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July 8, 2026Journal of risk and financial managementOpen Access

When ESG Starts to Pay Off: Nonlinear PSTR Evidence on Bank Performance and Stability in Europe and the USA

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Authors

HRHoussem RachdiHSHichem Saidi

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Overview

Investigates ESG's effects on bank performance and stability in Europe and USA, indicating critical thresholds for benefits.

Key Points

  • This research examines how ESG performance influences bank profitability and stability in Europe and the USA.
  • Panel Smooth Transition Regression framework applied to data from 68 European and 60 U.S. banks from 2010 to 2022.
  • Profitability assessed using ROA and ROE; financial stability measured by the Z-score.
  • Consideration of control variables such as bank size, capital adequacy, and macroeconomic conditions.
  • Identified an ESG threshold above which banks see significant improvements in profitability and stability.
  • European banks exhibit slightly greater stability gains, while U.S. banks achieve marginally higher profitability improvements.
  • Emphasizes the necessity for banks to reach a minimum level of ESG maturity for maximum benefits.

Cite This Study

Rachdi et al. (2026) studied this question.

synapsesocial.com/papers/6a4de8a7d2ea289ef628336bhttps://doi.org/10.3390/jrfm19070500
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