This study explores the impact of stock liquidity on firm default risk in China, focusing on the moderating role of state ownership. The empirical results confirm that enhanced liquidity decreases default risk; however, the interaction of state ownership weakens this relationship. Notably, state ownership strengthens the informational efficiency channel (the learning channel) but weakens the corporate governance channel, with the latter effect outweighing the former. The findings highlight the dual role of liquidity in reducing default risk and emphasize the implications of state ownership in shaping this relationship. These findings contribute to the literature on financial risk management and provide policy implications for improving corporate governance in state-controlled economies.
{"title":"Liquidity and default risk in China: The double-edged role of state ownership","authors":"Lingling Zhao , Vito Mollica , Yun Shen , Qi Liang","doi":"10.1016/j.pacfin.2025.102998","DOIUrl":"10.1016/j.pacfin.2025.102998","url":null,"abstract":"<div><div>This study explores the impact of stock liquidity on firm default risk in China, focusing on the moderating role of state ownership. The empirical results confirm that enhanced liquidity decreases default risk; however, the interaction of state ownership weakens this relationship. Notably, state ownership strengthens the informational efficiency channel (the learning channel) but weakens the corporate governance channel, with the latter effect outweighing the former. The findings highlight the dual role of liquidity in reducing default risk and emphasize the implications of state ownership in shaping this relationship. These findings contribute to the literature on financial risk management and provide policy implications for improving corporate governance in state-controlled economies.</div></div>","PeriodicalId":48074,"journal":{"name":"Pacific-Basin Finance Journal","volume":"95 ","pages":"Article 102998"},"PeriodicalIF":5.3,"publicationDate":"2025-11-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145579615","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 : 2025-11-06DOI: 10.1016/j.pacfin.2025.102983
Jiancheng Shen , Jia Wang , Xuejun Ma , Xin Chen , Han Cang
This paper applies novel deep learning models to predict financial market movement, volatility, and skewness in Chinese futures markets. Specifically, the introduced methods are cross-data-type 1-D convolutional neural network (CDT 1-D CNN) and hybrid convolutional LSTM-based variational sequence-to-sequence model with attention (CLVSA). The adaptive deep learning models directly utilize raw trading data to forecast financial risks for six commodity and equity index futures. The deep learning framework shows better financial market predictability than some state-of-the-art benchmarks, such as LSTM and Seq2Seqs. The experiment results show that the CLVSA model effectively extracts more generalized and informative features than traditional technical indicators for financial market risk prediction. Experimental results also show that, by introducing an approximate posterior, CLVSA takes advantage of an extra regularizer based on the Kullback-Leibler divergence to prevent itself from overfitting traps.
{"title":"Volatility and skewness predictability with deep learning and big data: Chinese futures market case","authors":"Jiancheng Shen , Jia Wang , Xuejun Ma , Xin Chen , Han Cang","doi":"10.1016/j.pacfin.2025.102983","DOIUrl":"10.1016/j.pacfin.2025.102983","url":null,"abstract":"<div><div>This paper applies novel deep learning models to predict financial market movement, volatility, and skewness in Chinese futures markets. Specifically, the introduced methods are cross-data-type 1-D convolutional neural network (CDT 1-D CNN) and hybrid convolutional LSTM-based variational sequence-to-sequence model with attention (CLVSA). The adaptive deep learning models directly utilize raw trading data to forecast financial risks for six commodity and equity index futures. The deep learning framework shows better financial market predictability than some state-of-the-art benchmarks, such as LSTM and Seq2Seqs. The experiment results show that the CLVSA model effectively extracts more generalized and informative features than traditional technical indicators for financial market risk prediction. Experimental results also show that, by introducing an approximate posterior, CLVSA takes advantage of an extra regularizer based on the Kullback-Leibler divergence to prevent itself from overfitting traps.</div></div>","PeriodicalId":48074,"journal":{"name":"Pacific-Basin Finance Journal","volume":"96 ","pages":"Article 102983"},"PeriodicalIF":5.3,"publicationDate":"2025-11-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145685106","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 : 2025-11-05DOI: 10.1016/j.pacfin.2025.102985
John Beirne , Nuobu Renzhi
Geopolitical shocks are found to heighten financial uncertainty and disrupt cross-border capital movements, with the magnitude of these effects depending on domestic structural characteristics. This paper examines the effects of country-specific geopolitical risk on capital flow volatility and asset markets across 29 emerging and advanced economies over the period 2000–2023. Using panel regressions and a panel structural VAR framework, the results show that geopolitical risk raises bond yields and leads to exchange rate depreciation, with stronger and more persistent effects in emerging economies. Asset markets for advanced economies are affected mainly through lower equity prices. The impact on capital flow volatility is slightly higher on average for advanced economies but remains more persistent for emerging economies. Greater financial development, higher central bank independence, and lower public debt mitigate the adverse effects of geopolitical risk on both capital flows and asset markets. These findings highlight the importance of strong macroeconomic fundamentals and institutional frameworks in building resilience against geopolitical shocks.
