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Volume 18
Issue 9
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J. Risk Financial Manag., Volume 18, Issue 9 (September 2025) – 61 articles

Cover Story (view full-size image): Blockchain is often presented as a tool to enhance accounting and ESG reporting by ensuring transparency and immutability. However, real-world data must enter blockchains through oracles, external systems that can introduce risks if poorly designed. This paper presents a systematic review of how academic literature addresses, or overlooks, this “oracle problem.” The findings indicate that, while oracles remain underexplored, interest in their role is steadily increasing, particularly in ESG reporting, where permissioned blockchains and attestation mechanisms are being examined as practical solutions to data verification challenges. By classifying existing oracle solutions and highlighting gaps, the study provides insights for researchers and practitioners seeking to build more reliable blockchain-based reporting systems. View this paper
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21 pages, 554 KB  
Article
Assessing the Environmental Impact of Fiscal Consolidation in OECD Countries: Evidence from the Panel QARDL Approach
by Ameni Mtibaa and Foued Badr Gabsi
J. Risk Financial Manag. 2025, 18(9), 529; https://doi.org/10.3390/jrfm18090529 - 22 Sep 2025
Viewed by 533
Abstract
Concerns about ensuring a sustainable environment are growing, attracting major attention from policy professionals worldwide. Therefore, this study investigates the nonlinear impacts of fiscal consolidation on CO2 emissions in 17 OECD countries from 1978 to 2020. To probe the short- and long-term [...] Read more.
Concerns about ensuring a sustainable environment are growing, attracting major attention from policy professionals worldwide. Therefore, this study investigates the nonlinear impacts of fiscal consolidation on CO2 emissions in 17 OECD countries from 1978 to 2020. To probe the short- and long-term connections across various quantiles of CO2 emissions, we adopted panel QARDL frameworks. The Granger non-causality test was used to investigate the variables’ association with CO2 emission. The study’s main findings confirm the overall beneficial effect of fiscal consolidation on carbon emissions. It reduces CO2 emissions at almost all quantiles in the short run. By contrast, in the long run, the effect is positive at lower quantiles and turns negative at upper quantiles. Furthermore, a causality analysis identified a bidirectional causal relationship between fiscal consolidation and CO2 emissions, confirming the existence of mutual influence. While Keynesian theory links fiscal consolidation to economic recession, our findings support the non-Keynesian view, showing that such policy can foster economic growth and thereby contribute to reducing CO2 emissions in the short run. Thus, OECD countries are orienting public spending and carbon taxation toward environmentally friendly practices while ensuring environmental protection and deficit reduction. Nonetheless, the identified mixed effect in the long run highlights the need for sustained consolidation policies by enhancing expenditure efficiency and adopting targeted taxation measures to achieve lasting emission reductions and support the transition to cleaner energy, even when emissions are relatively low. Full article
(This article belongs to the Special Issue Sustainable Finance for Fair Green Transition)
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34 pages, 1700 KB  
Article
Transforming Eurostat’s Table 29 into an Actuarial Balance Sheet: A Net Worth Approach to Assessing Public Pension Solvency
by Anna Castañer, Anne Marie Garvey, Juan Manuel Pérez-Salamero González and Carlos Vidal-Meliá
J. Risk Financial Manag. 2025, 18(9), 528; https://doi.org/10.3390/jrfm18090528 - 20 Sep 2025
Viewed by 818
Abstract
This article presents a transparent and replicable framework to assess the net worth of public pension systems within the broader context of fiscal sustainability and public sector balance sheets. Using Spain as a case study, it transforms Eurostat’s Table 29 data into an [...] Read more.
This article presents a transparent and replicable framework to assess the net worth of public pension systems within the broader context of fiscal sustainability and public sector balance sheets. Using Spain as a case study, it transforms Eurostat’s Table 29 data into an actuarial balance sheet and income statement, applying the Swedish open group (SOG) approach. The analysis shows that Spain’s pension system faces a significant funding shortfall, with assets covering only 72% of its liabilities. The proposed method enhances fiscal transparency and provides policymakers with a practical tool to evaluate and improve long-term pension sustainability across different institutional contexts. Full article
(This article belongs to the Special Issue Financial Reporting and Auditing)
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16 pages, 845 KB  
Article
Information Transmission Performance of the GIFT Nifty Futures: Evidence from High-Frequency Data
by Rajib Sarkar, Soumya Guha Deb and Amrit Panda
J. Risk Financial Manag. 2025, 18(9), 527; https://doi.org/10.3390/jrfm18090527 - 19 Sep 2025
Viewed by 1224
Abstract
This paper investigates the information transmission performance of GIFT Nifty futures using high-frequency data, a novel area of study given their recent introduction. We employ Johansen cointegration tests, Granger causality tests, GARCH models, Hasbrouck’s Information Share (IS) model, and Gonzalo–Granger’s Component Share (CS) [...] Read more.
This paper investigates the information transmission performance of GIFT Nifty futures using high-frequency data, a novel area of study given their recent introduction. We employ Johansen cointegration tests, Granger causality tests, GARCH models, Hasbrouck’s Information Share (IS) model, and Gonzalo–Granger’s Component Share (CS) model to assess market integration, volatility, and price discovery dynamics. Our findings reveal significant bidirectional Granger causality and cointegration between the GIFT Nifty futures price and the Nifty index price, indicating a stable long-term equilibrium. Additionally, the GARCH model captures substantial volatility, reflecting the market’s responsiveness to new information. The IS and CS models confirm that the GIFT Nifty futures play a crucial role in the price discovery process, leading the Nifty index. This research is timely, within eight months of the first anniversary of GIFT Nifty futures trading since its launch. The findings highlight the information transmission performance and importance of the GIFT Nifty futures in enhancing market stability and transparency, offering valuable insights into market behaviour, integration, and forecasting abilities. Full article
(This article belongs to the Special Issue Advancing Research in International Finance)
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29 pages, 947 KB  
Article
Quantile-Time-Frequency Connectedness in Global Equity Markets: Evidence from BRICS and G7 Economies
by Nejib Hachicha, Fredj Amine Dammak and Mejed Boumrifeg
J. Risk Financial Manag. 2025, 18(9), 526; https://doi.org/10.3390/jrfm18090526 - 19 Sep 2025
Viewed by 451
Abstract
We examine the quantile-time-frequency connectedness of stock returns among BRICS and G7 markets over the period January 2000 to January 2024, employing the Quantile Vector Autoregression (QVAR) model. Our findings reveal that spillover effects intensify during periods of extreme market conditions, compared to [...] Read more.
