Regulatory Risk Research Articles

Debt maturity and climate change exposure: does life cycle moderate?

PurposeIn this study, I explore how climate exposure influences debt maturity and whether the life cycle moderates this relationship.Design/methodology/approachThis study employs robust panel fixed-effects regression models on 32,249 firm-year observations over 2002–2022. The meticulous examination of the relationship between climate exposure and debt maturity and the use of IV regression models to address endogeneity ensure the validity and reliability of the findings. Exploiting an external shock to validate the results further enhances the robustness of the analysis.FindingsThe study reveals that climate change exposure significantly negatively affects debt maturity, a finding that holds for both climate-related opportunities and regulatory risks. While the life cycle impacts debt maturity, it exacerbates the negative effect for firms in the introductory and growth phases. This exacerbation is due to underinvestment problems and a lack of financial flexibility. These findings shed new light on the relationship between climate exposure and debt maturity, providing valuable insights for corporate finance professionals and strategic managers.Practical implicationsThe evidence presented in this study has strategic implications for corporate managers, investors, academia and other stakeholders. The insights on the choice or substitution of debt maturity during certain life cycle phases can provide valuable guidance to management, empowering them to make informed decisions.Originality/valueThe dynamic role of the corporate life cycle in the relationship between capital structure and climate exposure is a novel area of research. This paper significantly contributes to our understanding of the combined relationship of firm life cycle and climate exposure on debt maturity, offering a fresh perspective on an underexplored topic. This study’s unique approach and original findings will pique the interest of academic researchers and corporate finance professionals alike.

Evaluating the performance of multi-omics integration: a thyroid toxicity case study.

Multi-omics data integration has been repeatedly discussed as the way forward to more comprehensively cover the molecular responses of cells or organisms to chemical exposure in systems toxicology and regulatory risk assessment. In Canzler etal. (Arch Toxicol 94(2):371-388. https://doi.org/10.1007/s00204-020-02656-y ), we reviewed the state of the art in applying multi-omics approaches in toxicological research and chemical risk assessment. We developed best practices for the experimental design of multi-omics studies, omics data acquisition, and subsequent omics data integration. We found that multi-omics data sets for toxicological research questions were generally rare, with no datasets comprising more than two omics layers adhering to these best practices. Due to these limitations, we could not fully assess the benefits of different data integration approaches or quantitatively evaluate the contribution of various omics layers for toxicological research questions. Here, we report on a multi-omics study on thyroid toxicity that we conducted in compliance with these best practices. We induced direct and indirect thyroid toxicity through Propylthiouracil (PTU) and Phenytoin, respectively, in a 28-day plus 14-day recovery oral rat toxicity study. We collected clinical and histopathological data and six omics layers, including the long and short transcriptome, proteome, phosphoproteome, and metabolome from plasma, thyroid, and liver. We demonstrate that the multi-omics approach is superior to single-omics in detecting responses at the regulatory pathway level. We also show how combining omics data with clinical and histopathological parameters facilitates the interpretation of the data. Furthermore, we illustrate how multi-omics integration can hint at the involvement of non-coding RNAs in post-transcriptional regulation. Also, we show that multi-omics facilitates grouping, and we assess how much information individual and combinations of omics layers contribute to this approach.

Resource Planning and Collapse of Buildings in Kiambu County, Kenya

Purpose: The research sought to find out the impacts of resource planning on building collapse in Kiambu County, Kenya. Therefore, this research aimed to establish the impact of resource planning on building collapse in Kiambu to be able to advise on how to contain the problem and enhance the non-collapse of such buildings. Methodology: In this study, the authors adopted a simple random sampling technique to identify construction projects in Kiambu County based on Kahneman and Tversky’s Scheduling Fallacy Theory that covers problems such as over-optimism and false resource forecasting on resource requirement necessary for efficient completion of the project. The descriptive research method was also used in the study since it included both qualitative and quantitative data. The population of the study consisted of 545, which included the employees from the physical planning department, architects, surveyors, engineers, and contractors’ builders, and finally the sample size came to 231 as estimated By Yamane, 1967. Findings: The research findings revealed that poor resource management has partly influenced building failures. Attempts by the contractors to solve the problem and eradicate the vice have been frustrated by the locals and politicians for their selfish reasons which have not been highlighted in this study. The research also pointed out that handling of resources reveals the highest mean score of 4.1773 this means that most respondents hold positive attitudes towards their practice of resource planning. Unique Contribution to Theory, Policy, and Practice: The Scheduling Fallacy Theory of 1979 by Kahneman and Tversky was utilized to examine the construction collapses of Kiambu County and the cognitive biases of underestimating time, resources, and costs in construction projects. The study suggested that strict adherence to building codes, better regulatory standards, risk evaluation, and better resource allocation are needed. Prevention was recommended through cross-sector collaboration of government, developers, contractors, and regulatory bodies alike. Empirical research into resource planning faults and their impact on structural integrity was proposed.

