Equator principles and bank liquidity

Naiwei Chen, Hsiu-Hsi Huang and Chia-He Lin

International Review of Economics & Finance, 2018, vol. 55, issue C, 185-202

Abstract: This study examines whether and how Equator Principles (EP) adoption has bearings on the liquidity of banks that engaged in project finance from 2003 to 2010. Results reveal that EP Financial Institutions (EPFIs) generally have higher liquidity than non-EPFIs and such a finding remains valid after controlling other variables. Moreover, bank regulations positively affect bank liquidity and such a positive effect is stronger for EP Financial Institutions (EPFIs) than for non-EPFIs. Results suggest that EPFIs hold more liquidity buffers likely because of the higher risks and costs that accompany the adoption of EP as well as more effective bank regulations for EPFIs as opposed to non-EPFIs. In addition, banks that plan to adopt EP in the future should increase their liquidity holdings after adopting EP. Furthermore, authorities concerned should encourage non-EPFIs to adopt EP or other eco-friendly measures so that bank regulations can increase liquidity more effectively.

Keywords: Equator principles; Liquidity; Project finance; Corporate social responsibility (search for similar items in EconPapers)
JEL-codes: F30 G20 G30 M14 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1059056017305294
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:reveco:v:55:y:2018:i:c:p:185-202

DOI: 10.1016/j.iref.2017.07.020

Access Statistics for this article

International Review of Economics & Finance is currently edited by H. Beladi and C. Chen

More articles in International Review of Economics & Finance from Elsevier
Bibliographic data for series maintained by Catherine Liu ().