Volume 1, Issue 1

A Study on the Application of a Law for Foreign Trade Agency System in China

Chungweon Yoon, Hyunsoo Ha, Jongcheol Park

The foreign trade agency system of China is a result of foreign trade policy, not a system regarding legal factors. Therefore, Chinese scholars present various opinion whether foreign trade agency is considered as a consignment agency relationship or consignment dealing relationship, or dealing relationship. However this kind of confusion aroused different conclusion about similar cases related to foreign trade agency. So China established Contract Law in 1999 that it enacts legal relationship among parties. Moreover, Foreign Trade Law is amended in 2004 and as a result foreign trade right, which has an effect on ambiguity of Chinese foreign trade agency a lot, is opened. Hence it is that legal relationship among parties of Chinese foreign trade agency is partly obvious. Nevertheless uncertainty in application of a law still exists because when China establish Contract Law, they applied agency regulations in Anglo-American Law System on Chinese own Continental law system. Therefore, in case of our companies make trade contract with Chinese companies under Chinese foreign trade agency system, they have to consider as follows. Firstly, in case of our companies know that they participate in contract themselves as an agency of Chinese company, they should insert this content on contract in order to get rid of conflicts. Secondly, in case of our companies recognize between Chinese principal and agency, they should confirm whether principal has foreign trade right or not. Finally, in case of our companies recognize that agency relationship is not clear, to persist that they didn't know the agency relationship when they made a contract is much better than conflict settlement.

Keyword: Agency, Foreign trade Agency, Chinese foreign trade agency system

Analysis of House Price Expectancy in Korea

Mansuk Oh, Hyunsook Oh, Kyungsook Kwon

The financial crisis in 2008, caused by risky sub-prime mortgages in the United States, has brought a plunge in stock markets around the world, and Korea could not escape from its strong impact. The exchange rate of Korean won to U.S. dollar jumped to 1500 won per dollar. Korean government's attempt to soothe the volatility and prevent the unrest in markets failed despite its desperate measure of releasing the foreign exchange reserve. Stock prices dropped to a half the original value and the property market fell into hibernation. Since late 2007, property prices in Gang- Nam and the regions in Korea as known as Bubble Seven have started to decline. This downturn became nation-wide pace in late 2008. It is because the global financial crisis had a negative impact on consumer purchase behavior. For this reason, prices of apartments in Korea recorded minus volatility for the first time since 2000. Especially in Korea, housing price has a great impact on real economy. Thus, analysis of variables related to housing price would be useful for Korean government to get information about market expectations for future housing prices and to establish government policy for real estate markets. As a part of analyzing varaibles related to housing price in Korea, we analyze data from '2008 Demand Survey for Housing Finance' conducted by KB Bank (former Kookmin Bank) of Korea. In particular, we focus on the expectancy towards the trend of 2009 housing price which is observed in three categories; a) it will fall b) it will be the same c) it will rise, within one year. We find variables which significant affect the expectancy variable and study the impact of these variables using multi-category logistic regression model.

Keyword: Housing price, Mortgage, Multi-category logit model, Odds ratio, Regression analysis

Consumers' Purchasing Motives and Tendencies of Hair Beauty Service

Eunjeong Kim

This paper investigates relationships between consumers' purchasing motives and purchasing tendencies of hair beauty service. For this research purpose, it conducts the factor analyses to derive the factors of purchasing motives and those of purchasing tendencies, and then does canonical correlation analysis to identify relationships between the derived factors of purchasing motives and those of purchasing tendencies. With a total 197 cases as data through survey on university students, in the empirical study, derived are the seven factors of purchasing tendencies (purchasing tendency focused on pleasure, purchasing tendency focused on convenience, purchasing tendency focused on price, purchasing tendency focused on considering others' preferences, purchasing tendency focused on buying together with others, purchasing tendency focused on searching for information, purchasing tendency focused on risk aversion), and the five factors of the purchasing motives (feeling refreshed, seeking self-personality, achieving special purposes, seeking the latest fads, th other motives regardless of regular hair management). The canonical correlation analysis shows that the purchasing tendencies are closely related to the purchasing motives.

Keyword: Classification, Hair Beauty Service, Purchasing Motive, Purchasing Tendency

The Effect of Credite Rating Changes to Stock Prices

Saehwan Jeon, Byungwook Ko, Bohyoung Lee, Hyuntak Oh

This study analyse that corporate credite rating changes can effect the value of a firm. The results shows that downgrades of credit ratings give a statistically significant negative abnormal effect on stock prices and that the negative abnormal effect was higher after the announcement than before the announcement. And among the three types of evaluation that is occasional rating, regularly rating and orginal rating, the occasional rating showed a statistically significant effect on stock prices. But there wasn't a significant effect on stock prices by the upgrades of bond ratings. These results show that downgrades of bond ratings by rating agencies can provide useful information to the capital market in Korea. In other words, investors see the downgrade announcement as a news, and can perform a negative reaction (e.g. sell the stock) for the information. And also, this may imply the fact that rating agencies have a better inside information about the firms, or have a superior information processing technique. The fact that upgrades of bond ratings didn't show a significant effect on stock prices can be explained from the characters of rating agencies and contents of their announcements. Between mistakes of upgrading a risky firm and downgrading a safer firm, the former has a bigger impact on the reputation of the rating agency, since the bond owners can suffer losses if a bad firm mistakenly rated as good, fails to pay the principals and interests of the bond. So the rating agencies focuses more on negative bond information, and will take more time on downgrading announcements, and thus on the time of upgrade announcements, the stock prices may have already reflected the information. This is a similar result from previous studies in the US market. Also other information from the results have shown that the downgrade of bond rating announcements have a higher negative abnormal effect on stock prices of financial firms to non-financial firms. This can be from the fact that one of the main business areas of the financial firms are bonds, and so the downgrade change of the bonds may not only imply the internal environments of the firm (e.g. financial conditions of the firm), but also affect the future business and operations of the financial firm. And last, the downgrades between investment grades to investment grades showed a slightly less significant effect on stock prices, which show that investors may see the information as less important, since the firm is still in the investment grade.

