Pub Date : 2025-12-15DOI: 10.1016/j.ribaf.2025.103253
Ziqi Li , Zhihao Cai , Ho-Chuan Huang
This study examines the impact of CFO-CEO co-option on controlling shareholders’ equity pledging in Chinese A-share listed firms from 2003 to 2022. Findings indicate a significant positive relationship, as co-opted CFOs – those appointed after the CEO’s tenure begins – tend to align with CEO interests, facilitating higher pledge levels to meet short-term liquidity needs. Gender and tenure moderate this effect: female CFOs, despite being risk-averse, exhibit stronger influences due to compliance pressures, while newly appointed CFOs are more susceptible to CEO influence. External governance mechanisms, such as Big Four audits and concentrated market environments, mitigate this impact, whereas high information asymmetry exacerbates it. Additionally, financing constraints serve as a mediating mechanism, as co-opted CFOs heighten financial pressures, leading to increased equity pledging. These findings highlight governance risks associated with CFO co-option and provide policy insights for mitigating financial instability in emerging markets.
{"title":"The governance nexus: The impact of CFO-CEO collusion on controlling shareholders’ equity pledging","authors":"Ziqi Li , Zhihao Cai , Ho-Chuan Huang","doi":"10.1016/j.ribaf.2025.103253","DOIUrl":"10.1016/j.ribaf.2025.103253","url":null,"abstract":"<div><div>This study examines the impact of CFO-CEO co-option on controlling shareholders’ equity pledging in Chinese A-share listed firms from 2003 to 2022. Findings indicate a significant positive relationship, as co-opted CFOs – those appointed after the CEO’s tenure begins – tend to align with CEO interests, facilitating higher pledge levels to meet short-term liquidity needs. Gender and tenure moderate this effect: female CFOs, despite being risk-averse, exhibit stronger influences due to compliance pressures, while newly appointed CFOs are more susceptible to CEO influence. External governance mechanisms, such as Big Four audits and concentrated market environments, mitigate this impact, whereas high information asymmetry exacerbates it. Additionally, financing constraints serve as a mediating mechanism, as co-opted CFOs heighten financial pressures, leading to increased equity pledging. These findings highlight governance risks associated with CFO co-option and provide policy insights for mitigating financial instability in emerging markets.</div></div>","PeriodicalId":51430,"journal":{"name":"Research in International Business and Finance","volume":"82 ","pages":"Article 103253"},"PeriodicalIF":6.9,"publicationDate":"2025-12-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145790625","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 : 2025-12-12DOI: 10.1016/j.ribaf.2025.103252
De-Wai Chou , Chih-Chun Chen , Tung-Lin He
This research examines the impact of OpenAI’s technological announcements on the stock returns of artificial intelligence (AI) concept stocks and their matched firms in Taiwan’s equities market. Using an event study methodology and regression analyses, the findings reveal significant differences in cumulative abnormal returns (CARs) between AI concept stocks and matched firms, as the former consistently outperform their matched counterparts with the performance gap widening over longer event windows. The analysis highlights the crucial roles of product originality and the level of recognition for AI concept stocks by brokers and stock information websites in shaping investor responses, while R&D expenditures show limited long-term effects. These findings offer valuable insights for firms, investors, and policymakers in navigating the dynamics of innovation-driven growth in the burgeoning AI sector.
