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Journals / Fiscaoeconomia / 2026 / Volume: 10 Issue: 1

Does Sustainability Lower Financing Costs? Evidence from a Dynamic System GMM Analysis

Sürdürülebilirlik Uygulamaları Finansman Maliyetlerini Azaltır mı? Dinamik Sistem GMM Analizinden Bulgular

Burcu Zengin(Ankara Hacı Bayram Veli Üniversitesi)0000-0001-5275-6748
Pages
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Publication Date
2026-03-16
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AI Summary & Key Takeaways

AI Insight
⚡ TL;DR(Too Long; Didn't Read)

The empirical findings reveal a clear U-shaped relationship between ESG performance and the cost of debt.

📌 3 Key Takeaways

🎯
Objective & Hypothesis:This study provides a comprehensive examination of the non-linear relationship between environmental, social, and governance (ESG) performance and firms’ cost of debt.
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Key Findings & Data:Using a balanced panel dataset of 461 U.S. non-financial firms for the period 2019–2023, the analysis employs the dynamic System-GMM estimator to address potential endogeneity, lagged dependence, and unobserved firm-level heterogeneity.
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Conclusion & Impact:The empirical findings reveal a clear U-shaped relationship between ESG performance and the cost of debt.
🔬Design:Research Article
📍Scope:2019–2023 Verileri
⚙️Variables:ESG · Cost of Debt · System GMM

Abstract

This study provides a comprehensive examination of the non-linear relationship between environmental, social, and governance (ESG) performance and firms’ cost of debt. Using a balanced panel dataset of 461 U.S. non-financial firms for the period 2019–2023, the analysis employs the dynamic System-GMM estimator to address potential endogeneity, lagged dependence, and unobserved firm-level heterogeneity. The empirical findings reveal a clear U-shaped relationship between ESG performance and the cost of debt. Moderate ESG engagement enhances creditworthiness and reduces borrowing costs, whereas excessive or unbalanced ESG commitments can increase firms’ financing burdens. Robustness analyses confirm the presence of similar non-linear effects across the environmental, social, and governance dimensions, with environmental performance emerging as the strongest driver of the observed pattern. The social and governance pillars also exert significant, albeit relatively weaker, influences on borrowing costs. Overall, the results demonstrate that ESG functions as a dual-purpose strategic resource with the potential to either create value or impose financial pressures depending on its intensity. By highlighting the importance of maintaining a balanced and optimal level of ESG engagement to improve financing conditions, this study offers a meaningful contribution to the corporate finance and sustainability literature.

Özet

Bu çalışma, çevresel, sosyal ve yönetişim (ESG) performansı ile firmaların borçlanma maliyeti arasındaki doğrusal olmayan ilişkiyi kapsamlı biçimde incelemektedir. 2019–2023 döneminde ABD’de faaliyet gösteren 461 finans dışı firmadan oluşan dengeli panel veri seti, potansiyel içsellik sorunlarını, gecikmeli bağımlılıkları ve firma düzeyindeki gözlemlenemeyen heterojenliği kontrol edebilmek amacıyla dinamik System-GMM yöntemiyle analiz edilmiştir. Ampirik bulgular, ESG performansı ile borçlanma maliyeti arasında belirgin bir U-şekilli ilişki olduğunu ortaya koymaktadır. Buna göre, orta düzeyde ESG uygulamaları kredi değerliliğini artırarak borçlanma maliyetlerini düşürürken, aşırı ve dengesiz ESG taahhütleri firmaların finansman yükünü artırabilmektedir. Sağlamlık analizleri, çevresel, sosyal ve yönetişim boyutlarının her birinde benzer eğrisel etkilerin ortaya çıktığını doğrulamış; özellikle çevresel performansın borçlanma maliyeti üzerindeki etkinin en güçlü belirleyicisi olduğu tespit edilmiştir. Sosyal ve yönetişim boyutları da anlamlı, ancak daha düşük düzeyde etkiler üretmektedir. Genel olarak bulgular, ESG’nin firmalar için hem değer yaratma hem de maliyet oluşturma potansiyeli taşıyan çift yönlü bir stratejik kaynak olduğunu göstermektedir. Bu çalışma, firmaların finansman koşullarını iyileştirebilmeleri için ESG uygulamalarını dengeli, gerçekçi ve optimal bir seviyede yönetmeleri gerektiğini vurgulayarak literatüre önemli bir katkı sunmaktadır.

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Cite This Article

Zengin, B. (2026). Does Sustainability Lower Financing Costs? Evidence from a Dynamic System GMM Analysis. Fiscaoeconomia, Volume: 10 Issue: 1. https://doi.org/10.25295/fsecon.1762645

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