Pub Date : 2025-10-29DOI: 10.1016/j.intfin.2025.102243
Xiaojun Chu , Haigang Zhou
We study whether and how investor attention to the U.S. Federal Reserve transmits to China’s A-share market through stock-price jumps. Using Baidu search volumes for Fed-related terms as an attention proxy, we show that greater attention is associated with both a higher probability and a larger magnitude of jumps. These effects are not confined to FOMC announcement days; they also arise on non-announcement days, consistent with the continuous flow of Fed communications and expectation updating. The impact is stronger for negative jumps and among smaller, riskier firms where retail investors are most active. Robustness checks that control for domestic monetary policy attention, U.S. macroeconomic news and equity market conditions, alternative jump-identification methods, and pre-announcement attention measures yield similar conclusions. Taken together, the findings highlight investor attention as a behavioral channel of U.S. monetary policy spillovers and indicate that attention amplifies – rather than resolves – market uncertainty.
{"title":"The impact of investor attention to the federal reserve on jumps in China’s stock market","authors":"Xiaojun Chu , Haigang Zhou","doi":"10.1016/j.intfin.2025.102243","DOIUrl":"10.1016/j.intfin.2025.102243","url":null,"abstract":"<div><div>We study whether and how investor attention to the U.S. Federal Reserve transmits to China’s A-share market through stock-price jumps. Using Baidu search volumes for Fed-related terms as an attention proxy, we show that greater attention is associated with both a higher probability and a larger magnitude of jumps. These effects are not confined to FOMC announcement days; they also arise on non-announcement days, consistent with the continuous flow of Fed communications and expectation updating. The impact is stronger for negative jumps and among smaller, riskier firms where retail investors are most active. Robustness checks that control for domestic monetary policy attention, U.S. macroeconomic news and equity market conditions, alternative jump-identification methods, and pre-announcement attention measures yield similar conclusions. Taken together, the findings highlight investor attention as a behavioral channel of U.S. monetary policy spillovers and indicate that attention amplifies – rather than resolves – market uncertainty.</div></div>","PeriodicalId":48119,"journal":{"name":"Journal of International Financial Markets Institutions & Money","volume":"106 ","pages":"Article 102243"},"PeriodicalIF":6.1,"publicationDate":"2025-10-29","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145419549","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.intfin.2025.102241
Qi Gong , Zhaoyang Kong , Liang Li , Xiucheng Dong , Yang Li
Hypocrisy in environmental, social and governance (ESG) has become a growing concern in global capital markets. In the context of sustainable development, we examine whether and how corporate ESG greenwashing affects green total factor productivity (GTFP), a comprehensive indicator that captures both economic efficiency and environmental performance. Based on panel data comprising 7,755 firm-year observations from 705 Chinese listed firms over the period 2012–2022, we find that ESG greenwashing significantly undermines GTFP. Mechanism analysis reveals that this effect operates through tightened financing constraints and increased inefficient investment. The heterogeneity analysis reveals that the negative impact of ESG greenwashing on GTFP is particularly pronounced among cross-listed firms, highlighting the sustainability risks associated with symbolic ESG practices under multiple regulatory environments and underscoring the need for internationally harmonized ESG regulatory frameworks. Moreover, the detrimental effect is more severe among non-state-owned enterprises and firms with a higher proportion of negative media coverage. By linking ESG greenwashing with green productivity, this study contributes to the literature at the intersection of sustainability, corporate governance, and international securities markets. It offers practical implications for global investors, regulators, and firms, particularly in emerging markets, aiming to strengthen ESG accountability and reduce the sustainable development risks associated with superficial compliance.
