Geopolitical risk and firm-level environmental, social and governance (ESG) performance.

This study investigates the impact of geopolitical risk on firm-level environmental, social, and governance (ESG) performance. Using a news-based indicator of geopolitical risk across 41 countries and a comprehensive dataset spanning from 2002 to 2021 with 65,354 firm-year observations, we uncover that geopolitical risk is negatively associated with ESG performance. Our findings remain robust even when considering alternative measures of geopolitical risk, ESG components, and sub-samples. Moreover, we address potential endogeneity concerns through two-stage least squares, propensity score matching and entropy balancing approaches. Interestingly, we find that the effect of geopolitical risk is positive for countries with lower geopolitical risk and high peace, indicating that relatively stable environments can incentivize firms to enhance their sustainability practices. We also examine the potential channel effects of cash holding, corporate investment, and cost of capital, and found significant effects. Overall, this paper underscores the significance of geopolitical risk as a macro-level shock that significantly influences ESG performance.

The impact of containment measures and monetary and fiscal responses on US financial markets during the COVID-19 pandemic.

This paper analyses the effects of containment measures and monetary and fiscal responses on US financial markets during the Covid-19 pandemic. More specifically, it applies fractional integration methods to analyse their impact on the daily S&P500, the US Treasury Bond Index (USTB), the S&P Green Bond Index (GREEN) and the Dow Jones (DJ) Islamic World Market Index (ISLAM) over the period 1/01/2020-10/03/2021. The results suggest that all four indices are highly persistent and exhibit orders of integration close to 1. A small degree of mean reversion is observed only for the S&P500 under the assumption of white noise errors and USTB with autocorrelated errors; therefore, market efficiency appears to hold in most cases. The mortality rate, surprisingly, seems to have affected stock and bond prices positively with autocorrelated errors. As for the policy responses, both the containment and fiscal measures had a rather limited impact, whilst there were significant announcement effects which lifted markets, especially in the case of monetary announcements. There is also evidence of a significant, positive response to changes in the effective Federal funds rate, which suggests that the financial industry, mainly benefiting from interest rises, plays a dominant role.

Impact of economic policy uncertainty, geopolitical risk, and economic complexity on carbon emissions and ecological footprint: an investigation of the E7 countries.

There is a plethora of studies on the energy-consumption-environmental-quality nexus. Nevertheless, empirical research on the impact of global uncertainties on environmental quality is lacking. This study contributes to the literature by examining the impact of economic policy uncertainty (EPU), geopolitical risk (GPR), and economic complexity on the ecological footprint and carbon emissions of E7 economies for the period 1995-2018. Our empirical results indicate a long-term relationship between economic complexity, EPU, GPR, energy consumption, and two environmental quality indicators, carbon dioxide emissions and ecological footprint. In the long run, a divergence from disequilibrium takes 3 years to return to the equilibrating position. The environmental effects of key determinants are different in terms of direction, magnitude, and time span. Specifically, an inverted U-shape describes the relationship between economic complexity and environmental degradation in the long-term only, which confirms the environmental Kuznets curve (EKC) hypothesis. The environmental effects of EPU and GPR are harmful in the short run but prove to be beneficial in the long run. Higher energy consumption significantly degrades environment quality as expected. Based on these findings, the paper provides several useful suggestions for policymakers in the context of E7 countries.

Time and frequency domain connectedness and spill-over among fintech, green bonds and cryptocurrencies in the age of the fourth industrial revolution.

The study in the age of the 4th industrial revolution examines the time and frequency domain connectedness and spill-over among Fintech, green bonds, and cryptocurrencies. Using daily data from November 2018 to June 2020, we use both DY (Diebold & Yilmaz, 2012) and BK (Baruník et al., 2017) to examine the volatility connectedness of returns series. The results of DY suggest that, first, the total connectedness of 21st century technology assets and traditional common stocks is very high, and hence in the turbulent economy, there is a high probability of contemporaneous losses. Second, Bitcoin, MSCIW, MSCI US, and KFTX are net contributors of volatility shocks whereas US dollar, oil, gold, VIX, green bond and green bond select are net receivers. Therefore, Fintech and common equities are not good hedging instruments in the same portfolio. Third, the short-term witnesses higher volatility transmission than the long-term. That is, holding assets for a long-term is likely to mitigate risks whereas trading financial assets in the short-term can increase risk because of higher volatility. Fourth, the traditional assets, gold and oil, as well as modern assets, green bonds, are useful as good hedgers compared with other assets because shock transmissions from them to Fintech, KFTX are below 0.1% and, more importantly, the total volatility spill-over of all assets in the sample is moderately average, accounting for 44.39%.