Purpose The paper aims to develop a comprehensive regulatory framework for the use of Artificial Intelligence (AI) in the financial sector. Drawing on the European Union’s Artificial Intelligence Act (EU AIA), the study develops a risk-based proportional approach to AI regulations applicable across financial markets and institutions. Design/methodology/approach The paper employs a qualitative research design using a two-phase analytical approach. Firstly, it identifies specific AI risks and assesses their impact on financial regulatory objectives of financial stability, consumer protection and financial integrity. Secondly, it applies a risk-based proportional regulatory approach, drawing on the EU AIA to outline specific mechanisms for risk mitigation, governance and oversight to regulate AI risks. Findings The study finds that AI introduces new layers of risk and transmission channels that can affect financial markets and institutions. The paper applies the framework of EU AIA for classifying AI applications by risk levels (unacceptable, high, limited, minimal) and identifies corresponding tailored regulatory measures. Effective implementation of AI regulations depends on integrating these measures into strong internal governance and risk management frameworks within financial institutions. Practical implications The paper provides a risk-based regulatory design for AI governance for financial institutions by systematically applying the approach of the EU AIA and offers guidance for policymakers developing sector-specific AI oversight frameworks. Originality/value To the best of the author’s knowledge, this paper provides a novel contribution by offering one of the first structured frameworks for regulating AI in the financial sector, an area with scant literature.
Purpose This paper aims to analyze influencing factors on the covariation between sovereign and bank sector credit risks - the so-called sovereign-bank nexus.Design/methodology/approach Risk transmissions between sovereigns and banks are measured via credit default swap spreads with sovereign bond portfolios as well as capital ratios of large European banks between 2011 and 2020 serving as moderator variables in moderated multiple regression analyses.Findings The authors find a state dependent effect of exposure size: for low-risk sovereigns, higher bank exposures to the domestic sovereign strengthen the nexus. For high-risk sovereigns, higher exposures weaken the nexus. They attribute these findings to a state-dependent dominance of the underlying risk transmission channels - the asset channel and liquidity channel in the low-risk state, and the economy channel in the high-risk state. Furthermore, they confirm that, consistent with a guarantee channel and a bailout channel, the nexus weakens with the financial strength of banks. However, this effect reverses for the lowest decile of very weakly capitalized banks.Research limitations/implications While this paper does not aim to derive prescriptive regulatory recommendations, the findings offer several insights that may be informative for bank regulation and supervisory practice. A central implication of our results is that the sovereign-bank nexus cannot be adequately assessed using one-size-fits-all approaches. The impact of sovereign exposures on financial stability depends critically on the sovereign risk environment and bank characteristics. Regulatory measures that treat domestic sovereign exposures as uniformly destabilizing may therefore overlook important stabilizing channels in high-risk environments.Practical implications The results underscore the importance of incorporating state dependence and interaction effects into supervisory stress tests and risk assessments. Evaluations of sovereign risk exposures may benefit from jointly considering exposure size, sovereign risk and bank strength, rather than focusing on aggregate measures in isolation. From this perspective, policies aimed at improving transparency and risk-sensitive monitoring of sovereign exposures may be more effective than approaches to constrain exposure levels.Social implications The findings suggest that strengthening the resilience of the banking sector - rather than mechanically breaking the sovereign-bank nexus - remains a key objective for regulation and supervision.Originality/value The paper provides a conceptual re-assessment of the sovereign-bank nexus by showing that its strength and direction depend on the interaction of exposure size, sovereign risk and bank financial strength. By decomposing aggregate sovereign exposure measures and identifying competing transmission channels, the authors demonstrate that the nexus is a state dependent and nonlinear phenomenon rather than a uniform risk amplification mechanism.
