This paper analyses the interplay between monetary policy and bank profitability in Germany using a novel disaggregated panel dataset of over 2,700 banks from the Deutsche Bundesbank spanning 1999 to 2021. Employing fixed-effects panel regressions, the analysis identifies a regime-dependent and asymmetric impact of interest rate dynamics on bank profitability, measured by return on assets (ROA). Specifically, in the pre-2016 period, low short-term interest rates were associated with declining profitability. However, in the post-2016 environment, after the European Central Bank’s Main Refinancing Operations rate reached zero, both the short-term interest rate as well as the slope of the yield curve exhibited a positive and significant effect on ROA. These findings suggest that the effectiveness and transmission of monetary policy evolve in low-rate regimes, consistent with the reversal rate hypothesis. The study offers new empirical evidence on how monetary conditions interact with bank-specific characteristics in a structurally diverse banking sector, with implications for monetary policy design in low-for-long environments.
Trading simulations are widely used in finance education, but their pedagogical effects depend on instructional design. Competitive rules and performance feedback may shape trading behavior. This study examines a classroom intraday trading simulation involving CAC40 stocks in which students operated under a continuously updated ranking and a Top 3 reward scheme, creating a rank-order tournament with pedagogical issues. Using data from 133 students, we analyze performance heterogeneity through a distribution-sensitive methodology that combines quartile and extreme-group profiling with quantile regressions.The results show that excessive trading activity is associated with lower-ranking outcomes, while sustaining top-ranking performance strongly depends on maintaining sufficient market exposure. These findings indicate that different segments of the ranking distribution are shaped by different behavioral mechanisms, which mean-based analyses may fail to capture. We also incorporate OCEAN personality traits to support a profiling perspective. Personality traits help identify localized behavioral differences across distribution segments even if they did not represent a uniform predictor of performance.For financial educators, continuously visible rankings and tournament-style rewards should be treated as instructional design choices, not purely evaluative tools. They can increase engagement and may also intensify over-activation and suboptimal decisions unless paired with structured debriefing and behavioral supports.
Risk matrices, constructed on the Likelihood × Impact paradigm, have become the dominant artifact in enterprise risk management. While their colorful grids offer the illusion of precision and control, they suffer from a profound methodological weakness: likelihood scoring is not a measure of risk, but a proxy for ignorance. This paper delivers a comprehensive critique of the traditional risk matrix, drawing on critical scholarship to demonstrate its structural flaws, cognitive biases, and governance limitations. We argue that the prevailing model perpetuates a ritual of false precision, reinforcing compliance optics while failing to support strategic decision-making. In its place, we propose a Velocity × Impact framework, which reframes risk prioritization around two critical dimensions: time-to-impact (velocity) and strategic consequence (impact). The central thesis of this paper is clear: likelihood is a proxy for ignorance, while velocity is a proxy for urgency. By abandoning the ritual of probability scoring and embracing velocity-based intelligence, organizations can transition from a posture of passive compliance to dynamic readiness, ensuring that governance is not merely performative but operationally resilient.
This study analyzes the impact of financial inclusion on regional development using Partial Least Squares Structural Equation Modeling (PLS-SEM) and Multigroup Analysis (MGA). The empirical analysis is based on municipal-level data derived from the 2020 Economic Census and administrative records from the National Banking and Securities Commission (CNBV) in Mexico. The results reveal a positive and significant relationship between financial inclusion and regional development, indicating that territories with greater access to financial services tend to exhibit more dynamic economic and social outcomes. However, important heterogeneities emerge between urban and rural contexts, where the relationship is notably stronger in urban areas. These findings highlight the importance of strengthening financial infrastructure in underserved regions to foster the expansion of banking services, promote savings, consumption, and investment, and reduce spatial inequalities. Overall, the study contributes to the understanding of how financial inclusion can support more balanced territorial development.
Purpose – The purpose of this study is to examine the influence of service quality on customer retention in Indian private sector banks, with particular emphasis on the mediating role of customer satisfaction.Design/methodology/approach – The study adopts an empirical research design using primary data collected from 1,000 long-term customers of a leading Indian private sector bank. Service quality is measured using an extended SERVQUAL framework comprising tangibility, reliability, responsiveness, assurance, empathy and access. The data were analyzed using descriptive statistics, reliability and validity tests, multiple regression analysis, service quality gap analysis and Structural Equation Modeling (SEM).Findings – The results indicate that all service quality dimensions significantly influence customer satisfaction, with reliability and responsiveness emerging as the strongest predictors. Customer satisfaction, in turn, has a significant positive effect on customer retention and fully mediates the relationship between service quality and retention. The study also identifies negative gaps between customer expectations and perceptions across all service quality dimensions, highlighting areas requiring managerial attention.Practical implications – The findings suggest that private sector banks should prioritize reliability-driven service delivery, responsive customer support and continuous monitoring of service quality gaps to enhance customer retention.Originality/value – The study contributes to the banking literature by empirically validating the mediating role of customer satisfaction in the service quality–customer retention relationship in the Indian private banking context.By integrating service quality gap analysis with a mediation-based SEM framework, this study extends bank marketing literature by explaining how service quality translates into customer retention in an emerging market context.
