INCEIF Knowledge Repository (INCEIF University)
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1768 research outputs found
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Audit market competition: causes and consequences
No full textThe aim of this paper is to examine the impact of competition in audit market and client importance to perceived auditor independence from the perspective of Malaysian auditors, loan officers and senior managers of public listed companies. It is found that auditor independence would be threatened if auditors were to receive significant fees from a single client. The dependence on a single client would cause auditor to face a 'self-threat' risk, where they were economically and financially reliant on a single customer. The interview survey disclosed that regulatory authorities should closely monitor the profession by persistently scrutinising each audit firm's revenue and expenses
Causality between financial development and economic growth: an application of vector error correction and variance decomposition methods to Saudi Arabia
No full textThis article makes an attempt to test the possible directions of causality between financial development and economic growth, which were labelled by Patrick (1966) as the supply-leading and demand-following hypothesis. Saudi Arabia is taken as a case study. The methods applied are the error correction and variance decompositions techniques including the most recently developed ‘long-run structural modelling (LRSM)’ (Pesaran and Shin, 2002), which by imposing exactly identifying and overidentifying restrictions on the cointegrating vector has taken care of a major limitation of the conventional cointegrating estimates in that they were atheoretical in nature. To the best of our knowledge, there has not been any study on this issue with the application of the techniques that incorporate ‘LRSM’. The stability of the functions has also been tested by Cumulative Sum (CUSUM), Cumulative Sum of Squares (CUSUMSQ) and Chow Test (CHOW) tests. Our findings, based on the above mentioned rigorous techniques, tend to suggest that the direction of causation between financial development and economic growth is supply-leading (rather than demand–following), as expected at the early stage of development. These findings have clear policy implications in that a pro-active policy of growth and reform of the financial sector will help enhance economic growth in an open developing economy like Saudi Arabia
The effect of corporate governance structure on external audit fees: evidence from Malaysia
No full textOver the last few decades, a sizeable number of studies have examined the relationship between audit pricing model and corporate governance characteristics in developed economies (O'Sullivan and Diacon, 1994; Short et al., 1999; Peel & Clatworthy, 2001; Clatworthy & Peel, 2006; Yatim et al., 2006). The Cadbury Report (1992) viewed the auditor's report as "one of the corner stones of corporate governance". Peel and Clatworthy (2001) highlights that audit report contribute significantly towards "effective governance of modern corporations"
Efficiency of conventional versus Islamic banks: evidence from the Middle East
No full textThis paper aims to investigate the differences in mean cost, revenue and profit efficiency scores of conventional versus Islamic banks. It also aims to examine the effect of size and age on cost, revenue and profit efficiency of the sampled banks. This study evaluates a cross-country level data compiled from the financial statements of 40 banks in 11 Organisation of Islamic Conference (OIC) countries over the period 1990-2005. The data were collected for each year available from the BankScope database. The DEA nonparametric efficiency approach originally developed by Farrell was applied to analyse the data. The findings suggest no significant differences between the overall efficiency of conventional and Islamic banks. However, it was noted that, on average, banks are more efficient in using their resources compared to their ability to generate revenues and profits. The average bank lost an opportunity to receive 27.9 percent more revenue, given the same amount of resources. Similarly, the average bank lost the opportunity to make 20.9 percent more profits utilising the same level of inputs. Clearly there is substantial room for improvement in cost minimisation and revenue and profit maximisation in both banking systems. The size and age factor did not significantly influence the efficiency scores in both banking streams. This research is substantially different from the prior work in this area in three main ways. First, it investigates cost, revenue, and profit efficiency, whereas previous studies focus on cost, profit, or cost and profit efficiency. Also, no previous studies have compared conventional and Islamic banks. Second, this study distinguishes differences among big versus small, and old versus new banks, which allows more detailed insights on the efficiency issue. Third, the age issue in Islamic banks has been addressed, so far undocumented
Crime and economic conditions in Malaysia
No full textThe purpose of this paper is to analyze the impact of economic conditions on various categories of criminal activities in Malaysia for the period 1973‐2003. The autoregressive distributed lag bounds testing procedure was employed as the main tool. Dynamic ordinary least squares was also used to check the robustness of the results. The results indicate that murder, armed robbery, rape, assault, daylight burglary, and motorcycle theft exhibit long‐run relationships with economic conditions, and the causal effect in all cases runs from economic conditions to crime rates and not vice versa. In the long‐run, strong economic performances have a positive impact on murder, rape, assault, daylight burglary, and motorcycle theft, while on the other hand, economic conditions have negative impact on armed robbery. Further researches using other macroeconomic variables and also other countries are encouraged. The important implication of this result is that real gross national product per capita is an exogenous variable and it is, therefore, useful for fiscal policy variable. Government of the day should seriously consider the results of this study in any crimefighting policies that are formulated
Education, training & qualifications
No full textFinance used to be widely treated as part of economics which also encompasses personal, public and corporate finance. It is also considered as the science of fund management, spending, saving and budgeting. Hence it includes stocks, capital and money markets, unit trusts, asset management, etc. However, Islamic finance as is widely used today encompasses all of the above plus banking, takaful, wealth planning, capital and money markets and all activities related to them as well
Welfare cost of inflation in a stochastic balanced growth model
No full textThere is a large and growing literature on the welfare cost of inflation. However, work in this area tend to find moderate estimates of welfare gains. In this paper we reexamine welfare costs of inflation within a stochastic general equilibrium balanced growth model paying a particular attention to recursive utility, portfolio balance effects, and monetary volatility and monetary policy uncertainty. Our numerical analysis shows that a monetary policy that brings down inflation to the optimum level can have substantial welfare effects. Portfolio adjustment effects seem to be the dominant factor behind the welfare gains
Exchange rate and interest rate in Thailand: a look at traditional and revisionist views
No full textIn this paper, we analyze the traditional-revisionist debate on whether high interest rate can defend the downfall in currency values by allowing for asymmetric responses of exchange to positive and negative changes in the interest rate using Thailand data. Applying an EGARCH specification with long spam of data, we find evidence in support of the revisionist view. Namely, while the decline in the interest rate may lead to currecy depreciation, we find no evidence that high interest rate appreciates the currency. Instead, albeit small in magnitude, high interest rate tends to lead further depreciation. Thus, the policy of high interest rate to defend the currency can be futile and costly
Note from the editor
No full textThe year 2008, recorded some elating developments in the area of Islamic finance worldwide. The size of Shari’ah compliant assets rose to around 4 trillion, of which no more than 10 percent has so far been realized (Al-Amine, 2008, p. 1). The current financial meltdown is diverting global attention to Islamic finance as a better and safer alternative. Thus, the future of Islamic finance looked bright at the turn of the year
The effects of different parameterizations of Markov-switching in a CIR model of bond pricing
No full textWe examine several discrete-time versions of the Cox, Ingersoll and Ross (CIR) model for the term structure, in which the short rate is subject to discrete shifts. Our empirical analysis suggests that careful consideration of which parameters of the short-term interest rate equation that are allowed to be switched is crucial. Ignoring this issue may result in a parameterization that produces no improvement (in terms of bond pricing) relative to the standard CIR model, even when there are clear breaks in the data