Keyword: Credit rating change, Downgrade announcement, Upgrading a risky firm, Reputation of the rating agency

The Effects of Trust on Relationship Commitment in Insurance's Salesperson

Namgi Kim, Hyunok Lee, Byungryul Bae

The cognitive trust and affective trust are playing the key role in the relationships between the insurance's sales forces and consumer. This study try to find out how the antecedents of trust such as abilities, integrity, and benevolence affect to the cognitive trust and affective trust. And also try to find how the cognitive trust affect to affective trust. Based on the survey, we gathered the data and analyzed the data. Results are as follows: Abilities and benevolence are affect to the cognitive trusts and affective trusts positively. Integrity affect to the affective trusts, but do not affect to the cognitive trust. Cognitive trust affect to the affective trust, and cognitive trust and affective trust also affect to the relationship commitment.

Keyword: Cognitive trust, Affective trust, Relationship commitment

A Immigration Workers for the Competitiveness of Firms and Korean Economy

Changkon Choi

This paper address the foreign worker issues in terms of efficiency of firms and national aggregate economy. First, we attempt to measure the immigration surplus to see the effect of foreign workers on the firm's competitiveness. Next, employing the Solow and endogenous growth models, we examine the effect of foreign workers on the long run growth of economy. The result implies that high quality workers produce more immigration surplus and increase the rate of economic growth. The Solow model suggests that flow-in of foreign workers with less capital stock than domestic workers may decrease growth rate. The endogenous growth model with learning-by-investment tells us that while flow-in of foreign workers may increase growth rate, the growth effect are greater as they are endowed with higher level of capital. Based on the Roy model of immigration decision, we suggest that we need to reduce the entry costs of high quality foreign worker into Korea.

Keyword: Foreign workers, Immigration Surplus, Firms' and National Competitiveness, Immigration and Economic Growth, Roy model

An Empirical Study on the Cross Hedge Effectiveness of KOSPI200 Stock Index Futures on KOGI Cash Market

Chunghyo Hong

This paper is concerned with the cross hedge performance of KOSPI200 stock index futures market on the downside risk in Korea Corporate Governance Stock Price Index ("KOGI") covering the period from January, 2005 to December 2008. We introduce both the conventional hedge model and auto regressive conditional heteroskedasticity("ARCH") and compared their hedge performance. The main empirical results are as follows; First, there is no long-run relationship of level variables between KOGI and KOSPI200 stock index futures. Second, the optimal hedge ratio of minimum variance hedge model is relatively greater than that of ARCH model. Third, the hedge effectiveness of minimum variance hedge model outperfoms that of time varying ARCH model during the out-of sample period .. The general conclusions reached is that KOSPI200 stock index futures is a good financial derivative instruments to cross hedge the downside risk of KOGI long position.

Keyword: KOGI, KOSPI200 stock index futures, Hedge Performance, OLS, ARCH

The Short- and Long-term Effects of the Changes of Economic Variables on the Demand for and Supply of Tourism

Soowon Mo

The main purpose of this paper is to show the effects of exchange rate and world oil price on the inbound and outbound tourists. This is accomplished by modelling the tourism demand as exchange rate, oil price, industrial production, and dummy variables representing seasons, foreign exchange crisis and SARS. The dynamic rolling regression reveals that the exchange rate variable performs a key role relative to the oil price and the oil price increase is not so important factor in determining tourism demand contrary to our expectation. This study hitherto applies impulse response functions to the model to get an information regarding the responses of tourists to the shocks in the exchange rate rise of 40 won per dollar and in the oil price increase of 10 dollar per barrel. The results show that the exchange rate and the oil price reduce the outbound tourists by 990 thousand persons and 139 thousand persons, respectively, while the former increases the inbound tourists by 211 thousand persons and the latter decreases the foreign arrivals by 95 thousand persons.

Keyword: Exchange rate, Oil price, Accumulated Impulse-response, Rolling regression

A Study on the Relationship between Return on Real Estate and Interest Rate

Byungjin Yim

This study investigates the Relationship between Return on Real Estate (Housing Purchase Price Composite Indices) and 3-year KTB Interest Rate using 126 monthly data covering from January, 1997 to June, 2007. For this purpose we employs the vector-auto regressive model, Granger causality, impulse response function and variance decomposition. The major empirical results are as follows: First, from basic statistic analysis, both KOSPI and Real Estate rate index has unit roots. Second, there is at least one cointegration between them. In addition, we find that KOSPI index return has the reverse movement of Real Estate rate index return.

Keyword: KOSPI, Real Estate rate index return, Granger causality, VECM, VAR, impulse response funcion, variance decomposition