We examine the quantile-time-frequency connectedness of stock returns among BRICS and G7 markets over the period January 2000 to January 2024, employing the Quantile Vector Autoregression (QVAR) model. Our findings reveal that spillover effects intensify during periods of extreme market conditions, compared to more tranquil phases. Furthermore, the stock markets of France, Germany, the United States, the United Kingdom, Italy, and Canada emerge as primary sources of contagion, whereas the BRICS markets and Japan primarily act as recipients across all quantile regimes. The frequency-quantile decomposition reveals that short-term dynamics primarily drive the net transmission of shocks at both the median and upper quantiles, whereas long-term dynamics are dominant at the lower quantile, indicating more persistent effects during market downturns. Finally, we construct investment portfolios based on the Minimum Connectedness Portfolio (MCP) approach and evaluate them through average portfolio weights and Hedging Effectiveness (HE) ratios. The results demonstrate that G7-based portfolios tend to have lower average weights and higher hedging efficiency, implying greater diversification benefits and enhanced risk mitigation performance compared to BRICS-based portfolios. Full article
(This article belongs to the Section Financial Markets)
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19 pages, 633 KB  
Article
Machine Learning for Triple-Entry Accounting: Enhancing Transparency and Oversight
by Abraham Itzhak Weinberg and Alessio Faccia
J. Risk Financial Manag. 2025, 18(9), 525; https://doi.org/10.3390/jrfm18090525 - 19 Sep 2025
Viewed by 919
Abstract
This study develops a conceptual framework for integrating Triple-Entry (TE) accounting with machine learning (ML) to enhance transparency in financial reporting and auditing. TE extends the double-entry system by introducing a cryptographic third entry that captures contextual metadata and strengthens auditability. Existing research [...] Read more.
This study develops a conceptual framework for integrating Triple-Entry (TE) accounting with machine learning (ML) to enhance transparency in financial reporting and auditing. TE extends the double-entry system by introducing a cryptographic third entry that captures contextual metadata and strengthens auditability. Existing research has discussed TE models and blockchain implementations, yet there is limited exploration of how advanced analytics can operationalise these systems in practice. This paper reviews prior contributions, highlights the limitations of current approaches, and positions ML as a mechanism for anomaly detection, fraud prevention, and continuous oversight. The methodology is qualitative and analytical, based on a structured review of the accounting, blockchain, and ML literature, with a critical comparison of TE and multiparty computation (MPC) approaches. A workflow for transforming TE data into ML-ready features is outlined, linking technical methods to objectives such as compliance monitoring and forecasting. The proposed framework advances theoretical understanding while also identifying practical applications, including regulatory reporting and privacy-preserving audits. Contributions include the articulation of a research agenda for empirical testing of ML-enabled TE systems and guidance for auditors, regulators, and system designers on embedding transparency in distributed financial environments. Full article
(This article belongs to the Section Financial Technology and Innovation)
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31 pages, 3969 KB  
Article
From Headlines to Forecasts: Narrative Econometrics in Equity Markets
by Davit Hayrapetyan and Ruben Gevorgyan
J. Risk Financial Manag. 2025, 18(9), 524; https://doi.org/10.3390/jrfm18090524 - 18 Sep 2025
Viewed by 1496
Abstract
This study investigates whether firm-specific narratives extracted from the news add predictive content to monthly stock return models. Using bidirectional encoder representations from transformer-based topic modeling (BERTopic), we processed Microsoft (MSFT) news and constructed monthly narrative activations (binary presence and decay weighting). These [...] Read more.
This study investigates whether firm-specific narratives extracted from the news add predictive content to monthly stock return models. Using bidirectional encoder representations from transformer-based topic modeling (BERTopic), we processed Microsoft (MSFT) news and constructed monthly narrative activations (binary presence and decay weighting). These narrative activations are used in autoregressive moving-average models with exogenous regressors (ARIMA-X) to analyze MSFT monthly log returns alongside the U.S. Economic Policy Uncertainty (EPU) index from February 2021 to March 2025. Decay models using a similarity-distilled BERT embedding yielded three significant narratives: Media and Public Perception (MPP) (β = 0.0128, p = 0.002), Currency and Macro Environment (CME) (β = −0.0143, p < 0.001), and Tech and Semiconductor Ecosystem (TSE) (β = −0.0606, p = 0.014). Binary activation identifies reputational shocks: the Media and Public Perception (MPP) indicator predicts lower returns at one- and two-month lags (β = −0.0758, p = 0.043; β = −0.1048, p = 0.007). A likelihood-ratio test comparing ARIMA-X models with narrative regressors to a baseline ARIMA (no narratives) rejects the null hypothesis that narratives add no improvement in fit (p < 0.01). Firm-level narratives enhance monthly forecasts beyond conventional predictors; decay activation and similarity-distilled embeddings perform best. Demonstrated on Microsoft as a proof of concept, the ticker-agnostic design scales to multiple firms and sectors, contingent on sufficient firm-tagged news coverage for external validity. Full article
(This article belongs to the Section Financial Markets)
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19 pages, 4554 KB  
Systematic Review
Financial Auditing as an Effective Tool for Fraud Detection: A Systematic Review
by Cindy Becerra Huamán, David De la Cruz-Montoya, Joseph Gutierrez-Cuadros, Sonia Pilco Labajos and Mercedes Lopez-Almeida
J. Risk Financial Manag. 2025, 18(9), 523; https://doi.org/10.3390/jrfm18090523 - 18 Sep 2025
Viewed by 2188
Abstract
The article presents a broad and exhaustive approach to financial auditing studies, as well as their current state in academic research. Its main objective is to examine practices in the face of existing challenges. Financial auditing is strongly influenced by international standards, the [...] Read more.
The article presents a broad and exhaustive approach to financial auditing studies, as well as their current state in academic research. Its main objective is to examine practices in the face of existing challenges. Financial auditing is strongly influenced by international standards, the role of financial auditors in risk management, and the use of new technologies and artificial intelligence. Using a bibliometric analysis of 74 studies extracted from the Scopus database, the authors visualize the evolution of financial auditing using tools such as VOS Viewer. This reveals trends and keywords associated with financial auditing, accounting, management, risk management, and fraud. According to the study, there is a gap in expectations regarding the role of the auditor that is influenced by different cultural contexts and the growing use of forensic accounting services for fraud investigation and detection. The study also highlights the low use of accounting and auditing standards in countries such as Iraq and Egypt and observes the normalization of the fraud trend in Pakistan. Full article
(This article belongs to the Special Issue Accounting Ethics and Financial Management)
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25 pages, 377 KB  
Article
The Impact of Financial Manager Decisions on the Business Results of Micro and Small Companies in the Republic of Croatia in the Area of the City of Split
by Toni Miljak, Ivana Martinčević and Vesna Sesar
J. Risk Financial Manag. 2025, 18(9), 522; https://doi.org/10.3390/jrfm18090522 - 18 Sep 2025
Viewed by 685
Abstract
Doing business in today’s turbulent and, above all, changing environment represents a great challenge for financial managers in achieving quality management of the organization. Financial data and financial basis are key sources of information and a basis for the financial manager to make [...] Read more.
