ESG Investment, AI Risk Management, and Ethical Compliance in Strengthening Financial Stability

Xian Wei Yinze; Ling Chen Wuy

doi:10.69725/jebi.v2i2.272

Authors

Xian Wei Yinze Department of School of Economics and Management, Huazhong University of Science and Technology, 1037 Luoyu Road, Hongshan District, Wuhan, Hubei 430074, China
Ling Chen Wuy School of Business, Sun Yat-sen University, 135 Xingang Xi Road, Guangzhou, Guangdong 510275, China

DOI:

https://doi.org/10.69725/jebi.v2i2.272

Keywords:

ESG Investment, AI Risk Management, Ethical Compliance, Financial Stability, Transparency

Abstract

Purpose: The study engages in the empirical examination of the direct and mediated influence of ESG investment, AI for risk management and ethical compliance on financial stability. It aims to find out the extent that transparency quality of firms is an underlying factor for such modern strategic practices in making stability, investor confidence and market trust to be achieved.
Method: Information was collected from the senior managers through a structured questionnaire using quantitative approach. The relations proposed were estimated through regression techniques and mediation analysis examining the direct paths; and the significance of indirect effects using the SPSS Proces macro.
Findings: ESG investment, AI risk management and ethical compliance positiviely have a significant direct on financial stability as suggested by the results. The analysis also suggests strong support for full mediation of both relationships by transparency. This finding implies that information disclosure and communication are where the welfare effects of strategic behavior have been mostly exploited by reducing information asymmetry for stakeholders and by increasing their trust through transparent quarterly reporting.
Originality/value: This study presents the first comprehensive model that investigates in an integrated manner the synergy of three significant governance drivers. Its main theoretical contribution is to demonstrate, empirically, what I call transparency not just as an outcome but also as the primary mediating conduit translating drivers of real corporate action into observable financial condition and so providing a unified explanation for fragmented results.
Implications: The results present a clear strategic roadmap for corporate leadership, stressing the imperative to combine sustainability, technological governance and ethics supported by radical transparency. To regulators, the research suggests that it is in the public interest to maintain disclosure regimes designed to promote market efficiency and resiliency through making corporate conduct observable and credible.

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Author Biographies

Xian Wei Yinze, Department of School of Economics and Management, Huazhong University of Science and Technology, 1037 Luoyu Road, Hongshan District, Wuhan, Hubei 430074, China

Xian Wei Yinze is an Associate of Finance at the School of Economics and Management, Huazhong University of Science and Technology. He holds a Ph.D. in Financial Engineering from Tsinghua University and serves as a senior researcher at the university's Center for Digital Finance and Risk Management. Dr. Xian's research focuses on sustainable finance, corporate governance, and the application of artificial intelligence in financial markets. He has published extensively in leading journals including Journal of Banking & Finance and Energy Economics, and currently leads several national-level research projects on ESG integration in emerging markets. Dr. Xian frequently serves as a consultant to financial regulatory authorities and has been recognized with the National Youth Scholar Award in 2023 for his contributions to sustainable finance research.
Ling Chen Wuy , School of Business, Sun Yat-sen University, 135 Xingang Xi Road, Guangzhou, Guangdong 510275, China

Ling Chen Wu is a Research of Business Strategy at Sun Yat-sen University's School of Business, where she also directs the Institute of Corporate Governance and Sustainable Development. She earned her Ph.D. in Strategic Management from Fudan University and completed her postdoctoral research at the National University of Singapore. Dr. Chen's scholarly work centers on technological transformation, ethical compliance, and organizational resilience, with particular expertise in the Chinese context. Her research has appeared in top-tier publications such as Strategic Management Journal and Journal of Business Ethics. A recipient of the Ministry of Education's Outstanding Research Award, Dr. Chen actively contributes to policy-making through her role on the Expert Committee of the China Securities Regulatory Commission and maintains strong industry connections as a senior advisor to multiple Fortune 500 companies.

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