Ego versus Environment? How Overconfident Bank CEOs Delay Joining the Green Club That Would Have Them as a Member

Kwabena A. Addo, Shams Pathan and Steven Ongena
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Kwabena A. Addo: Utrecht University
Shams Pathan: University of Newcastle - Newcastle University Business School

No 25-20, Swiss Finance Institute Research Paper Series from Swiss Finance Institute

Abstract: We investigate how CEO overconfidence influences banks' decisions to join the United Nations Environment Programme Finance Initiative. Analyzing 13,000 bank-year observations, spanning the last quarter century, with a duration model, we find that overconfident CEOs delay participation by reducing the likelihood of joining by 15% annually. This effect is stronger in large, profitable, deposit-funded banks and persists across various CEO demographics. Our findings reveal how behavioral biases shape strategic decisions, highlighting overconfidence as a barrier to timely sustainability commitments. These insights underscore the importance of leadership traits in driving-or hindering-progress in green finance.

Keywords: CEO overconfidence; green bank alliances; green finance; duration model (search for similar items in EconPapers)
JEL-codes: G21 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2025-02
New Economics Papers: this item is included in nep-ene
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Persistent link: https://EconPapers.repec.org/RePEc:chf:rpseri:rp2520

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