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The purpose of this study is to examine the relationship between regulation of non-bank financial institutions (NBFIs) and their performance in Ghana.

The analysis is performed using data derived from the Bank of Ghana Database during a five-year period, 2006-2010. Correlated panels corrected standard errors model is used to estimate the regression equation. Capital adequacy requirements and the restrictions on the ability of non-bank financial institutions (NBFIs) to take deposits are used as proxies for regulatory pressure. The study also used the return on assets (ROA) and return on equity (ROE) as measures of NBFI performance.

Results of the study emerged with the evidence that there exists a positive relationship between minimum capital adequacy requirement of 10 per cent and profitability. This indicates that asking NBFIs to keep higher minimum capital adequacy ratio has resulted in improving their profitability. This suggests that capital regulation is an effective tool in enhancing the stability and the profitability of the financial services sector. In addition, the paper finds a positive relationship between regulatory pressure in terms of restrictions on deposits and NBFI profitability. This means that non-deposit-taking NBFIs have improved performance. This indicates that restricting NBFIs in terms of deposit-taking rather goes to increase profitability.

The value of this study is in respect of its contribution to the extant literature on financial regulation and performance of NBFIs.

This paper aims to analyze the effects of internal and external governance mechanisms on the performance and risk taking of banks from the Euro zone before and after the 2008 financial crisis.

To avoid macroeconomic problems and shocks and because of data availability, the authors select some countries of the Euro zone, namely, France, Belgium, Germany and Finland, during the 2004-2009 period. These countries share similar macroeconomic environments (unemployment, inflation and economic growth rates). All the data relating to the banks are manually drawn from the supervising reports submitted to banks and are available on the banks’ websites and/or on that of the AMF website. The banks included in our sample are drawn from the list of European central banks on www.ecb.int

The empirical results show that banks undertake tradeoffs between different governance mechanisms to alleviate the intensity of the agency conflicts between the shareholders and managers. The findings also confirm that internal mechanisms and capital regulations are complementary and significantly impact bank performance.

This analysis can be extended through studying the interaction between bondholders’ governance and shareholders’ governance and their impact on the 2008 financial crisis.

The changes in banking governance help banks find a useful and necessary way to avoid ill-considered risks that can cause a systemic risk. Therefore, some conditions should be met so that banking governance can contribute to the economic development.

Culture and mentality of good banking governance must grow as much as possible through awareness-raising, training, promotion, recognition of performance, enhancing procedure transparency and stability of good banking governance and regulations, strengthening the national capacity to fight against corruption, and preventive mechanisms.

This paper complements previous studies, mainly those of Andres and Vallelado (2008) who examine the impact of the components of the board on banking performance and of Laeven and Levine (2009) who estimate the combined effect of regulatory and ownership structure on the risk-taking of each bank.

The purpose of this paper is to examine the effects of corporate illegality on financial performance within the banking industry, in order to assess whether the regulatory framework is effective in curbing violations.

The operating performance of 84 publicly traded US banks that were subject to enforcement actions from US regulatory authorities over a 20‐year period were examined. Performance of each violating bank was analyzed several quarters after each violation and compared to a performance benchmark of non‐violating competitors.

Contrary to prior studies that show a negative effect of illegality on performance, the results of this investigation failed to show any significant and sustained effect of enforcement actions. This could be due to the unique situation of the banking industry. Nevertheless, the degree of impact depended on firm attributes, as smaller and riskier firms were affected more than others.

The paper is restricted to the US market, which is characterized by a special regulatory framework. Future research could investigate the issue in other markets. Also, this study does not differentiate with respect to the type of violation or seriousness of offense. Future studies could control for those issues.

The results of this study shed some insight on the effectiveness of regulations in the banking industry and suggest that regulators and policy makers should tighten‐up the sanctions and speed‐up the process.

This paper differs from other studies that investigate the effect of illegality on financial performance by focusing on a single and highly regulated industry that has unique characteristics.

This paper aims to assess the effects of external governance mechanisms on the performance of microfinance institutions (MFIs) in Togo.

Using annual time series data from a sample of 30 MFIs during the period 2011–2015, the authors apply panel data econometrics in their estimations.

The results indicate that the notation by a rating agency positively and significantly affects the financial return of MFIs. The quality and the regularity of the audits negatively and significantly influence the financial performance (measured by return on assets and operating self-sufficiency) but favorably and significantly influence social performance (increased number of active borrowers (NAB) and reduced size of loans). Furthermore, supervision increases the amount of individual loans but decreases the NAB, which means deterioration in social performance. Overall, this paper shows that external governance mechanisms significantly affect the performance of Togolese MFIs, but with varying effects depending on the mechanism considered.

