Since the adoption of “The 2030 Agenda for Sustainable Development” by all United Nations member states in 2015, nations have been striving to achieve sustainable development goals (SDGs) with varying degrees of progress across countries. Sustainable development, among other things, is likely to provide economic resilience by smoothing out the volatility of adverse shocks. This paper examines whether countries’ progress toward SDGs during the pre-COVID-19 period provided economic stability during the COVID-19 shock. We do not find such evidence using daily data from stock markets and confirmed COVID-19 cases over the first two years of the pandemic from 72 countries. On the contrary, our model demonstrates that cultural, openness and economic factors provided resilience during the shock. Our results imply that countries’ progress toward achieving SDGs did not provide economic immunity during the COVID-19 shock.
 

Using a large sample of banks operating in European Economic Area in the years 1996-2019 this study seeks to answer the question whether macroprudential policy affects the net interest margins of banks. 
Our study is based on the literature that analyses the effects of policy changes on bank performance. While there is an extensive literature on the determinants of bank margins and profits that follow the pioneering work of Ho and Saunders (1981) and some papers evaluate the role of interest rates and  monetary policy in bank performance (Molyneux et al., 2018; Claessens et al., 2018), the literature focusing on macroprudential policy and bank margins  is still somewhat limited. Thus our manuscript will fill in the gap in the literature that focuses on the role of macroprudential policy in the efficiency of banks. We are the first to study the role of this policy for bank margins.
Our results show that macroprudential policy improves efficiency of banks because it is associated with reduction of net interest margins due to the tightening of the tools. The effects of the instrument are diversified, with lending standards restrictions and liquidity requirements and limits on currency mismatches improving efficiency of bank lending. Our study shows that if the policy is tightened the NIM is reduced. The effects of the policy depend on the type of policy action undertaken, with activation of a new tools reducing margins. We also show that the heterogeneity in effects of the policy on NIM is driven by the objectives of the instruments.
 

Identifying the cross-border interbank network of banks in Turkey, we investigate the impact of a currency shock on banks’ borrowing from abroad. We find that currency shock has a significant negative impact on cross-border interbank network. Moreover, the impact is more negative for the highly centralized banks. On the other hand, we demonstrate that the interconnectedness of banks having high foreign share is increased with crisis. Finally, controlling for the headquarter of the foreign lenders, we document that the impact of a currency shock is stronger for the lender banks headquartered in the US.

We empirically investigate how engagement in the environmental and social dimensions affects the value of listed American insurance firms in the period 2002-2018. Moreover, we assess if higher environmental, social and governance (ESG) scores “insures insurers” when exogenous environmental or social shocks occur. Our results, robust to several additional checks and alternative specifications, show that a positive association exists, and it is strongly determined by all dimensions of the environmental score. Our research contributes to the sustainable finance literature providing the first empirical evidence on the relationship between financial and non-financial performance in the insurance industry, in terms of exposure to environmental and social shocks. Our findings are supportive of regulatory actions taken worldwide to enhance the environmental and social sustainability of insurance companies.

Green bonds fulfil market demand for debt securities and broaden the extent of proceeds used to fund climate-related initiatives. Since the first release of a green bond by a publicly-traded corporation in 2013, issuance volumes have amassed over $800 billion. They have resulted in a significant redirection of resources toward green-related initiatives, and institutional and retail investors alike have developed a strong predilection for investments that promote environmental sustainability (Krüger et al. 2020). In addition, green bond issuers have enjoyed increased levels of investor attention (Caramichael and Rapp 2022) that have translated into positive spillover effects on the equity prices of issuers. Early studies from Tang and Zhang (2020) and Flammer (2021) find evidence of positive abnormal returns in the equity prices of issuing firms when they announce the sale of upcoming green bonds. Both also acknowledge, however, the presence of information leakage associated with the price discovery behaviours, particularly in the week leading up to the announcement event.

