Abstract

Purpose – This study examines the impact of ESG lending and technology-related capital expenditures on banking performance in BRICS economies. It assesses how these factors influence return on risk-weighted assets and nonperforming loans, providing insights into the role of sustainable finance and digital transformation in banking stability.

Design/methodology/approach – Using quarterly panel data (2015–2023) from commercial banks in Brazil, Russia, India, China and South Africa (BRICS), this study employs fixed-effects regression models to estimate the effects of ESG lending and technology investment on banking performance. A robustness check is conducted by segmenting the sample into large and small banks to assess the moderating role of institutional scale.

Findings – The results indicate that greater exposure to high-ESG firms enhances banking performance by improving RoRWA and reducing NPLs. Similarly, borrowers investing in technology exhibit more substantial financial stability, leading to lower credit risk for banks. The effects are more pronounced in smaller banks, suggesting that sustainable and technology-driven lending strategies provide greater risk mitigation benefits for institutions with resource constraints.

Practical implications – The findings highlight the strategic importance of integrating ESG and technology factors into banking credit risk frameworks. Banks should develop specialized financial products and enhance ESG and technology-based credit assessments to optimize lending strategies. Policymakers should introduce incentives to promote sustainable finance, encourage digital transformation and standardize ESG reporting across emerging markets.

Originality/value – This study contributes to the sustainable banking literature by jointly examining the impact of ESG and technology investments on banking performance in emerging economies. It provides empirical evidence from BRICS, highlighting the role of institutional scale in shaping the effectiveness of sustainable finance strategies. The results offer actionable insights for banks and regulators seeking to balance financial performance and sustainability in high-growth but volatile markets.

Abstract

Purpose – This study examines the convergence of energy diversification, financial development and per-capita income in OECD countries.

Design/methodology/approach – The research employs the club convergence test to assess convergence among OECD countries and uses Granger causality tests and panel regressions to identify the determinants of convergence, using data from 1997 to 2021.

Findings – The convergence tests showed no overall convergence but revealed convergence clubs for each factor. Granger causality tests indicated short-run bi-directional relationships between the variables. Long-run panel regression analysis confirmed that technological progress significantly improves per capita income and energy diversification. Additionally, it revealed bi-directional relationships between energy diversification and financial development, a uni-directional relationship from financial development to per capita income and a U-shaped effect of per capita income on energy diversification, with a turning point at $67,112.8 per year.

Practical implications – The findings suggest that within each convergence club, implementing microeconomic incentives for technology development and diffusion in energy, production, and financial services could help lagging countries catch up.

Originality/value – This study pioneers the testing of convergence in energy diversification, financial development and per capita income in OECD countries and identifies the determinants of this convergence.