Catherine S. F. Ho

International comparison of Shari’ah compliance screening standards

Purpose - – This paper aims to review the Shari’ah investment screening methodologies of 34 prominent global Islamic finance users, including index providers, Shari’ah service providers, Islamic banks, a regulator, an association body and fund managers. Design/methodology/approach - – A comparative analysis is performed to highlight the variances of the Shari’ah-compliant methods and principles practiced by these renowned institutions with the latest compiled data. Findings - – The two sets of business screens and financial screens are profiled separately to clearly examine the similarities and differences between the different methodologies. Some of these practitioners are more specific in their listing of Shari’ah-impermissible activities, while some are more general in allowing more businesses to be included as permissible. The majority of these users practice a two-tier method of screening: qualitative and quantitative. Under quantitative screen, the range of allowable threshold ratios on non-permissible criteria differs slightly between them. Research limitations/implications - – With the wide divergence in screening methodologies applied by practitioners, there is a general consensus in the acceptance of compliant assets from various countries and practice. Standardization is, therefore, seen as a need not only to make understanding of Shari’ah investments clear to investors but also to discourage misunderstandings between scholars and investors. Practical implications - – The suggestion, therefore, is to set globally acceptable universal Shari’ah standard methodologies which are applicable by the world Islamic financial market. These standards which are relevant and logical to global ethical investing would further stimulate investments in Islamic finance. Social implications - – With Shari’ah-compliant asset growing exponentially relative to the world’s financial assets, it is alleged that greater harmonization of the global screening methods would prevent misunderstanding and provide a clearer insight on Shari’ah investing, which could further accelerate growth of the Islamic finance sector worldwide. Originality/value - – To provide a more transparent regulatory environment and build local and regional regulatory framework through establishment of standards, there should be more consistency with minimum barriers that prevent the industry from achieving its full potential. The paper also contributes to existing literature by documenting and analyzing the qualitative and quantitative screening procedures as practiced by a comprehensive set of global Islamic finance users. It is, therefore, important to share this knowledge as an effort toward greater understanding and harmonization of the practices at the global level to accelerate growth in the industry.

Sticky prices and time to equilibrium: evidence from Asia-Pacific trade-related economies

The theoretical relation between exchange rate and prices has been a difficult proposition to find supporting evidence despite many studies of developed economies using standard research methods. The exchange rate to price relation appears to hold in the long run only, a result consistent with sticky price hypothesis. There is a need to add to this sticky price literature by examining more yet-studied economies to this area of research. This article presents results to support long-run equilibrium in the Asia-Pacific economies as being 5 years. The methodology is used to group countries with high-trade intensity within a region and value-weight the resulting variables to test the theory in a regional context. Our positive finding on the long-run equilibrium, we believe, helps in some ways to enrich the literature on the exchange rate behaviour of an important region for world trade.

An Examination of FDI in China, Singapore, and Malaysia

This study analyzes the influence of macroeconomic factors and country-specific factors on foreign direct investment of three countries: China, Singapore, and Malaysia. The macroeconomic factors included are the inflation rate, interest rate, gross domestic product, trade openness, debt, exchange rate, domestic money, and unemployment. The country-specific factors are labor quality, infrastructure, financial resources, stock market performance, environment, natural resources, and political risk. The study applies unit root tests and regression analysis to ascertain the significance of the macroeconomic and country-specific factors on foreign direct investment of each country. All the macroeconomic factors and country-specific factors are transformed to ensure that there will be no unit root problem. The period of study for each country is from 1980 to 2011. The regression analysis is employed based on the ordinary least square (OLS) method. The study found that unemployment, infrastructure, financial resources, and the stock market performance influence the inflow of FDI.

