Genuine Progress Indicator vs. GDP Quantification of Economic Performance

As we know, Malaysia and South Korea, successful graduates of Asian Financial Crisis, employed different paths to recovery via Capital Control and IMF bail-out respectively. This paper tracks recovery trajectories of the two nations via orthodox and emergent growth indicators: GDP and GPI. We report unemployment, open-trade, fixed capital accumulation, and prior crisis to be influential determinants of both metrics, while credit and foreign exchange rate lack significance.
The 1997 Asian Financial Crisis serves as a pivotal point for measuring economic performances of most of its crisis-struck constituents. Within this literature, of particular import are Malaysia and South Korea—having applied dissimilar antidotes. The former adopted independent (capital controls) recovery plans, while Korea adopted the IMF treatment. Post-crisis, both nations are regarded as success stories, having achieved rapid growth, despite taking different routes, as measured by medium-term rates of GDP growth within a decade (Zumkehr & Andriesse, 2008).

The traditional yardstick of quantifying economic growth, GDP—along with its various derivatives like GNP and GNI, faces competition today from a number of alternative metrics. Economists and development experts of various disciplines, ranging as far back as 1960s, objected to multiple limitations of GDP as an economic performance measure. Most notably, sustainability advocates underscore GDP’s shortfalls as a general metric for well-being. These concerns have led to the experimentation and development of an eclectic array of indices for policy legislation from the 1970s onwards. Among them, Genuine Progress Indicator (GPI) has been demonstrating a rise in prominence as an alternative performance measure, particularly through reproduction at various regional and national levels as listed in Posner & Costanza (2011) and Bleys & Whitby (2015). Despite growing interest, quantification and adoption of GPI is very much in its infancy. Moreover, GPI figures are uncalculated for a great portion of world economies. For Malaysia and South Korea in particular, there are calls from academia and policy levels for development of GPI indices (Othman et al., 2014; Feeny et al., 2013).

GPI is best defined in its general framework based on the work of Talberth et al. (2007). As the metric’s parametrization is still a “work in progress,” a consensus on GPI’s definition is yet not reached. As such, countries applying the GPI measure broadly rely on the precedents set by other bodies and calibrate to suit its unique environment. Hence, a component of GPI for a country might not be the component for another country. Empirical attempts till date mostly use the same personal consumption data as GDP but make additions to account for the services from consumer durables, public infrastructure, volunteering, housework values, deductions to account for income inequality and costs of crime, environmental degradation, and loss of leisure. Its advocates claim that by incorporating the forestated variables this indicator better reflects sustainability performances of an economy.


In this paper, we construct GPI for South Korea and Malaysia from 1980 to 2014. Notwithstanding a few omissions in GPI components owing to data unavailability, we find GPI curves to be lower than their GDP counterparts. Our panel estimations reveal that external debt has a direct relationship to both GDP and GPI in the long term. However, capital controls are insignificant to both GDP and GPI measures. The results also suggest that unemployment rate, trade openness, fixed capital formation and history of previous crises are influential drivers of GDP and GPI. Credit and exchange rates, however, show inconsistent effects in GDP and GPI. Further explanation is by answering the three following questions.


Hashim, M., Sifat, I., & Mohamad, A. (2018) Tracking Genuine Economic Progress for IMF Debt or Capital Control: The Cases of Malaysia and South Korea. Economics & Business Letters, 7(4), Oviedo University Press.

(DOI will be updated later once assigned by the journal)

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Revisiting Fiat Regime’s Attainability of Shari’ah Objectives and Possible Futuristic Alternatives

Maqasid of Shari’ah is a millennium old theory on the higher objectives of Islamic divine law. As the discipline of Islamic economics and finance grew in politico-economic importance in the past three decades, a cathartic trend has emerged among Muslim experts to realign economic and financial practices with not merely the minimum legal requirements of religion but also the wisdom and crucial objectives of Shari’ah. An expositive example of this is the monetary economics debate of a Shari’ah consonant currency. Though vast majority of religious clerics have approbated fiat and paper currencies in strict legal terms since the 1980s, a revisionist movement since the mid-1990s seeks to counter it—some going as far as indorsing reversion to gold and silver coinage of medieval Islamic epoch of affluence. Unlike orthodox fiqhi (strict jurisprudentialism) approach that involves legalese with little leeway, Maqasid approach concerns itself with the spirit of the law. This paper operates in the exciting laboratory of Maqasidic framework to appraise the multitudinous role of fiat currency in protecting economic, political, and social public interests, prevention of harm, promotion of egalitarianism, and attainment of ultimate utopic vision of theological and spiritual demands in Shari’ah. The paper contributes, theoretically, by introducing several moral-philosophical arguments against fiat’s compatibility with Shari’ah, and, practically, by prognosticating the future course of discourse in light of advancements in technological innovations—including nascent crypto-currencies.

