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A special issue of Sustainability (ISSN 2071-1050). This special issue belongs to the section "Sustainable Management".

Deadline for manuscript submissions: 26 April 2024 | Viewed by 51475

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Special Issue Editors

Prof. Dr. David Aristei

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Guest Editor

Department of Economics, University of Perugia, 06123 Perugia, Italy
Interests: business statistics; banking and finance; microeconometrics; access to credit; sustainable finance
Special Issues, Collections and Topics in MDPI journals

Prof. Dr. Manuela Gallo

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Guest Editor

Department of Economics, University of Perugia, 06123 Perugia, Italy
Interests: banking and finance; corporate finance; bank management; access to finance; sustainable banking
Special Issues, Collections and Topics in MDPI journals

Special Issue Information

Dear Colleagues,

The aim of this special issue is to shed light on the new and challenging issues related to banking management, finance and sustainability.

Sustainable banking incorporates environmental, social and governance (ESG) criteria into traditional banking activity, and makes ESG benefits a key objective of the new banking business. Banks’ managerial and investment choices are made taking into account not only the aspects of risk and return, but also their social and environmental impacts.

Banks play a crucial role in the financial system, being involved in transferring funds from savers to borrowers: the intermediation process is possible because customers trust in banks and in their capability to ensure depositors’ protection. The financial crisis has weakened trust in banks, and in the financial system as a whole, highlighting the necessity for re-establishing a climate of confidence to guarantee an effective financial system, improve economic growth and facilitate monetary policy transmission mechanism to the real economy.

Sustainability thus represents an opportunity for banks, as it contribute to improve trust in the banking system. However, sustainable business must be financially viable, so that it can have a positive impact on banks’ profitability, stimulating the long term growth and resilience of the banking industry and the overall financial stability.

Banks are widely acknowledged as playing a crucial role in achieving the Sustainable Development Goals (SDGs), as they can promote responsible investments and integrate environmental and social criteria into lending and investment strategies. Financial intermediaries can support projects and activities that create a measurable positive economic, social and/or environmental impact, by providing easier access to capital (impact finance). Furthermore, banks can have an active role in promoting financial education and improving financial awareness and inclusion.

This Special Issue of Sustainability will comprise a collection of empirical and theoretical studies covering a wide range of themes related to bank management, finance and sustainability. In particular, we encourage submissions that address issues related (but not limited) to the following main topics:

Sustainable banking management;
Socially responsible investments;
ESG/CSR and banks' management and financial performance;
Banks’ contribution to SDGs;
Impact finance;
Financial literacy and financial education initiatives;
Financial inclusion and access to finance;
Microfinance and sustainability.

Papers selected for this Special Issue will undergo a rigorous peer review process with the aim of rapid and wide dissemination of research results.

Prof. David Aristei
Prof. Manuela Gallo
Guest Editors

Manuscript Submission Information

Manuscripts should be submitted online at www.mdpi.com by registering and logging in to this website. Once you are registered, click here to go to the submission form. Manuscripts can be submitted until the deadline. All submissions that pass pre-check are peer-reviewed. Accepted papers will be published continuously in the journal (as soon as accepted) and will be listed together on the special issue website. Research articles, review articles as well as short communications are invited. For planned papers, a title and short abstract (about 100 words) can be sent to the Editorial Office for announcement on this website.

Submitted manuscripts should not have been published previously, nor be under consideration for publication elsewhere (except conference proceedings papers). All manuscripts are thoroughly refereed through a single-blind peer-review process. A guide for authors and other relevant information for submission of manuscripts is available on the Instructions for Authors page. Sustainability is an international peer-reviewed open access semimonthly journal published by MDPI.

Please visit the Instructions for Authors page before submitting a manuscript. The Article Processing Charge (APC) for publication in this open access journal is 2400 CHF (Swiss Francs). Submitted papers should be well formatted and use good English. Authors may use MDPI's English editing service prior to publication or during author revisions.

