João Pinto

This paper examines the association between geoeconomic fragmentation (GEF) and corporate capital structure dynamics. Extending dynamic trade-off models beyond their implicit assumption of a stable global economic environment, we conceptualize GEF as a systemic risk factor that is consistent with higher adjustment costs and a higher option value of delaying financial rebalancing. We measure GEF using the Composite Geoeconomic Fragmentation Risk Index (CGFRI), which captures structural vulnerability, policy uncertainty, coercive restrictions, and realized fragmentation. Using a dynamic partial-adjustment framework for 121,454 non-financial firms across the European Union over 2015–2024, we find that heightened GEF risk is associated with greater observed leverage persistence and a lower observed speed of adjustment toward target leverage. This baseline inertia association is robust across alternative estimators, instrument sets, variable definitions, and sample restrictions. Because observed adjustment reflects both the underlying incentive to adjust and the frequency of refinancing events (Danis et al., 2014), the estimated decline in the speed of adjustment should be read as a lower bound on the underlying change. Among firms with large deviations from target — the only regime for which the specification is well identified — the association reverses, consistent with a forced-adjustment mechanism whereby the cost of continued misalignment outweighs the option value of waiting; because the low-deviation comparison group could not be reliably estimated, we treat this result as exploratory. We find no robust evidence that firm-level exposure to external finance dependence, cash-flow volatility, growth opportunities, sector sensitivity, supply-chain complexity, or financial constraints systematically moderates the baseline association. The pooled EU association nevertheless masks meaningful cross-country heterogeneity: it is sensitive to the exclusion of any one of the three largest national samples, and an apparent German- vs. French-origin divergence reflects Germany specifically rather than legal origin.

This paper examines how sustainability is priced within the contractual architecture of securitization. Using sustainable and conventional asset-backed securities (ABS) and mortgage-backed securities (MBS) issued in OECD countries between 2019 and 2025, we document three main findings. First, sustainable and conventional securitizations exhibit significantly different sensitivities to conventional pricing determinants, consistent with sustainability being priced jointly with security design. Second, we find no robust evidence of a sustainability-related funding discount: the positive spread differential for sustainable ABS attenuates substantially after controlling for observable characteristics, while the negative differential for sustainable MBS does not survive matched comparisons. Third, the sustainability-related pricing differential is significantly more favorable for MBS than for ABS and remains robust across alternative comparison samples. These findings show that the pricing relevance of sustainability depends on the collateral and contractual architecture of the structured claim. Securitization may therefore expand sustainable financing capacity without necessarily reducing its marginal cost.

Green bonds and green bank loans coexist as instruments for financing the low-carbon transition, yet the strategic mechanism through which issuers select between them remains weakly formalized. This paper models green debt instrument choice as a three-stage extensive-form game with perfect information in which a firm first selects a financing route, a bank then chooses credit enhancement in the bond branch or loan terms in the loan branch, and investors decide whether to subscribe. Because the bank’s credit enhancement enters the investors’ participation condition, the three players are genuinely strategically interdependent, and because the bond branch carries only a small standby cost rather than the full loan cost, the regulatory regime affects the choice of instrument and not merely the level of financing cost. The subgame-perfect equilibrium is characterized analytically by backward induction and is then implemented numerically over the eight admissible states of demand, issuer credibility and regulatory regime through a Monte Carlo experiment of 200,000 parameter draws. The share of simulated parameter configurations yielding a green bond equilibrium falls from 93.4% under high demand and strong credibility to 14.2% when both deteriorate; the regulatory regime flips the equilibrium instrument in 19.4% of draws, against 0% in the degenerate special case without the enhancement channel. A variance-based global sensitivity analysis (Sobol and Morris) and an incomplete-information extension with a noisy credibility signal complete the analysis. All reported quantities are numerical solutions of the model under an illustrative calibration, not empirical estimates.

This paper proposes a conceptual framework for understanding geoeconomic fragmentation risk as a multidimensional condition and operationalizes it through a composite index for the European Union (EU-27), linking macro-level fragmentation to firm-level strategic behavior under uncertainty. We argue that fragmentation is not captured by traditional indicators of macroeconomic risk, political instability, or trade openness. Rather, it is a multidimensional condition in which cross-border economic relations become strategically contested, politically coercible, and institutionally uncertain. To formalize this argument, we synthesize Knight's distinction between measurable risk and genuine uncertainty, Luttwak's conception of geo-economics as strategic conflict, and Turner's systemic account of interdependence, engaging with contemporary IPE scholarship on weaponized interdependence, sanctions effectiveness, trade discrimination and industrial policy, and geoeconomic statecraft. On that basis, we propose a composite index built from four dimensions: structural vulnerability, policy uncertainty, coercive restrictions, and realized fragmentation. The measure draws on country-risk data, uncertainty indexes, sanctions databases, and bilateral trade and investment data. The result is a framework that sharpens the concept of geoeconomic fragmentation risk and offers an operational path for empirical testing in corporate finance, international business, and political economy.

