Determinants of corporate voluntary disclosure in a transition economy

Why banks should be concerned about incorporating environmental, social and governance (ESG) criteria in the lending process? What is the motivation? This study aims to find the motives for considering environmental, social and governance (ESG) criteria in bank lending process. A primary survey has been conducted to know the current status and motivation for incorporating ESG factors in investment decisions. Sample comprised 30 private commercial banks (PCBs) operating in Bangladesh. Data collected were analyzed with graphs, descriptive statistics, and regression analysis. Findings of the study indicate that banks are mostly considering basic environmental, social and governance factors set by regulators qualitatively. They are lagging behind in considering the advanced ESG criteria needed for sustainable and efficient credit risk management. Based on motivation for incorporating ESG factors, it was found that banks pioneering in incorporating ESG factors in lending decisions are compensated through better financial performance. Findings of the study are expected to encourage practitioners and policy-makers to take more pragmatic steps to incorporate ESG risk factors quantitatively in lending decision-making process.

The aim of this paper is to illuminate the role of the socio-economic, cultural and religious context in shaping corporate social responsibility (CSR) practices of banks in Bangladesh. The authors utilize content analysis of annual reports and websites of banks to identify CSR activities in healthcare, education and financial inclusion sectors. Structuration theory (ST) is used to explain how interactions between bank managers (as agents) with the social structures (institutions and government) shape CSR practices. The findings show that banks’ engagement in CSR activities is embedded in the social fabric of Bangladesh and not a result of the Global Reporting Initiative (GRI). It is also noted that Islamic banks focus their CSR activities on social justice, while other banks target education and other humanitarian issues. The authors contribute to the literature on the determinants of CSR by revealing the rationalizations of different actors in the production and reproduction of CSR practices in Bangladesh, an insight attributed to ST. The researchers conclude that Islamic beliefs influenced managers to mitigate poverty through CSR investments.

The study investigates the impacts of firms-, industry-, and country-level covariates on the financing structure amongst the Indonesian listed companies. Using artificial nested testing procedure, the preferred models were selected that could illustrate the association between debt ratio and its determinants. By making use of the full sample, it was found that these three levels of determinants explain approximately 73% of leverage variations.
Further, the importance of these determinants on leverages across sectors is also investigated in this study. The sectoral behavior plays a crucial role as the firm- and sector-level covariates indicate more important variables than country-level covariates, which implies that the firm-level covariates become the main factors in firm financing structure determination.
The artificial nested testing procedure (F-test) was used choose the preferred models, which is suitable for each sector. The selection of models depends on the sectoral characteristics, which indirectly control the orientation and magnitude of relationships. Those three levels of determinants have different impacts on capital structure across sectors, which provides evidence that the sectoral behaviors indirectly tend to influence the association between determinants and firm financing pattern in the Indonesian context.