Doing business in today’s turbulent and, above all, changing environment represents a great challenge for financial managers in achieving quality management of the organization. Financial data and financial basis are key sources of information and a basis for the financial manager to make decisions and manage well. Financial data are the basis for the effective management of a company, they enable the monitoring of business performance and making operational and strategic decisions, and they are key for future planning and communication with stakeholders. The aim of this paper is an in-depth analysis of the business operations of selected micro and small companies from the city of Split, which are registered for the preparation and serving of food and beverages, to determine whether financial data, their proper use, and management have an impact on business performance. The resource-based view (RBV) is the basis for the development of this research framework. The RBV theory enables and explains the importance of resources, and through this study, the connection with how to interpret and use financial resources (financial data, i.e., information) and what potential effects they have on the financial performance of micro and small companies in the sector registered for the activity of preparing and serving food and beverages in the tourism sector. According to the Accounting Act in the Republic of Croatia, micro companies meet two of three criteria: total assets up to EUR 350,000, revenues up to 700,000, and an average number of employees during the business year of up to 10, while small companies meet two of the following three criteria: total assets up to EUR 4,000,000, revenues up to EUR 8,000,000, and an average number of employees during the business year of up to 50. The results of the research showed the importance of financial information as a resource necessary for business management and competitive position, but also the necessity of continuous investment in the education of financial managers in order to be able to implement the prescribed acts in a way that maximizes the evaluation of the companies’ business performance. Full article
(This article belongs to the Special Issue Commercial Banking and FinTech in Emerging Economies)
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20 pages, 1541 KB  
Article
Optimizing Investments in the Portfolio Intelligence (PI) Model
by Nikolaos Loukeris, Lysimachos Maltoudoglou, Yannis Boutalis and Iordanis Eleftheriadis
J. Risk Financial Manag. 2025, 18(9), 521; https://doi.org/10.3390/jrfm18090521 - 17 Sep 2025
Viewed by 594
Abstract
A new methodology is introduced that incorporates advanced higher moment evaluation in a new approach to the Portfolio Selection problem, supported by effective Computational Intelligence models. The Portfolio Intelligence (PI) model extracts hidden patterns from numerous accounting data and financial statements, filtering misleading [...] Read more.
A new methodology is introduced that incorporates advanced higher moment evaluation in a new approach to the Portfolio Selection problem, supported by effective Computational Intelligence models. The Portfolio Intelligence (PI) model extracts hidden patterns from numerous accounting data and financial statements, filtering misleading effects such as noise or fraud offering an optimal portfolio selection method. The chaotic reflections of speculative behaviors of investors are analyzed in fractal distributions, as higher moments with fundamentals clear the turbulence of noise while the PI model, under its robust AI classifiers, provides optimal investment support. Full article
(This article belongs to the Section Mathematics and Finance)
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16 pages, 2130 KB  
Article
Application of a Machine Learning Algorithm to Assess and Minimize Credit Risks
by Garnik Arakelyan and Armen Ghazaryan
J. Risk Financial Manag. 2025, 18(9), 520; https://doi.org/10.3390/jrfm18090520 - 17 Sep 2025
Viewed by 643
Abstract
The banking system, as the most important sector of the economy of every country, often encounters a number of risks. Financial institutions of that system operate in an unstable environment, and without having complete information about that environment, they may suffer significant losses. [...] Read more.
The banking system, as the most important sector of the economy of every country, often encounters a number of risks. Financial institutions of that system operate in an unstable environment, and without having complete information about that environment, they may suffer significant losses. The main source of such losses is considered to be credit risks, and for the management of these, various mathematical models are being developed which will allow banks to make decisions on granting a loan. Lately, for this purpose, machine learning (ML) classification algorithms have often been used for credit risk modeling. In this research work, using the ideas of well-known ML algorithms, a new algorithm for solving the binary classification problem was developed. By means of the algorithm created, based on real data, a classification model has been developed. Qualitative indicators of that model, such as ROC AUC, PR AUC, precision, recall, and F1 score, were evaluated. By modifying the resulting probabilities into a range of 300–850 score points, a scoring model has been developed, the usage of which can mitigate credit risk and protect financial organizations from major losses. Full article
(This article belongs to the Special Issue Lending, Credit Risk and Financial Management)
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26 pages, 611 KB  
Article
Bank Leverage Restrictions in General Equilibrium: Solving for Sectoral Value Functions
by Brittany Almquist Lewis
J. Risk Financial Manag. 2025, 18(9), 519; https://doi.org/10.3390/jrfm18090519 - 17 Sep 2025
Viewed by 359
Abstract
This paper develops a tractable method to solve a general equilibrium model with bank runs and exogenous leverage ratio restrictions, enabling welfare analysis of macroprudential policy across the business cycle. By computing bankers’ value functions via backward induction from steady state, the framework [...] Read more.
This paper develops a tractable method to solve a general equilibrium model with bank runs and exogenous leverage ratio restrictions, enabling welfare analysis of macroprudential policy across the business cycle. By computing bankers’ value functions via backward induction from steady state, the framework quantifies how leverage caps affect capital allocation, asset prices, and run probabilities during recovery from crises. Calibrated simulations show that welfare-enhancing policy is time-varying—lenient when households’ marginal utility of consumption is high, and restrictive in low-marginal-utility states. The results highlight a trade-off: tighter leverage restrictions improve stability but risk persistent efficiency losses if imposed too harshly after crises. Full article
(This article belongs to the Special Issue Financial Resilience in Turbulent Times)
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20 pages, 667 KB  
Article
The Role of Campaign Descriptions and Visual Features in Crowdfunding Success: Evidence from Africa
by Lenny Phulong Mamaro, Athenia Bongani Sibindi and Daniel Makina
J. Risk Financial Manag. 2025, 18(9), 518; https://doi.org/10.3390/jrfm18090518 - 17 Sep 2025
Viewed by 601
Abstract
Crowdfunding has gained popularity among entrepreneurs who seek funding for their business projects on crowdfunding platforms. The success of these campaigns largely depends on the ability to attract and convince backers to support the fundraising initiative. Drawing on signalling, persuasion, and attribution theories, [...] Read more.
