Journal of Financial Regulation and Compliance最新文献

{"title":"Banking on trust: exploring the relationship between Federal Reserve directors and financial institutions","authors":"Elizabeth Cooper","doi":"10.1108/jfrc-02-2024-0027","DOIUrl":"https://doi.org/10.1108/jfrc-02-2024-0027","url":null,"abstract":"<h3>Purpose</h3>\u0000<p>This study aims to analyze the risk profile of banks whose managers sit on Federal Reserve district bank boards in 2023. In particular, to analyze the impact tha Federal Reserve bank directors have on their own banks.</p><!--/ Abstract__block -->\u0000<h3>Design/methodology/approach</h3>\u0000<p>Use a matched sample approach to perform univariate analysis and multiple regression methodology to study whether banks whose managers sit on Federal Reserve Bank boards differ in risk profile from banks whose managers do not sit on Federal Reserve district boards.</p><!--/ Abstract__block -->\u0000<h3>Findings</h3>\u0000<p>There is limited evidence that banks managed by Fed directors have different capital ratios and leverage ratios relative to non-Fed director banks. There does appear to be a slight difference in the growth of Held-to-Maturity (HTM) Securities between the two samples. Specifically, banks managed by a Fed director saw their HTM portfolio grow over the study period, while banks managed by non-Fed directors reduced their HTM securities. Overall, the results suggest that bank directors on Federal Reserve district boards do so with no apparent detriment to the banks that they manage.</p><!--/ Abstract__block -->\u0000<h3>Research limitations/implications</h3>\u0000<p>Results of this study suggest that stakeholder director relationships are not associated with higher risk-taking at director banks. This study is unique in that, rather than looking at how director ties might influence the firm that they are on the board of, the focus here is how the firm (the Fed district, in this case) might influence director affiliations. Limitations include a small sample size (70 banks, including the matched sample), and data over a short time horizon. Additional measures of risk can also be analyzed in future research.</p><!--/ Abstract__block -->\u0000<h3>Practical implications</h3>\u0000<p>While there has been much speculation in the industry and in the press regarding the conflict of interest involving bank directors on Fed district boards, this research suggests there is little evidence of any risk differential involving these directors and their specialties to the Fed.</p><!--/ Abstract__block -->\u0000<h3>Originality/value</h3>\u0000<p>This study involves a unique approach to corporate governance analysis, whereby any conflict of interest that might exist between directors and the firm is studied from an alternate angle – in particular, whether the association with a regulator’s board impacts the director firm’s risk. Furthermore, with the recent events in the banking industry involving the collapse of several banks, including Silicon Valley, the notion that bank management participating on the boards of directors of their own regulator seemed a worthwhile question as to whether this diminished the safety and soundness of the banks that they run.</p><!--/ Abstract__block -->","PeriodicalId":44814,"journal":{"name":"Journal of Financial Regulation and Compliance","volume":null,"pages":null},"PeriodicalIF":0.9,"publicationDate":"2024-06-26","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"141509001","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Shrinking the 13D disclosure window will benefit non-activist investors","authors":"Ryan Christopher Polk, Steve Buchheit, Mark E. Riley, Mary S. Stone","doi":"10.1108/jfrc-01-2024-0016","DOIUrl":"https://doi.org/10.1108/jfrc-01-2024-0016","url":null,"abstract":"<h3>Purpose</h3>\u0000<p>This study aims to examine the Securities and Exchange Commission’s final rule in Modernization of Beneficial Ownership Reporting, which reduced the time for significant public company shareholders to file Schedule 13D (effective February 5, 2024). The authors corroborate prior results under the historic 10-day maximum reporting regime and provide updated academic analysis regarding how the five-day deadline between the “triggering” event, accumulating 5% of the outstanding shares and public disclosure of that event will affect abnormal returns.</p><!--/ Abstract__block -->\u0000<h3>Design/methodology/approach</h3>\u0000<p>This empirical archival study uses publicly available data.</p><!--/ Abstract__block -->\u0000<h3>Findings</h3>\u0000<p>The analyses show that changing from a 10-day to a 5-day Schedule 13 disclosure window will reduce activist investors’ opportunity to profit by legally delaying the filing of Schedule 13D. These excess returns for delay exist regardless of the profitability or size of the target firm or the shareholder’s disclosed reason for filing. The authors conclude that accelerating the timing of the disclosure window is an improvement that is in the best interest of the general investing public.</p><!