Pub Date : 2025-03-12DOI: 10.1016/j.qref.2025.101977
Zaghum Umar , Elroi Hadad , Andrew Phiri , Tamara Teplova
This paper studies the return and volatility spillover among the seven largest technology companies (including Apple, Microsoft, Amazon, Alphabet (Google), Meta Platforms (formerly Facebook), Tesla, and Nvidia) referred to as Magnificent seven. We employ a quantile connected approach to study spillover and connectedness under different market conditions. We observe a high degree of interconnectedness in the returns of these firms, with equities transitioning between roles as net receivers and transmitters across various market conditions. Notably, the influence of market size is apparent, with larger-cap firms predominantly acting as net transmitters, while smaller-cap counterparts serve as net receivers. We also identify asymmetry between quantiles, particularly evident in left tails, underscoring the significance of idiosyncratic shocks. Our findings have important implications for policy makers, investors and regulators.
{"title":"Dynamics of asymmetric connectedness among magnificent seven technology giants: Insights from QVAR analysis","authors":"Zaghum Umar , Elroi Hadad , Andrew Phiri , Tamara Teplova","doi":"10.1016/j.qref.2025.101977","DOIUrl":"10.1016/j.qref.2025.101977","url":null,"abstract":"<div><div>This paper studies the return and volatility spillover among the seven largest technology companies (including Apple, Microsoft, Amazon, Alphabet (Google), Meta Platforms (formerly Facebook), Tesla, and Nvidia) referred to as Magnificent seven. We employ a quantile connected approach to study spillover and connectedness under different market conditions. We observe a high degree of interconnectedness in the returns of these firms, with equities transitioning between roles as net receivers and transmitters across various market conditions. Notably, the influence of market size is apparent, with larger-cap firms predominantly acting as net transmitters, while smaller-cap counterparts serve as net receivers. We also identify asymmetry between quantiles, particularly evident in left tails, underscoring the significance of idiosyncratic shocks. Our findings have important implications for policy makers, investors and regulators.</div></div>","PeriodicalId":47962,"journal":{"name":"Quarterly Review of Economics and Finance","volume":"101 ","pages":"Article 101977"},"PeriodicalIF":2.9,"publicationDate":"2025-03-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143643253","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In this paper, we propose a novel QC-ISAM-ARMA temporal network with coupling2 to investigate the systemic importance of 30 listed Chinese financial institutions under different market cycles and conditions. This network can better capture the complex correlation including non-linearity, periodicity, and time variability among financial institutions and facilitate to find the optimal model by an adjustment parameter. The empirical study concludes that the newly constructed network demonstrates superior performance in identifying systemic importance. Furthermore, the systemic importance of Chinese financial institutions varies across market cycles and conditions. Banks consistently hold higher systemic importance, while insurance institutions show increased sensitivity to economic cycles and the systemic importance of securities firms increases significantly under stable market. Specially, further comparative study about banks means that the character of “too connected to fail" cannot be ignored and dynamic supervision is indeed necessary. This research offers new perspectives and constructive insights for analyzing the systemic importance of financial institutions. Additionally, the proposed new network model can be applied to assess interdependence in other domains beyond the financial sector.
{"title":"Systemic importance of Chinese financial institutions based on the QC-ISAM-ARMA temporal network with coupling","authors":"Xia Zhao , Xiao Sun , Jiefei Huang , Qingchun Meng","doi":"10.1016/j.qref.2025.101979","DOIUrl":"10.1016/j.qref.2025.101979","url":null,"abstract":"<div><div>In this paper, we propose a novel QC-ISAM-ARMA temporal network with coupling<span><span><sup>2</sup></span></span> to investigate the systemic importance of 30 listed Chinese financial institutions under different market cycles and conditions. This network can better capture the complex correlation including non-linearity, periodicity, and time variability among financial institutions and facilitate to find the optimal model by an adjustment parameter. The empirical study concludes that the newly constructed network demonstrates superior performance in identifying systemic importance. Furthermore, the systemic importance of Chinese financial institutions varies across market cycles and conditions. Banks consistently hold higher systemic importance, while insurance institutions show increased sensitivity to economic cycles and the systemic importance of securities firms increases significantly under stable market. Specially, further comparative study about banks means that the character of “too connected to fail\" cannot be ignored and dynamic supervision is indeed necessary. This research offers new perspectives and constructive insights for analyzing the systemic importance of financial institutions. Additionally, the proposed new network model can be applied to assess interdependence in other domains beyond the financial sector.</div></div>","PeriodicalId":47962,"journal":{"name":"Quarterly Review of Economics and Finance","volume":"101 ","pages":"Article 101979"},"PeriodicalIF":2.9,"publicationDate":"2025-03-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143642766","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-03-01DOI: 10.1016/j.qref.2025.101981
Aslihan Gizem Korkmaz , Erdem Ucar
We investigate the role of local social injustice, measured by racial prejudice and sexism, in corporate innovation. In a sample of U.S. firms, we find that local racial prejudice and sexism negatively affect corporate innovation. The results remain robust after the inclusion of other unobserved local factors. Furthermore, we find that the firms located in states with higher sexism levels continue to have lower corporate innovation outputs in the leading two and three years. The empirical findings imply that social injustice does not only have a social cost but also has economic consequences for firms.
