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How does bank branch expansion affect ESG: Evidence from Chinese commercial banks

Author

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  • Tian, Zongtao
  • Shen, Yongchang
  • Chen, Zhibin

Abstract

This research examines the relationship between bank branch expansion and ESG through the lens of geographical proximity. By utilizing panel data from Chinese listed firms during the 2010–2020 period, our results provide robust evidence that bank branch expansion promotes firms to fulfill ESG. Through increased bank competition and reduced distance between banks and enterprises, bank branch expansion contributes to ESG by strengthening financial support and optimizing informational efficiency. Additional analyses reveal that bank branch expansion enhances ESG in firms with financial backgrounds on boards, state-owned enterprises, firms with higher digital transformation and located in a superior legal environment. Overall, these findings reveal the influence of bank branch expansion on the non-financial behavior of firms and provide new empirical evidence for exploring the motivation for ESG.

Suggested Citation

  • Tian, Zongtao & Shen, Yongchang & Chen, Zhibin, 2024. "How does bank branch expansion affect ESG: Evidence from Chinese commercial banks," Economic Analysis and Policy, Elsevier, vol. 82(C), pages 502-514.
    • Handle: RePEc:eee:ecanpo:v:82:y:2024:i:c:p:502-514
    DOI: 10.1016/j.eap.2024.03.025
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    More about this item

    Keywords

    Bank branch expansion; ESG; Slack resource; Stakeholder theory; Geographic Proximity;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics

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