Sustainability Reporting and Credit Risk Management in the Romanian Banking Landscape
The paper analyses the association between the reporting of the Sustainable Development Goals (SDGs) and the behaviour of Romanian banks, focusing on the relationship between SDG disclosure scores (both total and across the four sustainability dimensions) and credit risk management practices, mea...
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| Main Authors: | , , |
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| Format: | Article |
| Language: | English |
| Published: |
Editura ASE
2025-08-01
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| Series: | Amfiteatru Economic |
| Subjects: | |
| Online Access: | https://www.amfiteatrueconomic.ro/temp/Article_3456.pdf |
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| Summary: | The paper analyses the association between the reporting of the Sustainable Development
Goals (SDGs) and the behaviour of Romanian banks, focusing on the relationship between
SDG disclosure scores (both total and across the four sustainability dimensions) and credit
risk management practices, measured by the level of credit loss allowances. The study
combines content analysis with fixed-effects regressions to examine a sample of Romanian
banks spanning the period 2017-2023. The results highlight a positive and significant
relationship between the level of SDG reporting - including the environmental, social, and
economic dimensions - and the expected credit loss allowances, suggesting that banks
actively engaged in sustainability reporting tend to support the financing of emerging
sectors, thus exposing themselves to higher credit risk. However, banks appear to mitigate
this risk through strong governance practices. The conclusions, relevant for policymakers,
emphasise the need for a balanced strategy between commitment to the Sustainable
Development Goals (SDGs) and financial stability, highlighting the role of sustainability
reporting in enhancing transparency, trust, and the identification of lower-risk sustainable
financing opportunities. This research contributes to the existing body of literature by
introducing SDG disclosure scores specifically tailored to the banking sector and by
employing the Quadruple Bottom Line (QBL) framework, which encompasses the four
pillars of sustainability. Moreover, it distinguishes itself by examining the relationship
between SDG reporting and credit risk – a relatively underexplored but highly relevant area
within the banking industry. |
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| ISSN: | 1582-9146 2247-9104 |