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Loan Origination and Monitoring Guidelines: How Do ESG Indicators Affect Firms’ Probability of Default?

In: Creating Value and Improving Financial Performance

Author

Listed:
  • Egidio Palmieri

    (University of Udine)

  • Enrico Fioravante Geretto

    (University of Udine)

  • Maurizio Polato

    (University of Udine)

Abstract

Considering the new paradigm expressed in EBA LOM guidelines, in this paper, we intend to answer the following research questions: (i) Are ESG factors capable of mitigating and reducing the probability of default of companies?; (ii) To what extent does ESG performance is correlated with a reduction in the likelihood of default?; (iii) Is the risk reduction effect differentiated for companies operating in different geographic areas?. To provide an answer to these research questions, a difference in difference analysis model was applied to a sample of 840 European and American listed companies with annual observations from 2000 to 2021: the data were collected on Bloomberg and Refinitiv DataStream.

Suggested Citation

  • Egidio Palmieri & Enrico Fioravante Geretto & Maurizio Polato, 2023. "Loan Origination and Monitoring Guidelines: How Do ESG Indicators Affect Firms’ Probability of Default?," Palgrave Macmillan Studies in Banking and Financial Institutions, in: Paul Wachtel & Giovanni Ferri & Ewa Miklaszewska (ed.), Creating Value and Improving Financial Performance, chapter 0, pages 59-84, Palgrave Macmillan.
    • Handle: RePEc:pal:pmschp:978-3-031-24876-4_3
    DOI: 10.1007/978-3-031-24876-4_3
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