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Green Economy and Credit Quality in the European Banking Industry: What are the Opportunities for Sustainability?

In: Business for Sustainability, Volume I

Author

Listed:
  • Elena Bruno

    (University of Pisa)

  • Giuseppina Iacoviello

    (University of Pisa)

  • Mavillonio Maria Saveria

    (University of Pisa)

Abstract

The chapter combines environmental, social and governance rating (ESGr), credit risk (CR), and financial performance (FP) of a sample of European banks in an empirical analysis. We analyzed the dynamics of ESGr and CR using the credit default swaps (CDS) spread. The first finding shows that ESGr enhances the mitigation of CR; therefore, the quality of green credit asset (GCA) and FP could be improved. This result is achieved using the regression technique: the GCA increase can reduce the non-performing loans and improve the solvency ratio. The study can be considered the first empirical attempt on the banking sector in UE to discover the variables that might have a positive correlation of CR, ESGr and FP, providing new perspectives on the financial sustainability in the banking sector.

Suggested Citation

  • Elena Bruno & Giuseppina Iacoviello & Mavillonio Maria Saveria, 2023. "Green Economy and Credit Quality in the European Banking Industry: What are the Opportunities for Sustainability?," Palgrave Studies in Cross-disciplinary Business Research, In Association with EuroMed Academy of Business, in: Demetris Vrontis & Alkis Thrassou & Leonidas Efthymiou & Yaakov Weber & S. M. Riad Shams & Evangelos (ed.), Business for Sustainability, Volume I, chapter 6, pages 117-140, Palgrave Macmillan.
    • Handle: RePEc:pal:pscchp:978-3-031-37361-9_6
    DOI: 10.1007/978-3-031-37361-9_6
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