Editorial: Financial Markets, Financial Volatility and Beyond, 3rd Edition

This Special Issue of the Journal of Risk and Financial Management brings together 17 original research articles that offer timely and impactful insights into the evolving landscape of finance and risk management. The contributions span a wide geographical scope—from small island economies to major global markets—and address critical themes such as market volatility, financial contagion, banking sector dynamics, portfolio optimization, behavioral finance, and the intersection of finance with environmental and geopolitical risks.

1. Revisiting Market Volatility and Risk Measurement

Several contributions reimagine conventional approaches to volatility and uncertainty. Jha et al. introduce a revised volatility index grounded in a heavy-tailed Levy process to better capture uncertainty shocks in financial markets. Boudri and El Bouhadi compare econometric and deep learning models, finding that simpler GARCH models remain surprisingly effective in forecasting volatility in pre-emerging markets. Metelski and Sobieraj explore trading volume concentration across S&P 500 constituents, revealing its predictive power for portfolio performance, while Dumitrescu and Grecu assess the impact of financial shocks on economic cycles across European economies, finding divergent sensitivities between developed and emerging markets.

2. Banking, Lending, and Financial Institutions

Banking sector performance is examined in multiple contexts. Hanif assesses Islamic banking efficiency across the GCC, identifying key internal performance drivers. Kumar et al. and Chun and Ardaaragchaa explore determinants of bank profitability and loan growth, respectively, in small island economies such as Fiji and Mongolia—highlighting the nuanced role of non-performing loans, liquidity, globalization, and economic shocks. A complementary study by Chand et al. revisits Fiji’s NPL trends, revealing heightened post-COVID vulnerabilities, especially among non-bank institutions.

3. Portfolio Optimization and Investment Behavior

In the realm of asset allocation, Kumar et al. apply the robust maximum diversified (RMD) portfolio to Fiji’s stock market, proposing refined investment strategies for low-liquidity environments. Song et al. investigate how stock overvaluation in China incentivizes managerial myopia, with implications for long-term performance. Lee delves into behavioral finance, showing how psychological traits and prior outcomes shape risk–payoff decisions—providing valuable insight for financial literacy and decision framing.

4. Financial Integration, Contagion, and Globalization

This Special Issue also features cross-market integration and contagion analysis. Niyitegeka and Habiyaremye apply wavelet techniques to detect post-crisis financial contagion between Germany and BRICS markets, while Izaguirre et al. document enhanced financial integration in Latin America following trade agreements with the US. Meanwhile, Truong et al. evaluate how geopolitical risks influence FDI in Vietnam, showing both short-term gains and long-term deterrents. Plastun et al. analyze the Ukrainian stock market’s structural resilience over decades of geopolitical turmoil, identifying persistent inefficiencies amid reform attempts.

5. Sustainability and Macroeconomic Development

Lastly, Rastogi et al. examine how environmental efficiency influences GDP per capita globally. Their results suggest that environmental improvements may hinder growth in low-income countries, while high-income democracies can absorb or reverse this trade-off—offering critical guidance for global climate financing frameworks.

6. Conclusions

From novel volatility measures and portfolio strategies to behavioral insights and macro-financial linkages, the papers in this Special Issue reflect the richness and diversity of contemporary financial research. By combining rigorous empirical methods with practical policy relevance, the authors collectively contribute to a deeper understanding of financial markets, financial risk, and global economic resilience. We hope that this collection stimulates further inquiry and informs the decisions of researchers, practitioners, and policymakers navigating today’s complex financial environment.