--/ Abstract__block -->\u0000<h3>Originality/value</h3>\u0000<p>To the authors’ knowledge, this is the only academic study of Schedule 13D filings to include the postpandemic period. As such, the authors establish an updated “baseline projection” for expectations regarding how the Modernization final rule will impact activist investors and stock returns under a five-day reporting regime. In addition, the authors measure and test abnormal returns after considering differences between “triggering” events and filing dates of Schedule 13Ds in the sample rather than grouping all filings. This approach allows the authors to account for the time difference between the triggering event and the filing date.</p><!--/ Abstract__block -->","PeriodicalId":44814,"journal":{"name":"Journal of Financial Regulation and Compliance","volume":null,"pages":null},"PeriodicalIF":0.9,"publicationDate":"2024-06-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"141509026","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Regulatory framework on governing equity crowdfunding: a systematic literature review and future directions","authors":"Prateek Gupta, Shivansh Singh, Renu Ghosh, Sanjeev Kumar, Chirag Jain","doi":"10.1108/jfrc-10-2023-0160","DOIUrl":"https://doi.org/10.1108/jfrc-10-2023-0160","url":null,"abstract":"\u0000Purpose\u0000The purpose of this study is to comprehensively analyse and compare equity crowdfunding (ECF) regulations across 26 countries, shedding light on the diverse regulatory frameworks, investor and issuer limits and the evolution of ECF globally. By addressing this research gap and providing consolidated insights, the study aims to inform policymakers, researchers and entrepreneurs about the regulatory landscape of ECF, fostering a deeper understanding of its potential and challenges in various economies. Ultimately, the study contributes to the advancement of ECF as an alternative financing method for small and medium enterprises (SMEs) and startups, empowering them to access much-needed capital for growth.\u0000\u0000\u0000Design/methodology/approach\u0000The study used the Preferred Reporting Items for Systematic Reviews and Meta-Analyses (PRISMA) model for a systematic literature review on global ECF regulations. Starting with 74 initial articles from Web of Sciences and Scopus databases, duplicates were removed and language criteria applied, leaving 42 articles. After a thorough full-text screening, 20 articles were excluded, resulting in the review of 22 papers from 2016 to 2022. PRISMA’s structured framework enhances the quality of systematic reviews, ensuring transparency and accessibility of findings for various stakeholders, including researchers, practitioners and policymakers, in the field of ECF regulations.\u0000\u0000\u0000Findings\u0000This study examines ECF regulations across various countries. Notably, the UK has advanced regulations, while the USA adopted them later through the Jumpstart Our Business Startups Act. Canada regulates at the provincial level. Malaysia and China were early adopters in Asia, but Hong Kong, Japan, Israel and India have bans. Turkey introduced regulations in 2019. New Zealand and Australia enacted laws, with Australia referring to it as “crowd-sourced equity funding”. Italy, Austria, France, Germany and Belgium have established regulations in Europe. These regulations vary in investor and issuer limits, disclosure requirements and anti-corruption measures, impacting the growth of ECF markets.\u0000\u0000\u0000Research limitations/implications\u0000This study’s findings underscore the diverse regulatory landscape governing ECF worldwide. It reveals that regulatory approaches vary from liberal to protectionist, reflecting each country’s unique economic and political context. The implications of this research highlight the need for cross-country analysis to inform practical implementation and the effectiveness of emerging ECF ecosystems. This knowledge can inspire regulatory adjustments, support startups and foster entrepreneurial growth in emerging economies, ultimately reshaping early-stage funding for new-age startups and SMEs on a global scale.\u0000\u0000\u0000Originality/value\u0000This study’s originality lies in its comprehensive analysis of ECF regulations across 26 diverse countries, shedding light on the intricate interplay between regulatory frameworks and a nation’s","PeriodicalId":44814,"journal":{"name":"Journal of Financial Regulation and Compliance","volume":null,"pages":null},"PeriodicalIF":0.9,"publicationDate":"2024-05-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140970883","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"The impact of announcements of regulatory and law enforcement penalties on stock market valuation of US banks from 2000 to 2022","authors":"Václav Brož","doi":"10.1108/jfrc-01-2024-0007","DOIUrl":"https://doi.org/10.1108/jfrc-01-2024-0007","url":null,"abstract":"<h3>Purpose</h3>\u0000<p>This paper aims to analyze stock market reactions to announcements of regulatory and law enforcement penalties imposed on banks operating in the USA.</p><!