Journal of Risk and Financial Management

22 pages, 541 KiB

Open AccessArticle

Innovation over ESG Performance? The Trade-Offs of STEM Leadership in Top Sustainable Firms

by Iman Harymawan, Doddy Setiawan, Desi Adhariani and Atikah Azmi Ridha Paramayuda

J. Risk Financial Manag. 2025, 18(7), 372; https://doi.org/10.3390/jrfm18070372 (registering DOI) - 5 Jul 2025

Considered as innovation-oriented, this research was conducted to examine whether STEM-educated CEOs drive better ESG performance. Using OLS regression, this research was conducted using listed companies assessed for their ESG performance on Sustainalytics in 2022 and identified as “top sustainable companies”, encompassing 1039 [...] Read more.

Considered as innovation-oriented, this research was conducted to examine whether STEM-educated CEOs drive better ESG performance. Using OLS regression, this research was conducted using listed companies assessed for their ESG performance on Sustainalytics in 2022 and identified as “top sustainable companies”, encompassing 1039 observations. The findings of this research reveal that STEM-educated CEOs are negatively associated with ESG performance in the top sustainable companies. Robustness analysis was also conducted to prevent endogeneity issues. This study introduces the novel idea of strategic trade-offs in ESG leadership. While STEM leaders drive innovation, their focus might lead to underinvestment in other crucial ESG aspects within already-sustainable firms. In addition, this research offers a contribution to governance and ESG research by bringing new insight on CEO selection for top ESG companies to better consider a balanced skillset beyond technological solutions. Full article

(This article belongs to the Section Sustainability and Finance)

► Show Figures

Figure 1

14 pages, 244 KiB

Open AccessArticle

How Capital Leases Affect Firm Performance: An Analysis in the Shipping Industry

by Ioannis C. Negkakis

J. Risk Financial Manag. 2025, 18(7), 371; https://doi.org/10.3390/jrfm18070371 - 3 Jul 2025

Abstract

This study examines the effects of capital lease arrangements on the operating performance of shipping firms as proxied by Return on Assets (ROA). The maritime industry is highly capital-intensive, often requiring substantial investments in fleet acquisition and maintenance, making ROA particularly relevant as [...] Read more.

This study examines the effects of capital lease arrangements on the operating performance of shipping firms as proxied by Return on Assets (ROA). The maritime industry is highly capital-intensive, often requiring substantial investments in fleet acquisition and maintenance, making ROA particularly relevant as it captures the effectiveness of firms in utilizing their leased and owned assets to generate operating income. As such, many firms rely on lease arrangements to access necessary resources while preserving liquidity and financial flexibility. Using an international sample of 209 shipping firms, we estimate fixed effects regressions to assess the relationship between lease intensity and performance of the shipping firms. The findings reveal that capital lease intensity is positively associated with operating performance, indicating that leasing can be a value-enhancing financing strategy in this sector. However, the performance benefits of capital leases diminish under IFRS 16 reporting, particularly for firms with higher leverage. These findings offer important implications for investors, regulators, and managers evaluating capital structure decisions and financial reporting strategies in capital-intensive industries post-IFRS 16 implementation. Full article

(This article belongs to the Special Issue Bridging Financial Integrity and Sustainability)

43 pages, 7399 KiB

Open AccessArticle

Analysis of the Effectiveness of Classical Models in Forecasting Volatility and Market Dynamics: Insights from the MASI and MASI ESG Indices in Morocco

by Oumaima Hamou, Mohamed Oudgou and Abdeslam Boudhar

J. Risk Financial Manag. 2025, 18(7), 370; https://doi.org/10.3390/jrfm18070370 - 2 Jul 2025

Abstract

This research evaluates the effectiveness of traditional models in predicting movements in the Moroccan financial market, with a focus on the MASI and MASI ESG indices. As environmental, social, and governance (ESG) criteria gain prominence in financial analysis, this study examines the strengths [...] Read more.

