Pub Date : 2026-01-20DOI: 10.1016/j.iref.2026.104926
Florinda Silva, Sónia Silva
This study analyzes the relationship between working capital management and the profitability of EU-based SMEs over the period 2012–2022. We find an inverted U-shaped relationship, indicating an optimal level of working capital investment that maximizes corporate profitability. Results show a positive effect of low levels of investment in working capital on profitability, which turns negative when such investment surpasses its optimal point. The optimal net trade cycle is lower for more financially constrained firms. Any deviation from the optimal investment point in working capital negatively impacts firms’ performance, particularly for more financially constrained firms. These findings remain robust to several additional tests.
{"title":"Working capital management and corporate performance: The role of financial constraints","authors":"Florinda Silva, Sónia Silva","doi":"10.1016/j.iref.2026.104926","DOIUrl":"10.1016/j.iref.2026.104926","url":null,"abstract":"<div><div>This study analyzes the relationship between working capital management and the profitability of EU-based SMEs over the period 2012–2022. We find an inverted U-shaped relationship, indicating an optimal level of working capital investment that maximizes corporate profitability. Results show a positive effect of low levels of investment in working capital on profitability, which turns negative when such investment surpasses its optimal point. The optimal net trade cycle is lower for more financially constrained firms. Any deviation from the optimal investment point in working capital negatively impacts firms’ performance, particularly for more financially constrained firms. These findings remain robust to several additional tests.</div></div>","PeriodicalId":14444,"journal":{"name":"International Review of Economics & Finance","volume":"106 ","pages":"Article 104926"},"PeriodicalIF":5.6,"publicationDate":"2026-01-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"146074647","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 : 2026-01-20DOI: 10.1016/j.iref.2026.104935
Sihan Liu , An Huang , Nan Lin , Zhenfu Han
This study examines how digital infrastructure affects firm productivity and highlights platform integration as a key enabling mechanism. Using a panel dataset of Chinese listed companies from 2014 to 2023, we employ a fixed-effects regression approach to assess the extent to which improvements in digital infrastructure enhance total factor productivity (TFP) at the firm level. In addition, the study investigates the moderating role of platform integration, positing that firms more deeply embedded in digital platform ecosystems are better positioned to capitalize on digital infrastructure to improve productivity outcomes. The empirical results demonstrate that digital infrastructure exerts a significantly positive effect on firm productivity. More importantly, the analysis shows that platform integration markedly strengthens this positive relationship, highlighting its essential function in converting digital infrastructure investments into measurable productivity gains. These findings highlight the importance of complementing tangible infrastructure investments with measures that foster platform ecosystem development and enterprise integration to fully unlock productivity gains, particularly in regions with developing digital foundations.
{"title":"Does platform integration unlock the value of digital infrastructure? Evidence from Chinese listed firms","authors":"Sihan Liu , An Huang , Nan Lin , Zhenfu Han","doi":"10.1016/j.iref.2026.104935","DOIUrl":"10.1016/j.iref.2026.104935","url":null,"abstract":"<div><div>This study examines how digital infrastructure affects firm productivity and highlights platform integration as a key enabling mechanism. Using a panel dataset of Chinese listed companies from 2014 to 2023, we employ a fixed-effects regression approach to assess the extent to which improvements in digital infrastructure enhance total factor productivity (TFP) at the firm level. In addition, the study investigates the moderating role of platform integration, positing that firms more deeply embedded in digital platform ecosystems are better positioned to capitalize on digital infrastructure to improve productivity outcomes. The empirical results demonstrate that digital infrastructure exerts a significantly positive effect on firm productivity. More importantly, the analysis shows that platform integration markedly strengthens this positive relationship, highlighting its essential function in converting digital infrastructure investments into measurable productivity gains. These findings highlight the importance of complementing tangible infrastructure investments with measures that foster platform ecosystem development and enterprise integration to fully unlock productivity gains, particularly in regions with developing digital foundations.</div></div>","PeriodicalId":14444,"journal":{"name":"International Review of Economics & Finance","volume":"106 ","pages":"Article 104935"},"PeriodicalIF":5.6,"publicationDate":"2026-01-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"146074705","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 : 2026-01-20DOI: 10.1016/j.iref.2026.104919
Shenghao Gao , Peyman Khezr , Armin Pourkhanali
This paper examines the implications of pre-announced revenue targets in uniform-price auctions used for seasoned equity offerings (SEOs). In this setting, issuers commit ex ante to a target revenue, a reserve price, and a maximum share quantity. Using a common-value framework, we show that under truthful bidding, the optimal issuer strategy is to set the share quantity such that the product of the reserve price and the share quantity equals the revenue target. This design induces more truthful bidding relative to standard uniform-price auctions without revenue commitments. We test these predictions using comprehensive data from China’s SEO market. First, we analyze how variations in issuer strategies affect SEO discounts and find that outcomes are most favorable when issuers follow the identified optimal strategy. Second, we evaluate auction performance by constructing a benchmark based on truthful bidding. The results indicate that this modified auction mechanism achieves prices only 0.028 below the truthful benchmark, with revenue less than 3% lower than the case with truthful bids. These findings highlight the potential effectiveness of uniform-price auctions with revenue targets in financial markets.