{"title":"Social injustice and corporate innovation","authors":"Aslihan Gizem Korkmaz , Erdem Ucar","doi":"10.1016/j.qref.2025.101981","DOIUrl":"10.1016/j.qref.2025.101981","url":null,"abstract":"<div><div>We investigate the role of local social injustice, measured by racial prejudice and sexism, in corporate innovation. In a sample of U.S. firms, we find that local racial prejudice and sexism negatively affect corporate innovation. The results remain robust after the inclusion of other unobserved local factors. Furthermore, we find that the firms located in states with higher sexism levels continue to have lower corporate innovation outputs in the leading two and three years. The empirical findings imply that social injustice does not only have a social cost but also has economic consequences for firms.</div></div>","PeriodicalId":47962,"journal":{"name":"Quarterly Review of Economics and Finance","volume":"101 ","pages":"Article 101981"},"PeriodicalIF":2.9,"publicationDate":"2025-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143549569","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"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 : 2025-02-28DOI: 10.1016/j.qref.2025.101978
Jungho Baek , James Lee Caton Jr , Dragan Miljkovic
In classical macroeconomic thought, monetary neutrality represents the theoretical baseline. The framework asserts that, in the long-run, nominal factors do not impact real factors. However, classical macroeconomics has little to say about the composition of productive capital. This has been of less concern to modern economists, but it was of particular concern to pre-Keynesian macroeconomists. Irving Fisher recognized that monetary factors may lead to short-run distortions of relative prices. Despite this recognition, the traditional macroeconomic framework allows for no consideration of persistent relative price distortions. We investigate presentations of macroeconomic theory where such distortions are considered or are at least possible. We leverage the fact that monetary equilibrium does not imply general equilibrium and that transaction costs make reassertion of the initial capital allocation unlikely. We empirically detect persistent distortions in the relative price of oil that suggest that monetary factors generate persistent distortions in capital structure.
{"title":"Testing monetary neutrality with respect to relative price of oil using divisia M4","authors":"Jungho Baek , James Lee Caton Jr , Dragan Miljkovic","doi":"10.1016/j.qref.2025.101978","DOIUrl":"10.1016/j.qref.2025.101978","url":null,"abstract":"<div><div>In classical macroeconomic thought, monetary neutrality represents the theoretical baseline. The framework asserts that, in the long-run, nominal factors do not impact real factors. However, classical macroeconomics has little to say about the composition of productive capital. This has been of less concern to modern economists, but it was of particular concern to pre-Keynesian macroeconomists. Irving Fisher recognized that monetary factors may lead to short-run distortions of relative prices. Despite this recognition, the traditional macroeconomic framework allows for no consideration of persistent relative price distortions. We investigate presentations of macroeconomic theory where such distortions are considered or are at least possible. We leverage the fact that monetary equilibrium does not imply general equilibrium and that transaction costs make reassertion of the initial capital allocation unlikely. We empirically detect persistent distortions in the relative price of oil that suggest that monetary factors generate persistent distortions in capital structure.</div></div>","PeriodicalId":47962,"journal":{"name":"Quarterly Review of Economics and Finance","volume":"101 ","pages":"Article 101978"},"PeriodicalIF":2.9,"publicationDate":"2025-02-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143620202","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-02-27DOI: 10.1016/j.qref.2025.101980
Xiaowu Huang, Renzhi Li, Xingyu Chen
To foster the growth of the green economy and support sustainable development, green finance reform innovation pilot zones (GFRIPZ) have been established since 2017 in China. This paper aims to comprehensively investigate how the green finance reform innovation policy affects corporate greenwashing behavior with data from Chinese listed companies from 2014 to 2020. First, the empirical results obtained using the staggered difference-in-differences model indicate that the implementation of the GFRIPZ policy significantly motivates firms to engage in greenwashing behavior. Second, we find that firms under non-state-owned enterprises (non-SOEs) ownership, in non-green industries, and in eastern areas are more likely to engage in greenwashing. Third, our mechanism analysis shows that the GFRIPZ policy stimulates firms’ greenwashing behavior by exacerbating management myopia and promoting public environmental awareness. Our conclusions provide essential guiding implications for green finance policy design and implementation, while offering significant reference value for evaluating policy effectiveness and its unintended consequences.