We further investment analysis and green bond literature by exploring the dynamics between these ‘green’ fixed income solution announcements, and equity price behaviours. Our study has two central objectives: to explore equity market reactions to green bond announcements, and to explore the potential for ‘green’ investing behaviours to be exploited by market insiders. First, we incorporate over 2,500 green bond announcement events by publicly-traded firms from 2013-2022, where the ‘announcement date’ is when information about an upcoming green bond sale is first publicly released to the market. Using this data, we demonstrate that green bond announcements have a significant spillover effect on the equity prices of issuers and that these spillover effects are concentrated amongst first-time issuers. Moreover, we find that statistically significant abnormal returns are only consistently observable in the days before the announcement event, and a sell-off tends to occur once the announcement is made publicly. These price discovery behaviours suggest evidence of information leakage before the official public announcement of the upcoming green bond issue.

This study further explains these market inefficiencies by relating the anomalous price discovery behaviours to anonymous information leaks made to Bloomberg News and Bloomberg First Word in the period leading up to the public green bond announcement. From a sample of over 1,000 Bloomberg First Word articles, early results suggest that equity price inefficiencies before a green bond is publicly announced are largely explained by the presence of information leaks and their temporal distance to the public announcement, and that information leaks are largely concentrated within a small subset of equity markets.

References:
Caramichael, J. and Rapp, A.C. (2022) The Green Corporate Bond Issuance Premium, International Finance Discussion Papers 1346, Washington, DC.

Flammer, C. (2021) 'Corporate green bonds', Journal of Financial Economics, 142(2), 499-516, available: https://doi.org/10.1016/j.jfineco.2021.01.010.

Krüger, P., Sautner, Z. and Starks, L.T. (2020) 'The importance of climate risks for institutional investors', The Review of Financial Studies, 33(3), 1067-1111, available: https://doi.org/10.1093/rfs/hhz137.

Tang, D.Y. and Zhang, Y. (2020) 'Do shareholders benefit from green bonds?', Journal of Corporate Finance, 61, 101427, available: https://doi.org/10.1016/j.jcorpfin.2018.12.001.

The study employed the asymmetric nonlinear smooth transition generalized autoregressive
conditional heteroskedasticity (ANST-GARCH) model to investigate the asymmetric responses of mean reversion and volatility.in cryptocurrency markets. The study finds strong evidence for the ANST-GARCH model. The study finds considerable asymmetries concerning the behaviour of investors who overreact to certain cryptocurrency market news. The study also shows asymmetric volatility is crucially significant in cryptocurrency markets and that investors can implement risk management techniques and trading strategies to mitigate the effect.
 

Purpose
The 2008 and 2020 crises reinvigorated discussions on the democratization of finance.  Peer-to-peer (P2P) lending is a valuable option worldwide, but credit risk is high.  To encourage investors, P2P platforms use blockchain and the option of crypto as collateral.  This study seeks insight into investor reactions to crypto collateral in P2P lending.

Design/methodology/approach
This study analyzes 663 lending decisions by 221 finance students conditioned through testimonials towards pro-social decision making on a mock P2P site.  These lenders - within the age demographic driving crypto adoption (Granit, 2021) - were asked about changes in decisions in the case of different collaterals, as well as their views on sustainability. Previous research on a mock P2P site finds lifelike decision making and similar heuristics in a general-public and student sample (Gonzalez and Komarova, 2014).

Findings
Loan applications can be funded more quickly with a pledge of 20% in traditional collateral but not in crypto assets or crypto currency.  Second, loan popularity also persuades investors, and lender projections of financial literacy influence decision confidence.  Third, male lenders report a lower interest in sustainability than female lenders.

Practical implications
Crypto collateral options in P2P platforms do not appear to support financial inclusion and there is not clear association between sustainability and pro-social P2P lending.  However, upcoming more stable digital currencies backed by central banks may further democratize P2P lending provided there is behavioral financial literacy as well.

Originality
This is the first study to examine sustainability views and the perception of crypto as a form of collateral in pro-social P2P lending.