{"title":"OpenAI's technological announcements: Market reactions and implications","authors":"De-Wai Chou , Chih-Chun Chen , Tung-Lin He","doi":"10.1016/j.ribaf.2025.103252","DOIUrl":"10.1016/j.ribaf.2025.103252","url":null,"abstract":"<div><div>This research examines the impact of OpenAI’s technological announcements on the stock returns of artificial intelligence (AI) concept stocks and their matched firms in Taiwan’s equities market. Using an event study methodology and regression analyses, the findings reveal significant differences in cumulative abnormal returns (CARs) between AI concept stocks and matched firms, as the former consistently outperform their matched counterparts with the performance gap widening over longer event windows. The analysis highlights the crucial roles of product originality and the level of recognition for AI concept stocks by brokers and stock information websites in shaping investor responses, while R&D expenditures show limited long-term effects. These findings offer valuable insights for firms, investors, and policymakers in navigating the dynamics of innovation-driven growth in the burgeoning AI sector.</div></div>","PeriodicalId":51430,"journal":{"name":"Research in International Business and Finance","volume":"82 ","pages":"Article 103252"},"PeriodicalIF":6.9,"publicationDate":"2025-12-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145790572","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 : 2025-12-08DOI: 10.1016/j.ribaf.2025.103249
Genhao Li , Xiaojiao Ye , Chaochao Li , Chao Long
Informal lending has long operated outside formal financial regulation, emerging as a key source of risk in the financial system. However, its role as a potential transmission channel for climate risks has rarely been explored in existing literature. Based on a dual perspective of physical and transition risks, this study systematically examines the impact of climate risks on informal lending default and their spillover effects on the formal financial system. The results show that climate risks exhibit significant heterogeneity in their impact on informal lending default: physical risk significantly increases default risk, serving as the primary climate threat faced by informal lending; transition risk, by contrast, presents a nonlinear impact characterized by short-term inhibition and long-term promotion, which is associated with its short-term boosting effect on return on capital (ROC). The core transmission mechanism is as follows: climate risks erode ROC, exacerbate operational risks, and drive a shift in financing channels toward informal lending, thereby increasing default risk. Heterogeneity analysis reveals that the aforementioned impacts are more pronounced among individual borrowers, in eastern China, and in scenarios affected by extreme low temperatures and heavy rainfall shocks. Furthermore, this study confirms that climate risks can be transmitted to the formal financial system via the informal lending channel, exhibiting significant cross-market spillover effects. This study expands the research scope of climate risks to the informal financial sector, offering new insights into the critical function of informal lending in climate risk transmission.
{"title":"Climate risk, informal lending default, and financial risk spillovers: A dual perspective of physical and transition risks","authors":"Genhao Li , Xiaojiao Ye , Chaochao Li , Chao Long","doi":"10.1016/j.ribaf.2025.103249","DOIUrl":"10.1016/j.ribaf.2025.103249","url":null,"abstract":"<div><div>Informal lending has long operated outside formal financial regulation, emerging as a key source of risk in the financial system. However, its role as a potential transmission channel for climate risks has rarely been explored in existing literature. Based on a dual perspective of physical and transition risks, this study systematically examines the impact of climate risks on informal lending default and their spillover effects on the formal financial system. The results show that climate risks exhibit significant heterogeneity in their impact on informal lending default: physical risk significantly increases default risk, serving as the primary climate threat faced by informal lending; transition risk, by contrast, presents a nonlinear impact characterized by short-term inhibition and long-term promotion, which is associated with its short-term boosting effect on return on capital (ROC). The core transmission mechanism is as follows: climate risks erode ROC, exacerbate operational risks, and drive a shift in financing channels toward informal lending, thereby increasing default risk. Heterogeneity analysis reveals that the aforementioned impacts are more pronounced among individual borrowers, in eastern China, and in scenarios affected by extreme low temperatures and heavy rainfall shocks. Furthermore, this study confirms that climate risks can be transmitted to the formal financial system via the informal lending channel, exhibiting significant cross-market spillover effects. This study expands the research scope of climate risks to the informal financial sector, offering new insights into the critical function of informal lending in climate risk transmission.</div></div>","PeriodicalId":51430,"journal":{"name":"Research in International Business and Finance","volume":"82 ","pages":"Article 103249"},"PeriodicalIF":6.9,"publicationDate":"2025-12-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145737207","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 : 2025-12-06DOI: 10.1016/j.ribaf.2025.103247
Qirui Tang , Yi Fang
Leveraging banking data from 107 countries between 2001 and 2020, this study explores the influence of extreme natural disasters on the banking industry's active risk-taking. The results reveal that the occurrence of extreme natural disasters leads to a reduction in active risk-taking and the magnitude of impacts caused by different types of disasters varies. Mechanism analysis shows that disasters reduce banks' active risk-taking levels by affecting the profitability of the demand side of funds. Heterogeneity analysis demonstrates that the impact of natural disasters on banking sectors' active risk-taking varies with national industrial structure. Banks in net energy-importing countries are more susceptible to the effects of natural disasters on active risk-taking. Furthermore, using machine learning methods, we demonstrate that natural disaster indicators are important predictors of financial crises and should be incorporated into early warning systems.