{"title":"Does the green finance policy motivate firms to greenwash? A quasi-natural experiment based on the \"Green finance reform innovation pilot zones\"","authors":"Xiaowu Huang, Renzhi Li, Xingyu Chen","doi":"10.1016/j.qref.2025.101980","DOIUrl":"10.1016/j.qref.2025.101980","url":null,"abstract":"<div><div>To foster the growth of the green economy and support sustainable development, green finance reform innovation pilot zones (GFRIPZ) have been established since 2017 in China. This paper aims to comprehensively investigate how the green finance reform innovation policy affects corporate greenwashing behavior with data from Chinese listed companies from 2014 to 2020. First, the empirical results obtained using the staggered difference-in-differences model indicate that the implementation of the GFRIPZ policy significantly motivates firms to engage in greenwashing behavior. Second, we find that firms under non-state-owned enterprises (non-SOEs) ownership, in non-green industries, and in eastern areas are more likely to engage in greenwashing. Third, our mechanism analysis shows that the GFRIPZ policy stimulates firms’ greenwashing behavior by exacerbating management myopia and promoting public environmental awareness. Our conclusions provide essential guiding implications for green finance policy design and implementation, while offering significant reference value for evaluating policy effectiveness and its unintended consequences.</div></div>","PeriodicalId":47962,"journal":{"name":"Quarterly Review of Economics and Finance","volume":"101 ","pages":"Article 101980"},"PeriodicalIF":2.9,"publicationDate":"2025-02-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143534491","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-02-12DOI: 10.1016/j.qref.2025.101976
Keehwan Park , Zhongzheng Fang
A flight to quality occurs from risky assets to safe-haven assets in heightened volatile markets of crisis periods. A safe-haven currency gains its value against other currencies in such crisis periods. Traditionally, the U.S. dollar, the Japanese yen, and the Swiss franc have long been considered safe-haven currencies in the investment community. We study the intra-safe haven currency behaviour between these currencies in crises from 2000 to 2022. Our study is motivated by the recent weakness of the Japanese yen during the early Ukraine war in 2022. Following our quantile regression results, we offer a new econometric model of the interactive crisis dummies. We find that intra-safe haven currency behaviour is time-varying, depending on the nature of the crisis. We contrast ours with the prior literature (e.g., Ranaldo and Soderline, 2010; Fatum and Yamamoto, 2016). Our new findings complement the prior literature and add value to the literature.
{"title":"Time-varying intra-safe haven currency behaviour: The U.S. dollar, the Swiss franc, and the Japanese yen","authors":"Keehwan Park , Zhongzheng Fang","doi":"10.1016/j.qref.2025.101976","DOIUrl":"10.1016/j.qref.2025.101976","url":null,"abstract":"<div><div>A flight to quality occurs from risky assets to safe-haven assets in heightened volatile markets of crisis periods. A safe-haven currency gains its value against other currencies in such crisis periods. Traditionally, the U.S. dollar, the Japanese yen, and the Swiss franc have long been considered safe-haven currencies in the investment community. We study the intra-safe haven currency behaviour between these currencies in crises from 2000 to 2022. Our study is motivated by the recent weakness of the Japanese yen during the early Ukraine war in 2022. Following our quantile regression results, we offer a new econometric model of the interactive crisis dummies. We find that intra-safe haven currency behaviour is time-varying, depending on the nature of the crisis. We contrast ours with the prior literature (e.g., Ranaldo and Soderline, 2010; Fatum and Yamamoto, 2016). Our new findings complement the prior literature and add value to the literature.</div></div>","PeriodicalId":47962,"journal":{"name":"Quarterly Review of Economics and Finance","volume":"100 ","pages":"Article 101976"},"PeriodicalIF":2.9,"publicationDate":"2025-02-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143428902","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-02-01DOI: 10.1016/j.qref.2025.101973
Wang-Zhe Han, Wanshan Meng
While the systemic risk of financial institutions has been frequently discussed, the equally systemically important non-financial corporations have received insufficient attention. We examine a sample of listed Chinese non-financial corporations from 2010 to 2022 and confirm that AI use in non-financial corporations reduces their systemic risk. This beneficial impact is more pronounced in non-state-owned corporations, corporations in the growth stage, and corporations in the economic expansion period. Subsequently, we attribute this result to three risk control channels: decreasing risk-taking levels, reducing default risk, and weakening credit risk contagion. The research extends the understanding of systemic risk to non-financial corporations, providing new insights for balancing technological upgrading with achieving economic stability.
