Journal of Risk and Financial Management

20 pages, 383 KB

Open AccessArticle

Fundamental Risk and Capital Structure Adjustment Speed: International Evidence

by Dilesh Rawal, Jitendra Mahakud and L Maheswar Rao Achary

J. Risk Financial Manag. 2025, 18(8), 468; https://doi.org/10.3390/jrfm18080468 - 21 Aug 2025

Viewed by 406

This study investigates the impact of countries’ fundamental risk on the speed of adjustment (SOA) towards firms’ target capital structures. Using a dataset comprising 17,747 non-financial firms from 44 countries, this study finds that a reduction in country-specific fundamental risk significantly increases a [...] Read more.

This study investigates the impact of countries’ fundamental risk on the speed of adjustment (SOA) towards firms’ target capital structures. Using a dataset comprising 17,747 non-financial firms from 44 countries, this study finds that a reduction in country-specific fundamental risk significantly increases a firm’s rate of leverage adjustment. More specifically, we observe that a one standard deviation reduction in fundamental risk results in a substantial 12.79% increase in SOA for book leverage and a 4.81% increase for market leverage. The study also finds evidence of the influence of individual dimensions of fundamental risk on SOA. It implies that improved operational efficiency, high foreign accessibility, enhanced corporate transparency, and increased political stability expedite the pace of leverage adjustment within firms. Robustness checks using a machine learning random forest estimator predicted leverage targets to corroborate these findings. The results highlight the critical role of institutional quality in reducing financing frictions and promoting more efficient corporate capital adjustments. These insights have profound implications for policymakers, emphasising the need to strengthen institutional and regulatory frameworks to enhance capital market integrity and reduce friction, which could ultimately create value for the firm stakeholders. Full article

(This article belongs to the Special Issue Emerging Issues in Economics, Finance and Business—2nd Edition)

18 pages, 411 KB

Open AccessArticle

ESG Practices, Green Innovation, and Financial Performance: Panel Evidence from ASEAN Firms

by Suchart Tripopsakul

J. Risk Financial Manag. 2025, 18(8), 467; https://doi.org/10.3390/jrfm18080467 - 21 Aug 2025

Viewed by 531

Abstract

This study examines the impact of environmental, social, and governance (ESG) practices on green innovation and financial performance among 174 publicly listed firms across ASEAN countries over the period from 2019 to 2023. Utilizing an unbalanced panel dataset of firms from key ASEAN [...] Read more.

This study examines the impact of environmental, social, and governance (ESG) practices on green innovation and financial performance among 174 publicly listed firms across ASEAN countries over the period from 2019 to 2023. Utilizing an unbalanced panel dataset of firms from key ASEAN economies, the analysis employs panel regression techniques. Green innovation performance is measured through innovation disclosures related to environmental technologies, while financial success is assessed via return on assets (ROA) and Tobin’s Q. The findings reveal that environmental and governance disclosure scores positively influence green innovation, whereas social scores exert a more immediate impact on financial performance. Moreover, green innovation is found to partially mediate the relationship between overall ESG practices and long-term market valuation. These results highlight the strategic role of ESG transparency in enhancing innovation-driven competitiveness, responsible business conduct, and sustainable employment across Southeast Asian markets. Implications are discussed for corporate managers, policymakers, and socially responsible investors. The study reinforces the case for ESG-aligned strategy as a pathway to both innovation, inclusive economic growth, and long-term competitiveness in ASEAN markets. Full article

(This article belongs to the Section Business and Entrepreneurship)

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17 pages, 375 KB

Open AccessArticle

The Moderating Role of SSB Conflicts of Interest and Audit Committee Independence in Good Corporate Governance and Islamic Bank Performance in Indonesia

by Jerry Marmen Simanjuntak, Faizi Faizi and Airlangga Surya Kusuma

J. Risk Financial Manag. 2025, 18(8), 466; https://doi.org/10.3390/jrfm18080466 - 21 Aug 2025

Viewed by 263

Abstract

The Sharia Supervisory Board (SSB) and the Audit Committee (AC) are crucial components of Good Corporate Governance (GCG) in Islamic banks. This study investigates the moderating role of SSB conflicts of interest arising from cross-membership in various Islamic Financial Institutions (IFIs) and AC [...] Read more.

The Sharia Supervisory Board (SSB) and the Audit Committee (AC) are crucial components of Good Corporate Governance (GCG) in Islamic banks. This study investigates the moderating role of SSB conflicts of interest arising from cross-membership in various Islamic Financial Institutions (IFIs) and AC members’ independence in the relationship between GCG and Islamic bank performance in Indonesia. Using a sample of ten full-fledged Islamic banks from 2014 to 2023, a Moderated Regression Analysis (MRA) was employed to test three hypotheses. The key findings indicate a significant positive relationship between GCG and Islamic bank financial performance. However, no significant moderating effects of SSB conflicts of interest on the GCG–performance relationship were found. Conversely, a significant positive moderating effect of AC independence was identified. These results have important implications for practitioners, regulators, and stakeholders of the Islamic banking industry. Islamic banks should prioritize the establishment of independent audit committees to strengthen their governance framework. While SSB cross-membership may not necessarily harm performance, banks should implement appropriate oversight mechanisms to manage potential conflicts of interest. The Indonesian Financial Services Authority (OJK) and similar regulatory bodies should continue to emphasize the importance of audit committee independence in their governance guidelines. Full article

(This article belongs to the Section Banking and Finance)

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32 pages, 706 KB

Open AccessReview

Corporate Failure Prediction: A Literature Review of Altman Z-Score and Machine Learning Models Within a Technology Adoption Framework

by Christoph Braunsberger and Ewald Aschauer

J. Risk Financial Manag. 2025, 18(8), 465; https://doi.org/10.3390/jrfm18080465 - 20 Aug 2025

Viewed by 645

Abstract

Research on corporate failure prediction is focused on increasing the model’s statistical accuracy, most recently via the introduction of a variety of machine learning (ML)-based models, often overlooking the practical appeal and potential adoption barriers in the context of corporate management. This literature [...] Read more.

