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Ego versus Environment? How Overconfident Bank CEOs Delay Joining the Green Club That Would Have Them as a Member

Author

Listed:
  • Kwabena A. Addo

    (Utrecht University)

  • Shams Pathan

    (University of Newcastle - Newcastle University Business School)

  • Steven Ongena

    (University of Zurich - Department Finance; Swiss Finance Institute; KU Leuven; NTNU Business School; Centre for Economic Policy Research (CEPR))

Abstract

We investigate how CEO overconfidence influences banks' decisions to join the United Nations Environment Programme Finance Initiative. Analyzing 13,000 bank-year observations, spanning the last quarter century, with a duration model, we find that overconfident CEOs delay participation by reducing the likelihood of joining by 15% annually. This effect is stronger in large, profitable, deposit-funded banks and persists across various CEO demographics. Our findings reveal how behavioral biases shape strategic decisions, highlighting overconfidence as a barrier to timely sustainability commitments. These insights underscore the importance of leadership traits in driving-or hindering-progress in green finance.

Suggested Citation

  • Kwabena A. Addo & Shams Pathan & Steven Ongena, 2025. "Ego versus Environment? How Overconfident Bank CEOs Delay Joining the Green Club That Would Have Them as a Member," Swiss Finance Institute Research Paper Series 25-20, Swiss Finance Institute.
    • Handle: RePEc:chf:rpseri:rp2520
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    File URL: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=5146120
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    More about this item

    Keywords

    CEO overconfidence; green bank alliances; green finance; duration model;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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