Suchergebnisse

A recent major development in international finance has been
the growing interest of the portfolio managers in emerging stock
markets. The interest in the emerging markets has been accelerated by
global trends towards the opening up of economies and financial markets,
the free flow of capital and the privatisation of financial
institutions. The integration of emerging markets globally has been
hindered so far as, besides other several factors, participating in
emerging securities markets has posed serious problems for international
investors. "These markets lack the depth, regulatory framework, and
structural safeguards that characterise equity markets in the 'United
States and in a few industrial countries," [Medewitz et al. (1991)]. A
peculiar risk of investing in the emerging markets, besides the
currency, political and investment risk, is the "risk arising out of the
development stage of emerging markets," [Errunza and Losq (1987)].
Compounding the difficulties for the international investor is the lack
of information pertinent for making investment decisions. A study of
emerging markets, therefore, becomes important in shedding light on the
economic and institutional characteristics of these markets.

Financial services sector has become a major driver of
economic growth in the developing countries through innovation in
response to the forces of globalisation and technology. Sound risk
management practices by financial institution are critical to the
stability of the institutions and to the sustainability of economic
growth. Therefore, measurement of market risk is important to all market
participants for devising risk management strategies. Value-at-Risk
(VaR) is the most widely used measure of market risk, which is defined
as the maximum possible loss to the value of financial assets with a
given probability over a certain time horizon. However, the task of
implementing the VaR approach still remains a challenge as the empirical
return distributions are found to be fat tailed and skewed in contrast
to the normal distribution as assumed in the theoretical models. An
extensive literature in finance (e.g., Nassim Taleb's The Black Swan)
underscores the importance of rare events in asset pricing and portfolio
choice. These rare events may materialise in the shape of a large
positive or negative investment returns, a stock market crash, major
defaults, or the collapse of risky asset prices.

I am extremely grateful to Pakistan Institute of Development
Economics, Islamabad for giving me an opportunity to share my views on
"Skill Development for Growth and Productivity". Pakistan is currently
experiencing an exciting period of economic and social change. The
post-WTO regime and the global market dictate has exposed Pakistans'
economy to international competitiveness necessitating rapid
technological changes in the industry. There is definite and recurring
need to optimise human resources through Skill Development efforts for
achieving high productivity culture for investments in the industrial,
commercial, agriculture and services sectors. There is clear indication
that low cost labour will no longer be significant advantage for any
business which is not based on productivity charged and quality oriented
workforce. Therefore, a growing realisation exists for the huge skill
deficiency and the demand for competitive workforce with constant supply
from educational, vocational/technical training institutions. These hard
facts point towards urgent development of strong network between various
stakeholders to achieve skill development for economic development.
Indeed skill excellence and human resource development has been
acknowledged as the major component of economic and social development
that contributes in direct proportion to poverty alleviation and
national prosperity.........

In the 1990s accessing international capital markets has
become a major source of external financing for many developing
countries. The paper reviews Pakistan's experience in tapping the global
financial markets. We conduct a cross-sectional econometric analysis of
the factors influencing the access to international equity and debt
capital. Results indicate that the factors as suggested in the earlier
literature do appear to be influential in determining the access to
international capital. The study finds that the role of credit rating in
attracting debt flows and of the local capital markets in attracting
equity flows is prominent. The rate of economic growth is a major
determinant of the access to foreign debt and equity funds. It also
appears that the country rating which is based on a comprehensive set of
variables indicating the financial health of the country subsumes the
other proxies of economic stability and debt management. This study
underscores the importance of institutional factors. Areas where
improvement is possible to facilitate access to the international
capital markets are identified as (1) political and legal environment,
including improvements in the quality of the system of civil laws and
its enforcement (2) private sector development through sustaining
economic liberalisation and privatisation programmes (3) improvement in
macro-economic management through a prudent internal and external debt
management (4) development of capital markets through, improvements in
market operations, enforcement of market regulations, strengthening of
financial institutions and effective dissemination of market
information.

The objective of the study is to examine possible presence of
nonlinear speculative bubbles in the Karachi Stock Exchange (KSE).
Bubbles are argued to exist when there are substantial deviations of
market value from the estimated fundamental values. We estimate a series
of fundamental values from a four variable Vector Autoregression Model
(VAR) using the main KSE100 index along with measures of world stock
prices, the Pakistani exchange rate, and the Pakistani short-term
interest rate. Residuals of this estimated fundamental time series are
then tested for possible speculative deviations using a Hamilton regime
switching test and a rescaled range Hurst coefficient test, with a
further test for nonlinearity beyond the ARCH effects using the BDS
statistic. For all of these, we reject the null hypotheses of the
absence of speculative bubbles and nonlinearities beyond ARCH in these
series. While these results suggest the possible presence of such
bubbles, we note methodological limits on proving that due to the
problem of mis-specified fundamentals. We further discuss some
characteristics of the regulatory environment that may make it
especially susceptible to such phenomena and may be considered by the
policy-makers for the attenuation of speculative and manipulative
behaviour. Keywords: Bubble, Pakistan, Stock Market, Regime Switching,
Rescaled Range Analysis, Nonlinearity