We investigate whether banks’ initial responses during the first wave of the COVID-19 pandemic in supporting their customers, communities, and governments were perceived as value-enhancing by investors. Using a unique responsible banking measure for a sample of the largest US and European commercial banks, we find a negative relationship between responsible bank behavior and stock market performance, particularly in the first wave of the pandemic. We also find that riskier banks were affected more negatively if they behaved responsibly. Overall, our findings show that banks’ responsible behavior during a crisis reduces, or at best is not relevant to, shareholder value.

We assess the relative effect of securitization activity on banks’ lending rates employing a uniquely detailed dataset from the euro-denominated syndicated loan market. We find that in the run-up to the 2007–2009 crisis banks more active at originating asset-backed securities did not price their loans more aggressively (i.e. with narrower lending spreads) than non-active banks. We show that also within the set of loans that were previously securitized, the relative level of securitization activity by the originating bank is not related to narrower lending spreads. Our findings, which are limited to the cross-sectional impact of securitization, suggest that the effect of securitization on the cost of corporate funding appears to be quite limited.

This study investigates whether board gender diversity matters in banks' initial responses to the COVID-19 pandemic in supporting their customers, communities and governments. We construct a unique and comprehensive COVID-19 Bank Response Measure (C19BRM) by compiling a novel hand-collected dataset on supportive measures announced by US and European banks during the first wave of the pandemic. We find that banks with higher board representation of women directors supported their customers and communities more. Our findings also reveal that banks with more women on the boards increased their charity and donations. Our results are robust to the potential self-selection bias of women choosing to join boards of more responsible banks, the omitted variables bias, and alternative measures of gender diversity.