Examining the impact of liquidity creation on bank stability in the Asia Pacific region: Do ESG disclosures play a moderating role?

IF 5.4 2区经济学 Q1 BUSINESS, FINANCE

Journal of International Financial Markets Institutions & Money Pub Date : 2024-01-24 DOI:10.1016/j.intfin.2024.101955

Juhi Gupta , Smita Kashiramka

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Abstract

The global financial crisis reignited concerns regarding the stability and sustainability of banks. Since liquidity creation (LC) is a core output of banks, we examine if the nexus between LC and bank stability is conditional on ESG (environmental, social, and governance) disclosure by banks. Our sample comprises 178 commercial banks (1568 observations) during the period 2010–2019 in the Asia-Pacific region. Using a two-step system GMM estimation, our results document a positive impact of LC on bank stability. Additionally, ESG disclosures positively moderate the stability effect of LC, i.e., higher LC is associated with significantly more enhancement in bank stability for banks that have a higher disclosure of ESG scores compared to banks that have a moderate disclosure. Furthermore, we also provide evidence of variation in the moderating role of ESG disclosures in advanced and emerging economies. Overall, our results recommend that integrating ESG practices into banks' internal processes improves their financial soundness. Additionally, blanket implementation of liquidity regulations might be detrimental to banks’ stability.

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研究亚太地区流动性创造对银行稳定性的影响：环境、社会和治理信息披露是否起到调节作用？

全球金融危机再次引发了人们对银行稳定性和可持续金融的关注。由于流动性创造（LC）是银行的核心产出，我们研究了流动性创造与银行稳定性之间的关系是否取决于银行的 ESG（环境、社会和治理）披露。我们的样本包括 2010-2019 年期间亚太地区的 178 家商业银行（1568 个观测值）。使用两步系统 GMM 估计法，我们的结果表明 LC 对银行稳定性有积极影响。此外，环境、社会和公司治理信息披露对信用级别对稳定性的影响具有正向调节作用，即与披露程度一般的银行相比，披露较高环境、社会和公司治理得分的银行的信用级别越高，其稳定性就会显著增强。此外，我们还提供证据表明，ESG 的调节作用在发达经济体和新兴经济体之间存在差异。总之，我们的研究结果表明，将环境、社会和公司治理实践纳入银行内部流程可以改善银行的财务稳健性。此外，一揽子实施流动性法规可能不利于银行的稳定性。

本文章由计算机程序翻译，如有差异，请以英文原文为准。

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来源期刊

Journal of International Financial Markets Institutions & Money Multiple-

CiteScore

6.60

自引率

10.00%

发文量

142

期刊介绍： International trade, financing and investments, and the related cash and credit transactions, have grown at an extremely rapid pace in recent years. The international monetary system has continued to evolve to accommodate the need for foreign-currency denominated transactions and in the process has provided opportunities for its ongoing observation and study. The purpose of the Journal of International Financial Markets, Institutions & Money is to publish rigorous, original articles dealing with the international aspects of financial markets, institutions and money. Theoretical/conceptual and empirical papers providing meaningful insights into the subject areas will be considered. The following topic areas, although not exhaustive, are representative of the coverage in this Journal. • International financial markets • International securities markets • Foreign exchange markets • Eurocurrency markets • International syndications • Term structures of Eurocurrency rates • Determination of exchange rates • Information, speculation and parity • Forward rates and swaps • International payment mechanisms • International commercial banking; • International investment banking • Central bank intervention • International monetary systems • Balance of payments.