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Legal and Practical Issues with Hire Purchase Financing Products Based on Sharikah al-Milk

Undergoing Revision at Arab Law Quarterly

Keywords: Sharikah al-Milk; Hire Purchase Financing; Islamic Finance Instrument; Legal Issues


Since its inception in the 1960s, realization in 1970s, growth in 1980s, and proliferation
in 1990s, the Islamic banking and financial industry has been experimenting with a
range of financial instruments based on contracts, principles, and precedents of
Shari’ah. Bulk of these involve customizing classical Islamic transactions and refitting
them into conventional-esque products. The Islamic equivalent of hire-purchase is one
such innovation. More specifically, this paper focuses on the legalistic, juristic, and
practical issues surrounding hire purchase through Sharikah al-Milk (HPSM), an i-hirepurchase instrument which employs three contracts consecutively: lease, sale, and
partnership. Essentially spawned as a competitor to the hire-purchase conventional
products, HPSM products have been successful in attracting consumer attention
worldwide. Despite being a marketing success, legal issues persist with this product,
such as conjoining multiple contracts into one, legal status of a wa’ad (promise),
conflation of gift as a sale contract, conditional sales’ validity, etc.

Stale News Hypothesis in Selected in FTSE/ASEAN 40 Stocks


This paper examines the influence wielded by social media buzz on stock market performances of selected stocks from several ASEAN stock exchanges. The advent of social media has changed the dynamics of information propagation and utilization in stock markets. Though information asymmetry still persists, current literature has only recently caught up with the dominant trend of social media eclipsing traditional media as a source of information. This is an issue of significant complexity and import for stock market actors. Employing a brand-new theoretical model of predicting impact of social media on asset prices—proposed by Jiao, Veiga and Walther—this study gauges the performances of stocks with active social media coverage for a month and finds abnormally high trading volume and volatility in the ensuing month. Though these findings are statistically significant in confirming stale news hypothesis by Tetlock (2011), this study is the first empirical application of Jiao et al.’s model. Therefore, after discussing the implications of these findings, this paper highlights the need for more replication studies to help develop a social-media related theory on asset prices and how this affects regulators’ responsibility of ensuring fair dissemination of information.

On IMF Debt and Capital Control: Evidence from Malaysia, Thailand, Indonesia, the Philippines and South Korea


The Asian financial crisis was a time of financial catastrophe that grasped quite a bit of East Asia starting in July 1997 and raised reasons for alarm of an overall economic emergency. This study investigates the effects of capital control and external debts during the 1997 financial crisis, and whether a country should impose capital control or opt for external debt to recuperate from the crisis. Utilizing system estimation approach, an econometric model is devised by employing panel data for Malaysia, Thailand, Indonesia, the Philippines and South Korea over the period from 1990 to 2000. Our findings suggest that on average the ASEAN economies choosing external debt perform better in achieving greater economic growth and rebounding compared to economies that imposed capital control.

Order imbalance and selling aggression under a shorting ban: Evidence from the UK



Imtiaz Mohammad Sifat and Azhar Mohamad

Highlights of the Study

  • We employ high-frequency data from the London Stock Exchange during shorting ban in 2008.
  • We find that order imbalance rises after the FSA’s ban. 
  • Market quality deteriorates following the ban on naked short selling. 
  • Selling aggression and market quality markers fail to improve after the FSA’s ban.


Order imbalance is one of the indicators used by traders to assess the excess of buy or sell orders for a security traded on an exchange. Order imbalance data are made transparent to market participants so as to enhance the quality of the opening and closing auction in the exchange. While order imbalance can result from escalating volatility of security prices, traders can protect themselves by using a limit instead of a market order. The order imbalance and other market quality measures are expected to worsen when a market is experiencing heavy shorting. Based on a high-frequency intraday dataset from the London Stock Exchange from September 2008 through April 2009, our findings suggest that the order imbalance rose after the ban on short selling was enacted in the UK stock market and that selling aggression as well as other market quality measures showed no evidence of any marked improvement.

JEL classification
G14; G18
Short selling; Market quality; Order imbalance; Intraday volatility; Regulation


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