CSR and banking soundness: A causal perspective

Abstract

This is the first study to examine the relationship between sustainability and soundness in banking as part of an integrated reporting approach. We consider 12 major European banks over the period 2006–2016. To test the relationship, two indexes were constructed, the sustainable performance index, which attempts to measure sustainability, and the banking soundness index, which measures bank soundness. The results show a bidirectional causality between sustainability and banking soundness. More specifically, soundness encourages banks to engage in sustainable development activities, while the implementation of a sustainable development approach has a negative effect on banking soundness. Our research contributes to the literature on this topic in two ways. First, we propose a new method for measuring banking soundness based on a Bayesian approach. This approach allows us to study a large number of criteria and allows us to determine proactively the importance and the contribution of different determinants in achieving soundness. In addition, to the best of our knowledge, this is the first study that attempts to study the relationship between bank soundness and sustainability.

ESG controversies and bank risk taking

“…In particular, since stakeholder engagement in sustainable development pushes banks to behave ethically and responsibly (ben Abdallah et al, 2020; Galletta, Mazzù, Naciti, et al, 2021; Khattak & Saiti, 2021; Raut et al, 2017; Scholtens, 2009), banks' compliance with ESG criteria should match their actions against commitments to reduce ESG controversies. Therefore, if a scandal occurs, the bank involved is penalized, and this affects its overall ESG score and grading.…”

Cluster analysis of the economic activity of Slovak companies regarding potential indicators of earnings management

“…They found that discretionary accrual management overestimates the company, causing its stock prices to rise. The study [8] mentions the topic of earnings management in connection with the analysis of the relationship between sustainability and reliability in banking. In the study [9], the authors deal with the influence of the result of earnings management from the point of view of the interest of shareholders towards the interests of the company's managers and also the methods of earnings management on the credibility of the company for shareholders.…”

Islamic Bank Sustainability in Indonesia: Value and Financial Performances Based on Social Responsibility and Green Finance

“…Sustainability points are customer satisfaction, good profitability, superior performance in the medium and long-term, and a contribution to the whole financial system by controlling and monitoring risk levels. 14 In contrast to the current developing theory, implementing sustainability is by implementing CSR. According to Shariah principles, the CSR concept is more than wanting to get a positive image and long-term impact but rather to the dimensions of service to God, environment and society.…”