Pub Date : 2025-03-11DOI: 10.1016/j.frl.2025.107144
Qingqing Cao , Raoul Minetti , Nicholas Rowe
We investigate the impact of inflation on banking stability. Using granular U.S. data from 1997 to 2014, we show that higher inflation induces a significant deterioration of banks’ capital position because of the maturity mismatch of banks’ assets and liabilities. Quantitative analysis reveals that the elasticity of banking capital to long-term inflation expectations is high, as a 1% increase to long-term inflation expectations leads to a 15% decrease in banks’ Tier 1 capital. The analysis suggests that the use of inflation to reduce sovereigns’ real debt burden could aggravate the sovereign-bank loop during debt crises.
{"title":"Macro-banking stability, sovereign debt and the inflation channel","authors":"Qingqing Cao , Raoul Minetti , Nicholas Rowe","doi":"10.1016/j.frl.2025.107144","DOIUrl":"10.1016/j.frl.2025.107144","url":null,"abstract":"<div><div>We investigate the impact of inflation on banking stability. Using granular U.S. data from 1997 to 2014, we show that higher inflation induces a significant deterioration of banks’ capital position because of the maturity mismatch of banks’ assets and liabilities. Quantitative analysis reveals that the elasticity of banking capital to long-term inflation expectations is high, as a 1% increase to long-term inflation expectations leads to a 15% decrease in banks’ Tier 1 capital. The analysis suggests that the use of inflation to reduce sovereigns’ real debt burden could aggravate the sovereign-bank loop during debt crises.</div></div>","PeriodicalId":12167,"journal":{"name":"Finance Research Letters","volume":"78 ","pages":"Article 107144"},"PeriodicalIF":7.4,"publicationDate":"2025-03-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143620035","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-03-11DOI: 10.1016/j.frl.2025.107187
Chuanpeng Wang , Chunlei Li , Yuanlun Wang
This study reports whether population ageing and unemployment rates have an impact on regional innovation outputs. Based on empirical analyses with relevant data for 2010 and 2020, the study finds that an increase in population ageing leads to an increase in regional innovation output, which is partly mediated by the unemployment rate, population ageing contributes indirectly to an increase in regional innovation output by reducing the unemployment rate. The study also shows the heterogeneity of this effect across regions.
{"title":"Population aging, unemployment rate and regional innovation","authors":"Chuanpeng Wang , Chunlei Li , Yuanlun Wang","doi":"10.1016/j.frl.2025.107187","DOIUrl":"10.1016/j.frl.2025.107187","url":null,"abstract":"<div><div>This study reports whether population ageing and unemployment rates have an impact on regional innovation outputs. Based on empirical analyses with relevant data for 2010 and 2020, the study finds that an increase in population ageing leads to an increase in regional innovation output, which is partly mediated by the unemployment rate, population ageing contributes indirectly to an increase in regional innovation output by reducing the unemployment rate. The study also shows the heterogeneity of this effect across regions.</div></div>","PeriodicalId":12167,"journal":{"name":"Finance Research Letters","volume":"78 ","pages":"Article 107187"},"PeriodicalIF":7.4,"publicationDate":"2025-03-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143644881","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-03-11DOI: 10.1016/j.frl.2025.107178
Zhijiu Yang , Fengyi You , Yanfang Qin , Ge Wu
This study identifies the impact of environmental taxes on firm financialization. Using a triple-differences (DDD) strategy, we find that the enactment of the Environmental Protection Tax Law significantly inhibits firm financialization, which is primarily driven by firms with political connections. The decline in firm financialization can be attributed to increased investments in R&D and environmental protection, especially for politically connected firms. Further analyses suggest that environmental enforcement and legal environments amplify the inhibitory effect. We argue that the fee-to-tax reform leads environmental protection to the rule of law and reduces potential government-business collusion, which is conducive to long-term environmental governance.
