Financial Governance Research Articles

Apes and agriculture

Non-human great apes – chimpanzees, gorillas, bonobos, and orangutans – are threatened by agricultural expansion, particularly from rice, cacao, cassava, maize, and oil palm cultivation. Agriculture replaces and fragments great ape habitats, bringing them closer to humans and often resulting in conflict. Though the impact of agriculture on great apes is well-recognized, there is still a need for a more nuanced understanding of specific contexts and associated negative impacts on habitats and populations. Here we review these contexts and their implications for great apes. We estimate that within their African and South-East Asian ranges, there are about 100 people for each great ape. Given that most apes live outside strictly protected areas and the growing human population and increasing demand for resources in these landscapes, it will be challenging to balance the needs of both humans and great apes. Further habitat loss is expected, particularly in Africa, where compromises must be sought to re-direct agricultural expansion driven by subsistence farmers with small fields (generally <0.64 ha) away from remaining great ape habitats. To promote coexistence between humans and great apes, new approaches and financial models need to be implemented at local scales. Overall, optimized land use planning and effective implementation, along with strategic investments in agriculture and wildlife conservation, can improve the synergies between conservation and food production. Effective governance and conservation financing are crucial for optimal outcomes in both conservation and food security. Enforcing forest conservation laws, engaging in trade policy discussions, and integrating policies on trade, food security, improved agricultural techniques, and sustainable food systems are vital to prevent further decline in great ape populations. Saving great apes requires a thorough consideration of specific agricultural contexts.

Battling for net zero carbon: the position of governance and financial indicators.

Africa, over the past years, has put various measures in place in the fight against carbon emissions. Achieving net zero carbon has caused the continent researchers to investigate various conditions required for a successful transition. Therefore, the political system cannot be left out since it plays a major role in decision-making. This study contributes to previous literature analyzing the empirical effect of financial development and governance quality on carbon emissions. The study is focused on 52 African countries with data from 1996 to 2021. Panel quantile and generalized method of moments are used for the analysis. The result indicates that financial development contributes to environmental degradation, government effectiveness, rule of law, and political stability which promote environmental pollution; however, control of corruption, renewable energy, and economic growth promote ecological sustainability. According to the aforementioned, it is crucial for governments to include financial development plans in national environmental strategies, particularly for those in African nations. Furthermore, governments should put restrictions on trade to control the trade of high-carbon technologies.

Perceptions, Promotion and Pre-eminence: India’s Presidency of the G20

New Delhi’s taking on the G20 Presidency represents a highly important—if not watershed—moment for Indian diplomacy. For an India that is transitioning from being a developing to a developed economy and whose great power rise centres upon core goals relating to development, modernisation, status, leadership, importance, prestige and pride, assuming the G20 Presidency seems transformational. A central part of the G20’s remit also concerns constructing and maintaining global financial architectures and governance mechanisms, which India can now crucially influence as her own economic clout increases on the global stage. Moreover, New Delhi’s Presidency signifies a pivotal time for the legitimacy of the G20 and one which potentially heralds a more representative era for the grouping, which will only enhance India’s global pre-eminence.

Tools for financing local economic development of local communities

The study examined the specific features of using the instruments of financing the economic development of territorial communities on the example of Ukraine. Economic and statistical analysis methods were used to process the data, including the Wilcoxon signed-rank test for comparing growth trends. The study identified the most common sources and tools for financing the economic development of local communities, in particular tax revenues, grants, loans, public-private partnerships. The financial instruments of local economic development in the UK, Denmark, and Slovenia were analysed, focusing on their flexibility, adaptability, and efficiency. The importance of integrating the best practices of these countries into the strategic financial management of territorial communities of Ukraine is substantiated. Specific recommendations for implementing successful international experience are proposed. It is recommended that Ukraine introduce monitoring and control systems similar to the British ones to ensure strict control over local budget expenditures, which is important for the stability and transparency of financial governance; consolidate or redistribute competencies in favour of larger communities, increase the share of local taxes, and introduce financial equalisation mechanisms to reduce financial inequality and ensure equal opportunities for all communities, as the Danish experience has shown. According to the Slovenian experience, it is necessary to develop clear standards for the provision of services, create independent supervisory authorities to monitor the effectiveness of local budgets, introduce fiscal decentralisation, and increase the share of local taxes to increase the autonomy of local authorities and reduce the disparity in the level of services between regions. The results obtained emphasised the importance of using an integrated and integrative approach to the development and management of financing tools for the local economic development of territorial communities. The practical significance of the study’s findings is manifested in the provision of specific recommendations on the use of various financing instruments, such as local guarantees, municipal bonds, and loans from international financial institutions and grants from international donors. These recommendations can help determine investment priorities and improve investment planning and management processes, which is important for the development of territorial communities

