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INSTITUTE OF DEVELOPING ECONOMIES

IDE Discussion Papers are preliminary materials circulated to stimulate discussions and critical comments

IDE DISCUSSION PAPER No. 144

Bank Borrowing and Financing of Medium-sized Firms in Indonesia


Miki HAMADA
March 2008

Institute of Developing Economies

Abstract The improvement of financial intermediation functions is crucial for a robust banking system. When lending, banks have to cope with such problems as information asymmetry and adverse selection. In order to mitigate these problems, banks have to product information and improve their techniques of lending. During the 1998 financial crisis, Indonesias banking system suffered severe damage and revealed that the countrys banking intermediation functions did not work well. This paper examines the financial intermediation functions of banks in Indonesia and analyzes the importance of bank lending to firms. The focus is on medium-sized firms, and relationship lending, one of the bank lending techniques, is used to examine financial intermediation in Indonesia. The results of logit regressions show that the relationship between a bank and a firm affects the probability of bank lending. The amount of borrowing and collateral are also affected by a firms relationship with a bank. When viewed from the standpoint of relationship lending to medium-sized firms, Indonesian banks cannot be criticized for any malfunction of financial intermediation.

Keywords: relationship lending, financial intermediation function, medium-sized firms, Indonesia, JEL classification: G21, N25, G30 The Institute of Developing Economies (IDE) is a semigovernmental, nonpartisan, nonprofit research institute, founded in 1958. The Institute merged with the Japan External Trade Organization (JETRO) on July 1, 1998. The Institute conducts basic and comprehensive studies on economic and related affairs in all developing countries and regions, including Asia, the Middle East, Africa, Latin America, Oceania, and Eastern Europe.

The views expressed in this publication are those of the author(s). expressed within.

Publication does

not imply endorsement by the Institute of Developing Economies of any of the views

INSTITUTE OF DEVELOPING ECONOMIES (IDE), JETRO 3-2-2, WAKABA, MIHAMA-KU, CHIBA-SHI CHIBA 261-8545, JAPAN

2008 by Institute of Developing Economies, JETRO

Bank Borrowing and Financing of Medium-sized Firms in Indonesia

Miki Hamada

Abstract The improvement of financial intermediation functions is crucial for a robust banking system. When lending, banks have to cope with such problems as information asymmetry and adverse selection. In order to mitigate these problems, banks have to product information and improve their techniques of lending. During the 1998 financial crisis, Indonesias banking system suffered severe damage and revealed that the countrys banking intermediation functions did not work well. This paper examines the financial intermediation functions of banks in Indonesia and analyzes the importance of bank lending to firms. The focus is on medium-sized firms, and relationship lending, one of the bank lending techniques, is used to examine financial intermediation in Indonesia. The results of logit regressions show that the relationship between a bank and a firm affects the probability of bank lending. The amount of borrowing and collateral are also affected by a firms relationship with a bank. When viewed from the standpoint of relationship lending to medium-sized firms, Indonesian banks cannot be criticized for any malfunction of financial intermediation.

Keywords

relationship lending, financial intermediation function, medium-sized firms, Indonesia

Institute of Developing Economies

1. Introduction Financial systems in development economies are often perceived as fragile. The fragility can be attributed to the immaturity of banking financial intermediation functions such as a deficiency of screening ability, banks poor risk management, and undeveloped legal and accounting systems. Improvement of financial intermediation is one of the most crucial issues in the development of a countrys financial system. When providing loans, banks have to cope with problems of asymmetric information and adverse selection, therefore collecting information on clients and the production of information are most important for banks. A rapid increase in non-performing loans is one of the consequences of massive lending based on the production of insufficient information. Indonesia is a case in point. This paper examines the financial intermediation functions in the Indonesian banking sector and analyzes the importance of bank lending to firms. It seems that the vulnerability of the banking sector aggravated the situation in Indonesia during the financial crisis in 1998, as indicated by the fact that the rate of nonperforming loans rose to 58.7% in 1999. In this paper the financial intermediation functions of banks will be evaluated from the standpoint of the relationship between firms and banks with the focus of examination being on medium-sized firms.