This research evaluates the effectiveness of traditional models in predicting movements in the Moroccan financial market, with a focus on the MASI and MASI ESG indices. As environmental, social, and governance (ESG) criteria gain prominence in financial analysis, this study examines the strengths and limitations of conventional predictive models. The findings reveal a significant correlation between the two indices while underscoring the challenges traditional models face in effectively integrating extra-financial dimensions, particularly environmental and social factors. These limitations hinder their ability to fully capture the complexities of the Moroccan financial market, where ESG considerations are increasingly shaping economic trends. Given these constraints, the study emphasizes the need for more advanced forecasting tools, particularly models that comprehensively incorporate ESG factors. Such advancements would enhance the understanding of ongoing economic transformations and address emerging challenges. By refining these tools, predictive models could become more relevant and better equipped to meet the specific demands of Morocco’s evolving financial landscape. Full article

(This article belongs to the Special Issue Machine Learning, Economic Forecasting, and Financial Markets)

► Show Figures

Figure 1

42 pages, 4966 KiB

Open AccessArticle

From Optimism to Recalibration: The Temporal Dynamics of Market Reactions to Women’s Board Appointments in Saudi Arabia

by Ezer Ayadi, Noura Ben Mbarek and Ines Chaabouni

J. Risk Financial Manag. 2025, 18(7), 369; https://doi.org/10.3390/jrfm18070369 - 2 Jul 2025

Abstract

This study examines stock market reactions to female board appointments among 34 publicly listed companies in Saudi Arabia between 2021 and 2024. We employ a multi-method approach covering 36 announcements. Our primary methodology is an event study, which we complement with two distinct [...] Read more.

This study examines stock market reactions to female board appointments among 34 publicly listed companies in Saudi Arabia between 2021 and 2024. We employ a multi-method approach covering 36 announcements. Our primary methodology is an event study, which we complement with two distinct robustness checks: the Local Projections (LP) method to capture the evolving nature of market responses and the Quantile-on-Quantile analysis to investigate how market conditions interact with the three phases surrounding the event—the anticipation period before the appointment, the appointment event itself, and the post-appointment adjustment period. This comprehensive methodological framework allows us to capture the immediate market response to appointment announcements and the longer-term implications for firm performance while accounting for various econometric challenges inherent in financial market data. Our findings reveal a negative market reaction that gradually intensifies, becoming marginally significant by the tenth trading day. This pattern suggests that investors in the Saudi market may initially view female board appointments with skepticism, potentially reflecting uncertainty about the impact of gender diversity in a traditionally male-dominated business environment. Furthermore, the evolution from 2021 to 2024 suggests a market that is progressively developing more sophisticated frameworks for evaluating female board appointments. Rather than exhibiting a monotonic trend toward either increasingly positive or negative reactions, the market appears to be engaging in a learning process characterized by periodic reassessments. Moreover, our results indicate that while the immediate event and anticipation phases yield mixed impacts across the return distribution, the adjustment period exhibits a robust and significantly negative interaction with market returns. These findings suggest that market overreactions, particularly during bullish periods, contribute to a pronounced correction effect following female board appointments. Full article

(This article belongs to the Section Business and Entrepreneurship)

► Show Figures

Figure 1

28 pages, 759 KiB

Open AccessArticle

Sustainable Investments in the Blue Economy: Leveraging Fintech and Adoption Theories

by Vikas Sharma, Ramona Rupeika-Apoga, Tejinder Singh and Munish Gupta

J. Risk Financial Manag. 2025, 18(7), 368; https://doi.org/10.3390/jrfm18070368 - 2 Jul 2025

Abstract

This study investigates the attributes influencing the adoption of fintech services for sustainable investment within the blue economy. Specifically, it integrates the Diffusion of Innovations (DOI) theory and the Technology Acceptance Model (TAM) to examine how the perceived relative advantages, compatibility, complexity, trialability, [...] Read more.

