IMF Debt and Capital Control

In the mid-1990s, a collapse of Thai Baht precipitated a cascade of currency collapses, culminating in a full-blown economic crisis in the South-East and East Asian regions. Ever since, this crisis has remained significant for academics and policymakers owing to its sudden trigger, rapid percolation, and varied consequences. For economists concentrating on crises, the 1997 crisis also serves as an epicenter for tracking crisis management schemes and recovery trajectories. In this regard, two economies—Malaysia and Korea—stand out as candidates for deeper investigation due to disparate recovery paths undertaken. The former imposed hard capital controls, while the latter acceded to IMF bail-out and restructuring. Since then, both economies performed impressively. As a ripple effect of the crisis, some countries embraced protectionist measures to safeguard stability of own currency. Malaysia, for example, opted for capital controls, whereas Thailand, South Korea and Indonesia underwent governmental and economic policy overhaul at the behest of the International Monetary Fund (IMF). This brings us to the issue of capital control; a means of regulating the flow of money in and out of domestic economy. Economists’ views on it are multifarious. While some extol its ability to facilitate free movement of capital across economies, others castigate its straitening effects on growth, productivity and mobility. Induced by factors such as globalization and financial market integration, lately most advanced economies have adopted a more liberal approach when it comes to capital control. Developing nations, however, remain sporadic exponents of stricter controls as their typically low reserves make them vulnerable to volatility. It is noteworthy that despite generally open approach to capital control measures, most advanced economies still have ad hoc contingency plans in place to forestall sudden mass capital exit or to deter speculative attack on domestic currency.

My co-authors and I have undertaken several research projects revisiting the aftermath and dynamics of the divergent paths taken by Malaysia and South Korea in pursuit of an economic recovery since the late 1990s. Links to the papers are available to the left.

The papers’ full versions are available at the publishers’ site. Author versions are available at

Predictive Power of Web Search Behavior

This paper investigates the predictive ability of web search behavior in connection with stock market returns and trading volume in five emerging economies in the ASEAN region using econometric and signal-processing techniques. More specifically, we use Vector Error Correction Model in conjunction with Wavelet analysis and find consistently low predictive ability of search activity in Google. In fact, investors in nearly all five markets appear to be interested in searching terms related to the market after high returns or high trading activities occur. In other words, high returns or high activities precede search interest. Our findings are at odds with the general results reported in earlier studies conducted in developed countries. Additionally, our analysis in the time-frequency domain detects a two-week lead-lag phenomenon in the association between search behavior and market returns for all markets but the Philippines.

Full paper can be accessed at publisher’s website:

Efficiency in the Shipping Industry


This paper is the first comprehensive investigation of the shipping industry’s efficiency in five countries from the ASEAN region: Malaysia, Singapore, the Philippines, Thailand, and Vietnam. Employing Data Envelopment Analysis and Stochastic Frontier Analysis, we compare efficiency dynamics of 45 international and offshore shipping providers engaged in fishing and ferrying. Our results indicate consistently diminishing efficiency from 2011 to 2017, a phenomenon that persists even in the traditionally efficient companies. Thereafter, we develop Altman Z-scores for the sampled companies and notice that despite rising inefficiency, most firms remain unencumbered by bankruptcy concerns, especially those with large capital buffers. In general, we observe a negative relationship between bankruptcy risk and efficiency. Furthermore, we notice that reducing inputs does not help boost efficiency.

JEL Codes: C14, G33, R4


Efficiency; Data envelopment analysis; Stochastic frontier analysis; Z-scores; Shipping companies.

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The downloadable PDF file above is the authors’ version of the accepted manuscript. The full, published, version of the paper will be available from Emerald Publishing, who will publish it on behalf of International Journal of Emerging Markets. For the final version, please refer to the publisher’s page, which will be updated here once the copy-editing process is done.


Ex-Post Effects of Circuit Breakers in an Emerging Financial Market

This blog post is a recap of the results from an investigation I carried out as part of my doctoral study on the ex-post effects of price limits in crisis and calm periods of Malaysian capital market. A full academic paper carrying details of the research’s results is forthcoming at Journal of Economies Studies (Volume 47, Issue 2). The paper is entitled Ex-post Effects of Circuit Breakers in Crisis and Calm Markets: Long Horizon Evidence from Wide-band Malaysian Price Limits. 


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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