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Volume 19
Issue 2
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J. Risk Financial Manag., Volume 19, Issue 2 (February 2026) – 68 articles

Cover Story (view full-size image): We propose two narratives to analyze monthly returns for the S&P 500 Index. The first narrative emphasizes variables that represent the macroeconomy: Fed Funds Effective Rate, Real M2, 10-Year T-Note minus 2-Year T-Note, Shiller Housing Index, industrial production, and 1-Year Expected Inflation. The second narrative focuses on microeconomic fundamentals that include earnings, CBOE Volatility, consumer sentiment, interest rates, global price of copper, and the Dollar Index. We perform a methodology of 348 rolling regressions for each narrative, each with a sample of 60 monthly observations, and estimate the significance of the independent variables considered. We conclude that microeconomic narratives, as captured by indicators linked to stock market activity, exhibit a stronger correlation with monthly returns than macroeconomic fundamentals. View this paper
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14 pages, 259 KB  
Article
Stock Market Efficiency and Banking Stability: Empirical Evidence from the MENA Region
by Rim Jalloul and Mahfuzul Haque
J. Risk Financial Manag. 2026, 19(2), 162; https://doi.org/10.3390/jrfm19020162 - 23 Feb 2026
Abstract
Stock market efficiency plays a vital role in financial economics, as it reflects how quickly and accurately asset prices incorporate available information. This study investigates stock market efficiency and banking sector stability in the MENA region, focusing on the dynamic interactions between macroeconomic [...] Read more.
Stock market efficiency plays a vital role in financial economics, as it reflects how quickly and accurately asset prices incorporate available information. This study investigates stock market efficiency and banking sector stability in the MENA region, focusing on the dynamic interactions between macroeconomic indicators, financial depth, and bank-specific variables. Using panel data from 21 countries over the period 2003–2021, the analysis employs both fixed-effects regression and a Panel Vector Autoregression (PVAR) framework to capture cross-country heterogeneity, temporal dynamics, and systemic interdependencies. The findings reveal that traditional macroeconomic variables, including inflation, GDP per capita, and domestic credit to the private sector, exert limited direct influence on banking sector stability as measured by the Z-score. Instead, the results highlight the importance of country-specific characteristics, institutional quality, and regulatory frameworks in shaping financial resilience across MENA countries. Overall, the findings confirm that effective risk management plays a central role in strengthening bank stability. By enhancing financial resilience, improving operational discipline, and reducing vulnerability to economic and financial shocks, sound risk management practices support the ability of banks to maintain consistent performance over time. The results further suggest that stability is not solely driven by internal mechanisms but also depends on the broader economic and institutional environment in which banks operate. Together, these elements reinforce the capacity of banking systems to contribute to long-term financial stability in the region. Full article
(This article belongs to the Special Issue Evaluating Risk and Return in Modern Financial Markets)
20 pages, 311 KB  
Article
Board Members’ Overseas Experience and Foreign Investors’ Holdings: Evidence from China’s A-Share Market
by Siyu Chen, Kangkang Fu and Yujie Song
J. Risk Financial Manag. 2026, 19(2), 161; https://doi.org/10.3390/jrfm19020161 - 20 Feb 2026
Viewed by 159
Abstract
We examine the effect of directors’ overseas experience on foreign investors’ holdings using a large panel of Chinese listed firms from 2009 to 2022. We find that firms with a higher proportion of overseas-experienced directors exhibit significantly greater foreign institutional ownership. This positive [...] Read more.
We examine the effect of directors’ overseas experience on foreign investors’ holdings using a large panel of Chinese listed firms from 2009 to 2022. We find that firms with a higher proportion of overseas-experienced directors exhibit significantly greater foreign institutional ownership. This positive association is robust to alternative variable definitions, model specifications, and sample restrictions, and it remains after addressing endogeneity concerns. Further analysis shows that the effect is stronger when overseas-experienced directors are more likely to function as effective monitors and advisors. Overall, our findings suggest that overseas experience helps transmit governance practices, knowledge, and skills valued by global investors and provides a credible signal that attracts foreign capital. Full article
(This article belongs to the Special Issue Corporate Finance and Governance in a Changing Global Environment)
23 pages, 324 KB  
Article
Audit Quality as a Mediator Between Internal Audit Firm Factors and Client’s Engagement Intention in Vietnam
by Phuong Thi Khanh Nguyen, Thanh Thi Le Nguyen, Ha Ngan Pham and Linh Dieu Nguyen
J. Risk Financial Manag. 2026, 19(2), 160; https://doi.org/10.3390/jrfm19020160 - 20 Feb 2026
Viewed by 161
Abstract
This study investigates how the internal characteristics of audit firms influence the audit quality of financial statements (audit quality) and, in turn, affect Client’s Engagement Intention in the Vietnamese context. Research data were collected using a convenience sampling method, surveying 634 auditors and [...] Read more.
This study investigates how the internal characteristics of audit firms influence the audit quality of financial statements (audit quality) and, in turn, affect Client’s Engagement Intention in the Vietnamese context. Research data were collected using a convenience sampling method, surveying 634 auditors and 283 board members from companies that use financial statement audit services in Vietnam. The results of structural equation modeling indicate that audit quality positively mediates the relationship between internal influencing factors and client’s engagement intention. Among these factors, The Competence of the Auditors exerts the strongest influence on audit quality, whereas The Hierarchy Level of the Audit Firm shows no statistically significant effect. The findings highlight that audit quality has a positive and direct influence on client’s engagement intention. These insights contribute to shaping strategies for improving research quality as well as offering practical implications for audit firms aiming to enhance the audit quality and foster long-term cooperative relationships with clients in Vietnam’s evolving audit environment. Full article
(This article belongs to the Special Issue Accounting, Auditing, and Reporting Quality: Challenges Under Uncertainty Conditions)
22 pages, 722 KB  
Article
Islamic Bankers’ Niyyah Toward Green Sukuk for Attaining Sustainable Finance: Evidence from Bangladesh
by Mohammad Ali Ashraf, Mir Rafiul Islam Ratul and Md. Kaium Hossain
J. Risk Financial Manag. 2026, 19(2), 159; https://doi.org/10.3390/jrfm19020159 - 20 Feb 2026
Viewed by 259
Abstract
This study investigates the factors associated with niyyah (worshipful intention) of Islamic bankers toward issuing green sukuk (G-sukuk) investment instruments. In particular, it analyses how bankers’ empathy, moral and ethical responsibilities, and self-efficacy are related with environmental awareness, perceived social support, [...] Read more.
