Investment Practices Research Articles

Carbon omission and financial market sustainability via government effectiveness: a cross-culture comparison of OECD and Asian emerging economies

PurposeFinancial market sustainability is gaining attention as investors and stakeholders become more aware of environmental, social and governance issues, pushing demand for responsible and ethical investment practices. Therefore, this study aims to investigate the impact of carbon (CO2) emissions from three sources, oil, gas and coal, on the stock market sustainability via effective government policies.Design/methodology/approachThe eight countries belong to two different regions of world: Asian economies such as Pakistan, India, Malaysia and China, and OECD economies such as Germany, France, the UK and the USA are selected as a sample of the study. The 22-year data from 2000 to 2022 are collected from the DataStream and the World Bank data portal for the specified countries. The generalized methods of movement (GMM) and wavelet are used as the econometric tool for the analysis.FindingsOur findings show that the CO2 emission from coal and gas significantly negatively impacts stock market sustainability, but CO2 emission from oil positively impacts stock market sustainability. Moreover, all the emerging Asian economies’ CO2 emissions from coal and gas have a much greater significant negative impact on the stock market sustainability than the OECD countries due to the critical situation. However, the government’s effective policies have a positive significant moderating impact between them, reducing the effect of CO2 emission on the stock market.Research limitations/implicationsThis study advocated strong implications for policymakers, governments and investors.Practical implicationsEffective government policies can protect the environment and make business operations suitable, leading to market financial stability. This study advocated strong implications for policymakers, governments and investors.Originality/valueThis study provides fresh evidence of the government’s effective role to control the carbon environment that provide the sustainability to the organizations with respect to OECD and emerging economy.

Building on Finance Theory to Forge the Future of Investment Practice

Building on Finance Theory to Forge the Future of Investment Practice

Sectoral Performance of ESG Enabled Stocks during COVID-19 Pandemic in the Indian Stock Market

Over past one decade, there is significant rise in Environment, Social and Governance (ESG) enabled investment practices across the globe and Indian economy is no exception to that. The ESG-enabled investment options provide better investment avenues for investment for retail and institutional investors by ensuring the long-term sustainability of the business. The present study tries to assess whether there is any impact of ESG scores on performance of stocks at the time of COVID-19 pandemic period. The study compares the performance of stocks with high ESG score vis-à-vis stocks with low ESG scores during COVID-19 period for different sectors of Indian stock market. The study considers the data of 312 sample firms listed on BSE 500 index. The event study methodology is used to assess the impact of COVID-19 on Indian stocks. The stocks were further divided into three categories high score (top 30% of firms), medium (middle 40% of firms) and low (bottom 30% of the firms). The results of the study suggest that the investors were more confident about the performance and revival of firms that carry high ESG scores than firms with low ESG scores. The investors are confident about the long-term prospects and sustainability of the firms, and they tend to hold their investment in the firms with high ESG scores.

The Impact of ESG Standards and Investment : Global Trends and Practices

In recent years, ESG (Environmental, Social, and Governance) investment has significantly integrated into investment strategies worldwide. The concept of ESG investing is not merely a fleeting trend but rather an essential tool for investors looking towards sustainable and responsible investment practices. With the evolution and adoption of ESG investments in the global market, a thorough examination of ESG investment practices reveals valuable insights. Nowadays, in economic landscape, the emphasis on ESG factors in investment decisions continues to grow, underscoring the importance of responsible investing practices in fostering long-term value creation and societal impact. This study offers noteworthy recommendations regarding ESG investment standards, aiming to drive improved ESG performance within enterprises. By adhering to robust ESG criteria, organizations can access enhanced financial prospects, paving the way for them to garner increased social recognition. Besides, this paper also put forward countermeasures and suggestions for China's ESG to improve China's ESG information disclosure system and the awareness of ESG.

