Malaysian Journal of Economic Studies

Impact of Government Incentives on Digital Content Creators in Malaysia: An Empirical Study

2025-06-13T21:50:03+08:00

The emergence of the digital creative content industry in Malaysia, highlighted in the Twelfth Malaysia Plan, reflects the nation’s pursuit of a share in the global digital market. Government initiatives, manifested through grants and incentives, aim to bolster the industry, but their effectiveness remains uncertain. This study explores the impact of these initiatives on digital content creators, utilising firm-level databases from the Malaysia Digital Economy Corporation. Employing parametric tests, the stochastic frontier model, and the panel model, the research reveals that pairing small funds with effective developmental programs yields superior results. Grant recipients exhibit notable growth in job creation ‒ particularly among local skilled workers ‒ heightened research and development (R&D) activity, and increased productivity and profits. Future grant policies should incorporate knowledge sharing from successful recipients and emphasise mentoring, while also supporting industrial training for educators to align curricula with industry expectations.

Quantitative Easing and Tightening Effects on Volatility Transmission in ASEAN’s Emerging Financial Markets

2025-06-13T22:05:23+08:00

This study examines the volatility transmission among four emerging financial markets in the ASEAN region, comprising Thailand, Malaysia, Indonesia and the Philippines, during quantitative easing (QE) and quantitative tightening (QT) policies. A copula-based GARCH model is used to investigate the relationship among the volatility of stock market returns in these four countries and to explore the relationship among their exchange rate returns. Daily data were divided into two periods: the QE period covered 23/3/2020–15/3/2022, and the QT period covered 16/3/2022–13/2/2023. The findings show the relationship among the volatility of stock market returns across four countries, revealing that upper-tail dependence is more prominent during periods of QE than QT. Furthermore, the volatility of exchange rate returns across countries tends to correlate more during periods of QT. This study provides empirical evidence of integration among the financial markets of the four countries, and findings that are valuable for portfolio management. Investors seeking yields in ASEAN’s emerging financial markets should closely monitor the Federal Reserve’s monetary policy, particularly during periods of QT, which pose a higher risk of unexpected negative returns.

Domestic Economic Policy Uncertainty, US Macroeconomic Uncertainty and Corporate Cash Holdings: International Evidence

2025-06-13T22:11:16+08:00

This study examines the impact of two different types of uncertainty, which are domestic economic policy uncertainty and macroeconomic uncertainty stemming from the United States (US) on corporate cash holdings. Using a sample of 18 countries from 2003 to 2023, we find that both types of uncertainty positively associated with corporate cash holdings due to precautionary motives. Our results demonstrate that the US macroeconomic uncertainty has a greater influence over domestic economic policy uncertainty on corporate cash holdings decision. Further analysis indicates that the influences of both types of uncertainty on corporate cash holdings are more pronounced in developed countries.

Banks’ Contribution and Exposure to Systemic Risk amid Natural Disasters: Evidence from Malaysia

2025-06-13T22:25:42+08:00

This study evaluates the extent to which banks in Malaysia have contributed to and been impacted by systemic risk in the wake of natural disaster events during a period spanning from 1 January 2007 to 31 March 2022. Employing delta conditional value-at-risk measures, our findings reveal that natural disasters, akin to past crises such as the global financial crisis and the COVID-19 pandemic, elevate systemic risk in the banking sector, though the magnitude of their impact is relatively less severe. Additionally, we find that there were more instances, either during the natural disaster event or in its aftermath, where the banks increased their contribution to systemic risk compared to instances where they experienced heightened systemic risk exposure. In terms of timing of the reaction, our analysis shows that the market exhibits a notable delay, with both systemic risk contribution and exposure primarily increasing after the disaster event has concluded, rather than during its occurrence. These results underscore the critical need for climate resilience in the banking industry and provide important insights into the systemic risk implications of natural disasters, particularly in developing, bank-centric countries like Malaysia. They also inform the formulation of targeted policy measures to effectively mitigate these risks.

Market Power in an Emerging Market Economy: Evidence from Philippine Publicly Listed Corporations

2025-06-13T22:30:20+08:00

This study investigates market power trends in an emerging market and developing economy (EMDE), the Philippines, by estimating markups for nonfinancial publicly listed corporations from 2001 to 2019 using a production-based methodology. While corroborating certain findings from advanced economies (AEs) regarding the positive relationship between firm size and markups, as well as markups and profitability, the substantial role larger firms play in markup movements, and the significant inter-sectoral variation in markups, this study reveals key distinctions. Notably, unlike AEs, the Philippines exhibits a more stable aggregate markup trend with limited evidence of consistent upward trend, potentially attributable to the heightened sensitivity of Philippine firms to macroeconomic fluctuations. This is further evidenced by the negative co-movement between markups and macroeconomic variables, such as interest rates and exchange rates. This study significantly contributes to the limited body of literature on market power in EMDEs by providing novel evidence from the Philippines and extending existing research on Philippine markups. These findings provide crucial insights for Philippine policymakers in enabling the development and implementation of more effective competition and antitrust policies to address market power dynamics and foster a more competitive landscape.

Survival of the Weakest: Listed Zombie Firms in Malaysia’s Industrial Products and Services Sector

2025-06-13T22:44:17+08:00

This study investigates the prevalence and determinants of zombie firms in the industrial goods and services sector listed on Bursa Malaysia from 2011 to 2022. Using the Altman Z-score, Ohlson O-score, and selected financial indicators, we find that 22% of firms with adequate financial disclosures can be classified as “walking dead.” Panel logistic regression analysis reveals that the asset turnover ratio is the most significant predictor of zombification, though its marginal effect diminishes at higher levels. Leverage follows a non-linear relationship, where moderate debt increases the probability of zombification, but excessive debt appears to reduce it ‒ possibly reflecting creditor intervention. Interestingly, firms were less likely to be classified as zombies during the COVID-19 period, potentially due to government relief measures and regulatory forbearance. Despite clear signs of financial distress, most zombie firms are not designated as PN17 or GN3, suggesting limitations in current distress recognition frameworks. These findings offer important implications for policymakers seeking to strengthen regulatory mechanisms and ensure efficient capital allocation. Retail investors may also benefit from improved tools to identify and avoid zombie firms.

Time-Varying Correlation and Quantile Relationship between Oil Prices and Regional Green Markets

2025-06-13T22:48:48+08:00

This study examines the time-varying equicorrelation and tail dependence between global oil prices and regional green markets. We use novel approaches, namely the GARCH-DECO model, Quantile-on-Quantile Regression (QQR), and Granger-causality in quantiles. The empirical findings show that global oil prices and renewable energy stock markets are inextricably linked. Specifically, there is a positive equicorrelation between global oil prices and clean energy stock markets. During times of turmoil, these trends become more pronounced, fostering contagion effects that diminish the benefits of diversification between renewable energy stocks and oil portfolios. The outcomes of the QQR technique reveal a heterogeneous interdependence structure between the oil and renewable energy stock markets across the entire distribution. Our results have significant implications for policymakers, investors and traders, as they may assist in understanding the behaviour of renewable energy and oil markets during periods of extreme market stress.

Mrs. Khoo Siew Mun: A Tribute

2025-06-13T23:22:51+08:00

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Mrs. Khoo Siew Mun: Publications and Writing

2025-06-13T23:27:30+08:00

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Book Review: Globalization: Perak’s Rise, Relative Decline, and Regeneration

2025-06-13T22:52:53+08:00

Sultan Nazrin Shah (2024). Globalization: Perak’s Rise, Relative Decline, and Regeneration. Oxford University Press.