Legal system environment and banking risk

IF 7.4 2区经济学 Q1 BUSINESS, FINANCE

Finance Research Letters Pub Date : 2025-01-14 DOI:10.1016/j.frl.2025.106793

Ruiqi Yang, Man Guo

引用次数: 0

Abstract

This study investigates the impact of the legal system environment—rule of law, government effectiveness, and political stability—on banking risk proxied by gross financial flows (GRFIN). Using panel data from 19 upper middle-income countries, we apply multiple econometric models. Macroeconomic variables such as trade openness, inflation rate and foreign direct investment have also been included. The results indicate that the scale of legal institutions has an even more pronounced negative relationship with banking risk. The interaction effects show that legal factors improve the level of resistance to macroeconomic fluctuations. In terms of policy implications, major factors stress institutional changes to strengthen governance and minimize the system risk of banking structures.

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来源期刊

Finance Research Letters BUSINESS, FINANCE-

CiteScore

11.10

自引率

14.40%

发文量

863

期刊介绍： Finance Research Letters welcomes submissions across all areas of finance, aiming for rapid publication of significant new findings. The journal particularly encourages papers that provide insight into the replicability of established results, examine the cross-national applicability of previous findings, challenge existing methodologies, or demonstrate methodological contingencies. Papers are invited in the following areas: Actuarial studies Alternative investments Asset Pricing Bankruptcy and liquidation Banks and other Depository Institutions Behavioral and experimental finance Bibliometric and Scientometric studies of finance Capital budgeting and corporate investment Capital markets and accounting Capital structure and payout policy Commodities Contagion, crises and interdependence Corporate governance Credit and fixed income markets and instruments Derivatives Emerging markets Energy Finance and Energy Markets Financial Econometrics Financial History Financial intermediation and money markets Financial markets and marketplaces Financial Mathematics and Econophysics Financial Regulation and Law Forecasting Frontier market studies International Finance Market efficiency, event studies Mergers, acquisitions and the market for corporate control Micro Finance Institutions Microstructure Non-bank Financial Institutions Personal Finance Portfolio choice and investing Real estate finance and investing Risk SME, Family and Entrepreneurial Finance