Operational Risk and ESG Performance in Indian Banks: the Moderating Role of CEO-Chairperson Duality
Keywords
operational risk, ESG performance, CEO chairperson duality, banksAbstract
This study investigates how operational risk (OR) influences the environmental, social, and governance (ESG) performance of Indian commercial banks, and explores whether CEO-Chairperson Duality (CCD) affects this relationship. Drawing on stakeholder theory and agency theory, the study argues that internal inefficiencies, such as high operating costs and weak process control, constrain banks’ ability to achieve sustainability goals. The study covers data from 32 Indian commercial banks between 2017 and 2024. Fixed-effects regression results indicate a negative, significant relationship between OR and ESG performance, confirming that banks with greater inefficiencies struggle more with ESG performance. Additionally, CCD positively moderates this effect, showing that CCD can reduce the negative impact of OR through faster and more consistent decision-making. The study adds valuable insights to ESG and corporate governance literature and suggests practical policies, including improving operational efficiency, integrating ESG into overall risk management frameworks, and adopting governance structures suited to each bank’s specific risks and contexts.
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