• Journal of Service Research and Studies
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• v.7 no.4
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• pp.139-150
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• 2017

Open economy tightly works with foreign economy. This paper investigates the effect of the shock of foreign bond yield on the credit spreads of domestic corporate bonds in Korea. Foreign bond is referred to as US treasury bond. Credit spreads are defined with the difference between log yields of domestic corporate bonds and log yield of Korea treasury bond. With the data of monthly three-year AA- and BBB- corporate bond yields- ratings, monthly three-year Korean treasury bond yields, monthly US dollar foreign exchange rates, and monthly three-year US Treasury bond yields during the period from October 2000 to September 2014 including global financial crisis period, the paper documents the results as follow. First of all, the yield of Korean treasury and the credit spreads are very sensitive to the increase in the level and the volatility of the yield of the US treasury bond. Changes in the level and the volatility little affect the change of the exchange rate. Second, the change in the level and the volatility negatively affect the level of Korean treasury bond yields but lead to the increase in the level of Korean treasury bond yields at the same time. Third, there exist time lags of the increases of credit spreads by the increase in the level and the volatility. These imply that credit spreads and bond yields are very sensitive to the change in the yields of foreign bonds such as US treasury bond.

• KDI Journal of Economic Policy
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• v.36 no.2
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• pp.103-136
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• 2014

The covered interest rate parity condition (CIRP) has been widely used in open macroeconomic analysis, risk management, exchange rate forecasts, and so forth. Due to the recent global financial crises, there have been remarkable changes in the financial markets of the emerging markets. These changes possibly influenced the dynamics of the covered interest rate parity condition. In this paper, we investigate whether the CIRP dynamics has changed, and what is the nature of the regime changes. To do this, we propose and estimate multiple-state Markov regime switching models using a Bayesian MCMC method. Our estimation results indicate that the default risk or the deviation from the CIRP has been decreased after the crisis. It seems to be associated with the more active interaction between the short-term bond market and the short-term foreign exchange market than before. The tightened relation of these two financial markets is caused by the arbitrage transaction of foreign investors.

• International Commerce and Information Review
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• v.9 no.2
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• pp.351-371
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• 2007

This study article is a study on the rules of origin review and rules of origin judgement. and The purpose of this article shall be studies to korea foreign law and Korea American FTA in origin country regulation. this article are two most important elements in determining market access in a FTA. that is the coverage of tariff elimination and rules of origin. The rule of origin in a FTA greatly influences the creation of economic profit and distribution. Therefor, The Result of the article is review to protection of domestic customers and domestic industries in rules of origin. This study contributes to a understanding of judgement of rules of origin and extend level of generalization of exchange law, WTO, FTA Regulations by review interaction relation.

• Asian Journal of Business Environment
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• v.11 no.4
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• pp.17-29
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• 2021

Purpose: The aim of this study is to explore the dynamic linkage between conditional stock market volatility and macroeconomic uncertainty of Bangladesh. Research design, data, and methodology: This study uses monthly data covering the time period from January 2005 to December 2018. A comprehensive set of macroeconomic variables, namely industrial production index (IP), consumer price index (CPI), broad money supply (M2), 91-day treasury bill rate (TB), treasury bond yield (GB), exchange rate (EX), inflow of foreign remittance (RT) and stock market index of DSEX are used for analysis. Symmetric and asymmetric univariate GARCH family of models and multivariate VAR model, along with block exogeneity and impulse response functions, are implemented on conditional volatility series to discover the possible interactions and causal relations between macroeconomic forces and stock return. Results: The analysis of the study exhibits time-varying volatility and volatility persistence in all the variables of interest. Moreover, the asymmetric effect is found significant in the stock return and most of the growth series of macroeconomic fundamentals. Results from the multivariate VAR model indicate that only short-term interest rate significantly influence the stock market volatility, while conditional stock return volatility is significant in explaining the volatility of industrial production, inflation, and treasury bill rate. Conclusion: The findings suggest an increasing interdependence between the money market and equity market as well as the macroeconomic fundamentals of Bangladesh.

