The determinants of ESG in the banking sector of MENA region: a trend or necessity?

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

doi:10.1108/cr-09-2021-0118

Cited by 34 publications

(37 citation statements)

References 70 publications

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“…This thus becomes a competitive advantage and a source of new revenue streams, especially during the health crisis. This somehow supports the view of the positive effect of ESG in the non-financial sector (Broadstock et al, 2021;El Khoury et al, 2021;Yoo et al, 2021;L€ o€ of et al, 2022;Zhang et al, 2022).…”

Section: Jedsupporting

confidence: 85%

“…As a result, especially during the health crisis, this has become a competitive advantage and a source of new revenue streams. All lends credence to the idea that ESG has a positive impact on financial performance, even in the non-financial sector (Wang et al, 2015;Broadstock et al, 2021;El Khoury et al, 2021;Yoo et al, 2021;L€ o€ of et al, 2022;Zhang et al, 2022).…”

Section: Literature Review 21 Esg Activities and Bank Performancementioning

confidence: 85%

“…The positive relationship between ESG activities and bank performance is documented by several studies such as Wu and Shen (2013), Shen et al (2016) and Buallay (2019). The positive effect of ESG activities only holds up to the certain level of ESG investments (Azmi et al, 2021;El Khoury et al, 2021). Others show no relationship between ESG activities and bank performance (Soana, 2011).…”

Section: Introductionmentioning

confidence: 91%

“…For instance, profitability pursuit in riskier investments may prevent banks from fulfilling the adoption of better ESG policies. This argument leads to a growing interest in assessing the relationship between ESG performance and financial performance in the banking sector globally (Friede et al, 2015;Buallay, 2020;Azmi et al, 2021;El Khoury et al, 2021). However, these results are mixed and inconclusive due to omitted variable bias, small sample size and inconsistent primary variable measurement (Horv athov a, 2010).…”

Section: Literature Review 21 Esg Activities and Bank Performancementioning

confidence: 99%

See 3 more Smart Citations

The environment, social and governance (ESG) activities and profitability under COVID-19: evidence from the global banking sector

Yuen

Ngo

et al. 2022

JED

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PurposeThis study investigated the impacts of the environment, social and governance (ESG) and its components on global bank profitability considering the COVID-19 outbreak.Design/methodology/approachThis study used a system generalized method of moments (GMM) proposed by Arellano and Bover (1995) to investigate the relationship between ESG and bank profitability using an unbalanced sample of 487 banks from 51 countries from 2006 to 2021.FindingsThe findings generally found that ESG activities may reduce bank profitability, thus supporting the trade-off hypothesis that adopting ESG standards could increase bank costs while lowering profitability. In addition, there is a U-shaped relationship between ESG and bank profitability, suggesting that ESG activities can help improve bank performance in the long term. Such effect is the first time observed in the global banking sector. This study’s results are robust across different models and settings (e.g. developed vs developing countries, different levels of profitability, and samples with vs without US banks).Practical implicationsThis study provides empirical evidence to support the sustainable development policy which is implemented by many countries. It also provides empirical incentives for bank managers to be more ESG-oriented in their activities.Originality/valueThis study provides a better understanding of the roles of ESG activity and its components in the global banking system, considering the recent crises.

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Section: Jedsupporting

confidence: 85%

Section: Literature Review 21 Esg Activities and Bank Performancementioning

confidence: 85%

Section: Introductionmentioning

confidence: 91%

Section: Literature Review 21 Esg Activities and Bank Performancementioning

confidence: 99%

See 2 more Smart Citations

The environment, social and governance (ESG) activities and profitability under COVID-19: evidence from the global banking sector

Yuen

Ngo

et al. 2022

JED

View full text Add to dashboard Cite

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“…This suggests that firms' attempt to be environment‐friendly reduces firm value. El Khoury et al (2021) and Kartadjumena and Rodgers (2019) show a negative association between banks' environmental and financial performance.…”

Section: Theoretical Consideration and Hypothesis Developmentmentioning

confidence: 97%

The nexus between environmental and financial performance: Evidence from gulf cooperative council banks

2022

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The paper examines the impact of banks environmental performance on their financial and market performance. We collect data from 56 gulf cooperative council (GCC) banks for the period 2010–2019. We apply ordinary least square (OLS), fixed effect, and generalized method of moments (GMM) estimation techniques and show that GCC banks' environmental performance negatively affects their accounting performance. The results, however, exhibit no significant impact of banks' environmental performance on market performance. Moreover, conventional banks have better environmental performance than their Islamic counterparts. Our results are consistent across different estimation techniques after controlling for endogeneity issues. The findings of the study are novel and offer important policy implications for management, regulatory authority, and environmental activists.

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The moderating role of board gender diversity in ESG and firm performance: Empirical evidence from Gulf countries

Alahdal,

Hashim,

Almaqtari

et al. 2024

Bus Strat Dev

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The study aims to analyze the impact of environmental, social, and governance performance (ESGP) on firm performance (FP) in the Gulf countries. Furthermore, this study examines how the number of female members on the board affects the relationship between ESGP and FP. This study uses balanced panel data of 424 firm‐year observations from 106 Gulf non‐financial listed firms from 2018 to 2021. The results show that the effect of ESGP and social performance (SP) on return on equity (ROE) is positive and statistically significant. SP and governance performance (GP) reveal a positive impact on ROE. However, a negative impact is exhibited instead for Tobin's Q (TQ). Conversely, environmental performance (EP) positively affects both ROE and TQ. Besides that, the diversity of board gender significantly and positively strengthens the relationships of ESGP, EP, SP, and GP with FP. The study concludes that policymakers in the Gulf countries and public company executives can use the suggestions from this research to change existing corporate governance rules to encourage more ESG performance and board diversity. We also emphasize the need to consider ESG performance and the diversity of the board when making plans to meet societal expectations and reach business goals. To the best of our knowledge, this study is among only a few that have investigated the effect of board gender diversity on the impact of ESGP on FP in the context of Gulf countries.

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The determinants of ESG in the banking sector of MENA region: a trend or necessity?

Cited by 34 publications

References 70 publications

The environment, social and governance (ESG) activities and profitability under COVID-19: evidence from the global banking sector

The environment, social and governance (ESG) activities and profitability under COVID-19: evidence from the global banking sector

The nexus between environmental and financial performance: Evidence from gulf cooperative council banks

The moderating role of board gender diversity in ESG and firm performance: Empirical evidence from Gulf countries

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