Purpose The purpose of this paper is to examine whether, and under what conditions, the expansion of anti-money-laundering (AML) compliance requirements can reduce effective enforcement against trade-based money laundering (TBML) through investigative capacity constraints, evidential decay and strategic adversarial adaptation. Design/methodology/approach A reduced-form theoretical model is developed using an M/G/m queueing framework with exponential evidential decay, endogenous threshold-based triage and strategic laundering behaviour. Comparative statics analyse the sensitivity of the results to evidential decay, splitting costs, attention dilution and cognitive capacity. Findings Increasing compliance intensity raises alert volume without proportionate capacity growth, generating congestion that degrades evidential quality and forces institutions into predictable triage. Rational launderers exploit these boundaries through splitting and bunching. The perverse effect is strongest when evidence decays rapidly, splitting is cheap and compliance expansion is extensive rather than informativeness-enhancing. Research limitations/implications The model is intentionally stylised, abstracts from institutional heterogeneity and cross-border coordination and does not attempt empirical calibration. Results describe short- to medium-run dynamics in which capacity adjustment lags regulatory expansion. Practical implications Results support shifting supervisory metrics from alert volume to time-to-action and confirmation rates, reducing the predictability of escalation thresholds, prioritising evidence preservation over scenario expansion and increasing per-transaction laundering costs through documentation requirements. Originality/value This paper formalises a mechanism – regulatory overload as a laundering enabler – widely observed in AML practice but not previously modelled. This study connects TBML to enforcement economics and queueing theory, identifying conditions under which compliance expansion becomes self-defeating.
Purpose Corporate governance and regulatory supervision are widely recognized as critical monitoring mechanisms in the banking sector. This study aims to investigate whether these mechanisms mitigate the adverse impact of economic policy uncertainty (EPU) on the earnings quality of Indian banks. Design/methodology/approach Using a panel of 44 banks over 2005-2024, earnings quality is measured through discretionary loan loss provisions (DLLPs), and EPU is captured using the Baker et al.'s (2016) index. The analysis uses the two-step system generalized method of moments estimator to address endogeneity and dynamic panel bias. Corporate governance is proxied by a composite board index and its subcomponents, while regulatory supervision is measured by the post-2015 asset quality review. Findings Heightened EPU significantly increases discretionary provisioning, and this effect remains robust across alternative DLLP measures and model specifications. Corporate governance attenuates the EPU-DLLP relationship in private banks but is less effective in state-owned banks. Regulatory supervision weakens the EPU-DLLP link primarily in state-owned banks. These results suggest that the moderating influence of governance and supervision depends on bank ownership. Originality/value This study provides novel evidence on the interaction between policy uncertainty, governance and regulatory oversight in shaping earnings quality in banks. By distinguishing ownership-specific effects and incorporating a major regulatory reform, it provides policymakers with timely insights. It contributes to the growing literature on policy uncertainty and bank behavior in emerging markets.
Purpose Recent developments in the US banking sector, including heightened sensitivity to unrealized losses on securities portfolios, have renewed interest in how investors price other comprehensive income (OCI). Despite the importance of OCI for financial institutions, there is limited evidence on how investors respond to aggregate OCI and its components under the regulatory shift introduced by Accounting Standards Update ASU 2016-01 . This study aims to address this gap by examining whether the market’s pricing of aggregate OCI and its major components changed following the new standard. Design/methodology/approach The study examines 8,000 quarterly observations for the 200 largest US commercial banks from 2011 to 2020. Using a fixed-effects model, it assesses how absolute changes in net income, OCI and the components of OCI affect abnormal returns (ARs). Unlike prior studies that mainly rely on annual data, this research uses quarterly observations to capture a more timely market reaction. Market response is measured through ARs aggregated over the three months following OCI disclosure. Findings The findings reveal significant changes in market reactions following the implementation of ASU 2016-01. More precisely, absolute changes in net income negatively affect ARs, and this relationship becomes more pronounced after ASU 2016-01 adoption. In addition, aggregate absolute OCI changes show no significant relationship with ARs in either period. However, disaggregated analysis exhibits significant component-specific effects: ASU 2016-01 increases the informativeness of available-for-sale (AFS) securities and cash flow hedge components, with a stronger post-ASU market response to hedge-related OCI disclosures per unit of variation, while AFS fluctuations exert a comparable effect for a one-standard-deviation change. Additional analysis shows noteworthy results: ARs are negatively related to negative OCI changes. Nevertheless, the effect of positive changes on ARs becomes positive and significant when 2020 observations are excluded, confirming that the pricing of OCI gains is disrupted under uncertainty. Research limitations/implications This study has several limitations. First, the baseline analysis ends in 2020 and therefore does not capture the 2022–2023 banking