Does the environmental impact of banks affect their financial performance?

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Silvia Bressan This is a preprint; it has not been peer reviewed by a journal. https://doi.org/ 10.21203/rs.3.rs-4011147/v1 This work is licensed under a CC BY 4.0 License Status: Posted Version 1 posted You are reading this latest preprint version Abstract We study empirically the environmental impact of banks, i.e. the negative externality on the environment and the society deriving from the use of a natural resource or the emission of a pollutant. We find that environmental “impact ratios”, i.e. environmental damage costs in proportion to total revenues, are negatively correlated with bank profitability. Furthermore, banks with a stronger impact on the environment are valued less by equity market investors and pay less cash to share- holders. Among environmental categories, potential damages from greenhouse gas emissions or waste seem to be especially severe. We deliver important insights for banks´ environmental management. If bankers would be able to address businesses and practices to be more renewable and lower in their emissions, they could im- prove both the operating as well as the market performance. Thus, firms would be financially more stable, and could react smoothly to the recent introduction of stricter and onerous environmental regulations. Finance Environmental impact environmental damage cost bank profitability market value Figures Figure 1 Figure 2 Figure 3 Figure 4 Figure 5 Figure 6 1 Introduction Recent regulations in both the United States and the European Union require firms to disclose their environmental impact. In the European Union, the Corporate Sustainabil- ity Reporting Directive (CSRD EU 2022/2464) imposes substantial new disclosure and compliance requirements on companies concerning information about sustainability re- lated factors, which include climate change and other environmental issues. 1 The United States Securities and Exchange Commission is looking at similar regulations, proposing more expansive climate related disclosure rules. 2 The enactment of these rules will make clearer to customers and stakeholders that firms could cause potential huge damages to the world’s green economy. A recent study of Greenstone et al. [ 2023 ] of nearly 15,000 worldwide public companies illustrates that corporations are responsible for a large share of the world´s climate pollution, and the costs they had to pay for damages to the envi- ronment could eat up about 44% of their profits. In this article we focus on the environmental damage cost of banks. Environmen- tal management is an important part of the social responsibility of corporations, and is specific for each sector, as every business has its own mechanism that coordinates its be- haviour and role within society [Van Marrewijk, 2003, Melo and Garrido-Morgado, 2012]. Inside banks corporate social responsibility strategies are even more complex to explain, and should be examined from several perspectives. In fact, the lending channel is rele- vant to determine banks’ sustainability and its interaction with other strategic decisions [Scholtens, 2009, Weber, 2012]. Offering loans to eco-friendly companies can improve financial performances [B˘atae et al., 2021] and lower risk-taking [Gangi et al., 2019], ulti- mately bringing relief on financing costs and capital levels. Nonetheless, the assessment of borrowers’ environmental profiles and risk can be costly, harming the profitability of banks [Caby et al., 2022]. Discussions among policy makers and academics have focused more frequently on environmental impacts inside non-financial sectors, and especially industrial and energy companies, which seem to be more directly involved in environmental practices that may put at risk the world’s ecological health. Nonetheless, banks do play a key role in driving negative externalities to the environment. In 2011 the report of Schuecking et al. (2011) provided a list of 20 “killer banks”, namely the world´s largest commercial banks funding the 74% of the coal industry funding since 2005. 3 Through their lending practices banks are inextricably linked to industrial activities that degrade the natural environment [Thompson and Cowton, 2004]. At the same time, banks use a considerable amount of resources for their own business, like for example energy and paper, and also generate substantial indirect carbon emissions through business travel [B˘atae et al., 2021]. Clearly, in the transition to a more environmentally friendly economy the role of banks cannot be seen as marginal. Gangi et al. [2019] argue that banking activities are environmentally relevant, because they can stimulate eco-friendly attitudes of borrowers, while through a “multiplier effect” they can also achieve huge benefits for the world’s ecology. Until now experts did not consider carefully whether banks incur considerable costs for their environmental engagement. We undertake this challenge and examine empirically banks’ environmental damage costs obtained by S&P Capital IQ Trucost, i.e. the estimate of the negative externality associated with the use of a resource or the emission of a pollutant. More precisely, environmental damage costs quantify in monetary terms the negative consequence on the society and the environment deriving from the use of water, the pollution of air, land or water, the generation of greenhouse gas or waste, and the use of natural resources (minerals, metals, natural gas, oil, coal, forestry, and agriculture). For each impact category, we compute “impact ratios” by taking environmental dam- age cost in percentage to total revenue. These numbers tell how much of the bank revenue would be impacted if the company had to pay back for the cost created to the environ- ment. Our results reveal that “impact ratios” affect in a negative way the bank operating performance, and are associated with a lower dividend payout. Furthermore, we also find that the bank market performance declines in impact ratios. Thus, banks threatening the environment more severely are less profitable, pay less cash to shareholders, and are discounted by stock market investors. The effects reveal to be stronger for externalities caused by waste and greenhouse gas emissions. Overall, our findings suggest that environmental damage costs reflect on bank activi- ties in a negative way. Therefore, bankers should examine more carefully their strategies for environmental management, trying to reduce negative externalities caused by the in- volvement of ecological resources. Not only this would be beneficial for the world´s green economy, but it could also improve the bank financial health and long-term growth. The remainder of this paper is organized as follows. Section 2 reviews the literature related to our topic. Section 3 describes the data that we analyze. Section 4 presents the empirical results. Section 5 concludes. 1 http://data.europa.eu/eli/dir/2022/2464/oj . 2 https://www.sec.gov/files/rules/proposed/2022/33-11042.pdf . 3 https://www.banktrack.org/manage/ems_files/download/bankrolling_climate_ch ange_1/a_look_into_the_portfolios_of_the_worlds_largest_banks.pdf. 2 Review of the literature The attention of regulators on corporate social responsibility (CSR) has grown substan- tially in the last decades. Environmental management constitutes an important part of CSR actions [Cai et al., 2016], leading academics to ask whether environmental prac- tices could reflect also into other corporate behaviors. In this article we focus on banks´ environmental damage costs, i.e. the negative externality in monetary terms caused by the usage of a natural resource or the emission of a pollutant. Environmental costs are largely unexplored in the previous literature, especially inside financial firms. A couple of articles provide insights on the relationship between environmental costs and bank performance. Based on a sample of banks in Bangladesh during 2008–2014, Bose et al. [2021] document that “green banking”, i.e. internal operations and business models that don’t harm the environment, raise the financial performance through cost efficiencies. Jo et al. [2015] use environmental data from worldwide countries to illustrate that lowering environmental costs increase the long-term performance of banks. The interpretation is that a bank with a little impact on the environment could enjoy a better reputation and receive a higher valuation from investors. This article extends this previous evidence, examining the relationship between the performance of banks and their environmental impact. Previous studies have considered also some other aspects related to banks´ environ- mental management. For example, Caby et al. [2022] examine data from the Carbon Disclosure Project during 2011–2019, showing that banks’ profitability increased in their disclosure on carbon emissions, but such positive impact was limited to the overall qual- ity of the bank climate change management and disclosure, beside the topic’s relevance to the board. As a consequence, the authors conclude that a concrete climate change management in the banking sector was not fully implemented. The results of Gangi et al. [2019] suggest that a bank governance focused on environmental issues could reduce cor- porate risk-taking. Similarly, Neitzert and Petras [2022] illustrate that environmentally friendly activities have a risk mitigation effect inside banks, and the reduction of risk from environmental management is much more evident than from social or governance activities which taken together constitute the three pillars of corporate social responsi- bility. In Europe, B˘atae et al. [2021] discover that the reduction of emissions and waste could enhance bank profits. In China, Yin et al. [2021] find that green lending increases the profitability of non-state-owned banks while also reduces their credit default risk. Regulators have questioned how environmental disclosure policies would affect bank lending. For example, Takahashi and Shino [2023] find that during 2006–2018 Japanese banks decreased loans to firms with high greenhouse gas emissions. Inside euro area banks in 2019 Gambacorta et al. [2023] report a negative relationship between environ- mental disclosure and brown lending. However, this effect is contingent on the tone of the financial report, i.e. depending on whether it reveals strong or low concerns on envi- ronmental risks. The authors conclude saying that is important to increase the awareness of environmental risks, incentivizing the commitment of banks to act as environmentally responsible lenders. 3 Data and variables We use the S&P Global Trucost´s “Environmental Register”, which is a database con- taining information on the direct and supply chain environmental costs for worldwide companies classified by primary industry and geography. Trucost examines the company’s activities that have an impact on “environmental categories” covering water used, waste generated, greenhouse gas emissions, land, water and air pollutants generated, and natural resources used. For each category Trucost identifies the negative external- ity originated by the firm and quantifies it in monetary terms providing a figure called environmental “damage cost”. To assess environmental damages, Trucost uses annually updated information disclosed by the company itself and, where gaps are present, mod- eled data. Direct damage costs are those associated with a company’s direct operations, while indirect damage costs are those that are borne in the company’s supply chain. Total damage costs are the sum of the two. More specifically, Trucost computes damage costs multiplying the company´s natural resources used or pollutants emitted (e.g. m3 of water or tCO2e) by environmental valuation coefficients. Valuation coefficients are factors that represent the average damage value, i.e. the external cost of damages to human, natural and built capital, resulting from an organization’s direct and indirect usage of natural resources or emission of pollutants. 4 We downloaded environmental damage costs and total revenues for firms that report the value “bank” inside the field named “primary industry” in our database. The fre- quency of observation is annual and the time horizon is the interval 2006–2022. The companies have headquarter in the geographies of Africa, Asia-Pacific, Europe, Latin America and Caribbean, Middle East, United States and Canada. Finally, using S&P Capital IQ, we obtain balance sheet data that match environmental costs. Overall, our sample counts 6,842 bank-year observations. For each bank during a certain financial year we compute the aggregate environ- mental “impact ratio” IR as the ratio of environmental damage costs to total revenues. This metric quantifies the percentage of a company’s annual earnings at risk should the company be held accountable for its negative environmental impacts. However, not all companies disclose their use of environmental resources and environ- mental costs. For companies without disclosure Trucost uses an econometrics environ- mental input-output model (EEIO) that approximates the damage originated from the company´s operations as well its supply chain tiers. The model combines information derived from a wide array of national, international, and industry databases. Trucost tests its approximated environmental costs with data disclosures collected from companies during the Trucost´s annual engagement program. The database includes a variable that takes the ratio between the company´s disclosed environmental costs over the total environmental costs assessed by Trucost. We download this item and call it DISCL . A high DISCL tells that the firm was relatively transparent in disclosing information on its environmental costs. Table 1 reports the average IR and DISCL in all geographic regions. Banks from the Latin America and Caribbean have the highest environmental impact ( IR close to 0.52%) followed by African ( IR close to 0.38%) and European banks ( IR close to 0.36%). In the regions of Asia-Pacific, Middle East, United States and Canada the impact ratio is between 26% and 29%. European banks are the most transparent institutions in disclosing their environmental engagements, as the proportion of disclosed costs is approximately 54%, while the most opaque institutions are United States and Canadian banks, with average DISCL almost equal to 12%. Table 1 Composition of the sample and averages of variables % of sample IR (%) DISCL (%) Africa 3.52 0.3788 33.5712 Asia-Pacific 38.54 0.2767 20.1934 Europe 18.02 0.3636 54.4767 Latin America and Caribbean 4.72 0.5181 30.7679 Middle East 5.89 0.2916 21.2821 United States and Canada 29.30 0.2610 11.6176 Total 100 0.3036 24.8998 We measure separate impact ratios corresponding to different environmental cate- gories, namely the use of water ( IR water ), the generation of waste ( IR waste ), the emission of greenhouse gas ( IR ghg ), the pollution of air ( IR airp ), the pollution of land or water ( IR lwp ), the use of natural resources (i.e. minerals, metals, natural gas, oil, coal, forestry, and agriculture) ( IR nr ). Figures 1 to 6 plot averages of environmental impact ratios inside geographic regions. For two categories the difference among geographies is more evident. Latin America and Caribbean banks are responsible for potential damages due to greenhouse gas emissions ( IR ghg close to 0.35%), while African banks drive the negative externality from waste ( IR waste close to 0.09%). For other categories we don´t observe sharp differences in the environmental impact of our banks, as impact ratios are close in magnitude among all geographies. In the following analysis we study the effect from environmental impact ratios on bank characteristics. The company´s profitability is measured alternatively by the return on assets ( ROA ) and return on equity ( ROE ), which divide the total net income respectively by book values of assets and equity. Higher values of ROA and ROE indi- cate that the operating performance improves. The dividend payout DIV is dividends declared during the period as a percent of earnings per share, and a high DIV means that huge shares of cash are distributed to shareholders. The price-to-book ratio PB is a yardstick for the bank franchise value, where a PB greater than one suggests that a bank can generate market value commensurate to the book value of its equity. Instead, a PB lower than unity reveals investors’ concern about shareholder value, leading to a higher cost of capital if the bank would issue additional equity. Finally, the bank market capitalization MKTCAP is the natural logarithm of the product between the number of shares outstanding and the average stock price. In our regressions we employ few more variables that take into account other aspects affecting the bank financial performance. First, SIZE is the bank size measured by the natural logarithm of the book value of total assets. TIER 1 is the tier 1 capital ratio as defined by the latest regulatory and supervisory guidelines. For US institutions, this will be transitional when applicable, and the lesser of the standardized and advanced approaches. For non-US institutions, this may be transitional or fully loaded, depending on availability. Controlling for TIER 1 we take into account the capacity of the bank to offset losses using the capital eligible for the regulatory requirement, and a bank with a high TIER 1 would be more resilient to financial distress. Finally, we assess the asset quality of the firm from two variables. First, RWA is total risk weighted assets as a percent of total assets. Depending on institution attributes and time period, total risk weighted assets is reported under either the US Basel III (B3) revised regulatory capital rules, advanced approaches rules or otherwise, or the general risk-based (GRB) regulatory capital rules. Preference between the GRB, B3 and B3-post parallel run values is given to the most conservative approach. Second, PROBL is problem loans over total assets. If the company reports multiple values for the following items, the numerator for PROBL is selected with the following ranking: non-performing loans, gross impaired loans, net impaired loans, and other problem loans. Table 2 summarizes the definition of all variables we employ in the analysis, while Table 3 reports descriptive statistics. Table 2 Definition of variables Variable Definition DISCL Bank´s disclosed environmental damage costs in percentage to the total environmental damage costs assessed by Trucost. DIV Dividends declared during the period as a percent of earnings per share. IR Total environmental damage costs (direct and indirect) in percent- age to total revenues. Environmental damage costs are computed multiplying water used, waste generated, air pollution generated, greenhouse gas emissions, land and water pollution generated, natural resources (minerals, metals, natural gas, oil, coal, forestry, and agriculture) used by the respective environmental impact valuation coefficients elaborated by S&P Global Trucost. IRairp Environmental damage costs deriving from the pollution of air in per- centage to total revenues. IRghg Environmental damage costs deriving from the emissions of green- house gases in percentage to total revenues. IRlwp Environmental damage costs deriving from the pollution of land or water in percentage to total revenues. IR nr Environmental damage costs deriving from the use of natural re- sources in percentage to total revenues. Natural resources include: minerals, metals, natural gas, oil, coal, forestry, and agriculture. IRwater Environmental damage costs deriving from the usage of water in per- centage to total revenues. IRwaste Environmental damage costs deriving from the production of waste in percentage to total revenues. MKTCAP Natural logarithm of the product between the number of shares out- standing and the average stock price. PB Market value of equity divided by book value of equity. PROBL Problem loans in percentage to total book value of assets. If the com- pany reports multiple values for the following items, the numerator for PROBL is selected with the following ranking: non-performing loans, gross impaired loans, net impaired loans, and other problem loans. ROA Net income in percentage to total book value of assets. ROE Net income in percentage to total book value of equity. RWA Total risk weighted assets in percentage to total book value of assets. Total risk weighted assets is reported under either the US Basel III (B3) revised regulatory capital rules, advanced approaches rules or otherwise, or the general risk-based (GRB) regulatory capital rules. Preference between the GRB, B3 and B3-post parallel run values is given to the most conservative approach. SIZE Natural logarithm of total book value of assets. TIER 1 Tier 1 capital ratio as defined by the latest regulatory and supervisory guidelines. For US institutions, this will be transitional when appli- cable, and the lesser of the standardized and advanced approaches. For non-US institutions, this may be transitional or fully loaded, de- pending on availability from S&P Capital IQ. Table 3 Descriptive statistics Mean Median Min Max St Dev IR (%) 0.3032 0.2589 0 30.6207 0.6554 IRwater (%) 0.0790 0.0767 0 3.2821 0.0539 IRwaste (%) 0.0157 0.0110 0 18.1411 0.2246 IR airp (%) 0.0462 0.0429 0 2.8156 0.0411 IR ghg (%) 0.1392 0.1042 0 30.2312 0.5769 IR lwp (%) 0.0140 0.0136 0 0.2878 0.0072 IR nr (%) 0.0094 0.0096 0 0.1749 0.0044 DISCL (%) 24.8934 0.0000 0.0000 1.0000 39.3367 ROA (%) 0.9616 0.9122 0.15 20.479 1.0263 ROE (%) 9.7360 9.7552 0.6000 72.7451 9.5132 DIV (%) 41.2207 35.2145 0 100.0000 47.1009 PB 1.2323 1.0996 0.0685 7.3675 0.8011 MKTCAP 8.7694 8.7677 1.3083 16.5826 2.6731 SIZE 18.0804 18.0606 11.9743 24.7811 2.4741 TIER 1 (%) 12.5357 11.7704 0.4586 81.8278 4.7425 RWA (%) 63.1712 65.1386 9.1004 117.1367 17.4343 PROBL (%) 3.0531 1.5600 0 79.4356 5.1827 4 For each environmental category, the valuation coefficient is based on at least a dozen resources based, among others, on pricing tables from world-renowned institutions like the World Bank and the OECD. Unfortunately, Trucost has not made available in a unique repository folder with public access all the documents outlining the methodology followed to assess environmental damage costs. These documents are sent privately to Trucost´s users, which the authors have consulted. However, an overview of the methodology used by Trucost for measuring environmental costs can be found at https://www.support.marketplace.spglobal.com/en/datasets/alternative/trucost_environmental /trucost_environmental_data_methodology_guide.pdf. To provide an example, in order to determine the cost for land and water pollution, Trucost uses a valuation coefficient elaborated from a model that takes into account the impact on human health and the disability adjusted life years (DALYs), beside the impacts of landfill and incineration. Trucost attributes a dollar cost to these impacts, which all together determine the cost for damages on the environment from land or water pollution. 