Does banking sector support for achieving the sustainable development goals affect bank loan loss provisions? International evidence

Ozili, Peterson K (2024): Does banking sector support for achieving the sustainable development goals affect bank loan loss provisions? International evidence. Forthcoming in:

Abstract

This study investigates whether banking sector support for the realization of the SDGs affects bank LLPs. Using country-level data for 28 countries from 2011 to 2018 and using the panel fixed effect regression estimation method, it was found that banking sector support for achieving SDG7 and SDG10 leads to a significant decrease in bank loan loss provisions. Banks that support the realization of SDG6, and operate in countries that have strong institutions, experience a significant decrease in LLPs while banks that support the realization of SDG7, and operate in countries that have strong institutions, experience a significant increase in LLPs. The regional results are mixed. In the Asian region, banking sector support for achieving SDG13 decreases bank LLPs while banking sector support for achieving SDG8 and SDG10 increases bank LLPs. In the European region, banking sector support for achieving SDG3 decreases bank LLPs while banking sector support for achieving SDG4 and SDG6 increase bank LLPs. In the African region, banking sector support for achieving SDG6 increases bank LLPs.

• Item Type: MPRA Paper
• Language: English
• Keywords: bank performance, sustainable development, sustainable development goals, loan loss provisions, institutional quality, economic growth, credit risk.
• Subjects: G - Financial Economics > G2 - Financial Institutions and Services; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q0 - General > Q01 - Sustainable Development

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