{"title":"Geopolitical risk, capital flow volatility, and asset market spillovers","authors":"John Beirne , Nuobu Renzhi","doi":"10.1016/j.pacfin.2025.102985","DOIUrl":"10.1016/j.pacfin.2025.102985","url":null,"abstract":"<div><div>Geopolitical shocks are found to heighten financial uncertainty and disrupt cross-border capital movements, with the magnitude of these effects depending on domestic structural characteristics. This paper examines the effects of country-specific geopolitical risk on capital flow volatility and asset markets across 29 emerging and advanced economies over the period 2000–2023. Using panel regressions and a panel structural VAR framework, the results show that geopolitical risk raises bond yields and leads to exchange rate depreciation, with stronger and more persistent effects in emerging economies. Asset markets for advanced economies are affected mainly through lower equity prices. The impact on capital flow volatility is slightly higher on average for advanced economies but remains more persistent for emerging economies. Greater financial development, higher central bank independence, and lower public debt mitigate the adverse effects of geopolitical risk on both capital flows and asset markets. These findings highlight the importance of strong macroeconomic fundamentals and institutional frameworks in building resilience against geopolitical shocks.</div></div>","PeriodicalId":48074,"journal":{"name":"Pacific-Basin Finance Journal","volume":"95 ","pages":"Article 102985"},"PeriodicalIF":5.3,"publicationDate":"2025-11-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145520876","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 : 2025-11-04DOI: 10.1016/j.pacfin.2025.102982
Bin Gao , Tao Song , Xiao Han , Jinlong Zhang
Using provincial government work reports (2011−2023) and A-share listed firm data, we develop a text-based index of regional governmental patience in capital cultivation and examine its impact on capital market pricing efficiency. We find that government cultivation of long-term capital significantly reduces corporate share price synchronization. This conclusion remains robust after conducting rigorous tests, including variable substitution and model specification adjustments. We reason that the long-term capital policy cultivation effect mitigates information asymmetry through three primary channels: enhancing analysts' research tracking, increasing institutional investors' attention, and improving media information disclosure. These channels collectively contribute to reducing stock price synchronization. The heterogeneity test demonstrates that the stock price synchronization reduction effect is more pronounced in state-owned enterprises, high-competition industries, policy-supported sectors, and regions with underdeveloped financial markets. Our study provides new empirical evidence on capital market development through the lens of governmental long-term capital cultivation.
