International Journal of Finance & Economics

Impact factor: 0.784 5-Year impact factor: 0.776 Print ISSN: 1076-9307 Online ISSN: 1099-1158 Publisher: Wiley Blackwell (John Wiley & Sons)

Subject: Business, Finance

Most recent papers:

How Does the VAT Retention and Refund Reform Affect Supply Chain Resilience? Evidence From China.
Jing Zeng, Jiayin Chen, Kam C. Chan.
International Journal of Finance & Economics. 3 days ago

["International Journal of Finance &Economics, EarlyView. ", "\nABSTRACT\nAs global supply chains face mounting instability, building resilience becomes increasingly valuable for firms. Drawing on data from Chinese firms (2012–2022) and leveraging the 2018 VAT retention and refund reform (VATRR) as a natural experiment, we analyse how VATRR affects supply chain resilience (SCR). The results indicate that the VATRR has a significant positive effect on firms' SCR. The analysis of underlying mechanisms shows this effect operates through three pathways: reduced financial constraints, higher innovation, and increased specialisation. Moreover, the evidence suggests the effect is more salient among small, young, non‐state‐owned firms, those in the eastern region, and capital‐technology‐intensive firms. Our research has important policy implications for developing countries to guide them in strengthening their SCR through tax policy.\n"]

May 07, 2026 doi: 10.1002/ijfe.70216 open full text
Import‐Driven Pathways to RMB Internationalisation: Evidence From Network Analysis.
Youzhe Wang, Wenxin Liu, Zhengtao Cheng.
International Journal of Finance & Economics. 3 days ago

["International Journal of Finance &Economics, EarlyView. ", "\nABSTRACT\nAgainst the backdrop of profound global economic restructuring and the growing diversification of the international monetary system, exploring the role of trade channels in promoting RMB internationalisation holds significant theoretical and practical importance. This paper examines how expanding imports affects the international influence of the RMB and explores the underlying mechanisms. Using a network topology approach and a high‐dimensional time‐varying parameter vector autoregression (HD‐TVP‐VAR) model, we measure the RMB's international influence and analyse the impact of import scale on it. The results show that expanding imports significantly enhances the RMB's influence in relevant regions, with the strongest effects observed in resource‐intensive and capital‐intensive industries. Mechanism analysis reveals that import expansion strengthens the RMB's international influence through channels such as boosting market confidence, improving bargaining power, and enhancing supply chain stability. Furthermore, the paper finds that the continued expansion of RMB internationalisation exerts a ‘double‐edged’ effect on China's domestic systemic financial risk, while simultaneously mitigating global systemic financial risk and enhancing macroeconomic resilience of other economies.\n"]

May 07, 2026 doi: 10.1002/ijfe.70220 open full text
Can Core Competence Help Enterprises Reduce Corporate Fraud?
Changling Sun, Zilan Bi, Kam C. Chan, Jinglu Zhao.
International Journal of Finance & Economics. 3 days ago

["International Journal of Finance &Economics, EarlyView. ", "\nABSTRACT\nThis paper empirically examines the impact of core competence on corporate fraud by constructing the measurement index of core competence through textual analysis, using Chinese A‐share listed companies from 2007 to 2022 as a research sample. It is found that: core competence can effectively reduce corporate fraud, and the conclusions still hold under a series of robustness tests. The mechanism test reveals that core competence can reduce performance pressure, improve internal control quality and enhance external attention, thereby reducing the motivation and opportunity for misconduct and binding corporate fraud. Further study finds that: the binding effect of core competence on corporate fraud is more significant in non‐state‐owned enterprises and enterprises in a well‐established external legal environment. Core competence is more significant in reducing disclosure violations and operational violations compared to executive violations. The findings of this paper not only enrich the literature on the economic consequences of core competence and the factors influencing corporate fraud, but also have significant theoretical and practical implications for how to avoid corporate fraud.\n"]

May 07, 2026 doi: 10.1002/ijfe.70219 open full text
Does Inflation Targeting Enhance Economic Performance? Evidence From Asian Economies.
Chandan Sethi, Bibhuti Ranjan Mishra.
International Journal of Finance & Economics. 4 days ago

["International Journal of Finance &Economics, EarlyView. ", "\nABSTRACT\nThis paper examines whether inflation targeting (IT) policies improve the macroeconomic performance of 28 Asian economies from 1998 to 2023. Specifically, it assesses the impact of IT on inflation, GDP growth, exchange rates and unemployment. The study employs two econometric methods: propensity score matching (PSM) and panel‐corrected standard errors (PCSE). The findings suggest that adopting an IT regime can significantly reduce inflation and exchange rate volatility. However, IT has no significant effect on GDP growth. In contrast, results reveal a positive, statistically significant impact on unemployment, suggesting potential short‐run labour‐market trade‐offs associated with disinflationary policies. These findings contribute to the ongoing debate on the effectiveness of IT by highlighting that its impact on real economic variables may vary across estimation approaches and underlying assumptions.\n"]

May 06, 2026 doi: 10.1002/ijfe.70211 open full text
Explaining Episodes of High Inflation: Demand‐ and Supply‐Side Drivers in Times of Uncertainty.
Maria‐Eleni K. Agoraki, Nektarios Aslanidis, Georgios P. Kouretas.
International Journal of Finance & Economics. 5 days ago

["International Journal of Finance &Economics, EarlyView. ", "\nABSTRACT\nIn this paper, we investigate the extent to which uncertainty anticipates episodes of high inflation in 30 economies worldwide. Our analysis accounts for several factors, including inflation expectations, real global economic activity, and supply chain disruptions. Using an instrumental variable (IV) approach, we identify exogenous variations in country‐level uncertainty by tracking uncertainty in large global economies, which is particularly relevant for small open economies. The results indicate that periods of high uncertainty are generally associated with low inflation. Importantly, our research reveals two distinct mechanisms through which uncertainty affects inflation. Uncertainty has a negative effect on demand‐driven inflation, while its effect on supply‐driven inflation is positive.\n"]

May 05, 2026 doi: 10.1002/ijfe.70215 open full text
Stock Market Volatility Predictability: A Transfer Entropy‐Determined Model‐Switching Strategy.
Xueqing Wang, Ying Yuan, Yong Qu.
International Journal of Finance & Economics. 9 days ago

["International Journal of Finance &Economics, EarlyView. ", "\nABSTRACT\nThis article proposes a Transfer Entropy‐Determined Model‐Switching (HAR‐TEDMS) strategy within the HAR‐RV framework to improve the predictive accuracy of stock market volatility. The core mechanism of the HAR‐TEDMS model is based on transfer entropy, which is used to identify whether the market is in a state of dependence or independence by examining the significance of information transmission between the oil implied volatility index (OVX) and the stock implied volatility index (VIX). This mechanism enables the model to dynamically switch between incorporating interactive or independent information from OVX and VIX, thereby effectively adapting to different market states. Empirical results reveal the superior forecasting performance of the HAR‐TEDMS model across different forecasting horizons. Furthermore, we confirm that the predictive ability of the HAR‐TEDMS model is primarily reflected in its capability to capture asymmetric information transmission and its adaptability to turbulent environments. This novel HAR‐TEDMS model enhances the understanding of information transmission mechanisms across financial markets, underlining its potential value in guiding investment strategies.\n"]

May 01, 2026 doi: 10.1002/ijfe.70210 open full text
A Bullet on Bribe‐Givers: Corporate Bribery and the Cost of Debt.
Yuetong Li, Xiaojia Zheng.
International Journal of Finance & Economics. 10 days ago

["International Journal of Finance &Economics, EarlyView. ", "\nABSTRACT\nThis study investigates the ramifications of corruption penalties on corporate debt financing. By employing the implementation of China's Amendment to the Criminal Law in 2015, we show that the heightened penalties for bribery significantly reduce firms' debt financing costs located in regions with higher levels of corruption. This reduction stems from decreased entertainment expenses and alleviated financial distress of firms. Furthermore, such mitigating effect is more pronounced in firms located in regions with weaker legal institutions and non‐coastal cities, or operating in fiercely competitive markets. We also find that firms increase charitable donations following the enactment of the Criminal Law, suggesting a shift from clandestine corruption towards more subtle philanthropic endeavours to maintain relationships with the government.\nJEL Classification: M10, M41, G30\n"]

April 30, 2026 doi: 10.1002/ijfe.70214 open full text
Do Private and Public Capital Flows Respond Differently to Income Inequality? Evidence From Emerging Markets and Developing Economies.
Jorge Carrera, Gabriel Montes‐Rojas, Mariquena Solla, Fernando Toledo.
International Journal of Finance & Economics. April 24, 2026

["International Journal of Finance &Economics, EarlyView. ", "\nABSTRACT\nInequality dynamics influence portfolio decisions in both the private and public sectors. In the private sector, increased inequality facilitates covering the fixed costs associated with participating in international financial markets. As society becomes more unequal, a larger proportion of the population can afford to operate in global markets in both directions to take debt and acquire external assets. In the public sector, inequality affects government policies and preferences, particularly fiscal policy and debt dynamics. In this paper we study the link between inequality and capital flows, taking advantage of a new database that differentiates private and public sectors. Higher income inequality is associated with higher total capital inflows and outflows and higher net flows. These patterns are stronger for private flows. Private outflows are more sensitive to financial openness than private inflows.\n"]

April 24, 2026 doi: 10.1002/ijfe.70212 open full text
Industry Portfolio Volatility Connections and Industry Portfolio Returns.
Michael Ellington, Michalis Stamatogiannis, Yawen Zheng.
International Journal of Finance & Economics. April 24, 2026

["International Journal of Finance &Economics, EarlyView. ", "\nABSTRACT\nThis paper tracks dynamic connections that form among daily US industry portfolio return volatilities using a Bayesian time‐varying parameter VAR model. Market participants often focus on sectors to filter vast amounts of information, and this focus results in cross‐industry return predictability. We characterise connections that form over the short‐, medium‐ and long‐term, analysing their role as indicators of sectoral uncertainties. These volatility‐based connections create a network structure that reflects co‐movement across different industries. By capturing these network dynamics, we assess their usefulness in predicting US industry portfolio returns. Our results show that network connections contain economically meaningful information for future industry portfolio returns, offering significant gains in both point and density forecasts.\n"]

April 24, 2026 doi: 10.1002/ijfe.70208 open full text
Mitigating Tax Avoidance: The Role of Board Interpersonal Diversity in the United Kingdom.
Eric O. Boahen, Emmanuel C. Mamatzakis, Lorenzo Neri, Antonella Russo.
International Journal of Finance & Economics. April 21, 2026

["International Journal of Finance &Economics, EarlyView. ", "\nABSTRACT\nThis study investigates how the board's interpersonal diversity is associated with company tax avoidance behaviour. The ‘Out of Africa’ theory of human origin, which assesses how individual attributes (including cognitive capabilities, capacities and problem‐solving style) and interpersonal trust are shaped by human evolution, forms the basis of the interpersonal diversity scale. A broad literature affirms how diversity in cognitive skills and interpersonal trust enhances board performance and monitoring mechanisms within the board members. In this study, we analyse how the interpersonal diversity of the board members for UK firms over the period 1999 to 2019 mitigates agency problems and tax avoidance. Our main finding shows interpersonal diversity is associated with lower tax avoidance. These results emphasise the importance of the composition of boards with members from diverse genetic backgrounds. This could be encouraged through disclosure requirements, guidelines or incentives for companies to diversify their board composition.\n"]

April 21, 2026 doi: 10.1002/ijfe.70213 open full text
Digital Financial Inclusion and Rural Household Debt Risks.
Yunhui Wang, Yihua Chen.
International Journal of Finance & Economics. April 13, 2026

["International Journal of Finance &Economics, Volume 31, Issue 2, Page 2012-2026, April 2026. ", "\nABSTRACT\nTechnology is a double‐edged sword. Departing from extant literature that centres on urban households, this study is the first to document the long‐run dynamic effects of digital inclusive finance on rural household debt risk in China. Using four waves (2016–2020) of the China Family Panel Studies (CFPS), we identify both the impact and underlying mechanisms. Results indicate that digital inclusive finance (DFI) significantly raises rural households' leverage by fueling material aspirations and reducing income uncertainty. The effect is most pronounced in the central and western regions, among purely agricultural households, and among those owning two dwellings. This study contributes new empirical evidence on the relationship between DFI and debt risks among rural households, thus offering valuable insights for policymakers in developing countries striving to foster the development of DFI in rural areas.\n"]

April 13, 2026 doi: 10.1002/ijfe.70028 open full text
Foreign Residency Rights and Corporate Bond Yield Spreads.
Zhong‐qin Su, Yiting Zhu, Hongmin Jin, Meiting Wu.
International Journal of Finance & Economics. April 13, 2026

["International Journal of Finance &Economics, Volume 31, Issue 2, Page 2027-2062, April 2026. ", "\nABSTRACT\nWe investigate the effect of ultimate controllers' foreign residency rights on corporate bond yield spreads. Using data on Chinese listed firms from 2010 to 2021, this study reveals a positive association between foreign residency rights and corporate bond yield spreads. The positive relationship is robust across different measures of foreign residency rights, estimation methods and after considering potential endogeneity issues. We propose two potential channels for the positive effect of foreign residency rights on corporate bond yield spreads: increasing firms' earnings management and taking more risk. Further, stronger external governance and internal governance alleviate the positive effects of foreign residency rights on corporate bond yield spreads. Additional analyses indicate that ultimate controllers with overseas residency rights are associated with more bond covenants, higher bank loan spreads and shorter loan maturity. Overall, our results indicate that corporate bondholders are fully aware of the expropriation risk created by controllers' foreign residency rights. Thus, investors and regulators in emerging markets should pay attention to controllers' foreign residency rights.\n"]

April 13, 2026 doi: 10.1002/ijfe.70029 open full text
Climate Risk and Risk‐Taking of Rural Financial Institutions in China.
Xiaoming Zhang, Luping He, Chien‐Chiang Lee.
International Journal of Finance & Economics. April 13, 2026

["International Journal of Finance &Economics, Volume 31, Issue 2, Page 1957-1978, April 2026. ", "\nABSTRACT\nThe research identifies the impact of climate risk on the risk‐taking of rural financial institutions in China and its mechanism, using 279 rural financial institutions from 2011 to 2021 as the research sample. Results show that climate risk significantly increases the risk‐taking of rural financial institutions, and agricultural economic development plays a mediating effect in the impact of climate risk on the risk‐taking of rural financial institutions. The impact of climate risk on the risk‐taking of rural financial institutions in China is more pronounced among financial institutions that have higher climate policy uncertainty and larger government environmental expenditures. Finally, the impact of climate risk on the risk‐taking of rural financial institutions in northern China is greater than that in southern China.\n"]

April 13, 2026 doi: 10.1002/ijfe.70025 open full text
Rural Commercial Bank's Efficiency on Supporting Rural Revitalization in China: Do Leverage Implementation and Green Finance Matter?
Yue Li, Zariyawati Mohd Ashhari, Nazrul Hisyam Ab Razak, Wei Ni Soh, Xianghua Tang, Kuan Kang.
International Journal of Finance & Economics. April 13, 2026

["International Journal of Finance &Economics, Volume 31, Issue 2, Page 1933-1956, April 2026. ", "\nABSTRACT\nThis paper provides an in‐depth examination of the role of rural financial institutions in rural development under deleveraging and greening externalities orientating China's economic transition. Specifically, we examine the impacts of leverage implementation and green finance on the multi‐dimensional efficiency (i.e., financial, social and comprehensive) of rural commercial banks (RCBs) in the following distinct ways. First, we account for the symmetric and asymmetric relationships between leverage and efficiency through a comparable analysis of using the ARDL model and the NARDL model, which follow dynamic heterogeneous panel data modelling by Shin et al. Second, we investigate the relationship between green finance and efficiency in an identical manner. Third, in order to capture potential nonlinearity, we quantify macroprudential green finance to ascertain its threshold effect on the leverage‐efficiency association by using the Hansen model. Our results depict that RCBs' efficiency, regardless of the dimensions involved, responds asymmetrically to changes in their leverage in both the long and short runs, while their asymmetric response to changes in green finance occurs solely in the long run. This finding is further corroborated by intuitive results of the cumulative sum of squares simulation and consolidates the observed financial accelerator effects in symmetric relationships. Additionally, the threshold role of macroprudential green finance triggers nonlinearity in associations of leverage with social and comprehensive efficiency. This finding suggests that, in light of the development of green finance, minor adjustments to macroprudential regulation below the threshold can facilitate micro prudence for RCBs' deleveraging.\n"]

April 13, 2026 doi: 10.1002/ijfe.70024 open full text
Decoding the Role of Corruption in Economic Freedom and CO2 Emissions Nexus: A Disaggregated Analysis From BRICS and N‐11.
Rafi Farooq, Amir Rahman, Khalid Ashraf Chisti.
International Journal of Finance & Economics. April 13, 2026

["International Journal of Finance &Economics, Volume 31, Issue 2, Page 1917-1932, April 2026. ", "\nABSTRACT\nThe current study examines the effect of economic freedom on overall CO2 emissions, territorial CO2 emissions, consumption CO2 emissions, and how the control of corruption moderates this relation. The study is based on a combined sample of BRICS and Next‐11 economies as well as on disaggregated analysis for the two blocks covering the period of 26 years (1995–2020). Employing a range of econometric techniques, including Driscoll and Kraay with fixed effects method, panel quantile regression, and panel threshold regressions, the study found a positive impact of economic freedom on overall CO2 emissions and a negative impact on Territorial and Consumption‐based CO2 emissions and this relationship remaining unchanged although coefficients reduced with the moderation of corruption control. The heterogeneous impact of economic freedom in low and high‐carbon emitting countries is being revealed, and a threshold effect of economic freedom, which depends on the income levels (GDP per capita), is also discovered. Towards the end, the study offers key stakeholders some policy recommendations and suggestions.\n"]

April 13, 2026 doi: 10.1002/ijfe.70023 open full text
Did Liquidity Limits Amplify Money Market Fund Redemptions During the COVID Crisis?
Peter G. Dunne, Raffaele Giuliana.
International Journal of Finance & Economics. April 13, 2026

["International Journal of Finance &Economics, Volume 31, Issue 2, Page 2863-2877, April 2026. ", "\nABSTRACT\nRegulation of Money Market Funds (MMFs) in the EU requires some categories of MMFs to consider applying liquidity management tools if they breach a minimum ‘weekly’ liquidity requirement. Anticipation of the application of such tools is a plausible amplifier of run risks. Using a larger European dataset than previously studied, we assess whether proximity to liquidity thresholds explains differences in redemptions both at the start of the COVID‐19 crisis and in the following months. We assess this effect for MMFs subject to and exempt from the liquidity regulation. The evidence shows that outflows can be robustly associated with proximity to minimum liquidity requirements in the peak of the crisis for funds required to consider suspending redemptions if breaches occur. In the post‐crisis phase the redemption‐liquidity relationship does not appear to be specifically related to mandated consideration of the suspension of redemptions. The evidence supports consideration of countercyclical liquidity requirements or buffers that are more usable in times of stress.\n"]

April 13, 2026 doi: 10.1002/ijfe.70021 open full text
Do off‐Site R&D Institutions Matter for Corporate Exploratory Innovation?
Chen Cheng, Jinghao Mu, Guanchun Liu.
International Journal of Finance & Economics. April 13, 2026

["International Journal of Finance &Economics, Volume 31, Issue 2, Page 1880-1898, April 2026. ", "\nABSTRACT\nThis study examines the effect of off‐site R&D institutions on exploratory innovation based on the emerging economy of China. The results using a sample of listed firms from 2009 to 2019 show that off‐site R&D institutions can significantly enhance exploratory innovation and firms engaged with off‐site R&D institutions exhibit 58.2% higher exploratory innovation than those without off‐site R&D institutions. To enhance the robustness of the finding, we employ robustness checks using difference‐in‐differences, placebo test, and propensity score matching methods. Further mechanism tests demonstrate that the positive productivity effect is attributed to knowledge base expansion, increased knowledge diversity, and the promotion of R&D cooperation, which is consistent with the knowledge diffusion channel. Our findings contribute to a more comprehensive understanding of technology diffusion across regions in a typical country that is engaged in technology catch‐up.\n"]

April 13, 2026 doi: 10.1002/ijfe.70020 open full text
The Financial Accelerator Mechanism: Time‐Varying Frequency‐Dependent Evidence From the C&I Loan Market.
Marco Gallegati, Edoardo Gaffeo.
International Journal of Finance & Economics. April 13, 2026

["International Journal of Finance &Economics, Volume 31, Issue 2, Page 1822-1832, April 2026. ", "\nABSTRACT\nEmpirical identification of the financial accelerator mechanism using aggregate data has proven difficult due to measurement challenges and the unobservability of the external finance premium, defined as the wedge between the cost of external finance and the opportunity cost of internal funds. We address this challenge by developing a novel empirical strategy which exploits the frequency‐dependent properties of the financial accelerator and uses survey‐based credit standards—rather than interest rate spreads—as a proxy for the external finance premium. The time‐frequency analysis of U.S. commercial and industrial loan market data—comprising loan growth, rate spreads, credit standards, and aggregate net worth—over a period marked by significant regulatory and structural changes in the financial system, provides three main results. First, credit standards provide a more informative proxy for the external finance premium than loan rate spreads. Second, the relationship between net worth and credit conditions is frequency‐dependent, with the strongest effects concentrated at business cycle frequencies (4–10 years). Third, the financial accelerator becomes empirically relevant only after the early 1990s, coinciding with the onset of financial deregulation and increasing agency frictions. These findings suggest that the strength and observability of the financial accelerator mechanism are both frequency‐ and time‐dependent, becoming more pronounced in the post‐deregulation era of U.S. financial history.\n"]

April 13, 2026 doi: 10.1002/ijfe.70017 open full text
The Effect of Corporate Leverage Regulation on Innovation: Evidence From a Quasi‐Natural Experiment in China.
Xiaofang Xu, Moran Jia, Yu Lu.
International Journal of Finance & Economics. April 13, 2026

["International Journal of Finance &Economics, Volume 31, Issue 2, Page 1711-1734, April 2026. ", "\nABSTRACT\nThis study examines the impact of Corporate Leverage Regulation (CLR) on corporate innovation. Innovation is key to firm performance and sustainable competitiveness, which may be affected by a firm's financial risk, and deleveraging is an essential measure to mitigate corporate financial risk. Taking advantage of the quasi‐natural experiment of CLR in China, which requires over‐indebted state‐owned companies to reduce their debt ratio, we examine the effects of the reduction in financial leverage on corporate innovation. We find that firms are more likely to enhance their innovation efficiency after CLR, which has a significant increase in corporate innovation outputs, while no significant increase in innovation inputs, and this increase is more pronounced for firms with a higher proportion of institutional investors, a lower degree of digital transformation, and less media attention. These findings suggest that appropriate government guidance and intervention to reduce excessive financial leverage risk is helpful for corporations to maintain sustainable growth and stay competitive in their industry. We also document that managerial myopia reduction, resource allocation efficiency improvement, and accounting information quality enhancement are the channels through which CLR affects firm innovation. Furthermore, we find that CLR significantly increases the value of firms. Taken together, our results suggest that a decrease in leverage has a causal effect on firms' innovation efficiency.\n"]

April 13, 2026 doi: 10.1002/ijfe.70011 open full text
Appeasing Stockholders at the Expense of Stakeholders: Do Contingencies Matter?
Ali Uyar, Cemil Kuzey, Habiba Al‐Shaer, Abdullah S. Karaman.
International Journal of Finance & Economics. April 13, 2026

["International Journal of Finance &Economics, Volume 31, Issue 2, Page 1660-1681, April 2026. ", "\nABSTRACT\nIn this study, we investigate whether dividend growth is associated with both sustainability reporting and assurance. In doing so, we aim to highlight whether appeasing stockholders more may damage stakeholder communication or not. Besides, we explore whether firm growth opportunity, free cash flow and firm risk moderate between dividend growth and sustainability reporting and assurance. We hope to shed light on firm strategies balancing the stockholders' and stakeholders' interests concurrently. We fetched the data for the period between 2002 and 2019 and ran country‐industry‐year fixed‐effects logistic regression. The findings indicate that dividend growth diminishes the likelihood of disseminating a sustainability report and assuring the sustainability report; however, this significant link is validated in the recent period (i.e., 2011–2019) rather than the earlier period (i.e., 2002–2010). Furthermore, while firms paying greater dividends with higher growth opportunities avoid assurance practice only, risky firms avoid both sustainability reporting and report assurance. Contrary to expectations, free cash flow does not significantly influence sustainability reporting and assurance practices of the firms paying greater dividends relative to the prior period. However, further analyses revealed a very significant difference between Anglo‐Saxon versus non‐Anglo‐Saxon countries.\n"]

April 13, 2026 doi: 10.1002/ijfe.70008 open full text
Earnings Quality and ESG Performance in Energy and Utilities: What Really Matters?
Antonios Persakis, Athanasios P. Fassas, Dionisis Philippas.
International Journal of Finance & Economics. April 13, 2026

["International Journal of Finance &Economics, Volume 31, Issue 2, Page 1627-1659, April 2026. ", "\nABSTRACT\nThe paper investigates the controversial relationship between firms' earnings quality and environmental, social and governance (ESG) performance, focusing on the energy and utility sectors given their significant regulatory pressures, environmental impact, and capital‐intensive nature, which render ESG performance particularly important for financial reporting practices. Using a cross‐country dataset of firms in these sectors, we empirically assess whether ESG performance amplifies or dampens earnings quality, extending our framework to incorporate CEO power and board strength, with respect to a comprehensive set of firm‐specific and country‐level controls. We show that a higher level of ESG commitment is positively associated with improved earnings quality, suggesting that ethical engagement and transparency enhance the integrity of financial reporting. We find that CEO power weakens the positive relationship between ESG commitment and earnings quality, as managerial discretion may facilitate earnings management practices that obscure the firm's underlying financial condition. In contrast, strong boards amplify earnings quality by enhancing effective oversight and promoting corporate accountability. Nevertheless, board effectiveness is subject to the inherent trade‐offs between maintaining legitimacy, addressing diverse stakeholder interests, and meeting economic needs. We conclude that ESG initiatives are substantially shaped by internal corporate governance structure and firm‐specific operational characteristics.\n"]

April 13, 2026 doi: 10.1002/ijfe.70007 open full text
Does Fund Herding Help Stabilise Fund Flows? An Investigation in a Fund Mutual‐Holding Network Framework.
Shuai Lu, Shouwei Li, Peter Teirlinck.
International Journal of Finance & Economics. April 13, 2026

["International Journal of Finance &Economics, Volume 31, Issue 2, Page 1557-1581, April 2026. ", "\nABSTRACT\nWe examine how fund herding affects fund flow performance by developing three herding measures based on a mutual‐holding network rather than merely identifying whether funds herd or not. We measure herding in terms of network connections, density, and peer influence to uncover latent patterns in fund herding. Our empirical findings reveal that fund herding is negatively linked to uncertainty in fund flows but positively related to fund flows. We also find that investor attention plays a key role in amplifying the herding effect on fund performance. Additionally, we show that the herding effect is not simply an attempt at window‐dressing. Lastly, we identify a “bellwether” effect, where herding tends to boost fund flows for successful funds while reducing flows for underperforming ones.\n"]

April 13, 2026 doi: 10.1002/ijfe.70004 open full text
Dynamic Persistence of Shocks to Stock Prices in Emerging Markets: Non‐Normal Distributions, Structural Changes and Asymmetry.
Saban Nazlioglu, Ilhan Kucukkaplan, Sevket Pazarci, Asim Kar, Osman Varol.
International Journal of Finance & Economics. April 13, 2026

["International Journal of Finance &Economics, Volume 31, Issue 2, Page 1512-1529, April 2026. ", "\nABSTRACT\nThis study examines the persistence of shocks to stock prices in emerging markets, with accounting for non‐normal distributions, structural changes and asymmetry by means of the recent developments in the quantile autoregression models. The results, from the data covering the January 1988–January 2025 period for the stock price index of 24 emerging markets, show the importance of simultaneously accounting for these data properties in analysing the effects of shocks to stock prices. We find that the shocks tend to be temporary, demonstrating a mean‐reversion in stock prices of emerging markets, which provides implications for trading strategies, portfolio investment and risk management.\n"]

April 13, 2026 doi: 10.1002/ijfe.70002 open full text
Unveiling the Double‐Edged Sword: Assessing the Impact of Venture Capital Market Competition on Startup Success in China.
Weiping Liang, Xiangyi Zhou, Wei Huang.
International Journal of Finance & Economics. April 13, 2026

["International Journal of Finance &Economics, Volume 31, Issue 2, Page 1493-1511, April 2026. ", "\nABSTRACT\nThis paper investigates the influence of venture capital (VC) market competition on startup success using data from the Chinese VC market. By employing Bartik instrumental variables and the Heckman–Sørensen two‐step method to tackle endogeneity, we demonstrate that VC competition hampers the matching process between high‐quality startups and VCs, while promoting larger VC syndication. The adverse effects of VC competition on high‐quality startups result in a negative correlation with their probability of success. Moreover, our supplementary analysis reveals that the negative effects of VC competition on the success of high‐quality startups are attenuated within high‐tech industries. Conversely, VC market competition does not exhibit a significant impact on low‐quality startups. Consequently, policymakers face the challenge of striking a balance between fostering a competitive VC market and ensuring startup success.\n"]

April 13, 2026 doi: 10.1002/ijfe.70001 open full text
A Novel DTW‐TMFG Network Analysis of Emerging Blockchain Market in China.
Hairong Lan, Liukai Wang, Yuncai Ning.
International Journal of Finance & Economics. April 13, 2026

["International Journal of Finance &Economics, Volume 31, Issue 2, Page 2313-2331, April 2026. ", "\nABSTRACT\nAlthough the blockchain industry has attracted significant supportive policies and venture capital in recent years, existing research primarily focuses on technological developments and application scenarios, largely overlooking the industrial structure which is crucial to the investment development of the industry. To gain a nuanced understanding of the industrial structure and facilitate its investment management, this study examines 84 listed blockchain enterprises in China, from 2017 to 2022, exploring their industrial structure from the financial information‐based network perspective. A novel industrial network, DTW‐TMFG, is proposed to describe both the macro industrial structure and the micro corporate characteristics. The empirical findings reveal heterogeneous influence and dependence across blockchain firms, as well as the prominent geographical unevenness, characterised by the dominance of the developed East and the weakened West, among which Beijing and Guangdong Province have basically formed blockchain industry clusters. Furthermore, the proposed network structure demonstrates robustness against random attacks. Some strategic insights from these macro and micro findings are provided to help stakeholders take informed actions to foster industrial investment and ensure the stable development of the blockchain industry.\n"]

April 13, 2026 doi: 10.1002/ijfe.70046 open full text
Financial Contagion: Detecting Non‐Simultaneous Breaks in DCC‐GARCH Models.
Farah Mugrabi.
International Journal of Finance & Economics. April 13, 2026