4 Results 4.1 Effects from the bank environmental impact on profitability We estimate regressions of bank j profitability at time t on its environmental impact following the equation below: Profitabilityj,t = α 0 + α 1 IR j,t− 1, r + α 1 Controls j,t− 1 + τ t + ψj + ω j,t . (1) The corporate profitability is assessed using alternatively ROA or ROE . We test re- gressions on the aggregate environmental impact IR , and also the impact from separate environmental categories denoted with the subscript r , i.e. impacts from the use of water ( IR water ), the use of other natural resources ( IR nr ), the production of waste ( IR waste ), the emissions of greenhouse gas ( IR ghg ), the pollution of air ( IR airp ), the pollution of land or water ( IR lwp ). The set of control variables includes the lagged ROA ,11a size ( SIZE ), level of regulatory capital ( TIER 1), and quality of assets ( RWA and PROBL ). Finally, τ t and ψ j denote respectively time and firm fixed effects, while ω j,t is the error term. Tables 4 – 5 report the outcomes. 5 The coefficient on the aggregate IR on ROA and ROE is negative. However, we observe differences among environmental categories. In fact, profits decline more considerably in the costs caused by waste and greenhouse gas emissions. Costs for the pollution of water and land, or the usage of other natural resources would be associated with higher profitability. Looking at the control variables, we notice that profits increase in the corporate size, while decline in problem loans. To better disentangle different effects among environmental categories, we interact impact ratios with the company´s share of cost disclosure DISC . The interaction term captures the effect from environmental costs on bank profitability when the environmental costs are largely disclosed by the company itself instead than being approximated by Trucost. Table 4 Regressions of bank return on assets ( ROA ) on environmental impact ratios plus controls (1) (2) (3) (4) (5) (6) (7) Regressors ROAt ROAt ROAt ROAt ROAt ROAt ROAt IRt − 1 -0.0155* (0.0081) IRwater,t − 1 0.2119*** (0.0567) IRwaste,t − 1 -0.0193*** (0.0064) IRairp,t − 1 -1.1470 (1.2583) IRghg,t − 1 -0.0209*** (0.0061) IRlwp,t − 1 5.6013* (2.9071) IRnr,t − 1 10.4643** (5.0102) ROAt − 1 0.5546*** 0.5540*** 0.5547*** 0.5547*** 0.5546*** 0.5528*** 0.5524*** (0.0527) (0.0527) (0.0527) (0.0527) (0.0527) (0.0527) (0.0527) SIZEt − 1 0.0003*** 0.0003*** 0.0003*** 0.0003*** 0.0003*** 0.0003*** 0.0003*** (0.0000) (0.0000) (0.0000) (0.0000) (0.0000) (0.0000) (0.0000) TIER 1 t − 1 0.0276*** 0.0276*** 0.0276*** 0.0276*** 0.0276*** 0.0281*** 0.0282*** (0.0081) (0.0081) (0.0081) (0.0081) (0.0081) (0.0081) (0.0081) RWAt − 1 0.0087*** 0.0087*** 0.0087*** 0.0087*** 0.0087*** 0.0087*** 0.0088*** (0.0010) (0.0010) (0.0010) (0.0010) (0.0010) (0.0010) (0.0010) PROBLt − 1 -0.0142*** -0.0142*** -0.0142*** -0.0142*** -0.0142*** -0.0141*** -0.0144*** (0.0033) (0.0033) (0.0033) (0.0033) (0.0033) (0.0033) (0.0033) α 0 -0.0052*** -0.0055*** -0.0053*** -0.0048*** -0.0053*** -0.0062*** -0.0070*** (0.0021) (0.0026) (0.0024) (0.0024) (0.0022) (0.0023) (0.0025) Firm fixed effects yes yes yes yes yes yes yes Time fixed effects yes yes yes yes yes yes yes N 4,761 4,761 4,761 4,761 4,761 4,761 4,761 R2 0.5284 0.5294 0.5285 0.5281 0.5282 0.5295 0.5290 N is the total number of observations. Standard errors are clustered at the company level and are reported in parenthesis. * p < 0.05, ** p < 0.01, *** p < 0.001 Table 5 Regressions of bank return on assets ( ROE ) on environmental impact ratios plus controls (1) (2) (3) (4) (5) (6) (7) Regressors ROEt ROEt ROEt ROEt ROEt ROEt ROEt l IRt − 1 -0.1914** (0.0852) IRwater,t − 1 2.5431*** (0.4673) IRwaste,t − 1 -0.2568*** (0.0458) IRairp,t − 1 -5.4436 (9.7238) IRghg,t − 1 -0.2275*** (0.0574) IRlwp,t − 1 51.4258*** (17.6964) IRnr,t − 1 66.4780* (39.4405) ROEt − 1 0.5366*** 0.5361*** 0.5367*** 0.5366*** 0.5366*** 0.5357*** 0.5354*** (0.0493) (0.0493) (0.0493) (0.0493) (0.0493) (0.0493) (0.0493) SIZEt − 1 0.0039*** 0.0039*** 0.0039*** 0.0039*** 0.0039*** 0.0040*** 0.0039*** (0.0014) (0.0014) (0.0014) (0.0014) (0.0014) (0.0014) (0.0014) TIER 1 t − 1 0.0893 0.0900 0.0893 0.0893 0.0894 0.0936 0.0929 (0.0581) (0.0581) (0.0581) (0.0581) (0.0581) (0.0578) (0.0578) RWAt − 1 0.0296*** 0.0294*** 0.0296*** 0.0297*** 0.0296*** 0.0295*** 0.0305*** (0.0093) (0.0093) (0.0093) (0.0093) (0.0093) (0.0093) (0.0093) PROBLt − 1 -0.2210*** -0.2208*** -0.2211*** -0.2208*** -0.2208*** -0.2203*** -0.2223*** (0.0611) (0.0611) (0.0611) (0.0611) (0.0611) (0.0611) (0.0611) α 0 -0.0063 -0.0091 -0.0067 -0.0047 -0.0068 -0.0152 -0.0180 (0.0156) (0.0155) (0.0155) (0.0160) (0.015) (0.0155) (0.0155) Firm fixed effects yes yes yes yes yes yes yes Time fixed effects yes yes yes yes yes yes yes N 4,713 4,713 4,713 4,713 4,713 4,713 4,713 R2 0.4431 0.4431 0.4430 0.4431 0.4430 0.4431 0.4430 N is the total number of observations. Standard errors are clustered at the company level and are reported in parenthesis. * p < 0.05, ** p < 0.01, *** p < 0.001 In Tables 6 – 7 all the interaction terms are negative and significant, and the coefficients are also higher in magnitude compared to coefficients in Tables 4 – 5 where the impact ratios were not multiplied with other terms. This means that, so long the bank discloses its negative environmental externalities, bank profits decline in the environmental impact. Table 6 Regressions of bank return on assets ( ROA ) on environmental impact ratios plus controls (1) (2) (3) (4) (5) (6) (7) Regressors ROAt ROAt ROAt ROAt ROAt ROAt ROAt DISCLt − 1 ×IRt − 1 -0.0329*** (0.0101) DISCLt − 1 ×IRwater,t − 1 -1.1038*** (0.3753) DISCLt − 1 ×IRwaste,t − 1 -0.0215*** (0.0068) DISCLt − 1 ×IRairp,t − 1 -1.4470*** (0.5224) DISCLt − 1 ×IRghg,t − 1 -0.0319*** (0.0122) DISCLt − 1 ×IRlwp,t − 1 -6.0733*** (1.9702) DISCLt − 1 ×IRnr,t − 1 -9.2104*** (2.8631) ROAt − 1 0.5539*** 0.5496*** 0.5547*** 0.5505*** 0.5543*** 0.5497*** 0.5496*** (0.0522) (0.0522) (0.0522) (0.0522) (0.0522) (0.0522) (0.0522) SIZEt − 1 0.0003*** 0.0003*** 0.0003*** 0.0003*** 0.0003*** 0.0003*** 0.0003*** (0.0000) (0.0000) (0.0000) (0.0000) (0.0000) (0.0000) (0.0000) TIER 1 t − 1 0.0275*** 0.0271*** 0.0276*** 0.0272*** 0.0276*** 0.0272*** 0.0271*** (0.0081) (0.0081) (0.0081) (0.0081) (0.0081) (0.0081) (0.0081) RWAt − 1 0.0086*** 0.0084*** 0.0087*** 0.0084*** 0.0086*** 0.0084*** 0.0083*** (0.0016) (0.0016) (0.0016) (0.0016) (0.0016) (0.0016) (0.0016) PROBLt − 1 -0.0142*** -0.0141*** -0.0142*** -0.0140*** -0.0142*** -0.0141*** -0.0140*** (0.0032) (0.0032) (0.0032) (0.0032) (0.0032) (0.0032) (0.0032) α 0 -0.0053*** -0.0060*** -0.0053*** -0.0059*** -0.0053*** -0.0060*** -0.0060*** (0.0020) (0.0020) (0.0020) (0.0020) (0.0020) (0.0020) (0.0020) Firm fixed effects yes yes yes yes yes yes yes Time fixed effects yes yes yes yes yes yes yes N 4,761 4,761 4,761 4,761 4,761 4,761 4,761 R2 0.5291 0.5291 0.5288 0.5291 0.5289 0.5291 0.5291 N is the total number of observations. Standard errors are clustered at the company level and are reported in parenthesis. * p < 0.05, ** p < 0.01, *** p < 0.001 Table 7 Regressions of bank return on assets ( ROE ) on environmental impact ratios plus controls (1) (2) (3) (4) (5) (6) (7) Regressors ROEt ROEt ROEt ROEt ROEt ROEt ROEt DISCLt − 1 ×IRt − 1 -0.4408*** (0.1405) DISCLt − 1 ×IRwater,t − 1 -16.8458*** (4.1980) DISCLt − 1 ×IRwaste,t − 1 -0.2845*** (0.0419) DISCLt − 1 ×IRairp,t − 1 -23.4657*** (6.6436) DISCLt − 1 ×IRghg,t − 1 -0.4025** (0.1666) DISCLt − 1 ×IRlwp,t − 1 -92.1474*** (22.1642) DISCLt − 1 ×IRnr,t − 1 -143.3329*** (34.1621) ROEt − 1 0.5357*** 0.5272*** 0.5367*** 0.5288*** 0.5361*** 0.5276*** 0.5274*** (0.0496) (0.0496) (0.0496) (0.0496) (0.0496) (0.0496) (0.0496) SIZEt − 1 0.0040*** 0.0048*** 0.0039*** 0.0046*** 0.0039*** 0.0048*** 0.0048*** (0.0013) (0.0013) (0.0013) (0.0013) (0.0013) (0.0013) (0.0013) TIER 1 t − 1 0.0885 0.0820 0.0893 0.0833 0.0892 0.0825 0.0815 (0.0582) (0.0582) (0.0582) (0.0582) (0.0582) (0.0582) (0.0582) RWAt − 1 0.0289*** 0.0245*** 0.0296*** 0.0253*** 0.0294*** 0.0246*** 0.0239** (0.0095) (0.0095) (0.0095) (0.0095) (0.0095) (0.0095) (0.0095) PROBLt − 1 -0.2210*** -0.2218*** -0.2211*** -0.2205*** -0.2208*** -0.2228*** -0.2210*** (0.0609) (0.0609) (0.061) (0.0609) (0.0610) (0.0599) (0.0609) α 0 -0.0073 -0.0170 -0.0067 -0.0155 -0.0074 -0.0166 -0.0171 (0.0151) (0.0151) (0.0151) (0.0151) (0.0151) (0.0151) (0.0151) Firm fixed effects yes yes yes yes yes yes yes Time fixed effects yes yes yes yes yes yes yes N 4,713 4,713 4,713 4,713 4,713 4,713 4,713 R2 0.4439 0.4450 0.4439 0.4450 0.4439 0.4450 0.4450 N is the total number of observations. Standard errors are clustered at the company level and are re- ported in parenthesis. * p < 0.05, ** p < 0.01, *** p < 0.001 4.2 Effects from the bank environmental impact on dividends and stock market performance Our previous outcomes revealed that environmental damage costs affect in a negative way the profitability of banks. We now test other aspects of our banks that could be sensitive to their environmental impact. First, we consider the dividend payout policy. As we found earlier that profits decrease in damage costs, we conjecture that banks incurring high environmental costs would also have less cash available to divert to shareholders in the form of dividends. Therefore, we estimate the model in (1) using the dividend payout DIV as the dependent variable. 6 The outcomes in Table 8 confirm our expectation, as all the impact ratios have a negative coefficient in the equations explaining DIV . We observe a stronger negative effect for damage costs deriving from waste and greenhouse gas emission. Secondly, we study the market performance of our banks estimating equations for the price-to-book ratio PB . According to Weber [2012] and B˘atae et al. [2021] environmental engagements are a way for banks for lowering their reputation risk. Forcadell and Aracil [2017] demonstrate empirically that Dow Jones Sustainability Index (DJSI) membership positively influences the economic performance of European banks, as the DJSI member- ship it constitutes a strong signal of sustainability commitment that improves corporate reputation. 7 Our hypothesis is that banks which potentially could destroy the environment would have a bad reputation. Therefore, market investors will push down their valuations to be compensated by the risk that negative externalities could translate into costs that subtract value to their claim. The outcomes in Table 9 corroborate this argument show- ing that PB decreases in impact ratios. Again, the coefficients are statistically more significant for costs due to waste and greenhouse gas emissions, beside for air pollution. To test this pattern more deeply, we show inside Table 10 regressions of market capital- ization MKTCAP on impact ratios. We observe that market capitalization decreases in environmental damages, especially related to greenhouse gas emissions. Overall, our findings suggest that huge negative externalities on the environment would harm the performance of banks, as they exhibit low profitability, pay out less cash to equityholders and have low market valuations. Table 8 Regressions of bank dividend payout ( DIV ) on environmental impact ratios plus controls (1) (2) (3) (4) (5) (6) (7) Regressors DIVt DIVt DIVt DIVt DIVt DIVt DIVt IRt − 1 -1.2992*** (0.4445) IRt − 1, water -34.1772 (31.4713) IRt − 1, waste -1.5235*** (0.4304) IRt − 1, airp -3.4445 (3.7553) IRt − 1, ghg -0.9908** (0.4973) IRt − 1, lwp -281.8407 (204.1290) IRt − 1, nr -204.9425 (243.3550) SIZEt − 1 0.0158*** 0.0159*** 0.0157*** 0.0156*** 0.0157*** 0.0154** 0.0156*** (0.0061) (0.0061) (0.0061) (0.0061) (0.0061) (0.0061) (0.0061) TIER 1 t − 1 1.1467*** 1.1517*** 1.1445*** 1.1447*** 1.1450*** 1.1464*** 1.1398** (0.4406) (0.4406) (0.4406) (0.4406) (0.4406) (0.4406) (0.4420) RWAt − 1 -0.2374*** -0.2340*** -0.2377*** -0.2366*** -0.2373*** -0.2363*** -0.2392*** (0.0844) (0.0844) (0.0844) (0.0844) (0.084)4 (0.0844) (0.0844) PROBLt − 1 -0.5094* -0.5085* -0.5108* -0.5090* -0.5090* -0.5143* -0.5087* (0.2621) (0.2621) (0.2621) (0.2621) (0.2621) (0.2621) (0.2621) α 0 0.2422 0.2591 0.2428 0.2414 0.2401 0.2806 0.2749 (0.2232) (0.2216) (0.2232) (0.2232) (0.2240) (0.2250) (0.2341) Firm fixed effects yes yes yes yes yes yes yes Time fixed effects yes yes yes yes yes yes yes N 3,642 3,642 3,642 3,642 3,642 3,642 3,642 R2 0.0801 0.0801 0.0801 0.0799 0.0799 0.0801 0.0801 N is the total number of observations. Standard errors are clustered at the company level and are reported in parenthesis. * p < 0.05, ** p < 0.01, *** p < 0.001 Table 9 Regressions of bank price-to-book ratio ( PB ) on environmental impact ratios plus controls (1) (2) (3) (4) (5) (6) (7) Regressors PBt PBt PBt PBt PBt PBt PBt IRt − 1 -5.3258*** (1.0885) IRt − 1, water -37.5805 (39.4741) IRt − 1, waste -26.4900* (13.9862) IRt − 1, airp -25.5070*** (6.7135) IRt − 1, ghg -4.5858*** (0.9588) IRt − 1, lwp -576.0966 (496.6185) IRt − 1, nr -788.0755 (535.1775) SIZEt − 1 -0.0056 -0.0058 -0.0058 -0.0058 -0.0057 -0.0064 -0.0059 (0.0111) (0.0111) (0.0111) (0.0111) (0.0111) (0.0111) (0.0111) TIER 1 t − 1 1.7878** 1.7813** 1.7879** 1.7822** 1.7836** 1.7674** 1.7503* (0.8921) (0.8921) (0.8921) (0.8919) (0.8921) (0.8919) (0.8978) RWAt − 1 -0.3613* -0.3606* -0.3620* -0.3596* -0.3625* -0.3625* -0.3723* (0.2031) (0.2031) (0.2031) (0.2031) (0.2031) (0.2031) (0.2051) PROBLt − 1 -0.8825*** -0.8851*** -0.8880*** -0.8826*** -0.8832*** -0.8911*** -0.8753*** (0.3078) (0.3078) (0.3078) (0.3078) (0.3078) (0.3081) (0.3069) α 0 1.8695*** 1.8888*** 1.8694*** 1.8702*** 1.8636*** 1.9502*** 1.9952*** (0.4871) (0.4859) (0.4860) (0.4860) (0.4870) (0.4960) (0.5153) Firm fixed effects yes yes yes yes yes yes yes Time fixed effects yes yes yes yes yes yes yes N 4,499 4,499 4,499 4,499 4,499 4,499 4,499 R2 0.3520 0.3518 0.3518 0.3518 0.3520 0.3518 0.3520 N is the total number of observations. Standard errors are clustered at the company level and are reported in parenthesis. * p < 0.05, ** p < 0.01, *** p < 0.001 Table 10 Regressions of logarithm of bank market capitalization ( MKTCAP ) on envi- ronmental impact ratios plus controls (1) (2) (3) (4) (5) (6) (7) Regressors MKTCAPt MKTCAPt MKTCAPt MKTCAPt MKTCAPt MKTCAPt MKTCAPt IRt − 1 -7.6351*** (2.3751) IRt − 1, water -71.7511 (53.5684) IRt − 1, waste -37.4138** (18.6724) IRt − 1, airp -43.5952*** (14.3864) IRt − 1, ghg -6.4255*** (1.7134) IRt − 1, lwp -15.0268** (7.2477) IRt − 1, nr -15.2706 (4.8891) SIZEt − 1 1.0776*** 1.0774*** 1.0774*** 1.0774*** 1.0775*** 1.0758*** 1.0773*** (0.0100) (0.0100) (0.0100) (0.0100) (0.0100) (0.0100) (0.0100) TIER 1 t − 1 8.3263*** 8.3195*** 8.3274*** 8.3251*** 8.3237*** 8.2835*** 8.3151*** (1.2268) (1.2301) (1.2299) (1.2289) (1.2262) (1.2177) (1.2267) RWAt − 1 2.1069*** 2.1104*** 2.1078*** 2.1117*** 2.1063*** 2.1054*** 2.1064*** (0.1570) (0.1570) (0.1570) (0.1570) (0.1570) (0.156j9) (0.1569) PROBLt − 1 -1.7698*** -1.7779*** -1.7809*** -1.7730*** -1.7720*** -1.7915*** -1.7779*** (0.4037) (0.4041) (0.4039) (0.4037) (0.4039) (0.4039) (0.4039) α 0 -12.5940*** -12.5586*** -12.6037*** -12.5964*** -12.6068*** -12.3840*** -12.5860*** (0.3588) (0.3601) (0.3561) (0.3578) (0.3588) (0.4143) (0.3691) Firm fixed effects yes yes yes yes yes yes yes Time fixed effects yes yes yes yes yes yes yes N 4,835 4,835 4,835 4,835 4,835 4,835 4,835 R2 0.9471 0.9471 0.9471 0.9471 0.9471 0.9471 0.9469 N is the total number of observations. Standard errors are clustered at the company level and are reported in parenthesis. * p < 0.05, ** p < 0.01, *** p < 0.001 5 We show estimates with one-period lagged regressors to overcome potential problems due to si- multaneity. However, we verified that all our regressions deliver results of same quality when we use contemporaneous regressors. 6 Regressors are one period lagged, but we checked that the quality of results does not change when the regressors are contemporaneous. 7 Dell’Atti et al. [ 2017 ] show that corporate social responsibility engagements determine the repu- tation of banks, but the effect is much more evident for social engagements while is not significant for environmental engagements. Nonetheless, the results are based on banks surveyed in 2010, and the same authors argue that during that time the focus on environmental impacts of banking activity was very small. 5 Conclusions We study the environmental impact from banks. We examine costs for hypothetical dam- ages on the environmental and the society caused by pollution, gas emissions, waste or the use of water or natural resources. Environmental “impact ratios” measure environ- mental damage costs in proportion to revenues, and approximate the negative externality deriving from environmental activities. Our main finding is that bank profitability and market valuation decrease substantially in environmental impact ratios. Thus, banks with a negative impact on the environment exhibit also a weaker financial performance. This result is important for bank managers and regulators addressing environmental management issues. In the longer run, high environmental damage costs could lead the bank to be financially unstable, worsening its reputation and increasing financing costs. Therefore, we suggest that a transition to activities and practices that are more renewable or lower in their emissions would not only be less harmful to our society, but it would be also strategic for the efficient continuation of the operating activity. Moreover, if the environmental damages of banks would be relatively small, the same firms could be less affected by the stricter and increasingly onerous environmental regulations that are currently developed. 8 To conclude, this article is a first contribution to the topic of environmental man- agement providing evidence on how the environmental impact of banks could drive their financial performance. Therefore, it opens few ways to research activity in different strands. For example, future studies in the field of finance could focus more narrowly on the relationship between environmental damage costs and bank risk-taking, to check if banks that are more environmentally “aggressive” would also be risk lovers. This type of research would also involve the more recent discussion on whether environmental risks should be captured by bank capital regulations. 9 Environmental studies instead could use our results to investigate more deeply causes and tools for the reduction of banks´ negative externalities on the environment. We leave these tasks to the future research agenda. 8 According to Mason et al. [2012] a firm may be forced to stop its activity because of an inability to bear the costs of complying with heavier environmental regulations. Oehmke [2022] argues that governments fearing the triggering of banking crises may be reluctant to introduce stricter environmental regulation that would depreciate banks´ assets. 