Natural disasters, in particular hurricanes, are linked to hospitals’ financial performance, how various parameters affect hospitals’ financial metrics, and financial indicators that are extremely relevant in establishing hospitals’ sustainability in any eventual emergency (Mah & Andrew, 2022; Schick et al., 2025). Most notably, hurricanes have led to the shutting down of hospitals in rural settings because rural health systems, especially hospitals, have unique issues when they face disasters (Traynor, 2020; Desai et al., 2019). Days Cash on Hand is a key financial indicator used to mark a hospital’s capability to recover from a financial crunch, such as a calamity. Data were obtained from the 2023 American Hospital Association (AHA) Annual Survey. The Bonferroni multiple comparisons test reveals that government-owned hospitals keep 101.75 days’ worth of cash on hand, whereas private hospitals keep 40.75 days’ worth of cash on hand. This results in government hospitals holding 61 more days of cash on hand than their private counterparts.
Artificial intelligence transforms financial services by enabling scalable, low-cost solutions that extend access to underserved populations, particularly in rural and informal economic sectors. Leveraging alternative data and automation, AI augments customer engagement and risk assessment capabilities. This paper presents a comparative analysis of AI-mediated financial inclusion in India, China, and the United States, illustrating diverse applications across economic development spectrums. Although AI holds strong potential to reduce barriers and personalize services, it concurrently raises risks of algorithmic bias, privacy erosion, and amplified digital divides. The analysis emphasizes that ethical, inclusive governance is critical to ensuring AI empowers rather than marginalizes. Based on synthesized case evidence, the study validates its principal hypothesis (H1) and concludes that AI significantly promotes financial inclusion, thereby elevating financial literacy and empowering historically marginalized communities.
Does a wage–price or price–wage spiral exist, and what are its implications? This issue has been investigated in two behavioral experiments. The findings indicate that both dynamics are possible: prices may rise first, triggering wage increases that subsequently push prices even higher, or wages may increase initially and thereby fuel inflation. Inflation erodes the real purchasing power of wages, generating distributional effects in which employees suffer real income losses while firms benefit. This redistribution raises labor demand, consistent with the Phillips curve framework. To mitigate these distributional effects, the central bank should pursue a more restrictive monetary policy in the case of a price–wage–price spiral than in a wage–price–wage spiral. In contrast, the application of similarly restrictive measures in a wage-price-wage spiral carries the risk of an increase in unemployment and corporate insolvencies.
This paper investigates the role of institutional quality in the effects of financial development on people's well-being in Sub-Saharan Africa. We use data from 35 countries from 2007 to 2021. The study tests for non-linearity between financial development and well-being by identifying threshold effects of financial development, using the panel smooth transition regression (PSTR) model of Gonzalez et al. (2005) and a quadratic model using the system GMM of Blundell and Bond (1998). The estimation results show that there is a non-linear relationship between financial development and well-being, conditioned by institutional quality and expressed as an inverted U-shape. There are financial development thresholds (40.217% for CRED and 49.038% for M2GDP) beyond which any improvement in the financial system leads to a loss of well-being in Sub-Saharan Africa. We show that low institutional quality reduces the positive effect of financial development on well-being. However, there are thresholds of institutional quality beyond which economic and political institutions reinforce the positive effect of financial development on well-being.
