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1 – 10 of over 12000Ali Fayyaz Munir, Shahrin Saaid Shaharuddin, Mohd Edil Abd Sukor, Mohamed Albaity and Izlin Ismail
This paper investigates the behavior of contrarian strategy payoffs under varying degrees of financial liberalization in the context of Asia-Pacific emerging market namely China…
Abstract
Purpose
This paper investigates the behavior of contrarian strategy payoffs under varying degrees of financial liberalization in the context of Asia-Pacific emerging market namely China, India, Indonesia, Korea, Malaysia, Pakistan, Philippines and Thailand for the period 1997–2017. These markets represent economies that display a gradual change in the degree of financial liberalization instead of fully opening their markets to foreign investors at once.
Design/methodology/approach
Using a daily dataset of 2,468 firms and four different measures of the degree of financial liberalization, the paper employs portfolio formation, panel regressions and binary modeling methods to reveal the impact of partial and complete financial liberalization on contrarian returns.
Findings
This paper documents a negative relationship between the degree of financial liberalization and contrarian strategy payoffs. The results further indicate that small-sized emerging markets reveal more significant and higher contrarian returns as compared to their larger counterparts. Moreover, the returns are significantly higher during negative market states, higher volatility and crises periods. The study findings are consistent with the investor-base broadening hypothesis.
Practical implications
The findings may serve as a useful input for investors and fund managers to devise contrarian investment strategies in emerging market economies. Together, the study provides additional insights for policymakers in managing financial liberalization and integration policies within their respective countries.
Originality/value
This study provides a novel viewpoint by examining the relationship between the degree of financial liberalization and contrarian strategy payoffs. The authors contribute to the existing debate by shifting the discussion to the investor-based broadening argument in which small and less liberalized emerging markets offer opportunities for investors and fund managers to produce abnormal contrarian returns that cannot be earned by other conventional investment strategies.
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This chapter reviews the effects of air transport liberalization, and investigates the roles played by airport-airline vertical arrangements in liberalizing markets. Our…
Abstract
This chapter reviews the effects of air transport liberalization, and investigates the roles played by airport-airline vertical arrangements in liberalizing markets. Our investigation concludes that liberalization has led to substantial economic and traffic growth. Such positive outcomes are mainly due to increased competition and efficiency gains in the airline industry, and positive externalities to the overall economy. Liberalization allows airlines to optimize their networks, and thus may introduce substantial demand and financial uncertainty to airports. Vertical arrangements between airlines and airports may offer a wide range of benefits to the parties involved, yet such arrangements could also lead to airline entry barriers which reduce the effects of liberalization. Three approaches have been developed to model the effects of liberalization in complex market conditions, which include the analytical, econometric and computational network methods. These approaches should be selectively utilized in policy studies on liberalization.
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Sheung Chi Chow, Yongchang Hui, João Paulo Vieito and ZhenZhen Zhu
This paper aims to examine the impact of stock market liberalization on efficiency of the stock markets in Latin America.
Abstract
Purpose
This paper aims to examine the impact of stock market liberalization on efficiency of the stock markets in Latin America.
Design/methodology/approach
Daily stock indices from Latin American countries, including Brazil, Mexico, Chile, Peru, Jamaica and Trinidad and Tobago, are used in the analysis. To examine the impact of stock market liberalization on efficiency, the authors use several approaches, including the runs test, Chow–Denning multiple variation ratio test, Wright variance ratio test, the martingale hypothesis test and the stochastic dominance (SD) test, on the above Latin American stock market indices.
Findings
The authors find that stock market liberalization does not improve stock market efficiency in Latin America.
Originality/value
This investigation is among the first to examine the impact of stock market liberalization on the efficiency of the stock markets. It is among the first to examine the impact of stock market liberalization on the efficiency of the Latin American stock markets. It is also among the first to apply the martingale hypothesis test and a SD approach on issue about efficient market.
