The impact of sustainable banking practices on bank stability

Kinan Salim*, Mustafa Disli, Adam Ng, Ginanjar Dewandaru, Malik Abdulrahman Nkoba

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

18 Citations (Scopus)

Abstract

This study seeks to examine whether corporate environmental performance (CEP) and corporate social performance (CSP) affect stability of the banking industry. The topic is of much interest to researchers and policy makers considering the growing demand to integrate environmental and social practices into banking business model. Based on a panel dataset of 473 banks in 74 countries, this research finds that CEP is negatively related to bank stability as measured by non-performing loans (NPL). However, the impact is insignificant for small and large banks, as well as for banks in countries with low environmental scores. Furthermore, CSP does not appear to have a significant relationship with bank stability, but financial product safety, which is an aspect of CSP, does. The results are robust to a variety of econometric specifications and have significant policy implications for investors, bankers and regulators.

Original languageEnglish
Article number113249
JournalRenewable and Sustainable Energy Reviews
Volume178
DOIs
Publication statusPublished - May 2023

Keywords

  • Bank stability
  • Environmental performance
  • Financial product safety
  • Social performance
  • Sustainable finance

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