Crowdfunding has gained popularity among entrepreneurs who seek funding for their business projects on crowdfunding platforms. The success of these campaigns largely depends on the ability to attract and convince backers to support the fundraising initiative. Drawing on signalling, persuasion, and attribution theories, this study examines how campaign descriptions and visual features specifically word description length, spelling errors, images, frequently asked questions (FAQs), number of backers, funding target, flexible funding, and campaign duration. The study utilised econometric techniques such as ordinary least squares and logistic regression models on a dataset consisting of 854 small and medium enterprises and entrepreneurial projects collected from Kickstarter, Indiegogo, and Fundraised databases. The probability of success is significantly increased by the length of project descriptions, the inclusion of images, and an increased number of backers. On the other hand, higher funding targets and flexible funding models decrease the probability of success. These results support the attribution and persuasion theories, indicating that detailed project descriptions can address information gaps and improve the project’s credibility and trustworthiness. This study contributes to the literature by providing an empirically grounded understanding of how textual and visual elements influence crowdfunding outcomes in the African context and offers practical guidance for entrepreneurs and investors on designing effective campaigns. Full article
(This article belongs to the Section Financial Markets)
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27 pages, 2849 KB  
Review
Fintech Converges with Investment and Risk: A Bibliometric Review
by Michael Y. Chuang and Sudip Kumar Shrestha
J. Risk Financial Manag. 2025, 18(9), 517; https://doi.org/10.3390/jrfm18090517 - 16 Sep 2025
Viewed by 1535
Abstract
The rapid growth of fintech is revolutionizing the delivery, access, and management of financial services. It also presents new risks and opportunities for investment. Despite growing scholarly interest, current research often remains fragmented and continues to explore technological innovation, investment behavior, and risk [...] Read more.
The rapid growth of fintech is revolutionizing the delivery, access, and management of financial services. It also presents new risks and opportunities for investment. Despite growing scholarly interest, current research often remains fragmented and continues to explore technological innovation, investment behavior, and risk management in isolation without fully addressing their interrelated dynamics. This lack of integration has hindered a comprehensive understanding of how fintech transforms financial ecosystems and subsequent decision-making processes. By conducting a systematic literature review, study addresses the research gap by examining key developments, trends, and patterns within this field through bibliometric analysis using VOSviewer 1.6.20 and Biblioshiny 2025. From the perspectives of authors, affiliations, papers, and journals, this investigation identifies publication trends, key contributors, and geographic distribution. The results also indicate that numerous areas warrant further investigation, such as sustainability, inclusion, risk management, technologies, and behavioral traits. The review provides a more comprehensive understanding of how fintech is affecting investment practices and risk considerations by consolidating findings and analyses. It underscores substantial prospects for future research and fosters a more comprehensive academic dialogue, thereby facilitating the advancement of more informed, responsive, and forward-thinking fintech strategies in financial management. Full article
(This article belongs to the Section Financial Technology and Innovation)
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24 pages, 567 KB  
Article
The Impact of Climate Change on the Insurance Industry: Perceptions of Industry Experts and Corporate Responses
by Qinshun Yang, Michał K. Lemański and Casey Watters
J. Risk Financial Manag. 2025, 18(9), 516; https://doi.org/10.3390/jrfm18090516 - 16 Sep 2025
Viewed by 1147
Abstract
The impact of climate change is posing substantial risks for contemporary businesses and individuals. In response, insurance companies are adapting old and adopting new strategies and practices. This study aims to identify operational and structural changes that insurance companies implement in response to [...] Read more.
The impact of climate change is posing substantial risks for contemporary businesses and individuals. In response, insurance companies are adapting old and adopting new strategies and practices. This study aims to identify operational and structural changes that insurance companies implement in response to risks posed by climate change. The overarching goal of this study is to understand the perceptions of industry experts about how climate change impacts the insurance industry, and identify corporate responses to the pressures stemming from climate change and the rising societal awareness of its impact. Using qualitative research methods, we gathered primary data from eight interviews with senior executives involved in sustainability initiatives within the insurance industry, along with secondary data on Singapore’s three largest insurance companies. Our findings indicate that industry experts view climate change as a significant external force influencing corporate strategies and operational frameworks. Further, insurance companies are investing in environmentally friendly businesses, changing product portfolios, and developing collaboration with administrative and regulatory bodies. Implications of these findings for managers and policymakers are discussed, along with directions for future research. Full article
(This article belongs to the Special Issue Insurance and Banking Industry in a New Era. Going through Overlapping Crises)
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3 pages, 151 KB  
Editorial
Editorial: Machine Learning Applications in Finance, 2nd Edition
by Jong-Min Kim
J. Risk Financial Manag. 2025, 18(9), 515; https://doi.org/10.3390/jrfm18090515 - 16 Sep 2025
Viewed by 598
Abstract
FinTech has become a central research focus in modern finance, driven by the increasing complexity and volume of financial data [...] Full article
(This article belongs to the Special Issue Machine Learning Applications in Finance, 2nd Edition)
14 pages, 271 KB  
Article
The Role of Financial Compensation Oversight Committees in Improving the Financial Performance Governance of Saudi Banks
by Ibrahim Ahmed Elamin Eltahir, Mozamil Awad Taha, Nasareldeen Hamed Ahmed Alnor, Salih Hamid Adam and Eltayeb Hamid Edres Musa
J. Risk Financial Manag. 2025, 18(9), 514; https://doi.org/10.3390/jrfm18090514 - 16 Sep 2025
Viewed by 915
Abstract
This study looks at how oversight committees affect CEO compensation governance and how this affects publicly traded banks’ financial performance. It specifically looks at how compensation committee mandates and structural traits affect how CEO compensation is matched to company performance results. The research [...] Read more.
This study looks at how oversight committees affect CEO compensation governance and how this affects publicly traded banks’ financial performance. It specifically looks at how compensation committee mandates and structural traits affect how CEO compensation is matched to company performance results. The research employs a panel dataset of sample firms across the study period, combining financial performance metrics like return on equity (ROE) and return on assets (ROA). It draws on agency theory and corporate governance theories. In addition to firm-level controls, the research takes into account committee-level factors such independence, experience, frequency of meetings, and ownership. The findings obtained through panel regression methods and testing show that improved pay-performance sensitivity and improved financial performance do not correlate with committee influence, independence, or financial expertise. The importance of empowered oversight committees in reducing interagency conflicts of interest and fostering efficient governance is demonstrated by these findings. By emphasizing how internal governance frameworks can be used to produce long-term organizational goals, the study adds to the discussion surrounding executive compensation. Full article
(This article belongs to the Special Issue Accounting, Auditing, and Reporting Quality: Challenges Under Uncertainty Conditions)
18 pages, 3731 KB  
Review
Financial Options Pricing: A Bibliometric Study and Cluster Analysis of Global Research Trends
by Sara Ali Alokley
J. Risk Financial Manag. 2025, 18(9), 513; https://doi.org/10.3390/jrfm18090513 - 16 Sep 2025
Viewed by 845
Abstract
This study presents a bibliometric analysis of the literature on financial options pricing. This study examined 1713 peer-reviewed journal articles published between January 2002 and January 2023. The literature on options pricing was analyzed using bibliometric methodologies and analysis techniques such as co-citation, [...] Read more.
