ESG activity and bank lending during financial crises

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dc.authorid0000-0003-3684-6692en_US
dc.contributor.authorDanışman, Gamze Öztürk
dc.contributor.authorTarazi, Amine
dc.date.accessioned2024-04-04T12:43:29Z
dc.date.available2024-04-04T12:43:29Z
dc.date.issued2023-01-03
dc.description.abstractThis paper explores how banks' environmental, social, and governance (ESG) activities affect their lending during financial crises. We use a sample of European listed banks with available ESG scores from 2002 to 2020 and consider the global financial crisis of 2007-2009 and the European sovereign debt crisis of 2010-2012. We estimate a two-step system GMM dynamic panel data model and also address potential endogeneity with instrumental variable (IV) and difference-in-difference (DiD) estimations. We find that lending falls to a lesser extent for banks with higher ESG scores during crisis times. Our findings are robust to using alternative ESG rating providers. An investigation of the different potential channels shows that, during crises, banks more engaged in ESG activities are less affected in terms of credit risk, asset risk, and profitability. They also face a lower reduction in market funding, allowing them to downsize to a lesser extent during crises, and their deposit rates do not increase as much as in less ESG-engaged banks. A deeper investigation reveals that our findings mainly hold for banks focused on traditional lending and deposit activities and are essentially driven by the environmental pillar component of ESG scores and the global financial crisis of 2007-2009.en_US
dc.fullTextLevelFull Texten_US
dc.identifier.doi10.1016/j.jfs.2023.101206en_US
dc.identifier.issn1878-0962
dc.identifier.issn1572-3089
dc.identifier.scopus2-s2.0-85178466505en_US
dc.identifier.urihttps://hdl.handle.net/11411/5249
dc.identifier.urihttps://doi.org/10.1016/j.jfs.2023.101206
dc.identifier.wosWOS:001128615200001en_US
dc.identifier.wosqualityQ1en_US
dc.indekslendigikaynakWeb of Scienceen_US
dc.indekslendigikaynakScopusen_US
dc.language.isoenen_US
dc.nationalInternationalen_US
dc.numberofauthors2en_US
dc.publisherELSEVIERen_US
dc.relation.ispartofJOURNAL OF FINANCIAL STABILITYen_US
dc.relation.publicationcategoryMakale - Uluslararası Hakemli Dergi - Kurum Öğretim Elemanıen_US
dc.rightsinfo:eu-repo/semantics/openAccessen_US
dc.subjectEnvironmental Social Governance (ESG) scoresen_US
dc.subjectBank Lendingen_US
dc.subjectBank Risken_US
dc.subjectEnvironmental pillaren_US
dc.subjectFinancial Crisisen_US
dc.subjectEuropean banksen_US
dc.titleESG activity and bank lending during financial crisesen_US
dc.typeArticleen_US
dc.volume70en_US

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