The tapestry of green economics: mapping the nexus of CO2 emissions, economic growth, and renewable energy

ABSTRACT This study examines the relationships between CO2 emissions, GDP, renewable energy consumption, and trade openness across 37 OECD countries from 1995–2020. Using a Panel Vector Autoregressive (PVAR) model and Granger Causality tests, the research probes the causality among these factors. Key findings show a notable causality from GDP, renewable energy, and trade openness to CO2 emissions. Specifically, lags in renewable energy consumption and trade openness significantly decrease CO2 emissions. Surprisingly, GDP's influence on CO2 emissions is found to be negligible, challenging the typical belief linking economic growth to environmental degradation. These insights hold great value for policymakers in environmental governance and climate finance. The data underscores the importance of promoting renewable energy and trade openness for effective CO2 reduction. The study advocates a sustainable environmental governance model, emphasizing strong legal structures and clarity in execution. Since GDP doesn't significantly impact CO2 emissions, there's potential to pivot towards sustainable economic growth models. The research offers a foundational empirical groundwork, suggesting that expanding future studies to include diverse variables might yield a more comprehensive understanding of the relationships in question.

Financial Management Education in Traditional Cake Entrepreneurship Under The Share of The Diamond Cooperative in Pisangan Village, South Tangerang

The main problem in Small, Micro, and Medium Enterprises (MSMEs), one of which is limited capital. Difficulties in obtaining loans or other external capital are partly because MSMEs do not have financial information that is accountable, transparent, has integrity, and is in accordance with Financial Accounting Standards. Apart from that, business financial management is still mixed with household finances, and the lack of knowledge regarding product cost calculations means that MSME products often have higher prices compared to imported products. Community service activities are carried out in collaboration with the Berlian Cooperative in the South Tangerang Region which is engaged in savings and loans and selling traditional Betawi cakes. The aim of this community service (PKM) is to provide education regarding business financial management and mechanisms for calculating costs and product selling prices based on cost accounting. The implementation method is in the form of lectures and simulations of calculating product costs and recording simple financial reports. The results of PKM activities show that the results of questionnaires distributed at the pre-activity stage show that this MSME group still has problems related to business bookkeeping and proper financial management so the average MSME actor in this group still does not know the exact amount of income and costs, and the profits generated from their efforts. Based on this, it is necessary to carry out further training and assistance related to financial management and literacy in banking and non-banking financial services so that MSME players can develop their businesses.
 Keywords: MSMEs, Financial Governance, Production Costs, Selling Prices

Financial Governance Management for Farmers, Ranchers, and Weavers of Camplong Ii Village, Kupang Regency

Camplong II Village is one of the villages in Kupang Regency, NTT with uniqueness in producing weaving both from the dyeing process, and weaving to selling weave products in the market, but business development in this village is quite slow. After identifying the problem, three biggest issues can be obtained, namely the problem of people's mindset towards the potential of weaving for community welfare, inefficient and innovative production processes, and lack of knowledge of entrepreneurship and business management. The community of ranchers and weavers is the basis for the proposal of this service, with the hope that it can be the initial stage of improving the mindset, community motivation, and business management in agriculture, animal husbandry, and tie weaving. The goal to be achieved in this community partnership program is to make farmers, ranchers, and weavers of Camplong II Village aware of the importance of good financial management and animal health management so that they can meet current and future needs. Activities in this service start from designing training activities, selecting instructors, Technical Guidance financial management, and animal health, and then conducting evaluation and feedback. The methods used are direct education and public assistance. The result of this service is an increase in the knowledge and skills of farmers, ranchers, and weavers in groups. Then counseling and assistance in financial governance management and animal health management by the Community Service team that made farmers, ranchers, and weavers experience improvement.

