Effect of ESG on Banking Sector
| Název práce v češtině: | Dopad ESG na bankovní sektor |
|---|---|
| Název v anglickém jazyce: | Effect of ESG on Banking Sector |
| Klíčová slova: | Bankovní sektor, ESG hodnocení, ESG, Hodnota banky |
| Klíčová slova anglicky: | Banking sector, ESG performance, ESG, Bank value |
| Akademický rok vypsání: | 2021/2022 |
| Typ práce: | bakalářská práce |
| Jazyk práce: | angličtina |
| Ústav: | Institut ekonomických studií (23-IES) |
| Vedoucí / školitel: | Mgr. Magda Pečená, Ph.D. |
| Řešitel: | skrytý - zadáno vedoucím/školitelem |
| Datum přihlášení: | 13.06.2022 |
| Datum zadání: | 13.06.2022 |
| Datum a čas obhajoby: | 11.09.2023 09:00 |
| Místo konání obhajoby: | Opletalova, O105, místnost č. 105 |
| Datum odevzdání elektronické podoby: | 01.08.2023 |
| Datum proběhlé obhajoby: | 11.09.2023 |
| Oponenti: | Mgr. Lukáš Petrásek |
| Seznam odborné literatury |
| Batae, Oana, Feleaga, Liliana, Dragomir, Voicu, 2020. Environmental, social, governance (ESG), and financial performance of European banks. Journal of Accounting and Management Information Systems. 19, 480-501.
Buallay, Amina, 2019. Is sustainability reporting (ESG) associated with performance? Evidence from the European banking sector. Management of Environmental Quality. Vol. 30, No. 1, pp. 98-115. Ersoy, Ersan, Swiecka, Beata, Grima, Simon, Özen, Ercan, Romanova, Inna, 2022. The Impact of ESG Scores on Bank Market Value? Evidence from the U.S. Banking Industry. Sustainability. 14(15):9527. Fabian, Jakub, 2022. ESG v bankovním risk management. Brno. Bachelor's thesis. Masaryk University. Faculty of Economics and Administration. Thesis supervisor Lukasz Prorokowski. Friede, Gunnar, Busch, Timo, Bassen, Alexander, 2015. ESG and financial performance: aggregated evidence from more than 2000 empirical studies. Journal of Sustainable Finance and Investment. vol. 5, no. 4: 210-233. Huang, Danny Z.X, 2019. Environmental, social and governance (ESG) activity and firm performance: a review and consolidation. Accounting and Finance. acfi.12569. Prokš, Petr, 2022. Effect of Green New Deal on investment funds. Praha. Bachelor’s thesis. Charles University. Faculty of Social Sciences. Thesis supervisor Magda Pečená. |
| Předběžná náplň práce v anglickém jazyce |
| Research question and motivation
The main research question I intend to study is what effects the set of environmental, social and governance issues and its score has on the performance and profitability of the European banking sector. Environmental, social, and corporate governance is an approach to evaluate the extent to which a corporation works on behalf of social and climate and general governance goals that go beyond the corporation's role to maximize profits. In my thesis, I am going to analyze, how these sets of issues have affected the performance metrics and how they can impact the way banks structure their business model and plans in the future. In recent years, European policymakers have increased their efforts to create a regulatory framework for improving sustainability in the financial system. Banks have alternatively perceived sustainability as a mean to increase their reputation, and also promote trust and credibility. The ESG combined score is a measure of a company’s exposure to long-term environmental, social, and governance risks, that are frequently overlooked during traditional financial analyses. ESG rating agencies are third-party companies (such as MSCI) that specialize in ESG scoring. ESG reporting is not mandatory for all organizations yet. However, some are required to make disclosures under the Non-financial Reporting Directive and Sustainable Finance Disclosure Regulation. ESG scoring has 3 Pillars: The Environment Pillar Score (EPS) includes sustainable use of resources, emissions, and innovation in reducing environmental footprints. The Social Pillar Score (SPS) includes job satisfaction, workplace health and safety, diversity, equality, and human rights. The Governance Pillar Score (GPS) includes management structure, equal treatment of shareholders, and Corporate Social responsibility (CSR) strategy, reporting and transparency. Contribution Banks’ ESG performance and its relationship with corporate financial performance represents a field of continuous interest for researchers and practitioners. Previous studies have mixed results (Batae, Feleaga, Dragomir, 2020). Some existing research investigating the effect of ESG on bank value and performance has assumed that the relationship is linear. However, different studies have found a non-linear relationship between ESG activity and bank market value, where lower levels of ESG activity indicate a positive impact on the market value of banks. The aim of the thesis is to contribute to existing literature and to broaden the existing research on the effect of ESG. This thesis will seek to prove what effects the ESG have on the market value and performance of banks. Methodology I will use the data provided by Thomson Reuters Eikon, Sustainalytics and MSCI, to study ESG scores. I intend to use the Banker’s website data to study bank value, performance and profitability, depending on their declarations and policies regarding ESG. I plan to analyze European banks' market value and performance in the 2017-2021 period. I will be using the OLS econometric method. H1: Above-average ESG scores have a significant positive impact on a bank‘s market value H2: Above-average ESG scores have a significant negative impact on a bank‘s market value H3: Below Average ESG scores have a significant positive impact on a bank‘s market value H4: Below Average ESG scores have a significant negative impact on a bank‘s market value H5: H1-4 are rejected, non-linear relationship between ESG scores and bank’s market value Outline Abstract Introduction 1. structure of the thesis 2. topic importance 3. how I add to existing research 4. research motivation Literature review and hypotheses 1. literature review and previous studies 2. hypotheses Methodology 1. sample and data sources Results 1. rejecting / not rejecting hypotheses Conclusion 1. general analysis of the results 2. recapitulation and evaluation of research hypotheses 3. suggestions for future research |