Abstract
Dear Readers,
The special issue is devoted to “Emerging Trends in Financial Institutions and Services,” covering diverse topics, such as behavioral finance, financial services, and institutions and financing issues in emerging markets. These topics have attracted significant attention among academics and practitioners worldwide. Behavioral finance is an emerging subfield in finance that tries to explain how managers and investors take real-life financial decisions. Oftentimes, their decisions may appear to be irrational and may therefore have unpredictable outcomes. In contrast, traditional finance theories assume that rationality drives investor’s decisions. Financial services such as banking, mortgages, credit cards, payment services, tax preparation and planning, accounting, and investing have become key drivers of growth especially in the emerging markets. Financial institutions such as central banks, retail and commercial banks, Internet banks, credit unions, savings and loan associations, investment banks and companies, brokerage firms, insurance companies, and mortgage companies have transformed the financial landscape especially in the emerging markets. New trends have emerged in the financing area in the emerging markets facilitated by FinTech. The selection gives the readers a flavor of current global trends on a variety of topics of contemporary interest.
The first theme we explore is behavioral issues in the financial services sector and includes three articles. The first article, “Investigating the determinants of financial wellbeing: A SEM approach,” by Prakash and Hawaldar, examines the determinants of financial well-being of a sample of IT professionals in India. The article utilizes confirmatory factor analysis and partial least squares structural equation modeling for analyzing the determinants and the connection between determining factors. The results suggest that financial well-being is positively influenced by financial literacy and financial behavior but negatively impacted by financial fragility. Further, gender appears to play a role. Overall, the study recommends offering tailor-made training modules instead of a one-size-fits-all approach. The second article, “Development and validation of an Islamic investor’s sentiment scale for stock market investment,” by Begam, Babu, and Sulphey, used a survey to assess the attitudes of Islamic investors about share market investment. The study identified Islamic investing ethics, religious considerations, profitability, social impact, and information accessibility as key factors affecting their attitude to share market investment. The third article on this theme, “Investors’ irrational sentiment and stock market returns,” by Yadav and Naik, examines the relationship between irrational sentiment and excess returns in the Indian stock market. The empirical results suggest that the impact of irrational sentiment is not uniform across all quintiles. Specifically, the results indicate that irrational sentiment has information regarding contemporaneous variation in excess returns only in the upper quantiles.
The second theme we include in this special issue is the role of financial intermediaries and professionals in delivering financial services. The first article on this theme, “Small savings scheme of post office and savings habit of people: The role of the financial consultant,” by Mohanta, analyzes the moderating effect of financial consultants in the relationship between financial literacy and behavior and the savings habit of people using a two-phase structural modeling approach. The second article, “Impact of shareholders’ activism on the performance of banks in India: A panel data application,” by Rastogi, Singh, and Kanoujiya, studies the usefulness of activist shareholders on the performance of banks. The results suggest that shareholder activism influences bank performance but not valuation. The article “Do central bank communications influence survey of professional forecasters? An empirical investigation,” by Kapoor and Kar, examines the determinants of inflation of financial forecasters. They examine the role of lagged inflation, central bank communications, repo rate, GDP, merchandise exports and imports, and crude oil prices. The results suggest that only lagged inflation and central bank inflation projections have a significant influence. Kulkarni, Dam, Pathan, and Vasundekar in their article, “Evaluating efficacy of statutory disclaimers of mutual funds on novice and seasoned investors,” explore the efficacy of statutory disclosures and find that novice and seasoned investors process information differently. While the disclosures are processed systematically by novice investors, they are deemed to be less informative to seasoned investors. Salameh, Hayat, and Ali in their article, “Reconnoitring the effects of risk and knowledge on use of intention for e-Money services among Saudi Arabian residents,” investigate the role of four types of risks on the intention to use e-money services in Saudi Arabia. The results suggest that psychological risk and knowledge about e-money services influence the e-money usage intention but financial, time, and service risks do not seem to matter.
The final theme explores financing issues and bank profitability. Verma, Shome, and Patel in their article, “Exploring the effects of firm-specific factors on financing preferences of listed SMEs in India,” study the influence of firm-specific factors on their financing practices. The results suggest that small and medium-sized enterprises prefer short-term spontaneous sources to short-term borrowings and use long-term debt as a last resort. Belcaid in their article, “Determinants of bank profitability in the context of financial liberalization: Evidence from Morocco,” examine the impact of internal and external factors on the profitability of Moroccan banks. The empirical results suggest a negative relationship between concentration, foreign ownership, and bank profitability. Also, high debt ratios appear to adversely impact profitability. Director independence, board size, and domestic ownership tend to have a positive impact on bank profitability.
Overall, this issue of carefully selected articles is informative and contains several valuable insights both for academics and policy makers.