{"title":"Environmental taxes, political connections, and firm financialization: Evidence from China's environmental tax reform","authors":"Zhijiu Yang , Fengyi You , Yanfang Qin , Ge Wu","doi":"10.1016/j.frl.2025.107178","DOIUrl":"10.1016/j.frl.2025.107178","url":null,"abstract":"<div><div>This study identifies the impact of environmental taxes on firm financialization. Using a triple-differences (DDD) strategy, we find that the enactment of the Environmental Protection Tax Law significantly inhibits firm financialization, which is primarily driven by firms with political connections. The decline in firm financialization can be attributed to increased investments in R&D and environmental protection, especially for politically connected firms. Further analyses suggest that environmental enforcement and legal environments amplify the inhibitory effect. We argue that the fee-to-tax reform leads environmental protection to the rule of law and reduces potential government-business collusion, which is conducive to long-term environmental governance.</div></div>","PeriodicalId":12167,"journal":{"name":"Finance Research Letters","volume":"78 ","pages":"Article 107178"},"PeriodicalIF":7.4,"publicationDate":"2025-03-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143637136","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-03-11DOI: 10.1016/j.frl.2025.107153
Ying Chen , Yuqiao Bu , Libing Fang , Yuanchu Xu
Owing to potential financial fraud by companies, we propose a new quality factor that is mitigated by the probability of financial fraud. We estimate fraud probability using a bivariate probit model that allows for unobservable companies that actually committed fraud but were not detected. Our empirical results show that the fraud-mitigated quality-minus-junk (fmQMJ) portfolio earns significant average excess returns in both China and the United States. Furthermore, it outperforms the original quality factor within the quintile groups of low size and low book-to-market ratio. A series of Fama–MacBeth regressions show that fmQMJ contributes a new pricing factor to the value-investing strategy widely advocated in practice and academia.
{"title":"A new quality factor adjusted by fraud probability","authors":"Ying Chen , Yuqiao Bu , Libing Fang , Yuanchu Xu","doi":"10.1016/j.frl.2025.107153","DOIUrl":"10.1016/j.frl.2025.107153","url":null,"abstract":"<div><div>Owing to potential financial fraud by companies, we propose a new quality factor that is mitigated by the probability of financial fraud. We estimate fraud probability using a bivariate probit model that allows for unobservable companies that actually committed fraud but were not detected. Our empirical results show that the fraud-mitigated quality-minus-junk (<em>fmQMJ</em>) portfolio earns significant average excess returns in both China and the United States. Furthermore, it outperforms the original quality factor within the quintile groups of low size and low book-to-market ratio. A series of Fama–MacBeth regressions show that <em>fmQMJ</em> contributes a new pricing factor to the value-investing strategy widely advocated in practice and academia.</div></div>","PeriodicalId":12167,"journal":{"name":"Finance Research Letters","volume":"78 ","pages":"Article 107153"},"PeriodicalIF":7.4,"publicationDate":"2025-03-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143628487","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-03-11DOI: 10.1016/j.frl.2025.107186
Yi Xu , Jiajun Qi , Jilong Chen , Lingbing Feng
This paper investigates the impact of cryptocurrency bans on company legal risks using a Difference-in-Differences framework. We find that such bans significantly reduce both the frequency and monetary value of lawsuits, lowering companies' legal exposure. Additionally, our analysis reveals that employees with financial backgrounds play a crucial role in helping companies mitigate legal risks in response to the ban's impact. However, as cryptocurrency-related financial activities are gradually phased out, the importance of these financially-skilled employees diminishes. Consequently, companies tend to "kick down the ladder" by dismissing these employees, highlighting an unintended consequence of the regulatory shift.
{"title":"Kick down the ladder? The impact of cryptocurrency bans on company legal risks and employee structure","authors":"Yi Xu , Jiajun Qi , Jilong Chen , Lingbing Feng","doi":"10.1016/j.frl.2025.107186","DOIUrl":"10.1016/j.frl.2025.107186","url":null,"abstract":"<div><div>This paper investigates the impact of cryptocurrency bans on company legal risks using a Difference-in-Differences framework. We find that such bans significantly reduce both the frequency and monetary value of lawsuits, lowering companies' legal exposure. Additionally, our analysis reveals that employees with financial backgrounds play a crucial role in helping companies mitigate legal risks in response to the ban's impact. However, as cryptocurrency-related financial activities are gradually phased out, the importance of these financially-skilled employees diminishes. Consequently, companies tend to \"kick down the ladder\" by dismissing these employees, highlighting an unintended consequence of the regulatory shift.</div></div>","PeriodicalId":12167,"journal":{"name":"Finance Research Letters","volume":"78 ","pages":"Article 107186"},"PeriodicalIF":7.4,"publicationDate":"2025-03-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143637692","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-03-10DOI: 10.1016/j.frl.2025.107184
Yubing Zhao , Zhe Yuan , Junting Jia
Organizational resilience is essential for firms navigating volatile business environments. This study examines the impact of labor productivity on resilience, emphasizing the moderating role of internal pay disparity. Using a panel dataset of Chinese listed firms (2010–2022), the results show that labor productivity enhances resilience, but excessive pay disparity weakens this effect by undermining employee morale. Heterogeneity analysis reveals that firm ownership, life cycle stage, and industry classification influence this relationship. These findings emphasize the need for balanced human capital management strategies to enhance resilience, providing valuable insights for managers and policymakers to optimize workforce efficiency and pay structures.