Recent studies in investor behavior have put forth a so-called “warm-glow” theory, suggesting that investors appear to have developed a preference for responsible investments. The theory explains why investors empirically appear to pay a premium for responsible assets. According to recent reports, however, Covid-19, supply chain uncertainties, and the recent surge in inflation, have led to a resurgence of investment in what could be considered non-responsible assets. Investor sentiment has changed. In this paper we put forth the hypothesis that market uncertainty acts as a contingency variable on warm-glow preferences, such that in times of crisis, the investor loses the taste for responsible assets, in favor of the preservation of consumption and wealth. Focusing on the global banking sector, we show that this helps explain what was observed during the financial crisis. Our study adds uncertainty as an important contextual contingency to discussions in the nascent warm-glow theory.
 

This paper provides a novel rationale for why banks combine lending and deposit taking. It shows that liquidity provision through demand deposits commits banks to monitoring. Investors with liquidity needs withdraw their deposits early and are not willing to refinance a bank. This curtails excessive bank lending and limits the moral hazard problem of a bank. In contrast, banks with tradable debt face a refinancing problem in which they expand on risky lending by reissuing bonds and exploiting investors that need to trade. In this setting, demand deposits may commit banks to monitoring even in the presence of deposit insurance.

Aspiring to achieve full EU membership, Western Balkan countries expect the banking sector to step up its contribution to the region’s development. In the past, lending booms have been found to be associated with financial reforms and economic growth (Ariccia, Igan, Laeven, & Tong, 2016; Levine, 2005). Such reforms are also expected to flow from the EU integration process (Dabrowski & Myachenkova, 2018). This opens the question how does EU integration affect bank lending behavior?
The paper analyzes bank lending behavior of Western Balkan candidate countries and EU member states from the perspective of two parallel EU integration processes, known as widening and deepening. While widening refers to EU enlargement to new member states (Sekulic, 2020), deepening refers to establishing close and structured cooperation between EU countries based on shared rules and institutions to which they transfer some of their sovereign powers (Patel, 2019), or so-called institutionalization of the EU (Sekulic, 2020). Whereas 2004, 2007, 2013 and the Western Balkan enlargements are examples of EU widening in the recent decades, the monetary and banking union are examples of EU deepening during the same period. Various points can be considered as important milestones for widening. The signing of Stabilization and Association Agreement, formal application for EU membership, granting of candidate country status, opening of negotiations and membership. On the other hand, Economic and Monetary Union and the Banking Union can be considered as significant points for EU deepening.
In addition to the basic relationship between EU integration and bank lending behavior, the paper also looks at potential channels that might be driving it. Specifically, the paper looks into how EU integration might affect bank lending through changes in individual country-specific and bank-specific factors.  Furthermore, we assert that implications of EU widening for bank lending may already be evident in the accession process. For this purpose, different milestones in the accession process are treated as separate EU widening events.
In terms of methodology, the paper develops two sets of econometric specifications along the lines of the models used by Alltavila at. all (2021), Kim&Sohn (2017), Micco&Panizza (2006), Allen at.all (2015) and Zandi at.all (2019). The response variable in both models is net-loans (Zandi, Haseeb, Widokarti, Ahmed, & Chankoson, 2019). The explanatory variables of interest are EU widening and deepening dummy variables. To control for the effects of other bank lending determinants, the first set of specifications includes several standard bank-specific and country-specific variables.The analysis is based on banking data from the FitchConnect database for the 2002-2020 period.
The results of the study show that EU integration events have a significant and positive relationship with bank lending growth measured as increase of net-loans. The study showed that candidate and new member countries have the highest impact from the EU integration. Finally, looking at potential channels through which EU integration events might affect bank lending, the results indicate that EU integration events intensify the relationship of some of the bank-specific factors with net-loans. 
 

