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Exchange Rate Volatility and Cross-Border Corporate Financial Stability
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Exchange Rate Volatility and Cross-Border Corporate Financial Stability

A special issue of Journal of Risk and Financial Management (ISSN 1911-8074). This special issue belongs to the section "Financial Markets".

Deadline for manuscript submissions: 31 January 2027 | Viewed by 4384

Special Issue Editors

Dr. Olajide Oyadeyi

E-Mail Website
Guest Editor
School of Business, Regent College London, London NW1 4NS, UK
Interests: financial markets; financial institutions; financial stability; monetary policy; financial economics; financial systems; macroeconomics; finance
Dr. Babajide Oyewo

E-Mail Website
Guest Editor
Essex Business School, University of Essex, Colchester CO4 3SQ, UK
Interests: sustainability; financial economics; international accounting; finance

Special Issue Information

Dear Colleagues,

This Special Issue of Risk and Financial Management, entitled “Exchange Rate Volatility and Cross-Border Corporate Financial Stability”, seeks to advance the understanding of how currency fluctuations influence the financial resilience, risk exposure, and strategic decisions of firms engaged in cross-border operations. Exchange rate volatility can affect revenue streams, cost structures, investment decisions, debt servicing, and overall market valuation, particularly for multinational corporations, exporters, and import-dependent firms.

We invite high-quality theoretical, empirical, and policy-oriented studies that explore the mechanisms through which exchange rate risks impact corporate financial stability, the role of hedging and risk management strategies, and the effectiveness of monetary, fiscal, and regulatory interventions. Researchers are encouraged to focus on advanced, emerging, and developing economies—especially comparative and region-specific analyses.

Topics of interest include, but are not limited to, exchange rate pass-through effects, currency risk and capital structure, derivatives and hedging effectiveness, financial distress prediction under exchange rate volatility, and sectoral resilience to currency shocks. Studies employing innovative methodologies, firm-level datasets, or interdisciplinary approaches bridging finance, economics, and international business are of particular interest.

This Special Issue aims to provide actionable insights for policymakers, corporate managers, investors, and scholars navigating the challenges of volatile currency environments.

Dr. Olajide Oyadeyi
Dr. Babajide Oyewo
Guest Editors

Manuscript Submission Information

Manuscripts should be submitted online at www.mdpi.com by registering and logging in to this website. Once you are registered, click here to go to the submission form. Manuscripts can be submitted until the deadline. All submissions that pass pre-check are peer-reviewed. Accepted papers will be published continuously in the journal (as soon as accepted) and will be listed together on the special issue website. Research articles, review articles as well as short communications are invited. For planned papers, a title and short abstract (about 250 words) can be sent to the Editorial Office for assessment.

Submitted manuscripts should not have been published previously, nor be under consideration for publication elsewhere (except conference proceedings papers). All manuscripts are thoroughly refereed through a single-blind peer-review process. A guide for authors and other relevant information for submission of manuscripts is available on the Instructions for Authors page. Journal of Risk and Financial Management is an international peer-reviewed open access monthly journal published by MDPI.

Please visit the Instructions for Authors page before submitting a manuscript. The Article Processing Charge (APC) for publication in this open access journal is 1600 CHF (Swiss Francs). Submitted papers should be well formatted and use good English. Authors may use MDPI's English editing service prior to publication or during author revisions.

Keywords

  • exchange rate volatility
  • corporate financial stability
  • currency risk
  • cross-border corporations
  • multinational corporations
  • hedging strategies
  • risk management
  • capital structure
  • exchange rate pass-through
  • financial distress prediction
  • derivatives
  • sectoral resilience
  • currency shocks
  • international business
  • emerging markets
  • comparative analysis
  • policy interventions
  • monetary policy
  • fiscal policy
  • firm-level analysis

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Published Papers (4 papers)

