Based on a small, open-economy IS-LM prototype model, this paper examines the sources of macroeconomic instabilities in Hong Kong and Singapore operating under two different currency board arrangements. The empirical findings suggest that in general, both external and internal factors contribute to the macroeconomic volatilities observed in the two economies. There is evidence of a tradeoff between exchange rate and interest rate targeting for the stability of money supply in Singapore. Our findings have important implications for Mainland China's monetary authorities in the transition from a hard-peg exchange rate regime like Hong Kong to a basket-link system like the one in Singapore. [ABSTRACT FROM AUTHOR]
TERENCE TAL-LEUNG CHONG, DANIEL TAK-YAN LAW, and LIN ZOU
Subjects
CAPITAL structure, PROFITABILITY, STOCK prices
Abstract
This paper examines the impact of profitability, stock price performance and growth opportunity on the capital structure of firms in Singapore, Taiwan and Hong Kong. In contrast to Kayhan and Titman (2007), it is found that firms in these three Chinese-dominated economies strongly prefer debt to equity or internal fund financing. They also take advantage of stock price appreciation by issuing more shares. An adjustment model for debt ratios is estimated. The results suggest that the leverage ratios of these firms slowly adjust toward their target levels. Deviations from the target due to the pecking order and market timing effects are found to be significant. [ABSTRACT FROM AUTHOR]
CAPITAL market, MONEY market, INTERNATIONAL economic relations, PORTFOLIO management (Investments)
Abstract
In this note, I document the change in correlation between Hong Kong, Singapore and the US financial market indexes using Geweke Measures after the handover of Hong Kong to China. The results show that these relationships have changed significantly. While the feedback relationship between Hong Kong, Singapore and the US markets increase after the handover of Hong Kong, the increases in feedback relationship between Singapore and the US markets is relatively higher compared to the change between Hong Kong and the US markets. [ABSTRACT FROM AUTHOR]