Is there a positive effect of ESG performances on the credit access in the hospitality and tourism (H&T) sector? The answer to this research question may help us understand the impact of sustainability performance on the credit access in the publicly traded global hospitality firms. Indeed, the growing interest in environmental and ethical issues and the progressive incorporation of social corporate result in the loan decision process are the result of a cultural path that sees banks react to market changes and pay attention to an increasingly sustainable future. So, this paper intends to investigate the level of integration of sustainability issues in loan decision-making processes.
The primary source for identifying the perimeter of international listed firms operating in the tourism sector was the Refinitiv Eikon database. Therefore, we collected individual ESG scores and financial data of publicly traded global hospitality firms from the Refinitiv global database. The Eikon database classifies firms into 10 main economic sectors, 28 business sectors and a further 54 industry groups according to their activities, including H&T as one of the industry groups. Hence, all data for these industries were retrieved from the Eikon database. For our analysis, we consider multilevel modelling for longitudinal data.
Overall, the empirical findings reveal that the cost of debt is lower for companies that have high levels of ESG. Hence, our research hypothesis is supported. In other words, the sustainability performance of a company is likely to influence the cost of debt charged by lending institutions.
This paper provides two types of contributions to the literature. First and foremost, current H&T literature has neglected credit access and ESG performance, despite their significance for corporate sustainability research and practice. To the best of our knowledge, this is the first study that exclusively focuses on the relationship between ESG performance and credit access in the H&T industry. Second, with this study, we open a promising new research avenue in the H&T literature that calls for scholarly attention to ESG’s ability to facilitate access to bank credit.
