Aggregate financial conditions indices (FCIs) are constructed to fulfil two aims: (i) The FCIs should resemble non-model-based composite indices in that their composition is adequately invariant for concatenation during regular updates; (ii) the concatenated FCIs should outperform financial...

Purpose The purpose of this paper is to explain how to model moderating effects of composites using partial least squares (PLS) path modeling. It provides the methodological underpinning of moderating effects in general and describes the various approaches for forming the interaction term, i.e.,...