The Role of ESG in Shaping the Impact of Financial Development on Banks' Performance

ABSTRACT This study investigates how financial development, divided into financial markets and financial institutions, affects banks' performance across 93 financially developed countries during the period between 2008 and 2023. The analysis highlights the role of environmental, social and governance readiness as core determinants that reshape financial progress and banking outcomes. On the basis of financial intermediation theory and the broader idea of stakeholder engagement, this study finds that entrepreneurship strengthens bank performance, internet usage negatively affects it, and mobile usage shows a negative effect in the case of financial institutions but a positive impact when financial markets are considered.