2. Bank Lending to Medium-sized Firms in Indonesia 2.1 Why medium-sized firms? During and after the 1998 financial crisis, Indonesias banking sector suffered serious damage. The large depreciation of the Indonesian rupiah made the net worth of most commercial banks inadequate. Non-performing loans rose rapidly, and the average rate for such loans at foreign exchange banks increased to 76.9%. Major commercial banks were bailed out through capital

injections from the government and nationalization. At that time it was reported that 70% to 90% of bank loans had been channeled to related companies (September 29, 1998, Jakarta Post). This fact raises doubts about the financial intermediation functions of Indonesian banks. Before the financial crisis and nationalization, major private banks belonged to conglomerates or business groups. Indonesian conglomerates had many large blue-chip companies operating in various sectors. Therefore Indonesian banks did not need to product information for channeling loans to related parties because information asymmetry did not exist within the business group. Thus if there were no information problems when banks allocated loans to related companies, it is difficult to affirm whether or not Indonesian banks have financial intermediation functions. However, how about when lending to small and medium-sized firms? Unlike large companies, small and medium-sized firms

are not related to conglomerates, and their information varies. Thus small and medium-sized firm lending seems to be meaningful for examining and evaluating banks financial intermediation functions. Although most bank lending is allocated to large companies, these companies have various funding sources in addition to domestic bank borrowing. Issuing stocks and bonds on capital markets and borrowing on international markets are other alternatives. For small and medium-sized firms, however, financing is a major difficulty, and bank borrowing, while difficult, is the most important external financial source for them. This is another reason for focusing on lending to small and medium-sized firms. Another reason lies within the context of Indonesia. Lending to small firms is not so difficult for banks because such lending is given preferential treatment. Loans to small firms are regulated by the central bank, and commercial banks in Indonesia are obligated to allocate 20% of their total loans to small-scale business, up to Rp500 million (= US$56,000) per client. This preferential treatment is called KUK (Kredit Usaha Kecil [Small Business Credit]). If a bank does not conform

to this regulation, it is penalized. On the other hand, if a bank follows the regulation, it gets a bonus. Thus banks have incentives to lend to small firms: they avoid penalties and get bonuses (Hamada-Takeda [2000]). Figure 1 shows that the percentage of KUK loans does not exceed 20% of total bank loans, which indicates that bank lending behavior to small firms is not based on self-motivated decisions. Under the KUK regulation there is no need for banks to voluntarily improve their techniques for lending to small firms.

Figure 1 Value and Percentage of Bank Loans


billion Rp Amount of bank lending 800000 700000 600000 500000 400000 300000 200000 100000 0 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Jun07 KUK Private sector 80 70 60 50 40 30 20 10 0 % 90

900000

As there is no government intervention, focusing on lending to medium-sized firms seems the most suitable for examining the financial intermediation functions of Indonesian banks. When lending to such firms, banks have to collect information and make lending decisions on their own.

2.2 What is the scale of lending to medium-sized firms? It is difficult to identify the scale of lending to medium-sized firms, however it is possible to estimate by comparing the sources of funds for large and medium-sized firms. Figures 2-a and 2-b

describe the sources of funds for the private sector. From these figures we can see a shift in the sources of funds.

Figure 2-a Private-Sector Sources of Funding in 1997


1997

Total market value of stocks 9%

Outstanding bonds 2%

Private sector excluding KUK 28% KUK 9% Consumption credit (individuals) 11% Public sector 2%

Bank loans 49% Overseas debt (billionl of Rp) 39%

Figure 2-b Private Sector Sources of Funding in 2004

2004

Total market value of stocks 20%

Outstanding bonds 5% Private sector excluding KUK 15% KUK 7% Consumption credit (individuals) 18%

Bank loans 42%

Overseas debt (billionl of Rp) 33%

Public sector 2%

Source: Author

Before the financial crisis in 1997, massive amounts of foreign capital flowed in: 39% of private sector capital was overseas debt; 49% was lending from domestic banks, and capital markets accounted for 11%. After the crisis overseas debt decreased to 33%: domestic bank loans fell to 42%, while capital markets increased to 25%. In the two figures, private sector excluding KUK is regarded as bank lending to large and medium-sized firms. The private sector excluding KUK decreased between 1997 and 2004 from 28% to 15% as a percentage of total sources of funds, while utilization of capital markets increased from 11% to 25%. Conjecturing that large firms for the most part shifted from domestic bank loans to capital markets, the current domestic bank-loan market would then be composed by and large of medium-sized firms and some large firms unable to shift to capital markets. Thus it can be argued that the 15% private sector excluding KUK lending in 2004 was mostly to medium-sized firms.

