Selected Papers from the World Finance and Banking Symposium Conference

A special issue of Risks (ISSN 2227-9091).

Deadline for manuscript submissions: closed (20 June 2022) | Viewed by 16841

Special Issue Editors


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Guest Editor
Department of Finance, Corvinus University of Budapest, 1093 Budapest, Hungary
Interests: market liquidity; market microstructure; central counterparties
Special Issues, Collections and Topics in MDPI journals

E-Mail Website
Guest Editor
Department of Finance, Instituto Politécnico de Viana do Castelo, 4900-347 Viana do Castelo, Portugal
Interests: market efficiency; neuro economics; corporate governance
Special Issues, Collections and Topics in MDPI journals

Special Issue Information

Dear Colleagues,

The World Finance and Banking Symposium will take place this year in Budapest, Hungary, at the Corvinus University of Budapest on 17–18 December 2021. The focus of the conference is the field of finance, economics, and banking. The aim of this Special Issue is to publish papers from the conference that focus mainly on topics of risk management and regulation, in the case of both financial and non-financial institutions.

https://www.world-finance-conference.com/conference.php?id=22#

Dr. Kata Váradi
Dr. João Vieito
Guest Editors

Manuscript Submission Information

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Keywords

  • Risk management of non-financial institutions
  • Risk management at financial institutions
  • Regulation

Published Papers (4 papers)

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Research

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18 pages, 584 KiB  
Article
A Framework for Risk Management in Small Medium Enterprises in Developing Countries
by Zodwa Z. F. Mthiyane, Huibrecht M. van der Poll and Makgopa F. Tshehla
Risks 2022, 10(9), 173; https://doi.org/10.3390/risks10090173 - 1 Sep 2022
Cited by 4 | Viewed by 9986
Abstract
Failure to holistically manage risk in Small Medium Enterprises (SMEs) is one of the major causes of small businesses failure. To answer the research question as to what supports the adoption of Enterprise Risk Management (ERM) in SMEs, this research aims to analyse [...] Read more.
Failure to holistically manage risk in Small Medium Enterprises (SMEs) is one of the major causes of small businesses failure. To answer the research question as to what supports the adoption of Enterprise Risk Management (ERM) in SMEs, this research aims to analyse Risk Management (RM) in SMEs and develops a framework to facilitate the adoption of ERM. In achieving the primary objective, the research establishes for SMEs: the sources of information for RM; the importance of information governance in managing risk; the fundamentals of RM; and the pillars of RM. Previous research conducted on RM in SMEs reviewed the challenges of the successful implementation of ERM in SMEs and proposed different ways to address these challenges. The common ground reached by the research is that there is a need for the simplification of ERM in SMEs. We followed an interpretive philosophy with an inductive research approach and employed a qualitative methodological choice with a cross-sectional time horizon through data collection, employing a review of the scholarly literature, to, in the end, develop a conceptual Small Medium Enterprises Risk Management Framework (SMERMF). The limitation of the research is that the empirical part of the research has not been concluded yet. To present the results, that will be compared to the theory and conclude the research. Full article
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20 pages, 1389 KiB  
Article
A Conceptual Framework to Analyse Illicit Financial Flows (IFFs)
by Ndiimafhi Norah Netshisaulu, Huibrecht Margaretha Van der Poll and John Andrew Van der Poll
Risks 2022, 10(9), 172; https://doi.org/10.3390/risks10090172 - 1 Sep 2022
Cited by 4 | Viewed by 3196
Abstract
This article develops a conceptual framework, based on a comprehensive literature review, to address illicit financial flows (IFFs), characterised by the illegal move of monies or capital across country borders. IFFs compromise transparency through complex transactions and incur harmful effects for both developing [...] Read more.
This article develops a conceptual framework, based on a comprehensive literature review, to address illicit financial flows (IFFs), characterised by the illegal move of monies or capital across country borders. IFFs compromise transparency through complex transactions and incur harmful effects for both developing and developed economies. Financial opacity creates a conducive environment for IFFs to flourish, as a challenge to good financial practices. Following an interpretive philosophy, an inductive research approach, qualitative methodological choice, cross-sectional time horizon all through data collection through review of scholarly literature, and framework were developed to analyse the said IFFs. Our framework encourages good corporate governance and provides insights, as well as the identification of possible characteristics of IFFs perpetuated in the financial statements of entities, which would discourage entities to engage in IFFs. Specifically, practitioners should be able to identify characteristics of IFFs and use the framework to address these. Within the finance dimension, it is important to study the specific mechanisms regarding how IFFs may damage an entity’s reputation, as well as their going concern. In future work, we shall enhance the framework through interviews with auditors, followed by a validation of the enhanced framework through a focus group. The utility of the final framework can be tested through case studies in the industry to analyse IFFs. Full article
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17 pages, 412 KiB  
Article
Financing Cooperative Supply Chain Members—The Bank’s Perspective
by Péter Juhász and Nóra Felföldi-Szűcs
Risks 2022, 10(7), 139; https://doi.org/10.3390/risks10070139 - 12 Jul 2022
Cited by 1 | Viewed by 1483
Abstract
This paper contributes to the supply chain finance literature with an agent-based Monte Carlo simulation model focusing on the bank’s point of view. Our theoretical model assesses how a bank should screen a supply chain (SC) member and whether that requires different considerations [...] Read more.
This paper contributes to the supply chain finance literature with an agent-based Monte Carlo simulation model focusing on the bank’s point of view. Our theoretical model assesses how a bank should screen a supply chain (SC) member and whether that requires different considerations and monitoring systems compared with traditional corporate loans. In the model, the SC members may cooperate, reducing their bankruptcy risk considerably; thus, the chance for and extent of inter-entity financial aid are critical to consider when assessing bankruptcy risk. A cooperative SC member cannot just be financed from debt taken by other members, but it may also offer protection to other SC members using its operating cash flow. Thus, based on our results, bankruptcy risk is SC-specific, rather than a characteristic of an individual firm. Therefore, to finance an SC member is a quasi-joint decision of its peers, so particular care should be paid to estimating and monitoring the correlations between the operational cash flows of cooperative SC members. One of the key results is that of edge default exposure of the bank; it might be optimal to limit the amount of the loan made available to a given collaborative SC member instead of charging higher rates or financing the most attractive SC member only. Another SC member offering an additional guarantee with its assets will provide the remaining need for financing. As this solution also reduces the total bankruptcy risk of the SC, the SC itself should prefer this financing structure. Full article