This study investigates the attributes influencing the adoption of fintech services for sustainable investment within the blue economy. Specifically, it integrates the Diffusion of Innovations (DOI) theory and the Technology Acceptance Model (TAM) to examine how the perceived relative advantages, compatibility, complexity, trialability, and observability of fintech services influence their perceived ease of use and perceived usefulness, and it explores their impact on the intention to adopt fintech services. Finally, the study assesses how the intention to adopt fintech services affects sustainable investment decisions in the blue economy. Data were collected from 224 stakeholders in the blue economy sectors in India during the summer of 2024 and analyzed using structural equation modeling with partial least squares (SEM-PLS). The results reveal which attributes significantly influence perceived ease of use and perceived usefulness. Additionally, perceived ease of use and perceived usefulness significantly influence the intention to adopt fintech services. The intention to adopt fintech services positively impacts sustainable investment decisions in the blue economy. This study provides a comprehensive framework for advancing fintech services that support sustainable investment decisions, thereby contributing to the growth of the blue economy. Full article

(This article belongs to the Special Issue Financial Technology (Fintech) and Sustainable Financing, 3rd Edition)

► Show Figures

Figure 1

21 pages, 1175 KiB

Open AccessArticle

The Effects of ESG Scores and ESG Momentum on Stock Returns and Volatility: Evidence from U.S. Markets

by Luis Jacob Escobar-Saldívar, Dacio Villarreal-Samaniego and Roberto J. Santillán-Salgado

J. Risk Financial Manag. 2025, 18(7), 367; https://doi.org/10.3390/jrfm18070367 - 2 Jul 2025

Abstract

The impact of Environmental, Social, and Governance (ESG) scores on financial performance remains a subject of debate, as the literature reports mixed evidence regarding their effect on stock returns. This research aims to examine the relationship between ESG ratings and the change in [...] Read more.

The impact of Environmental, Social, and Governance (ESG) scores on financial performance remains a subject of debate, as the literature reports mixed evidence regarding their effect on stock returns. This research aims to examine the relationship between ESG ratings and the change in ESG scores, or ESG Momentum, concerning both returns and risk of a large sample of stocks traded on U.S. exchanges. The study examined a sample of 3856 stocks traded on U.S. exchanges, considering 20 years of quarterly data from December 2002 to December 2022. We applied multi-factor models and tested them through pooled ordinary, fixed effects, and random effects panel regression methods. Our results show negative relationships between ESG scores and stock returns and between ESG Momentum and volatility. Contrarily, we find positive associations between ESG Momentum and returns and between ESG scores and volatility. Although high ESG scores are generally associated with lower long-term stock returns, an increase in a company’s ESG rating tends to translate into immediate positive returns and reduced risk. Accordingly, investors may benefit from strategies that focus on companies actively improving their ESG performance, while firms themselves stand to gain by signaling continuous advancement in ESG-related areas. Full article

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

► Show Figures

Figure 1

25 pages, 722 KiB

Open AccessArticle

The Impact of Financial Technology (FinTech) on Bank Risk-Taking and Profitability in Small Developing Island States: A Study of Fiji

by Shasnil Avinesh Chand, Baljeet Singh, Krishneel Narayan and Anish Chand

J. Risk Financial Manag. 2025, 18(7), 366; https://doi.org/10.3390/jrfm18070366 - 1 Jul 2025

Abstract

With the increasing adoption of technologies such as mobile banking and blockchain, the banking sector in developing and emerging economies is experiencing both opportunities and challenges. This study examines the impact of FinTech on bank risk-taking and profitability in the small island economy [...] Read more.

With the increasing adoption of technologies such as mobile banking and blockchain, the banking sector in developing and emerging economies is experiencing both opportunities and challenges. This study examines the impact of FinTech on bank risk-taking and profitability in the small island economy of Fiji, spanning the period from 2000 to 2024. We employ a fixed-effects model and conduct robustness checks using random effects, pooled ordinary least squares (OLS), and the generalized method of moments (GMM) method, focusing on seven banks (five commercial banks and two non-bank financial institutions). Our analysis evaluates the effect of FinTech while controlling for other bank-specific factors that may influence risk-taking and profitability. The results indicate that FinTech development significantly reduces bank risk-taking and enhances profitability, suggesting a positive and substantial impact on financial performance and stability. The findings highlight the need for banks operating in Fiji and similar small economies to continue and expand their investments in FinTech innovations. Furthermore, the study suggests that regulatory bodies and policymakers should strengthen institutional and regulatory frameworks to support and guide FinTech’s evolution within the banking sector. Full article