{"title":"How do extreme climate risks affect banking active risk-taking? Empirical evidence from 107 countries","authors":"Qirui Tang , Yi Fang","doi":"10.1016/j.ribaf.2025.103247","DOIUrl":"10.1016/j.ribaf.2025.103247","url":null,"abstract":"<div><div>Leveraging banking data from 107 countries between 2001 and 2020, this study explores the influence of extreme natural disasters on the banking industry's active risk-taking. The results reveal that the occurrence of extreme natural disasters leads to a reduction in active risk-taking and the magnitude of impacts caused by different types of disasters varies. Mechanism analysis shows that disasters reduce banks' active risk-taking levels by affecting the profitability of the demand side of funds. Heterogeneity analysis demonstrates that the impact of natural disasters on banking sectors' active risk-taking varies with national industrial structure. Banks in net energy-importing countries are more susceptible to the effects of natural disasters on active risk-taking. Furthermore, using machine learning methods, we demonstrate that natural disaster indicators are important predictors of financial crises and should be incorporated into early warning systems.</div></div>","PeriodicalId":51430,"journal":{"name":"Research in International Business and Finance","volume":"82 ","pages":"Article 103247"},"PeriodicalIF":6.9,"publicationDate":"2025-12-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145790571","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 : 2025-12-05DOI: 10.1016/j.ribaf.2025.103251
Abdissa Demise Damasa
This study examines the determinants, trends, and regional progress of financial sector development in seven East African countries from 1990 to 2023. Grounded in financial development theory, a composite index of financial development (FSDI) is constructed using Principal Component Analysis (PCA) to capture multidimensional aspects of financial access, depth, efficiency, stability, and liberalization. The study employs dynamic heterogeneous panel estimators, including mean group, pooled mean group, dynamic fixed effect, fully modified ordinary least square, canonical co-integration regression, feasible generalized least square, along with augmented mean group and common correlate effect mean group estimators to analyze both short-run and long-run relationships with economic and institutional factors. Results reveal significant disparities, with Kenya recording the highest index (0.72) and Sudan the lowest (0.22); followed by Burundi (0.66), while Rwanda, Ethiopia, Uganda, and Tanzania exhibit moderate development (0.49–0.30). In the long run, financial development is positively influenced by government consumption, bank deposits, gross domestic savings, corruption control, and remittances, whereas high lending interest rates constrain growth. In the short run, economic growth and bank deposits remain key contributors. Methodologically, the study contributes by integrating PCA-based index construction with dynamic heterogeneous panel estimation, providing robust insights into country-specific and regional dynamics. Policy recommendations include promoting domestic savings and investment, strengthening governance and anti-corruption measures, improving formal financial inclusion, managing interest rates prudently, and harnessing remittance flows to foster a more inclusive, resilient, and sustainable financial sector across East Africa.
{"title":"Financial sector development in East Africa: Determinants, trend, and regional progress","authors":"Abdissa Demise Damasa","doi":"10.1016/j.ribaf.2025.103251","DOIUrl":"10.1016/j.ribaf.2025.103251","url":null,"abstract":"<div><div>This study examines the determinants, trends, and regional progress of financial sector development in seven East African countries from 1990 to 2023. Grounded in financial development theory, a composite index of financial development (FSDI) is constructed using Principal Component Analysis (PCA) to capture multidimensional aspects of financial access, depth, efficiency, stability, and liberalization. The study employs dynamic heterogeneous panel estimators, including mean group, pooled mean group, dynamic fixed effect, fully modified ordinary least square, canonical co-integration regression, feasible generalized least square, along with augmented mean group and common correlate effect mean group estimators to analyze both short-run and long-run relationships with economic and institutional factors. Results reveal significant disparities, with Kenya recording the highest index (0.72) and Sudan the lowest (0.22); followed by Burundi (0.66), while Rwanda, Ethiopia, Uganda, and Tanzania exhibit moderate development (0.49–0.30). In the long run, financial development is positively influenced by government consumption, bank deposits, gross domestic savings, corruption control, and remittances, whereas high lending interest rates constrain growth. In the short run, economic growth and bank deposits remain key contributors. Methodologically, the study contributes by integrating PCA-based index construction with dynamic heterogeneous panel estimation, providing robust insights into country-specific and regional dynamics. Policy recommendations include promoting domestic savings and investment, strengthening governance and anti-corruption measures, improving formal financial inclusion, managing interest rates prudently, and harnessing remittance flows to foster a more inclusive, resilient, and sustainable financial sector across East Africa.</div></div>","PeriodicalId":51430,"journal":{"name":"Research in International Business and Finance","volume":"82 ","pages":"Article 103251"},"PeriodicalIF":6.9,"publicationDate":"2025-12-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145737209","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 : 2025-12-05DOI: 10.1016/j.ribaf.2025.103250
Zhongyuan Li , Shuo Chen , Ruike Ye , Wenzhi Chen
The motivation for outward foreign direct investment (OFDI) has consistently been a focal point in international business research. Using data from listed Chinese firms, this study examined whether peer effects drive OFDI. We meticulously identified peer effect-driven OFDI as an enterprise engaging in OFDI in a country where other firms from the same city and industry have already invested. Our findings revealed that peer firms’ OFDI activities significantly influence focal firms’ OFDI behavior, and learning and competition mechanisms drive these peer effects. The peer effects are more pronounced among firms that are larger, older, more profitable, or state-owned. Furthermore, under the learning mechanism, firms exhibit rational OFDI behavior, favoring geographically or culturally proximate countries. In contrast, under the competition mechanism, firms exhibit irrational OFDI behavior, preferring to invest in geographically or culturally distant countries. These results offer valuable insights for policymakers seeking to guide firms toward rational OFDI.
