This paper investigates the relationship between the net stable funding ratio (NSFR) and bank stability in Europe over the 2007–2022 period. By employing a two-step GMM panel model, we find a positive and significant link between the NSFR and banking stability in the European Union which is however stronger for banks located in the euro area than those in the non-euro area. Moreover, our results show that, within the euro area itself, for banks operating outside the core euro area, stronger liquidity positions do not translate into higher stability but conversely to higher instability. Overall, our findings highlight strong differences into how liquidity requirements relate to bank stability within the European union and also within the euro area itself which call for action by bank regulators.
{"title":"Net stable funding ratio: Implication for Bank stability in Europe","authors":"Imtynan Khalifeh , Francois Benhmad , Chawki El Moussawi , Amine Tarazi","doi":"10.1016/j.gfj.2025.101144","DOIUrl":"10.1016/j.gfj.2025.101144","url":null,"abstract":"<div><div>This paper investigates the relationship between the net stable funding ratio (NSFR) and bank stability in Europe over the 2007–2022 period. By employing a two-step GMM panel model, we find a positive and significant link between the NSFR and banking stability in the European Union which is however stronger for banks located in the euro area than those in the non-euro area. Moreover, our results show that, within the euro area itself, for banks operating outside the core euro area, stronger liquidity positions do not translate into higher stability but conversely to higher instability. Overall, our findings highlight strong differences into how liquidity requirements relate to bank stability within the European union and also within the euro area itself which call for action by bank regulators.</div></div>","PeriodicalId":46907,"journal":{"name":"Global Finance Journal","volume":"67 ","pages":"Article 101144"},"PeriodicalIF":5.5,"publicationDate":"2025-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144253777","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 : 2025-09-01Epub Date: 2025-07-18DOI: 10.1016/j.gfj.2025.101151
Md Khaled Hossain Rafi , Syed Riaz Mahmood Ali
We introduce a novel framework to measure how geopolitical risk exposure (GRE) affects stock returns. Using data from 40 countries over 1995–2022, we construct three factors: geopolitical risk factor (GPRF), geopolitical act factor (GPAF), and geopolitical threat factor (GPTF). This study documents four main findings. First, geopolitical threats (GPTs) have markedly stronger GRE than geopolitical acts (GPAs), with 58% of countries showing significant GPTF results vs. 35% for GPAF. Second, predictability is strongest at shorter horizons, with 68% of countries demonstrating significant one-month predictability for GPTF effects. Third, these effects persist even after accounting for established market risk factors, with 33% of countries maintaining significant GPTF relationships. Fourth, our factors provide economically meaningful out-of-sample forecasting ability, yielding positive values in 60% of countries and utility gains for mean–variance investors. The findings offer a practical framework for integrating GRE assessments into portfolio management decisions.
{"title":"Disaggregated geopolitical risks and global stock returns","authors":"Md Khaled Hossain Rafi , Syed Riaz Mahmood Ali","doi":"10.1016/j.gfj.2025.101151","DOIUrl":"10.1016/j.gfj.2025.101151","url":null,"abstract":"<div><div>We introduce a novel framework to measure how geopolitical risk exposure (GRE) affects stock returns. Using data from 40 countries over 1995–2022, we construct three factors: geopolitical risk factor (GPRF), geopolitical act factor (GPAF), and geopolitical threat factor (GPTF). This study documents four main findings. First, geopolitical threats (GPTs) have markedly stronger GRE than geopolitical acts (GPAs), with 58% of countries showing significant GPTF results vs. 35% for GPAF. Second, predictability is strongest at shorter horizons, with 68% of countries demonstrating significant one-month predictability for GPTF effects. Third, these effects persist even after accounting for established market risk factors, with 33% of countries maintaining significant GPTF relationships. Fourth, our factors provide economically meaningful out-of-sample forecasting ability, yielding positive <span><math><msup><mrow><mi>R</mi></mrow><mrow><mn>2</mn></mrow></msup></math></span> values in 60% of countries and utility gains for mean–variance investors. The findings offer a practical framework for integrating GRE assessments into portfolio management decisions.</div></div>","PeriodicalId":46907,"journal":{"name":"Global Finance Journal","volume":"67 ","pages":"Article 101151"},"PeriodicalIF":5.5,"publicationDate":"2025-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144711016","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 : 2025-09-01Epub Date: 2025-06-03DOI: 10.1016/j.gfj.2025.101133
Yuan Du , Lu Sun , Wei Cui , Hongxin Wang
Drawing on the distinct ecological cultures and ethics upheld by China's ethnic minority groups and the Han majority, this study investigates how ethnic ecological values influence corporate pro-environmental decision-making. Based on 28,945 firm-year observations from 2010 to 2022, we find that firms led by ethnic minority leaders engage in significantly higher levels of green investment. Furthermore, this positive effect strengthens as the proportion of minority leaders within corporate leadership increases. Using difference-in-differences and other econometric techniques, we confirm that these results are not driven by geographic location or reverse causality. Finally, we find that the green investment–enhancing effect is moderated by the age, tenure, and board directorship of ethnic minority leaders. This study contributes to the diversity literature by uncovering cultural and ethical pathways through which ethnicity shapes corporate strategies, offering new insights into the drivers of green investment in multiethnic contexts.