9 See for example https://www.ecb.europa.eu/pub/financial-stability/macroprudent ial-bulletin/html/ecb.mpbu202110_1 ~ 5323a5baa8.en.html. Recent evidence of Oehmke and Opp [2022] suggests that capital requirements could improve the capacity of carbon taxes to effectively reduce carbon emissions. Declarations The author declares no conflict of interests. References Oana Marina B˘atae, Voicu Dan Dragomir, and Liliana Feleag˘a. The relationship between environmental, social, and financial performance in the banking sector: A European study. Journal of Cleaner Production, 290:125791, 2021. Sudipta Bose, Habib Zaman Khan, and Reza M Monem. Does green banking perfor- mance pay off? Evidence from a unique regulatory setting in Bangladesh. Corporate Governance: An International Review, 29(2):162–187, 2021. J´erˆome Caby, Ydriss Ziane, and Eric Lamarque. The impact of climate change manage- ment on banks profitability. Journal of Business Research, 142:412–422, 2022. Li Cai, Jinhua Cui, and Hoje Jo. Corporate environmental responsibility and firm risk. Journal of Business Ethics, 139:563–594, 2016. Stefano Dell’Atti, Annarita Trotta, Antonia Patrizia Iannuzzi, and Federica Demaria. Corporate social responsibility engagement as a determinant of bank reputation: An empirical analysis. Corporate Social Responsibility and Environmental Management, 24(6):589–605, 2017. Francisco Javier Forcadell and Elisa Aracil. European banks’ reputation for corporate social responsibility. Corporate Social Responsibility and Environmental Management, 24(1):1–14, 2017. Leonardo Gambacorta, Salvatore Polizzi, Alessio Reghezza, and Enzo Scannella. Do banks practice what they preach? Brown lending and environmental disclosure in the euro area. Bank for International Settlements Working Paper No 1143, 2023. Francesco Gangi, Antonio Meles, Eugenio D’Angelo, and Lucia Michela Daniele. Sustain- able development and corporate governance in the financial system: Are environmen- tally friendly banks less risky? Corporate Social Responsibility and Environmental Management, 26(3):529–547, 2019. Michael Greenstone, Christian Leuz, and Patricia Breuer. Mandatory disclosure would reveal corporate carbon damages. Science, 381(6660):837–840, 2023. Hoje Jo, Hakkon Kim, and Kwangwoo Park. Corporate environmental responsibility and firm performance in the financial services sector. Journal of Business Ethics, 131: 257–284, 2015. Charles F Mason et al. The economics of eco-labeling: Theory and empirical implications. International Review of Environmental and Resource Economics, 6(4):341–372, 2012. Tiago Melo and Alvaro Garrido-Morgado. Corporate reputation: A combination of so- cial responsibility and industry. Corporate Social Responsibility and Environmental Management, 19(1):11–31, 2012. Florian Neitzert and Matthias Petras. Corporate social responsibility and bank risk. Journal of Business Economics, 92(3):397–428, 2022. Martin Oehmke. Bank capital regulation and climate change. Advisory Scientific Committee (ASC) Insight of the European Systemic Risk Board (ESRB) Number 3, pages 1–14, 2022. Martin Oehmke and Marcus M Opp. Green capital requirements. Swedish House of Finance Research Paper, (22-16), 2022. Bert Scholtens. Corporate social responsibility in the international banking industry. Journal of Business Ethics, 86(2):159–175, 2009. Koji Takahashi and Junnosuke Shino. Greenhouse gas emissions and bank lending. Bank for International Settlements Working Paper No 1078, 2023. Paul Thompson and Christopher J Cowton. Bringing the environment into bank lending: Implications for environmental reporting. The British Accounting Review, 36(2):197– 218, 2004. Marcel Van Marrewijk. Concepts and definitions of CSR and corporate sustainability: Between agency and communion. Journal of Business Ethics, 44:95–105, 2003. Olaf Weber. Environmental credit risk management in banks and financial service insti- tutions. Business Strategy and the Environment, 21(4):248–263, 2012. Wei Yin, Zheyi Zhu, Berna Kirkulak-Uludag, and Yaping Zhu. The determinants of green credit and its impact on the performance of Chinese banks. Journal of Cleaner Production, 286:124991, 2021. Additional Declarations The authors declare no competing interests. Cite Share Download PDF Status: Posted Version 1 posted You are reading this latest preprint version Research Square lets you share your work early, gain feedback from the community, and start making changes to your manuscript prior to peer review in a journal. As a division of Research Square Company, we’re committed to making research communication faster, fairer, and more useful. We do this by developing innovative software and high quality services for the global research community. Our growing team is made up of researchers and industry professionals working together to solve the most critical problems facing scientific publishing. Also discoverable on Platform About Our Team In Review Editorial Policies Advisory Board Help Center Resources Author Services Accessibility API Access RSS feed Manage Cookie Preferences © Research Square 2026 | ISSN 2693-5015 (online) Privacy Policy Terms of Service Do Not Sell My Personal Information {"props":{"pageProps":{"initialData":{"identity":"rs-4011147","acceptedTermsAndConditions":true,"allowDirectSubmit":true,"archivedVersions":[],"articleType":"Research Article","associatedPublications":[],"authors":[{"id":276168929,"identity":"b94ed637-36e2-4f2d-a511-7e8e73369bb9","order_by":0,"name":"Silvia 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(\u003cem\u003eIR\u003c/em\u003e\u003csub\u003e\u003cem\u003ewater\u003c/em\u003e\u003c/sub\u003e)\u003c/p\u003e","description":"","filename":"1.jpg","url":"https://assets-eu.researchsquare.com/files/rs-4011147/v1/401f8501d21cb90712c64eda.jpg"},{"id":52068062,"identity":"f6d293ff-2a2a-4c85-bebb-38e92bcb262a","added_by":"auto","created_at":"2024-03-06 07:21:48","extension":"jpg","order_by":2,"title":"Figure 2","display":"","copyAsset":false,"role":"figure","size":133805,"visible":true,"origin":"","legend":"\u003cp\u003eBank costs for damages caused by the production of waste in proportion to revenues (\u003cem\u003eIR\u003c/em\u003e\u003csub\u003e\u003cem\u003ewaste\u003c/em\u003e\u003c/sub\u003e)\u003c/p\u003e","description":"","filename":"2.jpg","url":"https://assets-eu.researchsquare.com/files/rs-4011147/v1/7e36eb7a042be532dcc7e704.jpg"},{"id":52068064,"identity":"df52782f-1187-4a8a-baee-995d369f3285","added_by":"auto","created_at":"2024-03-06 07:21:48","extension":"jpg","order_by":3,"title":"Figure 3","display":"","copyAsset":false,"role":"figure","size":149406,"visible":true,"origin":"","legend":"\u003cp\u003eBank costs for damages caused by air pollution in proportion to revenues (\u003cem\u003eIR\u003c/em\u003e\u003csub\u003e\u003cem\u003eairp\u003c/em\u003e\u003c/sub\u003e)\u003c/p\u003e","description":"","filename":"3.jpg","url":"https://assets-eu.researchsquare.com/files/rs-4011147/v1/2dab3e7c3b9d37ddc39c2d5c.jpg"},{"id":52068068,"identity":"a78ac20b-95c6-4af0-93d3-3c404a2c99a0","added_by":"auto","created_at":"2024-03-06 07:21:49","extension":"jpg","order_by":4,"title":"Figure 4","display":"","copyAsset":false,"role":"figure","size":138815,"visible":true,"origin":"","legend":"\u003cp\u003eBank costs for damages caused by greenhouse emissions in proportion to revenues (\u003cem\u003eIR\u003c/em\u003e\u003csub\u003e\u003cem\u003eghg\u003c/em\u003e\u003c/sub\u003e)\u003c/p\u003e","description":"","filename":"4.jpg","url":"https://assets-eu.researchsquare.com/files/rs-4011147/v1/59273b40b704dd8992522425.jpg"},{"id":52068066,"identity":"295b1e20-1a32-4208-b6d6-8d0daa57fcb2","added_by":"auto","created_at":"2024-03-06 07:21:49","extension":"jpg","order_by":5,"title":"Figure 5","display":"","copyAsset":false,"role":"figure","size":149025,"visible":true,"origin":"","legend":"\u003cp\u003eBank costs for damages caused by the pollution of land or water in proportion to revenues (\u003cem\u003eIR\u003c/em\u003e\u003csub\u003e\u003cem\u003elwp\u003c/em\u003e\u003c/sub\u003e)\u003c/p\u003e","description":"","filename":"5.jpg","url":"https://assets-eu.researchsquare.com/files/rs-4011147/v1/72b81aa2317a211982e1dc37.jpg"},{"id":52068065,"identity":"097add59-96c3-46a0-9786-95847ce23a17","added_by":"auto","created_at":"2024-03-06 07:21:48","extension":"jpg","order_by":6,"title":"Figure 6","display":"","copyAsset":false,"role":"figure","size":148159,"visible":true,"origin":"","legend":"\u003cp\u003eBank costs for damages caused by the use of natural resources (minerals, metals, natural gas, oil, coal, forestry, and agriculture) in proportion to revenues (\u003cem\u003eIR\u003c/em\u003e\u003csub\u003e\u003cem\u003enr\u003c/em\u003e\u003c/sub\u003e)\u003c/p\u003e","description":"","filename":"6.jpg","url":"https://assets-eu.researchsquare.com/files/rs-4011147/v1/ed87f07894b2d14caa3f78ed.jpg"},{"id":52068069,"identity":"95b75f6c-9a2e-4d57-84d2-9384c79de378","added_by":"auto","created_at":"2024-03-06 07:21:55","extension":"pdf","order_by":0,"title":"","display":"","copyAsset":false,"role":"manuscript-pdf","size":637432,"visible":true,"origin":"","legend":"","description":"","filename":"manuscript.pdf","url":"https://assets-eu.researchsquare.com/files/rs-4011147/v1/d5aa3099-c96a-4476-a13a-58df30763005.pdf"}],"financialInterests":"The authors declare no competing interests.","formattedTitle":"\u003cp\u003eDoes the environmental impact of banks affect their financial performance?\u003c/p\u003e","fulltext":[{"header":"1 Introduction","content":"\u003cdiv class=\"BlockQuote\"\u003e\n\u003cp\u003eRecent regulations in both the United States and the European Union require firms to disclose their environmental impact. In the European Union, the Corporate Sustainabil- ity Reporting Directive (CSRD EU 2022/2464) imposes substantial new disclosure and compliance requirements on companies concerning information about sustainability re- lated factors, which include climate change and other environmental issues.\u003csup\u003e1\u003c/sup\u003e The United States Securities and Exchange Commission is looking at similar regulations, proposing more expansive climate related disclosure rules.\u003csup\u003e2\u003c/sup\u003e The enactment of these rules will make clearer to customers and stakeholders that firms could cause potential huge damages to the world\u0026rsquo;s green economy. A recent study of Greenstone et al. [\u003cspan class=\"CitationRef\"\u003e2023\u003c/span\u003e] of nearly 15,000 worldwide public companies illustrates that corporations are responsible for a large share of the world\u0026acute;s climate pollution, and the costs they had to pay for damages to the envi- ronment could eat up about 44% of their profits.\u003c/p\u003e\n\u003cp\u003eIn this article we focus on the environmental damage cost of banks. Environmen- tal management is an important part of the social responsibility of corporations, and is specific for each sector, as every business has its own mechanism that coordinates its be- haviour and role within society [Van Marrewijk, 2003, Melo and Garrido-Morgado, 2012]. Inside banks corporate social responsibility strategies are even more complex to explain, and should be examined from several perspectives. In fact, the lending channel is rele- vant to determine banks\u0026rsquo; sustainability and its interaction with other strategic decisions [Scholtens, 2009, Weber, 2012]. Offering loans to eco-friendly companies can improve financial performances [B˘atae et al., 2021] and lower risk-taking [Gangi et al., 2019], ulti- mately bringing relief on financing costs and capital levels. Nonetheless, the assessment of borrowers\u0026rsquo; environmental profiles and risk can be costly, harming the profitability of banks [Caby et al., 2022].\u003c/p\u003e\n\u003cp\u003eDiscussions among policy makers and academics have focused more frequently on environmental impacts inside non-financial sectors, and especially industrial and energy companies, which seem to be more directly involved in environmental practices that may put at risk the world\u0026rsquo;s ecological health. Nonetheless, banks do play a key role in driving negative externalities to the environment. In 2011 the report of Schuecking et al. (2011) provided a list of 20 \u0026ldquo;killer banks\u0026rdquo;, namely the world\u0026acute;s largest commercial banks funding the 74% of the coal industry funding since 2005.\u003csup\u003e3\u003c/sup\u003e Through their lending practices banks are inextricably linked to industrial activities that degrade the natural environment [Thompson and Cowton, 2004]. At the same time, banks use a considerable amount of resources for their own business, like for example energy and paper, and also generate substantial indirect carbon emissions through business travel [B˘atae et al., 2021].\u003c/p\u003e\n\u003c/div\u003e\n\u003cdiv class=\"BlockQuote\"\u003e\n\u003cp\u003eClearly, in the transition to a more environmentally friendly economy the role of banks cannot be seen as marginal. Gangi et al. [2019] argue that banking activities are environmentally relevant, because they can stimulate eco-friendly attitudes of borrowers, while through a \u0026ldquo;multiplier effect\u0026rdquo; they can also achieve huge benefits for the world\u0026rsquo;s ecology. Until now experts did not consider carefully whether banks incur considerable costs for their environmental engagement. We undertake this challenge and examine empirically banks\u0026rsquo; environmental damage costs obtained by S\u0026amp;P Capital IQ Trucost,\u0026nbsp;i.e. the estimate of the negative externality associated with the use of a resource or the emission of a pollutant. More precisely, environmental damage costs quantify in monetary terms the negative consequence on the society and the environment deriving from the use of water, the pollution of air, land or water, the generation of greenhouse gas or waste, and the use of natural resources (minerals, metals, natural gas, oil, coal, forestry, and agriculture).\u003c/p\u003e\n\u003cp\u003eFor each impact category, we compute \u0026ldquo;impact ratios\u0026rdquo; by taking environmental dam- age cost in percentage to total revenue. These numbers tell how much of the bank revenue would be impacted if the company had to pay back for the cost created to the environ- ment. Our results reveal that \u0026ldquo;impact ratios\u0026rdquo; affect in a negative way the bank operating performance, and are associated with a lower dividend payout. Furthermore, we also find that the bank market performance declines in impact ratios. Thus, banks threatening the environment more severely are less profitable, pay less cash to shareholders, and are discounted by stock market investors. The effects reveal to be stronger for externalities caused by waste and greenhouse gas emissions.\u003c/p\u003e\n\u003cp\u003eOverall, our findings suggest that environmental damage costs reflect on bank activi- ties in a negative way. Therefore, bankers should examine more carefully their strategies for environmental management, trying to reduce negative externalities caused by the in- volvement of ecological resources. Not only this would be beneficial for the world\u0026acute;s green economy, but it could also improve the bank financial health and long-term growth.\u003c/p\u003e\n\u003cp\u003eThe remainder of this paper is organized as follows. Section 2 reviews the literature related to our topic. Section 3 describes the data that we analyze. Section 4 presents the empirical results. Section 5 concludes.\u003c/p\u003e\n\u003cp\u003e\u003csup\u003e1\u003c/sup\u003e \u003cspan class=\"ExternalRef\"\u003e\u003cspan class=\"RefSource\"\u003ehttp://data.europa.eu/eli/dir/2022/2464/oj\u003c/span\u003e\u003c/span\u003e.\u003c/p\u003e\n\u003cp\u003e\u003csup\u003e2\u003c/sup\u003e\u003cspan class=\"ExternalRef\"\u003e\u003cspan class=\"RefSource\"\u003ehttps://www.sec.gov/files/rules/proposed/2022/33-11042.pdf\u003c/span\u003e\u003c/span\u003e.\u003c/p\u003e\n\u003cp\u003e\u003csup\u003e3\u003c/sup\u003e\u003cspan class=\"ExternalRef\"\u003e\u003cspan class=\"RefSource\"\u003ehttps://www.banktrack.org/manage/ems_files/download/bankrolling_climate_ch\u003c/span\u003e\u003c/span\u003eange_1/a_look_into_the_portfolios_of_the_worlds_largest_banks.pdf.\u003c/p\u003e\n\u003c/div\u003e"},{"header":"2 Review of the literature","content":"\u003cp\u003e \u003cdiv class=\"BlockQuote\"\u003e \u003cp\u003eThe attention of regulators on corporate social responsibility (CSR) has grown substan- tially in the last decades. Environmental management constitutes an important part of CSR actions [Cai et al., 2016], leading academics to ask whether environmental prac- tices could reflect also into other corporate behaviors. In this article we focus on banks\u0026acute; environmental damage costs, i.e. the negative externality in monetary terms caused by the usage of a natural resource or the emission of a pollutant. Environmental costs are largely unexplored in the previous literature, especially inside financial firms.\u003c/p\u003e \u003cp\u003eA couple of articles provide insights on the relationship between environmental costs and bank performance. Based on a sample of banks in Bangladesh during 2008\u0026ndash;2014, Bose et al. [2021] document that \u0026ldquo;green banking\u0026rdquo;, i.e. internal operations and business models that don\u0026rsquo;t harm the environment, raise the financial performance through cost efficiencies. Jo et al. [2015] use environmental data from worldwide countries to illustrate that lowering environmental costs increase the long-term performance of banks. The interpretation is that a bank with a little impact on the environment could enjoy a better reputation and receive a higher valuation from investors. This article extends this previous evidence, examining the relationship between the performance of banks and their environmental impact.\u003c/p\u003e \u003cp\u003ePrevious studies have considered also some other aspects related to banks\u0026acute; environ- mental management. For example, Caby et al. [2022] examine data from the Carbon Disclosure Project during 2011\u0026ndash;2019, showing that banks\u0026rsquo; profitability increased in their disclosure on carbon emissions, but such positive impact was limited to the overall qual- ity of the bank climate change management and disclosure, beside the topic\u0026rsquo;s relevance to the board. As a consequence, the authors conclude that a concrete climate change management in the banking sector was not fully implemented. The results of Gangi et al. [2019] suggest that a bank governance focused on environmental issues could reduce cor- porate risk-taking. Similarly, Neitzert and Petras [2022] illustrate that environmentally friendly activities have a risk mitigation effect inside banks, and the reduction of risk from environmental management is much more evident than from social or governance activities which taken together constitute the three pillars of corporate social responsi- bility. In Europe, B˘atae et al. [2021] discover that the reduction of emissions and waste could enhance bank profits. In China, Yin et al. [2021] find that green lending increases the profitability of non-state-owned banks while also reduces their credit default risk.\u003c/p\u003e \u003cp\u003eRegulators have questioned how environmental disclosure policies would affect bank lending. For example, Takahashi and Shino [2023] find that during 2006\u0026ndash;2018 Japanese banks decreased loans to firms with high greenhouse gas emissions. Inside euro area banks in 2019 Gambacorta et al. [2023] report a negative relationship between environ- mental disclosure and brown lending. However, this effect is contingent on the tone of the financial report, i.e. depending on whether it reveals strong or low concerns on envi- ronmental risks. The authors conclude saying that is important to increase the awareness of environmental risks, incentivizing the commitment of banks to act as environmentally responsible lenders.\u003c/p\u003e \u003c/div\u003e \u003c/p\u003e"},{"header":"3 Data and variables","content":"\u003cdiv class=\"BlockQuote\"\u003e\n\u003cp\u003eWe use the S\u0026amp;P Global Trucost\u0026acute;s \u0026ldquo;Environmental Register\u0026rdquo;, which is a database con- taining information on the direct and supply chain environmental costs for worldwide companies classified by primary industry and geography. Trucost examines the company\u0026rsquo;s activities that have an impact on \u0026ldquo;environmental categories\u0026rdquo; covering water used, waste generated, greenhouse gas emissions, land, water and air pollutants generated, and natural resources used. For each category Trucost identifies the negative external- ity originated by the firm and quantifies it in monetary terms providing a figure called environmental \u0026ldquo;damage cost\u0026rdquo;. To assess environmental damages, Trucost uses annually updated information disclosed by the company itself and, where gaps are present, mod- eled data. Direct damage costs are those associated with a company\u0026rsquo;s direct operations, while indirect damage costs are those that are borne in the company\u0026rsquo;s supply chain. Total damage costs are the sum of the two.\u003c/p\u003e\n\u003cp\u003eMore specifically, Trucost computes damage costs multiplying the company\u0026acute;s natural resources used or pollutants emitted (e.g. m3 of water or tCO2e) by environmental valuation coefficients. Valuation coefficients are factors that represent the average damage value, i.e. the external cost of damages to human, natural and built capital, resulting from an organization\u0026rsquo;s direct and indirect usage of natural resources or emission of pollutants.\u003csup\u003e4\u003c/sup\u003e We downloaded environmental damage costs and total revenues for firms that report the value \u0026ldquo;bank\u0026rdquo; inside the field named \u0026ldquo;primary industry\u0026rdquo; in our database. The fre- quency of observation is annual and the time horizon is the interval 2006\u0026ndash;2022. The companies have headquarter in the geographies of Africa, Asia-Pacific, Europe, Latin America and Caribbean, Middle East, United States and Canada. Finally, using S\u0026amp;P Capital IQ, we obtain balance sheet data that match environmental costs. Overall, our sample counts 6,842 bank-year observations.\u003c/p\u003e\n\u003c/div\u003e\n\u003cdiv class=\"BlockQuote\"\u003e\n\u003cp\u003eFor each bank during a certain financial year we compute the aggregate environ- mental \u0026ldquo;impact ratio\u0026rdquo; \u003cem\u003eIR\u003c/em\u003e as the ratio of environmental damage costs to total revenues. This metric quantifies the percentage of a company\u0026rsquo;s annual earnings at risk should the company be held accountable for its negative environmental impacts.\u003c/p\u003e\n\u003cp\u003eHowever, not all companies disclose their use of environmental resources and environ- mental costs. For companies without disclosure Trucost uses an econometrics environ- mental input-output model (EEIO) that approximates the damage originated from the company\u0026acute;s operations as well its supply chain tiers. The model combines information derived from a wide array of national, international, and industry databases. Trucost tests its approximated environmental costs with data disclosures collected from companies during the Trucost\u0026acute;s annual engagement program.\u003c/p\u003e\n\u003c/div\u003e\n\u003cdiv class=\"BlockQuote\"\u003e\n\u003cp\u003eThe database includes a variable that takes the ratio between the company\u0026acute;s disclosed environmental costs over the total environmental costs assessed by Trucost. We download this item and call it \u003cem\u003eDISCL\u003c/em\u003e. A high \u003cem\u003eDISCL\u003c/em\u003e tells that the firm was relatively transparent in disclosing information on its environmental costs.\u003c/p\u003e\n\u003cp\u003eTable\u0026nbsp;\u003cspan class=\"InternalRef\"\u003e1\u003c/span\u003e reports the average \u003cem\u003eIR\u003c/em\u003e and \u003cem\u003eDISCL\u003c/em\u003e in all geographic regions. Banks from the Latin America and Caribbean have the highest environmental impact (\u003cem\u003eIR\u003c/em\u003e close to 0.52%) followed by African (\u003cem\u003eIR\u003c/em\u003e close to 0.38%) and European banks (\u003cem\u003eIR\u003c/em\u003e close to 0.36%). In the regions of Asia-Pacific, Middle East, United States and Canada the impact ratio is between 26% and 29%. European banks are the most transparent institutions in disclosing their environmental engagements, as the proportion of disclosed costs is approximately 54%, while the most opaque institutions are United States and Canadian banks, with average \u003cem\u003eDISCL\u003c/em\u003e almost equal to 12%.