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Financial centers in the Asia-pacific region: an empirical study on australia, Hong Kong, Japan and Singapore

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Author Info

  • J.P.A. Sagaram

    ()
    (Thomson Financial, Singapore)

  • J. Wickramanayake

    ()
    (Monash University, Department of Accounting and Finance, Caulfield East (Australia))

Abstract

The objective of this study is to empirically examine the status and sustainability ofAustralia, Hong Kong, Japan and Singapore as financial centers in theAsia-Pacific region. The sample period under investigation is from 1977 to 2002. This paper attempts to provide empirical evidence on significant factors such as taxes, economic activity, assets and liabilities of banks, regulation, socio-economic factors (education and quality of life) and the tax treatment of foreign institutions, that determine the status and sustainability of the above four financial centers. Although extensive research on financial centers has been conducted, there seems to be noempirical research focused on the above factors especially for Australia, HongKong, Japan and Singapore. This study uses three modeling approaches. Under the first approach: estimates of an error-correction model show the existence of a long-run relationship between the variables in the four financial centers. In the second approach: estimated pooled (panel) regression model indicates that majority of the variables under investigation are statistically significant when tested collectively for all four financial centers. Results of the third model show the importance of socio-economic and government intervention variables such as the education system, government economic policies, quality of life, the regulatory environment and the tax treatment of foreign corporations for the status and sustainability of financialcenters. The main policy implication of this study is that business friendly government policies promoting economic growth and socio-economic development are important for healthy growth of financial centers.

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File URL: http://ojs.uniroma1.it/index.php/PSLQuarterlyReview/article/view/9835/9720
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Bibliographic Info

Article provided by Banca Nazionale del Lavoro in its journal BNL Quarterly Review.

Volume (Year): 58 (2005)
Issue (Month): 232 ()
Pages: 21-51

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Handle: RePEc:psl:bnlaqr:2005:12

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Keywords: Bank; Regulation;

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  1. Yash P. Mehra, 1991. "An error-correction model of U.S. M2 demand," Economic Review, Federal Reserve Bank of Richmond, issue May, pages 3-12.
  2. Boswijk, Peter & Franses, Philip Hans, 1992. "Dynamic Specification and Cointegration," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 54(3), pages 369-81, August.
  3. Schenk, Catherine R., 2002. "Banks and the emergence of Hong Kong as an international financial center," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 12(4-5), pages 321-340.
  4. Engle, Robert F, 1982. "Autoregressive Conditional Heteroscedasticity with Estimates of the Variance of United Kingdom Inflation," Econometrica, Econometric Society, vol. 50(4), pages 987-1007, July.
  5. Peter C.B. Phillips & Mico Loretan, 1989. "Estimating Long Run Economic Equilibria," Cowles Foundation Discussion Papers 928, Cowles Foundation for Research in Economics, Yale University.
  6. Godfrey, Leslie G, 1978. "Testing for Higher Order Serial Correlation in Regression Equations When the Regressors Include Lagged Dependent Variables," Econometrica, Econometric Society, vol. 46(6), pages 1303-10, November.
  7. Michael Goldberg & Robert Helsley & Maurice Levi, 1988. "On the development of international financial centers," The Annals of Regional Science, Springer, vol. 22(1), pages 81-94, February.
  8. Howard Curtis Reed, 1980. "The Ascent of Tokyo as an International Financial Center," Journal of International Business Studies, Palgrave Macmillan, vol. 11(3), pages 19-35, September.
  9. Levine, Ross, 2005. "Finance and Growth: Theory and Evidence," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 12, pages 865-934 Elsevier.
  10. Dickey, David A & Fuller, Wayne A, 1981. "Likelihood Ratio Statistics for Autoregressive Time Series with a Unit Root," Econometrica, Econometric Society, vol. 49(4), pages 1057-72, June.
  11. Banerjee, Anindya, et al, 1986. "Exploring Equilibrium Relationships in Econometrics through Static Models: Some Monte Carlo Evidence," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 48(3), pages 253-77, August.
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