Do sustainability or environmental, social and governance (ESG) practices influence emerging Asia banks performance during COVID-19 pandemic?

As the COVID-19 crisis unfolds, the banking industry has once again come under scrutiny, particularly due to the recent collapses of notable financial institutions in the United States and Switzerland. This warrants an urgent reassessment of regulations, financial governance, and risk management practices. This research aims to investigate the relationship between Environmental, Social, and Governance (ESG) practices and bank performance within emerging Asian economies. Its urgency is underpinned by these recent financial disruptions and the need for resilient banking systems geared for sustainability. By exploring bank-specific performance indicators like the Net Interest Margin (NIM) and Capital Adequacy Ratio (CAR), this study offers an approach differentiated from traditional profitability measures, namely Return on Assets (ROA), Return on Equity (ROE), and Tobin's Q. This paper's quantitative approach includes multivariate regression analysis of unbalanced panel data from all publicly listed banks in these economies between 2018 and 2022. This research not only provides reflections on these institutions' performance during a global crisis but also illustrates the imperative for ESG assimilation in bank strategy and operations as a safeguard against future uncertainties.

금융권의 제로 트러스트 보안모델 적용방안에 관한 연구

The changed hybrid work environment such as the expansion of cloud computing technology and the increase in telecommuting due to the coronavirus infection (COVID-19), has brought about new security problems. The traditional perimeter security model has limitations in protecting various devices and environments because it is difficult to clearly distinguish network boundaries. The Zero Trust model, which has been proposed as an alternative security strategy to overcome this, is based on the premise that there is no trust in the assets and actors that are connected components when configuring corporate infrastructure and workflow. The financial sector is actively seeking to introduce the zero trust security model as a means of strengthening security. Demand for responding to advanced cyber-security threats, strengthening security policies, and applicability and necessity of a zero trust security model in the financial sector has expanded. This study proposed the components of a zero trust security model to be applied to the financial world based on financial governance and zero trust principles, components of the maturity model, and the results of expert interviews. The zero trust security model in the financial sector consists of four layers and eight detailed steps: perimeter security layer, authority definition layer, behavior detection layer, and internal control layer. This zero trust security model for the financial sector is expected to provide guidelines for key elements and construction steps to be considered when introducing zero trust in the financial sector.

Impact of Digital Economy on China's Services Trade Competitiveness

With the global spread of the new coronavirus epidemic, international trade has been greatly hindered. However, the rapid development of the digital economy has improved the efficiency of financial services and government governance, providing new solutions and perspectives for countries to develop service trade. Therefore, this paper uses the macro panel data of 30 provinces in China from 2013 to 2020 and the system GMM model to empirically test the impact of digital economy on the competitiveness of service trade from the perspective of financial development and government governance. This paper finds that the development of the digital economy can promote the progress of financial industry and strengthen the level of government governance so as to enhance the competitiveness of service trade; that is, financial development and government governance have mediating effects. Based on the above results, the author proposes to deepen the digital transformation of government governance, deepen the digital reform of financial services and promote the process of digital legal supervision.

Achieving carbon neutrality in West Africa: The impact of financial development and good governance.