["International Journal of Finance &Economics, Volume 31, Issue 2, Page 2638-2663, April 2026. ", "\nABSTRACT\nThis paper proposes a three‐step segmentation procedure (TSSP) for detecting non‐simultaneous structural breaks in return volatility and correlations within DCC–GARCH models, using the supremum Lagrange multiplier (SupLM) test to isolate multiple parameter shifts. By detecting breaks in unconditional correlations, our method identifies potential shift‐contagion episodes. Monte Carlo simulations demonstrate the TSSP's robust performance in detecting and locating both successive and common breaks affecting different subsets of parameters. Empirical application to equity and government bond returns in advanced and emerging economies reveals volatility shifts linked to the Global Financial Crisis and shift‐contagion associated with the European Sovereign Debt Crisis, and the post‐Covid‐19 pandemic interest rate hikes alongside the war in Ukraine in 2022.\n"]

April 13, 2026 doi: 10.1002/ijfe.70064 open full text
Analysis of Spatial Evolution of Inclusive Finance at the County Level: A Comparative Study of Traditional and Digital Finance.
Qiaoling Fu, Ying Zhang, Zeyun Yang, Xiangyu Zhang.
International Journal of Finance & Economics. April 13, 2026

["International Journal of Finance &Economics, Volume 31, Issue 2, Page 2621-2637, April 2026. ", "\nABSTRACT\nIn light of the increasing relevance of inclusive finance in reducing economic inequality, this study explores the developmental patterns of both traditional and digital inclusive finance at the county level within China. Utilising panel data from 1867 counties from 2014 to 2020, alongside the ‘Peking University Digital Financial Inclusion Index’, the paper examines the progression of these two forms of finance. By applying the Thiel index model and spatial econometric model, the research analyses the convergence and divergence between traditional and digital inclusive finance. The findings reveal: (1) Between 2014 and 2020, both traditional and digital inclusive finance experienced notable growth. The digital finance index surged by 147.64% at its median, surpassing the 71.21% growth of traditional finance. Nevertheless, a regional imbalance persists, with eastern areas showing more advancement than western ones. (2) Over 70% of regional disparities are attributed to factors within provinces. While digital inclusive finance saw fast convergence until 2016, its pace decelerated sharply thereafter. (3) Significant spatial clustering and correlation are observed in county‐level inclusive finance. In 2020, Moran's I index for digital finance was 0.215, indicating stronger spatial interdependence compared to traditional finance. Convergence is notably quicker in the western regions and poorer counties, with rates of 0.195 for traditional finance and 0.161 for digital finance in these areas. This study stands out by offering a detailed comparison of the spatial evolution and convergence of both types of inclusive finance, with particular attention to the influence of neighbouring regions. This approach sheds light on the spatial and temporal dynamics of financial inclusion in China, providing key insights for policymakers aiming to foster balanced regional growth and improve financial inclusion.\n"]

April 13, 2026 doi: 10.1002/ijfe.70063 open full text
Financial Well‐Being: A Combined Analysis of Objective and Subjective Factors and Institutional Context.
Helena Susana Amaral Geraldes, Ana Paula Matias Gama, Mário Augusto.
International Journal of Finance & Economics. April 13, 2026

["International Journal of Finance &Economics, Volume 31, Issue 2, Page 2593-2620, April 2026. ", "\nABSTRACT\nThis study analyses how financial literacy, financial inclusion, and financial resilience relate to financial well‐being, controlling for individual objective characteristics and contextual factors. Relying on the 2020 Organisation for Economic Co‐operation and Development International Survey of Adult Financial Literacy, it uses individual‐level data of 17,789 respondents from 16 countries and applies a multilevel model. Results indicate that financial literacy, financial inclusion, and financial resilience enhance financial well‐being. They also show that men, those who are younger, those with higher levels of education, and those who are employed have comparatively greater financial well‐being. Further, the study accounts for contextual‐level factors by adopting the sociodemographic (S), technological (T), economic (E), and political (P) spheres (STEP) approach, which shows that technological and political spheres are related to financial well‐being. These findings highlight the need for combined analyses of multiple factors to explain financial well‐being, which is deeply entrenched in local contexts with implications for policy issues related to the access to relevant resources that drive higher levels of financial well‐being.\n"]

April 13, 2026 doi: 10.1002/ijfe.70062 open full text
The Impact Mechanism of CEO Social Capital on Corporate Governance.
Yamin Xie, Ze Yuan.
International Journal of Finance & Economics. April 13, 2026

["International Journal of Finance &Economics, Volume 31, Issue 2, Page 2536-2567, April 2026. ", "\nABSTRACT\nCorporate governance in emerging markets often faces challenges due to inadequate institutional enforcement, making informal mechanisms essential supplements. This study examines how CEO social capital serves as an adaptive relational resource that influences corporate governance. Using a comprehensive panel dataset of Chinese A‐share listed firms from 2008 to 2022, the paper constructs multidimensional indices of CEO social capital and corporate governance. By employing a multi‐way fixed effects model along with instrumental variable and propensity score matching methods, the analysis addresses endogeneity concerns. Empirical findings indicate that CEO social capital significantly enhances corporate governance, with consistent effects across various model specifications. Mechanism analyses reveal that CEO social capital improves corporate governance by reducing agency costs, alleviating financing constraints and lowering the cost of equity. Further moderation analyses suggest that financial slack and risk‐taking amplify the governance‐enhancing effect of CEO social capital, while CEO turnover diminishes it. Heterogeneity tests show that the positive effect is more pronounced in non‐state‐owned and non‐high‐tech firms, while it diminishes in state‐owned and high‐tech enterprises. Theoretically, this study reconceptualises CEO social capital from an individual attribute to an embedded governance resource, advancing research on institutional evolution and cultural embeddedness. Practically, the findings underscore the importance of social capital in executive selection and incentive structures, inform investor assessments of governance quality and provide policy insights for integrating formal and informal mechanisms in institutional design to promote sustainable governance. Overall, this paper confirms the critical role of CEO social capital in corporate governance and outlines its contextual boundaries, offering new theoretical and practical pathways for understanding institutional embeddedness and sustainable development in emerging markets.\n"]

April 13, 2026 doi: 10.1002/ijfe.70060 open full text
Intraday and Overnight Causality in Time and Frequency Domains: Evidence From Stock Returns and Volatility.
Xiaojun Zhao, Mingxuan Lv, Xin Wen, Jingqi Xu.
International Journal of Finance & Economics. April 13, 2026

["International Journal of Finance &Economics, Volume 31, Issue 2, Page 2508-2535, April 2026. ", "\nABSTRACT\nThis paper investigates the causal links between the overnight returns (volatility) and the intraday returns (volatility) series of the S&P 500, DAX and SSE by using a new multiscale nonlinear Granger causality analysis framework. We discover a bidirectional and nonlinear Granger causality between the two series, indicating that robust predictive information can be derived from the other series. To explore the driving force behind nonlinear causality, the original returns (volatility) series are analysed through multiscale decomposition with ensemble empirical mode decomposition (EEMD), fine‐to‐coarse reconstruction and nonlinear Granger causality testing. By counterfactual inference in the time‐frequency domain, we find that statistical causality is driven by specific time‐frequency component(s) of the original series. We also find trading volume serves as an important transmission channel for nonlinear Granger causality. These observations suggest both short‐ and long‐term investment implications, providing meaningful insights for equity market investors in terms of yield and risk management.\n"]

April 13, 2026 doi: 10.1002/ijfe.70059 open full text
Household Indebtedness and the Effectiveness of Fiscal Policy.
Dooyeon Cho, Dong‐Eun Rhee.
International Journal of Finance & Economics. April 13, 2026

["International Journal of Finance &Economics, Volume 31, Issue 2, Page 2492-2507, April 2026. ", "\nABSTRACT\nThis study investigates whether the level of household debt significantly influences the effectiveness of fiscal policy. Our analysis, which uses heterogeneous panel data from 24 OECD economies, shows that the output effects of fiscal policy are ineffective in economies with high debt levels. However, its positive effects are more pronounced in economies with low debt levels. Departing from previous studies that focus on tax policy or crisis episodes, we provide macro‐level evidence that household debt systematically weakens fiscal policy transmission through the consumption channel. Our findings indicate that households with high debt levels may be more cautious about their spending behaviour, even in the presence of fiscal stimuli, due to concerns about their debt burden and future financial obligations. The results reveal that the effect of household debt on consumer behaviour is predominantly driven by precautionary saving motives rather than liquidity constraints, aligning more closely with the “wealthy hand‐to‐mouth” framework than traditional models. Overall, our study suggests that the level of household debt influences the effectiveness of fiscal policy, specifically, its ability to stimulate or affect consumer spending.\n"]

April 13, 2026 doi: 10.1002/ijfe.70058 open full text
Do Lenders and Donors Value Transparency? Evidence From Financial Organisations in the Social Sector.
Hubert Tchakoute Tchuigoua.
International Journal of Finance & Economics. April 13, 2026

["International Journal of Finance &Economics, Volume 31, Issue 2, Page 2431-2454, April 2026. ", "\nABSTRACT\nDrawing on the information asymmetry perspective, this study examines whether lenders and donors reward the transparency of financial organisations with a social mission such as microfinance institutions (MFIs). Using panel data econometrics on an unbalanced sample of 6338 MFI year observations for 1322 MFIs from 83 countries, our analysis reveals a positive correlation between transparency ratings, subsidies, and private debt. Greater transparency is associated with both market and non‐market financing, as MFIs with higher levels of transparency attract more capital from lenders at below‐market rates. Greater transparency helps MFIs attract capital at lower costs, especially in regulated environments and mature microfinance markets. Moreover, MFIs with high levels of transparency tend to have lower leverage in contexts where loan contracts are well enforced. This suggests that the relationship between transparency and leverage is context‐dependent.\n"]

April 13, 2026 doi: 10.1002/ijfe.70054 open full text
Digital Payments and Overspending: A Study of Payment Biases and Spending Behaviour Using Mental Accounting Perspective.
Mohay Ud Din Shah, Ikram Ullah Khan, Mehboob Ul Hassan, Qingyu Zhang, Safeer Ullah Khan.
International Journal of Finance & Economics. April 13, 2026

["International Journal of Finance &Economics, Volume 31, Issue 2, Page 2417-2430, April 2026. ", "\nABSTRACT\nWe survey 1208 payers through online questionnaires to examine the impact of mental accounting on consumers' vulnerability to payment biases in Pakistan. Using a mental accounting perspective, we evaluate the direct effects of current and future payment methods on consumer spending behaviour. Furthermore, it scrutinises the interaction role of Digital Financial Literacy (DFL) on the link between current payment methods and spending behaviour and government support between future payment methods and spending behaviour. Survey‐based questionnaires were used to gather data through purposive sampling. Smart‐PLS 4 results show that current and future payment methods significantly affect spending behaviour, with digital payments having a more pronounced impact than cash payments. Our findings also disclose that DFL profoundly moderates the relationship, while government support moderates only between future digital payments and spending behaviour. This study presents a comprehensive model that serves as a guideline for policymakers aiming to promote a cashless society and contributes to a better understanding of prudent spending behaviour.\n"]

April 13, 2026 doi: 10.1002/ijfe.70053 open full text
Should Practitioners Apply a Truncated Process for Pricing and Hedging?
Sharif Mozumder, Ghulam Sorwar, M. Kabir Hassan, M. Humayun Kabir, Farzana Afroz.
International Journal of Finance & Economics. April 13, 2026

["International Journal of Finance &Economics, Volume 31, Issue 2, Page 2396-2416, April 2026. ", "\nABSTRACT\nThis paper implements the deterministic volatility function (DVF) in the context of the truncated Black‐Scholes (TBS) model, which is identified as the truncated practitioners' Black‐Scholes (PTBS) model, and compares the pricing and hedging performance with the Black‐Scholes (BS), TBS, practitioners' BS (PBS) models. Using the S&P500 index call options data, we find that the PTBS model outperforms all in‐sample and out‐of‐sample regardless of moneyness. On weekly counts, the success rates of the PTBS model are significantly higher for both the in‐the‐money (ITM) and out‐of‐the‐money (OTM) options. The weekly approximation errors of delta and delta‐gamma approximations against full valuation for the PTBS model are lower than those of other models, and the PTBS model is more accurate and stable. The findings are robust to alternative sample variations.\n"]

April 13, 2026 doi: 10.1002/ijfe.70050 open full text
Dynamic Effects of U.S. Monetary Policy, Unconventional Tools, and Trade Integration.
Chokri Zehri, Abdullah Alsadan, Wissem Ajili Ben Youssef, Latifa Saleh Iben Ammar.
International Journal of Finance & Economics. April 13, 2026

["International Journal of Finance &Economics, Volume 31, Issue 2, Page 2365-2375, April 2026. ", "\nABSTRACT\nThe study examines the contagion and asymmetric impact of US monetary policy (USMP) on emerging market economies' (EMEs) domestic interest rates. We apply an Autoregressive Distributed Lag error correction model with structural breaks from 2020 to 2023. This model is applied to 26 EMEs. Our findings reveal a substantial influence of large‐scale asset purchases (a quantitative easing tool) and the 10‐year Treasury yield (a long‐term conventional tool) on EMEs' interest rates across both long‐ and short‐term perspectives. Furthermore, we identify an asymmetric effect, with the impact of USMP varying across EMEs, particularly pronounced in countries with extensive trade connections to the USA. Our results highlight the swift response of EMEs to USMP changes, especially in the short term. The study presents policy recommendations to help EMEs manage the effects of changes in USMP.\n"]

April 13, 2026 doi: 10.1002/ijfe.70048 open full text
Impact of FinTech on Stock Price Liquidity.
Irfan Ullah, Khalil Jebran, Mohib Ur Rahman.
International Journal of Finance & Economics. April 13, 2026

["International Journal of Finance &Economics, Volume 31, Issue 2, Page 2332-2364, April 2026. ", "\nABSTRACT\nWe examine whether and how financial technology (FinTech) influences stock price liquidity. FinTech was measured using the digital finance index from the Institute of Digital Finance of Peking University (PKU‐digital finance IIC), the Shanghai Finance Institute and Ant Financial Services Company. By using a sample of Chinese listed firms from 2011 to 2022, results from ordinary least squares regression indicate that FinTech is positively associated with stock price liquidity. The relationship between FinTech and stock price liquidity is more pronounced in the presence of higher media coverage, analysts' following, and in non‐state‐owned enterprises but weaker when economic policy uncertainty is higher. The findings remain consistent with alternative measures of FinTech, omitted variables problems and endogeneity issues. Results provide insights that the development of FinTech increases financial transparency, which promotes the information environment, thereby increasing stock liquidity. Findings contribute to the literature on the governance role of FinTech in influencing stock liquidity.\n"]

April 13, 2026 doi: 10.1002/ijfe.70047 open full text
Analyst Reports and Corporate Financial Distress Prediction.
Jie Sun, Jie Li, Zichen Wang.
International Journal of Finance & Economics. April 13, 2026

["International Journal of Finance &Economics, Volume 31, Issue 2, Page 2690-2712, April 2026. ", "\nABSTRACT\nSecurity analysts publish research reports on publicly listed companies periodically, providing crucial information for capital market participants. By extracting quantitative variables of stock recommendations and earnings forecasts and qualitative variables of readability and negative tone from analyst reports, this study examines the impact of analyst report information on corporate financial distress prediction (FDP). Using the asymmetric bagging method for handling imbalanced data and a light gradient boosting machine ensemble classifier, we construct several FDP models by stepwise incorporating the quantitative and qualitative variables from analyst reports, alongside benchmark variables such as financial ratios, corporate governance and analyst report attention, to investigate the incremental effect of analyst report information on corporate FDP. Empirical results based on a sample of Chinese listed firms from 2013 to 2021 show that the inclusion of analyst report variables significantly improves the performance of corporate FDP models. We further find that these variables exhibit heterogeneous abilities to identify the different types of financial distress arising from distinct reasons. Feature importance results indicate that qualitative attributes of analyst reports, particularly negative tone and readability, receive higher relative importance than traditional quantitative signals. Further interaction effect analysis indicates that high‐quality analyst reports exhibit relatively stronger predictive power for financial distress. Following the convergence of International Financial Reporting Standards, the predictive power of quantitative information in analyst reports weakened, while qualitative content demonstrated a stronger ability to predict financial distress.\n"]

April 13, 2026 doi: 10.1002/ijfe.70066 open full text
Rural–Urban Digital Divide: Evidence From Indian States.
Rashmi Arora, Nikhil Sapre.
International Journal of Finance & Economics. April 13, 2026

["International Journal of Finance &Economics, Volume 31, Issue 2, Page 2912-2932, April 2026. ", "\nABSTRACT\nThe Indian economy has achieved significant progress in recent years, with the country expected to contribute about 16% of the global growth. However, at the sub‐national level, economic development has been quite disparate over the decades, with widening inequality between the richer western and southern states and other parts of the country. Moreover, the pandemic has revealed sharp inequalities in access to digital technology, especially in regards to school education, finance, and health. In this study, we examine the digital divide in India between rural and urban areas at the sub‐national level. Specifically, our study constructs Digital Infrastructure Index (DII) and Digital Skills Index (DSI) for a sample of 18 Indian states, separately for rural and urban populations within each state. We then measure the rural–urban digital divide for both indices separately. Further, we examine the relationship between the indices and socio‐economic indicators. Our findings suggest that the “Digital India” growth story is far from equitable and that the low‐income states and the rural population deserve greater attention.\n"]

April 13, 2026 doi: 10.1002/ijfe.70045 open full text
Exploring the Information Acquisition Mechanism in a Bond Market: Evidence From Peer Effects in Bond Covenant Design in China.
Chunqiang Zhang, Tingting Yu, Kam C. Chan, Hengguang Wu, Wenbing Wang.
International Journal of Finance & Economics. April 13, 2026

["International Journal of Finance &Economics, Volume 31, Issue 2, Page 2293-2312, April 2026. ", "\nABSTRACT\nUsing a sample of corporate bonds issued by Chinese A‐share listed firms from 2007 to 2023, we study whether industry peer effects in bond covenant design exist and, if they do, the mechanisms through which they work as well as their economic consequences. We document that a firm's bond covenants index is positively affected by the average bond covenant index of its peers in the same industry. The findings remain intact after accounting for regional, underwriter and firm characteristics. Additional analysis suggests that the peer effects work through peer firms acquiring information about each other. Moreover, the peer effects are more salient in state‐owned firms or when the underwriters' reputation is lower. In contrast, when the firms' customer concentration is high, firms operate in a better information environment, or firms face less industry competition, industry peer effects in bond covenant design significantly diminish. Finally, we find that industry peer effects in corporate bond covenant design reduce the credit spread of a bond and improve the issuer's firm value. Overall, we not only broaden the scope of the research on industry peer effects but also advance the literature on the determinants of bond covenants.\n"]

April 13, 2026 doi: 10.1002/ijfe.70044 open full text
The Black‐Box of ESG Scores From Rating Agencies: Do They Genuinely Reflect Sustainability Practices, or Are They Disproportionately Shaped by Financial Performance?
Philipe Balan, Jorge Antunes, Peter Wanke, Yong Tan, Ali Meftah Gerged.
International Journal of Finance & Economics. April 13, 2026

["International Journal of Finance &Economics, Volume 31, Issue 2, Page 2275-2292, April 2026. ", "\nABSTRACT\nThis study examines the environmental, social and governance (ESG) scoring methodologies used by Bloomberg and S&P Global through the lens of Data Envelopment Analysis (DEA). It addresses a notable gap in the literature by identifying the underlying factors that shape ESG scores and providing practical insights for companies seeking to understand or improve their sustainability ratings. Our comparative analysis reveals clear differences between the two rating agencies. While Bloomberg's raw ESG scores are generally higher than those of S&P Global, the DEA‐normalised results tell a different story. Bloomberg applies stricter internal benchmarks, resulting in lower efficiency scores. In contrast, S&P's lower raw scores convert into higher DEA efficiencies, suggesting a more lenient, peer‐based benchmarking approach that tends to cluster firms near the top regardless of their absolute ESG performance. A particularly striking finding is that 99% of ESG scores from both agencies correlate with net income, highlighting a strong connection between financial performance and ESG ratings. Our regression analysis supports this, showing that firms with better financial outcomes tend to receive higher ESG scores. However, we also find that companies with growing cash reserves—often indicative of reinvestment and expansion—may be penalised, receiving lower ESG scores. This suggests a potential bias against firms prioritising long‐term growth over immediate returns. This study lays the groundwork for future research aimed at refining ESG datasets and expanding the scope of analysis.\n"]

April 13, 2026 doi: 10.1002/ijfe.70043 open full text
New Evidence on Factors Affecting Labour Shares in OECD Countries.
George Agiomirgianakis, Maria Grydaki, George Sfakianakis.
International Journal of Finance & Economics. April 13, 2026

["International Journal of Finance &Economics, Volume 31, Issue 2, Page 2249-2274, April 2026. ", "\nABSTRACT\nThis paper aims at contributing to the ongoing discussion about the causes of the declining trend of labour shares globally and the repercussions on income inequality by considering an inclusive set of labour share determinants consisting of factors reflecting monetary aspects, productivity, globalisation, competitiveness, human capital, and institutional dimensions. To examine the determinants of labour shares and the implications on income inequality, we focus on a panel of 30 OECD countries over 29 years, retrieving data from Penn World Table 10.01, OECD, and Worldwide Governance databases. We estimate a generalised method of moments (GMM) dynamic panel model to account for the potential endogeneity stemming from TFP, credit expansion, and FDI. Relevant policy implications from our results pertain mostly to social cohesion issues—all the more at the current juncture when non‐accommodative monetary policies are implemented at a large scale internationally.\n"]

April 13, 2026 doi: 10.1002/ijfe.70042 open full text
Plaintiff Litigation, Institution, and Startup Financing.
Yanan Feng, Bin Hao, Shumin Qiu, Haoxiang Zhang, Haoyu Xu.
International Journal of Finance & Economics. April 13, 2026

["International Journal of Finance &Economics, Volume 31, Issue 2, Page 2899-2911, April 2026. ", "\nABSTRACT\nPrior research has yielded mixed findings regarding the impact of patent litigation on firm financing, with evidence suggesting that patent litigation can influence VCs' perceptions of a start‐up's prospects in both positive and negative ways. Drawing on the institution‐based view, we argue that VCs' interpretation of plaintiff litigation largely rests on the institutional environment in which litigations are launched. Focusing on the context of transition economies, we propose that plaintiff litigation in such environments conveys information about start‐ups' competence in dealing with ambiguous institutions and in developing advanced technologies. We thus hypothesise that plaintiff litigation is positively related to the receipt of investment from high‐status VCs. Our empirical study shows that plaintiff litigation increases the receipt of investments from high‐status VCs by 1.86% in transition economies. Further analyses suggest that the relationship between plaintiff litigation and VC status is more significant in regions with lower anti‐corruption or a higher percentage of state‐owned enterprises (SOEs); the results also show that this relationship is significant in coastal regions and regions with great market heat, yet insignificant in non‐coastal regions and regions with low market heat.\n"]

April 13, 2026 doi: 10.1002/ijfe.70041 open full text
Risk Aversion and Economic Policy Uncertainty Impacts on Investor Attention: Evidence From International Stock Markets Indices.
Stephanos Papadamou, Athanasios P. Fassas, Nikoletta Poutachidou.
International Journal of Finance & Economics. April 13, 2026

["International Journal of Finance &Economics, Volume 31, Issue 2, Page 2878-2898, April 2026. ", "\nABSTRACT\nThis paper examines the relationship between economic policy uncertainty, risk aversion, and investors' attention for 15 equity indices across Asia, Europe, and North America. Our empirical results indicate that both risk aversion and economic uncertainty significantly increase the Google Search Volume across all equity indices. Additionally, we employed a Bayesian Panel VAR Model to explore causal relationships between risk aversion and investor attention. The impulse response analysis reveals that a positive shock in variance risk premium consistently triggers an increase in Google Search Volume across stock markets over the following month. These findings suggest that during periods marked by high economic policy uncertainty and elevated risk aversion, investors intensify their internet searches to acquire more specific information about stock indices.\n"]

April 13, 2026 doi: 10.1002/ijfe.70040 open full text
Dynamic Connectedness Between a Corporate Bond Market With WTI, Geopolitical and Financial Volatility: Spillover From Post‐COVID‐19 and Russian‐Ukrainian Clash.
Umer Shahzad, Kamel Si Mohammed, Mohammad Sharif Karimi.
International Journal of Finance & Economics. April 13, 2026

["International Journal of Finance &Economics, Volume 31, Issue 2, Page 2194-2207, April 2026. ", "\nABSTRACT\nThis study investigates the dynamic connectedness between the USA's corporate bond market (CB) and various factors, including WTI, financial uncertainty, and geopolitical risks. We employ two advanced techniques to analyse these relationships: TVP‐Vector autoregressive (TVP‐VAR) and VAR connectedness. Specifically, we focus on two significant events, the Russian‐Ukrainian conflict (RUC) and the COVID‐19 pandemic (C19P), to provide insights into the behaviour of the CB during these critical periods against the oil prices and uncertainties. The empirical analysis reveals compelling findings, particularly concerning the extreme events and the magnitude of effects observed. We find a significant increase in interconnections over the time impacts during these two events, lending support to using an asymmetric and heterogeneous product over the time‐varying. Furthermore, we observe that the influence of the GPR and the VIX factors is more robust when uncertainty rises rather than decreases, indicating temporary events. Policymakers and macroprudential authorities can benefit from these findings, as they emphasise the need to adapt to a changing monetary policy and reduce reliance on energy volatility to make informed decisions in a rapidly evolving financial landscape.\n"]

April 13, 2026 doi: 10.1002/ijfe.70037 open full text
Cryptocurrency Momentum: Is It an Illusion?
Klaus Grobys, Syed Jawad Hussain Shahzad.
International Journal of Finance & Economics. April 13, 2026

["International Journal of Finance &Economics, Volume 31, Issue 2, Page 2180-2193, April 2026. ", "\nABSTRACT\nRecent literature explores the profitability of various cryptocurrency momentum trading strategies and proposes cryptocurrency momentum as a pricing factor (Liu et al.). How risky is this factor‐based investment strategy for crypto‐investments? We answer this question by examining the distributional characteristics (hence, riskiness) of six cryptocurrency momentum trading strategies. The empirical evidence suggests that the realised variances of cryptocurrency momentum strategies are governed by power laws. The statistical tests derived from block bootstraps indicate that the population mean and variance of the momentum factor realised variances are statistically not defined. Contrary to the belief that cryptocurrency momentum trading strategies produce generous payoffs, our results imply that, in real life, we might not be able to realise these risk premiums. We conclude that the performance metrics evaluating the profitability of cryptocurrency momentum strategies, using variance as an input, are not informative. We also find cross‐sectional dependence amongst the tail risk of momentum strategies based on different formation periods.\n"]

April 13, 2026 doi: 10.1002/ijfe.70036 open full text
Exploring the Connectedness Between Green Bonds and Financial Markets and Its Drivers During Recent Crises: New Evidence From a TVP‐VAR Extended Joint Connectedness Approach and Wavelet Coherence Analysis.
Wafa Abdelmalek, Molka Khemakhem.
International Journal of Finance & Economics. April 13, 2026

["International Journal of Finance &Economics, Volume 31, Issue 2, Page 2160-2179, April 2026. ", "\nABSTRACT\nThis paper applies the TVP‐VAR extended joint connectedness model to investigate the time‐varying connectedness between green bonds, conventional bonds, stocks, clean energy, and commodities from January 2018 to April 2024, which includes the COVID‐19 pandemic, the Russia–Ukraine conflict, and the Israel–Palestine war. Empirical results show that the dynamic connectedness between green bonds and financial markets is time‐varying and intensifies significantly during the pandemic. Moreover, the volatility stock index VIX emerges as the primary driver of this connectedness. Additionally, green bonds are resilient to market turmoil and can serve as a hedging tool for many markets, especially agricultural and energy commodities.\n"]

April 13, 2026 doi: 10.1002/ijfe.70035 open full text
Reindustrialization Through AI and Automation? Productivity and Sectoral Employment in Advanced Economies.
Pedro Bação, Joshua Duarte, Ana Figueiredo, Marta Simões.
International Journal of Finance & Economics. April 13, 2026

["International Journal of Finance &Economics, Volume 31, Issue 2, Page 2118-2143, April 2026. ", "\nABSTRACT\nThis article examines the possible impact of AI, via associated productivity improvements, on sectoral employment dynamics across 36 sectors within 30 advanced economies over the period 1996–2021. Using a robust empirical framework, we employ both fixed effects and generalised method of moments estimators to account for employment persistence and endogeneity concerns. Our results suggest a divergent impact of technological progress on employment between secondary and tertiary sectors. Specifically, we find that productivity gains in secondary sectors, such as manufacturing, are associated with increased employment, whereas tertiary sectors exhibit employment contractions. These findings indicate that widespread adoption of AI and automation could contribute to reindustrialisation in advanced economies, as labour shifts from tertiary to secondary sectors. Policy implications include the need for proactive labour market policies focused on reskilling, workforce transitions, and adaptive safety nets to mitigate potential disruptions.\n"]

April 13, 2026 doi: 10.1002/ijfe.70033 open full text
The Impact of Digital Transformation on Corporate Cost Stickiness: Evidence From China's Agriculture‐Related Listed Companies.
Wenbing Luo, Yuxin Yu, Mingjun Deng.
International Journal of Finance & Economics. April 13, 2026

["International Journal of Finance &Economics, Volume 31, Issue 2, Page 2063-2081, April 2026. ", "\nABSTRACT\nThe transition to digital operations represents a critical driver in advancing the digital economy's quality growth. Within this context, the agricultural sector—encompassing farming, forestry, livestock, and fisheries—holds particular significance as a foundational pillar of national economic development, making its digital transformation especially consequential. This study examines the nexus between digital adoption and cost stickiness using a sample of Chinese agriculture‐related listed companies from 2007 to 2021. Empirical findings reveal that digital initiatives markedly mitigate cost stickiness. Further heterogeneity analysis demonstrates three key insights: the stickiness‐reducing effect is more pronounced in NSOEs compared to SOEs; companies with relatively dispersed equity and low institutional shareholding ratios exhibit stronger responsiveness to digital‐driven cost optimisation; stable operating environments amplify digitalisation's efficacy in curbing cost stickiness. The study offers actionable insights for policymakers and agricultural companies navigating digital modernisation pathways.\n"]

April 13, 2026 doi: 10.1002/ijfe.70030 open full text
Corporate Climate Risk Disclosure and Institutional Investor Holdings.
Feng Zhao, Siting Geng, He Xiao.
International Journal of Finance & Economics. April 13, 2026

["International Journal of Finance &Economics, Volume 31, Issue 2, Page 1754-1779, April 2026. ", "\nABSTRACT\nThis study investigates the impact of corporate climate risk disclosure on institutional investor shareholdings. The empirical results show that the disclosure of climate risk increases institutional investor ownership. The economic mechanism behind this finding is that climate risk disclosure reduces stock price crash risk, improves stock performance and promotes corporate reputation. Heterogeneous tests indicate that the positive relationship between the disclosure of climate risk exposure and institutional investor ownership is more pronounced for firms with a higher analyst following, non‐state‐owned firms, and after the 2015 New Environmental Protection Law. Further analyses show that institutional investors specifically focus on firms' disclosures on climate‐related technology opportunities and strategic transformation information. This study is among the first to provide market‐wide empirical evidence in the emerging market on how institutional investor ownership is affected by corporate climate risk disclosure, which further contributes to the mixed findings of how the financial market perceives climate risk information.\n"]