In the rapidly evolving and increasingly volatile global business landscape, robust governance mechanisms are no longer a matter of best practice but are essential for organizational sustainability, resilience, and long-term value creation. At the heart of effective enterprise risk management (ERM) lies not only the sophistication of risk identification and mitigation processes, but also, critically, the unfettered structural independence of the risk management function. This conceptual paper examines the structural and behavioral impediments to ERM independence under prevailing corporate governance models. It analyzes three common reporting structures for the ERM function: reporting to senior management, reporting to the Chief Executive Officer (CEO), and a hybrid model of reporting to the Board of Directors with a “dotted line” to the CEO. This study contends that each paradigm, based on agency theory and corporate governance principles, harbors intrinsic conflicts of interest that undermine the impartiality, authority, and overall efficacy of Enterprise Risk Management (ERM). The CEO's impact on performance evaluations and compensation, even in a dotted-line relationship, is seen as a substantial threat to behavioral independence. Consequently, this paper develops a conceptual framework for an optimal reporting structure. It posits that true independence is only achievable when the ERM function reports directly and exclusively to the Board of Directors or a dedicated Board Risk Committee. Furthermore, the framework asserts that the remuneration, budget, and resources of the ERM function must be determined at the Board level, completely insulated from management’s influence. This proposed model, termed the “Unfettered Guardian” framework, is designed to align the ERM function with the Board’s oversight duty, ensuring it serves its primary purpose as an objective guardian of shareholder value and long-term organizational sustainability.
The determination of an optimal level of financial leverage for commercial real estate investment transactions is a central concern both for investors and financial institutions. Investors seek the maximization of the economic value of the investment firm while financial institutions need to adequately price the overall risk in accordance with the available regulatory capital budget. Excess leverage and large and/or unexpected shifts in the default risk of commercial real estate portfolios are a relevant potential threat to both objectives and need to be addressed from the perspective of macro prudential guidance. Traditional modelling of (commercial real estate) asset values as geometric Brownian motions may not be sufficient to capture tail events and risks relevant to investors and financial institutions for pricing and risk assessment purposes, since the distribution of returns of such properties does not seem to be normal. We examine the default, prepayment risk and optimal unitranche leverage level of single-borrower non- recourse mortgage loans, based on a trade-off option theoretic structural approach that captures asymmetry and kurtosis of asset values’ returns distributions through the shifted lognormal distribution as in De Luna et al (2025). Our framework includes distress costs expanding the firm value paradigm of Modigliani and Miller (1958, 1963) to model interior optimal leverage solutions. We conduct several numerical experiments to examine how the different parameters of the model but also the returns distribution and load of distress costs affect the pricing of the CRE mortgage loan and the level of optimal and prudent leverage.
The aim of this paper is to highlight, through a systematic literature review, the impact of gender diversity on boards of directors (BoD), with regard to the concept of sustainability linked in particular to aspects such as CSR and ESG. Thus, major databases (Business Source Ultimate - EBSCO host and Scopus) were queried and 288 retrieved publications were considered. The period considered for publication is from 2010 to July 2025. The results were refined through the criterion of considering only publications from scientific journals recognised and accepted by ANVUR (National Agency for the Evaluation of the University System and Research Institutes – is an independent public Institution that evaluates, accredits and verify the quality of higher education and research in Italy. The mission is to promote excellence and continuous improvement in Italian Universities and Research Institutions) for a total of 247 articles. The results show that the presence of women on boards contributes to improved Corporate Social Responsibility (CSR) and Environmental, Social and Governance (ESG) performances, but this effect is evidently dependent on several factors, the main one being the company type, with the impact varying between family and non-family businesses. The main impacts of the presence of women on corporate boards that emerged from the literature review are more sustainable strategies, ethics and trust, communication, innovation-driven, focus on people, corporate reputation. It emerges also that in order to generate these impacts it is necessary to reach “critical mass” of women in decision-making roles. Furthermore, the influence of women and their ability to lead change is affected not only by their specific role in the organization but also by the institutional and cultural context.
Decision-making on stock markets is a complex experience characterized by strong emotions (Nofsinger, 2017). Price fluctuations are stimuli that can cause a wide range of psychological reactions in investors (Shiv et al., 2005). In particular, the perception of loss is a central area in behavioral finance: loss aversion (Kahneman & Tversky, 1979) suggests that the psychological impact of a loss is stronger than a gain of the same size. Traditionally, attention has focused on significant financial losses or bear markets, where intense emotions such as fear and panic are commonly found (Shiller, 2014). However, our study suggests addressing a less examined side of the emotional experience: the psychological and behavioral reactions of individuals to the perception of negative trends and small losses. Our goal is to understand if and how perceived unfavorable small stock market movements could induce significant emotional responses, particularly among novice investors. For this purpose, we used a qualitative exploratory study with eight students participating in a short-term (three-day) stock market simulation. During this period, the stock market index on which the students based their investments declined by 0.36%. This fluctuation does not constitute a bear market in the financial sense generally recognized. Nevertheless, our findings show that participants actively perceived a ‘general negative trend’ and exhibited significant emotional reactions, even facing small financial losses. Based on semi-structured interviews, our article aims at: 1) identifying the range of emotions felt by participants during the simulation; 2) describing the development of these emotions in response to perceived market variations; and 3) conducting a thematic analysis of their influence on participants' decisions, with a particular focus on emotional regret related to small losses and reactions to uncertainty and perceived losses. Our results demonstrate a significant change in emotions over time. From an initial interest and a relative emotional detachment, students show a growing emotional commitment to market fluctuations. Moreover, as the experiment progresses and disappointments increase, the emotional picture is largely defined by negative emotions, notably fear in relation to potential losses, as well as sadness and disappointment related to unfavorable results. Market surprises, particularly sudden falls, lead to intense reactions, which can result in panic and impulsive decisions. Given the inability to improve the financial situation, the experience can also result in abandonment and resignation. By examining these dynamics, we aim at contributing to understanding emotional impact in behavioral finance, beyond major crisis scenarios.
