ESG activity and bank lending during financial crises

Abstract

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Legal origin and bank lending behavior in developing countries: The mediating role of revenue diversification

“…As expected, the coefficients for liquidity are negative and significant at the 1% level, confirming that higher liquidity lowers banks’ inclination to lend. Furthermore, bank concentration has a positive and significant coefficient, in line with earlier studies by Danisman and Tarazi (2024) and Xie et al. (2019), indicating that banks in less concentrated markets charge lower loan rates, thereby fostering increased credit growth.…”

“…Considering spatio‐temporal differences in the banks prospect to expand beyond traditional lending activities, the mediation effect of diversification is studied across different subsamples, including varying income levels and geographical regions. Lastly, unlike previous studies that emphasized the importance of macroeconomic factors (Caglayan & Xu, 2016; Le et al., 2022) and climate change (Aslan et al., 2022; Danisman & Tarazi, 2024), this paper hypothesizes and tests the role of legal origin in shaping banks’ lending behavior.…”

“…Lastly, as there are no perfect instruments, the study conducts additional tests on Equation (3) using propensity score matching (PSM) technique. Legal origin is employed as the treatment variable to estimate its average treatment effects on bank lending behavior, following the approach of Danisman and Tarazi (2024).…”

“…Bank lending plays a central role in promoting financial development by facilitating the flow of funds from savers to borrowers, thereby fostering capital formation (Caglayan & Xu, 2016; Danisman & Tarazi, 2024). However, the ability of banks to lend is significantly constrained by market imperfections arising from information asymmetries between lenders and borrowers.…”

The Sustainability of the Factoring Chain in Europe in the Light of the Integration of ESG Factors

“…The study suggests that aligning bank loan portfolios with ESG principles can be financially advantageous for both banks and their clients. Danisman and Tarazi (2024) explore the role of ESG activity on bank lending during financial crises. They find that banks with strong ESG practices tend to maintain more stable lending practices during financial turmoil.…”