This study investigates the factors associated with niyyah (worshipful intention) of Islamic bankers toward issuing green sukuk (G-sukuk) investment instruments. In particular, it analyses how bankers’ empathy, moral and ethical responsibilities, and self-efficacy are related with environmental awareness, perceived social support, and green tech innovation, respectively. These factors then predicted bankers’ niyyah toward issuing G-sukuk. The present research employed the theory of bounded rational planned behavior as its theoretical foundation. Data were collected from 390 bankers employed in different Islamic banks. Random sampling technique was employed for this cross-sectional study and for analyzing data, this study applied structural equation modeling. Findings indicate that all predictors are statistically significant and positively associated with bankers’ niyyah toward G-sukuk for ensuring sustainable finance. Furthermore, G-sukuk initiatives can help to lower the carbon emissions and other harmful substances, which would improve overall environmental sustainability and ecological contexts related to SDG-13. There is limited empirical evidence available on the G-sukuk perspective in Bangladesh. This study will provide practical insights for the bankers and policymakers. Full article
(This article belongs to the Special Issue Sustainable Finance and Corporate Responsibility)
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21 pages, 369 KB  
Article
Leveraging Digital Banking to Enhance Financial Inclusion in Small Island Developing States: A Study of Fiji
by Shasnil Avinesh Chand
J. Risk Financial Manag. 2026, 19(2), 158; https://doi.org/10.3390/jrfm19020158 - 19 Feb 2026
Viewed by 196
Abstract
This study empirically examines the relationship between digital banking and financial inclusion in Fiji, a small island developing state with geographically dispersed populations and limited access to traditional banking infrastructure. Using annual panel data from eight financial institutions—six commercial banks and two non-bank [...] Read more.
This study empirically examines the relationship between digital banking and financial inclusion in Fiji, a small island developing state with geographically dispersed populations and limited access to traditional banking infrastructure. Using annual panel data from eight financial institutions—six commercial banks and two non-bank financial institutions—covering 2012–2024, the analysis accounts for cross-sectional dependence, heteroskedasticity, and serial correlation through Driscoll–Kraay panel-corrected standard errors, while robustness checks using the generalized method of moments (GMM) address potential endogeneity concerns. The results indicate that digital banking is positively associated with higher levels of financial inclusion in Fiji. Both the baseline model, which includes only digital banking, and the extended model, which incorporates banking-sector and macroeconomic controls, show consistent associations. From a policy perspective, the findings provide empirical support for strengthening digital financial infrastructure and regulatory frameworks to promote inclusive finance in small island economies. Overall, the study contributes to the limited empirical literature on digital finance in such contexts and offers insights for policymakers and financial institutions seeking to expand financial inclusion. Full article
(This article belongs to the Special Issue Commercial Banking and FinTech in Emerging Economies, 2nd Edition)
32 pages, 2379 KB  
Review
Structured Framework for Dealing with Types of Financial Statement Fraud, Integrating Common Modalities, Variables, Strategies, and Patterns
by Ludivia Hernandez Aros, José Jimmy Sarmiento Morales and John Johver Moreno Hernández
J. Risk Financial Manag. 2026, 19(2), 157; https://doi.org/10.3390/jrfm19020157 - 19 Feb 2026
Viewed by 195
Abstract
This article proposes a structured framework for financial statement fraud in five dimensions, nature of fraud, execution, participation, organizational impact, and environment, which are broken down into variables and subvariables to describe and analyze this phenomenon systematically. Based on a conceptual review and [...] Read more.
This article proposes a structured framework for financial statement fraud in five dimensions, nature of fraud, execution, participation, organizational impact, and environment, which are broken down into variables and subvariables to describe and analyze this phenomenon systematically. Based on a conceptual review and systematization, a structure is proposed that encompasses the diversity of intentions, motivations, methods, and actors involved, considering human and automated factors in current organizational contexts marked by digitization and increasing regulatory complexity. The framework also highlights the relevance of variables such as the persistence of fraud, technical capacity of fraudsters, and the level of internal/external collusion, integrating elements of internal control, corporate culture, and early warning signs. This framework provides a methodological basis that facilitates the design of more robust prevention, detection, and monitoring strategies, contributing to auditing practices, corporate governance, and strengthening control systems. Limitations to the need for empirical validation are identified, and future lines of research are suggested, aimed at applying data analysis, and artificial intelligence to address increasingly sophisticated fraud schemes. Full article
(This article belongs to the Section Business and Entrepreneurship)
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30 pages, 563 KB  
Article
A Panel Study on the Determinants of Profitability of Bulgarian Commercial Banks
by Petar Ilkov Peshev
J. Risk Financial Manag. 2026, 19(2), 156; https://doi.org/10.3390/jrfm19020156 - 19 Feb 2026
Viewed by 210
Abstract
This study examines the determinants of profitability for 21 Bulgarian commercial banks over the period from the first quarter of 2007 to the first quarter of 2025, using financial statement data. Bank profitability is measured by return on assets (ROA) and return on [...] Read more.
This study examines the determinants of profitability for 21 Bulgarian commercial banks over the period from the first quarter of 2007 to the first quarter of 2025, using financial statement data. Bank profitability is measured by return on assets (ROA) and return on equity (ROE) and modeled within a panel autoregressive distributed lag (PMG-ARDL) framework. The empirical specification combines bank-specific and macroeconomic variables, allowing for the identification of both long-run equilibrium relationships and short-run bank-level dynamics. The long-term results indicate that the net interest margin (NIM), net fee and commission margin (NFM), government bond yields, the growth of the gross domestic product (GDP), and the loan-to-deposit ratio (LDR) positively affect profitability. On the other hand, higher unemployment, rising housing prices, increased loan loss impairments, and the ratio of cash holdings to total assets reduce profitability. The findings provide policy-relevant insights for bank management, regulators, and macroprudential authorities regarding efficiency, income diversification, and credit risk management. The findings facilitate a more comprehensive assessment of banking sector resilience and provide a foundation for the development and refinement of macroprudential and supervisory policy measures. Full article
(This article belongs to the Special Issue Applied Public Finance and Fiscal Analysis)
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25 pages, 1188 KB  
Article
Insights into European Education Financing: Trends, Gaps, and Challenges Revealed Through Bibliometric Analysis
by Gabriela Badareu, Nicoleta Mihaela Doran and Leonica-Elena Gorie
J. Risk Financial Manag. 2026, 19(2), 155; https://doi.org/10.3390/jrfm19020155 - 19 Feb 2026
Viewed by 157
Abstract
This bibliometric study provides a comprehensive mapping of the scientific landscape on education financing in Europe, highlighting its main trends, conceptual foundations, and influential contributions. Based on 168 publications indexed in the Web of Science and analyzed using VOSviewer, the research traces the [...] Read more.