The sample size of 30 MFIs is small, and the geographic coverage of the study is restricted to MFIs operating in the city of Lomé, Togo. The authors did not have access to the information regarding the portfolio at risk at 30 days, even though it is a measure of financial performance. Likewise, we did not have access to the appendices to the financial statements for the calculation of prudential ratios. This method, which consists of asking the institutions using a questionnaire if they comply with prudential standards, may be biased because this study cannot verify the authenticity of the responses given that the standards are quantitative.

The study findings advocate that improving the financial and social performance of MFIs requires improving the quality of external governance mechanisms. MFIs should then pay close attention to well-functioning external governance mechanisms.

As MFIs are key social actors in a society, all mechanisms that contribute to their efficiency benefit society.

This study contributes to the corporate governance literature by showing that external governance mechanisms influence performance. These external mechanisms are complementary disciplinary measures to internal governance mechanisms and other tools.

Focusing on the Agri-Food and Beverage sector, the paper investigates the direct effect of worldwide mandatory non-financial disclosure on several financial dimensions as well as its moderating effects on the relationship between sustainability and financial performance.

The authors performed fixed-effect regressions on a sample of 180 global listed companies, considering a period of eight years. The authors also tested the moderating effects of non-financial disclosure regulation on the relationship between sustainability and financial performance.

The authors found a positive direct impact of mandatory non-financial disclosure on Operating Return on Asset, Return on Equity and Return on Sales. The analysis also highlighted the negative moderating effects of non-financial reporting regulation on the relationship between sustainability issues and financial performance. As for the Cost of Debt, the authors found mixed results.

This study considers a short-term perspective focusing on a limited sample composed of companies playing a key role in the global agri-food system.

The paper identifies which financial performance dimensions are positively or negatively affected by mandatory non-financial disclosure. Accordingly, managers can rearrange corporate activities to deal with further reporting normative requirements concurrently preserving financial performances and fostering corporate sustainability.

This study recommends fostering mandatory non-financial disclosure to increase corporate transparency fostering the sustainability transition of the Agri-Food and Beverage industry.

The paper highlights global mandatory non-financial disclosure effects on financial performance considering a sector that is cross-cutting impactful on plural sustainability issues.

This study aims to examine the hypothesis that the effect of insurer risks on profitability is conditional on regulation, using two main regulatory directives in the Ghanaian insurance market as a case study.

This study used the robust ordinary least square and random effect techniques in a panel data of 30 insurers from 2009 to 2015 to test the research hypothesis.

The results suggest that regulations on no credit premium and required capital have insignificant effects on profitability of insurers. On the contrary, this study documents evidence that both policies mitigate the effect of underwriting risk on profitability and suggests that regulations significantly mitigate the negative effect of underwriting risk to improve profitability.

The finding suggests that policymakers and regulators must continue to initiate, design and model regulations such that they help tame risk to improve the performance of insurers in Ghana.

This study provides first-time evidence on the role of regulations in controlling risks in a developing insurance market.

The role of environmental regulations in inducing innovation and improving performance has been studied in the literature. However, there have been no studies in the UK using statistical data. This paper aims to study the links among regulations, innovation and performance in the UK using sector level data.

The paper used structural equation modelling to study the links among the three variables simultaneously.

The analysis indicates that environmental regulations in the UK are significant in improving economic performance of the industrial sectors. They also find that, in the short run, environmental regulations negatively influence innovation, and innovation negatively influences economic performance in these sectors.

The results have implications both for policy makers and firms in the UK industrial sector. For policy makers, environmental regulations have generally improved economic performance. For firms, the study shows that sufficient planning in meeting government's environment standards can help improve their economic performance.

This is the first study in the UK to explore simultaneously the links among the three variables: environmental regulations, innovation, and performance, using secondary sector level data.

The authors investigate the impact of the stringency of environmental policy on the financial performance of European automobile manufacturers. This paper contributes to the debate about the impact of environmental policy on a firm's competitive performance.

The authors use cross-country sector-level panel data for 71 firms from 18 European countries from 2010 to 2019. The authors apply a fixed-effect model and then, to address the endogeneity issues, the authors use the generalized method of moments (GMM) model. To further examine the validity of the results, the authors use a data-mining modeling approach as a robustness test.