April 13, 2026 doi: 10.1002/ijfe.70014 open full text
Effects of Financial Agglomeration on Green Technology Innovation: Evidence From the Yangtze River Delta in China.
Yunfeng Yan, Aodong Jiao, Yun Zhang, Sajid Anwar.
International Journal of Finance & Economics. April 13, 2026

["International Journal of Finance &Economics, Volume 31, Issue 2, Page 2950-2963, April 2026. ", "\nABSTRACT\nThis study examines the effect of financial agglomeration on green technology innovation and its spatial spillovers across 27 cities in China's Yangtze River Delta from 2009 to 2023. Financial agglomeration significantly promotes green technology innovation, with heterogeneous effects shaped by local conditions. This positive impact is amplified in cities facing tighter financing constraints and those with stronger human capital infrastructure. In contrast, more stringent environmental regulations weaken the marginal effect of financial agglomeration on innovation. We also found positive spatial spillovers: financial agglomeration in one city promotes green innovation in neighbouring areas. The results highlight the importance of aligning financial development with local institutional and structural conditions. Policymakers should enhance the allocative efficiency of financial clusters, invest in human capital, and improve cross‐city coordination to support green innovation diffusion.\n"]

April 13, 2026 doi: 10.1002/ijfe.70055 open full text
Golden Returns From Green Investments: The Impact of Corporate Environmental Behaviour on Product Market Performance.
Changchun Pan, Yuhang Song, Yuzhe Huang.
International Journal of Finance & Economics. April 13, 2026

["International Journal of Finance &Economics, Volume 31, Issue 2, Page 2933-2949, April 2026. ", "\nABSTRACT\nIn the context of advancing the global economic green transition, advocating for and deepening green investment is a topic of common concern for all. This study utilises panel data from heavily polluting listed companies in China's A‐share market from 2003 to 2022 to examine the impact, mechanisms, and differences of corporate green investment on product market performance. We found that compared to competitors, the more green investments a company makes, the better its product market performance. Specifically, for every standard deviation increase in corporate green investment, product market performance improves by approximately 2%. The primary mechanisms driving this result are reduced operating costs and enhanced social reputation brought about by green investments, rather than improvements in technological innovation. This effect is more pronounced in companies with a higher proportion of executives with strong environmental backgrounds, those receiving more government financial subsidies, and those facing stronger regional environmental regulations. Furthermore, the improvement in product market performance due to green investment also significantly boosts operational performance and market value. Our research uncovers the golden returns of green investment, which is of great significance for expanding green investment scale and achieving sustainable economic development.\n"]

April 13, 2026 doi: 10.1002/ijfe.70052 open full text
Material ESG Performance and Bid Premium in Merger and Acquisition Deals.
Ndubuisi Ezenwa, Ibrahim Ayoade Adekunle, Robin Maialeh.
International Journal of Finance & Economics. April 13, 2026

["International Journal of Finance &Economics, Volume 31, Issue 2, Page 2376-2395, April 2026. ", "\nABSTRACT\nThis study examines the firm‐level and country‐level environmental, social, and governance (ESG) performance on bid premiums in cross‐border mergers and acquisitions (M&A) transactions. We document considerable variations in bid premiums. Higher carbon emissions are associated with higher bid premiums, suggesting that acquirers may perceive high‐emission firms as opportunities for restructuring or seek to exploit regulatory inefficiencies. In contrast, fossil fuel consumption (FFC) is linked to lower bid premiums, reflecting investor concerns over potential carbon transition risks. Strong institutional frameworks, particularly in regulatory quality and government effectiveness, are significant drivers of higher bid premiums, highlighting the importance of stable governance in M&A valuations. While cross‐border transactions generally reduce bid premiums due to transaction costs and information asymmetry, firms involved in cross‐border deals with block‐holder ownership tend to receive higher premiums, emphasising the strategic value of foreign firms with stable block‐holder ownership. ESG performance consistently enhances bid premiums, reinforcing the competitive advantage sustainability can provide in corporate transactions. Our findings contribute to the literature by offering a more comprehensive understanding of how institutional and macroeconomic factors, alongside firm‐level ESG performance, shape M&A pricing decisions, particularly in a globalised and volatile market context.\n"]

April 13, 2026 doi: 10.1002/ijfe.70049 open full text
Time‐Varying Efficiency and Predictability in Cryptocurrency Markets: Forward‐Looking Dynamics.
Darko B. Vukovic, M. Kabir Hassan, Vyacheslav Zinovev, Elena Moiseevna Rogova, Mohammed Shakib.
International Journal of Finance & Economics. April 13, 2026

["International Journal of Finance &Economics, Volume 31, Issue 2, Page 2229-2248, April 2026. ", "\nABSTRACT\nThis study investigates the time‐varying efficiency of major cryptocurrencies—Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC) and XRP—within the framework of the adaptive market hypothesis (AMH). We introduce a forward‐looking method by integrating predicted data into the Dominguez–Lobato (DL) and generalised spectral (GS) testing frameworks as part of Martingale Difference Theory (MDT). Our strategy allows us to forecast potential future inefficiencies in the market, advancing the traditional retrospective analyses (based on historical perspective) prevalent in the literature. We employ and test forecasted data to identify potential future shifts in market efficiency, as an extension of the Martingale difference hypothesis (MDH). The results indicate that cryptocurrency markets do not maintain a static level of efficiency but adapt over time, with varying degrees of predictability and inefficiency. The random forest (RF) model demonstrates the ability to forecast breaks in market efficiency.\n"]

April 13, 2026 doi: 10.1002/ijfe.70039 open full text
Climate Transition Risk, ESG Rating Divergence and Portfolio Performance: Evidence From Composite Scores and Climate‐Adjusted Factor Models.
Ahmed Bouteska, Murad Harasheh, Giovanni Esposito.
International Journal of Finance & Economics. April 13, 2026

["International Journal of Finance &Economics, Volume 31, Issue 2, Page 2208-2228, April 2026. ", "\nABSTRACT\nThis study investigates how ESG rating divergences and climate transition risks jointly influence portfolio performance. Using a newly constructed composite Environmental (E) score derived from principal component analysis (PCA) across three leading ESG providers (Eikon, RobecoSAM, Sustainalytics), we build industry‐adjusted portfolios for 389 US firms across 10 sectors, including agriculture and industrial sectors. We augment traditional Fama–French factor models with forward‐looking climate transition risk proxies, including carbon intensity, stranded asset exposure, sectoral vulnerability (Battiston index) and transition Value‐at‐Risk (tVaR) under NGFS climate scenarios. Our findings reveal that ESG score disagreements materially affect portfolio construction and return dynamics. After controlling for rating inconsistencies, high‐ESG portfolios consistently generate negative alphas relative to low‐ESG portfolios, with the economic magnitude of underperformance intensifying as the investment horizon extends from short‐ to long‐term. This underperformance persists even after adjusting for both traditional risk factors and transition‐specific risk exposures. The results highlight the importance of harmonising ESG ratings and integrating climate risk measures when evaluating the financial materiality of sustainability investments. The study offers practical implications for institutional investors navigating ESG integration under rising regulatory and climate policy pressures.\n"]

April 13, 2026 doi: 10.1002/ijfe.70038 open full text
Bitcoin Prices: Configurational Effects of Technological Drivers, Macroeconomic Fundamentals and Economic Agents' Expectation.
Jeevananthan Manickavasagam, Kanagaraj Ayyalusamy, Firoz Bhaiyat, Shilpi Jha, Tinu Jain, Surendra Poddar.
International Journal of Finance & Economics. April 13, 2026

["International Journal of Finance &Economics, Volume 31, Issue 2, Page 2098-2117, April 2026. ", "\nABSTRACT\nThis study aims at bridging critical gaps in the existing cryptocurrency research by exploring combinations of technological, macroeconomic and behavioural factors, namely, economic agents' expectations and the size of influence that each of them has on the Bitcoin price movements. In contrast to the existing studies that focused on individual determinants and estimated aggregate effects thereof, in this study, fuzzy‐set qualitative comparative analysis (fsQCA) is applied to determine configurations of drivers to determine the Bitcoin price and used necessary condition analysis (NCA) to quantify the magnitude of the effects using the monthly data between 2011 and 2022. Findings show that economic agents' expectations such as OECD's Business Confidence Index, Consumer Confidence Index and Composite Leading Indicator emerge as influential variables of Bitcoin, surpassing traditional drivers like Gold and Financial Stress Index. Among these, Business Confidence Index and Composite Leading Indicator exhibit a very large effect on Bitcoin prices, and from the technology variable group, Average Block Size exhibits a very large effect on Bitcoin prices. fsQCA indicates that nine distinct configurations contribute to high Bitcoin prices and eight configurations lead to low Bitcoin prices, thus depicting equifinality in Bitcoin price determination. These insights can provide policymakers and investors with a better understanding of the Bitcoin price dynamic by finding out necessary variables and equifinal pathways towards either high or low prices, thus promoting better risk management activities, as well as regulatory approaches to this highly dynamic asset class.\n"]

April 13, 2026 doi: 10.1002/ijfe.70032 open full text
ESG Performance, Family Ownership, and Corporate Risk‐Taking: The Moderating Role of the CSR Committee.
Zahra Adardour, Slimane Ed‐Dafali, Hicham Sbai, Khaled Hussainey.
International Journal of Finance & Economics. April 13, 2026

["International Journal of Finance &Economics, Volume 31, Issue 2, Page 1979-1994, April 2026. ", "\nABSTRACT\nIn today's dynamic business landscape, the importance of ESG factors in shaping risk management strategies has gained increasing attention. Within this context, corporate governance mechanisms play a key role in enhancing the effectiveness of ESG efforts and linking them to improved risk management. This research explores the potential relationship between ESG performance and firm risk while examining the moderating effect of family ownership and CSR committees. Based on 671 firm‐year observations from 61 French listed companies in the SBF120 index over the period 2012–2022, we performed EGLS regression analysis and robustness models to reinforce the validity and reliability of our results. Our findings indicate that ESG performance has a negative and significant impact on firm risks, specifically liquidity and default risks, as measured by cash and leverage. Firms with higher ESG scores tend to exhibit lower default and liquidity risks, suggesting that strong ESG practices contribute to better financial stability. Particularly, the effect of ESG performance in reducing firm risks is stronger in non‐family firms compared to family firms. In addition, the CSR committee has a significant and positive moderating role in reinforcing the impact of ESG performance in mitigating firm risks. These results are important for both businesses and investors, as ESG performance can lead to more stable cash flows and lower corporate debt, thereby improving investors' confidence and companies' financial resilience.\n"]

April 13, 2026 doi: 10.1002/ijfe.70026 open full text
Excess Remuneration, Governance, and Risk‐Taking in Islamic Banks.
Tastaftiyan Risfandy, M. Kabir Hassan.
International Journal of Finance & Economics. April 13, 2026

["International Journal of Finance &Economics, Volume 31, Issue 2, Page 1899-1916, April 2026. ", "\nABSTRACT\nWe comprehensively investigate the impact of remuneration on the governance of Islamic banks pertaining to the board of directors (BOD), Shariah supervisory board (SSB), executives, and the chief executive officer (CEO). The research in this area is still muted, especially using samples of Islamic banks and involving all board member types. Using the hand‐collected data of dollar remuneration on those board members, we estimate their ‘normal’ remuneration, and we find that all board types, including the CEO, are over‐remunerated from USD 20,790–305,920. However, in further investigation, we find that the excess remuneration in the directors and SSB favours the Islamic banks, particularly to lessen the risk‐taking incentive. Our result highlights the importance of Islamic banks' two‐layer governance system, which has a role in preventing excessive risk‐taking behaviour. Supporting the ‘efficiency wage hypothesis’, the good remuneration design for the directors and Shariah scholars will attenuate the agency problems in the context of Islamic banks. Regarding executives and the CEO, we do not find a significant impact of the excess remuneration. This is likely because the Islamic banking industry faces a number of restrictions due to its presence as a heavily regulated financial institution and the voluminous Shariah requirements that must be fulfilled in its operations.\n"]

April 13, 2026 doi: 10.1002/ijfe.70022 open full text
Firm Digitalisation Empowers ESG Performance‐Evidence From China.
Lin Wang, Lingyao Kong, Huixiang Zeng.
International Journal of Finance & Economics. April 13, 2026

["International Journal of Finance &Economics, Volume 31, Issue 2, Page 1860-1879, April 2026. ", "\nABSTRACT\nWith the deepening of the concept of green development, it is important to explore how firm digitalisation improves the environmental, social responsibility, and corporate governance (ESG) performance of firms to achieve sustainable development. This study examines the impact of firm digitalisation on ESG performance and its mechanisms using sample data of Chinese A‐share listed firms from 2011 to 2023. The results show that firm digitalisation can significantly improve ESG performance, and both management ability as an internal governance mechanism and institutional investors as an external governance mechanism can reinforce this improvement. A mechanism test reveals that improvements in the quality of internal control, total factor productivity, and information transparency are potential channels. Moreover, the effect of digitalisation on ESG performance is more significant for firms with a low supplier concentration and high government subsidies. The effect of digitalisation on ESG performance improvement is more significant for firms located in regions with a high environmental regulation intensity and a good level of digital economy development. In addition, compared to the corporate governance (G) dimension, digitalisation is more effective in improving environmental (E) and social responsibility (S) performance. This study, based on stakeholder theory and upper echelons theory, reveals the mechanisms and boundaries through which firm digitalisation enhances ESG performance, providing a reference for leveraging digital technologies to empower ESG governance and promote high‐quality corporate development.\n"]

April 13, 2026 doi: 10.1002/ijfe.70019 open full text
The Return Power of Analyst Reports: Definition, Factor and Strategy.
Yongli Li, Baoqiang Zhan, Tianchen Wang.
International Journal of Finance & Economics. April 13, 2026

["International Journal of Finance &Economics, Volume 31, Issue 2, Page 1833-1859, April 2026. ", "\nABSTRACT\nAnalyst reports are crucial in financial markets, providing information that guides investment decisions. However, existing research on their profitability and impact, especially over different time horizons, remains inconclusive. This study introduces a novel metric, ‘return power’, to assess the performance of analyst reports in both short‐ and long‐term contexts. We find that analyst reports serve as the short‐term ‘news’ and the long‐term ‘information’, each influencing stock returns differently. Using a dataset of 249,576 analyst reports from the Chinese stock market (2007–2022), we empirically examine key factors—such as broker's status, broker's prior performance, and investors' or analysts' attention—that affect return power at different time horizons. Based on these findings, we design investment strategies utilising both regression models and eight other well‐known machine learning techniques. Our results show that the regression‐based strategy outperforms other machine learning models and a market index, consistently providing superior risk‐adjusted returns across various transaction costs. This study confirms the profitability of analyst reports and offers a practical framework for report‐driven investment strategies.\n"]

April 13, 2026 doi: 10.1002/ijfe.70018 open full text
Caught in a Debt Trap: Financial Distress and Corporate Production Decisions.
Yanan Li, Wenjun Wang.
International Journal of Finance & Economics. April 13, 2026

["International Journal of Finance &Economics, Volume 31, Issue 2, Page 1805-1821, April 2026. ", "\nABSTRACT\nThe research investigates the causal effects of financial distress on corporate production within the oil industry framework. The identification strategy capitalises on the exogenous shock from the 2014 oil price collapse and pre‐existing firm‐level variations in debt maturity structures. Employing a difference‐in‐difference methodology, the study reveals that firms facing greater rollover risk in 2014 significantly expanded production in the post‐crisis period. This effect is particularly pronounced among firms with lower cash reserves, higher capital intensity, and increased levels of secured debt. The findings offer policy insights into the dramatic declines in commodity prices witnessed during the oil crisis and its subsequent impact.\n"]

April 13, 2026 doi: 10.1002/ijfe.70016 open full text
Herding and Anti‐Herding Behaviour in the UK, French and German Stock Markets Before and During the Covid Pandemic.
Dimitrios Asteriou, Paraskevi Katsiampa, Keith Pilbeam, Alexander Tziamalis.
International Journal of Finance & Economics. April 13, 2026

["International Journal of Finance &Economics, Volume 31, Issue 2, Page 1780-1804, April 2026. ", "\nABSTRACT\nThis paper studies herding and anti‐herding behaviour in three European stock markets before and during the Covid‐19 pandemic by employing both static and dynamic analysis. We examine four different questions related to herding behaviour: (i) Did herding behaviour increase during the pandemic? (ii) Does herding behaviour respond differently in up and down market conditions? (iii) Is herding behaviour related to the volume of trading activity? and (iv) Does herding behaviour increase in periods of high market volatility? We find that, contrary to much of the existing literature, there is very little evidence of herding activity, and if anything, we find the evidence points to anti‐herding behaviour during the Covid‐19 pandemic.\n"]

April 13, 2026 doi: 10.1002/ijfe.70015 open full text
US Economic Policy Uncertainty and the Exchange Market Pressure of Large Emerging‐Market Economies: Evidence From GETS‐VAR and Bayesian Quantile Regression Methods.
Hasan Güngör, Ifedolapo Olabisi Olanipekun, Godwin Olasehinde‐Williams, Ojonugwa Usman.
International Journal of Finance & Economics. April 13, 2026

["International Journal of Finance &Economics, Volume 31, Issue 2, Page 2473-2491, April 2026. ", "\nABSTRACT\nIntegrating emerging market economies into global financial and economic relations can expose them to external shocks. This paper explores the connection between the US economic policy uncertainty (USEPU) and exchange market pressure (EMP) in nine major emerging markets from 2000 to 2019. To achieve this objective, we use the general‐to‐specific vector autoregressive (GETS‐VAR) and Bayesian quantile regression methods. The empirical results reveal that USEPU predicts changes in the EMP of large emerging market economies, except for Turkey. However, no feedback causal effect from EMP to USEPU was observed. Also, the long‐run steady‐state effects and cumulative impulse responses show that an increase in USEPU intensifies the EMP in Brazil, India and Mexico. Furthermore, our findings reveal that the positive impact of USEPU is heterogeneous leading to asymmetric patterns across the distribution of EMP.\n"]

April 13, 2026 doi: 10.1002/ijfe.70057 open full text
The Relationship Between Energy Metal Price Volatility and Clean Energy Assets.
Philip Igeland, Mona El Yadini, Gazi Salah Uddin, Muhammad Yahya, Ali Ahmed, Axel Hedström.
International Journal of Finance & Economics. April 13, 2026

["International Journal of Finance &Economics, Volume 31, Issue 2, Page 1735-1753, April 2026. ", "\nABSTRACT\nCurrently, global economies are grappling with the challenges posed by aggressive climate actions aimed at reducing greenhouse gas emissions. These efforts are further complicated by high fuel prices, economic instability, inflationary pressures, and concerns about energy security, all of which are straining the global energy sectors. A proposed solution is a shift towards clean energy alternatives, but the technologies coupled with clean energy heavily rely on energy metals. This has led to increasing demand for these resources. Thus, the relationship between renewable energy metals and the price and volatility of clean energy assets needs to be explored. We analyse the volatility characteristics of the various clean energy sub‐sectors, regional indices, and oil prices and assess their dependence on renewable energy metals. Empirical results indicate that volatility in energy metal prices significantly influences the volatility of all clean energy indices, with the US lithium price having the most pronounced impact. These findings highlight the critical role of energy metal prices as risk determinants in the clean energy sectors. The success of the transition to clean energy may depend on the stability of energy metal markets. This underscores the need for stakeholders to ensure the continued availability and demand stability of these vital resources in our pursuit of clean energy.\n"]

April 13, 2026 doi: 10.1002/ijfe.70013 open full text
Using Deep Learning Conditional Value‐at‐Risk Based Utility Function in Cryptocurrency Portfolio Optimisation.
Xinran Huang, Linzhi Tan, Haozhe Su, Jeremy Eng‐Tuck Cheah.
International Journal of Finance & Economics. April 13, 2026

["International Journal of Finance &Economics, Volume 31, Issue 2, Page 2845-2862, April 2026. ", "\nABSTRACT\nOne of the critical risks associated with cryptocurrency assets is the so‐called downside risk, or tail risk. Conditional Value‐at‐Risk (CVaR) is a measure of tail risks that is not normally considered in the construction of a cryptocurrency portfolio. In this paper, we propose a new approach to portfolio construction based on a deep learning CVaR utility function. This approach is designed to address the issue of tail risk. We evaluate the performance of this approach in comparison to other portfolio construction techniques, including the naïve, minimum variance and mean‐variance portfolios. Our findings indicate that the proposed approach outperforms traditional optimisation models.\n"]

April 13, 2026 doi: 10.1002/ijfe.70012 open full text
Economic Policy Uncertainty, Investor Sentiment and Industry Stock Market Volatility in China: A Quantile Regression Approach.
Peng Guo, Luzhu Tian, Jing Shi.
International Journal of Finance & Economics. April 13, 2026

["International Journal of Finance &Economics, Volume 31, Issue 2, Page 1682-1710, April 2026. ", "\nABSTRACT\nFrom an industry perspective, we apply the quantile regression to investigate the impact of investor sentiment (IS) and China's/the US economic policy uncertainty (EPU) on Chinese stock market volatility. Considering the structural break of the stock market, we found that China's and the US EPU/IS and their interaction effects had a significant impact on China's stock market volatility at the market level. Moreover, there was an asymmetric dependence between China's and the US EPU/IS and stock market volatility, and the dependence structure was time‐varying. At the industry level, the impact of the EPU on industry stock market volatility was highly heterogeneous, and its significance mostly occurred in the upper and lower tails. China's and the US EPU/IS can exacerbate industry stock market volatility in bullish and bearish markets. In addition, China's and the US EPU/IS and their interaction effects are heterogeneous and asymmetric, and the effects change with the break point. Finally, the US EPU has a great impact on the industry stock market. However, its scope and degree of influence are gradually decreasing. Our findings shed new light on the relationship of the EPU, IS and stock market volatility in China.\n"]

April 13, 2026 doi: 10.1002/ijfe.70010 open full text
Reporting ESG Initiatives and Gender Diversity in Germany: Implications for Stock Liquidity.
Ahmed Hassanein, Nader Elsayed.
International Journal of Finance & Economics. April 13, 2026

["International Journal of Finance &Economics, Volume 31, Issue 2, Page 2824-2844, April 2026. ", "\nABSTRACT\nAdopting multiple theoretical perspectives, this study separately and jointly examines the impacts of reporting Environmental, Social, and Governance (ESG) initiatives and gender diversity in boardrooms on corporate stock liquidity. Using a sample of non‐financial firms listed on the Frankfurt CDAX from 2010 to 2023, the study investigates whether ESG reporting enhances stock liquidity and how gender diversity moderates this relationship. To assess ESG reporting, we utilise Refinitiv Workspace ESG scores, while gender diversity and stock liquidity are measured through various indices. The results demonstrate that firms with higher ESG reporting experience higher stock liquidity, with governance disclosure having the most substantial impact. Likewise, firms with greater gender‐diverse boards exhibit higher stock liquidity. Besides, gender diversity in the boardroom positively moderates the effect of ESG reporting and its components on stock liquidity, implying that as gender diversity increases within a company, the influence of ESG reporting on enhancing stock liquidity becomes more pronounced. The results signify the roles of ESG reporting gender diversity in enhancing stock liquidity and investor confidence, and provide theoretical and practical implications for firms, investors, and policymakers to promote sustainable corporate practices and enhance market liquidity.\n"]

April 13, 2026 doi: 10.1002/ijfe.70009 open full text
Hedging With Gold, Correlation Cycles and Risk Aversion: Evidence From Global Economic Sectors.
Geoffrey M. Ngene, Ann Nduati Mungai, M. Kabir Hassan.
International Journal of Finance & Economics. April 13, 2026

["International Journal of Finance &Economics, Volume 31, Issue 2, Page 1606-1626, April 2026. ", "\nABSTRACT\nWe investigate (i) the variation of gold's hedging, safe haven and diversification properties across dynamic correlation cycles and 11 global sector equities, and (ii) the joint impact of risk aversion and global crisis events on asymmetric dynamic conditional correlation (ADCC) between gold and each sector. Contrary to evidence based on linear models, we find that (i) gold is consistently a strong hedge in the low ADCC cycle and largely an effective diversifier at moderate ADCC cycles. (ii) Gold is predominantly a strong safe haven during low and moderate ADCC quantiles. (iii) Risk aversion is inversely related to sector‐gold ADCC, especially in the lower ADCC quantiles. Moreover, crisis events such as COVID‐19, the global financial crisis (GFC) and the European sovereign debt crisis (ESDC) amplify the impact of risk aversion on ADCC. (iv) Investors derive a marginal utility loss for hedging defensive sectors such as healthcare, consumer staples and utilities, requiring relatively lower gold allocation than cyclical sectors. Our results have important implications for dynamic portfolio allocation and risk management decisions.\n"]

April 13, 2026 doi: 10.1002/ijfe.70006 open full text
ESG and Firm Value: The Moderating Effects of Corporate Transparency and Institutional Environment.
Qing Li, Chengcheng Liu, Yu‐En Lin.
International Journal of Finance & Economics. April 13, 2026

["International Journal of Finance &Economics, Volume 31, Issue 2, Page 1582-1605, April 2026. ", "\nABSTRACT\nUsing a panel sample of firms across 53 countries and regions, we empirically explore the association between ESG performance and firm value and how it varies in different information and institutional environments. We find that ESG performance improves firm value across countries and regions. Moreover, both corporate transparency and developed markets positively moderate the relationship between ESG performance and firm value. Notably, we provide evidence that the positive moderating effect of transparency only exists in the low divergence of environmental, social, and governance performance and high accounting conservatism. We also find that corporate transparency and agency costs are mediating mechanisms through which ESG signals improve firm value. Based on signalling theory, our analysis suggests that ESG performance is an effective signal for investors, and corporate transparency and developed markets reduce the signalling costs and processing costs of ESG signals.\n"]

April 13, 2026 doi: 10.1002/ijfe.70005 open full text
Evaluating Innovation Output of Companies Backed by Corporate, Independent and Syndicated Venture Capital.
Fatima Shuwaikh, Sabrina Khemiri, Souad Brinette, Joakim Zebulon Börrén Dias.
International Journal of Finance & Economics. April 13, 2026

["International Journal of Finance &Economics, Volume 31, Issue 2, Page 1530-1556, April 2026. ", "\nABSTRACT\nThis paper examines how Corporate Venture Capital (CVC), Independent Venture Capital (IVC) and Venture Capital Syndicate (VCS) promote innovation among startups. Drawing on a dataset of 4406 venture‐backed deals in North America, spanning 1998–2019, it explores how the configurations of investors and their contextual factors influence innovation output. The findings show that syndicated and CVC‐backed ventures outperform IVC‐backed ventures. Syndicates with a larger membership are positively associated with innovation outcomes based on resource pooling and knowledge sharing; contextual factors, such as location and technology fit, environmental munificence and absorptive capacity have a positive moderating effect on the relationship between VC type and innovation outcomes. This research adds to both academic knowledge and practical implications, offering entrepreneurs, investors and policymakers' actionable insights about how to facilitate innovation, improve venture funding and enhance innovation management to ultimately strengthen the innovation ecosystem.\n"]

April 13, 2026 doi: 10.1002/ijfe.70003 open full text
Information Dissemination or Collusion: Embedded Underwriters and Bond Issue Pricing.
Yun‐Lang Wu, Zhu Ding, Jun Huang.
International Journal of Finance & Economics. April 13, 2026

["International Journal of Finance &Economics, Volume 31, Issue 2, Page 2780-2803, April 2026. ", "\nABSTRACT\nWe explore the role of underwriters embedded in relationship networks in nascent capital markets. Using a sample of bonds issued by Chinese listed companies from 2016 to 2022, we find that lead underwriters with business and geographic ties to the issuers can reduce initial bond yield spreads. Greater underwriter embedded intensity in issuers' relationship networks is associated with lower bond yield spreads. This association is attributable to the information dissemination effect of embedded underwriters, and potential collusive behaviour has been suppressed by strengthened regulation. Further analyses reveal that the source of this information advantage is that the embedded underwriters obtain more proprietary information from the issuers, and are better able to interpret the public information. In the long term, underwriter embeddedness also reduces issuers' ex post default probability. Collectively, our study explains the information advantages of embedded intermediaries and demonstrates the governance function of financial regulation in capital markets with imperfect institutions.\n"]

April 13, 2026 doi: 10.1002/ijfe.70096 open full text
Does Geopolitical Risk Matter for the Success of Initial Coin Offerings?
Aristogenis Lazos, Laurent Pataillot.
International Journal of Finance & Economics. April 13, 2026

["International Journal of Finance &Economics, Volume 31, Issue 2, Page 2754-2779, April 2026. ", "\nABSTRACT\nThis study investigates the effect of country‐specific geopolitical risk (GPR) on initial coin offering (ICO) success. The findings of this study reveal a positive relation. A plausible explanation may lie in prospect theory. When losses are more likely to take place, investors are risk‐seeking and may overweight the low probability of hitting a big win in their pursuit of high returns. As a result, they may invest in high GPR ICOs that, in turn, may have a positive effect on their success. High GPR ICOs that employ the know your customer scheme, however, exhibit a lower likelihood of success.\n"]

April 13, 2026 doi: 10.1002/ijfe.70070 open full text
Fintech and Dividend Payouts: Evidence From China.
Kun Wang, Bozhou Li, Lu Qiao, Zhiyi Xia.
International Journal of Finance & Economics. April 13, 2026

["International Journal of Finance &Economics, Volume 31, Issue 2, Page 2964-2979, April 2026. ", "\nABSTRACT\nThe rapid development of financial technologies (fintech) has significantly transformed the Chinese financial industry, which practitioners and academics well recognise. This study investigates how innovative technologies influence firm dividend policies. Utilising data from Chinese‐listed firms spanning 2011–2022, we find a positive relationship between fintech development and firm cash‐dividend payments. The results remain robust across various tests, including difference‐in‐differences, regional exclusions, and alternative measures. Mechanism analysis reveals that fintech developments alleviate firms' financial constraints, thereby enhancing their capacity to distribute cash dividends. Our further analysis does not support the monitoring channel through which digital finance influences dividend policies. We find no significant impact of fintech on stock dividends and share repurchases, suggesting that fintech has less influence on flexible payout methods. Our study provides novel insights into understanding payout policies in the context of ongoing technological advancements in the financial sector.\n"]

April 13, 2026 doi: 10.1002/ijfe.70068 open full text
Expectations and Speculation in the US Natural Gas Market.
Christina Anderl, Guglielmo Maria Caporale.
International Journal of Finance & Economics. April 13, 2026

["International Journal of Finance &Economics, Volume 31, Issue 2, Page 2713-2728, April 2026. ", "\nABSTRACT\nThis paper aims to assess the role of expectations as a determinant of the real price of natural gas in the US. Three specifications of a structural VAR (SVAR) model are estimated to identify an expectations‐driven speculative demand shock. The first includes natural gas inventories, consistently with the theory of storage; the second the risk‐adjusted futures spread; the third functional shocks defined as shifts in the entire risk‐adjusted natural gas futures term structure. The results of the third model suggest that speculative demand shocks have sizeable effects on the real price of natural gas. A shock decomposition exercise shows that increases in the price of natural gas are driven primarily by changes in the curvature of its futures term structure, which indicates that medium‐term expectations or large differences between short‐ and long‐term expectations are the main determinant of increases in the spot price of natural gas. It appears that speculative demand shocks are most relevant for the price of natural gas in the model with functional shocks, where they account for around 40% of its variation.\n"]

