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Sustainable Finance

A special issue of Sustainability (ISSN 2071-1050).

Deadline for manuscript submissions: closed (31 December 2018) | Viewed by 128260

Special Issue Editors

Dr. Laura Baselga-Pascual

E-Mail Website
Guest Editor
Deusto Business School, University of Deusto, Camino de Mundaiz 50, 20012 San Sebastian, Spain
Interests: banking system; bank regulation; bank corporate governance; bank ethics; sustainable finance
Dr. Nebojsa Dimic

E-Mail Website
Guest Editor
University of Vaasa, Faculty of Business Studies, Accounting and Finance, Wolffintie 34, 65200 Vaasa, Finland
Interests: emerging markets; sustainable finance; banking
Dr. Wojciech Kamil Przychodzen

E-Mail Website
Guest Editor
Deusto Business School, University of Deusto, Unibertsitate Etorb., 24, 48007 Bilbo, Bizkaia, Spain
Interests: SMEs; corporate governance; sustainable finance
Prof. Dr. Antonio Trujillo-Ponce

E-Mail Website
Guest Editor
Banking and Entrepeneurial Finance Research Group (BANEF). Department of Financial Economics and Accounting, Universidad Pablo de Olavide, Ctra. de Utrera - Km. 1, 41013 Seville, Spain
Interests: banking system; bank regulation; sustainability finance; credit risk; firm valuation

Special Issue Information

Dear Colleagues,

Sustainable finance seeks to increase the contribution of finance to sustainable and inclusive growth. In particular, it aims to support economic growth while reduces pressures on the environment, addresses green-house gas emissions and tackling pollution, and improves efficiency in the use of natural resources. Moreover, sustainable finance aspires to strengthen financial stability and asset pricing by improving the assessment and management of long-term material risks and intangible drivers of value creation – including those related to environmental, social and governance (ESG) factors. In short, sustainable finance means ‘better development’ and ‘better finance’ and a financial system that is focused on the longer term, as well as material ESG factors (High-Level Expert Group on Sustainable Finance; Interim Report to Advice on Developing a Comprehensive EU Strategy on Sustainable Finance, July 2017).

This Special Issue will comprise a selection of papers addressing, among others, concerns linked to: (1) the role of banks: Banks have an essential function in the transition towards a sustainable financial system. Potential topics to be investigated include the appropriateness of the capital framework for project finance and specialized lending, possibility of a ‘green adjustment’ for minimum capital requirements (e.g., lower capital requirements for green bonds and green loans), reinforcement of Pillars II and III of prudential regulation with regard to sustainability, effect of ethics and/or governance on banks’ financial performance, etc.; (2) the role of insurance companies and pension funds: consideration of adjusting Solvency II to enable greater investment by insurance companies in sustainable equity and long-term assets could be explored; (3) the role of asset managers: as asset managers are uniquely placed to help capital flow towards more sustainable investments, potential research questions may include how asset managers could integrate ESG factors into their strategy; (4) the role of credit rating agencies and stock exchanges: long-term sustainability risks and opportunities should move from an ‘add-on’ consideration to a ‘built-in’ feature in ratings. Additionally, much more can be done to promote sustainability by stock exchanges, e.g., they could support the growth of the green bond market by encouraging the development and application of robust standards; and (5) the role of supervisors: regulation is a key aspect in the emerging of sustainability finance. Research questions to be analyzed may include aspects, such as the develop of a classification system for sustainable assets; the establishment of a standard and label for green bonds and other sustainable assets, the reinforcement of ESG reporting requirements, the enhancing of the role of the supervisors in assessing ESG-related risks, etc.

Dr. Laura Baselga-Pascual
Dr. Nebojsa Dimic
Dr. Wojciech Kamil Przychodzen
Prof. Dr. Antonio Trujillo-Ponce
Guest Editors

Manuscript Submission Information

Manuscripts should be submitted online at www.mdpi.com by registering and logging in to this website. Once you are registered, click here to go to the submission form. Manuscripts can be submitted until the deadline. All submissions that pass pre-check are peer-reviewed. Accepted papers will be published continuously in the journal (as soon as accepted) and will be listed together on the special issue website. Research articles, review articles as well as short communications are invited. For planned papers, a title and short abstract (about 100 words) can be sent to the Editorial Office for announcement on this website.

