Bank Macroprudential Policies and Borrower ESG Performance

Jie Cui, Mamiz Haq, Steven Ongena and Eric K. M. Tan
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Jie Cui: Dongbei University of Finance and Economics
Mamiz Haq: Newcastle University
Steven Ongena: University of Zurich - Department Finance; Swiss Finance Institute; KU Leuven; NTNU Business School; Centre for Economic Policy Research (CEPR)
Eric K. M. Tan: University of Queensland

No 26-13, Swiss Finance Institute Research Paper Series from Swiss Finance Institute

Abstract: We examine the cross-border transmission of macroprudential policies to corporate ESG performance. Constructing a novel measure of U.S. firms' exposure to foreign regulatory shocks through syndicated lending relationships, we employ a triple-difference design that exploits variation across countries, banks, and time. We document significant and economically meaningful spillovers: U.S. borrowers exposed to foreign banks subject to capital or liquidity tightening experience significant declines in ESG performance, whereas exposure to loosening measures leads to ESG improvements. These effects are primarily driven by environmental and governance dimensions. We establish causality using the 2014 European Asset Quality Review as an exogenous regulatory shock, complemented by evidence from the staggered adoption of Basel III and stacked event-study analyses. Overall, our findings highlight an important real consequence of international bank regulation, showing that macroprudential policies can shape corporate sustainability outcomes through global credit markets.

Keywords: Macroprudential policies; ESG reporting; Bank-borrower lending relationship; Bank monitoring (search for similar items in EconPapers)
JEL-codes: G18 G20 G21 M14 M40 M48 N20 (search for similar items in EconPapers)
Pages: 100 pages
Date: 2026-01
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Persistent link: https://EconPapers.repec.org/RePEc:chf:rpseri:rp2613

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