Influence of External Stakeholder Involvement and Risk Perception on Affordable Housing: A Survey on the Implementation of Affordable Housing Project in Anderson-Ofafa Estate, Kisumu City (Kenya)

The significance of stakeholder involvement and risk forecasting in project management has been documented in literature and in studies all over the World. One such study was carried out in Anderson-Ofafa estate, Kisumu City. The main goal of the study was to assess the influence of external stakeholder involvement and risk perception on the implementation of the project. The stakeholders showed resistance to the housing project.The study aimed to establish the risks the project is exposed to based on stakeholder attitude and their influence on project performance, and whether the stakeholders were involved so as to provide solutions to problems bedeviling the project and to generate new knowledge. A survey of general respondents/ intelligent laypersons of age 18 years and above totaling 384 and key informants numbering 16 proportionately sampled from a population of 174,145 people found out that there was a significant correlation between stakeholder involvement, risk perception and project performance. In addition, the study established the occurrence of socio-political,regulatory and financial risk factors which had a perceived high influence of 50% and above, moderate influence of 39% and a very high influence of above 50% respectively.Updated risk register had a perceived high influence of 50% and above. Socio-political risk factors significantly influenced the project performance as was hypothesized by the alternative hypothesis of this study.Financial risk factors had the greatest impact.The stakeholders were involved in the project but were still not satisfied with its implementation.The results are expected to assist the project stakeholders align their goals with that of the project to foster sustainability.The practical or managerial implications is explained as follows- there are documented potential consequences and outcomes of stakeholder actions that have contributed to risk factors that will have extended effect on all stakeholders; including project beneficiaries, project providers, project influencers, and the project governance team. Interventions recommended include; Project sponsors to focus on strategies that manages risk perception and returns expectations, Project manager to reduce project scope, public sector to put measures that guarantee stability in laws and regulations and, the project should be infused into the new affordable housing program by the Kenya Kwanza government to benefit from the new government initiated housing levy fund.

Impact of digital transformation on financial stability in emerging markets: evidence from Ethiopia

This insightful study delves into the intricate relationship between key digital finance adoption indicators and the stability of the banking sector in Ethiopia, an emerging economy undergoing rapid digitalization. Covering annual data from 1991 to 2022 and utilizing an autoregressive distributed lag (ARDL) approach alongside Fully Modified Ordinary Least Squares (FMOLS) and Dynamic Ordinary Least Squares (DOLS) techniques, the researchers uncover thought-provoking findings that challenge conventional wisdom. Contrary to expectations of a positive long-term association, the analysis reveals a statistically significant negative relationship between both internet usage and mobile phone subscriptions and Ethiopia's banking system's financial stability. This robust result, validated through rigorous robustness checks, suggests that the breakneck pace of digital transformation may outpace the development of robust regulatory frameworks and risk management practices, ultimately undermining the overall stability of the financial sector. Interestingly, the short-term analysis presents a more nuanced picture, with mobile phone subscriptions exhibiting a stabilizing effect in the immediate aftermath. This intriguing dichotomy highlights the complex and evolving dynamics at play, where the challenges of integrating digital finance with the traditional banking infrastructure and the persistence of informal financial activities potentially offset the benefits of enhanced financial inclusion and transaction efficiency. These thought-provoking findings carry crucial implications for policymakers and industry stakeholders navigating the digital revolution. Policy implications emphasize the need for robust regulatory frameworks, enhanced cyber security measures, and improved financial literacy. The findings underscore the importance of a nuanced approach to digital finance in emerging economies, advocating for continuous adaptation of policies to address the evolving landscape of financial technology. Continued inquiry can better guide policies that foster digital transformation while safeguarding stability, especially in rapidly developing regions like sub-Saharan Africa.Graphical