turmoil, when unrealized losses became a central focus for investors and supervisors. Thus, the estimates should be interpreted as a preturmoil benchmark. Second, while we document associations between changes in NI/OCI (and their components) and ARs, we do not fully disentangle whether these effects reflect (i) revisions in investors’ cash-flow expectations or (ii) changes in perceived risk premia or discount rates. Third, banks’ portfolio rebalancing and hedging choices may respond endogenously to the reporting regime, thereby affecting both OCI components and returns. Although we include standard controls, we cannot rule out all forms of time-varying omitted risk exposures. Finally, because the tests use quarterly ARs, the observed reaction may incorporate both immediate market responses and gradual information assimilation. Practical implications These findings have implications for theory, research and practice, with clear relevance for standard setters, regulators, banks and capital-market participants. For theory, the results suggest that investors’ use of OCI is shaped by presentation and salience. OCI is more informative when examined at the component level than as an aggregate total, consistent with limited-attention interpretations. For research, the evidence motivates future work that disentangles cash-flow expectation revisions from discount-rate (risk-premium) effects and examines whether these channels vary across normal versus stress regimes. For standard setters (e.g. FASB), the findings support clearer and more comparable component-level OCI disclosure to enhance decision usefulness. For policymakers, the results indicate that reporting regimes could provide clearer and more disaggregated OCI disclosure information that would enhance transparency, support market discipline and improve the monitoring of banking-sector vulnerabilities. The findings also have important implications for regulators and supervisors. They emphasize the prudential relevance of unrealized losses on AFS portfolios. This role becomes more pronounced in regimes where such valuation losses are included in regulatory capital and can influence CET1 (Basel Committee on Banking Supervision, 2021; Su et al., 2025). This reading is consistent with supervisory lessons from the 2022–2023 banking stress episode (Board Fed, 2023; Yousaf et al., 2023). For banks and risk managers, the evidence underscores the value of transparent communication about securities-portfolio composition and hedging strategies. For investors and analysts, the results indicate that accounting updates such as ASU 2016-01 can change how markets price earnings volatility and OCI information, reinforcing the need to incorporate reporting-regime shifts when interpreting bank performance and risk. Originality/value Despite growing interest in how accounting standards affect financial reporting, no prior study has specifically examined ASU 2016-01 within the banking sector. Existing research has largely focused on insurance companies and often uses raw returns to assess value relevance, potentially overlooking the effects of unexpected information. This study addresses that gap by using ARs, a refined measure that captures unexpected market reactions, to evaluate the informativeness of OCI disclosures under ASU 2016-01. The findings offer new insights into how regulatory changes shape investor responses in US commercial banks.
Purpose The purpose of this paper is to examine the relationship between real estate foreclosures, state-level corruption and financial stability in US credit unions. Using a large sample covering the period 2006-2021, the study investigates how foreclosures affect credit union stability and whether corruption influences foreclosure activity. It further explores how different state foreclosure laws shape these relationships. By focusing on credit unions, an important yet under-researched segment of the financial system, the paper aims to provide new insights into the macro-financial and institutional factors associated with foreclosures.Design/methodology/approach The study uses a panel data set of 2,290 US credit unions over the period 2006-2021. Fixed-effects regressions are used to examine the impact of foreclosures on credit union stability, measured by the Z-score and the association between state-level corruption and foreclosure activity. The analysis incorporates credit union-specific controls, macroeconomic variables and quarter fixed effects. Subsample analyses are conducted based on foreclosure laws and pre- and post-crisis periods. Robustness tests include alternative variable definitions, instrumental variable techniques and additional state-level controls.Findings The authors find that foreclosures have a negative effect on credit union stability, especially in states without borrower-friendly foreclosure laws. State-level corruption shares a negative relationship with foreclosures in a more stringent regulatory framework after the crisis, suggesting corruption's power to "grease the wheels" and help credit unions reduce foreclosures. Finally, in states where the judicial foreclosure process is required, credit unions are more stable and have fewer foreclosures, while the opposite holds in states with non-recourse mortgages.Originality/value This paper offers several novel contributions. It provides the first comprehensive analysis of foreclosures within the US credit union sector, highlighting their implications for financial stability. The study also introduces a new perspective on corruption by showing that, under stringent post-crisis regulation, corruption may reduce foreclosures by "greasing the wheels." In addition, it enriches the foreclosure literature by jointly examining institutional quality, regulatory frameworks and stability outcomes. By incorporating foreclosure laws and state-level mental health conditions, the paper delivers policy-relevant insights into the broader social and financial consequences of foreclosures.