{"title":"Does AI contribute to systemic risk reduction in non-financial corporations?","authors":"Wang-Zhe Han, Wanshan Meng","doi":"10.1016/j.qref.2025.101973","DOIUrl":"10.1016/j.qref.2025.101973","url":null,"abstract":"<div><div>While the systemic risk of financial institutions has been frequently discussed, the equally systemically important non-financial corporations have received insufficient attention. We examine a sample of listed Chinese non-financial corporations from 2010 to 2022 and confirm that AI use in non-financial corporations reduces their systemic risk. This beneficial impact is more pronounced in non-state-owned corporations, corporations in the growth stage, and corporations in the economic expansion period. Subsequently, we attribute this result to three risk control channels: decreasing risk-taking levels, reducing default risk, and weakening credit risk contagion. The research extends the understanding of systemic risk to non-financial corporations, providing new insights for balancing technological upgrading with achieving economic stability.</div></div>","PeriodicalId":47962,"journal":{"name":"Quarterly Review of Economics and Finance","volume":"100 ","pages":"Article 101973"},"PeriodicalIF":2.9,"publicationDate":"2025-02-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143130274","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-01-31DOI: 10.1016/j.qref.2025.101975
Yu-En Lin , Shi Teng , Bo Yu , Keith S.K. Lam
This study investigates the relation between ESG ratings and firm investment efficiency and the moderate effect of ESG rating divergence on the relation. Using a sample of firms from 43 countries for the period between 2010 and 2022, we document a significantly positive relation between ESG ratings and firm investment efficiency and a significant negative moderate effect of ESG rating divergence on the positive relation. We also find four firm-level transmission channels-financial constraints, cash flows, opacity, and transparency-affect the ESG and investment inefficiency relation. In addition, our results indicate that the positive relation and the negative moderate effect can be explained by firms’ agency costs. The results hold in endogeneity and robustness tests.
{"title":"ESG rating, rating divergence and investment efficiency: International evidence","authors":"Yu-En Lin , Shi Teng , Bo Yu , Keith S.K. Lam","doi":"10.1016/j.qref.2025.101975","DOIUrl":"10.1016/j.qref.2025.101975","url":null,"abstract":"<div><div>This study investigates the relation between ESG ratings and firm investment efficiency and the moderate effect of ESG rating divergence on the relation. Using a sample of firms from 43 countries for the period between 2010 and 2022, we document a significantly positive relation between ESG ratings and firm investment efficiency and a significant negative moderate effect of ESG rating divergence on the positive relation. We also find four firm-level transmission channels-financial constraints, cash flows, opacity, and transparency-affect the ESG and investment inefficiency relation. In addition, our results indicate that the positive relation and the negative moderate effect can be explained by firms’ agency costs. The results hold in endogeneity and robustness tests.</div></div>","PeriodicalId":47962,"journal":{"name":"Quarterly Review of Economics and Finance","volume":"100 ","pages":"Article 101975"},"PeriodicalIF":2.9,"publicationDate":"2025-01-31","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143348359","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-01-31DOI: 10.1016/j.qref.2025.101974
Purba Bhattacherjee , Sibanjan Mishra , Sang Hoon Kang
The study examines the extreme time-frequency connectedness among 12 major cryptocurrencies for the period from February 26, 2018, to February 6, 2024. We employ the novel TVP-VAR approach proposed by Chatziantoniou et al. (2022), and three portfolio construction methods (i.e., MVP, MCP and MCoP). The results reveal interesting insights. First, it unveils the diverse sensitivities of individual cryptocurrencies to total return shocks, with short-term events exerting a predominant influence compared to long-term shocks. Notably, most cryptocurrencies act as net transmitters of shocks, reflecting their susceptibility to external market fluctuations. Second, the variations in the behavior of cryptocurrencies are observed during extreme market conditions and crisis periods, such as the COVID-19 pandemic and the Russia-Ukraine conflict. Furthermore, the outcomes of the portfolio construction process provide light on the efficacy of hedging as well as the performance of the portfolio. Notably, the minimum correlation portfolio (MCP) strategy outperforms other techniques, highlighting its superiority in terms of optimizing portfolio performance. Lastly, we report that macroeconomic factors and asset-based volatility are the significant drivers of cryptocurrency contagion. However, the degree and direction of their impact vary across market conditions and time-frequency horizons. These findings have important policy ramifications since they point to the necessity of strong regulatory frameworks and risk management techniques to reduce systemic risks and protect the financial stability of the bitcoin market.
