Chin-Hong Puah

Testing the Effectiveness of Monetary Policy in Malaysia Using Alternative Monetary Aggregation

The capability of monetary aggregates to generate stable links with fundamental economic indicators verifies the effectiveness of monetary targeting. However, traditional monetary aggregates become flawed when financial reforms take place. As official monetary aggregates fail to maintain stable links with crucial economic indicators in Malaysia, monetary targeting has been substituted by interest rate targeting. Therefore, Divisia monetary aggregates, which are considered superior to their simple-sum counterparts are used in the investigation for Malaysia. The findings imply that Divisia M2 money demand is stable and capable of generating appropriate coefficients with correct signs for the variables included. Thus, Divisia money has shed new light on the usefulness of monetary targeting in formulating monetary policy in Malaysia.

Testing rational expectations hypothesis in the manufacturing sector in Malaysia

The application of rational expectations hypothesis (REH) in macroeconomic research has marked a revolution in economic thinking, and the magnitude of its impact on the world of economics is undeniably significant. However, the extent to which REH applies in real-world settings is ambiguous even though the concept of REH is well established in economics literature because empirical evidence from previous studies is clearly mixed. This study used survey data on gross revenue and capital expenditures to examine the validity of REH in Malaysian manufacturing business expectations. Empirical results indicated that the manufacturers’ expectations are being irrationally constructed in terms of gross revenue predictions but comply with REH properties in Muths sense in the case of capital expenditures forecasts. Therefore, manufacturing firms in Malaysia are encouraged to incorporate more relevant information into their gross revenue predictions to provide more accurate and realistic forecasting.

Does retrenchment strategy induce family firm's value? A study from Malaysia

This paper investigated the performance of retrenchment strategy of Malaysian family firms. It followed prior research in value of diversification strategy such Lins and Servaes (2002), Fauver et al. (2004), or Lee et al. (2012), but with different strategy perspective which was retrenchment strategy. We also followed Reebs (2003) research on the performance family firms but taking Malaysia as the background of study. In short, we investigated the relationship between retrenchment and performance works in Malaysia family firms. We considered a sample of 443 Malaysia listed family companies between 2004 and 2013. Our background of study was Malaysian market, which was dominated by family firms. We documented the resulting strategy of retrenchment in family-controlled firm, which led to positive effect on financial performance and negative effect on accounting performance.

Forecasting Malaysian Business Cycle Movement

For years, economists have sought to summarize the visual evidence of cyclical oscillation in economic series to learn the characteristics of such cycles in real macroeconomic settings. The existence of various business cycle conceptions indeed shared a single objective, that is, to strengthen insight into the underlying thoughts behind recurring ups and downs in economic activity (Burns & Mitchell, 1946). However, the cyclical fluctuations in economic activity hardly follow a predictable pattern, as the size of expansion and contraction deviate across periods, each turning point in the business cycle presents certain crucial information that contains indications on future changing phases of the economy. Also, development in leading indicator analysis persuasively suggests that combinations of sets of leading series to form a unique composite index is generally better than any single series in explaining the cyclical movement.

Defensive Strategy’s Effect on Firm Value: Evidence from Public-Listed Companies in Malaysia

ABSTRACT This study examines the relationship between defensive strategy and firm value for a sample of 596 listed firms in Malaysia over the period 2008 to 2015. For the sake of robustness, the institutional setting is considered in this research by gauging the ownership structure. More specifically, this study seeks to determine whether a firm’s ownership structure might have a significant contribution to the value of its defensive strategy. Additionally, the value creation of defensive strategy is compared among family firms, government-linked firms, and foreign firms. This study concludes that defensive strategy, especially retrenchment strategy, has a positive significance on a firm’s excess value. This implies that defensive strategy will improve the firm performance. The reduction of the costs and assets, the efficiency of monitoring structure, the threat of dismissal, and the promotion of stewardship can enhance a firm’s benefits. Low profitability is found to be better for the firm performance. However, the ownership structures of government-linked and foreign firms tend to have a discount value on the excess value when these firms adopt retrenchment actions. The implication of this study lies in two main points. Firstly, it enriches the body of knowledge by showing how an effective defensive strategy creates value, and the role corporate governance plays in that relationship. Secondly, it helps to inform regulator and policymakers about how defensive strategy might have a good corporate governance to create value.

Assessing E-Learning System in Higher Education Institutes: Evidence from Structural Equation Modelling.