Purpose Ireland is one of the world centres for aircraft leasing, largely because of generous fiscal incentives. Aircraft leasing in Ireland is widely regarded as unregulated. This paper aims to examine the economic impact as well as financial, risk and regulatory aspects of aircraft leasing firms that avail of a particular tax subsidised debt called "section 110" debt.Design/methodology/approach This paper is based on aircraft leasing firms in Ireland that use tax exempt debt, called "section 110" debt. The study population was identified from searches of publicly available files in Companies Registration Office, Dublin. A population of over 350 aircraft leasing firms was identified. Data relating to financing, profitability, ownership structure and local expenditures were extracted from company accounts and used to build a data base of 1433 cases for the period 2010-2020.Findings The aircraft leasing industry in Ireland is regarded as a 'success story' but has low direct employment, low linkages with the domestic economy and low tax payments. Aircraft leasing is part of the non bank financial intermediation sector, that leads to risks to the wider financial system. Risks arise from violation of international treaties, for example by Russia, high debt equity ratios, large reported losses and opaque ownership structures.Originality/value There is no publicly available register of aircraft leasing firms in Ireland. The paper is based on a unique data base of financial structure, ownership and other variables, of a subset of aircraft leasing firms that have issued "section 110" debt.
Purpose This study aims to investigate how the coordinated development of digital finance affects the shadow banking activities of nonfinancial firms in China. It particularly examines whether this influence is nonlinear and how environmental regulation moderates the relationship. Design/methodology/approach Using panel data from nonfinancial firms listed on the Shanghai and Shenzhen Stock Exchanges in China from 2012 to 2022, this study constructs a digital finance coordination index via a coupling coordination model and use regression analyses to test nonlinear and moderating effects. Findings Digital finance coordination significantly promotes shadow banking activities, demonstrating a “U-shaped” nonlinear relationship. Environmental regulation moderates this effect: under low-intensity regulation, the promotion is stronger and nonlinearity weakens; under high-intensity regulation, the U-shaped effect is less evident. Research limitations/implications This study is limited by the sample of listed nonfinancial firms, which may not reflect trends in the broader economy. Future research should examine other sectors or regions for more generalizable insights. Practical implications Policymakers should tailor financial regulations to mitigate risks associated with the growth of shadow banking driven by digital finance. Stronger oversight is needed, particularly in markets with weak environmental regulation. Social implications The study highlights the need for a balanced regulatory approach to protect financial stability and reduce risks to social equity posed by unregulated shadow banking. Originality/value This study reveals the nonlinear impact of digital finance on shadow banking and the moderating role of environmental regulation, offering new empirical insights for understanding financial behavior in emerging markets.
Purpose This study aims to examine the interaction between compliance management and quality management and how their integration contributes to corporate governance and organisational learning in highly regulated organisations. Design/methodology/approach The research adopts an exploratory qualitative multiple-case study design. Semi-structured interviews were conducted with senior managers and directors responsible for compliance, quality management and safety functions in four large organisations operating in highly regulated industries. Data were analysed using qualitative content analysis and cross-case comparison to identify structural and cultural determinants of compliance maturity. Findings The findings indicate substantial variation in the organisational positioning of compliance, leadership commitment, technological innovation and cross-functional cooperation with quality management. The results suggest that compliance can evolve from a formal control mechanism into a value-creating governance function when strategically embedded and integrated with process-oriented quality management practices. Compliance maturity is shaped by interrelated structural and cultural factors and is associated with stronger governance coherence and organisational learning. Originality/value This study provides empirical insights into the underexplored interface between compliance and quality management and conceptualises compliance as a quality-oriented governance mechanism. It outlines a conceptual agenda for compliance maturity assessment and highlights the need for sector- and size-neutral frameworks to support benchmarking and organisational self-evaluation.