{"title":"Labor productivity, internal pay disparity, and organizational resilience","authors":"Yubing Zhao , Zhe Yuan , Junting Jia","doi":"10.1016/j.frl.2025.107184","DOIUrl":"10.1016/j.frl.2025.107184","url":null,"abstract":"<div><div>Organizational resilience is essential for firms navigating volatile business environments. This study examines the impact of labor productivity on resilience, emphasizing the moderating role of internal pay disparity. Using a panel dataset of Chinese listed firms (2010–2022), the results show that labor productivity enhances resilience, but excessive pay disparity weakens this effect by undermining employee morale. Heterogeneity analysis reveals that firm ownership, life cycle stage, and industry classification influence this relationship. These findings emphasize the need for balanced human capital management strategies to enhance resilience, providing valuable insights for managers and policymakers to optimize workforce efficiency and pay structures.</div></div>","PeriodicalId":12167,"journal":{"name":"Finance Research Letters","volume":"78 ","pages":"Article 107184"},"PeriodicalIF":7.4,"publicationDate":"2025-03-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143632088","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-03-10DOI: 10.1016/j.frl.2025.107176
Laura Gonzalez, Ivelina Pavlova
This article revisits the literature and introduces three articles presented at the 63th annual meeting of the Southwestern Finance Association (SWFA) and accepted in the Finance Research Letters Special Issue titled “Redefining the Future”. The 63rd annual SWFA meeting took place from February 28th to March 1st, 2024. The articles are in the fields of Artificial Intelligence in Banking and Financial Services, ETFs and Fintech Credit Adoption in relation to Gambling and Religiosity. We summarize the key findings of the literature and the accepted articles and conclude by presenting directions for future research.
{"title":"“Redefining the future: Summary of research and future directions”","authors":"Laura Gonzalez, Ivelina Pavlova","doi":"10.1016/j.frl.2025.107176","DOIUrl":"https://doi.org/10.1016/j.frl.2025.107176","url":null,"abstract":"This article revisits the literature and introduces three articles presented at the 63th annual meeting of the Southwestern Finance Association (SWFA) and accepted in the <ce:italic><ce:underline>Finance</ce:underline> Research Letters</ce:italic> Special Issue titled “Redefining the Future”. The 63<ce:sup loc=\"post\">rd</ce:sup> annual SWFA meeting took place from February 28th to March 1st, 2024. The articles are in the fields of Artificial Intelligence in Banking and Financial Services, ETFs and Fintech Credit Adoption in relation to Gambling and Religiosity. We summarize the key findings of the literature and the accepted articles and conclude by presenting directions for future research.","PeriodicalId":12167,"journal":{"name":"Finance Research Letters","volume":"27 1","pages":""},"PeriodicalIF":10.4,"publicationDate":"2025-03-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143666326","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-03-10DOI: 10.1016/j.frl.2025.107183
Xue Wang , Jinlong Qiu , Zhaoxue Qiu , Wenshuang Bao
Inquiry letters serve as a nonadministrative regulatory measure employed by Chinese stock exchanges to oversee listed firms. This study examines the impact of inquiry letters related to green and environmental protection issues on the green transformation of heavily polluting firms, focusing on mergers and acquisitions (M&As). The findings indicate that inquiry letters addressing green concerns encourage heavily polluting firms to pursue green M&As, primarily driven by the spotlight effect and the governance effect. Further analysis reveals that stronger government environmental regulations and increased public environmental awareness amplify this positive relationship. Moreover, green M&As prompted by regulatory inquiries represent a strategic shift toward green transformation. This study offers new insights into the economic consequences of inquiry letters.