Cryptocurrency Security Risk: Awareness Among General Public in Malaysia

In the age of digital payments, cryptocurrencies have gained significant attention as an alternative investment option. However, security risks such as phishing, hacking, and fraudulent exchanges present challenges for investors. This study aims to assess the level of awareness among the general public in Malaysia regarding cryptocurrency security risks. A quantitative research method was employed, using a survey questionnaire distributed to 150 Malaysian citizens via social media platforms. The questionnaire explored respondents' knowledge of cryptocurrencies, awareness of security risks, and protective measures such as security programs, two-factor authentication (2FA), and education. The results of the regression analysis show that the installation of security programs, 2FA, and public education are all significant predictors of increased awareness of cryptocurrency security risks, with a combined R² value of 0.523. This suggests that 52.3% of the variance in awareness is explained by these factors. The study concludes that strengthening security measures and providing education can significantly improve public understanding of cryptocurrency risks, leading to safer investment practices. The implications of these findings highlight the need for targeted education and security initiatives to enhance public confidence in cryptocurrency, making digital currency investments more secure

Role transition, investment practice and risk Management of Peer-to-peer Lending Investors: Based on the perspective of investor learning

Online peer-to-peer (P2P) lending has emerged as a result of the integration of finance and technology. Within the P2P lending market, individual investors have the opportunity to make repeated investments and engage in two-way transactions involving loans and investments. This setting provides an ideal scenario for studying the impact of different learning types on investors' risk management. Drawing on transaction data from the online lending platform Renrendai.com, we empirically examine the influence of role transition and investment practice on investors' risk identification, risk preference, and investment performance. We introduce variables related to loans and investment portfolios to analyze the effects. Our findings reveal that investment practice has a greater effect than role transition in reducing the investment default of online lending investors. Additionally, role transition is associated with a decrease in the investment amount set by investors and a reduced reliance on borrowers' credit ratings. Historical investment experience also leads to a decrease in the investment amount, while experiences of past investment failures improve investors' reference to borrowers' credit ratings. Furthermore, we observe that borrowing experience and previous investment failures contribute to a lower probability and proportion of high-risk loans in the portfolio. We shed light on the “black box” of investor learning and expand the research methodology for understanding investor behavior characteristics in the Fintech era.

Exploring Investment Practices in Initial Public Offerings (IPOs) among Undergraduate Students

This study aimed to explore the investment behavior of undergraduate students focusing on their participation in initial public offerings (IPOs). Data was collected through structured questionnaires from a sample of 321 students out of a total population of 1476 covering management, humanities, and education faculties. The data were collected during two-months period from April 1 to June 1, 2024. The study used exploratory research design with a quantitative approach to analyze data. The study explored that management faculty students are more likely to invest in IOPs compared to humanities faculty and education faculty students. It is also revealed that third and fourth year students were more involved in IPOs than first and second year students. Gender differences in investment behavior were also noted. Male students participate more actively in IPOs than female students. Parental education and profession did not significantly influence the investment behavior. The study pointed-out the need for targeted educational programs to improve financial literacy and informed investment decisions among students.

Golden Horizons: Investigating Shariah-Compliant Gold Investment Awareness Among Youth

Gold has long been regarded as a reliable medium of exchange and a store of value, owing to its inherent traits and functions associated with money. In the context of Malaysia, gold investment emerges as a lucrative and secure asset category for investors. They have the option to either physically possess and safeguard gold or opt for a more modern approach by establishing a gold investment account. Over recent years, there has been a noticeable growth in awareness among the public and seasoned gold investors in Malaysia. However, this upward trend has not been as pronounced among the younger demographic. This research aims to investigate the extent of awareness regarding Shariah-compliant gold investment among the young Muslim population in Terengganu, Malaysia. Utilizing a quantitative research methodology, data was collected through a survey administered by researchers via a Google Form, disseminated across various social media platforms. The study successfully obtained data from a sample of 120 respondents. The findings of this study reveal that, on the whole, the young Muslim generation in Terengganu exhibits a high level of awareness regarding Shariah-compliant gold investment. The significance of this research lies in shedding light on the dynamics of gold investment awareness, particularly within the context of Shariah compliance, among the youth in a specific region of Malaysia. The results provide valuable insights for financial institutions, policymakers, and educators seeking to tailor their strategies to enhance financial literacy and promote Shariah-compliant investment practices among the younger population. As Malaysia continues to evolve as a financial hub, understanding and addressing the investment preferences and awareness levels of its diverse demographic groups become crucial for fostering a robust and inclusive financial landscape. Since this study was conducted with small sample size and focusing in Terengganu only, it is strongly recommended to expand the research to other states in Malaysia.