This bibliometric study provides a comprehensive mapping of the scientific landscape on education financing in Europe, highlighting its main trends, conceptual foundations, and influential contributions. Based on 168 publications indexed in the Web of Science and analyzed using VOSviewer, the research traces the chronological evolution of the field, explores keyword co-occurrence networks, and identifies the most impactful studies. Findings indicate a steady growth of academic interest after 2005, with a notable peak from 2014 to 2019, stimulated by major European policy frameworks such as Europe 2020 and Horizon 2020. Keyword analysis reveals dominant themes—including higher education, performance-based funding, human capital, digitalization, and governance—while areas such as pre-university education, digital equity, and large-scale comparative assessments remain insufficiently explored. Highly cited publications focus on the diversification of funding sources, the tensions generated by neoliberal approaches in higher education, and the persistent challenges of financing inclusive education. In addition, country-level analysis highlights an uneven geographic distribution of research output, with scientific production concentrated in a limited number of European countries, alongside contributions from non-European partners reflecting international collaboration patterns. Overall, results show that European research on education financing is fragmented and often shaped by political and institutional priorities. By identifying major research directions and uncovering existing gaps, this study offers a valuable foundation for future investigations aimed at strengthening equity, sustainability, and innovation in the financing of education systems. Full article
(This article belongs to the Section Sustainability and Finance)
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29 pages, 345 KB  
Article
Retirement Plan Conflicts of Interest in Mutual Fund Management
by William Beggs
J. Risk Financial Manag. 2026, 19(2), 154; https://doi.org/10.3390/jrfm19020154 - 19 Feb 2026
Viewed by 137
Abstract
Form ADV regulatory disclosures made by mutual fund management firms indicate that nearly one-third of investment advisers to mutual funds offer pension consulting services to defined contribution plans, creating inherent conflicts of interest that allow advisers to recommend their own affiliated funds to [...] Read more.
Form ADV regulatory disclosures made by mutual fund management firms indicate that nearly one-third of investment advisers to mutual funds offer pension consulting services to defined contribution plans, creating inherent conflicts of interest that allow advisers to recommend their own affiliated funds to plan sponsors. Using the complete universe of Form ADV filings merged with CRSP mutual fund data, I examine how these retirement plan conflicts affect mutual fund portfolio management and performance over the period 2003 to 2014. In contrast to prior studies that relied on hand-collected plan-level data and focused on participant outcomes, this study provides fund-level evidence using comprehensive regulatory disclosures to assess how such conflicts affect managerial incentives. I found that equity mutual funds managed by conflicted advisers exhibited widespread underperformance and were managed to a significantly lesser extent, consistent with weakened incentives arising from sticky defined contribution assets. The effects were economically larger for target date mutual funds, which played a central role as default investment options in retirement plans. The results have important policy implications, suggesting that disclosure alone may be insufficient to mitigate conflicts of interest and highlighting the need for stronger fiduciary oversight and governance of plan menus, particularly for default investment options. Full article
(This article belongs to the Special Issue Mutual Fund Performance)
22 pages, 427 KB  
Article
ESG and Performance of European Listed Financial Companies: An Empirical Analysis
by Giovanni Baldissarro, Gianpaolo Iazzolino and Ferdinando Ielapi
J. Risk Financial Manag. 2026, 19(2), 153; https://doi.org/10.3390/jrfm19020153 - 19 Feb 2026
Viewed by 225
Abstract
In recent years, the integration of Environmental, Social, and Governance (ESG) factors into corporate strategies has become crucial, particularly in the European financial sector. This study analyzes the impact of ESG practices on financial performance indicators, such as Return on Assets (ROA) and [...] Read more.
In recent years, the integration of Environmental, Social, and Governance (ESG) factors into corporate strategies has become crucial, particularly in the European financial sector. This study analyzes the impact of ESG practices on financial performance indicators, such as Return on Assets (ROA) and Tobin’s Q, using a sample of 192 European financial companies from 2017 to 2022. The results show that environmental scores have a significant positive effect on Tobin’s Q, indicating greater investor confidence, while the influence on ROA is not significant. In contrast, social and governance scores do not significantly affect either ROA or Tobin’s Q. This is likely due to the European financial sector’s stringent regulatory standards and mandatory compliance requirements, which minimize differences in these areas across firms. Additionally, high levels of financial leverage and larger company size are negatively associated with financial performance. This study contributes to understanding ESG dynamics in the financial sector, highlighting the role of environmental practices in creating market value and the need for regulations to prevent greenwashing. Full article
(This article belongs to the Section Business and Entrepreneurship)
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19 pages, 548 KB  
Article
Using Credit Scores to Capture Regional Banks’ Portfolio Credit Risk: The Case of East Texas, USA
by Juan Castro, James Nguyen and Esther Castro
J. Risk Financial Manag. 2026, 19(2), 152; https://doi.org/10.3390/jrfm19020152 - 19 Feb 2026
Viewed by 177
Abstract
Credit scoring is the industry-standard methodology for quantifying the creditworthiness and default risk of individual loan applicants. However, assessing the risk at the portfolio level—across different branches or regions—requires more than just aggregating individual scores. This paper presents a simple, pragmatic model for [...] Read more.
Credit scoring is the industry-standard methodology for quantifying the creditworthiness and default risk of individual loan applicants. However, assessing the risk at the portfolio level—across different branches or regions—requires more than just aggregating individual scores. This paper presents a simple, pragmatic model for evaluating overall commercial bank portfolio risk by analyzing accumulated credit scores, facilitating effective inter-branch benchmarking. The proposed model is validated using credit score data from two distinct regions of the bank. Logistic regressions by region show that both northern and southern banks maintain low overall risk profiles due to strong portfolio credit scores. However, a nuanced analysis reveals regional discrepancies: the southern region appears riskier when segmented by credit score groupings (indicating a higher concentration of lower-tier borrowers), whereas the northern region exhibits higher risk when analyzed against a broader set of factors, such as approved amounts, maximum potential exposure, and approved versus book rates. This research suggests that portfolio risk is not one-dimensional; effective risk management requires analyzing both individual scores and the interaction of loan characteristics, particularly when comparing regional performance. Full article
(This article belongs to the Section Risk)
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20 pages, 2211 KB  
Article
Where Is the World Heading? Quantile Time-Frequency Connectedness Among Oil, Conventional and ESG Stock Returns
by Naziha Kasraoui and Wael Hemrit
J. Risk Financial Manag. 2026, 19(2), 151; https://doi.org/10.3390/jrfm19020151 - 18 Feb 2026
Viewed by 205
Abstract
This study examines the interactive link between global oil, conventional and the Environmental, Social, and Governance (ESG) stock returns, focusing on their complex structure, nonlinearity, and the duration of uncertainty. We use Quantile-on-Quantile (QoQ) and Frequency-domain Quantile Vector Autoregression (FD-QVAR) methods to apprehend [...] Read more.