This paper integrates statutory provisions, regulatory guidance, corporate governance standards, and literatures to ascertain the determinants of an effective anti-bribery and anti-corruption (ABAC) culture within Malaysian Public Listed Companies (PLCs). The introduction of corporate liability via Section 17A of the Malaysian Anti-Corruption Commission (MACC) Act 2009 has catalyzed a shift from compliance-centric activities to a more profound examination of organizational culture. This study classifies the determinants of an effective ABAC culture into “hard” factors (legal, structural, and procedural) and “soft” factors (behavioral, cultural, and leadership). Drawing parallels from seminal management theories, this paper proposes a refined Dual-Factor ABAC Culture Model, which posits that while “hard” factors function as essential safeguards to prevent misconduct, “soft” factors are the primary drivers that cultivate a sustainable culture of integrity. The analysis culminates in a conceptual framework that integrates these cultural enablers with institutional safeguards, offering a governance-ready diagnostic instrument for PLCs, regulators, and practitioners aiming to embed integrity as a strategic asset.
Risk identification remains foundational to enterprise risk management (ERM), yet its practice is often episodic, siloed, and anchored in backward looking data. Horizon scanning improved anticipatory capacity by formalizing external sensing, but its external fixation underweights internal culture, governance independence, and operational precursors. This paper advances Enterprise Risk Intelligence (ERI), a continuous, integrated capability that synthesizes internal and external signals into decision ready foresight for boards and executives and integrates the Mission Critical Objectives (MCOs) as ERI’s governing anchor. ERI+MCO closes the theory and practice gap by aligning sensing, synthesis, and assurance to the handful of objectives that are existential for value creation and preservation. Grounded in research across risk governance, strategic foresight, systems thinking, organizational culture, and decision-oriented intelligence, the concept elevates board oversight quality, strengthens Chief Risk Officer’s (CRO) independence, improves assurance alignment, and accelerates strategic responsiveness, without imposing new bureaucratic burden.
The current research explores key determinants of the uptake of circular economy (CE) principles in healthcare waste management in Saudi Arabian healthcare facilities. Data were collected using a mixed-method exploratory research strategy from 165 respondents including healthcare practitioners, waste management professionals, and regulatory officials. Findings show that the key challenges to CE adoption are infrastructural constraints, poor regulatory enforcement, financial constraints, and technological integration limitations. Though awareness of CE principles is present, actual application is low, particularly in rural or small facilities. Smart waste monitoring, automated segregation, and policy-based incentives were identified as main enablers by the participants. Saudi Arabia's Vision 2030 was considered to be promising for sustainable waste management strategies, although gaps exist in local implementation and institutional preparedness. This study contributes new findings to the intersection of healthcare sustainability, national policy, and environmental conservation in Saudi Arabia.
