A s i a n D e v e l o p m e n t B a n k I n s t i t u t e

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ADBI News
2015 Volume 9 Number 1

Promoting Better Lifetime Planning through

Financial Education

SYMPOSIUM

Affordable and appropriate access to financial For more information on this event, please visit:
services by households and small and medium- www.adbi.org/event/6522.better.lifetime.planning.nancial.edu/
sized enterprises (SMEs) is important for promoting www.oecd.org/daf/n/nancial-education/oecd-japan-better-
inclusive growth and financial development. lifetime-planning-through-nancial-education.htm

Yet, insufficient knowledge of financial products

and services is an impediment to making wise
In this issue
borrowing and investment decisions. A High-Level Promoting Better Lifetime Planning through Financial
Education 1
Global Symposium, organized by ADBI, the Bank
What Effects Will a US Exit from Quantitative Easing
of Japan, Financial Services Agency of Japan, Have on East Asian Currencies? 2
and the Organisation for Economic Co-operation The Impact of Housing on Health: A Japanese
and Development on 2223 January in Tokyo, Perspective 2
addressed cutting-edge policy issues and research Trade Governance and the WTO in the 21st Century 2
ideas to promote long-term financial planning Banking Supervision in ASEAN+3 Economies 3
through financial education. Particular focus Institutional Responses to Asias Development
was given to financial education research and Challenges 3
best practices, financial education for effective Institutionalizing Regional Financial Stability 4
pension management, targeting specific groups Asia Leadership Program: Sustainable Development
for effective financial education, and financial and Climate Change 4
inclusion, regulation, and education in Asia. ADBI Welcomes New Deputy Dean 5
The symposium was attended by high-level Improving Access to SME Finance 5
officials and experts from ministries of Upcoming Events 5
finance and education, central banks, regulatory Recent Publications 6
and supervisory authorities, officials of state Recent Working Papers 7
governments and international organizations, the ADBI and IDB Discuss SME Internationalization 8
academic community, the private sector, and Labor Migration in Asia: Building Effective Structures
and Institutions for Migration Governance 8
nongovernment organizations.

