Banking, Competitiveness and Sustainability: The Perspective of the Three Global Actors: US, China, Europe

Abstract

The research presents the interrelationships between banking performance, competitiveness and sustainability of the three banking systems and the impact of each sustainability variable selected on the other macroeconomic indicators in short, medium and long-time horizon. The empirical study involved the use of a panel Auto Regressive Vector methodology and was based on macroeconomic indicators relevant to the performance of the banking system (return on assets, return on equity, an annual growth rate of Gross Domestic Product), as well as indicators that can be assimilated to sustainability (renewable fuels used, CO2 emissions). The dependent variables were return on assets and the annual growth rate of Gross Domestic Product. The global sample analyzed comprises 29 countries, spread over three continents (Europe, North America, Asia), with data collected over a 10-years period (2011-2020). These countries together account for approximately 62% of global GDP (data from 2020). The research results show that as banks invest in green energy and sustainable products, competitiveness will also increase, which will have a negative impact on profitability in the short term. In the medium and long term, this impact will become positive also in terms of profitability increase. This strategic move to develop sustainable business models and to finance a higher percentage of green investments also adds extra competitive advantages, such as reputation and smart differentiation, from other less sustainability-oriented banking systems. The process impacts the systemic level, the macro perspective, the banking organizational level, the micro perspective, together with the perception of the customers.