{"title":"Ethnic green culture in leadership and corporate green investment: Evidence from China","authors":"Yuan Du , Lu Sun , Wei Cui , Hongxin Wang","doi":"10.1016/j.gfj.2025.101133","DOIUrl":"10.1016/j.gfj.2025.101133","url":null,"abstract":"<div><div>Drawing on the distinct ecological cultures and ethics upheld by China's ethnic minority groups and the Han majority, this study investigates how ethnic ecological values influence corporate pro-environmental decision-making. Based on 28,945 firm-year observations from 2010 to 2022, we find that firms led by ethnic minority leaders engage in significantly higher levels of green investment. Furthermore, this positive effect strengthens as the proportion of minority leaders within corporate leadership increases. Using difference-in-differences and other econometric techniques, we confirm that these results are not driven by geographic location or reverse causality. Finally, we find that the green investment–enhancing effect is moderated by the age, tenure, and board directorship of ethnic minority leaders. This study contributes to the diversity literature by uncovering cultural and ethical pathways through which ethnicity shapes corporate strategies, offering new insights into the drivers of green investment in multiethnic contexts.</div></div>","PeriodicalId":46907,"journal":{"name":"Global Finance Journal","volume":"67 ","pages":"Article 101133"},"PeriodicalIF":5.5,"publicationDate":"2025-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144222005","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 : 2025-09-01Epub Date: 2025-07-30DOI: 10.1016/j.gfj.2025.101163
Peiyuan Zhu
In prevailing theories of capital structure, the role of voting power is often neglected. However, voting mechanisms are critical in financing decisions, as shareholders typically place high value on maintaining control, and voting power is central to that control. This study introduces a financing theory that posits companies are more likely to pursue equity financing when incoming shareholders are unable to challenge the voting power of incumbent shareholders. The theory suggests that in certain ownership structures, newly entering large shareholders cannot meaningfully influence voting outcomes, prompting existing shareholders to favor equity financing. In contrast, when ownership structures allow new shareholders to significantly affect voting results, firms tend to prefer internal or debt financing. To evaluate this theory, the study conducts an empirical analysis using data from Chinese listed companies. The findings support the model's predictions and further reveal that this effect also impacts firm growth and dividend policies.
{"title":"How do voting powers matter in equity finance? Evidence from chinese private placements","authors":"Peiyuan Zhu","doi":"10.1016/j.gfj.2025.101163","DOIUrl":"10.1016/j.gfj.2025.101163","url":null,"abstract":"<div><div>In prevailing theories of capital structure, the role of voting power is often neglected. However, voting mechanisms are critical in financing decisions, as shareholders typically place high value on maintaining control, and voting power is central to that control. This study introduces a financing theory that posits companies are more likely to pursue equity financing when incoming shareholders are unable to challenge the voting power of incumbent shareholders. The theory suggests that in certain ownership structures, newly entering large shareholders cannot meaningfully influence voting outcomes, prompting existing shareholders to favor equity financing. In contrast, when ownership structures allow new shareholders to significantly affect voting results, firms tend to prefer internal or debt financing. To evaluate this theory, the study conducts an empirical analysis using data from Chinese listed companies. The findings support the model's predictions and further reveal that this effect also impacts firm growth and dividend policies.</div></div>","PeriodicalId":46907,"journal":{"name":"Global Finance Journal","volume":"67 ","pages":"Article 101163"},"PeriodicalIF":5.5,"publicationDate":"2025-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144773098","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 : 2025-09-01Epub Date: 2025-06-02DOI: 10.1016/j.gfj.2025.101131
Robin Chen , Shenru Li , Quang Thai Truong , Chia-Ying Chan
This study investigates the effect of female board representation on stock price crash risk in the United States over the period 2006 to 2020. The empirical evidence suggests that increased gender diversity at the board level is associated with enhanced market stability, as reflected in a reduced likelihood of stock price crashes. The mitigating impact of female directors on crash risk is particularly pronounced in firms operating under conditions of weak market competition, lower board independence, and limited analyst coverage. The findings remain robust after addressing potential endogeneity concerns through entropy balancing (EB) and two-stage least squares (2SLS) estimation techniques. Overall, this affirms the positive contribution of female directors to corporate governance and highlight the relevance of promoting gender equality in alignment with Sustainable Development Goal 5 (SDG 5).
