IDEAS home Printed from https://ideas.repec.org/a/gam/jijfss/v13y2025i1p3-d1559272.html

Examining the Impact of Environmental, Social, and Corporate Governance Factors on Long-Term Financial Stability of the European Financial Institutions: Dynamic Panel Data Models with Fixed Effects

Author

Listed:
  • Georgia Zournatzidou

    (Department of Business Administration, University of Western Macedonia, GR51 100 Grevena, Greece)

  • Konstantina Ragazou

    (Department of Management Science and Technology, University of Western Macedonia, GR50 100 Kozani, Greece)

  • George Sklavos

    (Department of Business Administration, University of Thessaly, GR41 500 Larissa, Greece)

  • Nikolaos Sariannidis

    (Department of Accounting and Finance, University of Western Macedonia, GR50 100 Kozani, Greece)

Abstract

Modern economies are progressively acknowledging the need to assess environmental, social, and corporate governance (ESG) elements to identify possible risks and possibilities. The financial sector, exerting significant influence over the economy, is essential for sustaining economic stability via the lending mechanism. Our study focuses on examining the influence of ESG factors on the financial stability of European financial institutions. To attain this goal, we utilized fixed-effects and random-effects dynamic panel models, analyzing 352 financial institutions across many European nations from 2019 to 2021. The study’s findings reveal a complex scenario. The findings indicate that ethical and corporate responsibility practices significantly impact the financial performance of European financial institutions. Nonetheless, the execution of policies pertaining to ESG ethics seems markedly inadequate. Our research reveals substantial evidence of a direct correlation between ethical practices and profit stability, diverging from other studies. This newly established group directly influences the financial performance of financial institutions in Europe. These findings enhance the comprehension of the interaction between ESG variables and financial stability, illuminating both the beneficial effects and the current deficiencies in ethical behaviors within the European banking sector.