{"title":"The consequences of hypocrisy: how ESG greenwashing undermines green total factor productivity","authors":"Qi Gong , Zhaoyang Kong , Liang Li , Xiucheng Dong , Yang Li","doi":"10.1016/j.intfin.2025.102241","DOIUrl":"10.1016/j.intfin.2025.102241","url":null,"abstract":"<div><div>Hypocrisy in environmental, social and governance (ESG) has become a growing concern in global capital markets. In the context of sustainable development, we examine whether and how corporate ESG greenwashing affects green total factor productivity (GTFP), a comprehensive indicator that captures both economic efficiency and environmental performance. Based on panel data comprising 7,755 firm-year observations from 705 Chinese listed firms over the period 2012–2022, we find that ESG greenwashing significantly undermines GTFP. Mechanism analysis reveals that this effect operates through tightened financing constraints and increased inefficient investment. The heterogeneity analysis reveals that the negative impact of ESG greenwashing on GTFP is particularly pronounced among cross-listed firms, highlighting the sustainability risks associated with symbolic ESG practices under multiple regulatory environments and underscoring the need for internationally harmonized ESG regulatory frameworks. Moreover, the detrimental effect is more severe among non-state-owned enterprises and firms with a higher proportion of negative media coverage. By linking ESG greenwashing with green productivity, this study contributes to the literature at the intersection of sustainability, corporate governance, and international securities markets. It offers practical implications for global investors, regulators, and firms, particularly in emerging markets, aiming to strengthen ESG accountability and reduce the sustainable development risks associated with superficial compliance.</div></div>","PeriodicalId":48119,"journal":{"name":"Journal of International Financial Markets Institutions & Money","volume":"106 ","pages":"Article 102241"},"PeriodicalIF":6.1,"publicationDate":"2025-10-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145371129","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper investigates the relationship between firms’ impact on biodiversity and its firm value and the economic and financial mechanisms underlying this link, filling a gap concerning the financial materiality of biodiversity loss. By analysing a global panel of 1,848 publicly listed companies across 49 countries from 2018 to 2022, this study highlights how the Corporate Biodiversity Footprint (CBF) influences not only firms’ market valuations (Tobin’s Q, Market-to-Book) but also their operating profitability as measured by Return on Assets (ROA). At the same time, the CBF affects firms’ cash generation capacity both decreasing the level and increasing the volatility of operating cash flows. Further heterogeneity analyses reveal that the effect of CBF on firm value is particularly strong for large firms, firms producing tangible goods, firms headquartered in megadiverse countries, and countries with a high level of biodiversity conservation. The erosion of ROA is especially evident in countries already severely affected by biodiversity loss. The results have important implications for investors, banks, corporate managers, and policymakers to improve risk pricing, forward-looking corporate governance, and realign corporate strategies and capital allocation with global biodiversity targets.
{"title":"Does biodiversity matter for firm value?","authors":"Simona Cosma , Stefano Cosma , Daniela Pennetta , Giuseppe Rimo","doi":"10.1016/j.intfin.2025.102240","DOIUrl":"10.1016/j.intfin.2025.102240","url":null,"abstract":"<div><div>This paper investigates the relationship between firms’ impact on biodiversity and its firm value and the economic and financial mechanisms underlying this link, filling a gap concerning the financial materiality of biodiversity loss. By analysing a global panel of 1,848 publicly listed companies across 49 countries from 2018 to 2022, this study highlights how the Corporate Biodiversity Footprint (CBF) influences not only firms’ market valuations (Tobin’s Q, Market-to-Book) but also their operating profitability as measured by Return on Assets (ROA). At the same time, the CBF affects firms’ cash generation capacity both decreasing the level and increasing the volatility of operating cash flows. Further heterogeneity analyses reveal that the effect of CBF on firm value is particularly strong for large firms, firms producing tangible goods, firms headquartered in megadiverse countries, and countries with a high level of biodiversity conservation. The erosion of ROA is especially evident in countries already severely affected by biodiversity loss. The results have important implications for investors, banks, corporate managers, and policymakers to improve risk pricing, forward-looking corporate governance, and realign corporate strategies and capital allocation with global biodiversity targets.</div></div>","PeriodicalId":48119,"journal":{"name":"Journal of International Financial Markets Institutions & Money","volume":"105 ","pages":"Article 102240"},"PeriodicalIF":6.1,"publicationDate":"2025-10-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145364598","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 : 2025-10-21DOI: 10.1016/j.intfin.2025.102239
Dezhong Xu , Bin Li , Tarlok Singh , Xiaoyue Chen , Jinze Li
We propose a new cross-market overnight momentum: the US stock market’s last half-hour return predicts the next day’s first half-hour stock returns in international markets. This predictability is statistically significant both in- and out-of-sample. The corresponding cross-market overnight time-series momentum (COTSM) strategy shows economic significance in international stock markets investments. The COTSM strategy remains profitable with the consideration of transaction costs, and the profitability is driven by some specific market characteristics. The COTSM is strong when international market spread is low, or information uncertainty is high.