Keywords

sustainability
bank management
socially responsible investment
corporate social responsibility
ESG criteria
impact finance
financial inclusion

Published Papers (12 papers)

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Research

24 pages, 955 KiB

Open AccessArticle

Wealthy Private Investors and Socially Responsible Investing: The Influence of Reference Groups

by David Risi, Falko Paetzold and Anne Kellers

Sustainability 2021, 13(22), 12931; https://0-doi-org.brum.beds.ac.uk/10.3390/su132212931 - 22 Nov 2021

Cited by 5 | Viewed by 3439

Abstract

Sustainable development requires a shift from traditionally invested assets to socially responsible investing (SRI), bringing together financial profits and social welfare. Private high-net-worth individuals (HNWIs) are critical for this shift as they control nearly half of global wealth. While we know little about HNWIs’ investment behavior, reference group theory suggests that their SRI engagement is influenced by their identification with and comparison to reference groups. We thus ask: how do reference groups influence the investment behavior of SRI-oriented HNWIs? To answer this question, we analyzed a unique qualitative data set of 55 semi-structured interviews with SRI-oriented HNWIs and industry experts. Our qualitative research found that, on the one hand, the family serves as a normative reference group that upholds the economic profit motive and directly shapes HNWIs to make financial gains from their investments at the expense of social welfare. On the other hand, fellow SRI-oriented HNWIs serve as a comparative reference group that does not impose any concrete requirements on social welfare performance, indirectly influencing SRI-oriented HNWIs to subordinate social concerns to financial profits. Our scholarly insights contribute to the SRI literature, reference group theory, and practice. Full article

(This article belongs to the Special Issue Bank Management, Finance and Sustainability)

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20 pages, 834 KiB

Open AccessArticle

Using Environmental, Social, Governance (ESG) and Financial Indicators to Measure Bank Cost Efficiency in Asia

by Hai-Yen Chang, Lien-Wen Liang and Yu-Luan Liu

Sustainability 2021, 13(20), 11139; https://0-doi-org.brum.beds.ac.uk/10.3390/su132011139 - 09 Oct 2021

Cited by 11 | Viewed by 6131

Abstract

Environmental, social, and governance (ESG) practices have been used as non-financial indicators to measure bank performance worldwide in the last decade. The United Nations (UN) has specified 17 Sustainable Development Goals (SDGs) for the implementation of these ESG concepts. However, it remains unclear whether the costs of ESG have exceeded the benefits. The purpose of this study is to examine the impact of ESG on the cost efficiency of developed and developing Asian banks using a two-step approach comprising stochastic frontier analysis (SFA) and stochastic metafrontier analysis (SMF). The data sample from 2015 to 2018 is separated into two groups: 60 Asian developed economies and 85 developing economies. The results show that banks in the developed Asian economies become more cost-efficient through environmentally friendly activities. The banks in the developing Asian economies increase their cost efficiency by socially responsible activities and improved governance. Moreover, banks in the developed Asian economies outperformed those in the developing Asian economies in terms of technology gap ratio (TGR) and metafrontier cost efficiency (MCE). The results of this study benefit not only investors and bank managers but also the entire banking sector and the world economy. Full article

(This article belongs to the Special Issue Bank Management, Finance and Sustainability)

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21 pages, 800 KiB

Open AccessArticle

Financial Knowledge, Confidence, and Sustainable Financial Behavior

by David Aristei and Manuela Gallo

Sustainability 2021, 13(19), 10926; https://0-doi-org.brum.beds.ac.uk/10.3390/su131910926 - 30 Sep 2021