\u003c/p\u003e\n\u003c/div\u003e\n\u003cdiv class=\"gridtable\"\u003e\n\u003ctable id=\"Tab1\" border=\"1\"\u003e\u003ccaption\u003e\n\u003cdiv class=\"CaptionNumber\"\u003eTable 1\u003c/div\u003e\n\u003cdiv class=\"CaptionContent\"\u003e\n\u003cp\u003eComposition of the sample and averages of variables\u003c/p\u003e\n\u003c/div\u003e\n\u003c/caption\u003e\n\u003cthead\u003e\n\u003ctr\u003e\n\u003cth align=\"left\"\u003e\u0026nbsp;\u003c/th\u003e\n\u003cth align=\"left\"\u003e\n\u003cp\u003e% of sample\u003c/p\u003e\n\u003c/th\u003e\n\u003cth align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eIR\u003c/em\u003e (%)\u003c/p\u003e\n\u003c/th\u003e\n\u003cth align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eDISCL\u003c/em\u003e (%)\u003c/p\u003e\n\u003c/th\u003e\n\u003c/tr\u003e\n\u003c/thead\u003e\n\u003ctbody\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eAfrica\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e3.52\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e0.3788\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e33.5712\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eAsia-Pacific\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e38.54\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e0.2767\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e20.1934\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eEurope\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e18.02\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e0.3636\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e54.4767\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eLatin America and Caribbean\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e4.72\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e0.5181\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e30.7679\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eMiddle East\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e5.89\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e0.2916\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e21.2821\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eUnited States and Canada\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e29.30\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e0.2610\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e11.6176\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eTotal\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e100\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e0.3036\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e24.8998\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003c/tbody\u003e\n\u003c/table\u003e\n\u003c/div\u003e\n\u003cdiv class=\"BlockQuote\"\u003e\n\u003cp\u003eWe measure separate impact ratios corresponding to different environmental cate- gories, namely the use of water (\u003cem\u003eIR\u003c/em\u003e\u003csub\u003e\u003cem\u003ewater\u003c/em\u003e\u003c/sub\u003e), the generation of waste (\u003cem\u003eIR\u003c/em\u003e\u003csub\u003e\u003cem\u003ewaste\u003c/em\u003e\u003c/sub\u003e), the emission of greenhouse gas (\u003cem\u003eIR\u003c/em\u003e\u003csub\u003e\u003cem\u003eghg\u003c/em\u003e\u003c/sub\u003e), the pollution of air (\u003cem\u003eIR\u003c/em\u003e\u003csub\u003e\u003cem\u003eairp\u003c/em\u003e\u003c/sub\u003e), the pollution of land or water (\u003cem\u003eIR\u003c/em\u003e\u003csub\u003e\u003cem\u003elwp\u003c/em\u003e\u003c/sub\u003e), the use of natural resources (i.e. minerals, metals, natural gas, oil, coal, forestry, and agriculture) (\u003cem\u003eIR\u003c/em\u003e\u003csub\u003e\u003cem\u003enr\u003c/em\u003e\u003c/sub\u003e). Figures\u0026nbsp;1 to 6 plot averages of environmental impact ratios inside geographic regions. For two categories the difference among geographies is more evident. Latin America and Caribbean banks are responsible for potential damages due to greenhouse gas emissions (\u003cem\u003eIR\u003c/em\u003e\u003csub\u003e\u003cem\u003eghg\u003c/em\u003e\u003c/sub\u003e close to 0.35%), while African banks drive the negative externality from waste (\u003cem\u003eIR\u003c/em\u003e\u003csub\u003e\u003cem\u003ewaste\u003c/em\u003e\u003c/sub\u003e close to 0.09%). For other categories we don\u0026acute;t observe sharp differences in the environmental impact of our banks, as impact ratios are close in magnitude among all geographies.\u003c/p\u003e\n\u003cp\u003eIn the following analysis we study the effect from environmental impact ratios on bank characteristics. The company\u0026acute;s profitability is measured alternatively by the return on assets (\u003cem\u003eROA\u003c/em\u003e) and return on equity (\u003cem\u003eROE\u003c/em\u003e), which divide the total net income respectively by book values of assets and equity. Higher values of \u003cem\u003eROA\u003c/em\u003e and \u003cem\u003eROE\u003c/em\u003e indi- cate that the operating performance improves. The dividend payout \u003cem\u003eDIV\u003c/em\u003e is dividends declared during the period as a percent of earnings per share, and a high \u003cem\u003eDIV\u003c/em\u003e means that huge shares of cash are distributed to shareholders. The price-to-book ratio \u003cem\u003ePB\u003c/em\u003e is a yardstick for the bank franchise value, where a \u003cem\u003ePB\u003c/em\u003e greater than one suggests that a bank can generate market value commensurate to the book value of its equity. Instead, a \u003cem\u003ePB\u003c/em\u003e lower than unity reveals investors\u0026rsquo; concern about shareholder value, leading to a higher cost of capital if the bank would issue additional equity. Finally, the bank market capitalization \u003cem\u003eMKTCAP\u003c/em\u003e is the natural logarithm of the product between the number of shares outstanding and the average stock price.\u003c/p\u003e\n\u003c/div\u003e\n\u003cdiv class=\"BlockQuote\"\u003e\n\u003cp\u003eIn our regressions we employ few more variables that take into account other aspects affecting the bank financial performance. First, \u003cem\u003eSIZE\u003c/em\u003e is the bank size measured by the natural logarithm of the book value of total assets. \u003cem\u003eTIER\u003c/em\u003e1 is the tier 1 capital ratio as defined by the latest regulatory and supervisory guidelines. For US institutions, this will be transitional when applicable, and the lesser of the standardized and advanced approaches. For non-US institutions, this may be transitional or fully loaded, depending on availability. Controlling for \u003cem\u003eTIER\u003c/em\u003e1 we take into account the capacity of the bank to offset losses using the capital eligible for the regulatory requirement, and a bank with a high \u003cem\u003eTIER\u003c/em\u003e1 would be more resilient to financial distress. Finally, we assess the asset quality of the firm from two variables. First, \u003cem\u003eRWA\u003c/em\u003e is total risk weighted assets as a percent of total assets. Depending on institution attributes and time period, total risk weighted assets is reported under either the US Basel III (B3) revised regulatory capital rules, advanced approaches rules or otherwise, or the general risk-based (GRB) regulatory capital rules. Preference between the GRB, B3 and B3-post parallel run values is given to the most conservative approach. Second, \u003cem\u003ePROBL\u003c/em\u003e is problem loans over total assets. If the company reports multiple values for the following items, the numerator for \u003cem\u003ePROBL\u003c/em\u003e is selected with the following ranking: non-performing loans, gross impaired loans, net impaired loans, and other problem loans. Table\u0026nbsp;\u003cspan class=\"InternalRef\"\u003e2\u003c/span\u003e summarizes the definition of all variables we employ in the analysis, while Table\u0026nbsp;\u003cspan class=\"InternalRef\"\u003e3\u003c/span\u003e reports descriptive statistics.\u003c/p\u003e\n\u003c/div\u003e\n\u003cdiv class=\"gridtable\"\u003e\n\u003ctable id=\"Tab2\" border=\"1\"\u003e\u003ccaption\u003e\n\u003cdiv class=\"CaptionNumber\"\u003eTable 2\u003c/div\u003e\n\u003cdiv class=\"CaptionContent\"\u003e\n\u003cp\u003eDefinition of variables\u003c/p\u003e\n\u003c/div\u003e\n\u003c/caption\u003e\n\u003cthead\u003e\n\u003ctr\u003e\n\u003cth align=\"left\"\u003e\n\u003cp\u003eVariable\u003c/p\u003e\n\u003c/th\u003e\n\u003cth align=\"left\"\u003e\n\u003cp\u003eDefinition\u003c/p\u003e\n\u003c/th\u003e\n\u003c/tr\u003e\n\u003c/thead\u003e\n\u003ctbody\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eDISCL\u003c/em\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eBank\u0026acute;s disclosed environmental damage costs in percentage to the\u003c/p\u003e\n\u003cp\u003etotal environmental damage costs assessed by Trucost.\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eDIV\u003c/em\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eDividends declared during the period as a percent of earnings per\u003c/p\u003e\n\u003cp\u003eshare.\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003c/tbody\u003e\n\u003c/table\u003e\n\u003c/div\u003e\n\u003cdiv class=\"gridtable\"\u003e\n\u003cdiv class=\"colspec\" align=\"left\"\u003e\u0026nbsp;\u003c/div\u003e\n\u003ctable id=\"Taba\" border=\"1\"\u003e\n\u003cthead\u003e\n\u003ctr\u003e\n\u003cth align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eIR\u003c/em\u003e\u003c/p\u003e\n\u003c/th\u003e\n\u003cth align=\"left\"\u003e\n\u003cp\u003eTotal environmental damage costs (direct and indirect) in percent- age to total revenues. Environmental damage costs are computed multiplying water used, waste generated, air pollution generated, greenhouse gas emissions, land and water pollution generated, natural resources (minerals, metals, natural gas, oil, coal, forestry, and agriculture) used by the respective environmental impact valuation\u003c/p\u003e\n\u003cp\u003ecoefficients elaborated by S\u0026amp;P Global Trucost.\u003c/p\u003e\n\u003c/th\u003e\n\u003c/tr\u003e\n\u003c/thead\u003e\n\u003ctbody\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eIRairp\u003c/em\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eEnvironmental damage costs deriving from the pollution of air in per-\u003c/p\u003e\n\u003cp\u003ecentage to total revenues.\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eIRghg\u003c/em\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eEnvironmental damage costs deriving from the emissions of green-\u003c/p\u003e\n\u003cp\u003ehouse gases in percentage to total revenues.\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eIRlwp\u003c/em\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eEnvironmental damage costs deriving from the pollution of land or\u003c/p\u003e\n\u003cp\u003ewater in percentage to total revenues.\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eIR\u003c/em\u003e\u003csub\u003e\u003cem\u003enr\u003c/em\u003e\u003c/sub\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eEnvironmental damage costs deriving from the use of natural re- sources in percentage to total revenues. Natural resources include:\u003c/p\u003e\n\u003cp\u003eminerals, metals, natural gas, oil, coal, forestry, and agriculture.\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eIRwater\u003c/em\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eEnvironmental damage costs deriving from the usage of water in per-\u003c/p\u003e\n\u003cp\u003ecentage to total revenues.\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eIRwaste\u003c/em\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eEnvironmental damage costs deriving from the production of waste\u003c/p\u003e\n\u003cp\u003ein percentage to total revenues.\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eMKTCAP\u003c/em\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eNatural logarithm of the product between the number of shares out-\u003c/p\u003e\n\u003cp\u003estanding and the average stock price.\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003ePB\u003c/em\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eMarket value of equity divided by book value of equity.\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003ePROBL\u003c/em\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eProblem loans in percentage to total book value of assets. If the com- pany reports multiple values for the following items, the numerator for \u003cem\u003ePROBL\u003c/em\u003e is selected with the following ranking: non-performing loans, gross impaired loans, net impaired loans, and other problem\u003c/p\u003e\n\u003cp\u003eloans.\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eROA\u003c/em\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eNet income in percentage to total book value of assets.\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eROE\u003c/em\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eNet income in percentage to total book value of equity.\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eRWA\u003c/em\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eTotal risk weighted assets in percentage to total book value of assets. Total risk weighted assets is reported under either the US Basel III (B3) revised regulatory capital rules, advanced approaches rules or otherwise, or the general risk-based (GRB) regulatory capital rules. Preference between the GRB, B3 and B3-post parallel run values is\u003c/p\u003e\n\u003cp\u003egiven to the most conservative approach.\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eSIZE\u003c/em\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eNatural logarithm of total book value of assets.\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003c/tbody\u003e\n\u003c/table\u003e\n\u003c/div\u003e\n\u003cdiv class=\"gridtable\"\u003e\n\u003cdiv class=\"colspec\" align=\"left\"\u003e\u0026nbsp;\u003c/div\u003e\n\u003ctable id=\"Tab3\" border=\"1\"\u003e\n\u003ctbody\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eTIER\u003c/em\u003e1\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eTier 1 capital ratio as defined by the latest regulatory and supervisory guidelines. For US institutions, this will be transitional when appli- cable, and the lesser of the standardized and advanced approaches. For non-US institutions, this may be transitional or fully loaded, de-\u003c/p\u003e\n\u003cp\u003epending on availability from S\u0026amp;P Capital IQ.\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003c/tbody\u003e\n\u003c/table\u003e\n\u003c/div\u003e\n\u003cdiv class=\"gridtable\"\u003e\n\u003ctable id=\"Tabb\" border=\"1\"\u003e\u003ccaption\u003e\n\u003cp\u003eTable 3\u003c/p\u003e\n\u003cp\u003eDescriptive statistics\u003c/p\u003e\n\u003c/caption\u003e\n\u003cthead\u003e\n\u003ctr\u003e\n\u003cth align=\"left\"\u003e\u0026nbsp;\u003c/th\u003e\n\u003cth align=\"left\"\u003e\n\u003cp\u003eMean\u003c/p\u003e\n\u003c/th\u003e\n\u003cth align=\"left\"\u003e\n\u003cp\u003eMedian\u003c/p\u003e\n\u003c/th\u003e\n\u003cth align=\"left\"\u003e\n\u003cp\u003eMin\u003c/p\u003e\n\u003c/th\u003e\n\u003cth align=\"left\"\u003e\n\u003cp\u003eMax\u003c/p\u003e\n\u003c/th\u003e\n\u003cth align=\"left\"\u003e\n\u003cp\u003eSt Dev\u003c/p\u003e\n\u003c/th\u003e\n\u003c/tr\u003e\n\u003c/thead\u003e\n\u003ctbody\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eIR\u003c/em\u003e (%)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e0.3032\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e0.2589\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e30.6207\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e0.6554\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eIRwater\u003c/em\u003e (%)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e0.0790\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e0.0767\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e3.2821\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e0.0539\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eIRwaste\u003c/em\u003e (%)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e0.0157\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e0.0110\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e18.1411\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e0.2246\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eIR\u003c/em\u003e\u003csub\u003e\u003cem\u003eairp\u003c/em\u003e\u003c/sub\u003e (%)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e0.0462\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e0.0429\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e2.8156\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e0.0411\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eIR\u003c/em\u003e\u003csub\u003e\u003cem\u003eghg\u003c/em\u003e\u003c/sub\u003e (%)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e0.1392\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e0.1042\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e30.2312\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e0.5769\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eIR\u003c/em\u003e\u003csub\u003e\u003cem\u003elwp\u003c/em\u003e\u003c/sub\u003e (%)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e0.0140\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e0.0136\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e0.2878\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e0.0072\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eIR\u003c/em\u003e\u003csub\u003e\u003cem\u003enr\u003c/em\u003e\u003c/sub\u003e (%)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e0.0094\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e0.0096\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e0.1749\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e0.0044\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eDISCL\u003c/em\u003e (%)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e24.8934\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e0.0000\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0000\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e1.0000\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e39.3367\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eROA\u003c/em\u003e (%)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e0.9616\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e0.9122\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.15\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e20.479\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e1.0263\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eROE\u003c/em\u003e (%)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e9.7360\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e9.7552\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.6000\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e72.7451\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e9.5132\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eDIV\u003c/em\u003e (%)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e41.2207\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e35.2145\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e100.0000\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e47.1009\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003ePB\u003c/em\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e1.2323\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e1.0996\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0685\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e7.3675\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e0.8011\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eMKTCAP\u003c/em\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e8.7694\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e8.7677\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e1.3083\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e16.5826\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e2.6731\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eSIZE\u003c/em\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e18.0804\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e18.0606\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e11.9743\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e24.7811\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e2.4741\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eTIER\u003c/em\u003e1 (%)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e12.5357\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e11.7704\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.4586\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e81.8278\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e4.7425\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eRWA\u003c/em\u003e (%)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e63.1712\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e65.1386\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e9.1004\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e117.1367\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e17.4343\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003ePROBL\u003c/em\u003e (%)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e3.0531\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e1.5600\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e79.4356\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"char\" char=\".\"\u003e\n\u003cp\u003e5.1827\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003c/tbody\u003e\n\u003c/table\u003e\n\u003cp\u003e\u003csup\u003e4\u003c/sup\u003eFor each environmental category, the valuation coefficient is based on at least a dozen resources based, among others, on pricing tables from world-renowned institutions like the World Bank and the OECD. Unfortunately, Trucost has not made available in a unique repository folder with public access all the documents outlining the methodology followed to assess environmental damage costs. These documents are sent privately to Trucost\u0026acute;s users, which the authors have consulted. However, an overview of the methodology used by Trucost for measuring environmental costs can be found at \u003cspan class=\"ExternalRef\"\u003e\u003cspan class=\"RefSource\"\u003ehttps://www.support.marketplace.spglobal.com/en/datasets/alternative/trucost_environmental\u003c/span\u003e\u003c/span\u003e/trucost_environmental_data_methodology_guide.pdf. To provide an example, in order to determine the cost for land and water pollution, Trucost uses a valuation coefficient elaborated from a model that takes into account the impact on human health and the disability adjusted life years (DALYs), beside the impacts of landfill and incineration. Trucost attributes a dollar cost to these impacts, which all together determine the cost for damages on the environment from land or water pollution.