass-through. With China at the heart of the region’s producer price deflation challenge, we consider the structural adjustments needed in China to cope with the decline and head off deflationary threats.
  • Kozluk, Tomasz; Mehrotra, Aaron (2008)
    BOFIT Discussion Papers 5/2008
    Published in Economics of Transition, Vol. 17, Issue 1, 2009, pp. 121-145
    We study the effects of Chinese monetary policy shocks on China s major trading partners in East Asia by estimating structural vector autoregressive (SVAR) models for six economies in the region. We find that a monetary expansion in Mainland China leads to an increase in real GDP (temporary) and the price level (permanent) in a number of economies in our sample, most notably in Hong Kong and the Philippines. The impact could result from intertemporal substitution present in a general equilibrium framework which allows for positive domestic impacts of foreign monetary expansions. Our results emphasize the growing importance of China for its neighboring economies and the significance of Chinese shocks for the design of monetary policy in Asian economies. Keywords: monetary policy shocks, Asian production chain, SVAR, East Asia, China, JEL: E52, F42
  • Fidrmuc, Jarko; Korhonen, Iikka (2009)
    BOFIT Discussion Papers 11/2009
    Published in Journal of Asian Economics, Volume 21, Issue 3, June 2010, Pages 293-303
    We analyze the transmission of global financial crisis to business cycles in China and India. The pattern of business cycles in emerging Asian economies generally displays a low degree of synchronization with the OECD countries, which is consistent with the decoupling hypothesis. By contrast, however, the current financial crisis has had a significant effect on economic developments in emerging Asian economies. Applying dynamic correlations, we find wide differences for different frequencies of cyclical development. More specifically, at business cycle frequencies, dynamic correlations are typically low or negative, but they are also influenced most by the global financial crisis. Finally, we find a significant link between trade ties and dynamic correlations of GDP growth rates in emerging Asian countries and OECD countries.
  • Rautava, Jouko (2008)
    Bofit. Focus/Opinion. Asiantuntijan näkemys 2/2008
    Vladimir Putinin esittämien linjausten mukaan Venäjän pitäisi olla vuonna 2020 maailman viidenneksi suurin talous, ilmeisesti Yhdysvaltain, Kiinan, Japanin ja Intian jälkeen. Näin se olisi Euroopan suurin yksittäinen kansantalous. Maan pitäisi samalla muuttua myös "parhaaksi paikaksi ihmisen elää". Äskeisessä linjapuheessaan Dmitri Medvedev esitti neljä i-kirjaimella alkavaa avainta tähän valoisaan tulevaisuuteen: instituutiot, innovaatiot, infrastruktuuri ja investoinnit. Puhe on saanut kovin myönteisen vastaanoton sekä näiden iskulauseiden että yleisen lain kunnioittamista ja liberaaleja sääntöjä painottavan sisältönsä takia. Asia ei ole aivan näin yksinkertainen, edes periaatteellisella tasolla. Nykyaikaisen taloudellisen kasvun teorian lähtökohdat auttavat sen havaitsemisessa.
  • Lainela, Seija; Ollus, Simon-Erik; Rautava, Jouko; Simola, Heli; Sutela, Pekka; Tekoniemi, Merja (2007)
    BOFIT Online 6/2007
    Tiivistelmä 3 Luonnonvarat kirous vai siunaus? 4 Simon-Erik Ollus Talouskasvu alueiden näkökulmasta 12 Merja Tekoniemi Finanssipolitiikan haasteet 20 Seija Lainela Hyötyykö Suomi Venäjästä? 27 Heli Simola Venäjä Aasian ja Euroopan välissä 34 Jouko Rautava Talouskasvun uudet ehdot 40 Pekka Sutela
  • Dean, Judith; Fung, K. C.; Wang, Zhi (2009)
    BOFIT Online 5/2009
    In this decade, China's foreign trade has increased rapidly and the share of high-technology goods in China's exports has become outstanding. These developments are partly related to processing trade that reflects the global production fragmentation. This paper discusses the role of processing trade in China by using a concept of vertical specialization (VS). The paper explains approaches to estimate vertical specialization and evaluates the findings of recent research in this field. It seems evident that processing trade has played a major role behind the fast growth of Chinese exports and the increase of high-tech goods in its exports. Moreover, recent research seems to imply that China's and much of Asia's exports are still heavily dependent on American and European consumers and, consequently, exports are not de-coupled from the final demands in the United States or Europe. Key words: China, vertical specialization, foreign trade, processing imports
  • Colavecchio, Roberta; Funke, Michael (2007)
    BOFIT Discussion Papers 17/2007
    Published in Journal of Asian Economics, Vol. 20, No. 2, March 2009 as "Volatility dependence across Asia-Pacific onshore and offshore currency forwards markets"
    This paper estimates switching autoregressive conditional heteroscedasticity (SWARCH) time series models for weekly returns of nine Asian forward exchange rates. We find two regimes with different volatility levels, whereby each regime displays considerable persistence. Our analysis provides evidence that the knock-on effects from China's U.S. dollar future rates upon other Asian countries have been modest, in that little evidence exists for co-dependence of volatility regimes. Keywords: China, renminbi, Asia, forward exchange rates, non-deliverable forward market, SWARCH models JEL-Classification: C22, F31, F36
  • Colavecchio, Roberta; Funke, Michael (2006)
    BOFIT Discussion Papers 16/2006
    Published in China Economic Review 19 (2008) 635-648