Research on corporate failure prediction is focused on increasing the model’s statistical accuracy, most recently via the introduction of a variety of machine learning (ML)-based models, often overlooking the practical appeal and potential adoption barriers in the context of corporate management. This literature review compares ML models with the classic, widely accepted Altman Z-score through a technology adoption lens. We map how technological features, organizational readiness, environmental pressure and user perceptions shape adoption using an integrated technology adoption framework that combines the Technology–Organization–Environment framework with the Technology Acceptance Model. The analysis shows that Z-score models offer simplicity, interpretability and low cost, suiting firms with limited analytical resources, whereas ML models deliver superior accuracy and adaptability but require advanced data infrastructure, specialized expertise and regulatory clarity. By linking the models’ characteristics with adoption determinants, the study clarifies when each model is most appropriate and sets a research agenda for long-horizon forecasting, explainable artificial intelligence and context-specific model design. These insights help managers choose failure prediction tools that fit their strategic objectives and implementation capacity. Full article

(This article belongs to the Section Business and Entrepreneurship)

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26 pages, 484 KB

Open AccessArticle

Exploring Governance Failures in Australia: ESG Pillar-Level Analysis of Default Risk Mediated by Trade Credit Financing

by Thuong Thi Le, Tanvir Bhuiyan, Thi Le and Ariful Hoque

J. Risk Financial Manag. 2025, 18(8), 464; https://doi.org/10.3390/jrfm18080464 - 20 Aug 2025

Viewed by 743

Abstract

This study examines the impact of overall Environmental, Social, and Governance (ESG) performance and its pillars on the default probability of Australian-listed firms. Using a panel dataset spanning 2014 to 2022 and applying the Generalized Method of Moments (GMM) regression, we find that [...] Read more.

This study examines the impact of overall Environmental, Social, and Governance (ESG) performance and its pillars on the default probability of Australian-listed firms. Using a panel dataset spanning 2014 to 2022 and applying the Generalized Method of Moments (GMM) regression, we find that firms with higher ESG scores exhibit a significantly lower likelihood of default. Disaggregating the ESG components reveals that the Environmental and Social pillars have a negative association with default risk, suggesting a risk-mitigating effect. In contrast, the Governance pillar demonstrates a positive relationship with default probability, which may reflect potential greenwashing behavior or an excessive focus on formal governance mechanisms at the expense of operational and financial performance. Furthermore, the analysis identifies trade credit financing (TCF) as a partial mediator in the ESG–default risk nexus, indicating that firms with stronger ESG profiles rely less on external short-term financing, thereby reducing their default risk. These findings provide valuable insights for corporate management, investors, regulators, and policymakers seeking to enhance financial resilience through sustainable practices. Full article

(This article belongs to the Special Issue Emerging Trends and Innovations in Corporate Finance and Governance)

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24 pages, 731 KB

Open AccessArticle

Textual Analysis of Sustainability Reports: Topics, Firm Value, and the Moderating Role of Assurance

by Sunita Rao, Norma Juma and Karthik Srinivasan

J. Risk Financial Manag. 2025, 18(8), 463; https://doi.org/10.3390/jrfm18080463 - 20 Aug 2025

Viewed by 394

Abstract

This study investigated how specific sustainability topics disclosed in standalone sustainability reports influence firm value and whether third-party assurance moderates this relationship. Drawing on signaling, agency, stakeholder, and legitimacy theories, we applied latent Dirichlet allocation (LDA) to extract latent topics from U.S. corporate [...] Read more.

This study investigated how specific sustainability topics disclosed in standalone sustainability reports influence firm value and whether third-party assurance moderates this relationship. Drawing on signaling, agency, stakeholder, and legitimacy theories, we applied latent Dirichlet allocation (LDA) to extract latent topics from U.S. corporate sustainability reports. We analyzed their impact on Tobin’s Q using panel regressions and supplement our findings with discrete Bayesian networks (DBNs) and Shapley additive explanations (SHAP) to capture non-linear patterns. We identified six core topics: environmental impact, sustainable consumption, daily necessities, socio-economic impact, healthcare, and operations. The results revealed that topics of healthcare and daily necessities have immediate and sustained positive effects on firm value, while environmental and socio-economic impact topics demonstrate lagged effects, primarily two years after disclosure. The presence of assurance, however, produces mixed outcomes: it enhances credibility in some cases, but reduces firm value in others, especially when applied to environmental and socio-economic disclosures. This suggests a dual signaling effect of assurance, potentially increasing investor scrutiny when gaps in performance are highlighted. Our findings underscore the importance of topic selection, consistency in reporting, and strategic application of assurance in ESG communications to maintain stakeholder trust and market value. Full article

(This article belongs to the Special Issue Sustainability Reporting and Corporate Governance)

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17 pages, 3919 KB

Open AccessArticle

Dynamic Connectedness Among Energy Markets and EUA Climate Credit: The Role of GPR and VIX

by Maria Leone, Alberto Manelli and Roberta Pace

J. Risk Financial Manag. 2025, 18(8), 462; https://doi.org/10.3390/jrfm18080462 - 20 Aug 2025

Viewed by 301

Abstract

Energy raw materials are the basis of the economic system. From this emerges the need to examine in more detail how various uncertainty indices interact with the dynamic of spillover connectedness among energy markets. The TVP-VAR model is used to investigate connectedness among [...] Read more.

Energy raw materials are the basis of the economic system. From this emerges the need to examine in more detail how various uncertainty indices interact with the dynamic of spillover connectedness among energy markets. The TVP-VAR model is used to investigate connectedness among US, European, and Indian oil and gas markets and the S&P carbon allowances Eua index. Following this, the wavelet decomposition technique is used to capture the dynamic correlations between uncertainty indices (GPR and VIX) and connectedness indices. First, the results indicate that energy market spillovers are time-varying and crisis-sensitive. Second, the time–frequency dependence among uncertainty indices and connectedness indices is more marked and can change with the occurrence of unexpected events and geopolitical conflicts. The VIX index shows a positive dependence on total dynamic connectedness in the mid-long-term, while the GPR index has a long-term effect only after 2020. The analysis of the interdependence among the connectedness of each market and the uncertainty indices is more heterogeneous. Political tensions and geopolitical risks are, therefore, causal factors of energy prices. Given their strategic and economic importance, policy makers and investors should establish a risk warning mechanism and try to avoid the transmission of spillovers as much as possible. Full article

(This article belongs to the Special Issue Banking Practices, Climate Risk and Financial Stability)

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27 pages, 696 KB

Open AccessArticle

The Impact of Economic Freedom on Economic Growth in Western Balkan Countries

by Roberta Bajrami, Kaltrina Bajraktari and Adelina Gashi

J. Risk Financial Manag. 2025, 18(8), 461; https://doi.org/10.3390/jrfm18080461 - 19 Aug 2025

Viewed by 404

Abstract

Although it is generally accepted that economic freedom stimulates economic growth, its effects in transitional economies are still up for debate. More empirical research is needed to examine the long-term effects of economic freedom on growth in the Western Balkans, a region characterised [...] Read more.

