The dark side of Bitcoin: Do Emerging Asian Islamic markets help subdue the ethical risk?

Sitara Karim, Brian M. Lucey, Muhammad Abubakr Naeem, Samuel A. Vigne

Research output: Contribution to journalArticlepeer-review

45 Citations (Scopus)


Continuous financing of illicit activities (drug and human trafficking, child abuse, cybercrimes) through Bitcoin nurtures the ethical risk of investors. Building on this argument, the current study investigates the extreme tail dependence between Bitcoin and Emerging Asian Islamic (EAI) markets. We report multiple tail-dependent copulas differing across turmoil periods for the whole sample period. Under the ethical-risk hypothesis and modern portfolio theory, our findings demonstrated stronger safe-haven properties of EAIs for Bitcoin to mitigate ethical risk, and higher diversification benefits are documented for both equally adjusted and optimal portfolios. We formulated useful implications for policymakers, governments, regulation authorities, ethical investors, and portfolio managers for policymaking and strategizing their investment portfolios.

Original languageEnglish
Article number100921
JournalEmerging Markets Review
Publication statusPublished - Mar 2023


  • Bitcoin
  • Conditional diversification benefits
  • Emerging Asian Islamic (EAI) markets
  • Time-varying optimal copula (TVOC)

ASJC Scopus subject areas

  • Business and International Management
  • Economics and Econometrics


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