Risk Governance and Control: Financial Markets and Institutions

Journal Information
ISSN / EISSN : 2077-429X / 2077-4303
Current Publisher: Virtus Interpress (10.22495)
Total articles ≅ 461
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Risk Governance and Control: Financial Markets and Institutions; doi:10.22495/rgc

Mauro Paoloni, Giorgia Mattei, Niccolo’ Paoloni, Valentina Santolamazza
Risk Governance and Control: Financial Markets and Institutions, Volume 10, pp 8-21; doi:10.22495/rgcv10i4p1

The Italian banking system has changed profoundly and nowadays banks have to adapt their strategies to attain an adequate level of profitability (Mattei, 2019). Digitalization and mergers and acquisitions (M&A) are useful to obtain this result. However, at the same time, they can have a negative impact on the relationship between the bank and the territory, compromising the local economic growth (Caporale, Di Colli, Di Salvo, & Lopez, 2016). The objective of this work is to understand if any strategies could be undertaken to maintain the territorial relationship even when M&A and digitalization have become necessary. The methodology used is an ethnographic exploratory single case study (Yin, 1984). The information collected using semi-structured interviews is interpreted through qualitative inductive content analysis (Elo & Kyngäs, 2008). The interviews suggest that even when M&A and digitalization have a negative impact on the relationship between bank and territory, these two processes, if well-managed, could both improve the bank’s profitability and the contact with the local reality. Therefore, if a strategic management process is defined in advance, it is possible to maintain, or, even gain profitability
Marco Venuti
Risk Governance and Control: Financial Markets and Institutions, Volume 10, pp 4-6; doi:10.22495/rgcv10i3editorial

The third issue of the journal Risk Governance and Control: Financial Markets and Institutions provides contributions to the exploration of subjects related to public and private finance and the functioning and investment techniques of financial markets. These are all topical issues that may give rise to further research in order to understand better how countries, markets and companies are facing the challenges due to the Covid-19.
Alessandra Von Borowski Dodl
Risk Governance and Control: Financial Markets and Institutions, Volume 10, pp 44-56; doi:10.22495/rgcv10i4p4

This study assesses the convenience and timeliness of making changes to the Central Bank of Brazil’s mission. We undertake this analysis from the normative and practical approaches and consider the perspective of inclusive development and the National Financial System’s role to be the main determinants of the selected strategic solution. The insertion of justice into the institutional mission of the Central Bank of Brazil not only signals a new normative proposal for public policies in this arena but also publicly compromises all agents, suggesting an agreement that engenders the expectations of reciprocity and increased legitimacy. The analysis is conducted through the political philosophy lens, based on the works of Rawls (1971, 2001) and Sen (1992, 2000, 2009). This approach focuses on neutralizing pre-existing views, as the purpose of this study is not to expand current results, but to question the governance structure of the National Financial System to select priorities and implement them. The advent of technology innovations emphasizes the opportunity for improvement, highlighting its risks and benefits. Therefore, the potential contribution of this study is to provide a policy-making alternative to promote publicly agreed objectives through governance structures.
Lilian Nyamwanza, Hilja Iyalo Haufiku, Mashaya Ellen, Charity Mhaka
Risk Governance and Control: Financial Markets and Institutions, Volume 10, pp 57-80; doi:10.22495/rgcv10i4p5

The objective of this research was to establish the impact of debt finance on the profitability of a firm using A furniture retail company (pseudo name “A”) as a case study. The mixed methods approach was employed quantitative data from financial statements and qualitative data from interviews. The target population was 25, hence the researchers used a population census, 24 participants assisted in the research. The statistical method used for analysing secondary data was STATA 11. The regression model and variables incorporated were debt ratio, which was the independent variable, and the return on asset ratio, which was the dependent variable, and the measure of profitability in this particular research. Main findings from the research indicated that debt financing was significantly and statistically negatively affecting the return on assets of the company. The regression yielded a p-value of 0.018 and a coefficient of 0.9992 thus confirming a 99.92% that the variability in profitability is well explained by the independent variable used in this research which is debt finance. The study recommends companies to carry out an in-depth cost-benefit analysis of debt financing to ensure optimum profitability especially for small and private limited companies in a volatile economy (Zimbabwe).
Evita Allodi, Enrico Maria Cervellati, Gian Paolo Stella
Risk Governance and Control: Financial Markets and Institutions, Volume 10, pp 22-32; doi:10.22495/rgcv10i4p2