Although it is generally accepted that economic freedom stimulates economic growth, its effects in transitional economies are still up for debate. More empirical research is needed to examine the long-term effects of economic freedom on growth in the Western Balkans, a region characterised by uneven reform trajectories, fiscal pressures, and institutional fragility. This study examines the effects of seven fundamental factors on real GDP per capita growth (annual percentage change) in six Western Balkan nations between 2013 and 2023. These factors include property rights, government spending, government integrity, business freedom, monetary freedom, trade openness, and education spending. Importantly, in order to better capture macroeconomic constraints, it takes into account two fiscal burden indicators: the public debt and the government budget deficit. A triangulated analytical framework is used: Random Forest regression identifies non-linear patterns and ranks the importance of variables; Bayesian Vector Autoregression (VAR) models dynamic interactions and inertia; and the Generalised Method of Moments (GMM) handles endogeneity and reveals causal relationships. The GMM results show that while government integrity (β = −0.0820, p = 0.0206), government spending (β = −0.0066, p = 0.0312), and public debt (β = −0.0172, p = 0.0456) have negative effects on growth, property rights (β = 0.0367, p = 0.0208), monetary freedom (β = 0.0413, p = 0.0221), and the government budget deficit (β = 0.0498, p = 0.0371) have positive and significant effects on growth. Although the majority of economic freedom indicators are statistically insignificant, Bayesian VAR confirms strong growth persistence (GDP(−1) = 0.7169, SE = 0.0373). On the other hand, the Random Forest model identifies the most significant variables as property rights (3.72), public debt (5.88), business freedom (4.65), and government spending (IncNodePurity = 9.80). These results show that the growth effects of economic freedom depend on the context and are mediated by the state of the economy. Market liberalisation and legal certainty promote growth, but their advantages could be offset by inadequate budgetary restraint and difficulties with transitional governance. A hybrid policy approach, one that blends strategic market reforms with improved institutional quality, prudent debt management, and efficient public spending, is necessary for the region to achieve sustainable development. Full article

(This article belongs to the Section Economics and Finance)

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20 pages, 328 KB

Open AccessArticle

Sectoral Contributions to Financial Market Resilience: Evidence from GCC Countries

by Khaled O. Alotaibi, Mohammed A. Al-Shurafa, Meshari Al-Daihani and Mohamed Bouteraa

J. Risk Financial Manag. 2025, 18(8), 460; https://doi.org/10.3390/jrfm18080460 - 19 Aug 2025

Viewed by 388

Abstract

This study investigates the contributions of five key sectors—insurance, materials, utilities, real estate, and transport—to the financial markets of six Gulf Cooperation Council (GCC) countries from 2004 to 2023. Grounded in the Sectoral Linkage Theory and Endogenous Growth Theory, the study employs a [...] Read more.

This study investigates the contributions of five key sectors—insurance, materials, utilities, real estate, and transport—to the financial markets of six Gulf Cooperation Council (GCC) countries from 2004 to 2023. Grounded in the Sectoral Linkage Theory and Endogenous Growth Theory, the study employs a Panel Autoregressive Distributed Lag (Panel ARDL) model to examine both short-term and long-term sectoral impacts on financial market resilience. The findings reveal that the insurance and transport sectors offer short-term market stimulation, but lack persistent effects. Conversely, the materials, utilities, and real estate sectors exhibit strong, long-run contributions to financial stability and economic diversification. These results highlight the asymmetric impact of sectoral dynamics on market performance in resource-rich contexts. This research contributes to the literature by providing empirical evidence on sectoral interdependence in oil-dependent economies and highlights the importance of structural diversification for sustainable financial resilience. The study provides actionable insights for policymakers and investors seeking to enhance market resilience and reduce reliance on hydrocarbon revenues through targeted sectoral development. Full article

(This article belongs to the Section Financial Markets)

36 pages, 1778 KB

Open AccessArticle

The Integration of Value-at-Risk in Assessing ESG-Based Collaborative Synergies in Cross-Border Acquisitions: Real Options Approach

by Andrejs Čirjevskis

J. Risk Financial Manag. 2025, 18(8), 459; https://doi.org/10.3390/jrfm18080459 - 19 Aug 2025

Viewed by 729

Abstract

This paper presents a novel framework for valuing ESG-based collaborative synergies in cross-border mergers and acquisitions (M&A) using a real options approach, with a specific application to L’Oréal’s acquisition of Aesop. The methodology integrates a Value-at-Risk (VaR) model to quantify and adjust for [...] Read more.

This paper presents a novel framework for valuing ESG-based collaborative synergies in cross-border mergers and acquisitions (M&A) using a real options approach, with a specific application to L’Oréal’s acquisition of Aesop. The methodology integrates a Value-at-Risk (VaR) model to quantify and adjust for ESG-related risks, providing a more robust valuation framework. We demonstrate how linking sustainability practices with real option valuation in multinational corporations (MNCs) can enhance long-term value creation and reduce risk, thereby aligning synergy goals with ESG objectives. By applying our VaR-adjusted model to the L’Oréal–Aesop case, this study contributes to corporate finance by integrating advanced risk management and sustainability into synergy valuation, and to international business by providing an empirical example of this integrated valuation approach for cross-border acquisitions. Full article

(This article belongs to the Special Issue Finance, Risk and Sustainable Development)

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17 pages, 302 KB

Open AccessArticle

Banking in the Age of Blockchain and FinTech: A Hybrid Efficiency Framework for Emerging Economies

by Vladimir Ristanović, Dinko Primorac and Ana Mulović Trgovac

J. Risk Financial Manag. 2025, 18(8), 458; https://doi.org/10.3390/jrfm18080458 - 18 Aug 2025

Viewed by 755

Abstract

In the present era where digitalization, FinTech, and blockchain technologies are reshaping the global financial landscape, traditional measures of bank performance need to evolve. This paper introduces a hybrid approach that combines multi-criteria efficiency assessment and econometric modeling to evaluate bank performance within [...] Read more.

In the present era where digitalization, FinTech, and blockchain technologies are reshaping the global financial landscape, traditional measures of bank performance need to evolve. This paper introduces a hybrid approach that combines multi-criteria efficiency assessment and econometric modeling to evaluate bank performance within the context of digital transformation in emerging economies. Focusing on a panel of banks across selected emerging markets, this study first applies a multi-criteria decision-making technique (Data Envelopment Analysis) to assess operational efficiency using both conventional indicators and digitalization-driven metrics, such as mobile banking penetration and blockchain adoption. We then employ a panel econometric model to investigate the factors that shape efficiency outcomes, with special attention to FinTech and blockchain innovations as potential drivers. The results reveal a nuanced picture of how digital technologies can influence bank performance, highlighting both opportunities and constraints for financial institutions in less developed markets. The findings offer actionable insights for bank managers, regulators, and policymakers striving to balance traditional operational priorities with the demands of digital transformation. By linking efficiency measurement with an examination of the digitalization process, this paper provides a timely contribution to the literature on banking and financial innovation, serving as a foundation for future research and strategic decision-making in the FinTech and blockchain era. Full article

(This article belongs to the Special Issue Commercial Banking and FinTech in Emerging Economies)

24 pages, 791 KB

Open AccessArticle

Herding Behavior, ESG Disclosure, and Financial Performance: Rethinking Sustainability Reporting to Address Climate-Related Risks in ASEAN Firms

by Ari Warokka, Jong Kyun Woo and Aina Zatil Aqmar

J. Risk Financial Manag. 2025, 18(8), 457; https://doi.org/10.3390/jrfm18080457 - 16 Aug 2025

Viewed by 492

Abstract

This study examines the intersection of environmental, social, and governance (ESG) disclosure (operationalized through sustainability reporting), corporate financial performance, and the behavioral dynamics of herding in capital structure decisions among non-financial firms in five ASEAN countries. As ESG and sustainability finance gain prominence [...] Read more.

