The impact of social and environmental sustainability on financial performance: a global analysis of the banking sector
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Despite the promising evidence of the corporate social and environmental performance-corporate financial performance relations across various business sectors, the findings from banking sector remain limited and inconclusive. This article examines the impact of access to finance and environmental financing on the financial performance of the banking sector globally. Based on cross-sectional linear regression and non-linear threshold regression of 713 banks from 75 countries over the period of 2013-2015, we find that access to finance has significantly positive effects on banks' financial performance in most of the estimation models controlling for both bank specific and macroeconomic variables. The positive impact on financial performance is channelled through loan growth (in both cases) and management quality (in the case of access to finance). We find that banks with total assets of lower than USD 2.07 billion experience significantly positive impact of access to finance on their ROE. Policy implications toward policy and regulatory development in the banking sector are discussed.
Sustainability , Bank performance , ESG , Access to finance , Environmental financing , Threshold
Nizam, E., Ng, A. B. K., Dewandaru, G., Nagayev, R., & Nkoba, M. A. (2019). The impact of social and environmental sustainability on financial performance: a global analysis of the banking sector. Journal of Multinational Financial Management, 49, pp. 35-53.