Pub Date : 2025-04-09DOI: 10.1016/j.gfj.2025.101112
Selahattin Murat Sirin
The green and digital transitions (twin transitions) are reshaping the global business environment, yet academic research exploring the financial implications of the green-digital nexus remains limited. This paper explores the financial implications of a key mechanism within the green-digital nexus, technological connectedness through knowledge creation and spillovers. Quantified through patent data between 2010 and 2022, this study examines how tech firms' financial performance is affected by knowledge creation and spillovers to green (technologies related to clean energy) and brown (technologies related to fossil fuels) domains using portfolio- and firm-level analyses with panel data regression models. The results indicate that financial connectedness is not straightforward, contrary to findings from aggregate level studies in the literature. While firm-level heterogeneity in knowledge creation does affect returns, there is no conclusive evidence that knowledge spillovers affect financial performance.
{"title":"The green transition and tech firms' financial performance: Insights from patent data","authors":"Selahattin Murat Sirin","doi":"10.1016/j.gfj.2025.101112","DOIUrl":"10.1016/j.gfj.2025.101112","url":null,"abstract":"<div><div>The green and digital transitions (twin transitions) are reshaping the global business environment, yet academic research exploring the financial implications of the green-digital nexus remains limited. This paper explores the financial implications of a key mechanism within the green-digital nexus, technological connectedness through knowledge creation and spillovers. Quantified through patent data between 2010 and 2022, this study examines how tech firms' financial performance is affected by knowledge creation and spillovers to green (technologies related to clean energy) and brown (technologies related to fossil fuels) domains using portfolio- and firm-level analyses with panel data regression models. The results indicate that financial connectedness is not straightforward, contrary to findings from aggregate level studies in the literature. While firm-level heterogeneity in knowledge creation does affect returns, there is no conclusive evidence that knowledge spillovers affect financial performance.</div></div>","PeriodicalId":46907,"journal":{"name":"Global Finance Journal","volume":"65 ","pages":"Article 101112"},"PeriodicalIF":5.5,"publicationDate":"2025-04-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143854592","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 : 2025-04-09DOI: 10.1016/j.gfj.2025.101110
Joseph DeCoste
This paper tests the existence of excessive comovement among firms in the S&P 500. Using a fuzzy regression discontinuity approach I show that membership in the S&P 500 leads to significant positive excess comovement in the long term. I evaluate a traditional, liquidity based explanation and a friction based explanation, and find no evidence that liquidity is driving excess comovement in the sample. I show that the previous lack of evidence for excess comovement shown in Chen, Singal, Whitelaw (2016) is due to heterogeneous effects on firms who are newly included versus those that are established members. One potential explanation is that immediately after inclusion, investors take time to rebalance and fully integrate the new stock into the group, reducing observed increases in comovement in the short term. These results constitute new evidence of frictions when exposed to large classes of noise traders with correlated demands, such as those populating the S&P 500.
{"title":"Comovement and S&P 500 membership","authors":"Joseph DeCoste","doi":"10.1016/j.gfj.2025.101110","DOIUrl":"10.1016/j.gfj.2025.101110","url":null,"abstract":"<div><div>This paper tests the existence of excessive comovement among firms in the S&P 500. Using a fuzzy regression discontinuity approach I show that membership in the S&P 500 leads to significant positive excess comovement in the long term. I evaluate a traditional, liquidity based explanation and a friction based explanation, and find no evidence that liquidity is driving excess comovement in the sample. I show that the previous lack of evidence for excess comovement shown in Chen, Singal, Whitelaw (2016) is due to heterogeneous effects on firms who are newly included versus those that are established members. One potential explanation is that immediately after inclusion, investors take time to rebalance and fully integrate the new stock into the group, reducing observed increases in comovement in the short term. These results constitute new evidence of frictions when exposed to large classes of noise traders with correlated demands, such as those populating the S&P 500.</div></div>","PeriodicalId":46907,"journal":{"name":"Global Finance Journal","volume":"65 ","pages":"Article 101110"},"PeriodicalIF":5.5,"publicationDate":"2025-04-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143816709","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}
This paper examines how executive stock ownership influences the choice of debt structure, investigating whether institutional owners moderate the relationship between the level of executive ownership and the decision to use public versus private debt. Our findings suggest that firms with higher levels of executive ownership tend to employ significantly more public debt financing to potentially reduce the monitoring intensity of their managerial decisions. However, we also find that oversight by motivated and longer-horizon institutional investors prevents firms from avoiding the more stringent monitoring associated with privately held debt. Further tests indicate that the link between CEO and executive ownership levels and the preference for public debt is more pronounced in smaller firms, which typically experience higher levels of information asymmetry. Our findings align with the monitoring avoidance hypothesis and the informational asymmetry hypothesis.