{"title":"Gender diversity in the boardroom: The role of female directors in mitigating stock price crash risk","authors":"Robin Chen , Shenru Li , Quang Thai Truong , Chia-Ying Chan","doi":"10.1016/j.gfj.2025.101131","DOIUrl":"10.1016/j.gfj.2025.101131","url":null,"abstract":"<div><div>This study investigates the effect of female board representation on stock price crash risk in the United States over the period 2006 to 2020. The empirical evidence suggests that increased gender diversity at the board level is associated with enhanced market stability, as reflected in a reduced likelihood of stock price crashes. The mitigating impact of female directors on crash risk is particularly pronounced in firms operating under conditions of weak market competition, lower board independence, and limited analyst coverage. The findings remain robust after addressing potential endogeneity concerns through entropy balancing (EB) and two-stage least squares (2SLS) estimation techniques. Overall, this affirms the positive contribution of female directors to corporate governance and highlight the relevance of promoting gender equality in alignment with Sustainable Development Goal 5 (SDG 5).</div></div>","PeriodicalId":46907,"journal":{"name":"Global Finance Journal","volume":"67 ","pages":"Article 101131"},"PeriodicalIF":5.5,"publicationDate":"2025-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144212115","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 : 2025-09-01Epub Date: 2025-07-24DOI: 10.1016/j.gfj.2025.101162
Steven A. Dennis (Firestone Endowed Chair in Corporate Finance) , Hua-Hsin Tsai , Marc Tony Via
We examine the use of CSR as damage control (Responsive CSR) after a reputational shock from a securities class action (SCA) lawsuit. We find that CSR scores increase following an SCA lawsuit, and we demonstrate that it is the high reputation firms who raise their CSR scores after the crisis, consistent with reputation repair. We demonstrate the effect is weaker in business-friendly states where the lawsuit is less likely to prevail, and we also demonstrate the effect is weaker when investors have limited ability to influence management. Finally, we demonstrate that it is the firms with long-horizon institutional owners holding considerable stakes in the firm who increase their CSR scores after a SCA lawsuit.
{"title":"Responsive CSR as damage control and the effect of institutional owner commitment","authors":"Steven A. Dennis (Firestone Endowed Chair in Corporate Finance) , Hua-Hsin Tsai , Marc Tony Via","doi":"10.1016/j.gfj.2025.101162","DOIUrl":"10.1016/j.gfj.2025.101162","url":null,"abstract":"<div><div>We examine the use of CSR as damage control (Responsive CSR) after a reputational shock from a securities class action (SCA) lawsuit. We find that CSR scores increase following an SCA lawsuit, and we demonstrate that it is the high reputation firms who raise their CSR scores after the crisis, consistent with reputation repair. We demonstrate the effect is weaker in business-friendly states where the lawsuit is less likely to prevail, and we also demonstrate the effect is weaker when investors have limited ability to influence management. Finally, we demonstrate that it is the firms with long-horizon institutional owners holding considerable stakes in the firm who increase their CSR scores after a SCA lawsuit.</div></div>","PeriodicalId":46907,"journal":{"name":"Global Finance Journal","volume":"67 ","pages":"Article 101162"},"PeriodicalIF":5.5,"publicationDate":"2025-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144739508","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 : 2025-09-01Epub Date: 2025-07-21DOI: 10.1016/j.gfj.2025.101154
Eva Lütkebohmert , Julian Sester , Hongyi Shen
Sovereign loan portfolios of Multilateral Development Banks (MDBs) typically comprise a small number of borrowers, making them particularly exposed to single name concentration (SNC) risk. Using realistic MDB portfolios constructed from publicly available data, this paper quantifies SNC risk through accurate Monte Carlo simulations. We find that SNC risk can account for up to 82% of total unexpected loss in MDB sovereign loan portfolios. Comparing the exact adjustment for SNC risk with its analytical approximation currently applied by a major rating agency, we show that the approximation can overestimate SNC risk by up to 266%. This overestimation has implications for the assessment of MDB capital adequacy, potentially limiting MDB lending capacity. Our results suggest that adopting a more accurate assessment of SNC risk could increase lending capacity by approximately 5% without affecting risk-weighted capital ratios. These findings highlight the importance of refining capital adequacy methodologies to better reflect the unique risk profiles of MDBs and unlock additional lending headroom for global development.
