The impact of financial sanctions on ESG performance of target countries

Xue-Ying Liu, Xin-Xin Zhao, Kun Ma and Susan Sunila Sharma

Pacific-Basin Finance Journal, 2024, vol. 87, issue C

Abstract: By employing a panel data analysis that covers for 102 countries from 1990 to 2020, this paper investigates the impact of financial sanctions on Environmental, Social, and Governance (ESG) performance of target countries. The results firstly demonstrate that financial sanctions significantly hampered the ESG performance of target countries. More specifically, the implementation of financial sanctions hinders environmental sustainability (E), social equality (S), and corporate governance (G) of target countries respectively. In addition, this paper also finds that financial sanctions significantly decrease ESG performance by restricting foreign capital flow, decreasing the level of globalization and increasing financial risk. Last but not least, this paper concludes that financial development and democracy can create a favorable environment for ESG performance in sanctioned countries and mitigate the adverse effects of financial sanctions.

Keywords: Financial sanctions; ESG performance; FDI; Globalization; Financial risk (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0927538X24002658
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:pacfin:v:87:y:2024:i:c:s0927538x24002658

DOI: 10.1016/j.pacfin.2024.102513

Access Statistics for this article

Pacific-Basin Finance Journal is currently edited by K. Chan and S. Ghon Rhee

More articles in Pacific-Basin Finance Journal from Elsevier
Bibliographic data for series maintained by Catherine Liu ().