This study examines the intersection of environmental, social, and governance (ESG) disclosure (operationalized through sustainability reporting), corporate financial performance, and the behavioral dynamics of herding in capital structure decisions among non-financial firms in five ASEAN countries. As ESG and sustainability finance gain prominence in addressing climate change and climate risk, understanding the behavioral factors that relate to ESG adoption is crucial. Employing a quantitative approach, this research utilizes a purposive sample of 125 non-financial firms from Indonesia, Malaysia, the Philippines, Singapore, and Thailand, gathered from the Bloomberg Terminal spanning 2018–2023. Managerial Herding Ratio (MHR) is used to assess herding behavior, while Sustainability Report Disclosure Index (SRDI) measures ESG disclosure. Partial Least Squares Structural Equation Modeling (PLS-SEM) and Multigroup Analysis (MGA) were applied for data analysis. This research finds that while sustainability reporting enhances return on assets (ROA) and Tobin’s Q, it does not significantly relate to net profit margin (NPM). The findings also confirm that herding behavior—where companies mimic the financial structures of peers—moderates the relationship between sustainability reporting and performance outcomes, with leader firms gaining more from transparency efforts. This highlights the double-edged nature of herding: while it can accelerate ESG adoption, it may dilute the strategic depth of climate action if firms merely follow rather than lead. The study provides actionable insights for regulators and corporate strategists seeking to strengthen ESG finance as a driver for climate resilience and long-term stakeholder value. Full article

(This article belongs to the Special Issue ESG and Sustainability Finance: Addressing Climate Change and Climate Risk)

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29 pages, 1519 KB

Open AccessArticle

The Impact of Fintech Risk on Bank Performance in Africa: The PVAR Approach

by Queen Magadi Mabe and Beatrice Desiree Simo-Kengne

J. Risk Financial Manag. 2025, 18(8), 456; https://doi.org/10.3390/jrfm18080456 - 15 Aug 2025

Viewed by 398

Abstract

This paper presents an empirical investigation into the role of Fintech risk, measured by the Fintech Financial Stress Indicator (FFSI), in shaping the dynamic behavior of bank performance by employing a panel vector autoregressive (PVAR) methodology on a dataset comprising 41 banks across [...] Read more.

This paper presents an empirical investigation into the role of Fintech risk, measured by the Fintech Financial Stress Indicator (FFSI), in shaping the dynamic behavior of bank performance by employing a panel vector autoregressive (PVAR) methodology on a dataset comprising 41 banks across 11 African economies over the semi-annual period from June 2004 to December 2020. The findings reveal that bank performance, measured by return on equity (ROE), exhibits a negative and short-lived response to FFSI shock, while the effects on bank stability, cost efficiency, and return on assets (ROA) are statistically insignificant. In addition, an increase in FFSI significantly enhances both ROA and ROE, with negligible impacts on cost efficiency and stability. In contrast, a decline in FFSI has a significant negative effect on ROE and stability but remains insignificant for ROA and cost efficiency. These results indicate that FFSI shocks have asymmetric effects on ROA, cost efficiency, and bank stability but a symmetric effect on ROE. The findings suggest that engagement in financial innovation initiatives may yield performance benefits for banks, provided such strategies are pursued within a sound regulatory framework to mitigate potential excessive risk-taking. Full article

(This article belongs to the Special Issue Commercial Banking and FinTech in Emerging Economies)

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26 pages, 553 KB

Open AccessSystematic Review

Financial Education and Personal Finance: A Systematic Review of Evidence, Context, and Implications from the Spanish Language Academic Literature in Latin America

by Elena Jesús Alvarado-Cáceres, Luz Maribel Vásquez-Vásquez and Víctor Hugo Fernández-Bedoya

J. Risk Financial Manag. 2025, 18(8), 455; https://doi.org/10.3390/jrfm18080455 - 15 Aug 2025

Viewed by 624

Abstract

The growing complexity of financial markets, driven by globalization and digitalization, has increased the need for individuals to make informed financial decisions. In this context, financial education and personal finance have become crucial areas of study. This systematic review aimed to identify and [...] Read more.

The growing complexity of financial markets, driven by globalization and digitalization, has increased the need for individuals to make informed financial decisions. In this context, financial education and personal finance have become crucial areas of study. This systematic review aimed to identify and analyze the existing scientific evidence on these topics, determine the countries contributing to the literature, and extract key conclusions and lessons. A comprehensive search was conducted across the Scopus, Scielo, and La Referencia databases using keywords in Spanish. The initial query yielded 97 documents, which were filtered using seven inclusion and exclusion criteria, resulting in a final sample of 19 relevant articles. The reviewed studies highlight that financial education is a key factor in promoting economic well-being, reducing over-indebtedness, supporting entrepreneurship, and enhancing social inclusion. The effectiveness of financial education depends on equitable access to information, the use of digital tools, tailored approaches for diverse populations, and systematic program evaluation. The findings suggest that collaborative efforts between governments, educational institutions, and the financial sector are necessary to develop inclusive and practical financial education strategies, particularly for vulnerable populations. Financial education must be approached as a continuous, adaptive process to effectively respond to evolving economic challenges. Full article

(This article belongs to the Special Issue The New Horizons of Global Financial Literacy)

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18 pages, 1393 KB

Open AccessArticle

Deconstructing the Enron Bubble: The Context of Natural Ponzi Schemes and the Financial Saturation Hypothesis

by Darius Karaša, Žilvinas Drabavičius, Stasys Girdzijauskas and Ignas Mikalauskas

J. Risk Financial Manag. 2025, 18(8), 454; https://doi.org/10.3390/jrfm18080454 - 15 Aug 2025

Viewed by 377

Abstract

This study examines the Enron collapse through an integrated theoretical framework combining the financial saturation paradox with the dynamics of a naturally occurring Ponzi process. The central objective is to evaluate whether endogenous market mechanisms—beyond managerial misconduct—played a decisive role in the emergence [...] Read more.