3. Relationship Lending Versus Transaction Lending In the previous section we estimated the present scale of bank lending to medium-sized firms. In this section we will look at bank lending techniques to these firms. Boot defined the provision of financial services by a financial intermediary as the: 1) investment in obtaining customer-specific information, often proprietary in nature; and 2) evaluation of the profitability of these investments though multiple interactions with the same customer over time and/or across products (Boot[1999]). Thus information is key to a financial intermediary. When providing financial services, information asymmetry is a serious problem for banks especially in the case of small and medium-sized firms because information on large firms is relatively available. Large firms usually prepare financial statements and provide public information. According to Udell lending techniques are based on: 1) financial statements, 2) relationship between bank and firm, 3) credit-scored lending, 4) asset, 5) factoring, and 6) trading credit (Udell: 2004).

Among these techniques, transactions-based lending is the most major one, under which the lending decisions are based on hard information that is relatively easily available like financial statement, credit score and asset at the time of loan origination, and does not rely on the soft data gathered over the course of a relationship with the borrower (Berger and Udell [2002]). While the most important in lending to small firms is relationship lending which emphasizes the length of time in a relationship between a bank and a firm. The relationship between a bank and a firm has several advantages for the firm that go beyond just borrowing. The fact of obtaining a loan from a bank improves the firms reputation and a longer bank-firm relationship brings more merits to the borrower. For example, at the beginning of a relationship, the interest rate on a loan is higher and much more collateral is required; however after several years, the interest rate decreases and the required collateral also decreases because of the banks accumulation of information on the firm. The interest rate especially is greatly affected by the length of a firms relationship with a bank (Berger and Udell[1995]). It is understandable that banks product and accumulate information through their relationships with firms, and this mitigates the problem of information asymmetry. As required collateral decreases proportionally with the length of a relationship, the function of collateral comes to be regarded not as a prerequisite but a compliment of lending. As well as being a useful technique for banks, relationship lending is also useful for small firms. The next section examines the actual conditions of financing for medium-sized firms in Indonesia, and the funding sources these firms prefer.

4. Financing of Medium-sized Firms The BPS (Badan Pusat Satistik [Statistics of the Republic of Indonesia]) provides data on large (more than 100 employees) and medium-sized (from 20 to 99 employees) manufacturing firms

covering basic information about firms, their output, value added, expenditures on inputs, sales, investment and financing. The data are obtained through annual surveys of more than 20,000 firms. This paper uses data for 1993, 1996, 1999 and 2001 in order to examine financing for investment. The reasons of choosing the years 1993, 1996, 1999 and 2001 are the following. In 1993 the largest number of firms responded to the annual survey, and the year 1993 is regarded as reflecting very well Indonesias strong economy before the financial crisis. The year 1996 is expected to reflect the bubble economy just before the crisis; the year 1999 reflects the worst economic situation just after the crisis, and the year 2001 is expected to show the slight recovery from the damage of the crisis. From 1993 to 1996 the total number of medium-sized firms increased 26.6% from 18,163 to 22,997. It was the period when the Indonesian economy grew rapidly due to the governments liberalization policies. In 1999 and 2001 the number decreased slightly. Table 1 shows the number

of firms that undertook new investment in each of the examined year. In 1993, 2,583 firms undertook new investment which accounted for 14.2% of the total number of medium-sized firms. In 1996 the percentage of new investment increased to 41.6%; however in 1999 and 2001 this decreased to 19.5% and 19.0% respectively because of the financial crisis.

Table 1

Investment by Medium-sized Firm Total Number of Medium-sized Firm Number of Firms Newly Investing
survey response rate of finance sources of investment

1993 1996 1999 2001 Source: BPS

18,163 22,997 22,070 21,396

2,583 9,560 4,311 4,063

14.2 41.6 19.5 19.0

98.7% 61.6% 63.6% 54.5%

The BPS surveys provide the sources of funds for investment. Table 2 shows the main sources of these funds. Respondent firms can check the categories that apply to their own situation; these

include: own funds, retained earnings, bank loans, capital markets, international markets, and government funding. In the four years examined, 30% - 40% of firms utilized bank loans, while 60% relied on their own funds, and 40% - 50% used retained earnings; only 4% - 6% of firms utilized capital markets. Thus most firms preferred to use internal sources.

