Yun Joo An’s research while affiliated with Yonsei University and other places

This chapter describes the principles of blockchain, cryptocurrency, and artificial intelligence (AI) and their applications to the financial sector. We first discuss blockchain, and discuss cryptocurrency, the best-known application of blockchain. We present the question of whether a cryptocurrency is a currency or an asset and whether it can be a new safe haven asset. We summarize the controversy regarding the issuance of a central bank digital currency (CBDC). We argue that digital currencies only show the potential to inject liquidity into an economy during market stress. Additionally, most of the recognized advantages of blockchain applications relate to two concepts: decentralization and consensus. Blockchain’s decentralization can be used to democratize banking services, corporate governance, and the real estate industry. Finally, we present the strengths of and concerns in using AI technologies in banking, lending platforms, and asset management, bearing in mind the most recently developed applications in these areas. This chapter provides a contribution to the literature that incorporates both theory and practice in blockchain, presenting a detailed review of performances and limitations of AI techniques in finance, including recent publications relating to the COVID-19 pandemic, CBDC, and alternative data.

Because corporate sustainability enhances corporate governance principles, firms are increasing their efforts to provide transparency and public disclosure. These efforts inform the public about the relationship between corporate governance and sustainability. Well-informed shareholders know about this relationship, which is becoming more apparent over time. In this study, we empirically examined the possible bilateral relationships between institutional ownership and a firm’s capital structure. Methodologically, we used an instrumental variable approach and the two-step generalized method of moments. The implications of this study are two-fold. First, we found that a firm’s debt level was low if its institutional ownership level was high. Institutional monitoring may substitute for external debt monitoring, leading firms to employ low leverage. Second, we found that the level of institutional ownership was high if a firm’s debt level was high. This association suggests that institutional investors prefer high-leveraged firms because institutional owners decrease their monitoring costs through debt monitoring. In the long run, sustainable institutional ownership materially impacts the capital structures of firms.