1
 A s i a n D e v e l o p m e n t
What Effects Will a US Exit from Quantitative
Easing Have on East Asian Currencies?
Once the US Federal Reserve exits from its
quantitative easing monetary policy strategy in
the near future, East Asian countries will likely
face capital outflow, currency depreciation, and
pressure to raise interest rates. This was the main
conclusion drawn by Eiji Ogawa, professor of
international finance of the Graduate School of
Commerce and Management at Hitotsubashi
University and faculty fellow of the Research
Institute of Economy, Trade and Industry (RIETI),
at a seminar held at ADBI on 17 February. Based
on his numerical estimates via causality tests and
vector autoregressive (VAR) modeling techniques,
he found that changes in interest rates in the United
States had the same directional effect on interest
The Impact of Housing on Health:
A Japanese Perspective
Home ownership has
a positive effect on
health spending as well
as self-assessed health,
according to Matthias
Helble, ADBI research
fellow, and Toshiaki
Aizawa, ADBI research
Trade Governance and the WTO in the 21st Century
What changes have been taking place in the world
trading system since the global financial crisis and
what are the implications for Asia? The World
Trade Organization Doha Development Round is
in a deadlock and the emergence of the mega
regional Trans-Pacific Partnership and the
Regional Comprehensive Economic Partnership
are likely to transform world trade governance.
Addressing these questions and the current state of
play at an ADBIIDE-JETRO seminar held on 20
March, trade experts including Richard Baldwin,
professor of international economics at the
Graduate Institute Geneva, emphasized the need to
start thinking ahead about the shape of regional
and global trade governance and reforming the
2
B a n k I n s t i t u t e
SEMINAR
rates in some East Asian
countries. Moreover,
widening interest rate
differentials between the
US currency and those
of East Asia tend to lead
to a depreciation of East
Asian currencies against
the US dollar. Changes
in these interest rate
differentials can also affect capital flows in the
portfolios and other investments of the balance of
payments of East Asian economies.
For more information on this event, please visit:
www.adbi.org/event/6532.effects.quantitative.monetary.policy/.
SEMINAR
associate, at a seminar held at ADBI on 20 February.
The researchers presented an ADBI study on Japans
housing policy, in particular its link with health. They
also introduced the Keio Household Survey and
gave details on an empirical analysis of the nexus
between home ownership and health in Japan.
For more information on this event, please visit:
www.adbi.org/event/6529.impact.housing.health.japan/.
SEMINAR
WTO. Former ADBI Dean and now Project
Professor at the University of Tokyo Masahiro
Kawai, ADBI Director of Research Ganeshan
Wignaraja, and IDE-JETRO Chief Senior
Researcher Satoshi Inomata also presented at the
seminar which was moderated by ADBI Dean
Naoyuki Yoshino.
For more information on this event, please visit:
www.adbi.org/event/6549.adbi.ide.jetro.seminar/.
 A s i a n D e v e l o p m e n t
Banking Supervision in ASEAN+3 Economies
The ASEAN+3 Macroeconomic Research Office
(AMRO), an independent regional surveillance
unit, monitors and analyzes ASEAN+3
(Association of Southeast Asian Nations plus the
Peoples Republic of China, Japan, and the
Republic of Korea) economies, including their
banking systems. What are the priorities to
consider when it comes to the supervision of
member country banks and within what
supervisory framework? This was the focus of
discussion in a session on Banking Supervisory
Priorities and Capacity at an AMRO/IMF seminar
held in Seoul, Republic of Korea, on 3 March. The
chair, ADBI Dean Naoyuki Yoshino, commented
that it is difficult to assess whether an economy is
developing bubble-like symptoms or is in line with
economic fundamentals, as all economic indicators
can remain positive. Gavin Gunning, senior
director of Standard & Poors, explained using
historic data and future projections how banks are
Institutional Responses to
Asias Development Challenges
As Asias wealth increases, development
challenges are increasing as well, including
inequality, resource constraints, environmental
degradation, infrastructure, and internal risks. Kurt
Tong, principal deputy assistant secretary for the
Bureau of Economic and Business Affairs at
the US Department of State, during a seminar
on 9 February at ADBI, indicated that these
multifaceted and transboundary challenges are
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Concise summaries of news, opinions, and editorials
B a n k I n s t i t u t e
SEMINAR
credit rated and compared internationally. Dean
Yoshino stated that the credit rating system, geared
toward large firms with readily available balance
sheets, is currently inadequate when it comes to
assessing many Asian businesses which tend to be
small and medium-sized enterprises or
family-owned operations, and therefore different
methods of assessment are required.
For more information on this event, please visit:
www.amro-asia.org/.
DISTINGUISHED SPEAKER SEMINAR
best addressed by regional economic institutions
that can offer opportunities for countries to
work together toward shared solutions. He cited
ASEAN, APEC, the OECD, and multilateral
development banks as existing regional institutions
making important contributions in Asia. These
include lifting millions out of poverty and
promoting regional stability, creating rules for
regional economic engagement, and providing
platforms for dialogue between the government
and the private sector, as well as safeguarding the
observance of transparency and core standards
for governance and procurement in the region.
For more information on this event, please visit:
www.adbi.org/event/6530.tong.distinguished.speaker/.
Download speech:
www.adbi.org/speeches/2015/02/16/6537.opening.remarks.
tong.dss/
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 A s i a n D e v e l o p m e n t
Institutionalizing Regional Financial Stability
The enhancement of regional financial stability
mechanisms (RFSMs) remains a continuous
challenge on the conceptual and organizational
level and, as they have short histories, their
organization, instruments, and processes have
not been seriously tested yet under practical
circumstances. One such example is the
European Stability Mechanism (ESM). At a
roundtable held at the German Institute for
Japanese Studies on 19 February, ADBI Dean
Naoyuki Yoshino, commenting on the current
situation surrounding the euro, indicated that based
on the YoshinoMizoguchi model, the desired
debt-to-gross domestic product ratio, currently
set at 60% in the eurozone, should in fact depend
Asia Leadership Program: Sustainable
Development and Climate Change
It is no longer possible to discuss development
without invoking the concept of sustainability. The
World Bank defines sustainable development as
development that meets the needs of the present
without compromising the ability of future
generations to meet their own needs. The Asia
Leadership Program on Sustainable Development
and Climate Change, held at ADBI on 27 March,
took this a step further by demonstrating that it is
Selected Asia Pathways posts published
SME Internationalization through Global Value
Chains and Free Trade Agreements: Malaysian
Evidence
Green Investment in Asian Cities: Lessons from the
Peoples Republic of China, Indonesia, and Japan
TTIPIs the EU Really Interested in an Economic
NATO?
Five Bond Market Trends to Watch Out for in 2015
4
B a n k I n s t i t u t e
ROUNDTABLE
on the economic structure of each country and
not be the same for all eurozone countries. He
emphasized that empirical analysis is required for
each country to determine the desired level.
For more information on this event, please visit:
www.adbi.org/les/Institutionalizing-Regional-Financial-
Stability-Roundtable.pdf.
POLICY DIALOGUE
impossible to discuss leadership outside the
context of sustainable development. Bringing
leaders in Asia and the Pacific together with
internationally recognized experts on sustainable
development and climate change, this policy
dialogue provided a platform to discuss key issues
and to share experiences and define solutions.
Being a recognized global benchmark for
sustainable development and climate change
adaptation and mitigation practices, Japan as the
host country played a central role in the dialogue.
The policy dialogue focused on the Asian
experience with infrastructure projects in the
energy, urban, and water sectors to highlight the
challenges unique to the region.
For more information on this event, please visit:
www.adbi.org/event/6540.asian.leadership/.
The Financial Sector Needs to Be Driving the Green
Transformation
Plurilateral Trade Agreements: An Overlooked but
Powerful Force for International Trade Opening for Asia?
Why Do We Need Financial Education in Asia?
Learning Crisis in South Asia
View all Asia Pathways posts at www.asiapathways-adbi.org/.
 A s i a n D e v e l o p m e n t B a n k I n s t i t u t e