This study examines the Enron collapse through an integrated theoretical framework combining the financial saturation paradox with the dynamics of a naturally occurring Ponzi process. The central objective is to evaluate whether endogenous market mechanisms—beyond managerial misconduct—played a decisive role in the emergence and breakdown of the Enron stock bubble. A logistic-growth-based saturation model is formulated, incorporating positive feedback effects and bifurcation thresholds, and applied to Enron’s stock price data from 1996 to 2001. The computations were performed using LogletLab 4 (version 4.1, 2017) and Microsoft^® Excel^® 2016 MSO (version 2507). The model estimates market saturation ratios (P/Pp) and logistic growth rate (r), treating market potential, initial price, and time as constants. The results indicate that Enron’s share price approached a saturation level of approximately 0.9, signaling a hyper-accelerated, unsustainable growth phase consistent with systemic overheating. This finding supports the hypothesis that a naturally occurring Ponzi dynamic was underway before the firm’s collapse. The analysis further suggests a progression from market-driven expansion to intentional manipulation as the bubble matured, linking theoretical saturation stages with observed price behavior. By integrating behavioral–financial insights with saturation theory and Natural Ponzi dynamics, this work offers an alternative interpretation of the Enron case and provides a conceptual basis for future empirical validation and comparative market studies. Full article

(This article belongs to the Section Financial Markets)

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21 pages, 1369 KB

Open AccessArticle

Economic Risk and Cryptocurrency: What Drives Global Digital Asset Adoption?

by Vyacheslav Stupak

J. Risk Financial Manag. 2025, 18(8), 453; https://doi.org/10.3390/jrfm18080453 - 14 Aug 2025

Viewed by 858

Abstract

Cryptocurrency is often viewed as a hedge against economic instability, yet the extent to which economic risk drives digital asset adoption remains unclear. This study asks to what extent does economic risk shape global cryptocurrency adoption? To address this question, the research investigates [...] Read more.

Cryptocurrency is often viewed as a hedge against economic instability, yet the extent to which economic risk drives digital asset adoption remains unclear. This study asks to what extent does economic risk shape global cryptocurrency adoption? To address this question, the research investigates how variables such as inflation, corruption, unemployment, and exchange rate volatility influence adoption patterns. Using panel data from 41 countries between 2019 and 2024, the study employs country fixed-effects regression models and Principal Component Analysis. A novel Regulatory Permissiveness Index is introduced to evaluate the role of national regulatory environments. The findings show that cryptocurrency adoption is primarily associated with structural enablers such as GDP per capita, internet penetration, and regulatory clarity. Among the economic risk indicators, higher corruption and lower unemployment significantly predict adoption. Other economic factors, such as inflation and exchange rate volatility, are not consistently significant. The results suggest that economic development and digital infrastructure, rather than reactive responses to economic crises, are the main drivers of cryptocurrency adoption. Nonetheless, the significance of corruption highlights the role of institutional dissatisfaction in adoption behaviour, even in economically stable settings. Full article

(This article belongs to the Special Issue Institutional Investors and Cryptocurrency)

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18 pages, 292 KB

Open AccessArticle

On the Nature and Security of Expiring Digital Cash

by Frank Stajano, Ferdinando Samaria and Shuqi Zi

J. Risk Financial Manag. 2025, 18(8), 452; https://doi.org/10.3390/jrfm18080452 - 13 Aug 2025

Cited by 1 | Viewed by 426

Abstract

Digital cash is coming, and it could be programmed to behave in novel ways. In 2020, the People’s Bank of China ran an experiment during which they distributed free digital cash to 50,000 citizens. But it had a twist: they programmed that digital [...] Read more.

Digital cash is coming, and it could be programmed to behave in novel ways. In 2020, the People’s Bank of China ran an experiment during which they distributed free digital cash to 50,000 citizens. But it had a twist: they programmed that digital cash to expire if not spent within a few days. This fascinating and somewhat paradoxical experiment opens many questions. If the cash expires, why would anyone accept it as payment? If it is intended to expire, can the recipient find ways to make it not expire? We explore a variety of possible attacks on expiring cash, countermeasures to those attacks, and alternative implementations, one based on CBDC and another on a public blockchain. We also discuss the more philosophical question of whether expiring cash is still cash: we argue it cannot be. Full article

(This article belongs to the Special Issue The Future of Money: Central Bank Digital Currencies, Cryptocurrencies and Stablecoins)

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16 pages, 710 KB

Open AccessArticle

Influence of Macroeconomic Variables on the Brazilian Stock Market

by Pedro Raffy Vartanian and Rodrigo Lucio Gomes

J. Risk Financial Manag. 2025, 18(8), 451; https://doi.org/10.3390/jrfm18080451 - 13 Aug 2025

Viewed by 662

Abstract

This research seeks to evaluate the effects of the preceding cyclical indicators and macroeconomic variables on the performance of the Brazilian stock market from January 2011 to December 2022. The objective is to identify how these factors influence the behavior of the main [...] Read more.

This research seeks to evaluate the effects of the preceding cyclical indicators and macroeconomic variables on the performance of the Brazilian stock market from January 2011 to December 2022. The objective is to identify how these factors influence the behavior of the main index representing this market. In this way, it was analyzed how shocks in the composite leading indicator of the economy (IACE) as well as the basic interest rate of the economy (SELIC), the broad national consumer price index (IPCA), the nominal exchange rate (in reals per dollar—BRL/USD) and the central bank economic activity index (IBC-Br) impact the performance of Brazilian stock market index (IBOVESPA). Using the vector autoregression (VAR) model with vector error correction (VEC), positive shocks were simulated in the IACE and the aforementioned macroeconomic variables to identify and compare their impacts on the index. The results obtained, through generalized impulse response functions, indicated that the shocks to the IACE, the exchange rate, and the inflation variables influenced the IBOVESPA in different and statistically significant ways. However, shocks to the economic activity index and the interest rate did not exert a statistically significant influence on the index, partially confirming the hypothesis, which was initially raised, that these factors influence the stock index in different ways. Full article

(This article belongs to the Section Applied Economics and Finance)

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18 pages, 1345 KB

Open AccessArticle

Detecting Structural Changes in Bitcoin, Altcoins, and the S&P 500 Using the GSADF Test: A Comparative Analysis of 2024 Trends

by Azusa Yamaguchi

J. Risk Financial Manag. 2025, 18(8), 450; https://doi.org/10.3390/jrfm18080450 - 12 Aug 2025

Viewed by 611

Abstract

Understanding structural regime shifts in crypto asset markets is vital for early detection of systemic risk. This study applies the Generalized Sup Augmented Dickey–Fuller (GSADF) test to daily high-frequency price data of five major crypto assets—BTC, ETH, SOL, AAVE, and BCH—from 2023 to [...] Read more.

