Corporate sustainability and financial performance of Chinese banks

Abstract

Purpose -This paper analyses the connection between the sustainability performance of Chinese banks and their financial indicators to explore whether sustainability regulations can be implemented without decreasing the financial performance of the banking sector.Design/methodology/approach -The study examined reports and websites of Chinese banks, categorized different corporate sustainability aspects, and conducted panel regression and Granger causality to analyse cause and effect variables.Findings -The environmental and social performance of Chinese banks increased significantly between 2009 and 2013. Furthermore, a bi-directional causality between financial performance and sustainability performance of Chinese banks has been found. Based on institutional theory, this interaction may be influenced by the Chinese Green Credit Policy.Research limitations/implications -The findings suggest that corporate sustainability performance and financial performance are not a trade-off but correlate positively. Further research is needed to analyse the effect of financial regulations, such as the Chinese Green Credit Policy.Practical implications -According to the good management theory by Waddock and Graves (1997) that claims a positive impact of corporate social performance on financial performance, Chinese banks can invest in corporate sustainability to increase their financial success and reinvest parts of the additional returns -also called slack resources -in sustainability activities.Social implications -Chinese banks are able to influence the economy to become greener and less polluting without sacrificing financial returns.Originality/value -To the best of our knowledge, this is the first study to explore the sustainability performance of Chinese banks, including their products and services.

The Impact of Green Lending on Credit Risk in China

“…The results contribute to knowledge about the institutional impact of financial sector sustainability regulation on credit risk [13]. Furthermore, the study advances the scholarship on the financial risks of green loans [14,15], and fills a gap in the research on the effect of the Chinese Green Credit Policy on green lending.…”

Bi-directional in sustainability reporting and profitability: A study in Indonesian banks and non-banks

“…Some recent empirical evidence in sustainability and financial performance shows mixed results as well. Some empirical studies support the arguments that sustainability reporting increases firm performance Bartlett (2012), Kusuma & Koesrindartoto (2014), Haryono et al (2016), Nnamani et al (2017), Weber (2017), Whetman (2017), Diantimala (2018), Gunarsih & Ismawati (2018)), while some studies found that there is no relationship between sustainability reporting to firm performance Utami (2015) and Sejati & Prastiwi (2015). The mixed results found in Xie (2015).…”

“…Nnamani et al (2017)'s study reveals that sustainability reporting has a positive and significant effect on the financial performance of firms studied. Weber (2017) investigates the causality between financial performance and sustainability performance in Chinese banks. The results show that there is a bi-directional causality between those two vari-Bi-directional in sustainability reporting and profitability: A study in Indonesian banks and non-banks Tri Gunarsih, Setiyono, Fran Sayekti, Tamas Novak | 23 | ables.…”

Sustainable development and economic performance: Gaps and trends for future research

“…Other studies aimed to examine the relationship between sustainability and financial outcomes in other aspects such as the hospitality industry (Singal, ), clarify the relationship between sustainable behavior and financial performance (Martínez‐Ferrero & Frías‐Aceituno, ), determine if supplier integration and sustainability programs have an influence on financial outcomes (Li, Chow, Choi, & Chan, ), examine the relationship between sustainability disclosure and financial results in Indian companies (Goel & Misra, ), determine whether sustainability integrated to the company strategy has an impact in the financial outcome of companies (Gómez‐Bezares, Przychodzen, & Przychodzen, ), and analyze the relationship between sustainable performance from Chinese banks and their financial results (Weber, ). These have brought positive results to the discussion by analyzing the variables through different points of view and the use of different methods.…”

“…Other authors suggested the analysis of not-for-profit organizations (Ameer & Othman, 2012), analysis of a greater number of companies and other countries (Chang & Kuo, 2008;Cristófalo et al, 2016;Gómez-Bezares et al, 2016;Martínez-Ferrero & Frías-Aceituno, 2013;Siminica et al, 2015;Wagner & Blom, 2011;Weber, 2017), and using different databases from those proposed by ESG (Singal, 2014). variables into their analyses, they have provided future researchers with different pathways to follow.…”