{"title":"Executive stock ownership, debt choice, and the moderating effect of institutional owners","authors":"Vivek Bhargava , Mukesh Chaudhry , Daniel Huerta , Thanh Ngo","doi":"10.1016/j.gfj.2025.101111","DOIUrl":"10.1016/j.gfj.2025.101111","url":null,"abstract":"<div><div>This paper examines how executive stock ownership influences the choice of debt structure, investigating whether institutional owners moderate the relationship between the level of executive ownership and the decision to use public versus private debt. Our findings suggest that firms with higher levels of executive ownership tend to employ significantly more public debt financing to potentially reduce the monitoring intensity of their managerial decisions. However, we also find that oversight by motivated and longer-horizon institutional investors prevents firms from avoiding the more stringent monitoring associated with privately held debt. Further tests indicate that the link between CEO and executive ownership levels and the preference for public debt is more pronounced in smaller firms, which typically experience higher levels of information asymmetry. Our findings align with the monitoring avoidance hypothesis and the informational asymmetry hypothesis.</div></div>","PeriodicalId":46907,"journal":{"name":"Global Finance Journal","volume":"65 ","pages":"Article 101111"},"PeriodicalIF":5.5,"publicationDate":"2025-04-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143807792","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 : 2025-03-30DOI: 10.1016/j.gfj.2025.101108
Yanyan Chen , Liubing Cheng
This study investigates the influence of CEO/CFO gender on corporate financial policies under uncertainty, including cash holdings, corporate investment, debt financing, and payout ratio. Using a sample of Chinese firms from 1999 to 2021, we find that during periods of high uncertainty, firms with female CEOs/CFOs do not exhibit greater risk aversion than those with male counterparts in financial activities. These findings persist even in firms with higher financial constraints or lower risk preferences. Our results remain robust when addressing model specification and endogeneity issues, controlling for other corporate financial behaviors and more executive characteristics, using alternative measures of uncertainty and corporate financial policies, and conducting sub-sample analysis. Overall, our findings suggest that gender differences in risk preferences might vanish in top management.
{"title":"Does executive gender matter for corporate financial policies under uncertainty?","authors":"Yanyan Chen , Liubing Cheng","doi":"10.1016/j.gfj.2025.101108","DOIUrl":"10.1016/j.gfj.2025.101108","url":null,"abstract":"<div><div>This study investigates the influence of CEO/CFO gender on corporate financial policies under uncertainty, including cash holdings, corporate investment, debt financing, and payout ratio. Using a sample of Chinese firms from 1999 to 2021, we find that during periods of high uncertainty, firms with female CEOs/CFOs do not exhibit greater risk aversion than those with male counterparts in financial activities. These findings persist even in firms with higher financial constraints or lower risk preferences. Our results remain robust when addressing model specification and endogeneity issues, controlling for other corporate financial behaviors and more executive characteristics, using alternative measures of uncertainty and corporate financial policies, and conducting sub-sample analysis. Overall, our findings suggest that gender differences in risk preferences might vanish in top management.</div></div>","PeriodicalId":46907,"journal":{"name":"Global Finance Journal","volume":"65 ","pages":"Article 101108"},"PeriodicalIF":5.5,"publicationDate":"2025-03-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143747675","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 : 2025-03-30DOI: 10.1016/j.gfj.2025.101109
Mansi Wang , Xinxin Yu , Xinyi Hong , Xiaotao Yang
Due to limited green innovation capabilities and motivation, enterprises opt for collaborative green innovation. However, the green innovation collaboration output across countries remains insufficient, and global climate risks continue to be severe. Previous research has largely focused on the relationship between digital technologies and green innovation, but there is a lack of exploration on the connection between digital finance and corporate green innovation collaboration. This paper utilizes panel data from 23,865 observations of Chinese enterprises from 2011 to 2022, using Python text analysis to construct an enterprise-level digital finance application index. The empirical results show that digital finance significantly promotes the level of green innovation collaboration, and the findings remain valid after a series of robustness tests. Furthermore, this study finds that digital finance enhances green innovation collaboration through three channels: promoting green investment, improving green total factor productivity, and reducing greenwashing behaviors. Further analysis of the internal and external synergies of digital finance reveals that enterprises applying digital finance models promote green innovation collaboration outputs between the enterprise and its subsidiaries. However, the positive impact on green innovation collaboration with supply chains is only observed in high-end green innovation collaborations. The aim of this study is to provide theoretical support for enhancing the level of green innovation collaboration in enterprises under the development of digital finance, offering reasonable suggestions for governments in formulating financial development strategies and green sustainable development policies.