Global spillovers of US climate policy risk: Evidence from EU carbon emissions futures

International climate policy risk spillovers occur when expected changes to climate policy stringency in one country affect expected climate policy stringency in another country. We develop an event study procedure to identify such spillovers in emissions trading systems, specifically examining the impact from the United States (US) to the European Union (EU). Distinguishing between policy events likely to reduce US commitment to climate action (‘brown events’) and those likely to increase it (‘green events’), we find that the average brown US policy event is associated with an anticipated increase in future EU carbon permit supply, leading to a cumulative 7.1% drop in EU carbon prices over the event window. Conversely, green US policy events are linked to an expected decrease in future EU permit supply, resulting in a cumulative 4.7% rise in EU carbon prices. These findings suggest that financial markets anticipate EU regulators to align with the direction of US climate policy. Our results underscore the significance of regulatory risk spillovers in global climate policy coordination.

Pharmaceutical industry promotional activities on social media: a scoping review

Abstract Objectives The rise of social media has broadened the reach and impact of pharmaceutical promotion across countries. This scoping review synthesizes available literature on the nature, extent, and impacts of such promotion, with a particular focus on public health implications. Methods Using a systematic strategy, we searched six multidisciplinary scholarly databases for empirical studies, both peer-reviewed and grey, published since 2004, which had collected data on pharmaceutical promotion via social media. Data were synthesized qualitatively into outcome domains. Key findings We included 45 studies, primarily conducted in the USA (20/45, 44%) and multi-nationally (15/45, 33%), and published after 2013 (40/45, 89%). Studies used content analyses, surveys, and interviews to measure pharmaceutical industry presence or impacts on the following indicators: social media, social media strategy, consumer reach and engagement, health information quality, ethical and regulatory guideline adherence, and consumer attitudes and behaviours. Taken together, these studies indicate a gradual increase in industry use of social media, notably including the development of novel consumer engagement strategies, such as targeted promotion and influencer sponsorship. Studies also showed that, in some cases, health information provided on social media is of low quality, ethically and legally questionable, and potentially harmful to public health. Conclusions Appreciating the regulatory and reputational risks of consumer engagement on social media, the pharmaceutical industry has gradually increased promotional activities on social media since its inception. Evidence of harmful content and promotional activities that have become more covert and targeted suggests the need for regulatory development.

How Readable Is the Information the United Kingdom's Statutory Health and Social Care Professional Regulators Provide for the Public to Engage With Fitness to Practise Processes?

The public are an important source of notifications and evidence for the investigation of concerns by regulators of professionals. The website is an important source of information for the public, but the complexity of information presented to engage with the public is unknown. This study explored the readability of information provided for the public to engage with fitness to practise processes by examining the websites of the 13 UK statutory health and social care professional regulators. Six readability algorithms were utilised to calculate the readability scores of 180 general and 8 easy-read documents published for the 15 sites of the United Kingdom's 13 health and social care statutory professional regulatory bodies. These tests were the Flesch Kincaid Reading Ease, the Flesch Kincaid Grade Level, the Gunning Fog Score, the Simple Measure of Gobbledygook (SMOG) Index, the Coleman Liau Index and the Automated Readability Index (ARI). All the fitness to practise documents analysed in this study are written at a level too difficult for most of the general population to read, except one easy-read document. There was also considerable variation in readability across resources for the same regulator, which could be confusing. Regulatory bodies risk excluding a large proportion of UK adults who may want to engage with professional regulatory proceedings. This is the first comparative analysis of readability conducted independent of the regulators of the fitness to practise website documents of health and social care regulators. The public are a key source of evidence in regulatory proceedings. Regulators could improve public engagement by addressing the complexity of language used. Our advisory group of people with lived experience of involvement as members of the public in fitness to practise proceedings discussed the findings and contributed to the recommendations.

Peer review of the pesticide risk assessment of the active substance elemental iron.