{"title":"A dual lens examination of peer effects on OFDI: Learning and competition perspectives","authors":"Zhongyuan Li , Shuo Chen , Ruike Ye , Wenzhi Chen","doi":"10.1016/j.ribaf.2025.103250","DOIUrl":"10.1016/j.ribaf.2025.103250","url":null,"abstract":"<div><div>The motivation for outward foreign direct investment (OFDI) has consistently been a focal point in international business research. Using data from listed Chinese firms, this study examined whether peer effects drive OFDI. We meticulously identified peer effect-driven OFDI as an enterprise engaging in OFDI in a country where other firms from the same city and industry have already invested. Our findings revealed that peer firms’ OFDI activities significantly influence focal firms’ OFDI behavior, and learning and competition mechanisms drive these peer effects. The peer effects are more pronounced among firms that are larger, older, more profitable, or state-owned. Furthermore, under the learning mechanism, firms exhibit rational OFDI behavior, favoring geographically or culturally proximate countries. In contrast, under the competition mechanism, firms exhibit irrational OFDI behavior, preferring to invest in geographically or culturally distant countries. These results offer valuable insights for policymakers seeking to guide firms toward rational OFDI.</div></div>","PeriodicalId":51430,"journal":{"name":"Research in International Business and Finance","volume":"82 ","pages":"Article 103250"},"PeriodicalIF":6.9,"publicationDate":"2025-12-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145737208","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 : 2025-12-05DOI: 10.1016/j.ribaf.2025.103248
Shuping Li , Xiaoyang Yao , Jianfeng Li
This study applies the generalized dynamic factor model (GDFM), TVP-VAR-DY framework, and pattern causality to investigate spillover effect from international commodity idiosyncratic volatility co-movements to China’s financial market risk, as well as the impact of a series of macroeconomic factors on such spillover effect. The empirical results indicate that the idiosyncratic volatility co-movements of energy, industrial metals, precious metals, soft commodities, and agricultural products all have significant spillover effects on China’s financial market risk. The influence of commodity idiosyncratic co-movements on China’s financial market risk is relatively stable under normal economic conditions but intensifies significantly during periods of deteriorating economic fundamentals. Macroeconomic factors such as international capital flows, investor sentiment, geopolitical risks, economic conditions, and international freight rates predominantly exhibit a positive causal effect on the dynamic spillover effect.