Advancing ESG Portfolio Optimization: Methods, Progress, and Future Directions

Objective - The integration of environmental, social, and governance (ESG) criteria into investment portfolios has emerged as a critical field of study, underscoring the interconnectedness between financial markets and global sustainability objectives. Methodology/Technique - This systematic literature review analyzes 157 academic documents, focusing on ESG portfolio optimization methodologies and identifying emerging trends. Key methods reviewed include genetic algorithms, dynamic optimization models, multi-objective optimization frameworks, and machine learning techniques. Findings - Despite considerable advancements, gaps remain, such as the need for broader application across diverse markets and asset classes, improved risk-return assessments, and standardized ESG data reporting. Future research should also investigate the role of central banks and regulators in fostering sustainable finance. Novelty - By addressing these gaps, stakeholders can better align investment practices with sustainability goals, contributing to a more resilient and inclusive global economy. Type of Paper: Review JEL Classification: G11, Q56, G28, G32 Keywords: Sustainable Investment, Sustainable Finance, ESG Portfolio Performance, ESG Risk Management, ESG Portfolio Optimization Reference to this paper should be referred to as follows: Billah, A.L; Koesrindartoto, D.P; Faturohman, T. (2024). Advancing ESG Portfolio Optimization: Methods, Progress, and Future Directions, Acc. Fin. Review, 9(2), 65 – 73. https://doi.org/10.35609/afr.2024.9.2(2)

Does corporate digitalization promote labor investment efficiency? Evidence from Chinese listed companies

This study examines whether and how corporate digitalization affects labor investment practices. Using a sample of Chinese listed companies from 2007 to 2023, we find that corporate digital development is positively associated with labor investment efficiency. Mechanism tests show that corporate digitalization can facilitate precise judgment of labor input scales, accelerate employment adjustment responsiveness, recruit high-quality potential workforce, and improve management oversight, thus contributing to making efficient labor investment decisions. Cross-sectional tests indicate that the positive impact of corporate digital development is more prominent for firms located in regions with stronger labor protection systems, industries with higher competition levels and those non-state-owned enterprises. Moreover, corporate digitalization can curb both over- and underinvestment in labor resources, and this effect is primarily manifested in firm’s hiring practices. Our findings contribute to the literature on the determinants of corporate labor investment efficiency and provide practice insight into the role of corporate digitalization in firm’s decision-making.

Foreign direct investment and the protection of garment workers' rights in Bangladesh

Purpose Critical examination of Bangladeshi laws related to workers’ rights in the garment industry. This paper aims to examine the impact of foreign direct investment (FDI) on the protection of garment workers’ rights in Bangladesh, analyzing how international investment practices influence labor standards and the overall well-being of workers in the garment industry. Design/methodology/approach In this study, qualitative and analytical methods has been used to analyze legal frameworks related to labor rights in Bangladesh and BITs. Findings The findings indicate a need to strengthen the current legal framework to better protect workers' rights in Bangladesh. The study also provides recommendations for the relevant authorities to improve the existing laws. Originality/value Novel idea critically evaluating the Bangladeshi legal framework in the context of foreign direct investment and implications for worker's rights.

When EFL learner identity intersects with their investment: Stories from Indonesia

Current research has looked at learner identity as a single construct and is studied as a separate entity from English as a foreign language (EFL) learners’ investment in learning. While the issue has gained much attention in recent times, there is an urgency to explore the intersection of learner identity and investment in English as a foreign language learning. To fill this lacuna, the present study employed a narrative inquiry to understand four Indonesian EFL learners’ identity construction and their investment. Data were garnered from individual semi-structured interviews that discerned the participants’ prior English learning experiences, present perspectives on learning English, and their future aspirations. In analyzing the data, we followed Braun and Clarke’s (2006) six-step analysis procedure. Findings suggest that learners’ prior learning experiences, current perspectives about the role of English in global communications, and their participation in the community of practice serve as mediators in their identity construction process and investment practices. In addition, investment influenced the way the participants constructed their identities as EFL learners. This study suggests the incorporation of identity-awareness pedagogy into the ELT curriculum in order to create more inclusive EFL teaching and learning practices.