\u003c/p\u003e\n\u003c/div\u003e"},{"header":"4 Results","content":"\u003cdiv id=\"Sec5\" class=\"Section2\"\u003e\n\u003ch2\u003e4.1 Effects from the bank environmental impact on profitability\u003c/h2\u003e\n\u003cdiv class=\"BlockQuote\"\u003e\n\u003cp\u003eWe estimate regressions of bank \u003cem\u003ej\u003c/em\u003e profitability at time \u003cem\u003et\u003c/em\u003e on its environmental impact following the equation below:\u003c/p\u003e\n\u003c/div\u003e\n\u003cp\u003e\u003cem\u003eProfitabilityj,t\u003c/em\u003e\u0026thinsp;=\u0026thinsp;\u003cem\u003e\u0026alpha;\u003c/em\u003e\u003csub\u003e0\u003c/sub\u003e\u0026thinsp;+\u0026thinsp;\u003cem\u003e\u0026alpha;\u003c/em\u003e\u003csub\u003e1\u003c/sub\u003e\u003cem\u003eIR\u003c/em\u003e\u003csub\u003e\u003cem\u003ej,t\u0026minus;\u003c/em\u003e1,\u003cem\u003er\u003c/em\u003e\u003c/sub\u003e\u0026thinsp;+\u0026thinsp;\u003cem\u003e\u0026alpha;\u003c/em\u003e\u003csub\u003e1\u003c/sub\u003e\u003cem\u003eControls\u003c/em\u003e\u003csub\u003e\u003cem\u003ej,t\u0026minus;\u003c/em\u003e1\u003c/sub\u003e\u0026thinsp;+\u0026thinsp;\u003cem\u003e\u0026tau;\u003c/em\u003e\u003csub\u003e\u003cem\u003et\u003c/em\u003e\u003c/sub\u003e\u0026thinsp;+\u0026thinsp;\u003cem\u003e\u0026psi;j\u003c/em\u003e\u0026thinsp;+\u0026thinsp;\u003cem\u003e\u0026omega;\u003c/em\u003e\u003csub\u003e\u003cem\u003ej,t\u003c/em\u003e\u003c/sub\u003e. (1)\u003c/p\u003e\n\u003cdiv class=\"BlockQuote\"\u003e\n\u003cp\u003eThe corporate profitability is assessed using alternatively \u003cem\u003eROA\u003c/em\u003e or \u003cem\u003eROE\u003c/em\u003e. We test re- gressions on the aggregate environmental impact \u003cem\u003eIR\u003c/em\u003e, and also the impact from separate environmental categories denoted with the subscript \u003cem\u003er\u003c/em\u003e, i.e. impacts from the use of water (\u003cem\u003eIR\u003c/em\u003e\u003csub\u003e\u003cem\u003ewater\u003c/em\u003e\u003c/sub\u003e), the use of other natural resources (\u003cem\u003eIR\u003c/em\u003e\u003csub\u003e\u003cem\u003enr\u003c/em\u003e\u003c/sub\u003e), the production of waste (\u003cem\u003eIR\u003c/em\u003e\u003csub\u003e\u003cem\u003ewaste\u003c/em\u003e\u003c/sub\u003e), the emissions of greenhouse gas (\u003cem\u003eIR\u003c/em\u003e\u003csub\u003e\u003cem\u003eghg\u003c/em\u003e\u003c/sub\u003e), the pollution of air (\u003cem\u003eIR\u003c/em\u003e\u003csub\u003e\u003cem\u003eairp\u003c/em\u003e\u003c/sub\u003e), the pollution of land or water (\u003cem\u003eIR\u003c/em\u003e\u003csub\u003e\u003cem\u003elwp\u003c/em\u003e\u003c/sub\u003e). The set of control variables includes the lagged \u003cem\u003eROA\u003c/em\u003e,11a size (\u003cem\u003eSIZE\u003c/em\u003e), level of regulatory capital (\u003cem\u003eTIER\u003c/em\u003e1), and quality of assets (\u003cem\u003eRWA\u003c/em\u003e and \u003cem\u003ePROBL\u003c/em\u003e). Finally, \u003cem\u003e\u0026tau;\u003c/em\u003e\u003csub\u003e\u003cem\u003et\u003c/em\u003e\u003c/sub\u003e and \u003cem\u003e\u0026psi;\u003c/em\u003e\u003csub\u003e\u003cem\u003ej\u003c/em\u003e\u003c/sub\u003e denote respectively time and firm fixed effects, while \u003cem\u003e\u0026omega;\u003c/em\u003e\u003csub\u003e\u003cem\u003ej,t\u003c/em\u003e\u003c/sub\u003e is the error term.\u003c/p\u003e\n\u003cp\u003eTables\u0026nbsp;\u003cspan class=\"InternalRef\"\u003e4\u003c/span\u003e\u0026ndash;\u003cspan class=\"InternalRef\"\u003e5\u003c/span\u003e report the outcomes.\u003csup\u003e5\u003c/sup\u003e The coefficient on the aggregate \u003cem\u003eIR\u003c/em\u003e on \u003cem\u003eROA\u003c/em\u003e and \u003cem\u003eROE\u003c/em\u003e is negative. However, we observe differences among environmental categories. In fact, profits decline more considerably in the costs caused by waste and greenhouse gas emissions. Costs for the pollution of water and land, or the usage of other natural resources would be associated with higher profitability. Looking at the control variables, we notice that profits increase in the corporate size, while decline in problem loans.\u003c/p\u003e\n\u003cp\u003eTo better disentangle different effects among environmental categories, we interact impact ratios with the company\u0026acute;s share of cost disclosure \u003cem\u003eDISC\u003c/em\u003e. The interaction term captures the effect from environmental costs on bank profitability when the environmental costs are largely disclosed by the company itself instead than being approximated by Trucost.\u003c/p\u003e\n\u003c/div\u003e\n\u003cdiv class=\"gridtable\"\u003e\n\u003ctable id=\"Tab4\" border=\"1\"\u003e\u003ccaption\u003e\n\u003cdiv class=\"CaptionNumber\"\u003eTable 4\u003c/div\u003e\n\u003cdiv class=\"CaptionContent\"\u003e\n\u003cp\u003eRegressions of bank return on assets (\u003cem\u003eROA\u003c/em\u003e) on environmental impact ratios plus controls\u003c/p\u003e\n\u003c/div\u003e\n\u003c/caption\u003e\n\u003cthead\u003e\n\u003ctr\u003e\n\u003cth align=\"left\"\u003e\u0026nbsp;\u003c/th\u003e\n\u003cth align=\"left\"\u003e\n\u003cp\u003e(1)\u003c/p\u003e\n\u003c/th\u003e\n\u003cth align=\"left\"\u003e\n\u003cp\u003e(2)\u003c/p\u003e\n\u003c/th\u003e\n\u003cth align=\"left\"\u003e\n\u003cp\u003e(3)\u003c/p\u003e\n\u003c/th\u003e\n\u003cth align=\"left\"\u003e\n\u003cp\u003e(4)\u003c/p\u003e\n\u003c/th\u003e\n\u003cth align=\"left\"\u003e\n\u003cp\u003e(5)\u003c/p\u003e\n\u003c/th\u003e\n\u003cth align=\"left\"\u003e\n\u003cp\u003e(6)\u003c/p\u003e\n\u003c/th\u003e\n\u003cth align=\"left\"\u003e\n\u003cp\u003e(7)\u003c/p\u003e\n\u003c/th\u003e\n\u003c/tr\u003e\n\u003c/thead\u003e\n\u003ctbody\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eRegressors\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eROAt\u003c/em\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eROAt\u003c/em\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eROAt\u003c/em\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eROAt\u003c/em\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eROAt\u003c/em\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eROAt\u003c/em\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eROAt\u003c/em\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eIRt\u0026thinsp;\u0026minus;\u003c/em\u003e\u0026thinsp;1\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.0155* (0.0081)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eIRwater,t\u0026thinsp;\u0026minus;\u003c/em\u003e\u0026thinsp;1\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.2119***\u003c/p\u003e\n\u003cp\u003e(0.0567)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eIRwaste,t\u0026thinsp;\u0026minus;\u003c/em\u003e\u0026thinsp;1\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.0193***\u003c/p\u003e\n\u003cp\u003e(0.0064)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eIRairp,t\u0026thinsp;\u0026minus;\u003c/em\u003e\u0026thinsp;1\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-1.1470\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(1.2583)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eIRghg,t\u0026thinsp;\u0026minus;\u003c/em\u003e\u0026thinsp;1\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.0209***\u003c/p\u003e\n\u003cp\u003e(0.0061)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eIRlwp,t\u0026thinsp;\u0026minus;\u003c/em\u003e\u0026thinsp;1\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e5.6013*\u003c/p\u003e\n\u003cp\u003e(2.9071)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eIRnr,t\u0026thinsp;\u0026minus;\u003c/em\u003e\u0026thinsp;1\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e10.4643**\u003c/p\u003e\n\u003cp\u003e(5.0102)\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eROAt\u0026thinsp;\u0026minus;\u003c/em\u003e\u0026thinsp;1\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.5546***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.5540***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.5547***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.5547***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.5546***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.5528***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.5524***\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0527)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0527)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0527)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0527)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0527)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0527)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0527)\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eSIZEt\u0026thinsp;\u0026minus;\u003c/em\u003e\u0026thinsp;1\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0003***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0003***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0003***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0003***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0003***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0003***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0003***\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0000)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0000)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0000)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0000)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0000)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0000)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0000)\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eTIER\u003c/em\u003e1\u003cem\u003et\u0026thinsp;\u0026minus;\u003c/em\u003e\u0026thinsp;1\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0276***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0276***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0276***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0276***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0276***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0281***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0282***\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0081)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0081)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0081)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0081)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0081)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0081)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0081)\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eRWAt\u0026thinsp;\u0026minus;\u003c/em\u003e\u0026thinsp;1\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0087***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0087***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0087***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0087***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0087***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0087***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0088***\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0010)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0010)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0010)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0010)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0010)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0010)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0010)\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003ePROBLt\u0026thinsp;\u0026minus;\u003c/em\u003e\u0026thinsp;1\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.0142***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.0142***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.0142***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.0142***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.0142***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.0141***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.0144***\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0033)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0033)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0033)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0033)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0033)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0033)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0033)\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003e\u0026alpha;\u003c/em\u003e0\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.0052***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.0055***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.0053***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.0048***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.0053***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.0062***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.0070***\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0021)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0026)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0024)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0024)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0022)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0023)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0025)\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eFirm fixed effects\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eTime fixed effects\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eN\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e4,761\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e4,761\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e4,761\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e4,761\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e4,761\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e4,761\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e4,761\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eR2\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.5284\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.5294\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.5285\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.5281\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.5282\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.5295\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.5290\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003c/tbody\u003e\n\u003c/table\u003e\n\u003c/div\u003e\n\u003cdiv class=\"BlockQuote\"\u003e\n\u003cp\u003e\u003cem\u003eN\u003c/em\u003e is the total number of observations. Standard errors are clustered at the company level and are reported in parenthesis. * p\u0026thinsp;\u003cem\u003e\u0026lt;\u003c/em\u003e\u0026thinsp;0.05, ** p\u0026thinsp;\u003cem\u003e\u0026lt;\u003c/em\u003e\u0026thinsp;0.01, *** p\u0026thinsp;\u003cem\u003e\u0026lt;\u003c/em\u003e\u0026thinsp;0.001\u003c/p\u003e\n\u003c/div\u003e\n\u003cdiv class=\"gridtable\"\u003e\n\u003ctable id=\"Tab5\" border=\"1\"\u003e\u003ccaption\u003e\n\u003cdiv class=\"CaptionNumber\"\u003eTable 5\u003c/div\u003e\n\u003cdiv class=\"CaptionContent\"\u003e\n\u003cp\u003eRegressions of bank return on assets (\u003cem\u003eROE\u003c/em\u003e) on environmental impact ratios plus controls\u003c/p\u003e\n\u003c/div\u003e\n\u003c/caption\u003e\n\u003cthead\u003e\n\u003ctr\u003e\n\u003cth align=\"left\"\u003e\u0026nbsp;\u003c/th\u003e\n\u003cth align=\"left\"\u003e\n\u003cp\u003e(1)\u003c/p\u003e\n\u003c/th\u003e\n\u003cth align=\"left\"\u003e\n\u003cp\u003e(2)\u003c/p\u003e\n\u003c/th\u003e\n\u003cth align=\"left\"\u003e\n\u003cp\u003e(3)\u003c/p\u003e\n\u003c/th\u003e\n\u003cth align=\"left\"\u003e\n\u003cp\u003e(4)\u003c/p\u003e\n\u003c/th\u003e\n\u003cth align=\"left\"\u003e\n\u003cp\u003e(5)\u003c/p\u003e\n\u003c/th\u003e\n\u003cth align=\"left\"\u003e\n\u003cp\u003e(6)\u003c/p\u003e\n\u003c/th\u003e\n\u003cth align=\"left\"\u003e\n\u003cp\u003e(7)\u003c/p\u003e\n\u003c/th\u003e\n\u003c/tr\u003e\n\u003c/thead\u003e\n\u003ctbody\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eRegressors\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eROEt\u003c/em\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eROEt\u003c/em\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eROEt\u003c/em\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eROEt\u003c/em\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eROEt\u003c/em\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eROEt\u003c/em\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eROEt\u003c/em\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003el\u003cem\u003eIRt\u0026thinsp;\u0026minus;\u003c/em\u003e\u0026thinsp;1\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.1914**\u003c/p\u003e\n\u003cp\u003e(0.0852)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eIRwater,t\u0026thinsp;\u0026minus;\u003c/em\u003e\u0026thinsp;1\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e2.5431***\u003c/p\u003e\n\u003cp\u003e(0.4673)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eIRwaste,t\u0026thinsp;\u0026minus;\u003c/em\u003e\u0026thinsp;1\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.2568***\u003c/p\u003e\n\u003cp\u003e(0.0458)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eIRairp,t\u0026thinsp;\u0026minus;\u003c/em\u003e\u0026thinsp;1\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-5.4436\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(9.7238)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eIRghg,t\u0026thinsp;\u0026minus;\u003c/em\u003e\u0026thinsp;1\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.2275***\u003c/p\u003e\n\u003cp\u003e(0.0574)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eIRlwp,t\u0026thinsp;\u0026minus;\u003c/em\u003e\u0026thinsp;1\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e51.4258***\u003c/p\u003e\n\u003cp\u003e(17.6964)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eIRnr,t\u0026thinsp;\u0026minus;\u003c/em\u003e\u0026thinsp;1\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e66.4780*\u003c/p\u003e\n\u003cp\u003e(39.4405)\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eROEt\u0026thinsp;\u0026minus;\u003c/em\u003e\u0026thinsp;1\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.5366***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.5361***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.5367***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.5366***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.5366***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.5357***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.5354***\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0493)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0493)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0493)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0493)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0493)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0493)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0493)\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eSIZEt\u0026thinsp;\u0026minus;\u003c/em\u003e\u0026thinsp;1\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0039***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0039***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0039***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0039***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0039***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0040***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0039***\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0014)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0014)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0014)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0014)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0014)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0014)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0014)\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eTIER\u003c/em\u003e1\u003cem\u003et\u0026thinsp;\u0026minus;\u003c/em\u003e\u0026thinsp;1\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0893\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0900\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0893\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0893\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0894\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0936\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0929\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0581)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0581)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0581)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0581)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0581)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0578)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0578)\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eRWAt\u0026thinsp;\u0026minus;\u003c/em\u003e\u0026thinsp;1\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0296***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0294***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0296***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0297***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0296***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0295***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0305***\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0093)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0093)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0093)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0093)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0093)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0093)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0093)\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003ePROBLt\u0026thinsp;\u0026minus;\u003c/em\u003e\u0026thinsp;1\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.2210***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.2208***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.2211***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.2208***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.2208***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.2203***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.2223***\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0611)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0611)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0611)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0611)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0611)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0611)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0611)\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003e\u0026alpha;\u003c/em\u003e0\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.0063\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.0091\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.0067\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.0047\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.0068\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.0152\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.0180\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0156)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0155)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0155)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0160)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.015)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0155)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0155)\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eFirm fixed effects\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eTime fixed effects\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eN\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e4,713\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e4,713\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e4,713\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e4,713\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e4,713\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e4,713\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e4,713\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eR2\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.4431\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.4431\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.4430\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.4431\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.4430\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.4431\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.4430\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003c/tbody\u003e\n\u003c/table\u003e\n\u003c/div\u003e\n\u003cdiv class=\"BlockQuote\"\u003e\n\u003cp\u003e\u003cem\u003eN\u003c/em\u003e is the total number of observations. Standard errors are clustered at the company level and are reported in parenthesis. * p\u0026thinsp;\u003cem\u003e\u0026lt;\u003c/em\u003e\u0026thinsp;0.05, ** p\u0026thinsp;\u003cem\u003e\u0026lt;\u003c/em\u003e\u0026thinsp;0.01, *** p\u0026thinsp;\u003cem\u003e\u0026lt;\u003c/em\u003e\u0026thinsp;0.001\u003c/p\u003e\n\u003cp\u003eIn Tables\u0026nbsp;\u003cspan class=\"InternalRef\"\u003e6\u003c/span\u003e\u0026ndash;\u003cspan class=\"InternalRef\"\u003e7\u003c/span\u003e all the interaction terms are negative and significant, and the coefficients are also higher in magnitude compared to coefficients in Tables\u0026nbsp;\u003cspan class=\"InternalRef\"\u003e4\u003c/span\u003e\u0026ndash;\u003cspan class=\"InternalRef\"\u003e5\u003c/span\u003e where the impact ratios were not multiplied with other terms. This means that, so long the bank discloses its negative environmental externalities, bank profits decline in the environmental impact.