Work

When interest rates rise, ESG is still relevant – The case of banking firms

Year: 2024

Type: article

Abstract: This study assesses whether ESG performance continues to drive banking outcomes during an unprecedented increase in interest rates. Analyzing a sample of banks from twenty-seven EU countries from Q3 2022 to Q1 2024, we find that ESG factors remain crucial for banking performance. Our evidence suggests that banks with fewer ESG controversies and higher ESG scores exhibit better risk-adjusted performance. Furthermore, institutions with stronger ESG profiles experience lower credit infections and consequently maintain better asset quality. These findings underscore the robust role of ESG factors in banking performance, regardless of interest rate regimes.

Source: Finance research letters

DOI: 10.1016/j.frl.2024.106128

Authors: Tingting Sun, Nawazish Mirza, Muhammad Umar, Farah Ktaish

Institutions: Shandong Management University, Excelia Business School, Lebanese American University

Language: English

Topic: Corporate Social Responsibility Reporting

Subfield: Strategy and Management

Field: Business, Management and Accounting

Domain: Social Sciences

Open Access status: hybrid

Estimated APC paid: $3,350

OpenAlex ID: W4402643071

FWCI: 6.5

Cites: 24

Cited by: 19

Related to: 10