ADBI Welcomes New Deputy Dean

STAFF

Bokhwan Yu became ADBIs new deputy dean MA in public administration

(Capacity Building, Training, and Special from Yonsei University and
Activities), effective 17 February. A national of a PhD in political economics
the Republic of Korea, he was previously an from the University of
alternative executive director at the World Bank. Cambridge. He has written
Dr. Yu has extensive experience as a policy maker extensively on development,
on both economic and environmental issues. He environmental policies, and
has served as secretary general of the Republic of green growth. Dr. Yu
Koreas Presidential Committee on Green Growth succeeds Jae-Ha Park, who
and has held several senior positions in the served as ADBIs deputy
Ministry of Strategy and Finance. Dr. Yu holds an dean from October 2011.

Improving Access to SME Finance

PANEL DISCUSSION

a high-level panel on SMEs and global markets

Credit rating systems for small and medium-sized
enterprises (SMEs) can improve access to finance
for SMEs, said ADBI Dean Naoyuki Yoshino at
organized by the International Trade Centre in
Geneva, Switzerland, on 26 March. Dean Yoshino
also pointed out the need to improve SME
financial education and literacy, and to introduce
hometown investment trust funds throughout
Asia. He explained that guaranteeing credit is
another way to mitigate the information asymmetry
between lenders and borrowers. However, he
stressed that the credit guarantee ratio should be
different from bank to bank based on the default
risk ratio and the amount to be lent to SMEs.
For more information on this event, please visit:
www.intracen.org/event/SMEs-AND-GLOBAL-MARKETS-
THE-MISSING-LINK-FOR-INCLUSIVE-GROWTH/.

