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Socially responsible banking: Weathering the Covid-19 storm

Author

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  • Chiaramonte, Laura
  • Dreassi, Alberto
  • Girardone, Claudia
  • Piserà, Stefano

Abstract

This paper investigates the impact of socially responsible banking activities on banks’ risk profiles, using data from the period of turmoil caused by the Coronavirus (Covid-19) outbreak in Europe. Our findings show that socially responsible banking activities served as a risk-hedging strategy at the peak of the pandemic. Furthermore, we reveal the role of banks’ environmental and social engagement in reducing the exposure to country-level Covid-19 cases and public perception using a Google Trends sentiment analysis. Finally, in explaining the ESG-bank risk relationship, we identify a mediating role of the Covid-19 “panic” as a viable economic channel.

Suggested Citation

  • Chiaramonte, Laura & Dreassi, Alberto & Girardone, Claudia & Piserà, Stefano, 2024. "Socially responsible banking: Weathering the Covid-19 storm," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 95(C).
    • Handle: RePEc:eee:intfin:v:95:y:2024:i:c:s1042443124000957
    DOI: 10.1016/j.intfin.2024.102029
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    References listed on IDEAS

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    More about this item

    Keywords

    Environmental; Social and Governance (ESG); Covid-19; European Banking; Bank Stability; Google Trends;
    All these keywords.

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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