Different types of climate risks and attention to climate news have been thoroughly studied in recent literature (e.g. Khalfaoui et_al., 2022). Due to the recent economic and geopolitical crises surrounding the trade war between the US and China, the Covid pandemic, and the Ukraine war, we argue that the presence of other crises has limited the attention and alertness to the ongoing risks of climate change. To study the effects of limited climate news attention, we analyze the effects of transitional and physical climate risks on implied volatility and volatility spillovers in the US and European stock markets. We conduct a multivariate analysis of exogenous news shocks on daily implied volatility indices in the US stock market and major European stock markets and observe that the general impact of climate news risk has increased after the Paris climate agreement. Based on the limited attention hypotheses, we further find that the sensitivity of implied volatility indices to climate risks, and the volatility spillover have been negatively impacted by the most recent crises, reflecting greater urgency of economic and geopolitical risks compared to climate risks.



Khalfaoui, Rabeh, Mefteh-Wali, Salma, Viviani, Jean-Laurent, Ben Jabeur, Sami, Abedin, Mohammad Zoynul, & Lucey, Brian M. 2022. How do climate risk and cleanenergy spillovers, and uncertainty affect U.S. stock markets? Technological forecasting and social change, 185, 122083.

 

Governments worldwide have adopted environmental regulations to fight global warming; however, the literature is divided on the impacts of such regulations on firm performance. Porter’s ‘win-win’ argument proposes a positive impact, while the ‘cost-regulation’ hypothesis suggests a negative impact. Against this backdrop, we examine the impact of the Perform, Achieve and Trade (PAT) scheme on energy efficiency and firm value using firm-level data from 2006 to 2015. Using a difference-in-differences (DiD) combined with the matching technique, we do not find the PAT scheme effective in enhancing the firm`s energy efficiency. However, the PAT scheme adversely affects firm value. On further examination, we find that increased expenditure on repair and maintenance, research and development, rising plant and machinery purchases, and a fall in productivity are potential channels for the decline in firm value post-PAT period. Our results are robust to alternative definitions of energy intensity, firm value, and empirical specifications. We also apply staggered DID and observe qualitatively similar results providing evidence to refute Porter’s ‘win-win’ argument in the case of India.

Sustainability, Energy Finance and the Role of Central Banks: A Review

Monika Marcinkowska
University of Łódź

Janusz Brzeszczyński
Robert Gordon University
and
University of Łódź

Ailie Charteris
University of Cape Town

Jerzy Gajdka
University of Łódź

Lidia Obojska
Kozminski University

Jan Jakub Szczygielski
Kozminski University
and
University of Pretoria

ABSTRACT

In this review paper, we discuss existing literature on sustainable finance with a particular focus on energy finance and the role of central banks.

We begin with the presentation of ESG risks connected with the energy market. We focus on environmental (i.e. climate-related) risks related to fossil fuels, but we also highlight environmental risks connected with non-fossil fuel energy sources. In addition, we discuss a less frequently emphasised aspect, i.e. social risks stemming from both: conventional energy sources as well as the transition towards renewable energy sources (including orderly transition and rapid changes induced by emergencies, such as wars). We also describe interdependencies between the different environmental and social risks indicating how they can escalate.

Moreover, we present a model describing risk drivers and their transmission channels through which those risks affect financial institutions and markets (banks, insurance companies, asset markets) as well as macroeconomic and social factors, namely: price stability, economic growth, financial stability and social wellbeing (including full employment and living conditions). Next, we link it to the mandates of central banks in order to show how sustainability fits into the overarching objectives of those institutions and what their potential or, in some cases, actual role is in this area.

We further explore in detail two key areas of central bank activity, i.e. monetary policy and macroprudential policy actions, and we present the instruments and tools (protective and proactive measures) which those institutions can use to serve not only the conventional goals of those policies, but also the objectives of sustainable finance and energy finance. Within that area we discuss intermediate targets and ultimate objectives. In particular, we analyse monetary policy operations: credit operations, collateral and asset purchases to show how standard operations are modified as a result of taking sustainability objectives into account. In doing so, we illustrate how the inclusion of the SDGs affects the effectiveness of these actions in terms of the primary (economic) objectives of central banks. In terms of macroprudential policy, we focus on climate stress tests and capital requirements (analysing all three Basel accord pillars) and other supervisory requirements.