{"title":"Pre-Announced Revenue Targets in Uniform-Price Auctions: Evidence from Seasoned Equity Offerings","authors":"Shenghao Gao , Peyman Khezr , Armin Pourkhanali","doi":"10.1016/j.iref.2026.104919","DOIUrl":"10.1016/j.iref.2026.104919","url":null,"abstract":"<div><div>This paper examines the implications of pre-announced revenue targets in uniform-price auctions used for seasoned equity offerings (SEOs). In this setting, issuers commit ex ante to a target revenue, a reserve price, and a maximum share quantity. Using a common-value framework, we show that under truthful bidding, the optimal issuer strategy is to set the share quantity such that the product of the reserve price and the share quantity equals the revenue target. This design induces more truthful bidding relative to standard uniform-price auctions without revenue commitments. We test these predictions using comprehensive data from China’s SEO market. First, we analyze how variations in issuer strategies affect SEO discounts and find that outcomes are most favorable when issuers follow the identified optimal strategy. Second, we evaluate auction performance by constructing a benchmark based on truthful bidding. The results indicate that this modified auction mechanism achieves prices only 0.028 below the truthful benchmark, with revenue less than 3% lower than the case with truthful bids. These findings highlight the potential effectiveness of uniform-price auctions with revenue targets in financial markets.</div></div>","PeriodicalId":14444,"journal":{"name":"International Review of Economics & Finance","volume":"106 ","pages":"Article 104919"},"PeriodicalIF":5.6,"publicationDate":"2026-01-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"146036001","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 : 2026-01-20DOI: 10.1016/j.iref.2026.104938
Ruiqian Li, Chang Che, Tong Huang
Understanding the drivers of greenwashing is crucial for promoting genuine sustainability practices. This study uses data from A-share listed companies between 2009 and 2022, applying resource dependence theory to examine whether and how financial distress affect environmental, social, and governance (ESG) greenwashing. Our findings indicate that financial distress prompts companies to engage in ESG greenwashing. Mechanism analysis shows that financial distress encourages companies to adopt ESG greenwashing by reducing green innovation and harming corporate reputation. Heterogeneity analysis shows that this promoting effect is stronger in companies with high customer concentration, significant media pressure, and intense industry competition. Additionally, ESG greenwashing induced by financial distress leads to a range of economic consequences, including reduced debt financing scale, misallocation of government environmental subsidies, and decreased analyst earnings forecast accuracy. This study enhances the literature on ESG greenwashing drivers by providing fresh perspectives on how financial distress influences corporate sustainability practices.
