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PhD theses

  • Nhat To Van (2008) 'Financial Constraints and Investment: Evidence from Vietnamese Small and Medium Enterprises'
  • Eunsuk Hong (2008) 'Location of Foreign Direct Investment in China: A Spatial Dynamic Analysis by Country of Origin'
  • Sebastian Brück (2008) 'The Making of Banking Scope Regulation: A Comparative Political Economy Analysis across Mainland China, Korea and Taiwan'
  • Franka Klingel (2007) 'Driving Forces of Privatization and Liquidation: Evidence from the Chinese State Sector'
  • Jeo Lee (2006) 'Exchange Rate Volatility and Currency Risk Management. The Case of Indonesia, Korea, and Thailand'
  • Damian Tobin (2006) 'Corporate Restructuring, Governance Reform and International Listing in China's Leading Corporations'
  • Tho Dinh Nguyen (2005) 'Real Options and Investment under Uncertainty. A Study Using Firm-Level Data for Thailand'

Nhat To Van

(2008) Financial Constraints and Investment: Evidence from Vietnamese Small and Medium Enterprises - PhD thesis

Abstract:
This study addresses two main questions: (1) what categories of Small and Medium Enterprises (SMEs) are likely to be rationed in credit markets; (2) what is the relationship between financing constraints and firm investment. Very few studies have considered these issues in the context of a transition economy. An extensive survey of 317 Vietnamese SMEs was carried out in 2005. Both the length of the relationship with their major creditor and the availability of collateral impact positively on the probability of success of credit applications. Furthermore, location can affect the firm’s ability to access the short-term credit, but not necessarily the long and/or medium-term one. The development of the financial system may thus impact on the accessibility of finance for firms. Regarding the second question, a positive relationship is found between internal finance and firm investment. The sensitivity of investment-cash flow is higher for less financially constrained firms.

Eunsuk Hong

(2008) Location of Foreign Direct Investment in China: A Spatial Dynamic Panel Data Analysis by Country of Origin - PhD thesis

Abstract:
The inflows of foreign direct investment (FDI) have played a vital role in China’s integration into the global trade system. China has also become the world’s market place for multinational enterprises (MNEs) thanks to its impressive economic development. Despite the sustained efforts to develop formal models of MNEs and to investigate the factors driving the locational patterns of FDI, most empirical studies have largely ignored the important issue of spatial interdependences of FDI locational decision-making. This thesis aims to fill this important gap. It reveals a number of interesting findings. First, the political economy analysis highlights institutional forces that drive China’s specific high demand for FDI. These drivers include soft budget constraint and investment hunger in the state-owned enterprise (SOE) sector, inter-jurisdictional competition for FDI in an institutional setting of federalism with Chinese style, and the fragmentation and inefficiency of China’s financial market. Second, the preliminary data analysis shows the great variations of FDI locational pattern by host region and by country of origin. Third, the results of econometric estimations show that while the traditional “gravity” type of determinants remain valid to the inclusion of spatial interdependence and to the specification by country of origin, the neighbouring-province FDI and GDP have significant impacts on FDI received by the host province. The directions of such impacts are consistent with the FDI motivation of “agglomeration with regional trade platform” rather than “horizontal” as implicitly assumed in the previous works.

Publications and Working papers
  • Hong, Eunsuk, Laixiang Sun and Tao Li (2008) 'Location of Foreign Direct Investment in China: A Spatial Dynamic Panel Analysis by Country of Origin' - an earlier version appeared as a DeFiMS Discussion Paper No. 86
  • Sun, Laixiang, Eunsuk Hong and Tao Li (2008) 'Incorporating Technology Diffusion, Factor Mobility and Structural Change into cross-region Growth Regression: An application to China', Project working paper for the CATSEI Project of the EU 6th Framework Programme (Project no. 044255).
  • Hong, Eunsuk and Laixiang Sun (2006) 'Dynamics of Internationalization and Outward Investment: Chinese Corporations' Strategies', China Quarterly (Cambridge University Press), no. 187, pp. 610-634.