Purpose The objective of this study was to conduct a comparative analysis of financial inclusion policies, regulatory frameworks and institutional strategies in the context of digital financial transformation across the BRICS countries, identifying advances, challenges and national patterns. Design/methodology/approach The research adopted a qualitative approach, using documentary analysis of official reports, strategic plans, regulatory documents and institutional analytical publications. The information was systematized through content analysis, enabling the identification of patterns, divergences and lessons across BRICS countries. Findings The analysis reveals three distinct trajectories of digital financial inclusion: (i) the State as architect, in China and Russia, characterized by centralized leadership; (ii) digital infrastructure as a public good, in India, where the state provides the technological foundation while the private sector drives innovation; and (iii) the paradox of sophistication and exclusion, in Brazil and South Africa, where the central challenge is converting formal access into effective use. The findings highlight the mismatch between access and use in countries with superficial inclusion, low financial literacy, and heightened risks of over-indebtedness, while also emphasizing the relationship between digitalization, sovereignty and sustainability, reflecting distinct national strategic priorities. Originality/value The study expands the literature on financial inclusion in the BRICS and provides practical lessons for other emerging economies, highlighting the importance of the state, public infrastructure, and the integration of social and educational policies. It also proposes a comparative analytical framework based on archetypes to guide policy formulation and future research on financial digitalization in emerging contexts.
Purpose - This paper aims to examine how environmental and social (E&S) disclosures influence ACD in France, explores the role of corporate governance (board independence, board size and executive directors) and evaluates the impact of the Grenelle II Law, a French regulation promoting corporate sustainability and transparency. Design/methodology/approach - The authors analyze 142 French listed firms over 2010-2020 using panel regressions and a 150-keyword content analysis to measure ACD. A Difference-in-differences approach assesses how the Grenelle II Law affected the relationship between E&S disclosures and ACD. Findings - Results show a positive association between E&S and ACD: firms more transparent in E&S reporting also disclose more on anti-corruption. Board independence and size further enhance ACD, and the E&S-ACD relationship strengthens following the full implementation of the Grenelle II Law. Practical implications - Integrating E&S strategies can increase ACD and stakeholder trust. Strong corporate governance, particularly independent and larger boards, supports transparency, providing guidance for policymakers to align sustainability and anti-corruption practices and helping investors assess firm ethics and governance. Originality/value - This study is among the first to investigate how E&S disclosures and governance influence ACD in France, a leading country in sustainability regulation. It highlights the effect of the Grenelle II Law on improving corporate transparency and introduces a novel 150-keyword content analysis tool for ACD.
PurposeWhile regulators and policymakers are interested in promoting banking competition for economic welfare gains, the franchise value hypothesis argues that increased banking competition leads to increased credit risk exposure. It is against this dilemma that this study relies on the credit information sharing regulation (CISR) and additionally takes advantage of the introduction of credit information sharing in Ghana to test how credit information sharing regulation regime has influenced the increasing effect of banking competition on bank credit risk.Design/methodology/approachThis study uses a battery of estimation techniques of 29 banks covering periods between 2000 and 2020 and additionally controls for year and technological effects.FindingsThe findings show that improved competition worsens credit risk, while CISRR lowers bank credit risk. The joint term of banking competition and CISRR has significant negative effect on credit risk while the net effect computation shows that under CISRR the positive contribution of competition to credit risk is reduced. These results suggest that policymakers in the pursuit of banking competitiveness must do so consciously because it can worsen bank credit risk. Similarly, while these results imply that regulators and bank managers can rely on CISR to tame credit risk directly, CISR can also suppress the positive effect of competition to credit risk.Research limitations/implicationsThis study is focused on and limited to Ghana as an African emerging economy using 29 banks between 2000 and 2020. Hence, the findings are limited to Ghana and other African economies with similar features like Ghana. From a theoretical perspective, the study establishes that the franchise value hypothesis explains the competition-credit risk nexus while noting that credit information sharing as supported by the information sharing theory tames the positive contribution of competition to credit risk exposure of banks in Ghana.Practical implicationsThe results suggest that policymakers in the pursuit of banking competitiveness must do so consciously because it can worsen bank credit risk. Similarly, while these results imply that regulators and bank managers can rely on CISR to tame credit risk directly, CISR can also suppress the positive effect of competition to credit risk. This calls for regulators and policymakers to enact laws that deepen and expand the coverage of CISR to improve the quality and depth of information shared among banks/lenders as doing so can improve the predictive power and screening abilities of banks for credit risk reduction.Originality/valueThis study provides first time evidence on how credit information sharing regulation can lower the positive effect of competition on credit risk in an African emerging economy setup.