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Research

27 pages, 362 KB  
Article
Foreign Exchange Governance and Financial Stability of Multinationals: Cross-Country Evidence
by Olajumoke Oyewo, Omobolanle Korede Oluwalana, Kolawole Alo and Gbenga Ekundayo
J. Risk Financial Manag. 2026, 19(5), 365; https://doi.org/10.3390/jrfm19050365 - 17 May 2026
Viewed by 213
Abstract
This study examines the association between foreign exchange (FX) governance and financial stability by analysing empirical evidence from multinational entities. We analyse a 16-year panel (2009–2024) comprising 6613 firm-year observations using OLS regression with industry and year fixed effects. Firm-level data on financial [...] Read more.
This study examines the association between foreign exchange (FX) governance and financial stability by analysing empirical evidence from multinational entities. We analyse a 16-year panel (2009–2024) comprising 6613 firm-year observations using OLS regression with industry and year fixed effects. Firm-level data on financial sustainability, FX governance, board attributes, and controls are drawn from the London Stock Exchange Group (formerly Refinitiv), while country-level institutional and economic indicators are obtained from the World Bank. The result suggests that FX governance is negatively associated with earnings volatility, implying that FX governance enhances the financial stability of organisations. The baseline result is robustness to endogeneity and selection bias. However, our subsample analysis reveals that the impact of FX governance on financial stability varies based on institutional quality and industry. Whereas FX governance is negatively associated with earnings volatility thus enhancing financial stability in high-institutional-quality settings, the impact is not significant in low-institutional-quality environments. This study contributes to knowledge by empirically validating the relevance of FX governance to financial stability. Our study also contributes to the limited studies on the role of FX governance in diminishing earnings volatility, thus exposing FX management as a strategy for achieving financial sustainability. The international sample analysed in the study contributes to the generalisability of results. Full article
(This article belongs to the Special Issue Exchange Rate Volatility and Cross-Border Corporate Financial Stability)
34 pages, 373 KB  
Article
Exchange Rate Volatility and Corporate Financial Stability in Eurozone vs. Non-Eurozone Firms
by Yetunde Bernice Oyewole, Grace Oluyemisi Akinola, Odunayo M. Olarewaju, Mustapha Bojuwon and Victoria Temitope Ikulagba
J. Risk Financial Manag. 2026, 19(5), 352; https://doi.org/10.3390/jrfm19050352 - 11 May 2026
Viewed by 317
Abstract
The objective of this study was to explore the impact of exchange rate volatility on corporate financial stability in European corporations, with particular emphasis on the Eurozone and non-Eurozone. The data set of this study consisted of 80 publicly listed non-financial corporations in [...] Read more.
The objective of this study was to explore the impact of exchange rate volatility on corporate financial stability in European corporations, with particular emphasis on the Eurozone and non-Eurozone. The data set of this study consisted of 80 publicly listed non-financial corporations in eight European countries over the period of 2010–2024. The model was able to capture the impact of various macroeconomic changes that affected European corporations in the past few years. The macroeconomic changes that were captured in this study were the European sovereign debt crisis, the COVID-19 pandemic in the world, and the conflict in Ukraine. The financial stability was measured by the Altman Z-score, the leverage ratio, and the current ratio. In this study, the financial impact of the exchange rate was measured by the rolling standard deviations and the conditional volatility with the Generalized Autoregressive Conditional Heteroskedasticity (GARCH) models. The fixed effects model estimation with the System Generalized Method of Moments (GMM) was used in this study. The results of this study showed that the exchange rate volatility was negatively correlated with financial stability in terms of the leverage ratio. However, the Eurozone provides protection against the financial impact of the exchange rate volatility in terms of the leverage ratio. The diagnostic tests in this study were carried out with the Hansen Test and the Arellano-Bond Test. The diagnostic tests confirmed that the results were valid. The significance of this study was that it provided longitudinal data on the impact of the exchange rate on the financial stability of European corporations with particular emphasis on the Eurozone and non-Eurozone. The study also provided new insights on the exchange rate in corporate finance. The Eurozone provides protection against the financial impact of the exchange rate. Full article
(This article belongs to the Special Issue Exchange Rate Volatility and Cross-Border Corporate Financial Stability)
26 pages, 1233 KB  
Article
Does Exchange Rate Volatility Matter for Banking-Sector Financial Stability? A Global Analysis