Understanding structural regime shifts in crypto asset markets is vital for early detection of systemic risk. This study applies the Generalized Sup Augmented Dickey–Fuller (GSADF) test to daily high-frequency price data of five major crypto assets—BTC, ETH, SOL, AAVE, and BCH—from 2023 to 2025. The results reveal asset-specific structural breaks: BTC and BCH aligned with macroeconomic shocks, while DeFi tokens (e.g., AAVE, SOL) exhibited fragmented, project-driven shifts. The S&P 500 index, in contrast, showed no persistent regime shifts, indicating greater structural stability. To examine inter-asset linkages, we construct co-occurrence matrices based on GSADF breakpoints. These reveal strong co-explosivity between BTC and other assets, and unexpectedly weak synchronization between ETH and AAVE, underscoring the sectoral idiosyncrasies of DeFi tokens. While the GSADF test remains central to our analysis, we also employ a Markov Switching Model (MSM) as a secondary tool to capture short-term volatility clustering. Together, these methods provide a layered view of long- and short-term market dynamics. This study highlights crypto markets’ structural heterogeneity and proposes scalable computational frameworks for real-time monitoring of explosive behavior. Full article

(This article belongs to the Section Risk)

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17 pages, 674 KB

Open AccessArticle

Falling Short in the Digital Age: Evaluating the Performance of Data Center ETFs

by Davinder K. Malhotra, Ivar Kirkhorn and Frank Ragone

J. Risk Financial Manag. 2025, 18(8), 449; https://doi.org/10.3390/jrfm18080449 - 11 Aug 2025

Viewed by 632

Abstract

This study evaluates the performance of U.S. data center Exchange-Traded Funds (ETFs) relative to major equity and technology benchmarks, using monthly returns from January 2000 through December 2024, with particular emphasis on the COVID-19 period and the subsequent post-vaccine era. Data center ETFs [...] Read more.

This study evaluates the performance of U.S. data center Exchange-Traded Funds (ETFs) relative to major equity and technology benchmarks, using monthly returns from January 2000 through December 2024, with particular emphasis on the COVID-19 period and the subsequent post-vaccine era. Data center ETFs have not provided better risk-adjusted returns even though they are often advertised as access points to the digital economy. Digital infrastructure demand increased through the pandemic but did not improve the performance of these funds which stayed weak across both traditional and conditional multi-factor asset pricing models. These ETFs struggle with asset selection and market timing proficiency, which leads to relatively poor performance results during volatile market conditions. The downside risks linked to these funds tend to match or exceed the downside risks of broader indices like the S&P 1500 Information Technology Index. Although these investments are based on strong thematic narratives, they do not achieve returns that align with investor expectations. Full article

(This article belongs to the Section Financial Markets)

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10 pages, 240 KB

Open AccessArticle

The Lunar New Year Effect on Stock Market Returns: Evidence from Ho Chi Minh Stock Exchange

by Loc Dong Truong, H. Swint Friday and Dung Tri Nguyen

J. Risk Financial Manag. 2025, 18(8), 448; https://doi.org/10.3390/jrfm18080448 - 11 Aug 2025

Viewed by 681

Abstract

This study is devoted to investigating the Lunar New Year effect on market returns for the Ho Chi Minh Stock Exchange (HOSE). The data employed in this study include a daily series of the VN30-Index, which is a market capitalization weighted index of [...] Read more.

This study is devoted to investigating the Lunar New Year effect on market returns for the Ho Chi Minh Stock Exchange (HOSE). The data employed in this study include a daily series of the VN30-Index, which is a market capitalization weighted index of 30 large capitalization and high liquidity stocks traded on the HOSE, for the period from 6 February 2012 to 31 December 2024. The empirical findings derived from ordinary least squares (OLS), exponential-generalized autoregressive conditional heteroskedasticity [EGARCH(1,1)] regression models consistently confirm that the average return in the last two days and five days before the Lunar New Year are significantly higher than the average market returns on other days of the year. However, this study finds that the average return during the first two trading days and five trading days following the Lunar New Year are not significantly different from the average market returns on other days throughout the year. Full article

(This article belongs to the Special Issue Behavioral Finance and Financial Management)

33 pages, 4945 KB

Open AccessArticle

Development of the ESG Pillar Scores and Data Availability: Empirical Evidence from the Insurance Industry

by Tim Brasch and Christian Eckert

J. Risk Financial Manag. 2025, 18(8), 447; https://doi.org/10.3390/jrfm18080447 - 11 Aug 2025

Viewed by 512

Abstract

The aim of this paper is to empirically investigate the development of the ESG score and, in particular, the respective pillar scores, as well as the data availability based on region, firm size, and business sector within the insurance industry. We also analyze [...] Read more.

The aim of this paper is to empirically investigate the development of the ESG score and, in particular, the respective pillar scores, as well as the data availability based on region, firm size, and business sector within the insurance industry. We also analyze the interrelationships of the ESG score and data availability, focusing on descriptive statistics and correlation analysis. For this purpose, we use data from the London Stock Exchange Group (LSEG), over a period of 13 years (2010–2022). Our results show that region, firm size, and the different core businesses of insurers lead to different developments in ESG scores and data availability. Differences can also be found in the general level of the scores. However, there is no clear pattern in the evolution of ESG scores and data availability. Furthermore, we find significant and strong interrelationships within the ESG score and its data availability. In summary, the findings of this study provide a foundation for improving the interpretation and application of ESG metrics. Full article

(This article belongs to the Special Issue Environmental, Social, and Governance (ESG), Corporate Social Responsibility (CSR), and Green Finance)

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22 pages, 436 KB

Open AccessArticle

Investigation of the Antecedents of Digital Transformation and Their Effects on Operational Performance in the Jordanian Manufacturing Sector

by Hebah Almajali, Nawaf Thuneibat and Nour Qatawneh

J. Risk Financial Manag. 2025, 18(8), 446; https://doi.org/10.3390/jrfm18080446 - 11 Aug 2025

Viewed by 509

Abstract

Digitalization is viewed as an important promoter of competitiveness, offering future avenues to new value and revenue opportunities. Nevertheless, the factors that determine the drivers of digital transformation (DT) adoption still need to be explored and understood further. Based on the RBV and [...] Read more.

Digitalization is viewed as an important promoter of competitiveness, offering future avenues to new value and revenue opportunities. Nevertheless, the factors that determine the drivers of digital transformation (DT) adoption still need to be explored and understood further. Based on the RBV and institutional theory, this study examines the roles played by organizational culture, IT readiness, and customer demands of firms in the implementation of DT and the consequent improvement of operational performance. The results of a survey carried out among 226 manufacturing companies in Jordan indicate that these antecedent factors have a significant and positive effect on the adoption of DT and operational performance. The results also demonstrate that the implementation of DT enhances the operational performance of firms by increasing their efficiency and effectiveness. This research adds to the existing literature on digital transformation through an examination of the antecedents of its adoption. These findings are useful, as they assist firms in viewing digital transformation as an overarching opportunity that needs to be leveraged to improve their operational performance and competitiveness. Full article

(This article belongs to the Special Issue AI and Emerging Technologies in Governance, Risk and Earnings Management)

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24 pages, 3643 KB

Open AccessArticle

Inequality in Housing Payment Insecurity Across the United States During the COVID-19 Pandemic: Who Was Affected and Where?

by Xinba Li and Chuanrong Zhang

J. Risk Financial Manag. 2025, 18(8), 445; https://doi.org/10.3390/jrfm18080445 - 10 Aug 2025

Viewed by 549

Abstract

Widespread job losses and economic disruptions during the COVID-19 pandemic led to significant housing payment insecurity, disproportionately affecting various demographic groups and regions across the United States (US). While previous studies have explored the pandemic’s impact on housing insecurity, they all focused on [...] Read more.

