Journal of Central Banking Law and Institutions

THE FACTORS AFFECTING THE ADOPTION OF A WELL-INTEGRATED INTERNET BANKING SYSTEM IN MAURITIUS

2024-06-08T05:40:52+00:00

As the result of technological advancements, online banking is becoming a major feature for banks because it helps customers to save time and benefits banks financially. Although Mauritius’s banking sector is well developed, its e-banking sector has lagged behind other countries. Hence, the purpose of this study is to identify the factors affecting the adoption of internet banking. 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 banking customers prefer the traditional way as they do not trust the internet to manage their money. Also, though many use e-banking now they still think human contact is important for banking relation and 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 into their everyday lives and use it to its full potential.

THE IMPACT OF FINANCIAL DEVELOPMENT ON CARBON EMISSIONS: AN ASEAN PERSPECTIVE

2024-06-07T13:49:07+00:00

The global discourse surrounding the climate crisis has intensified in recent years, leading to various international agendas of global and regional bodies. Notably, ASEAN, characterised by its rapid development, has emerged as a significant contributor to CO2 emissions. Therefore, this study seeks to explore the relationship between financial development and CO2 emissions using the data of nine ASEAN countries from 2000 to 2020. Recognizing the multidimensional nature of financial development, the analysis divides financial development to two distinct indices, FM and FI. This study uses panel data ARDL with the PMG estimation used after testing all the outcomes. The analysis found non-significant effects of financial development on carbon emissions using various estimation techniques. However, separating into FI and FM yields insightful results. While the effect in the short run is unclear, FI increases the carbon emission in the long run by 1.17 percent of each one percent increase, proving that financial institutions in the current state promote an unsustainable effect on the environment. This effect occurs because they drive demand towards energy consumption while also expanding more environmentally harmful sectors. The error correction term signifies that the adverse effect of financial institutions takes approximately six years. These findings underscore the importance of integrating sustainability into development of the financial sector and advancing its maturity by enhancing access to financial institutions and markets to reduce the adverse effect of the climate crisis.

BANK INDONESIA’S ROLE IN MITIGATING ISSUES OF MONETARY ECONOMIC SOVEREIGNTY AND HUMAN RIGHTS

2024-06-08T05:10:18+00:00

Bank Indonesia has strategic authority to maintain the stability of monetary conditions in Indonesia through monetary policy. One concern is the risk is the emergence of shadow banking where fintech companies 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 mandates 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 risks posed by shadow banking. Interlinking works 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 to regulate 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.

INTERNATIONAL ISLAMIC BANKS’ POPULARITY AMIDST THE ASEAN ECONOMIC COMMUNITY: INSIGHTS FROM INDONESIA AND MALAYSIA

2024-08-14T02:11:15+00:00

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 the broader goals of the AEC, as an alternative financial system, helping to build a more resilient and inclusive financial system in the region. Because of this resiliency and inclusiveness, Islamic banks have been encouraged to develop into international banks in the ASEAN region through increasing their assets and earnings. This paper aims to examine the position of International Islamic banks (IIb) in the AEC under its conventional banking services: OCBC Bank from Singapore, Maybank and CIMB Bank from Malaysia. Through the analysis of banking trends, 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 IIb in Indonesia are provided by CIMB Bank. This paper provides an overview of the globalisation of IIb in ASEAN and fills a research gap on the development of IIb, particularly within the AEC.

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

2024-08-05T23:14:00+00:00

During the financial crisis that started in 2008, banks in the European Union (EU) needed state aid to stay afloat. After years of bailing out failing banks with public money, which led to high public debt levels across the EU, the European Commission introduced the bail-in approach. This approach required stress tests and asset quality reviews (AQR) to identify capital shortfalls in the various banking systems. The idea was to review the quality of banks’ assets, including the collateral valuations and the adequacy of assets and other collateral provisions. This study focuses on the case of Slovenia, the first EU member state that applied a bail-in approach even before it became a legally binding law at the EU level. The Slovenian bail-in led to the cancellation of all subordinated obligations (shares or bonds) held by thousands of investors, mainly private individuals. The information asymmetry and data confidentiality argument together with the applied assumptions in AQR and stress tests have raised questions about the reliability and credibility of the national and EU authorities in this respect. This paper focuses on the social/human dimension of this case by presenting the current situation through the lens of the temporal dimension of former investors’ plight in their legal attempts to challenge those extraordinary measures. The paper revolves around data confidentiality and other issues that have contributed to the fact that this situation remains unresolved, more than ten years after the nationalisation measures. The finding of this analysis is that former investors have had no legal means to effectively challenge nationalisation measures because the authorities in Slovenia have failed to provide an appropriate tool that would be effective and available in practice.

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

2023-04-12T21:14:07+00:00

In today’s world, given the increasing importance of geopolitical risk (GPR), this study investigates the impact of GPR on corporate investment, or capital expenditure, of nonfinancial firms considering institutional settings. Utilising data on 337,399 firm-years from 42 countries for the period 1996-2021 (retrieved from Datastream), empirical findings show that firms in higher GPR countries present fewer 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 be concerned about the level of GPR, governance, and legal system when determining where to invest. Policymakers should consider GPR and institutional quality to attract foreign investors.

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

2024-03-09T13:37:53+00:00

As a business of trust, the banking and financial services industry must protect its reputation to ensure consumer’s confidence. However, recent adoption of emerging internet communication technologies (ICT) have introduced new risks and challenges, such as safeguarding systems from cyberattacks and protecting consumer’s personal data. Cyberattacks, especially ransomware have shed new light on the importance of privacy and security throughout the banking and financial industry’s digitization efforts. Any organisation affected by cybersecurity attacks must face a twofold legal question. First, whether or not there has been a violation of the legal security requirements? Second, is to determine whether the attack triggers Data Breach Notification to the Data Protection Authority and/or Data Owners. 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 the European General Data Protection Regulation (EU GDPR) practices. To address the challenges of patchwork data breach notification requirements in Indonesia, 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.