Bank credit loss and ESG performance

Elena Bruno, Giuseppina Iacoviello and Caterina Giannetti

Finance Research Letters, 2024, vol. 59, issue C

Abstract: We study the impact of ESG scores on Non-performing loans (NPLs) for a sample of European listed banks over the period 2002–2020. Relying on two different types of instrumental variables and fractional logit estimations, we find that banks with greater levels of the ESG score have higher levels of NPLs. The main effect goes through the Governance pillar and Controversies components. Our findings suggest that even if ESG practices may enhance bank value and stability, a negative effect may directly emerge from the loan loss channel.

Keywords: Non-performing loans; Banks; ESGC score; Fractional logit (search for similar items in EconPapers)
JEL-codes: C23 G01 G21 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1544612323010917
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:59:y:2024:i:c:s1544612323010917

DOI: 10.1016/j.frl.2023.104719

Access Statistics for this article

Finance Research Letters is currently edited by R. Gençay

More articles in Finance Research Letters from Elsevier
Bibliographic data for series maintained by Catherine Liu ().