This study examines the interactive link between global oil, conventional and the Environmental, Social, and Governance (ESG) stock returns, focusing on their complex structure, nonlinearity, and the duration of uncertainty. We use Quantile-on-Quantile (QoQ) and Frequency-domain Quantile Vector Autoregression (FD-QVAR) methods to apprehend the differences in market states and investment horizon conditions. Based on the (QoQ) approach, we provide solid evidence of the decreasing dependence of crude oil returns on conventional and clean energy stock returns at lower quantile. Our results show that ESG stock markets display greater resilience during severe market downturns. Additionally, the (FD-QVAR) estimation results demonstrate that conventional assets are the primary source of short-term (high frequency) and long-term (low frequency) return shocks. The ESG investments can support international diversification amid persistent oil market declines. The findings provide valuable insights for ESG investors, policymakers, and regulators on risk assessment, hedging strategies, and the intrinsic resilience of sustainable finance. Full article
(This article belongs to the Section Sustainability and Finance)
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24 pages, 501 KB  
Article
Measuring Technostress in Corporate Culture: Insights from the 10-K Annual Reports
by Nayera Eltamboly, Magdy Farag, Mohamed Gomaa and Maysa Abdallah
J. Risk Financial Manag. 2026, 19(2), 150; https://doi.org/10.3390/jrfm19020150 - 15 Feb 2026
Viewed by 236
Abstract
This study introduces an innovative approach for quantifying the technostress phenomenon, drawing on textual narratives from the firm’s annual report. Based on a dataset covering the Standard and Poor’s 500 (S&P 500) index firms, we analyze 2532 10-K annual reports and highlight the [...] Read more.
This study introduces an innovative approach for quantifying the technostress phenomenon, drawing on textual narratives from the firm’s annual report. Based on a dataset covering the Standard and Poor’s 500 (S&P 500) index firms, we analyze 2532 10-K annual reports and highlight the key contributors of technostress across six different dimensions of technostress using a combined score. A major advantage of the new six-dimensional scoring framework is that it offers a set of objective metric proxies to capture technostress without bias, utilizing a refined list of 42 key clues derived through factor analysis. Also, it adopts natural language processing, revealing hidden patterns and anomalies that indicate technostress. We further validate this framework by applying fixed-effect regression models to examine the impact of technostress on productivity. The main results imply that the four technostress dimensions presented in techno-risks, insecurity, uncertainty, and invasion negatively impact firms’ productivity. This framework offers practical implications for firms, allowing them to generate a rich profile concerning the degree of technostress associated with existing practices, highlighting the crucial need for advanced interventions, facilitating comparisons with other firms from the same or different industries, as well as cross-country comparisons. Full article
(This article belongs to the Special Issue Shaping the Future of Accounting)
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30 pages, 1605 KB  
Article
Digital Disruptive Innovation and Firm Performance Nexus: Role of Dynamic Managerial Competence, Innovative Work Practices and COVID-19
by Omar Al Farooque, Shoaib Raza and Ashfaq Ahmad Khan
J. Risk Financial Manag. 2026, 19(2), 149; https://doi.org/10.3390/jrfm19020149 - 14 Feb 2026
Viewed by 315
Abstract
This study investigates, with a particular focus on understanding how digital change shapes firm performance in an emerging economy context, first, the impact of digital disruptive innovation, conceptualized as an external condition characterized by technological, market, and competitive turbulence on firm performance within [...] Read more.
This study investigates, with a particular focus on understanding how digital change shapes firm performance in an emerging economy context, first, the impact of digital disruptive innovation, conceptualized as an external condition characterized by technological, market, and competitive turbulence on firm performance within tech-intensive service sector companies, and second, the mediating influence of management skills, proxied by dynamic core managerial competence, and the moderating influence of modern management practices, proxied by innovative work practices, on this relationship. It also examines the moderating effect of innovative work practices on the relationship between digital disruptive innovation and dynamic core management competence, and the impact of COVID-19 on the link between dynamic core management competence and firm performance. This study applies structural equation modelling (SEM) (AMOS 26.0 software) to explore several hypotheses testing for target relationships. The sample was collected via a Qualtrics online survey from 730 senior executives working in digital telecom and banking firms in Pakistan. The study findings show that digital disruptive innovation has a negative effect on service sector performance, and this negative impact is also mediated by dynamic core management competence, as heightened digital disruption tends to weaken managerial competence, which subsequently affects firm performance. While innovative work practices exhibit a positive association with performance, they also positively moderate the negative effect of digital disruptive innovation on performance and mitigate the negative impact of dynamic core management competence on performance. The analysis also reveals that the COVID-19 pandemic positively moderates the effect of dynamic core management competence on performance, indicating that managerial adaptability becomes particularly important when firms operate under crisis conditions. Overall, this study highlights the significance of these phenomena on firm performance in an emerging economy context and provides practical insights for managers and policymakers operating in digitally disrupted service sectors. Full article
(This article belongs to the Section Business and Entrepreneurship)
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28 pages, 595 KB  
Article
Assessing the European Central Bank’s Institutional Capacity and Readiness for the Introduction of the Digital Euro
by Ioannis Tsouris, Georgios L. Thanasas and Maria Rigou
J. Risk Financial Manag. 2026, 19(2), 148; https://doi.org/10.3390/jrfm19020148 - 14 Feb 2026
Viewed by 329
Abstract
This paper examines the European Central Bank’s institutional capacity and readiness to introduce a digital euro in the context of accelerating digitalization, geopolitical uncertainty, and growing competition in the global monetary system. Rather than treating the digital euro primarily as a technological innovation, [...] Read more.
This paper examines the European Central Bank’s institutional capacity and readiness to introduce a digital euro in the context of accelerating digitalization, geopolitical uncertainty, and growing competition in the global monetary system. Rather than treating the digital euro primarily as a technological innovation, the study conceptualizes it as a multidimensional institutional project shaped by regulatory mandates, governance choices, stakeholder expectations and risk considerations. Drawing on institutional theory and stakeholder theory, the analysis adopts a qualitative research design combining semi-structured expert interviews with systematic document analysis of ECB and EU policy material. The findings indicate that while the ECB has developed a structured roadmap encompassing investigation, preparation and potential issuance phases, significant challenges remain across regulative, normative and cognitive dimensions of readiness. These challenges include tensions between privacy and compliance requirements, cybersecurity and interoperability risks, potential effects on financial stability, and the management of public trust and stakeholder acceptance. The paper argues that the success of a digital euro will depend not only on technical feasibility, but on the ECB’s ability to align design and implementation choices with institutional legitimacy and behavioral expectations. By integrating institutional readiness and risk analysis, the study contributes to the literature on central bank digital currencies and offers insights relevant to policymakers concerned with monetary sovereignty and financial resilience in the digital age. Full article
(This article belongs to the Special Issue The Future of Money: Central Bank Digital Currencies, Cryptocurrencies and Stablecoins, 2nd Edition)
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24 pages, 365 KB  
Article
The Effects of Green Innovation on Stock Liquidity: Evidence from US Companies
by Xinze Qian, Haizhi Wang, Yiqiao Xu and Richard Zhang
J. Risk Financial Manag. 2026, 19(2), 147; https://doi.org/10.3390/jrfm19020147 - 14 Feb 2026
Viewed by 240
Abstract
This study investigates whether green innovation (GI) enhances stock liquidity by mitigating information asymmetry. Using a hand-collected panel of 4752 unique U.S. publicly listed firms from 2010 to 2024, we employ OLS regressions to show that GI is associated with significantly higher stock [...] Read more.
