Sustainable Development Goals and Bank Profitability: International Evidence

• Autorzy: Peterson K. Ozili
• Języki publikacji: EN

Abstrakty

EN

This article explores the impact of achieving the Sustainable Development Goals on bank profitability. The study considers multiple indicators of Sustainable Development Goals and bank profitability across 28 countries. The findings demonstrate that achieving specific Sustainable Development Goals leads to a significant improvement in bank profitability. More specifically, achieving good health and well-being leads to an increase in bank non-interest income. Providing clean water and sanitation for all also increases bank return on assets. On the other hand, taking strong action to combat climate change results in decreased bank return on assets. Additionally, attaining quality education and promoting affordable and clean energy sources lead to an increase in bank return on equity. The regional findings indicate that achieving the Sustainable Development Goals has varying impacts on bank profitability measures across banks in Europe, Asia, and Africa.(original abstract)

Słowa kluczowe

EN

Sustainable development; Profitability; Profitability of banks

PL

Rozwój zrównoważony; Rentowność; Rentowność banków

• Czasopismo: Modern Finance
• Rocznik: 2023
• Tom: 1
• Numer: nr 1
• Strony: 70--92

Twórcy

autor

Peterson K. Ozili

• Central Bank of Nigeria

Bibliografia

• Al Lawati, H., & Hussainey, K. (2022). Does Sustainable Development Goals Disclosure Affect Corporate Financial Performance? Sustainability, 14(13), 7815. https://doi.org/10.3390/su14137815.
• Albertazzi, U., & Gambacorta, L. (2009). Bank profitability and the business cycle. Journal of Financial Stability, 5(4), 393-409. https://doi.org/10.1016/j.jfs.2008.10.002.
• Anton, S. G., & Nucu, A. E. A. (2020). The effect of financial development on renewable energy consumption. A panel data approach. Renewable Energy, 147, 330-338. https://doi.org/10.1016/j.renene.2019.09.005.
• Avrampou, A., Skouloudis, A., Iliopoulos, G., & Khan, N. (2019). Advancing the Sustainable Development Goals: Evidence from leading European banks. Sustainable Development, 27(4), 743-757. https://doi.org/10.1002/sd.1938.
• Bahl, K., Kiran, R., & Sharma, A. (2023). Scaling Up Banking Performance for the Realisation of Specific Sustainable Development Goals: The Interplay of Digitalisation and Training in the Transformation Journey. Sustainability, 15(18), 13798. https://doi.org/10.3390/su151813798.
• Bain, R., Johnston, R., Mitis, F., Chatterley, C., & Slaymaker, T. (2018). Establishing Sustainable Development Goal baselines for household drinking water, sanitation, and hygiene services. Water, 10(12), 1711. https://doi.org/10.3390/w10121711.
• Barua, S. (2020). Financing Sustainable Development Goals: A review of challenges and mitigation strategies. Business Strategy & Development, 3(3), 277-293. https://doi.org/10.1002/bsd2.94.
• Bernstein, S. (2017). The United Nations and the governance of Sustainable Development Goals. Governing through goals: Sustainable Development Goals as governance innovation, 213-239. https://doi.org/10.7551/mitpress/9780262035620.003.0009.
• Bolanle, A. B., Adebiyi, S. O., & Muyideen, A. A. (2012). Corporate social responsibility and profitability of Nigeria banks causal relationship. Research Journal of Finance and Accounting, 3(1), 6-17.
• Bolton, B. J. (2013). Corporate social responsibility and bank performance. Available at SSRN 2277912. https://doi.org/10.2139/ssrn.2277912.
• Borio, C., Gambacorta, L., & Hofmann, B. (2017). The influence of monetary policy on bank profitability. International Finance, 20(1), 48-63. https://doi.org/10.1111/infi.12104.
• Brollo, F., Hanedar, E., & Walker, M. S. (2021). Pakistan: Spending Needs for Reaching Sustainable Development Goals (SDGs). International Monetary Fund. Washington D.C. https://doi.org/10.2139/ssrn.4026282.
• Buallay, A., Fadel, S. M., Alajmi, J., & Saudagaran, S. (2020). Sustainability reporting and bank performance after financial crisis: evidence from developed and developing countries. Competitiveness Review: An International Business Journal, 31(4), 747- 770. https://doi.org/10.1108/CR-04-2019-0040.
• Caby, J., Ziane, Y., & Lamarque, E. (2022). The impact of climate change management on banks profitability. Journal of Business Research, 142, 412-422. https://doi.org/10.1016/j.jbusres.2021.12.078.
• Chang, D. S., & Kuo, L. C. R. (2008). The effects of sustainable development on firms' financial performance-an empirical approach. Sustainable Development, 16(6), 365-380. https://doi.org/10.1002/sd.351.