{"title":"Can digital finance promote green innovation collaboration in enterprises?","authors":"Mansi Wang , Xinxin Yu , Xinyi Hong , Xiaotao Yang","doi":"10.1016/j.gfj.2025.101109","DOIUrl":"10.1016/j.gfj.2025.101109","url":null,"abstract":"<div><div>Due to limited green innovation capabilities and motivation, enterprises opt for collaborative green innovation. However, the green innovation collaboration output across countries remains insufficient, and global climate risks continue to be severe. Previous research has largely focused on the relationship between digital technologies and green innovation, but there is a lack of exploration on the connection between digital finance and corporate green innovation collaboration. This paper utilizes panel data from 23,865 observations of Chinese enterprises from 2011 to 2022, using Python text analysis to construct an enterprise-level digital finance application index. The empirical results show that digital finance significantly promotes the level of green innovation collaboration, and the findings remain valid after a series of robustness tests. Furthermore, this study finds that digital finance enhances green innovation collaboration through three channels: promoting green investment, improving green total factor productivity, and reducing greenwashing behaviors. Further analysis of the internal and external synergies of digital finance reveals that enterprises applying digital finance models promote green innovation collaboration outputs between the enterprise and its subsidiaries. However, the positive impact on green innovation collaboration with supply chains is only observed in high-end green innovation collaborations. The aim of this study is to provide theoretical support for enhancing the level of green innovation collaboration in enterprises under the development of digital finance, offering reasonable suggestions for governments in formulating financial development strategies and green sustainable development policies.</div></div>","PeriodicalId":46907,"journal":{"name":"Global Finance Journal","volume":"65 ","pages":"Article 101109"},"PeriodicalIF":5.5,"publicationDate":"2025-03-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143842463","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 : 2025-03-28DOI: 10.1016/j.gfj.2025.101107
Francesco Guidi, Giuseppina Madonia, Sohan Sarwar
Equity market linkages are of interest to international investors aiming at diversifying their equity portfolio holdings. In fact, the benefit of equity portfolio diversification across different international markets depends on whether markets are integrated or segmented. To discern whether there are any potential benefits to diversification, we investigate the degree of integration across the equity markets of selected Latin American countries (that is, Argentina, Brazil, Chile, Colombia and Peru) by applying dynamic and static cointegration techniques to the largest equity markets of that region. Our aim is to find out whether these equity markets enjoy a long-run relationship as a whole, at the sectoral level, or if they follow different trends. We use weekly equity prices between 2005 and 2023, which marked the end of the Covid-19 pandemic. Our findings suggest that the equity markets are not, as a whole, integrated – with the exception of periods of financial distress. This indicates that there is some potential for international portfolio diversification across Latin American equity markets. On the other hand, our sectoral analysis points to specific diversification opportunities across most of the sectors.
{"title":"Equity market linkages across Latin American countries","authors":"Francesco Guidi, Giuseppina Madonia, Sohan Sarwar","doi":"10.1016/j.gfj.2025.101107","DOIUrl":"10.1016/j.gfj.2025.101107","url":null,"abstract":"<div><div>Equity market linkages are of interest to international investors aiming at diversifying their equity portfolio holdings. In fact, the benefit of equity portfolio diversification across different international markets depends on whether markets are integrated or segmented. To discern whether there are any potential benefits to diversification, we investigate the degree of integration across the equity markets of selected Latin American countries (that is, Argentina, Brazil, Chile, Colombia and Peru) by applying dynamic and static cointegration techniques to the largest equity markets of that region. Our aim is to find out whether these equity markets enjoy a long-run relationship as a whole, at the sectoral level, or if they follow different trends. We use weekly equity prices between 2005 and 2023, which marked the end of the Covid-19 pandemic. Our findings suggest that the equity markets are not, as a whole, integrated – with the exception of periods of financial distress. This indicates that there is some potential for international portfolio diversification across Latin American equity markets. On the other hand, our sectoral analysis points to specific diversification opportunities across most of the sectors.</div></div>","PeriodicalId":46907,"journal":{"name":"Global Finance Journal","volume":"65 ","pages":"Article 101107"},"PeriodicalIF":5.5,"publicationDate":"2025-03-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143769304","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-03-28DOI: 10.1016/j.gfj.2025.101106
Ly Thi Hai Tran
Previous studies primarily focus on the nexus between economic policy uncertainty and corporate investment within that country. This paper examines the impact of China's economic policy uncertainty on firm-level investment in Southeast Asian economies. Using the sample of 3600 firms in Southeast Asia over the period 2020–2021, we find that firms reduce investment when China's economic policy uncertainty increases. We investigate the effect channels and find that trade connection with China exacerbates the negative influence of China's uncertainty on capital expenditures. At the same time, a higher level of a nation's financial development weakens the impact. Our further analysis of firm features representing irreversibility shows that the effect of China's economic policy uncertainty and the mechanisms are more pronounced among firms with higher irreversibility. Our results support the option-to-delay theory and highlight the cross-border influence of policy uncertainty from major countries to smaller ones.