{"title":"Cross-market overnight time-series momentum","authors":"Dezhong Xu , Bin Li , Tarlok Singh , Xiaoyue Chen , Jinze Li","doi":"10.1016/j.intfin.2025.102239","DOIUrl":"10.1016/j.intfin.2025.102239","url":null,"abstract":"<div><div>We propose a new cross-market overnight momentum: the US stock market’s last half-hour return predicts the next day’s first half-hour stock returns in international markets. This predictability is statistically significant both in- and out-of-sample. The corresponding cross-market overnight time-series momentum (COTSM) strategy shows economic significance in international stock markets investments. The COTSM strategy remains profitable with the consideration of transaction costs, and the profitability is driven by some specific market characteristics. The COTSM is strong when international market spread is low, or information uncertainty is high.</div></div>","PeriodicalId":48119,"journal":{"name":"Journal of International Financial Markets Institutions & Money","volume":"105 ","pages":"Article 102239"},"PeriodicalIF":6.1,"publicationDate":"2025-10-21","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145364599","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 : 2025-10-15DOI: 10.1016/j.intfin.2025.102236
Tony Cavoli , Isma Khan , G.M. Wali Ullah
FinTech credit has grown significantly in recent years and can have important economic and financial outcomes. Social capital can provide societal benefits which impact FinTech lending. There are three factors that influence this connection: the inequality of income, the prevalence of digital technology, and the quality of institutions. This paper examines the relationship between social capital and FinTech lending for a panel of 56 countries for 2013–19, focusing on these important conditioning factors. We find that that greater social capital results in higher levels of FinTech lending. These results are robust to different model specifications, after correcting for possible endogeneity issues, and over different indicators of social capital. This effect is more pronounced for countries with better institutions, higher internet penetration, and lower income inequality – highlighting the need for authorities to consider their impact when formulating policy.
{"title":"Social capital and FinTech lending: international evidence","authors":"Tony Cavoli , Isma Khan , G.M. Wali Ullah","doi":"10.1016/j.intfin.2025.102236","DOIUrl":"10.1016/j.intfin.2025.102236","url":null,"abstract":"<div><div>FinTech credit has grown significantly in recent years and can have important economic and financial outcomes. Social capital can provide societal benefits which impact FinTech lending. There are three factors that influence this connection: the inequality of income, the prevalence of digital technology, and the quality of institutions. This paper examines the relationship between social capital and FinTech lending for a panel of 56 countries for 2013–19, focusing on these important conditioning factors. We find that that greater social capital results in higher levels of FinTech lending. These results are robust to different model specifications, after correcting for possible endogeneity issues, and over different indicators of social capital. This effect is more pronounced for countries with better institutions, higher internet penetration, and lower income inequality – highlighting the need for authorities to consider their impact when formulating policy.</div></div>","PeriodicalId":48119,"journal":{"name":"Journal of International Financial Markets Institutions & Money","volume":"105 ","pages":"Article 102236"},"PeriodicalIF":6.1,"publicationDate":"2025-10-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145325873","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 : 2025-10-10DOI: 10.1016/j.intfin.2025.102237
Yang-Rong Mao , Huai-Long Shi , Huayi Chen , Yu-Lei Wan
Cross-firm momentum effects via shared analyst coverage are well-documented in developed markets, but their robustness remains unclear in emerging markets, where information diffusion is asymmetric and analyst coverage is highly concentrated. Our work revisits this effect in an environment of extreme informational frictions — the Chinese market. We reconstruct the information transmission channel within the analyst coverage network by introducing a novel weighting scheme based on strength centrality (). This measure identifies influential leader firms that command disproportionate attention from both analysts and the market. Our results demonstrate that -weighted connected-firm returns robustly predict cross-sectional stock returns, yielding significant and persistent profits even under a rigorous stock filter. This performance cannot be subsumed by strategies based on alternative weighting schemes or by explanations such as intra-industry cross-firm momentum and information discreteness. Further analysis reveals that the superiority of the -based approach stems from its ability to effectively identify firms with stronger cross-period fundamental linkages. In addition, high- stocks are characterized by higher investor attention, more efficient information processing, lower arbitrage costs, and greater international exposures. With this evidence, we further confirm a directional spillover: cross-firm momentum effects flow exclusively from these high- leaders to low- laggards, and there is no reverse spillover. Our findings suggest that cross-firm momentum may be systematically underestimated in many international markets due to methodological limitations rather than economic irrelevance. The -based framework therefore offers a portable tool for global investors and researchers operating in environments with asymmetric information.
