Changjun Zheng

This study examines the relationship between environmental uncertainty and ESG performance, with a focus on the moderating roles of ESG controversies and gender diversity on the board. It utilizes an unbalanced panel dataset of 315 Chinese and US banks from 2011 to 2022. By employing a two‐step system GMM and 2SLS estimations, this study finds that environmental uncertainty adversely influences ESG performance. The findings also suggest a U‐shaped relationship between environmental uncertainty and ESG performance, indicating an adverse effect of environmental uncertainty on ESG performance, which is initially negative but weakens throughout environmental uncertainty and turns positive when the environment is highly uncertain. However, ESG controversies moderate these effects, as does the moderating role of gender board diversity, especially in US banks. Gender diversity helped mitigate the adverse impacts of uncertainty on ESG performance, though this effect is weaker in Chinese banks. The findings offer significant policy insights for bank managers, policymakers, and regulators aiming to improve ESG strategies in the face of crises and global uncertainties.

This study employs causal forests to analyze the relationship between bank digital transformation and bank systemic risk using data of 41 listed banks in China from 2010 to 2021. The results show that bank digital transformation mitigates bank systemic risk of state-owned banks through increasing the capital adequacy ratio and decreasing interbank business. For non-state-owned banks, digital transformation increases the bank’s systemic risk for some while decreasing it for others. In addition, there is a U-shaped relationship between the asset turnover ratio and the impact of bank digital transformation on bank systemic risk. Our research offers valuable suggestions for guiding practical management decisions and policy formulation.

This study explores the effect of fintech-driven inclusive finance on the profitability of banks using an unbalanced panel dataset from 660 banks across 40 developing countries between 2011 and 2021. We start with a fixed-effect estimate and subsequently validate our main findings using two-stage least squares (2SLS-IV), two-step system generalized method of moments (GMM), and generalized least squares (GLS) methodologies. Our analysis centers on three key profitability metrics: ROA, ROE, and NIM. Our findings suggest that fintech-backed inclusive finance boosts ROA by 9.10%, ROE by 18.87%, and NIM by 7.98%, highlighting the growing importance of mobile, internet, and agent banking in these nations. We also note that large banks benefit more from inclusive finance than small ones. Additionally, conventional banks see a more marked improvement in profitability than Islamic and savings banks. The relationship between inclusive finance and bank profitability is stronger in countries with higher GDP growth and those actively advancing financial inclusion through fintech, compared to countries with slower GDP growth and less emphasis on financial inclusion. When examining the interaction effects, the COVID-19 pandemic has further emphasized the positive connection between fintech and bank profitability. This suggests that fintech-driven inclusive finance can play a role in enhancing bank profitability, even in challenging times like the COVID-19 period. The transition towards fintech, however, mandates substantial investments, enhanced financial literacy, and heightened customer security, presenting persistent challenges for governments, policymakers, regulators, and financial institutions.

This study examines the causal relationships and interdependencies among three dimensions of sustainable development goals (SDGs) in Africa: environmental factors, agricultural production (for societal aspects), and finance development (for economic aspects). The study focuses on three regions, the whole SSA (Sub-Saharan Africa, excluding the high-income countries), West-Central Africa (W-CA), and South and East Africa (S-EA), and uses data from 1970 to 2018. It uses vector error correction model (VECM), impulse response function (IRF), and analysis of causality direction methods. The findings indicate bidirectional causal effects among the three SDG dimensions in Africa. Finance development factors influence both environmental and agricultural factors, while agro-production factors significantly affect both finance development and environmental factors. This study concludes that bidirectional causal effects exist within these dimensions, confirming their interdependencies and emphasizing the need for integrating these dimensions into African sustainable development goals. Recommendations include incorporating green aspects in financing development plans and establishing regulatory authorities to effectively coordinate and control these sustainable dimensions at both the Sub-Saharan Africa and state levels, ensuring impactful greenhouse and sustainable agriculture development for sustainable food production.

