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Bank Deposits and Deposit Rates: The Impact of COVID-19 and the Effect of ESG Scores

In: Corporate Governance in the Banking and Financial Sector

Author

Listed:
  • Alessio Bongiovanni

    (Leeds University Business School, University of Leeds)

  • Jonathan Williams

    (University of Surrey)

Abstract

We consider the effect of the COVID-19 pandemic on deposit flows and prices at bank holding companies in the US. Specifically, we examine whether deposit markets are sensitive to banks’ ESG credentials on the grounds that greater commitment by banks to ESG as evidenced by higher ESG scores is proxy for trust, which is known to dissipate following an exogenous shock. Our empirical evidence shows that depositors used the information embedded in banks’ ESG scores to discipline banks. Following the shock, depositors rewarded high ESG scoring banks with faster growth of noninterest-bearing deposits and willingness to accept lower deposit interest rates.

Suggested Citation

  • Alessio Bongiovanni & Jonathan Williams, 2025. "Bank Deposits and Deposit Rates: The Impact of COVID-19 and the Effect of ESG Scores," Palgrave Macmillan Studies in Banking and Financial Institutions, in: Timothy King & Jonathan Williams (ed.), Corporate Governance in the Banking and Financial Sector, chapter 0, pages 161-182, Palgrave Macmillan.
    • Handle: RePEc:pal:pmschp:978-3-031-83353-3_7
    DOI: 10.1007/978-3-031-83353-3_7
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