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Corporate sustainability and financial performance of Chinese banks

Author

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  • Olaf Weber

Abstract

Purpose - This paper analyzes the connection between the sustainability performance of Chinese banks and their financial indicators to explore whether sustainability regulations can be implemented without decreasing the financial performance of the banking sector. Design/methodology/approach - The study examined reports and websites of Chinese banks, categorized different corporate sustainability aspects and conducted panel regression and Granger causality to analyze cause and effect variables. Findings - The environmental and social performance of Chinese banks increased significantly between 2009 and 2013. Furthermore, a bi-directional causality between financial performance and sustainability performance of Chinese banks has been found. Based on institutional theory, this interaction may be influenced by the Chinese Green Credit Policy. Research limitations/implications - The findings suggest that corporate sustainability performance and financial performance are not a trade-off but correlate positively. Further research is needed to analyze the effect of financial regulations, such as the Chinese Green Credit Policy. Practical implications - According to the good management theory by Waddock and Graves (1997) that claims a positive impact of corporate social performance on financial performance, Chinese banks can invest in corporate sustainability to increase their financial success and re-invest parts of the additional returns – also called slack resources – in sustainability activities. Social implications - Chinese banks are able to influence the economy to become greener and less polluting without sacrificing financial returns. Originality/value - This is the first study to explore the sustainability performance of Chinese banks, including their products and services.

Suggested Citation

  • Olaf Weber, 2017. "Corporate sustainability and financial performance of Chinese banks," Sustainability Accounting, Management and Policy Journal, Emerald Group Publishing Limited, vol. 8(3), pages 358-385, July.
    • Handle: RePEc:eme:sampjp:sampj-09-2016-0066
    DOI: 10.1108/SAMPJ-09-2016-0066
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    Citations

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    Cited by:

    1. Ren, Yi-Shuai & Boubaker, Sabri & Liu, Pei-Zhi & Weber, Olaf, 2023. "How does carbon regulatory policy affect debt financing costs? Empirical evidence from China," The Quarterly Review of Economics and Finance, Elsevier, vol. 90(C), pages 77-90.
    2. Ahmad Yuosef Alodat & Zalailah Salleh & Haitham Nobanee & Hafiza Aishah Hashim, 2023. "Board gender diversity and firm performance: The mediating role of sustainability disclosure," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 30(4), pages 2053-2065, July.
    3. Sanoran, Kanyarat (Lek), 2023. "Corporate sustainability and sustainable growth: The role of industry sensitivity," Finance Research Letters, Elsevier, vol. 53(C).
    4. Yaghoub Abdi & Xiaoni Li & Xavier Càmara‐Turull, 2022. "How financial performance influences investment in sustainable development initiatives in the airline industry: The moderation role of state‐ownership," Sustainable Development, John Wiley & Sons, Ltd., vol. 30(5), pages 1252-1267, October.
    5. Shaymaa Al-Said Salem & Dina Elkhattat, 2023. "Environmental Responsibility of the Banking Sector in UAE: Practices to Confront Climate Change Risks," Scientia Moralitas Conference Proceedings 01256, Research Association for Interdisciplinary Studies.
    6. Teresa C. Herrador-Alcaide & Montserrat Hernández-Solís & Susana Cortés Rodríguez, 2023. "Mapping barriers to green supply chains in empirical research on green banking," Palgrave Communications, Palgrave Macmillan, vol. 10(1), pages 1-16, December.
    7. Nejla Ould Daoud Ellili & Haitham Nobanee, 2023. "Impact of economic, environmental, and corporate social responsibility reporting on financial performance of UAE banks," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 25(5), pages 3967-3983, May.
    8. Xin Guan & Naveed Ahmad & Muhammad Safdar Sial & Jacob Cherian & Heesup Han, 2023. "CSR and organizational performance: The role of pro‐environmental behavior and personal values," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 30(2), pages 677-694, March.

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