The close relationship between governments and their central banks generates risks for both partners. This paper presents an original qualitative empirical approach based on textual analysis of the United States of America, China, and their Central Banks’ respective communications. These financial communications are the subject of comparison through a textual analysis to determine these actors’ positions in the “cultural theory” and, more widely, the sociology of risk. The risk profiles identified of the United States of America Federal government and the People’s Bank of China do not necessarily correspond to their legal status and economic role. These results also shed light on the fact that the cultural background cannot be separated from the risk perception in these countries. However, an eye needs to be kept on the geopolitics and securities risk factors that can influence the global economy’s evolution.

With the growth of an economy, the banking industry expands and the competitiveness becomes intense with the increased number of banks in the economy. The objective of this research was to discover the influence of industry-specific and macroeconomic determinants of non-performing loans (NPLs) in the entire banking system of Bangladesh. We performed an analysis for the period from 1979 to 2018 by an autoregressive distributed lag (ARDL) model and checked the robustness of the results in the vector error correction (VEC) model. The outcomes of this research suggest that both industry-specific and macroeconomic factors influence NPLs significantly. Among the industry-specific determinants, bank loan growth, net operating profit, and deposit rates negatively impact NPLs with statistical significance while bank liquidity and lending rates have a significant positive affiliation with NPLs. Gross domestic product (GDP) growth and unemployment, among the macroeconomic variables, have a negative connection with NPLs. Whereas, domestic credit and exchange rates have a significant positive association with NPLs. The contribution of this research is that the outcomes found by means of econometric models can be used for predicting and measuring NPLs in upcoming years, not only for Bangladesh but also for developing and emerging economies. Individual banks, as well as the banking sector, by and large, can get a guideline from this research.

The paper analyzes the determinants of the loan loss provision (LLP) of 22 commercial banks in Pakistan from 2010 to 2017. The motive of the research is that LLP is a measure of credit risk as a proxy for bank risk-taking behavior profits and banks’ sustainability. Especially after the occurrence of a global financial crisis. The quantitative research method of data collection from Bureau Van Dijk’s BankFocus portal and the World Bank’s World Development Indicators. Other than considering specific bank variables such as capital adequacy ratio, return on average equity, and government securities, the effects of macroeconomic variable inflation and lending interest rates are explicitly studied. The model of pooled ordinary least squares (POLS), fixed effect (FE), panel corrected standard error (PCSE), and panel data estimation in the form of a general method of moments (GMM) two-step system is used to find the risk-taking behavior of banks in Pakistan. The results obtained by the use of inflation (INF) as an instrumental variable of LLP are highly dependable with a negative impact on loan loss provision. Lending interest rate (LIR) has a positive and significant relationship with LLP and contribute in the study of macroeconomic variables for bank risk-taking, excessive amount of interest rate was not beneficial for banks to earn profits especially during the economic crises. Return on average equity (ROAE) significantly moderates LLP with a negative interaction and helped the bank with profitable operations and save bank from solvency. Capital adequacy ratio (CAR) and government securities (GOV) are insignificant to LLP. The result is robust by measure of endogeneity, and highlights the important role of commercial banks’ sustainability to explain risk-taking behavior in Pakistan with the intention to increase profits after the occurrence of financial crises. The study further contributes to future research on managerial policy and decision making. In summary, the paper on loan loss provision has the capacity to forecast commercial banks’ credit risk for risk-taking in an emerging country.

Over last two decades, emerging and developing nations have desperately endeavored for efficient banking sectors. In this study, we argue that bank efficiency generates incentives that can impact banks’ capital holdings and the cost of financial intermediation. Analyzing a panel dataset of 1190 banks from BRICS (Brazil, Russia, India, China, South Africa) countries over the period 2007–2015, we find robust evidence that more efficient banks hold higher capital and charge lower financial intermediation costs. In an extended sample over the period 2000–2015, we observe that cost efficiency had a marginal positive impact on bank capital during the global financial crisis of 2007–2009. We also observe that on average, banks increased the cost of financial intermediation during the crisis, however, greater efficiency helped banks to not charge higher intermediation costs. Our results imply the beneficial impact of bank efficiency for bank stability and real economy.