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Finance, Risk and Sustainable Development
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Finance, Risk and Sustainable Development

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

Deadline for manuscript submissions: 30 January 2025 | Viewed by 5024

Special Issue Editor

Dr. Susana Álvarez-Otero

E-Mail Website
Guest Editor
Faculty of Economics and Business, Business Administration Department, University of Oviedo, 33071 Oviedo, Spain
Interests: corporate investment; mutual funds; IPOs; CSR; sustainable finance

Special Issue Information

Dear Colleagues,

Climate change and environmental deterioration pose a severe threat to the existence of human society. Finance plays a crucial role in changing this situation and this fact incorporates risk. Since the turn of the previous century, the globe has confronted major environmental concerns, such as environmental degradation due to human activity coupled with energy consumption that creates dangerous emissions. This situation has made policymakers and academics concerned enough to advocate for measures to eliminate or minimize carbon from the environment by reengineering activities responsible for CO2 emissions and engaging in eco-friendly practices. The Paris Climate Change Agreement (COP26) has played a pivotal role in mitigating the effects of climate change and kicking off a low-carbon global economy. The overall focus of this Special Issue is to provide an update analysis, from theoretical and empirical points of view, to improve and achieve sustainable development through the appropriate way in which to finance projects in order to reach the Sustainable Development Goals.

In this Special Issue, original research articles and reviews are welcome. Research areas may include (but are not limited to) the following:

  • Finance, climate change, and sustainability.
  • Risk and climate change.
  • How sustainable finance can help to reach sustainable development.
  • Effects of the adequate use of finance on the Sustainable Development Goals.
  • CSR, finance, and the Sustainable Development Goals.

I look forward to receiving your contributions.

Dr. Susana Álvarez-Otero
Guest Editor

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 100 words) can be sent to the Editorial Office for announcement on this website.

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 1400 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

  • finance
  • climate change
  • sustainable finance
  • Sustainable Development Goals
  • CSR

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Published Papers (4 papers)

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Research

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21 pages, 878 KiB  
Article
Loan Pricing in Peer-to-Peer Lending
by David D. Maloney, Sung-Chul Hong and Barin Nag
J. Risk Financial Manag. 2024, 17(8), 331; https://doi.org/10.3390/jrfm17080331 - 1 Aug 2024
Viewed by 383
Abstract
Lenders writing loans in the peer-to-peer market carry risk with the anticipation of an expected return. In the current implementation, many lenders do not have an exit strategy beyond holding the loan for the full repayment term. Many would-be lenders are deterred by [...] Read more.
Lenders writing loans in the peer-to-peer market carry risk with the anticipation of an expected return. In the current implementation, many lenders do not have an exit strategy beyond holding the loan for the full repayment term. Many would-be lenders are deterred by the risk of being stuck with an illiquid investment without a method for adjusting to overall economic conditions. This risk is a limiting factor for the overall number of loan transactions. This risk prevents funding for many applicants in need, while simultaneously steering capital towards other more liquid and mature markets. The underdeveloped valuation methods used presently in the peer-to-peer lending space present an opportunity for establishing a model for assigning value to loans. We provide a novel application of an established model for pricing peer-to-peer loans based on multiple factors common in all loans. The method can be used to give a value to a peer-to-peer loan which enables transactions. These transactions can potentially encourage participation and overall maturity in the secondary peer-to-peer loan trading market. We apply established valuation algorithms to peer-to-peer loans to provide a method for lenders to employ, enabling note trading in the secondary market. Full article
(This article belongs to the Special Issue Finance, Risk and Sustainable Development)
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23 pages, 2467 KiB  
Article
Reforming Sustainability-Linked Bonds by Strengthening Investor Trust
by Frederic de Mariz, Pieter Bosmans, Daniel Leal and Saumya Bisaria
J. Risk Financial Manag. 2024, 17(7), 290; https://doi.org/10.3390/jrfm17070290 - 8 Jul 2024
Viewed by 819
Abstract
This paper explores the emergence of sustainability-linked bonds (SLBs) as an innovative instrument to finance sustainability objectives. SLBs are any type of bond instrument for which the financial characteristics vary depending on whether the issuer achieves predefined sustainability objectives. SLBs were launched in [...] Read more.
This paper explores the emergence of sustainability-linked bonds (SLBs) as an innovative instrument to finance sustainability objectives. SLBs are any type of bond instrument for which the financial characteristics vary depending on whether the issuer achieves predefined sustainability objectives. SLBs were launched in 2019, represent 7% of labeled bonds, and now exceed USD 250 billion. In the context of the growth of sustainable finance and concerns of greenwashing, this paper asks whether SLBs are an effective mechanism to attract sustainable finance. Drawing on a complete revision of the literature and interviews with practitioners, the findings highlight the potential of SLBs to contribute to sustainability financing, especially in hard-to-abate sectors. Recommendations include defining standardized KPIs based on a materiality assessment, requesting SPTs to be supported by science, and tailored step-up mechanisms. The academic literature and experts converge in their description of greenwashing risks posed by SLBs, their signaling effect, and the lack of sophistication in SLB pricing, in particular the optionality represented by step-ups. The literature differs from the practitioners’ perception on the existence of an issuance premium. Enhancing the design of SLBs represents an opportunity to add rigor to sustainable finance and better price externalities, where material topics have an explicit impact on the cost of funding. Full article
(This article belongs to the Special Issue Finance, Risk and Sustainable Development)
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15 pages, 2456 KiB  
Article
Renewable Energy Stocks’ Performance and Climate Risk: An Empirical Analysis
by Lingyu Li, Xianrong Zheng and Shuxi Wang
J. Risk Financial Manag. 2024, 17(3), 121; https://doi.org/10.3390/jrfm17030121 - 18 Mar 2024
Viewed by 1719
Abstract
This article studies the relationship between renewable energy stocks’ performance and climate risk. It shows that publicly held renewable energy stocks underperform as a reaction to climate policy information releases, modeled by feed-in tariff (FIT) legislation announcements. The study examined stock price behaviors [...] Read more.
This article studies the relationship between renewable energy stocks’ performance and climate risk. It shows that publicly held renewable energy stocks underperform as a reaction to climate policy information releases, modeled by feed-in tariff (FIT) legislation announcements. The study examined stock price behaviors 2 days before and 30 days after FIT policy announcements. The stock sample used in the study has 3702 firm-day combinations, which included 180 cleantech firms and 32 events from 2007 to 2017. Based on the residual analysis of the sample’s abnormal return, it indicated that the FIT announcements are associated with significant declines in returns. The cumulative abnormal return until Day 18 was a significant −0.83%, while the average abnormal return on the day was −0.16% at normal levels. The study partially excluded the likelihood of a transitory result by varying the measurement horizon. It also adopted both the market model and the Fama–French three-factor models to rule out model misspecification when estimating abnormal returns and thus increased the robustness. In fact, the results were stable to changes in estimating the model’s specifications. In addition, the study compared the portfolio’s performance with mimicking portfolios in terms of size, book-to-market equity (BE/ME), and the firms’ geographic location. It demonstrated that the documented anomaly of the portfolio of renewable energy companies is robust. Full article
(This article belongs to the Special Issue Finance, Risk and Sustainable Development)
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Review

