Contemporary Issues in Finance, Investment and Banking in Malaysia

With the growing literature on information asymmetry and industry 4.0 (IR4.0), a systematic review of the application of IR4 on mitigating information asymmetry is inevitable. Most of the existing literature focuses on management and computer science, and limited study links the analysis directly to the impact of technology on mitigating information asymmetry in corporate governance. Therefore, this study aims to fill in the literature gaps by refining and identifying the linkage between adoption IR4.0 or enabling technologies of IR4.0 (Blockchain, Cyber-Physical System (CPS), Internet of Things (IoT) and Cloud Computing) related to mitigating information asymmetry. Firstly, the systematic review found 521 research articles from Scopus and Web of Science database and analysed nine articles based on inclusion and exclusion criteria. The review analysis found that blockchain technology plays a vital contribution in representing the enabling technologies of IR4.0. Most of the review analysis discussed blockchain technology on mitigating information asymmetry in corporate governance. Only one review article discussed widely with enabling technologies of IR4.0 on mitigating information asymmetry. However, the management field report was discussed too widely with theory and concepts related to computer science literature. Therefore, this study will focus on the discussion of blockchain technology on mitigating information asymmetry. The findings conclude that the enabling technologies of IR4.0 will mitigate information asymmetry in corporate governance in the form of enabling open information transactions, decentralised governance, representing faithfulness of financial reporting, promote smart contracts, and enhance market competitiveness and social welfare. Finally, this study emphasised a framework based on the systematic literature review which suggested that IR4.0 will be a new mechanism to mitigate information asymmetry in the corporate governance, which will directly influence the intention of the corporate governance players to mitigate information asymmetry.

Understanding how market sentiment reflects the firm investment decision (capital expenditure) is crucial for businesses to make a proper investment strategy. This is because investor sentiment and firms’ investment decision-making lie behind the reasoning that a firm’s investment selection forms the most crucial part of its overall business decisions. Thus, this study examines how market sentiment, measured by Business Condition Index (BCI) and Consumer Sentiment Index (CSI), reflects Malaysian firms’ investment from 2000 to 2018. This study applies a system generalised method of moment (GMM) technique with 673 firms’ unbalanced panel data. Due to global uncertainty and market downturn, an investor’s confidence level can change from optimism to infectious pessimism. When the market is pessimistic, investors’ confidence becomes negative, leading to a decline in capital expenditure (CAPEX). The findings show that both market sentiment indicators significantly influence private firms’ investment. Higher market sentiment indices create optimism for firms and increase business fixed investment.

Crypto or stock? Investors should understand what they are investing in when weighing cryptocurrencies or stocks. Although cryptocurrencies such as Bitcoin, Ethereum and Cardano have surged in value in recent years, savvy investors have to scrutinise what they are getting into and keep an eye out before jumping in. Therefore, this chapter begins by introducing cryptocurrencies and stocks to help the readers understand these fundamentals. In this chapter, we will look into the definition of cryptocurrency and stocks, the fundamentals of cryptocurrencies and stocks and the interconnectedness between these two investments in recent years.

The size effect has been the most significant anomaly in stock price. Unlike developed stock markets, Malaysia’s market is smaller, less liquid, more volatile, prone to higher risk premiums and has higher cost of funds. These features could be attributed to informational inefficiency, high trading costs, and less competition. Nonetheless, investors have become interested in the Malaysian stock market for international diversification and potentially high returns. Thus, this research aims to examine the size effect in Malaysia’s cross-section of stock returns, involving 828 stocks listed in the FTSE Bursa Malaysia KLCI Index from January 2011 to December 2020. Fama–MacBeth-profitability regressions suggest that small firms and dividend payers perform better than large firms and non-dividend payers. Moreover, the small significant positive coefficient of lagged profitability suggests that Malaysian stock’s returns are not highly persistent. The findings would benefit investors, fund managers, and top management for portfolio diversification and risk management in Malaysia’s stock.

The COVID-19 pandemic has been shattering the world since the beginning of 2020 and has caused an enormous impact on the stock markets. Malaysia, a small and open economy, was equally affected by the pandemic. This is reflected in the Movement Control Order (MCO) implementation, which ceased most of the economic activities and consequently affected the Malaysian stock market. Therefore, this study aims to examine the impact of COVID-19 on the FTBM Kuala Lumpur Composite Index (KLCI) and 13 other sectoral indices using the Autoregressive Distributed Lag (ARDL) model. Using the sample period from 5 February 2020 to 31 December 2020, the main results showed that the increase in COVID-19 cases in Malaysia and globally still positively impacted the KLCI and all sectoral indices during this period. The findings of this study bring implications for investors, investment institutions, and policymakers in the following aspects. First, this study helps investors in determining strategies to manage their portfolios. This study also assists investment institutions in identifying risks in each sector during the pandemic. Finally, this study helps policymakers set policies to maintain stock market stability while facing market shocks like this pandemic. This study is relevant in increasing perspectives to help all stakeholders execute the best decisions, especially with the COVID-19 pandemic still active worldwide.