Review

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8 pages, 347 KiB  
Review
The Effect of Option Grants on Managerial Risk Taking: A Review
by Guoyu Lin, Chenyong Liu, Jehu Mette and Rohan Crichton
Risks 2022, 10(8), 143; https://doi.org/10.3390/risks10080143 - 22 Jul 2022
Cited by 2 | Viewed by 1517
Abstract
This article presents a systematic review of the theoretical and empirical literature on option grants and managerial risk taking. One of the objectives is the motivation of further research on the topic. Risk-averse managers hold less diversified portfolios and, thus, tend to take [...] Read more.
This article presents a systematic review of the theoretical and empirical literature on option grants and managerial risk taking. One of the objectives is the motivation of further research on the topic. Risk-averse managers hold less diversified portfolios and, thus, tend to take less risk than optimal for shareholders. More option grants may encourage risk taking and result in higher firm value or alternatively increase the sensitivity of wealth to stock-price fluctuations mitigating overall risk-taking incentives. The net effect of options on risk-taking behavior is, therefore, ambiguous and calls for more empirical investigation. This is crucial for fiscal policymaking and regulation reforms. Yet, establishing a causal link between option granting and managerial risk taking has been challenging due to reverse causality, omitted correlated variables and measurement errors. In this review, we revisit the VegaDelta question by synthesizing the relevant research in economics, finance and accounting. We find that the empirical literature has successfully utilized natural experiments (e.g., regulation changes) to better establish causality, even though some mixed results are also documented. Finally, we also emphasize potential future research avenues especially relating to accounting disclosure, earnings management and tax policy. Full article
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