Corporate ESG Profiles and Banking Relationships

• 成果类型: Article
• 署名作者: Houston, Joel F.; Shan, Hongyu
• 署名单位: State University System of Florida; University of Florida; Fordham University
• 刊物名称: REVIEW OF FINANCIAL STUDIES
• ISSN/ISSBN: 0893-9454
• DOI: 10.1093/rfs/hhab125
• 发表日期: 2022
• 页码: 3373
• 关键词: LENDING RELATIONSHIPS; SOCIAL-RESPONSIBILITY; governance; INFORMATION; externalities; COMPETITION; management; IMPACT; FIRMS; loans

摘要

We show that banking relationships promote corporate environmental, social, and governance (ESG) policies. Specifically, banks are more likely to grant loans to borrowers with ESG profiles similar to their own and positively influence the borrower's subsequent ESG performance. Their influence is more pronounced when (1) banks have significantly better ESG ratings than borrowers and (2) borrowers are bank dependent. We exploit M&A among lenders as a source of quasi-exogenous variation in the lender's ESG standard to alleviate endogeneity concerns. Overall, our study presents the first evidence on the interplay between responsible bank lending and borrowers' ESG behavior.