While the importance of insurance is widely recognised, for individuals as well as for society as a whole, the number of individuals actually buying insurance is dramatically low. After stressing this concept in this paper we focus on the critical comparison between three strands of research: financial literacy, insurance literacy, and behavioural insurance literacy and decision-making. Through an in-depth analysis of previous studies and empirical evidence, we set the stage to adapt the various definitions of financial literacy to propose our own definition of insurance literacy as a three-dimensional construct, based on three key pillars: knowledge, skills, and understanding. Finally, we analyse the limits resulting from the lack of insurance literacy and the possible benefits literate consumers can achieve. While our paper is built around our theoretical proposal of a new definition of insurance literacy, it can constitute an incentive for other researchers to analyse more in-depth insurance-related decisions with empirical studies, based on our theoretical foundation. Our final goal is thus to pave the way ahead.
Michael Ojo Oke, Adeola Oluwakemi Adejayan, Funsho Tajudeen Kolapo, Joseph Oluseye Mokuolu
Risk Governance and Control: Financial Markets and Institutions, Volume 10, pp 33-43; doi:10.22495/rgcv10i4p3

The study investigates the pull and push factors as determinants of foreign portfolio investment flows in the emerging market from 1986 to 2018. The study employs autoregressive distributed lag (ARDL) bound cointegration test and ARDL error correction model (ECM). This work is intended to explore the determinants of foreign portfolio investment (FPI) in Nigeria and compare the result explored by Kaur and Dhillon (2010) in India. The result revealed that of all the explanatory variables, only MCAP, DMINT, REER, USGS and USINFR have a positive effect on FPI while GDPGR, USGDPGR, USGS and USINFR are significant. From the result of the analysis, the study agrees with Kaur and Dhillon (2010) that the host country gross domestic product (GDP) growth rates and the United States of America (the U.S.A.) inflation rates are among the significant pull and push factors that determine FPI flows in the long run. Based on these findings, the study recommends that economic policymakers in the host country should be more committed to strengthening its economy by boosting its GDP in order to push foreign investors to the economy since the dwindling in economic growth, low rate of return and rise in inflation rates of the developed countries such as the U.S.A. could push foreign investors to the emerging markets.
Kazuyuki Shimizu
Risk Governance and Control: Financial Markets and Institutions, Volume 10, pp 75-82; doi:10.22495/rgcv10i3p6

The purpose of this paper is to understand why unemployment improvement and social inequality occur at the same time. For this question, a key factor is the capitalisation of work-related social security, such as environmental, social, and governance (ESG) resulting from digital transformation (DX). This paper will discuss two crucial points of the capitalisation of social security. Firstly it is the shareholder value, and then sustainable investment such as ESG. Shareholder value is a matter of stock price and corporate management. Nowadays, the stock price of tech giants, such as Google, Apple, Facebook and Amazon (GAFA) is skyrocketing. It has a significant impact on general corporate management just like the dot-com bubble in the ’90s. Sustainable investment offers the modification of shareholder value. The sustainable investment performances of non-ethical companies and ESG (blue-chips) were investigated during the period of Lehman and the COVID-19 crisis. However, in the real sense, investment performance is not a fundamental solution to problems associated with monopolies, disparities and the environment. In particular, the monopoly situation is related to Azar’s common ownership (Azar, Schmalz, & Tecu, 2017). As such, it will be essential for trade unions, who function as pension managers, to address these problems as a countervailing power (Galbraith, 1952).
Risk Governance and Control: Financial Markets and Institutions, Volume 10, pp 62-74; doi:10.22495/rgcv10i3p5

This work is licensed under a Creative Commons Attribution 4.0 International License. Abstract Over the past decade, the Russian government
Betchani Tchereni, Songezo Mpini
Risk Governance and Control: Financial Markets and Institutions, Volume 10, pp 50-61; doi:10.22495/rgcv10i3p4

This paper examines the effect of monetary policy decisions on stock markets in emerging economies particularly South Africa for the period 2000Q1 to 2016Q4. This is important as the monetary authorities would understand how their decisions may cause reactions to the stock market. Monetary policy directly shocks money supply and repo rate and indirectly GDP and inflation among many macroeconomic variables. A hypothesis that stock markets do not respond to monetary policy determinations is formulated and tested using a two-stage approach by employing first the vector error correction model to determine the long-run relationship of the variables and secondly GARCH (1, 2) model to determine the volatility. And the results suggest that about 5.2% variations in the Johannesburg Stock Exchange (JSE) volatility are due to monetary policy shocks. Overall, there is a negative relationship between M2 and stock market volatility. However, there is a positive link between repo rate and JSE volatility, which is not economically preferable because variations in repo rate influence the aggregate demand of investment on securities. The study recommends that the Monetary Policy Committee an expansionary monetary policy of keeping the repo rate lower must be pursued in order to increase borrowing that makes the public to have money to make transactions in securities on the financial market.
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