April 13, 2026 doi: 10.1002/ijfe.70067 open full text
The Effect of Geopolitical Risk on the Volatility of Connectedness Between Carbon Neutrality and Energy Markets: Evidence From China.
Yingyue Sun, Yu Wei, Lin Ren.
International Journal of Finance & Economics. April 13, 2026

["International Journal of Finance &Economics, Volume 31, Issue 2, Page 2568-2592, April 2026. ", "\nABSTRACT\nAs China plays a pivotal role in shaping global energy trends, the healthy development of energy markets faces formidable challenges, making the achievement of carbon neutrality, particularly, crucial. Unfortunately, geopolitical risk (GPR) introduces significant uncertainties for the interactions between China's carbon neutrality process and energy markets. To this end, we explore the connectedness between China's carbon neutrality index and energy futures prices from both return and risk perspectives using the TVP‐VAR method. Additionally, we analyse the impact mechanisms and predictive effects of GPR on the volatility of this connectedness applying the GARCH‐MIDAS method. Our empirical findings reveal several key insights. First, the GPR drives the volatility in connectedness between China's carbon neutrality index and energy futures prices, particularly, within the petrochemical industry, while the opposite impact is observed in certain coal‐related sectors. Moreover, the models indicate that poor GPR predictive effects are primarily evident in industries with a close link to coal energy in their production processes. Secondly, the risk connectedness of China's carbon neutrality index and energy futures prices contains more implicit information and is more responsive to GPR shocks compared to return connectedness. This explains why the GPR is less effective in forecasting the volatility of risk connectedness. Finally, the global GPR is more helpful than the China‐specific GPR in forecasting the volatility of connectedness in China's carbon neutrality index and energy futures prices. These insights reveal the potential vulnerability of China's carbon neutrality and energy markets to GPR, offering actionable guidance for strengthening risk management strategies.\n"]

April 13, 2026 doi: 10.1002/ijfe.70061 open full text
Financial Technology and Environmental Performance: International Evidence.
Charilaos Mertzanis, Asma Houcine, Athanasios Pavlopoulos, Apostolos Vetsikas, Ilias Kampouris.
International Journal of Finance & Economics. April 13, 2026

["International Journal of Finance &Economics, Volume 31, Issue 2, Page 2664-2689, April 2026. ", "\nABSTRACT\nThis study examines the impact of FinTech market growth on environmental performance across 58 countries (2013–2020), using Environmental Performance Index data and comprehensive FinTech finance metrics from the BIS. Findings reveal a consistently positive and statistically significant relationship, robust across fixed‐effects models, lagged specifications, alternative FinTech measures and instrumental variable techniques. FinTech enhances environmental outcomes by facilitating green finance, improving ESG transparency, enabling real‐time environmental monitoring and promoting energy efficiency through digital tools. The effect is especially pronounced in countries with strong institutional effectiveness. This research contributes new international evidence to the FinTech‐sustainability nexus, highlighting the diverse transmission channels and the role of governance in leveraging FinTech for environmental improvements.\n"]

April 13, 2026 doi: 10.1002/ijfe.70065 open full text
CFO's Famine Experience and Earnings Management: The Moderating Effect of the CEO Power.
Radwan Alkebsee, Abdullah Muhammad Dhrubo, Adeeb Alhebri, Redhwan Aldamari, Ebrahim Mohammed Al‐Matari.
International Journal of Finance & Economics. April 13, 2026

["International Journal of Finance &Economics, Volume 31, Issue 2, Page 2729-2753, April 2026. ", "\nABSTRACT\nThis study examines the impact of CFOs' famine experience on earnings management practices in China. Using data from Chinese listed firms over the period 2010–2021, we document a negative association between CFOs' famine experiences and earnings management practices (accruals and real activities). These findings are in line with the imprinting theory assumption that early life experiences imprint and shape individuals' personalities and behaviours. We also find that CFOs with such formative experience are likely to enhance financial reporting quality by reducing earnings management in firms with less powerful CEOs, while it diminishes in firms with CEOs who have strong control over the firm. The results remain consistent and robust after addressing endogeneity concerns. This study contributes to the existing literature in this regard.\n"]

April 13, 2026 doi: 10.1002/ijfe.70069 open full text
Practice What You Preach: A Multilevel Perspective on Stock Exchanges' Female Directorship.
Faten Ben Slimane, Laura Padilla‐Angulo.
International Journal of Finance & Economics. April 13, 2026

["International Journal of Finance &Economics, Volume 31, Issue 2, Page 2804-2823, April 2026. ", "\nABSTRACT\nStock exchanges, as organisations, have traditionally been male‐dominated and run as old boys' clubs; however, they increasingly face societal pressures for board gender diversity. Despite these pressures, the gender diversity of exchange boards remains low. Surprisingly, although exchanges are expected to set an example for corporate governance practices, their board gender strategies have been underexamined. Drawing on institutional theory and the strategic response approach, we use a unique hand‐collected firm‐level dataset comprising a representative sample of stock exchanges worldwide and covering a 25‐year period to investigate the predictors of exchanges' compliance with those pressures, adopting a multilevel approach. We find that mandatory quotas, having a female CEO, and the representation of directors with solid business backgrounds positively impact gender diversity. We also find that national culture plays a role.\n"]

April 13, 2026 doi: 10.1002/ijfe.70000 open full text
Mergers and Acquisitions and Brexit: A Natural Experiment.
Di Luo, Tapas Mishra, Mamata Parhi, Zhuang Zhang.
International Journal of Finance & Economics. April 13, 2026

["International Journal of Finance &Economics, Volume 31, Issue 2, Page 2082-2097, April 2026. ", "\nABSTRACT\nWe study the impact of Brexit uncertainty on one of the most important forms of corporate investment: mergers and acquisitions (M&As). Brexit provides us with an ideal natural experiment to explore the real effects of economic uncertainty and understand the underlying transmission mechanism. We document a significant decline in the number of M&A deals for UK firms after Brexit compared to EU firms. This inhibiting effect is amplified by the channels of real options, foreign trade, and financial constraints. Overall, our results provide for deeper understanding of this unprecedented uncertainty in Brexit policy on local M&A activity. Policy makers are urged to respond.\n"]

April 13, 2026 doi: 10.1002/ijfe.70031 open full text
Expansionary and Contractionary Fiscal Multipliers in the United States.
George Kapetanios, Panagiotis Koutroumpis, Christopher Tsoukis, Ekaterina Glebkina.
International Journal of Finance & Economics. April 13, 2026

["International Journal of Finance &Economics, Volume 31, Issue 2, Page 2144-2159, April 2026. ", "\nABSTRACT\nWe estimate the fiscal (spending) multiplier using quarterly US data, 1981Q3–2024Q4. We define government spending shocks as actual minus expected expenditure growth, the latter obtained from the Survey of Professional Forecasters. We employ the Jordà local projections method, coupled with state dependence of parameters, with smooth transition between states. A key testable hypothesis is that the positive and negative spending shocks have numerically (as well as qualitatively) different effects. We find that multipliers of shocks differ qualitatively (in terms of cyclicality) as well as quantitatively. Multipliers are almost always above unity (and often well above). Importantly, we uncover evidence that negative shocks have stronger effects over longer periods of time in the case of the FEC multipliers and likely with the PVIR‐FM multipliers, too. Pooled‐shock estimation can seriously bias results. Additionally, there is strong evidence that the two types of shock produce almost uniformly significantly different estimated coefficients of our key estimable equation.\n"]

April 13, 2026 doi: 10.1002/ijfe.70034 open full text
Effect of Prudential Policies on Sovereign Bond Markets: Evidence From the ASEAN‐4 Countries.
Joshua Aizenman, Gazi Salah Uddin, Tianqi Luo, Ranadeva Jayasekera, Donghyun Park.
International Journal of Finance & Economics. April 13, 2026

["International Journal of Finance &Economics, Volume 31, Issue 2, Page 2455-2472, April 2026. ", "\nABSTRACT\nThis paper examines the effects of prudential policies on the sovereign vulnerability of ASEAN‐4 countries. We measure sovereign vulnerability within the network connectedness of sovereign bonds between ASEAN‐4 countries (Indonesia, Malaysia, the Philippines and Thailand) and six other countries (the US, the UK, the European Union, China, India and Japan) from 2012 to 2022. Local projections (LPs) are employed to estimate the dynamic effects of prudential measures. The effects are analysed across various prudential instruments, including reserve requirements, capital requirements, capital buffers, loan‐to‐value ratio caps and concentration limits. The results suggest that markets with tighter prudential policies are significantly less exposed to the sovereign shocks of other economies. The efficacy period of prudential policy in mitigating sovereign vulnerability becomes significant after seven quarters. Capital requirements and concentration limits show immediate effects, while reserve requirements operate with a longer delay.\n"]

April 13, 2026 doi: 10.1002/ijfe.70056 open full text
Sustainability Performance and Corporate Risk: Evidence From the Tourism Industry.
Omneya Abdelsalam, Antonios Chantziaras, Vassiliki Grougiou, Stergios Leventis, Nikolaos Tsileponis.
International Journal of Finance & Economics. April 13, 2026

["International Journal of Finance &Economics, Volume 31, Issue 2, Page 1995-2011, April 2026. ", "\nABSTRACT\nWe investigate the impact of sustainability performance (Refinitiv Environmental, Social, and Governance [ESG] scores) on corporate risk (CR). We apply stakeholder theory and the resource‐based view to an international sample of 247 tourism firms from 2002 to 2018. We demonstrate a negative association between ESG and CR, which is more pronounced when pension funds act as the controlling shareholders. We reveal that tourism firms with stronger ESG performance have statistically and economically significantly less risk of volatile earnings and a lower probability of failure than their counterparts with poor ESG. Our findings are robust to endogeneity and model misspecification. Overall, we add new evidence suggesting that ESG generates value and concrete positive outcomes for tourism firms, an effect moderated by the identity of controlling shareholders.\n"]

April 13, 2026 doi: 10.1002/ijfe.70027 open full text
Environmental Courts and Corporate ESG Greenwashing.
Zhonghua Cheng, Yanhao Yang.
International Journal of Finance & Economics. April 13, 2026

["International Journal of Finance &Economics, EarlyView. ", "\nABSTRACT\nEnvironmental courts serve as a pivotal judicial mechanism for addressing corporate ESG greenwashing. Based on data from China's A‐share listed corporations from 2009 to 2023, this study employs a double machine learning (DML) model to empirically examine the causal effect of environmental courts on corporate ESG greenwashing. The findings indicate that: (1) Environmental courts significantly curb corporate ESG greenwashing, a result that holds across a series of robustness checks. (2) Heterogeneity tests suggest that the inhibitory effect manifests more strongly in large corporations, corporations without political connections, technology‐based corporations, and polluting corporations. (3) Mechanism tests reveal that environmental courts mainly operate through four pathways: refining judicial review standards, strengthening guidance from case precedents, enhancing judicial review capacity, and intensifying judicial accountability.\n"]

April 13, 2026 doi: 10.1002/ijfe.70207 open full text
Customer Geographical Proximity and Corporate Financialisation: Evidence From China.
Yan Zhao, Kun Su.
International Journal of Finance & Economics. April 10, 2026

["International Journal of Finance &Economics, EarlyView. ", "\nABSTRACT\nThis study examines the impact of customer geographical proximity on corporate financialisation. The results show that customer geographical proximity exacerbates corporate financialisation rather than alleviates it. Moreover, this impact can be achieved by reducing corporate profitability and enhancing the turnover of firms' working capital. Furthermore, the findings also suggest that the impact of customer geographical proximity on corporate financialisation is more pronounced in firms with higher levels of earnings management, whereas good corporate governance can help to reduce this effect. Our study provides substantial evidence for understanding corporate financialisation at the supply chain level and offers specific policy implications for the governance of corporate financialisation.\n"]

April 10, 2026 doi: 10.1002/ijfe.70209 open full text
Stock Returns, ESG Performance and Divergence of Social Attention.
Tianyu Mu, Yun Tang, Hongbo Duan.
International Journal of Finance & Economics. April 02, 2026

["International Journal of Finance &Economics, EarlyView. ", "\nABSTRACT\nGrowing social attention has become an increasingly salient force shaping firms' sustainable development. However, the impacts of divergent social attention remain unclear. By categorizing social attention into retail attention and public attention, this study examines their distinct impacts on stock returns and environmental, social, and governance (ESG) performance. Retail attention temporarily boosts stock returns by reducing information asymmetry but leads to long‐term decreases in returns as the effect diminishes, while public attention consistently results in a decline in stock returns over time. The study reveals an inverted U‐shaped relationship between social attention and ESG performance. In sub‐dimensions, retail attention works on the governance pillar while public attention focuses more on both the social and governance pillars. Moreover, high levels of social attention do not improve green development; instead, they reduce stock returns of brown firms. This study provides a feasible solution on how firms respond to the impact of social attention in pursuit of sustainable transition.\n"]

April 02, 2026 doi: 10.1002/ijfe.70206 open full text
Transforming for Tomorrow: Corporate Digital Innovation, CSR, and Sustainability in the Face of ESG Risks.
Kamran Mohy‐ud‐Din, Muhammad Shahbaz.
International Journal of Finance & Economics. March 31, 2026

["International Journal of Finance &Economics, EarlyView. ", "\nABSTRACT\nThis study investigates the role of corporate digital innovation in bolstering corporate resilience in the face of escalating sustainability‐related challenges. Specifically, our study examines whether corporate digital innovation serves as strategic buffers that strengthen sustainability performance. Utilising a panel dataset of annual observations from 920 firms based in G5 countries from 2014 to 2024, our analysis encompasses 10,120 firm‐year observations. Our findings suggest that corporate digital innovation potentially contributes to advancing sustainable futures. Additionally, our study highlights the crucial role of CSR committees in reinforcing the relationship between corporate investments in patents and the implementation of effective sustainability strategies. Our results demonstrate that these committees significantly strengthen this relationship, thereby enhancing the efficacy of digital innovation. Moreover, global CSR reporting is shown to enhance firms' capacities to navigate uncertainties associated with evolving sustainability policies. In addition, emissions performance and ESG ratings show a strong response to patent evaluation when innovation expenditures exceed the threshold level of 3.467%. Furthermore, high‐tech exports are found to significantly influence environmental performance and mitigate carbon emissions when innovation expenditure thresholds surpass 2.717% and 3.467%, respectively. Collectively, these findings suggest that robust digital innovation practices contribute to corporate value creation in the face of ESG risk.\n"]

March 31, 2026 doi: 10.1002/ijfe.70199 open full text
Natural Disasters and Household Participation in Financial Assets: Evidence From China.
Chufu Wen, Fenghua Wen, Zhijian (James) Huang.
International Journal of Finance & Economics. March 29, 2026

["International Journal of Finance &Economics, EarlyView. ", "\nABSTRACT\nThis paper examines the impact of natural disaster experience on household participation in financial assets in China. Our findings show that exposure to natural disasters significantly reduces both the likelihood and investment level in risky financial assets, including stocks, mutual funds and wealth management products, whereas participation in low‐risk assets such as savings remains largely unaffected. Further analysis identifies increased household financial distress and reduced risk tolerance as the primary channels through which disaster experience affects financial behaviour. Heterogeneity analyses reveal that the negative impact on stock and mutual fund participation is more pronounced among households with higher liquidity and those of Han ethnicity. Moreover, the decline in mutual fund participation is stronger among households with weaker social networks, suggesting that social capital may play a buffering role in mitigating disaster‐induced risk aversion.\n"]

March 29, 2026 doi: 10.1002/ijfe.70194 open full text
Does Market Power Fuel the Systemic Stability of Alternative Financial Systems?
Aamina Khurram, Abdullah Iqbal, Vasileios Pappas, Mohammad Abweny.
International Journal of Finance & Economics. March 29, 2026

["International Journal of Finance &Economics, EarlyView. ", "\nABSTRACT\nThis paper examines the bidirectional relationship between competition and systemic risk in dual financial systems where Islamic and conventional financial institutions operate side by side. Using a sample of publicly listed financial institutions from the Asia‐Pacific, Gulf Cooperation Council (GCC), and Middle East and North Africa (MENA) regions from 2000 to 2019, we estimate systemic risk through ΔCoVaR and competition using the Lerner index. Employing a panel vector autoregressive framework, we analyse how this relationship evolves across different economic phases, with particular focus on the Global Financial Crisis (GFC). We find that lower competition is consistently associated with reduced systemic risk, with this effect being stronger—by approximately 25%—in conventional financial institutions. Notably, the competition–risk relationship is asymmetric and time‐varying. Put simply, competition enhances stability pre‐crisis; it amplifies systemic risk during the GFC, especially in the conventional sector. Post‐crisis, this fragility effect persists in conventional institutions but dissipates in Islamic ones. Our findings contribute to the literature on competition, systemic risk, and comparative banking by highlighting how alternative financial models and economic conditions jointly shape financial stability.\n"]

March 29, 2026 doi: 10.1002/ijfe.70202 open full text
Assessing the Effect of Information Sharing in the Farm Credit Market: Evidence From Developing Countries.
Emile S. Sonehekpon, Rose Fiamohe.
International Journal of Finance & Economics. March 28, 2026

["International Journal of Finance &Economics, EarlyView. ", "\nABSTRACT\nThis paper investigates the effect of financial information sharing on agricultural credit across 60 developing countries. We first develop a simple theoretical model that elucidates how enhanced information flow, via private credit bureaus and public credit registries, can mitigate information asymmetries and improve lending decisions in the farm credit market. The model predicts that when financial institutions have access to shared borrower information, they are more likely to increase credit provision to agricultural enterprises. To empirically validate these predictions, we employ panel data covering the period 2013–2020, sourced from the FAO, World Development Indicators, Worldwide Governance Indicators, and the World Bank's Doing Business database. Using the System Generalised Method of Moments (GMM) estimator to address potential endogeneity and dynamic effects, we find robust evidence that information sharing significantly enhances agricultural credit availability. This effect is particularly pronounced in the long term, suggesting that sustained improvements in information infrastructure yield cumulative benefits for agricultural finance. Our findings underscore the importance of policy frameworks that promote the development and integration of credit information systems. By facilitating transparency and reducing credit risk, such systems can strengthen the relationship between financial institutions and agricultural enterprises, ultimately supporting broader agricultural development goals.\n"]

March 28, 2026 doi: 10.1002/ijfe.70201 open full text
Integrating Sustainability Into Portfolio Selection With Risk‐Utility Profiling.
Ranadeva Jayasekera, Jelena Stankevičienė, Ramūnas Pranauskas, Rasa Subačienė, David Charles George Liney.
International Journal of Finance & Economics. March 28, 2026

["International Journal of Finance &Economics, EarlyView. ", "\nABSTRACT\nModern portfolio theory (MPT) traditionally focuses on the risk–return trade‐off, often overlooking investors' sustainability preferences. This paper introduces a unified portfolio‐selection framework, which we term green portfolio theory (GPT), integrating environmental, social and governance (ESG) considerations alongside classical risk aversion. We calibrate investor preferences for risk, return and sustainability using an extended profiling instrument, then embed these parameters within a single objective function that jointly evaluates expected return, risk and ESG impact. Individual absolute risk aversion (λ) is determined using the Arrow–Pratt measure of absolute risk aversion. The resulting optimisation yields a three‐dimensional efficient frontier, illustrating how varying sustainability weights modify optimal asset allocations. Empirical illustrations demonstrate that investors with stronger ESG preferences tend to accept modest reductions in expected return, with the marginal rate of substitution between risk, return and sustainability determined by individual preference parameters. We also propose a coupled utility parameter SHAIRP (specific Hamilton adjusted impact return preference), that quantifies the return ‘sacrifice’ investors are willing to make in order to achieve a concrete sustainability improvement and this is loosely derived from W. D. Hamilton's work on kin selection in evolutionary biology and genetics. Our framework provides a practical methodology for constructing portfolios that align financial objectives with ethical imperatives and enables asset managers to design investment products in accordance with emerging regulatory requirements for responsible investing. By extending traditional MPT to account for sustainability, we offer robust guidance for investors and advisors navigating the evolving landscape of sustainable finance.\n"]

March 28, 2026 doi: 10.1002/ijfe.70189 open full text
Does Digital Banking Promote Remittance Receipts? Evidence From Developing Countries.
Syed Ali Abbas, Eliyathamby A. Selvanathan, Saroja Selvanathan.
International Journal of Finance & Economics. March 27, 2026

["International Journal of Finance &Economics, EarlyView. ", "\nABSTRACT\nIn the realm of technological advancement, like many sectors, the financial sector swiftly embraced digital transformation to help facilitate financial transactions, especially remittance receipts. The digitalisation of the banking sector has made transfers and access to funds quite easier, faster, and more economical by reducing transaction costs. This paper examines the impact of digital banking on remittance flows using the World Bank's Global Findex (2014, 2017, and 2021) surveys and panel macroeconomic data for 53 developing countries. Applying the panel corrected standard errors and instrumental variable two‐stage least square (IV‐2SLS) estimation techniques, the findings suggest a non‐linear (inverted U‐shaped) relationship between digital banking and remittances, that is these private (external financial) flows initially increase at low levels of digital banking while at the higher level of digitalisation, remittances start decreasing. Controlling the heterogeneity and endogeneity, in addition, the results suggest that exchange rate depreciation (of the home country's currency) increases remittance inflows. Moreover, remittance receipts increase with (the development of) human capital and (per capita) income of developing countries.\n"]

March 27, 2026 doi: 10.1002/ijfe.70205 open full text
Waves Across the Atlantic: How Macro and Monetary Releases Ripple Through Euro Area Markets.
Rokas Kaminskas, Linas Jurkšas.
International Journal of Finance & Economics. March 26, 2026

["International Journal of Finance &Economics, EarlyView. ", "\nABSTRACT\nWe provide evidence regarding how European and US macroeconomic and monetary policy events affect euro area markets. By analysing over 170 macroeconomic indicators from 2002 to 2024, we assess the impacts across different events, countries and time periods. We rely on a high‐frequency impact identification strategy and estimate the effects of releases on market variability and the directional effects of surprises across different markets. We find that, compared to European data releases, US events tend to have a more pronounced effects on euro area markets. On average, monetary and employment events induce the strongest repricing in euro area financial markets. In most of the specifications, exchange rate and long‐term sovereign yields were more sensitive to macroeconomic releases, while short‐term bonds and stock prices were impacted much less frequently.\n"]

March 26, 2026 doi: 10.1002/ijfe.70196 open full text
Digital Dividend or Digital Divide: Can Fintech Bridge the Wealth Gap Amid Public Health Emergencies? a Comparative Research of Urban and Rural China.
Chuna Chen, Zhuomin Tan, Song Liu.
International Journal of Finance & Economics. March 25, 2026

["International Journal of Finance &Economics, EarlyView. ", "\nABSTRACT\nAs a significant driver of financial innovation, can fintech provide protection for household wealth during major public health events? This paper utilises data from the China Household Finance Survey (CHFS) from 2015 to 2021 to construct Difference‐in‐Differences and Triple Difference models to assess the effectiveness of fintech in mitigating the adverse wealth impacts on urban and rural families during the COVID‐19 pandemic. The research indicates that: (1) the pandemic has exacerbated the pre‐existing wealth inequality between urban and rural families in China; (2) following the outbreak, fintech alleviated the negative impacts on urban family wealth, but did not significantly affect rural family wealth, thereby widening the inequality exacerbated by the digital divide; (3) the factors driving this digital divide include disparities in financial literacy between urban and rural residents, which lead to unequal access to the benefits of fintech.\n"]

March 25, 2026 doi: 10.1002/ijfe.70195 open full text
Interdependence of Venture Capital Screening Criteria: A Decision Support Framework.
Norah Almubarak, Tarifa Almulhim.
International Journal of Finance & Economics. March 23, 2026

["International Journal of Finance &Economics, EarlyView. ", "\nABSTRACT\nStudies of the Venture Capital (VC) screening process traditionally assume that VC criteria are independent of other criteria. However, these criteria may interact and influence each other in cause‐and‐effect relationships. Therefore, there is a need to understand the interdependence of VC screening criteria. In this study, a decision support framework is proposed for VC screening criteria, based on the Decision‐Making Trial and Evaluation Laboratory (DEMATEL) method and Intuitionistic Fuzzy Set (IFS) theory (IFS‐DEMATEL). Building on prior work on VC investors, we identify a holistic list of 20 evaluation criteria in seven categories (founding team, product or service, financial, market, environmental, social, and governance characteristics). The IFS‐DEMATEL method is used to identify the relative importance attached by VC investors to different criteria, pinpoint the most significant criteria, and explicate the cause‐and‐effect relationships between criteria. Finally, the proposed framework is used to empirically examine VC screening criteria based on a case study involving VC experts/investors from the UK and the US. We find that environmental protection, the team and working environment, and profitability are the most influential criteria; that is, they have the greatest impact on the other criteria. This study both enhances the VC screening literature and makes an important practical contribution by proposing and illustrating a decision support framework capable of addressing VC screening decisions in complex and imprecise real‐world scenarios.\n"]

March 23, 2026 doi: 10.1002/ijfe.70204 open full text
Motive and Opportunity: Order Choice in a Limit Order Book With Dispersed Information.
James Steeley, Charles Schnitzlein, Patricia Chelley‐Steeley.
International Journal of Finance & Economics. March 20, 2026

["International Journal of Finance &Economics, EarlyView. ", "\nABSTRACT\nWe test predictions of market microstructure theory relating to the determinants of order choice in a limit order book where information is dispersed among traders. Using an experimental limit order book, with a large state space, we find that informed traders exhibit patience, compatible with the ‘waiting game’ behaviour described in Foster and Viswanathan. In responding to expected profits, informed traders prefer limit orders that disguise their information as predicted by Roşu and Riccó et al.\n"]

March 20, 2026 doi: 10.1002/ijfe.70200 open full text
The Contribution of International Remittance to Financial Development in Developing Countries: A Further Investigation.
Canh Phuc Nguyen, Nguyen Doan, Luis Chavez‐Bedoya, Christophe Schinckus.
International Journal of Finance & Economics. March 20, 2026

["International Journal of Finance &Economics, EarlyView. ", "\nABSTRACT\nThis study analyses the impact of international remittances on financial development in 105 developing countries from 2003 to 2021. Using a two‐step system GMM estimator, we find that remittances have a significant negative effect on overall financial development. This effect is robust across most dimensions, negatively influencing the depth and efficiency of both financial institutions and markets. A key exception is financial access, where remittances have a positive effect, promoting financial inclusion. Our main contribution is identifying three transmission channels that explain this negative result. Using three‐stage least squares (3SLS) estimation, we show that remittances reduce domestic savings and stimulate the shadow economy, both of which hinder financial development. Conversely, they also promote entrepreneurial activity, which supports it. The net effect, however, remains negative. Furthermore, we show that this effect is conditional on national characteristics. The negative impact is stronger in countries with a colonial history, a civil law system, high FDI, high natural resource rents and a highly dependent population. It is weaker, or even positive, in linguistically homogeneous countries and in those with a large agricultural sector. These findings suggest that the mixed evidence in the literature is caused by the offsetting nature of these channels and contingent national factors. We conclude that policymakers must implement targeted strategies to direct remittances away from informal activities and consumption and towards formal investment and entrepreneurship to harness their developmental potential.\n"]

March 20, 2026 doi: 10.1002/ijfe.70203 open full text
Shock Absorbers or Amplifiers? How Do Firms Transmit Shocks in a Polycrisis Era?
Miaomiao Tao, Jianda Wang, Xiaohang Ren, Ruijun Bu.
International Journal of Finance & Economics. March 20, 2026

["International Journal of Finance &Economics, EarlyView. ", "\nABSTRACT\nWe explore how fluctuations in global oil prices and geopolitical tensions reshape the spread of financial risk among firms worldwide. We separate these shocks into short‐, medium‐ and long‐term effects using oil price data and a global political risk index. We demonstrate that major events like COVID‐19 and the Russia–Ukraine conflict contributed significantly to escalated cross‐border risk propagations. Energy‐exporting countries such as the United Arab Emirates became central to the global risk network due to their role in energy markets. Interestingly, long‐term shifts in oil prices and political risks are the main drivers of rising firm‐level risk spillovers, while short‐ and medium‐term changes help offset some of the risk. Geopolitical tensions have a stronger impact on energy firms than oil price changes. Developed‐country firms show stronger, more significant responses to oil and geopolitical shocks than developing‐country firms. Strong firms can reduce some risk spillovers, but this effect weakens during prolonged geopolitical or energy shocks.\n"]

March 20, 2026 doi: 10.1002/ijfe.70197 open full text
Bank Income Smoothing, Societal Patriarchy and Policy Uncertainty.
Tanveer Ahsan, Saqib Aziz, Akanksha Jalan, Fazal Muhammad, Dhoha Trabelsi.
International Journal of Finance & Economics. March 19, 2026

["International Journal of Finance &Economics, EarlyView. ", "\nABSTRACT\nUsing a sample of 745 banks from 26 OECD countries over the period 1997–2023, we investigate the moderating effects of societal patriarchy on bank income smoothing (IS), amidst policy uncertainty (PU). Results indicate that in periods of high PU, banks operating in highly patriarchal societies tend to curtail the use of loan loss provisions (LLP) to smooth their income. Specifically, the moderating effect of patriarchy is attenuated in a low uncertainty environment, while in periods of financial crisis marked by high uncertainty, income smoothing rises dramatically. Moreover, better governance frameworks tend to limit income smoothing behaviour in banks, highlighting the significance of robust monitoring and governance. Our results survive the Placebo test, GMM estimation and instrument variable analysis, hence remain robust to concerns of endogeneity and reverse causality.\n"]

March 19, 2026 doi: 10.1002/ijfe.70191 open full text
Leading the Chain, Lifting the Output: The Chain Leader System Policy and Supply Chain Participants' Productivity.
Jun Hu, Xinli Xie, Liang Wang, Daifei Yao.
International Journal of Finance & Economics. March 17, 2026

["International Journal of Finance &Economics, EarlyView. ", "\nABSTRACT\nThis study examines the impact of China's chain leader system (CLS)—a novel, institutionalised form of public–private partnership (PPP)—on corporate total factor productivity (TFP). The CLS formalises state–enterprise collaboration by appointing government officials as “chain leaders” and designating key firms as “chain masters” to jointly coordinate industrial chain development. We construct a mathematical theoretical model to analyse the system's effects on firm‐level productivity. Leveraging a staggered difference‐in‐differences research design, we find that the implementation of the CLS significantly enhances firm‐level TFP. The effect is more pronounced when provincial officials serve as chain leaders, when state‐owned enterprises (SOEs) act as chain masters, and in regions characterised by strong financial and economic developments. Moreover, productivity gains are especially salient in technology‐intensive sectors, highly competitive industries, non‐SOEs, and firms with a high degree of specialisation. Mechanism analysis further reveals that the CLS strengthens industrial chain integration, reduces coordination costs, alleviates financing constraints, improves access to commercial credit, and promotes R&D investment and collaborative innovation. These findings highlight the effectiveness of structured PPP mechanisms in improving industrial governance and fostering productivity in emerging economies.\n"]