Adaptive strategies and sustainable investments: navigating organizations through a VUCA environment in and after COVID-19

This study delves into the resilience and adaptability of employees within the volatile, uncertain, complex, and ambiguous (VUCA) business environment, examining their readiness to manage effectively and the organizational agility in navigating change, alongside the impact of sustainable investment practices. Employing quantitative methods, a survey was conducted among employees at two pivotal moments: during and after the COVID-19 pandemic restrictions. Factorial analysis revealed a strong preference for participatory work styles and highlighted the critical need for employee involvement in significant decision-making processes. Although the value of sustainable investments was recognized, a noticeable gap was found in employees’ understanding and adaptability towards these investments. The use of the Wilcoxon test illuminated the significant impact of external disruptions, such as the pandemic, on organizational operations and preparedness. The findings underscore the imperative for organizations to champion continuous learning and training, enabling strategic and innovative responses to the challenges unique to the VUCA world. By aligning adaptive interventions with the demands of the VUCA environment, organizations can define a clear trajectory towards sustainable growth and enhance their proactive stance against sudden shifts in the business landscape.

Successful Community Infrastructure Risk Management in a Decarbonized Future

It remains uncertain how a decarbonized economy will function and how organizational roles will need to adapt. Irrespective, the climate is forcing a changing risk context, and organizations and communities are in transition, whether actively engaged or not. Managing the emergent risks is critical to a successful transition and community survival. However, it requires a system of systems view. The asset and function-based investment practice does not reflect value. Community transition is complex and persistent efforts to simplify aspects in isolation and project familiar models based on no-longer-valid assumptions that overcomplicate the calculus no longer suffice. Successful risk management of community transition to a decarbonized future requires a shared understanding of the outcome across all stakeholders to build a sense of ownership and partnership. Each step in that transition must follow a risk-sequenced progression that is measurable and transparent, ideally independently validated. Community transition risk management relies on social capital and delivers enhanced economic benefits. This article advocates an infrastructure systems planning approach instead of an asset-based one.

The Effect of Implementing Sharia Principles in the Financial Industry on Economic Stability: Case Study at Bank BTPN Syariah

This study investigates the impact of implementing Sharia principles on economic stability, using Bank BTPN Syariah as a case study. By adhering to core Islamic financial tenets such as the prohibition of interest (riba), the avoidance of excessive uncertainty (gharar), and the emphasis on risk-sharing and asset-backed financing, Bank BTPN Syariah aims to foster a more resilient and ethical financial system. Data was collected through interviews with key stakeholders, surveys of clients, and analysis of financial documents. The findings indicate that the application of Sharia principles contributes significantly to financial stability by promoting prudent risk management and ethical investment practices. The bank's focus on financial inclusion and supporting underserved communities enhances economic stability and client trust. This study reinforces existing theoretical frameworks that highlight the benefits of Islamic banking in mitigating financial risks and promoting sustainable economic growth. Practical implications for Bank BTPN Syariah include maintaining strong regulatory compliance and enhancing ethical conduct, while broader recommendations for the Islamic banking sector and policymakers emphasize the need for supportive frameworks to facilitate the widespread adoption of Sharia principles. Future research should explore the long-term impacts of Sharia-compliant practices and the role of technological advancements in this sector.

FOREIGN INVESTMENT IN THE SYSTEM OF MOVEMENT TOWARDS SUSTAINABLE DEVELOPMENT OF THE NATIONAL ECONOMY

The article examines aspects of foreign investment in the context of moving towards the sustainable development of the national economy, which is the purpose of the article. The impact of foreign investments on the innovative development of the economy has been investigated. An assessment of the influence of foreign investments on key sectors of the national economy has been conducted. The author's contribution lies in addressing the issues of attracting foreign investments into the sustainable development system. Scientific novelty consists in the development of a classification system of risks associated with the attraction of foreign investments. The importance of a comparative analysis of foreign investment practices in countries with different levels of economic development is highlighted as an element of the practical implementation. The main conclusions of the study are presented.