{"title":"Reducing stock price synchronicity: How government-driven long-term capital cultivation improves market efficiency in China","authors":"Bin Gao , Tao Song , Xiao Han , Jinlong Zhang","doi":"10.1016/j.pacfin.2025.102982","DOIUrl":"10.1016/j.pacfin.2025.102982","url":null,"abstract":"<div><div>Using provincial government work reports (2011−2023) and A-share listed firm data, we develop a text-based index of regional governmental patience in capital cultivation and examine its impact on capital market pricing efficiency. We find that government cultivation of long-term capital significantly reduces corporate share price synchronization. This conclusion remains robust after conducting rigorous tests, including variable substitution and model specification adjustments. We reason that the long-term capital policy cultivation effect mitigates information asymmetry through three primary channels: enhancing analysts' research tracking, increasing institutional investors' attention, and improving media information disclosure. These channels collectively contribute to reducing stock price synchronization. The heterogeneity test demonstrates that the stock price synchronization reduction effect is more pronounced in state-owned enterprises, high-competition industries, policy-supported sectors, and regions with underdeveloped financial markets. Our study provides new empirical evidence on capital market development through the lens of governmental long-term capital cultivation.</div></div>","PeriodicalId":48074,"journal":{"name":"Pacific-Basin Finance Journal","volume":"95 ","pages":"Article 102982"},"PeriodicalIF":5.3,"publicationDate":"2025-11-04","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145468249","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 : 2025-11-04DOI: 10.1016/j.pacfin.2025.102984
Mengting Lu , Haibing Shu
This paper examines whether transportation network development, particularly commuting time affects firm investment decisions, including investment breadth and depth. We find that when the commuting time drops at a given distance, the parent company tends to not only invest in more subsidiaries and in more diverse industries but also invest more in subsidiaries. Moreover, we find commuting time is negatively correlated with the probability of executives taking concurrent appointments and the parent company guaranteeing its subsidiaries, suggesting that distant commutes lead to greater supervision costs and higher information asymmetry. At last, we find that SOEs and large firms are more sensitive to commuting time regarding investment breadth than non-SOEs and small firms but less sensitive in investment amount.
{"title":"The impact of transportation network development on firm investment decisions: Evidence from China","authors":"Mengting Lu , Haibing Shu","doi":"10.1016/j.pacfin.2025.102984","DOIUrl":"10.1016/j.pacfin.2025.102984","url":null,"abstract":"<div><div>This paper examines whether transportation network development, particularly commuting time affects firm investment decisions, including investment breadth and depth. We find that when the commuting time drops at a given distance, the parent company tends to not only invest in more subsidiaries and in more diverse industries but also invest more in subsidiaries. Moreover, we find commuting time is negatively correlated with the probability of executives taking concurrent appointments and the parent company guaranteeing its subsidiaries, suggesting that distant commutes lead to greater supervision costs and higher information asymmetry. At last, we find that SOEs and large firms are more sensitive to commuting time regarding investment breadth than non-SOEs and small firms but less sensitive in investment amount.</div></div>","PeriodicalId":48074,"journal":{"name":"Pacific-Basin Finance Journal","volume":"95 ","pages":"Article 102984"},"PeriodicalIF":5.3,"publicationDate":"2025-11-04","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145468160","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 : 2025-11-02DOI: 10.1016/j.pacfin.2025.102981
Haoyuan Qin , Eping Liu
The reform of the registration-based IPO system represents a profound transformation in the evolution of China's capital market, shaping not only its future trajectory but also the long-term growth prospects of the Chinese economy. Drawing upon the signaling theory and cognitive dissonance theory, this paper examines the impact of the registration-based reform on the behavioral characteristics of management during IPO roadshows. Using A-share listed companies with IPO roadshow videos from 2017 to 2023 as the research sample, this paper constructs construct indicators capturing managerial facial emotions and response characteristics. The study found that compared with the IPO roadshow under the approval-based system, the facial expressions of management in the IPO roadshow under the registration-based system are more positive, the responses are more positive, and the similarity of questions and answers is higher. Further research shows that the issuance price-earnings ratio of enterprises has increased under the registration-based system, and the behavioral characteristics of management are significantly correlated with the issuance price-earnings ratio and the long-term market performance after issuance. This paper deepens the economic effect analysis of the management's behavioral characteristics during the IPO roadshow under the background of the registration-based system reform. The potential role of management soft information in the stock issuance price formation mechanism is explored, providing academic reference and empirical basis for the healthy development and regulatory optimization of the capital market
