Socially responsible banking: Weathering the Covid-19 storm

Laura Chiaramonte, Alberto Dreassi, Claudia Girardone and Stefano Piserà

Journal of International Financial Markets, Institutions and Money, 2024, vol. 95, issue C

Abstract: This paper investigates the impact of socially responsible banking activities on banks’ risk profiles, using data from the period of turmoil caused by the Coronavirus (Covid-19) outbreak in Europe. Our findings show that socially responsible banking activities served as a risk-hedging strategy at the peak of the pandemic. Furthermore, we reveal the role of banks’ environmental and social engagement in reducing the exposure to country-level Covid-19 cases and public perception using a Google Trends sentiment analysis. Finally, in explaining the ESG-bank risk relationship, we identify a mediating role of the Covid-19 “panic” as a viable economic channel.

Keywords: Environmental, Social and Governance (ESG); Covid-19; European Banking; Bank Stability; Google Trends (search for similar items in EconPapers)
JEL-codes: G01 G21 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:intfin:v:95:y:2024:i:c:s1042443124000957

DOI: 10.1016/j.intfin.2024.102029

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