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Does It Pay to Be Sustainable? Evidence from European Banks

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  • Candida Bussoli
  • Danilo Conte
  • Graziana Letorri
  • Marco Barone

Abstract

This paper aims to explore the relationship between the economic, environmental, social, and corporate governance component of Corporate Social Performance (CSP) and the Corporate Financial Performance (CFP) in the European banking sector. The empirical analyses, based on panel data, are performed on a sample of 70 listed European banks (EU28) over the period 2011-2015. The main results show a significant and positive relationship between the aggregated CSP measure and the average profitability of banks' assets and market capitalization. Furthermore, the social component positively affects the average return on assets and equity; the economic component is positively associated with the performance of prospective profitability and market capitalization; finally, the environmental component is positively associated with the ROAA. Sustainable banks, in line with the stakeholder Theory, through ethical and social policies, might increase their financial and economic performance.

Suggested Citation

  • Candida Bussoli & Danilo Conte & Graziana Letorri & Marco Barone, 2021. "Does It Pay to Be Sustainable? Evidence from European Banks," International Journal of Business and Management, Canadian Center of Science and Education, vol. 14(1), pages 128-128, July.
    • Handle: RePEc:ibn:ijbmjn:v:14:y:2021:i:1:p:128
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    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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