Upcoming Events

Distributional Aspects of Structural Change and Growth

26
This seminar will examine structural change with respect to welfare distribution and present an estimation of the influence
May
of structural change on inequality using an unconditional quantile regression-based decomposition analysis.

The Role of Standards for International Trade in Asian Economies

29 This seminar will address the role of technical standards for international trade in Asian economies. Theoretical arguments
May on standards potential to foster international trade or represent non-tariff measures to trade will be examined as well as
how empirical studies try to quantify the impact of standards.

Asia Regional Workshop on PublicPrivate Partnerships: Engaging the Private Sector

25
This training seeks to improve the capacity of government officials to establish effective publicprivate partnerships (PPPs)
June
to meet Asias infrastructure demands for the 21st century.

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 A s i a n D e v e l o p m e n t B a n k I n s t i t u t e

Recent Publications

A World Trade Organization for the 21st Century: The Asian Perspective
This unique compilation of essays addresses a core political economy question: how do market forces
and trade regulation interact? Its fresh Asian perspective offers a much-needed contribution to our
understanding of how treaty-based regional and bilateral economic integration is driven by the Factory
Asia phenomenon.
Manfred Elsig, University of Bern, Switzerland
More information: www.adbi.org/publications/9781783479276/.

New Global Economic Architecture: The Asian Perspective

This book addresses how a regional architecture, particularly in Asia, can induce a supply of regional
public goods that strengthens the global public goods supplied through the global architecture, to
promote sustainable economic development.
More information: www.adbi.org/publications/9781783472192/.

Financial System Stability, Regulation, and Financial Inclusion

This book is the record of a joint conference in 2014 organized by the Asian Development Bank
Institute; Financial Services Agency, Japan; and International Monetary Fund Regional Office for Asia
and the Pacific. Participants included noted scholars, policy makers, and financial industry participants
from Asia.
More information: www.adbi.org/publications/9784431552536/.

New Frontiers in AsiaLatin America Integration:

Trade Facilitation, Production Networks, and FTAs
This book examines new frontiers in AsiaLatin America integration through interregional
comparative studies in three key areas: trade facilitation, logistics, and infrastructure; production
networks, supply chains, and small and medium-sized enterprises; and free trade agreements (FTAs).
More information: www.adbi.org/publications/9788132109761/.

Building Human Capital through Labor Migration in Asia

This report is a summary of the major policy issues raised at discussions at the Fourth Roundtable on
Labor Migration. It outlines the trends in labor migration in Asia and reviews the links between
migration and human capital development.
More information: www.adbi.org/book/2015/01/23/6528.building.human.capital.labor.migration.asia/.

Transpacific Rebalancing: Implications for Trade and Economic Growth

Persistently large external imbalances in the world economy, especially among the economies that
border on the Pacific, may have contributed to the global financial crisis. While the magnitude of
global trade disruption led to a significant reduction in the imbalances, it may prove temporary. In this
timely book, Asian and American economists explore the central questions on the issue with a view to
achieving sustained rebalancing.
More information: www.adbi.org/publications/9780815722601/.

Renminbi Internationalization: Achievements, Prospects, and Challenges

Following the global financial crisis of 2008, the major monetary policy objective of the Peoples
Republic of China is the internationalization of the renminbi. It is, essentially, a window onto its
governments aspirations and the larger process of economic and financial transformation. This book
offers a new perspective on the larger issues of economic, financial, and institutional change in what
will eventually be the worlds largest economy.
More information: www.adbi.org/publications/9780815726111/.

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 A s i a n D e v e l o p m e n t B a n k I n s t i t u t e

Recent Working Papers

Why Do SMEs Not Borrow More from Banks? Evidence from the Peoples Republic of China and Southeast Asia
Authors: Ganeshan Wignaraja and Yothin Jinjarak
This paper examines the relationship between firm characteristics and borrowing from commercial banks by small and medium-sized enterprises
(SMEs) in the Peoples Republic of China, Indonesia, Malaysia, the Philippines, Thailand, and Viet Nam.
Read Working Paper 509 at www.adbi.org/working-paper/2015/01/09/6523.why.do.sme.not.borrow.from.banks/.

