Exploring The Impact Mechanism Of ESG Rating On Financial Performance Of Chinese And American Commercial Banks

Since the 1980 s,sustainable development has gradually become the focus of global attention,and ESG(Environmental,Social and Corporate Governance),which aims to integrate environmental,social and corporate governance factors into corporate management and investor decision-making,has become a A common focus of theoretical research and social practice.In addition,due to differences in national conditions such as institutional arrangements,regulatory methods,history and culture,and ESG development stages in different countries,different countries should form their own ESG development goals,priorities and strategies.With the wide application of ESG ratings in countries around the world,a large number of studies have attempted to explore the potential impact path of ESG and corporate performance from the quantifiable perspective of corporate finance.There is still a lack of research on the impact of ESG ratings on commercial banks in different institutional environments.Based on this,this paper selects commercial banks in China and the United States as research samples,and explores the impact mechanism of Chinese and American banks’ ESG ratings on financial performance based on the banks’ Bloomberg ESG scores and financial performance data from 2015 to 2020.The research is mainly divided into five parts: the first part establishes a two-way fixed-effect model under the total sample and China-US sub-sample divided by country,selects the best fitting model and judges the impact through the benchmark regression results of ESG ratings on financial performance direction,and preliminarily test the correlation between the two;the second part analyzes the difference between the impact of different ESG dimensions and the impact of ESG overall rating by establishing a two-way fixed effect model of ESG sub-dimension rating on financial performance;the third part Test the intermediary effect of bank risk factors in the relationship between the two,and verify the possible risk mitigation value of ESG investment;the fourth part examines the moderating effect of bank individual characteristic factors on the relationship between the two,in order to test the effect of banks with different characteristics on the relationship between the two.Provide a theoretical basis for formulating a differentiated ESG investment strategy;finally,in the fifth part,an extended discussion on the relationship between banks’ ESG ratings and financial performance is carried out in terms of financial supervision and financial development level in the external environment,especially through Stakeholders represented by institutional investors’ perception and feedback on bank ESG information,verify the relationship between the two in different countries above,and explore the role of this external regulatory force on ESG information and financial performance.dredging effect,so as to verify the possible internal mechanism of action between the two.Based on related theories such as signal transmission,this paper establishes a series of research hypotheses in view of the institutional background differences and regulatory differences in ESG governance between China and the United States,and finally draws the main conclusions as follows:(1)The impact of bank ESG ratings on financial performance The direction will vary by country and ESG sub-dimensions,and there are both linear and nonlinear correlations.(2)In the intermediary effect test,the Z-value,a measure of bank risk-taking,has a significant masking effect on the relationship between ESG ratings and financial performance of commercial banks in the full sample and the U.S.sub-sample,that is,ESG ratings can reduce the probability of bank failure by reducing the probability of bankruptcy.Ways to slow down the downward trend in financial performance in the process of investing in ESG.(3)In the moderating effect test,the individual characteristic factors of banks will have different moderating effects on the relationship between the ESG rating and financial performance of commercial banks in different countries,indicating that the moderating effect research should be carried out under the premise of considering the national background and bank characteristic factors.Develop an ESG investment strategy in line with the characteristics of domestic commercial banks.To sum up,this paper believes that commercial banks should make ESG investments based on their own business level and risk tolerance under the premise of considering the national background.At the same time,relevant regulatory agencies of the Chinese government should also formulate unified ESG disclosure standards and evaluation systems as soon as possible,so as to enhance the public’s understanding of ESG.Awareness of ESG ratings can promote sustainable social and economic development.In terms of innovation,this paper takes the intermediary banking industry under different backgrounds in China and the United States as the research object,and explores the impact direction under the consideration that the relationship between banks’ ESG ratings and financial performance may have both linear and nonlinear relationships.In order to give a certain explanation to the disputes about the relationship between the two in historical research under the division of specific countries and industries,and through the mediating effect of risk factors and the moderating effect of bank characteristic factors on the relationship between the two,and the extension of the external environment.It is innovative to further explore the influence mechanism between the two.