--/ Abstract__block -->\u0000<h3>Design/methodology/approach</h3>\u0000<p>This paper examines abnormal stock market returns around penalty announcements for banks operating in the USA from 2000 to 2022. The authors use a comprehensive data set of nearly 600 penalties to conduct their event study.</p><!--/ Abstract__block -->\u0000<h3>Findings</h3>\u0000<p>This paper finds evidence of positive and statistically significant abnormal returns on the day of the penalty announcement. However, the authors also observe negative and statistically significant abnormal returns days later, violating the semi-strong efficient market hypothesis.</p><!--/ Abstract__block -->\u0000<h3>Originality/value</h3>\u0000<p>By accounting for confounding events and analyzing subsamples, the authors reconcile conflicting results from prior literature that have variously shown negative, null or positive stock market reactions to penalty announcements.</p><!--/ Abstract__block -->","PeriodicalId":44814,"journal":{"name":"Journal of Financial Regulation and Compliance","volume":null,"pages":null},"PeriodicalIF":0.9,"publicationDate":"2024-05-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140926022","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Creating financial inclusion in “Belt and Road” countries in Europe, Asia and Africa: regulation, technology and financial literacy","authors":"Xiaoling Song, Xuan Qin, XiaoMeng Feng","doi":"10.1108/jfrc-11-2023-0180","DOIUrl":"https://doi.org/10.1108/jfrc-11-2023-0180","url":null,"abstract":"<h3>Purpose</h3>\u0000<p>This study aims to comparatively measure the impact factors of financial inclusion and their spillover effects for Belt and Road countries using panel data from 57 countries in 2011, 2014, 2017 and 2021 and relevant indicators from three dimensions: availability, usage and quality to construct a digital empowerment index of financial inclusion.</p><!--/ Abstract__block -->\u0000<h3>Design/methodology/approach</h3>\u0000<p>A spatial Durbin panel model is constructed to empirically test the impact mechanism of financial inclusion under digital empowerment.</p><!--/ Abstract__block -->\u0000<h3>Findings</h3>\u0000<p>Results reveal that improving a country’s quality of regulation, technology and residents’ financial literacy significantly contributes to the development of its financial inclusion, while improving its neighboring countries’ financial literacy also boosts its financial inclusion development. This study provides theoretical support for evaluating the development level of inclusive finance in “Belt and Road” countries, promoting the development of inclusive finance and alleviating the problem of financial exclusion.</p><!--/ Abstract__block -->\u0000<h3>Originality/value</h3>\u0000<p>This study is original as it creates a research paradigm for “Belt and Road” countries, enabling systematic testing and comparative analysis of inclusive finance development. It incorporates traditional and digital services, evaluating them based on sharing, fairness, convenience and specific group benefits. An inclusive financial index is constructed using the coefficient of variation and arithmetic weighted average methods. Additionally, it introduces a more rational analysis approach for the influence mechanism and spatial effect, using an economic geography nested matrix and spatial Durbin model to explore spatial effects in inclusive finance.</p><!--/ Abstract__block -->","PeriodicalId":44814,"journal":{"name":"Journal of Financial Regulation and Compliance","volume":null,"pages":null},"PeriodicalIF":0.9,"publicationDate":"2024-05-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140841775","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Market power and bank risks: insights from India and Bangladesh","authors":"Suman Das, Ambika Prasad Pati","doi":"10.1108/jfrc-12-2023-0196","DOIUrl":"https://doi.org/10.1108/jfrc-12-2023-0196","url":null,"abstract":"<h3>Purpose</h3>\u0000<p>This study aims to investigate whether various types of risks faced by the publicly listed commercial banks of India and Bangladesh are driven by market power and provides comparative insights from both economies.</p><!--/ Abstract__block -->\u0000<h3>Design/methodology/approach</h3>\u0000<p>By using the adjusted Lerner index to gauge bank market power and applying the generalised methods of moments (GMM) regression approach, the research delved into the relationship between bank market power and three distinct facets of risk across a sample of 26 publicly listed commercial banks in India and 22 listed banks in Bangladesh spanning from 2011 to 2022.</p><!--/ Abstract__block -->\u0000<h3>Findings</h3>\u0000<p>The results indicate that for Bangladesh, both “competition fragility” and “competition stability” viewpoints coexist simultaneously across all risk types, supporting a nonlinear relationship between market power and risk. However, in the Indian context, a nonlinear association exists only in the case of credit risk, while the relationship with insolvency risk is linear, substantiating the “competition fragility view”. Apart from market power and bank-specific variables, GDP growth rate has emerged as a prominent driver across all risk categories in both countries.