Corporate Sustainability and Financial Performance of Chinese Banks
Sustainability Accounting, Management and Policy Journal, 8(3), 358-385, 2017
54 Pages Posted: 16 Feb 2018
Date Written: November 5, 2017
Purpose – This paper analyses the connection between the sustainability performance of Chinese banks and their financial indicators to explore whether sustainability regulations can be implemented without decreasing the financial performance of the banking sector.
Design/methodology/approach – The study examined reports and websites of Chinese banks, categorized different corporate sustainability aspects, and conducted panel regression and Granger causality to analyse cause and effect variables.
Findings – The environmental and social performance of Chinese banks increased significantly between 2009 and 2013. Furthermore, a bi-directional causality between financial performance and sustainability performance of Chinese banks has been found. Based on institutional theory, this interaction may be influenced by the Chinese Green Credit Policy.
Research limitations/implications – The findings suggest that corporate sustainability performance and financial performance are not a trade-off but correlate positively. Further research is needed to analyse the effect of financial regulations, such as the Chinese Green Credit Policy.
Practical implications – According to the good management theory by Waddock and Graves (1997) that claims a positive impact of corporate social performance on financial performance, Chinese banks can invest in corporate sustainability to increase their financial success and re-invest parts of the additional returns - also called slack resources - in sustainability activities.
Social implications – Chinese banks are able to influence the economy to become greener and less polluting without sacrificing financial returns.
Originality/value – To the best of our knowledge, this is the first study to explore the sustainability performance of Chinese banks, including their products and services.
Keywords: Banks, China, credit, green economy, good management theory, regulation, corporate sustainability
JEL Classification: G21, G28, G38
Suggested Citation: Suggested Citation