Financial literacy has garnered significant attention in the realm of investment on a global scale over the years. This phenomenon is ascribed to its pivotal role in the process of making investment decisions. The global economy has undergone increased complexity; thus, it is imperative for each individual to engage actively and astutely in investment decision-making to effectively navigate the escalating cost of living. Numerous individuals exhibit interest in various forms of investments, finding them captivating due to the ability to make decisions and subsequently observe the consequences of those decisions. Nevertheless, not all investment endeavors yield profits, given that investors may not invariably be accurate in their decision-making. Therefore, this research sought to analyze the influence of financial literacy on the investment decisions of designated Matatu SACCO employees in Nanyuki town, Kenya. Specifically, the research involved evaluating the influence of savings techniques, debt management, financial planning, and project appraisal methods on investment decisions. Underpinning theories were information asymmetry, behavioral economics and financial education. A causal research design was employed, focusing on 8 Matatu SACCOs in Nanyuki Town, Kenya, as the units of analysis. Data was gathered from 195 employees of the SACCOs, representing various departments, utilizing a stratified sampling method and simple random sampling techniques for participant selection. The study encompassed a sample of 131 participants. Primary data was acquired through questionnaire. Descriptive analysis, correlation and multiple regression was utilized for data synthesis. The study revealed that saving techniques, debt management techniques, financial planning and project appraisal techniques had a positive significant effect on investment decisions. The study concludes that savings strategies often encourage financial literacy and education. As Matatu SACCO employees engage in saving, they may also seek information on various investment options available to them. Debt management strategies often involve education on financial planning, budgeting, and investment options enabling employees to gain a better understanding of their financial situation, which enhances their ability to make informed investment choices.. The study recommends that the Matatu SACCO should organize regular workshops focusing on financial literacy, covering topics such as budgeting, saving, and investment options. The Matatu SACCO should create a clear debt management policy that outlines acceptable debt levels, repayment schedules, and consequences of default. The Matatu SACCO should invite financial experts and successful investors to share their experiences and insights, providing real-world context to theoretical knowledge. The Matatu SACCO employees in Nanyuki town, Kenya should organize regular workshops and seminars focused on project evaluation methodologies, financial analysis, and investment decision-making.
Financial health has been identified by the World Bank as key poverty reduction constituent element, as it is important in aiding economic development goals. The financial health among the vulnerable including the aged is very important in ensuring access to medication, food and other basic amenities. Inua Jamii Programme is crucial in identification of the disadvantage groups and providing them with sustainable programme. The global environment has continuously recorded an increase in the number of people with various challenges. Cash transfer programme has been executed globally to reinforce the vulnerable group. The lubricants of poverty among the ageing population results from poor health, inaccessibility to financial support, household straining to cater for basic needs, ignorance and loss of jobs among others. The key aim of this study was to evaluate the effects financial management techniques on financial health of InuaJamii program beneficiaries in Uasin Gishu County, Kenya. Theories anchoring the research included ageing theory, financial education theory and empowerment theory. Explanatory research design will be employed. The target population for this studycomprised people who are presently receiving the cash transfer from the government who are 4,093. Through Fishers formula, 351 sample size was arrived at. Primary data was gathered by a questionnaire. The study revealed that cash management, budgeting management, financial literacy and risk management t techniques had a positive significant effect on financial health among Inua Jamii cash transfer benefices in UasinGishu County, Kenya. Further it was established that proper cash management often improves financial health. As the elderly engage in budgetary planning, it helps them to prioritize key basic needs requirements. Financial literacy often involve education on financial planning, budgeting, and investment options enabling the beneficiaries to gain a better understanding of their financial situation, which enhances their ability to make informed decisions and hence improving their financial health. Financial risk management equips the beneficiaries with knowledge about different risk mitigation strategies necessary for financial wellbeing. The study recommends the stakeholders should organize regular workshops focusing on financial literacy, covering topics such as cash management, budgeting and risk management. These skills are geared towards improving beneficiaries’ financial health.
The real estate market offers significant opportunities for financial success, yet navigating its complexities—such as tax benefits and regulatory influences—can be challenging. Stochastic processes play a critical role in minimizing risk and optimizing returns in this domain. Despite its historically stable growth, real estate remains underutilized, particularly among lower-income households, partly due to the limitations of traditional financial models like Black-Scholes. These models often struggle to account for the volatility, interest rate fluctuations, and government policies that influence real estate markets. This paper demonstrates the efficacy of integrating advanced stochastic models, such as the Heston model and jump diffusion models, to address these limitations. Additionally, we explore diverse methods for validating these models and highlight key considerations in their design to ensure greater accuracy and practical relevance. These insights aim to enhance the robustness of real estate modeling, providing a pathway for improved financial decision-making.
This study examines the question of whether poorly diversified CEOs with high levels of inside debt engage the firm in costly hedging activity to reduce personal risk exposure at the expense of shareholder wealth. This study utilizes multifactor asset pricing regressions on the returns from self-financing portfolios of hedging firms that are long firms with high levels of CEO inside debt and short those with low levels. When these returns are value-weighted there is no evidence of significant abnormal returns, suggesting in aggregate hedging activity is not carried out at shareholder expense. Using equally-weighted returns that emphasize the typical smaller firms, however, result in significant negative abnormal returns, suggesting these firms lack the managerial sophistication and economies of scale to hedge efficiently, but still engage in costly hedging activity to mitigate CEOs’ personal risks at the expense of shareholders. In all models, high CEO debt firms are less risky than their counterparts, mostly in terms of market, size, and profitability risks as evidenced with significant factor loadings.