Estimating Dual Deposit Insurance Premium Rates and Forecasting Non-performing Loans: Two New Models
Authors: Naoyuki Yoshino, Farhad Taghizadeh-Hesary, and Farhad Nili
This paper develops a model for calculating dual fair premium rates to differentiate the deposit insurance premiums to be paid by risky banks that
endanger the stability of the financial system and healthy banks and other financial institutions that have shown good financial performance.
Read Working Paper 510 at www.adbi.org/working-paper/2015/01/14/6524.calculating.deposit.insurance.premium/.

The Impacts of Infrastructure in Development: A Selective Survey

Author: Yasuyuki Sawada
This paper examines two issues surrounding the idea that physical infrastructure is a precondition for industrialization and economic development: the difficulty
of experimental evaluation in the context of large-scale infrastructure and the need to improve the interpretation of micro-level infrastructure evaluation results.
Read Working Paper 511 at www.adbi.org/working-paper/2015/01/20/6526.impacts.infrastructure.in.dev/.

International Spillovers of Monetary Policy: US Federal Reserves Quantitative Easing and Bank of Japans
Quantitative and Qualitative Easing
Author: Masahiro Kawai
This paper assesses the impact of unconventional US and Japanese monetary policies on emerging economies, and explores policy coordination issues
to promote macroeconomic and financial stability in developed and emerging economies.
Read Working Paper 512 at www.adbi.org/working-paper/2015/01/21/6527.international.spillovers.monetary.policy/.

Trilemma Challenges for the Peoples Republic of China

Authors: Masahiro Kawai and Li-Gang Liu
This paper reviews recent developments in exchange rate regimes, capital account and interest rate liberalization, and monetary policy making in the
Peoples Republic of China and the effects on the countrys monetary policy autonomy.
Read Working Paper 513 at www.adbi.org/working-paper/2015/02/10/6533.trilemma.challenges.prc/.

Dynamic Shift to a Basket-Peg or Floating Regime in East Asian Countries in Response to the Peoples Republic of
Chinas Transition to a New Exchange Rate Regime
Authors: Naoyuki Yoshino, Sahoko Kaji, and Tamon Asonuma
This paper analyzes a desirable transition path for East Asian countries given the Peoples Republic of Chinas transition to a new exchange rate regime.
Read Working Paper 514 at www.adbi.org/working-paper/2015/02/12/6534.oating.regime.east.asian.countries/.

SME Internationalization through Global Value Chains and Free Trade Agreements: Malaysian Evidence
Authors: Menaka Arudchelvan and Ganeshan Wignaraja
Drawing on a survey of Malaysian enterprises, this paper examines the characteristics of small and medium-sized enterprises in global value chains
and free trade agreements and explores the policy implications. It finds that even among SMEs, firm size matters for participation in GVCs and FTAs.
Read Working Paper 515 at www.adbi.org/working-paper/2015/02/16/6535.sme.internationalization.malaysia/.

Towards Trade Policy Analysis 2.0: From National Comparative Advantage to Firm-Level Trade Data
Author: Lucian Cernat
This paper makes the case for the need to upgrade current analytical tools used for trade policy analysis and complement them with more detailed firm-level data.
Read Working Paper 516 at www.adbi.org/working-paper/2015/02/17/6536.trade.policy.analysis/.

Dynamic Effect of a Change in the Exchange Rate System: From a Fixed Regime to a Basket-Peg or a Floating Regime
Authors: Naoyuki Yoshino, Sahoko Kaji, and Tamon Asonuma
This paper evaluates the dynamic effects of a shift in an exchange rate system from a fixed regime to a basket peg, or to a floating regime, and obtains
transition paths for the shift based on a dynamic stochastic general equilibrium model of a small open economy.
Read Working Paper 517 at www.adbi.org/working-paper/2015/03/05/6548.dynamic.effect.exchange.rate.system/.

