ESG PERFORMANCE AND MONETARY POLICY TRANSMISSION DYNAMICS FROM AN EMPIRICAL PERSPECTIVE
Keywords:
Monetary policy transmission, ESG performance, corporate resilience, sustainability discount, macroprudential policy.Abstract
This study investigates the relationship between Corporate Environmental, Social, and Governance (ESG) performance and the effectiveness of monetary policy transmission. By employing a panel data regression framework across diverse markets, including Germany, Brazil, Turkey, and South Korea, the research demonstrates that high-ESG firms function as a structural buffer, exhibiting thirty-five percent lower sensitivity to interest rate hikes compared to low-ESG counterparts. The findings reveal a clear bifurcation in the credit channel, characterized by a sustainability discount that reduces borrowing costs for sustainable firms during contractionary cycles. Ultimately, this research provides an original contribution by quantifying how sustainability metrics influence corporate financial agility, suggesting that central banks should integrate ESG-related macroprudential tools to enhance systemic stability and ensure that monetary tightening does not inadvertently obstruct the transition to a sustainable economy.
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