</p><!--/ Abstract__block -->\u0000<h3>Research limitations/implications</h3>\u0000<p>The filtration of banks is a limitation that might have influenced the outcomes. This study recommends that the Reserve Bank of India encourages further bank consolidation. Along the same line, Bangladesh Bank should closely oversee the growing competitive landscape. Furthermore, the regulators must monitor the elevated levels of non-performing loans to reduce credit risk so as to bolster the stability of their respective banking sectors.</p><!--/ Abstract__block -->\u0000<h3>Originality/value</h3>\u0000<p>This comparative study is the first attempt to analyse the market power and risk relationship and includes a novel bank-specific variable, i.e. technology, apart from other established variables.</p><!--/ Abstract__block -->","PeriodicalId":44814,"journal":{"name":"Journal of Financial Regulation and Compliance","volume":null,"pages":null},"PeriodicalIF":0.9,"publicationDate":"2024-04-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140810436","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Interconnectedness of European insurers and cat shocks contagion effects","authors":"Bojan Srbinoski, K. Poposki, Vasko Bogdanovski","doi":"10.1108/jfrc-10-2023-0163","DOIUrl":"https://doi.org/10.1108/jfrc-10-2023-0163","url":null,"abstract":"Purpose\u0000The purpose of this paper is to examine the evolution of interconnectedness of European insurers among themselves, as well as with other non-financial firms, for the period 2000–2021 and to analyze the stock return movements around the costliest catastrophic events (hurricanes) in the past two decades.\u0000\u0000Design/methodology/approach\u0000This paper follows the “simple” approach of Patro et al.(2013) and examines the daily stock return correlations of the largest 30 insurers and the largest 30 non-financial firms headquartered in Europe. In addition, the study uses event study methodology to examine stock return movements around the costliest hurricanes.\u0000\u0000Findings\u0000We find that the European insurance sector has become highly interconnected during the past two decades; however, its increasing connectedness with non-financial firms is limited to a few firms. In addition, we find weak evidence of the destabilizing effects of catastrophic events on European insurers and non-financial firms; however, the potential for cat risk contagion effects exists as the insurance industry becomes heavily interconnected.\u0000\u0000Originality/value\u0000The extant literature is largely concerned with the contribution of the insurance sector to the systemic risk of the financial sector. We focus on a specific region (Europe) and analyze the evolution of interconnectedness of the largest insurers within the insurance sector as well as with the largest non-financial firms encapsulating important crisis periods. In addition, we relate to the literature that examines the market reactions around catastrophic events to test the relevance of traditional insurance activities in instigating potential contagion shocks.\u0000","PeriodicalId":44814,"journal":{"name":"Journal of Financial Regulation and Compliance","volume":null,"pages":null},"PeriodicalIF":0.9,"publicationDate":"2024-04-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140655414","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"A commentary on the EU money laundering reform in light of the subsidiarity principle","authors":"Markus Tiemann","doi":"10.1108/jfrc-10-2023-0172","DOIUrl":"https://doi.org/10.1108/jfrc-10-2023-0172","url":null,"abstract":"<h3>Purpose</h3>\u0000<p>In July 2021, the European Commission has proposed a set of conjunct initiatives to reform the antimoney laundering/countering the financing of terrorism (AML/CFT) regulatory regime in Europe with the main aims to (i) harmonize the AML/CFT regulation and (ii) centralize the authority to a higher degree at European Union (EU) level. This paper aims to assess the reform in light of the EU subsidiarity principle.</p><!--/ Abstract__block -->\u0000<h3>Design/methodology/approach</h3>\u0000<p>The paper uses a benchmark approach to compare the proposed EU money laundering reform against Article 5(3) of the Treaty on the Functioning of the European Union.</p><!--/ Abstract__block -->\u0000<h3>Findings</h3>\u0000<p>The paper confirms that more centralized decision-making at EU level in this policy area is justified, mainly because (i) the policy area is not an area where the EU has exclusive competence, (ii) EU centralized action is necessary and (iii) it also adds value, for instance, for level playing field and efficiency considerations as long as local information advantage will not be lost. As such, the subsidiarity principle can be applied and is an adequate tool to legitimize EU centralized action in the field of money laundering combat.</p><!--/ Abstract__block -->\u0000<h3>Originality/value</h3>\u0000<p>As the EU AML regulatory reform has not yet been sufficiently discussed in light of the subsidiarity principle, the article is of innovative nature.