- Item type
- Study and report
- Dissertation
- Language
- English
- Publication year
- 2023
"The banking system is a vital component of the economy and has thus been facing pressure to improve its sustainability disclosures to improve externalities and provide more transparent information to stakeholders. The purpose of this paper is to empirically investigate whether ESG disclosure has an impact on the performance of banks in the EU.
Regarding the methodology, the paper conducts linear regression analyses on panel data from 32 major listed banks supervised by the ECB from 2012 to 2021. It considers ROA, ROE and market capitalization as performance dependent variables (operational, financial and market performance); ESG disclosure scores from Bloomberg as independent variables (general and broken down into individual components); total assets and financial leverage as bank specific control variables; and
countries’ GDP and governance levels as macroeconomic control variables.
Its key findings are that ESG disclosure does have a statistically significant positive impact on ROA and ROE, yet none on market capitalization. Additionally, when broken down into its ESG components, social disclosure shows a negative relationship to market performance. Therefore, banks should improve their ESG practices not only to better their externalities, but to also enhance their performances even if not yet fully recognized by markets."
