TY - JOUR
T1 - The impact of sustainable banking practices on bank stability
AU - Salim, Kinan
AU - Disli, Mustafa
AU - Ng, Adam
AU - Dewandaru, Ginanjar
AU - Nkoba, Malik Abdulrahman
N1 - Publisher Copyright:
© 2023 Elsevier Ltd
PY - 2023/5
Y1 - 2023/5
N2 - 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.
AB - 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.
KW - Bank stability
KW - Environmental performance
KW - Financial product safety
KW - Social performance
KW - Sustainable finance
UR - http://www.scopus.com/inward/record.url?scp=85150809269&partnerID=8YFLogxK
U2 - 10.1016/j.rser.2023.113249
DO - 10.1016/j.rser.2023.113249
M3 - Article
AN - SCOPUS:85150809269
SN - 1364-0321
VL - 178
JO - Renewable and Sustainable Energy Reviews
JF - Renewable and Sustainable Energy Reviews
M1 - 113249
ER -