Analysis of the Impact of ESG Performance on Financial Market Stability Based on Multivariate Statistical Modeling Perspective

• Published in: Applied mathematics and nonlinear sciences Vol. 9; no. 1
• Main Authors: Wen, Qian, Shan, Rui, Guo, Minrui, Li, Yuwu, Liu, Jinmiao
• Format: Journal Article
• Language: English
• Published: Sciendo 01-01-2024
• Subjects: 68-02; ESG performance; Financial market; Heterogeneity test; Multiple linear regression; Weighted least squares
• ISSN: 2444-8656; 2444-8656
• DOI: 10.2478/amns-2024-1740

ESG performance reflects corporate social responsibility, while financial market stability shows the dynamic changes of enterprises, and exploring the relationship between the two is of great significance to optimize the structure of financial market stability. In this paper, on the basis of combining the mechanisms of ESG performance and financial market stability, brand value is introduced as a mediating effect to analyze the mechanism of ESG performance on financial market stability and relevant research hypotheses are designed. The appropriate research model is established with 30 commercial banks in China as the research object through the use of a multiple linear regression model with weighted least squares estimation for parameter estimation. For the impact of ESG performance on financial market stability, empirical analysis is carried out using benchmark regression, mediation effect test, heterogeneity test, and robustness test. Every 1% increase in the ESG composite score of financial institutions increases financial market stability by 0.179%, and only the social dimension of ESG performance is significant for financial market stability. High-cost and small-sized financial institutions are more capable of lowering financial market risk, and the difference in the Beta value of ESG performance of financial institutions between the highest and lowest groups is 1.067, which is significant at the 1% level. Financial enterprises need to pay full attention to the contribution of ESG performance to the stability of the financial market in order to support the enhancement of their economic efficiency and the maintenance of stable and healthy development of the market.