• Korean System Dynamics Review
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• v.2 no.2
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• pp.25-40
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• 2001

This paper describes the forecast of power plant construction in a competitive korean electricity market. In Korea, KEPCO (Korea Electric Power Corporation, fully controlled by government) was responsible for from the production of the electricity to the sale of electricity to customer. However, the generation part is separated from KEPCO and six generation companies were established for whole sale competition from April 1st, 2001. The generation companies consist of five fossil power companies and one nuclear power company in Korea at present time. Fossil power companies are scheduled to be sold to private companies including foreign investors. Nuclear power company is owned and controlled by government. The competition in generation market will start from 2003. ISO (Independence System Operator will purchase the electricity from the power exchange market. The market price is determined by the SMP(System Marginal Price) which is decided by the balance between demand and supply of electricity in power exchange market. Under this uncertain circumstance, the energy policy planners such as government are interested to the construction of the power plant in the future. These interests are accelerated due to the recent shortage of electricity supply in California. In the competitive market, investors are no longer interested in the investment for the capital intensive, long lead time generating technologies such as nuclear and coal plants. Large unclear and coal plants were no longer the top choices. Instead, investors in the competitive market are interested in smaller, more efficient, cheaper, cleaner technologies such as CCGT(Combined Cycle Gas Turbine). Electricity is treated as commodity in the competitive market. The investors behavior in the commodity market shows that the new investment decision is made when the market price exceeds the sum of capital cost and variable cost of the new facility and the existing facility utilization depends on the marginal cost of the facility. This investors behavior can be applied to the new investments for the power plant. Under these postulations, there is the potential for power plant construction to appear in waves causing alternating periods of over and under supply of electricity like commodity production or real estate production. A computer model was developed to sturdy the possibility that construction will appear in waves of boom and bust in Korean electricity market. This model was constructed using System Dynamics method pioneered by Forrester(MIT, 1961) and explained in recent text by Sternman (Business Dynamics, MIT, 2000) and the recent work by Andrew Ford(Energy Policy, 1999). This model was designed based on the Energy Policy results(Ford, 1999) with parameters for loads and resources in Korea. This Korea Market Model was developed and tested in a small scale project to demonstrate the usefulness of the System Dynamics approach. Korea electricity market is isolated and not allowed to import electricity from outsides. In this model, the base load such as unclear and large coal power plant are assumed to be user specified investment and only CCGT is selected for new investment by investors in the market. This model may be used to learn if government investment in new unclear plants could compensate for the unstable actions of private developers. This model can be used to test the policy focused on the role of unclear investments over time. This model also can be used to test whether the future power plant construction can meet the government targets for the mix of generating resources and to test whether to maintain stable price in the spot market.

• The Korean Journal of Applied Statistics
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• v.24 no.1
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• pp.103-114
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• 2011

Current series for testing stock market cointegrations tend to be restricted to analyzing the relations between stock market prices and may not be able to understand the whole picture of the variations in the stock market system. The nature of the variations in the stock prices, between the countries that experienced economic crisis and those did not, are different for a certain period of time, and accordingly excluding the potentially important variables in the stock market system causes statistical bias. This study considers domestic foreign exchange markets and financial markets in testing for the cointegrating relations of the stock prices in Korea and major investing countries. The results demonstrate the possibility of specification errors unless those markets are included in the statistical modeling process.

