International financial centres, office market rents and volatility

Despite continuing developments in information technology and the growing economic significance of the emerging Eastern European, South American and Asian economies, international financial activity remains strongly concentrated in a relatively small number of international financial centres. That concentration of financial activity requires a critical mass of office occupation and creates demand for high specification, high cost space. The demand for that space is increasingly linked to the fortunes of global capital markets. That linkage has been emphasised by developments in real estate markets, notably the development of global real estate investment, innovation in property investment vehicles and the growth of debt securitisation. The resultant interlinking of occupier, asset, debt and development markets within and across global financial centres is a source of potential volatility and risk. The paper sets out a broad conceptual model of the linkages and their implications for systemic market risk and presents preliminary empirical results that provide support for the model proposed.

Post-crisis regulatory reforms and bank performance: lessons from Asia

Based on a large dataset from eight Asian economies, we test the impact of post-crisis regulatory reforms on the performance of depository institutions in countries at different levels of financial development. We allow for technological heterogeneity and estimate a set of country-level stochastic cost frontiers followed by a deterministic bootstrapped meta-frontier to evaluate cost efficiency and cost technology. Our results support the view that liberalization policies have a positive impact on bank performance, while the reverse is true for prudential regulation policies. The removal of activities restrictions, bank privatization and foreign bank entry have a positive and significant impact on technological progress and cost efficiency. In contrast, prudential policies, which aim to protect the banking sector from excessive risk-taking, tend to adversely affect banks cost efficiency but not cost technology.

The impact of deregulation and re-regulation on bank efficiency: evidence from Asia

Following the 1997 crisis, banking sector reforms in Asia have been characterised by the emphasis on prudential regulation, associated with increased financial liberalisation. Using a panel data set of commercial banks from eight major Asian economies over the period 2001-2010, this study explores how the coexistence of liberalisation and prudential regulation affects banks’ cost characteristics. Given the presence of heterogeneity of technologies across countries, we use a stochastic frontier approach followed by the estimation of a deterministic meta-frontier to provide ‘true’ estimates of bank cost efficiency measures. Our results show that the liberalization of bank interest rates and the increase in foreign banks' presence have had a positive and significant impact on technological progress and cost efficiency. On the other hand, we find that prudential regulation might adversely affect bank cost performance. When designing an optimal regulatory framework, policy makers should combine policies which aim to foster financial stability without hindering financial intermediation.

The mean evolution and variability of the Asian summer monsoon: Comparison of ECMWF and NCEP-NCAR reanalyses

The behavior of the Asian summer monsoon is documented and compared using the European Centre for Medium-Range Weather Forecasts (ECMWF) Reanalysis (ERA) and the National Centers for Environmental Prediction-National Center for Atmospheric Research (NCEP-NCAR) Reanalysis. In terms of seasonal mean climatologies the results suggest that, in several respects, the ERA is superior to the NCEP-NCAR Reanalysis. The overall better simulation of the precipitation and hence the diabatic heating field over the monsoon domain in ERA means that the analyzed circulation is probably nearer reality. In terms of interannual variability, inconsistencies in the definition of weak and strong monsoon years based on typical monsoon indices such as All-India Rainfall (AIR) anomalies and the large-scale wind shear based dynamical monsoon index (DMI) still exist. Two dominant modes of interannual variability have been identified that together explain nearly 50% of the variance. Individually, they have many features in common with the composite flow patterns associated with weak and strong monsoons, when defined in terms of regional AIR anomalies and the large-scale DMI. The reanalyses also show a common dominant mode of intraseasonal variability that describes the latitudinal displacement of the tropical convergence zone from its oceanic-to-continental regime and essentially captures the low-frequency active/break cycles of the monsoon. The relationship between interannual and intraseasonal variability has been investigated by considering the probability density function (PDF) of the principal component of the dominant intraseasonal mode. Based on the DMI, there is an indication that in years with a weaker monsoon circulation, the PDF is skewed toward negative values (i,e., break conditions). Similarly, the PDFs for El Nino and La Nina years suggest that El Nino predisposes the system to more break spells, although the sample size may limit the statistical significance of the results.

Response of the Asian summer monsoon to a weakening of Atlantic thermohaline circulation

Various paleoclimate records have shown that the Asian monsoon was punctuated by numerous suborbital time-scale events, and these events were coeval with those that happened in the North Atlantic. This study investigates the Asian summer monsoon responses to the Atlantic Ocean forcing by applying an additional freshwater flux into the North Atlantic. The simulated results indicate that the cold North Atlantic and warm South Atlantic induced by the weakened Atlantic thermohaline circulation (THC) due to the freshwater flux lead to significantly suppressed Asian summer monsoon. The authors analyzed the detailed processes of the Atlantic Ocean forcing on the Asian summer monsoon, and found that the atmospheric teleconnection in the eastern and central North Pacific and the atmosphere-ocean interaction in the tropical North Pacific play the most crucial role. Enhanced precipitation in the subtropical North Pacific extends the effects of Atlantic Ocean forcing from the eastern Pacific into the western Pacific, and the atmosphere-ocean interaction in the tropical Pacific and Indian Ocean intensifies the circulation and precipitation anomalies in the Pacific and East Asia.

How does a weakened Atlantic thermohaline circulation lead to an intensification of the ENSO-south Asian summer monsoon interaction?