Table 2 Numbers of firms by source of funds 1993 Bank loans Own funds Retained earnings Stocks/bonds Source: BPS 1,003 1,587 1,191 111 39.4 62.4 46.8 4.4 2,010 3,700 3,331 406 1996 33.6 61.8 55.6 6.8 987 1,735 1,471 191 1999 34.7 61 51.7 6.7 640 1,578 1,098 94 2001 28.9 71.3 49.6 4.2

Although most firms use a combination of several funding sources (Table 3), a firms own funds is the single most preferred source. In the four years examined, 25%- 30% of firms used their own funds; around 20% used retained earnings; those relying on bank loans were only 6%-12%. Clearly firms prefer to use internal funds rather than external sources. This observation fits the pecking order theory which asserts that firms prefer internal financing first, then external financing, through the issuing of debt and stock (Fama and French [2002]) .

Table 3 Combination Sources Single Sources Bank loans Own funds Retained Bank loans Own funds Retained earnings earnings 1993 39.6 52.9 46.7 12.2 27.6 18.4 1996 34.1 62.7 56.4 7.5 25.9 20.6 1999 36.0 63.3 37.5 8.8 24.5 19.5 2001 28.9 71.2 49.6 6.3 34.7 17.4 Source: BPS

5. Data and Empirical model 5.1 Data The above discussion has showed that medium-sized firms prefer internal funding sources. The question then is how banks determine loans. This section examines determinants of bank lending using logit regression analysis. From the BPS data of large and medium-sized manufacturing firms, the data for medium-sized firms in 1993, 1996 and 1999 are used. Table 4 presents the descriptive statistics. Table 4 Descriptive Statistics 1993 Total of 2583 firms Average Employees Output Own funds Bank loans Retained earrings Age of firms Assets 1996 Total of 4448 firms Average Employees Output Own funds Bank loans Retained earrings Age of firms Assets 1999 Total of 1636 firms Average Employees Output Own funds Bank loans Retained earrings Age of firms Assets 42 3,002,649 954,354 430,680 267,540 13 1,479,545 minimum 20 4,200 0 0 0 0 20 maximum 99 287,187,024 848,250,000 175,000,000 150,000,000 99 286,340,600 Std. Dev. 21 12,148,175 21,133,012 5,028,543 4,080,154 13 12,331,658 38 737,308 377,296 58.360 74,809 10 n.a minimum 20 3,069 0 0 0 0 n.a maximum 99 101,920,749 568,000,000 11,080,000 36,800,000 95 n.a 45 1,167,948 778,059 613,302 628,952 12 117,003 minimum 20 3,756 0 0 0 0 0 maximum 99 60,741,006 666,547,444 795,805,182 640,079,853 93 50,500,000

(thousand Rp) Std. Dev. 21 3,958,345 17,819,240 16,412,820 17,809,960 13 1,464,434 (thousand Rp) Std. Dev. 19 2,754,430 9,631633 450,533 750.943 10 n.a

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5.2 Model Using the above data, we will examine the probability of firm borrowing . Firm i uses a bank loan for new investment in period t.

pi Yit = ln 1 p i = 0 + 1loani ( t 1) + 2 ownit + 3 earnit + 4 yeari + 5 ln output it + u i

pi is the probability of firm i using a bank loan. Yit =


1, in the case of firm i using a bank loan in t. 0, in the case firm i not using a bank loan in t.

LOAN t 1 : dummy variable: if firm i used a bank loan in t-1, 1, not used a bank loan, 0. OWN t = dummy variable: if firm i used own capital in t, 1, not used own capital, 0. EARN t = dummy variable: if firm i used retained earnings in t, 1, not used retained earnings, 0.
AGE = years for operation

LNOUTt = natural logarithm of output at t

6. Empirical Results The results of the analysis show that the record of past loans has a positive effect on future borrowing. The coefficients of all variables, except AGE, are significant in all three of the years examined: 1993, 1996 and 1999. The coefficients of the borrowing record and the natural logarithm of output are positive while the coefficients of own funds, retained earnings and international borrowing are negative. AGE was expected to affect bank borrowing positively, however it turns out not to be significant.

