Description:
A key departure in this study from many earlier studies is that, on the continuum of financial stress from nil to very high, both very high levels of stress and very low levels are seen as being harmful and potential harbinger of a financial-market crisis. Specifically, a surfeit of stress can act as a tipping point into crisis and a dearth of stress can encourage hubris and increase a nation’s susceptibility to financial contagion from another nation; even one that is far removed by geographic and/or economic distance. This paper focuses on developing financial stress indices for the US and Australia using composite market indices, trade weight indices and yields on securities with different maturity dates. Monthly data from January 1989 to December 2011 was sourced from the Australian Bureau of Statistics (ABS), the Reserve Bank of Australia (RBA), the Federal Reserve Bank (FRB), the Bureau of Economic Analysis (BEA), the Federal Reserve Bank of St Louis website, Bank of Canada, Reserve Bank of New Zealand and Yahoo finance website. For purposes of this study the aggregate measures of stress consists of inverted yield spreads, volatility measures for market indices, volatility measures of trade weighted indexes, risk spreads, credit risk spreads and a measures of risk in the equity market.
Description:
While prospecting by junior mining companies (JMCs) is a vital contributor to modern wealth creation, attributes of the junior mining sector (JMS) limit JMC-fund raisings to external equity (shares). In considering responses by JMC principals to deep discounting and other JMC-investor strategies, potential responses were found to: increase returns to principals, increase JMS moral-hazard issues, and further deepen price discounts on JMC share offerings, especially IPOs. It is suggested that the attractiveness and moral-hazard consequences of these potential responses can be greatly diminished if mining-tenement fees are raised and JMC prospecting costs are allowed as an offset against those fees
Description:
•Wealth effect of Chinese PE announcements can be seen on application, approval, and completion.•No significant price response on announcements of withdrawal or rejection of applications.•Market discount, proceeds from private placements, and private-institutional buying systematically influence market reaction.•Influence of announcement effect differs across changes in ownership of investor categories.•Results are consistent with the information and ownership structure hypotheses. In response to the China Securities Regulatory Commission's regulation of private equity placements (PEP) in 2006, this study investigates the impact of the announcements of PEP applications, withdrawals, rejections, approvals, and completions on the returns of the firms that issue private equity (PE) and the factors that influence market reactions to these announcements. The results show that issuing firms experience stock price responses only to the announcements of PE applications, approvals, and completions. The announcement effect is positively related to the market discount, proceeds from private placements, and private institutional buying and ownership changes; and negatively related to government or government institutional buying and changes in the ownership of management buyers.
Description:
The effect of the aging baby-boom-cohort on asset values is extensively studied. While that effect varies by country, there are likely to be commonalities. Thus, research on a relatively small advanced open economy like New Zealand can provide insight into the general effect. In this study monthly data from 1991 to 2017 is used to examine how aging population in New Zealand affects its stock market considering key demographic and non-demographic macroeconomic variables and a new focus on fast-and-slow-moving institutional change. The results suggest that the net effect of an aging population on stock markets is insignificant. However, real GDP and foreign portfolio investment (FPI) show a positive relationship with the stock market. The findings reveal that FPI can mitigate possible negative effects from aging in an open economy. Moreover, the policy implications of the study suggest that international-factor mobility, skilled-migration policies, and technology-based productivity growth can boost stock markets.
Description:
The effect of the aging baby-boom-cohort on asset values is extensively studied. While that effect varies by country, there are likely to be commonalities. Thus, research on a relatively small advanced open economy like New Zealand can provide insight into the general effect. In this study monthly data from 1991 to 2017 is used to examine how aging population in New Zealand affects its stock market considering key demographic and non-demographic macroeconomic variables and a new focus on fast-and-slow-moving institutional change. The results suggest that the net effect of an aging population on stock markets is insignificant. However, real GDP and foreign portfolio investment (FPI) show a positive relationship with the stock market. The findings reveal that FPI can mitigate possible negative effects from aging in an open economy. Moreover, the policy implications of the study suggest that international-factor mobility, skilled-migration policies, and technology-based productivity growth can boost stock markets.