Achieving a net zero carbon has been one of the main agendas for all state and non-state actors. The political system of developing countries sometimes makes both internal and external actors question their efforts toward the agenda. Therefore, this study contributes to previous literature in analyzing the empirical effect of financial development and governance quality on carbon emissions. The study covers sixteen West African countries with data from 1996 to 2021. The study employs the Generalized Method of Moments for the analysis. Financial development in all the models contributes to carbon emissions. However, the effect of governance quality indicators varies depending on the model and the indicator(s) used. Nevertheless, economic governance and political governance in most models contribute to environmental pollution, but institutional governance helps promote environmental quality. Renewable energy and economic growth promote environmental quality through carbon mitigation. However, trade openness promotes environmental pollution by encouraging the release of carbon emissions. Finally, relevant policy implications are proposed based on the empirical findings of the study.

MENA oil exporters need a renewable energy transition before the oil wells run dry: A special focus on innovation, financial development, and governance

Unlike previous studies, this paper specifically casts light on Middle Eastern and North African (MENA) oil exporters that desperately need to give a strong boost to renewable energy (RE) sources and export rather than uselessly burn their hydrocarbon resources, which support an overwhelming part of their economies. This paper extends the previous research by investigating the impact of oil revenues, innovation, financial development, and governance on renewable energy generation in eight oil‐rich MENA countries over the period 1996–2020 using the three‐stage least squares (3SLS) estimator, which is asymptotically more efficient than the two‐stage least squares (2SLS) employed in the similar‐scoped study of Bellakhal et al. (Energy Economics, 2019, 84, 104541). Furthermore, this study aims to detect structural changes in the econometric relationships between variables depending on a novel test with structural breaks proposed by Karavias and Tzavalis (Computational Statistics & Data Analysis, 2014, 76, 391–407). The main findings indicate that oil rents negatively and significantly affect RE production in MENA oil exporters in general and in non‐GCC countries in particular. While renewable energy production in the GCC countries is positively and significantly affected by oil rents. Innovation‐led RE increases at a greater pace in the GCC countries than in their non‐Gulf counterparts. renewable energy production appears to be positively and significantly affected by financial development and governance in oil‐rich MENA countries.

The predictive roles of financial indicators and governance scores on firms’ emission performance in the tourism and hospitality industry

The tourism and hospitality (T&H) industry can significantly impact the environment by using natural resources and waste generation. Measuring and improving firms’ emission performance in this industry is becoming increasingly important. However, the prediction of financial indicators and governance scores on firms’ emission performance is still poorly established. Drawing on the agency and stakeholders’ theory, our research explores whether financial indicators and governance scores predict firms’ emission performance in the T&H industry. Data on all companies that are publicly traded was acquired from Thomson Reuters Eikon using 485 publicly traded tourism firms as of the end of the fiscal year 2021. Our findings suggest that governance pillar score (GP), management score (MS), board size (BS), and market capitalization (MC) are the best four predictors of carbon emission reduction scores in T&H companies. Theoretical and practical implications are presented, and directions for further research are provided.

The Influence of Financial Literacy and Educational Background on the Financial Governance of Nagari Owned Enterprises

Initial observations carried out at Nagari-Owned Enterprises (BUMNag) in Nagari Z found that BUMNag managers' understanding of good financial governance still needed to be improved, causing the financial governance of BUMNag in Nagari Z not to be improved. This is due to a need for more training regarding financial literacy and a mismatch in the educational background of the BUMNag managers. This research aims to determine and analyze the influence of financial literacy and educational background on financial governance in Nagari-owned enterprises (BUMNag) in Nagari Z. The approach used in this research is quantitative with a survey method. The data used in this research is primary data obtained from distributing questionnaires to managers of Nagari-owned enterprises in Nagari Z with 83 respondents. The sampling method used in this research is the stratified random sampling method. The research results show that financial literacy and educational background partially influence the financial governance of BUMNag in Nagari Z. In line with these results, financial literacy and educational background simultaneously influence the financial governance of BUMNag in Nagari Z.