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Table 5 Regression results Year Number of observations Coefficients (p-value in parentheses) Constant LOAN (t-1) OWN(t) EARN(t) LOANf(t) AGE LNOUT(t) Log likelihood Pseudo R2

1993 2280

1996 3600

1999 1442

-2.47 2.88 -0.89 -1.01 -1.01 0.00 0.16

(0.000) (0.000) (0.000) (0.000) (0.011) (0.615) (0.000) -1076.1863 0.2925

-3.42 2.54 -0.79 -0.53 -1.27 0.00 0.21

(0.000) (0.000) (0.000) (0.000) (0.007) (0.919) (0.000) -1683.7205 0.2255

-3.43 3.10 -0.53 -0.74 -0.96 0.00 0.16

(0.000) (0.000) (0.001) (0.000) (0.070) (0.398) (0.001) -594.31267 0.3325

Being based on a logit model, the positive coefficients of this estimation show that there is a high probability of borrowing in the given year. For 1993 the coefficient of the previous years record is 2.88 meaning that if a firm borrowed from a bank in 1992, the probability that it borrowed again in 1993 was 94.7%. Likewise for 1996 and 1999 the probability of borrowing is very high, around 92.7% and 95.7% respectively. On the other hand, if a firm had other financial sources such as its own funds, retained earnings or international markets, the probability of borrowing was low because the coefficients of these variables are negative. Thus if a firm has other funding sources , that firm is inclined not to resort to bank loans. If output increases the probability of borrowing also increases.

7. Relationship Lending and Collateral Collateral is one of the important elements in assessing the relationship between a bank and a firm. In general banks require collateral for a loan regardless of whether undertaking transaction lending or relationship lending. Asset size is a good proxy for collateral; however in the BPS data set,

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not all firms gave answers to the question of asset size 1 .

Table 6 Comparison of Loans in 1993 to Firms That Borrowed or Did Not Borrow in 1992 firms that did not borrowed in 1992 borrowed in 92 average loan amount in 1993 527,961 611,446 . (thousand of rupiah) average assets in 1993 698,823 289,393

Table 6 compares the difference in the average amount of a loan and amount of collateral between firms that borrowed in both 1992 and 1993 and those that borrowed only in 1993. The average amount of a loan to a firm that borrowed in both years was larger than for a firm that did not borrowed in 1992. This indicates that a firms past record of borrowing affects the amount of its next loan. However, the amount of assets of firms borrowing in both years was much smaller than that of firms that borrowed only in 1993 which seems to indicate that assets complement information on a firms past record of borrowing.

Table 7

Amount of Borrowing and Collateral Firms borrowing in 1993 Borrowed Did not in 92 borrow Firms borrowing in 1997* Borrowed Did not in 96 borrow Firms borrowing in 1999 Borrowed Did not in 98 borrow 128 28.8% 4,532,589 771,599 810,926 105.1%

No. of firms in the 569 312 653 178 316 previous year % 64.6% 35.4% 78.6% 21.4% 71.2% Ave. output (1,000 Rp) 1,116,317 1,569,987 910,901 707,511 3,066,641 Ave. borrowing1,000 2,285,861 214,782 134,345 92,317 1,802,415 Rp Ave. collateral** 110,875 288,937 39,575 42,711 1,196,403 1,000Rp Borrowing / Collateral 4.9% 134.5% 29.5% 46.3% 66.4% amount *Data on firm assets were unavailable for 1996, therefore data for 1997 were used. ** Assets are a proxy for collateral Source: BPS

There were 349 firms that provided assets information.

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From the foregoing analysis it can be argued that for banks in Indonesia, financial intermediation functions operate from the standpoint of relationship lending. Table 7 shows that if a firm already has a relationship with a bank, the amount that can be borrowed is larger and collateral can be smaller than for a firm without a relationship.

7. Conclusion This paper examined the funding sources of medium-sized firms and the financial intermediation functions of banks in Indonesia from the standpoint of relationship lending. In order to mitigate problems of information asymmetry, banks have to product information and improve their techniques of lending. This paper examined whether Indonesian banks product information as a function of financial intermediation. The results of logit regression show that the relationship between banks and firms affects the probability of borrowing. The amount of borrowing and collateral is also affected by the existence of a firms relationship with a bank. Due to the lack of information, the effect of this relationship on interest rates was not examined. However, it can be argued that in Indonesia banks perform financial intermediation functions when examined from the standpoint of relationship lending.

