DLSU Business & Economics Review Volume 28 No. 1

Authors: Siti Muliana Samsi, Zarinah Yusof and Kee-Cheok Cheong
Year: 2018, Volume 28 No. 1
Pages: 1-33
Abstract:

This study empirically examines the effects of the global financial crisis on economic growth through a model that considers various sectoral indices, with particular reference to the stock market, bank, and real estate. Using analysis of cointegration, parsimonious error correction model (PECM), impulse response function (IRF) and variance decomposition analysis (VDC), the study found that the effect of the global financial crisis on growth differs among ASEAN-5 countries. The PECM analysis reveals that the crisis has the real effect on the stock market and bank equations. Three out of five ASEAN countries show that the global financial crisis has a bigger effect on bank equations. This suggests that the global financial crisis created the conditions for the current credit crisis wherein increased risk premium is charged on banks loans globally. The findings from IRF and VDC highlight the shock and error variance in economic growth which were mostly explained by the stock market and banks. This finding suggests that the stock market and the banking sector provide the best leading information for economic activity, especially in developing countries. Thus, a new regulatory governance needs to be based on a well-functioning network of national and regional authorities and include international supervision of financial institutions with a global reach.

Author: M. Shabri Abd. Majid
Year: 2018, Volume 28 No. 1
Pages: 34-48
Abstract:

The objective of this study is to empirically explore the impacts of the 2008 global financial crisis on both Islamic and conventional equity markets of Malaysia, Indonesia, Japan, the UK, and the US. Daily closing indices, spanning from July 2007 to July 2011, are utilized and analyzed using cointegration technique and impulse response functions. The study found that the conventional equity markets performed marginally poorer than their Islamic counterparts during the 2008 global financial crisis. This finding implied that the Islamic equity markets were more stable and resilient than the Islamic equity markets amidst the crisis period.

Author: Kristine Joy E. Carpio
Year: 2018, Volume 28 No. 1
Pages: 49-66
Abstract:

The future of the stock market may never be predicted consistently, nor its past behavior understood entirely, but any knowledge gained from observing it could help decide on a sound investment strategy. In this study, I looked at the daily returns of the Philippine Stock Exchange index (PSEi) from March 1, 1990, to January 31, 2017, and see how the data relates to the mathematically verifiable aspects of the noise theory and efficient market theory (EMT). In relation to the noise theory, I looked at the occurrences of anomalies. For the EMT, I made use of discrete-time Markov chains to determine some trends. The study results showed that most stock market anomalies are present while persistent behavior is hardly present in the dataset. Furthermore, I applied day ahead time domain forecasting methods starting with the simple moving average models to autoregressive moving average models. The augmented Dickey-Fuller test indicate that the daily returns are a stationary series although the ACF and PACF plots have consistently shown non-zero correlations for lags 1, 9, 12, 13. I have obtained AR(1) and ARMA(1,2) processes for the data and both models indicate the same forecasting accuracy via the Diebold-Mariano test. Although these time domain processes were unable to predict the random noise in the data, these processes were accurate in predicting the signs of the values as supported by the Pesaran-Timmermann test.

Author: Claro G. Gañac
Year: 2018, Volume 28 No. 1
Pages: 67-85
Abstract:

Technology and the Internet have changed every facet of human life on the planet. It has spawned online marketplaces where consumers anywhere around the world can shop 24/7 throughout the year. This empirical study aimed to explain the meteoric rise of Internet shopping not just because of the leaps-and-bounds advances in technology but also by intrinsic predisposition of consumers to engage in exploratory buying and consumption. The Internet has brought about a shopping environment with high inherent avenues for exploratory behavior. It is the proposition of this study that online shopping has encouraged exploratory information acquisition, heightened evaluation involvement, and impulsive buying to enhance the optimum stimulation level (OSL) level of consumers. It utilized the generic purchase decision model as a framework to measure Internet-domain exploratory shopping behavior. Descriptive research using online survey was conducted among 388 netizens to explore the proposed relationship. Principal component analysis on the OSL and exploratory buying behavior constructs confirmed the internal consistency of the empirical measurements. The study found that OSL traits of variety seeking, sensation seeking, and innovativeness have significant statistical correlation with actual exploratory consumer behavior. Variety-seeking OSL exhibited the highest correlation coefficient exceeding 0.50 with exploratory information acquisition and purchase behavior. Sensation-seeking showed the weakest linkage with exploratory buying behavior across the spectrum of information acquisition to purchase behavior, while consumer innovativeness exhibited the highest correlation with impulsive buying behavior. Income did not exert a significant direct or moderating effect on OSL traits regarding exploratory consumer behavior.

Authors: Gita Sugiyarti, Augusty Tae Ferdinand and Tatiek Nurchayati
Year: 2018, Volume 28 No. 1
Pages: 86‑96
Abstract:

The purpose of this study is to mediate the influence of market sensing capabilities on the marketing performance by proposing acculturative products uniqueness that mediate the gap between market sensing capabilities and improvement of marketing performance. The sample data from 160 small and medium enterprises of batik, ceramics, and interior design in Indonesia were used to test the model consisting of four hypotheses. The statistical tests in our model used four variables: market sensing capabilities, product innovation, acculturative products uniqueness, and marketing performance. The results of the data show that acculturative products uniqueness has an important role in improving marketing performance.