Submitted manuscripts should not have been published previously, nor be under consideration for publication elsewhere (except conference proceedings papers). All manuscripts are thoroughly refereed through a single-blind peer-review process. A guide for authors and other relevant information for submission of manuscripts is available on the Instructions for Authors page. Sustainability is an international peer-reviewed open access semimonthly journal published by MDPI.

Please visit the Instructions for Authors page before submitting a manuscript. The Article Processing Charge (APC) for publication in this open access journal is 2400 CHF (Swiss Francs). Submitted papers should be well formatted and use good English. Authors may use MDPI's English editing service prior to publication or during author revisions.

Keywords

  • Environmental, social and governance (ESG) factors
  • Sustainability risks
  • Banking system
  • Insurance companies
  • Environmental regulation
  • Accounting for sustainability
  • Sustainable investment goals
  • Ethics in finance

Published Papers (17 papers)

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Research

16 pages, 2703 KiB  
Article
Rating the Raters: Evaluating how ESG Rating Agencies Integrate Sustainability Principles
by Elena Escrig-Olmedo, María Ángeles Fernández-Izquierdo, Idoya Ferrero-Ferrero, Juana María Rivera-Lirio and María Jesús Muñoz-Torres
Sustainability 2019, 11(3), 915; https://doi.org/10.3390/su11030915 - 11 Feb 2019
Cited by 182 | Viewed by 50038
Abstract
Environmental, social, and governance (ESG) rating agencies, acting as relevant financial market actors, should take a stand on working towards achieving a more sustainable development. In this context, the objective of this paper is, on the one hand, to understand how criteria used [...] Read more.
Environmental, social, and governance (ESG) rating agencies, acting as relevant financial market actors, should take a stand on working towards achieving a more sustainable development. In this context, the objective of this paper is, on the one hand, to understand how criteria used by ESG rating agencies in their assessment processes have evolved over the last ten years and, on the other hand, to analyze whether ESG rating agencies are contributing to fostering sustainable development by the inclusion of sustainability principles into their assessment processes and practices according to the ESG criteria. This research is based on a comparative descriptive analysis of the public information provided by the most representative ESG rating and information provider agencies in the financial market in two periods: 2008 and 2018. The findings show that ESG rating agencies have integrated new criteria into their assessment models to measure corporate performance more accurately and robustly in order to respond to new global challenges. However, a deep analysis of the criteria also shows that ESG rating agencies do not fully integrate sustainability principles into the corporate sustainability assessment process. Full article
(This article belongs to the Special Issue Sustainable Finance)
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22 pages, 1865 KiB  
Article
Quantifying Risk in Traditional Energy and Sustainable Investments
by Antonio Díaz, Gonzalo García-Donato and Andrés Mora-Valencia
Sustainability 2019, 11(3), 720; https://doi.org/10.3390/su11030720 - 30 Jan 2019
Cited by 7 | Viewed by 3320
Abstract
These days we are witnessing a deep change in the characteristics of the type of energy that our economies are supplied with. A clear trend is that sustainable and green energies are decisively replacing traditional fossil fuel-based sources of energy. For various reasons, [...] Read more.
These days we are witnessing a deep change in the characteristics of the type of energy that our economies are supplied with. A clear trend is that sustainable and green energies are decisively replacing traditional fossil fuel-based sources of energy. For various reasons, this fundamental change implies an increasing risk in investments on portfolios heavily based on traditional energy industries. What is less known, is that these industries have returns that show a very low correlation with sustainable fossil fuel-free stock portfolios making them an appealing tool for portfolio managers to design properly diversified investments. In this study we examine this and related phenomena proposing statistical methods to implement the expected shortfall (ES), the challenging risk measure recently adopted by the financial regulator. We obtain evidence that a newly proposed backtesting procedure for the ES based on multinomial tests is an adequate and simple method to validate these risk measures when applied to a highly volatile stock index. Backtesting results of the ES show that flexible heavy-tailed distribution α–stable performs well for modelling the loss distribution. These results are even improved when the variances of fossil fuel price returns are included as external regressors in the GARCH model variance equation. In this case, the ES computed from the four considered loss distributions perform properly. Full article
