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December
1999
(Issue No. 112)
Synopsis
Future Role of Discount Houses in
the Malaysian Financial System
by Abdul Wahid Omar and Dr Yuen Jching
This paper discusses the background and current operations of
the discount house industry in Malaysia and compares it with that of other
countries. The origins of the discount houses are reviewed and the traditional
restricted roles of the discount houses are examined and discussed. The unique
and special features of domestic discount houses are highlighted and their
significantly expanded role in the financial system critically examined,
notably in the important debt securities market. The discount houses¡¯
substantial involvement and success in arranging, underwriting, trading and
investment in debt securities clearly suggest an enlarged and continuing role
for the industry in the development of domestic debt securities.
The Malaysian Economy: Towards
Sustaining High Quality Growth
by Dr R. Thillainathan
This paper is based on a Memorandum submitted to the Ministry
of Finance Malaysia at its pre-Budget dialogue with the private sector in June
1999. In addition to offering suggestions on how to strategise for sustained
high quality growth which include relaxing the regime of exchange controls,
quickening the pace of bank and corporate restructuring and reforming the
financial sector and the capital market, the writer also reviews the Malaysian
economy before and after the Asian crisis.
Top
East Asia Exchange Rate Regime: Future
Policy Choices
by Dr Mahani Zainal Abidin
What are the exchange rate options available to the East Asian
nations? This paper looks at the five possibilities, namely a free floating
exchange rate, a managed float, a fixed exchange rate, a currency block and a
monetary union. The floating rate lies at one end of the spectrum of choices
while the complete fixing to one currency is at the other end. A managed float
is somewhere in between. A currency block and a monetary union are medium and
long-term currency system options.
Framework for Financial
Supervision: Micro and Macro Issues
by Andrew L. T. Sheng
This paper revisits the Asian financial crisis. According to
the author, financial supervision is all about risk management. Indeed, risk
management of financial institutions is related to the management of not only
micro-risk factors but also macro-risk factors, such as market risks, which are
beyond the control of a single market participant. Such variables used to be
under the control of central banks, but in an open economy, global forces new
determine these variables, as illustrated by the Asian crisis. Therefore, the
need for financial institutions, regulators and policymakers to pursue
appropriate risks management policies.
Top
Information Technology and
Banking: An Economic Perspective
by Patrick Er and Dr Gan Wee Beng
This paper evaluates the impact of IT on the lines of business
and delivery channels in retail banking, and assess how far the investment in
IT has created lasting value for the banking institutions. While the advent
computer and telecommunications technology has provided banking institutions
with new delivery channels and also enhanced the efficiency of the banking
system, it has also led to changes in consumer behaviour, lower barriers to
entry to potential non-bank rivals, and unleash a new wave of competition.
Top
International Capital
Mobility, Investment and Savings: An Empirical Study on the ASEAN Economies
by Dr Tan Hui Boon
The relationship between savings and investment is a crucial
indicator of international capital mobility and it has important implications
on the development of the ASEAN economies. This paper examines the dynamic
savings-investment relationship and the degree of international capital
mobility in the region based on the time-series approach of cointegration and
vector error-correction modeling (VECM). The savings and investment variables
for the five ASEAN economies, namely, Indonesia, Malaysia, the Philippines,
Singapore and Thailand, possessed a general upward trend during the sample
period of 1968-1997. The trend, however, reverted for the case of Thailand in
1997 when the country was hit by the financial crisis. The absence of short-run
causality running from savings to investment, as indicated by the estimated
results of this study, implies a high degree of short-run international capital
mobility in the region. The upward trend of investment in the region during the
boom period of 1988-1996 is supported by the net foreign capital inflows,
especially for the case of Malaysia, the Philippines and Thailand. For
Singapore, the savings rate rose to match its investment rate in the mid-1980s,
and it is now a net capital exporter since 1986.
Top
Impact of Cashflow Fluctuations on Bank's Vault Cash Management
by Dr Balachandher Krishnan Guru, Santha
Vaithilingam and V.Sigamani
This study focuses on the seasonal variations in the demand for
and supply of cash in the form of withdrawals and deposits faced by commercial
banks in Malaysia. In the absence of such variations a blanket vault cash
management policy would be adequate and appropriate. However, the reality of
the situation is that commercial banks¡¯ demand for and supply of cash are not
known with certainty but are in fact stochastic in nature. Furthermore, if the
variations are just random in nature then some buffer or safety stock policy
for cash holding would be sufficient but if the variations are systematic in
nature, that is with significant seasonal effects then it would be useful to
have a proper understanding these seasonal variations in order to formulate a
more efficient vault cash management policy.
Efficient vault cash management requires accurate forecasting
of the demand for and supply of cash at these commercial banks. To this extent,
this study aims to identify seasonal variations in the form of day of week,
month of year, and time of month effect on the demand for and supply of cash
based on daily cash data obtained from a branch of one of the largest
commercial banks in Malaysia. Among other things, the findings indicate the
need for a more dynamic cash management strategy that takes these seasonal
effects into consideration in addition to other factors such as location of
branches and customer base at the local commercial banks.
Top
Culture at Work: Leadership
Awareness for Global Banking
by Dr Carol O¡¯Conner
In this first of a two-part series, the writer emphasises the
importance of recognising and cooperating with international cultural
differences as an ongoing policy towards building relationships and resolving
problems when national conflicts of interests occur. Geert Hofstede¡¯s "Culture
in the Workplace" research is described featuring four cultural dimensions and
the concept of an index which ranks 53 countries in order of their preferences
for these cultural dimensions. The ranking of cultural preferences for six
countries is presented and the preferences of four countries are analysed in
the article¡¯s first part. Those included are Malaysia, Japan, the UK and
Germany. An analysis of the scores for the USA and France are included in Part
Two with a discussion about the impact of cultural differences on leadership
behaviour.
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