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Harridutt Ramcharran and Doseong Kim
Recent studies of the impact of financial liberalization in emerging markets have not examined the dynamic impact of the liberalization process on equity returns despite the…
Abstract
Recent studies of the impact of financial liberalization in emerging markets have not examined the dynamic impact of the liberalization process on equity returns despite the important implications on ongoing reform policies. We analyze six Asian equity markets using a dynamic adjustment model with three independent variables: market capitalization value, pricebook value ratio, and price‐earnings ratio. We use panel data for the period 1991‐2000 and the LSDVR (least square dummy variable regression) approach to identify the timing effects of liberalization. The stability of the model is also tested. The results indicate, in most cases, the significance of all three variables and the timing effects. Evidence of significant structural changes is also supported.
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Duc Khuong Nguyen and Mondher Bellalah
This paper aims to empirically reexamine the dynamic changes in emerging market volatility around stock market liberalization.
Abstract
Purpose
This paper aims to empirically reexamine the dynamic changes in emerging market volatility around stock market liberalization.
Design/methodology/approach
First, a bivariate GARCH‐M model which counts for partial market integration is developed for modeling stock market volatility in emerging market countries. Second, the Bai and Perron stability test in a linear framework and a pooled time‐series cross‐section model were employed to examine the empirical relationship between stock market liberalization and volatility.
Findings
Structural breaks detected in emerging market volatility series did not take place at the time of official liberalization dates, but they rather coincide with alternative events of liberalization process. The effects of official liberalization on return volatility are on average insignificant. The stock return volatility is however lowered when the participation of the US investors becomes effective and important on emerging markets, and when emerging markets increase in size.
Research limitations/implications
The study assumes a static degree of market integration. Future research should extend our model by using a time‐varying measure of market integration.
Practical implications
Policymakers in frontier markets should open up local stock markets to attract foreign investments and to allow local firms to benefit from international risk sharing. Also, the gradual embankment of market‐liberalization is necessary to gain investors' confidence and to prevent the harmful effects of foreign capital flows.
Originality/value
The consideration of alternative events of liberalization process and the use of a powerful stability test to examine the time‐series properties of conditional volatilities.
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Purpose – Examine the role of institutional investors in accelerating the development of capital markets and economies abroad, the determinants of their investment, both in the…
Abstract
Purpose – Examine the role of institutional investors in accelerating the development of capital markets and economies abroad, the determinants of their investment, both in the domestic and foreign markets, and their importance in promoting good corporate governance practices worldwide and facilitating increased financial integration.
Methodology/approach – Review and synthesize recent academic literature (1970–2011) on the process of international financial integration and the role of foreign institutional investors in the increasingly global financial markets.
Findings – Despite the concern that short-term flow of international capital can be destructive to the emerging and developing market economies, academic evidence on a destabilizing effect of foreign investment activity is limited. Institutional investors’ systematic preference for stocks of large, well-known, globally visible foreign firms can explain the presence of a home bias in international portfolio investment.
Research limitations – Given the breadth of the two literature streams, only representative studies (over 45 published works) are summarized.
Social implications – Regulators of emerging markets should first improve domestic institutions, governance, and macroeconomic fundamentals, and then deregulate domestic financial and capital markets to avoid economic and financial crises in the initial stages of liberalization reforms.
Originality/value of paper – A useful source of information for graduate students, academics, and practitioners on the importance of foreign institutional investors.
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This paper intends to promote a re‐consideration of the most appropriate policy framework for implementing the European Union (EU) digital agenda.
Abstract
Purpose
This paper intends to promote a re‐consideration of the most appropriate policy framework for implementing the European Union (EU) digital agenda.
Design/methodology/approach
The paper examines relevant EU documentation and the related research literature on EU telecommunications reform within a context of economic market theory and policy analysis models.
Findings
The liberalization principle driving EU telecommunications reform for the past quarter century has stalled, and may be reversed by the policy framework adopted for implementing the digital agenda. The public sector broadband funding model is likely to be wasteful and ineffective. Other options for implementation should be considered.