(This article belongs to the Special Issue Sustainable Finance)
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19 pages, 312 KiB  
Article
Integrated Reporting Assurance: Perceptions of Auditors and Users in Spain
by Estibaliz Goicoechea, Fernando Gómez-Bezares and José Vicente Ugarte
Sustainability 2019, 11(3), 713; https://doi.org/10.3390/su11030713 - 29 Jan 2019
Cited by 17 | Viewed by 5758
Abstract
Integrated reporting is a key instrument used to inform stakeholders about the sustainability issues of a company. Only an assured report can effectively instill confidence in its users regarding the sustainability of the company. Based on the International Integrated Reporting Framework issued by [...] Read more.
Integrated reporting is a key instrument used to inform stakeholders about the sustainability issues of a company. Only an assured report can effectively instill confidence in its users regarding the sustainability of the company. Based on the International Integrated Reporting Framework issued by the International Integrated Reporting Council (IIRC), the authors solicited perceptions from auditors and audit report users about several aspects of integrated reporting assurance. An analysis of the responses suggests that integrated reporting assurance is important, but there are many challenges (both methodological and related to the characteristics of non-financial information) for auditors to overcome. Reporting companies and auditors must work to overcome these problems. The former ones must improve the quality of non-financial information and the later must adapt their audit procedures. This paper provides valuable insights into preferences regarding the form and content of the audit report on integrated reporting. This study is useful to regulators of audit activity, auditors’ corporations, the IIRC, and other international associations, academics, and audit report users, and contributes to the current integrated reporting literature by examining the perceptions of auditors and users regarding the assurance of integrated reporting. Integrated reporting assurance is still an under-explored field of research. Full article
(This article belongs to the Special Issue Sustainable Finance)
16 pages, 434 KiB  
Article
Trade Credit as a Sustainable Resource during an SME’s Life Cycle
by Francisco-Javier Canto-Cuevas, María-José Palacín-Sánchez and Filippo Di Pietro
Sustainability 2019, 11(3), 670; https://doi.org/10.3390/su11030670 - 28 Jan 2019
Cited by 17 | Viewed by 4715
Abstract
Inadequate access to finance for small and medium-sized enterprises (SMEs) can present a major impediment to SMEs’ contribution towards driving sustainable economic growth. The aim of this article is to investigate the role of life cycle on SME financing decisions while focusing on [...] Read more.
Inadequate access to finance for small and medium-sized enterprises (SMEs) can present a major impediment to SMEs’ contribution towards driving sustainable economic growth. The aim of this article is to investigate the role of life cycle on SME financing decisions while focusing on trade credit. To this end, we study whether trade credit and its firm-factor determinants differ depending on the stage of life cycle of the SMEs. For the empirical analysis, a sample is employed of manufacturing SMEs operating in 12 European Union countries over the period 2008–2014 and a panel data model with fixed effects is applied. We find that the business life cycle influences trade credit and that this influence is stronger in young firms, although this relation is non-linear across the firms’ life cycle. We further show that the impact of firm-factor determinants on trade credit differs across the business life cycle in terms of magnitude levels. Our results demonstrate that the business life cycle matters when analysing trade credit, and it should therefore be considered when managers and policymakers strive to solve the financial problems of an SME and to consequently incorporate the SME into the sustainable economy. Full article
(This article belongs to the Special Issue Sustainable Finance)
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16 pages, 1092 KiB  
Article
Sustainability Performance. A Comparative Analysis in the Polish Banking Sector
by Zbigniew Korzeb and Reyes Samaniego-Medina
Sustainability 2019, 11(3), 653; https://doi.org/10.3390/su11030653 - 26 Jan 2019
Cited by 34 | Viewed by 5331
Abstract
