How sustainable banking fosters the SDG 10 in weak institutional environments

Fernando Úbeda, Francisco Forcadell, Elisa Aracil and Alvaro Mendez ()

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: The role of the financial sector is central in reducing income inequality – the goal of SDG 10 – by facilitating economic opportunities. However, institutional weaknesses may also undermine this effect. We argue that sustainable banking generates bidirectional trust to overcome institutional weaknesses, particularly the weak rule of law. Empirical evidence from 46 countries aggregating data of 1060 banks over 2010–2017 shows that sustainable banking lessens income inequality in weak rule of law settings. The results are robust after including the effects of bank digitalisation. This study has important implications for sustainable banking expansion into weak institutional environments and demonstrates banks’ efforts in their commitment to reducing inequality.

Keywords: banks; ESG; inequality; institutions; rule of law; sustainable Development Goals (search for similar items in EconPapers)
JEL-codes: F3 G3 (search for similar items in EconPapers)
Pages: 11 pages
Date: 2022-07-01
New Economics Papers: this item is included in nep-ban, nep-env and nep-fdg
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Citations: View citations in EconPapers (5)

Published in Journal of Business Research, 1, July, 2022, 146, pp. 277 - 287. ISSN: 0148-2963

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Journal Article: How sustainable banking fosters the SDG 10 in weak institutional environments (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:114881

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