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Does being a responsible bank pay off? Evidence from the COVID-19 pandemic

Kara, Alper, Ongena, Steven, Yildiz, Yilmaz (2024) Does being a responsible bank pay off? Evidence from the COVID-19 pandemic. Journal of Financial Stability, 74 . Article Number 101317. ISSN 1572-3089. (doi:10.1016/j.jfs.2024.101317) (KAR id:106917)

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https://doi.org/10.1016/j.jfs.2024.101317

Abstract

We investigate whether banks’ initial responses during the first wave of the COVID-19 pandemic in supporting their customers, communities, and governments were perceived as value-enhancing by investors. Using a unique responsible banking measure for a sample of the largest US and European commercial banks, we find a negative relationship between responsible bank behavior and stock market performance, particularly in the first wave of the pandemic. We also find that riskier banks were affected more negatively if they behaved responsibly. Overall, our findings show that banks’ responsible behavior during a crisis reduces, or at best is not relevant to, shareholder value.

Item Type: Article
DOI/Identification number: 10.1016/j.jfs.2024.101317
Uncontrolled keywords: Responsible banking; Market performance; Corporate social responsibility; ESG; COVID-19 pandemic
Subjects: H Social Sciences
Divisions: Divisions > Kent Business School - Division > Department of Accounting and Finance
Funders: University of Kent (https://ror.org/00xkeyj56)
SWORD Depositor: JISC Publications Router
Depositing User: JISC Publications Router
Date Deposited: 19 Aug 2024 11:55 UTC
Last Modified: 09 Oct 2024 14:35 UTC
Resource URI: https://kar.kent.ac.uk/id/eprint/106917 (The current URI for this page, for reference purposes)

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