By considering the dynamic impact of environmental policy and overcoming the endogeneity issues, the results show that the impact of the stringency of environmental policy on a firm's financial performance depends on the time horizon: the stringency of environmental policy has a short-term negative impact but a long-term positive impact on a firm's financial performance.

The authors limited the study to the auto industry in Europe. In addition, future research could consider the impact of environmental policy on other financial performance indicators such as Return on Sales or Return on Equity. Also, it would be interesting to conduct a similar study in the United States or China using a firm-level data set to examine the robustness of the results.

Stringency of environmental policy improves a firm's financial performance in the long term. It is essential for firms and managers to consider the dynamic impacts of environmental policy on their financial performance and adopt a long-term perspective when evaluating the costs and benefits of complying with environmental regulations. The findings help management develop a long-term vision for investment and budget allocation. The results support management's view for strategic decision-making against the common budget argument and challenges for stockholders when it comes to adopting new technologies and planning long-term investment.

It is crucial for firms to recognize the broader societal benefits that come with environmental policy. Firms must not only focus on their financial performance but also on their social responsibility to protect the environment and contribute to the greater good. Therefore, firms must take a long-term perspective and recognize the broader societal benefits of environmental policy in order to make informed decisions that support both their financial success and their social responsibility.

This paper contributes to the literature by helping to explain the inconsistent results of studies about the impact of environmental policy on a firm's competitiveness. Using a firm's financial performance as one of the main metrics for competitiveness, this study takes into account both endogeneity and contemporaneity in evaluating the impact of the stringency of environmental policy on a firm's financial performance.

The learning outcomes of this study are to gain an understanding of the banking regulations and their impact on banking performance, to understand the intermediation role of banks by channelizing depositors’ savings and providing loans to borrowers, to explain an impact of a recent regulatory change in the Indian banking that directly impacts their financial performance, to critically evaluate the different financial ratios to analyze the performance of a bank and to build a DuPont analysis framework for banks.

The case serves as a primer on banking regulations in India and provides insights into banking performance. Banking regulations play an important role in maintaining financial stability, specifically in emerging economies like India. The protagonist of the case is Salil Kumar who presented his internship project to the review committee of Stock Investment Company on April 16, 2021. However, he had to rework and present his final project within seven days on the basis of the feedback received from the committee. Kumar faced the dilemma of bringing together a comparative study across two banks, namely, Industrial Credit and Investment Corporation of India (ICICI Bank) and State Bank of India (SBI) and building a DuPont framework covering the different aspects of banking performance. The case exemplifies the intricate regulatory landscape in India within which banks operate and highlights the recent alterations introduced by the Reserve Bank of India. For instance, the framework for dealing with domestic systemically important banks (D-SIBs) was introduced in 2014 and subsequently adopted in August 2015. The D-SIB framework provides inherent guarantee to large banks such as ICICI Bank and SBI. This ensures government backup in the event of any failure, thereby securing financial stability. The case study is suitable for banking and financial accounting courses taught in postgraduate management programs. Once the case is studied, the students are expected to understand the basics of banking, regulations, impact of regulations on banking performance and financial measures.

The case provides valuable insights into the intricate dynamics of the banking industry, offering a critical perspective for analysis. A well-structured teaching note would serve as a valuable tool for instructors, allowing them to facilitate engaging classroom discussions and effectively guide students toward achieving the desired teaching objectives.

Teaching notes are available for educators only.

CSS 1: Accounting and Finance.

At present, the number of corporates certified by ISO14001 in China is ranked first in the world. This paper aims to explore the effectiveness of ISO14001 certification and the moderating effect of financial performance and external institutional pressures on the effectiveness.

This paper selects Shenzhen and Shanghai A-share listed companies in the heavy polluting industry from 2010 to 2017 as the research sample, and studies the impact of ISO14001 certification on corporate environmental performance and the moderating effect of financial performance and external institutional pressures.

This paper finds that ISO14001 certification has a positive impact on corporate environmental performance; corporate financial performance has a positive moderating effect in the relationship between ISO14001 certification and corporate environmental performance; government regulation, industry competition and media supervision also have positive moderating effects; and corporate environmental information disclosure has not yet had a positive moderating effect.

Most of the current empirical research on this topic are carried out in the context of developed countries, and lack empirical evidence from developing countries. This paper will help to make up for this deficiency. In addition, this paper will help explain why the effectiveness of ISO14001 certification generates variation in different corporates and under what conditions it will play a positive role.