PurposeThis paper aims to assess the impact of corporate governance (CG) quality on value creation in Indian listed firms following the enactment of the Companies Act, 2013, a landmark reform that significantly strengthened the CG framework.Design/methodology/approachThe paper uses system GMM estimation to estimate the effect of different CG mechanisms on firm value, which is in terms of economic value added (EVA) and market value added (MVA). The scores on governance quality are built by summing several attributes in each governance mechanism, which allows the disaggregated evaluation of regulatory impact. System GMM is applied to overcome endogeneity and dynamic biases that are often present in the research of CG.FindingsThe findings show that the overall quality of governance has improved following the regulatory reform. Nonetheless, board-level attributes, such as board size and independence, do not show any significant relationship with firm value creation. Conversely, the quality of audit committee and ownership structure has statistically significant and positive impact on the EVA and MVA, highlighting the differentiated effectiveness of governance mechanisms.Originality/valueThis research paper contributes to the body of governance literature by showing that post-reform governance effectiveness is not uniform across the board but rather heterogeneous even within a given regulatory regime. The research demonstrates that value creation is motivated by substantive monitoring arrangements, especially audit quality and ownership structure, but board reforms based on compliance and compulsory committees do not have significant economic returns. The results also indicate that governance reforms in India are more successful when they are consistent with the prevalent ownership arrangements, in particular, family-owned companies, which point to the contextual constraints of the global governance template transplantation. To policymakers, the findings underscore the fact that the quality of enforcement should be prioritized over formal compliance; to investors and managers, they highlight the fact that governance should be assessed beyond aggregate scores. Together, the research offers new evidence of the translation of emerging-market governance reforms into firm value and a framework of evaluating the effectiveness of governance beyond regulatory symbolism.
PurposeThis research aims to evaluate the long-term asymmetric influence of financial fraud (FF), measured by total amount lost to fraud and total amount of fraud, on financial inclusion (FI) proxied by the FI index (developed by two-stage Principal Component Analysis) in Nigeria, from 1989 to 2023.Design/methodology/approachThe research used the non-linear autoregressive distributed lag (NARDL) technique to assess the asymmetric influence of FF on FI. To ascertain the consistency and robustness of the NARDL results and correct any potential endogeneity, alternative estimation methods including the linear autoregressive distributed lag (ARDL), fully modified ordinary least squares (FMOLS), dynamic ordinary least squares (DOLS) and canonical co-integrating regression (CCR) were employed.FindingsThe bounds-testing to co-integration results portray evidences of long-term relation between FF and FI (alongside income growth, inflation and interest rates, employment rate and money supply). The asymmetric test's results reveal evidences of long-term asymmetry between FF and FI. The results portray that rising FF reduces FI, while declining FF enhances FI during long-term. In addition, income growth, employment rate, money supply, inflation and interest rates, are long-term drivers of FI. Using alternative estimation methods like linear ARDL, DOLS, CCR and FMOLS, this study finds evidence that growing FF dampens FI in Nigeria.Research limitations/implicationsThe study concentrates on Nigeria, and measures FF as total amount lost to fraud and total amount of fraud, which may not comprehensively capture all types of fraud (e.g. identity theft, cyber fraud and unauthorized transactions).Practical implicationsFinancial institutions and policymakers should adopt advanced fraud detection technologies, enhance financial literacy programmes, and strengthen regulatory frameworks to protect consumers to restore trust in the financial system.Social implicationsFraud-related financial losses erode public trust in formal financial institutions, discouraging individuals, especially those in vulnerable and low-income groups, from (re)engaging with the financial system.Originality/valueTo the best of the authors' knowledge, this (research) is the first attempt to provide insights into the role of FF in FI in Nigeria.