{"title":"Name concentration risk in Multilateral Development Banks’ portfolios: Measurement and capital adequacy implications","authors":"Eva Lütkebohmert , Julian Sester , Hongyi Shen","doi":"10.1016/j.gfj.2025.101154","DOIUrl":"10.1016/j.gfj.2025.101154","url":null,"abstract":"<div><div>Sovereign loan portfolios of Multilateral Development Banks (MDBs) typically comprise a small number of borrowers, making them particularly exposed to single name concentration (SNC) risk. Using realistic MDB portfolios constructed from publicly available data, this paper quantifies SNC risk through accurate Monte Carlo simulations. We find that SNC risk can account for up to 82% of total unexpected loss in MDB sovereign loan portfolios. Comparing the exact adjustment for SNC risk with its analytical approximation currently applied by a major rating agency, we show that the approximation can overestimate SNC risk by up to 266%. This overestimation has implications for the assessment of MDB capital adequacy, potentially limiting MDB lending capacity. Our results suggest that adopting a more accurate assessment of SNC risk could increase lending capacity by approximately 5% without affecting risk-weighted capital ratios. These findings highlight the importance of refining capital adequacy methodologies to better reflect the unique risk profiles of MDBs and unlock additional lending headroom for global development.</div></div>","PeriodicalId":46907,"journal":{"name":"Global Finance Journal","volume":"67 ","pages":"Article 101154"},"PeriodicalIF":5.5,"publicationDate":"2025-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144685570","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 : 2025-09-01Epub Date: 2025-08-28DOI: 10.1016/j.gfj.2025.101177
Wenjing Yin, Gaomiao Wang, Yumiao Yu
A growing number of institutional investors are showing interest in “green” firms, highlighting the increasing importance of environmental, social, and governance (ESG) information. However, as the use of mainstream ESG data expands, the prevalence of greenwashing is also rising. This paper investigates how long-term institutional cross-ownership influences corporate responses to this critical stakeholder concern. We hypothesize that long-term institutional cross-ownership mitigates corporate greenwashing by enabling investors to acquire in-depth information and directly monitor firms in the context of systematic risk management. Our findings indicate that firms with long-term cross-ownership exhibit significantly lower levels of greenwashing. Supporting the information-gathering hypothesis, the effect is more pronounced in firms operating in hard-to-value industries. Supporting the direct monitoring hypothesis, the effect is less evident among firms subject to heightened external scrutiny. Overall, our study suggests that longer investment horizons lead institutional cross-owners to enhance the transparency of stakeholder-related activities, driven primarily by financial motivations.
{"title":"Watchdogs of greenwashing: The role of long-term institutional cross-ownership","authors":"Wenjing Yin, Gaomiao Wang, Yumiao Yu","doi":"10.1016/j.gfj.2025.101177","DOIUrl":"10.1016/j.gfj.2025.101177","url":null,"abstract":"<div><div>A growing number of institutional investors are showing interest in “green” firms, highlighting the increasing importance of environmental, social, and governance (ESG) information. However, as the use of mainstream ESG data expands, the prevalence of greenwashing is also rising. This paper investigates how long-term institutional cross-ownership influences corporate responses to this critical stakeholder concern. We hypothesize that long-term institutional cross-ownership mitigates corporate greenwashing by enabling investors to acquire in-depth information and directly monitor firms in the context of systematic risk management. Our findings indicate that firms with long-term cross-ownership exhibit significantly lower levels of greenwashing. Supporting the information-gathering hypothesis, the effect is more pronounced in firms operating in hard-to-value industries. Supporting the direct monitoring hypothesis, the effect is less evident among firms subject to heightened external scrutiny. Overall, our study suggests that longer investment horizons lead institutional cross-owners to enhance the transparency of stakeholder-related activities, driven primarily by financial motivations.</div></div>","PeriodicalId":46907,"journal":{"name":"Global Finance Journal","volume":"67 ","pages":"Article 101177"},"PeriodicalIF":5.5,"publicationDate":"2025-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144921756","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 : 2025-09-01Epub Date: 2025-07-26DOI: 10.1016/j.gfj.2025.101158
Sang Baum Kang , Satwik Sinha , Jiyong Eom
High-yield green bonds are corporate bonds rated BB+ or below, specifically designated to finance environmentally friendly projects. The market for these bonds is approximately one-fifth the size of the investment-grade green bond market and has been steadily growing. However, this segment has received little attention in the literature. In this study, we make the first attempt to examine the pricing of high-yield green bonds, both theoretically and empirically. We propose a novel economic model in which the credit spread of high-yield green bonds depends not only on the probability of financial success, but also on the environmental success probability of the projects financed by the bond and the investor’s willingness to trade financial return for environmental return. The credit spread of a high-yield green bond can be lower than that of a conventional (or brown) bond only if some investors have confidence in the issuer’s ability to deliver environmental value by successfully implementing green projects. Empirically, we investigate whether such a negative wedge between green and brown credit spreads exists in the high-yield bond market, using a standard matching methodology. We find that the mean credit spread of high-yield green bonds is lower than that of their brown counterparts, although the difference is not statistically significant.
