Review of Pacific Basin Financial Markets and Policies

This study investigates the effects of Basel II and Basel III capital adequacy rules and the regulatory framework adopted by Chinese banking regulators on the efficiency of the banking sector in China during the post-Basel II era (2007–2017) and compares the results with that of the pre-Basel II era (1996–2006). The study finds that both cost and profit efficiency of the banking industry have improved significantly from the pre-Basel II era (1996–2006) to the post-Basel II era (2007–2017). Subperiod analyses show that the risk-based capital ratio (Tier 1 capital ratio) is significantly positively associated with profit efficiency during both pre- and post-Basel II eras. Overall, the “Big Four” national banks and regional commercial banks signal higher profit efficiency during the post-Basel II era.

We evaluate the impact of strategic orientation on the failure probability of financial institutions. Using the US credit union industry as the empirical setting, we find that credit unions which exhibit preferential treatment to borrowers are more likely to fail, whereas those who set operational strategies towards balancing the benefits between savers and borrowers experience a lower failure probability. The impacts appear to be more pronounced in small credit unions and in credit unions which have a lower operating experience. We also find that borrower-oriented credit unions generate lower interest margins while neutral behavior credit unions generate higher margins.

The worldwide lockdown caused by COVID-19 has led to the complete suspension of shipping, land transportation, and aviation. As a result of the redistribution of global resources, governments have recently advocated acquisitions and mergers with strategic alliances and vertical integrations to revitalize the economy. This study aims to investigate how the mergers and acquisitions (M&A) were negotiated and how the equilibrium price was achieved with game theory and information economics in agricultural and fishery biotechnology industry. The findings in the present study propose that by adopting investment valuation (asset-based approach, revenue method, market method) and presenting three patents (globally unique nondrug-denatured pure male tilapia and GPS $-25^{\circ }$C cloud cold chain logistics), the more the vulnerable company is able to attain a triumphant price during the negotiation of M&A.

In this study, we evaluate the impact of US monetary policy between 2008 and 2018 (after implementation of quantitative easing policy) on assets, bonds, exchange rates of selected East Asian countries (Japan, South Korea, and Thailand). Our finding emphasized the significant role of US monetary policy on the East Asia financial markets especially in the case of South Korea. Results show that the US Treasury bill spread had the long run and US corporate spread had the short run effects on the asset markets of these countries. More specifically, sovereign yields respond significantly to US term spreads and stock prices respond largely to US corporate spread. The responses of exchange rate and house prices to US monetary policy are significant but attenuate.

The paper provides an updated evidence of the linkage between stock market and macroeconomic factors in Pakistan. The sample period is from January 2011 to November 2017. Macroeconomic variables used are money supply, exchange rate, treasury bill rate, inflation and industrial production. Generalized autoregressive conditional heteroscedasticity (GARCH) models have been used to examine the impact of macroeconomic factors on stock market return and stock market volatility. Findings suggest that macroeconomic factors have an impact on stock market volatility. The fluctuations in inflation and money supply negatively influence the volatility of stock market returns. In contrast, industrial production positively affects the fluctuations of stock market returns. The findings are important for shareholders, investors, regulatory authorities and policymakers.

The least effective working capital management and poor corporate governance resulted in the 2008 global financial crisis besides various other factors as highlighted by the prior studies. So far, the existing literature reveals that WCM and CG affect firm performance (FP) on an individual basis. However, the collective effect of working capital management and corporate governance on firm performance has been paid the least attention. This study investigates the collective effect of working capital management and corporate governance on firm performance for Australia and Hong Kong markets, being the top two markets in the Pacific region. For this purpose, a system generalized method of moments based on two steps is applied to address the endogeneity issue. The results establish that working capital management and corporate governance affect firm performance on an individual basis and then these individual effect results compliment the collective effect results. The limitation of the study is that it did not consider two stages of Least Squares Regression due to difficulty in the identification of instrumental variables for both explanatory variables. As a policy implication, firm manager may take the benefit of the findings of this study while devising financial policies to enhance firm performance. Future investors may use the findings of this study to make an informed decision on future investment in both markets.

Trade openness plays a critical role in the growth of China and its partners. Using a system generalized method of moments (system GMM) estimator and quantile regression, a new viewpoint is presented on trade openness in China for institutional and economic factors over 15 years with 192 economies. The empirical findings provide two contrasting views. Intriguingly, China is seeking to broaden this strategy to countries with less control over corruption and low political stability. By categorizing countries as advanced, emerging, and developing, the study provides the evidence that exchange rate volatility has a negative effect on trade openness, while investment, labor force, and broad money share a positive impact. This study suggests that Chinese policymakers should further boost financial reform to promote trade development. Other countries desirous of greater trade openness with China should have more efficient management of macroscopic economic factors. Finally, the study also examines the two main groups of international offshore financial center from econometric convergence test and club clustering for trade openness in China from the worldwide perspective.

This study aims to assess the trade potential of Pakistan in terms of destinations and products against 101 potential trading partners while applying the gravity model and the trade potential index. The findings indicate that Pakistan’s trade/export potential is maximum with the countries which are not its traditional trading partners. On the other hand, “manufactured goods”, “misc manufactured articles” and “food groups” are the products where maximum trade/export potential exists. Results indicate that Pakistan should not only adopt proactive measures to tap non-traditional partners but it is equally important to strengthen the level of trade with its traditional trading partners.