This study aims to examine university students’ acceptance of e-learning systems in Pakistan. A Web-based learning system is a new form of utilizing technological features. Although, developed countries have initiated and established the concept for e-learning, developing countries require empirical support to implement e-learning.,This paper further explains a conceptual model that is based on the technology acceptance model (TAM). Earlier theories such as the theory of reasoned action (TRA), theory of planned behaviour (TPB) and decomposed theory of planned behaviour (DTPB) have been conducted on user behavioural intention (BI). TAM is considered as the most relevant framework in a Web-based context. To analyse the present study’s hypothesized model, structural equation modelling (SEM) has been used to statistically analyse self-reported sample data from 424 university students.,The results revealed that TAM, with the combination of new constructs, explains university students’ acceptance of the e-learning system reasonably well. Additionally, work life quality (WLQ) and facilitating conditions (FC) have a greater influence on the BI and the actual use (AU) of the e-learning system, respectively.,The study has also provided valuable implications for academics and practitioners for ways to enhance the acceptance of the e-learning system in the higher education of Pakistan.

Does Bank Size and Funding Risk Effect Banks’ Stability? A Lesson from Pakistan

The purpose of this research is to address the two important questions. Does bank size effect bank stability? Does funding risk explain bank stability? For this purpose, we have obtained a balanced panel data from the banking sector of Pakistan. The sample data consist over five Islamic and nineteen conventional banks from 2007 to 2015. The results suggest that bank size has a negative effect on stability under Z-score model, while a positive relationship was found when stability is measured through risk-adjusted return on assets (RAROA) and risk-adjusted equity-to-asset ratio (RAEA). Moreover, funding risk has a positive relationship with bank stability under all three stability models. The results obtained from robustness check analysis confirm the strength of our findings, when inflation, financial development and GDP were used as controlled variables. Additionally, the impact of inflation and GDP on bank stability is negative, while a positive relationship is reported between bank stability and financial development under all three models. Overall, present research is a first attempt to empirically analyse the size–stability and funding risk–stability relationship in the banking sector of Pakistan.

Acceptance of Islamic banking as innovation: a case of Pakistan

This study aims to investigate the factors that determine the customer adoption of Islamic banking in Pakistan.,This paper aims to use a sample of 540 Islamic bank customers located in the biggest city of Pakistan (Karachi). This study is based on the diffusion of innovation (DOI) theory and analyzed the role of five attributes (compatibility, relative advantage, complexity, observability and trialability) along with the consumer awareness about the customer adoption of Islamic banking. Additionally, the present research also considers Islamic banking as a new idea (innovation) in Pakistan under the framework of DOI theoretical assumptions. The exploratory and confirmatory factor analyses are applied to the sample data. The theoretical framework is then tested using structural equation modeling.,The findings of the study revealed that all five attributes of the DOI theory are positively and significantly related to the customer adoption of Islamic banking. The customer awareness also proved its importance in the hypothesized model by representing a positive and significant relationship.,The present study provides a useful guideline for the Islamic bank managers and the academicians to better understand the customer adoption of Islamic banking.

Islamic home financing in Pakistan: a SEM-based approach using modified TPB model

Abstract The present study attempts to examine the Islamic home financing using the modified theory of planned behavior model (TPB). Sample data of 375 are conveniently drawn from walk-in customers of Islamic banks located in the biggest city Karachi. This study employed both exploratory factor analysis and confirmatory factor analysis to confirm the validity and reliability of the measurement model. The modified theoretical framework was examined by applying the structural equation modeling using frequently reported goodness-of-fit indices. The findings indicate that the original constructs of TPB model, attitude (ATT), subjective norm (SN) and perceived behavioral control has a positive and significant impact on the customer intention to use Islamic home financing. Furthermore, ATT is found to be the most influential factor in determining the customer intention toward Islamic home financing. On the other hand, we introduced two new factors, pricing on home financing (PHF) and religious belief (RB), which proved their presence in the TPB model by showing a significant impact on the customer intention to use the facility of home financing. In addition, PHF has a negative impact while religious belief has a positive relationship with the customer intention to use Islamic home financing in Pakistan. This study also suggests that the standard TPB model is successfully modified by introducing PHF and RB factors. Therefore, Islamic bank managers should consider this study to promote the Islamic home financing facility in Pakistan.

Are business forecasts of the construction sector rational? Survey-based evidence from Malaysia

Abstract This paper extends the direct measure to business expectations in assessing the doctrine of forecast rationality in the contemporary environment of Malaysia’s construction sector. The survey’s expectational series on business operational forecasts across the period 1990 to 2010 is inconsistent with Muth’s concept of rational expectations. Although strict rationality failed to be evidenced, weakly rational conduct can be observed in capital expenditure forecasts. Nevertheless, both operational variables in question are optimistically biased upward and neither of them can accurately reflect the true market perception. This evidence casts doubt on the usefulness of the investigated survey series in providing a realistic panorama of the construction sector in the near future. Notwithstanding, the irrational upshot may drop a hint to the reader on the root of alarming property overhang and price hikes in construction-related markets since expectations play a foremost role in providing equilibrium in the supply and demand in this growth-initiating market.