Corporate ESG Profiles and Banking Relationships

Houston, Joel F.; Shan, Hongyu

doi:10.2139/ssrn.3331617

Cited by 18 publications

(15 citation statements)

References 45 publications

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“…The difference between the low and high bank coefficients is significant at the 5% level. 16 The coefficient values also reduce to about a third of those in Columns 5 to 8. This finding indicates that high ESG lenders are simultaneously more attractive to high ESG borrowers and less in need of attracting them, such that they do not offer reduced spreads.…”

Section: Conditional Matching Resultsmentioning

confidence: 87%

Corporate ESG Profiles, Matching, and the Cost of Bank Loans

Shin

2020

SSRN Journal

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Section: Conditional Matching Resultsmentioning

confidence: 87%

Corporate ESG Profiles, Matching, and the Cost of Bank Loans

Shin

2020

SSRN Journal

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“…Third, our paper adds to the growing literature on the role of key nonshareholder stakeholders in shaping corporate CSR activities [25,30,31]. Most notably, recent papers by Hauptmann [32] and by Francis et al [33] document that banks reward firms' CSR performance ex post by reducing cost of debts or covenant requirements.…”

Section: Introductionmentioning

confidence: 78%

“…CSR plays an important role in enhancing banks' reputations as Wu and Shen [24] show that banks put in place initiatives of environmental protection and charity behavior and treat their customers with integrity in order to promote their reputations and brand names, which brings banks higher prices and quantities of noninterest income. For banks with higher CSR ratings, they are more likely to improve borrowers' CSR performance [25]. For borrowers, their ethical behaviors reduce the costs of bank debt financing and such reduction is higher if the lender also exhibits higher ethical standards [55].…”

Section: Literature Reviewmentioning

confidence: 99%

“…Reverse causality, in the case when CSR motivated firms choose banks with a CSR orientation, is not likely to be a concern. Prior literature shows that banks positively impact the evolution of borrower's CSR profile, not the other way around [25] The main concern is omitted variable bias. Our estimates of the impact of affiliated banks' CSR orientation on the firm's CSR performance are conditional on the firm's decision to have the banker sitting on its board.…”

Section: Does the Csr Orientation Of Affiliated Bank Matter?mentioning

confidence: 99%

“…This anecdotal evidence collectively demonstrates that banks have a reputational incentive in CSR investments. Empirical studies generally confirm that banks have different CSR orientations due to differences in size, resources, and strategies [23,24], and banks, with different CSR orientations, have an asymmetric influence on borrowers' CSR performance [25]. Thus, it is plausible that affiliated banker directors from banks with higher CSR orientation have a stronger influence on firms' CSR investments.…”

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

Do Affiliated Bankers on Board Enhance Corporate Social Responsibility? US Evidence

et al. 2021

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In this study, we examine whether and to what extent affiliated bankers on board may affect firms’ corporate social performance. Using a propensity score-matched sample from 2002 to 2016, we find that board directors from affiliated banks exert significantly positive influence on firms’ corporate social performance. Furthermore, board of directors from affiliated banks are negatively associated with firm investments in corporate social responsibility (CSR) activities when firms experience financial distress. Finally, we find that the effect of affiliated bankers on board on firms’ CSR performance depends on the affiliated banks’ CSR orientation, as affiliated banker directors from banks with higher CSR orientation have a stronger influence on firms’ investments in CSR activities. The results suggest that improving firm’s CSR performance is consistent with the affiliated banks’ interests.

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Banks and environmental, social and governance drivers: Follow the market or the authorities?

Torre

Leo

Panetta

2021

Corp Soc Responsibility Env

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This paper goes beyond the relationship between a bank ESG performance (ESGP) and corporate financial performance (CFP). Here, the link between ESG factors and financial benchmarks is analysed to verify whether banks may find in the market reaction sufficient stimuli (higher CFP) to adopt ESG conduct spontaneously. Using panel estimation methods on European banks listed in STOXX Europe 600, between 2008 and 2019, this paper tests the relationship between ESGP and CFP considering different dimensions of financial performance at once, both accounted-based (ROA and ROE) and market-based (Capitalisation to Book Value, Tobin's Q). Besides, we employ VBM (EVA Spread) not previously considered. The main findings support the current approach of banking authorities, focusing on bank ESG risks, more than ESG opportunities, in order to "force" banks into adopting a new ESG business model, at this early stage of transition to sustainability.

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Corporate ESG Profiles and Banking Relationships

Cited by 18 publications

References 45 publications

Corporate ESG Profiles, Matching, and the Cost of Bank Loans

Corporate ESG Profiles, Matching, and the Cost of Bank Loans

Do Affiliated Bankers on Board Enhance Corporate Social Responsibility? US Evidence

Banks and environmental, social and governance drivers: Follow the market or the authorities?

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