This article analyses the Polish banking sector’s involvement with sustainable development through a multidimensional evaluation applying the technique for order preference by similarity ideal solution (TOPSIS) method with different weight vectors. Our results highlight numerous shortcomings in the sustainability performance of commercial banking [...] Read more.
This article analyses the Polish banking sector’s involvement with sustainable development through a multidimensional evaluation applying the technique for order preference by similarity ideal solution (TOPSIS) method with different weight vectors. Our results highlight numerous shortcomings in the sustainability performance of commercial banking activities. In fact, there was backsliding during the analysed period (2015–2017), which suggests that supporting sustainability performance was not one of the priorities of the Polish banking sector. However, we found a dichotomy between national and foreign banks. The government-owned banks and national banks showed greater commitment to this issue than did the banks with foreign capital. This finding suggests that banks with foreign capital were not fully interested in sponsoring activities aimed at sustainable development. Full article
(This article belongs to the Special Issue Sustainable Finance)
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20 pages, 274 KiB  
Article
Corporate Social Responsibility Disclosure and Stock Price Crash Risk: Evidence from China
by Jingwen Dai, Chao Lu and Jipeng Qi
Sustainability 2019, 11(2), 448; https://doi.org/10.3390/su11020448 - 16 Jan 2019
Cited by 36 | Viewed by 7511
Abstract
We take Chinese A-share listed companies in years 2010–2015 as a sample to examine the relationship between Corporate Social Responsibility (CSR) information disclosure and stock price crash risk using the fixed effect model. The results show that: (1) There is an inverted U-shaped [...] Read more.
We take Chinese A-share listed companies in years 2010–2015 as a sample to examine the relationship between Corporate Social Responsibility (CSR) information disclosure and stock price crash risk using the fixed effect model. The results show that: (1) There is an inverted U-shaped nonlinear relationship between CSR information disclosure and stock price crash risk. That is, as the CSR information disclosure level increases, the CSR information disclosure first aggravates and then reduces the stock price crash risk; (2) under different disclosure motives, there is a significant difference in the impact of CSR information disclosure on stock price crash risk. There is still an inverted U-shaped relationship between mandatory CSR information disclosure and stock price crash risk, but not for the semi-mandatory and voluntary disclosure; (3) the academic independent director has a positive adjustment effect on the relationship between CSR information disclosure and stock price crash risk, while the institutional investor has a negative adjustment effect on the relationship between CSR information disclosure and stock price crash risk. The research is of great significance for promoting the fulfillment of CSR, improving corporate governance and stabilizing the capital market. Full article
(This article belongs to the Special Issue Sustainable Finance)
22 pages, 310 KiB  
Article
Board Attributes and Corporate Social Responsibility Disclosure: A Meta-Analysis
by Jaime Guerrero-Villegas, Leticia Pérez-Calero, José Manuel Hurtado-González and Pilar Giráldez-Puig
Sustainability 2018, 10(12), 4808; https://doi.org/10.3390/su10124808 - 17 Dec 2018
Cited by 43 | Viewed by 7058
Abstract
Many studies have examined the relationships between board attributes (board independence, CEO duality, board size, and women on boards) and corporate social responsibility disclosure (CSRD) as a means to improve a firm’s reputation. This research was performed in various international settings and uneven [...] Read more.
Many studies have examined the relationships between board attributes (board independence, CEO duality, board size, and women on boards) and corporate social responsibility disclosure (CSRD) as a means to improve a firm’s reputation. This research was performed in various international settings and uneven outcomes were obtained. We therefore meta-analyzed 88 studies to summarize scattered evidence and found that CEO duality had a significantly negative relationship with CSRD, while board independence, board size and women representation had a significantly positive relationship with CSRD. These relationships were more significant in countries with low levels of commitment to sustainable goals. Thus, our study revealed differences in the relationship between board attributes and CSRD, and that these differences were conditioned by the institutional contexts in which firms operate. Our research has practical implications for practitioners and policy makers alike as we offer guidelines on the most suitable corporate governance mechanisms to achieve lower capital costs and better access to finance. Full article
