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In this paper, we analyze the determinants of corporate saving in the form of changes in the stock of cash for 11 Asian economies using firm-level data from the Oriana Database for the 2002 - 2011 period. We find some evidence that cash flow has a positive impact on the change in the stock of cash, which suggests that Asian firms are borrowing constrained and that they save more when their cash flow increases so that they will be able to finance future investments. Moreover, we find in the developed economy sample that, as expected, cash flow has a positive impact on the change in the stock of cash only in the case of the smallest firms, which are more likely to be borrowing constrained, and find in the developing economy sample that, as expected, the positive impact of cash flow on the change in the stock of cash declines with firm size. In addition, we find that the cash flow sensitivity of cash declined after the global financial crisis. Finally, we find some evidence that Tobin's q has a positive impact on the change in the stock of cash.

In this paper, we present data on trends over time in domestic saving rates in twelve economies in developing Asia during the 1966-2007 period and analyze the determinants of these trends. We find that domestic saving rates in developing Asia have, in general, been high and rising but that there have been substantial differences from economy to economy and that the main determinants of these trends appear to have been the age structure of the population (especially the aged dependency ratio), income levels, and the level of financial sector development. We then project future trends in domestic saving rates in developing Asia for the 2011-2030 period based on our estimation results and find that the domestic saving rate in developing Asia as a whole will remain roughly constant during the next two decades despite rapid population aging in some economies in developing Asia because population aging will occur much later in other economies and because the negative impact of population aging on the domestic saving rate will be largely offset by the positive impact of higher income levels.

This paper assesses the role of consumption and saving in Asia's growth. It examines the composition of national saving, analyzes what forces drive saving rates, and draws policy conclusions from the analysis that are relevant for the economies in the region and which might play an important part in rebalancing global growth. The paper identifies a number of issues. A rapid rise in the profitability of state-owned and private enterprises together with distorted dividend policies and underdeveloped financial markets in the People's Republic of China (PRC) seem to have contributed to the corporate sector saving spiral. Rising corporate saving rates in India can be attributed to lower corporate tax rates, customs duty, and interest rates along with restructuring of firms. Channeling corporate saving into investment will require elimination of policy distortions and financial sector development including availability of better saving instruments and improved business and investment climates. At the household level, demographic trends, financial development, and precautionary saving are revealed to be important for Asian savers. Two case studies from the PRC and Philippines suggest that these factors are interrelated and complement one another. The surge in urban households' saving in the PRC has two main drivers. First, younger households lack access to credit and accumulate savings in order to purchase durable goods such as televisions, white goods, and automobiles. Second, most urban households undertake precautionary saving as a hedge against risks of illness or other healthcare expenses and in order to finance educational expenses. Hence policies that develop financial markets enabling borrowing against future income, and that rationalize public spending to increase social transfers, reform pension systems, and provide universal health care insurance and education, appear top priorities. These policies would moderate household saving rates and help in rebalancing growth toward consumption.

This paper seeks to outline issues arising from rapid foreign exchange reserve accumulations in Asia. Greater attention is paid to People's Republic of China and India for the significance of the accumulation fed by surges in capital inflows. The paper finds that sterilization interventions by the two economies appear to be effective in curbing credit growth, but the impacts appear limited and shortlived. In this regard, adjustments of exchange rate policies are called for to have more freedom in policy options, though incentives to live with exchange rate fluctuations are still limited, and in fact the currencies have been managed more tightly than before. Therefore, the paper argues that, while maintaining the current exchange rate practices with capital controls in place, domestic reforms should be pushed further to be ready for capital account convertibility and more exchange rate flexibility in the long term.

This paper attempts to examine the performances of Asian AMCs. Our analysis reveals that the AMCs vary significantly in their design and performances. We claim that AMCs can trigger moral hazard-inspired bank lending, especially when the mode of NPL transfer from banks to AMC entails little cost to banks. Empirical examination of Thai experience of AMCs reveals that the moral hazard–inspired bank lending resulted in creating more new NPLs in the case of public AMCs. On the other hand, the new centralized AMC, the Thai Asset Management Company (TAMC) decreases the new NPL ratio, suggesting that TAMC provokes no adverse moral hazard effect on financial institutions. In addition, we find that the same institutional consideration significantly decreases new NPL in foreign banks and finance companies. The former because they are generally considered better managed, and the latter because they are the institutions that survived the Asian crisis, and hence the more viable and presumably better run finance companies.