Title: THE IMPACT OF ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) DISCLOSURE ON THE FINANCIAL PERFORMANCE OF COMMERCIAL BANKS: EMPIRICAL EVIDENCE IN ASEAN+3

Authors: NGUYEN Minh Hieu, LUONG Dac Duc, NGUYEN Tra Giang, NGUYEN Hoang Vinh and PHAM Tuan Anh

Abstract: This study investigates the impact of ESG disclosure on the financial performance of commercial banks in the ASEAN+3 regions during 2015–2024. While prior research provides mixed evidence, empirical findings remain limited for emerging markets characterized by heterogeneous institutional environments and bank-dominated financial systems. We construct a unique, endogenous ESG disclosure index through content analysis of annual and sustainability reports following GRI standards. Utilizing Bayesian panel regression to address cross-country heterogeneity and parameter uncertainty, our results indicate that ESG disclosure has a positive and economically significant effect on bank financial performance, specifically ROA and ROE. Posterior probability estimates consistently support the hypothesis that enhanced ESG transparency reduces information asymmetry and strengthens market trust. The findings suggest that ESG disclosure functions as a strategic informational mechanism, signaling long-term value creation in emerging banking systems.

Keywords: ESG disclosure; bank performance; Bayesian regression; ASEAN+3.

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