Banking on the Equator. Are Banks that Adopted the Equator Principles Different from Non-Adopters?

We analyze the performance of banks that adopted the Equator Principles. The Equator Principles are designed to assure sustainable development in project finance. The social, ethical, and environmental policies of the adopters differ significantly from those of banks that did not adopt the Equator Principles. They are also significantly larger. Most other bank characteristics do not show significant differences. Shareholders did not react negatively to the announcement of the adoption of the Equator Principles. We conclude that adoption of the Equator Principles is used to signal responsible conduct.