Financial Risk and Profitability in Frontier and Emerging Markets: Panel Evidence from the Palestinian and Turkish Stock Exchanges

Costs, Growth and Performance Persistence in Hungarian Equity Mutual Funds: A Quantile Panel Analysis

The value-creation capacity of active asset management remains one of the most debated issues within modern portfolio theory. While the relationship between costs and performance is typically negative in developed markets, in smaller and less liquid markets—where information asymmetry is more pronounced—higher fees may also be interpreted as signals of managerial ability. This study investigates this apparent contradiction in the context of the Hungarian equity mutual fund market, using a panel dataset covering 79 funds over the period 2017–2024, with a particular focus on identifying non-linear effects among performance determinants. The methodological framework combines fixed-effects panel regression with Driscoll-Kraay robust standard errors, complemented by quantile regression estimates to examine different segments of the return and alpha distributions. The results indicate that growth dynamics (NAV_change) and cumulative historical performance (Yield_from_start) consistently enhance fund performance, while the negative effect of past returns suggests the dominance of mean reversion. The impact of the total expense ratio (TER) proves to be non-linear and specification-dependent—a finding con-firmed by an extensive battery of robustness checks—thereby rejecting the cost-signalling hypothesis with respect to risk-adjusted excess returns (Jensen’s alpha). Quantile estimates further reveal that the effects of economies of scale and cost structure differ significantly between underperforming and top-performing funds, confirming that analyses based on average effects obscure the heterogeneity of market dynamics. By jointly modelling returns and risk-adjusted performance across the full conditional distribution, the study contributes a distribution-sensitive theoretical account of active management’s limitations in a small, less liquid market, showing that these limitations are conditional on fund size and cost structure rather than uniform across the fund population.

CAPITAL STRUCTURE AND FINANCIAL PERFORMANCE IN MAJOR ALGERIAN FIRMS

This study examines the effect of capital structure on the financial performance of major Algerian firms over the period 2020–2024. A balanced panel of six large companies — Sonatrach, Biopharm, Saidal, El Aurassi, Alliance Assurances, and Sonelgaz — is analyzed using two accounting-based performance indicators (ROA and ROE) and two leverage proxies (Debt Ratio and Leverage). Panel data models are estimated, and appropriate specification tests are applied to select the optimal estimator. The findings reveal a statistically significant negative relationship between debt ratios and both ROA and ROE, with leverage exerting a stronger adverse effect on equity returns than on asset returns. Random Effects models are preferred over pooled OLS based on the Breusch–Pagan LM and Hausman specification tests, highlighting the importance of firm-specific heterogeneity. Firm size and sales growth are positively associated with financial performance. The results are consistent with Pecking Order, Trade-off, and Agency theories in the context of costly bank financing and underdeveloped capital markets. Financial managers are encouraged to adopt more moderate leverage levels, while regulators are advised to promote alternative market-based financing instruments to reduce firms' dependence on bank credit.

Stock Price Volatility and Corporate Financial Performance of Manufacturing Firms in Nigeria

This study investigates the empirical relationship between stock price volatility and the corporate financial performance of listed manufacturing firms on the Nigerian Exchange Group (NGX) from 2014 to 2024. Using a panel data approach, the study measures financial performance through Return on Assets (ROA) and Return on Equity (ROE), while stock price volatility is captured using the Generalized Autoregressive Conditional Heteroskedasticity (GARCH 1,1) model. Control variables include firm size, leverage and asset growth. Panel Fixed Effects and System Generalized Method of Moments (GMM) estimation techniques are applied to control for unobserved heterogeneity and endogeneity. The empirical findings reveal a significant negative relationship between stock price volatility and both ROA and ROE, suggesting that equity market instability diminishes corporate performance by increasing the cost of capital and deterring long-term investment. Firm size exhibits a positive impact while leverage negatively affects performance. The study recommends that manufacturing firms adopt robust risk-management frameworks to hedge against market shocks and urges the Securities and Exchange Commission (SEC) to implement policies that stabilize equity pricing on the Nigerian Exchange Group.

Revenue Diversification Through Non-Interest Income and Bank Performance in European Banking

This paper examines the relationship between revenue diversification, profitability, and risk in European banks, with particular emphasis on the structural break induced by the COVID-19 shock. Using quarterly supervisory data from the European Banking Authority (EBA) over the period 2016Q1–2024Q4, we distinguish between pre- and post-pandemic regimes and estimate dynamic fixed-effects models that account for unobserved heterogeneity and persistence in bank performance. The results reveal a pattern consistent with regime dependence. Descriptive (quintile-based) comparisons suggest that banks with greater reliance on non-interest income tended to report higher profitability prior to COVID-19, although data limitations prevent us from confirming this pattern in a full multivariate regression for the pre-COVID subsample. In the post-COVID period, once bank and time fixed effects, persistence, and balance-sheet characteristics are properly controlled for, revenue diversification does not exert a statistically significant effect on either profitability or earnings volatility; this result is robust across bank fixed effects only, two-way (bank and time) clustered, and one-way (bank) clustered specifications. We show that diversification is systematically associated with differences in bank size, capitalization, and lending intensity, indicating that income structure is closely linked to underlying business model characteristics. These findings suggest that the observed diversification–performance relationship largely reflects cross-sectional heterogeneity rather than a stable causal effect. Overall, the evidence indicates that revenue diversification does not provide a consistent improvement in risk-adjusted performance in European banking. Instead, performance and risk dynamics are primarily driven by balance-sheet composition and persistence. The results highlight the importance of accounting for structural heterogeneity and macroeconomic regimes when evaluating the role of non-interest income in bank performance.

PANEL EVIDENCE ON FINANCIAL DRIVERS OF ALGERIAN FIRM’S RETURNS (2019-2024)

This study investigates the influence of key financial variables on the profitability of Algerian firms using panel data from 37 companies spanning 2019–2024. Return on Assets (ROA) and Return on Equity (ROE) serve as dependent variables, while long-term debt ratio, financial leverage, liquidity, and firm size constitute the primary explanatory factors. Panel regression analysis reveals a significant negative association between long-term debt and ROA, indicating reduced asset efficiency under high indebtedness, whereas firm size exerts a positive effect on both profitability measures. Liquidity shows no significant impact, and financial leverage displays mixed effects across models. Robustness is confirmed through comprehensive diagnostic tests including heteroskedasticity, autocorrelation, and multicollinearity assessments. These findings offer critical implications for financial decision-making and policy formulation within Algeria's dynamic business environment. The analysis employs fixed effects models to control for firm-specific heterogeneity, providing reliable evidence on debt-profitability dynamics in an emerging market context. Such insights aid managers in optimizing capital structures amid economic volatility.

Cash holdings in an emerging market technology sector: evidence from BIST firms within the trade-off and pecking order frameworks