Does Bank Going Public Affect the Borrowers' ESG Performance? Evidence From a Quasi‐Natural Experiment in China

ABSTRACT Using a quasi‐natural experiment of commercial bank initial public offerings (IPOs), this study examines how bank listings affect borrowing firms' environmental, social, and governance (ESG) performance. The results reveal significant improvements in borrowers' ESG performance, particularly in the environmental and social dimensions, after lending banks go public. The positive effect is stronger for private enterprises, firms in highly marketized regions, and borrowers of city or rural commercial banks. The impact of national joint‐stock commercial bank listings is comparatively weaker. Mechanism analyses reveal that bank IPOs enhance lenders' bargaining power and strengthen ESG disclosure requirements, driving improvements in borrowers' ESG outcomes.