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References Booth, James R. [1996], Loan Collateral Decisions and Corporate Borrowing Costs, Arizona State University Working Paper. Berger, Allen N. and Udell, Gregory F [1995], Relationship Lending and Lines of Credit in Small Firm Finance, The Journal of Business, Vol.68, No.3, pp351-381 --------[2002], Small Business Credit availability and relationship lending: the importance of bank Organizational Structure, The Economic Journal, 112, pp32-53. Bebczuk, R. N., [2004] What Determines the Access to Credit by SMEs in Argentina?, Faculltad de Clenclas Economicas Universidad Nacional de la Plata. Boot, A. W. A., [2000] Relationship banking: What do we know?, Journal of Financial Intermediation, 9, pp.7-25. Badan Pusat Staristik (BPS), Statistik Industri (various years). Eugene F. Fama; Kenneth R. French [2002] Testing Trade-Off and Pecking Order Predictions about Dividends and Debt, The Review of Financial Studies, Vol.15, No1, pp.1-33. Ramakrishnan, S., and Thakor, A.V. [1984] Information Reliability and a Theory of Financial Intermediation. Review of Economic Studies Vol. 51, pp.415-432. Udell, Gregory F. [2004], SME Lending: Defining the Issues in a Global Perspective, Kelley School of Business, Indiana University.

In Japanese Miki Hamada-Takeda [2000] The Sequence of Financial Liberalization and Financial Fragility, in The Asian Currency Crisis: Causes and Problems in Prescription, eds K. Kunimune, Institute of Developing Economies, Chiba. --------------------------[2001] Restructuring Indonesias Banks and Corporate, in Financial Restructuring and Corporate Restructuring: Asian Experience, eds K. Kunimune Institute of Developing Economies, Chiba. ---------------------------[2002] Formation and Structural Change of the Financial Sector, in Democratizing Indonesia: Politics and Economy in Historical Perspective, eds Y. Sato, Institute of Developing Economies, Chiba.

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91 90 89 88 87 86 85 84 83 82 81 80 79 78 77 76 75 74 73 72 71 70 69 68 67 66 65 64 63 62 61

Haruka I. MATSUMOTO Koji KUBO Akifumi KUCHIKI DING Ke Koji KUBO G. BALATCHANDIRANE G. BALATCHANDIRANE Tomohiro MACHIKITA Tomohiro MACHIKITA Tomohiro MACHIKITA Asao ANDO and Bo MENG Yuka KODAMA So UMEZAKI Ikuo KUROIWA Daisuke HIRATSUKA Masahisa FUJITA DING Ke Emad M. A. ABDULLATIF Alani Tatsuya SHIMIZU Hitoshi SUZUKI Akifumi KUCHIKI Takayuki TAKEUCHI Shinichi SHIGETOMI Kozo KUNIMUNE Yasushi UEKI Toshihiro KUDO Akifumi KUCHIKI Ken IMAI Koichi FUJITA and Ikuko OKAMOTO Tatsufumi YAMAGATA Hisaki KONO

The Evolution of the "One China" Concept in the Process of Taiwan's Democratization Natural Gas and Seeming Dutch Disease Clusters and Innovation: Beijing's Hi-technology Industry Cluster and Guangzhou's Automobile Industry Cluster Domestic Market-based Industrial Cluster Development in Modern China Do Foreign Currency Deposits Promote or Deter Financial Development in Low-income Countries?: An Empirical Analysis of Cross-section Data IT Offshoring and India: Some Implications IT Clusters in India Are Job Networks Localized in a Developing Economy? Search Methods for Displaced Workers in Thailand Career Crisis? Impacts of Financial Shock on the Entry-Level Labor Market: Evidence from Thailand Is Learning by Migrating to a Megalopolis Really Important? Evidence from Thailand Transport Sector and Regional Price Differentials: A SCGE Model for Chinese Provinces Poverty Analysis of Ethiopian Females in the Amhara Region: Utilizing BMI as an Indicator of Poverty Monetary and Exchange Rate Policy in Malaysia before the Asian Crisis Rules of Origin and Local Content in East Asia Outward FDI from and Intraregional FDI in ASEAN: Trends and Drivers Economic Development Capitalizing on Brand Agriculture: Turning Development Strategy on Its Head Distribution System of Chinas Industrial Clusters: Case Study of Yiwu China Commodity City Crowding-Out and Crowding-In Effects of Government Bonds Market on Private Sector Investment (Japanese Case Study) Expansion of Asparagus Production and Exports in Peru The Nature of the State in Afghanistan and Its Relations with Neighboring Countries An Asian Triangle of Growth and Cluster-to-Cluster Linkages Integration under One Country, Two Systems - The Case of Mainland China and Hong KongBringing Non-governmental Actors into the Policymaking Process: The Case of Local Development Policy in Thailand Financial Cooperation in East Asia Export-Led Growth and Geographic Distribution of the Poultry Meat Industry in Brazil Myanmar's Economic Relations with China: Can China Support the Myanmar Economy? Negative Bubbles and Unpredictability of Financial Markets: The Asian Currency Crisis in 1997 Explaining the Persistence of State-Ownership in China Agricultural Policies and Development of Myanmar Agriculture: An Overview The Garment Industry in Cambodia: Its Role in Poverty Reduction through Export-Oriented Development Is Group Lending A Good Enforcement Scheme for Achieving High Repayment Rates?Evidence from Field Experiments in Vietnam