{"title":"Do facial expressions and responses during roadshows affect IPO prices? Empirical evidence from China's registration-based system reform","authors":"Haoyuan Qin , Eping Liu","doi":"10.1016/j.pacfin.2025.102981","DOIUrl":"10.1016/j.pacfin.2025.102981","url":null,"abstract":"<div><div>The reform of the registration-based IPO system represents a profound transformation in the evolution of China's capital market, shaping not only its future trajectory but also the long-term growth prospects of the Chinese economy. Drawing upon the signaling theory and cognitive dissonance theory, this paper examines the impact of the registration-based reform on the behavioral characteristics of management during IPO roadshows. Using A-share listed companies with IPO roadshow videos from 2017 to 2023 as the research sample, this paper constructs construct indicators capturing managerial facial emotions and response characteristics. The study found that compared with the IPO roadshow under the approval-based system, the facial expressions of management in the IPO roadshow under the registration-based system are more positive, the responses are more positive, and the similarity of questions and answers is higher. Further research shows that the issuance price-earnings ratio of enterprises has increased under the registration-based system, and the behavioral characteristics of management are significantly correlated with the issuance price-earnings ratio and the long-term market performance after issuance. This paper deepens the economic effect analysis of the management's behavioral characteristics during the IPO roadshow under the background of the registration-based system reform. The potential role of management soft information in the stock issuance price formation mechanism is explored, providing academic reference and empirical basis for the healthy development and regulatory optimization of the capital market</div></div>","PeriodicalId":48074,"journal":{"name":"Pacific-Basin Finance Journal","volume":"95 ","pages":"Article 102981"},"PeriodicalIF":5.3,"publicationDate":"2025-11-02","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145468161","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 : 2025-10-27DOI: 10.1016/j.pacfin.2025.102964
Jiming Liu , Yi Liu , Yue Zhang , Kai Wu
This study examines how collateral shocks affect corporate financialization. Using data on Chinese listed firms from 2008 to 2021, we reveal a positive correlation between the rising market value of firms’ real estate assets and their financial asset holdings. This effect is robust to endogeneity concerns and is more pronounced for firms with weaker analyst coverage, lower growth opportunities, and more conservative risk-taking. We identify credit availability and executive myopia as significant channels driving this relationship. Our results suggest that collateral appreciation primarily affects illiquid financial investments and shadow banking activities. These findings underscore the collateral channel’s crucial role in shaping corporate financial behaviors.
{"title":"Riding the wave: How collateral shocks affect corporate financialization","authors":"Jiming Liu , Yi Liu , Yue Zhang , Kai Wu","doi":"10.1016/j.pacfin.2025.102964","DOIUrl":"10.1016/j.pacfin.2025.102964","url":null,"abstract":"<div><div>This study examines how collateral shocks affect corporate financialization. Using data on Chinese listed firms from 2008 to 2021, we reveal a positive correlation between the rising market value of firms’ real estate assets and their financial asset holdings. This effect is robust to endogeneity concerns and is more pronounced for firms with weaker analyst coverage, lower growth opportunities, and more conservative risk-taking. We identify credit availability and executive myopia as significant channels driving this relationship. Our results suggest that collateral appreciation primarily affects illiquid financial investments and shadow banking activities. These findings underscore the collateral channel’s crucial role in shaping corporate financial behaviors.</div></div>","PeriodicalId":48074,"journal":{"name":"Pacific-Basin Finance Journal","volume":"95 ","pages":"Article 102964"},"PeriodicalIF":5.3,"publicationDate":"2025-10-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145419484","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 : 2025-10-25DOI: 10.1016/j.pacfin.2025.102976
Yangyang Zhuang , Haolun Han , Ditian Zhang , Pan Tang
This paper takes the 10-year government bond yields of 40 major economies in the world as the research object, aiming to establish a network of major global government bond markets, build an evaluation system to measure the importance of economies and the degree of mutual influence, explore the geographical clustering effects and risk spillover effects between developed and emerging economies during the COVID-19 epidemic, and conduct an in-depth analysis of the evolution of market structure. Our empirical research results indicate that, firstly, different economies have formed the double standard clustering effects of geographical location and economic type. In addition, in a specific period, within the large cluster, there are obvious small clusters of economic groups, including the GIIPS economies, the Euro core area, and the Four Little Dragon economies in Asia. The global market clustering index showed a downward trend after the outbreak of the COVID-19 pandemic and reached its peak during the normalization period of the COVID-19 pandemic. Secondly, in the entire period of research, the United States ranked first on the list of economic importance, while Japan ranked last. Thirdly, the spillover effects of external risks generated by economies in Europe and America have always been stronger than those in Asia and Africa. And economies within the same continent formed clusters based on economic types, which is consistent with the clusters formed in the importance network of the government bond markets. Finally, the correlation indicators of the stock market and the foreign exchange market demonstrate a substantial positive link with the risk spillover of the government bond market, indicating that the closer the trade and financial links between the two economies and the higher the level of economic integration, the higher the risk spillover level of the government bond market between them.