{"title":"Financial distress and corporate ESG greenwashing","authors":"Ruiqian Li, Chang Che, Tong Huang","doi":"10.1016/j.iref.2026.104938","DOIUrl":"10.1016/j.iref.2026.104938","url":null,"abstract":"<div><div>Understanding the drivers of greenwashing is crucial for promoting genuine sustainability practices. This study uses data from A-share listed companies between 2009 and 2022, applying resource dependence theory to examine whether and how financial distress affect environmental, social, and governance (ESG) greenwashing. Our findings indicate that financial distress prompts companies to engage in ESG greenwashing. Mechanism analysis shows that financial distress encourages companies to adopt ESG greenwashing by reducing green innovation and harming corporate reputation. Heterogeneity analysis shows that this promoting effect is stronger in companies with high customer concentration, significant media pressure, and intense industry competition. Additionally, ESG greenwashing induced by financial distress leads to a range of economic consequences, including reduced debt financing scale, misallocation of government environmental subsidies, and decreased analyst earnings forecast accuracy. This study enhances the literature on ESG greenwashing drivers by providing fresh perspectives on how financial distress influences corporate sustainability practices.</div></div>","PeriodicalId":14444,"journal":{"name":"International Review of Economics & Finance","volume":"106 ","pages":"Article 104938"},"PeriodicalIF":5.6,"publicationDate":"2026-01-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"146036068","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 : 2026-01-20DOI: 10.1016/j.iref.2026.104931
Xiaozhen Jiang , Lerong He , Xunfang Zhuo
This study empirically examines the relationship between executive inequity aversion and corporate innovation through the lens of behavioral agency theory. Utilizing a sample of Chinese listed companies from 2007 to 2020, we find that executive inequity aversion negatively impacts corporate innovation. This result remains robust after addressing potential endogeneity and is consistent across various alternative measures and econometric models. Furthermore, moderation mechanism tests indicate that this negative effect is more pronounced when executives possess greater managerial power, yet this effect attenuates in state-owned enterprises. Additionally, heterogeneity analysis reveals that the inhibiting effect of executive inequity aversion on corporate innovation is stronger in high-tech firms. Overall, this study enhances the theoretical understanding of the executive pay gap from a behavioral perspective and offers implications for improving executive compensation design in an innovation-driven era.
{"title":"Executive inequity aversion and corporate innovation: A behavioral agency theory perspective","authors":"Xiaozhen Jiang , Lerong He , Xunfang Zhuo","doi":"10.1016/j.iref.2026.104931","DOIUrl":"10.1016/j.iref.2026.104931","url":null,"abstract":"<div><div>This study empirically examines the relationship between executive inequity aversion and corporate innovation through the lens of behavioral agency theory. Utilizing a sample of Chinese listed companies from 2007 to 2020, we find that executive inequity aversion negatively impacts corporate innovation. This result remains robust after addressing potential endogeneity and is consistent across various alternative measures and econometric models. Furthermore, moderation mechanism tests indicate that this negative effect is more pronounced when executives possess greater managerial power, yet this effect attenuates in state-owned enterprises. Additionally, heterogeneity analysis reveals that the inhibiting effect of executive inequity aversion on corporate innovation is stronger in high-tech firms. Overall, this study enhances the theoretical understanding of the executive pay gap from a behavioral perspective and offers implications for improving executive compensation design in an innovation-driven era.</div></div>","PeriodicalId":14444,"journal":{"name":"International Review of Economics & Finance","volume":"106 ","pages":"Article 104931"},"PeriodicalIF":5.6,"publicationDate":"2026-01-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"146074743","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 : 2026-01-20DOI: 10.1016/j.iref.2026.104934
Zirui Zhou , Daiying Zhu , Mingzhen Liu
Based on data sourced from Chinese A-share listed high-tech companies spanning the period from 2013 to 2023, this study conducts an empirical investigation into how intellectual capital influences corporate innovation performance, as well as the moderating role played by executive incentive mechanisms. The findings reveal that intellectual capital exerts a notably positive influence on both innovation inputs and outputs, thereby substantiating the key tenets of the resource-based view and knowledge-based theory. Both executive compensation incentives and equity incentives markedly boost the efficiency with which intellectual capital is transformed into innovation outcomes, demonstrating a two-pronged enhancement mechanism characterized by "direct impact plus moderating influence". Furthermore, the moderating effect varies across enterprise sizes; large-scale enterprises are better positioned to unlock the innovation potential of intellectual capital by capitalizing on their resource integration capabilities, whereas small-scale enterprises face the challenge of overcoming technological transformation barriers to fully harness this potential.