This study presents a bibliometric analysis of the literature on financial options pricing. This study examined 1713 peer-reviewed journal articles published between January 2002 and January 2023. The literature on options pricing was analyzed using bibliometric methodologies and analysis techniques such as co-citation, citation networks, content, publication and keywords trends. The contribution of this study to the literature on options pricing lies in enhancing the understanding of the field by proposing ten clusters. These clusters will help investors, policymakers and researchers gain deeper insights on the topic and the research gaps and are crucial for the investment financial communities in light of institutions’ and society’s rising reliance on financial derivatives. Full article
(This article belongs to the Section Mathematics and Finance)
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33 pages, 2278 KB  
Article
Modeling Behavioral and Attitudinal Drivers of Life Insurance Selection and Premiums: Polynomial Approaches to Perceived Affordability in Term and Cash Value Products
by Florent Nkouaga, Jeffrey Czajkowski, Kelly Edmiston and Brenda Rourke
J. Risk Financial Manag. 2025, 18(9), 512; https://doi.org/10.3390/jrfm18090512 - 15 Sep 2025
Viewed by 1004
Abstract
Background: Life insurance markets are experiencing unprecedented transformation in the wake of economic disruption, evolving consumer expectations, and behavioral shifts following the COVID-19 pandemic. Traditional economic models often fail to capture the complex interplay of attitudinal, and cognitive factors that now shape insurance [...] Read more.
Background: Life insurance markets are experiencing unprecedented transformation in the wake of economic disruption, evolving consumer expectations, and behavioral shifts following the COVID-19 pandemic. Traditional economic models often fail to capture the complex interplay of attitudinal, and cognitive factors that now shape insurance demand and premium selection. Methods: This study analyzes nationally representative survey data from over 3600 U.S. adults (2024 NAIC Financial Inclusion Survey). It uses a weighted full maximum likelihood Heckman selection model to identify determinants of life insurance uptake and premiums. The main innovation is modeling psychological price, a composite of perceived affordability, with higher-order polynomials. The design integrates psychometrically validated measures of financial knowledge and risk tolerance. Political ideology, race and ethnicity, and sources of financial advice serve as exclusion restrictions in the selection equation. Results: Psychological price shows an inverse-U relation with term outcomes: uptake rises at low to moderate affordability and declines at high affordability; among purchasers, term premiums rise at low to mid affordability and decline at high levels. For cash value policies, premiums decrease as psychological price increases. Financial knowledge and risk tolerance increase term uptake; financial knowledge reduces cash premiums. Education and income increase term uptake and term premiums. Compared with respondents reporting no ideology, conservative and centrist respondents have lower term uptake and higher cash uptake; using a professional advisor is associated with higher cash uptake. The selection correlation is positive for term (ρ≈0.98) and negative for cash (ρ≈−0.38), indicating non-random selection in both markets. Implications: In order to reduce disparities, insurers should target the mid-affordability threshold with term offerings, streamline options for high-affordability consumers, offer pricing support and guidance for low-affordability households, increase uptake through advice channels and financial education, and address affordability barriers. Conclusions: Nonlinear affordability effects shape both market entry and pricing choices. Modeling psychological price with higher-order polynomials identifies thresholds and turning points that linear specifications miss. The results support targeted product design and outreach when perceived affordability drives insurance participation and premium choices. Full article
(This article belongs to the Special Issue Business, Finance, and Economic Development)
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19 pages, 448 KB  
Article
How Can Government Regulation Reinforce the Low-Carbon Effects of Green Finance in China? Heterogeneity of Resource-Based Cities and High-Energy-Consuming Cities
by Yuying Hu, Yue Deng and Zhilun Jiao
J. Risk Financial Manag. 2025, 18(9), 511; https://doi.org/10.3390/jrfm18090511 - 15 Sep 2025
Viewed by 515
Abstract
Based on panel data of 273 prefecture-level cities in China from 2006 to 2022, this study empirically examines the impact and mechanism of green finance on urban low-carbon development from the perspective of government regulation. The study yields the following key results: First, [...] Read more.
Based on panel data of 273 prefecture-level cities in China from 2006 to 2022, this study empirically examines the impact and mechanism of green finance on urban low-carbon development from the perspective of government regulation. The study yields the following key results: First, green finance significantly promotes urban low-carbon development, and this finding remains valid after addressing endogeneity issues and conducting a series of robustness tests. Second, government regulation strengthens the low-carbon effect of green finance through two pathways: market-oriented reform and urban land planning. Third, the low-carbon effect of green finance is more pronounced in resource-based cities and low-energy-consuming cities, which corresponds to urban disparities in development stages and resource constraints. Given these results, this study proposes two targeted recommendations: institutionalizing the coordination mechanism between land use and carbon markets and implementing context-specific green finance strategies via urban differentiation approaches. Full article
(This article belongs to the Special Issue Featured Papers in Climate Finance)
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24 pages, 563 KB  
Article
The Impact of Liquidity and Leverage on the Financial Performance of the Johannesburg Stock Exchange-Listed Consumer Goods Firms
by Floyd Khoza
J. Risk Financial Manag. 2025, 18(9), 510; https://doi.org/10.3390/jrfm18090510 - 15 Sep 2025
Viewed by 2901
Abstract
Understanding the role of liquidity and leverage is crucial in assessing financial performance, particularly in the consumer goods sector. This study examined the impact of liquidity and leverage on financial performance, using a sample of 13 consumer goods firms listed on the Johannesburg [...] Read more.