{"title":"Clustering effects and spillover effects in major global government bond markets during the COVID-19 pandemic","authors":"Yangyang Zhuang , Haolun Han , Ditian Zhang , Pan Tang","doi":"10.1016/j.pacfin.2025.102976","DOIUrl":"10.1016/j.pacfin.2025.102976","url":null,"abstract":"<div><div>This paper takes the 10-year government bond yields of 40 major economies in the world as the research object, aiming to establish a network of major global government bond markets, build an evaluation system to measure the importance of economies and the degree of mutual influence, explore the geographical clustering effects and risk spillover effects between developed and emerging economies during the COVID-19 epidemic, and conduct an in-depth analysis of the evolution of market structure. Our empirical research results indicate that, firstly, different economies have formed the double standard clustering effects of geographical location and economic type. In addition, in a specific period, within the large cluster, there are obvious small clusters of economic groups, including the GIIPS economies, the Euro core area, and the Four Little Dragon economies in Asia. The global market clustering index showed a downward trend after the outbreak of the COVID-19 pandemic and reached its peak during the normalization period of the COVID-19 pandemic. Secondly, in the entire period of research, the United States ranked first on the list of economic importance, while Japan ranked last. Thirdly, the spillover effects of external risks generated by economies in Europe and America have always been stronger than those in Asia and Africa. And economies within the same continent formed clusters based on economic types, which is consistent with the clusters formed in the importance network of the government bond markets. Finally, the correlation indicators of the stock market and the foreign exchange market demonstrate a substantial positive link with the risk spillover of the government bond market, indicating that the closer the trade and financial links between the two economies and the higher the level of economic integration, the higher the risk spillover level of the government bond market between them.</div></div>","PeriodicalId":48074,"journal":{"name":"Pacific-Basin Finance Journal","volume":"95 ","pages":"Article 102976"},"PeriodicalIF":5.3,"publicationDate":"2025-10-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145419477","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 : 2025-10-24DOI: 10.1016/j.pacfin.2025.102975
Liang He , Yue Yao , Yiqiu Wang , Xiaoxing Liu
This study investigates the impact of investor sentiment on bank liquidity risk. We first develop a theory of bank liquidity in markets influenced by sentiment risk. Our theory suggests that traditional commercial banks benefit from deposit inflows driven by investors seeking a safe haven, which serve as a natural hedge against liquidity risk. In contrast, modern banks may encounter heightened liquidity risk due to mark-to-market accounting and high leverage. Additionally, while banks that effectively manage sentiment risk tend to maintain prudent liquidity levels, they may still take on excessive leverage during periods of pronounced asset bubbles. Empirical analysis using data from China and the United States supports our theoretical predictions. In China, where the banking sector is predominantly composed of traditional commercial banks, investor sentiment has a countercyclical effect on deposit flows, thereby mitigating liquidity risk during periods of low sentiment. In the United States, by contrast, investor sentiment amplifies the procyclical nature of loan expansion and overall bank liquidity conditions. Moreover, banks with greater trading expertise or subject to stricter liquidity regulations are more effective at mitigating sentiment-induced liquidity risk. By highlighting the varying effects of investor sentiment on bank liquidity risk across different banking systems, this study provides new insights into bank risk management and financial regulation in sentiment-driven markets.