• Choudhury, T., Kamran, M., Djajadikerta, H. G., & Sarker, T. (2021). Can banks sustain the growth in renewable energy supply? International evidence. The European Journal of Development Research, 1-31. https://doi.org/10.1057/s41287-021-00492-z.
• Cosma, S., Venturelli, A., Schwizer, P., & Boscia, V. (2020). Sustainable development and European banks: A nonfinancial disclosure analysis. Sustainability, 12(15), 6146. https://doi.org/10.3390/su12156146.
• Costa-Climent, R., & Martínez-Climent, C. (2018). Sustainable profitability of ethical and conventional banking. Contemporary Economics, 12(4), 519-531.
• De Paz, C., Muller, M., Munoz Boudet, A. M., & Gaddis, I. (2020). Gender dimensions of the COVID-19 pandemic. World Bank Publications. https://doi.org/10.1596/33622.
• Gangi, F., Meles, A., D'Angelo, E., & Daniele, L. M. (2019). Sustainable development and corporate governance in the financial system: Are environmentally friendly banks less risky? Corporate Social Responsibility and Environmental Management, 26(3), 529-547. https://doi.org/10.1002/csr.1699.
• Goyal, P., & Rahman, Z. (2014). Corporate sustainability performance and firm performance association: A literature review. International Journal of Sustainable Strategic Management, 4(4), 287-308. https://doi.org/10.1504/IJSSM.2014.070843.
• Goyal, P., Rahman, Z., & Kazmi, A. A. (2013). Corporate sustainability performance and firm performance research: Literature review and future research agenda. Management Decision, 51(2), 361-379. https://doi.org/10.1108/00251741311301867.
• Gupta, A. K., & Gupta, N. (2020). Effect of corporate environmental sustainability on dimensions of firm performance-Towards sustainable development: Evidence from India. Journal of Cleaner Production, 253, 119948. https://doi.org/10.1016/j.jclepro.2019.119948.
• Hasan, M. B., & Hossain, M. N. (2022). Green finance and sustainable development: A case of the Bangladesh economy. In Handbook of Research on Big Data, Green Growth, and Technology Disruption in Asian Companies and Societies (pp. 58-81). IGI Global. https://doi.org/10.4018/978-1-7998-8524-5.ch004.
• Hasan, M. B., Rashid, M. M., Hossain, M. N., Rahman, M. M., & Amin, M. R. (2023). Using green and ESG assets to achieve post- COVID-19 environmental sustainability. Fulbright Review of Economics and Policy. https://doi.org/10.1108/FREP-04-2022-0026.
• Heirman, K. A., Gill, J. C., & Caven, S. (2021). Decent work and economic growth. In Geosciences and the Sustainable Development Goals (pp. 183-207). Springer, Cham. https://doi.org/10.1007/978-3-030-38815-7_8.
• Huang, Q. (2020). Ownership concentration and bank profitability in China. Economics Letters, 196, 109525. https://doi.org/10.1016/j.econlet.2020.109525.
• Hutton, G. (2016). Can we meet the costs of achieving safely managed drinking water, sanitation, and hygiene services under the new Sustainable Development Goals? Journal of Water, Sanitation and Hygiene for Development, 6(2), 191-194. https://doi.org/10.2166/washdev.2016.037.
• Jan, A., Rahman, H.U., Zahid, M., Salameh, A.A., Khan, P.A., Al-Faryan, M.A.S., Aziz, R.B.C. and Ali, H.E., (2023). Islamic cor-porate sustainability practices index aligned with SDGs towards better financial performance: Evidence from the Malaysian and Indonesian Islamic banking industry. Journal of Cleaner Production, 405, 136860. https://doi.org/10.1016/j.jclepro.2023.136860.
• Jawaad, M., & Zafar, S. (2020). Improving sustainable development and firm performance in emerging economies by implementing green supply chain activities. Sustainable Development, 28(1), 25-38. https://doi.org/10.1002/sd.1962.
• Judkins, R. R., Fulkerson, W., & Sanghvi, M. K. (1993). The dilemma of fossil fuel use and global climate change. Energy & Fuels, 7(1), 14-22. https://doi.org/10.1021/ef00037a004.
• Kharas, H., Prizzon, A., & Rogerson, A. (2014). Financing the Post-2015 Sustainable Development Goals. Overseas Development Institute, London.
• Lagoarde-Segot, T. (2020). Financing the Sustainable Development Goals. Sustainability, 12(7), 2775. https://doi.org/10.3390/su12072775.
• Lee, C. C., Yang, S. J., & Chang, C. H. (2014). Non-interest income, profitability, and risk in the banking industry: A cross-country analysis. The North American Journal of Economics and Finance, 27, 48-67. https://doi.org/10.1016/j.najef.2013.11.002.
• Levine, R. (2005). Finance and growth: theory and evidence. Handbook of Economic Growth, 1, 865-934. https://doi.org/10.1016/S1574-0684(05)01012-9.
• Lior, N., Radovanović, M., & Filipović, S. (2018). Comparing sustainable development measurement based on different priorities: Sustainable Development Goals, economics, and human well-being-Southeast Europe case. Sustainability Science, 13(4), 973-1000. https://doi.org/10.1007/s11625-018-0557-2.
