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This chapter measures financial integration in 10 industries over 4 different periods. We use two robust measures of integration: (i) the Pukthuanthong and Roll (2009)’s multi-factor R-square and (ii) the Volosovych (2011)’s integration index. Both measures, based on PCA, indicate that the difference between the level of integration over the period 2009–2012 (“Post-Lehman” era) and the level of integration over the period 1994–1998 (“Post-Liberalizations” era) is relatively high. In addition, the level of financial integration across international equity markets decreased during the late 1990s. This suggests that de jure integration does not necessarily improve de facto integration. Overall, our findings give rise to a “diversification benefits-insurance benefits trade-off.”

A series of environmental pollution issues and economic improvement go hand in hand. Since financial listed companies contribute significantly to the national economic development, China has been paying increasing attention to the development of the financial industry. The purpose of this paper is to explore the relationship among the development level of the financial industry, over-investment of the listed companies and environmental pollution through a macro-level and micro-level mechanism.

In this study, we adopt the 2011–2017 panel data of listed companies in the manufacturing industry to study the impacts of the financial industry on environmental pollution. Meanwhile, the paper uses a mediator model, and over-investment is introduced to the econometric model as a mediator to explore whether the development of the financial industry can affect the environmental pollution through over-investment.

A U-shaped relationship between financial industry development and environmental pollution was observed through a macro-perspective; additionally, over-investment of the listed companies significantly increased environmental pollution, along with a significant mediator effect of over-investment. A significant positive correlation was observed between financial industry development and environmental pollution in the East region of China, while the correlation was negative in the Central and West regions. The mitigation effect of financial industry development on environmental pollution was more significant in the low-end manufacturing industry, compared with basic and high-end manufacturing industries.

Strengthening the incentives and supervision toward company managers, reducing over-investment behaviors, encouraging suitable financial industry development to reduce financial risks, improving environmental conservation laws and regulations, and implementing stringent penalty mechanisms for environmental conservation are necessary.

The financial industry offers a unique setting to study innovations. Financial innovations have fueled the growth of economies, markets and societies. The financial industry has successfully become the breeding ground for innovative services, processes, business models and technologies. This study seeks to provide a holistic view of the literature on financial innovations, synthesize the research findings and offer future directions for research in light of three market developments that are disrupting the industry and opening up a new era for the financial services industry. Disruptions from within and outside the industry offer new generations of radically innovative services. Moreover, new generations of consumers differ from previous generations in their needs and wants and look for innovative ways to handle their financial needs. Finally, significant developments related to financial innovations have emerged in Asia and developing countries.

This study systematically reviews the academic research literature on financial innovations in two phases. The first phase provides a quantitative review of 546 journal articles published between 1990 and 2018. In the second phase, the study synthesizes the extant research on financial innovations and maps them in five research areas: firms' introduction and adoption of FIs, financial innovation development, the outcomes of financial innovations, regulations and intellectual property, and consumers.

The analysis found that disciplines differ with regard to the employed research methodologies, the units of analysis, sources of data and the innovations they examined. A positive trend in the number of published articles during this period is observed. However, studies have primarily focused on the USA and Europe and less so on other parts of the world. The literature synthesis further identifies research gaps in the available research that highlight future research opportunities in light of the three market disruptions. The financial services industry is on the brink of a new era due to disruptions from within and outside the industry and the entrance of new generations of consumers. Moreover, the financial industry has successfully become the breeding ground for innovative services, processes and business models. Therefore, financial innovations offer promising opportunities for bridging the gap between research on product and service innovations.

The work provides a holistic and systematic overview of extant research on financial innovations and highlights future research opportunities in light of the three disruptive market developments. It helps researchers take advantage of the opportunities in studying financial innovations while maintaining industry relevance.

The study is the first to review and synthesize the academic research literature on financial innovations across marketing, finance and innovation disciplines. In addition, the study highlights three primary disruptive forces in the financial industry and identifies future research directions in light of these disruptive forces.

Starting from the theoretical mechanism of profit sharing between finance and the real economy, this paper reviews and analyzes the profitability of China's banking industry and makes a horizontal comparison with the banking industry of the United States, Japan, and Germany.

Based on the panel threshold model, it is found that there is a dual-threshold asymmetric effect between banking profit and the growth of real economy. When the net profit rate of the banking industry is lower than 0.491%, the increase in banking profitability will inhibit the growth of real economy due to profit grabbing; when the rate falls within the range of 0.491–0.801%, the increase in bank profitability is conducive to the growth of real economy.

Finance and the real economy are in the most comfortable symbiotic state; when the rate is higher than 0.801%, the continued increase in bank profitability will weaken the promotion effect of finance on the real economy, but bank profitability and the growth of real economy are still in a symbiotic state of positive promotion.

The promotion effect of China's bank profitability to the growth of real economy has shifted from the suboptimal state to the optimal range as a whole, which is attributed to the strong deleveraging and strict supervision of the Chinese government after 2016, the timely and decisive “stepping on the brakes”, pulling the financial sector back from the “illusion” caused by “self-circulated” profits and preventing it from harming the real economy.

The apparent lag between macro-economic behavior and financial implications in the construction industry is yet to be examined. The purpose of this paper is to understand the nature of the lag and the relationship between economic changes from year-to-year and the impact on the financial status of construction companies.

