Do formal and informal institutions shape the influence of sustainable banking on financial development?

Úbeda Mellina, Fernando; Forcadell, Francisco Javier; Suárez Suárez, Nuria

UAM_Biblioteca

Author

Úbeda Mellina, Fernando

; Forcadell, Francisco Javier; Suárez Suárez, Nuria

Entity

UAM. Departamento de Financiación e Investigación Comercial

Publisher

Elsevier

Date

2021-08-18

Citation

Finance Research Letters (2021): 18 August 2021

ISSN

1544-6123

DOI

10.1016/j.frl.2021.102391

Funded by

The authors acknowledge financial support from the Spanish Ministry of Economy and Competitiveness, Project RTI2018-097447-B-I00 and PID2020-118064GB-I00, and from the Professorship Excellence Program in accordance with the multi-year agreement signed by the Government of Madrid and the Autonoma University of Madrid (Line #3)

Project

Gobierno de España. RTI2018-097447-B-I00; Gobierno de España. PID2020-118064GB-I00

Editor's Version

https://doi.org/10.1016/j.frl.2021.102391

Subjects

Culture; Financial development; Formal and informal institutions; Reputation; Sustainable banking; Trust; Economía

URI

http://hdl.handle.net/10486/700718

Rights

Esta obra está bajo una licencia de Creative Commons Reconocimiento-NoComercial-SinObraDerivada 4.0 Internacional.

Abstract

This paper explores the moderating role of formal and informal institutions on the sustainable banking and financial development link. We compute an aggregated measure of sustainability in the banking sector for a sample of 46 countries for the period 2010-2018. Our results indicate that sustainable banking positively influences financial development only in countries with strong formal institutions. Nevertheless, informal institutions can generate the necessary trust in the banking sector, allowing the positive effect of sustainable banking on financial development in countries with weak formal institutions. The results are robust after controlling the potential endogeneity issues

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