ESG and financial performance of banks in the MENAT region: concavity–convexity patterns

Khoury, Rim El; Nasrallah, Nohade; Alareeni, Bahaaeddin

doi:10.1080/20430795.2021.1929807

Cited by 121 publications

(122 citation statements)

References 95 publications

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“…Prior studies reported mixed results regarding the impact of corporate governance on bank performance [9,11,12,23,31,32]. Birindelli et al [32] used a fixed-effects panel regression model to analyze the relationship between the composition of the board of directors and the ESG performance among 108 listed banks in the U.S. and Europe from 2011 to 2016.…”

Section: Governancementioning

confidence: 99%

“…However, other researchers found governance negatively affected bank performance in emerging countries and some European countries [12,23,31]. Azmi et al [12] examined the relationship between the disclosure of ESG activities and bank value based on 251 banks from 2011 to 2017 from 40 emerging economies.…”

Section: Governancementioning

confidence: 99%

“…The results revealed that governance had a negative impact on bank market value. El Khoury et al [31] investigated the financial performance of 46 banks in the Middle East, North Africa, and Turkey (MENAT region) from 2007 to 2019. The empirical evidence showed that in the long run, bank costs exceeded the benefits of social and governance programs.…”

Section: Governancementioning

confidence: 99%

“…and macroeconomic indicators (unemployment rate, GDP, etc.) of the countries in which banks were headquartered to examine bank performance [2,7,10,23,31]. The combination of bank-specific and macroeconomic indicators provided for a comprehensive analysis of the banks and revealed the factors that contributed the most to bank performance.…”

Section: Financial Variablementioning

confidence: 99%

“…The UN gave a higher score for better ESG performance of an economy. The financial variables are divided into bank-specific variables and macroeconomic variables for the economies in which the banks were headquartered [2,10,23,31]. The literature used the bank-specific financial indicators as variables to show the distinct characteristics of banks [43][44][45][46].…”

Section: Variables and Definitionsmentioning

confidence: 99%

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Using Environmental, Social, Governance (ESG) and Financial Indicators to Measure Bank Cost Efficiency in Asia

2021

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Environmental, social, and governance (ESG) practices have been used as non-financial indicators to measure bank performance worldwide in the last decade. The United Nations (UN) has specified 17 Sustainable Development Goals (SDGs) for the implementation of these ESG concepts. However, it remains unclear whether the costs of ESG have exceeded the benefits. The purpose of this study is to examine the impact of ESG on the cost efficiency of developed and developing Asian banks using a two-step approach comprising stochastic frontier analysis (SFA) and stochastic metafrontier analysis (SMF). The data sample from 2015 to 2018 is separated into two groups: 60 Asian developed economies and 85 developing economies. The results show that banks in the developed Asian economies become more cost-efficient through environmentally friendly activities. The banks in the developing Asian economies increase their cost efficiency by socially responsible activities and improved governance. Moreover, banks in the developed Asian economies outperformed those in the developing Asian economies in terms of technology gap ratio (TGR) and metafrontier cost efficiency (MCE). The results of this study benefit not only investors and bank managers but also the entire banking sector and the world economy.

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Section: Governancementioning

confidence: 99%

Section: Governancementioning

confidence: 99%

Section: Governancementioning

confidence: 99%

Section: Financial Variablementioning

confidence: 99%

Section: Variables and Definitionsmentioning

confidence: 99%

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Using Environmental, Social, Governance (ESG) and Financial Indicators to Measure Bank Cost Efficiency in Asia

2021

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COVID‐19 impact, financial and ESG performance: Evidence from G20 countries

Amosh

Khatib

2023

Bus Strat Dev

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During the pandemic, all countries of the world were affected by a health pandemic was the largest in the twenty‐first century, which affected the performance of companies and put them in a difficult situation with the escalation of uncertainty. Our study evaluates the impact of the COVID‐19 pandemic on firms' financial performance and the moderating role of environmental, social, and governance (ESG) performance in this relationship. Based on a large international panel dataset that includes nine countries from G20 extracted from the Thomson Reuters EIKON database for the period from 2016 to 2021, a set of statistical analyses was applied, including descriptive statistics, correlation matrix, fixed effect regression, and robust regression using GMM model. The findings indicate that the pandemic negatively affected financial performance significantly, while the performance of ESG limits this effect. Thus, companies engaged in ESG activities are the least affected during the pandemic. Fulfilling stakeholders' demands enhances companies' performance during crises and corporate directors' resort to maintaining the performance of ESG as one of the effective strategies during the crisis to reduce the impact of COVID‐19 on financial performance. This study shows that compliance with ESG issues can mitigate negative financial impacts during crises and that while implementing ESG practices is costly, it satisfies stakeholders and generates financial gains for companies. Theoretically, we directed the theoretical lens to research through crisis and stakeholder theories to explain events.

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Strategic orientation, risk‐taking, corporate life cycle and environmental, social and governance (ESG) practices: Evidence from ASEAN countries

et al. 2023

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Environmental, social, and governance (ESG) considerations have become increasingly important in the business world. Companies are expected to operate responsibly and sustainably, and stakeholders are demanding greater transparency and accountability. Our research aims to examine the influence of determinants on ESG practices in ASEAN countries (Indonesia, Malaysia, Singapore, the Philippines, Thailand, and Vietnam), as measured by ESG performance on the Refinitiv Eikon. Although there have been many studies discussing ESG, only a few have discussed this relationship by involving strategic orientation, risk taking and corporate life cycle simultaneously. We use panel regression based on a sample of 2373 observations from 2004 to 2022. The results show that the prospector strategy orientation encourages a greater increase in ESG practices compared to the defender strategy orientation, which means that companies with a prospector orientation are more willing to practice ESG because they have strategic resources. The increasing risk‐taking by companies will reduce ESG practices. The more mature the company's life cycle stage will improve ESG practices. This brings implications that the strategy orientation chosen by the company, risk‐taking, and corporate life cycle are the determining factors for companies implementing ESG practices in ASEAN countries. This research contributes to the literature related to corporate sustainability by considering ESG as one of the measurements of sustainability which is currently the main investment trend being observed in financial markets, especially ASEAN countries which are the best areas to invest.

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ESG and financial performance of banks in the MENAT region: concavity–convexity patterns

Cited by 121 publications

References 95 publications

Using Environmental, Social, Governance (ESG) and Financial Indicators to Measure Bank Cost Efficiency in Asia

Using Environmental, Social, Governance (ESG) and Financial Indicators to Measure Bank Cost Efficiency in Asia

COVID‐19 impact, financial and ESG performance: Evidence from G20 countries

Strategic orientation, risk‐taking, corporate life cycle and environmental, social and governance (ESG) practices: Evidence from ASEAN countries

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