Working Paper: CEPR ID: DP18108
Authors: Zlem Dursunde Neef; Joaquin Forchieri; Thomas Gehrig; Alexander Schandlbauer
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
JEL Codes: G21; E51
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| a bank's ESG score (G21) | daily stock return (G17) |
| retail ownership (L81) | negative impact of ESG on stock returns (G41) |
| banks' ESG performance (G21) | lending behavior (G21) |
| banks with higher ESG scores (G21) | loan supply (E51) |
| high share of retail investors (G24) | loan supply reduction (E51) |