Description:
It was 1970. It was the Age of Aquarius. The Boeing 747 was introduced into intercontinental service. In Australia, the Federal Treasurer, Les Bury, began to notice that inflation and unemployment were rising simultaneously. And Australian students began studying economics using a localised adaptation of Samuelson's classic textbook.
Description:
This paper empirically tests Levine's [1] endogenous growth model, which suggests that stock market and tax policy jointly affect economic growth. Following Levine [1], tax or impeding financial market activities have the potential to lower per capita growth rate. Using monthly data from 1980 to 2008, the relationship between tax revenue, stock market as proxies by direct tax revenue and KLCI respectively and economic growth in Malaysia is modeled using the Granger causality and VECM framework. Results support Levine's theory and reveal that over the sample period both tax revenue and stock market affect pattern of economic growth in Malaysia. These findings indicate that strong growth can be achieved through booming of stock market activities and the high revenue collection. Fiscal policy authorities in Malaysia will find these results useful.
Description:
Adelaide has made a significant contribution to Australian economics. Since 1966, the University of Adelaide and Flinders University have been the partners behind the journal Australian Economic Papers (AEP). It has been an adventurous undertaking sometimes disconcerted by financial vulnerability, which at times, threatened its very existence. After outlining the journal's history, this paper undertakes a forensic examination of the AEP, and provides a comparison with its most obvious competitor, The Economic Record (ER). Despite its bold ambitions, we find that the AEP is now Australia's second‐ranking generalist economics journal and suffering the fate of being of that genre.
Description:
In contrast with many other countries, Chinese listed firms must obtain approval to make private-equity placements (PEPs) from the Chinese Security Regulatory Commission (CSRC), a state bureau that regulates capital market financing. We analyse the role of political connection (PC) and ownership structures when accessing private equity (PE) market, while investigating the mechanisms through which political ties operate within the regulatory process of PEPs. The findings suggest that PCs do not contribute to the firm's decision to apply for PEPs, but firms with state-ownership demonstrate a higher propensity to apply for PEPs. PC and state-ownership appear to help firms to obtain approval from the CSRC, and these firms are treated more favourably than their rivals without such connections. Politically connected firms spend less time in managing bureaucracy, but PC and state-ownership negatively affect proceeds from the PE market in China. Firms with politically connected directors with professional business backgrounds tend to spend less time managing the CSRC, and these professionals positively affect proceeds from the PE market in China. This study provides important insights for policy-makers, investors, PE issuing firms and security market regulators.
Description:
We examine the pricing difference of Green Bonds (GB) and conventional bonds (CBs) in capital markets worldwide. Credit spread is used to observe whether investors would like to pay a premium for GBs over CBs. This study uses panel data regression with hybrid model to analyse daily observations over the period 2016 to 2017. We employ Option-Adjusted spread (OAS) to measure the credit spreads of bonds while controlling for bond specific, macroeconomic and global factors that influence the spread. With the hybrid model used in the panel data analysis, we were able to capture the fixed-effects of variables in a random effect model. We find that GBs are traded at a premium of 63 basis points (BPS), compared with a comparable corporate bond issue. We find that the green label provides issuers an incentive to raise funds through issuing GBs while providing investors an opportunity to diversify their investments returns. Our findings provide several implications to the major stakeholders driving the GB market to scale up the market to finance the required level of global green investment needs. We stress an urgent need to support the growth of the GB market to achieve sustainable development through mitigating climate change challenges. Abbreviation GB: Green Bond; CB: Conventional Bond; YS: Yield Spread; BPS: Basis Points; OAS: Option-Adjusted Spread; PCSE: Panels Corrected Standard Errors; CPI: Consumer Price Index; GBPs: Green Bond Principles; CBS: Climate Bond Standard.