Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/317656 
Year of Publication: 
2023
Citation: 
[Journal:] Journal of Business Economics and Management (JBEM) [ISSN:] 2029-4433 [Volume:] 24 [Issue:] 5 [Year:] 2023 [Pages:] 923-938
Publisher: 
Vilnius Gediminas Technical University, Vilnius
Abstract: 
The relevance of sustainable development in the financial institution and its value is significant in today's financial landscape. This research aims to evaluate the efficiency of converting sustainable development outcomes, quantified through ESG, into a financial institution's valuation, measured by the P/E ratio. In order to reach the aim, the DEA method was applied. The results reveal that only one financial institution has an efficiency score of 1, signifying a notable efficiency level. Most financial institutions in the dataset possess efficiency scores (represented by theta) below 0.1, indicating a relative inefficiency in converting their E, S, and G scores into P/E ratios. The results reveal that high E, S, and G scores do not result in higher P/E ratios. It might be advisable to diversify investments across different financial institutions with diverse ESG profiles to mitigate risk and optimise returns. These potential research perspectives offer opportunities for a more profound understanding of the connection between ESG factors and the valuation of financial institutions. They allow for an examination of the quality and transparency of ESG reporting, considering the specific internal factors relevant to international financial institutions, as ESG continues to gain recognition as an integral component of a company's intangible assets.
Subjects: 
banks
data envelopment analysis (DEA)
diversified financial services and capital markets
efficiency
ESG
financial institutions
insurance companies
P/E ratio
JEL: 
G21
G22
G32
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article

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