Sustainable banking and trust in the global South

Fernando Ubeda, Alvaro Mendez and Francisco Javier Forcadell

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

Abstract: Trust in banking plays a significant role in promoting financial inclusion. Multinational banks (MNBs) have the potential to enhance trust by adopting sustainable banking practices. We investigate the impact of MNBs' adoption of ESG (Environmental, Social and Governance) practices on trust in banking in 38 developing countries. Using an instrumental variable approach and control function estimation, our findings indicate that sustainable practices by commercial MNBs are positively and significantly associated with increased trust in banking. The results remain consistent across different samples, lending robustness to our findings. By demonstrating the importance of sustainable banking in fostering trust, this study contributes to the limited literature on trust in banking in the global South.

JEL-codes: G21 (search for similar items in EconPapers)
Pages: 11 pages
Date: 2024-03-21
New Economics Papers: this item is included in nep-ban, nep-env, nep-fdg, nep-fle and nep-soc
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Published in Global Policy, 21, March, 2024, 15(S1), pp. 34 - 44. ISSN: 1758-5880

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