Search

Market discipline has been well recognized as effective means for preventing excessive business risk taking. Nevertheless, as the nature of investment in Islamic Finance may not meet the required characteristics, the ability of market discipline to work in its particular instrument market still needs to be proven. This study employed mixed method to answer the research questions. The quantitative analysis was carried out using event study approach, while in qualitative research we gathered qualitative information using questionnaire and Focus Group Discussion (FGD), as well as interviews. This study utilized data of daily prices of some financial instruments traded in Indonesia, including conventional stocks, syariah-compliant stocks, bond, sukuk, conventional mutual fund, syariah-compliant mutual fund, IHSG, and Jakarta Islamic Index (JII). We employed 7-day, 30-day, 60-day, and 90-day windows around the date of the Islamic gold investment Scandal revelation in 2013, in both conventional and Islamic Finance markets. The qualitative study involved individual respondents, people in the relevant supervisory agencies, academicians, and professionals working in financial institutions. We find that market discipline works well only in Sukuk market and only in shorter period. We also find that negative market actions in both capital market segments may obscure the existence of market discipline. The qualitative study results show that insufficient capability of investors for assessing the investment credibility explains the empirical findings.

This study explores whether IMF-supported programs in low-income countries (LICs) catalyze Official Development Assistance (ODA). Based on a comprehensive set of ODA measures and using Propensity Score Matching approach to address selection bias, we show that programs addressing policy or exogenous shocks have a significant catalytic impact on both the size and the modality of ODA. Moreover, the impact is greatest when LICs are faced with substantial macroeconomic imbalances or large shocks. Nevertheless, when countries attracting similar donor assistance before shocks are matched results for bilateral ODA turn insignificant, suggesting that the catalytic impact is attributed primarily to multilateral ODA.