Table 3 The results of our baseline...

Table 3

The results of our baseline model

Profit_t	ROA			ROE
Profit_t−1	0.148*** (0.041)	0.368*** (0.11)	0.335*** (0.112)	0.445*** (0.032)	0.279** (0.142)	0.342*** (0.077)
ESG	−0.028*** (0.008)	−0.049*** (0.019)	−0.05*** (0.017)	−0.237*** (0.07)	−0.562* (0.31)	−0.424*** (0.149)
SQESG	0.0001** (0.0001)	0.0005** (0.0002)	0.0005** (0.0002)	0.001** (0.0006)	0.006** (0.003)	0.003** (0.002)
LA	0.017** (0.007)	0.0001 (0.016)	0.0006 (0.016)	0.04 (0.056)	0.21 (0.167)	−0.166 (0.13)
DEPO	−0.003 (0.002)	0.008 (0.006)	0.009* (0.005)	−0.01 (0.02)	0.088 (0.097)	0.056 (0.049)
NPL	−0.006 (0.007)	−0.026 (0.023)	−0.024 (0.022)	−0.185*** (0.056)	−0.432 (0.278)	−0.094 (0.184)
CAP	0.056** (0.023)	0.13** (0.051)	0.147*** (0.046)	0.23 (0.171)	0.79 (0.9)	0.899** (0.436)
LNTA	0.183*** (0.034)	0.064 (0.081)	0.062 (0.077)	1.332*** (0.302)	0.023 (0.717)	1.227*** (0.466)
OPEN	0.012*** (0.003)	0.006 (0.008)	0.006 (0.008)	0.105*** (0.034)	−0.03 (0.083)	0.152*** (0.056)
GDP	0.038*** (0.003)			0.458*** (0.024)
INF	0.035*** (0.006)			0.134*** (0.036)
COV		−0.187*** (0.068)	−0.206*** (0.057)		−2.311** (1.08)	−1.696*** (0.496)
GFC			−0.265* (0.159)			−4.299*** (1.639)
CONST	−4.96*** (1.267)	−2.429 (3.405)	−2.517 (3.211)	−31.13*** (10.84)	2.893 (35.145)	−26.353 (17.963)
Observations	2,773	3,376	3,376	2,773	3,376	3,376
AR1 (p-value)	0.000	0.000	0.000	0.000	0.001	0.000
AR2 (p-value)	0.190	0.071	0.113	0.415	0.105	0.201
Hansen test (p-value)	0.170	0.265	0.179	0.086	0.546	0.142

Profit_t	ROA			ROE
Profit_t−1	0.148*** (0.041)	0.368*** (0.11)	0.335*** (0.112)	0.445*** (0.032)	0.279** (0.142)	0.342*** (0.077)
ESG	−0.028*** (0.008)	−0.049*** (0.019)	−0.05*** (0.017)	−0.237*** (0.07)	−0.562* (0.31)	−0.424*** (0.149)
SQESG	0.0001** (0.0001)	0.0005** (0.0002)	0.0005** (0.0002)	0.001** (0.0006)	0.006** (0.003)	0.003** (0.002)
LA	0.017** (0.007)	0.0001 (0.016)	0.0006 (0.016)	0.04 (0.056)	0.21 (0.167)	−0.166 (0.13)
DEPO	−0.003 (0.002)	0.008 (0.006)	0.009* (0.005)	−0.01 (0.02)	0.088 (0.097)	0.056 (0.049)
NPL	−0.006 (0.007)	−0.026 (0.023)	−0.024 (0.022)	−0.185*** (0.056)	−0.432 (0.278)	−0.094 (0.184)
CAP	0.056** (0.023)	0.13** (0.051)	0.147*** (0.046)	0.23 (0.171)	0.79 (0.9)	0.899** (0.436)
LNTA	0.183*** (0.034)	0.064 (0.081)	0.062 (0.077)	1.332*** (0.302)	0.023 (0.717)	1.227*** (0.466)
OPEN	0.012*** (0.003)	0.006 (0.008)	0.006 (0.008)	0.105*** (0.034)	−0.03 (0.083)	0.152*** (0.056)
GDP	0.038*** (0.003)			0.458*** (0.024)
INF	0.035*** (0.006)			0.134*** (0.036)
COV		−0.187*** (0.068)	−0.206*** (0.057)		−2.311** (1.08)	−1.696*** (0.496)
GFC			−0.265* (0.159)			−4.299*** (1.639)
CONST	−4.96*** (1.267)	−2.429 (3.405)	−2.517 (3.211)	−31.13*** (10.84)	2.893 (35.145)	−26.353 (17.963)
Observations	2,773	3,376	3,376	2,773	3,376	3,376
AR1 (p-value)	0.000	0.000	0.000	0.000	0.001	0.000
AR2 (p-value)	0.190	0.071	0.113	0.415	0.105	0.201
Hansen test (p-value)	0.170	0.265	0.179	0.086	0.546	0.142

Note(s): ROA, pre-tax return on assets; ROE, pre-tax return on assets; ROE, pre-tax return on equity; ESG, the ESG combined score; SQESG, the squared value of ESG; LA, the ratio of total loans to total assets; DEPO, the ratio of total deposits to total loans; NPL, the ratio of non-performing loans to total loans; CAP, the ratio of total equity to total assets; LNTA, the natural logarithm of total assets; OPEN, the banking freedom index; GDP, the growth rate of GDP; INF, the inflation rate; COV, dummy variable for the COVID-19 period of 2020–2021; GFC, dummy variable for the global financial crisis period of 2007–2009. Variables in italics are instrumented through the GMM procedure following Arellano and Bover (1995). Robust standard errors are in parentheses. *, **, and *** denote significance at the 10%, 5%, and 1% levels, respectively

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