Green bonds and green bank loans coexist as instruments for financing the low-carbon transition, yet the strategic mechanism through which issuers select between them remains weakly formalized. This paper models green debt instrument choice as a three-stage extensive-form game with perfect information in which a firm first selects a financing route, investors then decide whether to subscribe to a green bond issuance, and a bank sets lending conditions under regulatory incentives. The subgame-perfect equilibrium is characterized analytically by backward induction and is then implemented numerically: the equilibrium correspondence is mapped over the parameter space and evaluated through a Monte Carlo experiment of 200,000 parameter drawing across the eight admissible states of demand, issuer credibility and regulatory regime. Equilibrium green bond issuance requires two conditions to hold jointly, namely investor participation and a demand-driven advantage exceeding the fixed issuance and certification cost. The simulation shows that green bond adoption falls from 79.2% under high demand and strong credibility to 1.5% under moderate demand and weak credibility, with a sharp discontinuity at the participation threshold, and that bank concessionally shifts financing levels without altering the bond-versus-loan margin. The framework provides a tractable basis for assessing sustainability-related financing risk and for the empirical separation of feasibility, optimality and institutional transmission channels.

The main purpose of this research is to examine the significance of green bonds and green banking loans as financing tools for ecologically sustainable projects in the face of increasing worldwide environmental issues. This research seeks to uncover the determinants of both instruments’ issuance and the obstacles to their acceptance. A thorough systematic literature review will be conducted to assess the efficacy of these tools in improving company financial performance and cost of debt, advancing environmental sustainability, and influencing investor behavior. This methodology guarantees a comprehensive and impartial examination of peer-reviewed publications from reputable sources such as Web of Science and Scopus. Although issues such as greenwashing, market liquidity, and regulatory discrepancies still exist, both tools are growing steadily in the sustainable financing spectrum. The results also suggest that both instruments are influenced by several factors, often overlapping due to their common focus on financing sustainable projects. The credit rating, financial health, and overall environmental performance of the issuing entity significantly influence the attractiveness and pricing of green bonds, as do the market conditions, regulatory frameworks, and certification. The environmental profile and creditworthiness of the borrower are key determinants for green banking loans. The review enhances the current body of knowledge by presenting a theoretical structure for comprehending the dynamics of green debt markets and proposing practical recommendations for policymakers and financial institutions. Furthermore, it emphasizes the deficiencies in existing research, including the need for further longitudinal investigations into green bank loans and a more thorough examination of the notion of ‘greenium’. We searched Web of Science and Scopus up to 26 April 2024. Eligibility criteria included peer-reviewed English-language studies on green bonds or green banking loans. After screening, 128 studies were found to have met the inclusion criteria.

This paper investigates how geoeconomic fragmentation (GEF) affects corporate capital structure dynamics. Challenging the implicit assumption of a stable global economic order in canonical trade-off models, we hypothesise that GEF constitutes a systemic, regime-changing shock that not only elevates adjustment costs but also destabilises the target leverage ratio itself. Using a dynamic partial adjustment framework on a panel of 121,454 medium-to-large non-financial firms across the European Union from 2015 to 2024, we document a significant reduction in the speed of adjustment (SOA) towards target leverage under heightened GEF risk. This inertia is most pronounced for firms with larger target deviations, indicating a breakdown of the market-disciplining mechanism. We identify three primary transmission channels-elevated cost of external finance, increased cash flow volatility, and strategic inertia driven by real options-and find that the effect is heterogeneous, amplified for firms in geoeconomically sensitive sectors and for financially constrained firms. However, firms with complex global supply chains exhibit faster adjustment, consistent with restructuring-driven deleveraging. Our findings quantify the "cost of fragmentation" in terms of heightened market frictions and offer actionable insights for policymakers and corporate treasurers navigating an era of systemic geoeconomic risk. The paper bridges corporate finance with strategic management, revealing how financing decisions are embedded in broader organisational processes of adaptation and resilience.