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

► Show Figures

Figure A1

28 pages, 1219 KiB

Open AccessArticle

Inflation Forecasting: LSTM Networks vs. Traditional Models for Accurate Predictions

by Tormod Rygh, Camilla Vaage, Sjur Westgaard and Petter Eilif de Lange

J. Risk Financial Manag. 2025, 18(7), 365; https://doi.org/10.3390/jrfm18070365 - 1 Jul 2025

Abstract

This study investigates the effectiveness of neural network models, particularly LSTM networks, in enhancing the accuracy of inflation forecasting. We compare LSTM models with traditional univariate time series models such as SARIMA and AR(p) models, as well as machine learning approaches like LASSO [...] Read more.

This study investigates the effectiveness of neural network models, particularly LSTM networks, in enhancing the accuracy of inflation forecasting. We compare LSTM models with traditional univariate time series models such as SARIMA and AR(p) models, as well as machine learning approaches like LASSO regression. To improve the standard LSTM model, we apply advanced feature selection techniques and introduce data augmentation using the MBB method. Our analysis reveals that LASSO-LSTM hybrid models generally outperform LSTM models utilizing PCA for feature selection, particularly in datasets with multiple features, as measured by RMSE. However, despite these enhancements, LSTM models tend to underperform compared to simpler models like LASSO regression, AR(p), and SARIMA in the context of inflation forecasting. These findings suggest that, for policymakers and central bankers seeking reliable inflation forecasts, traditional models such as LASSO regression, AR(p), and SARIMA may offer more practical and accurate solutions. Full article

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

► Show Figures

Figure 1

24 pages, 2014 KiB

Open AccessArticle

A Behavioral Theory of the Income-Oriented Investors: Evidence from Japanese Life Insurance Companies

by Hiroyuki Sasaki

J. Risk Financial Manag. 2025, 18(7), 364; https://doi.org/10.3390/jrfm18070364 - 1 Jul 2025

Abstract

This study investigates the yield-seeking behavior of income-oriented institutional investors, who are essential players in financial markets. While external pressures compelling firms to “reach for yield” are well-documented, the firm-level behavioral drivers underlying this phenomenon remain largely underexplored. Drawing on the behavioral theory [...] Read more.

This study investigates the yield-seeking behavior of income-oriented institutional investors, who are essential players in financial markets. While external pressures compelling firms to “reach for yield” are well-documented, the firm-level behavioral drivers underlying this phenomenon remain largely underexplored. Drawing on the behavioral theory of the firm, this study argues that an investor’s performance relative to their social aspiration level (the peer average) influences their yield-seeking decisions, and that this effect is moderated by “portfolio slack,” defined as unrealized gains or losses. To test this theory in the context of persistent low-yield pressure, this study constructs and analyzes a panel dataset of Japanese life insurance companies from 2000 to 2019. The analysis reveals that these investors increase their portfolio income yield after underperforming their peers and decrease it after outperforming. Furthermore, greater portfolio slack amplifies yield increases after underperformance and mitigates yield decreases after outperformance. In contrast, organizational slack primarily mitigates yield reductions after outperformance. This research extends the behavioral theory of the firm to the asset management context by identifying distinct performance feedback responses and proposing portfolio slack as an important analytical construct, thereby offering key insights for investment managers and financial regulators. Full article

(This article belongs to the Section Financial Markets)

► Show Figures

Figure 1

25 pages, 468 KiB

Open AccessReview

Analysing the Factors Contributing to the Decline of Auditors Globally and Avenue for Future Research: A Scoping Review

by Thameenah Abrahams and Masibulele Phesa

J. Risk Financial Manag. 2025, 18(7), 363; https://doi.org/10.3390/jrfm18070363 - 1 Jul 2025

Abstract

Aim: This article explores the contributing factors to the decline in the number of auditors globally and aims to provide the consequences and possible recommendations. Auditors play a critical role in ensuring transparency, trust, and credibility of financial statements. However, the profession is [...] Read more.