March 17, 2026 doi: 10.1002/ijfe.70198 open full text
Revisiting and Extending Our Understanding of Market Responses to Unconventional Monetary Policy.
Yong Joo Kang, Young Ho Eom, Woon Wook Jang.
International Journal of Finance & Economics. March 16, 2026

["International Journal of Finance &Economics, EarlyView. ", "\nABSTRACT\nWe revisit and extend Hattori et al. by quantitatively assessing the magnitude and direction of market responses to the US Federal Reserve's expansionary unconventional monetary policy announcements during the 2008 global financial crisis. Unlike Hattori et al., who examined the equity tail risk, we extend their analysis by investigating the impact on market participants' risk aversion using the real‐world probability density obtained via the Ross recovery theorem. Risk aversion is proxied using the variance and skew risk premiums that are obtained from higher moments of both the real‐world and risk‐neutral distributions. We show that expansionary unconventional monetary policy announcements had a significant mitigating effect on risk aversion. Furthermore, we show that quantitative easing announcements had a more significant impact on risk aversion than forward guidance announcements. This provides quantitative support regarding the difference in transmission channels between than forward guidance and quantitative easing announcements.\n"]

March 16, 2026 doi: 10.1002/ijfe.70192 open full text
Can Banking Intermediates Crowd Out Their High‐Tech Promising Successors? A Financial Stress Perspective.
Nikolaos A. Kyriazis, Konstantinos A. Dimitriadis, Panayiotis Theodossiou.
International Journal of Finance & Economics. March 15, 2026

["International Journal of Finance &Economics, EarlyView. ", "\nABSTRACT\nThis study examines the evolving relationship between large U.S. Financial institutions and Big Tech firms amid rising financial stress driven by global crises, including the COVID‐19 pandemic, the Russia‐Ukraine war, and inflationary shocks. Using weekly data from January 2013 to December 2024, the study employs the Quantile‐VAR (Q‐VAR) framework and the Financial Stress Index (FSI) to evaluate net pairwise and extended joint connectedness across various market regimes. Findings reveal that most Big Tech stocks affect financial stress but this reverses in bull markets. Bank stocks’ causal footprint on financial stress is obvious in all conditions and Morgan Stanley concentrates and leads systemic causality in bull markets. Overall, Big Tech stocks display weaker connection with the FSI but play a major role in bear markets, the Covid‐19 and the Russia‐Ukraine war crises. The results suggest that technology firms are poised to play an increasingly dominant role in financial intermediation, potentially merging with or replacing traditional banks, especially during future crises, offering critical insights for investors, regulators, and policymakers.\n"]

March 15, 2026 doi: 10.1002/ijfe.70183 open full text
Pre‐ and Post‐COVID Digital Financial Service Adoption and Income Inequality: A Disaggregated Analysis Based on Education and Geography.
Romanus Osabohien, Oluwayemisi Kadijat Adeleke, Ngwengeh Brendaline Beloke, Musa Abdu, Mamdouh Abdulaziz Saleh Al‐Faryan.
International Journal of Finance & Economics. March 14, 2026

["International Journal of Finance &Economics, EarlyView. ", "\nABSTRACT\nThe COVID‐19 pandemic has accelerated the adoption of digital financial services (DFS), but its impact on income inequality remains underexplored, especially when considering the role of education and geography. This study investigates the implications of COVID‐19 driven digital financial service adoption, educational level on income inequality, with a specific focus on the unique dynamics within Central Africa (Cameroon), Southeast Asia (Malaysia), and West Africa (Nigeria). Using the Global Financial inclusion data, the study engaged the logit and marginal effect regression. Result shows that digital financial transactions (DFTs), particularly digital payments made is a significant driver of upward income mobility across Nigeria, Cameroon, and Malaysia, both before and after COVID‐19. Also, the pandemic increased existing inequalities along gender and education lines but improved financial digitization, thereby raising the effects of digital payments on upward income mobility from 14 to 15 percentage points pre‐COVID to 18–22 percentage points post‐COVID. The findings further show that the individuals' ability to convert digital access into income gains was significantly contingent upon gender, educational level, and location. Educated individuals and urban residents benefited more from financial digitization in terms of upward income mobility, whereas women recorded stronger income gains post‐COVID, suggesting narrowing gaps in digital finance benefits. However, receiving digital payments showed more context‐specific effects, significant in Cameroon pre‐COVID and in Nigeria post‐COVID, highlighting variation in remittances, social transfers, and institutional responses. The study concludes by recommending present and future financial digitalization policies which would help prioritise the provision and security of digital payment technologies. Also, the policies must move beyond accelerating access to strengthening digital capability. Likewise, given the significant gains recorded by women, policies must continue to support female digital inclusion through tailored interventions including gender‐responsive financial products and women‐focused outreach. Lastly, the significant urban–rural divide requires massive public investment in closing the digital infrastructure gap.\n"]

March 14, 2026 doi: 10.1002/ijfe.70184 open full text
Impact of Sovereign Debt Maturity on Fiscal Sustainability.
António Afonso, José Alves, Oļegs Matvejevs, Oļegs Tkačevs.
International Journal of Finance & Economics. March 14, 2026

["International Journal of Finance &Economics, EarlyView. ", "\nABSTRACT\nThis study is the first to investigate the impact of the term structure of public debt on fiscal sustainability. We adopt the widely used backward‐looking measure of fiscal sustainability—fiscal responsiveness as proposed by Bohn. Using data from De Graeve and Mazzolini and focusing on a sample of 19 most developed countries, we demonstrate that sovereign borrowing with maturity above 10 years significantly reduces fiscal responsiveness. Conversely, public debt with maturity between 3 and 5 years is associated with the highest responsiveness of the primary balance to public debt. The findings indicate that the increase of long‐term public debt since the beginning of this century has contributed to reducing fiscal responsiveness by half. Furthermore, unconventional monetary policy, by suppressing yields at longer maturities, has likely played a key role in the discovered relationship.\n"]

March 14, 2026 doi: 10.1002/ijfe.70193 open full text
Do Credit Ratings Matter for Stock Price Crash Risk? New Evidence From China.
Chien‐Chiang Lee, Yizhong Wu, Chi‐Chuan Lee, Diyun Peng.
International Journal of Finance & Economics. March 12, 2026

["International Journal of Finance &Economics, EarlyView. ", "\nABSTRACT\nThrough a large sample of China's firms, this research assesses whether and how firms' credit ratings affect future stock price crash risk (SPCR). Evidence reveals that credit ratings can negatively affect SPCR. The negative effect is consistently more pronounced when stock price synchronisation is higher and is stronger in firms with low institutional investor shareholding, suggesting that domestic credit rating agencies have the potential to enhance the information environment while simultaneously reducing regulatory costs. Moreover, the impact is more pronounced for firms with low media coverage, firms with low audit quality, and in state‐controlled firms. Through our research, policymakers and investors should pay more attention to credit ratings that help play the information intermediary role of credit rating agencies.\n"]

March 12, 2026 doi: 10.1002/ijfe.70190 open full text
The Shielding Effect of Foreign Managers: Evidence From Chinese Listed Companies During the U.S.‐China Trade War.
Bo Pu, Tong Qi, Jiezhou Ying.
International Journal of Finance & Economics. March 10, 2026

["International Journal of Finance &Economics, EarlyView. ", "\nABSTRACT\nThis study applies a difference‐in‐differences approach to evaluate the impact of managers' foreign experience on the long‐term performance of firms during the U.S.‐China trade war. Empirical evidence indicates that Chinese publicly listed firms with American managers outperform their counterparts. They exhibit higher total assets, investment, and operational efficiency after the trade war. This pattern is not observed among managers from other countries. Further investigation reveals that firms affected by U.S. policy, including those in high‐tech sectors and state‐owned enterprises, do not gain advantages from the presence of American managers. The baseline effects differ among firms based on their varying degrees of foreign exposure. The effects increase when firms undertake exports and direct investment in the United States and have larger foreign shareholdings. Moreover, our findings indicate that American managers maintain relationships with U.S. customers after the trade war, enabling firms to mitigate the adverse impacts more effectively.\n"]

March 10, 2026 doi: 10.1002/ijfe.70162 open full text
Alleviating Related Party Transactions Through Corporate Social Responsibility.
Muhammad Usman, Alaa Mansour Zalata, Ammar Ali Gull, Nanyan Dong.
International Journal of Finance & Economics. March 10, 2026

["International Journal of Finance &Economics, EarlyView. ", "\nABSTRACT\nUsing a sample of Chinese firms from 2010 to 2021, we examine whether corporate social responsibility (CSR) influences firms' propensity to engage in related‐party transactions (RPTs)—an intriguing yet underexplored relationship. We find robust evidence that CSR‐oriented firms are less likely to permit RPTs. Our results further indicate that RPTs conducted by more CSR‐oriented firms are viewed favourably by the market and are associated with higher subsequent market value. In contrast, RPTs among other firms correlate with reduced market value, suggesting that CSR‐oriented firms only allow efficient RPTs to meet legitimate needs and align with strategic value‐maximisation objectives. Additional analysis reveals that ownership structure and firm‐level governance quality moderate the CSR‐RPTs relationship. These findings remain robust to alternative RPT measures and are not driven by endogeneity concerns.\n"]

March 10, 2026 doi: 10.1002/ijfe.70177 open full text
Corporate Sustainability Practices, Governance, and Risk‐Taking: Global Evidence.
Tanveer Bagh, Elie Bouri, Hammad Riaz, Kainat Iftikhar.
International Journal of Finance & Economics. March 10, 2026

["International Journal of Finance &Economics, EarlyView. ", "\nABSTRACT\nThis study investigates the effect of environmental, social, and governance performance (ESGP) on corporate risk‐taking (CRT) in a sample of 8492 firms from 52 countries over the period 2011–2023. Using a robust methodology comprising high‐dimensional fixed effects, propensity score matching, generalised method of moments, and instrumental variables, our results show the following. Firstly, firms with higher environmental, social, and governance (ESG) standards are less inclined to take excessive business risks, and this association strengthens through strong internal and external corporate governance mechanisms. Secondly, ESGP alleviates financing constraints and improves audit reputation and transparency, enhancing ESGP's impact on CRT. Thirdly, regional and country‐specific factors such as ESG disparities, institutional quality, ownership structures, ESG readiness, and levels of development play an important role in shaping the effectiveness of ESG across diverse contexts. The study further decomposes total firm risk into systematic and idiosyncratic components using asset pricing models, revealing that firms with high ESGP exhibit lower beta, reduced idiosyncratic risk, and lower Fama–French three‐factor idiosyncratic risk levels. This supports the view that ESGP enhances corporate resilience, reduces uncertainty, and serves as an effective tool for managing both market‐wide and firm‐specific risks. Our study extends the corporate sustainable finance, governance, and risk management literature, offering crucial policy insights aligned with the global sustainable development agenda.\n"]

March 10, 2026 doi: 10.1002/ijfe.70187 open full text
Media Scrutiny, Monitoring and Corporate Financialisation: How Media Shapes Corporate Financialisation in China.
Simeng Lyu, Muneer M. Alshater, Siyuan Zhao, Yuanyuan Guo, Yanshuang Li.
International Journal of Finance & Economics. March 08, 2026

["International Journal of Finance &Economics, EarlyView. ", "\nABSTRACT\nDoes media coverage encourage or restrain corporate financialisation in emerging markets? Focusing on China, and contrary to common assumptions, this study demonstrates that media coverage significantly inhibits corporate financialisation, particularly amid policies prioritising the ‘real economy’. This core finding withstands extensive robustness checks. Using a quantitative content analysis of media coverage of Chinese non‐financial companies and regression analysis using data from 2008 to 2022, we propose and find evidence for two underlying mechanisms: media coverage enhances external monitoring and operational efficiency within firms. The inhibitory impact is amplified for state‐owned enterprises (SOEs), companies located in the eastern region, and firms operating under high competitive pressure. Notably, this impact is primarily driven by positive media coverage, which emerges as the key factor behind the suppression of corporate financialisation. This research provides novel empirical evidence on the disciplinary role of media in curbing corporate financialisation within a major emerging market, contributing significantly to the literature on corporate finance and media economics.\n"]

March 08, 2026 doi: 10.1002/ijfe.70145 open full text
Researcher–Entrepreneur Relationship and Performance of Innovative Startups.
Yangguang Huang, Helen Hui.
International Journal of Finance & Economics. March 04, 2026

["International Journal of Finance &Economics, EarlyView. ", "\nABSTRACT\nMany innovative startups are joint ventures between researchers and entrepreneurs, who collaborate in R&D and product commercialization. Government policies such as grants, subsidies, and patent licensing fees act as Pigouvian subsidies, incentivizing R&D by bridging the gap between the social and private returns of innovation. However, these subsidies may inadvertently strengthen the researcher's bargaining power within the researcher–entrepreneur relationship, leading to reduced research effort and skewed equity allocation that can undermine startup performance. Our findings suggest that addressing both external market failures and internal researcher–entrepreneur frictions requires a comprehensive policy portfolio. Conventional Pigouvian subsidies to innovation must be complemented with policies on startup governance and the entrepreneur labor market.\n"]

March 04, 2026 doi: 10.1002/ijfe.70171 open full text
Technological Evolution in Fintech: A Decadal Scientometric and Systematic Review of Developments and Criticisms.
Muhammad Imran Qureshi, Nohman Khan.
International Journal of Finance & Economics. March 03, 2026

["International Journal of Finance &Economics, EarlyView. ", "\nABSTRACT\nThis study aims to classify pivotal fintech innovations and explore the prospects and pitfalls associated with emerging fintech services extensively discussed in the literature. We conducted a multistage systematic review of research published on fintech over the past decade from a technological perspective. Using the Preferred Reporting Items for Systematic Reviews and Meta‐Analyses (PRISMA) framework, we meticulously selected 947 records for a scientometric analysis of fintech research. This analysis revealed four main literature clusters based on keyword co‐occurrence identified through R software: blockchain technology and cryptocurrency, financial inclusion, peer‐to‐peer (P2P) technologies, and artificial intelligence, aligned with developments in fintech. Subsequently, a systematic literature review was performed within each cluster. After applying rigorous inclusion and exclusion criteria, 121 research articles from Scopus and Web of Science (WoS) databases were included for the second stage of the systematic review and synthesis. The findings highlight that fintech plays a crucial role in promoting economic growth, reducing poverty, and addressing income inequality, particularly in low‐income groups, while facing significant regulatory and technological challenges. Ethical considerations and robust regulatory frameworks are essential for sustainable development, especially in blockchain and cryptocurrency sectors, where concerns over security, trust, and skilled human support are prevalent.\n"]

March 03, 2026 doi: 10.1002/ijfe.70180 open full text
Household Consumption Intentions by Income Group During Monetary Policy Easing and Tightening.
Helder Ferreira de Mendonça, Daniel Pereira dos Anjos.
International Journal of Finance & Economics. February 27, 2026

["International Journal of Finance &Economics, EarlyView. ", "\nABSTRACT\nWe investigate how the monetary policy interest rate affects Brazilian households' consumption intentions under two distinct regimes: monetary easing and tightening cycles. Using data from low‐ and high‐income households, we assess both the magnitude and the dynamics of this relationship. Overall, the evidence highlights two central findings. First, during the easing cycle, increases in the policy rate reduce households' consumption intentions, with a stronger effect among high‐income households. Second, during the tightening cycle, the relationship between the policy rate and consumption intentions becomes positive, and the divergence across income groups widens. We also document a temporal asymmetry: Under the easing cycle, the impact of a policy rate increase fades within 6 months, whereas during the tightening cycle, the effects of rate hikes persist for up to 12 months. These findings underscore the state‐dependent and income‐level dimensions of monetary transmission.\n"]

February 27, 2026 doi: 10.1002/ijfe.70188 open full text
Heterogeneous Market Efficiency in Cryptocurrency Markets: A Multi‐Frequency Memory‐Based Approach.
Shuyue Li, Tapas Mishra, Larisa Yarovaya.
International Journal of Finance & Economics. February 26, 2026

["International Journal of Finance &Economics, EarlyView. ", "\nABSTRACT\nEmpirical cryptocurrency researchers frequently use concepts of mean reversion, trend and cointegration to characterise price dynamics and tests of market inefficiency. This paper introduces a broader memory‐driven framework to examine how the concept of market efficiency has evolved over time, especially by characterising varied mean‐reversion strategies with slow‐paced error corrections to identify a semi‐strong market efficiency in crypto markets. We find strong evidence that market efficiency in Bitcoin (BTC) and Ethereum (ETH) is heterogeneous and time‐varying across all frequencies. Event shocks and structural breaks exert substantial influence on abrupt changes in efficiency, while results at the 240‐min sampling interval show robustness. The findings suggest that policymakers should time interventions to mitigate lag effects, release policy during low‐leverage periods and closely monitor the two distinct waves of efficiency breaks as well as cross‐frequency risk exposure. For practitioners, linking efficiency dynamics to trading strategies can enhance risk management and statistical arbitrage opportunities, while scholars can build advanced regime‐switching models informed by these empirical patterns. This paper provides new insight into price patterns and market efficiency dynamics, contributing to the understanding of the complex interplay between event shocks, structural breaks and regime switching of market efficiency in cryptocurrency markets.\n"]

February 26, 2026 doi: 10.1002/ijfe.70179 open full text
What Can We Learn From Energy Consumption on Excess Stock Return Prediction?
Fei Lu, Feng Ma, M. I. M. Wahab.
International Journal of Finance & Economics. February 25, 2026

["International Journal of Finance &Economics, EarlyView. ", "\nABSTRACT\nStock market return prediction has long been a focal point within the realm of financial research. This study introduces a novel series of energy consumption indicators, predicated on economic constraints, to forecast stock market excess returns. Empirical results indicate that these newly constructed indicators are instrumental in predicting excess returns. Moreover, the combination models consistently outperform other competing models, especially under the constraint method based on the Sharpe ratio. We also highlight that energy consumption indicators maintain robust performance during periods of financial turbulence, such as the financial crisis and the COVID‐19 pandemic, with a notable emphasis on non‐renewable energy consumption from the commercial sector. Our findings offer valuable insights into forecasting stock market returns from an energy consumption perspective.\n"]

February 25, 2026 doi: 10.1002/ijfe.70174 open full text
Does Climate Finance Influence Environmental Sustainability?
Monica Singhania, Renuka Prasad.
International Journal of Finance & Economics. February 25, 2026

["International Journal of Finance &Economics, EarlyView. ", "\nABSTRACT\nClimate Finance has gained prominence as a vital instrument to support the global transition towards environmental sustainability. While existing studies primarily emphasise carbon dioxide reduction, relatively little is known about how climate finance affects broader ecological outcomes and the role of adaptation finance. This study examines the influence of climate finance—disaggregated into mitigation and adaptation flows—on multiple sustainability indicators across 33 Asian economies from 2000 to 2021. Environmental outcomes are measured through carbon dioxide, methane and nitrous oxide emissions, as well as the ecological footprints and the load capacity factor, thereby providing a multidimensional view of sustainability. To address endogeneity and dynamic effects, the analysis employs a dynamic panel approach using the two‐step system generalised method of moments. The results indicate that climate finance significantly reduces methane and nitrous oxide emissions, while enhancing the load capacity factor; its effects on carbon dioxide emissions and the ecological footprint remain limited. Adaptation finance has a stronger positive impact on ecological sustainability than mitigation finance, underscoring the importance of a balanced allocation between the two components. Economic growth, trade openness and industrial activity continue to increase environmental pressures, which calls for stronger governance frameworks and improved institutional mechanisms to ensure effective use of climate finance. By extending the scope beyond CO2‐centric analyses and distinguishing between mitigation and adaptation flows, this study contributes fresh evidence to the climate finance literature. The findings carry important implications for policymakers, emphasising the need to align financial allocations with the Paris Agreement and Sustainable Development Goals to achieve lasting sustainability outcomes.\n"]

February 25, 2026 doi: 10.1002/ijfe.70181 open full text
Two Shades of Green? Gender Differences in Environmental Concern and Activism.
Hava Orkut, Caroline Perrin.
International Journal of Finance & Economics. February 25, 2026

["International Journal of Finance &Economics, EarlyView. ", "\nABSTRACT\nThis study examines gender differences in environmental concern and activism using data from the World Values Survey. The results indicate that women are more likely than men to be concerned about the environment, but are less likely to engage in environmental activism. The study further explores potential channels underlying women's lower participation in environmental activism and shows that women tend to prioritise non‐environmental causes in their leisure time. Moreover, family responsibilities and work commitments limit women's ability to translate environmental concern into activism, reinforcing the concern–action gap. These results highlight a prioritisation effect, whereby women reallocate civic engagement toward more role‐congruent activities, such as women's groups, rather than disengaging per se.\n"]

February 25, 2026 doi: 10.1002/ijfe.70172 open full text
The Relationship Among Climate Policy Uncertainty and Energy Markets: Fossil Versus Renewable and Low‐Carbon Assets.
Dimitrios Asteriou, Anastasia Dimiski.
International Journal of Finance & Economics. February 24, 2026

["International Journal of Finance &Economics, EarlyView. ", "\nABSTRACT\nThis paper investigates the intricate relationship between climate policy uncertainty (CPU) and energy market dynamics, focusing on fossil‐based and renewable/low‐carbon energy assets. Utilising a comprehensive dataset spanning from April 1987 to December 2023, comprising monthly observations of CPU, stock market returns, spot oil prices and various energy commodity futures, we employ time series regressions to analyse the effects of CPU on market returns. Our findings reveal that fossil‐based energy assets are significantly and negatively impacted by changes in CPU, while renewable and low‐carbon energy assets exhibit minimal or negligible effects. Moreover, we identify a heightened negative impact of CPU during periods of increased uncertainty, underscoring investor sensitivity to abrupt spikes in climate policy uncertainty, particularly in fossil‐based energy sectors. Robustness analysis confirms the efficacy of the CPU index as a reliable indicator, emphasising the importance of using comprehensive metrics to assess the influence of climate policy uncertainty on financial markets. Our study underscores the necessity for policymakers and industry stakeholders to recognise the implications of climate policy uncertainty on energy markets and prioritise efforts to establish clear and consistent policy frameworks to facilitate the transition to a more sustainable energy landscape.\n"]

February 24, 2026 doi: 10.1002/ijfe.70186 open full text
On the Role of the European Banking Sector in Mitigating Climate Change.
John Hlias Plikas, Dimitrios Kenourgios.
International Journal of Finance & Economics. February 24, 2026

["International Journal of Finance &Economics, EarlyView. ", "\nABSTRACT\nWe explore the role of the European banking sector in mitigating climate change through five transmission channels: (1) Banking Sector; (2) Environmental; (3) Economic; (4) Social and (5) Governance, considering both the direct and indirect effects. Utilising bank‐level data from 2010 to 2023, covering 77 banks under the Single Supervisory Mechanism (SSM) across 19 EU countries, we identify key drivers influencing carbon footprint. Direct effects through the banking sector channel reveal that the carbon footprint of bank loans, NPL ratio, bank capital to asset and loan disbursements contribute to carbon footprint, while bank regulatory capital to risk‐weighted assets, green bonds and return on assets reduce it. Bank capital and return on assets emerge as pivotal factors since they can be utilised in driving eco‐friendly investments. Regarding the indirect effects, through the environmental channel, energy consumption contributes to carbon footprint, while environmental protection investments of the total economy and renewable energy consumption reduce it. Through the economic channel, economic growth (GDP) and consumption of goods and services increase the carbon footprint. In the social channel, income inequality also contributes to the carbon footprint. Finally, the strength of the legal rights index, operating through the governance channel, reduces the carbon footprint.\n"]

February 24, 2026 doi: 10.1002/ijfe.70182 open full text
Time Varying Efficiency and Asymmetric Extreme Risk Spillover Effects: Evidence From the Chinese and US Stock Markets.
Wenhao Xie, Guangxi Cao.
International Journal of Finance & Economics. February 23, 2026

["International Journal of Finance &Economics, EarlyView. ", "\nABSTRACT\nIn this study, we employ the term Adjusted Market Inefficiency Magnitude (AMIM) to quantify the efficiency of the Chinese and American stock markets and further use the conditional quantile‐based connectedness approach to investigate the extreme risk spillover between the Chinese and American stock markets under different shock scales. Our results show that the stock markets in China and the United States are efficient for most periods, and the efficiency has time‐varying characteristics. Extreme events have a certain impact on the efficiency. The risk spillover from the US stock market to the Chinese stock market dominates and exhibits time‐varying characteristics. The Chinese stock market has stronger external spillover ability during extreme rises, while the US stock market has stronger external spillover ability during extreme declines. The total spillover index and directional spillover index exhibit a U‐shaped characteristic under different quantiles. The spillover‐out (spillover‐in) level in extreme states is stronger than that in normal states, and the spillover effects in extreme rising and falling states are asymmetric, with a larger total spillover level in extreme falling states. The impact of the COVID‐19 and the Russia‐Ukraine war on extreme risk spillovers between the Chinese and American stock markets is very weak. These findings offer valuable insights for financial regulators in systemic risk mitigation and for investors in strategic asset allocation.\n"]

February 23, 2026 doi: 10.1002/ijfe.70185 open full text
An Investigation of the Relationship Between Central Bank Unconventional Monetary Policy and Bitcoin Activity.
Niamh Wylie, Martha O'Hagan‐Luff.
International Journal of Finance & Economics. February 23, 2026

["International Journal of Finance &Economics, EarlyView. ", "\nABSTRACT\nThis article investigates whether the unconventional monetary policy (UMP) measures pursued by the Federal Reserve, the Bank of England, the Bank of Japan, and the European Central Bank since the Global Financial Crisis (GFC) are associated with an appetite for cryptocurrency. Previous studies, which almost exclusively focus on the relationship between cryptocurrency price effects and UMP, do not find evidence to support this relationship, but cryptocurrency prices have been found to be heavily manipulated. This research extends beyond price effects by examining underlying activity metrics for the most established cryptocurrency, bitcoin. It uses a novel dataset sourced from Twitter (rebranded X) to capture the reaction by social media users to UMP activity by the main central banks. Applying ARDL‐OLS modelling, we find evidence to support a significantly positive relationship between social media attention surrounding Quantitative Easing and Negative Interest Rate Policy and bitcoin‐related activity, and consistent with previous studies, no association with bitcoin returns. Our results may imply that perceived interference in the fiat monetary system is connected to the growing network effect of bitcoin, in part as a resistance movement against the power of institutional authority, reflecting an erosion of trust in central banks. Policy implications are discussed.\n"]

February 23, 2026 doi: 10.1002/ijfe.70175 open full text
The Effects of International Board Diversity on Working Capital.
Ofra Bazel‐Shoham, Matthew Imes, Zaheer Khan, Amir Shoham, Shlomo Y. Tarba.
International Journal of Finance & Economics. February 23, 2026

["International Journal of Finance &Economics, EarlyView. ", "\nABSTRACT\nBy focusing on working capital ratios, this paper examines the impact of international board diversity on the firm's working capital. This study is based on an S&P 1500 index sample of 13,716 firm‐year observations drawn between 2005 and 2025. The findings show that the presence of international directors on corporate boards reduces working capital ratios. The results are robust to a battery of empirical tests, including a novel instrumental variable test of the first pronoun drop in the languages spoken in the county where the corporation is headquartered. In addition, we find that the channel by which board international diversity impacts working capital holdings is the institutional collectivist culture of the directors' home country. This finding is consistent with Cushion Theory, which assumes that culturally collective societies tend to take higher risks than individualistic ones.\n"]

February 23, 2026 doi: 10.1002/ijfe.70178 open full text
Corporate Climate Risk and Greenwashing Behaviour: Evidence From China.
Jilong Chen, Yikai Han, Yating Li, Cunwei Sha, Yang Zhao.
International Journal of Finance & Economics. February 18, 2026

["International Journal of Finance &Economics, EarlyView. ", "\nABSTRACT\nWith the growing severity of environmental challenges, climate risk and ESG information disclosure have emerged as critical issues in contemporary corporate governance. This paper examines the impact of climate risk on corporate greenwashing, using panel data from Chinese A‐share listed firms during 2009–2022. We provide causal evidence that higher climate risk significantly increases the likelihood of greenwashing. Mechanism tests show that this effect operates through multiple channels, including higher cost of equity capital, weakened supply chain stability, intensified regulatory scrutiny, and heightened stakeholder pressure. Moreover, we find that environmental regulation positively moderates this relationship, revealing unintended consequences of policy interventions. Heterogeneity analysis further indicates that the impact of climate risk on greenwashing is stronger among firms that are less environmentally friendly, with fewer female directors, greater institutional ownership, stronger analyst attention, and higher baseline levels of greenwashing. These findings enrich the literature on climate finance and ESG disclosure by identifying climate risk as a driver of greenwashing. They also offer practical implications for regulators, capital markets, and corporate governance in curbing greenwashing and promoting credible sustainable practices.\n"]

February 18, 2026 doi: 10.1002/ijfe.70176 open full text
Drivers of Cashless Payment Decision in Vietnam.
Chi H. P. Ho, Kiet T. Nguyen, Tu D. Quach, Vang Q. Dang.
International Journal of Finance & Economics. February 18, 2026

["International Journal of Finance &Economics, EarlyView. ", "\nABSTRACT\nWhile sufficient infrastructure is a prerequisite for a cashless economy, understanding what drives individuals to choose cashless payment methods over cash at points of sale where both options are available remains underexplored. This study investigates the factors influencing cashless payment decisions in Vietnam, a developing country where cash dominates, accounting for 86% of transactions. Using survey data from 405 individuals in Ho Chi Minh City and Can Tho City, collected pre‐COVID‐19, the research applies conditional logistic regression to analyse choices across six common points of sale venues offering both payment options. Results reveal that younger individuals under 40 years old, women, higher‐income earners, students, office workers, and those who trust in payment safety are more likely to opt for cashless methods. Unlike prior studies that focus on specific payment tools, such as credit cards, this paper examines all cashless forms, offering a broader perspective. The findings suggest policies to enhance trust, target youth, and incentivise businesses, contributing to Vietnam's digital economy goals.\n"]

February 18, 2026 doi: 10.1002/ijfe.70173 open full text
Risk Transmission and Co‐Movements Between Financial Markets and Commodity Markets in the COVID‐19 Period.
V. Moutinho, H. Oliveira, M. Neves, J. Monteiro.
International Journal of Finance & Economics. February 18, 2026

["International Journal of Finance &Economics, EarlyView. ", "\nABSTRACT\nThis study examines risk transmission and co‐movements between financial markets (G7 countries and China) and commodity markets (gold and oil) during the COVID‐19 crisis. Daily closing prices for major equity indices (CAC40, CSI300, DAX30, FTSE100, MIB, NIKKEI, TSX and S&P500) and futures prices for gold, brent and WTI were analysed using DCC–MGARCH, VaR and CoVaR models. The results indicate that oil markets (WTI and brent) faced the highest risk exposure, underscoring their vulnerability to extreme economic shocks, while gold, despite some sensitivity, generally acted as a safe‐haven asset. CoVaR analysis revealed significant systemic risk transmission, with gold amplifying risk for European indices (FTSE and CAC40) and energy markets showing even stronger spillovers, particularly with the CSI. At the 1% confidence level, Asian markets like CSI and Nikkei demonstrated the highest sensitivity to commodity price shocks, while S&P 500 exhibited the lowest, reflecting the diversification benefits of mature financial markets.\n"]