{"title":"How do executive incentives strengthen the innovation transformation of intellectual capital?","authors":"Zirui Zhou , Daiying Zhu , Mingzhen Liu","doi":"10.1016/j.iref.2026.104934","DOIUrl":"10.1016/j.iref.2026.104934","url":null,"abstract":"<div><div>Based on data sourced from Chinese A-share listed high-tech companies spanning the period from 2013 to 2023, this study conducts an empirical investigation into how intellectual capital influences corporate innovation performance, as well as the moderating role played by executive incentive mechanisms. The findings reveal that intellectual capital exerts a notably positive influence on both innovation inputs and outputs, thereby substantiating the key tenets of the resource-based view and knowledge-based theory. Both executive compensation incentives and equity incentives markedly boost the efficiency with which intellectual capital is transformed into innovation outcomes, demonstrating a two-pronged enhancement mechanism characterized by \"direct impact plus moderating influence\". Furthermore, the moderating effect varies across enterprise sizes; large-scale enterprises are better positioned to unlock the innovation potential of intellectual capital by capitalizing on their resource integration capabilities, whereas small-scale enterprises face the challenge of overcoming technological transformation barriers to fully harness this potential.</div></div>","PeriodicalId":14444,"journal":{"name":"International Review of Economics & Finance","volume":"106 ","pages":"Article 104934"},"PeriodicalIF":5.6,"publicationDate":"2026-01-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"146189413","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 : 2026-01-20DOI: 10.1016/j.iref.2026.104930
Lu Chen , Sizhou Wen , Yang Gao , Jiurui Rong
With the high-speed growth of new-generation information technology, the digital economy has had a profound impact on the global value chain (GVC) division of labor status in the manufacturing. Based on country-industry panel data from 2008 to 2018, our research explore the factors influenced by the digital economy on the manufacturing GVC division of labor. It is found that the digital economic growth dramatically contributes to the enhancement of manufacturing GVC division of labor status, and influences by promoting the production link to climb up to the R&D end, enhancing the inter-industry linkage, and reducing the cost of inter-country trade. Heterogeneous factors such as foreign digital resource inputs, higher national income levels, and industry capital-technology intensity reinforce the value chain status -enhancing effect of the digital economy. The results of the study are instructive for the policy making on the digital economy and manufacturing industry development.
{"title":"Evolution of the manufacturing industry's status in the global value chain division of labor driven by the digital economy","authors":"Lu Chen , Sizhou Wen , Yang Gao , Jiurui Rong","doi":"10.1016/j.iref.2026.104930","DOIUrl":"10.1016/j.iref.2026.104930","url":null,"abstract":"<div><div>With the high-speed growth of new-generation information technology, the digital economy has had a profound impact on the global value chain (GVC) division of labor status in the manufacturing. Based on country-industry panel data from 2008 to 2018, our research explore the factors influenced by the digital economy on the manufacturing GVC division of labor. It is found that the digital economic growth dramatically contributes to the enhancement of manufacturing GVC division of labor status, and influences by promoting the production link to climb up to the R&D end, enhancing the inter-industry linkage, and reducing the cost of inter-country trade. Heterogeneous factors such as foreign digital resource inputs, higher national income levels, and industry capital-technology intensity reinforce the value chain status -enhancing effect of the digital economy. The results of the study are instructive for the policy making on the digital economy and manufacturing industry development.</div></div>","PeriodicalId":14444,"journal":{"name":"International Review of Economics & Finance","volume":"106 ","pages":"Article 104930"},"PeriodicalIF":5.6,"publicationDate":"2026-01-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"146189417","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 : 2026-01-20DOI: 10.1016/j.iref.2026.104929
David Alaminos, Miguel Guillén-Pujadas
This study examines the potential of generative AI, specifically ChatGPT, in bank valuation using established financial models such as the Dividend Discount Model, Free Cash Flow to Equity, Excess Return, and Relative Valuation techniques. Through a four-stage evaluation, ChatGPT's performance is compared to human-driven analysis, highlighting its ability to process complex data, apply structured frameworks, and integrate nuanced assumptions. Results show high accuracy for large banks, with minimal deviations when explicit formulas and assumptions are included, though challenges persist for smaller banks and complex models. The findings demonstrate ChatGPT's potential as a complementary tool for financial analysts, capable of automating routine valuation tasks and improving efficiency. Its adaptability to established frameworks underscores its value in financial modeling and decision-making. This study provides practical findings into integrating AI in finance while identifying opportunities for further research, including hybrid human-AI approaches, diverse datasets, and ethical considerations in AI-driven financial analysis.
