Environmental risk management and financial performance in the banking industry: A cross-country comparison

Maya Finger, Ilanit Gavious, Ronny Manos

Research output: Contribution to journalArticlepeer-review

48 Scopus citations

Abstract

The Equator Principles (EP) provide banks with environmental guidelines for project finance. Distinguishing between banks from developed and developing countries, we analyse the effect of EP adoption on performance. Two sets of hypotheses for each sub-sample of banks are developed and tested using comparison analyses, event-study methodology and two-stage selection modelling. We find that in developed (developing) countries, EP adoption is associated with an increase (decrease) in funding activity and in the share of income from interest. These results indicate that EP adoption is a strategic decision for banks in developing countries, and a form of greenwashing in developed countries.

Original languageEnglish
Pages (from-to)240-261
Number of pages22
JournalJournal of International Financial Markets, Institutions and Money
Volume52
DOIs
StatePublished - 1 Jan 2018

Keywords

  • Corporate social responsibility
  • Cross-country
  • Environmental risk management
  • Equator principles
  • Financial institutions
  • Financial performance

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics

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