February 18, 2026 doi: 10.1002/ijfe.70160 open full text
How Does International Investment Affect National Innovation?
Shufeng Cong, Lee Chin, Sanjar Mirzaliev, Piratdin Allayarov, Huiyu Zheng.
International Journal of Finance & Economics. February 13, 2026

["International Journal of Finance &Economics, EarlyView. ", "\nABSTRACT\nThis paper examines the impact of international investment on national innovation, focusing on the role of inward foreign direct investment (IFDI), outward foreign direct investment (OFDI), and two‐way foreign direct investment (DFDI). Analysis of cross‐country panel data from 2011 to 2023 using the double machine learning method reveals that IFDI significantly promotes national innovation through technology transfer and competitive pressure. In contrast, OFDI and DFDI demonstrate a more limited direct impact on innovation. The results of propensity score matching–difference‐in‐differences show that ASEAN's Regional Comprehensive Economic Partnership policies boost national innovation. Additionally, mechanism tests show that economic freedom moderates the relationship between international investment and national innovation. Greater economic freedom alleviates market access barriers and promotes the integration of foreign investment into the local innovation ecosystem, thereby amplifying the positive impact of IFDI. The analysis also points out that the relationship between international investment and innovation varies across regions and levels of development, with the impact of IFDI being stronger in developing countries and Asian countries. The study therefore emphasises the importance of tailoring international investment strategies to specific economic and regional circumstances to maximise their contribution to national innovation. Policymakers should focus on improving the quality of inward investments, supporting outward investment for technology acquisition, and promoting a balanced two‐way investment system to ensure innovation‐driven growth.\n"]

February 13, 2026 doi: 10.1002/ijfe.70170 open full text
Stringent Financial Regulation and the Upgrading of Corporate Labour Skill Structures.
Guoyue Zhu, Zhaojie Xue, Yunsheng Mi.
International Journal of Finance & Economics. February 12, 2026

["International Journal of Finance &Economics, EarlyView. ", "\nABSTRACT\nAs China's first unified financial regulatory policy, the effectiveness of the New Asset Management Regulations (NAMR) remains to be fully explored. Although existing literature has examined the economic consequences of NAMR implementation, limited attention has been paid to its impact on labour skill structures. High‐quality human capital is the core driving force behind the development of real‐sector firms' main businesses and serves as crucial evidence for evaluating the effectiveness of NAMR implementation. This study investigates the impact of NAMR on firms' labour skill structures using data from Chinese A‐share listed companies from 2014 to 2021, employing a difference‐in‐differences model. The findings indicate that NAMR implementation has promoted the upgrading of firms' labour skill structures. This effect is more pronounced in firms led by CEOs with financial backgrounds, in non‐state‐owned enterprises, and in regions with higher levels of marketization. Mechanism analysis reveals that NAMR promotes the upgrading of firms' labour skill structures through the ‘financing constraint effect’ and the ‘investment substitution effect’. Furthermore, the enhancement of labour skill structures following NAMR implementation is found to further improve firm value and productivity. These findings provide meaningful insights for policymakers and stakeholders seeking to strengthen financial regulation and promote high‐quality corporate development.\n"]

February 12, 2026 doi: 10.1002/ijfe.70169 open full text
Crypto‐Climate Dynamics: Unveiling the Link Between Environmental Attention and Market Uncertainties Through Time‐Frequency Quantile Analysis.
Brahim Gaies, Najeh Chaâbane, Nadia Arfaoui, Jean‐Michel Sahut.
International Journal of Finance & Economics. February 12, 2026

["International Journal of Finance &Economics, EarlyView. ", "\nABSTRACT\nThis paper explores the relationship between the Cryptocurrency Environment Attention Index (ICEA) and the level of uncertainty in the cryptocurrency market, including cryptocurrency price uncertainty and cryptocurrency policy uncertainty. We apply the wavelet coherence method, the novel quantile coherency technique introduced by Baruník and Kley, and a quantile‐on‐quantile regression analysis to a sample of data ranging from 2 January 2014 to 30 December 2022. Findings indicate that, in the near term, ICEA can exacerbate uncertainty in the cryptocurrency market due to news events and social media discourse concerning environmental issues associated with cryptocurrencies. In the medium run, pricing and policy uncertainties in the cryptocurrency market may attract public scrutiny about environmental concerns, resulting in regulatory discussions and modifications. The findings indicate that the correlation between environmental concerns over cryptocurrencies and uncertainties in the crypto market demonstrates a more consistent and enduring trend over the long run. Our analysis uncovers dynamic and asymmetric bidirectional effects between ICEA and cryptocurrency uncertainty indices, particularly pronounced during bullish market regimes, a dimension not previously explored in the literature. Methodologically, our choice to employ wavelet coherence, quantile coherency and quantile‐on‐quantile regression is deliberate. Unlike traditional cointegration or linear approaches, which can only reveal average or long‐term equilibrium relationships, these frequency‐ and quantile‐based tools capture the asymmetric, time‐varying and tail‐dependent co‐movements between ICEA and cryptocurrency uncertainty. This methodological design is thus directly aligned with the volatile and non‐linear nature of cryptocurrency markets, where extreme events and regime shifts are central features.\n"]

February 12, 2026 doi: 10.1002/ijfe.70128 open full text
Can Digital Financial Inclusion Improve Pension Insurance Coverage: An Empirical Study Based on Provincial Panel Data in China.
Qiyin Zhang, Can Huang, Xiaoxia Wang.
International Journal of Finance & Economics. February 09, 2026

["International Journal of Finance &Economics, EarlyView. ", "\nABSTRACT\nThis study empirically investigates the impact of digital financial inclusion (DFI) on basic pension insurance (PI) coverage in China using provincial panel data from 2012 to 2022. Facing increasing pressure from an ageing population, China's pension system is challenged by financial constraints and inadequate contribution density and weak contribution compliance, for which DFI is explored as a potential solution. We measure DFI using the Peking University Digital Financial Inclusion Index, which includes coverage breadth, usage depth, and digitization level. Basic pension insurance coverage is measured by the number of insured individuals. Employing a two‐way fixed‐effects model and a one‐period lagged DFI as an instrumental variable to address endogeneity, our findings reveal that DFI expansion significantly increases basic PI coverage. Robustness checks, including variable substitution and sample interval adjustment, confirm these results. Heterogeneity analysis indicates varied DFI effects across income levels and regions. A key contribution is identifying labour productivity as a significant mechanism through which DFI enhances PI coverage. This study offers novel theoretical insights and practical implications for policymakers addressing pension security in ageing societies, particularly highlighting the differentiated regional impacts.\n"]

February 09, 2026 doi: 10.1002/ijfe.70168 open full text
The Effect of CSR Report Similarity on CSR Performance.
Yiqing Tan.
International Journal of Finance & Economics. February 08, 2026

["International Journal of Finance &Economics, EarlyView. ", "\nABSTRACT\nThis study explores the effect of corporate social responsibility (CSR) report similarity on CSR performance. Using a dataset of Chinese companies, this research shows that CSR performance improves with an increasing degree of CSR report similarity. Specifically, this study reveals that this positive association is driven by reducing socially irresponsible activities and is driven by both improving external CSR and internal CSR. However, this research shows that when companies have more comparable reports, the effects of CSR practices on enhancing financial performance and decreasing the degree of stock return volatility are lower. The findings provide implications for policymakers that mandating a standardised CSR disclosure framework can harmonise reporting practices to enable stakeholders to benchmark firms effectively, thus fostering long‐term sustainability.\n"]

February 08, 2026 doi: 10.1002/ijfe.70159 open full text
Returnee Directors and Related Party Transactions.
Muhammad Abubakkar Siddique, Fangjun Wang, Alaa Mansour Zalata, Daniel Gyimah, Muhammad Usman.
International Journal of Finance & Economics. February 06, 2026

["International Journal of Finance &Economics, EarlyView. ", "\nABSTRACT\nIn this study, we investigate whether returnee directors (Chinese nationals with foreign experience serving as directors) mitigate opportunistic related party transactions (RPTs), a relatively under‐investigated area of research. Using a large dataset of Chinese listed firms, we find that firms with returnee directors are significantly less likely to engage in RPTs (especially abnormal RPTs); this is because returnee directors' international experience and relative independence enable them to serve as effective monitors. This effect is more pronounced in non‐state‐owned firms and those with weak internal governance. Notably, we find that RPTs in firms with returnee directors are associated with improved firm performance. This suggests that returnee directors, while curbing opportunistic RPTs, may facilitate efficient RPTs that enhance firm value. Furthermore, our analysis reveals that independent returnee directors exert a more significant influence in constraining RPTs compared to executive returnee directors. Our findings remain consistent after a battery of robustness tests.\n"]

February 06, 2026 doi: 10.1002/ijfe.70158 open full text
Development of an Aggregate Model for Cyber Risk Assessment Using Deep Neural Network and Structural Equation Modelling.
Steward Doss, N. Raveendran.
International Journal of Finance & Economics. February 05, 2026

["International Journal of Finance &Economics, EarlyView. ", "\nABSTRACT\nInsurers and reinsurers providing capacity to cyber insurance risks have now realised that current pricing models, though effective to date, do not accurately estimate an actuarially fair premium. Increased cyber risk exposure from connected devices, the volume of unstructured data, limited loss experience, and evolving risk complexity have contributed to the challenges of accurately modelling cyber risks. Most current models are based on reported or economic losses collected from secondary sources. The urgent need to develop a hybrid pricing model that integrates loss exposures and qualitative risk perceptions for cyber insurance policies is evident. This paper proposes a machine‐learning approach for modelling cyber risks using neural networks. We developed a model that accurately estimates the probability of loss for various cyber risks across industry segments. We developed a multilayer neural network model to predict the likelihood of cyber risk. We used a structural equation model to examine the aggregate effects of cyber risk on associated exposures. The outputs of both models can be used to estimate the organisation's financial liability and determine appropriate insurance coverage. Our findings show that system vulnerability, user awareness, and cyber risk mitigation significantly affect cyber risk exposure, and that the models' predictive ability is statistically significant. Furthermore, the results of these models were highly useful in building cyber risk resilience and developing actuarial pricing for the selected sectors or industries.\n"]

February 05, 2026 doi: 10.1002/ijfe.70166 open full text
How Does Vulnerability Framing by Microfinance Institutions Leverage Funding Success in Crowdfunding?
Ana Paula Matias Gama, Ricardo Emanuel‐Correia, Fábio Duarte, Mário Augusto.
International Journal of Finance & Economics. February 04, 2026

["International Journal of Finance &Economics, EarlyView. ", "\nABSTRACT\nThis study draws on framing theory to investigate how microfinance institutions (MFIs) strategically construct a vulnerability‐oriented organisational identity and how this framing influences their funding decisions during the pre‐campaign phase of prosocial crowdfunding. Using a unique dataset of 334,852 microloans issued by 140 MFIs across 59 countries on the Kiva platform, we distinguish between MFIs exclusively listed on Kiva and those also featured on Mix Market. Our findings reveal a pronounced funding bias among MFIs that do not emphasise vulnerability in their framing. In contrast, MFIs that adopt a prognostic vulnerability frame tend to reverse this bias—particularly those solely reliant on Kiva. While both types of MFIs demonstrate some capacity to mitigate funding inequality, the effect is significantly more pronounced among those exclusively listed on Kiva. Our results also point to a potential mission drift, possibly incentivised by Kiva's vulnerability badge system, which may reward financial stability over genuine outreach to vulnerable borrowers. Overall, the findings underscore the central role of institutional framing in shaping MFIs' funding strategies and access to capital for marginalised entrepreneurs in the pre‐campaign phase.\n"]

February 04, 2026 doi: 10.1002/ijfe.70167 open full text
Revisiting the Nexus Between Trade Liberalisation and Income Inequality: The Case of Sub‐Saharan African Countries.
Guivis Zeufack Nkemgha, Le Roi Nso Fils, Ulrich Kevin Kamwa.
International Journal of Finance & Economics. February 01, 2026

["International Journal of Finance &Economics, EarlyView. ", "\nABSTRACT\nThis paper examines the impact of trade liberalisation on income inequality across 24 Sub‐Saharan African (SSA) countries from 2000 to 2020. Using IV‐Tobit and 2SLS models, we consistently find that greater trade openness significantly exacerbates inequality in the region. Critically, we document an inverted U‐shaped relationship between trade and inequality—similar to the Laffer Curve—but this mitigating effect is only observed in high‐income, less corrupt, and democratic SSA countries. In addition, trade openness demonstrates a dual, contradictory effect on inequality: the disruptive impact on employment significantly outweighs the mitigating effect of the education channel. This disparity underscores that without robust labour market and social protection policies, the negative employment consequences of trade liberalisation will dominate the potential equalising gains from human capital development.\n"]

February 01, 2026 doi: 10.1002/ijfe.70164 open full text
Reading the Financial Stars: The Interplay of Chinese Fortune‐Telling, Western Astrology, and Investment Decisions.
Cheng Xu, Xudong He, Yanqi Sun, Min Bai.
International Journal of Finance & Economics. January 30, 2026

["International Journal of Finance &Economics, EarlyView. ", "\nABSTRACT\nThis paper explores the influence of traditional Chinese fortune‐telling and Western Astrology on investor decision‐making, specifically emphasising the indirect paths of investment through intermediaries such as entrepreneurs or fund managers. We scrutinise how fortune‐telling techniques, which purport to predict the fortunes of these intermediaries, shape investment decisions. Conducting two preregistered studies, we uncover the nuanced mechanisms that govern these indirect relationships. Study 1 demonstrates that venture capitalists' decisions are markedly influenced by both Chinese and Western fortune‐telling reports predicting the fortunes of their intermediaries, such as entrepreneurs or fund managers, whereas Study 2 reveals that individual investors in China respond only to Chinese fortune‐telling techniques that forecast the fortunes of their intermediaries, such as fund managers. Importantly, this divergence is not due to differences in awareness, as all participants underwent training and assessment in these techniques. We further discover that higher financial literacy levels temper the sway of fortune‐telling. Our findings highlight the paramount role of recognising not only the direct influences on investment but, more critically, the indirect pathways mediated by cultural and seemingly irrational factors. This comprehensive understanding contributes to the crafting of investment strategies and policies that navigate the multifaceted labyrinth of cultural influences, cognitive biases, and the layered intricacies of the financial system.\n"]

January 30, 2026 doi: 10.1002/ijfe.70141 open full text
Corporate Social Responsibility, Resource Curse and Crash Risk: New Evidence From International Stock Markets.
Shi Teng, Yu‐En Lin, Siyang Wang.
International Journal of Finance & Economics. January 30, 2026

["International Journal of Finance &Economics, EarlyView. ", "\nABSTRACT\nThis study investigates the relationship between corporate social responsibility (CSR) and stock price crash risk in the context of the resource curse. We find that CSR mitigates stock price crash risk. Based on institutional theory, stakeholder theory and agency theory, using a large firm‐level panel dataset spanning 52 countries, we find that CSR generally mitigates stock price crash risk. What's more, resource dependence negatively moderates this relationship, weakening CSR's risk‐mitigating effect. Further analysis of resource‐dependent developing countries reveals that CSR is associated with higher crash risk in environments characterised by poor institutional quality and high corruption. Our results highlight the critical role of institutional quality and corruption control in enabling CSR to fulfil its risk‐reducing potential in resource‐dependent economies.\n"]

January 30, 2026 doi: 10.1002/ijfe.70163 open full text
Geopolitical Risk and Bank Stability in the MENA Region: The Moderating Role of Diversification and Financial Flexibility.
Dexiang Wu, Ahmed Rashed, Ahmed A. Elamer.
International Journal of Finance & Economics. January 29, 2026

["International Journal of Finance &Economics, EarlyView. ", "\nABSTRACT\nWe investigate the impact of geopolitical risk on bank stability in the Middle East and North Africa (MENA) region. We further examine how internal strategic factors—namely, bank diversification and financial flexibility—moderate this relationship, potentially serving as buffers against external political shocks. Using a balanced panel of 107 listed MENA banks from 2007 to 2023, comprising 1819 bank‐year observations, we employ panel corrected standard error (PCSE) and robustness checks. It utilises both accounting‐based (Z‐score and NPL) and market‐based (distance‐to‐default and long‐term earnings volatility) indicators of bank stability. We incorporate the Caldara and IacovielloGeopolitical Risk Index and its growth rate to capture both level and momentum effects of geopolitical risks. The findings demonstrate a statistically significant negative relationship between geopolitical risk and bank stability. However, banks with higher levels of diversification and financial flexibility are more resilient to geopolitical shocks, highlighting their moderating role in turbulent geopolitical environments. We further conduct additional tests showing that asset diversification partially and complementarily mediates the adverse effect of geopolitical risk on bank stability. Robustness analyses reveal that strong institutional governance provides critical buffers that enable banks to absorb geopolitical shocks and sustain financial stability. Moreover, crisis‐specific tests indicate that global and regional shocks (e.g., global financial crisis, Arab Spring, COVID‐19 and Russia–Ukraine War) significantly intensify the negative GPR–stability relationship. Geopolitical risk erodes bank stability, particularly in weakly governed and resource‐dependent economies, highlighting banks' heterogeneous vulnerability to external shocks. This paper emphasises the importance of internal strategic buffers in regions prone to political volatility and provides actionable insights for bank executives, regulators and policymakers.\n"]

January 29, 2026 doi: 10.1002/ijfe.70165 open full text
Performance of Excess Cash Holding Portfolios: Evidence From the United Kingdom.
Gbenga Adamolekun, Edward Jones, Hao Li.
International Journal of Finance & Economics. January 27, 2026

["International Journal of Finance &Economics, EarlyView. ", "\nABSTRACT\nIn this study, we investigate the impact of excess cash holdings on the performance of UK portfolios during periods of high economic uncertainty from 1980 to 2018. We argue that macro‐level uncertainty poses significant risks to firms. A high level of uncertainty also enhances the value of cash holdings, as cash‐rich firms are more likely to demonstrate financial flexibility and overcome financial constraints. Consistent with our prediction, we document that portfolios with high cash holdings outperform those with low cash holdings by 7% after adjusting for the Fama–French 25 portfolio sort. Our results are robust after adjusting for asset pricing factors. Our empirical evidence suggests that the trade‐off between the benefit of carrying and the cost of holding excess cash depends on the macro‐level of uncertainty, highlighting the value of cash as a safe haven during such times. In evaluating how limits to arbitrage affect the outperformance of excess cash holding portfolios, we find that the effect dissipates for stocks with high transaction costs. Furthermore, we document that the outperformance of the excess cash holding portfolio is pronounced during periods of low investor sentiment. In general, the study's results are economically meaningful for investors.\n"]

January 27, 2026 doi: 10.1002/ijfe.70153 open full text
Investigating the Nexus Between Forest Product Trade and Economic Growth: Evidence From the Autoregressive Distributed Lag Approach.
Muhammad Nasrullah, Muhammad Rizwanullah, Mohammad Maruf Hasan.
International Journal of Finance & Economics. January 27, 2026

["International Journal of Finance &Economics, EarlyView. ", "\nABSTRACT\nThe study aims to scrutinise the nexus amongst the exports of forest products, gross capital formation, exchange rates, population, and economic growth of BRICS (Brazil, Russia, India, China, and South Africa) and USMCA (United States–Mexico–Canada Agreement) countries. This study employs an autoregressive distributed lag (ARDL) model using annual time‐series data from 1970 to 2023. The estimated elasticities of the net exports of forest products obtained from ARDL confirm their significant role in the economic growth of BRICS and USMCA countries in both the short and long run. The estimated results also highlight that the International Tropical Timber Agreement (ITTA, 1983 and 1994), trade barriers (anti‐dumping and countervailing duties) imposed on forest products, and trade blocs (BRICS and USMCA) significantly affect economic growth. This study provides new evidence for policymakers to formulate precise policies to diversify and expand the forest product market by exploring new trade partners, changing market conditions and free and fair trade. The study suggests introducing new policies and agreements for forest trade more effectively, thereby enhancing a country's economic growth whilst maintaining a sustainable environment and forest diversity. Additionally, the study recommends that an effective policy is needed to resolve trade disputes and create a conducive environment for the forest product trade.\n"]

January 27, 2026 doi: 10.1002/ijfe.70142 open full text
Economic Policy Uncertainty and Income Inequality Across Europe.
Don Bredin, Stilianos Fountas, Paraskevi Tzika.
International Journal of Finance & Economics. January 27, 2026

["International Journal of Finance &Economics, EarlyView. ", "\nABSTRACT\nThis paper investigates the impact of Economic Policy Uncertainty (EPU) on income inequality across a broad set of European countries from 1995 to 2022, with a particular focus on the core‐periphery divide. Applying both time series and panel data methodologies—including Vector Autoregressions (VAR), panel VAR and local projections—we assess how economic uncertainty influences inequality dynamics. Our findings reveal three key insights. First, uncertainty shocks significantly affect income inequality in nearly all countries, and the effect is time‐varying. Second, the effect is heterogeneous across countries but varies: uncertainty tends to reduce inequality in core European countries such as Belgium, Germany, Ireland and the Netherlands, while mainly increasing it in periphery and intermediate countries like France, Greece, Italy and Spain. Third, panel analysis confirms this asymmetry, showing more persistent and positive inequality effects in periphery countries. These results suggest that income inequality in Europe's periphery is more vulnerable to economic uncertainty, underscoring the importance of stable policy environments and targeted fiscal responses.\n"]

January 27, 2026 doi: 10.1002/ijfe.70161 open full text
Debt spikes, blind spots, and financial stress.
Laura Jaramillo, Carlos Mulas‐Granados, Joao Tovar Jalles.
International Journal of Finance & Economics. October 18, 2017

Are blind spots of public debt spikes sizable? And how do they affect financial stress indicators? This paper tackles these questions empirically, using information from 179 episodes of public debt spikes between 1945 and 2014. We find that large public debt spikes are neither driven by high primary deficits nor by output declines but instead by stock‐flow adjustments. These blind spots in debt dynamics are sizable in both advanced economies and emerging markets and could amount to more than 20% of gross domestic product in the median episode. These public debt spikes increase financial stress indicators significantly, in particular when a large share of public debt is held by domestic commercial banks. Enhanced transparency and better debt forecasting tools could help address financial market tensions resulting from blind spots in debt dynamics.

October 18, 2017 doi: 10.1002/ijfe.1598 open full text
US macroannouncements and international asset pricing.
Ding Du.
International Journal of Finance & Economics. October 17, 2017

The world capital asset‐pricing model is the benchmark model in international finance. However, recent research finds that the premium on the world market factor is insignificant. In this paper, we investigate if the world market risk premium is particularly significant on US macroeconomic announcement days. Empirically, we apply the methodology to daily country exchange‐traded funds. Our findings suggest that although the world market risk premium is insignificant on nonannouncement days, it is strongly significant on US macroeconomic announcement days. In addition, we find that US monetary policy announcements are the most important macroeconomic announcements to drive the world market risk premium. Our findings are consistent with the notion of monetary policy uncertainty and the empirical literature that connects policy uncertainty with systematic risk.

October 17, 2017 doi: 10.1002/ijfe.1592 open full text
On the stock market reactions to fiscal policies.
Pasquale Foresti, Oreste Napolitano.
International Journal of Finance & Economics. October 16, 2017

In this paper, a panel analysis is employed to investigate the effects of fiscal policies on stock market indexes in 11 members of the Eurozone. Many studies have focused on the effects of monetary policy on the stock market, whereas the number of contributions studying the effects of fiscal policy on the stock market is surprisingly limited. Therefore, we know little, if any, on the sign and stability of the stock market reaction to fiscal policies. Our results show that fiscal policies influence the stock market and that, following an increase (decrease) in public deficit, stock market indexes go down (up). Nevertheless, further analysis shows that the signs of the estimated stock market reactions are not constant over time and that they change according to the surrounding macroeconomic scenario.

October 16, 2017 doi: 10.1002/ijfe.1584 open full text
The assessment of the United States quantitative easing policy: Evidence from global stock markets.
Jung‐Bin Su, Ken Hung.
International Journal of Finance & Economics. October 16, 2017

This study assesses the performance of the quantitative easing policy implemented by the United States (US) on the stock markets with a framework of structure break. The empirical results show that the business cycle or the value of gross domestic production has a negative impact on the stock markets for most of the countries even if both gross domestic production and many stock prices are procyclical. Moreover, the purchases of US Treasury securities and mortgage‐backed securities respectively affect the stock markets synchronously and laggardly. Notably, they both have a positive impact on the stock markets during the study period. Finally, during the after structure break period, the volatility can be easily affected by bad news, and the investors have the lower profit or even the greater loss and bear the greater risk and variation of risk owing to the global financial crisis caused by the US. On the basis of the above findings, some policy implications are offered in this study.

October 16, 2017 doi: 10.1002/ijfe.1590 open full text
On equity risk prediction and tail spillovers.
Panos Pouliasis, Ioannis Kyriakou, Nikos Papapostolou.
International Journal of Finance & Economics. October 16, 2017

This paper studies the impact of modelling time‐varying variances of stock returns in terms of risk measurement and extreme risk spillover. Using a general class of regime‐dependent models, we find that volatility can be disaggregated into distinct components: a persistent stable process with low sensitivity to shocks and a high volatility process capturing rather short‐lived rare events. Out‐of‐sample forecasts show that, once regime shifts are accounted for, accuracy is improved compared to the standard generalized autoregressive conditional heteroscedasticity or the historical volatility model. Volatility plays an important role in controlling and monitoring financial risks. Therefore, by means of a risk management application, we illustrate the economic value and the practical implications of risk control ability of the models in terms of value at risk. Finally, tests for predictability in co‐movements in the tails of stock index returns suggest that large losses are strongly correlated, supporting asymmetric transmission processes for financial contagion in the left tail of return distributions, whereas contagion in reverse direction (gains) is weak.

October 16, 2017 doi: 10.1002/ijfe.1594 open full text
The importance of firm level multinationality in the country versus industry debate.
Cormac Mullen, Jenny Berrill.
International Journal of Finance & Economics. October 13, 2017

We conduct the most comprehensive empirical analysis that exists to date of the effect multinationality has on the explanatory power of country and industry factors in international diversification. We investigate the impact the size, scope, and location of a company's international sales has on country versus industry factors, analysing 1,276 firms from Belgium, Canada, France, Germany, Italy, Japan, the Netherlands, Spain, the UK, and the US over the 15‐year period, 1998–2012. We find that the magnitude of the country factor is greater than the magnitude of the industry factor for the period as a whole but that a company's level of international sales has a greater impact on the magnitude of its industry factor than the magnitude of its country factor. Counter‐intuitively, we find stocks with lower sales exposure to their country of origin have a higher country factor, and we show the existence of both a strong local and international industry factor. Our results suggest country‐of‐origin diversification may no longer be sufficient to exploit country‐specific risk and the country factor has become a “country classification” factor.

October 13, 2017 doi: 10.1002/ijfe.1597 open full text
Central bank swap lines and CIP deviations.
William A. Allen, Gabriele Galati, Richhild Moessner, William Nelson.
International Journal of Finance & Economics. October 12, 2017

We study the use of U.S. dollar central bank swap lines as a tool for addressing dislocations in the foreign currency swap market against the USD since the global financial crisis. We find that the use of the Federal Reserve's USD central bank swap lines was mainly related to tensions in U.S. money markets during times of financial crisis, and less to tensions that were confined to foreign exchange swap markets. In particular, we find that the use of USD central bank swap lines did not react significantly to the recent period of persistent deviations of covered interest parity since 2014. These results are consistent with the view that the Federal Reserve was guided by enlightened self‐interest when providing swap lines to foreign central banks, in order to reduce dislocations in U.S. financial markets and support financial stability. In recent years, foreign exchange swap markets have not functioned properly, but it appears that now that the crisis is over, the Federal Reserve and other central banks have decided against trying permanently to fill the gap left by the dysfunction in the commercial foreign exchange swap market.

October 12, 2017 doi: 10.1002/ijfe.1596 open full text
Economics blogs sentiment and asset prices.
Vincenzo Farina, Antonio Parisi, Ugo Pomante.
International Journal of Finance & Economics. October 11, 2017

One of the most important research streams in finance is to understand the determinants of stock market dynamics. Using a large amount of linguistic data regarding 960,808 posts during a 5‐year time period (from March 1, 2008, to August 31, 2013), we develop an economics blogs pessimism indicator (considered as a proxy for either investor sentiment or risk aversion), and we show its validity to build performing trading strategies.

October 11, 2017 doi: 10.1002/ijfe.1591 open full text
Corporate governance structure and efficiencies of cooperative banks.
Nobuyoshi Yamori, Kozo Harimaya, Kei Tomimura.
International Journal of Finance & Economics. October 11, 2017

How to discipline managers of cooperative structured financial institutions (co‐ops) is considered a critical issue by the Japanese financial regulatory authorities because co‐ops play a significant role in the domestic banking market, especially for small and medium‐sized enterprises. This paper seeks to clarify whether the effect of the governance‐related variables on firm performance varies across stock and cooperative banks in Japan. We consider regional banks as a proxy of stock banks and Shinkin banks, one of the representative co‐ops, as a proxy of cooperative banks. We use cost and profit efficiency scores obtained from stochastic frontier analysis as performance measures. The results in this paper confirmed that having a large number of board members has negative effects on efficiency measures for both stock and cooperative banks. On the other hand, the presence of outside directors has a significant effect on efficiency measures for cooperative banks, whereas such variables have no significant effect for stock banks. These results suggest that outside directors' discipline is more necessary for cooperative banks than for stock banks, which are under strong pressure from shareholders. For cooperative banks, a high ratio of representative council members, which is the most important decision‐making body for Shinkin banks, has negative effects on efficiency measures. Our findings support the current proposals of the financial regulatory authorities' council to appoint outside directors to the board as a means for strengthening governance of the co‐ops.

October 11, 2017 doi: 10.1002/ijfe.1593 open full text
Mean and variance equation dynamics: Time deformation, GARCH, and a robust analysis of the London housing market.
Steve Cook, Duncan Watson.
International Journal of Finance & Economics. October 06, 2017

The potential relationship between time deformation and generalized autoregressive conditional heteroscedasticity (GARCH) is examined. Despite time deformation and GARCH being mean and variance equation phenomena, respectively, they are argued herein to share a common motivation relating to the examination of changes in the temporal evolution of time‐series processes. Via extensive simulation analysis, a close connection between the two concepts is established. It is found that the presence of GARCH can result in the spurious detection of time deformation, particularly when examining the heavy‐tailed distributions and volatile data typically considered in empirical finance. It is shown that although the application of heteroskedasticity corrected covariance matrix estimators often increases, rather than corrects, the detected oversizing of the tests of time deformation, the application of GARCH filters does provide a solution to size distortion. The findings of the experimental analysis are drawn upon to provide a robust empirical examination of the London housing market where evidence of overwhelming and widespread nonlinearity is detected in the form of time deformation. The implications of these findings for the conduct of future, and the interpretation of previous, research are discussed.

