This study examines the nonlinear and heterogeneous effects of macroeconomic uncertainty on bank stability in ASEAN emerging markets, with particular emphasis on the moderating roles of capital and liquidity buffers. Using panel data of 62 banks over 2010-2023, the analysis integrates panel threshold regression (PTR) with double machine learning (DML) and causal forests. PTR results reveal a statistically significant capital adequacy threshold of approximately 8%, above which the adverse effect of uncertainty is significantly attenuated, while liquidity shows consistent mitigating effects in machine learning (ML) estimates but lacks robust threshold evidence. In contrast, ML evidence uncovers conditional heterogeneity: higher liquidity systematically reduces the destabilising impact of uncertainty, whereas elevated capital ratios in some cases amplify vulnerability, reflecting structural frictions and risk-taking incentives in emerging markets. Robustness checks across alternative stability measures, subsamples (pre-vs. post-COVID, small vs. large banks), and uncertainty regimes confirm that uncertainty shocks are most damaging during high-uncertainty episodes and for smaller banks. The findings highlight that while both buffers matter, capital provides strong protection only once a critical threshold is reached, whereas liquidity consistently supports resilience. These insights underscore the need for tailored macroprudential strategies that integrate buffer design with institutional quality.
This paper examines the short- and long-run effects of natural resource rents, including oil and gas rents, on human capital accumulation in Brunei Darussalam, using the autoregressive distributed lag (ARDL) bound test, augmented-ARDL cointegration tests, and the Gregory-Hansen structural break testing approach for nondegenerate cointegration over the pre-COVID-19 period from 1975 to 2019. The evidence shows that resource rents (both aggregate and disaggregate oil and gas rents) crowd in human capital accumulation in both the short and long run, consistent with a ‘resource blessing’ view. The findings also reveal that past physical capital accumulation has a complementary effect on current human capital accumulation, but only in the short run. At the same time, aggregate government expenditure promotes the development of human capital only in the long run.
Sultan Nazrin Shah (ed.) (2026). Chronicling Themes in the Economic and Social History of Malaysia. Singapore: World Scientific.
This study examines how tax loss carryforwards (TLCFs) affect firm investment efficiency and whether political connections moderate this relationship. Using firm level data from Malaysia and ordinary least squares estimation, the results show that longer TLCF shelter periods are associated with higher investment efficiency. However, this positive effect is significantly attenuated among politically connected firms (PCFs). Further analysis reveals that TLCFs mitigate underinvestment but do not significantly affect overinvestment, regardless of political connections. This study contributes to the literature by providing novel evidence on the real effects of tax-based incentives in an emerging market setting. It further highlights how political connections distort the effectiveness of such incentives and underscores the interaction between tax policy and political economy in shaping corporate investment outcomes.
This study examines the relationship between CEO age and firm digital trans formation using Chinese listed firms from 2011 to 2022. Drawing on upper echelons, as well as career concern and career horizon perspectives, we identify a robust inverse U-shaped relationship: digital transformation intensity increases with CEO age up to an inflection point at approximately 51.05 years and declines thereafter. Younger CEOs tend to adopt a more cautious approach toward long-term and uncertain digital investments due to career concerns, whereas mid-career CEOs are more actively engaged in digital transformation as a result of accumulated experience, authority and balanced risk incentives. In contrast, as career horizons shorten, older CEOs become increasingly risk-averse. We further find that firm size positively moderates this relationship by enhancing managerial discretion through greater resource availability and implementation capacity. These findings highlight the joint role of executive career stage and organisational context in shaping digital transformation strategies. This study contributes to the literature by demonstrating that CEO age effects are nonlinear, career stage dependent, and context-sensitive, and provides practical insights for aligning executive characteristics with organisational conditions to support digital transformation.