Cited by 11 | Viewed by 4786

Abstract

This paper analyzes the effect of financial knowledge and confidence in shaping individual investment choices, sustainable debt behavior, and preferences for socially and environmentally responsible financial companies. Exploiting data from the “Italian Literacy and Financial Competence Survey” (IACOFI) carried out by the Bank of Italy in early 2020, we address potential endogeneity concerns in order to investigate the causal effect of objective financial knowledge on individual financial behaviors. To this aim, we perform endogenous probit regressions, using the respondent’s long-term planning attitude, the use of information and communication technology devices, and the financial knowledge of peers as additional instrumental variables. Our main empirical findings show that objective financial knowledge exerts a positive and significant effect on financial market participation and preferences for ethical financial companies. Moreover, we provide strong empirical evidence about the role of confidence biases on individual financial behaviors. In particular, overconfident individuals display a higher probability of making financial investments, experiencing losses due to investment fraud, and being over-indebted. Conversely, underconfident individuals exhibit suboptimal investment choices, but are less likely to engage in risky financial behaviors. Full article

(This article belongs to the Special Issue Bank Management, Finance and Sustainability)

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21 pages, 670 KiB

Open AccessArticle

The Role of External Support on the Implementation of Resource Efficiency Actions: Evidence from European Manufacturing Firms

by David Aristei and Manuela Gallo

Sustainability 2021, 13(17), 9531; https://0-doi-org.brum.beds.ac.uk/10.3390/su13179531 - 24 Aug 2021

Cited by 5 | Viewed by 1768

Abstract

This paper contributes to analyze the relationship between firms’ recourse to different types of external support and adoption of environmental sustainability practices. To this aim, we consider both direct financial support and indirect support, in the form of advice and consulting services, upon which the firm relies on in its efforts to be more resource efficient. The empirical analysis uses data on 6595 manufacturing firms from 35 European countries, taken from the third and fourth waves of the Flash Eurobarometer survey “Small and Medium Enterprises, Resource Efficiency and Green Markets”. Our empirical findings suggest that firms using external financing and external advice are more likely to implement greening investments and practices. Moreover, we provide strong empirical evidence that external support significantly contributes to increase the benefits from the adoption of resource efficiency actions in terms of production cost reduction. This study further contributes to the existing literature by highlighting the heterogenous effects of direct and indirect external support on the environmental sustainability actions of both SMEs and large firms. Full article

(This article belongs to the Special Issue Bank Management, Finance and Sustainability)

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15 pages, 291 KiB

Open AccessArticle

Does Gender Diversity Affect the Environmental Performance of Banks?

by Clara Gallego-Sosa, Yakira Fernández-Torres and Milagros Gutiérrez-Fernández

Sustainability 2020, 12(23), 10172; https://0-doi-org.brum.beds.ac.uk/10.3390/su122310172 - 05 Dec 2020

Cited by 15 | Viewed by 2757

Abstract

Climate change is one of the greatest challenges facing humanity today. Therefore, all segments of society must act together to stop the deterioration of the planet and the depletion of its resources. The business sector must play an active role in acting responsibly toward the environment. Given the importance of this issue, major efforts have been made to analyze the environmental performance of the most polluting sectors. In contrast, other sectors that are also of great interest due to their contribution to sustainable development, such as the banking sector, have been overlooked. Notable factors conditioning performance include aspects of corporate governance such as gender diversity. However, the empirical evidence reveals a lack of consensus regarding the influence of women directors on corporate environmental performance. This background motivates the study of the commitment of the banking sector to reducing their environmental impact and the analysis the influence of board gender diversity on environmental performance. Data for the period 2009 to 2018 on 52 banks from the most polluting Western regions were studied using descriptive statistics and fixed effects econometric estimation to test the relationship between a selection of relevant variables. The key conclusions are that banks are committed to protecting the environment and that there are no significant differences between banks’ commitment to the planet on the basis of board gender diversity. Full article

(This article belongs to the Special Issue Bank Management, Finance and Sustainability)

26 pages, 745 KiB

Open AccessArticle

Doing Good or Avoiding Evil? An Explorative Study of Depositors’ Reasons for Choosing Social Banks in the Pre and Post Crisis Eras

by Nikolas Höhnke

Sustainability 2020, 12(23), 10082; https://0-doi-org.brum.beds.ac.uk/10.3390/su122310082 - 03 Dec 2020