PurposeThis study aims to investigate the determinants of voluntary disclosure in US small banks, focusing on the impact of market discipline exerted by depositors. Using a regulatory change in 2017 that allowed small banks to choose between two quarterly reporting formats, the research examines how insured deposit concentration, capital strength and market competition influence disclosure decisions.Design/methodology/approachThis study leverages the 2017 introduction of the rationalized call report (Federal Financial Institutions Examination Council 051) for banks under $1bn in assets. Using data from the Wharton Research Data Services (WRDS) database, a sample of 5,131 eligible banks is constructed, excluding those with foreign branches, missing data or exceeding the asset threshold.FindingsThe findings indicate that banks with higher insured deposits, stronger capital buffers and operating in less competitive markets are more likely to reduce their disclosure levels. This behavior is attributed to the reduced market discipline faced by these banks.Originality/valueThis study contributes to the literature by highlighting the unique characteristics of small banks and their disclosure policies under market discipline, offering insights into future regulatory and disclosure practices.
PurposeThis paper aims to evaluate whether US public companies should be required to disclose the number and percentage of shares registered outside the depository trust company's nominee, Cede & Co. It examines how the growth of directly registered, non-Cede-owned (NCO) shares affects market transparency, float calculation, liquidity assessment and short-selling dynamics.Design/methodology/approachThe study analyzes regulatory gaps in existing Securities and Exchange Commission (SEC) disclosure rules, synthesizes issuer-level evidence from recent market episodes and conducts comparative review of transfer-agent practices and state corporate-law inspection rights. It also draws on case studies - including GameStop, AMC, Express, Bed Bath and Beyond, KOSS and Trump Media and Technology Group - to illustrate how undisclosed NCO ownership affects market participants. The paper then proposes targeted amendments to Regulation S-K to standardize reporting of NCO shares.FindingsRising levels of directly registered ownership reveal a structural blind spot in SEC reporting. Because NCO shares are illiquid and unavailable for securities lending, their omission from Forms 10-K and 10-Q distorts widely used metrics such as public float and short-interest ratios. Evidence from issuers of varying size demonstrates that NCO ownership materially affects market transparency, especially when it comprises a significant fraction of outstanding shares. Standardized disclosure would improve the interpretability of market-liquidity data and strengthen investor protection.Practical implicationsMandated disclosure would enable investors, analysts and regulators to more accurately assess liquidity risk, float constraints and short-selling conditions.Originality/valueTo the best of the authors' knowledge, this paper is the first to evaluate the regulatory implications of NCO share disclosure and to provide a concrete, administratively feasible framework for integrating NCO reporting into existing SEC rules.
PurposeThe purpose of this study is to test whether the introduction and enforcement of virtual asset service providers (VASP) licensing and anti-money laundering (AML) crypto laws have an impact on overall AML effectiveness in selected countries from 2013 to 2023.Design/methodology/approachThis study empirically tests how the introduction and enforcement of VASP licensing and cryptocurrency-related AML laws affect AML effectiveness, proxied by the inverted AML Basel Index, in selected countries over 2013-2023 via dynamic event-study methods (Sun and Abraham, 2021; Callaway and Sant'Anna, 2021) to capture time-specific treatment effects, alongside a two-way fixed effects method with control variables covering macroeconomic conditions, digital infrastructure, financial inclusion and governance.FindingsThe results reveal that the introduction of VASP licensing and AML crypto laws produces the most substantial and sustained improvements in AML effectiveness, while the enforcement phases show weaker and less consistent effects. Among controls, only regulatory quality positively and significantly contributes to AML performance.Research limitations/implicationsThe data on VASP licensing and AML crypto law introduction was hand-collected. The rest of the data was available till 2023 only.Practical implicationsThe results suggest that policymakers should prioritise the timely introduction of VASP licensing and AML crypto laws, as legislative adoption itself yields immediate improvements in AML effectiveness, especially in jurisdictions with stronger regulatory quality.Originality/valueThis study bridges the gap between the early wave of event studies in the crypto space and the few papers analysing determinants of cryptocurrency regulation, as well as AML effectiveness. Moreover, the main novelty of the research is the analysis of the effect of the VASP licensing, which is not present in the literature in a quantified way.
