Can ESG performance contribute to a reduction in banks’ nonperforming loans? evidence from emerging countries banks
Banks play a crucial role in fostering financial stability, and understanding how ESG performance can impact loan quality is vital, particularly in economies with varying regulatory frameworks. Using a quantitative research approach, this study examines the relationship between nonperforming loans (...
| Main Authors: | , , |
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| Format: | Article |
| Language: | English |
| Published: |
Elite Scientific Forum
2024
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| Online Access: | http://psasir.upm.edu.my/id/eprint/117850/ http://psasir.upm.edu.my/id/eprint/117850/1/117850.pdf |
| _version_ | 1848867360137543680 |
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| author | Hussain, Suman Najam Ali, Rosalan Johari, Jalila |
| author_facet | Hussain, Suman Najam Ali, Rosalan Johari, Jalila |
| author_sort | Hussain, Suman Najam |
| building | UPM Institutional Repository |
| collection | Online Access |
| description | Banks play a crucial role in fostering financial stability, and understanding how ESG performance can impact loan quality is vital, particularly in economies with varying regulatory frameworks. Using a quantitative research approach, this study examines the relationship between nonperforming loans (NPLs) and environmental, social, and governance (ESG) performance in banks within emerging markets banks. Utilizing data from banks in these regions, we find a negative correlation between a bank's ESG score and its level of NPLs. Additionally, we observe that strong performance across all three ESG pillars- Environmental, Social, and Governance—reduces the NPL ratio. Our findings suggest an improved ESG approach bolstering financial stability by indicating that higher ESG performance improves loan quality in emerging market banks and thus reduces NPLs. |
| first_indexed | 2025-11-15T14:35:15Z |
| format | Article |
| id | upm-117850 |
| institution | Universiti Putra Malaysia |
| institution_category | Local University |
| language | English |
| last_indexed | 2025-11-15T14:35:15Z |
| publishDate | 2024 |
| publisher | Elite Scientific Forum |
| recordtype | eprints |
| repository_type | Digital Repository |
| spelling | upm-1178502025-06-13T07:17:06Z http://psasir.upm.edu.my/id/eprint/117850/ Can ESG performance contribute to a reduction in banks’ nonperforming loans? evidence from emerging countries banks Hussain, Suman Najam Ali, Rosalan Johari, Jalila Banks play a crucial role in fostering financial stability, and understanding how ESG performance can impact loan quality is vital, particularly in economies with varying regulatory frameworks. Using a quantitative research approach, this study examines the relationship between nonperforming loans (NPLs) and environmental, social, and governance (ESG) performance in banks within emerging markets banks. Utilizing data from banks in these regions, we find a negative correlation between a bank's ESG score and its level of NPLs. Additionally, we observe that strong performance across all three ESG pillars- Environmental, Social, and Governance—reduces the NPL ratio. Our findings suggest an improved ESG approach bolstering financial stability by indicating that higher ESG performance improves loan quality in emerging market banks and thus reduces NPLs. Elite Scientific Forum 2024 Article PeerReviewed text en http://psasir.upm.edu.my/id/eprint/117850/1/117850.pdf Hussain, Suman Najam and Ali, Rosalan and Johari, Jalila (2024) Can ESG performance contribute to a reduction in banks’ nonperforming loans? evidence from emerging countries banks. Pakistan Journal of Life and Social Sciences, 22 (2). pp. 11896-11909. ISSN 1727-4915; eISSN: 2221-7630 https://www.pjlss.edu.pk/pdf_files/2024_2/11896-11909.pdf 10.57239/PJLSS-2024-22.2.00848 |
| spellingShingle | Hussain, Suman Najam Ali, Rosalan Johari, Jalila Can ESG performance contribute to a reduction in banks’ nonperforming loans? evidence from emerging countries banks |
| title | Can ESG performance contribute to a reduction in banks’ nonperforming loans? evidence from emerging countries banks |
| title_full | Can ESG performance contribute to a reduction in banks’ nonperforming loans? evidence from emerging countries banks |
| title_fullStr | Can ESG performance contribute to a reduction in banks’ nonperforming loans? evidence from emerging countries banks |
| title_full_unstemmed | Can ESG performance contribute to a reduction in banks’ nonperforming loans? evidence from emerging countries banks |
| title_short | Can ESG performance contribute to a reduction in banks’ nonperforming loans? evidence from emerging countries banks |
| title_sort | can esg performance contribute to a reduction in banks’ nonperforming loans? evidence from emerging countries banks |
| url | http://psasir.upm.edu.my/id/eprint/117850/ http://psasir.upm.edu.my/id/eprint/117850/ http://psasir.upm.edu.my/id/eprint/117850/ http://psasir.upm.edu.my/id/eprint/117850/1/117850.pdf |