• Littig, B. (2018). Good work? Sustainable work and sustainable development: a critical gender perspective from the Global North. Globalizations, 15(4), 565-579. https://doi.org/10.1080/14747731.2018.1454676.
• Lopez, M., Garcia, A., & Rodriguez, L. (2007). Sustainable development and corporate performance: A study based on the Dow Jones sustainability index. Journal of Business Ethics, 75(3), 285-300. https://doi.org/10.1007/s10551-006-9253-8.
• Meena, R. (2013). Green banking: As an initiative for sustainable development. Global Journal of Management and Business Studies, 3(10), 1181-1186.
• Molyneux, P., & Thornton, J. (1992). Determinants of European bank profitability: A note. Journal of Banking & Finance, 16(6), 1173-1178. https://doi.org/10.1016/0378-4266(92)90065-8.
• Odetayo, T. A., Adeyemi, A. Z., & Sajuyigbe, A. S. (2014). Impact of corporate social responsibility on the profitability of Nigeria banks. International Journal of Academic Research in Business and Social Sciences, 4(8), 252. https://doi.org/10.6007/IJARBSS/v4-i8/1094.
• Omer, A. M. (2008). Energy, environment, and sustainable development. Renewable and Sustainable Energy Reviews, 12(9), 2265-2300. https://doi.org/10.1016/j.rser.2007.05.001.
• Ozili, P. K. (2017). Bank profitability and capital regulation: Evidence from listed and non-listed banks in Africa. Journal of African Business, 18(2), 143-168. https://doi.org/10.1080/15228916.2017.1247329.
• Ozili, P. K. (2021). Circular economy, banks, and other financial institutions: What's in it for them? Circular Economy and Sustainability, 1(3), 787-798. https://doi.org/10.1007/s43615-021-00043-y.
• Ozili, P. K., & Arun, T. G. (2023). Does economic policy uncertainty affect bank profitability? International Journal of Managerial Finance, 19(4), 803-830. https://doi.org/10.1108/IJMF-04-2022-0177.
• Ozili, P. K., & Uadiale, O. (2017). Ownership concentration and bank profitability. Future Business Journal, 3(2), 159-171. https://doi.org/10.1016/j.fbj.2017.07.001.
• Peeters, H. (2005). Sustainable development and the role of the financial world. In The World Summit on Sustainable Development (pp. 241-274). Springer, Dordrecht. https://doi.org/10.1007/1-4020-3653-1_11.
• Phan, T. T. H., Tran, H. X., Le, T. T., Nguyen, N., Pervan, S., & Tran, M. D. (2020). The relationship between sustainable development practices and financial performance: A case study of textile firms in Vietnam. Sustainability, 12(15), 5930. https://doi.org/10.3390/su12155930.
• Quadrelli, R., & Peterson, S. (2007). The energy-climate challenge: Recent trends in CO2 emissions from fuel combustion. Energy Policy, 35(11), 5938-5952. https://doi.org/10.1016/j.enpol.2007.07.001.
• Ramos, D. L., Chen, S., Rabeeu, A., & Abdul Rahim, A. B. (2022). Does SDG Coverage influence firm performance? Sustainability, 14(9), 4870. https://doi.org/10.3390/su14094870.
• Sergi, B. S., Popkova, E. G., Borzenko, K. V., & Przhedetskaya, N. V. (2019). Public-private partnerships as a mechanism of financing sustainable development. In Financing Sustainable Development (pp. 313-339). Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-16522-2_13.
• Shahbaz, M., Raghutla, C., Chittedi, K. R., Jiao, Z., & Vo, X. V. (2020). The effect of renewable energy consumption on economic growth: Evidence from the renewable energy country attractive index. Energy, 207, 118162. https://doi.org/10.1016/j.en-ergy.2020.118162.
• Stock, J. H., & Watson, M. W. (2008). Heteroskedasticity-robust standard errors for fixed effects panel data regression. Econometrica, 76(1), 155-174. https://doi.org/10.1111/j.0012-9682.2008.00821.x.
• Sun, H. P., Sun, W. F., Geng, Y., Yang, X., & Edziah, B. K. (2019). How does natural resource dependence affect public education spending? Environmental Science and Pollution Research, 26(4), 3666-3674. https://doi.org/10.1007/s11356-018-3853-6.
• Sundararaman, T., & Ranjan, A. (2019). Achieving Sustainable Development Goal 3 in the Indian context: The policy-action incoherence. In India's Social Sector and SDGs (pp. 129-141). Routledge India. https://doi.org/10.4324/9780367341824-6.
• Vorisek, D. L., & Yu, S. (2020). Understanding the cost of achieving the Sustainable Development Goals. World Bank Policy Research Working Paper, No. 9164. https://doi.org/10.1596/1813-9450-9164.
• Weber, O. (2014). The financial sector's impact on sustainable development. Journal of Sustainable Finance & Investment, 4(1), 1-8. https://doi.org/10.1080/20430795.2014.887345.
• Wolf, J. (2013). Improving the sustainable development of firms: The role of employees. Business Strategy and the Environment, 22(2), 92-108. https://doi.org/10.1002/bse.1731.
• ---

Identyfikatory

DOI

10.61351/mf.v1i1.44