(This article belongs to the Special Issue Sustainable Finance)
22 pages, 2137 KiB  
Article
Is the High Interest Rate Combined with Intense Deleveraging Campaign Desirable? A Collateral Mechanism under Stringent Credit Constraints
by Qiuyi Yang, Youze Lang and Changsheng Xu
Sustainability 2018, 10(12), 4803; https://doi.org/10.3390/su10124803 - 16 Dec 2018
Cited by 1 | Viewed by 2937
Abstract
Recently, China has witnessed a continuously increasing Debt-to-GDP ratio and a vigorously expanding shadow banking sector. Housing prices hovering at a high level seriously affect the lives of ordinary residents. Disappointingly, a variety of activities such as intense deleveraging campaigns and tight monetary [...] Read more.
Recently, China has witnessed a continuously increasing Debt-to-GDP ratio and a vigorously expanding shadow banking sector. Housing prices hovering at a high level seriously affect the lives of ordinary residents. Disappointingly, a variety of activities such as intense deleveraging campaigns and tight monetary controls produce little effect. Why do these seemingly rightful implementations hardly work? What should governments do to stop the incessant expansion of asset bubbles? What role ought financial supervisors to play in regulating credit markets and facilitating a sustainable and inclusive economic growth? This paper sets off from the pledgeability of asset bubbles and constructs a generalized overlapping generation (OLG) model incorporating financial frictions and collateral constraints, in order to explore the bubble evolution under the alterations of market interest rates and credit conditions. The results show a unique bubble equilibrium, in which the steady-state bubble size expands when interest rate increases. Numerical results further reveal that the bubble-inflation effect of a higher interest rate is reinforced by a more stringent collateral constraint. Our research contributes to an explanation of the inefficacy of present policies and provides the following policy implications: The combination of an interest rate elevation and a strong loan restriction is in fact undesirable for suppressing asset bubbles. Not merely does it strike productivity and capital formation, but it also fosters investors to hold more risky assets to solve liquidity shortage under constrained borrowing capacity. Full article
(This article belongs to the Special Issue Sustainable Finance)
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16 pages, 1167 KiB  
Article
Incorporating Sustainability Considerations into Lending Decisions and the Management of Bad Loans: Evidence from Greece
by Theodosios Anagnostopoulos, Antonis Skouloudis, Nadeem Khan and Konstantinos Evangelinos
Sustainability 2018, 10(12), 4728; https://doi.org/10.3390/su10124728 - 12 Dec 2018
Cited by 7 | Viewed by 4524
Abstract
The financial sector’s role is undeniably crucial in modern economies. Yet, this sector often attracts criticisms. Of particular concern is the negligence of proper credit risk management, which may undermine (macro)economic stability. The absence of appropriate policies (industry and institutional) draws attention to [...] Read more.
The financial sector’s role is undeniably crucial in modern economies. Yet, this sector often attracts criticisms. Of particular concern is the negligence of proper credit risk management, which may undermine (macro)economic stability. The absence of appropriate policies (industry and institutional) draws attention to firm performance indicators, which remain short-sighted in assessing the provision of sustainable risk management. The sector and, in particular, financial intermediaries (FIs) must confront the complex task of assessing their impacts and, in doing so, actively endorse enabling conditions towards sustainable development. Our paper offers managerial insights from a wide range of financial intermediaries (FIs) currently active in Greece. We address the critical question of how FIs incorporate sustainability in credit risk management. A mixed-methods approach of online questionnaires and semi-structured interviews was utilized to link and investigate managerial perspectives of sustainability risks and their impact on bad loans. The executives’ responses revealed that sustainability risk management indeed exists, but it has yet to penetrate core processes. It does provide strong motives over new management techniques and contributes to a higher level of materiality of FI’s core operations. Nonetheless, there is still plenty of room for improvement before sustainability risk assessments are comprehensively incorporated in all phases of the credit risk management process so that a robust sustainability management approach underpins FI’s core mission and goals. Full article
(This article belongs to the Special Issue Sustainable Finance)
