Research BWL VI

Research at the chair of Banking and Finance is based on empirical as well as theoretical and experimental working methods. Thus robust insights can be gained. The research is currently focused on the following topics:

• Climate Risk and Climate-related financial disclosures
• Sustainable Finance and Corporate Governance 
• Financial Literacy und Sustainability Literacy
• Behavioral & Social Finance

Climate Risk and Climate-related financial disclosures:

Climate change has far-reaching economic implications. Extreme weather events and the (necessary) transition to a low-carbon economy pose a threat to the stability of firms and markets, potentially exacerbating financial risks such as credit and market risk. As a result, identifying, measuring and managing climate risks is becoming increasingly important for financial actors. To what extent do investors already factor CO2 risks into their equity assessments? How can financial actors, especially credit institutions, integrate climate risks more effectively into their risk management? How do they adjust their credit conditions accordingly? And what insights can be gained from the climate-related reporting of these institutions? These questions are addressed in the following projects:

• Auzepy, A., Bannier, C. E. (2024). Climate Risk Integration in Bank Risk Management and Capital Requirements: An interview-based Analysis of Approaches and Challenges. Working Paper.
• Auzepy, A., Bannier, C. E., & Martin, F. (2023). Are sustainability-linked loans designed to effectively incentivize corporate sustainability? A framework for review. Financial Management, 52, 643–675. https://doi.org/10.1111/fima.12437 [Link]
• Auzepy A, Tönjes E, Lenz D, Funk C. (2023). Evaluating TCFD reporting—A new application of zero-shot analysis to climate-related financial disclosures. PLOS One 18(11): e0288052. https://doi.org/10.1371/journal.pone.0288052 [Link]
• Auzepy, A., Bannier, C. E., Bofinger, Y.; Rock, B. (2022). Carbon Footprints & Equity Risk Assessments. SSRN Working Paper. [Link] 

Sustainability and Corporate Governance: Compliance and ESG:

What is the role of sustainability strategies, i. e. commitment in the field of ESG (Environmental, Social, Governance), for companies? Is that a way to reduce risks? How does compliance stand out from this? And how can investors in the capital markets benefit if they take ESG into account in their investment decisions? We are exploring these questions in different projects that compare companies with their cultural backgrounds (USA, UK and continental Europe).

• Auzepy, A., Bannier, C. E., & Martin, F. (2022). Walk the Talk: Shareholders’ Soft Engagement on Annual General Meetings. Center for Financial Studies Working Paper No. 689, 2023. [Link]
• Bannier, C. E. und Reinschmidt, J. (2022). The effects of sustainable management compensation systems.
• Bannier, C. E., Bauer, A., Bofinger, Y. und Ewelt-Knauer, C. (2020). Corporate Compliance Systems - The Effect on Equity and Credit Risk, Working Paper, Justus-Liebig-University Gießen [Link]

Financial Literacy and Sustainability Literacy:

The increasing complexity of investment products makes a solid financial knowledge indispensable for weighing up risk-return aspects. Regulatory requirements also demand that a client's financial knowledge is taken into account in the advisory process. But what about the Sustainability-Literacy, when private clients increasingly want to, or rather shall, incorporate sustainability aspects into their investment decisions? How can sustainability be measured in such a way that private customers can rely on this measure in their decisions? What does this mean for the companies or their reporting obligations to the capital market?

Behavioral and Social Finance:

Do socio-social aspects such as cultural morals or ideologies spread on social networks influence our economic decisions? What does this mean for the "optimal" provision of economic information so that the most rational decisions possible are made within social contexts? In various experimental projects, we are particularly concerned with the question how errors in investment and repayment decisions of private households can be avoided.