Does competition affect ESG controversies? Evidence from the banking industry

Antonella Francesca Cicchiello, Matteo Cotugno and Cristian Foroni

Finance Research Letters, 2023, vol. 55, issue PB

Abstract: This study empirically investigates the link between competition (measured by the Lerner index) and banks’ Environmental, Social, and Governance Controversies (ESGC). Using a logit regression analysis on a sample of European banks over the period 2010–2020, we find that banks respond to increased competitive pressure from consumers and competitors by avoiding their engagement in ESG controversies that can undermine their reputation. Overall, these results highlight that competition is an important factor that stimulates banks’ sustainability practices in order to preserve their competitive advantage. These findings are robust and hold for alternative measures of market competition and ESG controversies.

Keywords: ESG; Market competition; European countries; Banking sector; Corporate social responsibility (search for similar items in EconPapers)
JEL-codes: G21 M14 Q56 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:55:y:2023:i:pb:s1544612323003446

DOI: 10.1016/j.frl.2023.103972

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