ABSTRACT
The economic and environmental consequences of bad banking practices have aroused much attention. In China, banks are at the center of shadow banking activities through which they avoid regulation and support environmentally unfriendly businesses such as fossil fuel companies and other high-pollution enterprises. In this paper, we study the impact of bank's engagement in shadow banking activities on its sustainability by using annual panel data of Chinese commercial banks. The result shows that bank's engagement in shadow banking activities has a negative impact on its sustainability and the negative impact of bank's engagement in shadow banking activities is more pronounced for city commercial banks and unlisted banks which are less regulated and lack corporate social responsibility (CSR). Furthermore, we explore the underlying mechanism of our findings and prove that bank's sustainability is impeded because it transforms high-risk loan into shadow banking activities which are less regulated. Finally, by using difference-in-difference (DiD) approach, we find that bank's sustainability improved after the financial regulation on shadow banking activities. Our research provides empirical evidence that the financial regulation on bad banking practices is beneficial for bank's sustainability.
Subject(s)
Banking, Personal , Commerce , Environmental Pollution , Ethics, Business , Industry , Sustainable Growth , Banking, Personal/economics , Banking, Personal/ethics , Banking, Personal/legislation & jurisprudence , China , Cities , Commerce/economics , Commerce/ethics , Commerce/legislation & jurisprudence , Environmental Pollution/economics , Environmental Pollution/ethics , Environmental Pollution/legislation & jurisprudence , Government Regulation , Industry/economics , Industry/ethics , Industry/legislation & jurisprudence , Social Responsibility , Sustainable Development/economics , Sustainable Development/legislation & jurisprudenceABSTRACT
We study the connection between personal and professional behavior by introducing usage of a marital infidelity website as a measure of personal conduct. Police officers and financial advisors who use the infidelity website are significantly more likely to engage in professional misconduct. Results are similar for US Securities and Exchange Commission (SEC) defendants accused of white-collar crimes, and companies with chief executive officers (CEOs) or chief financial officers (CFOs) who use the website are more than twice as likely to engage in corporate misconduct. The relation is not explained by a wide range of regional, firm, executive, and cultural variables. These findings suggest that personal and workplace behavior are closely related.
