Sim Kee Boon Institute for Financial Economics at SMU (SKBI)

[HIGHLIGHTS] As the year draws to a close, the Sim Kee Boon Institute for Financial Economics (SKBI) extends our heartfelt gratitude to you for being an integral part of our journey this year. Your engagement, whether online or in person at our events has been invaluable in helping us further our aim of advancing applied financial and economic research as well as engaging the broader finance community. We deeply value your continued support in the coming year. Wishing you a joyous holiday season and a successful year ahead! Check out our 2024 year-in-review here >> https://lnkd.in/gTFdJvrT SMU Financial Literacy, Inclusion and Technology Programme Singapore Green Finance Centre

[NEWSLETTER] Environmental, Social, and Governance (ESG) considerations are no longer just buzzwords—they’ve become a common theme in asset management strategies. Yet, questions remain: how does ESG information impact firm value, and what are the mechanisms at play? Our latest newsletter highlights a fascinating SMU study by Asst Prof Tianhao Yao that explores this debate, focusing on the influence of negative ESG news on analysts’ perspectives of firms. Read more here >> https://bit.ly/3Ox2zIH

[NEWSLETTER] The importance of ESG information continues to grow. Earlier this year, Minister for Transport and Second Minister for Finance, Chee Hong Tat, announced that starting from the financial year 2025, all listed companies in Singapore will be required to make climate-related disclosures. In our latest newsletter, Priscilla Lu, Vice Chair of Renewable Infrastructure and Clean Private Equity at Schroders Capital Infrastructure Asia, shares her insights on ESG disclosures and the incentives driving firms toward greater transparency. Read more here >> https://bit.ly/3D53r4z

[EVENT] Highlights from the 14th SKBI Annual Conference panel discussion on "Transition Finance in the Asian Context". In the panel discussion moderated by Dr Rajiv Lall (Singapore Green Finance Centre), the distinguished panellists included Hironori Shimojima (Sumitomo Mitsui Banking Corporation – SMBC Group), Vivek Pathak (IFC - International Finance Corporation), and Dr V Anantha Nageswaran (Government of India). Rajiv emphasised the importance of just transition frameworks, noting that while significant transitions are underway, it’s essential to ensure they are equitable and inclusive. He invited the panellists to share perspectives on what a just transition framework means within their fields. Hironori opened by discussing SMBC’s core position on transition governance and sustainability. SMBC’s mission focuses on creating social value through three key pillars, with environmental goals as a central priority. A just transition involves promoting inclusive economic growth that benefits all stakeholders, ensuring no one is left behind. Aligned with their commitment to social value creation, SMBC aims to foster a society where all people can participate meaningfully in the economy and benefit from sustainable development. Vivek emphasised the importance of addressing workforce impacts in transition finance. For businesses to make a lasting impact, they should re-educate and reskill workers, particularly as certain jobs may disappear due to the transition. Concrete plans to retrain individuals at the bottom of the economic pyramid are needed to ensure that no one is left behind in the shift to a low-carbon economy. Rajiv posed a question to Dr Anantha, asking whether there has been insufficient focus on economic growth within just transition frameworks, given the emphasis on fairness. Anantha agreed that while fairness is essential, growth is also crucial, especially for developing countries, and that decarbonisation must support economic development. Relying on external financing alone introduces uncertainty, so fostering growth is necessary for stability. He also argued that a just transition should consider historical emissions, allowing developing countries to grow sustainably, given developed nations’ historical contributions to global emissions. A participant asked about investment risks, including political and socially sensitive issues that deter companies from exposure to these areas. The panellists shared their views on the role of de-risking, highlighting the importance of measures to mitigate certain risks while recognising positive outcomes in developing regions. They emphasised that transparency is crucial for effective risk management in these contexts.

[EVENT] Highlights from the paper presentation at the “Transition Finance in the Asian Context” session during SKBI’s 14th Annual Conference.   Rajiv Lall (Singapore Green Finance Centre) presented a paper titled, “Accelerating the Transition of Strategically Important Energy Sector SOEs: A Proposal for India”, emphasizing the need for intelligent approaches to transition finance, especially for countries that require external funding, such as India and several ASEAN countries. In the Asian context, he noted significant challenges, including regulatory constraints, complex stakeholder demands that limit capital flow, and a generally high cost of capital. Dr. Lall underscored that blended finance could be crucial, particularly as an early-stage catalyst, to facilitate these transitions. However, assessing the credibility of transition plans remains challenging, though the availability of concessional capital could significantly accelerate the transition process. He also pointed out the importance of maintaining a growth-centric approach. Using India as a case study, he highlighted the immediate priority of focusing on the transition within the electricity sector, noting that such a transition is feasible without an exclusive reliance on NTPC’s strategic role. The paper also recommends that the Indian government position NTPC as a market leader in commercializing new technologies. Download presentation slides here >> https://lnkd.in/gJRvQtVD #research #blendedfinance #transitionfinance

[EVENT] At the recent SKBI Industry Workshop on “Human or Artificial Intelligence – Perspectives of a Global Quantitative Investment Powerhouse,” Two Sigma Co-Founder David Siegel likened the term "AI" to calling cars, airplanes, and rockets "vehicles." He explained that to understand AI’s potential, we must address its specific methodologies—such as generative or predictive AI—rather than generalizing under one label. David also emphasized the importance of a deep understanding of AI, warning against overfitting in neural networks and overhyped projections about future advancements that often lack scientific grounding and are largely driven by speculation. In response to a question on AI replacing jobs, David referenced the law of supply and demand. He noted that as AI reduces the cost of software development, it is expected to drive greater demand for software—and for software engineers. While the skills required of engineers may evolve, he emphasized that AI, for the foreseeable future, is a productivity tool, not a replacement for humans. We extend our heartfelt appreciation to our guest speaker, David Siegel & moderator, Kenny Lam for sharing their valuable insights on this topic. To get updates on future industry workshops & bite-sized insights from industry experts, subscribe to the SKBI mailing list here >> https://lnkd.in/gZYGMKgx

