Be good to be wise: Environmental, Social, and Governance awareness as a potential credit risk mitigation factor

IF 9.4 3区 管理学 Q1 BUSINESS, FINANCE Journal of International Financial Management & Accounting Pub Date : 2022-01-18 DOI:10.1111/jifm.12156
Marina Brogi, Valentina Lagasio, Pasqualina Porretta
{"title":"Be good to be wise: Environmental, Social, and Governance awareness as a potential credit risk mitigation factor","authors":"Marina Brogi,&nbsp;Valentina Lagasio,&nbsp;Pasqualina Porretta","doi":"10.1111/jifm.12156","DOIUrl":null,"url":null,"abstract":"<p>Integrating Environmental, Social, and Governance (ESG) factors into credit risk assessment is the new frontier for credit risk management as regulators and investors increasingly require banks to channel loans to “sustainable” borrowers and ultimately foster sustainable growth. Our findings show that higher ESG awareness is strongly associated with better creditworthiness (proxied by the Altman <i>Z</i>-score). We apply a two-step methodology to 3331 companies from various industries and geographies in the 2000–2016 period which reveals that high ESG awareness scores are strongly and very significantly associated with a reduction in firm credit risk. We check the robustness by using the Probability of Default as a dependent variable and an instrumental variable constructed with a factor analysis. Our results support the appropriateness of the introduction of ESG awareness parameters in the creditworthiness assessment of borrowers.</p>","PeriodicalId":46659,"journal":{"name":"Journal of International Financial Management & Accounting","volume":"33 3","pages":"522-547"},"PeriodicalIF":9.4000,"publicationDate":"2022-01-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://onlinelibrary.wiley.com/doi/epdf/10.1111/jifm.12156","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Journal of International Financial Management & Accounting","FirstCategoryId":"91","ListUrlMain":"https://onlinelibrary.wiley.com/doi/10.1111/jifm.12156","RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q1","JCRName":"BUSINESS, FINANCE","Score":null,"Total":0}
引用次数: 0

Abstract

Integrating Environmental, Social, and Governance (ESG) factors into credit risk assessment is the new frontier for credit risk management as regulators and investors increasingly require banks to channel loans to “sustainable” borrowers and ultimately foster sustainable growth. Our findings show that higher ESG awareness is strongly associated with better creditworthiness (proxied by the Altman Z-score). We apply a two-step methodology to 3331 companies from various industries and geographies in the 2000–2016 period which reveals that high ESG awareness scores are strongly and very significantly associated with a reduction in firm credit risk. We check the robustness by using the Probability of Default as a dependent variable and an instrumental variable constructed with a factor analysis. Our results support the appropriateness of the introduction of ESG awareness parameters in the creditworthiness assessment of borrowers.

查看原文
分享 分享
微信好友 朋友圈 QQ好友 复制链接
本刊更多论文
明智行事:环境、社会和治理意识是潜在的信贷风险缓解因素
随着监管机构和投资者越来越多地要求银行向“可持续”借款人提供贷款,并最终促进可持续增长,将环境、社会和治理(ESG)因素纳入信贷风险评估是信贷风险管理的新前沿。我们的研究结果表明,更高的ESG意识与更好的信用度密切相关(以Altman Z-score为代表)。在2000-2016年期间,我们对来自不同行业和地区的3331家公司应用了两步方法,结果表明,高ESG意识分数与公司信用风险的降低密切相关。我们使用违约概率作为因变量和通过因子分析构建的工具变量来检查稳健性。我们的研究结果支持在借款人的信用评估中引入ESG意识参数的适当性。
本文章由计算机程序翻译,如有差异,请以英文原文为准。
求助全文
约1分钟内获得全文 去求助
来源期刊
CiteScore
9.10
自引率
2.00%
发文量
23
期刊介绍: The Journal of International Financial Management & Accounting publishes original research dealing with international aspects of financial management and reporting, banking and financial services, auditing and taxation. Providing a forum for the interaction of ideas from both academics and practitioners, the JIFMA keeps you up-to-date with new developments and emerging trends.
期刊最新文献
Cross‐border cooperation and tax avoidance of U.S. cross‐listed firms Issue Information How does asset redeployability affect stock price crash risk? Integrated reporting quality and negative ESG media coverage: Empirical evidence from South Africa Employee training and bank stability
×
引用
GB/T 7714-2015
复制
MLA
复制
APA
复制
导出至
BibTeX EndNote RefMan NoteFirst NoteExpress
×
×
提示
您的信息不完整,为了账户安全,请先补充。
现在去补充
×
提示
您因"违规操作"
具体请查看互助需知
我知道了
×
提示
现在去查看 取消
×
提示
确定
0
微信
客服QQ
Book学术公众号 扫码关注我们
反馈
×
意见反馈
请填写您的意见或建议
请填写您的手机或邮箱
已复制链接
已复制链接
快去分享给好友吧!
我知道了
×
扫码分享
扫码分享
Book学术官方微信
Book学术文献互助
Book学术文献互助群
群 号:481959085
Book学术
文献互助 智能选刊 最新文献 互助须知 联系我们:info@booksci.cn
Book学术提供免费学术资源搜索服务,方便国内外学者检索中英文文献。致力于提供最便捷和优质的服务体验。
Copyright © 2023 Book学术 All rights reserved.
ghs 京公网安备 11010802042870号 京ICP备2023020795号-1