Cited by 1 | Viewed by 1951

Abstract

The global financial crisis is expected to be of great relevance for social banks’ growth of deposits. However, it is still unclear why depositors choose social banks in general, and how the global financial crisis has affected depositors’ choice of social banks. The present paper thus explores a comprehensive set of reasons for choosing social banks, the individual relevance of reasons, as well as differences before and after the global financial crisis. Data was collected through a survey of five social banks, interviews with nine industry experts, and an online survey with 108 social and 413 conventional depositors. Using content analysis, a multi-level system of reasons for choosing social banks was identified, which refers to the social banks’ “good” and conventional banks’ “evil” characteristics. Based on a frequency analysis of codings per category, reasons with potential superior relevance for depositors’ decision-making were explored. A comparison with reasons for choosing conventional banks imply that depositors’ reasons for choosing social banks differ from those for choosing conventional banks in general. The results also indicate that the global financial crisis might have helped social banks’ growth by attracting new customer target groups, who chose social banks because of conventional banks’ “evil” characteristics. Full article

(This article belongs to the Special Issue Bank Management, Finance and Sustainability)

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30 pages, 577 KiB

Open AccessArticle

Do CSR Ratings Affect Loan Spreads? Evidence from European Syndicated Loan Market

by Danilo Drago and Concetta Carnevale

Sustainability 2020, 12(18), 7639; https://0-doi-org.brum.beds.ac.uk/10.3390/su12187639 - 16 Sep 2020

Cited by 5 | Viewed by 2862

Abstract

We investigate whether corporate social responsibility (CSR) ratings affect the syndicated loan spreads paid by European listed firms. By performing ordinary least squares (OLS) pooled regressions on a sample of 1101 syndicated loans granted to European companies, we find evidence that borrowers’ CSR ratings have a significant impact on loan spreads. However, the relationship between CSR ratings and loan spreads is quite complex. Low CSR-rated firms pay higher loan spreads than better CSR-rated firms, but high CSR ratings are not always rewarded by lenders. The benefits of a high CSR rating level are significant only for firms located in countries that pay great attention to sustainability issues. Overall, our work provides a key to reconciling the mixed results obtained in the empirical literature, as we find evidence of a significant lack of homogeneity within the European Union countries regarding the relationship between CSR performance and the cost of debt financing. Full article

(This article belongs to the Special Issue Bank Management, Finance and Sustainability)

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29 pages, 3242 KiB

Open AccessArticle

Perception and Drivers of Financial Constraints for the Sustainable Development

by Tamara Teplova, Tatiana Sokolova, Mariya Gubareva, Kristina Galenskaya and Andrey Teplov

Sustainability 2020, 12(17), 7217; https://0-doi-org.brum.beds.ac.uk/10.3390/su12177217 - 03 Sep 2020

Cited by 3 | Viewed by 2468

Abstract

Financial market imperfections constrain firms’ ability to obtain funds. This is especially true for the former communist bloc countries. However, the restrictions on access to financing and the attitudes of management in these geographies remain overlooked by academic research and represent an important obstacle on the roadmap to sustainable development. The objective of this paper is to fill this gap by analyzing the impact of ownership structure, institutional environment development, and debt market profile on the perception of financial constraints by the representatives of corporate top management from 28 countries of the former communist bloc. Our analysis spans over the period 2002–2013. We apply the probit and Heckman models to investigate nonlinear and multicast effects of the considered factors. We evidence that during the crisis and post-crisis periods, foreign ownership alleviates the restrictions on access to financial resources. We also discuss the role of state ownership. We find that the volume of local currency bond market has a nonlinear U-shape relationship. Our results are useful for policy makers focused on sustainable development of the former communist economies by means of improving access of businesses to financing. Full article

(This article belongs to the Special Issue Bank Management, Finance and Sustainability)

