Can a pro-public orientation explain the holding of capital by G-SIBs?
South African Journal of Business Management
| Field | Value | |
| Title | Can a pro-public orientation explain the holding of capital by G-SIBs? | |
| Creator | Ndebele, Cindy de Jager, Phillip Toerien, Francois | |
| Description | Purpose: We investigate the correlation between capital structure and a set of, mostly, standard capital structure determinants for a unique sample: Global Systemically Important Banks (G-SIBs).Design/methodology/approach: We augment the standard set of regression determinants with a proxy measure of pro-public orientation (DataStream’s Refinitiv Environmental, social and governance [ESG] scores). We expect to find that a more pro-public orientated G-SIB holds more capital. This is because very large and systemic banks underpin the functioning of society. The public, therefore, has a direct interest in bank safety with a better capitalised bank being a safer bank. On the other hand, shareholders of a safer bank suffer because of lower profitability.Findings/results: Initial results indicated no relation between pro-public orientation and bank leverage; however, further analysis showed that bank leverage decreases as the governance component score increases. This suggests that the governance of G-SIBs is important for financial stability. Bank size was found to have no intermediation effect on the relationships, implying that our results are not because of a clustering among the largest banks. Correlations between the control variables and bank leverage provide support for the argument that bank leverage is not solely determined by regulations.Originality/value: We extend recent work on social ratings and capital structure in non-financial firms to banks. Our results provide further support for the proposition that the drivers of the capital structures of non-financial firms also determine those of banks, weakening the argument that capital regulation is the sole determinant of bank capital structures. Our sample focuses attention on a core financial decision of very important, if not the most important, players in the global economy. | |
| Publisher | AOSIS | |
| Date | 2023-05-16 | |
| Identifier | 10.4102/sajbm.v54i1.3652 | |
| Source | South African Journal of Business Management; Vol 54, No 1 (2023); 14 pages 2078-5976 2078-5585 | |
| Language | eng | |
| Relation |
The following web links (URLs) may trigger a file download or direct you to an alternative webpage to gain access to a publication file format of the published article:
https://sajbm.org/index.php/sajbm/article/view/3652/2478
https://sajbm.org/index.php/sajbm/article/view/3652/2479
https://sajbm.org/index.php/sajbm/article/view/3652/2480
https://sajbm.org/index.php/sajbm/article/view/3652/2481
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