Sebastian F. Brück

(2008) The Making of Banking Scope Regulation: A Comparative Political Economy Analysis across Mainland China, Korea and Taiwan - PhD thesis

Abstract:
Over the past decade, financial sector regulators in North America, Western Europe and Japan have taken an increasingly liberal approach to determining commercial banks’ permissible business scope: In contrast to earlier times, commercial banks are now commonly authorized to conduct not only traditional intermediation activities but are free to expand into investment banking, asset management and insurance. Curiously, while regulators in the Republic of Korea and Taiwan have followed this trend by adopting Financial Holding Company Laws in 2000 and 2001 respectively, the People’s Republic of China restricted commercial banks’ permissible range of activities via its 1995 Commercial Bank Law. The study presented here examines the reasons behind this divergence in East Asian banking scope regulatory policy-making, an area of banking regulation that remains significantly under-researched in the relevant literature. A unified, motivations-based analytical framework is proposed and subsequently applied to account for the divergent banking scope regulatory policy-making outcomes observed in China, Korea and Taiwan. The analysis reveals that financial sector policy-making choices in all three economies are driven by a mixture of autonomous, publicly minded government action and self-interest maximizing behavior on behalf of (groups of) affected stakeholders, typically in the context of crisis conditions.

Publications and Working papers
  • Brück, Sebastian and Laixiang Sun (2008) 'Dream of the Red Financial Supermarket: The Gradual Emergence of Integrated Financial Services Provision in China in the 21st Century', Journal of Chinese Economic & Business Studies (Taylor & Francis), vol. 6, no. 4, pp. 385-405.
  • Brück, Sebastian and Laixiang Sun (2008) 'Accounting for Micro Drivers of East Asian Governance Outcomes: Conceptual Framework and an Application to Banking Regulation' - an earlier version appeared as a DeFiMS Discussion Paper No. 81 in 2007
  • Brück, Sebastian and Laixiang Sun (2007) 'Achieving Effective Governance under Divided Government and Private Interest Group Pressure: Taiwan’s 2001 Financial Holding Company Law', Journal of Contemporary China (Routledge), vol. 16, no. 53, pp. 655-680.

Franka Klingel

(2007) Driving Forces of Privatization and Liquidation: Evidence from the Chinese State Sector - PhD thesis

Abstract:
In the early and mid 1990s China started a quiet but revolutionary reform process in restructuring its state-owned enterprise (SOE) sector. The major forms of the reform include liquidations, mergers and groupings, and full and partial privatization. In contrast to most other restructuring forms, full privatization and liquidation promise the most profound changes in terms of efficiency gains and more effective governance of the enterprise. However, they are not interest or incentive compatible across the major interest groups involved and this makes them difficult to implement. Despite their growing popularity, there has been a lack of academic attention to identifying the fundamental mechanisms and driving forces that have led to the wide acceptance and implementation of full privatization and liquidation in China. This research aims to fill this important gap. It relies on a unique dataset that provides firm-level data of SOEs operating in four Chinese provinces. Using the multinomial logit-regression technique the probabilities of the different restructuring outcomes to occur within the next year(s), given various firm specific characteristics, are modelled and estimated. The estimations show significant inter-province variations in the key driving forces. Whilst the restructuring decision in reform leader regions is mainly based on economic considerations, that in reform follower regions is subject to the joint force of social, political and economic considerations. The research suggests that full privatization and liquidation can be implemented without massive social unrest, even though they are not interest or incentive compatible. The dominance of the non-state sector is proven to be a paramount element in improving the benefit-risk calculus of SOE full privatization and liquidation for all major players in the restructuring game, and in particularly for the local government as the leading player.

