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Dynamics of Financial Risk on the Effect of Sustainable Practices on Financial Performance: Evidence From the Indian Banking Companies

Dynamics of Financial Risk on the Effect of Sustainable Practices on Financial Performance: Evidence From the Indian Banking Companies
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Author(s): Dany Thomas (School of Business Management and Legal Studies, Kollam, India), Ria Mammen (St. Thomas College, Kozhencherry, India), Vimal George Kurian (CMS College, Kottayam, India)and S. P. Asha (SN College, Kollam, India)
Copyright: 2024
Pages: 24
Source title: ESG Frameworks for Sustainable Business Practices
Source Author(s)/Editor(s): Biju Ajithakumari Vijayappan Nair (University of Kerala, India), Glenn Muschert (Khalifa University of Science and Technology, UAE)and Ambili Jayachandran (University of Kerala, India)
DOI: 10.4018/979-8-3693-3880-3.ch011

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Abstract

The study examine the influence of financial risk on the nature of the relationship between ESG and the financial performance of Indian banks. In India, loans are key financial products of banks that are exposed to carbon-intensive sectors, which hinder their efforts to mitigate against transition risks and global ESG standards, amid the growing pressure from international investors. The study uses ROA to measure financial performance. The independent variable ESG was measured using the ESG scores Indian banks indexed in the NIFTY 100 ESG Index. Altman's Z-score model which predicts the financial risk of Indian banks was considered as the mediating variable to assess its influence on the nature of the relationship between ESG and financial performance. The evidence from the study would be useful to identify the changes in the financial performance of Indian banks resulting from their sustainable performance.

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