Author: Reynaldo A. Bautista, Jr.
Year: 2018, Volume 28 No. 1
Pages: 97-109
Abstract:

Fair trade (FT), a movement that aims to set fair prices for products, alleviate poverty, and assist producers marginalized by the traditional economic model, lends itself to investigation through social capital (SC) lens as SC sits within the network theory area of management literature. The primary contribution of this paper is the analysis of whether FT impacts the dynamics of the different SC dimensions. This study used both quantitative and qualitative techniques. I surveyed 97 farmers from Atok (fair trade supplier) and 96 farmers from Tublay (non-fair trade supplier). Also, I conducted focus group discussions of 8 to 10 members from each group and in-depth interviews with formal and informal leaders and key-informants (buyer and local government leaders). The t-test revealed that the farmer cooperative that supplies to FT organization has a significantly higher tendency to ask support from non-government organizations (NGO) and financial institutions. Likewise, they have a higher score in collective action and perceived economic performance. Additionally, regression analysis showed that trust in local government unit (LGU), empowerment, and cooperative classification are positive predictors of perceived economic performance while trust in NGO and membership expansion have negative effects on perceived economic performance.

Author: Renz Adrian T. Calub
Year: 2018, Volume 28 No. 1
Pages: 110-127
Abstract:

Physicians are expected to provide the best healthcare to their patients; however, it cannot be discounted that their practice is driven primarily by incentives. In this paper, a physician utility maximization model that links physician quality of service to compensation schemes was constructed. Results showed that relative to fixed payment, fee-for-service and mixed payment yield higher quality. Multinomial treatment effects regression of vignette scores on payment schemes also support this hypothesis, indicating that physicians are still below the best level of quality and that incentives to improve are still present.

Authors: Tran Thi Xuan Anh, Le Quoc Tuan, and Bui Ngoc Phuong
Year: 2018, Volume 28 No. 1
Pages: 128-149
Abstract:

This research examines whether and to what degree does ownership structure affect the capital structure, using a universal sample of Vietnamese listed firms from 2009 to 2015. We consider the ownership structure in two dimensions: ownership concentration and ownership types. Our paper is among the few to deploy Herfindahl index of all major shareholders, institutional shareholders, and even foreign shareholders as proxies for ownership concentration. The results depict a positive and significant impact of ownership concentration on the overall capital structure of the companies. Further tests indicate that the effect of ownership structure is stronger for short-term debt and bank debt and weaker or even not significant for long-term debt. Despite the fact that the ownership of state, institutional investors, and foreign investors do not significantly affect the capital structure ratio, we find a non-linear relationship between managerial ownership and the structure of overall debt and bank debt.

Authors: Ming-Te Lee, Shew-Huei Kuo and Ming-Long Lee
Year: 2018, Volume 28 No. 1
Pages: 150-165
Abstract:

This study explores whether and how office property prices diffuse across quality classes in Hong Kong. The empirical results reveal that the trends in office property prices are stochastic and demonstrate significant price lead-lag relationships among office property classes. The lead-lag patterns are apparent in both the long run and the short run. In addition, shocks from Class C prices have the strongest and longest-lasting impact on office prices in Hong Kong. In addition to providing new evidence on the ripple effect of commercial property prices across quality classes, this is the first study to explore the ripple effect of commercial property prices in both the short run and the long run. This study is also the first to employ the Vogelsang test (1998) and impulse response analysis to investigate the diffusion of commercial property prices. The findings have implications for government authorities, investors, and financial institutions in terms of policy formation, the timing of office property investments, and the diversification of their office-property-related portfolios.

Authors: Ignatius Suprih Sudrajat, Endang Siti Rahayu, Supriyadi, and Kusnandar
Year: 2018, Volume 28 No. 1
Pages: 166-175
Abstract:

This study is about the effect of an institution on the production cost efficiency of organic rice farming. This research used the stochastic frontier approach with cross-section data and estimated with maximum likelihood estimation (MLE). This study aims to determine the effect of institution variables on production cost inefficiency. A survey was conducted on 216 organic rice farmers during two planting seasons using purposive sampling method in Dlingo Village, Mojosongo, Boyolali, Central Java, Indonesia. The result of the research shows that the average value of production cost efficiency is 0.4268. The role of farmer groups and agricultural counselors is the most dominant variable in determining the production cost inefficiency of organic rice farming.

Authors: Willy F. Zalatar and Anna Bella D. Siriban-Manalang
Year: July 2018, Volume: 28 No. 1
Pages: 176-188
Abstract:

Lean manufacturing has been gaining worldwide popularity as a means of reducing waste, improving quality, and increasing the competitiveness of manufacturing firms. This paper aims to develop a composite lean index (CLI) which can be used to measure the degree of lean adoption in Philippine manufacturing companies. The lean index employs actual quantitative data, rather than subjective assessment, which is more prevalent in the literature. Fifteen performance indicators divided into process and equipment, manufacturing planning and control, human resources, and supplier and customer relationships are proposed and then validated using empirical data. Results showed that a CLI, which yields a single value from 0 to 1, can be computed from the 15 metrics formulated using multi-attribute value theory. Manufacturing companies can utilize this index for monitoring progress of lean implementation through the years as well as for benchmarking purposes with other firms. On the other hand, academicians can benefit from this index since most statistical analyses in researches require numerical values as inputs.