Knowledge Platform: Sustainable co-creation – through interdisciplinary solutions

Our research is characterized by the keywords in this word cloud.

Research projects

• Bank Liquidity Management and Regulatory Arbitrage in Unconventional Times
  

  The project evaluates the effect of liquidity regulation on banks Asset and Liability Management strategies, stemming from updated regulatory requirements. Unlike the vast majority of studies dealing with liquidity and capital regulation, our interest is on the responses and effect of sudden events (addressing financial instability) and not the response to the regulation. The project departs from the effects of liquidity regulation on financial stability in event of capital shocks taking place in banks. We link to this a discussion of a double constraint environment (that is, empirically we are investigating a period where both capital and liquidity regulations are in play), and add analyses of different balance sheet strategies adopted by banks in response to capital shocks to meet capital and liquidity requirements. Responses include both compliance based theories and regulatory arbitrage. In this context, we also raise concern over the impact from expansionary monetary policy which may provide easy ways to increase bank liquidity but withdrawing liquidity from the market in areas that requires capital in event of severe systemic chocks. Our initial findings include that there are no severe change to the overall bank liquidity in event of negative capital shock, but more analysis of more granular data gives us the understanding that banks adjust their asset and liability strategies to comply with the liquidity regulations in ways that benefits the compliance and not necessarily the management of risk. Additionally, we discover that banks prefer adjusting the asset side of the balance sheet instead of improved funding according to the regulatory attention. This regulatory arbitrage strategy from a capital shock simultaneously address the capital and liquidity regulation and differ from what we know about regulatory responses.                      Contact: Magnus Willesson

• From Cocktails to Compliance: the Changing Nature of Correspondent Banking
  

  The project evaluates the changing nature of cross country correspondent banking relationships (CCBR) in both a Global and a Nordic context. Efficient transactions technology and contracting across countries have led a banking sector’s self-evident role sector in international trade. However, new banking regulation associated with Anti Money Laundering and Counter Terrorist Financing (AML/CTF) have changed the bank’s role and restrict the banks to act in international correspondent banking relationships (CCBR) via existing infrastructure that may play a significant role for both banks and exporting and importing firms. The regulation aim to reduce the risk of international capital flows and simplify the monitoring of the actors involved in international trade. At the same time new costs are imposed to the banks. Requirements to validate both their correspondent banks (Know Your Customer - KYC) and their clients (Know your customer’s customer - KYCC) require more resources from the banks. The higher cost have influenced how the CCBR are organized between banks showing that the number of CCBR has decreased globally. In the Nordic market, the number of relationships decreased by between 18% (Norway) and 32% (Sweden) in countries together with a decrease in values. These reductions indicate that banks have changed their CCBR strategy.

  The project identify different changes in correspondent banking and – unlike previous studies – motives to the banks’ changes. In addition to changes in the transactions, banks reorganize their correspondent banking both in terms of how they monitor their correspondent banking relationships and the relationship to their clients. In the former, banks have gone from informal monitoring relationships towards attention to compliance. In the latter, banks use different strategies that both serves and impose costs to their clients differently.                                          Contact: Magnus Willesson

• Understanding the financial benefits of the Subscription Economy
  

  The project analyze different aspects of the subscription economy, emphasizing the financial side of subscription offers. In both business-to-business and business-to-consumer relationships, we can see a growing interest in subscription commitments between suppliers and users, changing focus from buying and selling products and services to the use of products. The interest in subscription arrangements is partly related to the circular economy and sustainable supply chain, which addresses goals of reducing overall consumption of resources. The current literature focus mainly on how subscription arrangements add value to the customer supply chain, which includes the matching of cash flows and of competition. The financial side of subscription economy is described only vaguely in the existing literature and without concern of fixed assets (who make the capital investment and how should it be financed). Changing from selling capital goods to subscription arrangements changes not only the cash flows but the bearing of fixed cost, and the following financing and risk.