The COVID-19 pandemic might be bad news for all economic units, but it has become an unprecedented push factor for cryptocurrencies. These digital currencies have received overflowing investment through capital withdrawn from traditional investment instruments such as stocks and bonds. This chapter investigates the reaction and efficiency of Bitcoin and 40 altcoins from the World Health Organization’s announcement of the COVID-19 pandemic on 11 March 2020 and the first vaccination approval on 31 December 2020. Using the event study approach for the observation period from 1 January 2019 until 31 October 2021, we find that their reactions are significant and increasingly positive on the longer event windows. We also find that the size effect is highly significant in the cryptocurrency market compared to the stock markets. Cryptocurrencies with saturated supply react more drastically than those with unlimited supply, but the impact of supply is less pronounced than size. Meanwhile, Bitcoin appears to be more efficient than all altcoins except for the five largest cap. The results of this study would be beneficial for investors, particularly those searching for a safe haven or hedger in the cryptocurrency market.

This chapter focuses on the relationships between Bitcoin price and monetary policy whether the roles of monetary policy still empower the performances of bitcoin or whether bitcoin price, in this digital era, overruns the monetary policy and government control. In the new norms of COVID-19 pandemic, where the electronic transactions and digital transactions and activities turn up to be the necessities, this chapter also explores whether the relationships between monetary policy and Bitcoin could be weaker. The relationships are compared between 8 months before and 8 months during COVID-19 pandemic for the 3 countries: US, China and Malaysia. The authorities are recommended to focus on the acceptance of cryptocurrency or even to establish one nation’s digital currency.

Systematic reviews have been conducted to determine how Fintech and financial literacy influence the adoption of Islamic banking products. Guided by the PRISMA (Preferred Reporting Items for Systematic reviews and Meta-Analyses) method, a systematic review from Scopus, Web of Science, Dimensions and Google Scholar databases has identified 19 related studies. Three main themes have been found: Fintech, Financial Literacy, additional factors and demographic. These four themes further produced a total of 17 sub-themes. Past studies found that fintech and financial literacy have positively influenced the behavioural intention in adopting Islamic banking products. Most researchers investigated how perceived usefulness, perceived ease of use and perceived risk influence the customers’ adoption decision. With regard to fintech infrastructure, policymakers and industry players should pay attention to the management of platforms, products and features offered. In terms of Islamic financial literacy, awareness and knowledge of the society can be enhanced via educational and training programs in social media to instill positive attitudes towards Islamic banking products and services. Further, religion, product pricing, cost–benefit analysis, reputation, social influence and government support also play a role in influencing the customers’ decision towards the adoption of Islamic banking products and services. Besides, demographic indicators like gender, age, education level and employment status should be appropriately targeted by the relevant authorities when developing strategic programs to boost the adoption level of Islamic banking products and services within the context of fintech and financial literacy.

This study reviews the factors influencing the adoption of online investment. Guided by PRISMA (Preferred Reporting Items for Systematic Reviews and Meta-Analyses) review method, we identified 16 related studies using Web of Science and Scopus databases. In depth review of these articles have brought us to five main themes—attitude, subjective norms, perceived behavioural control and others. These five main themes have been further narrowed down into 29 sub-themes. There are few recommendations discussed in this study for future researchers’ references.

Millennials (born between 1981 and 1996) and generation Z (born between 1997 and 2012, also known as Gen-Z) make up more than half the world’s population (Deloitte, 2020). Together they form the largest demographic globally. Both generations are categorised as being technology savvy, well educated and entrepreneurial (DeVaney, 2015), accounting for most of the global workforce with the former at their prime earning years. According to Morgan Stanley report in 2019, 95% of millennials are interested in sustainable investing or want to tailor their investments to their values. Another survey in 2018 indicated that 87% of high net worth (HNW) millennials considered a company's ethical, sustainable and governance (ESG) track record as an essential investment decision consideration. The inclination of these generations towards sustainable and ethical investing is very much understandable as millennials and Gen-Z are tackling their concerns by taking socially conscious actions to protect the planet and shine a spotlight on societal issues. Millennials said protecting the environment was their top concern, followed by health care and disease prevention, unemployment and income inequality/distribution of wealth (Deloitte, 2020). Preference towards ethical banking reflects a desire for their money not just to earn a return but to align with their values and contribute to the social good. Therefore, instead of being conceptualised as a niche market, Millennials and Gen-Z should be treated as submarkets that differ in their levels of awareness of ethical issues, consider discrete motives when making financial decisions and are willing to engage in cause-related banking to varying degrees. Connecting with these customers with different banking behaviour and preference is a critical part of any bank’s entry-point marketing strategy. In doing so, it is important to understand factors influencing ethical banking behaviour among millennials and Gen-Z. Following the ethical decision-making model by Bayer et al. (Journal of Business Economics 89:655–697, 2019) and Rest (Moral development: advances in research and theory, Praeger, 1986), this study incorporated constructs, namely, religious value, technology-related factors and ethical obligations. This study frames its analysis based on a sample of 500 millennials and Gen-Z banking customers to provide evidence for Malaysian market. The expected findings suggest that millennials and Gen-Z in Malaysia felt that their intentions to engage in ethical banking are motivated by the perceptions of their own capabilities, attitudes and perceptions of other people close to them. Based on these findings, it is recommended that banks should refocus their attention on the banking needs of these generations of customers to gain a better understanding of what influences their behaviours. Retail banking executives and marketers need to adjust their approaches, products and messaging to keep pace with unique behaviour of these generations. Banks can make use of the findings to improve their marketing strategies for customised ethical products and services offered to leverage on this significant segment of populations, thus increasing profitability.