Originality/value
This paper examines current EU policy shaping the development of broadband networks and the evolution of the digital economy and information society. It highlights the progress and limitations of EU policy as it has evolved as a reference for implementation of current policy objectives. It will be of value to policy makers, industry analysts and players, as well as researchers in academia and other institutions.
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Saleh M. Nsouli, Mounir Rached and Norbert Funke
The purpose of the paper is to review the issues involved in determining the appropriate speed of adjustment and the sequencing of economic reforms, and to develop a checklist of…
Abstract
Purpose
The purpose of the paper is to review the issues involved in determining the appropriate speed of adjustment and the sequencing of economic reforms, and to develop a checklist of key guidelines for policymakers as a basis for their decision‐making process.
Design/methodology/approach
The paper develops a conceptual framework based on a survey of the theoretical and empirical literature, and the practical experience of the authors in this area.
Findings
The analysis in the paper shows that the optimal speed and sequence of reforms is country‐specific. But key policy considerations can help guide policymakers in the design of their reform strategy.
Practical implications
The arguments favoring a shock approach or a gradual approach are not absolute. Each country has to choose the proper speed of adjustment and sequencing of reforms by examining country‐specific factors. A thorough case‐by‐case analysis is needed before a decision on the appropriate timing and sequencing of reforms can be made.
Originality/value
The analysis in the paper leads to key reform guidelines for policymakers – covering areas such as prerequisites and resource constraints, political economy considerations, credibility and sustainability of reforms – that are instrumental in developing a well‐sequenced strategy.
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Shahzad Hussain, Muhammad Akbar, Qaisar Ali Malik, Tanveer Ahmad and Nasir Abbas
The purpose of this paper is to examine the impact of corporate governance, investor sentiment and financial liberalization on downside systematic risk and the interplay of…
Abstract
Purpose
The purpose of this paper is to examine the impact of corporate governance, investor sentiment and financial liberalization on downside systematic risk and the interplay of socio-political turbulence on this relationship through static and dynamic panel estimation models.
Design/methodology/approach
The evidence is based on a sample of 230 publicly listed non-financial firms from Pakistan Stock Exchange (PSX) over the period 2008–2018. Furthermore, this study analyzes the data through Blundell and Bond (1998) technique in the full sample as well sub-samples (big and small firms).
Findings
The authors document that corporate governance mechanism reduces the downside risk, whereas investor sentiment and financial liberalization increase the investors’ exposure toward downside risk. Particularly, the results provide some new insights that the socio-political turbulence as a moderator weakens the impact of corporate governance and strengthens the effect of investor sentiment and financial liberalization on downside risk. Consistent with prior studies, the analysis of sub-samples reveals some statistical variations in large and small-size sampled firms. Theoretically, the findings mainly support agency theory, noise trader theory and the Keynesians hypothesis.
Originality/value
Stock market volatility has become a prime area of concern for investors, policymakers and regulators in emerging economies. Primarily, the existence of market volatility is attributed to weak governance, irrational behavior of market participants, the liberation of financial policies and sociopolitical turbulence. Therefore, the present study provides simultaneous empirical evidence to determine whether corporate governance, investor sentiment and financial liberalization hinder or spur downside risk in an emerging economy. Furthermore, the work relates to a small number of studies that examine the role of socio-political turbulence as a moderator on the relationship of corporate governance, investor sentiment and financial liberalization with downside systematic risk.
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Anna Dąbrowska and Adrian Lubowiecki-Vikuk
The purpose of this chapter is to provide a viewpoint on the importance of liberalization for the development of service economy. This study of the authors results from the…
Abstract
The purpose of this chapter is to provide a viewpoint on the importance of liberalization for the development of service economy. This study of the authors results from the conducted research and experience obtained so far in the field of liberalization of the services market and its effects on Polish service enterprises. In addition, it contains practical insights on the liberalization, taking into consideration the benefits and barriers perceived by Polish service enterprises entering the markets of Central and Eastern Europe countries (CEEC) and for the economy. This chapter provides insight for the researchers and practitioners who are interested in the problematic of the liberalization of the services market in the context of managing a company operating in the CEEC area.
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