This paper adopts a three-equation New Keynesian model to evaluate the appropriateness of China's monetary policy framework. Our simulation results show that a hybrid rule that relies on both interest rate and quantity of money to conduct monetary policy appears to be more suitable than its...

Among the various risks faced by banks that may have a systemic impact on the banking system, the credit risk has long been one of the concerns of central banks. This paper illustrates how to assess the credit risk of the banking system in Hong Kong by constructing an index of multiple default...

Traditional measures of concentration of financial market activities do not adequately reflect an economy¡¦s status as an international financial centre (IFC). In this paper, we construct alternative measures that better capture the ability of an IFC to attract capital flows and international...

Financial integration has strong implications for financial stability. On the one hand, financial integration among economies helps improve their capacity to absorb shocks and foster development. On the other hand, intensified financial linkages in a world of increasing capital mobility may also...

This paper analyses the potential benefits from reforms aimed at promoting domestic demand in the region, as well as the effects of slower growth in the United States and the G3 on EMEAP economies.The analysis is based on simulation scenarios using an expanded version of the IMF Global...

Forward exchange rates convey information about the risk premiums of the currency exposures of the investors. The extraction of these risk premiums provides market information for the expected future values of a currency, which may be useful for policymakers in their market surveillance and...

In this paper, we model the policy stance of the People¡¦s Bank of China (PBoC) as a latent variable, and the discrete changes in the reserve requirement ratio, policy interest rates, and the scale of open market operations are taken as signals of movement of this latent variable. We run a...

Investors' attitude towards risk is a key factor driving the movement in asset prices. Global reduction in investors' risk appetite has coincided with episodes of global financial market correction. In this paper, we derive a measure for risk appetite based on the methodology of Gai and Vause...

This study develops a probit econometric model to identify a set of leading indicators of banking distress and estimate banking distress probability for Hong Kong and other EMEAP economies. Macroeconomic fundamentals, currency crisis vulnerability, credit risk of banks and companies, asset price...

This paper applies a gravity model to investigate the determinants of foreign direct investment (FDI) in East Asia. We find that economic fundamentals (such as market size, per capita income, and country risk indicators), economic and cultural ties, and information asymmetry are important...