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15 pages, 772 KiB  
Review
Does Islamic Sustainable Finance Support Sustainable Development Goals to Avert Financial Risk in the Management of Islamic Finance Products? A Critical Literature Review
by Lukman Raimi, Ibrahim Adeniyi Abdur-Rauf and Saheed Afolabi Ashafa
J. Risk Financial Manag. 2024, 17(6), 236; https://doi.org/10.3390/jrfm17060236 - 6 Jun 2024
Viewed by 1405
Abstract
Policymakers, governments, and Islamic financial institutions are increasingly focusing on sustainable development, leading to an in-depth examination of current sustainable finance practices, projects, and product portfolios. This study examines the role of Islamic sustainable finance (ISF) in promoting Sustainable Development Goals (SDGs) to [...] Read more.
Policymakers, governments, and Islamic financial institutions are increasingly focusing on sustainable development, leading to an in-depth examination of current sustainable finance practices, projects, and product portfolios. This study examines the role of Islamic sustainable finance (ISF) in promoting Sustainable Development Goals (SDGs) to avert financial risk in the management of Islamic Finance Products (ISFP). Through qualitative analysis, the study conducts a critical literature review (CLR) that incorporates conceptual, theoretical, and empirical perspectives on ISF and SDGs and addresses two specific research questions. Our study examines over 48 journals from 2010 to 2024 and provides insights into how ISF advances the SDGs across all environmental, social, and economic dimensions. It also highlights that ISF promotes green entrepreneurship by investing in sustainable projects, supporting SMEs, and offering alternative financing. ISF also promotes financial stability, justice, and growth and is consistent with the principles of Maqasid al-Shari’ah. Key ISF mechanisms that promote the SDGs include Islamic Green Sukuk, Socially Responsible Investment Funds, Islamic Microfinance, and Islamic Impact Investing. Integrating Islamic ethical principles into financial activities is crucial for inclusive and sustainable economic development. These qualitative insights are critical for policymakers, Islamic financial institutions, Halal entrepreneurs, environmentalists, and investors to understand the potential of Islamic social finance (ISF) to support sustainable practices, projects, and portfolios. Furthermore, the ISFs alignment with Maqasid al-Shari’ah highlights its importance in promoting sustainable development while mitigating financial risk in ISFPs management. The study offers robust contributions to the existing literature to provide comprehensive insights into how ISF can be effectively used to promote SDGs. Full article
(This article belongs to the Special Issue Finance, Risk and Sustainable Development)
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