Egidio Palmieri

This paper investigates how banking innovation strategies, namely FinTech M&As and ESG practices, affect bank performance under rising competitive pressures and regulatory complexity. Using a unique dataset of 543 listed banks across 49 countries from 2000 to 2023, we analyse whether these strategic investments enhance banks' profitability, efficiency and risk profiles. The empirical strategy combines bilateral fixed effects and 2SLS‐IV estimations to address endogeneity concerns. We complement the analysis with a cluster‐based classification of banks' business models to assess heterogeneity in strategic responses. Our findings suggest that FinTech‐related M&As primarily improve banks' market‐based risk measures over time, while ESG adoption enhances balance sheet stability and profitability, though efficiency effects remain mixed. Crucially, we show that the performance impact of these levers is moderated by institutional and structural factors. We identify when banks benefit more from specialised strategies (FinTech or ESG) and when a combined approach is more effective. The paper contributes to M&A and banking performance literatures by uncovering the trade‐offs inherent in innovation‐driven transformations, and it offers actionable implications for managers and regulators seeking to align FinTech adoption and sustainability with long‐term value creation. The primary implication is that banks should not treat FinTech acquisitions and ESG adoption as universal performance‐enhancing strategies, but should align them with their business model, institutional environment, and strategic objectives to balance profitability, efficiency and risk.

Purpose: This paper provides a structured integrative review of the literature on bank–FinTech cooperation in the Asia-Pacific countries, organizing evidence across interaction modes and multi-actor configurations through which digital financial services are produced, distributed and governed in emerging markets in the Asia-Pacific region. Design/methodology/approach: We analyzed 204 peer-reviewed articles published between 2015 and 2024; using structured qualitative content coding and bibliometric mapping (co-citation and keyword; analysis). This combined approach identifies the main research streams and clarifies how prior studies conceptualize cooperation, risk, and institutional context. Findings: The review identified three core research clusters: (1) the impact of bank–FinTech cooperation on bank performance, efficiency, and risk-taking, (2) regulatory arbitrage, shadow banking, and implications for prudential supervision and (3) organizational transformation and business-model reconfiguration within financial institutions. A distinctive finding is the centrality of Asia-Pacific evidence, particularly from China, which currently provides the primary empirical basis for claims regarding how FinTech integration affects incumbents' profitability, credit allocation and systemic risk in emerging financial systems. Overall, the evidence reveals a structural tension: bank–FinTech cooperation may improve efficiency and service innovation, but it may also shift risks outside the traditional regulatory perimeter, increase platform dependence and create new supervisory challenges. Practical implications: The review helps bank managers assess cooperation modes not only in terms of innovation access and cost efficiency but also about data control, operational dependence and long-term competitive exposure. For regulators and policymakers, interdependencies among banks, FinTech firms, BigTech platforms must be monitored. Originality/value: This study offers a structured integrative synthesis of fragmented research on bank – FinTech cooperation. Its novelty lies in connecting three bodies of evidence that are usually examined separately: performance and efficiency effects, regulatory arbitrage and risk migration, and organizational transformation. By interpreting these streams through an ecosystem perspective, this study clarifies how firm-level cooperation modes relate to broader issues of competition, financial stability, risk allocation and regulatory design. Targeted directions for comparative research across institutional contexts are also identified.

Purpose: This study investigates how alternative finance digital platforms act as innovation drivers in the bank–firm relationship. Specifically, it explores how crowdfunding, peer-to-peer lending, and invoice trading models act as alternative funding channels that redefine traditional credit intermediation processes by innovating risk assessment practices, trust-building mechanisms and incumbent banks’ competitive positioning within emerging digital ecosystems. Design/methodology/approach: A bibliometric review of 973 articles indexed in Web of Science and Scopus from 1994 to 2024 is conducted. Science mapping techniques (i.e. co-citation, co-authorship and keyword co-occurrence) are combined with cartography analysis to identify intellectual structures and clusters. A content analysis of the most influential contributions is used to outline a conceptual framework grounded in financial intermediation theory and innovation management. Findings: Results show a sharp post-2014 acceleration and subsequent maturation of alternative finance research after 2014. Four dominant themes emerge connected to our clusters: (1) data intensive credit risk assessment on digital platforms, (2) trust and social factors in online lending, (3) information asymmetry and communication in platform settings and (4) funding and banking competition in the presence of alternative finance. Taken together, these themes illustrate how platform technologies, algorithmic scoring, and social reputation systems reconfigure relationship lending and progressively shift banks from exclusive intermediaries to actors embedded in multi-sided ecosystems. Originality/value: The paper offers the first integrated bibliometric and content-based review of alternative finance, bank–firm nexus, and innovation management practices. The study conceptualizes alternative finance as an ecosystem-level innovation rather than a marginal funding channel and highlights the organizational and strategic implications for incumbent banks. The framework and research agenda proposed an advance understanding of platformisation, algorithmic screening of firms, digitally mediated trust and hybrid intermediation models in the literature on innovation management.

