Jarita Duasa

Determinants of Malaysian Trade Balance: An ARDL Bound Testing Approach

Abstractn This paper examines the short- and long-run relationships between trade balance, real exchange rates, income and money supply in the case of Malaysia. The inclusion of income and money variables in the study is purposely to examine the monetary and absorption approaches to the balance of payments beside the conventional approach of elasticity, using exchange rates. Using the bound testing approach to cointegration and error correction models, developed within an autoregressive distributed lag (ARDL) framework, we investigate whether a long-run equilibrium relationship exists between trade balance and the determinants. Additionally, we adopt an innovation accounting by simulating variance decompositions (VDC) and impulse response functions (IRF) for further inferences. Using this approach, we find evidence of a long-run relationship between trade balance and income and money supply variables but not between trade balance and real exchange rate. The findings also suggest that Marshall–Lerner condition does not hold in the long-run for Malaysia and for policy wise the Malaysian trade balance/balance of payments should be viewed from absorption and monetary approaches.

The relationship between capital structure and performance of Islamic banks

Purpose – This paper aims to examine the effect of capital structure on Islamic banks’ (IBs) performance to provide guidance to finance managers for raising capital funds. As newcomers to the markets, IBs are facing a trade-off. They can either use high capital ratios which increase the soundness and safety of the bank and lower the required return by investors, or depend on deposits and Islamic bonds which are considered cheaper sources of funds due to their tax rebate. An IB’s management must carefully decide the appropriate mix of debt and equity, i.e. capital structure, to maximize the value of the bank. Design/methodology/approach – Using a sample of 85 IBs covering banking systems in 19 countries, the study uses a two-stage least squares method to examine the performance determinants of IBs to control the reverse causality from performance to capital structure. Findings – After control of the macroeconomic environment, financial market structure and taxation, results indicate that IBs’ performance (...

Consumer purchase intention towards environmentally friendly vehicles: an empirical investigation in Kuala Lumpur, Malaysia

This paper examines whether attitudes towards electric vehicles (ATEVs), subjective norms (SNs) and perceived behavioural control (PBC) have significant associations with consumer purchase intention (PI) and the purchase behaviour of environmentally friendly vehicles (EFVs). The results from the survey questionnaires are analysed using confirmatory factor analysis (CFA) and structural equation modelling (SEM). The findings of this paper indicate that ATEV, SN and PBC significantly influence PI. This finding also indicates that environmental consequence and individual preferences do not influence the PI of the respondents. We found that Malaysian car owners are largely unaware of the greenhouse effects on the environment or attach to it little importance, which is reflected in their PI towards EFVs. The outcomes of this study could help policymakers design programmes to influence attitudes, subjective norms, perceived behavioural control and purchase behaviour to prevent further air pollution and reduce CO2 emissions from the transportation sector.

How individual values and attitude influence consumers’ purchase intention of electric vehicles—some insights from Kuala Lumpur, Malaysia

This article observes how the individual values and attitudes of consumers in Kuala Lumpur, Malaysia influence their purchase intention of electric vehicles (EVs) using the well-known theory of reasoned action (TRA). This study analyzed the data collected from 200 respondents from Kuala Lumpur, Malaysia. These respondents were asked about their views concerning their value sets, attitudes and purchase intention of EV using the structural equation modelling (SEM) technique. Findings of this study indicate that individual consequences relating to cost and convenience of consumers is negatively related to intention to purchase EVs. Environmental consequences are not a significant predictor of purchase intention. Conservation value was found to be positively related to the attitude of the respondents on environmental consequences but less intensely with individual consequences, while both self-transcendence value and self-enhancement value were positively related to individual consequences. Individual consequences and self-enhancement values were negatively related to environmentally responsible purchase intention. This article shows that the extended TRA might be applicable to the Malaysian context. The results of the study also suggest that domestic and foreign manufacturers of EVs should also take into consideration the perceptible easiness and convenience of users to recycle and reuse battery by using special materials that are recyclable and not harmful to the users.

Water Pollution Challenges and Future Direction for Water Resource Management Policies in Malaysia

Water pollution is a major problem in the global environment. This necessitates continuing assessment and review of water resource policy at all levels. The main objectives of this article are to investigate major sources of water pollution, water resource policies and challenges to improve water quality in Malaysia. The findings indicate that the major problem associated with water pollution is that human heart and kidneys can be adversely affected if polluted water is consumed regularly. Other health problems associated with polluted water are poor blood circulation, skin lesions, vomiting, cholera, gastroenteritis and damage to the nervous system. It also highlighted that residential, agricultural and industrial wastes are three main sources of river pollution in Malaysia. This article also identified several challenges fronting as rural water supply and sanitation, recreational water and safe drinking water in Malaysia. Finally, we discuss the water resource policies in Malaysia and provide some recommendations that will be helpful for policymakers to improve river water quality, particularly in Malaysia.