[EVENT] Key takeaways from the paper presentations during the "Blended Finance – De-risking or Concessionality?" session at the 14th SKBI Annual Conference on Transition Finance. Dr Raúl C. Rosales, PhD (Imperial College London) presented his study “Mobilizing finance for net zero energy systems” and highlighted blended finance's potential for financial innovation to enhance transition funding solutions. He brought up the need to scale commercial bank lending to meet the capital requirements for decarbonisation and adaptation projects. Referencing Multilateral Development Banks (MDBs), he higlighted that they should play a larger role in providing catalytic or concessional financing support that strengthens blended finance structures and makes them more appealing to investors. To find out more, download Dr Raul's presentation slides here >> https://lnkd.in/gtNiCmNe Professor Hao Liang (Singapore Management University) addressed the complexities of decarbonization in Asia, highlighting the region's significant energy consumption. Sharing from his paper, “Greening the Brown Sectors with Transition Finance: International and Chinese Evidence”, he emphasized that the rationale for green businesses must encompass both green and brown sectors, underscoring the need for transition finance for brown firms. He discussed financial instruments like transition bonds, providing an example of a coal-dependent firm in Indonesia that used transition bonds to shift to cleaner energy. His empirical findings indicated that increased debt costs lead to worse environmental performance in brown businesses, while lower capital costs allow them to improve their green ratios. These findings can be extended to international sample. Professor Hao concluded by emphasizing the role of blended finance in mitigating risks associated with renewable energy adoption, thereby facilitating de-risked investments. To find out more, download Professor Hao's presentation slides here >> https://lnkd.in/gHx3YzXK

[EVENT] Highlights from the "Blended Finance – De-risking or Concessionality?" panel, moderated by Hao Liang (Singapore Green Finance Centre) at SKBI's 14th Annual Conference on Transition Finance.   Raúl C. Rosales, PhD (Imperial College London) emphasized the necessity of concrete regulations to mobilize funds in blended finance. Jaclyn Dove (Standard Chartered Singapore) focused on sustainability investments and their connections to transition finance, highlighting the role of innovation hubs that facilitate client transitions. Don Guo (Prudential plc), shared about a recently published paper advocating for investments in emerging markets and brown companies as crucial for transitioning to greener practices. Raphael Erasmus (Pentagreen Capital) explained that while blended finance is not new, it faces unique challenges, including complexity and difficulties in replication. She highlighted how blended finance can assist firms struggling to secure funding by combining different capital types to mitigate risks and provide stable revenues, noting that impact investments consider both returns and climate agendas.    Regarding the challenges and uses of blended finance, Jaclyn mentioned the difficulty of aligning stakeholder objectives and the need for collaboration to standardize approaches. She shared a case study of a bank structuring financing to achieve stakeholder returns. Don highlighted his firm's experience financing infrastructure green bonds in Vietnam, emphasizing the importance of local currency and transparency for local projects. Raphael noted that many people do not fully understand blended finance, which requires time and resources to navigate. She called for improved categorization of capital and asset allocation strategies in a predominantly bank-driven market. Raul underscored the importance of identifying the right stakeholders and ensuring government awareness and leadership.    In response to a question about "de-risking" in the context of blended finance and how to scale it, Jaclyn highlighted that the investment structure determines returns, emphasizing the role of concessional guarantee programs in mitigating challenges. Don added that each transaction incurs capital charges, which can be reduced through tailored de-risking measures.    To conclude, the panellists emphasised the need for regulatory clarity, government guarantees, and collaborative efforts to enhance the effectiveness of blended finance. #blendedfinance #finance

[EVENT] At the session titled, "AI and Digital Transition", Prof Dejing Dou (Fudan University) shared exciting insights on the evolving role of artificial intelligence (#AI) across various sectors such as entertainment, healthcare, environmental science, finance and compliance, and data privacy and security. Prof Dou highlighted the future of AI as one focused on enhancing interpretability, security, and privacy through the integration of semantic technologies, adversarial learning, and federated learning in generative AI models. These innovations aim to tackle key challenges, from deepfakes and misinformation to data privacy and bias, making AI systems more transparent, reliable, and secure. This session was part of the 14th Annual SKBI Conference on Transition Finance, co-organised with Singapore Green Finance Centre. 📄 Slides from this session are now available for download on our website >> https://lnkd.in/dcvMXRCM 🖥️ Catch a replay of the session >> https://lnkd.in/gMsiBx7b  #AI #ArtificialIntelligence #TechInnovation #DataPrivacy #ResponsibleAI #MachineLearning

[EVENT] SKBI Director, Hong Zhang's presentation, “Can AI Help Human Decisions: A Finance Perspective in #Digital Transition” discussed the rise of #AI in the financial markets, particularly in processing financial information and assisting in financial decision-making. He raised two key questions: 1️⃣ the rationale behind AI's success 2️⃣ how AI exposes the limitations of human intelligence. Using neural network tools, Zhang's findings showed that AI can assist trading by aligning with best human decisions and identifying key mistakes made by human traders. Relevant discussion points raised by observers also covered topics such as the characteristics of data used in neural networks, a comparison of AI performance with traditional investment methods, and the potential for AI to assist human decisions This session was part of the 14th Annual SKBI Conference on Transition Finance, co-organised with Singapore Green Finance Centre. In the coming weeks, we will be updating our website with video recordings and slides of selected topics >> https://lnkd.in/gwCXSTKs