ESG Performance and Bank Risk-Taking in Developed and Developing Countries
The Moderating Role of Environmental Uncertainty
Bibliographic Data
| ID | 22007151 |
|---|---|
| Authors | Changjun Zheng (Huazhong University of Science and Technology), Meliev Murod (Huazhong University of Science and Technology, corresponding author), Md Abdul Mannan Khan (0000-0003-1584-7485, Gopalganj Science and Technology University, corresponding author), Mijanur Rahman (International Islamic University Chittagong, Bangladesh), M D Rahman (0000-0002-7569-8859, International Islamic University Chittagong), Trina Saha (0000-0002-7054-0729, Noakhali Science and Technology University), Ashik-Uz-Zaman (Gopalganj Science and Technology University) |
| Year | 2026 |
| Volume | 16 |
| Issue | 1 |
| Publication date | 2026-01-01 |
| Open Access | Yes |
| Type | ARTICLE |
| Venue | SAGE Open (JOURNAL) |
| Journal identifiers | ISSN: 2158-2440 • E-ISSN: 2158-2440 |
| Publisher | SAGE Publications (PUBLISHER • US) |
| DOI | 10.1177/21582440261425935 |
| OpenAlex | W7131100703 |
| Language | EN |
| References cited | 102 |
This article examines the linear and non-linear relationships between environmental, social, and governance (ESG) performance and bank risk-taking in developed and emerging economies, with a focus on the moderating effects of environmental uncertainty. This paper employs a cross-country unbalanced sample of 315 listed banks in China and the USA over the 2011 to 2022 period. The authors employ a two-step generalized methods of moments (2sGMM) regression model to mitigate potential endogeneity issues. The two-stage least squares (2SLS) regression technique was also used for the robustness check. The findings disclose a significant negative relationship between ESG performance and bank risk-taking, highlighting that higher ESG performance generally mitigates risk exposure. Additionally, the analysis shows a non-linear, U-shaped relationship, suggesting that while ESG practices initially reduce risk, there is a threshold beyond which the benefits diminish. Moreover, environmental uncertainty significantly moderates the ESG performance-risk-taking nexus, especially in the Chinese banking sector. These findings highlight the trade-offs between enhancing sustainability practices and managing external volatility. These findings embrace the robust results after using alternative methods and individual components of ESG performance. This article also contributes to the growing body of literature by providing valuable policy insights into the importance of ESG consideration in enhancing bank stability while navigating global uncertainties
China · Corporate governance · Endogeneity · Moderation · Regression analysis · Sustainability · Corporate Social Responsibility Reporting · Energy, Environment, Economic Growth · Sustainable Finance and Green Bonds
| Highly cited | No |
|---|