Widespread job losses and economic disruptions during the COVID-19 pandemic led to significant housing payment insecurity, disproportionately affecting various demographic groups and regions across the United States (US). While previous studies have explored the pandemic’s impact on housing insecurity, they all focused on specific periods, populations or areas. No study has yet provided a comprehensive analysis of inequality in housing insecurity throughout the pandemic, particularly in terms of spatial disparities. Our study addresses this gap by analyzing individual-level and aggregated data from the Household Pulse Survey (HPS) (N = 2,062,005). The findings reveal heightened vulnerability among individuals aged 40–54, those with lower education and income, Black and Hispanic/Latino populations, women, households with children, individuals who experienced job loss, the divorced, and larger households. Renters experienced greater housing insecurity than homeowners. A hotspot analysis identified the southeastern US as a region of acute housing insecurity, revealing that insecurity cannot be solely measured by affordability. The regression results show that poverty is the main reason for differences in housing insecurity across places, and rent burden is also important. The geographically weighted regression (GWR) model shows stronger coefficients in southern states, highlighting that poverty and rent burden are particularly influential factors in these areas. This study shows the multifaceted nature of housing insecurity, calling for targeted group or location policy interventions. Full article

(This article belongs to the Section Financial Markets)

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34 pages, 1602 KB

Open AccessArticle

Dynamic Spillovers Among Green Bond Markets: The Impact of Investor Sentiment

by Thuy Duong Le, Ariful Hoque and Thi Le

J. Risk Financial Manag. 2025, 18(8), 444; https://doi.org/10.3390/jrfm18080444 - 8 Aug 2025

Viewed by 555

Abstract

This research investigates the dynamic spillover effects among green bond markets and the impact of investor sentiment on these spillovers. We employ different research methods, including a time-varying parameter vector autoregression, an exponential general autoregressive conditional heteroscedasticity, and a generalized autoregressive conditional heteroskedasticity-mixed [...] Read more.

This research investigates the dynamic spillover effects among green bond markets and the impact of investor sentiment on these spillovers. We employ different research methods, including a time-varying parameter vector autoregression, an exponential general autoregressive conditional heteroscedasticity, and a generalized autoregressive conditional heteroskedasticity-mixed data sampling model. Our sample is for twelve international green bond markets from 3 January 2022 to 31 December 2024. Our results evidence the strong correlation between twelve green bond markets, with the United States and China being the net risk receivers and Sweden being the largest net shock transmitter. We also find the varied impact of direct and indirect investor sentiment on the net total directional spillovers. Our research offers fresh contributions to the existing literature in different ways. On the one hand, it adds to the green finance literature by clarifying the dynamic spillovers among leading international green bond markets. On the other hand, it extends behavioral finance research by including direct and indirect investor sentiment in the spillovers of domestic and foreign green bond markets. Our study is also significant to related stakeholders, including investors in their portfolio rebalancing and policymakers in stabilizing green bond markets. Full article

(This article belongs to the Special Issue Borrowers’ Behavior in Financial Decision-Making)

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20 pages, 313 KB

Open AccessArticle

Unlocking Innovation from Within: The Role of Internal Knowledge in Enhancing Firm Performance in Sub-Saharan Africa

by Johnson Bosco Rukundo and Bernis Byamukama

J. Risk Financial Manag. 2025, 18(8), 443; https://doi.org/10.3390/jrfm18080443 - 8 Aug 2025

Viewed by 459

Abstract

This paper examines the role of internal knowledge in driving innovation and firm performance in sub-Saharan Africa, using panel data from the World Bank Enterprise Surveys covering fifteen countries in the region. Specifically, the analysis assesses the extent to which internal knowledge, measured [...] Read more.

This paper examines the role of internal knowledge in driving innovation and firm performance in sub-Saharan Africa, using panel data from the World Bank Enterprise Surveys covering fifteen countries in the region. Specifically, the analysis assesses the extent to which internal knowledge, measured through employee educational attainment, stimulates innovation, and whether innovation, in turn, contributes to improved firm performance. The findings reveal that internal knowledge has a significant positive effect on innovation, and that both internal knowledge and innovation are key drivers of firm performance in developing country contexts. These results underscore the strategic importance of building firm-level knowledge capabilities to enhance competitiveness, particularly among manufacturing firms. The study offers valuable policy implications, emphasizing the need to strengthen internal learning systems, workforce skills, and innovation support mechanisms to foster inclusive industrial growth in sub-Saharan Africa. Full article

(This article belongs to the Special Issue Sustainable Production: Finance, Technology, and Institutional Quality)

20 pages, 672 KB

Open AccessArticle

Driving Financial Inclusion in Indonesia with Innovative Credit Scoring

by Latif Adam, Jiwa Sarana, Bitra Suyatno, Muhammad Soekarni, Joko Suryanto, Tuti Ermawati, Yeni Saptia, Septian Adityawati, Erla Mychelisda, Yogi Pamungkas, M. Rifqy Nurfauzan Abdillah, Lisa Angelia and Mahmud Thoha

J. Risk Financial Manag. 2025, 18(8), 442; https://doi.org/10.3390/jrfm18080442 - 7 Aug 2025

Viewed by 927

Abstract

Innovative Credit Scoring (ICS) holds promise for reshaping financial inclusion in Indonesia, offering a potent alternative to conventional credit assessments that often exclude underserved populations. By leveraging alternative data—from telco records to e-commerce and social media footprints—and AI/ML technologies, ICS can deliver more [...] Read more.