Understanding the role of liquidity and leverage is crucial in assessing financial performance, particularly in the consumer goods sector. This study examined the impact of liquidity and leverage on financial performance, using a sample of 13 consumer goods firms listed on the Johannesburg Stock Exchange (JSE) from 2014 to 2024. Despite the present literature on this association, few traceable studies have investigated this phenomenon, and there is a dearth of literature in this sector. The dependent variable for this study was financial performance, and the return on assets (ROA) was employed as a proxy for financial performance. The independent variables employed for this study were liquidity (LIQ), leverage (LEV), and the quadratic term of leverage (LEV2). However, Net profit margin (NPM), inventory turnover (INVT), average collection period (ACP), firm size (FS), and its quadratic term (FS2) were the control variables. The researcher performed the Durbin–Wu–Hausman test, the Breusch–Pagan LM test, redundant fixed effect testing, the Hausman test, and the panel heteroskedasticity LR test before employing the suitable model. After employing the panel least squares (PLS), the fixed effects (FE) model was considered appropriate and efficient for this study. Applying the model, the researcher found a statistically significant and positive impact of LIQ, LEV2, NPM, and FS2 on ROA. Furthermore, a statistically significant and negative impact of ACP on ROA. However, the impact of LEV and FS was negative and statistically insignificant on ROA. Furthermore, the impact of INVT on ROA was statistically positive and insignificant. To improve the financial performance of the firms efficiently, this study recommends that financial managers of consumer goods firms should pay special attention to maintaining and monitoring a healthy liquidity ratio and implement sound working capital management. Furthermore, integrate the strategic liquidity planning into their financial decision-making. The findings highlight that while a moderate level of leverage might not increase financial performance, a strategic increase in debt to a certain optimal level can improve the financial performance of a firm. Full article
(This article belongs to the Section Financial Markets)
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26 pages, 1234 KB  
Article
Application of Accounting Standards in the Valuation of Biological Assets: An Analysis of the Poultry Sector in Tungurahua, Ecuador
by Priscila Campos-Llerena, Zonia Chávez-Hernández, Patricia Jiménez-Estrella and César Salazar-Mejía
J. Risk Financial Manag. 2025, 18(9), 509; https://doi.org/10.3390/jrfm18090509 - 13 Sep 2025
Viewed by 965
Abstract
This study analyzes the application of International Accounting Standard IAS 41—Agriculture in poultry companies (ISIC A0146.03) in the province of Tungurahua, Ecuador, with the aim of evaluating the degree of regulatory compliance, the level of technical knowledge of accounting managers, and the impact [...] Read more.
This study analyzes the application of International Accounting Standard IAS 41—Agriculture in poultry companies (ISIC A0146.03) in the province of Tungurahua, Ecuador, with the aim of evaluating the degree of regulatory compliance, the level of technical knowledge of accounting managers, and the impact of the lack of homogenization in the presentation of financial statements. The research is based on a quantitative–descriptive approach, through the application of a structured questionnaire to 26 representatives of poultry companies, complemented with the financial analysis of the activity during the period 2010–2024. The results show that the application of IAS 41 is not exhaustive or uniform, and various valuation methods are used that are not always aligned with the fair value approach required by the standard. Likewise, significant heterogeneity in accounting criteria is detected, which limits comparability and reduces the usefulness of financial information for decision-making. Most respondents have general but limited knowledge of the standard, which affects its technical implementation. The study concludes that it is necessary to strengthen specialized accounting training, establish sectoral standardization criteria, and promote regulatory supervision to ensure transparent, coherent, and useful financial information. Full article
(This article belongs to the Special Issue Finance and Accounting in Times of Global Uncertainty: ESG, SDGs, and Digital Disruption)
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25 pages, 834 KB  
Article
Organizational Ambidexterity: How Balanced Scorecard (BSC) and Activity-Based Costing (ABC) Enable Exploration–Exploitation Synergy and Sustainable Performance
by Ahmed Abdullah Saad Al-Dhubaibi
J. Risk Financial Manag. 2025, 18(9), 508; https://doi.org/10.3390/jrfm18090508 - 13 Sep 2025
Viewed by 1126
Abstract
This study investigates how management accounting systems (MASs), specifically the balanced scorecard (BSC) and activity-based costing (ABC), foster organizational ambidexterity (OA) and, in turn, enhance firm performance. Drawing on the resource-based view, theory of constraints, and the ambidexterity literature, this research explores whether [...] Read more.
This study investigates how management accounting systems (MASs), specifically the balanced scorecard (BSC) and activity-based costing (ABC), foster organizational ambidexterity (OA) and, in turn, enhance firm performance. Drawing on the resource-based view, theory of constraints, and the ambidexterity literature, this research explores whether BSC and ABC act as enablers of the exploration–exploitation balance necessary for long-term competitiveness. A quantitative survey design was employed, targeting large- and medium-sized organizations in Saudi Arabia. Data from 186 valid responses were analyzed using structural equation modeling (SEM) to test the proposed relationships. The results provide robust empirical evidence that both BSC and ABC significantly contribute to OA. While BSC indirectly enhances organizational performance through OA, ABC exerts a direct positive effect on performance. Furthermore, higher levels of OA were found to significantly improve business outcomes, confirming its role as a critical mediator of strategic and operational success. The study makes three key contributions: First, it validates the role of MASs in building ambidextrous capabilities that enable firms to balance efficiency with innovation. Second, it demonstrates the complementary effects of BSC and ABC in driving superior organizational performance. Third, it highlights the strategic value of MASs in aligning organizational practices with sustainable development goals, thereby reconciling short-term profitability with long-term growth. Full article
(This article belongs to the Section Business and Entrepreneurship)
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28 pages, 788 KB  
Article
Understanding Consumer Behavior in Digital Banking: The DABU Model as an Extension of TAM and UTAUT
by Dijana Vuković
J. Risk Financial Manag. 2025, 18(9), 507; https://doi.org/10.3390/jrfm18090507 - 12 Sep 2025
Viewed by 704
Abstract
The aim of this research was to examine the impact of digitalisation on the use of banking products among consumers in the Republic of Croatia, with a particular focus on analysing habits, perceptions, and barriers related to digital banking. The study was conducted [...] Read more.