{"title":"Regulatory inquiry letters and green M&As of heavily polluting firms","authors":"Xue Wang , Jinlong Qiu , Zhaoxue Qiu , Wenshuang Bao","doi":"10.1016/j.frl.2025.107183","DOIUrl":"10.1016/j.frl.2025.107183","url":null,"abstract":"<div><div>Inquiry letters serve as a nonadministrative regulatory measure employed by Chinese stock exchanges to oversee listed firms. This study examines the impact of inquiry letters related to green and environmental protection issues on the green transformation of heavily polluting firms, focusing on mergers and acquisitions (M&As). The findings indicate that inquiry letters addressing green concerns encourage heavily polluting firms to pursue green M&As, primarily driven by the spotlight effect and the governance effect. Further analysis reveals that stronger government environmental regulations and increased public environmental awareness amplify this positive relationship. Moreover, green M&As prompted by regulatory inquiries represent a strategic shift toward green transformation. This study offers new insights into the economic consequences of inquiry letters.</div></div>","PeriodicalId":12167,"journal":{"name":"Finance Research Letters","volume":"78 ","pages":"Article 107183"},"PeriodicalIF":7.4,"publicationDate":"2025-03-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143620033","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-03-09DOI: 10.1016/j.frl.2025.107180
Dongliang Yuan , Duo Shang , Xinmei Wu
Based on Chinese A-share listed companies from 2010 to 2022, we find that cross-listing has a significant dampening effect on ESG rating disagreement. Specifically, cross-listing reduces ESG rating disagreement through five channels: improving internal controls, obtaining international standard certifications, attracting media attention, facilitating institutional investor site visits, and improving the quality of information disclosure. In addition, the dampening effect of cross-listing on ESG rating disagreement is reinforced by the overseas experience of executives, the internationalization of the enterprise and the openness of the enterprise's location.
{"title":"Cross-listing and ESG rating disagreement","authors":"Dongliang Yuan , Duo Shang , Xinmei Wu","doi":"10.1016/j.frl.2025.107180","DOIUrl":"10.1016/j.frl.2025.107180","url":null,"abstract":"<div><div>Based on Chinese A-share listed companies from 2010 to 2022, we find that cross-listing has a significant dampening effect on ESG rating disagreement. Specifically, cross-listing reduces ESG rating disagreement through five channels: improving internal controls, obtaining international standard certifications, attracting media attention, facilitating institutional investor site visits, and improving the quality of information disclosure. In addition, the dampening effect of cross-listing on ESG rating disagreement is reinforced by the overseas experience of executives, the internationalization of the enterprise and the openness of the enterprise's location.</div></div>","PeriodicalId":12167,"journal":{"name":"Finance Research Letters","volume":"78 ","pages":"Article 107180"},"PeriodicalIF":7.4,"publicationDate":"2025-03-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143600743","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-03-09DOI: 10.1016/j.frl.2025.107141
Songsheng Mao , Tingfeng Tang , Gongyan Yang
In light of the Carbon Peaking and Carbon Neutrality Goals established by the Chinese government, the reduction of pollution emission through digitization is crucial for the sustainable development for China's listed enterprises. This paper analyzes the impact of digitalization on enterprise pollution emission, using the expansion of Shapiro's enterprise pollution model. It empirically tests the effects and mechanisms of pollution emission reduction in relation to enterprise digital transformation, based on the estimated pollution emission data from Chinese A-share listed companies between 2008 and 2020. The findings indicate that digital transformation of enterprise can significantly diminish the intensity of enterprises pollution emission, with technological advancement and green innovation serving as the mechanisms by which digitalization achieves pollution reduction. In addition, heterogeneity analysis shows that the digital transformation of state-owned enterprises and heavily polluting industries yields a more significant reduction in pollution, but there is no heterogeneity in the intensity of regional environmental regulations. This paper discusses the strategies for company pollution reduction in the context of digitalization and offers guidance for enterprises to seize on the opportunities presented by technology revolution and green economic transformation.
{"title":"Does digital transformation reduce China's corporate pollution emission intensity?","authors":"Songsheng Mao , Tingfeng Tang , Gongyan Yang","doi":"10.1016/j.frl.2025.107141","DOIUrl":"10.1016/j.frl.2025.107141","url":null,"abstract":"<div><div>In light of the Carbon Peaking and Carbon Neutrality Goals established by the Chinese government, the reduction of pollution emission through digitization is crucial for the sustainable development for China's listed enterprises. This paper analyzes the impact of digitalization on enterprise pollution emission, using the expansion of Shapiro's enterprise pollution model. It empirically tests the effects and mechanisms of pollution emission reduction in relation to enterprise digital transformation, based on the estimated pollution emission data from Chinese A-share listed companies between 2008 and 2020. The findings indicate that digital transformation of enterprise can significantly diminish the intensity of enterprises pollution emission, with technological advancement and green innovation serving as the mechanisms by which digitalization achieves pollution reduction. In addition, heterogeneity analysis shows that the digital transformation of state-owned enterprises and heavily polluting industries yields a more significant reduction in pollution, but there is no heterogeneity in the intensity of regional environmental regulations. This paper discusses the strategies for company pollution reduction in the context of digitalization and offers guidance for enterprises to seize on the opportunities presented by technology revolution and green economic transformation.</div></div>","PeriodicalId":12167,"journal":{"name":"Finance Research Letters","volume":"78 ","pages":"Article 107141"},"PeriodicalIF":7.4,"publicationDate":"2025-03-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143644883","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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