2007 2007 2007 2007 2007 2007 2007 2006 2006 2006 2006 2006 2006 2006 2006 2006 2006 2006 2006 2006 2006 2006 2006 2006 2006 2006 2006 2006 2006 2006 2006

No.

Author(s)

Title

60 59 58 57 56 55 54 53 52 51

Hiroshi KUWAMORI Tatsuya SHIMIZU Noriyuki YANAGAWA, Seiro ITO, and Mariko WATANABE Reiko AOKI, Kensuke KUBO, and Hiroko YAMANE Koji KUBO Jiro OKAMOTO Yusuke OKAMOTO Hikari ISHIDO and Yusuke OKAMOTO Masahiro KODAMA Arup MITRA and Yuko TSUJITA Bo MENG, Hajime SATO, Jun NAKAMURA,Nobuhiro OKAMOTO, Hiroshi KUWAMORI, and Satoshi INOMATA Maki AOKI-OKABE, Yoko KAWAMURA, and Toichi MAKITA Arup MITRA and Hajime SATO Shinichi SHIGETOMI Yasushi HAZAMA Kentaro YOHIDA and Machiko NAKANISHI Masanaga KUMAKURA Ikuko OKAMOTO Toshihiro KUDO Yukihito SATO Taeko HOSHINO Chang Soo CHOE Toshihiro KUDO Etsuyo MICHIDA and Koji NISHIKIMI Akifumi KUCHIKI Masami ISHIDA Masanaga KUMAKURA Akifumi KUCHIKI

The Role of Distance in Determining International Transport Costs: Evidence from Philippine Import Data Executive Managers in Peru's Family Businesses Trade Credits under Imperfect Enforcement: A Theory with a Test on Chinese Experience Indian Patent Policy and Public Health: Implications from the Japanese Experience The Degree of Competition in the Thai Banking Industry before and after the East Asian Crisis Australia's Foreign Economic Policy: A 'State-Society Coalition' Approach and a Historical Overview Integration versus Outsourcing in Stable Industry Equilibrium with Communication Networks Winner-Take-All Contention of Innovation under Globalization: A Simulation Analysis and East Asias Empirics Business Cycles of Non-mono-cultural Developing Economies Migration and Wellbeing at the Lower Echelons of the Economy: A Study of Delhi Slums Interindustrial Structure in the Asia-Pacific Region: Growth and Integration, by Using 2000 AIO Table

2006 2006 2006 2006 2006 2006 2006 2006 2006 2006

50

2006

49 48 47 46 45 44 43 42 41 40 39 38 37 36 35 34 33

International Cultural Relations of Postwar Japan Agglomeration Economies in Japan: Technical Efficiency, Growth and Unemployment Organization Capability of Local Societies in Rural Development: A Comparative Study of Microfinance Organizations in Thailand and the Philippines

2006 2006 2006

Retrospective Voting in Turkey: Macro and Micro Perspectives 2006 Factors Underlying the Formation of Industrial Clusters in Japan and Industrial Cluster Policy: A Quantitative Survey Trade and Business Cycle Correlations in Asia-Pacific Transformation of the Rice Marketing System and Myanmar's Transition to a Market Economy The Impact of United States Sanctions on the Myanmar Garment Industry President Chain Store Corporation's Hsu Chong-Jen: A Case Study of a Salaried Manager in Taiwan Executive Managers in Large Mexican Family Businesses Key Factors to Successful Community Development: The Korean Experience Stunted and Distorted Industrialization in Myanmar North-South Trade and Industly-Specific Pollutants Theory of a Flowchart Approach to Industrial Cluster Policy Effectiveness and Challenges of Three Economic Corridors of the Greater Mekong Sub-region Trade, Exchange Rates, and Macroeconomic Dynamics in East Asia: Why the Electronics Cycle Matters Theoretical Models Based on a Flowchart Approach to Industrial Cluster Policy 2005 2005 2005 2005 2005 2005 2005 2005 2005 2005 2005 2005 2005

No.