Benefit or burden? An exploratory analysis of the impact of anti‐money laundering regulations on sustainable development in developing economies

AbstractOver the years, efforts have been put in place to address money laundering activities including financial crime and illicit funding controls. These efforts have been recognized to promote financial integrity and effective governance systems. They have been further adjudged by the United Nations' sustainable development (Goal‐16) with a major concern to achieve peaceful, just and inclusive development. Previous studies reveal that money laundering activities have major implications for economic growth. However, little is known about the main implications of anti‐money laundering (AML) regulations on sustainable development. On this note, this study contributes to the ongoing debate by investigating the relationship between AML regulations and sustainable development in 72 developing economies, consisting 29 upper middle income, 33 low middle income and 10 low income countries. Using instrumental variable generalized method of moment (IV‐GMM), panel quantile estimation technique and dynamic panel threshold analysis, the findings are as follows. First, AML regulations promote sustainable development. Second, the panel quantile regression reveals that countries with moderate AML regulations attain higher sustainable development than those with excessive regulations. Further results on regional analysis show that AML regulations are more effective in Latin America, South Asia, Europe & Central Asia and Middle East & North Africa than in Sub‐Saharan Africa and East Asia & Pacific. These results are robust and stable after conducting a number of robustness analyses. The study suggests that effective AML regulations should be moderate and well‐implemented to further improve economic, social and environmental sustainability in developing countries.

Determining the combined effect of financial system architecture, macroeconomic factors and governance on the development of local currency government bond market in Kenya

This study sought to examine the current state of the local currency government bond market in Kenya to determine the effects of financial system structure, macro-economic factors and the country’s governance on its development. The study used secondary data from the World Bank’s WDI and DataStream databases for the period 1998 to 2019. Descriptive statistics - applying trend analysis, measures of central tendency and dispersion and documents analysis were employed to conduct a stocktaking of Kenya's government bond market development since its inception, while multiple linear time series regression using Ordinary Least Square (OLS) technique was employed to examine the determinants of the government bond market development in Kenya. In the findings, the combined model, corporate bond, political stability and general election were largely positively significant. Bank credit to the private sector and fiscal balance were positively significant, whereas inflation and interest capping were negatively significant at a 5 per cent confidence level. GDP_ growth rate was significant at 10 per cent. The study thus recommends that the government's efforts should focus towards building the financial markets, controlling its micro and macro-economic factors and building a strong administrative structure in its quest to achieve its Vision 2030 objectives of financial independence. It is this structure that will encourage bond market growth and liquidity that will, in future, enable them to achieve financial independence.

Economics for an uncertain world

Uncertainty, where we do not know the likelihood of future events, dominates our world. This article examines how economics as a profession and discipline can address uncertainty. From Frank Knight to John Maynard Keynes to Friedrich von Hayek to George Shackle, economics has highlighted the importance of uncertain knowledge and distinguished this from calculable risk. In this article we show how such insights were lost through the rise of narrow neoclassical thinking and were excluded through the emergence of a dominant economics of control that rose to prominence during the twentieth century and especially in the neoliberal era. However, through a range of perspectives in economics that emphasise the importance of complexity, informality, positionality and narratives, uncertainty is once again being embraced within an increasingly heterodox economics. In many ways, this chimes with the work of Albert Hirschman who, starting from the mid-1960s, emphasised the importance of addressing uncertainty in development theory and practice. Through two examples on pastoral development and global financial governance, we highlight the continued relevance of Hirschman’s thinking on the importance of adaptation, flexibility and learning-by-doing as responses to uncertainty and for the development of reliable, robust approaches to development policy and practice. In conclusion, we argue that economics theory, methodologies, professional practice and training need to change, recovering some of the insights from previous generations of economic thinkers and practitioners, in order to reinvent an economics appropriate for our uncertain world.

