Fintech firms and banks sustainability: Why cybersecurity risk matters?

Abstract

In the new and evolving digitalized world, the cybersecurity threats have placed the assets and information of corporations, institutions, governments, and individuals at constant risk. Banks are not an exception. Offering the low-interest rate is becoming the fundamental strategic move of the banks to sustain. Due to the high demand for a tailored portfolio of financial products, the availability of sophisticated communication and advance transaction mechanisms lead to an emergence of a new type of competitor known as financial technology service (i.e., fintech). The collaboration between these fintech organizations and banks has recently increased to provide fine-tuned service to the consumer and satisfy emerging market needs. However, this collaboration between banks and fintech firms has triggered significant cybersecurity risk. Hence, the dilemma is whether the bank should embrace such collaboration to resuscitate the profit margin or be pragmatic, and shirk to eliminate sustainability risk? We argue that the alliance between bank and fintech firms triggers a high-level of cybersecurity risk. We propose a theoretical model and discuss various types of cybersecurity risks. The benefit (or cost-if any) of having alliance could be enormous in yielding profitability and increase sustainability if both fintech and banks collaboratively abate the cybersecurity risks.

The role of project’s initiatives focused on the reduction of environmental footprints during COVID-19: evidence from the United States firms

“…This study focuses on reducing environmental footprints on the performance of U.S. corporations during COVID-19 . Previous studies concentrate on the ecological factor's effects on accounting-based performance (Kuckertz et al 2019 ), governance (Najaf et al 2021a , b , c ), corporate risk-taking (Najaf et al 2021a , b , c ). However, this study twists the direction and assumes that the rise of environmental concern is related to financial performance during the pandemic period.…”

“…Following the prior literature, we use Return On Assets (ROA), Return On Equity (ROE), and Earning Per Share (EPS), for the performance measurements (Najaf et al 2021a , b , c ). Whereas ROA, ROE, and EPS are considered proxies for the firms' financial performance.…”

“…We check the impact of EF on the financial performance during the COVID-19 period. For this reason, we create a dummy variable ( COVID ), where the value of "1" is assigned to all observations during the year 2020 and "0" to the prior COVID-19 period (the year 2010 until 2019) (Najaf et al 2021a , b , c ). To check the impact of EF during the COVID-19, we considered the interaction between the COVID and EF variables.…”

“…In this regard, Sroufe et al ( 2019 ) documented that firms engaged with more environmental and sustainable initiatives are better positioned than counterparts in operational and financial risk. Building on their study, Najaf et al ( 2021a , b , c ) clarified that the firm's positive reputation builds a trustful and secure relationship with the stakeholders, lowering the possibility of firms facing litigations or adverse market reactions, leading to mitigating and reducing the firms' operational risk.…”

“…Outstanding Shares Bloomberg Focus independent variables Variable Definition Relevant studies COVID It is a dichotomous variable, which indicates the year of COVID-19. Where "1" = are COVID period (the year 2020) and "0", otherwise Najaf et al ( 2021a , b , c ) EF Indicates whether the company has implemented any initiatives to reduce the environmental footprint of its supply chain. Environmental footprint reductions could be achieved by reducing waste, by reducing resource use, by reducing environmental emissions, by insisting on the introduction of environmental management systems etc.…”