Impact of ESG Risk on Portfolio Optimization and Returns: An Analysis Using the Markowitz Model

This paper explores the integration of Environmental, Social, and Governance (ESG) factors into portfolio optimization using the Markowitz Model, focusing on two groups of ten stocks each from the Technology, Media, and Telecom (TMT) sectors. These stocks are categorized into low and high ESG risk groups according to established ESG rating agencies. Employing historical data, the study computes key financial metrics such as annualized returns, standard deviation, and Sharpe ratios to conduct various portfolio optimizations including the minimal risk frontier, efficient frontier, and inefficient frontier, while also applying five specific operational constraints reflective of real-world investment limits. The analysis distinctly highlights the superior performance of the low ESG risk group, which demonstrated higher returns and better risk-adjusted return profiles, as evidenced by elevated Sharpe ratios. These findings suggest that ESG integration not only aligns with broader societal goals but also enhances financial performance, especially under diverse regulatory and strategic constraints. This research enriches the discourse on sustainable investing by providing empirical evidence on how ESG factors influence traditional portfolio management strategies, potentially guiding future investor decisions and promoting a shift towards more sustainable investment practices.

Investment Knowledge in the Young Generation: A Theory of Reasoned Action Perspective

This study aims to explore the investment knowledge of students from the Faculty of Economics and Business at Universitas Negeri Makassar using the Theory of Reasoned Action framework. Basic investment knowledge is crucial for prospective investors to avoid irrational investment practices, such as gambling, following trends without analysis, falling victim to fraud, and facing significant financial losses. Adequate knowledge, experience, and business instincts are essential for analyzing which assets to invest in within the capital market. Understanding the correct methods of investing is vital to minimize the risk of losses, particularly in stock market investments. While the growth of investors in Indonesia's capital market is promising, the overall interest in investing remains relatively low compared to other countries. This study underscores the importance of enhancing investment education to better prepare young investors. By increasing their financial literacy and decision-making capabilities, we can help foster a more robust investment culture and contribute to the financial well-being of the young generation.

Financial Literacy and Investment Behaviour among Working Women in Higher Education in India

Financial literacy is a critical skill for individuals, empowering them to make informed financial decisions and improving their investment behaviour. This paper explores the level of financial literacy and its impact on the investment behaviour of working women in higher education in India. The study employs a qualitative approach, gathering data through surveys and interviews with women engaged in various academic and professional fields. The findings indicate that while there is a growing awareness of financial instruments among this demographic, significant gaps in knowledge persist. Factors influencing investment behaviour include educational background, perceived risk, and access to financial resources. The results highlight the importance of financial education programs tailored specifically for working women in academia to foster better investment practices and enhance their financial security.

Financial network communities and methodological insights: a case study for Borsa Istanbul Sustainability Index

This study investigates the influence of Environmental, Social, and Governance (ESG) scores on the clustering and community formation of companies within various network models. Using daily closing prices of 78 companies operating in the Borsa Istanbul Sustainability Index, we constructed correlation, mutual information (both continuous and discrete), and causality (both linear and nonlinear) networks to analyse intercompany relationships. We performed community detection using the Leading Eigenvector and Girvan–Newman methods, which revealed that companies within the same sector, particularly in the financial and manufacturing sectors, tend to form tight-knit communities. These intra-sectoral clusters reflect strong market behaviour correlations driven by sector-specific factors. Additionally, mixed-sector communities highlighted the presence of significant inter-sector dependencies. To assess the impact of ESG scores on these communities, nonparametric tests such as the Kruskal–Wallis, Conover, and log-rank were applied. Results showed that specific ESG factors, including emission, CSR strategy, innovation, and human rights, significantly influenced community formation. For instance, companies with strong performance in emission reduction and CSR strategies were found to form more cohesive communities, emphasizing the role of sustainability in shaping financial networks. Study findings underscore the critical role of ESG factors in financial market dynamics, promoting sustainable investment practices by highlighting the importance of integrating ESG considerations into investment decisions. These results suggest that sustainability metrics not only affect individual company performance but also contribute to the formation of interconnected communities with shared sustainability practices.