  The project analyze the subscription economy based on financial claims and risks shifting between actors in the financial supply chain. In doing so, we employ banking theory to analyze the benefit of different arrangements; including aggregated costs, benefits for different actors in the financial supply chain, as well as their comparative advantage in risk monitoring that influence how they consider funding of the capital goods. We can observe that arrangements could increase actors’ aggregated costs, funding needs and riskiness, partly by taking risks away from the banking sector. The analysis concentrate on a discussion if subscription arrangements just shifts the role of participants in the supply chain without changes in the aggregated benefit of the financial supply chain or if firms have better monitoring capacity than banks and reduce the aggregated risk and cost.                                                                  Contact: Magnus Willesson

• Credit rating, corporate governance and capital structure
  

  This research project focus on analysing of capital structure theory by combining empirical evidence from three different relations that could further explain the important theories of capital structure. We know empirically that corporate governance affect credit rating positively. We also know from empirical studies that corporate governance affect firms’ ability to have an optimal capital structure positively. However, it is unclear how credit rating affect a firm’s capital structure which is one aim to answer in present project. Externally founded by Nasdaq Nordic Foundation.                                                                                            Contact: Christopher von Koch, Maziar Sahamkhadam

• Socially responsible multiobjective optimal portfolios
  

  We extend the socially responsible multiobjective problem to (i) estimate optimal portfolios via reward/risk maximization, (ii) include dependence structure between asset returns using vine copulas, and (iii) incorporate enhanced indexation utilizing cumulative zero-order stochastic dominance. In an application of the MOP optimization to a sample of Eurostoxx 50 constituents, we show that the optimal MOPs provide investors with the flexibility of incorporating different objectives. We find that including social responsibility results in lower portfolio return and economic performance, but at the same time it reduces the portfolio risk. Contact: Maziar Sahamkhadam, Andreas Stephan 

• Socially responsible investment and ESG-constrained optimal portfolios in the global forestry industry
  

  What is the impact of considering ESG ratings on the performance of forestry portfolios? This paper investigates whether ESG-constrained portfolios of listed forestry & paper stocks perform better than benchmark portfolios consisting of Timberland real estate investment trusts (REIT) and the Standard & Poor’s (S&P) Global Timber & Forestry index. The study runs over the periods 2016-2020 and 2018-2021 covering the COVID-19 crisis. We apply historical as well as copula-augmented predictive models to analyze out-of-sample performance of various forestry portfolio strategies. We find that ESG-constrained portfolios achieve lower volatility and downside risk compared to the benchmark portfolios.                                                                              Contact: Hans Lööf, Maziar Sahamkhadam, Andreas Stephan           

• Addressing consumer behaviour and circularity related to recycling of glass

  This application concerns a pilot project, laying the foundation for a larger research project. The larger project is based on an inter-disciplinary, co-production partnership between the commercial art glass and glass processing industry and recyclers, and the academic glass-, design-, logistic- and consumer behaviour researchers. The collaboration will enable the study of consumer behaviour, circularity/transport flows, influence of design and qualities in the different types of glass wastes. The pilot project deals with the complex problem that known technical solutions are not being utilised by companies because of lack of recycling systems and uncertainty of the soft aspects in customer acceptance of recycled glass.                                            Contact:Helena Forslund, Soniya Billore

• Collaboration on energy efficient cold magnets                                      The European Regional Structural Fund Programme for Småland and Islands and Region Kronoberg have decided to contribute to a new collaboration project with Uppsala University, Linnaeus University and a cluster of technology companies in the province of Småland. The project of SEK 19 million aims to develop energy efficient superconducting magnets where research and technical development can be combined to create global competitiveness.                                                                            More information: LNU, UU                                                                  Contact: Helena Forslund, Veronica Ülgen                                                                                                 
• Project: Digital acceleration for medium size sustainable cities (DIACCESS)
  The aim of the project is to solve real societal challenges by combining municipal administrations and municipal companies with the digital innovators of the business community, in order to develop digital solutions that meet society's various needs through business-related innovation.
  Contact: Soniya Billore                                                                                     

• XPRESS – EU project promoting green public procurement in the energy sector
  The project focuses on public procurement in the energy sector, and how to make it easier for suppliers of green alternatives.
  Linnaeus University plays an important role in the project. We have a scientific role by guiding and supervising so that the right empirical data is collected in Sweden, helping with contacts with authorities and various organizations, and doing analyzes. We perform qualitative and quantitative research tasks and work on disseminating results through communication activities. In addition, we develop an interactive web portal to facilitate future collaboration between innovative small and medium-sized companies and public purchasers.
  More information: Web, Facebook, Twitter & Linkedin
  Contact: Arash Kordestani

List of publications in DiVA – Digitala Vetenskapliga Arkivet