RT Journal Article
T1 Do sustainability risks affect credit ratings? Evidence from European Banks
A1 Samaniego-Medina, Reyes
A1 Giráldez, Pilar
K1 Banking sector
K1 Credit rating
K1 ESG
K1 Controrersy
AB Targets defined in accordance with Environmental, Social and Governance (ESG) criteria confront the business world, particularly the banking industry, with new challenges. The aim of this paper is to study the effect of ESG controversies on the credit rating of the European banking sector, involving 65 European banks from 18 countries in the 2011-2020 period. This empirical study includes different approaches. Firstly, we apply an ordered logit model to ascertain the influence of ESG concerns on credit ratings. Secondly, we analyse the impact of ESG controversies on the probability of obtaining a better rating scale through the marginal effects. And finally, we use matching analysis to measure the real impact of ESG controversies on credit ratings. Our findings suggest that ESG controversies have a negative effect on credit rating. In addition, it is a relevant negative factor in the probability of obtaining a better rating in future reviews of credit assessments. Specifically, the lower the level of ESG controversies, the greater the probability of achieving the highest credit ratings. This research provides a comprehensive view of the impact of ESG controversies on credit ratings awarded to European financial institutions. European banks should take special care to avoid such controversies, as a source of reputational risk, when setting their policies so that their credit ratings would not be affected.
PB Bucharest University of Economic Studies Publishing House
YR 2022
FD 2022-06-30
LK https://hdl.handle.net/10433/21488
UL https://hdl.handle.net/10433/21488
LA en
NO Samaniego-Medina, R., & Giráldez-Puig, P. (2022). Do sustainability risks affect credit ratings? Evidence from European banks. Amfiteatru Economic, 24(61), 720-738.
NO Departamento de Economía Financiera y Contabilidad
DS RIO
RD May 21, 2026