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24 pages, 294 KiB  
Article
Do Credit Ratings Take into Account the Sustainability Performance of Companies?
by Maite Cubas-Díaz and Miguel Ángel Martínez Sedano
Sustainability 2018, 10(11), 4272; https://doi.org/10.3390/su10114272 - 19 Nov 2018
Cited by 16 | Viewed by 3501
Abstract
In the last few decades, sustainability performance measuring has become a widely-studied issue, and various measurement proposals have been put forward. However, it is also important to know whether those measures are actually being used in the real world. In this case, we [...] Read more.
In the last few decades, sustainability performance measuring has become a widely-studied issue, and various measurement proposals have been put forward. However, it is also important to know whether those measures are actually being used in the real world. In this case, we take one very important indicator used by investors when they make investment decisions: the credit rating of the potential investment. We test whether credit ratings take into account the above-mentioned measures. Following the literature, we conduct a fixed-effects ordered probit analysis, using as controls the variables usually found in the related literature on credit rating analysis. The dependent variables are S&P ratings. We find that companies with higher sustainability performance tend to have higher credit ratings, though having a less consistent performance over time seems to have no effect. To check the robustness of our results, we also perform the analysis for different sectors and sub-periods. In addition, we conduct the analysis using sustainability scores provided by ASSET4 (Datastream) as an explanatory variable and using Fitch credit ratings as the explained variable. Full article
(This article belongs to the Special Issue Sustainable Finance)
15 pages, 268 KiB  
Article
Family Female Executives and Firm Financial Performance
by Pilar Giraldez-Puig and Emma Berenguer
Sustainability 2018, 10(11), 4163; https://doi.org/10.3390/su10114163 - 12 Nov 2018
Cited by 15 | Viewed by 3065
Abstract
The aim of this paper is to analyze the relationship of family executive women with firm performance in family firms. We have obtained a final sample of 269 family and non-family firms (comprising 3073 firm/year observations) from the Spanish High Council of Chamber [...] Read more.
The aim of this paper is to analyze the relationship of family executive women with firm performance in family firms. We have obtained a final sample of 269 family and non-family firms (comprising 3073 firm/year observations) from the Spanish High Council of Chamber (SHCC) website, while data were collected from System for Analysis of Iberian Balances database (SABI) for the period 2000 to 2011. Applying a generalized method of moments (GMM) panel data methodology, we observe a positive effect on the return on assets (ROA) depending on the existence of family ties of executive women. Several implications for the career development of women in family firms arise from our results. Full article
(This article belongs to the Special Issue Sustainable Finance)
16 pages, 459 KiB  
Article
Development of the Financial Sector and Growth of Microfinance Institutions: The Moderating Effect of Economic Growth
by Isabel Sainz-Fernandez, Begoña Torre-Olmo, Carlos López-Gutiérrez and Sergio Sanfilippo-Azofra
Sustainability 2018, 10(11), 3930; https://doi.org/10.3390/su10113930 - 29 Oct 2018
Cited by 12 | Viewed by 5015
Abstract
This article analyzes the moderating effect the degree of economic growth has on the relationship between the development of the financial system and the microfinance industry activity. The hypotheses proposed establish that the influence of the development of the financial system on the [...] Read more.
This article analyzes the moderating effect the degree of economic growth has on the relationship between the development of the financial system and the microfinance industry activity. The hypotheses proposed establish that the influence of the development of the financial system on the activity of the microfinance sector will be different depending on the level of economic growth. The estimates were made using the System-GMM methodology for panel data, which allows controlling the unobservable heterogeneity and the problems of endogeneity. We find that the degree of economic growth affects the relationship between the financial sector development and microfinance activity. Under negative economic growth conditions, the development of the financial sector has a negative impact on the activity of the microfinance sector, but when economic growth is high, the development of the financial sector positively influences the activity of the microfinance sector. Full article
(This article belongs to the Special Issue Sustainable Finance)