Independent smallholders are crucial to Malaysia's oil palm sector, yet their productivity remains below potential due to technical inefficiency and diverse production environments. This study examines the technical efficiency and production determinants of independent oil palm smallholders using a stochastic frontier analysis (SFA) framework. Primary survey data were analysed with a Cobb-Douglas stochastic frontier production function estimated under half-normal and truncated-normal distributions, with models specified both with and without environmental variables. The truncated-normal model provided the best fit, and the mean technical efficiency was about 0.63, indicating that smallholders produce only 63% of their potential output, with substantial variation across farms. Including environmental variables - such as rainfall, temperature, soil type, land type, humidity, sunlight and climate-related shocks - improved model fit and altered several input elasticities. Fertiliser use showed a negative association with output, while irrigation, labour, pest control, sunlight and temperature contributed positively to productivity. Accounting for environmental heterogeneity reduced unexplained variance, revealing that part of the observed inefficiency reflects environmental constraints rather than managerial shortcomings. These findings highlight the need for site-specific strategies tailored to local agroecological conditions to enhance smallholder productivity.
This paper examines the impact of innovation on non-performing loans in the banking sector. Specifically, innovation has the potential to either limit banks’ lending activities or enhance their operational efficiency, both of which may contribute to a reduction in non-performing loans. Utilising a dataset comprising 120 countries over the period from 2013 to 2020, the study provides empirical evidence supporting this hypothesis. The results remain robust even after addressing endogeneity concerns through the application of alternative regression techniques, including instrumental variables and system generalized method of moments models. Additionally, the study highlights that the impact of innovation on non-performing loans is more pronounced in countries with lower levels of corruption, whereas its effects may be diluted in high corruption contexts. These findings offer significant policy implications, emphasising the importance of fostering innovation and reducing corruption to promote sustainable banking practices and economic growth.
This study examines the effects of information and communication technology (ICT) adoption and income diversification (IDI) on bank competitiveness in emerging economies, with evidence from Vietnam. Both ICT and IDI serve as strategic drivers of performance, yet their joint and nonlinear impacts remain underexplored in developing financial systems undergoing digital transformation. Using a dynamic panel of 29 Vietnamese commercial banks from 2010 to 2022, the study employs the system generalized method of moments (S-GMM) estimator to address endogeneity and capture nonlinear and interaction effects. Bank competitiveness is measured by the Lerner index, with controls for bank-specific and macroeconomic factors, including the COVID-19 shock. The results indicate inverted U-shaped relationships between ICT, IDI and competitiveness, implying diminishing returns beyond optimal thresholds. The negative interaction between ICT and IDI suggests that simultaneous overinvestment may weaken competitive advantages, while macroeconomic volatility further moderates these effects. The study contributes to the literature by revealing the nonlinear and interactive mechanisms through which digital transformation and diversification jointly shape bank competitiveness in a developing economy, offering practical implications for balancing innovation and diversification strategies.
The global energy transition is crucial in tackling climate change and achieving sustainable development, with renewable energy playing a central role in replacing fossil fuels. Therefore, many countries have implemented carbon pricing policies to internalise environmental externalities. While most of the existing literature focuses on the impact of such policies on carbon dioxide (CO2) emissions, their influence on renewable energy capacity remains underexplored. We examine the impact of carbon pricing policies - emissions trading schemes (ETS) and carbon taxes - on renewable energy capacity across 18 developing and 21 developed countries from 2006 to 2022. Given that the standard difference-in-differences (DiD) approach may violate the parallel trends assumption due to cross-country heterogeneity, we employ a combination of propensity score matching (PSM) and staggered DiD to mitigate selection bias and improve causal inference. We find that carbon pricing policies significantly increase renewable energy capacity in developing countries, both in the short run and long run. However, implementation of these policies appears to reduce renewable energy capacity in developed countries, possibly due to policy design, market maturity, or regulatory overlap. The findings highlight the importance of strengthening carbon pricing in developing countries, while developed economies may require more targeted reforms or complementary policies to enhance renewable energy development.
