Discussion paper

DP18108 How did banks' ESG conduct affect financial performance and lending during COVID-19?

This paper examines the link between ESG conduct and banks' stock performance during the COVID-19 crisis using a large global sample of banks. We find that a one standard deviation increase in a bank's ESG score is associated on average with a 0.14 percentage point lower daily stock returns during the onset of the COVID-19 pandemic. Examining the potential drivers behind the negative impact of the ESG conduct, we show that banks with a higher fraction of retail investors are more affected. Last, we provide evidence for a negative association between banks' ESG performance and their lending in times of COVID-19, which is again relatively more pronounced for banks with a higher share of retail ownership.

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Citation

Dursun-de Neef, O, J Forchieri, T Gehrig and A Schandlbauer (2023), ‘DP18108 How did banks' ESG conduct affect financial performance and lending during COVID-19?‘, CEPR Discussion Paper No. 18108. CEPR Press, Paris & London. https://cepr.org/publications/dp18108