Preliminary Investigation on the Determinants of Household Debt Burden

The study of household debt burden is important because households are an essential element of each social and economic system. This means that any debt-service problems that they encounter will portray a negative influence on the whole economy in the long run. Further, household debt is currently becoming a very crucial social and economic problem for both highly developed countries and emerging markets (including ASEAN). This paper attempts to conduct a preliminary investigation on the determinants of household debt burden by looking first at the trend of household debt in some advanced economies and emerging ASEAN countries. It will also review some macroeconomic factors inherent in household debt burden, namely, interest rate, inflation rate, housing price index, unemployment rate, and aggregate consumer consumption. Accordingly, the aim of this paper is to produce a conceptual framework and discuss the methodology process involved. It is hoped that the evidences laid out from previous literatures on the importance of solving the household debt burden issue, in some way, have caused the curiosity for further investigation in determining, uncovering, and validating the determinant factors that may affect household debt burden in the selected countries under this study.

Evaluating the Determinants of International Trade Competitiveness of Emerging ASEAN5 4 Countries

This paper investigates significant factors that improve international trade competitiveness of ASEAN5+4 countries. Due to worldwide liberalization and globalization policies which promote borderless flow of capital and goods, international trade is vital to the development of emerging nations in attracting investments and facilitating expansion. Results from this study uncover that exchange rate and economic growth play very significant role in improving trade competiveness and escalating cross-border trade. Inflation rate significantly affects India and the Philippines, while stock market only marginally affects trade of India and Singapore. Additionally, growth in population affects developed nations negatively as in Japan and Singapore but positively on the Philippines. This study provides policy propositions to developed and developing nations in the region on strategies to improve competitiveness, expand international trade and further enhance economic growth.

International trade competitiveness of emerging ASEAN5+4 countries

This paper investigates significant factors that improve international trade competitiveness of ASEAN5+4 countries. Due to worldwide liberalization and globalization policies which promote borderless flow of capital and goods, international trade is vital to the development of emerging nations in attracting investments and facilitating expansion. Results from this study uncover that exchange rate and economic growth play very significant role in improving trade competiveness and escalating cross-border trade. Inflation rate significantly affects India and the Philippines, while stock market only marginally affects trade of India and Singapore. Additionally, growth in population affects developed nations negatively as in Japan and Singapore but positively on the Philippines. This study provides policy propositions to developed and developing nations in the region on strategies to improve competitiveness, expand international trade and further enhance economic growth.

Exchange rate, macroeconomic fundamentals and international trade

This paper aims to investigate significant relation between exchange rates, macroeconomic fundamentals and international trade of a group of Asian countries from 1980 to 2009. International trade is imperative to the progress of developing countries to induce investments and earn foreign exchange in this liberalized and globalized borderless world. Regression analyses reveal that market size and exchange rate play very important function in the promotion of international trade. Growth in population has significant negative effects on developed nations: Japan and Singapore, but has positive effects on the Philippines. Additionally, inflation rate affects the Philippines and India negatively, while financial market development is only marginally significant on total trade of Singapore and India. Results from the study present policy implications to emerging and developed Asian countries on strategies to facilitate international trade and enhance growth.

The effects of engaging financial advisers in mergers and acquisitions (M&As)

This study attempts to investigate the significance of financial advisers in M&As. Specifically the complexity of the deals and the performance of advisers are examined. The results show that the third tier advisers were more likely to complete the deals compared to the first and the second tier advisers. In term of speed of completion, both the first and the second tier advisers did not outperform the third tier advisers. It is also found that different tiers of financial advisers were not significant in determining the wealth effect.

Factors analysis of domestic risk characteristics for MNCs

This research investigates the significant domestic risks characteristics taken into consideration by multinational corporations (MNCs) when making investment decisions across countries. These risk characteristics are factor analyzed to reveal their importance in the decision making process of foreign expansion and investment. A set of methodologies were applied with reliability and validity tests, as well as factor analysis in analyzing the results. Novel data from MNCs assent that key risk characteristics vital to foreign direct investment (FDI) decisions can be factored into eight risk groups namely: facilities and location, market, political, technical, legal, financial, human resource and cultural risks. Results provided important information in attracting value-added investments for emerging countries.