Despite Malaysia's reputation as one of the most attractive destinations for foreign direct investment (FDI) in Asia, the nation has experienced a downward trend in FDI flows since reaching a peak in 2011. This sustained decline warrants a critical examination of the shadow economy, a lesser-explored determinant of FDI, impeded by measurement challenges. By focusing on the roles of smuggling and tax evasion-two key components of the shadow economy-this study examines their impact on Malaysia's attractiveness to foreign investors. Our research utilises data from Malaysian Customs annual reports from 1999 to 2018 and employs the autoregressive distributed lag technique to analyse the relationship between the shadow economy and FDI inflows. The findings reveal a significant negative impact: the uncertainties created by smuggling and tax evasion impose additional costs on investors, thereby deterring FDI. This study underscores the urgent need for Malaysia to enhance its investment climate through the establishment of transparent and unambiguous laws, rules and regulations, thereby reducing investor uncertainty and revitalising FDI inflows.
This paper examines how land-use rights affect household access to both formal and informal credit and how different credit sources relate to household estimate probit models for borrowing choice across five lender types, Tobit models for loan amounts, and ordinary least squares (OLS) models for income effects, incorporating interaction terms to capture whether owned land is used as collateral. Results indicate that when land is pledged as collateral, loan amounts rise in both markets; for interest rates, formal pricing is largely policy invariant, while in informal markets collateral primarily sharpens the negative rate-scale slopes rather than uniformly lowering levels. We discuss mechanisms explaining why informal credit can have positive income effects (speed, contractual flexibility and embedded information) and highlight the policy implications of issuing land-use rights certificates and improving lending transparency.
We examined the impact of financial resources (FR), health resources (HR), social resources (SR) and psychological resources (PR) on retirement well-being (RWB) among older adults in Malaysia. Using a quantitative approach with non-probability sampling, a self-administered questionnaire was distributed to individuals aged 60 years and above, yielding 166 usable responses. Data were analysed using multivariate regression analysis based on their diverse backgrounds. The findings reveal that all four types of retirement resources significantly and positively affect RWB, with PR emerging as the strongest predictor, followed by FR. Gender moderates the relationship between FR, SR and PR, and RWB, indicating that men's RWB is more influenced by FR and PR, while women benefit more from SR, though excessive SR can lower their RWB. The moderating effect of caring of grandchildren (CG) is insignificant for most resources except PR, where non-caregivers require strong PR to achieve similar levels of RWB. The findings highlight the importance of enhancing psychological resilience, financial resilience and social support among older adults. Practical implications include promoting health and wellness programs within the private sector and developing targeted policy interventions to strengthen retirees' overall well-being and quality of life in Malaysia.
Consumption of unhealthy foods possesses harmful effects on health, thereby increasing the disease burden. If low-income people, especially those living in urban areas, do not make efforts to reduce their consumption on unhealthy foods, the health-economic costs borne by them will rise. To date, there is a growing number of Malaysian studies that examine factors affecting consumption expenditure on unhealthy foods, but none has paid attention to the urban poor. The objective of this study is to narrow this research gap. Cross-sectional data from the South East Asia Obesogenic Food Environment (SEAOFE) study was used. A seemingly unrelated regressions (SUR) model was utilised to estimate the effects of sociodemographic and health factors on expenditure of oil and fats, processed foods, sugar-sweetened beverages and alcoholic drinks. Findings showed that income and household size were positively associated with expenditure on unhealthy foods. Individuals who were between 61 and 70 years old had higher expenditure on unhealthy foods than their younger counterparts. The Chinese spent less on certain unhealthy foods compared to the Malays. Being employed, having tertiary-level education, being married and living with chronic diseases increased spending on unhealthy foods. These findings suggest that the Malaysian government should consider increasing the tax on sugar-sweetened beverages and using health campaigns to educate the urban poor about the risks of unhealthy foods.