    This paper uses multivariate GARCH techniques to study volatility spillovers between the Chinese non-deliverable forward market and seven of its Asia-Pacific counterparts over the period January 1998 to March 2005.To account for the time-variability of conditional correlation, a dynamic correlation structure is included in the volatility model specification.The empirical results demonstrate that the renminbi non-deliverable forward (NDF) has been a driver of various Asian currency markets but that such co-movements exhibit a substantial degree of heterogeneity.As to the determinants of the magnitude of these comovements, we test the relevance of potential factors and find that it is the degree of real and financial integration, in particular, that exerts the largest influence on volatility transmission. Keywords: China, renminbi, Asia, forward exchange rates, non-deliverable forward market, multivariate GARCH models JEL-Classification: C22, F31, F36
  • Melolinna, Marko (2014)
    BOFIT Discussion Papers 18/2014
    This paper studies the effects of demand shocks caused by Emerging Asian (EMA) countries on oil prices over the past two decades, using vector autoregression models. The analysis builds on previous work done on identifying different types of oil shocks using structural time series methods. However, uniquely, this paper introduces a commodity demand indicator for EMA economies that is based on data independent of oil production and consumption data, thus properly accounting for oil demand pressures stemming from macroeconomic conditions in the EMA economies and the rest of the world. The analysis strongly suggests that EMA demand shocks have had a persistent and statistically significant effect on the level and variation of global oil prices over the past two decades. This result differs from some of the previous literature and hence proves that the choice of oil demand indicator in an oil-market VAR makes a material difference for the results. Furthermore, tentative evidence suggests that the effect of EMA demand is mainly driven by demand dynamics in China. The results of the benchmark model are robust to different sample periods and to variations in the definition of the oil demand indicators, as well as to an alternative identification strategy based on sign restrictions. Publication keywords: macroeconomic shocks, oil markets, sign restrictions, vector autoregression
  • Weill, Laurent; Godlewski, Christophe (2012)
    BOFIT Discussion Papers 7/2012
    Published in Comparative Economic Studies (2014) 56, 132–153 as Why do large firms opt for Islamic loans?
    This paper examines motivations for large firms to choose an Islamic loan over a conventional loan. This investigation helps understanding the causes of the expansion of Islamic finance activities. We employ a dataset of Islamic and conventional syndicated loans from countries from the Middle East and from Southeast Asia for the period 2001-2009, testing determinants for the choice of an Islamic loan at the facility, firm, and country level. We find that loan characteristics do not influence the choice of an Islamic loan, suggesting that borrowers asking for an Islamic loan are not rationed in terms of maturity and amount. The quality of the borrower does not lead to influence the choice of an Islamic loan, meaning that Islamic loans are not associated with a different default risk than conventional loans. We identify three country-level determinants as potential driving forces expanding the preference for Islamic loans. The strongest determinant is religiosity, i.e. the share of Muslim population in a country, but the quality of institutions and level of financial development also play substantial roles.
  • Nordman, Tom (1998)
    IDÄNTALOUKSIEN KATSAUKSIA. REVIEW OF ECONOMIES IN TRANSITION 5/1998
    The Asian financial crisis has engulfed most of the region's countries, with the notable exception of China, which has maintained a stable dollar exchange rate.However, China's situation is being widely discussed, some commentators claim that China will eventually be forced to devalue while others maintain that China neither needs to nor would gain from a devaluation. China, not yet a fully open economy, has the means and resources to withstand pressures against its currency.Reserves remain comfortable and the trade surplus is even growing as China's exports to the United States and Europe continue to grow at a healthy pace although exports to other Asian countries have slumped.Domestic economic activity is recovering from a slowdown as public expenditure is rising.However, rapid reform of China's state-owned industries and bad-debt ridden state-owned commercial banks may be endangered if foreign direct investment fails to pick up the slack in the labour market as stateowned industries and government ministries shed millions of workers.Chinese authorities might be tempted to ease the pressure through a devaluation of the renminbi.However, China's exports have an import content of 50 percent, so a small devaluation would make little difference, and a large devaluation would probably trigger a new round of competitive devaluations among the region's countries, in the end leaving everyone worse off than before.For the time being China is therefore best served by maintaining a stable exchange rate, but in the longer term China may have to reconsider the wisdom of its peg to the US dollar. Keywords: China, Asian crisis, devaluation, exports, trade surplus, exchange reserves, renminbi, reform
  • Solanko, Laura (2020)
    Bank of Finland Bulletin. Blog
    Over the past decade, one of Russia’s key policy objectives has been the ’pivot to the East’, that is, a shift in policy emphasis to the East, to Asia. This policy reorientation gained added urgency after 2014 as relations with many Western countries deteriorated. From Russia’s standpoint, the pivot to Asia has made sense both economically and politically.