In the next part we describe the issues related to central banks’ communication with the market, taking into account aspects of sustainable finance with particular regard to energy finance. We concentrate on central banks’ disclosures (on overall governance, strategy and risk management) with regard to sustainability and present other means of communication (publications, speeches, education etc.).

We conclude by discussing the constraints faced by central banks in relation to sustainable finance and energy finance as well as the limits of their role in this regard.  

Finally, we outline the gaps in the existing literature and indicate the directions for future research.
 

A dataset of more than 5,000 corporations over the period from 2002 to 2019 is built to analyse the relation between indicators of firms’ environmental performance and their stock market valuation.
Several models are estimated, from dummy regressions to propensity score matching, using several indicators of environmental performance. The results suggest a mild evidence of Greenium. Non-linearities do not explain this result, as the effect is not found to be stronger for larger changes in the environmental performance. However, the effect is stronger when firms announce emission targets, thereby reinforcing their commitment to greener processes. This signaling effect has become stronger over time. Also, the valuation of “greener” firms is found to be less volatile. This could be explained by the fact that “greener” companies attract a longer-term oriented investor base, more stable by definition.
 

As empirical research in international finance, sustainable and climate finance, and other areas, has becomes more diverse in the research questions asked, it has converged on a core set of econometric tools. At the same time, researchers’ understanding of the proper use of the tools has advanced. Nevertheless, recent methodological papers point out further refinements that can help produce the most accurate inferences possible. This workshop session will provide a relatively non-technical overview of some of these refinements and their practical implementation.
 

This study aims to empirically assess if a measure of global environmental awareness can forecast stock returns. Further, it tests if stocks of more environmentally friendly companies are expected to show higher returns than those of less environmentally friendly companies when environmental awareness among investors increases. To capture environmental awareness, it uses the index of Dabbous et al. (2023) who identify 342 keywords and aggregate the individual Google search volumes of these keywords to construct a measure of environmental awareness. All aspects of the E-pillar in Environmental, Social, and Governance (ESG) rating provided by Sustainalytics are used to proxy how environmentally friendly companies are. Daily total return and market capitalization data from Thomson Reuters Datastream from the beginning of the year 2010 until the end of the year 2018 are used. In addition to the analysis with individual stock level data, we sort stocks based on their E-pillar score and form quintile portfolios for every month. We calculate the difference between the returns of the fifth quintile portfolio (highest E-pillar score) and the first quintile portfolio (lowest E-pillar score).  Results confirm that on average, individual stocks with a higher E-pillar score show lower returns and alphas. Second, the findings indicate that when climate change concerns rise unexpectedly, stocks with higher E-pillar score reduce the differences in returns and alphas or show even higher returns and alphas than stocks with lower E-pillar score. The results confirm that when environmental issues matter, stocks with higher environmental risks suffer more than stocks with lower environmental risks.

This study examines the impact of oil price uncertainty on Special Purpose Acquisition Companies (SPAC) operating in the wide energy sector. Existing since 2003 and labeled as a new asset class, SPACs brought structural changes in IPO market and, in the last few years ,outnumbered traditional IPOs. A significant proportion  of SPACs entering the market are energy-related related causes. This paper aims to understand their financial returns and the relationship with oil price uncertainty. To achieve that we analyze a sample from 2003-2022.
 

This paper focuses on the reactions of investors to disclosures related to emerging technologies in firms’ initial 8-K filing each year. We conducted a keyword search of each 8-K filing by US firms between 2010 and 2019 based on the Gartner Hype Cycle. We find that investor reactions to emerging technologies-related disclosures are significantly positive in the short-term but reversed in the long-term. Further investigation suggests that this reversal of investors attitude is due to insider selling after emerging technologies-related disclosures. We also find a negative impact of over-selling, with the more emerging technologies words in a firm’s initial 8-K filing and the number of 8-Ks including those words each year, the more negative the short-term market reaction. Furthermore, investors seem to be attracted by technologies which are at the peak of inflated expectations. Firms with lower institutional holdings, lower analyst coverage, or higher information asymmetry attract a positive market reaction to the disclosures. Our results are robust to placebo tests, alternative measures of CARs, and after excluding other event noise. These novel findings expand the study of market reactions to a specific technology.