Aim: This article explores the contributing factors to the decline in the number of auditors globally and aims to provide the consequences and possible recommendations. Auditors play a critical role in ensuring transparency, trust, and credibility of financial statements. However, the profession is experiencing a decline across the globe. The decrease in the number of registered auditors has become a pressing issue, raising concerns about the future of the assurance industry’s ability to maintain the number of registered auditors and continue providing assurance services to public and private entities or companies. Methodology: A scoping-review methodology was adopted to analyse the existing literature on the global decline in the number of auditors. This approach utilises research evidence to identify trends, challenges, and opportunities within the audit profession. Relevant studies were sourced from databases such as ScienceDirect, Google Scholar, and ResearchGate, as well as the grey literature. Main findings: This study identifies a combination of factors driving the decline of auditors globally. Economic pressures, such as cost reduction initiatives and outsourcing, have impacted the demand for traditional auditing services. Complex regulatory requirements have increased barriers to entry, while technological advancements, such as artificial intelligence, are disrupting traditional auditing roles. Additionally, the profession suffers from negative perceptions regarding workload, remuneration, and work–life balance, discouraging new entrants. Practical implications: The findings emphasise the urgent need for the auditing profession to adapt to evolving challenges. Stakeholders, including regulatory bodies and professional organisations, must address issues such as technological integration, career development pathways, and regulatory simplification. Enhanced public awareness campaigns and training initiatives are critical to attracting and retaining professional talent. Contribution: This study contributes to the limited body of knowledge on the global decline of auditors by creating a broad spectrum of evidence. It highlights actionable strategies to address the profession’s challenges and provides a foundation for future research on sustaining the relevance of auditors in a dynamic global economy. Full article

(This article belongs to the Special Issue Financial Management)

► Show Figures

Figure 1

28 pages, 1030 KiB

Open AccessArticle

A Quantum Leap in Asset Pricing: Explaining Anomalous Returns

by James W. Kolari, Jianhua Huang, Wei Liu and Huiling Liao

J. Risk Financial Manag. 2025, 18(7), 362; https://doi.org/10.3390/jrfm18070362 - 1 Jul 2025

Abstract

This paper investigates the ability of asset pricing models to explain the cross-section of average stock returns of anomaly portfolios. A large sample of 286 anomaly portfolios are employed. We perform out-of-sample cross-sectional regression tests of both prominent asset pricing models and a [...] Read more.

This paper investigates the ability of asset pricing models to explain the cross-section of average stock returns of anomaly portfolios. A large sample of 286 anomaly portfolios are employed. We perform out-of-sample cross-sectional regression tests of both prominent asset pricing models and a relatively new model dubbed the ZCAPM. Empirical tests strongly support the lesser known ZCAPM but not other multifactor models. Further analyses of out-of-sample mispricing errors of the models reveal that the ZCAPM provides much more accurate pricing of anomaly portfolios than other models. We conclude that anomalies are anomalous to popular multifactor models but not the ZCAPM. By implication, the efficient market hypothesis is supported. Full article

(This article belongs to the Special Issue Financial Reporting Quality and Capital Markets Efficiency)

► Show Figures

Figure 1

16 pages, 933 KiB

Open AccessArticle

Decoding ESG: Consumer Perceptions, Ethical Signals and Financial Outcomes

by Stacie F. Waites

J. Risk Financial Manag. 2025, 18(7), 361; https://doi.org/10.3390/jrfm18070361 - 1 Jul 2025

Abstract

This study investigates how consumers respond to firm communications emphasizing Environmental, Social and Governance (ESG) dimensions. Through experimental design, how consumers distinguish among ESG components and how each affects behavioral finance outcomes, including purchase intentions, willingness to buy and brand trust is assessed. [...] Read more.

