N°25-20: Ego versus Environment? How Overconfident Bank CEOs Delay Joining the Green Club That Would Have Them as a Member

We investigate how CEO overconfidence influences banks' decisions to join the United Nations Environment Programme Finance Initiative. Analyzing 13,000 bank-year observations, spanning the last quarter century, with a duration model, we find that overconfident CEOs delay participation by reducing the likelihood of joining by 15% annually. This effect is stronger in large, profitable, deposit-funded banks and persists across various CEO demographics. Our findings reveal how behavioral biases shape strategic decisions, highlighting overconfidence as a barrier to timely sustainability commitments. These insights underscore the importance of leadership traits in driving-or hindering-progress in green finance.