Review of Pacific Basin Financial Markets and Policies

The Chinese government established the Act on Commercial Banks 1995 to enforce and regulate commercial banking activities. The government envisaged that the Act, together with other bank reforms, would improve credit risk management practice among commercial banks, hence, prompting the banks to reduce and ultimately stop local government directed policy lending to state-owned enterprises (SOEs). This paper examines the lending behavior of a government-controlled commercial bank before and after the passage of the Act. We find that the bank tightened control of the credit risk of borrowers after the passage of the Act. We also find that SOEs are charged a rate of interest higher than that charged to private firms.

This study investigates the perception of factors that are likely to influence the Internet information relevance of financial institutions. The media richness theory and stakeholder theory point out that the extent of information and stakeholder communication will influence the utilization of online information, while not many of these discussions are associated with financial institutions. This study integrates seven information categories into three constructs: sufficiency, stakeholder communication and external supervision, using a structural equation model to examine whether the three constructs relate to information utilization. The results show that stakeholder communication and external oversight are significantly related to the user's intention to utilize online information of financial institutions, while information sufficiency is not. These findings correspond to stakeholder theory as well as international guidelines that emphasize external oversight of financial institutions.

While there is a strong research tradition in exploring attitudes to and behavior in relation to retirement planning in Western countries, (e.g., Grable and Lytton, 1997; Jacobs-Lawson and Hershey, 2005) there is less research in Asian societies. Not only are we unaware of whether demographic factors, such as marital status, income level, level of education and gender, have a different impact in Asian countries, we also do not know the impact of Asian cultural values on retirement planning. Using a sample of 613 working Singaporean Chinese between the ages of 20 and 59 we establish that Chinese cultural heritage such as the belief in luck, destiny and the belief that children will support their elderly parents are not important. However, feng shui is statistically significant in this study.

In this paper, we study the relation between order imbalances (buyer versus seller-initiated trades measured by a buy ratio) at an early trading hour and intraday price discovery in the Chinese stock markets. We find that the volatility of order imbalances is the highest around the open. There is strong evidence that order imbalances in the early trading hours have significant predictive power to intraday price discovery. The intraday returns of the high buy-ratio quintiles are significantly higher than those of the low buy-ratio ones. The evidence indicates that the information incorporated in early trading signals the intraday price discovery, and the information around the open dominates that revealed over the rest of the trading day.

The main purpose of this paper is to advocate a rule-based forecasting technique for anticipating stock index volatility. This paper intends to set up a stock index indicators projection prototype by using a multiple criteria decision making model consisting of the cluster analysis (CA) technique and Rough Set Theory (RST) to select the important attributes and forecast TSEC Capitalization Weighted Stock Index. The projection prototype was then released to forecast the stock index in the first half of 2009 with an accuracy of 66.67%. The results point out that the decision rules were authenticated to employ in forecasting the stock index volatility appropriately.

The main purpose of this paper is to compare the performance of portfolio strategies, comprising investments in emerging markets alone, and those strategies of combining investment in emerging and developed markets. The major finding of this paper is: the portfolio strategy combining investment in emerging markets with that in developed markets does not offer any additional value over a portfolio strategy confining investments to the emerging markets only. This paper, therefore, recommends a strategy that emphasizes country selection from emerging markets alone.