The impact of corporate sustainability and digitalization on international banks’ performance

Abstract

We analyse the implications for international banks of two contemporary megatrends: corporate sustainability (CS) and digital-ization. The digital environment and the availability of massive data from customers generate asymmetric information forbanks to the detriment of customers, who experience individual vulnerabilities such as privacy rights. This can hinder the posi-tive influence of digitalization in banks’performance, with relevant managerial and political implications. In this context, thereputation generated by CS strategies can constitute a credence factor that reduces customers’fears of opportunistic behaviorand information asymmetries. We test andfind support for our hypothesis over a panel data of large international banks fromdeveloped countries. Ourfindings shed light on the mutual reinforcement of CS and digitalization strategies in enhancingbanks’market performance and efficiency