{"title":"The impact of co-movements in international commodity idiosyncratic volatility on China’s financial market risk","authors":"Shuping Li , Xiaoyang Yao , Jianfeng Li","doi":"10.1016/j.ribaf.2025.103248","DOIUrl":"10.1016/j.ribaf.2025.103248","url":null,"abstract":"<div><div>This study applies the generalized dynamic factor model (GDFM), TVP-VAR-DY framework, and pattern causality to investigate spillover effect from international commodity idiosyncratic volatility co-movements to China’s financial market risk, as well as the impact of a series of macroeconomic factors on such spillover effect. The empirical results indicate that the idiosyncratic volatility co-movements of energy, industrial metals, precious metals, soft commodities, and agricultural products all have significant spillover effects on China’s financial market risk. The influence of commodity idiosyncratic co-movements on China’s financial market risk is relatively stable under normal economic conditions but intensifies significantly during periods of deteriorating economic fundamentals. Macroeconomic factors such as international capital flows, investor sentiment, geopolitical risks, economic conditions, and international freight rates predominantly exhibit a positive causal effect on the dynamic spillover effect.</div></div>","PeriodicalId":51430,"journal":{"name":"Research in International Business and Finance","volume":"82 ","pages":"Article 103248"},"PeriodicalIF":6.9,"publicationDate":"2025-12-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145737210","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 : 2025-12-03DOI: 10.1016/j.ribaf.2025.103222
Liukai Wang , Yuqing Li , Larisa Yarovaya
The Metaverse industry has attracted global attention and holds significant potential for investment, yet its investment environment and portfolio strategies remain underexplored, particularly in China. This study analyzes the industry’s structure and interdependencies using returns from 110 listed Metaverse firms. Employing a Kendall-based network, we identify leaders and peripheral enterprises within the industry. From a micro-perspective, we propose a hybrid Kendall-based investment scheme, showing that portfolios of peripheral firms consistently outperform those of leaders and the overall market. The scheme also proves robust across different network scales, investor preferences, and market conditions. Overall, this research advances understanding of the Metaverse industry by combining a macro view of its industrial environment with a micro focus on portfolio design, offering practical insights for regulators, managers, and investors.
{"title":"Interdependence and portfolio scheme of emerging industry of Metaverse","authors":"Liukai Wang , Yuqing Li , Larisa Yarovaya","doi":"10.1016/j.ribaf.2025.103222","DOIUrl":"10.1016/j.ribaf.2025.103222","url":null,"abstract":"<div><div>The Metaverse industry has attracted global attention and holds significant potential for investment, yet its investment environment and portfolio strategies remain underexplored, particularly in China. This study analyzes the industry’s structure and interdependencies using returns from 110 listed Metaverse firms. Employing a Kendall-based network, we identify leaders and peripheral enterprises within the industry. From a micro-perspective, we propose a hybrid Kendall-based investment scheme, showing that portfolios of peripheral firms consistently outperform those of leaders and the overall market. The scheme also proves robust across different network scales, investor preferences, and market conditions. Overall, this research advances understanding of the Metaverse industry by combining a macro view of its industrial environment with a micro focus on portfolio design, offering practical insights for regulators, managers, and investors.</div></div>","PeriodicalId":51430,"journal":{"name":"Research in International Business and Finance","volume":"82 ","pages":"Article 103222"},"PeriodicalIF":6.9,"publicationDate":"2025-12-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145790570","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}
By reducing the asset-liability maturity mismatch, the Basel III Net Stable Funding Ratio (NSFR) might have a tremendous impact on banks’ ability to make profits. We show that the joint effect of the adoption of ultra-expansionary measures of monetary policy and this liquidity requirement can seriously threaten banks’ profitability in terms of their net interest margins. Based on a panel dataset of European banks observed over the 2011–2018 years, we find that the level and the dynamics of interest rates affect the relationship between NSFR and banks’ profits. The impact of the NSFR is null during the years 2011–2012, when market rates firstly raise and then decline, which suggests that, when rates show a certain volatility, the decrease in the funding cost due to a lower exposure to funding liquidity risk more than offsets the drawback of lower interest earnings. This result does not hold for the years 2013–2018, when interest rates stay close to the zero level and, finally, become negative, but with a much more stable trend. We argue that the higher level of interest rates in the years 2011–2012 gives banks the room to negotiate more profitable conditions with the clientele following the changes in market rates observed during those years. The proximity to the zero level of the interest rates and their stability remove or significantly limit that possibility and can explain the negative impact of the NSFR on banks’ net interest margins.
