1. INVESTMENT POLICY, GEOPOLITICAL RISK AND THE ROLE OF INSTITUTIONS: INTERNATIONAL EVIDENCE

Hasan Tekin

Abstract

In today’s world, since geopolitical risk (GPR) has increasing importance, this study investigates the impact of GPR on corporate investment, or capital expenditure, of non-financial firms considering the existence of institutional settings. Utilizing 337,399 firm-years from 42 countries for the period 1996-2021, empirical findings show that firms in higher GPR countries have lower investment opportunities. Namely, firms use capital expenditures as a substitute for GPR. Next, the negative impact of governance on capital expenditures across the whole sample remains for the firms in civil law countries. However, it reverts to positive for those in common law countries. In other words, capital expenditures are a substitute for (outcome of) governance in civil (common) law countries. Overall, investors should concern about the level of GPR, governance, and legal origin of the country to invest in. Policymakers should consider GPR and institutional quality to attract foreign investors.

2. IB AN ASSESSMENT OF INTERNET BANKING IN MAURITIUS: INTERNET BANKING

Yuvraj Sunecher, Needesh Ramphul, Hemant Chittoo, Kamlesh Singh Poolay

Abstract

E-banking known as Internet Banking allows banks' clients to do their financial transactions via internet. As the result of the technological advancements, online banking is becoming a major feature for banks because it helps customers to save time and benefits banks in a financial way. Although Mauritius’s banking sector is well developed, its e-banking sector is lagging behind compared to other countries so this study would try to find what do Mauritians think of Internet banking. Other objectives were to find out if Mauritians are wary of the security of the system and to know the reasons why those who do not use the system and what could be done to change their mind. From the findings of the study, it can be seen that many Mauritians nowadays use internet banking, but it is principally the new generation whereas the older ones prefer the traditional way as they do not trust internet to manage their money. Also, though many use e-banking now they still think human contact is important for banking relation thus continue to visit their banks thus proving that even if online banking is in well integrated in Mauritius now, it still has a long way to go for Mauritians to integrate it in their everyday life and use it to its full potential.

3. THE IMPACT OF FINANCIAL DEVELOPMENT ON CARBON EMISSIONS: ASEAN PERSPECTIVE

Muhammad Firdaus Al Farohi NA, Muhammad Zaky Nur Fajar, Muhammad Jamie Rofie Quality

Abstract

The global discourse surrounding climate crisis has intensified in recent years, leading to various international dialogues. Notably, ASEAN, characterized by its rapid development, has emerged as a significant contributor to CO2 emissions. Against this backdrop, this study seeks to explore the relationship between financial development, financial institutions, financial markets, and CO2 emissions across ASEAN. Recognizing the multidimensional nature of financial development, the analysis encompasses a comprehensive set of financial market and financial institution indices. Specifically, the study examines four financial market indices (Overall Financial Market, FM-access, FM-depth, and FM-efficiency) and four financial institution indices (Overall Financial Institution, FI-access, FI-depth, and FI-efficiency). Utilizing panel data with generalized least squares estimation to address hxeteroscedasticity, the analysis spans the period from 2000–2019. Empirical findings reveal a significant positive correlation between financial development, financial markets, financial institutions, and its sub-indices on CO2 emissions, except FI-access. Moreover, the results illustrate an inverted U-shaped for most indices and their respective square terms on CO2 emissions, except FI-efficiency, FM-depth, and FM-efficiency. This underscores the importance of integrating sustainability into development of the financial sector and advancing its maturity by enhancing access to financial institutions and markets, as well as improving the efficiency and depth of financial institutions.

4. THE DATA INTERLINK POLICY BETWEEN BANK INDONESIA, FINANCIAL TECHNOLOGY COMPANIES, AND BANKING INSTITUTIONS FOR MITIGATING SHADOW BANKING RISKS, IT IS MONETARY ECONOMIC SOVEREIGNTY OR HUMAN RIGHTS?

Dara Salsabila

Abstract

Bank Indonesia has strategic authority in maintaining the stability of monetary conditions in Indonesia through monetary policies. One concern is addressing the risk of shadow banking that arises when many fintech companies emerge and absorb and channel funds from the public. In the long term, this situation can impact the operational conditions of the banking system. One of Bank Indonesia's authorities is to supervise the provision of services by fintech companies (peer-to-peer lending) to align with the national financial and payment vision and mission, including establishing interlinks between fintech and banking to avoid shadow banking risks. Interlinking can be realized if each party is willing to share customer data. If Bank Indonesia requires fintech companies to share customer or user data, it must be based on clear and specific legislation. This is crucial because user data falls under personal data, and the state must guarantee the protection of its citizens' personal data. This article discusses the importance of legislation regarding the legitimacy of Bank Indonesia's authority in realizing interlinks between fintech companies and Bank Indonesia, as well as banking institutions, to avoid shadow banking. The article employs a normative legal approach using literature and legal sources.

