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This paper proposes a new multi-dimensional financial inclusion index.

The authors employ two-stage principal component analysis (PCA) and aggregating indicators of availability, access and use. The paper first assesses the cross-country variations in the index and analyses trends over time for a sample of countries members of the Union for the Mediterranean (UfM) from 2010–2018. Second, it investigates factors that could explain the level of financial inclusion across countries.

The financial inclusion index shows a downward trend for the full sample over the period under investigation; however when splitting the sample by income group, it appears that high- and middle–income countries did not register the same trend. When examining the determinants of financial inclusion for the UfM countries, the authors find that macroeconomic, social and governance factors, as well as banking conditions, matter. Policy-makers in low- and middle-income economies should consider the importance of digital financial inclusion, which is substituting the role to traditional banking system, to close the gap and accelerate its development.

First, the authors provide a new measure of financial inclusion using a three-dimensional index: availability, access and use, for which weights are assigned using PCA. It uses data available for the UfM sample by combining data from different databases in order to include most indicators considered in the literature, as the majority of studies only use single measures (number of bank branches, ownership of a bank account, ratio of credits or deposits to gross domestic product [GDP], etc.). Second, by focussing on UfM countries, the study covers a region that includes both large developed and small developing economies that are connected via financial and trade ties, whilst previous studies generally give global evidence from an international sample with little or no economic ties. Third, splitting the sample by country income groups, the paper presents a more comprehensive representation of the cross-country variation in financial inclusion levels between high- and middle-income economies for this region.

Before providing an overview of the conference with the above title and this Special Issue, this paper aims to present a view of the meaning of systemic risk, factors that affect systemic risk and measures of systemic risk. Thereafter, the conference presentations and the papers in this issue are summarized.

Characteristics and measures of systemic risk are reviewed. Conference papers and presentations are summarized.

While some aspects of systemic risk of a financial institution can be measured, an important aspect associated with contagion through markets is not easily captured by simple measures.

The conference and the papers in this issue contribute to the policy debate about sources and characteristics of systemic risk.

This study aims to estimate the regulatory compliance impact on the risk of banks operating in Pakistan. The direct and indirect regulatory compliance of conventional banks with Islamic operations in terms of risk from 2009 to 2017 are estimated.

This study used a two-step system generalized method of moment (GMM) (dynamic panel) to examine the relationship between regulatory compliance, Islamic operations and the bank risk and tested the direct and indirect impacts of regulatory compliance and Islamic operations on the said risk.

Regulatory compliance has a significant and positive relation with bank risk, whereas the Islamic bank operations have a significant and negative relationship. Thus, regulatory compliance creates pressure on banks, but the Islamic operations of conventional banks reduce this pressure in direct and indirect ways.

Per the policy of State Bank of Pakistan (SBP), banks shall pursue Islamic operations to reduce regulatory pressure and widen their scope. The results suggest that regulatory compliance creates pressure on bank risk irrespective of the type of the bank. Thus, the SBP should seek the appropriate measure for this occurrence.

To the best of the authors’ knowledge, this work is the very first study that has considered the unique Islamic operations of conventional banks and estimated its impact on risk. Moreover, this work examined two types of bank risk instead of employing stability and market measure. This research is also the first to implement a two-step system GMM for the methodology.

This paper aims to investigate whether the sustainability disclosure with the environmental, social and governance (ESG) aspects has an impact on the financial performance represented by Tobin’s Q, return on assets (ROA) and return on equity indices in the Levant countries for the period 2012–2019, which was a period of turmoil and political repercussions that affected the countries of the region.

Using the content analysis technique, the data was collected from 124 nonfinancial companies from Levant countries (Jordan, Palestine, Syria and Lebanon), and 883 observations were collected as panel data for the research analysis.

The findings indicate that the environmental, social and ESG collective performance maximizes financial performance, while the governance performance influences ROA only. This suggests that companies pay great attention to various stakeholders, mainly external. Maximizing stakeholder value remains an optimal strategy to achieve the company’s financial goals. Thus, improving the disclosure levels of nonfinancial performance in the capital markets will improve the chances of growth of the financial performance indicators of companies.

The study provided insights about the ESG role and its impact on the financial performance of companies in a less explored context by previous literature, namely, the Levant.

Since the 1980s, the global financial system has faced several crises that have led regulators to consider new conjectural and structural problems. These crises (new technology bubbles, the sub‐prime crisis …) have led economists and financial analysts to the following conclusions. First of all, systemic risk has increased during the last 30 years, which had led regulators to devise rules to evaluate information more efficiently. Second, the recent collapse of stock markets despite the national rescue measures shows the importance of preventative procedures. The third point is that aggressive capitalism has demonstrated its limits. The aim of this paper is to show that regulation is a necessary but not sufficient condition to ensure the efficiency of banking institutions, financial markets and the management of companies.

Through the analysis of the Swiss banking sector, the paper provides an insight for banks to satisfy social pressure on more ethical behavior. This case could be an example for another functioning for financial institutions.

By refocusing on their core business, banking institutions will be capable of realizing profit and creating value for the community.

The arguments discussed in this paper could be of interest both for professionals and academics willing to solve the antagonism between profit and ethics: profit can be compatible with social value added.

Banking and finance is not “an ethics free zone”. By changing their behavior, banks can improve their credibility on the market and renew the confidence towards clients.

This study aims to examine how different combinations of firm determinants enhance environmental reporting (ER) in New Zealand.

This study collects data from annual and sustainability reports of 145 listed companies in New Zealand. This study uses content analysis to examine the extent of ER and then the fuzzy set qualitative comparative analysis (FsQCA) to determine the configurations of determinants of reporting.

The findings reveal ten configurations of determinants showing that ER relies on the existence or non-existence of other firm determinants such as firm size, profitability, ownership and presence of an environment committee (EC). Among ten configurations, ER*∼ROE (ROE denotes return on equity; firms with no profitability but with ECs) stands out, indicating that ER is strongly influenced by the presence of an EC when no profitability exists.

The configuration analysis in this study extends the current ER literature.

The findings provide insight into the management to look for new paths when they make environmental-related strategies based on the existence and non-existence of firm determinants. The findings also support policymakers considering multiple combinations of criteria when mandating ER to promote better climate risk reporting in New Zealand.

Previous studies on determinants of ER mainly use regression analysis to analyse their data. In contrast, the current study uses configuration analysis.