{"title":"Generative AI as a tool for bank valuation analysis","authors":"David Alaminos, Miguel Guillén-Pujadas","doi":"10.1016/j.iref.2026.104929","DOIUrl":"10.1016/j.iref.2026.104929","url":null,"abstract":"<div><div>This study examines the potential of generative AI, specifically ChatGPT, in bank valuation using established financial models such as the Dividend Discount Model, Free Cash Flow to Equity, Excess Return, and Relative Valuation techniques. Through a four-stage evaluation, ChatGPT's performance is compared to human-driven analysis, highlighting its ability to process complex data, apply structured frameworks, and integrate nuanced assumptions. Results show high accuracy for large banks, with minimal deviations when explicit formulas and assumptions are included, though challenges persist for smaller banks and complex models. The findings demonstrate ChatGPT's potential as a complementary tool for financial analysts, capable of automating routine valuation tasks and improving efficiency. Its adaptability to established frameworks underscores its value in financial modeling and decision-making. This study provides practical findings into integrating AI in finance while identifying opportunities for further research, including hybrid human-AI approaches, diverse datasets, and ethical considerations in AI-driven financial analysis.</div></div>","PeriodicalId":14444,"journal":{"name":"International Review of Economics & Finance","volume":"106 ","pages":"Article 104929"},"PeriodicalIF":5.6,"publicationDate":"2026-01-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"146074651","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 : 2026-01-20DOI: 10.1016/j.iref.2026.104939
Weihong Wang , Xiao Xu , Mina Li , Shenglin Ma
Environmental regulation(Er) structurally shapes enterprise investment strategies under China's fiscal decentralization(Fd) system. Employing dynamic panel data from 2008 to 2022 listed industrial firms, this study focuses on three aspects: (1) Developing a tripartite framework to reveal how Er amplifies technology investments(Ti) and financial investments(Fi), while suppressing productive investments(Pi) through executive risk preferences and environmental concerns; (2) Higher Fd diminishes the promotion effects of Er on Ti and Fi, and alleviates its constraints on Pi; (3)Market-oriented Er influence all three investment types, whereas command-based Er only affect Ti; (4) Heterogeneous effects covers types of spatial economic and market characteristics, industrial technology attributes and enterprise financial resource endowments to identify differential drivers across institutional and contextual dimensions. This study examines how central-local conflicting environmental governance goals influence enterprise investment decisions under fiscal decentralization, provides an empirical basis for reconstructing the theoretical model of institutional pressure and strategic response.