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26 pages, 1064 KiB

Open AccessArticle

Risk-Intolerant but Risk-Taking—Towards a Better Understanding of Inconsistent Survey Responses of the Euro Area Households

by Katarzyna Kochaniak and Paweł Ulman

Sustainability 2020, 12(17), 6912; https://0-doi-org.brum.beds.ac.uk/10.3390/su12176912 - 25 Aug 2020

Cited by 4 | Viewed by 2414

Abstract

The sustainable development of the EU internal market for retail financial services is based on the rules of ‘suitability’, ‘know your client’, and ‘know your product’. The rules ensure that financial institutions (including banks) offer retail clients only products and services that are adequate to their purposes and preferences, including risk tolerance. Our study, however, concerns households for which the above rules are not valid, since they declare risk aversion and possess risky assets. According to the European Union Markets in Financial Instruments Directive and Regulation (MiFID II and MiFIR), the inconsistent information they provide within survey questions should classify them to more compound suitability assessment procedures. In the study, we use nationally representative data for 16 euro area countries from the second wave of the Eurosystem Household Finance and Consumption Survey. Using logit regression, we identify sets of socio-demographic and socio-economic characteristics conducive to the possession of risky assets by risk-averse households in individual countries. To assess their similarity, we use the hierarchical taxonomic method with Ward’s formula. The results of the study showed that risky assets were primarily possessed by risk-averse households that were characterised by high income, including from self-employment, and reference persons having a university degree and at least 55 years of age. The significance of their other characteristics was mainly shaped at the national level. The clear similarity of sets of the characteristics was confirmed only for a few pairs of countries. The information inconsistency that may result from erroneous self-assessments of being risk-averse was recognised in all countries and most often concerned high-income households with reference persons being males with a university degree. In 11 countries, the reason for this inconsistency could also be the inadequacy of assets held, also among senior households. The results provide insights for practitioners and policy. Identification of households providing inconsistent information to financial institutions, with the recognition of its reasons based on easily verifiable characteristics, may prove helpful in suitability assessments. The results confirming the similarity of household profiles requiring special attention between countries may be useful for entities operating cross-border. Due to the collection of information on risk aversion based on the single question self-classification method, conclusions regarding the restrictions of its use should also be considered relevant. In turn, policy implications may relate to consumer protection, since significant fractions of risk-averse households indeed participate in risky assets. Moreover, in selected countries, the risk-averse senior households were recognised as susceptible to making wrong investment decisions. Full article

(This article belongs to the Special Issue Bank Management, Finance and Sustainability)

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18 pages, 255 KiB

Open AccessArticle

Human Capital, Social Capital, and Farmers’ Credit Availability in China: Based on the Analysis of the Ordered Probit and PSM Models

by Jiaojiao Liu, Gangren Zhang, Jun Zhang and Chongguang Li

Sustainability 2020, 12(4), 1583; https://0-doi-org.brum.beds.ac.uk/10.3390/su12041583 - 20 Feb 2020

Cited by 11 | Viewed by 2550

Abstract

Rural credit is very important to the increase of farmers’ income and the development of rural economy, and it has attracted wide attention from scholars. Many scholars have paid attention to the impact of social capital on farmers’ credit availability, but the research conclusions have not yet been unified. In addition, human capital is also one of the important factors that scholars pay attention to. However, the research mainly focuses on farmer education and pays less attention to their health. Based on the China Household Income Project (CHIP2013) database, we evaluated the impact of human capital (education and health of farmers) and social capital on the credit availability of farmers. To ensure the robustness of our results, we used both the ordered probit model and the propensity score matching (PSM) model to carry out the estimations. Therefore, the study not only improves the research framework of the impact of human capital on farmers’ credit availability, but also uses a more accurate method to estimate the net impact of social capital on farmers’ credit availability. The results showed that, firstly, in terms of human capital, farmers’ educational and health levels have a significant positive impact on their formal credit availability, but no significant impact on their informal credit availability. In particular, farmers with a high school education or above are more likely to obtain a formal loan. Secondly, in terms of social capital, interpersonal relationship capital and political relationship capital are beneficial for farmers obtaining loans from formal and informal channels. Organizational relationship capital only has a more significant positive impact on the informal credit availability of farmers. These results imply that formal financial institutions not only pay attention to farmers’ human capital but also their social capital to reduce the risk of lending. However, informal lenders, that is, relatives or friends, pay more attention to the social capital of farmers. Full article