The conclusions of the European Food Safety Authority (EFSA) following the peer review of the initial risk assessments carried out by the competent authority of the rapporteur Member State Austria for the pesticide active substance elemental iron and the considerations as regards the inclusion of the substance in Annex IV of Regulation (EC) No 396/2005 are reported. The context of the peer review was that required by Regulation (EC) No 1107/2009 of the European Parliament and of the Council. The conclusions were reached on the basis of the evaluation of the representative uses of elemental iron in field and greenhouses (permanent and non-permanent structures) via granule application by spreading on all edible and non-edible crops, ornamental plants and amenity grassland to control molluscs. The reliable endpoints, appropriate for use in regulatory risk assessment, are presented. Missing information identified as being required by the regulatory framework is listed.

Peer review of the pesticide risk assessment of the active substance pirimicarb.

The conclusions of the European Food Safety Authority (EFSA) following the peer review of the initial risk assessments carried out by the competent authorities of the rapporteur Member State Sweden for the pesticide active substance pirimicarb are reported. The context of the peer review was that required by Commission Implementing Regulation (EU) No 844/2012, as amended by Commission Implementing Regulation (EU) No 2018/1659. The conclusions were reached on the basis of the evaluation of the representative use(s) of pirimicarb as an insecticide on winter and spring wheat and sugar beet via foliar spray application and on ornamental pot plants in permanent greenhouses. The reliable end points, appropriate for use in regulatory risk assessment are presented. Missing information identified as being required by the regulatory framework is listed. Concerns are identified.

Peer review of the pesticide risk assessment of the active substance pyrimethanil.

The conclusions of the European Food Safety Authority (EFSA) following the peer review of the initial risk assessments carried out by the competent authorities of the rapporteur Member State Czech Republic and co-rapporteur Member State Austria for the pesticide active substance pyrimethanil and of confirmatory data following the maximum residue limit (MRL) review under Article 12 of Regulation (EC) No 396/2005 are reported. The context of the peer review was that required by Commission Implementing Regulation (EU) No 844/2012, as amended by Commission Implementing Regulation (EU) No 2018/1659. The conclusions were reached on the basis of the evaluation of the representative uses of pyrimethanil as a fungicide on grapevine and pome fruit (field uses), strawberry and lettuce (field and greenhouse uses). The reliable end points, appropriate for use in regulatory risk assessment are presented. Missing information identified as being required by the regulatory framework is listed. Concerns are identified.

Addressing Regulatory Risks in Fintech through Decentralized Technologies

The fintech industry, characterized by rapid innovation and disruption of traditional financial services, faces significant regulatory challenges that can hinder its growth and sustainability. Managing these regulatory risks is crucial to ensuring compliance and maintaining trust within the industry. Decentralized technologies, particularly blockchain, have emerged as potential solutions for enhancing regulatory compliance through increased transparency, security, and automation. This study aims to analyze the role of decentralized technologies in addressing regulatory risks in the fintech sector. Utilizing the SmartPLS method for data analysis, the research examines the relationships between decentralized technology adoption, compliance automation, and regulatory risk mitigation. The findings reveal that decentralized technologies significantly reduce regulatory risks by automating compliance processes and enhancing transparency. These insights offer valuable implications for fintech companies and regulators, suggesting that the integration of decentralized technologies can be a strategic approach to managing regulatory challenges in the industry.

Strategies for Mitigating and Managing Risks in Bank Investments

This paper suggests that while studies of banking risk management often emphasize analytics and stress testing to improve risk governance, there is too little emphasis on historical case studies to generate comprehensive risk management strategies. Using numerous case studies, the paper suggests four categories of risk - market risks, credit risks, regulatory risks, and operational risks - that impact overall investment outcomes. By extensively reviewing both historic failures and historic successes, the paper highlights the importance of understanding different types of risks and adopting strategic measures to manage them effectively. Emphasis is placed on the necessity of a diversified investment portfolio to mitigate market volatility and credit exposure. Additionally, the paper provides actionable strategies for navigating regulatory complexities and operational challenges, supported by real-world case studies and practical examples. This research aims to equip investors with valuable insights and tools to optimize investment opportunities while minimizing potential risks in the banking sector.