Our study provides new evidence on the impact of the various sources of uncertainty on the ESG thematic bond markets in emerging and frontier countries. Motivation comes from the fact that sustainable finance in emerging markets is growing rapidly, reflected in the strong post-COVID era recovery of ESG flows and exceptional green bonds volume issuances. In particular, gross flows into ESG-related emerging markets bond grew from $66 billion in 2020 to $200 billion in 2021 (Goel et al, 2022). Our study is one of the first papers to link sustainable finance in emerging and frontier markets (represented by the ESG thematic bond markets) to different sources of uncertainty. In our analysis we cover wide spectrum of uncertainty sources, originating from political, geopolitical, economic, macro and financial, climate policy, economic policy, Trade Policy Uncertainty and risk aversion.

Dataset includes J.P. Morgan ESG CEMBI Index universe on the aggregate and country levels (tracking liquid, US Dollar-denominated emerging market fixed and floating-rate debt instruments issued by corporates) launched in 2012. The index utilizes an ESG scoring and screening methodology to tilt toward issuers ranked higher on ESG criteria and green bond issues, and to underweight and remove issuers that rank lower. The empirical analysis include the following measures tracking particular uncertainty sources: (i) Political Risk Index (International Country Risk Guide); (ii) Geopolitical Risk Index (Caldara and Iacoviello, 2022); (iii) Economic Uncertainty (Bekaert et al., 2022); (iv) Financial Uncertainty (Jurado et al., 2015); (v) Climate Policy Uncertainty (Gavriilidis, 2021); (vi) Economic Policy Uncertainty EPU (Baker et al., 2016); (vii) Trade Policy Uncertainty (Caldara et al., 2020); and (viii) Risk Aversion Index (Bekaert et al., 2022).

Methodological framework is similar to Baur and Smale (2020). More specifically, we apply regression analysis with different specifications to investigate the impact of various uncertainty sources (both level and change) on the ESG thematic bond returns from emerging and frontier markets.

The study has important practical implications for international investors in the context of sustainable investing and diversification strategies in emerging and frontier bond markets. In addition, our results might be useful for portfolio managers who are evaluating the risk originating from different uncertainty sources. 

Corporate capital structure is one of the most important areas of corporate finance. A constant need to study SMEs' behaviour in their choice of financing sources is highlighted in the literature. Stock liquidity is a potential, rather underexplored factor that can differentiate the choice of external financing source. There are relatively few studies related to this issue, especially in small and medium-sized enterprises as well as in the markets of Central and Eastern Europe. Using data on firms from Central and Eastern Europe covering the period 2009 to 2021, in this study we analyse if firms of different sizes and with various levels of stock liquidity differ in their preference for financing deficit via debt issuance. Our study is the first in which the relationship between liquidity and debt-equity choice is considered solely from a pecking order theory point of view. We regress the net debt issuance on the financial deficit and utilise several liquidity measures. Our results indicate that stock liquidity may be a substitute for debt issuance in alleviating the adverse effects of information asymmetry in small and medium-sized companies.

We analyze the relation between virtual stock holding changes on a social trading platform and stock holding changes of all private investors in a national economy. Our data sources are the social trading platform wikifolio.com and the Securities Holdings Statistics-Base plus (SHS-base) of the German central bank. We find that the transactions of signal providers on wikifolio.com are a good proxy for aggregate transactions of private investors – mirrored by the SHS-base – during the same month, and a good predictor for the aggregate transactions of the private investors in the following month.