\u003c/p\u003e\n\u003c/div\u003e\n\u003cdiv class=\"gridtable\"\u003e\n\u003ctable id=\"Tab6\" border=\"1\"\u003e\u003ccaption\u003e\n\u003cdiv class=\"CaptionNumber\"\u003eTable 6\u003c/div\u003e\n\u003cdiv class=\"CaptionContent\"\u003e\n\u003cp\u003eRegressions of bank return on assets (\u003cem\u003eROA\u003c/em\u003e) on environmental impact ratios plus controls\u003c/p\u003e\n\u003c/div\u003e\n\u003c/caption\u003e\n\u003cthead\u003e\n\u003ctr\u003e\n\u003cth align=\"left\"\u003e\u0026nbsp;\u003c/th\u003e\n\u003cth align=\"left\"\u003e\n\u003cp\u003e(1)\u003c/p\u003e\n\u003c/th\u003e\n\u003cth align=\"left\"\u003e\n\u003cp\u003e(2)\u003c/p\u003e\n\u003c/th\u003e\n\u003cth align=\"left\"\u003e\n\u003cp\u003e(3)\u003c/p\u003e\n\u003c/th\u003e\n\u003cth align=\"left\"\u003e\n\u003cp\u003e(4)\u003c/p\u003e\n\u003c/th\u003e\n\u003cth align=\"left\"\u003e\n\u003cp\u003e(5)\u003c/p\u003e\n\u003c/th\u003e\n\u003cth align=\"left\"\u003e\n\u003cp\u003e(6)\u003c/p\u003e\n\u003c/th\u003e\n\u003cth align=\"left\"\u003e\n\u003cp\u003e(7)\u003c/p\u003e\n\u003c/th\u003e\n\u003c/tr\u003e\n\u003c/thead\u003e\n\u003ctbody\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eRegressors\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eROAt\u003c/em\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eROAt\u003c/em\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eROAt\u003c/em\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eROAt\u003c/em\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eROAt\u003c/em\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eROAt\u003c/em\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eROAt\u003c/em\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eDISCLt\u0026thinsp;\u0026minus;\u003c/em\u003e\u0026thinsp;1 \u003cem\u003e\u0026times;IRt\u0026thinsp;\u0026minus;\u003c/em\u003e\u0026thinsp;1\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.0329***\u003c/p\u003e\n\u003cp\u003e(0.0101)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eDISCLt\u0026thinsp;\u0026minus;\u003c/em\u003e\u0026thinsp;1 \u003cem\u003e\u0026times;IRwater,t\u0026thinsp;\u0026minus;\u003c/em\u003e\u0026thinsp;1\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-1.1038***\u003c/p\u003e\n\u003cp\u003e(0.3753)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eDISCLt\u0026thinsp;\u0026minus;\u003c/em\u003e\u0026thinsp;1 \u003cem\u003e\u0026times;IRwaste,t\u0026thinsp;\u0026minus;\u003c/em\u003e\u0026thinsp;1\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.0215***\u003c/p\u003e\n\u003cp\u003e(0.0068)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eDISCLt\u0026thinsp;\u0026minus;\u003c/em\u003e\u0026thinsp;1 \u003cem\u003e\u0026times;IRairp,t\u0026thinsp;\u0026minus;\u003c/em\u003e\u0026thinsp;1\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-1.4470***\u003c/p\u003e\n\u003cp\u003e(0.5224)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eDISCLt\u0026thinsp;\u0026minus;\u003c/em\u003e\u0026thinsp;1 \u003cem\u003e\u0026times;IRghg,t\u0026thinsp;\u0026minus;\u003c/em\u003e\u0026thinsp;1\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.0319***\u003c/p\u003e\n\u003cp\u003e(0.0122)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eDISCLt\u0026thinsp;\u0026minus;\u003c/em\u003e\u0026thinsp;1 \u003cem\u003e\u0026times;IRlwp,t\u0026thinsp;\u0026minus;\u003c/em\u003e\u0026thinsp;1\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-6.0733***\u003c/p\u003e\n\u003cp\u003e(1.9702)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eDISCLt\u0026thinsp;\u0026minus;\u003c/em\u003e\u0026thinsp;1 \u003cem\u003e\u0026times;IRnr,t\u0026thinsp;\u0026minus;\u003c/em\u003e\u0026thinsp;1\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-9.2104***\u003c/p\u003e\n\u003cp\u003e(2.8631)\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eROAt\u0026thinsp;\u0026minus;\u003c/em\u003e\u0026thinsp;1\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.5539***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.5496***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.5547***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.5505***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.5543***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.5497***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.5496***\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0522)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0522)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0522)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0522)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0522)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0522)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0522)\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eSIZEt\u0026thinsp;\u0026minus;\u003c/em\u003e\u0026thinsp;1\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0003***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0003***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0003***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0003***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0003***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0003***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0003***\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0000)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0000)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0000)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0000)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0000)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0000)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0000)\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eTIER\u003c/em\u003e1\u003cem\u003et\u0026thinsp;\u0026minus;\u003c/em\u003e\u0026thinsp;1\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0275***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0271***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0276***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0272***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0276***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0272***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0271***\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0081)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0081)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0081)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0081)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0081)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0081)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0081)\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eRWAt\u0026thinsp;\u0026minus;\u003c/em\u003e\u0026thinsp;1\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0086***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0084***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0087***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0084***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0086***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0084***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0083***\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0016)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0016)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0016)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0016)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0016)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0016)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0016)\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003ePROBLt\u0026thinsp;\u0026minus;\u003c/em\u003e\u0026thinsp;1\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.0142***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.0141***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.0142***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.0140***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.0142***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.0141***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.0140***\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0032)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0032)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0032)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0032)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0032)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0032)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0032)\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003e\u0026alpha;\u003c/em\u003e0\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.0053***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.0060***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.0053***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.0059***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.0053***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.0060***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.0060***\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0020)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0020)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0020)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0020)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0020)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0020)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0020)\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eFirm fixed effects\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eTime fixed effects\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eN\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e4,761\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e4,761\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e4,761\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e4,761\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e4,761\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e4,761\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e4,761\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eR2\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.5291\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.5291\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.5288\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.5291\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.5289\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.5291\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.5291\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003c/tbody\u003e\n\u003c/table\u003e\n\u003c/div\u003e\n\u003cdiv class=\"BlockQuote\"\u003e\n\u003cp\u003e\u003cem\u003eN\u003c/em\u003e is the total number of observations. Standard errors are clustered at the company level and are reported in parenthesis. * p\u0026thinsp;\u003cem\u003e\u0026lt;\u003c/em\u003e\u0026thinsp;0.05, ** p\u0026thinsp;\u003cem\u003e\u0026lt;\u003c/em\u003e\u0026thinsp;0.01, *** p\u0026thinsp;\u003cem\u003e\u0026lt;\u003c/em\u003e\u0026thinsp;0.001\u003c/p\u003e\n\u003c/div\u003e\n\u003cdiv class=\"gridtable\"\u003e\n\u003ctable id=\"Tab7\" border=\"1\"\u003e\u003ccaption\u003e\n\u003cdiv class=\"CaptionNumber\"\u003eTable 7\u003c/div\u003e\n\u003cdiv class=\"CaptionContent\"\u003e\n\u003cp\u003eRegressions of bank return on assets (\u003cem\u003eROE\u003c/em\u003e) on environmental impact ratios plus controls\u003c/p\u003e\n\u003c/div\u003e\n\u003c/caption\u003e\n\u003cthead\u003e\n\u003ctr\u003e\n\u003cth align=\"left\"\u003e\u0026nbsp;\u003c/th\u003e\n\u003cth align=\"left\"\u003e\n\u003cp\u003e(1)\u003c/p\u003e\n\u003c/th\u003e\n\u003cth align=\"left\"\u003e\n\u003cp\u003e(2)\u003c/p\u003e\n\u003c/th\u003e\n\u003cth align=\"left\"\u003e\n\u003cp\u003e(3)\u003c/p\u003e\n\u003c/th\u003e\n\u003cth align=\"left\"\u003e\n\u003cp\u003e(4)\u003c/p\u003e\n\u003c/th\u003e\n\u003cth align=\"left\"\u003e\n\u003cp\u003e(5)\u003c/p\u003e\n\u003c/th\u003e\n\u003cth align=\"left\"\u003e\n\u003cp\u003e(6)\u003c/p\u003e\n\u003c/th\u003e\n\u003cth align=\"left\"\u003e\n\u003cp\u003e(7)\u003c/p\u003e\n\u003c/th\u003e\n\u003c/tr\u003e\n\u003c/thead\u003e\n\u003ctbody\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eRegressors\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eROEt\u003c/em\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eROEt\u003c/em\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eROEt\u003c/em\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eROEt\u003c/em\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eROEt\u003c/em\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eROEt\u003c/em\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eROEt\u003c/em\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eDISCLt\u0026thinsp;\u0026minus;\u003c/em\u003e\u0026thinsp;1 \u003cem\u003e\u0026times;IRt\u0026thinsp;\u0026minus;\u003c/em\u003e\u0026thinsp;1\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.4408***\u003c/p\u003e\n\u003cp\u003e(0.1405)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eDISCLt\u0026thinsp;\u0026minus;\u003c/em\u003e\u0026thinsp;1 \u003cem\u003e\u0026times;IRwater,t\u0026thinsp;\u0026minus;\u003c/em\u003e\u0026thinsp;1\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-16.8458***\u003c/p\u003e\n\u003cp\u003e(4.1980)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eDISCLt\u0026thinsp;\u0026minus;\u003c/em\u003e\u0026thinsp;1 \u003cem\u003e\u0026times;IRwaste,t\u0026thinsp;\u0026minus;\u003c/em\u003e\u0026thinsp;1\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.2845***\u003c/p\u003e\n\u003cp\u003e(0.0419)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eDISCLt\u0026thinsp;\u0026minus;\u003c/em\u003e\u0026thinsp;1 \u003cem\u003e\u0026times;IRairp,t\u0026thinsp;\u0026minus;\u003c/em\u003e\u0026thinsp;1\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-23.4657***\u003c/p\u003e\n\u003cp\u003e(6.6436)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eDISCLt\u0026thinsp;\u0026minus;\u003c/em\u003e\u0026thinsp;1 \u003cem\u003e\u0026times;IRghg,t\u0026thinsp;\u0026minus;\u003c/em\u003e\u0026thinsp;1\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.4025**\u003c/p\u003e\n\u003cp\u003e(0.1666)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eDISCLt\u0026thinsp;\u0026minus;\u003c/em\u003e\u0026thinsp;1 \u003cem\u003e\u0026times;IRlwp,t\u0026thinsp;\u0026minus;\u003c/em\u003e\u0026thinsp;1\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-92.1474***\u003c/p\u003e\n\u003cp\u003e(22.1642)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eDISCLt\u0026thinsp;\u0026minus;\u003c/em\u003e\u0026thinsp;1 \u003cem\u003e\u0026times;IRnr,t\u0026thinsp;\u0026minus;\u003c/em\u003e\u0026thinsp;1\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-143.3329***\u003c/p\u003e\n\u003cp\u003e(34.1621)\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eROEt\u0026thinsp;\u0026minus;\u003c/em\u003e\u0026thinsp;1\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.5357***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.5272***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.5367***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.5288***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.5361***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.5276***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.5274***\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0496)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0496)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0496)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0496)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0496)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0496)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0496)\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eSIZEt\u0026thinsp;\u0026minus;\u003c/em\u003e\u0026thinsp;1\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0040***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0048***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0039***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0046***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0039***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0048***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0048***\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0013)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0013)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0013)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0013)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0013)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0013)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0013)\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eTIER\u003c/em\u003e1\u003cem\u003et\u0026thinsp;\u0026minus;\u003c/em\u003e\u0026thinsp;1\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0885\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0820\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0893\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0833\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0892\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0825\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0815\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0582)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0582)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0582)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0582)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0582)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0582)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0582)\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eRWAt\u0026thinsp;\u0026minus;\u003c/em\u003e\u0026thinsp;1\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0289***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0245***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0296***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0253***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0294***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0246***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0239**\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0095)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0095)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0095)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0095)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0095)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0095)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0095)\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003ePROBLt\u0026thinsp;\u0026minus;\u003c/em\u003e\u0026thinsp;1\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.2210***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.2218***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.2211***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.2205***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.2208***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.2228***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.2210***\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0609)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0609)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.061)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0609)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0610)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0599)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0609)\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003e\u0026alpha;\u003c/em\u003e0\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.0073\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.0170\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.0067\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.0155\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.0074\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.0166\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.0171\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0151)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0151)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0151)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0151)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0151)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0151)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0151)\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eFirm