IMPACT OF DIGITALISATION ON BANKING SECTOR

The banking sector has been substantially changed by the fast development of digital technology. The effect of digitalisation on general financial services, client contacts, and banking operations is investigated in this article. In banking, digitalisation has brought about the automation of formerly manual procedures, therefore improving client happiness, efficiency, and operating expenses while lowering running costs. Offering 24/7 access to financial services from anywhere in the globe, services such internet banking, smartphone apps, and digital payment systems have transformed the way consumers connect with banks. Furthermore, digitalisation has helped fintech to emerge, therefore undermining established banking structures and encouraging more innovation and competitiveness. Advanced technologies such artificial intelligence (AI), machine learning (ML), and blockchain have been embraced by banks to guarantee better security in transactions, provide tailored services, and help to guide decisions. Although digitalisation has many advantages, it also brings problems like cybersecurity threats, data privacy issues, and the necessity of large technological infrastructure investment. This study also addresses its function in financial inclusion by enabling underprivileged groups to use banking services. Banks have to strike a mix between innovation and regulatory compliance, risk control, and client confidence as the digital revolution unfolds. The results of this research imply that banks must embrace digital transformation if they are to stay competitive in an economy becoming more and more digital and also meet the changing demands of tech-savvy customers.

Weathering the Storm: Unravelling the Influence of Climate Change Risk Exposure on Firms’ Human Capital Investment

AbstractBuilding on agency theory, this study examines the impact of climate change risks on corporate investment in human capital as a key factor of production. Using a sample of US listed firms for the period 1989–2017, we find that firms respond to the growing climate risks by enhancing efficiency in human capital investment, primarily through a reduction in over‐hiring, consistent with our conjecture that firms adopt more prudent and efficient recruitment strategies in reaction to higher climate risks. Cross‐sectional analyses suggest that such an improvement in human capital investment decisions is more salient for firms with poor corporate governance, less intellectual capital and facing greater industry competition and less pronounced for firms with more resilient assets against climate change. By exploiting two exogenous events that cause significant increases in climate risk as quasi‐natural experiments, we conduct difference‐in‐differences analyses and find consistent evidence that the firms engage in more efficient human capital investment in response to both the physical and regulatory risks of climate change. Collectively, despite the overwhelming negative impact of climate change, our study reveals that such risks can play a disciplinary role in promoting more efficient managerial decisions on human capital investment.

Sacco Based Financial Characteristics and Financial Performance of Deposit Taking Savings and Credit Co-operative Societies in Kenya

In Kenya, Deposit-Taking Savings and Credit Cooperative Societies have faced significant challenges that have adversely impacted their financial performance. While existing literature has linked financial performance to financial characteristics, there remain conceptual and contextual gaps in empirical research. These gaps prompted the current study to examine SACCO-based financial characteristics as a tool for enhancing the financial performance of DT-SACCOs in Kenya. The study employed a descriptive research design, targeting a population of 190 DT-SACCOs. Using purposive sampling, 181 SACCOs that had been operational since 2018 were selected for analysis. Secondary data from the period 2018 to 2023 were utilized, and a quantitative approach was applied to generate both descriptive and inferential statistics. Panel regression was used to estimate the direct relationship between SACCO-based financial characteristics and financial performance, while also appraising how the Sacco Societies Regulatory Authority risk regulations moderated this relationship. The study concluded that capital adequacy had a statistically significant positive effect on financial performance, indicating that stronger capital buffers enhance profitability. In contrast, asset quality and financial investments showed statistically significant negative effects, suggesting that poor loan quality and mismanaged investments negatively impact financial outcomes. Liquidity, however, was positively associated with financial performance, underscoring the importance of maintaining adequate liquidity reserves. Moreover, the relationship between SACCO-based financial characteristics and financial performance was significantly moderated by SASRA risk regulations, highlighting the critical role of regulatory oversight in shaping financial outcomes. Based on these findings, the study recommends that DT-SACCOs in Kenya should: maintain optimal capital adequacy levels to safeguard financial stability; prioritize careful asset quality management and regular loan monitoring to develop sound lending policies; optimize financial investments to ensure sufficient funding for operational expenses; and maintain adequate liquidity levels to meet financial obligations and improve overall performance.