Innovative Credit Scoring (ICS) holds promise for reshaping financial inclusion in Indonesia, offering a potent alternative to conventional credit assessments that often exclude underserved populations. By leveraging alternative data—from telco records to e-commerce and social media footprints—and AI/ML technologies, ICS can deliver more accurate, inclusive, and responsive credit evaluations. However, its potential is constrained by structural inefficiencies and weak regulatory frameworks. This study employs a qualitative, exploratory design based on eight focus group discussions with 36 stakeholders, including regulators, financial institutions, data providers, and academics. Thematic analysis reveals three core barriers: fragmented regulation, limited data interoperability, and algorithmic opacity. To address these challenges, the paper recommends four policy priorities: (1) enforce and expand POJK 29/2024; (2) establish interoperable, integrated MSME data systems; (3) mandate algorithm audits to reduce bias and opacity; and (4) invest in digital infrastructure to close regional access gaps. Without these systemic shifts, ICS may fall short of its inclusive promise. Full article

(This article belongs to the Special Issue Financial Inclusion Strategies: Emerging Trends and Global Perspectives)

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18 pages, 860 KB

Open AccessArticle

Disruption in Southern Africa’s Money Laundering Activity by Artificial Intelligence Technologies

by Michael Masunda and Haresh Barot

J. Risk Financial Manag. 2025, 18(8), 441; https://doi.org/10.3390/jrfm18080441 - 7 Aug 2025

Viewed by 722

Abstract

The rise in illicit financial activities across the South Africa–Zimbabwe corridor, with an estimated annual loss of $3.1 billion demands advanced AI solutions to augment traditional detection methods. This study introduces FALCON, a groundbreaking hybrid transformer–GNN model that integrates temporal transaction analysis (TimeGAN) [...] Read more.

The rise in illicit financial activities across the South Africa–Zimbabwe corridor, with an estimated annual loss of $3.1 billion demands advanced AI solutions to augment traditional detection methods. This study introduces FALCON, a groundbreaking hybrid transformer–GNN model that integrates temporal transaction analysis (TimeGAN) and graph-based entity mapping (GraphSAGE) to detect illicit financial flows with unprecedented precision. By leveraging data from South Africa’s FIC, Zimbabwe’s RBZ, and SWIFT, FALCON achieved 98.7%, surpassing Random Forest (72.1%) and human auditors (64.5%), while reducing false positives to 1.2% (AUC-ROC: 0.992). Tested on 1.8 million transactions, including falsified CTRs, STRs, and Ethereum blockchain data, FALCON uncovered $450 million laundered by 23 shell companies with a cross-border detection precision of 94%, directly mitigating illicit financial flows in Southern Africa. For regulators, FALCON met FAFT standards, yielding 92% court admissibility, and its GDPR-compliant design (ε = 1.2 differential privacy) met stringent legal standards. Deployed on AWS Graviton3, FALCON processed 2 million transactions/second at $0.002 per 1000 transactions, demonstrating real-time scalability, making it cost-effective for financial institutions in emerging markets. As the first AI framework tailored for Southern Africa’s financial ecosystems, FALCON sets a new benchmark for ethical AML solutions in emerging economies with immediate applicability to CBDC supervision. The transparent validation of publicly available data underscores its potential to transform global financial crime detection. Full article

(This article belongs to the Special Issue Selected Papers from the 1st International Online Conference on Risk and Financial Management)

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22 pages, 1177 KB

Open AccessArticle

An Empirical Study on the Impact of Financial Technology on the Profitability of China’s Listed Commercial Banks

by Xue Yuan, Chin-Hong Puah and Dayang Affizzah binti Awang Marikan

J. Risk Financial Manag. 2025, 18(8), 440; https://doi.org/10.3390/jrfm18080440 - 6 Aug 2025

Viewed by 803

Abstract

This paper selects 50 listed commercial banks in China from 2012 to 2023 as research samples, and employs the fixed effects model and Hansen’s threshold regression method to systematically examine the impact mechanism and non-linear characteristics of FinTech development on the profitability of [...] Read more.

This paper selects 50 listed commercial banks in China from 2012 to 2023 as research samples, and employs the fixed effects model and Hansen’s threshold regression method to systematically examine the impact mechanism and non-linear characteristics of FinTech development on the profitability of commercial banks. The key findings are summarized as follows: (1) FinTech significantly undermines the overall profitability of commercial banks by reshaping the competitive landscape of the industry and intensifying the technology substitution effect. This is primarily reflected in the reduction in traditional interest income and the erosion of market share in intermediary business. (2) Heterogeneity analysis indicates that large state-owned banks and joint-stock banks experience more pronounced negative impacts compared to small and medium-sized banks. (3) Additional research findings reveal a significant single-threshold effect between FinTech and bank profitability, with a critical value of 4.169. When the development level of FinTech surpasses this threshold, its inhibitory effect diminishes substantially, suggesting that after achieving a certain degree of technological integration, commercial banks may partially alleviate external competitive pressures through synergistic effects. This study offers crucial empirical evidence and theoretical support for commercial banks to develop differentiated technology strategies and for regulatory authorities to design dynamically adaptable policy frameworks. Full article

(This article belongs to the Section Financial Technology and Innovation)

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18 pages, 313 KB

Open AccessArticle

Sustainability and Profitability of Large Manufacturing Companies

by Iveta Mietule, Rasa Subaciene, Jelena Liksnina and Evalds Viskers

J. Risk Financial Manag. 2025, 18(8), 439; https://doi.org/10.3390/jrfm18080439 - 6 Aug 2025

Viewed by 531

Abstract

This study explores whether sustainability achievements—proxied through ESG (environmental, social, and governance) reporting—are associated with superior financial performance in Latvia’s manufacturing sector, where ESG maturity remains low and institutional readiness is still emerging. Building on stakeholder, legitimacy, signal, slack resources, and agency theories, [...] Read more.

This study explores whether sustainability achievements—proxied through ESG (environmental, social, and governance) reporting—are associated with superior financial performance in Latvia’s manufacturing sector, where ESG maturity remains low and institutional readiness is still emerging. Building on stakeholder, legitimacy, signal, slack resources, and agency theories, this study applies a mixed-method approach (that consists of two analytical stages) suited to the limited availability and reliability of ESG-related data in the Latvian manufacturing sector. Financial indicators from three large firms—AS MADARA COSMETICS, AS Latvijas Finieris, and AS Valmiera Glass Grupa—are compared with industry averages over the 2019–2023 period using independent sample T-tests. ESG integration is evaluated through a six-stage conceptual schema ranging from symbolic compliance to performance-driven sustainability. The results show that AS MADARA COSMETICS, which demonstrates advanced ESG integration aligned with international standards, significantly outperforms its industry in all profitability metrics. In contrast, the other two companies remain at earlier ESG maturity stages and show weaker financial performance, with sustainability disclosures limited to general statements and outdated indicators. These findings support the synergy hypothesis in contexts where sustainability is internalized and operationalized, while also highlighting structural constraints—such as resource scarcity and fragmented data—that may limit ESG-financial alignment in post-transition economies. This study offers practical guidance for firms seeking competitive advantage through strategic ESG integration and recommends policy actions to enhance ESG transparency and performance in Latvia, including performance-based reporting mandates, ESG data infrastructure, and regulatory alignment with EU directives. These insights contribute to the growing empirical literature on ESG effectiveness under constrained institutional and economic conditions. Full article

(This article belongs to the Section Business and Entrepreneurship)

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J. Risk Financial Manag., Volume 18, Issue 8 (August 2025) – 63 articles

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