The Effect of ESG on the Valuation of the Indian Banks Through Moderation of Net Interest Margin

There have been several studies across the world establishing a association between ESG and the valuation of banks and firms. The importance of ESG -related requirements for enterprises has significantly increased in recent years. The current study aims to determine how ESG impacts bank valuation while examining how the net interest margin moderates the link. The study runs the panel data method on a sample data of thirteen years, i.e., from 2010 to 2022. The study's findings show that ESG increases the bank's worth when banks boost NIM (Net Interest Margin). It is found that, up to a point, both profitability and ESG contribute value to the bank's valuation. Moreover, the NIM plays a critical moderating role in the correlation between the ESG and the bank's value. Due to our study, the involvement of the policy-makers, regulators, and other stakeholders would increase. However, all unlisted banks, i.e., the urban cooperative banks, are not included in the study because the Market value, as defined, applies only to listed institutions. We didn't attempt to dissect each element of ESG separately and research how each affected bank valuation.