{"title":"China's economic policy uncertainty and firm-level investment in Southeast Asian economies: The role of trade connection and financial development","authors":"Ly Thi Hai Tran","doi":"10.1016/j.gfj.2025.101106","DOIUrl":"10.1016/j.gfj.2025.101106","url":null,"abstract":"<div><div>Previous studies primarily focus on the nexus between economic policy uncertainty and corporate investment within that country. This paper examines the impact of China's economic policy uncertainty on firm-level investment in Southeast Asian economies. Using the sample of 3600 firms in Southeast Asia over the period 2020–2021, we find that firms reduce investment when China's economic policy uncertainty increases. We investigate the effect channels and find that trade connection with China exacerbates the negative influence of China's uncertainty on capital expenditures. At the same time, a higher level of a nation's financial development weakens the impact. Our further analysis of firm features representing irreversibility shows that the effect of China's economic policy uncertainty and the mechanisms are more pronounced among firms with higher irreversibility. Our results support the option-to-delay theory and highlight the cross-border influence of policy uncertainty from major countries to smaller ones.</div></div>","PeriodicalId":46907,"journal":{"name":"Global Finance Journal","volume":"65 ","pages":"Article 101106"},"PeriodicalIF":5.5,"publicationDate":"2025-03-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143747674","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 : 2025-03-18DOI: 10.1016/j.gfj.2025.101104
Ziwei Wang , Haijun Yang , Zhen Li
We reveal how technological innovation impacts cryptocurrency network operations and market information structures, using BRC-20 tokens as an example. By collecting on-chain blockchain data and exchange data from March 2023 to March 2024, we find that the introduction of BRC-20 tokens significantly alters Bitcoin transaction activity, manifests as a decrease in unique addresses, increased per-unit transaction fees, and extended confirmation times. Furthermore, we expand the research framework for Bitcoin market price efficiency by identifying market information, public information, private information, and noise in the Bitcoin market. We show that introducing BRC-20 tokens increases the market information share while reducing dependence on public information, with almost no negative impact on the share of private information. Finally, we construct a “technological innovation, blockchain response, market adjustment” dynamic analysis framework to evaluate and reveal that the Bitcoin network has significant self-healing capabilities and can quickly digest the impact of new types of tokens after major technical upgrades such as ORDI listing, announcing and launching the BRC-20 swap, and the Ordinals Jubilee update. This research provides investors with empirical evidence of the Bitcoin network's self-healing capabilities, helping them more accurately assess the short and long-term impacts of technological shocks on the market, thereby formulating more effective investment strategies.