October 06, 2017 doi: 10.1002/ijfe.1589 open full text
Determinants of long‐ versus short‐term bank credit in EU countries.
Haelim Park Anderson, Claudia Ruiz‐Ortega, Thierry Tressel.
International Journal of Finance & Economics. October 02, 2017

This paper empirically examines the determinants of credit at different maturities across countries of the European Union during the last decade. We document the lengthening of maturities since the early 2000s and whether these patterns were driven by similar factors in advanced and emerging market economies. Before the 2008 crisis, long‐term credit expanded faster than short‐term credit in most countries of our sample and contracted less than short‐term credit after 2008. We find that foreign liabilities were more important sources of funding in emerging market countries than in advanced economies. In addition, aggregate demand mattered less for credit extension to firms in emerging market countries than in advanced countries.

October 02, 2017 doi: 10.1002/ijfe.1583 open full text
Mutual fund skill in timing market volatility and liquidity.
Jason Foran, Niall O'Sullivan.
International Journal of Finance & Economics. July 31, 2017

We investigate both market volatility timing and market liquidity timing for the first time among UK mutual funds. We find strong evidence that a small percentage of funds time market volatility successfully, that is, when conditional market volatility is higher than normal, systematic risk levels are lower. The evidence around market liquidity timing ability is similar although it is slightly less prevalent compared to volatility timing. Here, funds lower the fund market beta in anticipation of reduced market liquidity. We also find a positive relation between liquidity timing ability and fund abnormal performance where skilled liquidity timers outperform unskilled timers by around 3% p.a.—though this finding is driven by poor liquidity timing funds going on to yield negative alpha. However, despite the evidence of volatility and liquidity timing ability among funds, we fail to find in support of persistence in this timing. We find little evidence supporting market return timing ability.

July 31, 2017 doi: 10.1002/ijfe.1580 open full text
Euro area time‐varying fiscal sustainability.
António Afonso, João Tovar Jalles.
International Journal of Finance & Economics. July 11, 2017

We assess the time‐varying features of fiscal sustainability in the euro area via revisiting the empirical relationship between the primary budget surplus and the debt‐to‐GDP ratio. Focusing on a sample of 11 Euro‐area countries between 1999Q1 and 2013Q4 and by means of time series analyses, we find that (a) fiscal policy seems to have been sustainable in Belgium, France, Germany, and the Netherlands and a Ricardian (monetary dominant) regime might have been present; (b) debt exhibited a negative response following an innovation in the budget surplus in half of the sample; (c) the time‐varying coefficient model shows that the 2008–2009 global economic and financial crisis exerted a sizeable negative impact on fiscal sustainability; and (d) expenditure‐based fiscal rules are strong determinants of fiscal sustainability. All in all, we found some evidence against the Fiscal Theory of the Price Level.

July 11, 2017 doi: 10.1002/ijfe.1582 open full text
Alphas in disguise: A new approach to uncovering them.
Venkata Chinthalapati, Cesario Mateus, Natasa Todorovic.
International Journal of Finance & Economics. July 10, 2017

Four‐factor Carhart alphas of passive indices should be zero, but recent empirical evidence shows otherwise. We propose an optimization algorithm that makes small (fixed) adjustments to the time series of the market, size, value, and momentum factors, which ensures a zero alpha for any (single) self‐designated benchmark index of a mutual fund. Our “adjusted factors” can then be used to estimate a mutual fund's “adjusted alpha.” We test this methodology on a sample of 1,281 active and 102 tracker U.S. equity mutual funds (reporting S&P 500 index as their prospectus benchmark). Our time series adjustment of the Carhart 4 factors leads to an increase (decrease) in a fund's “adjusted alpha” in periods of fund‐benchmark underperformance (outperformance). On the whole, our “adjusted alphas” of both active and tracker funds are statistically significantly negative. This is particularly pronounced for tracker funds.

July 10, 2017 doi: 10.1002/ijfe.1581 open full text
What drives differences of opinion in sovereign ratings? The roles of information disclosure and political risk.
Huong Vu, Rasha Alsakka, Owain Gwilym.
International Journal of Finance & Economics. April 27, 2017

This paper investigates the causes of split sovereign ratings across S&P, Moody's, and Fitch for 64 countries from 1997 to 2011. We identify that split sovereign ratings are not symmetric, with S&P tending to be the most conservative agency. We find that opaque sovereigns are more likely to receive split ratings. Political risk plays a highly significant role in explaining split ratings and dominates economic and financial indicators. Out‐of‐sample model performance is enhanced by capturing political risk. Government information disclosure affects split ratings between Moody's and Fitch in emerging countries. The study implies an incentive for governments to reduce political uncertainty and to enhance transparency.

April 27, 2017 doi: 10.1002/ijfe.1579 open full text
The role of time‐varying return forecasts for improving international diversification benefits.
Maria del Mar Miralles‐Quiros, Jose Luis Miralles‐Quiros.
International Journal of Finance & Economics. April 12, 2017

The aim of this study is to provide empirical evidence of the international diversification benefits obtained employing not only time‐varying volatility forecasts but also time‐varying return forecasts from a multivariate approach that considers the dynamic relationships in return series as well as in volatilities and correlations. To that end, instead of using market indexes from different investment areas, we employ exchange trade funds actively traded on the New York Stock Exchange in recent years. It avoids nonsynchronous problems as well as allowing us to allocate internationally on a daily basis for which this approach is especially appropriate. Our overall results show that using this technique, it is possible to obtain economic gains and outperform the common benchmark strategies, even when the costs associated with the daily rebalance of each portfolio are taken into account.

April 12, 2017 doi: 10.1002/ijfe.1578 open full text
How fat are the tails of equity market indices?
Stoyan Stoyanov, Lixia Loh, Frank J. Fabozzi.
International Journal of Finance & Economics. March 21, 2017

Using a generalized autoregressive conditional heteroskedasticity model to explain away the volatility clustering of volatility effect and extreme value theory to analyse the residuals' left and right tails, we study the tail thickness of 22 developed and 19 emerging equity market indices. In‐sample and out‐of‐sample tests indicate that exponential tails of the residuals cannot be strongly rejected. We study the dispersion of extremes of developed and emerging markets, and we report a statistically significant tail asymmetry in both types of markets and a significant change in both tail risk and tail asymmetry of emerging markets after the financial crisis of 2008.

March 21, 2017 doi: 10.1002/ijfe.1577 open full text
Multilateral Loans and Interest Rates: Further Evidence on the Seniority Conundrum.
Sven Steinkamp, Frank Westermann.
International Journal of Finance & Economics. March 20, 2017

During Europe's sovereign debt crisis, interest rate spreads have been highly correlated with the share of multilateral loans that were considered senior to private markets. As both variables are potentially endogenous, we follow 2 different approaches to analyze the direction of causality. First, we use a set of instrumental variable regressions where the differences between sovereign ratings serve as instruments. Second, we analyze a new panel survey dataset on seniority and interest rate expectations. In both approaches, we find evidence for the seniority conundrum, that is, a positive impact of multilateral loans on interest rate spreads.

March 20, 2017 doi: 10.1002/ijfe.1575 open full text
Eurozone cycles: An analysis of phase synchronization.
Brigitte Granville, Sana Hussain.
International Journal of Finance & Economics. March 16, 2017

This paper analyses synchronization, both across and between business and financial cycles (growth and classical) in a subset of 10 countries representative of the Economic and Monetary Union. Employing an extended data set from 1960 to 2013, we find evidence of synchronization across financial cycles. In case of business cycles, we find contrasting results: There is significant synchronization across growth cycles but no evidence of a common classical cycle. This confirms, first, that economic and financial variables in the Economic and Monetary Union behave differently and, second, that synchronization in business cycles arises from synchronized deviations from the trend, but the underlying macroeconomic fundamentals are not in synch. Furthermore, we adopt a novel approach to break down our full sample period into smaller subperiods to follow the evolution of synchronization over time. Our results highlight the role played by the monetary union in further increasing macroeconomic divergences.

March 16, 2017 doi: 10.1002/ijfe.1576 open full text
Equity flows, stock returns and exchange rates.
Angelos Kanas, Sotirios Karkalakos.
International Journal of Finance & Economics. March 06, 2017

We explore the effects of equity flows between U.S. and U.K. investors upon equity and exchange rate returns within a unified empirical framework on the basis of a trivariate vector autoregressive system that incorporates mean and volatility spillovers and allows for dynamic conditional correlations. Our findings are as follows: First, we reveal strong evidence of volatility spillovers across equity returns, exchange rate returns, and equity flows. Second, we find strong evidence that U.K. investors rebalance their portfolios by engaging in a positive feedback trading known in the literature as “trend chasing.” Third, we document strong dynamic effects from net flows to equity returns, illustrating a trading rule that portfolios are dynamically adjusted over a short‐run horizon influencing changes in stock returns. Last, correlation uncertainty appears to be reduced from the start of the 1990s onwards.

March 06, 2017 doi: 10.1002/ijfe.1574 open full text
Pricing the ECB's forward guidance with the EONIA swap curve.
Matthieu Picault.
International Journal of Finance & Economics. February 27, 2017

On July 4, 2013, following several other major central banks, the European Central Bank (ECB) gave for the first time forward guidance on interest rates, which affected market participants' expectations of future interest rates in the context of a Zero Lower Bound. Using an ARMAX(1,1) model in which the effect of the communication of negative macroeconomic news was disentangled from the commitment positive shock, the impact of the forward guidance on money market interest rates is estimated through the Euro Overnight Index Average swap, also called overnight index swap, at maturities between 2 months and 10 years using abnormal returns from an event study. The results and robustness checks suggest that the ECB's guidance lowered overnight index swap rates for maturities within 10 months to 3 years. These results imply the existence of a commitment effect from the ECB's communication. In the context of decreasing market liquidity because of the 3‐year long‐term refinancing operation repayment, market participants priced the low period of interest rates until mid‐2016.

February 27, 2017 doi: 10.1002/ijfe.1572 open full text
Monetary policy and leverage shocks.
Khandokar Istiak, Apostolos Serletis.
International Journal of Finance & Economics. January 24, 2017

The current mainstream approach to monetary policy in the United States is based on the new Keynesian model and is expressed in terms of the federal funds rate. It ignores the role of financial intermediary leverage (or collateral rates). But as the federal funds rate has reached the zero lower bound, the issue is whether there is a useful role of leverage in monetary policy and business cycle analysis. Motivated by these considerations and by recent financial intermediary asset pricing theories in this paper, we investigate the macroeconomic effects of broker–dealer leverage and the interdependence between monetary policy and broker–dealer leverage in the context of a structural vector autoregression model, using quarterly U.S. data over the period from 1967:1 to 2014:3. We address the simultaneity problem of identifying monetary policy and leverage shocks by using a combination of short‐run and long‐run restrictions. We also use the sign restriction approach to the identification of shocks to distinguish between leverage supply and leverage demand shocks, as one would expect the macroeconomic effects of these two types of leverage shocks to be quite different. Our results show that monetary policy and broker–dealer leverage demand shocks produce results that capture reasonable macroeconomic dynamics.

January 24, 2017 doi: 10.1002/ijfe.1571 open full text
Is there still a Berlin Wall in the post‐issue operating performance of European IPOs?
Tiago Pinho Pereira, Miguel Sousa.
International Journal of Finance & Economics. January 06, 2017

This paper studies the post‐IPO operating performance of a sample of 555 European firms that went public between 1995 and 2006. Consistent with previous findings, we observe a decline in post‐issue operating performance of IPO firms. However, firms located in emerging European countries perform even worse after the IPO than firms located in developed European countries. Our results suggest that this less successful post‐issue operating performance by firms located in emerging countries can be explained by a more aggressive use of accruals and a better timing of the IPO in order to coincide with a period of high operating performance.

January 06, 2017 doi: 10.1002/ijfe.1573 open full text
Banking and Currency Crises: Differential Diagnostics for Developed Countries.
Mark Joy, Marek Rusnák, Kateřina Šmídková, Bořek Vašíček.
International Journal of Finance & Economics. November 07, 2016

We identify a set of ‘rules of thumb’ that characterize economic, financial and structural conditions preceding the onset of banking and currency crises in 36 advanced economies over 1970–2010. We use the classification and regression tree methodology and its random forest extension, which permits the detection of key variables driving binary crisis outcomes, allows for interactions among key variables and determines critical tipping points. We distinguish between basic country conditions, country structural characteristics and international developments. We find that crises are more varied than they are similar. For banking crises, we find that low net interest rate spreads in the banking sector and a shallow, or inverted, yield curve is their most important forerunners in the short term. In the longer term, it is high house price inflation. For currency crises, high domestic short‐term rates coupled with overvalued exchange rates are the most powerful short‐term predictors. We find that both country structural characteristics and international developments are relevant banking‐crisis predictors. Currency crises, however, seem to be driven more by country idiosyncratic, short‐term developments. We find that some variables, such as the domestic credit gap, provide important unconditional signals, but it is difficult to use them as conditional signals and, more importantly, to find relevant threshold values. Copyright © 2016 John Wiley & Sons, Ltd.

November 07, 2016 doi: 10.1002/ijfe.1570 open full text
Corporate Governance, Bank Mergers and Executive Compensation.
Yan Liu, Carol Padgett, Simone Varotto.
International Journal of Finance & Economics. November 04, 2016

Using a sample of US bank mergers from 1995 to 2012, we observe that the pre‐post merger changes in CEO bonus are significantly negatively related to the strength of corporate governance within the bidding bank. This suggests that bonus compensation is not consistent with the ‘optimal contracting hypothesis’. Salary changes, on the other hand, are not affected by corporate governance which is in line with ‘optimal contracting’. We also find that good governance is associated with more accretive deals for the bidder. Overall, our results are consistent with the notion that, unlike salary and long‐term compensation, bonus compensation is not aligned with value creation and is more vulnerable to CEO manipulation in banks with poor corporate governance. Copyright © 2016 John Wiley & Sons, Ltd.

November 04, 2016 doi: 10.1002/ijfe.1565 open full text
Benchmarking Judgmentally Adjusted Forecasts.
Philip Hans Franses, Bert Bruijn.
International Journal of Finance & Economics. October 26, 2016

Many publicly available macroeconomic forecasts are judgmentally adjusted model‐based forecasts. In practice, usually only a single final forecast is available, and not the underlying econometric model, nor are the size and reason for adjustment known. Hence, the relative weights given to the model forecasts and to the judgement are usually unknown to the analyst. This paper proposes a methodology to evaluate the quality of such final forecasts, also to allow learning from past errors. To do so, the analyst needs benchmark forecasts. We propose two such benchmarks. The first is the simple no‐change forecast, which is the bottom line forecast that an expert should be able to improve. The second benchmark is an estimated model‐based forecast, which is found as the best forecast given the realizations and the final forecasts. We illustrate this methodology for two sets of GDP growth forecasts, one for the USA and one for the Netherlands. These applications tell us that adjustment appears most effective in periods of first recovery from a recession. Copyright © 2016 John Wiley & Sons, Ltd.

October 26, 2016 doi: 10.1002/ijfe.1569 open full text
Euro Effect on Trade in Final, Intermediate and Capital Goods.
Inmaculada Martínez‐Zarzoso, Florian Johannsen.
International Journal of Finance & Economics. October 13, 2016

The aim of this paper is to provide fresh evidence on the effect of the adoption of the euro on exports of different types of goods. The novelty with respect to previous research is threefold. First, disaggregated trade data are used to allow for heterogeneous effects for final intermediate and capital goods. Second, we distinguish between the euro effect on the extensive and the intensive margins of trade. Finally, we estimate the impact of the Euro adoption controlling for exchange rate volatility, exchange rate movements and EU membership. This allows us to disentangle the effect of a common currency beyond the elimination of trade barriers and of any variation in the exchange rate. The main results indicate that the impact of the Euro on trade values (intensive margin) is around 9% for intermediates, 7% for final goods and it is negative for capital goods. Interestingly, the Euro effects on the extensive margin of trade are found to be negative and significant for the three types of goods, pointing to increasing specialization. Copyright © 2016 John Wiley & Sons, Ltd.

October 13, 2016 doi: 10.1002/ijfe.1567 open full text
Macro News and Commodity Returns.
Guglielmo Maria Caporale, Fabio Spagnolo, Nicola Spagnolo.
International Journal of Finance & Economics. October 11, 2016

This paper adopts a vector autoregression‐generalized autoregressive conditional heteroscedasticity approach to model the dynamic linkages between both mean and variance of macro news and commodity returns (Gold, Corn, Wheat, Soybeans, Silver, Platinum, Palladium, Copper, Aluminium and Crude Oil) over the period 01/01/2001–26/09/2014. The chosen specification also controls for the effect of the exchange rate. The results can be summarized as follows. Mean spillovers running from news to commodity returns are positive with the exception of Gold and Silver. Volatility spillovers are bigger in size and affect most commodity returns. Both first‐moment and second‐moment linkages are stronger in the post‐September 2008 period. Overall, our findings confirm that commodities, despite not being financial assets, are sensitive to macro news (especially their volatility) and also suggest that the global financial crisis has strengthened such linkages. Copyright © 2016 John Wiley & Sons, Ltd.

October 11, 2016 doi: 10.1002/ijfe.1568 open full text
Financial Cycle, Business Cycle and Monetary Policy: Evidence from Four Major Economies.
Yong Ma, Jinglan Zhang.
International Journal of Finance & Economics. October 11, 2016

Economists used to think that financial factors are not important in the business cycle, but the 2008 global financial crisis has made it apparent that financial cycle plays a much larger role in macroeconomic dynamics than anticipated. Against this background, economists endeavor to introduce financial factors into macroeconomic models. In this paper, we incorporate financial cycle into a four‐equation model to study the linkages and interactions between financial cycle, business cycle and monetary policy. The results suggest that financial cycle plays a significant role in the business cycle, and that financial cycle shock has become a main driving force for macroeconomic fluctuations, especially during times of financial instability. In addition, by comparing the performance of the finance‐augmented Taylor rule with that of the conventional Taylor rule, we find that both the financial system and the real economy will be better stabilized under the finance‐augmented Taylor rule. This result adds new evidence to the argument that monetary policy has an important role in safeguarding the financial system and that financial stability should be adopted as a target for monetary policy. Copyright © 2016 John Wiley & Sons, Ltd.

October 11, 2016 doi: 10.1002/ijfe.1566 open full text
Intraday Rallies and Crashes: Spillovers of Trading Halts.
Bei Cui, Arie E. Gozluklu.
International Journal of Finance & Economics. August 12, 2016

This paper analyses a set of intraday rally and crash events at the firm level during the single‐stock circuit breaker program and documents the cross‐sectional spillover effects of such events on non‐halted stocks. We test whether such major price jumps, and subsequent trading halts, affect related stocks through the destabilizing eme price movements that trigger the circuit breakers at the firm level are accompanied by a massive surge in volume, spread and short‐term volatility, which gradually revert back to normal. Speculative strategies of arbitrageurs such as momentum and pairs trading cause cross‐sectional spillovers in volume and volatility during the trading halt. Copyright © 2016 John Wiley & Sons, Ltd.

August 12, 2016 doi: 10.1002/ijfe.1556 open full text
Real Effects of Inflation on External Debt in Developing Economies.
Mark Assibey‐Yeboah, Sushanta Mallick, Mohammed Mohsin.
International Journal of Finance & Economics. July 11, 2016

This paper uses an intertemporal optimizing model with country‐specific risk premium to evaluate the real effects of inflation in a small open developing economy. In the model, a central bank targets inflation, and the consumer requires real balances in advance for consumption spending. We show that a positive inflation shock (either due to growth in money supply or depreciation of the domestic currency) yields a decrease in real output and consumption—as inflation creates a tax wedge in the intratemporal condition between consumption and leisure—leading to a decrease in the stock of real debt in domestic currency. Employing these theoretical predictions and using annual data from a set of six developing countries (Chile, Ghana, Indonesia, Kenya, Malaysia and Thailand), we estimate a sign‐restriction based structural vector autoregression model along with a panel vector autoregression model for robustness analysis. The empirical results support the trade‐off of inflation with reference to the key real variables including the external debt position, which is a significant result given the ambiguity in the empirical literature as to whether governments can escape from debt crisis via higher inflation. Copyright © 2016 John Wiley & Sons, Ltd.

July 11, 2016 doi: 10.1002/ijfe.1553 open full text
Determinants of Liquidity (Re)Allocation and the Decision to Cross‐List or Cross‐Delist.
Roland Füss, Ulrich Hommel, Jan‐Carl Plagge.
International Journal of Finance & Economics. June 06, 2016

This paper examines the factors influencing the liquidity allocation between local and foreign dual listings. Based on a comprehensive data set covering the period between 2001 and 2011, empirical results suggest that the fraction of trading in the foreign listing decreases with a higher degree of stock market integration measured as the stock price correlation with the world market. Furthermore, the analysis of individual cross‐listings reveals that both an improvement of a country's state of economic development and a better regulatory environment significantly affect the allocation of trading. While an improvement in economic development increases both local and foreign liquidity, a strengthening of regulatory standards leads to a decrease in trading volumes at foreign exchanges. Finally, the liquidity share in the foreign listing is found to decrease over time, a trend that turns out to be driven by developing rather than by developed markets. Copyright © 2016 John Wiley & Sons, Ltd.

June 06, 2016 doi: 10.1002/ijfe.1555 open full text
Panel Data Models and the Uncovered Interest Parity Condition: The Role of Two‐Way Unobserved Components.
Nils Herger.
International Journal of Finance & Economics. June 01, 2016

This paper endeavours to show how the specification of the regression testing the uncovered interest parity (UIP) condition can determine whether or not the hypothesized proportional relationship between international interest rate differences and exchange rate changes is rejected. Across major currencies, various terms to maturity, different data frequencies and the short as well as the long time horizon, single‐equation regressions partly reject the UIP condition. However, this ‘UIP puzzle’ tends to disappear when panel data regressions account, for example, for risk premiums by means of two‐way unobserved component specifications with random or fixed effects for both currencies and time periods. The closest concurrence with the UIP condition arises when specifying the time‐specific component as fixed effect, which provides a way to address the potential bias when unobserved exchange rate risk premiums correlate with interest rates. Copyright © 2016 John Wiley & Sons, Ltd.

June 01, 2016 doi: 10.1002/ijfe.1552 open full text
Impact of Domestic Investor Protection on Foreign Investment Decisions: Evidence from Bond Markets.
Elina Pradkhan.
International Journal of Finance & Economics. May 26, 2016

This study explores the relationship between domestic creditor protection and foreign investment decisions in bond markets. It also investigates how the difference between domestic and foreign creditor protections affects the foreign investment. The impact of domestic creditor protection on cross‐border investment in bonds is twofold. A high level of domestic creditor protection increases international diversification. At the same time, an efficient protection of creditor rights at home reduces the sensitivity of foreign investment to foreign creditor protection. These results hold most strongly for investing countries with high levels of domestic creditor protection. In addition, this study shows that the difference between domestic and foreign creditor protections matters for investment decisions: if domestic creditor protection is more efficient than foreign creditor protection, the sensitivity of foreign investment to foreign (domestic) creditor protection decreases (increases). Copyright © 2016 John Wiley & Sons, Ltd.

May 26, 2016 doi: 10.1002/ijfe.1554 open full text
Sovereign Credit Ratings in Developing Economies: New Empirical Assessment.
Gabriel Caldas Montes, Diego S. P. Oliveira, Helder Ferreira Mendonça.
International Journal of Finance & Economics. May 24, 2016

This study contributes to understanding the main determinants of sovereign ratings for developing countries making use of information from Standard & Poor's, Moody's, and Fitch. Based on a sample of 40 countries for the period 1994 to 2013 and panel data approach, we extended previous works in the literature by including new economic aspects, as well as, new institutional and governance variables (e.g. inflation targeting, financial openness, democracy, corruption, etc.). The findings denote that, besides the traditional macroeconomic variables, adoption of inflation targeting, financial openness, democracy, law and order, and less corruption are important to improve the sovereign ratings. Copyright © 2016 John Wiley & Sons, Ltd.

May 24, 2016 doi: 10.1002/ijfe.1551 open full text
Danger Zones for Banking Crises in Emerging Markets.
Paolo Manasse, Roberto Savona, Marika Vezzoli.
International Journal of Finance & Economics. April 04, 2016

This paper employs a recently developed statistical algorithm in order to build an early warning model for banking crises in emerging markets. The procedure creates many ‘artificial’ samples by iteratively perturbing the original data set and estimates many models from these samples. The final model is constructed by aggregation, so that, by construction, it is flexible enough to accommodate new data for out‐of‐sample prediction. Out of a large number (540) of candidate explanatory variables, ranging from macroeconomic variables to balance sheet indicators, our procedure selects a handful of indicators (and their combinations) that is sufficient to generate accurate out‐of‐sample predictions of banking crises. Using data covering emerging markets from 1980 to 2010, the model identifies two banking crisis' ‘danger‐zones’, e.g. economic configurations that are conducive to crises. The first occurs when high interest rates on bank deposits, possibly reflecting liquidity risks and solvency fears, interact with credit‐booms and capital flights; the second occurs when an investment boom is financed by a large rise in banks' net foreign exposure. We compare our model to models derived by standard econometric techniques, and find that our approach delivers much better out‐of‐sample predictions. Copyright © 2016 John Wiley & Sons, Ltd.

April 04, 2016 doi: 10.1002/ijfe.1550 open full text
International Sentiment Spillovers in Equity Returns.
Deven Bathia, Don Bredin, Dirk Nitzsche.
International Journal of Finance & Economics. February 23, 2016

This paper examines the extent of spillovers from US investor sentiment on G7 aggregate market, value and growth stock returns. As a proxy for investor sentiment, we include individual investor survey, measured by the University of Michigan consumer confidence index and market sentiment measured by Baker and Wurgler composite sentiment index. Using monthly data for the period January 1991 to December 2013, our results indicate the presence of significant spillover effects of US investor sentiment on G7 stock returns. Our findings from generalized impulse response functions show that aggregate market and growth stocks of all non‐US G7 countries are significantly affected by the propagation of the US market sentiment. The financial crisis of 2007 has played a significant role in affecting value stock returns in these countries. Our findings further reveal that both the rational and irrational components of the US individual investor sentiment do not play any significant role in affecting international stock returns. Copyright © 2016 John Wiley & Sons, Ltd.

February 23, 2016 doi: 10.1002/ijfe.1549 open full text
What Does Rebalancing Really Achieve?
Keith Cuthbertson, Simon Hayley, Nick Motson, Dirk Nitzsche.
International Journal of Finance & Economics. February 17, 2016

There is now a substantial literature on the effects of rebalancing on portfolio performance. However, this literature contains frequent misattribution between ‘rebalancing returns’, which are specific to the act of rebalancing, and ‘diversification returns’, which can be earned by both rebalanced and unrebalanced strategies. Confusion on this issue can encourage investors to follow strategies that involve insufficient diversification and excessive transactions costs. This paper identifies the misleading claims that are made for rebalanced strategies and demonstrates in theory and by simulation that the apparent advantages of rebalanced strategies over infinite horizons give an inaccurate impression of their performance over finite horizons. Copyright © 2016 John Wiley & Sons, Ltd.

February 17, 2016 doi: 10.1002/ijfe.1545 open full text
Asymmetric Monetary Policy Rules for an Open Economy: Evidence from Canada and the UK.
Mustafa Caglayan, Zainab Jehan, Kostas Mouratidis.
International Journal of Finance & Economics. February 17, 2016

We present an analytical framework to examine the open economy monetary policy rule of a central bank under asymmetric preferences. The resulting policy rule is then empirically examined using quarterly data with regard to Canada and the UK from 1983q1 to 2007q4. Our empirical investigation shows that the open economy policy rule receives support from the data and that the monetary policy makers in the UK and Canada have asymmetric preferences. Robustness checks based on model calibration provide support for the suggested policy rule. Copyright © 2016 John Wiley & Sons, Ltd.

February 17, 2016 doi: 10.1002/ijfe.1547 open full text
The Risk Premium, Interest Rate Determination, and Monetary Independence Under a Fixed, but Adjustable, Exchange Rate.
Kit Pasula.
International Journal of Finance & Economics. February 17, 2016

This paper examines interest rate determination and monetary independence in a small economy with a fixed exchange rate. The risk premium is determined endogenously in the stochastic, general‐equilibrium model. The sign of the risk premium and the magnitude of the interest rate depend on the specification of the policy rule for the future exchange rate. Increases in domestic credit can decrease, increase or have no effect on the interest rate. The offset coefficient can differ from −1 (the ‘trilemma’ may not hold), but numerical calculations indicate that the offset is close to −1. Under certain conditions, empirical analyses overestimate monetary independence. Copyright © 2016 John Wiley & Sons, Ltd.

February 17, 2016 doi: 10.1002/ijfe.1548 open full text
Convergence in Corporate Statutory Tax Rates in the Asian and Pacific Economies.
Yang Chen, Juan Carlos Cuestas, Paulo José Regis.
International Journal of Finance & Economics. February 15, 2016

Countries in the Asia and Pacific region have shown many macroeconomic similarities during a period of economic integration. This paper argues that there may be one more macroeconomic feature to add to the list: strong statutory tax convergence. Using data on the statutory corporate tax rate in 15 countries from 1980 to 2014, we identify (i) a significant dynamic tax convergence pattern and (ii) three tax convergence clubs. The latter consist of the small tax haven economies of Hong Kong and Singapore, the East Asian countries (plus one) and the South and Southeast Asian and Oceania countries. These economies, within groups, have been reducing the tax gaps with their neighbours over time. Copyright © 2016 John Wiley & Sons, Ltd.

February 15, 2016 doi: 10.1002/ijfe.1546 open full text
The Role of a Changing Market Environment for Credit Default Swap Pricing.
Julian S. Leppin, Stefan Reitz.
International Journal of Finance & Economics. January 14, 2016

This paper investigates the impact of a changing market environment on the pricing of credit default swaps (CDS) spreads written on debt from EURO STOXX 50 firms. A panel smooth transition regression reveals that parameter estimates of standard CDS‐pricing variables are time varying depending on current values of a set of variables such as the European Central Bank's systemic stress composite index, the Sentix index for the current and future economic situation and the VStoxx. These variables describe the market's transition between different regimes, thereby reflecting the impact of substantial swings in agents' risk perception on CDS spreads. Overall, our results confirm the importance of nonlinearities in the pricing of risk derivatives during tranquil and turbulent times. Copyright © 2016 John Wiley & Sons, Ltd.

January 14, 2016 doi: 10.1002/ijfe.1543 open full text
Current Account Reversals in Industrial Countries: does the Exchange Rate Regime Matter?
Cosimo Pancaro, Christian Saborowski.
International Journal of Finance & Economics. December 21, 2015

This paper studies current account reversals in industrial countries across different exchange rate regimes. There are two major findings which have important implications for industrial economies with external imbalances: first, triggers of current account reversals differ between exchange rate regimes. While the current account deficit and the output gap are significant predictors of reversals across all regimes, reserve coverage, credit booms, openness to trade and the US short term interest rate determine the likelihood of reversals only under more rigid regimes. Conversely, the real exchange rate affects the probability of experiencing a reversal only under flexible arrangements. Second, current account reversals in advanced economies do not have an independent effect on growth. This result holds not only for industrial economies in general but also for countries with fixed exchange rate regimes in particular. Copyright © 2015 John Wiley & Sons, Ltd.