• International Commerce and Information Review
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• v.10 no.2
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• pp.391-410
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• 2008

Emphasis on relationship management might be found out from Williamson (1975), who tried to elucidate why an organization exists. According to his transaction cost theory, an organization is established to evade opportunistic actions of the market and build up a hierarchy of value chain. However, judged from the perspective of exchange relationship in a trade, the transaction cost theory was likely to approach to buyer-seller relationship by the mechanism of competition. Therefore, an organization exists to control the competition of the market. Relationship management suggested by relationship marketing focuses on cooperation between buyers and sellers, rather than competition against each other. Relationship management aims to provide a framework for making a market relationship that might become an asset or a resource of the firm. In the process of maintaining and strengthening long-term and cooperative relationship with all stakeholders included customers, suppliers and staff, they continue to create new values. The purpose of this empirical research, by investigating how relationship management of multinational enterprises influences on their competitive advantages and performances, is to suggest that a cooperative relationship established for a long time in the market, so-called quasi-market relationship, substitutes for an organization.

• East Asian Journal of Business Economics (EAJBE)
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• v.6 no.4
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• pp.1-12
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• 2018

Purpose - This paper tests the effect of the structure of manufacturing and marketing subsidiary network on FX exposure of Korean MNEs. Furthermore, the moderating effect of pass-through ability on the relationship between the subsidiary network and FX exposure is explored. Research design and methodology - This study utilizes a sample of 309 Korean MNEs constructed from database offered by KOTRA and KIS-VALUE. Results - As operational flexibility arising from having operations in multiple locations provides an option for firms to tackle FX exposure, greater breadth of manufacturing subsidiary network reduces FX exposure, and greater depth increases FX exposure. However, both the breadth and depth of marketing subsidiary network decrease FX exposure due to the firm's higher level of market presence and knowledge to devise an appropriate marketing strategy that can buffer adverse exchange rate movement. Such an effect is intensified when MNE's have FX exposure pass-through ability stemming from differentiated good. Conclusions - Empirical findings suggest that types and structure of Korean MNEs' foreign subsidiary network are closely related to the level of FX exposure they are experiencing. Also, they can utilize marketing subsidiary network more efficiently when having a higher R&D intensity.

• The Journal of Asian Finance, Economics and Business
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• v.9 no.5
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• pp.409-419
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• 2022

This paper examines the post-IPO price volatility in the first trading days after the IPO of SOEs that carry out equitization, on a sample of 76 IPOs on the Hanoi Stock Exchange (Vietnam) in the period 2013-2018. Oversubscription rate, firm size, issuance size, internal equity ownership, and listing delay are all factors that influence IPO price volatility in a primitive stock market. The results showed that the average initial market-adjusted return for the first three trading days was -11.95%; -9.58% and -7.29% and the level of price volatility is related to the rate of oversubscription and company size. Issuance price, issuance size, internal equity holdings, and listing delay do not seem to contribute significantly to post-IPO share prices. Individual investors based their valuation on information released during and after the IPO. In general, the number of IPOs that yield positive and negative returns in the first trading days is about the same, indicating that the two phenomena of undervaluation and overvaluation still occur in the process of valuing shares of Vietnamese SOEs for IPOs.

• The Journal of Asian Finance, Economics and Business
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• v.9 no.1
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• pp.203-211
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• 2022

Foreign direct investment (FDI) has increased at an exponential rate during the last two decades. It is now a feature of emerging market economies as well. Foreign direct investment and financial development are important factors in an economy's growth. Various studies have examined the impact of foreign direct investment and financial development on economic growth in different countries and areas. However, the findings are currently inconclusive. Using updated data from 1970 to 2020, this study will examine the relationships between FDI, financial development, and economic growth in 30 rising economies.GDP is the dependent variable, while FDI, financial development, trade openness, infrastructure, exchange rate, and GDP growth are the independent factors. To estimate the panel data, we used the most recent econometric models. The study's major findings suggest that FDI and financial development are critical determinants in emerging economies' economic progress. Furthermore, multiple robustness checks supported the study's empirical findings. The results of this study include various practical recommendations for investors, governments, and policymakers, given the increased interest in global economic integration and member states' reliance on FDI as a critical aspect of sustaining prosperity.