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18 pages, 2537 KiB  
Article
Bail-In: A Sustainable Mechanism for Rescuing Banks
by Marc Sanchez-Roger, María Dolores Oliver-Alfonso and Carlos Sanchís-Pedregosa
Sustainability 2018, 10(10), 3789; https://doi.org/10.3390/su10103789 - 19 Oct 2018
Cited by 7 | Viewed by 4293
Abstract
Until the Great Recession, rescuing banks with taxpayers’ money had been the preferred way to deal with banking crises. The dramatic effects of these practices on the real economy highlighted that bailouts are not a sustainable method to resolve troubled banks going forward. [...] Read more.
Until the Great Recession, rescuing banks with taxpayers’ money had been the preferred way to deal with banking crises. The dramatic effects of these practices on the real economy highlighted that bailouts are not a sustainable method to resolve troubled banks going forward. As a result, a new regulatory framework has been proposed, forcing the financial industry to move from “bailout” to “bail-in.” Understanding the implications of such a change is key to ensuring the success of these new banking rules. This article aims to build up a comprehensive and unbiased set of research articles in order to draw conclusions about the current status of the academic literature in the field of capital and loss absorption requirements. A research agenda on the topic is also proposed. The methodological approach undertaken is based on ProKnow-C (Knowledge Development Process-Constructivist). We also contribute to the development of Proknow-C methodology by adding a cross-reference extension to the original framework. The results of our analysis point out that further research has to be undertaken on the subject of loss absorption requirements. Full article
(This article belongs to the Special Issue Sustainable Finance)
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22 pages, 268 KiB  
Article
Is the Social Responsibility Information Disclosed by the Companies really Valuable?—Evidence from Chinese Stock Price Synchronicity
by Jingwen Dai, Chao Lu, Yang Yang and Yanhong Zheng
Sustainability 2018, 10(10), 3578; https://doi.org/10.3390/su10103578 - 08 Oct 2018
Cited by 16 | Viewed by 3638
Abstract
Social responsibility information disclosed by listed companies is an important way to transfer non-financial information to the stock market, which affects the level of stock price synchronicity. In order to explore whether Corporate Social Responsibility (CSR) information is valuable in improving capital market [...] Read more.
Social responsibility information disclosed by listed companies is an important way to transfer non-financial information to the stock market, which affects the level of stock price synchronicity. In order to explore whether Corporate Social Responsibility (CSR) information is valuable in improving capital market pricing efficiency, this paper conducted empirical research based on a sample of China Shanghai and Shenzhen A-share listed companies in years 2010–2015. The results showed that: (1) Overall, there is a significant positive correlation between CSR information and stock price synchronicity; (2) under different disclosure motives, there is no significant difference in the impact of CSR on stock price synchronicity; (3) Securities analysts and institutional investors can negatively regulate the positive relationship between CSR and stock price synchronicity, while the media will intensify the positive effect of CSR on stock price synchronicity. This research is of great significance in promoting the fulfillment of CSR and improving capital market pricing efficiency. Full article
(This article belongs to the Special Issue Sustainable Finance)
13 pages, 2837 KiB  
Article
Linkage Analysis among China’s Seven Emissions Trading Scheme Pilots
by Xuedi Li, Jie Ma, Zhu Chen and Haitao Zheng
Sustainability 2018, 10(10), 3389; https://doi.org/10.3390/su10103389 - 23 Sep 2018
Cited by 8 | Viewed by 2662
Abstract
This paper focuses on the time-varying correlation among China’s seven emissions trading scheme markets. Correlation analysis shows a weak connection among these markets for the whole sample period, which spans from 9 June 2014 to 30 June 2017. The return rate series of [...] Read more.
This paper focuses on the time-varying correlation among China’s seven emissions trading scheme markets. Correlation analysis shows a weak connection among these markets for the whole sample period, which spans from 9 June 2014 to 30 June 2017. The return rate series of the seven markets show the characteristics of a fat-tailed and skewed distribution, and the Vector Autoregression (VAR) residuals present a significant Autoregressive Conditional Heteroscedasticity (ARCH) effect. Therefore, we adopt Vector Autoregression Generalized ARCH model with Dynamic Conditional Correlation (VAR-DCC-GARCH) to capture the time-varying correlation coefficients. The results of the VAR-DCC-GARCH show that the conditional correlation coefficients fluctuate fiercely over time. At some points, the different markets present a significant correlation with the value of the even peaks of the coefficient at 0.8, which indicates that these markets are closely connected. However, the connection between each market does not last long. According to the actual situation of China’s regional carbon emission markets, policy factors may explain most of the temporary, significant co-movement among markets. Full article
