Akademik Veri Yönetim Sistemi
Turkish German University Economics Conference 2023, İstanbul, Türkiye, 14 - 15 Aralık 2023
The nature of the relationship between bank performance and ESG activities remains an area of growing interest among investors, academics, regulators, and scholars, as indicated in the literature by an increasing number of related studies; however, the research results show significant and notable variations. Therefore, this research aims to analyze the influence of ESG factors on the financial performance of banks in both developed and emerging markets. Through employing panel multiple regression analysis on annual data spanning from 2010 to 2021, covering a total of 220 banks (with 114 from developed markets and 106 from emerging markets), our study reveals that ESG collectively exerts a significant positive impact on the financial performance of banks in developed markets, while no discernible effect is observed in emerging markets. Furthermore, when assessing ESG pillars separately, we uncover varied outcomes. The study indicates that only the environmental and social pillars have a strong positive impact on bank performance in developed markets, whereas governance has no impact. Interestingly, in emerging markets, only the governance factor has a significant positive impact on bank performance, while the environment and social factors have no significant impact. The results also show that the ESG controversy has a strong positive impact on bank performance, both in emerging and developed markets. In addition to these findings, further regression analysis results show variations in ESG impact when lagging effects are not considered. This research adds to existing literature by offering further insights into the relationship between bank performance and ESG metrics. Notably, it conducts a comparative analysis between developed and emerging markets while also considering the lagging effects. Moreover, the outcomes hold relevance for various stakeholders, including ESG-conscious investors, bank management, policymakers, and other interested parties, providing valuable guidance for decision-making.