This study assesses the effectiveness and drawbacks of maximum loan-to-value (LTV) ratios as a macroprudential tool based on Hong Kong¡¦s experience and econometric analyses of panel data from 13 economies. The tool is found to be effective in reducing systemic risk stemming from the...

This paper proposes a quasi-bounded process for exchange rate dynamics within a target zone, consistent with a credible exchange rate band in which the exchange rate cannot breach the strong-side limit while the weak-side limit is only accessible under restricted conditions of the relationship...

The empirical results show that after the introduction of the three refinements to the Linked Exchange Rate system in May 2005 the Hong Kong dollar follows a bounded process that is consistent with a fully credible exchange rate band. The bounded process will limit the movements of the exchange...

This paper identifies major determinants of mutual fund flows to Hong Kong equities, which is essential for financial regulators and investors to understand potential sources of instability in domestic financial markets. We find that fund flows to global equities outweigh other fund-specific...

This paper assesses whether long-term institutional investors help stabilise or destabilise Hong Kong and international stock markets. We use a novel dataset based on individual funds issued by insurance companies and pension funds worldwide. This allows us to examine each economic region in...

This note provides a cost-benefit analysis of the proposed regulatory reform by the Basel Committee on Banking Supervision (BCBS) for Hong Kong. Following largely the methodology of a cross-country analysis by the BCBS, the long-term benefit from the reform is assumed to be derived mainly from a...

This study assesses the effectiveness and drawbacks of maximum loan-to-value (LTV) ratios as a macroprudential tool based on Hong Kong's experience and econometric analyses of panel data from 13 economies. The tool is found to be effective in reducing systemic risk stemming from the...