</p><!--/ Abstract__block -->","PeriodicalId":44814,"journal":{"name":"Journal of Financial Regulation and Compliance","volume":null,"pages":null},"PeriodicalIF":0.9,"publicationDate":"2024-04-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140576558","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"How effective are the enforcement activities of derivatives exchanges in the digital age? A survey of enforcement notices through the lens of humans","authors":"Alexander Conrad Culley","doi":"10.1108/jfrc-08-2023-0132","DOIUrl":"https://doi.org/10.1108/jfrc-08-2023-0132","url":null,"abstract":"<h3>Purpose</h3>\u0000<p>The purpose of this paper is to scrutinise the effectiveness of four derivative exchanges’ enforcement efforts since 2007. These exchanges include the Commodity Exchange Inc. and ICE Futures US from the United States and ICE Futures Europe and the London Metal Exchange from the UK.</p><!--/ Abstract__block -->\u0000<h3>Design/methodology/approach</h3>\u0000<p>The paper examines 799 enforcement notices published by four exchanges through a behavioural science lens: HUMANS conceived by Hunt (2023) in <em>Humanizing Rules: Bringing Behavioural Science to Ethics and Compliance</em>.</p><!--/ Abstract__block -->\u0000<h3>Findings</h3>\u0000<p>The paper finds the effectiveness of the exchanges’ enforcement efforts to be a mixed picture as financial markets transition from the digital to artificial intelligence era. Humans remain a key cog in the wheel of market participants’ trading operations, albeit their roles have changed. Despite this, some elements of exchanges’ enforcement regimes have not kept pace with the move from floor to remote trading. However, in other respects, their efforts are or should be, effective, at least in behavioural terms.</p><!--/ Abstract__block -->\u0000<h3>Research limitations/implications</h3>\u0000<p>The paper’s findings are arguably limited to exchanges based in Anglophone jurisdictions. The information published by the exchanges is variable, making “like-for-like” comparisons difficult in some areas.</p><!--/ Abstract__block -->\u0000<h3>Practical implications</h3>\u0000<p>The paper makes several recommendations that, if adopted, could help exchanges to increase the potency of their enforcement programmes.</p><!--/ Abstract__block -->\u0000<h3>Originality/value</h3>\u0000<p>A key aim of the paper is to shift the lens through which the debate concerning the efficacy of exchange-level oversight is conducted. Hitherto, a legal lens has been used, whereas this paper uses a behavioural lens.</p><!--/ Abstract__block -->","PeriodicalId":44814,"journal":{"name":"Journal of Financial Regulation and Compliance","volume":null,"pages":null},"PeriodicalIF":0.9,"publicationDate":"2024-04-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140576281","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Does intellectual capital reduce the probability of default?","authors":"Sakshi Khurana, Meena Sharma","doi":"10.1108/jfrc-10-2023-0162","DOIUrl":"https://doi.org/10.1108/jfrc-10-2023-0162","url":null,"abstract":"Purpose\u0000This study aims to examine the impact of intellectual capital (IC) on default risk in Indian companies listed on the National Stock Exchange.\u0000\u0000Design/methodology/approach\u0000This study applies panel data regression analysis to derive a relationship between IC and default risk for the sample period 2013–2022. The value-added intellectual coefficient (VAIC) of Pulic (2000) has been applied to measure IC performance, and default risk is estimated using the revised Z-score model of Altman (2000).\u0000\u0000Findings\u0000The results revealed a positive association between Z-score and VAIC. It implies that a higher value of VAIC improves financial stability and leads to a lower likelihood of default. The findings further suggest that new default forecasting models can be experimented with IC indicators for better default prediction.\u0000\u0000Practical implications\u0000The findings can have implications for investors and banks. This paper provides evidence of IC performance in improving the financial solvency of firms. Investors and financial institutions should invest their resources in a healthy firm that effectively manages and invests in their IC. It will eventually award investors and creditors high returns through efficient value-creation processes.\u0000\u0000Originality/value\u0000This study provides evidence of IC performance in improving the financial solvency of Indian high-defaulting firms, which lacks sufficient evidence in this domain of research. Numerous studies exist examining the relationship between firm performance and IC value, but this area is inadequately focused and underresearched. This study, therefore, fills the research gap from an Indian perspective.\u0000","PeriodicalId":44814,"journal":{"name":"Journal of Financial Regulation and Compliance","volume":null,"pages":null},"PeriodicalIF":0.9,"publicationDate":"2024-04-02","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140352414","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}