This study investigates the change of the El Niño–Southern Oscillation (ENSO)-South Asian summer monsoon interaction in response to a weakened Atlantic thermohaline circulation (THC) by applying an additional freshwater flux into the North Atlantic. The simulated results indicate that the weakened THC leads to intensified ENSO-South Asian summer monsoon relationship and enhanced South Asian summer monsoon interannual variability. Furthermore, it is suggested that this intensification of the ENSO-monsoon relationship is likely due to the enhanced ENSO variability induced by the weakened THC. This study indicates that the low frequency fluctuation of Atlantic SSTs might have an influence on South Asian summer monsoon interannual variability and the ENSO-monsoon interaction, and suggests a nonlocal mechanism for the observed decadal-multidecadal modulation of ENSO-monsoon relationship.

On the long-term interannual variability of the east Asian winter monsoon

The East Asian Winter Monsoon (EAWM) and Siberian High (SH) are inherently related, based on prior studies of instrumental data available for recent decades (since 1958). Here we develop an extended instrumental EAWM index since 1871 that correlates significantly with the SH. These two indices show common modes of variation on the biennial (2-3 year) time scale. We also develop an index of the pressure gradient between the SH and the Aleutian Low, a gradient which critically impacts EAWM variability. This difference series, based on tree-ring reconstructions of the SH and the North Pacific Index (NPI) over the past 400 years, shows that the weakening of this gradient in recent decades has not been unusual in a long-term context. Correlations between the SH series and a tree-ring reconstruction of the El Nino-Southern Oscillation (ENSO) suggest a variable tropical-higher latitude teleconnection.

Overview: oxidant and particle photochemical processes above a south-east Asian tropical rain forest (the OP3 project); introduction, rationale, location, characteristics and tools

In April–July 2008, intensive measurements were made of atmospheric composition and chemistry in Sabah, Malaysia, as part of the "Oxidant and particle photochemical processes above a South-East Asian tropical rainforest" (OP3) project. Fluxes and concentrations of trace gases and particles were made from and above the rainforest canopy at the Bukit Atur Global Atmosphere Watch station and at the nearby Sabahmas oil palm plantation, using both ground-based and airborne measurements. Here, the measurement and modelling strategies used, the characteristics of the sites and an overview of data obtained are described. Composition measurements show that the rainforest site was not significantly impacted by anthropogenic pollution, and this is confirmed by satellite retrievals of NO2 and HCHO. The dominant modulators of atmospheric chemistry at the rainforest site were therefore emissions of BVOCs and soil emissions of reactive nitrogen oxides. At the observed BVOC:NOx volume mixing ratio (~100 pptv/pptv), current chemical models suggest that daytime maximum OH concentrations should be ca. 105 radicals cm−3, but observed OH concentrations were an order of magnitude greater than this. We confirm, therefore, previous measurements that suggest that an unexplained source of OH must exist above tropical rainforest and we continue to interrogate the data to find explanations for this.

Stages of organizational transformation in transition economies: A dynamic capabilities approach

How do organizations previously dominated by the state develop dynamic capabilities that would support their growth in a competitive market economy? We develop a theoretical framework of organizational transformation that explains the processes by which organizations learn and develop dynamic capabilities in transition economies. Specifically, the framework theorizes about the importance of, and inter-relationships between, leadership, organizational learning, dynamic capabilities, and performance over three stages of transformation. Propositions derived from this framework explain the pre-conditions enabling organizational learning, the linkages between types of learning and functions of dynamic capabilities, and the feedback from dynamic capabilities to organizational learning that allows firms in transition economies to regain their footing and build long-term competitive advantage. We focus on transition contexts, where these processes have been magnified and thus offer new insights into strategizing in radically altered environments.

Impact of the Atlantic Ocean on the multidecadal fluctuation of El Nino–Southern Oscillation–South Asian monsoon relationship in a coupled general circulation model

The multidecadal variability of El Niño–Southern Oscillation (ENSO)–South Asian monsoon relationship is elucidated in a 1000 year control simulation of a coupled general circulation model. The results indicate that the Atlantic Multidecadal Oscillation (AMO), resulting from the natural fluctuation of the Atlantic Meridional Overturning Circulation (AMOC), plays an important role in modulating the multidecadal variation of the ENSO-monsoon relationship. The sea surface temperature anomalies associated with the AMO induce not only significant climate impact in the Atlantic but also the coupled feedbacks in the tropical Pacific regions. The remote responses in the Pacific Ocean to a positive phase of the AMO which is resulted from enhanced AMOC in the model simulation and are characterized by statistically significant warming in the North Pacific and in the western tropical Pacific, a relaxation of tropical easterly trades in the central and eastern tropical Pacific, and a deeper thermocline in the eastern tropical Pacific. These changes in mean states lead to a reduction of ENSO variability and therefore a weakening of the ENSO-monsoon relationship. This study suggests a nonlocal mechanism for the low-frequency fluctuation of the ENSO-monsoon relationship, although the AMO explains only a fraction of the ENSO–South Asian monsoon variation on decadal-multidecadal timescale. Given the multidecadal variation of the AMOC and therefore of the AMO exhibit decadal predictability, this study highlights the possibility that a part of the change of climate variability in the Pacific Ocean and its teleconnection may be predictable.