{"title":"Extreme frequency connectedness, determinants and portfolio analysis of major cryptocurrencies: Insights from quantile time-frequency approach","authors":"Purba Bhattacherjee , Sibanjan Mishra , Sang Hoon Kang","doi":"10.1016/j.qref.2025.101974","DOIUrl":"10.1016/j.qref.2025.101974","url":null,"abstract":"<div><div>The study examines the extreme time-frequency connectedness among 12 major cryptocurrencies for the period from February 26, 2018, to February 6, 2024. We employ the novel TVP-VAR approach proposed by Chatziantoniou et al. (2022), and three portfolio construction methods (i.e., MVP, MCP and MCoP). The results reveal interesting insights. First, it unveils the diverse sensitivities of individual cryptocurrencies to total return shocks, with short-term events exerting a predominant influence compared to long-term shocks. Notably, most cryptocurrencies act as net transmitters of shocks, reflecting their susceptibility to external market fluctuations. Second, the variations in the behavior of cryptocurrencies are observed during extreme market conditions and crisis periods, such as the COVID-19 pandemic and the Russia-Ukraine conflict. Furthermore, the outcomes of the portfolio construction process provide light on the efficacy of hedging as well as the performance of the portfolio. Notably, the minimum correlation portfolio (MCP) strategy outperforms other techniques, highlighting its superiority in terms of optimizing portfolio performance. Lastly, we report that macroeconomic factors and asset-based volatility are the significant drivers of cryptocurrency contagion. However, the degree and direction of their impact vary across market conditions and time-frequency horizons. These findings have important policy ramifications since they point to the necessity of strong regulatory frameworks and risk management techniques to reduce systemic risks and protect the financial stability of the bitcoin market.</div></div>","PeriodicalId":47962,"journal":{"name":"Quarterly Review of Economics and Finance","volume":"100 ","pages":"Article 101974"},"PeriodicalIF":2.9,"publicationDate":"2025-01-31","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143420660","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-01-17DOI: 10.1016/j.qref.2025.101963
Yoko Shirasu , Yukihiro Yasuda
Mergers and acquisitions play a crucial part in global investment, particularly in the banking sector. We use comprehensive data on banks’ mergers and acquisitions in Asia-Pacific countries to investigate the performance implications of different types of foreign institutional investors holding equity stakes in acquirer banks. We find that acquirer banks with higher equity stakes from foreign bank investors experience an increase in their Q ratios, a proxy for bank value, and loan ratios in the three years post-acquisition when their income streams are diversified. By contrast, acquirer banks in which investment advisors or fund-type investors hold significant ownership stakes fail to expand their core business in the long run despite short-term cost reductions. Our findings suggest that bank-type foreign investors in Asia’s opaque banking industry improve acquirer bank performance through influential advisory functions.
{"title":"Do foreign bank investors promote acquirer bank value in Asia-Pacific countries?","authors":"Yoko Shirasu , Yukihiro Yasuda","doi":"10.1016/j.qref.2025.101963","DOIUrl":"10.1016/j.qref.2025.101963","url":null,"abstract":"<div><div>Mergers and acquisitions play a crucial part in global investment, particularly in the banking sector. We use comprehensive data on banks’ mergers and acquisitions in Asia-Pacific countries to investigate the performance implications of different types of foreign institutional investors holding equity stakes in acquirer banks. We find that acquirer banks with higher equity stakes from foreign bank investors experience an increase in their Q ratios, a proxy for bank value, and loan ratios in the three years post-acquisition when their income streams are diversified. By contrast, acquirer banks in which investment advisors or fund-type investors hold significant ownership stakes fail to expand their core business in the long run despite short-term cost reductions. Our findings suggest that bank-type foreign investors in Asia’s opaque banking industry improve acquirer bank performance through influential advisory functions.</div></div>","PeriodicalId":47962,"journal":{"name":"Quarterly Review of Economics and Finance","volume":"100 ","pages":"Article 101963"},"PeriodicalIF":2.9,"publicationDate":"2025-01-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143420673","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"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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