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Sustainability reporting and bank performance after financial crisis: Evidence from developed and developing countries

Amina Buallay (Business School, Brunel University, London, UK)
Sayed M. Fadel (Department of Banking and Finance, Ahlia University, Manama, Bahrain)
Jasim Alajmi (Department of Banking and Finance, Ahlia University, Manama, Bahrain)
Shahrokh Saudagaran (Milgard School of Business, University of Washington Tacoma, Tacoma, Washington, USA)

Competitiveness Review

ISSN: 1059-5422

Article publication date: 10 April 2020

Issue publication date: 25 May 2021

1959

Abstract

Purpose

This study aims to examine the relationship between sustainability reporting and bank performance after financial crisis in developed and developing countries.

Design/methodology/approach

This study examines 882 banks from developed and developing countries covering 11 years after the 2008 financial crisis. The independent variable is environmental, social and governance (ESG) scores. The dependent variables are return on assets, return on equity and Tobin’s Q. This study uses bank- and country-specific control variables to measure the relationship between sustainability reporting and bank performance.

Findings

The findings deduced from the empirical results demonstrate that ESG improves banks’ accounting and market-based performance in developed countries, supporting value creation theory. Using pooling regression and instrumental variable – generalized method of moments, this study finds that ESG weakens banks’ performance in developed and developing countries.

Originality/value

To the best of the author’s knowledge, this is the first study to investigate and compare the impact of sustainability reporting on banks’ performance in developed and developing countries. The study found similarities in the impact of sustainability reporting and the improvement of banks’ current and future performance.

Keywords

Citation

Buallay, A., Fadel, S.M., Alajmi, J. and Saudagaran, S. (2021), "Sustainability reporting and bank performance after financial crisis: Evidence from developed and developing countries", Competitiveness Review, Vol. 31 No. 4, pp. 747-770. https://doi.org/10.1108/CR-04-2019-0040

Publisher

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Emerald Publishing Limited

Copyright © 2020, Emerald Publishing Limited

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