Summary:
The role of the financial sector is central in reducing income inequality – the goal of SDG 10 – by facilitating economic opportunities. However, institutional weaknesses may also undermine this effect. We argue that sustainable banking generates bidirectional trust to overcome institutional weaknesses, particularly the weak rule of law. Empirical evidence from 46 countries aggregating data of 1060 banks over 2010–2017 shows that sustainable banking lessens income inequality in weak rule of law settings. The results are robust after including the effects of bank digitalisation. This study has important implications for sustainable banking expansion into weak institutional environments and demonstrates banks’ efforts in their commitment to reducing inequality.
Spanish layman's summary:
La banca sostenible fomenta los criterios ESG al asignar recursos, contribuyendo al ODS10 (Reducir la desigualdad). Sin embargo, el entorno institucional afecta dicho potencial. Analizamos 1060 bancos concluyendo que la banca sostenible reduce la desigualdad solo ante cierta calidad institucional.
English layman's summary:
Sustainable banking promotes ESG criteria when allocating resources, contributing to SDG10 (Reduce inequality). However, the institutional environment affects this potential. We analyze 1,060 banks, concluding that sustainable banking reduces inequality only under a certain institutional quality.
Keywords: Sustainable Development Goals; Inequality; Institutions; Rule of law; Banks; ESG
JCR Impact Factor and WoS quartile: 11,300 - Q1 (2022)
DOI reference:
https://doi.org/10.1016/j.jbusres.2022.03.065
Published on paper: July 2022.
Published on-line: April 2022.
Citation:
F. Úbeda, F.J. Forcadell, E. Aracil, A. Méndez, How sustainable banking fosters the SDG 10 in weak institutional environments. Journal of Business Research. Vol. 146, pp. 277 - 287, July 2022. [Online: April 2022]
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