December 21, 2015 doi: 10.1002/ijfe.1535 open full text
Monetary Developments and Expansionary Fiscal Consolidations: Evidence from the EMU.
António Afonso, Luís Martins.
International Journal of Finance & Economics. December 17, 2015

We provide new insights into the existence of expansionary fiscal consolidations in the Economic and Monetary Union, using annual panel data from 14 European Union countries, over the period of 1970–2013. Different measures were calculated for assessing fiscal consolidations, based on the changes in the cyclically adjusted primary balance. A similar ad hoc approach was used to compute monetary episodes. Panel estimations for private consumption show that, in some cases, when fiscal consolidations are coupled with monetary expansions, the traditional Keynesian signals are reversed in the cases of general government final consumption expenditure, social transfers and taxes. Keynesian effects prevail when fiscal consolidations are not matched by monetary easing. Panel probit estimations suggest that longer consolidations contribute positively to its success, whilst the opposite is the case for revenue‐based ones. Copyright © 2015 John Wiley & Sons, Ltd.

December 17, 2015 doi: 10.1002/ijfe.1544 open full text
Can High‐frequency Trading Strategies Constantly Beat the Market?
Viktor Manahov.
International Journal of Finance & Economics. November 25, 2015

Policymakers are still debating whether or not high‐frequency trading (HFT) is beneficial or harmful to financial markets. We develop four artificial stock markets populated with HFT scalpers and aggressive high‐frequency traders using Strongly Typed Genetic Programming trading algorithm. We simulate real‐life HFT by applying Strongly Typed Genetic Programming to real‐time millisecond data of Apple, Bank of America, Russell 1000 and Russell 2000 and observe that HFT scalpers front‐run the order flow generating persistent profits. We also use combinations of forecasting techniques as benchmarks to demonstrate that HFT scalping strategies anticipate the trading order flow and constantly beat the market. Copyright © 2015 John Wiley & Sons, Ltd.

November 25, 2015 doi: 10.1002/ijfe.1541 open full text
Welfare and Stochastic Dominance for the Measurement of Banks' Domestic Systemic Importance: Analytical Framework and Application.
Gaston Andrés Giordana.
International Journal of Finance & Economics. November 24, 2015

This paper proposes an analytical framework to rank alternative measures of banks' systemic importance in terms of their welfare impact. The advantage of our approach is that it does not require knowing the exact mathematical form of the underlying welfare function in the absence of a widely accepted model of systemic risk. The framework consists of two pillars. First, economic welfare is linked to the measured degree of systemic importance of banks. Second, the association between the concepts of stochastic and welfare dominance of distributions of the measured degree of systemic importance is defined. Then, the alternative measures can be welfare‐ranked by just establishing stochastic dominance relationships. An illustration is presented using Luxembourg data. Copyright © 2015 John Wiley & Sons, Ltd.

November 24, 2015 doi: 10.1002/ijfe.1542 open full text
The Pass‐through of Exchange Rate in the Context of the European Sovereign Debt Crisis.
Nidhaleddine Ben Cheikh, Christophe Rault.
International Journal of Finance & Economics. November 11, 2015

This paper investigates whether exchange rate pass‐through (ERPT) into import prices is a nonlinear phenomenon for five heavily indebted Euro area countries, namely the so‐called GIIPS group (Greece, Ireland, Italy, Portugal and Spain). Using logistic smooth transition models, we explore the existence of nonlinearity with respect to sovereign bond yield spreads (versus the German bund) as an indicator of confidence crisis/macroeconomic instability. Our results provide strong evidence that the extent of ERPT is higher in periods of macroeconomic distress, that is, when sovereign bond yield spreads exceed a given threshold. For almost all the GIIPS countries, we reveal that the increase in macroeconomic instability and the loss of confidence during the recent sovereign debt crisis have entailed higher sensitivity of import prices to exchange rate movements. For instance, the rate of pass‐through in Greece is equal to 0.66% when the yield differential is below 2.13%, but beyond this threshold level, the sensitivity of import prices becomes higher and reaches full ERPT. Our findings raise the serious question of whether the exchange rate could be an effective tool to boost the trade balance and prevent deflationary threats when financial crisis hits. Copyright © 2015 John Wiley & Sons, Ltd.

November 11, 2015 doi: 10.1002/ijfe.1539 open full text
The Relative Predictability of Stock Markets in the Americas.
Graham Smith, Aneta Dyakova.
International Journal of Finance & Economics. November 03, 2015

The degree of return predictability is measured for seven Latin American stock markets and those in Canada and the United States using three finite‐sample variance ratio tests. Daily data for the period beginning in February 1994 and ending in December 2011 are used in a fixed‐length rolling window to capture short‐lived predictability, track changes in predictability through time and rank markets by relative predictability. Overall, the degree of return predictability varies widely. The most predictable are those located in Chile and Peru; the least predictable are in Argentina and Brazil. Predictability has decreased for all of those stock markets examined, except those located in Ecuador and the United States. Predictability largely coincides with times of crisis. Copyright © 2015 John Wiley & Sons, Ltd.

November 03, 2015 doi: 10.1002/ijfe.1536 open full text
Linkages Between the US and European Stock Markets: A Fractional Cointegration Approach.
Guglielmo Maria Caporale, Luis A. Gil‐Alana, James C. Orlando.
International Journal of Finance & Economics. November 03, 2015

This paper analyses the long‐memory properties of US and European stock indices, as well as their linkages, using fractional integration and fractional cointegration techniques. These methods are more general and have higher power than the standard ones usually employed in the literature. The empirical evidence based on them suggests the presence of unit roots in both the Standard and Poor's 500 Index and the Euro Stoxx 50 Index. Also, fractional cointegration appears to hold at least for the subsample from December 1996 to March 2009 ending when the global financial crisis was still severe; subsequently, the US and European stock markets diverged and followed different recovery paths, possibly as a result of various factors such as diverging growth and monetary policy. Establishing whether the degree of cointegration has changed over time is important because past literature has shown that diversification benefits arise when markets are not cointegrated. Copyright © 2015 John Wiley & Sons, Ltd.

November 03, 2015 doi: 10.1002/ijfe.1537 open full text
The Return of the Monday Effect in European Currency Markets: An Empirical Analysis of the Impact of the Economic Crisis on Market Efficiency.
Peter J. Bush, John E. Stephens.
International Journal of Finance & Economics. October 15, 2015

This paper examines the relationship of multiple currencies, coupled with the Euro, to examine if there is evidence of the return of the Monday effect as a result of the recent global economic crisis. Each currency pair, which consists of the US dollar, Japanese yen, Great British pound, Canadian dollar, and Australian dollar, is compared with the Euro to find evidence to support the presence of the Monday effect. The currency pairs are tested in 1999–2004 as the first time period, again in 2005–2009 as the second time period, and then finally in 2010–2012 as the final time period, which represents the period impacted by the economic crisis. It is the authors' contention that the economic crisis that occurred after 2008 had a significant impact in the currency markets and that the Monday effect has become more pronounced because of a weakening of market efficiency. The results provide evidence that in the 2010–2012 period three currency pairs exhibit a statistically significant Monday effect. This Monday effect was not evident in either the 1999–2004 or the 2005–2009 periods, according to our analysis. This leads the authors to postulate that the economic crisis resulting from the mortgage meltdown has had a statistically verifiable effect on currency markets throughout the world. Copyright © 2015 John Wiley & Sons, Ltd.

October 15, 2015 doi: 10.1002/ijfe.1534 open full text
Bank Dividends, Real Gdp Growth And Default Risk.
Angelos Kanas.
International Journal of Finance & Economics. May 09, 2014

We reveal evidence that the US aggregate bank dividends exercise a causal impact on the US real GDP growth during the period from the introduction of the Prompt Corrective Action framework in 1992 until the outburst of the subprime mortgage market crisis in 2007. Over this period, the positive signalling effects of bank dividends outperform the negative effect of dividends on default risk. During the pre‐Prompt Corrective Action and the recent post‐2007 periods, bank dividends do not affect GDP growth. This regime‐dependent relation is due to an asymmetric role of bank default risk. These findings are of interest to bank regulators in reassessing the role of bank dividends within Basel III and carry important policy implications as bank dividends constitute an important tool available to policy makers for strengthening real activity. Copyright © 2014 John Wiley & Sons, Ltd.

May 09, 2014 doi: 10.1002/ijfe.1491 open full text
The Impact Of Fallen Angels On Investment Grade Corporate Bonds Portfolios: Evidence From The European Market.
Enrica Bolognesi, Marianna Ferro, Andrea Zuccheri.
International Journal of Finance & Economics. May 09, 2014

This work examines the impact on the price of corporate bonds denominated in Euro of a downgrade to high yield announced by Standard & Poor's and/or Moody's Investors Service. In particular, we observe the bond price behaviour around three events. The first event is the first downgrade announcement from one of the rating agencies, and we find significant cumulative abnormal returns before and at around the event. The second event is the downgrade announcement by the second rating agency: in this case, the security becomes a fallen angel and must leave the institutional portfolios constrained to investment grade (IG) securities. We record again a significant negative price reaction but larger than in the previous case and significantly higher when preceded by a widening of the credit spread in the corporate bonds market. Broadening the existing literature, we perform a third event study, focused on the subsequent bond deletion from an IG benchmark. In this case, our results show positive and significant excess returns after the month‐end index rebalancing, revealing a price reversal pattern of the fallen angel after its release from the index. This price rebound is the higher, whereas the stronger was the bond price pressure at the downgrade announcement. These insights offer some practical guideline for those professionals that manage IG and high‐yield portfolios. Copyright © 2014 John Wiley & Sons, Ltd.

May 09, 2014 doi: 10.1002/ijfe.1496 open full text
Cross‐Border Banking, Externalities And Sovereign Distress: Does The Euro Need A Common Banking Authority?
Aitor Erce.
International Journal of Finance & Economics. April 04, 2014

This paper analyses the role of linkages between cross‐border banks and sovereigns in the spread of crises. After discussing evidence from past crises, I focus on the Euro Area. Banks from the Euro‐core played a key role in shedding the seeds for the transition from the US mortgage crisis to the Euro Area crisis. While national authorities supported their damaged banks, the Euro‐system's infrastructure allowed Euro‐core banks to undo intra‐area exposures with minor disruptions. Although this helped stabilize peripheral asset markets, the extent to which public funding replaced private one implied less macroeconomic correction and the current fiscal woes. The combination of cross‐border banking and national resolution schemes creates an externality on sovereigns, who are forced to contain the effects stemming from the balance sheet management of cross‐border banks. Weak public finances can easily push a banking crisis into a fiscal one. This negative externality is reinforced by Central Banks' mandate that limits fiscal cooperation. In the context of the Euro Area, to limit this problem, the Union should equip itself with a common bank resolution authority, which delinks banks and sovereigns. In addition, to limit the externality, macro‐prudential policy could set contributions for cross‐border operators in order to pre‐fund future bank rescues. Copyright © 2014 John Wiley & Sons, Ltd.

April 04, 2014 doi: 10.1002/ijfe.1475 open full text
Nonlinear Interdependence Between The Us And Emerging Markets' Industrial Stock Sectors.
Taufiq Choudhry, Bashir Nur Osoble.
International Journal of Finance & Economics. April 04, 2014

This paper investigates the time‐varying, long‐run and short‐run dynamic relationships between stock industrial sectors of the US and three leading emerging markets/countries: Brazil, Malaysia, and South Africa between January 2000 and December 2009. A crucial empirical contribution of the study is the application of the nonlinear econometric time series techniques for the evaluation of the long‐run global relationships and causality linkages. Further contribution is the application of industrial sector indices rather than national indices. The results of the time‐varying analysis reaffirm the view that relationships between global financial markets tend to be quite volatile over time and particularly high in a time of high financial turbulence. Overall, the relatively weak interdependence between the US and the emerging markets' industry sectors suggests potential diversification benefits for investors in diversifying their portfolio investment across industrial sectors of emerging markets. Copyright © 2014 John Wiley & Sons, Ltd.

April 04, 2014 doi: 10.1002/ijfe.1494 open full text
Estimating Liquidity Risk Using The Exposure‐Based Cash‐Flow‐At‐Risk Approach: An Application To The Uk Banking Sector.
Meilan Yan, Maximilian J. B. Hall, Paul Turner.
International Journal of Finance & Economics. March 14, 2014

This paper uses a relatively new quantitative model for estimating UK banks' liquidity risk. The model is called the exposure‐based cash‐flow‐at‐risk (CFaR) model, which not only measures a bank's liquidity risk tolerance but also helps to improve liquidity risk management through the provision of additional risk exposure information. Using data for the period 1997–2010, we provide evidence that there is variable funding pressure across the UK banking industry, which is forecasted to be slightly illiquid with a small amount of expected cash outflow (i.e. £0.06 billion) in 2011. In our sample of the six biggest UK banks, only the HSBC maintains positive CFaR with 95% confidence, which means that there is only a 5% chance that HSBC's cash flow will drop below £0.67 billion by the end of 2011. RBS is expected to face the largest liquidity risk with a 5% chance that the bank will face a cash outflow that year in excess of £40.29 billion. Our estimates also suggest Lloyds TSB's cash flow is the most volatile of the six biggest UK banks, because it has the biggest deviation between its downside cash flow (i.e. CFaR) and expected cash flow. Copyright © 2014 John Wiley & Sons, Ltd.

March 14, 2014 doi: 10.1002/ijfe.1495 open full text
Dislocations In The Won‐Dollar Swap Markets During The Crisis Of 2007–2009.
Naohiko Baba, Ilhyock Shim.
International Journal of Finance & Economics. March 14, 2014

We analyse dislocations in the foreign exchange swap and cross‐currency swap markets between Korean won and US dollar from 2007 to 2009. A regime‐switching analysis of deviations from covered interest parity (CIP) identifies a crisis period starting in June 2007. Using an EGARCH model, we find that volatility index and the credit default swap spreads of Korean and US banks are the main factors explaining CIP deviations. We show that the Bank of Korea's US dollar loans of the proceeds of swaps with the US Federal Reserve were effective in reducing CIP deviations, whereas the provision of funds using its foreign reserves was not. Copyright © 2014 John Wiley & Sons, Ltd.

March 14, 2014 doi: 10.1002/ijfe.1492 open full text
Long‐Run Determinants Of The Brazilian Real: A Closer Look At Commodities.
Emanuel Kohlscheen.
International Journal of Finance & Economics. March 14, 2014

We use cointegration analysis to show that the long‐run behaviour of the Brazilian Real effective exchange rate between January 1999 and September 2012 can largely be explained by the price variation of a basket of five commodities—that accounted for 51% of Brazilian export revenues in 2011. We estimate that a 10% variation in the real price of these five commodities moves the fundamental long‐run real exchange rate by almost 5%. Changes in interest rate differentials do not explain short or long term movements in the exchange rate during this period. Furthermore, we find that deviations of the real effective exchange rate from the long run equilibrium level have an estimated half‐life of approximately 8 months. The growing exports of oil and fuel and of iron ores, as well as the important oil discoveries in the pre‐salt layer, suggest that commodity prices will continue to influence the value of the Real in the future. Copyright © 2014 John Wiley & Sons, Ltd.

March 14, 2014 doi: 10.1002/ijfe.1493 open full text
Order Flows, Fundamentals And Exchange Rates.
Kentaro Iwatsubo, Ian W. Marsh.
International Journal of Finance & Economics. March 04, 2014

We examine the links between end‐user order flows as seen by a major European commercial bank and macroeconomic fundamentals. We show that both exchange rate changes and flows are only weakly related to macroeconomic news announcements and hypothesize that ‘the cat is already out of the bag’ by the time the news is announced. Instead, order flows of financial and corporate customers reflect in real time the evolution of macroeconomies. The actions of the banks receiving the order flows in turn reveal the information to the market as a whole, which prices the exchange rate accordingly. By the time the news is announced, the exchange rate already contains the majority of the information. Copyright © 2014 John Wiley & Sons, Ltd.

March 04, 2014 doi: 10.1002/ijfe.1490 open full text
A Single Composite Financial Stress Indicator And Its Real Impact In The Euro Area.
Mevlud Islami, Jeong‐Ryeol Kurz‐Kim.
International Journal of Finance & Economics. December 28, 2013

In this paper, we construct a single composite financial stress indicator (FSI), which aims to predict developments in the real economy in the euro area. Our FSI was shown to perform better than the Euro STOXX 50 volatility index for the recent banking crisis and the euro‐area sovereign debt crisis and to be able to serve as an early warning indicator for negative impacts of financial stress on the real economy. Copyright © 2013 John Wiley & Sons, Ltd.

December 28, 2013 doi: 10.1002/ijfe.1483 open full text
Is Correlation Puzzle Really Puzzling? Reassessing Motives Of Foreign Asset Holdings By Us Investors.
Kenta Inoue.
International Journal of Finance & Economics. December 28, 2013

This paper addresses a correlation puzzle in the financial gravity literature by taking into account a return‐chasing motive previously under‐researched as determinants of cross‐border asset holdings. I estimate a financial gravity equation to explain US investors' behaviour and confirm that even with the return chasing motive, the correlation puzzle remains unsolved. Furthermore, the data give a limited support for the return‐chasing motive. I find that USA's foreign asset holdings cannot be well explained by the correlation structure and excess returns. Copyright © 2013 John Wiley & Sons, Ltd.

December 28, 2013 doi: 10.1002/ijfe.1476 open full text
The Impact Of The Euro Crisis On The Financial Performance Of European And North American Firms.
Greg Filbeck, Kenneth Louie, Xin Zhao.
International Journal of Finance & Economics. October 11, 2013

In this paper, we investigate the impact of the changes in European percentage sales before and after the Euro crisis for both US‐based and European‐based companies, both overall and across industries. We find that larger firms are associated with a decrease in return on assets (ROAs) in the post‐crisis era; the largtest of these large firms are associated with an increase in ROAs after the crisis. In addition, European (North American) headquartered companies experience a statistically significant decrease (increase) in European sales after controlling for the additional control variables such as industry. Overall, we note that companies which have lower European sales and strategically move their sales out of Europe after crisis experienced an increase in ROA. This result is robust after controlling for endogeneity issues. Copyright © 2013 John Wiley & Sons, Ltd.

October 11, 2013 doi: 10.1002/ijfe.1473 open full text
Fixing The Phillips Curve: The Case Of Downward Nominal Wage Rigidity In The Us.
Stefan Reitz, Ulf D. Slopek.
International Journal of Finance & Economics. October 11, 2013

Whereas microeconomic studies point to pronounced downward rigidity of nominal wages in the US economy, the standard Phillips curve neglects such a feature. Using a stochastic frontier model, we find macroeconomic evidence of a strictly nonnegative error in an otherwise standard Phillips curve in post‐war data on the US nonfinancial corporate sector. This error depends on growth in the profit ratio, output, and trend productivity, which should all determine the flexibility of wage adjustments. As the error usually surges during an economic downturn, the empirical model suggests that the downward pressure on inflation arising from higher unemployment in a standard Phillips curve framework is significantly cushioned. This might help to understand the robustness of inflation especially in the most recent past. In general, the cyclical dynamics of inflation appear to be more complex than captured by a conventional Phillips curve. Copyright © 2013 John Wiley & Sons, Ltd.

October 11, 2013 doi: 10.1002/ijfe.1472 open full text
Exchange Rate Misalignment Estimates—Sources Of Differences.
Yin‐Wong Cheung, Eiji Fujii.
International Journal of Finance & Economics. October 11, 2013

We study the differences in currency misalignment estimates obtained from datasets derived from two different International Comparison Programme (ICP) surveys. A decomposition exercise reveals that year 2005 misalignment estimates are substantially affected by the ICP price revision. Furthermore, we find that differences in misalignment estimates are systematically affected by a country's participation status in the ICP survey and its data quality—a finding that casts doubt on the economic and policy relevance of these misalignment estimates. The findings are robust to the use of alternative datasets and specifications. The patterns of changes in estimated degrees of misalignment across individual countries, as exemplified by the Brazil, Russia, India and China economies, are highly variable. Copyright © 2013 John Wiley & Sons, Ltd.

October 11, 2013 doi: 10.1002/ijfe.1474 open full text
A Global Model Of International Yield Curves: No‐Arbitrage Term Structure Approach.
Iryna Kaminska, Andrew Meldrum, James Smith.
International Journal of Finance & Economics. February 22, 2013

This paper extends a popular no‐arbitrage affine term structure model to jointly model bond markets and exchange rates across the UK, USA and euro area. Using a monthly data set of forward rates from 1992, we first demonstrate that two global factors account for a significant proportion in the variation of bond yields across countries. We also show that, for an explanation of country‐specific movements in yield curves, local factors are required. Although we implement a very general factor structure, we find that our global factors are related to global inflation and global economic activity, whereas local factors are closely linked to monetary policy rates. In this respect, our results are similar to previous work. But an important advantage of our joint international model is that we are able to decompose interest rates into risk‐free rates and risk premia. Additionally, we are able to study the implications for exchange rates. We show that whereas differences in risk‐free rates matter, to a large extent, changes in the exchange rate are determined by time‐varying exchange rate risk premia. Copyright © 2013 John Wiley & Sons, Ltd.

February 22, 2013 doi: 10.1002/ijfe.1468 open full text
The Relevance Of Accuracy For The Impact Of Macroeconomic News On Exchange Rate Volatility.
HelinÄ LaakkOnen, Markku Lanne.
International Journal of Finance & Economics. February 22, 2013

We study whether the accuracy of news announcements matters for the impact of news on exchange rate volatility. We use high‐frequency EUR/USD returns and releases of 20 US macroeconomic indicators and measure the precision of news in three different ways. When the precision is defined by the size of the first revision of the previous month's figure, we find that precise news increases volatility significantly more than imprecise news. Also, news on indicators that are in general more precise increase volatility more than news on typically imprecise indicators. Finally, we use real‐time data to measure the ‘true’ precision of news and find that the size of the first revision of the previous month's figure is a reasonable signal of ‘true’ precision. Copyright © 2013 John Wiley & Sons, Ltd.

February 22, 2013 doi: 10.1002/ijfe.1467 open full text
Financial Integration And External Sustainability.
Pascal Towbin.
International Journal of Finance & Economics. December 07, 2012

A stable net external position requires that the trade balance responds negatively to changes in the net external position. If financial integration makes financing external imbalances less costly, we expect slower external adjustment in more integrated economies. The study estimates theoretically founded trade balance reaction functions for a panel of 70 countries from 1970–2008. The empirical analysis finds that adjustment in integrated economies is slower. Consistent with the presented theory, the trade balance of integrated economies is more persistent, responds less strongly to net foreign assets and is more sensitive to fluctuations in net output. Under high integration, the response to the net external position is weak and close to the minimum required to ensure external sustainability. Copyright © 2012 John Wiley & Sons, Ltd.

December 07, 2012 doi: 10.1002/ijfe.1469 open full text
A Case For Interest Rate Inertia In Monetary Policy.
Mikael Bask.
International Journal of Finance & Economics. November 26, 2012

We argue that it is not necessary for the central bank to react to the exchange rate to have a desirable outcome in the economy. Indeed, when the Taylor rule includes contemporaneous data on the variables in the rule, the central bank can disregard from the exchange rate as long as there is enough with interest rate inertia in monetary policy. The reason is that interest rate inertia and a reaction to the current nominal exchange rate change are perfect substitutes in monetary policy. Hence, we give a rationale for the central bank to focus on the interest rate change rather than the interest rate level to have a desirable outcome in the economy, which we define as a determinate rational expectation equilibrium that is stable under least squares learning. Copyright © 2012 John Wiley & Sons, Ltd.

November 26, 2012 doi: 10.1002/ijfe.1470 open full text
The Balance Sheet Channel In A Small Open Economy In A Monetary Union.
João Sousa, Isabel Marques Gameiro.
International Journal of Finance & Economics. September 19, 2012

This paper uses a two‐country VAR approach to study the transmission of monetary policy shocks in Portugal, focusing in particular on the financial decisions of households, corporations (financial/non‐financial), the government and the rest of the world. We find that a monetary policy shock has a contractionary effect on economic activity and increases the financing needs of households and non‐financial corporations. The financial sector plays an important role, supplying the necessary funds to these sectors and thus facilitating their adjustment to the shock. We do not find much evidence of a significant systematic behaviour of the government or the rest of the world in response to monetary policy shocks. Copyright © 2012 John Wiley & Sons, Ltd.

September 19, 2012 doi: 10.1002/ijfe.1464 open full text
Financial System Sophistication And Unemployment In Industrial Countries.
Horst Feldmann.
International Journal of Finance & Economics. July 10, 2012

By using data on 21 industrial countries from 1984 to 2006 and a large number of controls, this paper studies the unemployment effects of one major characteristic of the financial system: its level of sophistication, that is, the variety of financial institutions and instruments available to the economy. The paper finds that a higher level of sophistication is likely to reduce unemployment among the total labour force as well as among high‐skilled workers. The magnitude of both effects appears to be modest. By contrast, financial system sophistication does not appear to affect unemployment among low‐skilled workers. Copyright © 2012 John Wiley & Sons, Ltd.

July 10, 2012 doi: 10.1002/ijfe.1466 open full text
Exchange Rate Reversion Under Regimes Other Than Free Float.
Luke Lin, Wenyuan Lin.
International Journal of Finance & Economics. May 11, 2012

Several studies indirectly point out that the exchange rate system may be one of the factors for establishing purchasing power parity (PPP). However, current researches on PPP have mainly focused on the recent floating period and need various statistical models to carry out. We use quantile autoregression technique to comprehensively examine the mean reversion properties of the New Taiwan Dollar (NTD), where the NTD was both in a fixed regime period and a managed floating system period. Empirical findings indicate that NTD showed comparatively faster recovery when subjected to a larger or positive disturbance from the market. Additionally, when NTD was in a fixed regime period, PPP was mostly established. But during the managed floating system period, it was only partially established. These results suggest that mean reversion of real exchange rate heavily depends on the regime effect. Copyright © 2012 John Wiley & Sons, Ltd.

May 11, 2012 doi: 10.1002/ijfe.1465 open full text
Financial Markets And International Risk Sharing In Emerging Market Economies.
Martin Schmitz.
International Journal of Finance & Economics. May 11, 2012

In light of rapidly increasing foreign equity liability positions of emerging market economies, we test for a necessary condition of international risk sharing, namely for systematic patterns between idiosyncratic output fluctuations and financial market developments. Panel analysis of 22 emerging market economies shows strong evidence for pro‐cyclicality of capital gains on domestic stock markets both over short‐term and medium‐term horizons. This implies that domestic output fluctuations can be hedged through cross‐border ownership of financial markets. Copyright © 2012 John Wiley & Sons, Ltd.

May 11, 2012 doi: 10.1002/ijfe.1463 open full text
Overcrowding Versus Liquidity In The Euro Sovereign Bond Markets.
Andrea Coppola, Alessandro Girardi, Gustavo Piga.
International Journal of Finance & Economics. April 10, 2012

With the adoption of a common currency, the degree of substitution between financial instruments supplied by EMU Member States to finance their national debts has risen. Providing the market for euro‐denominated government securities with a large volume of similar financial instruments is likely to increase liquidity and lower yields. By contrast, providing an excessive volume of the same instrument might increase the return demanded by investors. This paper aims at empirically assessing the balance between liquidity and overcrowding effects by EMU countries' issuance plans. Our results document a significant relationship between bunching in issues and bond yields. Copyright © 2012 John Wiley & Sons, Ltd.

April 10, 2012 doi: 10.1002/ijfe.1454 open full text
How Reliable Are De Facto Exchange Rate Regime Classifications?
Barry Eichengreen, Raul Razo‐Garcia.
International Journal of Finance & Economics. April 10, 2012

We analyze disagreements over de facto exchange‐rate‐regime classifications using three popular de facto regime data series. While there is a moderate degree of concurrence across classifications, disagreements are not uncommon, and they are not random. They are most prevalent in middle‐income countries (emerging markets) and low‐income (developing) countries as opposed to advanced economies. They are most prevalent for countries with well‐developed financial markets, low reserves and open capital accounts. This suggests caution when attempting to relate the exchange rate regime to financial development, the openness of the financial account, and reserve management and accumulation decisions. Copyright © 2012 John Wiley & Sons, Ltd.

April 10, 2012 doi: 10.1002/ijfe.1456 open full text
Do Credit Rating Agencies Add Value? Evidence From The Sovereign Rating Business.
Eduardo Cavallo, Andrew Powell, Roberto Rigobon.
International Journal of Finance & Economics. March 21, 2012

The debt crisis in several European Union nations has resulted in a set of downgrades in sovereign ratings, sparking a lively debate whether these opinions actually matter. Ratings and bond spreads may both be considered as noisy signals of fundamentals. Ratings only add value if, controlling for spreads and observable country fundamentals, they help explain other market variables. We employed a unique dataset of over 75 000 daily observations on emerging countries around rating actions by the three major agencies. We found that ratings do indeed add information, and this finding is robust to a variety of different tests. Copyright © 2012 John Wiley & Sons, Ltd.

March 21, 2012 doi: 10.1002/ijfe.1461 open full text
Spillovers Between Business Confidence And Stock Returns In Greece, Italy, Portugal, And Spain.
Erdal Atukeren, Turhan Korkmaz, Emrah İ Çevik.
International Journal of Finance & Economics. March 14, 2012

This paper employs Hong's (2001) causality‐in‐mean and causality‐in‐variance tests to investigate the spillovers between business confidence and stock returns for the four economically distressed Southern European countries, namely Greece, Italy, Spain, and Portugal. The sample uses monthly data and covers the period from January 1988 to December 2010. Our causality‐in‐mean results indicate that there is feedback relationship between stock returns and business confidence in Portugal. The direction of causality‐in‐mean runs from business confidence to stock returns in Italy, but it is in the reverse direction in the case of Spain. Nevertheless, there is still evidence of a contemporaneous interaction between business confidence and stock returns in both Italy and Spain. On the other hand, causality‐in‐variance indicate the presence of volatility spillovers from business confidence to stock returns in Portugal, while a causal relationship is found in the current month in the case of Italy. Business confidence causes stock returns only in the mean in Greece. These results indicate that the stock market and business confidence relationship has its own idiosyncratic properties and that the stock market reactions to the current macroeconomic environment and expectations about the future developments might evolve differently in each country. Copyright © 2012 John Wiley & Sons, Ltd.

March 14, 2012 doi: 10.1002/ijfe.1453 open full text
European Central Bank Policy‐Making And The Financial Crisis.
Janko Gorter, Fauve Stolwijk, Jan Jacobs, Jakob Haan.
International Journal of Finance & Economics. March 07, 2012

We estimated Taylor rule models for the euro area using Consensus Economics forecasts of inflation and output growth for the period 1998.6–2010.8. We first examined whether the recent financial crisis has affected European Central Bank (ECB) policies. Our results indicate that the ECB puts stronger emphasis on maintaining price stability than the earlier point estimates suggested. Next, we analysed whether economic developments in individual euro area countries affect ECB decisions. Despite the diverging economic developments in the countries in the euro area, notably during the recent financial crisis, we did not find support for the view that policy decisions have been influenced by regional developments. Copyright © 2012 John Wiley & Sons, Ltd.

March 07, 2012 doi: 10.1002/ijfe.1452 open full text