This study investigates how consumers respond to firm communications emphasizing Environmental, Social and Governance (ESG) dimensions. Through experimental design, how consumers distinguish among ESG components and how each affects behavioral finance outcomes, including purchase intentions, willingness to buy and brand trust is assessed. Results confirm that consumers perceive the ESG dimensions as distinct from a non-ESG control message. However, the Social and Governance dimensions are perceived as closely related. Importantly, all three dimensions—Environmental, Social, and Governance—significantly improved behavioral outcomes, supporting the persuasive power of ESG messaging. Mediation analyses reveal that perceived ethicality drives these effects across all dimensions, while perceived authenticity plays a stronger mediating role for social messaging. These findings contribute to finance literature by illuminating the consumer-level mechanisms through which ESG communication influences firm value and offer strategic insights for both practitioners and investors seeking to leverage ESG as a market signal. Full article

(This article belongs to the Special Issue Sustainable Finance and ESG Investment)

► Show Figures

Figure 1

22 pages, 2233 KiB

Open AccessArticle

From Disruption to Integration: Cryptocurrency Prices, Financial Fluctuations, and Macroeconomy

by Zhengyang Chen

J. Risk Financial Manag. 2025, 18(7), 360; https://doi.org/10.3390/jrfm18070360 - 1 Jul 2025

Abstract

This paper examines cryptocurrency shock transmission to financial markets and the macroeconomy using a Bayesian structural VAR with Pandemic Priors from 2015 to 2024. By affecting overall risk appetite, cryptocurrency price shocks generate positive financial market spillovers, accounting for 18% of equity and [...] Read more.

This paper examines cryptocurrency shock transmission to financial markets and the macroeconomy using a Bayesian structural VAR with Pandemic Priors from 2015 to 2024. By affecting overall risk appetite, cryptocurrency price shocks generate positive financial market spillovers, accounting for 18% of equity and 27% of commodity price fluctuations. Real economic effects are significant in driving investment but remain limited, contributing only 4% to unemployment and 6% to industrial production variance. However, cryptocurrency shocks explain 18% of price-level forecast error variance at long horizons. Narrative analysis reveals sentiment and technology as primary shock drivers. These findings demonstrate cryptocurrency’s deep financial system integration with important inflation implications for monetary policy. Full article

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

► Show Figures

Figure 1

21 pages, 328 KiB

Open AccessArticle

Impact of Digitalization on Sustainable Development: A Comparative Analysis of Developed and Developing Economies

by Nahed Zghidi and Riadh Trabelsi

J. Risk Financial Manag. 2025, 18(7), 359; https://doi.org/10.3390/jrfm18070359 - 1 Jul 2025

Abstract

The role of digitization in promoting Sustainable Development (SD), as a key topic in recent scientific research, remains a subject of debate. In order to investigate this, a panel dataset covering 28 developed and 27 developing countries from 2000 to 2020 was used [...] Read more.

The role of digitization in promoting Sustainable Development (SD), as a key topic in recent scientific research, remains a subject of debate. In order to investigate this, a panel dataset covering 28 developed and 27 developing countries from 2000 to 2020 was used to assess the impact of the digital economy on SD. The findings show that while digital indicators have varying effects on the Human Development Index (HDI), factors like mobile subscriptions, internet users, and broadband access significantly influence human development, with impacts differing by country’s development level. These results offer nuanced insights for policymakers, highlighting that digital transformation must be supported by adequate infrastructure, institutional quality, and inclusive policies to effectively contribute to sustainable development in developing countries. Full article

(This article belongs to the Special Issue Sustainable Finance for Fair Green Transition)

26 pages, 2184 KiB

Open AccessArticle

Analyzing the Criteria of Private Equity Investment in Emerging Markets: The Case of Tunisia

by Amira Neffati, Wided Khiari, Azhaar Lajmi and Farah Mejri

J. Risk Financial Manag. 2025, 18(7), 358; https://doi.org/10.3390/jrfm18070358 - 1 Jul 2025

Abstract

Restrictive conditions that financial institutions require on credit allocation remain the main constraints to developing and creating new businesses. In this context, the concept of private equity came to fill this problem. However, because it is a riskier business, investors thoroughly assess before [...] Read more.

