How did banks' ESG conduct affect financial performance and lending during COVID-19?

Ozlem Dursun-de Neef, Joaquin Forchieri, Thomas Gehrig and Alexander Schandlbauer

No 18108, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This paper examines the link between ESG conduct and banks' stock performance during the COVID-19 crisis using a large global sample of banks. We find that a one standard deviation increase in a bank's ESG score is associated on average with a 0.14 percentage point lower daily stock returns during the onset of the COVID-19 pandemic. Examining the potential drivers behind the negative impact of the ESG conduct, we show that banks with a higher fraction of retail investors are more affected. Last, we provide evidence for a negative association between banks' ESG performance and their lending in times of COVID-19, which is again relatively more pronounced for banks with a higher share of retail ownership.

Keywords: ESG; Sustainable banks; COVID-19; Bank lending (search for similar items in EconPapers)
JEL-codes: E51 G21 (search for similar items in EconPapers)
Date: 2023-04
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