International Journal of Financial Studies

Social trust is a fundamental element in the evolution of digital finance, significantly influencing its development. This study presents an innovative exploration of the role and internal mechanisms of social trust in digital finance, utilizing using provincial panel data from 27 provinces in China spanning the period from 2012 to 2021. By focusing on trust as a core element, the study enriches the research framework on digital finance development, revealing that beyond traditional factors such as technology and the economy, social and psychological factors also affect digital finance growth. These findings provide new perspectives on understanding digital finance development. The study elucidates the complex substitution and interdependence between formal and informal institutions, offering valuable insights for optimizing institutional frameworks to promote digital finance. It also uncovers significant regional heterogeneity in the influence of social trust on digital finance, and social trust primarily enhances the depth and digitization of digital finance, while its effect on the breadth of digital finance is statistically insignificant. These insights serve as a valuable reference for policymakers aiming to ensure the sustainable expansion of the digital finance sector.

Investor sentiment has increasingly been recognized as a behavioural factor influencing asset prices beyond traditional rational asset pricing models, yet evidence from South Africa’s property remains limited. This study investigates the short-run and long-run relationship between investor sentiment and FTSE/JSE-listed property indices, to determine the influence of sentiment on property index pricing within the South African context. Using monthly data for selected JSE/FTSE property indices, a composite investor sentiment index was constructed through a principal component analysis (PCA) of multiple market-based sentiment proxies. Consequently, a Vector Error Correction Model (VECM) was estimated to examine both the long-run and short-run relationships, integrated with the VEC Granger causality tests to determine the direction of influence between variables. The findings report a novel relationship between investor sentiment and the FTSE/JSE property indices, as they provide new insights at the disaggregated level, which is overlooked in the literature. In the short run, the findings suggest that market psychology drives short-term property price adjustments. Moreover, in the long run, the relationship remains significant, indicating that this effect persists, underscoring the enduring influence of sentiment on market valuation. Additionally, the Granger causality results indicate uni-directional relationships, where investor sentiment drives listed property pricing and macroeconomic variables, reinforcing its predictive role. The study concludes that investor sentiment is a key determinant of South Africa’s listed property market, consistent with the rationale of behavioural finance theory, and underscores that investment decisions within this market are substantially influenced by investor psychology, contributing to property market volatility.

In light of the growing interest in sustainable finance among investors and academics, in this study, we present an empirical analysis designed to understand whether sustainable investments outperform, underperform, or perform neutrally relative to conventional investments. The literature presents a spectrum of often-opposed conclusions, precluding the establishment of a definitive, consensus-driven judgment. Therefore, our analysis examines the behavior of sustainable investments within the Eurozone equity market from January 2019 to December 2023. Twenty portfolios are constructed to simulate sustainable investment strategies differentiated by environmental, social, and governance (ESG) strategy; stock inclusion/exclusion thresholds; and the type of ESG rating employed in the selection process. The analysis reveals that sustainable investments do not statistically significantly outperform or underperform traditional investments. This finding is significant for investors committed to ESG principles, as it suggests that they can align their investment choices with their ethical convictions without sacrificing performance.