Self-Regulation in Collaborative Environments: The Case of the Equator Principles in Banking

Working Paper
Sustainable Banking

Why do firms self-regulate? And when is self-regulation successful? In this paper, we study the adoption of the Equator Principles by banks that are active in syndicated lending. We show that when firms collaborate, self-regulated firms pressure non-self-regulated firms to become self-regulated with the purpose of reducing effort asymmetries, and find that such a pressure increases with the duration of the collaboration.

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