Impact of environmental cost information on reducing bank risk: an applied study

Abstract

This paper aims to explaining how environmental cost information supports make the rational decisions related to granting bank credit, i.e., to know the relationship of cause and effect between the environmental cost information and the degree of credit risk through a statistical analysis of data in Iraqi banks. The researcher has used the descriptive approaches to formulate the theoretical side and used analytical approaches in empirical testing. The main findings of this work found increase in credit risks due to the inefficiency of credit analysts in diagnosing the weaknesses and threats of the entity requesting credit, especially related to environmental protection. Since the Iraqi banks did not adopt the environmental cost information in decisions of granting bank credits. The finding of this work will have significant implications to take environmental costs and laws into consideration when providing bank credits, especially those companies that have negative environmental impacts.