Baiding Hu

This study investigates the extent to which capital inflows and their composition affect domestic credit growth in emerging market and developing economies (EMDEs) and the role of institutional quality in mediating the capital inflows and domestic credit growth nexus. Using a sample of 130 EMDEs from 1991-2015, the study uses generalized method of moments to control for endogeneity issues. The study makes notable contributions to the literature and policy discourse. First, this is the first empirical studies that documents the persistence of domestic credit growth in EMDEs. Second, the study provides a granular analysis of the capital inflows – domestic credit growth nexus. Whereas gross capital inflows significantly exert a positive impact on domestic credit growth, disaggregated-level analyses showed that only foreign direct investment positively affects domestic credit growth whereas portfolio equity has a negative effect; and portfolio debt and other investment do not. Third, the study adds novel evidence that institutional quality plays a crucial role in mediating the capital inflows – domestic credit growth nexus. Fourth, this study crystallises the lens used to investigate the interactions between capital inflows and institutional quality in analysing the capital inflows – domestic credit growth nexus. Finally, the findings are helpful for designing and implementing macro-financial policy and strengthening institutions, especially in managing capital flows and financial sector.

This paper investigates the price stability properties of precious metals during the 1997 Asian Financial Crisis, 2007–2008 Global Financial Crisis, and 2010 Eurozone Crisis. To analyse the interaction between precious metal prices and the US stock market stock performances, we use the ICSS algorithm along with the GARCH model to evaluate how the number of rapid changes in volatility of precious metals has been reduced. The results suggest gold is the most stable of the precious metals. However, silver, platinum, and palladium showed positive price correlation when the US Dow Jones market was unstable. These results imply that: (1) the correlation among stocks market returns has little to no significant impact on the price movement of precious metals, but the US Dow Jones has some influence on precious metal markets except gold, which means investors can reap this benefit from diversification; (2) investors can systematically increase their portfolio returns by going short with the gold investments with low price co-movement and long on silver, platinum, and palladium with high co-movement with stock prices.

This paper investigates the nature of volatility spillovers between stock returns and hedge funds returns in twelve Asia Pacific countries in the 1997–2018 period. The sample period encompasses sub periods, 1997 Asia financial crisis, 2008 Global financial crisis and 2010 Eurozone crisis; these sub periods were characterised by financial upheavals. We apply the EGARCH methodology to model volatility and volatility spillovers in and between the markets. Our results show that the volatility of stock returns does not affect the volatility of hedge funds returns; however, there are inconsistent evidence of unidirectional volatility spillover from hedge funds to stock market returns.

This study investigated the linkages between foreign direct investment (FDI) and financial development measured by banks and stock markets in 30 Asian developing countries from 1986 to 2019. We used a bivariate model with Granger causality tests to test the reverse causality between FDI and financial development and multivariate models with the system generalized method of moments (GMM) estimator to identify how one factor affected the other. Our Granger test results showed a bidirectional linkage between FDI and financial development. Using the system GMM estimator, we showed that greater financial development drew more inward FDI to host countries. Similarly, local financial markets benefited from FDI by improving capital mobilization and financial services and products to intensify economic activity. Our findings suggest that, to attract FDI, policymakers should improve local banks and the stock market environment with strong institutional backgrounds to enhance foreign investors’ confidence and provide incentives to increase cross-border investments in host economies.

In Vietnam, poverty is prevalent and extremely severe among rural ethnic minorities (REM). Despite a number of studies on characteristics of poverty, very few studies comprehensively examine the determinants of poverty intensity. This study employs binary and fractional logit models to investigate the determinants of poverty and the poverty intensity of the REM. Data are obtained by combining the 2012, 2014, and 2016 Vietnam Household Living Standards Surveys. The results show that education, wage-paying employment, housing conditions, and domestic remittances reduce poverty and its intensity. Poverty incidence reduction also hinges on development programmes on credit and scholarships. The likelihood and shortfall of poverty declined for households residing in the Red River and Mekong Deltas, and in southeast Vietnam. However, language barriers, farm size and overseas remittances influenced the poverty intensity but not the likelihood of poverty. Our results suggest that previous studies using only logit models have neglected several influences of poverty intensity, which the current research overcomes.