{"title":"Investor sentiment and bank liquidity risk: Theory and evidence","authors":"Liang He , Yue Yao , Yiqiu Wang , Xiaoxing Liu","doi":"10.1016/j.pacfin.2025.102975","DOIUrl":"10.1016/j.pacfin.2025.102975","url":null,"abstract":"<div><div>This study investigates the impact of investor sentiment on bank liquidity risk. We first develop a theory of bank liquidity in markets influenced by sentiment risk. Our theory suggests that traditional commercial banks benefit from deposit inflows driven by investors seeking a safe haven, which serve as a natural hedge against liquidity risk. In contrast, modern banks may encounter heightened liquidity risk due to mark-to-market accounting and high leverage. Additionally, while banks that effectively manage sentiment risk tend to maintain prudent liquidity levels, they may still take on excessive leverage during periods of pronounced asset bubbles. Empirical analysis using data from China and the United States supports our theoretical predictions. In China, where the banking sector is predominantly composed of traditional commercial banks, investor sentiment has a countercyclical effect on deposit flows, thereby mitigating liquidity risk during periods of low sentiment. In the United States, by contrast, investor sentiment amplifies the procyclical nature of loan expansion and overall bank liquidity conditions. Moreover, banks with greater trading expertise or subject to stricter liquidity regulations are more effective at mitigating sentiment-induced liquidity risk. By highlighting the varying effects of investor sentiment on bank liquidity risk across different banking systems, this study provides new insights into bank risk management and financial regulation in sentiment-driven markets.</div></div>","PeriodicalId":48074,"journal":{"name":"Pacific-Basin Finance Journal","volume":"95 ","pages":"Article 102975"},"PeriodicalIF":5.3,"publicationDate":"2025-10-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145420039","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 is an exploratory study that takes a machine learning approach using artificial neural networks to investigate a conjectured relationship between CEO remuneration and debt of New Zealand local councils. While prior literature reported an inverse relationship between CEO remuneration and financial distress in the private sector, no study is known to have yet examined a relationship between CEO remuneration and debt in the public/government sector. Using data from seventy-eight New Zealand local councils, the results reveal that a neural network model can reliably predict whether a local council holds a high amount of debt with CEO remuneration as the key predictor variable. The results strongly indicate that an underlying statistical relationship likely exists between CEO remuneration and the amount of council debt in the presence of political competition. These results run contrary to previous findings in the private sector and offer a promising ground for future confirmatory studies to further investigate this relationship.
{"title":"USING neural networks and CEO remuneration to predict the debt-income ratio of New Zealand local councils","authors":"Bikram Chatterjee , Sukanto Bhattacharya , Abhishek Mukherjee","doi":"10.1016/j.pacfin.2025.102980","DOIUrl":"10.1016/j.pacfin.2025.102980","url":null,"abstract":"<div><div>This is an exploratory study that takes a machine learning approach using artificial neural networks to investigate a conjectured relationship between CEO remuneration and debt of New Zealand local councils. While prior literature reported an inverse relationship between CEO remuneration and financial distress in the private sector, no study is known to have yet examined a relationship between CEO remuneration and debt in the public/government sector. Using data from seventy-eight New Zealand local councils, the results reveal that a neural network model can reliably predict whether a local council holds a high amount of debt with CEO remuneration as the key predictor variable. The results strongly indicate that an underlying statistical relationship likely exists between CEO remuneration and the amount of council debt in the presence of political competition. These results run contrary to previous findings in the private sector and offer a promising ground for future confirmatory studies to further investigate this relationship.</div></div>","PeriodicalId":48074,"journal":{"name":"Pacific-Basin Finance Journal","volume":"95 ","pages":"Article 102980"},"PeriodicalIF":5.3,"publicationDate":"2025-10-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145419483","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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