The Impact of ESG Scores on Bank Market Value? Evidence from the U.S. Banking Industry

Ersan Ersoy, Beata Swiecka, Simon Grima, Ercan Özen and Inna Romanova
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Beata Swiecka: Institute of Economics and Finance, University of Szczecin, 70-453 Szczecin, Poland
Simon Grima: Department of Insurance and Risk Management, Faculty of Economics, Management & Accountancy, University of Malta, MSD2080 Msida, Malta
Ercan Özen: Faculty of Applied Sciences, Usak University, Uşak 64000, Turkey
Inna Romanova: Faculty of Business, Economics and Management, University of Latvia, LV-1586 Riga, Latvia

Sustainability, 2022, vol. 14, issue 15, 1-14

Abstract: Although there is a large volume of literature on the relationship between Environmental, Social and Governance (ESG) and firm performance, only a limited number of studies have focused on the banking sector. In addition, most of them used linear models. Therefore, in this study, we examined the impact of ESG and ESG pillar scores (environmental, social, and governance) on the market value of U.S. commercial banks by using linear and non-linear panel regression models over the period of 2016–2020. Moreover, we used the market value as a bank value indicator and included the effect of COVID-19. Results show an inverted U-shaped relationship between market value and ESG and The Social Pillar Score (SPS) and a U-shaped relationship between market value and The Environment Pillar Score (EPS). Findings from this study are important indicators for investment managers and policymakers who want to maximise bank market value while complying with ESG standards.

Keywords: ESG; bank performance; bank value; sustainability; COVID-19 (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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