Journal of Banking & Finance最新文献

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Conflict of interest to declare? A study of individual-controlled funds in China

IF 3.6 2区经济学 Q1 BUSINESS, FINANCE

Journal of Banking & Finance

Pub Date : 2025-02-01 DOI: 10.1016/j.jbankfin.2024.107376

Zhuang Zhuang , Carl Hsin-han Shen , Juan Yao

China's financial deregulation has led to the rise of individual-controlled fund management companies, where the largest shareholder is a person rather than an institution. This study examines these mutual funds, known as “individual-controlled funds” (ICFs), particularly from the perspective of potential conflict of interest. ICFs are more likely to prioritize performance given there is limited interference in their activities by affiliated institutions. They consistently outperform peers by 0.7 % per month, after accounting for fund characteristics. This outperformance is more pronounced when the largest individual owner has greater influence in the fund company. We also document the lower propensity of ICFs to engage in misconduct. Our findings demonstrate that minimizing conflicts of interest benefits performance in the mutual fund industry.

引用次数: 0

The association of high perceived inflation with trust in national politics and central banks✰

IF 3.6 2区经济学 Q1 BUSINESS, FINANCE

Journal of Banking & Finance

Pub Date : 2025-02-01 DOI: 10.1016/j.jbankfin.2024.107368

Carin van der Cruijsen , Jakob de Haan , Maarten van Rooij

Using a survey in the Netherlands, we find that high inflation perceptions are associated with low trust in Dutch politics and the Dutch central bank, also if we control for a broad array of potential confounding factors. The higher individuals’ perceived inflation is and the harder it is for them to make ends meet, the lower their trust in Dutch politics, the Dutch central bank, and the European Central Bank. We also find that trust in an authority is lower when it is considered responsible for bringing inflation down. Quite remarkably, most people think the government is responsible for maintaining price stability.

引用次数: 0

Predicting individual corporate bond returns

IF 3.6 2区经济学 Q1 BUSINESS, FINANCE

Journal of Banking & Finance

Pub Date : 2025-02-01 DOI: 10.1016/j.jbankfin.2024.107372

Guanhao Feng , Xin He , Yanchu Wang , Chunchi Wu

Using machine learning and many predictors, we find strong bond return predictability, with an out-of-sample R-squared of 4.48% and an annualized Sharpe ratio of 3.27. ML models identify important predictors for aggregate predictors (bond market returns, TERM and HML factors, GDP growth) and bond characteristics (downside risk, short-term reversal, return skewness, and credit spreads). Predictability varies over time, being stronger during periods of high investor risk aversion, slow economic growth, and strong cross-sectional factor explanatory power. Our results highlight the benefits of leveraging both cross-sectional and time-series predictors to forecast corporate bond returns while considering public and private bonds.

引用次数: 0

Macroprudential policy spillovers in international banking groups. Beggar-thy-neighbour and the role of internal capital markets

IF 3.6 2区经济学 Q1 BUSINESS, FINANCE

Journal of Banking & Finance

Pub Date : 2025-02-01 DOI: 10.1016/j.jbankfin.2024.107349

Aurea Ponte Marques , Diego Vila Martín , Carmelo Salleo , Giuseppe Cappelletti

Beggar-thy-neighbour in macroprudential policy? This paper studies the impact of macroprudential policies – specifically OSII buffers – on banking groups and their cross-border operations. Using granular data from three confidential databases, we present the first evidence on how banking groups respond to changes in capital requirements. Our findings reveal that: (i) consolidated parent banks constrained by OSII buffers cut back on debt and equity holdings in their foreign subsidiaries, altering global financial structures; (ii) subsidiaries with reduced funding and equity from their parent show a notable decline in lending to non-financial corporations; and (iii) overall, cross-border subsidiaries of OSII-constrained banks exhibit reduced lending and risk-taking towards non-financial corporations, hinting at a role of these subsidiaries in propping up the group’s consolidated capital buffers. While higher capital buffers enhance financial stability by curbing excessive risk-taking, they also constrain the funding and lending capacities of foreign subsidiaries, disrupting local credit markets and creating a “beggar-thy-neighbour” problem. Policymakers need to balance these impacts with the benefits of financial integration.

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引用次数: 0

Trading without meeting friends: Empirical evidence from the wuhan lockdown in 2020

IF 3.6 2区经济学 Q1 BUSINESS, FINANCE

Journal of Banking & Finance

Pub Date : 2025-02-01 DOI: 10.1016/j.jbankfin.2024.107355

Yichu Huang , Udichibarna Bose , Zeguang Li , Frank Hong Liu

Using a unique proprietary dataset of daily mutual fund trading records and the COVID-19 pandemic-triggered lockdown in Wuhan (China) as a natural experiment, we find that individual mutual fund investors in Wuhan significantly reduced their daily trading frequency, total investment of their portfolios, and risk level of their invested funds during the lockdown period as compared to investors in other cities. The results suggest that the elimination of face-to-face interaction among individual investors during the lockdown reduced their information sharing, which led to more conservatism in their financial trading. We rule out alternative explanations of salience bias due to limited investor attention and temporary changes in personal circumstances such as depression and/or income reduction, during the lockdown period. Finally, consistent with the theory of naïve investor trading, we also find that investors received higher trading returns during the lockdown as they reduced trading aggressively in the absence of face-to-face interactions.