Author(s)

Title

32 31 30 29 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5

Takao TSUNEISHI Yuko TSUJITA Satoshi INOMATA Bo MENG and Asao ANDO Nobuhiro OKAMOTO, Takao SANO, and Satoshi INOMATA Masahisa FUJITA and Tomoya MORI Hiroko UCHIMURA Shinichiro OKUSHIMA and Hiroko UCHIMURA Banri ITO and Tatsufumi YAMAGATA Etsuyo MICHIDA Daisuke HIRATSUKA Masahisa FUJITA and Tomoya MORI Graciana B. FEMENTIRA Hitoshi SUZUKI Tomokazu ARITA, Masahisa FUJITA, and Yoshihiro KAMEYAMA Karma URA Masahisa FUJITA and Toshitaka GOKAN Koji KUBO Marcus BERLIANT and Masahisa FUJITA Gamini KEERAWELLA Taeko HOSHINO Hikari ISHIDO Akifumi KUCHIKI Sanae SUZUKI Masahisa FUJITA and Shlomo WEBER Tatsuya SHIMIZU Katsumi HIRANO Masahisa FUJITA and JacquesFrancois THISSE

The Regional Development Policy of Thailand and Its Economic Cooperation with Neighboring Countries Economic Reform and Social Setor Expenditures: A Study of Fifteen Indian States 1980/81-1999/2000 Towards the Compilation of the Consistent Asian International I-O Table: The Report of the General Survey on National I-O Tables An Economic Derivation of Trade Coefficients under the Framework of Multi-regional I-O Analysis Estimation Technique of International Input-Output Model by Non-survey Method Frontiers of the New Economic Geography Influence of Social Institutions on Inequality in China Economic Reforms and Income Inequality in Urban China Who Develops Innovations in Medicine for the Poor? Trends in Patent Applications Related to Medicines for HIV/AIDS, Tuberculosis, Malaria and Neglected Diseases Management for a Variety of Environmental Pollution and North-South Trade The "Catching Up" Process of Manufacturing in East Asia Transport Development and the Evolution of Economic Geography Case Study of Applied LIP Approach/Activities in the Philippines: The Training Services Enhancement Project for Rural Life Improvement (TSEP-RLI) Experience Structural Changes and Formation of Rst-shahr in Postrevolutionary Rural Society in Iran Regional Cooperation of Small & Medium Firms in Japanese Industrial Clusters Peasantry and Bureaucracy in Decentralization in Bhutan On the Evolution of the Spatial Economy with Multi-unit Multi-plant Firms: The Impact of IT Development Imperfect Competition and Costly Screening in the Credit Market under Conditions of Asymmetric Information Knowledge Creation as a Square Dance on the Hilbert Cube Formless as Water, Flaming as a Fire Some observations on the Theory and Practice of Self-Determination Family Business in Mexico: Responses to Human Resource Limitations and Management Succession East Asias Economic Development cum Trade Divergence Prioritization of Policies: A Prototype Model of a Flowchart Method Chairmanship in ASEAN+3: A Shared Rule of Behaviors On Labor Complementarity, Cultural Frictions and Strategic Immigration Policies Family Business in Peru: Survival and Expansion under the Liberalization Mass Unemployment in South Africa: A Comparative Study with East Asia Globalization and the Evolution of the Supply Chain: Who Gains and Who Loses?

2005 2005 2005 2005 2005 2005 2005 2005 2005 2005 2005 2005 2005 2004 2004 2004 2004 2004 2004 2004 2004 2004 2004 2004 2004 2004 2004 2004

No.

Author(s)

Title

4 3 2 1

Karma URA Gamini KEERAWELLA Takahiro FUKUNISHI Pk. Md. Motiur RAHMAN and Tatsufumi YAMAGATA

The First Universal Suffrage Election, at County (Gewog) Level, in Bhutan The LTTE Proposals for an Interim Self-Governing Authority and Future of the Peace Process in Sri Lanka International Competitiveness of Manufacturing Firms in SubSaharan Africa Business Cycles and Seasonal Cycles in Bangladesh

2004 2004 2004 2004