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The Impact of ESG Scores on Bank Market Value? Evidence from the U.S. Banking Industry

Author

Listed:
  • Ersan Ersoy

    (Faculty of Applied Sciences, Usak University, Uşak 64000, Turkey)

  • Beata Swiecka

    (Institute of Economics and Finance, University of Szczecin, 70-453 Szczecin, Poland)

  • Simon Grima

    (Department of Insurance and Risk Management, Faculty of Economics, Management & Accountancy, University of Malta, MSD2080 Msida, Malta
    Faculty of Business, Economics and Management, University of Latvia, LV-1586 Riga, Latvia)

  • Ercan Özen

    (Faculty of Applied Sciences, Usak University, Uşak 64000, Turkey)

  • Inna Romanova

    (Faculty of Business, Economics and Management, University of Latvia, LV-1586 Riga, Latvia)

Abstract

Although there is a large volume of literature on the relationship between Environmental, Social and Governance (ESG) and firm performance, only a limited number of studies have focused on the banking sector. In addition, most of them used linear models. Therefore, in this study, we examined the impact of ESG and ESG pillar scores (environmental, social, and governance) on the market value of U.S. commercial banks by using linear and non-linear panel regression models over the period of 2016–2020. Moreover, we used the market value as a bank value indicator and included the effect of COVID-19. Results show an inverted U-shaped relationship between market value and ESG and The Social Pillar Score (SPS) and a U-shaped relationship between market value and The Environment Pillar Score (EPS). Findings from this study are important indicators for investment managers and policymakers who want to maximise bank market value while complying with ESG standards.

Suggested Citation

  • Ersan Ersoy & Beata Swiecka & Simon Grima & Ercan Özen & Inna Romanova, 2022. "The Impact of ESG Scores on Bank Market Value? Evidence from the U.S. Banking Industry," Sustainability, MDPI, vol. 14(15), pages 1-14, August.
    • Handle: RePEc:gam:jsusta:v:14:y:2022:i:15:p:9527-:d:879312
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    References listed on IDEAS

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    Cited by:

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    2. Hsiao-Yen Mao & Wen-Min Lu & Hsin-Yen Shieh, 2023. "Exploring the Influence of Environmental Investment on Multinational Enterprises’ Performance from the Sustainability and Marketability Efficiency Perspectives," Sustainability, MDPI, vol. 15(10), pages 1-23, May.
    3. José Ramón Segarra-Moliner & Inmaculada Bel-Oms, 2023. "How Does Each ESG Dimension Predict Customer Lifetime Value by Segments? Evidence from U.S. Industrial and Technological Industries," Sustainability, MDPI, vol. 15(8), pages 1-13, April.
    4. Wang, Qishu, 2023. "Herding behavior and the dynamics of ESG performance in the European banking industry," Finance Research Letters, Elsevier, vol. 58(PD).
    5. Arnone, Massimo & Leogrande, Angelo, 2024. "The Sustainability of the Factoring Chain in Europe in the Light of the Integration of ESG Factors," MPRA Paper 121342, University Library of Munich, Germany.
    6. Mohammed R. M. Salem & Shahida Shahimi & Suhaili Alma’amun, 2024. "Does Mediation Matter in Explaining the Relationship between ESG and Bank Financial Performance? A Scoping Review," JRFM, MDPI, vol. 17(8), pages 1-18, August.

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