Restrictive conditions that financial institutions require on credit allocation remain the main constraints to developing and creating new businesses. In this context, the concept of private equity came to fill this problem. However, because it is a riskier business, investors thoroughly assess before investing in a firm’s capital. This work aims to analyze the criteria of private equity investment and explore how Tunisian private equity investors make investment decisions. The methodology applied aligns with prior works studying investment criteria used by private equity investors. Results show that 100% of investors prefer to invest in firms that aim to achieve some growth and are in the development phase. In addition, under informational asymmetry between entrepreneurs and investors, the latter place greater importance on the business plan, information gathered during interviews with promoters, and information on the products. Full article

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

► Show Figures

Figure 1

14 pages, 346 KiB

Open AccessArticle

An Empirical Investigation into the Investment–Saving Relationship Through Granger Non-Causality Panel Tests

by Antonio Focacci

J. Risk Financial Manag. 2025, 18(7), 357; https://doi.org/10.3390/jrfm18070357 - 30 Jun 2025

Abstract

The investment–saving relationship has been the subject of much debate. On the one hand, there is the conventional mainstream neoclassical school of thought that advocates for the idea that saving determines investment. On the other hand, heterodox economists (mainly in the post-Keynesian/structuralist tradition) [...] Read more.

The investment–saving relationship has been the subject of much debate. On the one hand, there is the conventional mainstream neoclassical school of thought that advocates for the idea that saving determines investment. On the other hand, heterodox economists (mainly in the post-Keynesian/structuralist tradition) posit an inverse relationship between these variables. This article empirically investigates the direction of causality in order to contribute to the existing literature on the topic. To this end, two Granger panel tests are applied to a dataset of 106 countries over the period from 1980 to 2023. The econometric techniques used are effective in accounting for both cross-sectional dependence and heterogeneity in the data. In summary, our findings align with the theoretical models that posit bidirectional causality as the most probable explanation of the mechanism driving investment and saving. More specifically, they are consistent with post-Keynesian (demand-led) assumptions describing an open economy operating below its maximum potential growth rate within a current account solvency constraint. Full article

(This article belongs to the Section Economics and Finance)

14 pages, 268 KiB

Open AccessArticle

Exploring the Implications of the Managerial Choice of Accounting Conservatism Strategy on the Financial Growth of Saudi Banks

by Salih Hamid Adam, Nasareldeen Hamed Ahmed Alnor, Mozamil Awad Taha, Ebrahim Mohammed Al-Matari and Ibrahim Ahmed Elamin Eltahir

J. Risk Financial Manag. 2025, 18(7), 356; https://doi.org/10.3390/jrfm18070356 - 29 Jun 2025

Abstract

Purpose: This study aims to provide a comprehensive and objective view to investigate whether the motives of strong financial managers to adopt an accounting conservatism strategy have significant effects on improving financial growth opportunities in the context of banks listed on the Saudi [...] Read more.

Purpose: This study aims to provide a comprehensive and objective view to investigate whether the motives of strong financial managers to adopt an accounting conservatism strategy have significant effects on improving financial growth opportunities in the context of banks listed on the Saudi Stock Exchange, while knowing how this relationship is affected by litigation risks. Design/Methodology/Approach: Using data from Saudi financial databases, this study examines how litigation risk moderates the relationship between accounting conservatism and financial growth in Saudi listed banks. Basu’s (1997) model and accrual-based metrics measure conservatism, whereas assets, liabilities, and business age are used to measure financial growth. Litigation risk factors included previous lawsuits. Validity was ensured using fixed-effects regression and robustness tests. Findings: The study found that accounting conservatism has a mixed impact on financial growth, litigation risk moderates the relationship between conservatism and financial growth, and litigation risk has a positive impact on accounting conservatism. Practical Implications: Use a balanced strategy to maintain accounting conservatism, lower litigation risk while maintaining the accuracy of financial statements, take legal risk into account when evaluating the quality of financial reporting, increase transparency without impeding growth, create guidelines tailored to a particular bank, and fortify governance to reduce lawsuits while permitting long-term financial growth. Originality/Value: In order to bridge the gap between conservatism strategies and long-term financial stability in emerging economies, this study examines how managerial decisions in accounting conservatism affect the financial growth of Saudi banks, incorporating litigation risk as a moderating factor. It also contributes to financial policies, risk management, and regulations. Full article