Suggested Citation

  • Georgia Zournatzidou & Konstantina Ragazou & George Sklavos & Nikolaos Sariannidis, 2025. "Examining the Impact of Environmental, Social, and Corporate Governance Factors on Long-Term Financial Stability of the European Financial Institutions: Dynamic Panel Data Models with Fixed Effects," IJFS, MDPI, vol. 13(1), pages 1-20, January.
    • Handle: RePEc:gam:jijfss:v:13:y:2025:i:1:p:3-:d:1559272
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2227-7072/13/1/3/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2227-7072/13/1/3/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Ignatov, Konstantin, 2023. "When ESG talks: ESG tone of 10-K reports and its significance to stock markets," International Review of Financial Analysis, Elsevier, vol. 89(C).
    2. Georgia Zournatzidou & Christos Floros, 2023. "Hurst Exponent Analysis: Evidence from Volatility Indices and the Volatility of Volatility Indices," JRFM, MDPI, vol. 16(5), pages 1-15, May.
    3. Georgia Zournatzidou & George Sklavos & Konstantina Ragazou & Nikolaos Sariannidis, 2024. "Anti-Competition and Anti-Corruption Controversies in the European Financial Sector: Examining the Anti-ESG Factors with Entropy Weight and TOPSIS Methods," JRFM, MDPI, vol. 17(11), pages 1-18, October.
    4. Dinh, Jeannette Mai & Isaak, Andrew Jay & Wehner, Marius Claus, 2024. "Sustainability-oriented crowdfunding: An integrative literature review," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 448, pages 1-38.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Xi CHEN & Adnan KHURSHID & Alexandru Răzvan TOPA & Radu Alexandru BUDU, 2025. "Green Finance, Innovation, and Financial Markets: Shaping Industrial Resilience in China and Europe," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(1), pages 165-179, April.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Dimitrios Koemtzopoulos & Georgia Zournatzidou & Konstantina Ragazou & Nikolaos Sariannidis, 2025. "Cryptocurrencies Transit to a Carbon Neutral Environment: From Fintech to Greentech Through Clean Energy and Eco-Efficiency Policies," Energies, MDPI, vol. 18(2), pages 1-19, January.
    2. Dimitrios Koemtzopoulos & Georgia Zournatzidou & Nikolaos Sariannidis, 2025. "Can Cryptocurrencies Be Green? The Role of Stablecoins Toward a Carbon Footprint and Sustainable Ecosystem," Sustainability, MDPI, vol. 17(2), pages 1-17, January.
    3. Juraj Smiesko & Pavel Segec & Martin Kontsek, 2023. "Machine Recognition of DDoS Attacks Using Statistical Parameters," Mathematics, MDPI, vol. 12(1), pages 1-30, December.
    4. Vu, Thanh Nam & Junttila, Juha-Pekka & Lehkonen, Heikki, 2024. "ESG news and long-run stock returns," Finance Research Letters, Elsevier, vol. 60(C).
    5. Carè, Rosella & Fatima, Rabia & Agnese, Paolo, 2025. "Crowdfunding and sustainable development: A systematic review," Finance Research Letters, Elsevier, vol. 78(C).
    6. Cerchione, Roberto & Liccardo, Giuseppe & Passaro, Renato, 2025. "Crowdfunding business models through the lens of sustainable development: A taxonomy for backers and funders," Finance Research Letters, Elsevier, vol. 78(C).
    7. Chune Young Chung & Incheol Kim & Rong Yang, 2025. "Are Environmentally Sensitive Firms More Likely to Release Corporate Environmental Disclosures? Evidence From Environmental Risk Management," Business Strategy and the Environment, Wiley Blackwell, vol. 34(3), pages 3338-3359, March.
    8. Chandradew Sharma, 2025. "Multi Scale Analysis of Nifty 50 Return Characteristics Valuation Dynamics and Market Complexity 1990 to 2024," Papers 2509.00697, arXiv.org.
    9. Bongiorno, Giuseppe & Cardamone, Ernesto & Passarelli, Mariacarmela, 2025. "Navigating crowdfunding for sustainability: Practical implications mapped," Finance Research Letters, Elsevier, vol. 76(C).
    10. Fiza Amjad & Yulei Rao & Amin Ur Rahman & Sajjad Ahmad Baig & Muhammad Usman & Muhammad Waleed Younas, 2026. "Innovative Strategies for SMEs’ Sustainability: Crowdfunding, Industry 4.0, and Sustainable Business Models Using SEM-ANN Approach," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 17(2), pages 3490-3521, April.
    11. Jiang, Wenwen & Kang, Jangkoo & Kim, Hwa-Sung, 2024. "Is the zero-leverage policy value-enhancing?," The Quarterly Review of Economics and Finance, Elsevier, vol. 93(C), pages 176-189.
    12. Se‐Hee Jeong & Jeong‐Ji Han & Soyoung Jun & Shawn Kim & Jong Woo Kim, 2025. "Investor Responses to ESG News Sentiment: Exploring Differential Effects and Industry Moderation," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 32(3), pages 3944-3964, May.
    13. Cheng, Shi & Huang, Shan, 2024. "ESG combined score effects on stock performance of S&P 500-listed firms," Finance Research Letters, Elsevier, vol. 66(C).
    14. Zournatzidou, Georgia & Staikouras, Christos & Ragazou, Konstantina & Zopounidis, Constantin & Sariannidis, Nikolaos, 2025. "Unlocking the threshold effects of ESG performance towards policy energy efficiency of the European energy sector: A hybrid multi-criteria decision-making approach based on weight-entropy TOPSIS," Energy Economics, Elsevier, vol. 151(C).
    15. Jiang, Haiyan & Li, Wan, 2025. "How does the fair competition policy upgrade enterprises' value chains," International Review of Economics & Finance, Elsevier, vol. 102(C).
    16. Hopp, Christian & Dey, Pascal & Riniker, Maria & Rüdiger, Matthias, 2025. "Financing sustainable entrepreneurship: Unpacking the role of campaign information and risk disclosure in reward-based crowdfunding," Finance Research Letters, Elsevier, vol. 74(C).
    17. D'Arcangelis, Anna Maria & Galloppo, Giuseppe & Guida, Roberto & Paimanova, Viktoriia, 2025. "CSR engagement and financial performance: The case of Italian unrated ESG small caps," International Review of Economics & Finance, Elsevier, vol. 101(C).
    18. Bade, Marco & Reichenbach, Felix, 2025. "Which sustainable development goals favor crowdfunding success?," Finance Research Letters, Elsevier, vol. 71(C).
    19. Georgia Zournatzidou & Dimitrios Farazakis & Ioannis Mallidis & Christos Floros, 2024. "Stochastic Patterns of Bitcoin Volatility: Evidence across Measures," Mathematics, MDPI, vol. 12(11), pages 1-16, May.
    20. Michelino, Francesca & Varriale, Vincenzo & Appio, Francesco & Caputo, Mauro, 2025. "Crowdfunding for sustainable development: Comparing stand-alone and combined applications," Finance Research Letters, Elsevier, vol. 74(C).

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jijfss:v:13:y:2025:i:1:p:3-:d:1559272. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.