5. THE ASCENDANCY OF INTERNATIONAL ISLAMIC BANKS IN THE ASEAN ECONOMIC COMMUNITY: A COMPARATIVE ANALYSIS OF INDONESIA AND MALAYSIA (CFP)

Tate Agape Bawana, Fadillah Mansor, Kamaruzaman Noordin

Abstract

The establishment of the ASEAN Economic Community (AEC) aimed to achieve regional integration among all ASEAN member states, with particular emphasis on financial integration. Islamic banking is in line with some of the broader goals of the AEC, as an alternative financial system. It may help build a more resilient and inclusive financial system in the region. This necessity then encourages Islamic bank to develop into an international bank in the ASEAN region to increase its assets and earnings albeit fewer than traditional banks, and they continue to function as Islamic windows. The aim of this research is to examine the favour of International Islamic banks (IIBs) in the AEC under its conventional bank services: OCBC bank from Singapore, Maybank and CIMB bank from Malaysia. Through Google trends analysis, this qualitative study compares the level of popularity of those banks in Indonesia and Malaysia, the two Muslim-majority countries in ASEAN, after the initial establishment of the AEC period in 2016 to 2024. The findings indicated that the most popular Islamic financial services in Malaysia are provided by Maybank, while the most well-known Islamic financial services under IIBs in Indonesia are provided by CIMB Bank. This research provides an overview of the globalization of the Islamic bank in ASEAN and fills a research gap on the development of IIBs, particularly within the AEC.

6. SOCIAL DIMENSION OF THE ASSET QUALITY REVIEW IN THE EUROPEAN UNION

Vesna Lukovic

Abstract

During the financial crisis from 2008 to 2013 in the European Union (EU), banks needed a vast amount of state aid to stay afloat. After years of the bail-out approach to save failing banks by public money, which produced high public debt levels across the EU, the European Commission introduced a bail-in approach. That led to the need for stress tests and the asset quality review (AQR) to identify capital shortfalls in the banking systems. The idea was to review the quality of banks’ assets, including the collateral valuation and the adequacy of asset and other provisions. The case study in this paper is Slovenia, one of the first EU member states that applied the bail-in approach even before it became a legally binding law at the EU level. This resulted in the cancellation of all shares or subordinated bonds held by thousands of investors, mainly private persons. They had no legal means to effectively challenge these measures due to the ongoing failure of the authorities in Slovenia to provide a legal tool which would be effective and available in practice. The focus of the paper is on data and the applied assumptions that led to the cancellation of all shares or subordinated bonds. Because of information asymmetry and the lack of legal protection, those investors are still not in a position to start legal proceedings in national courts, as of the beginning of 2024, more than a decade later. The finding of this research is that AQR and stress tests undermined the reliability and credibility of the EU and national authorities with regard to the rescue operation of banks.

7. MANAGING INDONESIAN DATA BREACH NOTIFICATION IN THE FINANCIAL SERVICE SECTOR: A CASE FOR ONE-STOP NOTIFICATION MODEL

Muhammad Deckri Algamar, Prof. Abu Bakar Munir, Hendro

Abstract

As a business of trust, the banking and financial service industry is required to safeguard its reputation to ensure consumer’s confidence. However, recent adoption of ICT and emerging technologies have introduced new risks and challenges, such as safeguarding the systems from cyberattacks and protecting consumer’s personal data. Cyberattacks, especially Ransomware have shed a new light on the importance of privacy and security throughout the banking and financial industry digitization efforts. Any organization affected by cybersecurity attacks must face a twofold legal question. First, whether or not there has been a violation towards the security requirement set forth in law. Second, is to determine whether the attack triggers Data Breach Notification to Data Protection Authority and/or Data Subjects. This paper examines the complexity of maintaining security obligations under Indonesian Law (UU ITE, UU PDP, RPP PDP, and other relevant regulations while also highlighting the common challenges in steering Data Breach Notification, with an enhanced perspective of EU GDPR practices. After finding that there is (i) a need to clarify on when to comply with Data Breach Notification and; (ii) the fragmented procedural approach of notifying various supervisory authorities isdelaying critical incident response. This paper proposes a proactive approach by Indonesia’s future Personal Data Protection Authority in creating a one-stop notification model to enable effective data breach incident management and notification.