(This article belongs to the Section Banking and Finance)

10 pages, 402 KiB

Open AccessArticle

Arbitrage Returns on the MISO Exchange

by Kevin Jones

J. Risk Financial Manag. 2025, 18(7), 355; https://doi.org/10.3390/jrfm18070355 - 29 Jun 2025

Abstract

This paper examines arbitrage opportunities available in one of the largest wholesale electricity markets in the world, the Midcontinent Independent System Operator (MISO) electricity exchange. While prior research suggests that market efficiency on the exchange has increased over time, this study reveals that [...] Read more.

This paper examines arbitrage opportunities available in one of the largest wholesale electricity markets in the world, the Midcontinent Independent System Operator (MISO) electricity exchange. While prior research suggests that market efficiency on the exchange has increased over time, this study reveals that historical pricing information can still be used to generate positive returns. I find that a trading rule based on prior spot and forward prices generates statistically and economically significant risk-adjusted returns across the entire MISO footprint. These returns may in part be explained by the relatively small number of financial traders in the market and the ability of generation owners to exercise market power. Full article

(This article belongs to the Section Energy and Environment: Economics, Finance and Policy)

► Show Figures

Figure 1

22 pages, 585 KiB

Open AccessArticle

Economic Policy Uncertainty and China’s FDI Inflows: Moderating Effects of Financial Development and Political Stability

by Liqiang Dong, Mohamad Helmi Bin Hidthiir and Mustazar Bin Mansur

J. Risk Financial Manag. 2025, 18(7), 354; https://doi.org/10.3390/jrfm18070354 - 26 Jun 2025

Abstract

This paper investigates the impact of global EPU and China’s EPU on China’s FDI inflows, examining whether financial development and political stability moderate these relationships. Using panel data from 212 countries spanning 2009 to 2022, we first establish causal direction through Granger causality [...] Read more.

This paper investigates the impact of global EPU and China’s EPU on China’s FDI inflows, examining whether financial development and political stability moderate these relationships. Using panel data from 212 countries spanning 2009 to 2022, we first establish causal direction through Granger causality tests, then employ instrumental variable estimation to address endogeneity concerns, while conducting heterogeneity analysis across development levels and Belt and Road Initiative participation. We find that both global and domestic EPU significantly reduce China’s FDI inflows, with a 1% increase in China’s EPU leading to a 0.083% decrease in FDI inflows. However, political stability and financial development serve as effective moderators, reducing EPU’s negative impact by up to 60% and 70%, respectively. The effects vary substantially across investor countries: non-developed countries show ten times stronger sensitivity to EPU than developed countries, while Belt and Road Initiative countries demonstrate 86% lower sensitivity than non-BRI countries. This research advances EPU–FDI theory by demonstrating how institutional quality creates “policy buffers” against uncertainty and provides policymakers with evidence that strengthening political stability and financial development can maintain investor confidence during uncertain periods, while strategic international partnerships can insulate investment flows from policy volatility. Full article

(This article belongs to the Section Economics and Finance)

► Show Figures

Figure 1

Journal Description

Journal of Risk and Financial Management

Latest Articles

Journal Menu

Journal Browser

Highly Accessed Articles

Latest Books

E-Mail Alert

News

Topics

Conferences

Special Issues

Topical Collections

Further Information

Guidelines

MDPI Initiatives

Follow MDPI