{"title":"Detecting cross-firm momentum effects via shared analyst coverage: The role of leaders","authors":"Yang-Rong Mao , Huai-Long Shi , Huayi Chen , Yu-Lei Wan","doi":"10.1016/j.intfin.2025.102237","DOIUrl":"10.1016/j.intfin.2025.102237","url":null,"abstract":"<div><div>Cross-firm momentum effects via shared analyst coverage are well-documented in developed markets, but their robustness remains unclear in emerging markets, where information diffusion is asymmetric and analyst coverage is highly concentrated. Our work revisits this effect in an environment of extreme informational frictions — the Chinese market. We reconstruct the information transmission channel within the analyst coverage network by introducing a novel weighting scheme based on strength centrality (<span><math><mrow><mi>S</mi><mi>C</mi></mrow></math></span>). This measure identifies influential leader firms that command disproportionate attention from both analysts and the market. Our results demonstrate that <span><math><mrow><mi>S</mi><mi>C</mi></mrow></math></span>-weighted connected-firm returns robustly predict cross-sectional stock returns, yielding significant and persistent profits even under a rigorous stock filter. This performance cannot be subsumed by strategies based on alternative weighting schemes or by explanations such as intra-industry cross-firm momentum and information discreteness. Further analysis reveals that the superiority of the <span><math><mrow><mi>S</mi><mi>C</mi></mrow></math></span>-based approach stems from its ability to effectively identify firms with stronger cross-period fundamental linkages. In addition, high-<span><math><mrow><mi>S</mi><mi>C</mi></mrow></math></span> stocks are characterized by higher investor attention, more efficient information processing, lower arbitrage costs, and greater international exposures. With this evidence, we further confirm a directional spillover: cross-firm momentum effects flow exclusively from these high-<span><math><mrow><mi>S</mi><mi>C</mi></mrow></math></span> leaders to low-<span><math><mrow><mi>S</mi><mi>C</mi></mrow></math></span> laggards, and there is no reverse spillover. Our findings suggest that cross-firm momentum may be systematically underestimated in many international markets due to methodological limitations rather than economic irrelevance. The <span><math><mrow><mi>S</mi><mi>C</mi></mrow></math></span>-based framework therefore offers a portable tool for global investors and researchers operating in environments with asymmetric information.</div></div>","PeriodicalId":48119,"journal":{"name":"Journal of International Financial Markets Institutions & Money","volume":"105 ","pages":"Article 102237"},"PeriodicalIF":6.1,"publicationDate":"2025-10-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145269870","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 study investigates how mergers and acquisitions (M&A) involving FinTech companies influence the Environmental, Social, and Governance (ESG) performance of acquiring banks. Using a global sample of 105 M&A deals completed by banks worldwide between 2009 and 2023, our findings indicate that FinTech acquisitions tend to enhance banks’ ESG performance. However, this effect is not immediately observable, manifesting only in the fifth year post-acquisition. To refine the analysis, we match banks that engaged in FinTech acquisitions with similar banks that did not, controlling for pre-acquisition characteristics. This approach reveals a positive and significant effect on environmental (E) and overall ESG scores starting from the third year, with social (S) scores showing significant improvement as early as the first year post-acquisition.
These findings contribute to the understanding of how FinTech M&As shape the ESG performance of traditional banks. The results also provide valuable insights for bank managers, policymakers, and financial regulators, emphasizing the role of FinTech acquisitions in advancing sustainability within the banking sector.