Risk is in the eye of the investor: Cryptocurrency investors’ engagement with risk, regulatory advice, and regulatory institutions

Despite regulators’ warnings that investing in cryptoassets is highly risky, cryptocurrency investments are prevalent. To explore investors’ engagement with regulatory risk advice, we conducted two surveys. Cryptocurrency investors residing in the UK and the US were asked about their interpretation of the notion of risk, awareness of regulatory risk advice, and attitudes towards the advice and the regulators. Investors were also asked whether they followed the advice. Qualitative content analysis of their answers suggests that people often invest in cryptocurrencies although they understand the risks involved and are aware of the regulators’ advice. They do so due to their risk propensity, self-reliance, criticism of the informativeness of the advice, or attitudes towards regulators. Furthermore, negative attitudes towards regulators often stem from lack of trust and the perception that regulators are dated. This study suggests that regulators could benefit investors by providing them with more informative advice and addressing their attitudes.

Profile and Different Approaches for Size Characterization of Microplastics in Drinking Water from the Lisbon Water Supply System.

Microplastics (MPs) contribute to the overall pollution of water sources, affecting not only aquatic ecosystems but also water for human consumption (WHC). Currently, there needs to be a global consensus on safe levels of microplastics in WHC, which will allow regulatory efforts and risk assessments to be carried out. Therefore, this study aims to characterize MP particles in WHC of the Lisbon water supply system (LWSS) and compare two approaches to quantify these particles (length and width of the particles, and the area equivalent diameter (AED) of the particles). The quantification of MP particles was made via micro-FTIR (Fourier Transform Infrared Spectroscopy) on transmission mode after water filtration on 5 µm silicon filters. Thirty-eight WHC samples from the LWSS showed MPs up to 836 MPs/L, with an average value of 196 MPs/L. The most representative polymer was polyethylene (PE, 77.2%). The other eight polymers were also quantified. The length and width of MPs ranged between 84 µm and 41 µm, respectively. The AED of MPs ranged between 24 µm and 405 µm. The MP dimensions of both approaches can differ significantly.

Laying the foundations for negative emissions technologies: insights from a workshop

Abstract Pre-empting the worst consequences of climate change requires both mitigation of emissions from the global energy system and carbon dioxide removal through negative emissions technologies. Despite their nascence, negative emissions technologies are being incorporated into nationally determined contributions to achieve ambitious targets. It is therefore urgent to build a scaffolding that enables their expansion. Here, we report results from a workshop that brought together 34 prominent stakeholders, including scientists, engineers, energy system analysts, economists, experts in public policy, and policy makers. Participants discussed the likely cost and performance of these technologies; elucidated the opportunities and risks facing deployment; and envisioned how nations might build the necessary scaffolding for expansion. The majority narrative is that negative emissions technologies will have a bridging role in decarbonizing existing assets. Different models of deployment were proposed. Reaching the scale of deployment necessary to meet emissions targets is lengthy and expensive. Financial and regulatory risks are seen as greater barriers to deployment at scale than technological risk. Greater certainty regarding carbon pricing, production tax credits, and support for geological characterization and trunkline construction could reduce the former. Critical to expansion is a large-scale increase in low-carbon power production; the implementation of regulatory frameworks that remove uncertainty surrounding investment decisions; and prudent societal engagement.

The capitalization of property rights to groundwater

AbstractThere is limited empirical evidence on the value of formal property rights to natural resources when they are not transferable, and there is regulatory uncertainty about enforcement. This paper takes a hedonic approach to understanding how three core features of groundwater property rights—access, allocation, and seniority—are capitalized into agricultural land values in the High Plains Aquifer region of Kansas. We find that groundwater access rights confer an average land value premium of 71%, or $1445/acre in 2019 dollars. Water rights having larger allocations and more seniority are more highly valued in the land market. The seniority effect is small but is consistent with more junior rights facing greater regulatory risk of curtailment. Taken together, these results suggest that the land market capitalizes constraints to groundwater pumping provided by groundwater property rights. We use our empirical estimates to quantify the distributional costs of modifying existing patterns of pumping, a common challenge of groundwater management organizations seeking to improve the sustainability of extraction.