引用次数: 0

Banking prudentials, leverage, and innovation partnership choice in China

IF 3.6 2区经济学 Q1 BUSINESS, FINANCE

Journal of Banking & Finance

Pub Date : 2025-02-01 DOI: 10.1016/j.jbankfin.2024.107347

Fushu Luan , Yang Chen , Lin Lang , King Yoong Lim

In a theoretical context where innovators borrow loans or settle for state-owned enterprise (SOE) sponsorship for their projects, we examine the effects of banking prudential regulations and their interaction with corporate leverage on the patenting partnership choice in China using a unique matched patent-firm-bank loan dataset for 15,623 observations in the 2013–17 period. We use a unique instrumental variable (IV) strategy to identify idiosyncratic bank prudential reform shocks associated with the post-2012 Basel III regulation and find prudential metrics (corporate leverage) of the financiers (firms) to positively (negatively) influence SOE patenting partnership choice, though prudential regulation mitigates the latter. Prudential reforms therefore come at a cost of further SOE dominance. However, conditional on an innovation project being SOE sponsored, we find positive spillover effect from the SOE’s employment mandate to loan productivity. Our results are robust across different IV strategies, alternative measures, sub-sample and mechanism analyses.

引用次数: 0

Board reforms and firm employment: Worldwide evidence

IF 3.6 2区经济学 Q1 BUSINESS, FINANCE

Journal of Banking & Finance

Pub Date : 2025-02-01 DOI: 10.1016/j.jbankfin.2024.107379

Yi Si , Minfeng Yu , Lei Zhang , Qing (Clara) Zhou

Managers often overreact to revenue fluctuations, leading to unnecessary workforce adjustments and increased training costs. This study examines how board governance influences firms’ employment sensitivity to revenue fluctuations. Analyzing global board reforms, we find that board reforms significantly reduce managerial overreaction to revenue fluctuations. Utilizing recent difference-in-differences estimators that address heterogeneous treatment effects, we ensure the robustness of our results. The reduction in employment sensitivity is more pronounced when board reforms strengthen the independence of boards and audit committees, particularly in jurisdictions with weaker board efficacy, shareholder, and employment protection legislation. Enhanced effects are observed in firms with initially lower board independence and rapid reform compliance, in entities experiencing greater information asymmetry, marked by higher labor intensity, higher pre-reform agency costs and financial constraints, and in firms led by less experienced CEOs or boards with higher male representation.

引用次数: 0

Political relations and media coverage

IF 3.6 2区经济学 Q1 BUSINESS, FINANCE

Journal of Banking & Finance

Pub Date : 2025-02-01 DOI: 10.1016/j.jbankfin.2024.107364

Jun Myung Song , Bohui Zhang , Thomas Ruf

We study the impact of political relations on media coverage. Using a sample of 3,290 American Depository Receipts (ADRs) from 45 countries, we find that deteriorating political relations between the US and an ADR firm's home country induce negative coverage by the US media of the ADR firm. To alleviate endogeneity, we adopt France's and Germany's opposition to the Iraq War and the inauguration of the US president as two shocks to bilateral political relations between the US and foreign countries. In placebo tests, we show no negative effect of political relations on ADR firms’ press releases or non-US media coverage. We further document the three economic mechanisms underlying the impact of political relations on media coverage: US journalists’ country sentiment, a country's popularity among US readers, and the US media's political beliefs. Finally, we document two consequences of negative coverage by the US media: investors respond less to negative news of firms from countries with deteriorating political relations with the US, and negative coverage leads to a greater likelihood of firms terminating their ADRs.

引用次数: 0

Information Dissemination and the Monetary Policy Uncertainty Premium: Evidence from China

IF 3.6 2区经济学 Q1 BUSINESS, FINANCE

Journal of Banking & Finance

Pub Date : 2025-02-01 DOI: 10.1016/j.jbankfin.2024.107371

Jianhao Lin , Jiacheng Fan , Yifan Zhang

This paper proposes a novel monetary policy uncertainty (MPU) measure aggregating information from policy communication, policy operation and news coverage. We find that the aggregate MPU measure significantly commands a negative risk premium in the cross-section of the Chinese stock market. Stocks with higher (lower) MPU beta, favored (avoided) for hedging against MPU shocks, contribute to the premium through their under-performance (outperformance). Our results remain robust after controlling for economic uncertainty, economic policy uncertainty, and monetary policy surprises. We further show that the aggregate MPU measure outperforms its individual components in both portfolio- and stock-level asset pricing tests.

引用次数: 0

Local boy does good: The effect of CSR activities on firm value

IF 3.6 2区经济学 Q1 BUSINESS, FINANCE

Journal of Banking & Finance

Pub Date : 2025-01-31 DOI: 10.1016/j.jbankfin.2025.107398

Zicheng Lei , Dimitris Petmezas , P. Raghavendra Rau , Chen Yang

We examine the relation between home CEOs and corporate social responsibility (CSR). Our analysis shows home CEOs are associated with higher CSR engagement and increased firm value. These firms exhibit higher asset turnover, lower cost of equity, improved productivity, sales, and profit margins. Home CEOs focus more on community, environmental, and employee-related CSR, and are linked to reduced carbon emissions. This relationship is stronger in firms with higher local business concentration and investor monitoring. Firms led by home CEOs earn higher returns during recent crises. Our results suggest the value increase is not primarily due to agency effects and remain robust to endogeneity concerns. The study indicates a CEO’s community connection may influence CSR effectiveness, suggesting that mere CSR engagement may not suffice to boost trust and value. These results highlight the potential importance of local ties in corporate leadership and CSR strategy.

引用次数: 0

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