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Board Characteristics, Social Trust and ESG Performance in the European Banking Sector

Author

Listed:
  • Bruna Miranda

    (Faculty of Economics, University of Porto, 4200-464 Porto, Portugal)

  • Catarina Delgado

    (Faculty of Economics, University of Porto, CEF.UP, 4200-464 Porto, Portugal
    Faculty of Economics, University of Porto, LIAAD/ INESC TEC, 4200-465 Porto, Portugal)

  • Manuel Castelo Branco

    (Faculty of Economics, University of Porto, CEF.UP and OBEGEF 4200-464 Porto, Portugal)

Abstract

The aim of this study is to examine the impacts of board size, gender diversity and independence on ESG performance whilst also examining the impact of country-level social trust on such performance. We perform a panel data analysis and the least squares method for a sample of 75 European banks and a time span of 4 years from 2016 to 2019. We find that ESG performance is positively associated with board gender diversity and independence, and negatively associated with board size. Surprisingly, we find a negative relationship between country-level social trust and ESG performance. This is an important finding that we interpret as being related to the loss of confidence in the banking sector in the wake of the 2008 financial crisis. To regain such trust, the banking sector is likely to have suffered higher social pressure to engage in ESG activities in countries where social trust is lower.

Suggested Citation

  • Bruna Miranda & Catarina Delgado & Manuel Castelo Branco, 2023. "Board Characteristics, Social Trust and ESG Performance in the European Banking Sector," JRFM, MDPI, vol. 16(4), pages 1-17, April.
    • Handle: RePEc:gam:jjrfmx:v:16:y:2023:i:4:p:244-:d:1125135
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    References listed on IDEAS

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    2. Shen, Chung-Hua & Wu, Meng-Wen & Chen, Ting-Hsuan & Fang, Hao, 2016. "To engage or not to engage in corporate social responsibility: Empirical evidence from global banking sector," Economic Modelling, Elsevier, vol. 55(C), pages 207-225.
    3. Sara De Masi & Agnieszka Słomka‐Gołębiowska & Claudio Becagli & Andrea Paci, 2021. "Toward sustainable corporate behavior: The effect of the critical mass of female directors on environmental, social, and governance disclosure," Business Strategy and the Environment, Wiley Blackwell, vol. 30(4), pages 1865-1878, May.
    4. Asif Saeed & Robert Sroufe, 2021. "Performance, Risk, and Cost of Capital: Trends and Opportunities for Future CSR Research," JRFM, MDPI, vol. 14(12), pages 1-20, December.
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    2. SangRyeong Lee & Jin-Woo Park & DongRyeol Choi, 2023. "The Effects of ESG Management on Business Performance: The Case of Incheon International Airport," Sustainability, MDPI, vol. 15(24), pages 1-22, December.
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    5. Kepas Antoni Adrianus Manurung & Hermanto Siregar & Dedi Budiman Hakim & Idqan Fahmi & Tanti Novianti, 2024. "Business Model and Strategy for Sustainable Lending of State-Owned Banks in Indonesia," JRFM, MDPI, vol. 17(9), pages 1-32, September.

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