Islamic Capital Market Integration and Asymmetric Information: A Study in the Five Asean Countries From the Post-Global Financial Crisis

Abstract

This study aims at examining the integration impact of the five ASEAN Islamic capital markets on asymmetric information for ASEAN Economic Community (AEC) development. Utilizing samples of market and financial panel data from 2009 to 2015 among the five ASEAN Islamic capital markets, and applying two-country portfolios of the Islamic capital markets among the five ASEAN countries to measure the different levels of Islamic capital market integration, this study suggests that the different levels of the Islamic capital market integration between Indonesia and Malaysia are found to result in asymmetric information negatively. The strongest Islamic capital market integration between Indonesia and Malaysia affect reduced asymmetric information more consistently than the other two-country portfolios, while the weakest level of integration between the Philippines and any other four Islamic capital markets that affects asymmetric information inconsistently is also supported. These results confirm an interplay between a modern portfolio theory, Efficient Market Hypothesis (EMH), contract theory, and general economic theory, and also provide new insights for stakeholders in investment decisions and strategies, cross-border regulation of economic resources, and other plentiful benefits.

Ethnomethodology Approach in Investment Decision Making in Islamic Capital Market: An Interaction and Social Practice of Market Participants

“…The research revealed that market participants actively assess the lawfulness of their investments, ensuring that every entity they choose adheres to Islamic standards. Ethnomethodological analysis describes the process of careful assessment of a company's financial structure, revenue sources, and business practices, creating a clear dividing line between investments that are shariah-compliant and those that are not (Qizam, 2021). In addition, research findings state that socio-cultural factors are also a central point in making investment decisions.…”

“…The Islamic capital market is also one of the investment instruments that is increasingly in demand by the people of Indonesia. This is evidenced by the increasing number of Islamic capital market investors in Indonesia (Qizam, 2021). Based on data from the Otoritas Jasa Keuangan (OJK), the number of Islamic capital market investors in Indonesia in 2022 reached 162,900 investors, an increase of 20.2% from the previous year (OJK, 2023).…”