{"title":"Will technological advancement affect Bitcoin trading and pricing? Evidence from BRC-20 tokens","authors":"Ziwei Wang , Haijun Yang , Zhen Li","doi":"10.1016/j.gfj.2025.101104","DOIUrl":"10.1016/j.gfj.2025.101104","url":null,"abstract":"<div><div>We reveal how technological innovation impacts cryptocurrency network operations and market information structures, using BRC-20 tokens as an example. By collecting on-chain blockchain data and exchange data from March 2023 to March 2024, we find that the introduction of BRC-20 tokens significantly alters Bitcoin transaction activity, manifests as a decrease in unique addresses, increased per-unit transaction fees, and extended confirmation times. Furthermore, we expand the research framework for Bitcoin market price efficiency by identifying market information, public information, private information, and noise in the Bitcoin market. We show that introducing BRC-20 tokens increases the market information share while reducing dependence on public information, with almost no negative impact on the share of private information. Finally, we construct a “technological innovation, blockchain response, market adjustment” dynamic analysis framework to evaluate and reveal that the Bitcoin network has significant self-healing capabilities and can quickly digest the impact of new types of tokens after major technical upgrades such as ORDI listing, announcing and launching the BRC-20 swap, and the Ordinals Jubilee update. This research provides investors with empirical evidence of the Bitcoin network's self-healing capabilities, helping them more accurately assess the short and long-term impacts of technological shocks on the market, thereby formulating more effective investment strategies.</div></div>","PeriodicalId":46907,"journal":{"name":"Global Finance Journal","volume":"65 ","pages":"Article 101104"},"PeriodicalIF":5.5,"publicationDate":"2025-03-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143684574","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 : 2025-03-17DOI: 10.1016/j.gfj.2025.101105
Rwan El-Khatib , Dobrina Jandik , Tomas Jandik
We examine the effects of bilateral social connections and acquirer CEO network centrality on merger performance using a sample of M&A deals from 30 countries. Our results indicate that board overlaps between acquirers and targets are associated with higher abnormal acquisition returns for bidder shareholders, although the average effect in our full sample is lower than that documented for U.S. bidders. In addition, we document a positive relationship between bidder CEO centrality and acquisition gains—a finding that contrasts with previous research on U.S. firms and may be explained by generally lower CEO centrality in non-U.S. firms, which limits the potential for network-based entrenchment. We further show that the benefits of both bilateral ties and overall CEO connectedness are less pronounced in countries with weak auditing and accounting reporting standards and/or inefficient takeover markets. Ultimately, our findings suggest that efficient formal institutions are crucial for fully realizing the benefits of informal interpersonal social networks in M&A outcomes.
{"title":"Does social network connectedness affect acquirer merger performance around the world?","authors":"Rwan El-Khatib , Dobrina Jandik , Tomas Jandik","doi":"10.1016/j.gfj.2025.101105","DOIUrl":"10.1016/j.gfj.2025.101105","url":null,"abstract":"<div><div>We examine the effects of bilateral social connections and acquirer CEO network centrality on merger performance using a sample of M&A deals from 30 countries. Our results indicate that board overlaps between acquirers and targets are associated with higher abnormal acquisition returns for bidder shareholders, although the average effect in our full sample is lower than that documented for U.S. bidders. In addition, we document a positive relationship between bidder CEO centrality and acquisition gains—a finding that contrasts with previous research on U.S. firms and may be explained by generally lower CEO centrality in non-U.S. firms, which limits the potential for network-based entrenchment. We further show that the benefits of both bilateral ties and overall CEO connectedness are less pronounced in countries with weak auditing and accounting reporting standards and/or inefficient takeover markets. Ultimately, our findings suggest that efficient formal institutions are crucial for fully realizing the benefits of informal interpersonal social networks in M&A outcomes.</div></div>","PeriodicalId":46907,"journal":{"name":"Global Finance Journal","volume":"65 ","pages":"Article 101105"},"PeriodicalIF":5.5,"publicationDate":"2025-03-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143738044","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 : 2025-03-04DOI: 10.1016/j.gfj.2025.101100
S. Mehmet Özsoy, Mehdi Rasteh, Erkan Yönder
Unlike other climate shocks, droughts are slow and silent, and their impacts are not immediate. We define a two-year drought shock at the bank level and quantify the impact of droughts on bank stability and performance. Applying a difference-in-differences methodology, we find drought shocks to significantly worsen Z-Score, return on assets, and stock volatility. Non-performing loans of affected banks are significantly higher compared to unaffected banks. The economic impacts are comparable to those associated with a 1 % decline in unemployment rate. We also document that affected banks close branches in drought-hit regions but do not increase their capital ratios.
{"title":"Understanding drought shocks: Bank financial stability and loan performance","authors":"S. Mehmet Özsoy, Mehdi Rasteh, Erkan Yönder","doi":"10.1016/j.gfj.2025.101100","DOIUrl":"10.1016/j.gfj.2025.101100","url":null,"abstract":"<div><div>Unlike other climate shocks, droughts are slow and silent, and their impacts are not immediate. We define a two-year drought shock at the bank level and quantify the impact of droughts on bank stability and performance. Applying a difference-in-differences methodology, we find drought shocks to significantly worsen <em>Z</em>-Score, return on assets, and stock volatility. Non-performing loans of affected banks are significantly higher compared to unaffected banks. The economic impacts are comparable to those associated with a 1 % decline in unemployment rate. We also document that affected banks close branches in drought-hit regions but do not increase their capital ratios.</div></div>","PeriodicalId":46907,"journal":{"name":"Global Finance Journal","volume":"65 ","pages":"Article 101100"},"PeriodicalIF":5.5,"publicationDate":"2025-03-04","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143580505","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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