{"title":"Green dreams, risky assets? A study of high-yield green bonds","authors":"Sang Baum Kang , Satwik Sinha , Jiyong Eom","doi":"10.1016/j.gfj.2025.101158","DOIUrl":"10.1016/j.gfj.2025.101158","url":null,"abstract":"<div><div>High-yield green bonds are corporate bonds rated BB+ or below, specifically designated to finance environmentally friendly projects. The market for these bonds is approximately one-fifth the size of the investment-grade green bond market and has been steadily growing. However, this segment has received little attention in the literature. In this study, we make the first attempt to examine the pricing of high-yield green bonds, both theoretically and empirically. We propose a novel economic model in which the credit spread of high-yield green bonds depends not only on the probability of financial success, but also on the environmental success probability of the projects financed by the bond and the investor’s willingness to trade financial return for environmental return. The credit spread of a high-yield green bond can be lower than that of a conventional (or brown) bond only if some investors have confidence in the issuer’s ability to deliver environmental value by successfully implementing green projects. Empirically, we investigate whether such a negative wedge between green and brown credit spreads exists in the high-yield bond market, using a standard matching methodology. We find that the mean credit spread of high-yield green bonds is lower than that of their brown counterparts, although the difference is not statistically significant.</div></div>","PeriodicalId":46907,"journal":{"name":"Global Finance Journal","volume":"67 ","pages":"Article 101158"},"PeriodicalIF":5.5,"publicationDate":"2025-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144780840","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 : 2025-09-01Epub Date: 2025-06-18DOI: 10.1016/j.gfj.2025.101148
Jang-Chul Kim , Sharif Mazumder , Ali Nejadmalayeri , Qing Su
Motivated by the pioneering work of Porter (1990) and a vast supporting literature, we posit that global competitiveness improves a nation's ability to benefit from globalization and financial liberalization. To prove the veracity of this supposition, we study the relationship between the competitiveness of countries worldwide, as measured by the Global Competitiveness Index as well as its sub-indices, and the market liquidity of cross-listed stocks from 43 countries on the NYSE between 2006 and 2019. Our findings suggest that a country's greater global competitiveness extends beyond its borders, thereby significantly enhancing the liquidity of its foreign-listed stocks. This extenuating impact of global competitiveness on cross-listed stocks is partially but significantly due to reduced information asymmetry in global markets. Competitiveness associated with efficiency and innovation are particularly crucial in improving market liquidity and ameliorating the adverse effects of information asymmetry on market liquidity.
{"title":"Global competitiveness and market liquidity","authors":"Jang-Chul Kim , Sharif Mazumder , Ali Nejadmalayeri , Qing Su","doi":"10.1016/j.gfj.2025.101148","DOIUrl":"10.1016/j.gfj.2025.101148","url":null,"abstract":"<div><div>Motivated by the pioneering work of Porter (1990) and a vast supporting literature, we posit that global competitiveness improves a nation's ability to benefit from globalization and financial liberalization. To prove the veracity of this supposition, we study the relationship between the competitiveness of countries worldwide, as measured by the Global Competitiveness Index as well as its sub-indices, and the market liquidity of cross-listed stocks from 43 countries on the NYSE between 2006 and 2019. Our findings suggest that a country's greater global competitiveness extends beyond its borders, thereby significantly enhancing the liquidity of its foreign-listed stocks. This extenuating impact of global competitiveness on cross-listed stocks is partially but significantly due to reduced information asymmetry in global markets. Competitiveness associated with efficiency and innovation are particularly crucial in improving market liquidity and ameliorating the adverse effects of information asymmetry on market liquidity.</div></div>","PeriodicalId":46907,"journal":{"name":"Global Finance Journal","volume":"67 ","pages":"Article 101148"},"PeriodicalIF":5.5,"publicationDate":"2025-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144366798","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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