This study examines whether environmental, social, and governance performance is associated with lower default risk in European insurance firms, and whether the strength of this association differs between life and non‐life business models. Default risk is measured through Bloomberg market implied probabilities of default derived from structural credit risk models at 1 year and five‐year horizons. ESG performance is proxied by the composite ESG score provided by LSEG. Using an unbalanced panel of 152 insurers from 22 European countries over 2014 to 2023, we estimate panel quantile regressions to allow the ESG default risk relationship to vary across the conditional distribution of default risk. Across the full sample, higher ESG performance is associated with lower short term and long‐term default probabilities, with economically larger and more robust effects among non‐life insurers and among firms in the upper quantiles of default risk. For life insurers, the estimated association is weaker and less consistently significant across quantiles, suggesting that capital strength and asset liability management remain the primary drivers of market implied solvency over longer horizons, while ESG performance operates as a complementary factor rather than a dominant determinant. A set of robustness exercises based on alternative functional forms, lagged ESG measures, an accounting‐based stability proxy, and endogeneity‐oriented specifications support the main pattern of results. The findings have practical implications for integrating sustainability variables into solvency relevant risk governance. In non‐life, governance quality, transparency, and operational risk controls appear most closely linked to lower default risk. In life, ESG policies are best interpreted as part of long horizon risk management and investment discipline, and not as a substitute for core capital and asset liability management.

This study investigates whether green bond issuance in the presence of environmental, social and governance (ESG) performance improvements affects banks' financial performance. Using a panel of 1738 bank‐year observations from 2009 to 2023, the study examines the efficacy of ESG pillars in enhancing the value of green bond issuance, particularly assessing its impact on profitability, funding costs and loan portfolio quality. The findings suggest that green bond issuance enhances the quality of banks' loans, particularly in the presence of increased environmental performance. Moreover, an enhancement in governance scores decreases the funding costs in the presence of green bond issuance, which signals heightened investor confidence and improved reliability. This study contributes to the literature on sustainable finance by indicating the extent to which green finance can expand the financial and risk‐related benefits of green bond issuance by banks. Moreover, the findings indicate the strategic value of incorporating ESG factors into capital market operations for bank managers. This study empirically demonstrates that ESG and green bond issues are effective in improving financial performance and achieving long‐term sustainable development goals in the banking industry.

This article examines the effects of environmental performance on the default probability and the cost of capital of Italian small and medium-sized enterprises (SMEs). The empirical analysis is based on a data set of 16,567 Italian SMEs over the period 2013–2022. Both the cost of debt and the cost of capital are measured using a specific model tailored to Italian SME sectors. In our analysis, we also utilize a random effect model, focusing on multiple measures of a firm’s probability of default (PD). To cope with potential endogeneity issues, we have applied the instrumental variables (IV) two-stage least squares (2SLS). Our study contributes to SME financial management and environmental performance literature by demonstrating the significant role of environmental factors in reducing default risk and financing costs. We find that environmental improvements notably benefit the cost of capital more than the cost of debt, particularly aiding equity holders. Differently from previous works, this article focuses on the effect of environmental variables on default risk, cost of debt and cost of capital in two ways: (a) it is based on a large sample of unlisted Italian SMEs; (b) it uses an estimate of the default probabilities and the cost of capital suitable for private capital companies.

This volume provides a thorough examination of the drivers of recent innovations in the financial sector. The book's distinctive feature lies in its unique integration of two subjects of particular relevance in the fields of finance and banking: Environmental, Social and Governance (ESG) policies and Fintech innovations. This integration provides a comprehensive perspective on their interdependent influence and implications for financial intermediaries and the financial sector. The book offers an analysis of the theoretical and empirical essentials behind these transformations, including empirical analyses of the bank-specific impact of ESG factors on ratings, loan quality and internal control systems. While facilitating broader research regarding sustainable finance and providing essential findings for those hoping to comprehend and implement the aforementioned strategies into practice, the volume showcases the increasing significance of environmental issues in financial decision-making. Finally, the book addresses the way financial technology innovations are causing disruption to so-called "traditional" credit markets and affecting banking stability in general. It offers a comparison of green and brown Fintech, examining their safety and sustainability dimensions, and discuss the trade-off between progress and the need for responsibility. This work serves to bridge a significant gap between theoretical and practical approaches, providing findings and implications for researchers and academics studying finance, technology and sustainability. Through multiple methodologies, the authors explore changes related to ESG and Fintech, facilitating deeper understanding of their operational implications and significance.

The book's first part analyses the environmental, social, and governance (ESG) practices of financial intermediaries to address market expectations. The chapters of the first section demonstrate how ESG performance enhancements affect stability, operational efficiency, and risk management in financial institutions and outline how these institutions react to the changing regulatory environment.

The financial sector is experiencing a fundamental change due to two simultaneous transitions: the digital and green transitions. The “twin transitions” are transforming the operating and strategic models of financial intermediaries with far-reaching implications for both their profitability and risk appetite and their contribution to the sustainability of the broader economies (BCBS, 2019; FSB, 2019). With this background, the book “Innovation in Banking and Financial Intermediaries: The Disruptive Role of ESG Policies and Fintech Players” aims to explore these transformations by focusing on some of the most critical research questions emerging from the intersection of these two areas of innovation (EBA, 2018).