fixed effects\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eTime fixed effects\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eN\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e4,713\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e4,713\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e4,713\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e4,713\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e4,713\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e4,713\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e4,713\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eR2\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.4439\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.4450\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.4439\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.4450\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.4439\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.4450\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.4450\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003c/tbody\u003e\n\u003c/table\u003e\n\u003c/div\u003e\n\u003cdiv class=\"BlockQuote\"\u003e\n\u003cp\u003e\u003cem\u003eN\u003c/em\u003e is the total number of observations. Standard errors are clustered at the company level and are re- ported in parenthesis. * p\u0026thinsp;\u003cem\u003e\u0026lt;\u003c/em\u003e\u0026thinsp;0.05, ** p\u0026thinsp;\u003cem\u003e\u0026lt;\u003c/em\u003e\u0026thinsp;0.01, *** p\u0026thinsp;\u003cem\u003e\u0026lt;\u003c/em\u003e\u0026thinsp;0.001\u003c/p\u003e\n\u003c/div\u003e\n\u003c/div\u003e\n\u003cdiv id=\"Sec6\" class=\"Section2\"\u003e\n\u003ch2\u003e4.2 Effects from the bank environmental impact on dividends and stock market performance\u003c/h2\u003e\n\u003cdiv class=\"BlockQuote\"\u003e\n\u003cp\u003eOur previous outcomes revealed that environmental damage costs affect in a negative way the profitability of banks. We now test other aspects of our banks that could be sensitive to their environmental impact. First, we consider the dividend payout policy. As we found earlier that profits decrease in damage costs, we conjecture that banks incurring high environmental costs would also have less cash available to divert to shareholders in the form of dividends. Therefore, we estimate the model in (1) using the dividend payout \u003cem\u003eDIV\u003c/em\u003e as the dependent variable.\u003csup\u003e6\u003c/sup\u003e The outcomes in Table\u0026nbsp;\u003cspan class=\"InternalRef\"\u003e8\u003c/span\u003e confirm our expectation, as all the impact ratios have a negative coefficient in the equations explaining \u003cem\u003eDIV\u003c/em\u003e. We observe a stronger negative effect for damage costs deriving from waste and greenhouse gas emission.\u003c/p\u003e\n\u003cp\u003eSecondly, we study the market performance of our banks estimating equations for the price-to-book ratio \u003cem\u003ePB\u003c/em\u003e. According to Weber [2012] and B˘atae et al. [2021] environmental engagements are a way for banks for lowering their reputation risk. Forcadell and Aracil [2017] demonstrate empirically that Dow Jones Sustainability Index (DJSI) membership positively influences the economic performance of European banks, as the DJSI member- ship it constitutes a strong signal of sustainability commitment that improves corporate reputation.\u003csup\u003e7\u003c/sup\u003e\u003c/p\u003e\n\u003cp\u003eOur hypothesis is that banks which potentially could destroy the environment would have a bad reputation. Therefore, market investors will push down their valuations to be compensated by the risk that negative externalities could translate into costs that subtract value to their claim. The outcomes in Table\u0026nbsp;\u003cspan class=\"InternalRef\"\u003e9\u003c/span\u003e corroborate this argument show- ing that \u003cem\u003ePB\u003c/em\u003e decreases in impact ratios. Again, the coefficients are statistically more significant for costs due to waste and greenhouse gas emissions, beside for air pollution. To test this pattern more deeply, we show inside Table\u0026nbsp;\u003cspan class=\"InternalRef\"\u003e10\u003c/span\u003e regressions of market capital- ization \u003cem\u003eMKTCAP\u003c/em\u003e on impact ratios. We observe that market capitalization decreases in environmental damages, especially related to greenhouse gas emissions.\u003c/p\u003e\n\u003cp\u003eOverall, our findings suggest that huge negative externalities on the environment would harm the performance of banks, as they exhibit low profitability, pay out less cash to equityholders and have low market valuations.\u003c/p\u003e\n\u003c/div\u003e\n\u003cdiv class=\"gridtable\"\u003e\n\u003ctable id=\"Tab8\" border=\"1\"\u003e\u003ccaption\u003e\n\u003cdiv class=\"CaptionNumber\"\u003eTable 8\u003c/div\u003e\n\u003cdiv class=\"CaptionContent\"\u003e\n\u003cp\u003eRegressions of bank dividend payout (\u003cem\u003eDIV\u003c/em\u003e ) on environmental impact ratios plus controls\u003c/p\u003e\n\u003c/div\u003e\n\u003c/caption\u003e\n\u003cthead\u003e\n\u003ctr\u003e\n\u003cth align=\"left\"\u003e\u0026nbsp;\u003c/th\u003e\n\u003cth align=\"left\"\u003e\n\u003cp\u003e(1)\u003c/p\u003e\n\u003c/th\u003e\n\u003cth align=\"left\"\u003e\n\u003cp\u003e(2)\u003c/p\u003e\n\u003c/th\u003e\n\u003cth align=\"left\"\u003e\n\u003cp\u003e(3)\u003c/p\u003e\n\u003c/th\u003e\n\u003cth align=\"left\"\u003e\n\u003cp\u003e(4)\u003c/p\u003e\n\u003c/th\u003e\n\u003cth align=\"left\"\u003e\n\u003cp\u003e(5)\u003c/p\u003e\n\u003c/th\u003e\n\u003cth align=\"left\"\u003e\n\u003cp\u003e(6)\u003c/p\u003e\n\u003c/th\u003e\n\u003cth align=\"left\"\u003e\n\u003cp\u003e(7)\u003c/p\u003e\n\u003c/th\u003e\n\u003c/tr\u003e\n\u003c/thead\u003e\n\u003ctbody\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eRegressors\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eDIVt\u003c/em\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eDIVt\u003c/em\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eDIVt\u003c/em\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eDIVt\u003c/em\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eDIVt\u003c/em\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eDIVt\u003c/em\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eDIVt\u003c/em\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eIRt\u0026thinsp;\u0026minus;\u003c/em\u003e\u0026thinsp;1\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-1.2992***\u003c/p\u003e\n\u003cp\u003e(0.4445)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eIRt\u0026thinsp;\u0026minus;\u003c/em\u003e\u0026thinsp;1,\u003cem\u003ewater\u003c/em\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-34.1772\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(31.4713)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eIRt\u0026thinsp;\u0026minus;\u003c/em\u003e\u0026thinsp;1,\u003cem\u003ewaste\u003c/em\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-1.5235***\u003c/p\u003e\n\u003cp\u003e(0.4304)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd 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align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(243.3550)\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eSIZEt\u0026thinsp;\u0026minus;\u003c/em\u003e\u0026thinsp;1\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0158***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0159***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0157***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0156***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0157***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0154**\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0156***\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0061)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0061)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0061)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0061)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0061)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0061)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0061)\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd 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align=\"left\"\u003e\n\u003cp\u003e(0.4406)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.4406)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.4406)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.4406)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.4406)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.4420)\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eRWAt\u0026thinsp;\u0026minus;\u003c/em\u003e\u0026thinsp;1\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.2374***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.2340***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.2377***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.2366***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.2373***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.2363***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.2392***\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0844)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0844)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0844)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0844)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.084)4\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0844)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0844)\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003ePROBLt\u0026thinsp;\u0026minus;\u003c/em\u003e\u0026thinsp;1\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.5094*\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.5085*\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.5108*\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.5090*\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.5090*\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.5143*\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.5087*\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.2621)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.2621)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.2621)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.2621)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.2621)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.2621)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.2621)\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003e\u0026alpha;\u003c/em\u003e0\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.2422\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.2591\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.2428\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.2414\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.2401\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.2806\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.2749\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.2232)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.2216)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.2232)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.2232)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.2240)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.2250)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.2341)\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eFirm fixed effects\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eTime fixed effects\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eN\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e3,642\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e3,642\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e3,642\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e3,642\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e3,642\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e3,642\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e3,642\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eR2\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0801\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0801\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0801\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0799\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0799\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0801\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.0801\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003c/tbody\u003e\n\u003c/table\u003e\n\u003c/div\u003e\n\u003cdiv class=\"BlockQuote\"\u003e\n\u003cp\u003e\u003cem\u003eN\u003c/em\u003e is the total number of observations. Standard errors are clustered at the company level and are reported in parenthesis. * p\u0026thinsp;\u003cem\u003e\u0026lt;\u003c/em\u003e\u0026thinsp;0.05, ** p\u0026thinsp;\u003cem\u003e\u0026lt;\u003c/em\u003e\u0026thinsp;0.01, *** p\u0026thinsp;\u003cem\u003e\u0026lt;\u003c/em\u003e\u0026thinsp;0.001\u003c/p\u003e\n\u003c/div\u003e\n\u003cdiv class=\"gridtable\"\u003e\n\u003ctable id=\"Tab9\" border=\"1\"\u003e\u003ccaption\u003e\n\u003cdiv class=\"CaptionNumber\"\u003eTable 9\u003c/div\u003e\n\u003cdiv class=\"CaptionContent\"\u003e\n\u003cp\u003eRegressions of bank price-to-book ratio (\u003cem\u003ePB\u003c/em\u003e) on environmental impact ratios plus controls\u003c/p\u003e\n\u003c/div\u003e\n\u003c/caption\u003e\n\u003cthead\u003e\n\u003ctr\u003e\n\u003cth align=\"left\"\u003e\u0026nbsp;\u003c/th\u003e\n\u003cth align=\"left\"\u003e\n\u003cp\u003e(1)\u003c/p\u003e\n\u003c/th\u003e\n\u003cth align=\"left\"\u003e\n\u003cp\u003e(2)\u003c/p\u003e\n\u003c/th\u003e\n\u003cth align=\"left\"\u003e\n\u003cp\u003e(3)\u003c/p\u003e\n\u003c/th\u003e\n\u003cth align=\"left\"\u003e\n\u003cp\u003e(4)\u003c/p\u003e\n\u003c/th\u003e\n\u003cth align=\"left\"\u003e\n\u003cp\u003e(5)\u003c/p\u003e\n\u003c/th\u003e\n\u003cth align=\"left\"\u003e\n\u003cp\u003e(6)\u003c/p\u003e\n\u003c/th\u003e\n\u003cth align=\"left\"\u003e\n\u003cp\u003e(7)\u003c/p\u003e\n\u003c/th\u003e\n\u003c/tr\u003e\n\u003c/thead\u003e\n\u003ctbody\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eRegressors\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003ePBt\u003c/em\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003ePBt\u003c/em\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003ePBt\u003c/em\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003ePBt\u003c/em\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003ePBt\u003c/em\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003ePBt\u003c/em\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003ePBt\u003c/em\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eIRt\u0026thinsp;\u0026minus;\u003c/em\u003e\u0026thinsp;1\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-5.3258***\u003c/p\u003e\n\u003cp\u003e(1.0885)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eIRt\u0026thinsp;\u0026minus;\u003c/em\u003e\u0026thinsp;1,\u003cem\u003ewater\u003c/em\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-37.5805\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(39.4741)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eIRt\u0026thinsp;\u0026minus;\u003c/em\u003e\u0026thinsp;1,\u003cem\u003ewaste\u003c/em\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-26.4900*\u003c/p\u003e\n\u003cp\u003e(13.9862)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eIRt\u0026thinsp;\u0026minus;\u003c/em\u003e\u0026thinsp;1,\u003cem\u003eairp\u003c/em\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-25.5070***\u003c/p\u003e\n\u003cp\u003e(6.7135)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eIRt\u0026thinsp;\u0026minus;\u003c/em\u003e\u0026thinsp;1,\u003cem\u003eghg\u003c/em\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-4.5858***\u003c/p\u003e\n\u003cp\u003e(0.9588)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eIRt\u0026thinsp;\u0026minus;\u003c/em\u003e\u0026thinsp;1,\u003cem\u003elwp\u003c/em\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-576.0966\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(496.6185)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eIRt\u0026thinsp;\u0026minus;\u003c/em\u003e\u0026thinsp;1,\u003cem\u003enr\u003c/em\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-788.0755\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(535.1775)\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eSIZEt\u0026thinsp;\u0026minus;\u003c/em\u003e\u0026thinsp;1\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.0056\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.0058\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.0058\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.0058\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.0057\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.0064\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.0059\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0111)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0111)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0111)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0111)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0111)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0111)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0111)\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eTIER\u003c/em\u003e1\u003cem\u003et\u0026thinsp;\u0026minus;\u003c/em\u003e\u0026thinsp;1\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e1.7878**\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e1.7813**\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e1.7879**\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e1.7822**\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e1.7836**\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e1.7674**\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e1.7503*\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.8921)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.8921)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.8921)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.8919)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.8921)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.8919)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.8978)\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eRWAt\u0026thinsp;\u0026minus;\u003c/em\u003e\u0026thinsp;1\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.3613*\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.3606*\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.3620*\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.3596*\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.3625*\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.3625*\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.3723*\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.2031)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.2031)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.2031)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.2031)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.2031)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.2031)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.2051)\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003ePROBLt\u0026thinsp;\u0026minus;\u003c/em\u003e\u0026thinsp;1\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.8825***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.8851***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.8880***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.8826***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.8832***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.8911***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-0.8753***\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.3078)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.3078)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.3078)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.3078)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.3078)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.3081)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.3069)\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003e\u0026alpha;\u003c/em\u003e0\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e1.8695***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e1.8888***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e1.8694***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e1.8702***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e1.8636***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e1.9502***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e1.9952***\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.4871)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.4859)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.4860)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.4860)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.4870)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.4960)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.5153)\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eFirm fixed effects\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eTime fixed