This study investigates whether green innovation (GI) enhances stock liquidity by mitigating information asymmetry. Using a hand-collected panel of 4752 unique U.S. publicly listed firms from 2010 to 2024, we employ OLS regressions to show that GI is associated with significantly higher stock liquidity. Our empirical evidence indicates that the relation between GI and market liquidity is highly contingent on firms’ market and accounting environments. Specifically, the liquidity-enhancing effect of GI is stronger for firms facing higher exposure to climate change risk and environmental regulatory uncertainty, where green signaling is most valuable. Furthermore, we find that a strong stakeholder orientation both stimulates green innovation and amplifies its positive impact on stock liquidity. Finally, the liquidity benefits of GI are more pronounced among firms adopting conservative financial reporting practices, suggesting that reporting conservatism mitigates the endogenous risks associated with GI and enhances the credibility of innovation-related disclosures. Overall, our findings establish a robust link between product market sustainability and financial market efficiency, highlighting the role of green innovation in reducing information frictions. Full article
(This article belongs to the Special Issue Emerging Trends and Innovations in Corporate Finance and Governance)
14 pages, 322 KB  
Article
Evaluating Factor Contributions for Sold Homes
by Jason R. Bailey, W. Brent Lindquist and Svetlozar T. Rachev
J. Risk Financial Manag. 2026, 19(2), 146; https://doi.org/10.3390/jrfm19020146 - 13 Feb 2026
Viewed by 196
Abstract
We evaluated the contributions of ten intrinsic and extrinsic factors readily available from website data to individual home sale prices for three major U.S. cities using a P-spline generalized additive model (GAM). We identified the relative significance of each factor by evaluating the [...] Read more.
We evaluated the contributions of ten intrinsic and extrinsic factors readily available from website data to individual home sale prices for three major U.S. cities using a P-spline generalized additive model (GAM). We identified the relative significance of each factor by evaluating the change in the adjusted R2 value resulting from its removal from the model. We combined this with information from correlation matrices to identify the added predictive value of a factor. For these three cities, the tests revealed that living area and location (latitude, longitude) had the strongest impact on explained variance, and each factor independently added predictive value. Relative impacts of the other factors were city-dependent. We utilized this information to develop an improved GAM with superior concurvity values. The improved GAM required the use of linear orthogonalization of factors combined with smoothing functions based on tensor products of correlated factors. Full article
(This article belongs to the Special Issue Real Estate Finance and Risk Management)
22 pages, 353 KB  
Article
Board Gender Diversity and Innovation Strategies: Sectoral Effects on ESG Performance in Financial and Non-Financial Firms
by Omotayo Olaleye Feyisetan and Fadi Alkaraan
J. Risk Financial Manag. 2026, 19(2), 145; https://doi.org/10.3390/jrfm19020145 - 13 Feb 2026
Viewed by 360
Abstract
This study empirically examines the joint effects of innovation strategy intensity and gender diversity in boardrooms on firms’ environmental, social, and governance (ESG) performance. Drawing on the Resource-Based View and Upper Echelons Theory, we analyse a panel of financial and non-financial firms listed [...] Read more.
This study empirically examines the joint effects of innovation strategy intensity and gender diversity in boardrooms on firms’ environmental, social, and governance (ESG) performance. Drawing on the Resource-Based View and Upper Echelons Theory, we analyse a panel of financial and non-financial firms listed in the FTSE 350 on the London Stock Exchange over the period 2012–2023. Using panel regression models, we find that innovation intensity is positively associated with ESG performance across both sectors. Board gender diversity also exhibits a positive relationship with ESG performance; however, the effect is economically weaker and statistically insignificant for non-financial firms. The proportion of women employees shows sector-specific effects, being negatively related to ESG performance in financial firms but positively related in non-financial firms. While women in management positions are positively associated with ESG performance in nested models, this relationship weakens in full specifications, suggesting the influence of competing organisational factors. Notably, the presence of female executives consistently enhances ESG performance across models. Overall, the findings highlight the importance of gender diversity in senior leadership for advancing ESG outcomes and raise questions about whether conventional innovation metrics adequately capture sustainability-oriented innovation. The study offers important theoretical and managerial implications. Full article
(This article belongs to the Special Issue Corporate Finance: Financial Management of the Firm)
28 pages, 774 KB  
Article
Refurbished Institutional Quality and Good Governance for Bank Stability: A Meta-Analysis of Emerging Economies
by Sheikh Mohammad Rabby, Mohammad Mizenur Rahaman, Golam Morshed Shahriar Tanim and Adiba Rahman Bushra Chowdhury
J. Risk Financial Manag. 2026, 19(2), 144; https://doi.org/10.3390/jrfm19020144 - 13 Feb 2026
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Abstract
In an increasingly volatile global financial environment, strong institutions and sound governance are essential for safeguarding banking stability and mitigating systemic risks in emerging economies. Across the 11 emerging economies examined, weaknesses in institutional quality and inconsistencies in governance frameworks continue to elevate [...] Read more.