(This article belongs to the Special Issue Sustainable Finance)
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16 pages, 915 KiB  
Article
Is the Development of China’s Financial Inclusion Sustainable? Evidence from a Perspective of Balance
by Bao Zhu, Shiting Zhai and Jing He
Sustainability 2018, 10(4), 1200; https://doi.org/10.3390/su10041200 - 16 Apr 2018
Cited by 12 | Viewed by 4658
Abstract
Balance plays an important role in the sustainable development of China’s financial inclusion. First, this paper reports the entropy weight method used to construct a financial inclusion index (FII) and measure the level of development of financial inclusion in China’s regions. [...] Read more.
Balance plays an important role in the sustainable development of China’s financial inclusion. First, this paper reports the entropy weight method used to construct a financial inclusion index (FII) and measure the level of development of financial inclusion in China’s regions. Second, the concept of the Gini coefficient of financial inclusion is proposed and the structural balance of China’s financial inclusion is shown, as calculated by using this Gini coefficient. Third, we report the use of a dynamic shift-share model to further discuss the development balance of the financial inclusion of China’s regions. The results show that there is an imbalance in the development of financial inclusion in China’s regions. For 2006–2016, the Gini coefficient and the structural balance of China’s financial inclusion show a significant downward trend. The gap of the financial inclusion development between regions is narrowing and the structure of China’s financial inclusion tends to be reasonable. The penetration dimension is at a structural disadvantage. Availability and usage dimension are at a structural advantage, which can effectively promote the development of China’s financial inclusion. In the future, the government should establish a more balanced financial inclusion development mechanism, making full use of structural advantages of the availability and usage of financial services to promote the sustainable development of China’s financial inclusion. Full article
(This article belongs to the Special Issue Sustainable Finance)
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18 pages, 2884 KiB  
Article
A Taxonomy of Climate Accounting Principles for Financial Portfolios
by Jakob Thomä, Stan Dupré and Michael Hayne
Sustainability 2018, 10(2), 328; https://doi.org/10.3390/su10020328 - 27 Jan 2018
Cited by 11 | Viewed by 6330
Abstract
Climate accounting for financial portfolios has seen growing prominence in the past years, thanks to both private and public sector initiatives. Over 200 financial institutions have conducted some form of portfolio analysis. In the context of this growing prominence, the academic and practitioner’s [...] Read more.
Climate accounting for financial portfolios has seen growing prominence in the past years, thanks to both private and public sector initiatives. Over 200 financial institutions have conducted some form of portfolio analysis. In the context of this growing prominence, the academic and practitioner’s discussion of climate accounting has largely focused on questions of climate data quality and choices for estimation models. Missing in this debate is an analysis of the underlying accounting principles related to climate data. There is no overview of the climate accounting principles and the implications of choosing different principles and rules. This article provides a taxonomy of key accounting choices currently applied for climate accounting of financial portfolios, notably regarding units of accounting, boundaries of accounting, normalization rules, and allocation rules. Based on a review of data providers accounting approaches in practice, as well as sample applications of different accounting principles, it distills key accounting categories and highlights the potential sensitivity of the ultimate results to these choices. The article concludes that climate assessments of portfolios may be equally sensitive to accounting choices as to the quality of underlying data, suggesting more attention and standards are needed. Full article
(This article belongs to the Special Issue Sustainable Finance)
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