Governance impacts of blockchain-based decentralized autonomous organizations: an empirical analysis

The rapid rise in blockchain-based Decentralized Autonomous Organizations (DAOs) offers policy-makers and decision-makers new opportunities to automatically execute decisions and processes that help enhance transparency, accountability, participation and trust. Yet, many DAOs have a limited lifespan. There is little empirical evidence of the effect of governance elements on the viability of DAOs. Using 220 on-chain governed DAOs, this paper analyses how governance elements (accountability, decision/voting, and incentives) influence the viability of DAOs in the long-term. The findings show that DAOs without weighted decision-making and without incentive structures are more viable than those with weighted decision power and incentive mechanisms. This suggests that financial and share-like DAO governance elements do not or may even negatively contribute to the long-term viability of DAOs. Also, voting power distribution is found to have a statistically significant influence on DAOs’ viability. We further propose a preliminary theory that relates governance elements to the long-term viability of DAOs. These insights will help policy-makers in designing more viable DAOs. Future research should investigate how DAO objectives, the chosen deployment infrastructure and the type of users can impact the long-term viability of DAOs.

ISSUES IN FINANCIAL GOVERNANCE PRACTICES IN MALAYSIA'S MOSQUES

Background and Purpose: Mosques, like every other religious organisation, have financial, human, and physical resources. As a prominent symbol of Islam, it also serves the community as a service provider, not only to their congregations but also to the public. The purpose of this article is to examine and analyse the challenges surrounding mosque financial governance. In Malaysia, the mosque's function and potential have not been fully realised and utilised to continuously impact on society. Even though Malaysia has been a Muslim country since the 15th century, mosques still have concerns. Fund management, regulatory compliance, and facility management are noted issues. Because State Religious Councils are the sole trustees of mosques, it is proposed that mosque governance practices in Malaysia vary and differ according to the laws provided by each state. It was discovered that previous research has mostly focused on fund management because of its potential to raise funds through financial contributions.
 
 Methodology: This paper looks at concerns surrounding mosques' existing financial governance practices in Malaysia. The paper aims to raise awareness among mosque committees and the public about the necessity of good financial governance practises in religious institutions, particularly mosques.
 
 Contributions: As this is a conceptual paper, findings are expected to lead to a comprehensive study on issues and their relationships that will enable us to identify necessary measures to enhance the Malaysian mosque institution.
 
 Keywords: Mosque, financial governance, fund management, regulatory compliance, facilities management.
 
 Cite as: Mohamed, I. S., Mustafa, N., Syed Yusuf, S. N., & Rozzani, N. (2023). Issues in financial governance practices among Malaysia's mosques. Journal of Nusantara Studies, 8(TI), 134-146. http://dx.doi.org/10.24200/jonus.vol8issTIpp134-146

THE EFFECT OF FINANCIAL AND CORPORATE GOVERNANCE FACTORS ON THE FORCED FINANCIAL RESTATEMENT LIKELIHOOD: EVIDENCE FROM MALAYSIA

Background and Purpose: Forced financial restatement (FFR) creates a major concern as it has an instantaneous and disastrous effect on a firm’s share price. Whilst studies focusing on FFR are limited, this study investigated the financial and corporate governance influences that affect the FFR likelihood within the emerging background of Malaysia. This study aims to provide new evidence and insights to Malaysian regulators in developing strategies to reinforce financial reporting quality.
 
 Methodology: The influences of board independence, political connection, audit committee financial expertise, government-related institutional ownership, family ownership and control, corporate reporting quality, and financial distress on FFR occurrence were investigated. A multivariate logistic model was employed on 4,759 firm-year observations from 2002 until 2012.
 Findings: Findings revealed that aggressive accounting influences the FFR likelihood. Based on the results, the number of independent board directors, the presence of politically connected investors or management, working capital accruals management, real earnings management, and the financial health of the firm amplified the FFR occurrences.
 
 Contributions: This study enriches the body of knowledge on FFR by investigating a wider range of financial and corporate governance factors as possible determinants of FFR.
 
 Keywords: Forced financial restatement, opportunistic, accruals management, real earnings management, Malaysia.
 
 Cite as: Slack, R., Othman, I. W., Stratling, R., Syed-Yusuf, S. N., & Wan Mohd Radzi, W. S. (2023). The effect of financial and corporate governance factors on the forced financial restatement likelihood: Evidence from Malaysia. Journal of Nusantara Studies, 8(TI), 147-176. http://dx.doi.org/10.24200/jonus.vol8issTIpp147-176