In an increasingly volatile global financial environment, strong institutions and sound governance are essential for safeguarding banking stability and mitigating systemic risks in emerging economies. Across the 11 emerging economies examined, weaknesses in institutional quality and inconsistencies in governance frameworks continue to elevate credit risk and undermine financial resilience. This study investigates the effects of institutional quality (IQ) and corporate governance (CGG) on bank stability, drawing on the Financial Stability and Risk Management (FSRM) theory, which highlights robust institutions, effective risk oversight, and sound governance as core determinants of financial system strength. Using dynamic panel data from 2011–2024, the study applies the generalized method of moments (GMM) approach to assess bank performance through non-performing loans (NPLs) and Z-Score as key dependent variables. The model incorporates IQ, CGG, bank-specific characteristics (bank assets, capital adequacy, cost-to-income ratio), and macroeconomic indicators (GDP, inflation, exchange rate, real interest rate) as explanatory factors, addressing endogeneity, unobserved heterogeneity, and persistence in banking outcomes. The results reveal strong persistence in NPLs (lag = 0.965, p < 0.01) and Z-Score (lag = 0.920, p < 0.01), indicating notable path dependence in bank performance. Institutional quality significantly enhances bank stability (Z-Score coefficient = 0.073, p = 0.040), while BA shows a negative but insignificant effect (coefficient = 0.005, p = 0.432), implying that rapid asset growth without prudent risk management may weaken resilience. CGG shows negative but insignificant effects, while macroeconomic factors also appear insignificant, indicating limited short-term impact. Countries with stronger institutions, such as South Korea, display lower NPLs and higher stability, whereas weaker institutional environments like Iran, Pakistan, and Bangladesh face higher credit risk and reduced stability. Overall, the study highlights IQ and prudent balance sheet management as key to stronger bank stability, urging policymakers to reinforce institutional frameworks, tighten regulatory discipline, and ensure controlled asset growth to reduce systemic vulnerabilities. Full article
(This article belongs to the Section Banking and Finance)
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15 pages, 558 KB  
Article
Price Efficiency of Cryptocurrencies
by Jonathan Lee Miller
J. Risk Financial Manag. 2026, 19(2), 143; https://doi.org/10.3390/jrfm19020143 - 13 Feb 2026
Viewed by 227
Abstract
We test price efficiency, which shows the fairness of trading for retail investors using the runs tests and variance ratio tests. We reject the hypothesis that Bitcoin prices are price efficient on most markets, but efficient on the Bitstamp BTC/USD. Coinbase departs from [...] Read more.
We test price efficiency, which shows the fairness of trading for retail investors using the runs tests and variance ratio tests. We reject the hypothesis that Bitcoin prices are price efficient on most markets, but efficient on the Bitstamp BTC/USD. Coinbase departs from efficiency, indicating that fraud, later found by regulators, has significantly harmed retail investors. We also document barriers to trading of Bitcoin, which result in difficulties in arbitrage despite global price differences. My results predict the hack of the Bitfinex exchange, which caused it to close and harmed many people. Full article
(This article belongs to the Special Issue Intersection of Investment and FinTech)
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32 pages, 912 KB  
Article
Financial Inclusion and Rural Economic Empowerment: Evidence from Self-Help Groups in Maharashtra, India
by Madan Survase and Bibhudutta Panda
J. Risk Financial Manag. 2026, 19(2), 142; https://doi.org/10.3390/jrfm19020142 - 13 Feb 2026
Viewed by 538
Abstract
The importance of financial inclusion for economic development is well acknowledged in literature. Despite this, a large percentage of the rural population still remains outside the formal financial system. This study examines factors associated with financial inclusion and their relationship with rural economic [...] Read more.
The importance of financial inclusion for economic development is well acknowledged in literature. Despite this, a large percentage of the rural population still remains outside the formal financial system. This study examines factors associated with financial inclusion and their relationship with rural economic well-being. The study is based on a primary survey of 426 Self-Help Group (SHG)-participating rural women from three districts in rural Maharashtra, India. Using Structural Equation Modeling (SEM), the study finds that physical banking services (PBS) are positively associated with household economic well-being through greater access to and use of credit facilities. PBS is also positively associated with access to and use of insurance services in rural areas, but no positive association is found between insurance services and economic well-being. The National Rural Livelihood Mission (NRLM) emerges as an important policy channel. NRLM complements access to PBS and mediates the association between PBS, credit usage, and rural economic well-being. The study highlights that policies focusing on the effective implementation of NRLM programs, improved awareness and delivery of insurance schemes, and targeted efforts to address both supply-side and demand-side barriers to financial access are important for improving economic well-being. Full article
(This article belongs to the Special Issue Recent Developments in Finance and Economic Growth)
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29 pages, 1782 KB  
Article
Financial Capabilities and Financial Well-Being: The Mediating Role of Financial Resilience
by Arturo Garcìa-Santillàn
J. Risk Financial Manag. 2026, 19(2), 141; https://doi.org/10.3390/jrfm19020141 - 13 Feb 2026
Viewed by 279
Abstract
This study proposes a two-stage structural model integrating financial literacy, education, attitudes, behavior, financial advice, and financial stress as predictors of financial capabilities. It examines the relationship between financial capabilities and financial well-being, highlighting financial resilience as a potential mediator. The main contribution [...] Read more.
This study proposes a two-stage structural model integrating financial literacy, education, attitudes, behavior, financial advice, and financial stress as predictors of financial capabilities. It examines the relationship between financial capabilities and financial well-being, highlighting financial resilience as a potential mediator. The main contribution is positioning financial resilience as a central explanatory mechanism, offering a holistic perspective that addresses theoretical gaps and provides empirical evidence in the context of an emerging economy. A non-experimental, quantitative, cross-sectional design was applied with a sample of 365 university students from Veracruz, Mexico. Data were collected via an online questionnaire and analyzed using exploratory and confirmatory factor analysis, structural equation modeling (SEM), and mediation analysis with bootstrap procedures. The results indicate that financial literacy, education, attitudes, financial advice, and behavior positively influence financial capabilities, with financial advice being the strongest predictor. Financial capabilities strongly affect financial well-being, whereas financial resilience did not mediate this relationship. Limitations include the cross-sectional design and non-probability sampling. Future research could examine additional mediators and moderators and evaluate interventions in diverse socio-economic contexts. Full article
(This article belongs to the Special Issue From Financial Fragility to Resilience: Households, Investors, and Small Businesses)
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17 pages, 306 KB  
Article
Extending Maximum-Entropy Interbank Reconstruction to a Multi-Country Framework with Cross-Border Exposures
by Simone Sbaraglia, Pin Guo and Stefano Zedda
J. Risk Financial Manag. 2026, 19(2), 140; https://doi.org/10.3390/jrfm19020140 - 13 Feb 2026
Viewed by 154
Abstract
Estimating bilateral interbank exposures is essential for assessing systemic risk and contagion in global banking systems. We propose a reconstruction framework that extends the maximum-entropy approach to a multi-country setting by integrating domestic balance-sheet total interbank exposure values with country-level aggregate cross-border exposures. [...] Read more.