The aim of this research was to examine the impact of digitalisation on the use of banking products among consumers in the Republic of Croatia, with a particular focus on analysing habits, perceptions, and barriers related to digital banking. The study was conducted on a convenience sample of 820 respondents—citizens of the Republic of Croatia—representing diverse age groups, education levels, and degrees of digital literacy. To gain deeper insights into consumer behaviour, a new conceptual model—DABU (Digital Acceptance of Banking Use)—was developed. This model integrates elements of existing theoretical frameworks (TAM, UTAUT, CBM) and introduces additional variables relevant to the context of digital banking, such as digital literacy, perceived security, and perceived barriers. Data were collected using a structured survey questionnaire and analysed through descriptive statistics, factor analysis, and structural equation modeling (SEM). The findings indicate that digital literacy and perceived security are key predictors of the intention to use digital banking services, whereas perceived barriers have a significant negative effect. Moreover, differences in digital banking usage patterns were observed across age groups, education levels, and prior experience with digital technologies. The results contribute to a better understanding of the factors influencing consumer digital behaviour and provide practical guidelines for developing targeted strategies within the financial sector aimed at increasing the adoption and accessibility of digital banking services. Full article
(This article belongs to the Special Issue Commercial Banking and FinTech in Emerging Economies)
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60 pages, 5577 KB  
Article
Performance of Pairs Trading Strategies Based on Various Copula Methods
by Yufei Sun
J. Risk Financial Manag. 2025, 18(9), 506; https://doi.org/10.3390/jrfm18090506 - 12 Sep 2025
Viewed by 973
Abstract
This study evaluates three pairs trading strategies—the distance method (DM), mispricing index (MPI) copula, and mixed copula—across the Chinese equity market from 2005 to 2024, incorporating time-varying transaction costs. To enhance computational efficiency, a novel two-step methodology is proposed that first selects candidate [...] Read more.
This study evaluates three pairs trading strategies—the distance method (DM), mispricing index (MPI) copula, and mixed copula—across the Chinese equity market from 2005 to 2024, incorporating time-varying transaction costs. To enhance computational efficiency, a novel two-step methodology is proposed that first selects candidate pairs based on the sum of squared differences and then applies copula models to capture nonlinear and asymmetric dependence structures between stocks. Pre-cost monthly excess returns are 84, 30, and 25 basis points, respectively, dropping to 81, 23, and 15 basis points post-costs. While the DM consistently delivers higher returns, copula strategies offer advantages in stability and resilience, especially in volatile markets. The Student-t copula proves particularly effective in capturing dependence structures with fat tails and asymmetric correlations. Although copula methods face challenges such as unconverged trades—instances where spreads fail to revert within the trading horizon—they nonetheless highlight the diversification and risk mitigation potential of advanced dependence-based approaches. Enhancing trade convergence and controlling downside risk could further improve copula strategy performance. Overall, the results highlight the diversification and risk mitigation potential of advanced copula-based pairs trading models under dynamic market conditions. Full article
(This article belongs to the Special Issue Financial Funds, Risk and Investment Strategies)
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32 pages, 1339 KB  
Article
Beyond Quotas: The Influence of Board Gender Diversity on Capital Structure in Firms from Latin America and the Caribbean
by Juan David González-Ruiz, Nini Johana Marín-Rodríguez and Camila Ospina-Patiño
J. Risk Financial Manag. 2025, 18(9), 505; https://doi.org/10.3390/jrfm18090505 - 11 Sep 2025
Viewed by 684
Abstract
Board gender diversity (BGD) has gained attention as a governance mechanism that may influence corporate financial decisions. However, empirical evidence from Latin America and the Caribbean (LAC) remains limited despite the region’s significant gender disparities in corporate leadership and distinct institutional characteristics. This [...] Read more.
Board gender diversity (BGD) has gained attention as a governance mechanism that may influence corporate financial decisions. However, empirical evidence from Latin America and the Caribbean (LAC) remains limited despite the region’s significant gender disparities in corporate leadership and distinct institutional characteristics. This study examines how BGD affects capital structure decisions in LAC firms, drawing on agency theory and resource dependency theory. We analyze a panel dataset of 403 firms from 2015 to 2022, sourced from the London Stock Exchange Group database, using fixed effects models with Driscoll–Kraay standard errors to control for firm heterogeneity and econometric concerns. Results show that BGD is significantly and negatively associated with leverage ratios, with a one percentage point increase in female board representation corresponding to a 0.15 to 0.25 percentage point decrease in debt-to-capital ratios. This relationship is robust across multiple specifications and exhibits threshold effects, with stronger impacts when female representation reaches 20% or higher. The negative association is more pronounced for larger firms, consistent with enhanced governance benefits in complex organizations. Our findings suggest that gender-diverse boards exercise more effective oversight of financial decisions, leading to more conservative capital structures in emerging markets where governance mechanisms are particularly important for firm credibility and stakeholder confidence. Full article
(This article belongs to the Special Issue Emerging Trends and Innovations in Corporate Finance and Governance)
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14 pages, 601 KB  
Article
The Effect of Currency Misalignment on Income Inequality
by Sarah R. Crane, Uyen T. Le and Scott A. Miller
J. Risk Financial Manag. 2025, 18(9), 504; https://doi.org/10.3390/jrfm18090504 - 11 Sep 2025
Viewed by 459
Abstract
This paper examines the relationship between currency misalignment and income inequality across 70 countries from 1998 to 2021. Currency misalignment occurs when the actual exchange rate diverges significantly from the equilibrium exchange rate. Using fixed-effects and random-effects regressions, we find that currency overvaluation [...] Read more.
This paper examines the relationship between currency misalignment and income inequality across 70 countries from 1998 to 2021. Currency misalignment occurs when the actual exchange rate diverges significantly from the equilibrium exchange rate. Using fixed-effects and random-effects regressions, we find that currency overvaluation is associated with higher income inequality, while undervaluation is linked to lower income inequality. These findings are strongest in emerging markets and upper-middle-income countries, where undervalued currencies may be associated with stronger tradable-sector activity and narrower income gaps. In contrast, lower-income countries experience increasing levels of inequality during the early stages of development, even with growth, which is consistent with the Kuznets hypothesis. For advanced markets and higher-income nations, currency misalignment is not statistically related to income inequality, which is likely due to the presence of stronger financial systems and more stable institutions that reduce the effects of currency misalignment. The results are robust across the two grouping methods—development level (IMF) and income level (World Bank). Overall, the study highlights that while undervaluation may be associated with equitable growth in emerging markets, its benefits likely depend on a country’s development stage and are more likely when accompanied by appropriate social and economic policies to mitigate potential risks. Full article
(This article belongs to the Special Issue Emerging Topics in Business Risk)
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34 pages, 880 KB  
Article
ESG Strategy and Tax Avoidance: Insights from a Meta-Regression Analysis
by Maria Mitroulia, Evangelos Chytis, Thomas Kitsantas, Michalis Skordoulis and Petros Kalantonis
J. Risk Financial Manag. 2025, 18(9), 503; https://doi.org/10.3390/jrfm18090503 - 11 Sep 2025
Cited by 1 | Viewed by 991
Abstract
This research examines the relationship between environmental, social, and governance (ESG) criteria and tax behavior, with a particular focus on tax avoidance (TA). Despite the extensive literature on ESG and tax behavior, there remains a research gap concerning their interaction in the financial [...] Read more.