{"title":"Funding liquidity regulation, ultra-expansionary monetary policy and European banks’ profitability","authors":"Erika Bragaglia , Domenico Curcio , Giuseppe Galloppo , Roberto Guida","doi":"10.1016/j.ribaf.2025.103246","DOIUrl":"10.1016/j.ribaf.2025.103246","url":null,"abstract":"<div><div>By reducing the asset-liability maturity mismatch, the Basel III Net Stable Funding Ratio (NSFR) might have a tremendous impact on banks’ ability to make profits. We show that the joint effect of the adoption of ultra-expansionary measures of monetary policy and this liquidity requirement can seriously threaten banks’ profitability in terms of their net interest margins. Based on a panel dataset of European banks observed over the 2011–2018 years, we find that the level and the dynamics of interest rates affect the relationship between NSFR and banks’ profits. The impact of the NSFR is null during the years 2011–2012, when market rates firstly raise and then decline, which suggests that, when rates show a certain volatility, the decrease in the funding cost due to a lower exposure to funding liquidity risk more than offsets the drawback of lower interest earnings. This result does not hold for the years 2013–2018, when interest rates stay close to the zero level and, finally, become negative, but with a much more stable trend. We argue that the higher level of interest rates in the years 2011–2012 gives banks the room to negotiate more profitable conditions with the clientele following the changes in market rates observed during those years. The proximity to the zero level of the interest rates and their stability remove or significantly limit that possibility and can explain the negative impact of the NSFR on banks’ net interest margins.</div></div>","PeriodicalId":51430,"journal":{"name":"Research in International Business and Finance","volume":"82 ","pages":"Article 103246"},"PeriodicalIF":6.9,"publicationDate":"2025-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145684890","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 : 2025-12-01DOI: 10.1016/j.ribaf.2025.103245
Abu Bakkar Siddik , Noor ul Amin
This study examines the impact of artificial intelligence (AI) on banking stability in 37 OECD countries from 2010 to 2022, guided by Neo-Schumpeterian innovation theory which frames AI as both a stabilizing and disruptive force. AI is operationalized using annual venture capital funding directed toward AI-focused startups, covering domains such as machine learning, generative AI, natural language processing, and predictive analytics—data sourced from Crunchbase. We further validate this using an alternative proxy: the number of AI startups. Banking stability is measured by the Z-score, capturing the risk of insolvency. Using Panel-Corrected Standard Errors (PCSE) for baseline estimation, and two-step System Generalized Method of Moments (GMM) as the core identification strategy to address endogeneity, along with Heckman selection models to correct sample selection bias, the findings reveal that increased AI funding significantly enhances banking stability—particularly in technologically advanced and well-regulated OECD economies. Furthermore, mechanism analysis confirms the partial role of financial development in this relationship, while government effectiveness shows no significant mediation. Cross-country heterogeneity analysis reveals stronger effects in Western Europe and countries with advanced financial infrastructure. By integrating AI investment dynamics with institutional and technological contexts, this study provides actionable insights for designing responsible AI strategies that promote banking resilience while managing systemic risks.
{"title":"Disruptive innovation or systemic resilience? Investigating the impact of artificial intelligence on banking stability","authors":"Abu Bakkar Siddik , Noor ul Amin","doi":"10.1016/j.ribaf.2025.103245","DOIUrl":"10.1016/j.ribaf.2025.103245","url":null,"abstract":"<div><div>This study examines the impact of artificial intelligence (AI) on banking stability in 37 OECD countries from 2010 to 2022, guided by Neo-Schumpeterian innovation theory which frames AI as both a stabilizing and disruptive force. AI is operationalized using annual venture capital funding directed toward AI-focused startups, covering domains such as machine learning, generative AI, natural language processing, and predictive analytics—data sourced from Crunchbase. We further validate this using an alternative proxy: the number of AI startups. Banking stability is measured by the Z-score, capturing the risk of insolvency. Using Panel-Corrected Standard Errors (PCSE) for baseline estimation, and two-step System Generalized Method of Moments (GMM) as the core identification strategy to address endogeneity, along with Heckman selection models to correct sample selection bias, the findings reveal that increased AI funding significantly enhances banking stability—particularly in technologically advanced and well-regulated OECD economies. Furthermore, mechanism analysis confirms the partial role of financial development in this relationship, while government effectiveness shows no significant mediation. Cross-country heterogeneity analysis reveals stronger effects in Western Europe and countries with advanced financial infrastructure. By integrating AI investment dynamics with institutional and technological contexts, this study provides actionable insights for designing responsible AI strategies that promote banking resilience while managing systemic risks.</div></div>","PeriodicalId":51430,"journal":{"name":"Research in International Business and Finance","volume":"82 ","pages":"Article 103245"},"PeriodicalIF":6.9,"publicationDate":"2025-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145684897","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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