Estimating bilateral interbank exposures is essential for assessing systemic risk and contagion in global banking systems. We propose a reconstruction framework that extends the maximum-entropy approach to a multi-country setting by integrating domestic balance-sheet total interbank exposure values with country-level aggregate cross-border exposures. The method distributes each country’s external positions across its resident banks and then reconstructs the domestic interbank matrices under maximum-entropy constraints, yielding a globally consistent exposure matrix. Cross-border aggregates—such as those published by the BIS—enter the framework only as optional external constraints rather than as objects of empirical validation. The resulting dual-layer interbank network improves the internal coherence of multi-country exposure estimates and provides a consistent input for contagion simulations and systemic risk analysis. Full article
(This article belongs to the Special Issue Banking Practices, Climate Risk and Financial Stability)
20 pages, 632 KB  
Article
To Reward or Not to Reward? Stock Market Reaction to Renewable-Energy Project Awards
by Ines Belgacem and Leila Louhichi
J. Risk Financial Manag. 2026, 19(2), 139; https://doi.org/10.3390/jrfm19020139 - 12 Feb 2026
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Abstract
This study investigates whether equity markets in a hydrocarbon-based emerging economy react to corporate participation in large-scale renewable-energy investments. Focusing on Saudi Arabia’s National Renewable Energy Program (NREP) during 2017–2024, we examine stock market responses to public announcements of utility-scale solar and wind [...] Read more.
This study investigates whether equity markets in a hydrocarbon-based emerging economy react to corporate participation in large-scale renewable-energy investments. Focusing on Saudi Arabia’s National Renewable Energy Program (NREP) during 2017–2024, we examine stock market responses to public announcements of utility-scale solar and wind project awards involving listed firms. Using an event-study design, we analyze cumulative abnormal returns (CARs) for 42 firm–event observations linked to 21 projects. Expected returns are estimated using the market model, with robustness checks based on market-adjusted and CAPM specifications incorporating the Saudi Interbank Offered Rate (SAIBOR) as the risk-free rate. The results show statistically significant abnormal returns around award announcements, with stronger effects in short event windows. Cross-sectional analyses indicate that market reactions are more pronounced for domestic Saudi firms and increase with project size, suggesting that institutional context and project salience shape investor responses. Overall, the findings provide evidence that renewable project awards are valuation-relevant events in Saudi Arabia’s capital market and contribute to the event-study and green-finance literature in a hydrocarbon-dependent economy undergoing transition under Vision 2030. Full article
(This article belongs to the Special Issue Sustainable Finance and ESG Investment)
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23 pages, 885 KB  
Article
Global Payment Fragmentation and Small Financial Centres: Evidence from Cyprus
by Petros Lois and Spyros Repousis
J. Risk Financial Manag. 2026, 19(2), 138; https://doi.org/10.3390/jrfm19020138 - 12 Feb 2026
Viewed by 271
Abstract
The global financial system is undergoing a period of increasing fragmentation as payment and settlement infrastructures become politicised and alternative systems emerge. Platforms such as SWIFT and Euroclear remain central to cross-border finance, yet their use in sanction enforcement has encouraged the development [...] Read more.
The global financial system is undergoing a period of increasing fragmentation as payment and settlement infrastructures become politicised and alternative systems emerge. Platforms such as SWIFT and Euroclear remain central to cross-border finance, yet their use in sanction enforcement has encouraged the development of parallel payment and settlement arrangements, particularly among BRICS economies. This paper examines the implications of global payment system fragmentation for Cyprus, a small open economy and euro-area financial centre. Rather than focusing on direct exclusion or adoption of alternative systems, the analysis highlights indirect transmission channels, including confidence effects, compliance costs, capital flow volatility, and reputational risk. A conceptual framework is developed to explain how infrastructure fragmentation affects rule-taking economies, followed by a scenario analysis illustrating potential outcomes under different fragmentation trajectories. The results suggest that even under managed coexistence, fragmentation increases operational complexity and regulatory pressures for small financial centres. More severe fragmentation scenarios could amplify funding risks and challenge financial intermediation models. The paper concludes with policy recommendations for Cyprus and the European Union, emphasising regulatory alignment, compliance capacity, and infrastructure governance as key tools for managing fragmentation-related risks. Full article
(This article belongs to the Special Issue Alternative Finance and Financial Innovation: Risks, Opportunities, and Regulation)
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42 pages, 4696 KB  
Article
Analysing South Africa’s King IV Report on Achieving Sustainable Development Goals Through Enhanced Transparency and Sustainability Practices
by Munyaradzi Duve and Benjamin Marx
J. Risk Financial Manag. 2026, 19(2), 137; https://doi.org/10.3390/jrfm19020137 - 11 Feb 2026
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Abstract
The study examines the compliance of South African JSE-listed companies with the King IV Report principles on corporate governance and their contribution to Sustainable Development Goals (SDGs). To achieve this, integrated reports were downloaded from the websites of the top 22 JSE-listed companies [...] Read more.
The study examines the compliance of South African JSE-listed companies with the King IV Report principles on corporate governance and their contribution to Sustainable Development Goals (SDGs). To achieve this, integrated reports were downloaded from the websites of the top 22 JSE-listed companies representing six different economic sectors. Using content analysis of the 22 top-performing companies, this study assesses transparency in governance as well as SDG disclosure practices. Results show high compliance with King IV Report principles, especially good performance, legitimacy, and effective control, though full disclosure is not yet achieved. Similarly, while SDG-aligned reporting is robust, only a small percentage of listed companies provided full disclosure on all SDG themes. For regulators, the findings are supportive of stricter reporting and possibly mandatory disclosures aligned with King IV and SDGs. The study’s findings validate the views of stakeholder theory and the triple bottom line framework. Full article
(This article belongs to the Special Issue Sustainable Finance and ESG Investment)
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31 pages, 1243 KB  
Article
Market Power and Multidimensional Efficiency in Banking: Diversification, Stability, and Digital–Governance Dynamics
by Ari Warokka, Jong Kyun Woo, Dewi Sartika and Aina Zatil Aqmar
J. Risk Financial Manag. 2026, 19(2), 136; https://doi.org/10.3390/jrfm19020136 - 11 Feb 2026
Viewed by 242
Abstract
This study examines how banks navigate the dual strategic imperatives of securing market power and optimizing multidimensional operational efficiency—technical, scale, and allocative efficiency—within emerging and transitional banking systems. Focusing on business model diversification and financial stability, this study also accounts for the conditioning [...] Read more.