Correlation was made between US economic growth and construction industry financial indicators over a 28-year period. Cumulative per cent growth in US GDP was considered an independent variable, while nine financial ratios were calculated and considered dependent variables in this study.

The results of this study found that correlation improved when considering lag of two, three or sometimes four years after the economic event. Some financial ratios proved more sensitive than others, supporting the hypothesis of this study.

The practical application of this study for construction companies is to understand how the construction industry lag impacts financial behavior. It therefore informs managerial decisions related to solvency, liquidity, equity structure and managerial practices; all of which are measured by financial ratios.

This study was intended to advance the research in this area and also to serve to strengthen industry members in their financial management of construction companies. Economic dynamics have long-lasting implications, which can be addressed through an increased focus on managing financial health.

Though the lag is intuitively known and has been studied from market perspectives, there is a lack of empirical study evaluating the impact of lag on financial key performance indicators.

Presents a case study demonstrating financial statement ratio analysis (FSRA). This analysis matches company to industry data and builds sales forecasting models. FSRA imputes forecast standards of sales and costs, and applies them to a budgeted financial statement variance analysis for the EE (electronic and electrical) industry. Develops the concept of industry base standards, integrating them into the more traditional statistical and accounting concepts of quality control standards. Provides an implementation example, and reviews possible improvements to the current methodology and approach. Uses a similar methodology to forecast the stock market value with some exceptions. Models sales and costs of an individual company and an industry based largely on aggregate industry databases. For this purpose, uses a multivariate linear trend regression analysis for the sales forecasting model. Defines and tests related hypotheses and evaluates their significance and confidence levels. For an illustration uses the EE industry and the APM company. Also demonstrates a microcomputer‐based FSRA software that speeds, facilitates, and helps to accomplish the stated objectives. The FSRA software uses industry financial statement databases, computes financial ratios and builds forecasting models.

The United States (US) sugar program protects domestic sugar farmers from unrestricted imports of heavily-subsidized global sugar. Sugar-using firms (SUFs) criticize that program for causing US sugar prices to be higher than world sugar prices. This study examines the financial performance of publicly traded SUFs to determine if they are performing at an economic disadvantage in terms of accounting profitability, risk and economic profitability compared to other industries.

Firm-level financial accounting and market data from 2010 to 2019 were utilized to construct financial metrics for publicly traded SUFs, agribusinesses and general US firms. These financial metrics were analyzed to determine how SUFs compare to their agribusiness peer group and general US companies. The comprehensive financial analysis in this study covers: (1) accounting profit rates, (2) drivers of profitability, (3) economic profit rates, (4) trend analysis and (5) peer comparisons. Quantile regression analysis and Wilcoxon–Mann–Whitney statistics are employed for statistical comparisons.

Regarding various profitability and risk measures, SUFs outperform their agribusiness peers and the general benchmark of all US firms in terms of accounting profit rates, risk levels and economic profit rates. Furthermore, compared to other US industries using the 17 French and Fama classifications, SUFs have the highest return on investment and economic profit rate―measured by the Economic Value Added® margin―and the second-lowest opportunity cost of capital, measured by the weighted average cost of capital.

This study finds nothing to suggest that the US sugar program hinders the financial success of SUFs, contrary to recent claims by sugar-using firms. Notably in this analysis is the evaluation of economic profit rates and a series of robustness techniques.

This macroeconomic analysis chronicles the risk behavior of market-based financial intermediaries and traditional depository institutions from 1980 to 2010 and assesses the role that competition, financial innovation and regulation played in their evolving risk behaviors. The paper aims to discuss these issues.

Using a two-part CAPM framework in line with Campbell et al. (2001), risk measures are constructed through the decomposition of industry-level risk and firm-level idiosyncratic risk. These constructed measures are used in a VAR model with a historical decomposition approach to assess the impact of the three factors on the relative risk behavior of these firms.

The results indicate that the market-based and traditional intermediaries exhibited a period of diverging relative average firm-level risk behavior followed by a period of converging risk behavior. Using the derived firm-level risk measures, the impact of competition, financial innovation and regulatory changes on explaining these changing risk behaviors is explored. The results suggest that regulatory changes (i.e. deregulation) can best explain the relative risk behavior over the divergence period through late 1999 relative to the other two variables. The period from November 1999 through the financial crisis marks the converging risk behaviors across these intermediaries. Over this period, the changing nature of competition played the most important role in driving these behaviors.

The key contribution of this analysis highlights the evolutionary changes in the risk behaviors of market-based and traditional financial intermediaries and the factors driving both their diverging and converging nature over time.

This study seeks to evaluate the stability of financial ratios across industry and over time. The sample comprises companies listed on the Stock Exchange of Singapore from 1980 to 1991 over six industry groupings. A set of 29 most commonly used ratios was selected for the study. Descriptive statistics, factor analysis and analysis of variance were performed. From the factor analysis results, eight representative ratios were identified. Analysis of variance and multiple comparisons were subsequently performed for each representative ratio to test if it is significantly different across industry and over time. The results indicate that financial ratio averages of the various industries are significantly different. This implies that the appropriate benchmark for evaluating company performance and position should be industry‐specific instead of economy based. Also, five of the representative ratios are significantly different over time and not all the industrial averages move consistently over time (i.e., interaction effects of industry and time exist). Thus, industry averages are not necessarily appropriate benchmarks for setting and evaluating performance through time.