{"title":"Do FinTech Acquisitions Affect Banks' ESG Performance? Evidence from Global M&As","authors":"Antonella Francesca Cicchiello , Cristian Foroni , Stefano Monferrà , Giuseppe Torluccio","doi":"10.1016/j.intfin.2025.102229","DOIUrl":"10.1016/j.intfin.2025.102229","url":null,"abstract":"<div><div>This study investigates how mergers and acquisitions (M&A) involving FinTech companies influence the Environmental, Social, and Governance (ESG) performance of acquiring banks. Using a global sample of 105 M&A deals completed by banks worldwide between 2009 and 2023, our findings indicate that FinTech acquisitions tend to enhance banks’ ESG performance. However, this effect is not immediately observable, manifesting only in the fifth year post-acquisition. To refine the analysis, we match banks that engaged in FinTech acquisitions with similar banks that did not, controlling for pre-acquisition characteristics. This approach reveals a positive and significant effect on environmental (E) and overall ESG scores starting from the third year, with social (S) scores showing significant improvement as early as the first year post-acquisition.</div><div>These findings contribute to the understanding of how FinTech M&As shape the ESG performance of traditional banks. The results also provide valuable insights for bank managers, policymakers, and financial regulators, emphasizing the role of FinTech acquisitions in advancing sustainability within the banking sector.</div></div>","PeriodicalId":48119,"journal":{"name":"Journal of International Financial Markets Institutions & Money","volume":"105 ","pages":"Article 102229"},"PeriodicalIF":6.1,"publicationDate":"2025-10-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145269868","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 : 2025-10-06DOI: 10.1016/j.intfin.2025.102210
Shuyue Li, Larisa Yarovaya, Tapas Mishra
This paper empirically examines whether machine learning (ML) methods can capture long memory in the cryptocurrency markets. We design two tests to evaluate seven widely used ML regression algorithms and sequence-to-sequence (Seq2Seq) models to determine their ability to capture long-memory characteristics of financial data. Specifically, we assess their accuracy in estimating the fractional integration parameter for both univariate and systemic memory. Additionally, we examine whether the predicted time series preserve the long-memory properties of the original cryptocurrency market data. Our findings reveal that most ML algorithms fail to handle long-memory series effectively, while models incorporating Long Short-Term Memory (LSTM) and Attention-LSTM components exhibit superior performance. Whilst comparing models using Mean Squared Errors (MSE), we find that our tests identify models better for directional predictions. These results highlight the limitations of conventional ML mechanism for long-range dependence and position Seq2Seq models as a promising alternative for addressing the complex movements of cryptocurrency time series. Our approach can be readily extended, offering both academics and practitioners a systematic procedure for evaluating arbitrary ML models, thereby yielding insights not only into their generalization of performance but also into the interpretability of their capacity for long-term dependence.
{"title":"Machine learning, memory and efficiency in cryptocurrency markets","authors":"Shuyue Li, Larisa Yarovaya, Tapas Mishra","doi":"10.1016/j.intfin.2025.102210","DOIUrl":"10.1016/j.intfin.2025.102210","url":null,"abstract":"<div><div>This paper empirically examines whether machine learning (ML) methods can capture long memory in the cryptocurrency markets. We design two tests to evaluate seven widely used ML regression algorithms and sequence-to-sequence (Seq2Seq) models to determine their ability to capture long-memory characteristics of financial data. Specifically, we assess their accuracy in estimating the fractional integration parameter <span><math><mi>d</mi></math></span> for both univariate and systemic memory. Additionally, we examine whether the predicted time series preserve the long-memory properties of the original cryptocurrency market data. Our findings reveal that most ML algorithms fail to handle long-memory series effectively, while models incorporating Long Short-Term Memory (LSTM) and Attention-LSTM components exhibit superior performance. Whilst comparing models using Mean Squared Errors (MSE), we find that our tests identify models better for directional predictions. These results highlight the limitations of conventional ML mechanism for long-range dependence and position Seq2Seq models as a promising alternative for addressing the complex movements of cryptocurrency time series. Our approach can be readily extended, offering both academics and practitioners a systematic procedure for evaluating arbitrary ML models, thereby yielding insights not only into their generalization of performance but also into the interpretability of their capacity for long-term dependence.</div></div>","PeriodicalId":48119,"journal":{"name":"Journal of International Financial Markets Institutions & Money","volume":"105 ","pages":"Article 102210"},"PeriodicalIF":6.1,"publicationDate":"2025-10-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145269803","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 : 2025-10-06DOI: 10.1016/j.intfin.2025.102225
Erdinc Akyildirim , Shaen Corbet , Steven Ongena , David Staunton
This study examines the financial impact of negative ESG events on European banks. Exploiting a dataset of 11,832 reputational shocks from 2007 through 2023, we find evidence of significant negative abnormal stock returns and increased volatility following negative media coverage. High-severity media coverage, as well as the reporting of previously unknown problems, increases the magnitude of the shock. We complement the main analysis with a rich dataset of bank characteristics to explain variations in the results. Furthermore, we find that deposit instability exacerbates these effects, such that banks with more volatile deposit bases suffer more pronounced stock price declines following ESG incidents, indicating that investors perceive them as more vulnerable to sudden changes in sentiment. However, banks with stronger ex-ante ESG engagement experience less deposit volatility and more muted market responses, which highlights the role of ESG practices in mitigating reputational risk. A range of placebo testing procedures are employed to demonstrate that these effects are specific to the bank-level ESG events in our data and not caused by general market movements. Our findings highlight the interconnection between ESG risk, investor and depositor reactions, and the protective value of sustained ESG engagement.