Jeo Lee

(2006) Exchange Rate Volatility and Currency Risk Management. The Case of Indonesia, Korea, and Thailand - PhD thesis

Abstract:
Conventional monetary theories and models of exchange rates fail to provide a consistent explanation for the currency movements as they have mainly been applied to the developed currency markets. This thesis provides an empirical analysis of the determinants, volatility, and currency exposure of exchange rates for those Asian countries which were most severely affected by the Asian currency crisis in 1997, namely, Indonesia, Korea, and Thailand. The study examines a novel approach for risk management in a developing country context. The benefits from currency hedging are shown to be larger in Asian economies than in developed countries.

Working papers

Damian Tobin

(2006) Corporate Restructuring, Governance Reform and International Listing in China's Leading Corporations - PhD thesis

Abstract:
This thesis examines how the mechanism of international listing facilitates the adoption of better corporate governance practices in China’s large state enterprises (SOEs). It argues that the causes of poor corporate governance in China’s large SOEs are rooted in the discretion of policy makers to re-optimise policy decisions and the consequent opportunistic behaviour of management. To better understand how international listing works in China, this thesis suggests an analytical paradigm which integrates the property rights perspective in economics and the resource-dependence perspective in management. An application of this integrated paradigm to the Chinese context shows that the ability of firms to overcome institutional constraints are to be sought, not just in the firm’s ability to adapt to changes in its property rights configuration, but the interplay between changes in property rights and the firm-specific resources that enable it to respond innovatively to changes in its environment. The studies of the banking, telecommunication, and oil industries indicates that international listing can provide an effective mechanism to mitigate weak governance practices, provided enterprises are prepared to bond themselves, install more credible monitoring controls, and meet higher standards of corporate governance. Listing imposes a set of consistent rules on state enterprises, induces corporate restructuring and subjects enterprise management to external monitoring by international capital markets. By changing the institutional rules and incentives for management, it also provided management with the incentives to identify areas where they can legitimately pursue commercial activities. The findings suggest that a more immediate constraint for management in these industries is a lack of familiarity with the market mechanism.

Publications
  • Tobin, Damian and Laixiang Sun (forthcoming in 2009) 'International Listing as a Means to Mobilize the Benefits of Financial Globalization: Micro-Level Evidence from China', World Development (Elsevier)
  • Tobin, Damian and Shikha Singh (2008) 'International Best Practices, Domestic Constraints and International Listing: Evidence from China’s State Banking Sector', Journal of Chinese Economic & Business Studies (Taylor & Francis), vol. 6, no. 4 (November 2008)
  • Tobin, Damian (2008) 'From Maoist Self-Reliance to International Oil Consumer: A Resource-Based Appraisal of the Challenges Facing China’s Petrochemical Sector', Journal of Chinese Economic & Business Studies (Taylor & Francis), vol. 6, no. 4 (November 2008)
  • Sun, Laixiang and Damian Tobin (2005) 'International Listing as a Mechanism of Commitment to More Credible Corporate Governance Practices: the case of the Bank of China (Hong Kong)', Corporate Governance: An International Review (Blackwell Publishing), vol. 13, no. 1 (January 2005), pp. 81-91
  • Tobin, Damian (2005) 'Economic Liberalization, the Changing Role of the State and ‘Wagner’s Law’: China’s Development Experience since 1978', World Development (Elsevier), vol. 33, no. 5, pp. 729–743

Tho Dinh Nguyen

(2005) Real Options and Investment under Uncertainty. A Study Using Firm-Level Data for Thailand - PhD thesis

Abstract:
The real options theory of investment argues that uncertainty has a negative impact on irreversible investment and that the negative impact is more significant with an increasing level of irreversibility. This dissertation investigates these predictions using firm-level panel data for a sample of selected companies in the Stock Exchange of Thailand. The findings suggest that uncertainty has a negative impact on irreversible investment and that the negative impact is stronger for firms with more irreversible assets. The study of real options provides useful insights into corporate investment decisions and has important policy implications.

Working Paper