(This article belongs to the Special Issue Bank Management, Finance and Sustainability)

17 pages, 2187 KiB

Open AccessArticle

The Impact of Mobile Money on the Financial Performance of the SMEs in Douala, Cameroon

by Frank Sylvio Gahapa Talom and Robertson Khan Tengeh

Sustainability 2020, 12(1), 183; https://0-doi-org.brum.beds.ac.uk/10.3390/su12010183 - 24 Dec 2019

Cited by 30 | Viewed by 11308

Abstract

Often financially excluded by the traditional banking system, small and medium-sized enterprises (SMEs) in many developing countries have found in mobile money services (MMS) a sustainable alternative. Despite its potential in propelling inclusive growth, the use and adoption of mobile money (MM) by SMEs has generally been low in developing countries, and one of the reasons has been limited data that supported its impact on financial performance. As a result, there was a need to investigate the impact of the mobile money payment and receipt services on the financial performance of the SMEs in Cameroon. This paper implemented a mixed research paradigm with data collected through the administration of a survey questionnaire and from one-on-one in-depth interviews. A sample of 285 SMEs responded to the survey, while 12 owners/managing directors were purposively selected to participate in the personal interviews. Version 25 of the Statistical Package for the Social Sciences (SPSS) software was used to analyse the quantitative data, while the qualitative data was analysed along themes. The results were, after that, triangulated for credibility reasons. The concluding findings indicated that the mobile money payment and receipt services contributed of the order of 73% of the total variance in the turnover of the SMEs in Douala after they had begun to use the technology. By confirming the positive relationship between the use of mobile money services and the financial performance of businesses, it is hoped that all the relevant stakeholders will see this as a possible solution to the financial challenges that SMEs face in developing economies. Full article

(This article belongs to the Special Issue Bank Management, Finance and Sustainability)

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25 pages, 496 KiB

Open AccessArticle

Sustainable Business Practices and Firm’s Financial Performance in Islamic Banking: Under the Moderating Role of Islamic Corporate Governance

by Amin Jan, Maran Marimuthu, Rohail Hassan and Mehreen

Sustainability 2019, 11(23), 6606; https://0-doi-org.brum.beds.ac.uk/10.3390/su11236606 - 22 Nov 2019

Cited by 23 | Viewed by 6774

Abstract

This paper examines the moderating role of Islamic corporate governance on the link between sustainable business practices and the firm’s financial performance. A post-crisis period sustainability data for the decade of 2008–2017 was collected by the study. For data collection, this study used the weighted content method. The Generalized Method of Moments (GMM) statistical test was used for empirical testing. The results of the study found that the link between sustainable business practices with the firm’s financial performance measured from the shareholders’ and the management’s perspective is positive, while the subjected link measured from the market perspective was found to be insignificant. This implies that the market stakeholders of the Islamic banks are reluctant for their bank’s spending on sustainable business practices. Interestingly, the insignificant link between sustainable business practices and market performance became significant with the moderating role of Shariah governance and managerial ownership. It shows that the moderating role of Shariah governance and managerial ownership is giving confidence to market stakeholders of Islamic banks for receiving a higher financial return through sustainable business practices initiatives. These results may provide insights for several policymakers of the Islamic banking industry about integrating vital sustainability practices in their business models and about the balanced moderating role of Islamic corporate governance in the link between sustainable business practice and the firm’s financial performance. It provides a roadmap to the Islamic banking industry for efficient management of sustainability practices from an Islamic perspective and subsequently improvement of financial performance through it. Full article

(This article belongs to the Special Issue Bank Management, Finance and Sustainability)

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