THE EFFECT OF SUSTAINABILITY PERFORMANCE ON CORPORATE CREDIT RATING IN GLOBAL BANKING INDUSTRY

Wardah, Awwalin Ikhsaniah Saldi (2023) THE EFFECT OF SUSTAINABILITY PERFORMANCE ON CORPORATE CREDIT RATING IN GLOBAL BANKING INDUSTRY. Masters thesis, Universitas Andalas.

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Abstract

ABSTRACT This study aims to analyze and find empirical evidence of the effect of sustainability performance on corporate credit ratings in the world banking industry. The sustainability performance of this study was measured using scores from 10 categories contained in all ESG pillars from the Refinitiv Eikon Database. Meanwhile, the corporate credit rating is measured using the International Credit Rating Scale issued by Fitch Ratings. In addition, this research also uses two control variables: firm size and profitability. The sample used in this study are companies in the banking industry worldwide from 2012-2021. The data analysis technique used in this study is Panel Data Regression using STATA 14.2 for Windows. The results of the study show that the emission score has a negative and insignificant relationship with the corporate credit rating. The innovation score and resource use score have a negative and significant relationship with the corporate credit rating. Community scores and workforce scores have a significant positive effect on corporate credit rating. The human rights score also has a positive but not significant effect on the corporate credit rating. Product responsibility score has a negative and significant relationship with corporate credit rating. CSR strategy score has a significant positive effect on corporate credit rating. Management score also has a positive but not significant effect on corporate credit rating. The shareholder score has a negative and significant relationship with the corporate credit rating. Finally, the two study control variables consisting of firm size and profitability have a significant positive relationship with corporate credit rating. Keywords: Sustainability Performance, ESG, Credit Ratings, Global Banking

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