Capital market development in Southeast Asia : from speculative crisis to spectacles of financialization

The aftermath of the Asian financial crisis of 1997-1998 witnessed a significant transformation of the financial systems of the Southeast Asia region. It saw the ascendance of capital markets in financial systems that had traditionally very much relied on bank loans and other sorts of so-called relationship finance. This emergence of capital markets was by design rather than the spontaneous and natural result of their evolving market orders as policymakers have shifted from planning for outcomes to planning for uncertainty. A financialized version of capital market development, conceptualized here as situated knowledge practice, has manifested itself in increasingly spectacular financial designs. The essay explores two sites of the circulation of new financial knowledge: the dramatic performances of financial knowledge at (Islamic) capital market conferences and the new urban designs where financial knowledge is put to work. The analysis is informed by observations from Jakarta, Kuala Lumpur and Singapore

Corporate Islam, global capitalism and the performance of economic moralities

Recent years have witnessed the rapid expansion of the Islamic economy, which by some estimates has reached a size of US$ 4 trillion. The growth of the Islamic economy presents an intriguing test case for the compatibility of global capitalism and moral – in this case specifically Islamic – principles. This article adopts a performative lens to draw attention to the role of the World Islamic Economic Forum and the Global Islamic Economy Summit as legitimation mechanisms celebrating economic diversity and the success of Muslim entrepreneurs with the aim of increasing the visibility of the Islamic economy. Here, a polyphony of Muslim voices is sought to be consolidated into the voice of ‘business Islam’, with important implications for how the Islamic economy is conceived, defined and delineated

Sexy money : the hetero-normative politics of global finance

The article develops a critical analysis of gendered narratives of global finance. The post-subprime crisis equation of unfettered global finance with the excessive masculinity of individual bankers is read in line with a wider gender narrative. We discuss how hetero-normative relations between men and women underpin financial representations through three historical examples: war bond advertising, Hollywood films about bankers, and contemporary aesthetic representations of female politicians who advocate for austerity. A politics emerges whereby gender is used to encompass a/the spectrum between embedded and disembedded finance, approximate to the divide between oikonomia and chrematistics. The apparently desirable ‘marriage’ between the state and finance that ensues carries several ambiguities – precisely along gender lines – that point to a pervasive limit: the myth of embedded liberalism in the imagination of global finance

Conflicts of Interest in Financial Intermediation

The last years have seen a surge of scandals in financial intermediation. This article argues that the agency structure inherent to most forms of financial intermediation gives rise to conflicts of interest. Though this does not excuse scandalous behavior it points out market imperfections. There are four types of conflicts of interest: personal-individual, personal-organizational, impersonal-individual, and finally, impersonal-organizational conflicts. Analyzing recent scandals we find that all four types of conflicts of interest prevail in financial intermediatio

The gendered everyday political economy of Kampung eviction and resettlement in Jakarta

This report is the result of a collaborative partnership between the University of Warwick’s Department of Politics and International Studies and Universitas Indonesia’s Centre for Elections and Political Party (CEPP). The research was funded by the British Council’s Newton Fund under an Institutional Links Grant (project reference 217195589). The project had two complementary streams (a) to conduct research into the gender impact of urban resettlement schemes for the poor in Jakarta and to develop policy recommendations that sought to address issues arising from the research; and (b) to develop an academic partnership that would better develop links between UK and Indonesian academic institutions. This report focuses on the research into urban resettlement

Introduction to the political economy of the sub-prime crisis in Britain : constructing and contesting competence

It is almost always inadvisable to try to second-guess the character of a General Election campaign before it begins in earnest. Yet, even in today’s shadow-boxing phase in advance of the British General Election due to be called in 2010, a number of important campaign contours are already in evidence. It is one of the unwritten laws of British electoral politics that governments unravel – particularly those of a certain longevity – as events appear ever more to have spiralled out of their control. The task for the Brown Government in the upcoming General Election campaign is to try to convince voters that there is still life left within Labour despite its current travails with the credit crunch and British banks’ self-imposed entrapment in the subprime crisis. Claim and counter-claim are likely to pass between the Government and the opposition parties as to where the blame lies for the current disarray of the banking sector, whose model of regulation is most responsible and who is best placed to ensure a successful clean-up operation. Whoever is perceived to have come out on top in this debate is likely to stand a very good chance of winning the election

Governed interdependence, communities of practice and the production of capital market knowledge in Southeast Asia

This article revisits the notion of governed interdependence to examine the knowledge practices that have underpinned the expansion of debt capital markets in Southeast Asia, with a focus on Indonesia and Malaysia. It identifies two types of communities of practice - one of planners/policymakers, one of market practitioners - as central to the production of capital market knowledge and traces the emphasis placed on them by state actors through consecutive capital market development plans. The article then moves on to examining how both countries have sought to implement regimes for the training and licensing of capital market professionals in the wake of the financial crisis of the late 1990s. It argues that these knowledge practices bestow capital markets with legitimacy which makes the practices of investing in and borrowing from debt capital markets socially acceptable, if not even a key developmental objective. This is in the context of both the Asian crisis and more recent crises repeatedly showing the dangers of speculative portfolio investment as well as Islamic stipulations against speculative finance in these two Muslim-majority countries

Whose legitimacy? Islamic finance and the global financial order

Islamic finance is a fast growing segment of international financial markets. Deriving its core principles from the Quran and the Sharia, the objective of Islamic finance is to install a more equitable financial and economic order that at the same time is transaction-friendly. Thus, Islam could be seen as a foundation for the inclusion of the ethical and moral dimensions of economics and markets. This coincides with rising demand for Islamic financial products. Indeed, recent years have witnessed increasing efforts to develop and to institutionalise Islamic capital markets and above all, to make Islamic finance acceptable (and thus investable) to the mainstream. In this article, I use the question of legitimacy to explore whether Islamic finance offers an alternative to the existing international financial order. To this end, I take a closer look at the knowledge base from which Islamic financial products are constructed and assessed as well as the emerging international regulatory framework for Islamic financial markets. I conclude that efforts to expand the social constituency of Islamic finance to the transnational sphere of global finance are overly focused on its epistemic legitimation as normal financial activity. As a consequence, the currently emerging power, knowledge and governance structures for Islamic finance tend to emulate, and therefore largely reproduce, the existing global financial order

The political economy of financial development in Malaysia : from the Asian Crisis to 1MDB

Current inquiries into the political economy of financial policymaking in Malaysia tend to focus on the high-level drama of crisis politics or simply point to the limited impact of post-crisis financial reforms, given that politico-business relations have remained close. In so doing, pundits ignore a number of intriguing questions: what is the relationship between financial development and financialisation and how has it played out in the Malaysian context? And more generally: how can a country like Malaysia become significantly more financially developed, yet fail to emancipate the financial system from political control; a core element of the financial development discourse? To unravel the complexities of this puzzle, this book subjects the history and contemporary practices of financial policymaking in Malaysia to scrutiny. It argues that to understand financial development in Malaysia, its progress and reversals, it is important to conceptualise it as a political, rather than a merely technical process. In so doing, the book echoes a more profound concern in the political economy literature, namely the evolving relationship between states and markets, and the supposed retreat or reassertion of the state at a time of increasing (financial) globalisation. The book can generate further insights into the evolving role of the state with regard to broader processes of development and marketisation, as they relate specifically to finance