This study examines how banks navigate the dual strategic imperatives of securing market power and optimizing multidimensional operational efficiency—technical, scale, and allocative efficiency—within emerging and transitional banking systems. Focusing on business model diversification and financial stability, this study also accounts for the conditioning roles of governance quality, institutional complexity, credit risk, and digitalization. Using bank-level data from Association of Southeast Asian Nations (ASEAN) and Middle East and North Africa (MENA) countries, the analysis applies Partial Least Squares Structural Equation Modeling (PLS-SEM) and multi-group analysis to assess direct, mediating, and moderating relationships. The results indicate that diversification and financial stability significantly strengthen market power, while their effects on efficiency are largely negative across efficiency dimensions. Governance quality partially mediates the stability–market power relationship, whereas institutional complexity weakens this linkage. Digital transformation maturity and market digitalization condition the diversification–efficiency nexus, with effects varying across efficiency types and regions. Overall, the findings reveal a strategic trade-off between competitive positioning and operational efficiency, emphasizing the importance of governance structures and digital capabilities in shaping bank performance across heterogeneous institutional contexts. Full article
(This article belongs to the Special Issue Corporate Finance and Governance in a Changing Global Environment)
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17 pages, 1096 KB  
Article
Dynamic Risk Parity Portfolio Optimization: A Comparative Study with Markowitz and Static Risk Parity
by Peerapat Wattanasin, Thoedsak Chomtohsuwan and Tanpat Kraiwanit
J. Risk Financial Manag. 2026, 19(2), 135; https://doi.org/10.3390/jrfm19020135 - 11 Feb 2026
Viewed by 335
Abstract
Quantitative asset allocation remains a critical challenge in modern finance, particularly due to the inherent uncertainty of expected returns (μ) and the sensitivity of portfolio outcomes to the stability of portfolio weights. This study conducts a comparative empirical analysis of three portfolio strategies—MVO, [...] Read more.
Quantitative asset allocation remains a critical challenge in modern finance, particularly due to the inherent uncertainty of expected returns (μ) and the sensitivity of portfolio outcomes to the stability of portfolio weights. This study conducts a comparative empirical analysis of three portfolio strategies—MVO, Static RP, and Dynamic RP—using a long-only portfolio of eleven highly liquid assets, consisting of U.S. large-cap equities and gold, over the period 2015–2025. Results from historical backtesting indicate maintaining a competitive Sharpe ratio (1.418) and the lowest Maximum Drawdown (−0.2770) relative to Markowitz MVO (−0.3120) and Static RP (−0.2788). Although Markowitz delivers the numerically highest Sharpe ratio (1.655), this advantage is largely driven by in-sample optimization, with limited robustness under realistic implementation settings. In contrast, Dynamic RP demonstrates superior downside risk management, weight stability, and adaptability to changing market conditions, suggesting a more practical and resilient framework for real-world investment applications. Overall, the findings indicate that Dynamic Risk Parity provides an effective and robust alternative to traditional mean-variance optimization, offering investors a strategy that balances return potential, risk mitigation, and portfolio stability, while addressing key limitations of classical MVO approaches. Full article
(This article belongs to the Section Mathematics and Finance)
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19 pages, 331 KB  
Article
Comparing Higher-Order Co-Moment Functionals with Conditional Tail Risk Measures
by Abootaleb Shirvani and Mahshid Fahandezhsadi
J. Risk Financial Manag. 2026, 19(2), 134; https://doi.org/10.3390/jrfm19020134 - 10 Feb 2026
Viewed by 137
Abstract
This paper compares higher-order co-moment functionals (co-skewness and co-kurtosis) with conditional tail-risk measures, namely Co-Expected Shortfall (CoES) and Co-Value at Risk (CoVaR), within a unified coherence-based framework. On the theoretical side, we present explicit counterexamples showing that co-skewness violates subadditivity and co-kurtosis violates [...] Read more.
This paper compares higher-order co-moment functionals (co-skewness and co-kurtosis) with conditional tail-risk measures, namely Co-Expected Shortfall (CoES) and Co-Value at Risk (CoVaR), within a unified coherence-based framework. On the theoretical side, we present explicit counterexamples showing that co-skewness violates subadditivity and co-kurtosis violates monotonicity, confirming that higher-order co-moments are descriptive diagnostics rather than admissible risk measures. By contrast, CoES inherits the coherence of Expected Shortfall in a conditional joint-tail setting, while CoVaR remains non-coherent and captures tail events only at a quantile level without accounting for loss severity. Empirically, we adopt a predictive, single-index, lagged-conditioning design to examine temporal conditional tail dependence in S&P 500 daily losses from 2007 to 2023. This framework measures the persistence and amplification of market-wide tail risk rather than cross-sectional contagion across institutions. Conditional tail-risk estimates are reported only when the joint tail is sufficiently populated to ensure reliable identification. When these conditions are met, CoES delivers stable and economically interpretable signals of conditional tail fragility, with pronounced elevations during prolonged stress episodes such as the Lehman collapse and the COVID-19 crisis. Robustness analysis at a less extreme tail level confirms that the qualitative ordering of stress regimes is preserved. CoVaR captures sharp conditional stress episodes but exhibits greater sensitivity to sample size, while higher-order co-moments, both raw and standardized, remain sign-unstable and weakly informative. Overall, the results support a clear hierarchy: co-moments as descriptive supplements, CoVaR as a scenario-based stress indicator, and CoES as the coherent benchmark for conditional tail-risk measurement. Full article
(This article belongs to the Section Mathematics and Finance)
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24 pages, 1610 KB  
Article
The Effect of Environmental, Social, and Governance on Firm Value in Southeast Asia: The Moderating Role of Digitalization
by Bahrul Yaman, Deni Pandu Nugraha, Faizul Mubarok, Amanj Mohamed Ahmed, Maria Fekete-Farkas, Istvan Hagen and Zsolt Tégla
J. Risk Financial Manag. 2026, 19(2), 133; https://doi.org/10.3390/jrfm19020133 - 10 Feb 2026
Viewed by 269
Abstract
With an emphasis on the moderating effect of digitalization, this study links the relationship between corporate valuation in Southeast Asia and environmental, social, and governance (ESG) frameworks. Although the importance of ESG practices for long-term wealth creation and organizational sustainability is becoming more [...] Read more.
With an emphasis on the moderating effect of digitalization, this study links the relationship between corporate valuation in Southeast Asia and environmental, social, and governance (ESG) frameworks. Although the importance of ESG practices for long-term wealth creation and organizational sustainability is becoming more widely acknowledged, little scholarly attention has been dedicated to how digitalization affects the relationship between ESG and firm value in emerging markets. The influence of social engagement, environmental accountability, and governance quality on firm value metrics such as asset returns, equity return, and Tobin’s Q are assessed by utilizing a longitudinal dataset comprising 132 publicly traded companies from six Southeast Asian nations from 2017 to 2023. Panel Estimated Generalized Least Squares (EGLS) is employed to mitigate heteroskedasticity and cross-sectional dependence. The results show that digitalization has a moderating effect and that social and governance aspects greatly increase firm value. Digitalization specifically increases the influence between governance and asset returns and between social elements and Tobin’s Q, while decreasing the influence between social factors and asset returns, and between governance and Tobin’s Q. Furthermore, another finding shows that digitalization decreases the influence of social factors on return on equity. These findings point out how necessary it is to strategically incorporate technological development into ESG projects in order to optimize sustainable value creation. Full article
(This article belongs to the Special Issue Corporate Finance: Financial Management of the Firm)
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