Epsilon Archive for Student Projects

Abstract

The presented paper employs a between-subject experimental survey with one control and two treatment groups. These three groups were each shown a different narrative capturing either a bank that does traditional banking operations, a bank which does traditional banking operations and has a focus on following environmental-, social-, and governance (ESG) guidelines, and a social bank which puts focus on maximizing social welfare. Participants were then asked questions on their perceptions of the respective bank on both an economic performance (investment opportunity attractiveness) and an emotional level (willingness to be customer). They gave ratings on both dimensions using Likert-scale items. Comparing between treatments, it is found that ESG narrative banks rank significantly higher than traditional banks in both dimensions. However, this increased score is marginal when compared to social narrative, which scores significantly higher in both dimensions than both traditional and ESG narrative banks. Using alternative dependent variables, this effect only seems to remain for the emotional dimension, in which social treatment scores significantly and substantially higher than ESG (which in turn scored significantly higher than traditional). These results have implications for a future role of sustainability engrained within the financial system. That is, given growing awareness around sustainability in general, this may also increase awareness around sustainability particularly in the banking sector. Thus, positive perceptions of social banking may indicate a more prominent role of the institutions in the future, given that perceptions are able to drive (parts of) the individual’s behavior.