{"title":"Do environmental regulations affect corporate investment preferences? Institutional considerations based on fiscal decentralization","authors":"Weihong Wang , Xiao Xu , Mina Li , Shenglin Ma","doi":"10.1016/j.iref.2026.104939","DOIUrl":"10.1016/j.iref.2026.104939","url":null,"abstract":"<div><div>Environmental regulation(<em>Er</em>) structurally shapes enterprise investment strategies under China's fiscal decentralization(<em>Fd</em>) system. Employing dynamic panel data from 2008 to 2022 listed industrial firms, this study focuses on three aspects: (1) Developing a tripartite framework to reveal how <em>Er</em> amplifies technology investments(<em>Ti</em>) and financial investments(<em>Fi</em>), while suppressing productive investments(<em>Pi</em>) through executive risk preferences and environmental concerns; (2) Higher <em>Fd</em> diminishes the promotion effects of <em>Er</em> on <em>Ti</em> and <em>Fi,</em> and alleviates its constraints on <em>Pi</em>; (3)Market-oriented <em>E</em>r influence all three investment types, whereas command-based <em>Er</em> only affect <em>Ti</em>; (4) Heterogeneous effects covers types of spatial economic and market characteristics, industrial technology attributes and enterprise financial resource endowments to identify differential drivers across institutional and contextual dimensions. This study examines how central-local conflicting environmental governance goals influence enterprise investment decisions under fiscal decentralization, provides an empirical basis for reconstructing the theoretical model of institutional pressure and strategic response.</div></div>","PeriodicalId":14444,"journal":{"name":"International Review of Economics & Finance","volume":"106 ","pages":"Article 104939"},"PeriodicalIF":5.6,"publicationDate":"2026-01-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"146074646","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 : 2026-01-20DOI: 10.1016/j.iref.2026.104917
Songbo Jia, Bin Sui, Guangdi Shi, Xin Gao
In today's complex and volatile financial environment, corporate defaults are no longer isolated credit events confined to individual entities. Their risks rapidly propagate through interconnected financial networks, forming Systemic Risk that threatens the entire financial system. Existing research has clearly revealed the contagion chain: “corporate default leads to damage to financial institutions linked to the defaulting firm, which in turn leads to risk transmission to institutions connected to the damaged institutions”. It indicates that risks primarily propagate through channels such as interbank lending, asset sales, and cross-shareholdings. However, existing literature tends to focus on empirical analysis and network simulation in methodology, with limited research adopting an evolutionary game theory perspective, particularly lacking in-depth exploration of the aforementioned four-party game dynamics. Additionally, studies generally overlook the government's pivotal role in interrupting risk transmission. Therefore, this paper constructs a four-party evolutionary game model involving the government, enterprises, direct lending financial institutions, and affiliated financial institutions. It focuses on analysing the core role of government intervention in the risk transmission chain, specifically examining whether and how the government can intervene to influence the strategic interactions among these four parties, thereby effectively breaking the vicious cycle of “default-asset impairment-panic contagion”. The study finds that establishing penalty mechanisms at the front end of the contagion chain and implementing incentive-compatible intervention policies at intermediate stages can significantly suppress risk transmission. This provides new theoretical foundations and policy implications for preventing and controlling systemic financial risks.
{"title":"Government intervention and corporate default risk contagion: An analysis based on a four-party evolutionary game","authors":"Songbo Jia, Bin Sui, Guangdi Shi, Xin Gao","doi":"10.1016/j.iref.2026.104917","DOIUrl":"10.1016/j.iref.2026.104917","url":null,"abstract":"<div><div>In today's complex and volatile financial environment, corporate defaults are no longer isolated credit events confined to individual entities. Their risks rapidly propagate through interconnected financial networks, forming Systemic Risk that threatens the entire financial system. Existing research has clearly revealed the contagion chain: “corporate default leads to damage to financial institutions linked to the defaulting firm, which in turn leads to risk transmission to institutions connected to the damaged institutions”. It indicates that risks primarily propagate through channels such as interbank lending, asset sales, and cross-shareholdings. However, existing literature tends to focus on empirical analysis and network simulation in methodology, with limited research adopting an evolutionary game theory perspective, particularly lacking in-depth exploration of the aforementioned four-party game dynamics. Additionally, studies generally overlook the government's pivotal role in interrupting risk transmission. Therefore, this paper constructs a four-party evolutionary game model involving the government, enterprises, direct lending financial institutions, and affiliated financial institutions. It focuses on analysing the core role of government intervention in the risk transmission chain, specifically examining whether and how the government can intervene to influence the strategic interactions among these four parties, thereby effectively breaking the vicious cycle of “default-asset impairment-panic contagion”. The study finds that establishing penalty mechanisms at the front end of the contagion chain and implementing incentive-compatible intervention policies at intermediate stages can significantly suppress risk transmission. This provides new theoretical foundations and policy implications for preventing and controlling systemic financial risks.</div></div>","PeriodicalId":14444,"journal":{"name":"International Review of Economics & Finance","volume":"106 ","pages":"Article 104917"},"PeriodicalIF":5.6,"publicationDate":"2026-01-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"146074644","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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