Capital controls re-examined: the case for ‘smart’ controls

The global financial crisis which began in east Asia in 1997 is not over, neither is the inquest into its implications for adjustment policy. In the wake of this crisis, we focus here on the role of capital controls, which formed a much publicised part of the crisis-coping strategy in one country (Malaysia) and, less openly, were also deployed by other crisis-afflicted countries. Evaluation so far has examined different target variables with different estimation methods, generally concentrating on efficiency and stability indicators and ignoring equity measures; it has also typically treated `control´ as a one-zero dummy variable, ignoring the `quality´ of intervention and in particular the extent to which efficiency gains are obtained in exchange for controls. Partly because of these limitations, the literature has reached no consensus on the impact of controls, nor therefore about where they fit within the set of post-crisis defence mechanisms. We propose an approach in which the government plays off short-term political security against long-term economic gain; the more insecure its political footing, the greater the weight it gives to political survival, which is likely to increase the probability of controls being imposed. The modelling of this approach generates a governmental `policy reaction function´ and an impact function for controls, which are estimated by simultaneous panel-data methods across a sample of thirty developing and transitional countries between 1980-2003, using, for the period since 1996, the `new´ IMF dataset which differentiates between controls by type. We find that controls appear to cause increases in income equality, and are significantly associated with political insecurity and relatively low levels of openness to trade. They do not, in our analysis, materially influence the level of whole-economy productivity or GDP across the sample of countries examined, although they do influence productivity in particular sectors, in particular manufacturing. But the dispersion around this central finding is wide: the tendency for controls to depress productivity by encouraging rent-seeking sometimes is, and sometimes is not, counteracted by purposive government policy actions to maintain competitiveness. Whether or not this happens – whether, as we put it, controls are `smart´, and the manner in which they are smartened - is vital, on both efficiency and equity grounds. We devise a formula for, and make the case for capital controls which are time-limited, and contain an inbuilt incentive to increased productivity, as a means of improving the sustainability and equity of the adjustment process whilst keeping to a minimum the cost in terms of productive efficiency.

Developing cash waqf model as an alternative source of financing for micro enterprises in Malaysia

Purpose n n n n nThis paper aims to attempt to offer a viable alternative model of source of financing which is known as integrated cash waqf micro enterprises investment (ICWME-I) model for micro enterprises in Malaysia. n n n n nDesign/methodology/approach n n n n nThe literature on the issues of accessing to finance faced by micro enterprises and cash waqf are reviewed critically and used in the attempt of proposing an alternative model. n n n n nFindings n n n n nThe paper has developed ICWME-I model as a source of financing for micro enterprises. This model is expected to provide financial services by using cash waqf fund and involved the participatory contract between non-profit organization and micro enterprises. In addition, with the proposed model, there will be no collateral requirement, interest rate and other stringent requirements which usually imposed by existing conventional financial institutions. n n n n nResearch limitations/implications n n n n nThe paper is based on conceptual explorations of literature in the area of micro enterprises and cash waqf. This is a conceptual paper, so it did not use any empirical analysis. n n n n nPractical implications n n n n nThe findings of this paper will provide micro enterprises with an alternative source of financing to start-up or expand their business by using cash waqf fund. The present study also has implications for government and policy makers. With the involvement of non-profit organization that is proposed in this model, it helps the government to reduce its expenses for the development of micro enterprises. n n n n nOriginality/value n n n n nThis paper offers an additional literature on cash waqf especially from the Malaysian context. Furthermore, this paper adds to the literature on waqf and cash waqf. The paper proposes a viable alternative model for micro enterprises as a source of financing by using cash waqf fund. This model incorporates Musharakah Mutanaqisah (diminishing partnership) as a financial arrangement between non-profit organization and micro enterprises.

Modeling environmental performance and economic development

The paper attempts to explore the contribution of neconomic development, population size or population density as nwell as the landlocked characteristic of the countries on the nenvironmental performance using cross-sectional data of ncountries in the world listed by the United Nation (UN). The nmethods adopted in the present study are Ordinary Least nSquare (OLS) method and Generalized Method of Moments n(GMM). Overall, using Environmental Performance Indicator n(EPI) 2010 as a measurement of the effectiveness of national nenvironmental protection effort, the present study finds that neconomic development/performance positively contributes to nthe countries’ environmental performance. On the other hand, npopulation size gives negative impact on the environmental nperformance of the countries.

Malaysia's palm oil exports: Does exchange rate overvaluation and undervaluation matter?

This paper examines the impact of exchange rate risk on the exports of palm oil in the era of recurring financial crises and global economic instability. The exchange rate risk is captured by misalignments in the real bilateral US/RM exchange rate.xa0 This paper is divided into two parts. First, the incidence of exchange rate misalignment is observed using price-based approach (purchasing power parity) and model-based approach [behavioural equilibrium exchange rate (BEER)]. Next, the estimated exchange rate misalignment is used as a variable in the export model to capture the impact of risks. The long run estimates suggest that exchange rate misalignments affect palm oil exports in a negative manner. Then, the estimated misalignments are segregated into events of overvaluation and undervaluation to further comprehend their individual impact.xa0 Results suggest that in the long run, overvaluation has a significant negative impact on palm oil exports. The opposite however, could not be construed in the case of undervaluation which indicates asymmetries in the impact of overvaluation and undervaluation of the exchange rate on palm oil exports. Hence, it is imperative that policy-makers avoid both overvaluation and undervaluation and keep the real exchange rate in line with the economic fundamentals. n n xa0 n n Keywords:xa0 Exchange rate misalignment, overvaluation, undervaluation, palm oil exports.

Public Environmental Awareness and Performance in Kuala Lumpur City, Malaysia A Case Study on Household Electrical and Electronic Equipment

The aim of this article is to estimate the perception, knowledge and attitude of the respondents towards electrical and electronic equipment waste (e-waste) management. It also tried to identify current e-waste management practiced by households in Kuala Lumpur. In order to ensure a higher response rate, face-to-face survey was employed. In this study, it has been found that 69 per cent of the respondents were satisfied with Kuala Lumpur’s environmental quality, while 31 per cent were not satisfied. More than one third of the respondents informed that they send their electric and electronic equipment (EEE) to charity or transfer the EEE to relatives if they cannot repair them. Only a small fraction of the used EEE finds its way to recycling facilities and manufacturer as there is no efficient take back scheme for consumers. It has also been found in this study that more than 81 per cent of the respondents are unenthusiastic to pay for the recycling of their e-waste. It is interesting to find that much of the EEE was updated within two thirds of their designed lifetime.