effects\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eN\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e4,499\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e4,499\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e4,499\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e4,499\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e4,499\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e4,499\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e4,499\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eR2\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.3520\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.3518\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.3518\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.3518\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.3520\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.3518\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.3520\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003c/tbody\u003e\n\u003c/table\u003e\n\u003c/div\u003e\n\u003cdiv class=\"BlockQuote\"\u003e\n\u003cp\u003e\u003cem\u003eN\u003c/em\u003e is the total number of observations. Standard errors are clustered at the company level and are reported in parenthesis. * p\u0026thinsp;\u003cem\u003e\u0026lt;\u003c/em\u003e\u0026thinsp;0.05, ** p\u0026thinsp;\u003cem\u003e\u0026lt;\u003c/em\u003e\u0026thinsp;0.01, *** p\u0026thinsp;\u003cem\u003e\u0026lt;\u003c/em\u003e\u0026thinsp;0.001\u003c/p\u003e\n\u003c/div\u003e\n\u003cdiv class=\"gridtable\"\u003e\n\u003ctable id=\"Tab10\" border=\"1\"\u003e\u003ccaption\u003e\n\u003cdiv class=\"CaptionNumber\"\u003eTable 10\u003c/div\u003e\n\u003cdiv class=\"CaptionContent\"\u003e\n\u003cp\u003eRegressions of logarithm of bank market capitalization (\u003cem\u003eMKTCAP\u003c/em\u003e ) on envi- ronmental impact ratios plus controls\u003c/p\u003e\n\u003c/div\u003e\n\u003c/caption\u003e\n\u003cthead\u003e\n\u003ctr\u003e\n\u003cth align=\"left\"\u003e\u0026nbsp;\u003c/th\u003e\n\u003cth align=\"left\"\u003e\n\u003cp\u003e(1)\u003c/p\u003e\n\u003c/th\u003e\n\u003cth align=\"left\"\u003e\n\u003cp\u003e(2)\u003c/p\u003e\n\u003c/th\u003e\n\u003cth align=\"left\"\u003e\n\u003cp\u003e(3)\u003c/p\u003e\n\u003c/th\u003e\n\u003cth align=\"left\"\u003e\n\u003cp\u003e(4)\u003c/p\u003e\n\u003c/th\u003e\n\u003cth align=\"left\"\u003e\n\u003cp\u003e(5)\u003c/p\u003e\n\u003c/th\u003e\n\u003cth align=\"left\"\u003e\n\u003cp\u003e(6)\u003c/p\u003e\n\u003c/th\u003e\n\u003cth align=\"left\"\u003e\n\u003cp\u003e(7)\u003c/p\u003e\n\u003c/th\u003e\n\u003c/tr\u003e\n\u003c/thead\u003e\n\u003ctbody\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eRegressors\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eMKTCAPt\u003c/em\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eMKTCAPt\u003c/em\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eMKTCAPt\u003c/em\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eMKTCAPt\u003c/em\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eMKTCAPt\u003c/em\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eMKTCAPt\u003c/em\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eMKTCAPt\u003c/em\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eIRt\u0026thinsp;\u0026minus;\u003c/em\u003e\u0026thinsp;1\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-7.6351***\u003c/p\u003e\n\u003cp\u003e(2.3751)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eIRt\u0026thinsp;\u0026minus;\u003c/em\u003e\u0026thinsp;1,\u003cem\u003ewater\u003c/em\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-71.7511\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(53.5684)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eIRt\u0026thinsp;\u0026minus;\u003c/em\u003e\u0026thinsp;1,\u003cem\u003ewaste\u003c/em\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-37.4138**\u003c/p\u003e\n\u003cp\u003e(18.6724)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eIRt\u0026thinsp;\u0026minus;\u003c/em\u003e\u0026thinsp;1,\u003cem\u003eairp\u003c/em\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-43.5952***\u003c/p\u003e\n\u003cp\u003e(14.3864)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eIRt\u0026thinsp;\u0026minus;\u003c/em\u003e\u0026thinsp;1,\u003cem\u003eghg\u003c/em\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-6.4255***\u003c/p\u003e\n\u003cp\u003e(1.7134)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eIRt\u0026thinsp;\u0026minus;\u003c/em\u003e\u0026thinsp;1,\u003cem\u003elwp\u003c/em\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-15.0268**\u003c/p\u003e\n\u003cp\u003e(7.2477)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eIRt\u0026thinsp;\u0026minus;\u003c/em\u003e\u0026thinsp;1,\u003cem\u003enr\u003c/em\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-15.2706\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(4.8891)\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eSIZEt\u0026thinsp;\u0026minus;\u003c/em\u003e\u0026thinsp;1\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e1.0776***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e1.0774***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e1.0774***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e1.0774***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e1.0775***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e1.0758***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e1.0773***\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0100)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0100)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0100)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0100)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0100)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0100)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.0100)\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eTIER\u003c/em\u003e1\u003cem\u003et\u0026thinsp;\u0026minus;\u003c/em\u003e\u0026thinsp;1\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e8.3263***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e8.3195***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e8.3274***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e8.3251***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e8.3237***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e8.2835***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e8.3151***\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(1.2268)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(1.2301)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(1.2299)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(1.2289)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(1.2262)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(1.2177)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(1.2267)\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003eRWAt\u0026thinsp;\u0026minus;\u003c/em\u003e\u0026thinsp;1\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e2.1069***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e2.1104***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e2.1078***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e2.1117***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e2.1063***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e2.1054***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e2.1064***\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.1570)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.1570)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.1570)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.1570)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.1570)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.156j9)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.1569)\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e\u003cem\u003ePROBLt\u0026thinsp;\u0026minus;\u003c/em\u003e\u0026thinsp;1\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-1.7698***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-1.7779***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-1.7809***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-1.7730***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-1.7720***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-1.7915***\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e-1.7779***\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e(0.4037)\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd 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align=\"left\"\u003e\n\u003cp\u003e(0.3691)\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eFirm fixed effects\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eTime fixed effects\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eyes\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eN\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e4,835\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e4,835\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e4,835\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e4,835\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e4,835\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e4,835\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e4,835\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003eR2\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.9471\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.9471\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.9471\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.9471\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.9471\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.9471\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd align=\"left\"\u003e\n\u003cp\u003e0.9469\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003c/tbody\u003e\n\u003c/table\u003e\n\u003c/div\u003e\n\u003cdiv class=\"BlockQuote\"\u003e\n\u003cp\u003e\u003cem\u003eN\u003c/em\u003e is the total number of observations. Standard errors are clustered at the company level and are reported in parenthesis. * p\u0026thinsp;\u003cem\u003e\u0026lt;\u003c/em\u003e\u0026thinsp;0.05, ** p\u0026thinsp;\u003cem\u003e\u0026lt;\u003c/em\u003e\u0026thinsp;0.01, *** p\u0026thinsp;\u003cem\u003e\u0026lt;\u003c/em\u003e\u0026thinsp;0.001\u003c/p\u003e\n\u003cdiv class=\"BlockQuote\"\u003e\n\u003cp\u003e\u003csup\u003e5\u003c/sup\u003eWe show estimates with one-period lagged regressors to overcome potential problems due to si- multaneity. However, we verified that all our regressions deliver results of same quality when we use contemporaneous regressors.\u003c/p\u003e\n\u003c/div\u003e\n\u003cdiv class=\"gridtable\"\u003e\n\u003cdiv class=\"colspec\" align=\"left\"\u003e\n\u003cp\u003e\u003csup\u003e6\u003c/sup\u003eRegressors are one period lagged, but we checked that the quality of results does not change when the regressors are contemporaneous.\u003c/p\u003e\n\u003cp\u003e\u003csup\u003e7\u003c/sup\u003eDell\u0026rsquo;Atti et al. [\u003cspan class=\"CitationRef\"\u003e2017\u003c/span\u003e] show that corporate social responsibility engagements determine the repu- tation of banks, but the effect is much more evident for social engagements while is not significant for environmental engagements. Nonetheless, the results are based on banks surveyed in 2010, and the same authors argue that during that time the focus on environmental impacts of banking activity was very small.\u003c/p\u003e\n\u003c/div\u003e\n\u003c/div\u003e\n\u003c/div\u003e\n\u003c/div\u003e"},{"header":"5 Conclusions","content":"\u003cdiv class=\"BlockQuote\"\u003e\n\u003cp\u003eWe study the environmental impact from banks. We examine costs for hypothetical dam- ages on the environmental and the society caused by pollution, gas emissions, waste or the use of water or natural resources. Environmental \u0026ldquo;impact ratios\u0026rdquo; measure environ- mental damage costs in proportion to revenues, and approximate the negative externality deriving from environmental activities. Our main finding is that bank profitability and market valuation decrease substantially in environmental impact ratios. Thus, banks with a negative impact on the environment exhibit also a weaker financial performance. This result is important for bank managers and regulators addressing environmental management issues. In the longer run, high environmental damage costs could lead the bank to be financially unstable, worsening its reputation and increasing financing costs. Therefore, we suggest that a transition to activities and practices that are more renewable or lower in their emissions would not only be less harmful to our society, but it would be also strategic for the efficient continuation of the operating activity. Moreover, if the environmental damages of banks would be relatively small, the same firms could be less affected by the stricter and increasingly onerous environmental regulations that are currently developed.\u003csup\u003e8\u003c/sup\u003e\u003c/p\u003e\n\u003c/div\u003e\n\u003cdiv class=\"BlockQuote\"\u003e\n\u003cp\u003eTo conclude, this article is a first contribution to the topic of environmental man- agement providing evidence on how the environmental impact of banks could drive their financial performance. Therefore, it opens few ways to research activity in different strands. For example, future studies in the field of finance could focus more narrowly on the relationship between environmental damage costs and bank risk-taking, to check if banks that are more environmentally \u0026ldquo;aggressive\u0026rdquo; would also be risk lovers. This type of research would also involve the more recent discussion on whether environmental risks should be captured by bank capital regulations.\u003csup\u003e9\u003c/sup\u003e Environmental studies instead could use our results to investigate more deeply causes and tools for the reduction of banks\u0026acute; negative externalities on the environment. We leave these tasks to the future research agenda.\u003c/p\u003e\n\u003cp\u003e\u003csup\u003e8\u003c/sup\u003eAccording to Mason et al. [2012] a firm may be forced to stop its activity because of an inability to bear the costs of complying with heavier environmental regulations. Oehmke [2022] argues that governments fearing the triggering of banking crises may be reluctant to introduce stricter environmental regulation that would depreciate banks\u0026acute; assets.\u003c/p\u003e\n\u003c/div\u003e\n\u003cdiv class=\"BlockQuote\"\u003e\n\u003cp\u003e\u003csup\u003e9\u003c/sup\u003eSee for example \u003cspan class=\"ExternalRef\"\u003e\u003cspan class=\"RefSource\"\u003ehttps://www.ecb.europa.eu/pub/financial-stability/macroprudent\u003c/span\u003e\u003c/span\u003e ial-bulletin/html/ecb.mpbu202110_1\u0026thinsp;~\u0026thinsp;5323a5baa8.en.html. Recent evidence of Oehmke and Opp [2022] suggests that capital requirements could improve the capacity of carbon taxes to effectively reduce carbon emissions.\u003c/p\u003e\n\u003c/div\u003e"},{"header":"Declarations","content":"\u003cp\u003eThe author declares no conflict of interests.\u003c/p\u003e"},{"header":"References","content":"\u003col\u003e\n\u003cli\u003eOana Marina B˘atae, Voicu Dan Dragomir, and Liliana Feleag˘a. The relationship between environmental, social, and financial performance in the banking sector: A European study. Journal of Cleaner Production, 290:125791, 2021.\u003c/li\u003e\n\u003cli\u003eSudipta Bose, Habib Zaman Khan, and Reza M Monem. Does green banking perfor- mance pay off? Evidence from a unique regulatory setting in Bangladesh. Corporate Governance: An International Review, 29(2):162\u0026ndash;187, 2021.\u003c/li\u003e\n\u003cli\u003eJ\u0026acute;er\u0026circ;ome Caby, Ydriss Ziane, and Eric Lamarque. The impact of climate change manage- ment on banks profitability. Journal of Business Research, 142:412\u0026ndash;422, 2022.\u003c/li\u003e\n\u003cli\u003eLi Cai, Jinhua Cui, and Hoje Jo. Corporate environmental responsibility and firm risk. Journal of Business Ethics, 139:563\u0026ndash;594, 2016.\u003c/li\u003e\n\u003cli\u003eStefano Dell\u0026rsquo;Atti, Annarita Trotta, Antonia Patrizia Iannuzzi, and Federica Demaria. Corporate social responsibility engagement as a determinant of bank reputation: An empirical analysis. Corporate Social Responsibility and Environmental Management, 24(6):589\u0026ndash;605, 2017.\u003c/li\u003e\n\u003cli\u003eFrancisco Javier Forcadell and Elisa Aracil. European banks\u0026rsquo; reputation for corporate social responsibility. Corporate Social Responsibility and Environmental Management, 24(1):1\u0026ndash;14, 2017.\u003c/li\u003e\n\u003cli\u003eLeonardo Gambacorta, Salvatore Polizzi, Alessio Reghezza, and Enzo Scannella. 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The economics of eco-labeling: Theory and empirical implications. International Review of Environmental and Resource Economics, 6(4):341\u0026ndash;372, 2012.\u003c/li\u003e\n\u003cli\u003eTiago Melo and Alvaro Garrido-Morgado. Corporate reputation: A combination of so- cial responsibility and industry. Corporate Social Responsibility and Environmental Management, 19(1):11\u0026ndash;31, 2012.\u003c/li\u003e\n\u003cli\u003eFlorian Neitzert and Matthias Petras. Corporate social responsibility and bank risk. Journal of Business Economics, 92(3):397\u0026ndash;428, 2022.\u003c/li\u003e\n\u003cli\u003eMartin Oehmke. Bank capital regulation and climate change. Advisory Scientific Committee (ASC) Insight of the European Systemic Risk Board (ESRB) Number 3, pages 1\u0026ndash;14, 2022.\u003c/li\u003e\n\u003cli\u003eMartin Oehmke and Marcus M Opp. Green capital requirements. Swedish House of Finance Research Paper, (22-16), 2022.\u003c/li\u003e\n\u003cli\u003eBert Scholtens. Corporate social responsibility in the international banking industry. Journal of Business Ethics, 86(2):159\u0026ndash;175, 2009.\u003c/li\u003e\n\u003cli\u003eKoji Takahashi and Junnosuke Shino. Greenhouse gas emissions and bank lending. Bank for International Settlements Working Paper No 1078, 2023.\u003c/li\u003e\n\u003cli\u003ePaul Thompson and Christopher J Cowton. Bringing the environment into bank lending: Implications for environmental reporting. The British Accounting Review, 36(2):197\u0026ndash; 218, 2004.\u003c/li\u003e\n\u003cli\u003eMarcel Van Marrewijk. Concepts and definitions of CSR and corporate sustainability: Between agency and communion. Journal of Business Ethics, 44:95\u0026ndash;105, 2003.\u003c/li\u003e\n\u003cli\u003eOlaf Weber. Environmental credit risk management in banks and financial service insti- tutions. Business Strategy and the Environment, 21(4):248\u0026ndash;263, 2012.\u003c/li\u003e\n\u003cli\u003eWei Yin, Zheyi Zhu, Berna Kirkulak-Uludag, and Yaping Zhu. The determinants of green credit and its impact on the performance of Chinese banks. Journal of Cleaner Production, 286:124991, 2021.\u003c/li\u003e\n\u003c/ol\u003e"}],"fulltextSource":"","fullText":"","funders":[],"hasAdminPriorityOnWorkflow":false,"hasManuscriptDocX":true,"hasOptedInToPreprint":true,"hasPassedJournalQc":"","hasAnyPriority":true,"hideJournal":true,"highlight":"","institution":"Free University of Bozen-Bolzano","isAcceptedByJournal":false,"isAuthorSuppliedPdf":false,"isDeskRejected":"","isHiddenFromSearch":false,"isInQc":false,"isInWorkflow":false,"isPdf":false,"isPdfUpToDate":true,"isWithdrawnOrRetracted":false,"journal":{"display":true,"email":"[email protected]","identity":"researchsquare","isNatureJournal":false,"hasQc":true,"allowDirectSubmit":true,"externalIdentity":"","sideBox":"","snPcode":"","submissionUrl":"/submission","title":"Research Square","twitterHandle":"researchsquare","acdcEnabled":true,"dfaEnabled":false,"editorialSystem":"","reportingPortfolio":"","inReviewEnabled":false,"inReviewRevisionsEnabled":true},"keywords":"Environmental impact, environmental damage cost, bank, profitability, market value","lastPublishedDoi":"10.21203/rs.3.rs-4011147/v1","lastPublishedDoiUrl":"https://doi.org/10.21203/rs.3.rs-4011147/v1","license":{"name":"CC BY 4.0","url":"https://creativecommons.org/licenses/by/4.0/"},"manuscriptAbstract":"\u003cp\u003eWe study empirically the environmental impact of banks, i.e. the negative externality on the environment and the society deriving from the use of a natural resource or the emission of a pollutant. We find that environmental “impact ratios”, i.e. environmental damage costs in proportion to total revenues, are negatively correlated with bank profitability. Furthermore, banks with a stronger impact on the environment are valued less by equity market investors and pay less cash to share- holders. Among environmental categories, potential damages from greenhouse gas emissions or waste seem to be especially severe. We deliver important insights for banks´ environmental management. If bankers would be able to address businesses and practices to be more renewable and lower in their emissions, they could im- prove both the operating as well as the market performance. Thus, firms would be financially more stable, and could react smoothly to the recent introduction of stricter and onerous environmental regulations.\u003c/p\u003e","manuscriptTitle":"Does the environmental impact of banks affect their financial performance?","msid":"","msnumber":"","nonDraftVersions":[{"code":1,"date":"2024-03-06 07:21:35","doi":"10.21203/rs.3.rs-4011147/v1","editorialEvents":[{"type":"communityComments","content":2}],"status":"published","journal":{"display":true,"email":"[email protected]","identity":"researchsquare","isNatureJournal":false,"hasQc":true,"allowDirectSubmit":true,"externalIdentity":"","sideBox":"","snPcode":"","submissionUrl":"/submission","title":"Research Square","twitterHandle":"researchsquare","acdcEnabled":true,"dfaEnabled":false,"editorialSystem":"","reportingPortfolio":"","inReviewEnabled":false,"inReviewRevisionsEnabled":true}}],"origin":"","ownerIdentity":"9f65a64e-4c0e-4017-b470-0a26165dfe56","owner":[],"postedDate":"March 6th, 2024","published":true,"recentEditorialEvents":[],"rejectedJournal":[],"revision":"","amendment":"","status":"posted","subjectAreas":[{"id":29108659,"name":"Finance"}],"tags":[],"updatedAt":"2024-03-06T07:21:35+00:00","versionOfRecord":[],"versionCreatedAt":"2024-03-06 07:21:35","video":"","vorDoi":"","vorDoiUrl":"","workflowStages":[]},"version":"v1","identity":"rs-4011147","journalConfig":"researchsquare"},"__N_SSP":true},"page":"/article/[identity]/[[...version]]","query":{"redirect":"/article/rs-4011147","identity":"rs-4011147","version":["v1"]},"buildId":"qtupq5eGEP_6zYnWcrvyt","isFallback":false,"isExperimentalCompile":false,"dynamicIds":[84888],"gssp":true,"scriptLoader":[]}