{"title":"Understanding reputational risks: The impact of ESG events on European banks","authors":"Erdinc Akyildirim , Shaen Corbet , Steven Ongena , David Staunton","doi":"10.1016/j.intfin.2025.102225","DOIUrl":"10.1016/j.intfin.2025.102225","url":null,"abstract":"<div><div>This study examines the financial impact of negative ESG events on European banks. Exploiting a dataset of 11,832 reputational shocks from 2007 through 2023, we find evidence of significant negative abnormal stock returns and increased volatility following negative media coverage. High-severity media coverage, as well as the reporting of previously unknown problems, increases the magnitude of the shock. We complement the main analysis with a rich dataset of bank characteristics to explain variations in the results. Furthermore, we find that deposit instability exacerbates these effects, such that banks with more volatile deposit bases suffer more pronounced stock price declines following ESG incidents, indicating that investors perceive them as more vulnerable to sudden changes in sentiment. However, banks with stronger ex-ante ESG engagement experience less deposit volatility and more muted market responses, which highlights the role of ESG practices in mitigating reputational risk. A range of placebo testing procedures are employed to demonstrate that these effects are specific to the bank-level ESG events in our data and not caused by general market movements. Our findings highlight the interconnection between ESG risk, investor and depositor reactions, and the protective value of sustained ESG engagement.</div></div>","PeriodicalId":48119,"journal":{"name":"Journal of International Financial Markets Institutions & Money","volume":"105 ","pages":"Article 102225"},"PeriodicalIF":6.1,"publicationDate":"2025-10-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145269867","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 : 2025-10-04DOI: 10.1016/j.intfin.2025.102226
Khadija S. Almaghrabi , Walid Ben-Amar , Ziyu Kong
This study examines the relationship between firm-level exposure to biodiversity risk and access to supplier financing. We find that firms’ access to trade credit decreases significantly with increased firm-level exposure to biodiversity risk. Mechanism test shows that reduced operating performance is the primary channel through which biodiversity risk affects access to trade credit. This effect is more pronounced among firms with low market power, those in industries with higher exposure to biodiversity risk, and those with weak corporate culture or low product innovation. Moreover, we find that firms highly exposed to biodiversity risk that receive less trade credit from suppliers tend to extend less trade credit to their customers. Given the growing attention to biodiversity risk, our findings offer important implications for both policymakers and corporate decision-makers seeking to understand and manage the broader financial and operating consequences of biodiversity risk.
{"title":"Biodiversity risk and firms’ access to trade credit","authors":"Khadija S. Almaghrabi , Walid Ben-Amar , Ziyu Kong","doi":"10.1016/j.intfin.2025.102226","DOIUrl":"10.1016/j.intfin.2025.102226","url":null,"abstract":"<div><div>This study examines the relationship between firm-level exposure to biodiversity risk and access to supplier financing. We find that firms’ access to trade credit decreases significantly with increased firm-level exposure to biodiversity risk. Mechanism test shows that reduced operating performance is the primary channel through which biodiversity risk affects access to trade credit. This effect is more pronounced among firms with low market power, those in industries with higher exposure to biodiversity risk, and those with weak corporate culture or low product innovation. Moreover, we find that firms highly exposed to biodiversity risk that receive less trade credit from suppliers tend to extend less trade credit to their customers. Given the growing attention to biodiversity risk, our findings offer important implications for both policymakers and corporate decision-makers seeking to understand and manage the broader financial and operating consequences of biodiversity risk.</div></div>","PeriodicalId":48119,"journal":{"name":"Journal of International Financial Markets Institutions & Money","volume":"105 ","pages":"Article 102226"},"PeriodicalIF":6.1,"publicationDate":"2025-10-04","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145223147","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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