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The Impact of Macroeconomic, Social and Governance Factors on the Sustainability and Well-Being of the Economic Environment and the Robustness of the Banking System

Author

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  • Vasile Dedu

    (Department of Money and Banking, Faculty of Finance and Banking, Bucharest University of Economic Studies, 010374 Bucharest, Romania)

  • Dan-Costin Nițescu

    (Department of Money and Banking, Faculty of Finance and Banking, Bucharest University of Economic Studies, 010374 Bucharest, Romania)

  • Maria-Alexandra Cristea

    (Department of Money and Banking, Faculty of Finance and Banking, Bucharest University of Economic Studies, 010374 Bucharest, Romania)

Abstract

The paper highlights the connection between the European Union banking system and a set of representative factors—macroeconomic, social, and governance factors—selected from the perspective of sustainability and well-being. The analysis is carried out as a panel regression on EU member countries with annual data for 2005–2018, and it explores the impact of the selected factors on the robustness of the banking systems in the European Union countries. The analyzed variables to reflect the robustness of the banking system were the domestic credit to the private sector and the nonperforming loans (NPL) rate. Those indicators are of high relevance and concern within the current pandemic context. The results show that the banking development degree influences the increase of private-sector lending and the decrease of the NPL rate. Social and governance factors impact differently the level of private sector and NPL rate. All macroeconomic indicators used to influence the level of private-sector lending. The research reflects the fact that to promote and adopt a culture of sustainability and to ensure well-being, a close collaboration between all sectors of an economy is needed, together with a strong policy interconnection and harmonization between micro and macro.

Suggested Citation

  • Vasile Dedu & Dan-Costin Nițescu & Maria-Alexandra Cristea, 2021. "The Impact of Macroeconomic, Social and Governance Factors on the Sustainability and Well-Being of the Economic Environment and the Robustness of the Banking System," Sustainability, MDPI, vol. 13(10), pages 1-13, May.
    • Handle: RePEc:gam:jsusta:v:13:y:2021:i:10:p:5713-:d:558063
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    References listed on IDEAS

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    Cited by:

    1. Saba Iqbal & Safia Nosheen, 2023. "Moderating impact of non-performing loans on the relationship between sustainable development goals and the financial performance of banks," Future Business Journal, Springer, vol. 9(1), pages 1-12, December.

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