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Corporate sustainability and financial performance of Chinese banks

Olaf Weber (School of Environment, Enterprise and Development, University of Waterloo, Waterloo, Canada)

Sustainability Accounting, Management and Policy Journal

ISSN: 2040-8021

Article publication date: 3 July 2017

Abstract

Purpose

This paper analyzes the connection between the sustainability performance of Chinese banks and their financial indicators to explore whether sustainability regulations can be implemented without decreasing the financial performance of the banking sector.

Design/methodology/approach

The study examined reports and websites of Chinese banks, categorized different corporate sustainability aspects and conducted panel regression and Granger causality to analyze cause and effect variables.

Findings

The environmental and social performance of Chinese banks increased significantly between 2009 and 2013. Furthermore, a bi-directional causality between financial performance and sustainability performance of Chinese banks has been found. Based on institutional theory, this interaction may be influenced by the Chinese Green Credit Policy.

Research limitations/implications

The findings suggest that corporate sustainability performance and financial performance are not a trade-off but correlate positively. Further research is needed to analyze the effect of financial regulations, such as the Chinese Green Credit Policy.

Practical implications

According to the good management theory by Waddock and Graves (1997) that claims a positive impact of corporate social performance on financial performance, Chinese banks can invest in corporate sustainability to increase their financial success and re-invest parts of the additional returns – also called slack resources – in sustainability activities.

Social implications

Chinese banks are able to influence the economy to become greener and less polluting without sacrificing financial returns.

Originality/value

This is the first study to explore the sustainability performance of Chinese banks, including their products and services.

Keywords

Citation

Weber, O. (2017), "Corporate sustainability and financial performance of Chinese banks", Sustainability Accounting, Management and Policy Journal, Vol. 8 No. 3, pp. 358-385. https://doi.org/10.1108/SAMPJ-09-2016-0066

Publisher

:

Emerald Publishing Limited

Copyright © 2017, Emerald Publishing Limited