This study evaluates the extent to which banks in Malaysia have contributed to and been impacted by systemic risk in the wake of natural disaster events during a period spanning from 1 January 2007 to 31 March 2022. Employing delta conditional value-at-risk measures, our findings reveal that natural disasters, akin to past crises such as the global financial crisis and the COVID-19 pandemic, elevate systemic risk in the banking sector, though the magnitude of their impact is relatively less severe. Additionally, we find that there were more instances, either during the natural disaster event or in its aftermath, where the banks increased their contribution to systemic risk compared to instances where they experienced heightened systemic risk exposure. In terms of timing of the reaction, our analysis shows that the market exhibits a notable delay, with both systemic risk contribution and exposure primarily increasing after the disaster event has concluded, rather than during its occurrence. These results underscore the critical need for climate resilience in the banking industry and provide important insights into the systemic risk implications of natural disasters, particularly in developing, bank-centric countries like Malaysia. They also inform the formulation of targeted policy measures to effectively mitigate these risks
This study examines the time-varying equicorrelation and tail dependence between global oil prices and regional green markets. We use novel approaches, namely the GARCH-DECO model, Quantile-on-Quantile Regression (QQR), and Granger-causality in quantiles. The empirical findings show that global oil prices and renewable energy stock markets are inextricably linked. Specifically, there is a positive equicorrelation between global oil prices and clean energy stock markets. During times of turmoil, these trends become more pronounced, fostering contagion effects that diminish the benefits of diversification between renewable energy stocks and oil portfolios. The outcomes of the QQR technique reveal a heterogeneous interdependence structure between the oil and renewable energy stock markets across the entire distribution. Our results have significant implications for policymakers, investors and traders, as they may assist in understanding the behaviour of renewable energy and oil markets during periods of extreme market stress.
This study examines the impact of two different types of uncertainty, which are domestic economic policy uncertainty and macroeconomic uncertainty stemming from the United States (US) on corporate cash holdings. Using a sample of 18 countries from 2003 to 2023, we find that both types of uncertainty positively associated with corporate cash holdings due to precautionary motives. Our results demonstrate that the US macroeconomic uncertainty has a greater influence over domestic economic policy uncertainty on corporate cash holdings decision. Further analysis indicates that the influences of both types of uncertainty on corporate cash holdings are more pronounced in developed countries.
This study investigates market power trends in an emerging market and developing economy (EMDE), the Philippines, by estimating markups for nonfinancial publicly listed corporations from 2001 to 2019 using a production-based methodology. While corroborating certain findings from advanced economies (AEs) regarding the positive relationship between firm size and markups, as well as markups and profitability, the substantial role larger firms play in markup movements, and the significant inter-sectoral variation in markups, this study reveals key distinctions. Notably, unlike AEs, the Philippines exhibits a more stable aggregate markup trend with limited evidence of consistent upward trend, potentially attributable to the heightened sensitivity of Philippine firms to macroeconomic fluctuations. This is further evidenced by the negative co-movement between markups and macroeconomic variables, such as interest rates and exchange rates. This study significantly contributes to the limited body of literature on market power in EMDEs by providing novel evidence from the Philippines and extending existing research on Philippine markups. These findings provide crucial insights for Philippine policymakers in enabling the development and implementation of more effective competition and antitrust policies to address market power dynamics and foster a more competitive landscape.
This study investigates the prevalence and determinants of zombie firms in the industrial goods and services sector listed on Bursa Malaysia from 2011 to 2022. Using the Altman Z-score, Ohlson O-score, and selected financial indicators, we find that 22% of firms with adequate financial disclosures can be classified as “walking dead.” Panel logistic regression analysis reveals that the asset turnover ratio is the most significant predictor of zombification, though its marginal effect diminishes at higher levels. Leverage follows a non-linear relationship, where moderate debt increases the probability of zombification, but excessive debt appears to reduce it ‒ possibly reflecting creditor intervention. Interestingly, firms were less likely to be classified as zombies during the COVID-19 period, potentially due to government relief measures and regulatory forbearance. Despite clear signs of financial distress, most zombie firms are not designated as PN17 or GN3, suggesting limitations in current distress recognition frameworks. These findings offer important implications for policymakers seeking to strengthen regulatory mechanisms and ensure efficient capital allocation. Retail investors may also benefit from improved tools to identify and avoid zombie firms.