Purpose-This study aims to analyze intellectual capital on financial stability with a comprehensive look at the property-liability (P-L) insurance operations and explore the moderating effect of fintech. Design/methodology/approach-This study collects data from P-L insurers in Taiwan from 2010 to 2020. Using ordinary least squares and hierarchical regression models to examine the impact of intellectual capital on financial stability and the moderating effect of fintech. Findings-The results find that intellectual capital affects financial stability and reveal an inverted U-shaped relationship between human capital and financial stability. While structural capital is significantly negatively related to solvency ratio. E-commerce and artificial intelligence (AI) + big data + cloud computing are significantly positively related to solvency ratio, blockchain and the Internet of Things are significantly negatively related to Z-score and solvency ratio, respectively. Furthermore, fintech moderates the relationship between intellectual capital and financial stability. Originality/value-These results offer new insights to insurers' manager for improving financial stability by effectively using intellectual capital composition characteristics and fintech to enhance financial stability and provide a reference for insurers in developing countries to establish an early warning and stable financial system.
PurposeThis study aims to investigate the role of financial technology (Fintech) in mitigating the impact of the COVID-19 pandemic on the banking sector. We constructed a Fintech index as a proxy for digital transformation and assessed its effect on financial performance and resilience. The study also examines how ESG commitments influence the effectiveness of digitalization. Design/methodology/approachWe conducted a text-mining analysis on the annual reports of publicly listed banks in Thailand from 2012 to 2023. Using AntConc software, we extracted Fintech-related keywords and applied principal component analysis (PCA) to create a Fintech index. We used fixed-effect regression models to examine the impact of Fintech adoption on banks’ profitability and shareholder value. To address endogeneity, we applied an instrumental variable regression. We also used a difference-in-differences approach to assess the role of Fintech in enhancing resilience during the COVID-19 period. FindingsBanks with higher Fintech adoption demonstrated stronger profitability and firm value, particularly during the pandemic. The positive interaction between Fintech and COVID-19 confirms digitalization’s role in resilience. ESG commitments negatively moderated this relationship, suggesting that sustainability efforts may limit financial gains from digital investments. Originality/valueTo the best of the authors’ knowledge, this study is among the first to apply text mining and PCA to analyze the impact of Fintech on banking resilience in the Asia-Pacific region during the COVID-19 pandemic. It also examines ESG as a moderating factor, offering new insights into how digitalization and sustainability interact in banking.
PurposeThis paper aims to analyze the structural features and regulatory challenges of US private equity, with a focus on informational asymmetries between general and limited partners. It examines how short-term, high-leverage strategies and limited transparency have shaped both industry practices and regulatory responses. Particular attention is given to recent efforts by the US Securities and Exchange Commission (SEC) to increase disclosure and accountability. Design/methodology/approachThis paper integrates empirical findings, industry reports, case studies and legal rulings to examine informational asymmetries in private equity. It introduces a two-level framework distinguishing asymmetries at the fundraising and operational stages. It also evaluates recent SEC rulemaking, enforcement strategies and court challenges. FindingsThe short-term, profit-driven strategies of private equity concentrate market power and frequently disadvantage limited partners, employees and customers. Informational asymmetries allow general partners to exploit opaque governance structures, limiting oversight. While the SEC has sought to enhance transparency through disclosure rules, private equity firms have successfully challenged these regulations in court. Despite setbacks, the SEC continues to enforce accountability through whistleblower programs and existing laws. Originality/valueThis paper highlights the systemic risks associated with private equity and the regulatory challenges in addressing them. It advocates for balanced reforms that maintain private equity’s role in economic growth while ensuring transparency, stakeholder protection and financial stability.