Research Question/Issue: The goal of this study is to meta-analyze the results of 146 studies examining the effect of real earnings management (REM) and three categories of corporate governance: ownership structure, gatekeepers, and management characteristics. Our research question investigates whether and how these categories affect REM.
Research Findings/Insights: Regarding the ownership structure category, the shareholding of insiders and families weakens the limiting effect of institutional investors on REM, although state ownership seems to limit REM when compared with institutional ownership. For the gatekeepers category, the only factor identified as more effective in reducing REM than external audit quality is the analyst coverage. In the management characteristics category CEO duality weakens the mitigating effect of executive compensation on REM. The study finds significant differences in certain aspects of structural and methodological heterogeneity in existing empirical results.
Theoretical/Academic implications: Results of our study can be interpreted in light of agency theory, and signaling theory. Further operationalization and expanding the analysis of individual components of the corporate governance categories could contribute to a stronger link between REM and theories in corporate governance.
Practitioner/Policy implications: We have not found a significant mitigating effect of external and internal audit on REM. Such results should lead to a spread of knowledge among audit firms and audit committee members when it comes to recognizing and countering REM. Our results may be useful for investors since companies followed by more analysts and having higher state ownership may have less REM, which may increase investor confidence as to the quality of the information provided by the company.
Keywords: Corporate Governance, Ownership Structure, Gatekeepers, Management Characteristics, Real Earnings Management, Heterogeneity, Meta-Analysis
 

Theoretical models predict that exit threat can mitigate agency problems and force managers to
undertake actions that would maximize the firm value in the long run. We examine whether the
institutional blockholder exit threat curbs managerial misbehavior and short-termism reflected
in real earnings management. Our study exploits a natural experiment—a Polish pension fund
reform that imposed a real threat of exit on pension fund portfolio companies. Using
a difference-in-differences approach, we provide evidence that the reform significantly
decreased the level of real earnings management in “treated” companies, that is, companies
with pension funds playing the role of blockholders. The effect was more significant for firms
in a multiple blockholder setting, firms under common ownership, and firms with higher
insider’s stakes.

For assessing various performance indicators of companies, the focus is shifting from strictly financial (quantitative) publicly disclosed information to qualitative (textual) information. This textual data can provide valuable weak signals, for example, through stylistic features, which can complement the quantitative data on financial performance or on Environmental, Social, and Governance (ESG) criteria. In this work, we investigate the link between ESG quantitative scores and textual features from various aspects - the evolution of ESG topics over time, industry-specific features and effects, and the relationship between corporate ESG scores and text-based sustainability reporting measures.

 
This research is the first of its kind to examine the impact of the Economic Policy Uncertainty (EPU) index on the Non-performing Loans (NPLs) and government debt in the 19 Eurozone countries. Using a sample of panel data for 450 banks during the 2001-2021 period,we find that EPU has a positive impact on the NPLs, but negative on government debt considering that this indirect positive impact on the overall economic performance, financial stability and the real economy as an early warning of a crisis. The lesson learned from the previous European debt crisis has made the Eurozone introduce economic support packages to counter and overcome the Covid-19 consequences, with the main purpose of maintaining the financial system stability. Although the EPU index as an early warning for the instability has been blamed for generating a panic about the increase of the NPLs, this paper reveals it otherwise. 

In the third decade of the third millennium, we have witnessed major health (i.e., COVID pandemic) and political (i.e., Ukrainian conflict) crises, which despite their non-economic origin have significant undesired economic effects, such as inflation. The key monetary response to inflation worldwide was an increase in interest rates, yet despite significant increases, inflation proves to be stubborn. The study reported herein estimates the effects of interest rates, currency index, and unemployment on inflation rates in the context of enduring non-economic Crises. The proposed model is tested using monthly panel data for a period of 72 months for the US and EU. The findings show that interest rates have a significant impact on inflation decline, but the impact is minimal for increases less than 10 points above the base level, whereas an increase in interest rate over 100 points above the base level even triggers an opposite effect, i.e., increased prices. While the effect of currency depreciation is only marginally related to the increase in inflation, we observe that the unemployment rate is significantly negatively related to the inflation rate. More precisely, when the unemployment level is one percentage point above the base level, inflation drops to just two percent. As for regional differences, the US is more responsive to inflation than the EU and the Eurozone. We observe that increase of interest rate below 200 points (i.e., mild monetary policy) has a delayed effect on inflation decline, while an increase of the interest rate over 200 points (i.e., more aggressive monetary policy) delivers an almost-immediate inflation decline effect.