Banks’ Business Models and ESG Performance

33 Pages Posted: 27 Jun 2024

See all articles by Carlo Bellavite Pellegrini

Carlo Bellavite Pellegrini

Catholic University of Milan

Peter Cincinelli

Department of Management, University of Bergamo, Italy

Andrea Roncella

Catholic University of the Sacred Heart of Milan

Abstract

In this paper, we study the relationship between banks’ business models and the Environmental, Social and Governance (ESG) performance. We use a threshold regression model (Hansen, 1999) to identify an optimal threshold level in the business models of a sample of 80 European listed banks during 2006 - 2021 time period. We find a significant and positive relationship between the ESG score when the level of capital and stock of deposits are above a certain threshold, highlighting how greater attention to sustainability policies is associated with banks that rely more on deposits as a source of funding. We also find that the ESG score is sensitive to a lower values of income structure, confirming that a greater focus on ESG risks is more in line with banks characterized by traditional activities.

Keywords: Business models, ESG rating, Risk taking, Banks.

Suggested Citation

Bellavite Pellegrini, Carlo and Cincinelli, Peter and Roncella, Andrea, Banks’ Business Models and ESG Performance. Available at SSRN: https://ssrn.com/abstract=4878731 or http://dx.doi.org/10.2139/ssrn.4878731

Carlo Bellavite Pellegrini

Catholic University of Milan ( email )

Largo Gemelli 1
Milan, MI Milano 20123
Italy

Peter Cincinelli (Contact Author)

Department of Management, University of Bergamo, Italy ( email )

Via dei Caniana, 2
Bergamo, 24129
Italy

Andrea Roncella

Catholic University of the Sacred Heart of Milan ( email )

Largo Gemelli, 1
Via Necchi 9
Milan, MI 20123
Italy

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