Financial Institutions’ Risk Profile and Contribution to the Sustainable Development Goals

Abstract

This study analyses the impact of Spanish financial institutions’ risk profile on their contribution to the 2030 Agenda. Financial institutions play a significant role in ensuring financial inclusion and sustainable economic growth and usually incorporate environmental and social considerations into their risk management systems. The results show that financial institutions with less capital risk, with lower management efficiency and with higher market risk usually make higher contributions to the Sustainable Development Goals (SDGs), according to their sustainability reports. The novel aspect of the present study is that it identifies the risk profile of financial institutions that incorporate sustainability into their business operations and measure the impact generated in the environment and in society. The study findings have important implications for shareholders, investors and analysts, according to the view that sustainability reporting is a vehicle that financial institutions use to express their commitment to the 2030 Agenda and to higher quality corporate reporting.

The Behavioral Role of Digital Economy Adaptation in Sustainable Financial Literacy and Financial Inclusion

“…The most important measures of reliability are composite reliability and factor loadings. The reliability at the item and construct level is satisfied if it exceeds the threshold level of 0.50 and 0.70 (Zia-ur-rehman et al, 2017 ; Gambetta et al, 2021 ). The composite reliability and the factor loading of the constructs are shown in Table 2 .…”

“…Discriminant validity is measured using the Fornell and Larcker ( 1981 ) test, which describes that the square root should be greater than the correlation between other constructs in the rows and columns. Thus, discriminant validity is the criteria that measure the difference of a variable from the others (Zia-ur-rehman et al, 2017 ; Gambetta et al, 2021 ). Table 3 represents the validity of the variables in the research study.…”

“…According to the effect size of the constructs omitted on the endogenous constructs, it is determined as small, medium, and large based on relative values 0.02, 0.15, and 0.35, respectively. Table 5 represents the f square value of the variables in different relations (Gambetta et al, 2021 ).…”

“…According to the Organization for Economic Co-operation and Development (OECD) working paper on finance, low financial literacy contributed to the low financial inclusion rate (Gambetta et al, 2021 ). Financial literacy refers to understanding the financial concepts as the individual needs to choose among different financial services.…”

Green Insurance: A Roadmap for Executive Management

“…When revising assessment criteria, the focus should not only be laid on exclusions or additional due diligence processes but also on opportunities for positive risk selection. Gambetta et al (2021), for example, found that financial institutions that contribute more to sustainability goals portray a balanced risk profile. Some exclusions may apply, for example, for mining companies and for electricity supply companies in which the proportion of electricity generation attributable to coal exceeds a defined level (SIA 2020).…”