This research examines the relationship between environmental, social, and governance (ESG) criteria and tax behavior, with a particular focus on tax avoidance (TA). Despite the extensive literature on ESG and tax behavior, there remains a research gap concerning their interaction in the financial sector. The study is based on a dataset of 125 observations from 33 articles covering the period 2012–2023. The results of the meta-regression suggest that both ESG and TA indicators account for the different findings of the primary studies. Part of the observed heterogeneity can also be explained by the diversity of data samples and econometric approaches. Using the results of the meta-regression, we attempt to predict the association between ESG and TA in hypothetical and plausible study designs. The findings show no or small-to-moderate association between the two, suggesting that companies tend to separate ESG strategies from TA and underscoring the need for more consistent measurement practices. Notably, the link between the main variables appears to be strengthened in environments with extreme behaviors, both in terms of ESG and tax strategy. Distinct from prior meta-studies that centered on CSR and taxation, our analysis isolates the ESG/TA nexus by accounting for measurement heterogeneity (different ESG and TA proxies) and demonstrates that extreme behaviors largely drive the observed association. By examining the determinants of the heterogeneity of primary research into the ESG/TA relationship, this meta-analysis provides valuable insights that can guide future research, practical implementation, and regulatory policies. In particular, researchers should rely on long-run measures of TA (e.g., multi-year ETRs) and harmonized ESG indicators to reduce bias and enhance comparability across studies, thereby providing policymakers with more robust and consistent evidence. Full article
(This article belongs to the Special Issue AI and Sustainable Growth in Economics and Finance: Global Trends and Challenges)
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25 pages, 1662 KB  
Systematic Review
Tax Fraud Detection Using Artificial Intelligence-Based Technologies: Trends and Implications
by Rida Belahouaoui and James Alm
J. Risk Financial Manag. 2025, 18(9), 502; https://doi.org/10.3390/jrfm18090502 - 11 Sep 2025
Viewed by 2731
Abstract
This study examines the role of artificial intelligence (AI) tools in enhancing tax fraud detection within the ambit of the OECD Tax Administration 3.0, focusing on how these technologies streamline the detection process through a new “Adaptive AI Tax Oversight” (AATO) framework. Through [...] Read more.
This study examines the role of artificial intelligence (AI) tools in enhancing tax fraud detection within the ambit of the OECD Tax Administration 3.0, focusing on how these technologies streamline the detection process through a new “Adaptive AI Tax Oversight” (AATO) framework. Through a textometric systematic review covering the period from 2014 to 2024, the integration of AI in tax fraud detection is explored. The methodology emphasizes the evaluation of AI’s predictive, analytical, and procedural benefits in identifying and combating tax fraud. The research underscores AI’s significant impact on increasing detection accuracy, predictive capabilities, and operational efficiency in tax administrations. Key findings reveal the ways by which the development and application of the AATO framework improves the tax fraud detection process. The implications highlight not only the governance benefits and ethical challenges that arise, but also provide practical guidance for tax authorities worldwide in leveraging AI to reduce compliance costs and strengthen regulatory frameworks. Finally, the study offers recommendations for future research, particularly in refining AI methodologies, differentiating policy implications across high-income and low- and middle-income countries, and addressing governance and ethical issues to ensure equitable and sustainable tax administration practices. Full article
(This article belongs to the Section Financial Technology and Innovation)
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17 pages, 1480 KB  
Article
Banking and Cooperatives in Ecuador: Comparative Evidence of Technical Efficiency and Financial Resilience
by Byron Eraso Cisneros, Cristina Pérez-Rico and José L. Gallizo Larranz
J. Risk Financial Manag. 2025, 18(9), 501; https://doi.org/10.3390/jrfm18090501 - 10 Sep 2025
Viewed by 700
Abstract
In Ecuador’s financial system, private banks and savings and credit cooperatives coexist, both playing a key role in financial intermediation and the economic inclusion of traditionally underserved sectors. During the COVID-19 pandemic, these institutions faced unprecedented challenges that tested their adaptability and operational [...] Read more.
In Ecuador’s financial system, private banks and savings and credit cooperatives coexist, both playing a key role in financial intermediation and the economic inclusion of traditionally underserved sectors. During the COVID-19 pandemic, these institutions faced unprecedented challenges that tested their adaptability and operational efficiency. In this context, the present study evaluates the technical efficiency of banks and cooperatives in Ecuador over the 2015–2023 period, using a combined approach involving Data Envelopment Analysis (DEA) and mixed linear models (MLMs). A longitudinal and comparative methodology is adopted, allowing for the analysis of efficiency trends over time and the identification of their main structural determinants. The results show that cooperatives exhibit a higher average technical efficiency than banks, as well as greater resilience during the health crisis. The analysis reveals that operating expenses negatively impact efficiency, while equity and social capital show no significant effects. By combining DEA and MLMs, the study offers a more comprehensive and nuanced understanding of the factors influencing efficiency, underscoring the importance of tailored policies and institutional strategies focused on resource optimization and continuous improvement. The study concludes that efficiency does not rely solely on size or asset volume, but rather on managerial capacity and organizational adaptability in complex and changing environments. Full article
(This article belongs to the Section Financial Markets)
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34 pages, 426 KB  
Article
Monitoring Mechanisms and Budget Variances: Evidence from the 50 Largest US Cities
by Dongkuk Lim
J. Risk Financial Manag. 2025, 18(9), 500; https://doi.org/10.3390/jrfm18090500 - 10 Sep 2025
Viewed by 644
Abstract
I examine how the association between the current period’s budget variance and the subsequent period’s budget is affected by various governmental monitoring mechanisms. Specifically, I consider the following governance and monitoring mechanisms: governance structure, state/city budget-limiting regulations, and voter-initiated monitoring. I find that [...] Read more.
I examine how the association between the current period’s budget variance and the subsequent period’s budget is affected by various governmental monitoring mechanisms. Specifically, I consider the following governance and monitoring mechanisms: governance structure, state/city budget-limiting regulations, and voter-initiated monitoring. I find that city budgets ratchet in the top 50 populous cities in the US. I also document evidence of asymmetric ratcheting—the current period’s favorable budget variances result in budget increases in the following year that are larger than the decreases associated with unfavorable variances of the same magnitude. Consistent with the political budget cycle hypothesis that budget pattern alters during pre-election periods, I find the asymmetric ratcheting pattern becomes invisible in times of election, particularly when an incumbent runs for re-election. Given this evidence of the opportunistic budgetary pattern, I hypothesize and find that some monitoring mechanisms mitigate the sensitivity of the subsequent period’s budget with respect to the current period’s budget variance. Full article
(This article belongs to the Special Issue Politics and Financial Markets)
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