Finance: Research, Policy and Anecdotes

Postcard from Kuala Lumpur

Last week I started my appointment as the 6th Tun Ismail Ali Chair, at the University of Malaya in Kuala Lumpur, a chair sponsored by the Malaysian Central Bank.  The first chair holder was the late Ronald McKinnon and I feel certainly honored to follow him, though these are certainly big shoes to fill. Until summer 2018 I will spend a total of around two months at the University of Malaya and the Central Bank, interacting with researchers, analysts and policy makers and giving lectures and seminars.

 

Malaysia is a fascinating and interesting country, in many aspects.  While often in the shadow of Singapore (part of the original Malaysian federation), its financial system is also a very developed one.  Its Private Credit ratio stands at well over 100% and well above the value predicted by GDP per capita and other socio-economic factors. Similarly, its capital market and contractual savings institutions are well developed.  It has also aimed at becoming a global Islamic finance centre, with research institutes to support it.  In terms of regulatory policies, it is certainly interesting, having been the outlier after the East Asian crisis in imposing capital controls.  Politically, it is similarly fascinating, a constitutional monarchy with rotating kings (drawn from the nine sultans the country has) and with a careful balance between the three ethnic groups.   I am very much looking forward to my next visit in November.