Adjustments of Capital Account Restrictions and Exchange Rate Regimes in East Asia
Authors: Naoyuki Yoshino, Sahoko Kaji, and Tamon Asonuma
This paper discusses adjustments of capital account restrictions and exchange rate regimes in East Asia.
Read Working Paper 518 at www.adbi.org/working-paper/2015/03/27/6587.capital.account.restrictions.east.asia/.

The Middle-Income Transition around the Globe: Characteristics of Graduation and Slowdown
Authors: Paul Vandenberg, Lilibeth Poot, and Jeffrey Miyamoto
The paper investigates the situation of middle-income economies around the world. Since 1965, only 18 economies with a population of more than
3 million and not dependent on oil exports have made the transition to being high income.
Read Working Paper 519 at www.adbi.org/working-paper/2015/03/31/6588.middle.income.transition.globe/.

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 A s i a n D e v e l o p m e n t
ADBI and IDB Discuss SME Internationalization
Small and medium-sized enterprises (SMEs) are
the economic linchpin of many economies and play
a crucial role in economic growth and job creation.
However, relative to their contribution in national
and local economies, they are underrepresented
in international trade. Greater internationalization
provides SMEs the opportunity to achieve economies
of scale, expand market share, and increase
productivity. Therefore, SME internationalization
Labor Migration in Asia: Building Effective
Structures and Institutions for Migration Governance
How can labor recruitment agencies working
in both sending and receiving countries be
regulated? At the 5th Roundtable on Labour
Migration in Asia, held in Shanghai, Peoples
Republic of China, on 2830 January, ADBI Senior
Economist Paul Vandenberg spoke on the need for
government-to-government (G-to-G) arrangements
to cut out intermediary fees that ultimately reduce
the amount of funds migrant workers send to their
families. The annual event, organized by ADBI,
the OECD, and the ILO, was hosted this year by
the Asia-Pacific Finance and Development Center
under the theme Building Effective Structures
and Institutions for Migration Governance.
ADBI News
Publisher: Yasuro Narita
ADBI News reports quarterly on the activities of the Asian
Development Bank Institute. The views expressed in this
newsletter do not necessarily reflect the views or policies
of the Asian Development Bank Institute or the Asian
Development Bank. Materials may be reprinted with credit
given to ADBI News. To send comments or to request a
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message to +81-3-3593-5571; or write to ADBI News,
Kasumigaseki Building 8F, 3-2-5 Kasumigaseki,
Chiyoda-ku, Tokyo 100-6008, Japan.
B a n k I n s t i t u t e
SEMINAR
is a potent way of accelerating economic
development. A Latin American/Caribbean and
Asia/Pacific Economics and Business Association
(LAEBA) seminar, co-hosted by ADBI and the
Inter-American Development Bank (IDB) on
16 January, provided an opportunity for experts
in Asia, the European Union, and Latin
America to share lessons and good practices on
SME internationalization and to identify policy
options. Business strategies and national level
policies were assessed to promote the greater
internationalization of SMEs. The event concluded
that a market-friendly business environment,
access to finance, and institutional support were
essential to SME internationalization.
For more information on this event, please visit:
www.adbi.org/event/6518.2015.laeba.sme.internationalization/.
ROUNDTABLE
Representatives from
over 30 countries
heard from experts on
policies, regulations,
and arrangements
in both migrant
sending and receiving
countries. ADBI Dean Naoyuki Yoshino provided
opening remarks. Launched at the Roundtable also
was the report Building Human Capital through
Labor Migration in Asia, a co-publication of
ADBI, the OECD, and the ILO.
For more information on this event, please visit:
www.adbi.org/event/6531.5th.roundtable.labor.migration.asia/.
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