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Bank lending cyclicality and ESG activities: Global evidence

Author

Listed:
  • Abdelsalam, Omneya
  • Azmi, Wajahat
  • Disli, Mustafa
  • Kowsalya, V.

Abstract

This paper examines how banks' lending behavior is influenced by their ESG activities. To achieve this objective, we use a global sample of 277 banks for the period 2012–2019. We find that banks that engage in ESGs are less prone to procyclical lending than those that do not. In the case of environmental activities, the results are more pronounced. In essence, we demonstrate that ESG activities, and in particular environmental activities, can serve as indicators to identify banks that stabilize credit during difficult times. This study has implications for policymakers as well as other stakeholders.

Suggested Citation

  • Abdelsalam, Omneya & Azmi, Wajahat & Disli, Mustafa & Kowsalya, V., 2023. "Bank lending cyclicality and ESG activities: Global evidence," Finance Research Letters, Elsevier, vol. 58(PD).
    • Handle: RePEc:eee:finlet:v:58:y:2023:i:pd:s1544612323009133
    DOI: 10.1016/j.frl.2023.104541
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    Keywords

    ESG activities; Lending behavior;

    JEL classification:

    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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