by Olajide O. Oyadeyi, Md Mizanur Rahman, Obinna Ugwu, Bisayo O. Otokiti and Adekunle Adewole
J. Risk Financial Manag. 2026, 19(5), 313; https://doi.org/10.3390/jrfm19050313 - 25 Apr 2026
Viewed by 771
Abstract
Exchange rate volatility has intensified in recent decades, yet its systematic implications for banking-sector stability remain contested. This study investigates whether exchange rate volatility constitutes a meaningful source of financial fragility using a global panel of 103 countries over the period 2000–2021. Financial [...] Read more.
Exchange rate volatility has intensified in recent decades, yet its systematic implications for banking-sector stability remain contested. This study investigates whether exchange rate volatility constitutes a meaningful source of financial fragility using a global panel of 103 countries over the period 2000–2021. Financial stability is proxied by the banking-sector Z-score, while exchange rate volatility is estimated using a EGARCH-based framework to capture time-varying uncertainty. To address cross-sectional dependence, heterogeneity, and endogeneity, the analysis employs Driscoll–Kraay fixed effects, two-step system GMM, and quantile regressions. The results reveal that exchange rate volatility exerts a statistically and economically significant negative effect on banking stability, reducing Z-scores across countries and income groups. The findings remain robust across alternative specifications and estimators. Bank-level fundamentals—capitalisation, liquidity, and credit—enhance stability, whereas higher non-performing loans and risk exposure amplify fragility. Macroeconomic conditions also matter, with stronger growth, institutional quality and external balances supporting resilience, while inflation, economic policy uncertainty and expansionary government spending weaken stability. By integrating time-varying volatility modelling with dynamic panel techniques in a large cross-country setting, this study provides new global evidence that exchange rate volatility is not merely a macroeconomic fluctuation but a structural source of banking-sector risk. The findings carry important implications for macroprudential policy, foreign-exchange management, and coordinated monetary–fiscal responses aimed at safeguarding financial stability in open economies. Full article
(This article belongs to the Special Issue Exchange Rate Volatility and Cross-Border Corporate Financial Stability)
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21 pages, 479 KB  
Article
AI-Driven Business Model Innovation and TRIAD-AI in South Asian SMEs: Comparative Insights and Implications
by Md Mizanur Rahman
J. Risk Financial Manag. 2025, 18(12), 709; https://doi.org/10.3390/jrfm18120709 - 12 Dec 2025
Viewed by 1941
Abstract
Artificial Intelligence (AI) is a transformational force reshaping business processes, financial decision-making, and enabling firms to create, deliver and capture value more effectively. While large corporations in South Asian countries, particularly Bangladesh, India, Pakistan and Sri Lanka have started leveraging AI to drive [...] Read more.
Artificial Intelligence (AI) is a transformational force reshaping business processes, financial decision-making, and enabling firms to create, deliver and capture value more effectively. While large corporations in South Asian countries, particularly Bangladesh, India, Pakistan and Sri Lanka have started leveraging AI to drive Business Model Innovation (BMI), Small and Medium Enterprises (SMEs) continue to face significant challenges. These include limited infrastructure, poor bandwidth penetration, unreliable electricity, weak institutional capacity and governance immaturity, along with ethics and compliance concerns. These challenges hinder SMEs from fully exploiting AI-driven BMI and reduce their financial resilience and competitiveness in increasingly digital and globalised markets. This paper examines how South Asian countries are adopting AI technologies in SMEs by comparing patterns and variations in adoption, capability, ethics, risks, compliance, and financial outcomes. The paper proposes a tailored, actionable framework, called TRIAD (Target, Restructure, Integrate, Accelerate, and Democratise)-AI, designed to address technical, organisational and institutional challenges that shape AI-driven BMI across South Asian SMEs and to meet regional and global SME needs. The framework integrates the best practices from global AI leaders such as China, Estonia and Singapore, emphasising responsible AI adoption through robust ethics and compliance standards, and risk management, and offering practical guidance for South Asian SMEs. By adopting this framework, South Asian countries can gain a competitive advantage, enhance operational efficiency, support GDP growth across the region and ensure adherence to all relevant international AI standards for responsible, sustainable, and financially sound innovation. Full article
(This article belongs to the Special Issue Exchange Rate Volatility and Cross-Border Corporate Financial Stability)
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