International Journal of Banking, Accounting and Finance (3 papers in press)

Regular Issues

• The interplay of political risk, investments, and cash holdings in corporate financial strategies  
  by Adriana Bruscato Bortoluzzo, Adalto Barbaceia Gonçalves, Daniel Strozzi Soares 
  Abstract: This study examines how systematic versus idiosyncratic political risks differentially affect corporate investments and cash holdings using 117,049 firm-quarter observations of US public firms from 2002 to 2022. We distinguish between economic policy uncertainty (EPU) as systematic risk and firm-level political risk (PRisk) as idiosyncratic risk, addressing a fundamental gap in literature. Employing panel data regression models with fixed effects and quantile regressions, our results reveal significant heterogeneity in political risk transmission mechanisms. While both risks negatively correlate with investments, PRisk loses explanatory power, but EPU maintains consistent negative correlations. For cash holdings, PRisk shows robust positive correlations supporting precautionary motives. Quantile regressions demonstrate that idiosyncratic political risk primarily affects firms in the lowest investment quantiles, while systematic risk exerts substantially greater influence on high-investment firms. Our findings extend the systematic versus idiosyncratic risk framework to political uncertainty, providing the first comprehensive comparison of how different types of political uncertainty operate through distinct channels.
  Keywords: political risk; PRisk; systematic risk; idiosyncratic risk; cash holdings; investment decisions; economic policy uncertainty; EPU; corporate finance; quantile regression.
  DOI: 10.1504/IJBAAF.2026.10077794
   
  
• Do digital mergers and acquisitions driven by industry trends create value? Evidence from China  
  by Jingyi Guan, Xiaoyi Zhuang, Eping Liu 
  Abstract: Previous mergers and acquisitions (M&A) waves drove firm expansion but also caused financial instability and regulatory issues, leading to market downturns. Our study investigates whether digital M&A, influenced by industry dynamics in the digital economy, creates value for firms. We analyse M&A transactions of Chinas A-share listed firms from 2010 to 2022, focusing on industry spillover effects and changes in long-term market performance. Results show that prior-year digital M&A in the same industry promotes firms to pursue digital M&A, but the long-term market performance tends to be poor. The decline is linked to increased R&D investment driven by industry trends, resulting in excessive spending. Heterogeneity tests reveal that weak digital capabilities, low business similarity, and less positive M&A announcement sentiment worsen long-term performance. Governance mechanisms include sending management to the target, boosting compensation incentives, and enhancing external oversight. Our findings highlight risks in digital M&A, offering insights for company decision-makers.
  Keywords: digitalisation; M&A; spillover effects; market performance; R&D investment; China.
  DOI: 10.1504/IJBAAF.2026.10078477
   
  
• Liquidity creation and convergence in the EU27 commercial banking sector  
  by Dimitrios G. Giantsios, Simeon Papadopoulos 
  Abstract: In this paper, we examine the creation of liquidity in the European commercial banking sector. Our dataset comprises 1,064 privately owned commercial banks across all 27 EU member states, yielding 8,128 yearly observations for the period 2012-2021. We first measure the extent of liquidity creation and then assess whether banks’ capacities to generate liquidity have converged across member states or whether significant disparities persist. On average, the liquidity created on- and off-balance sheet- amounts to approximately 33% of total assets in the European banking sector. Our results indicate that full convergence in liquidity creation among EU-27 banking systems has not been achieved. Instead, we identify six distinct subgroups of banks that exhibit convergence within their respective clusters. When off-balance sheet liquidity creation is excluded, the analysis reveals four converging subgroups of banks. Robustness checks confirm these findings: while convergence across the EU banking sector as a whole is absent, partial convergence is evident through the formation of subgroups of national banking systems with similar liquidity creation dynamics.
  Keywords: liquidity creation; European banking; liquidity creation convergence; integration; Phillips and Sul convergence method.
  DOI: 10.1504/IJBAAF.2026.10078510