IDEAS home Printed from https://ideas.repec.org/a/eee/reveco/v96y2024ipas105905602400621x.html
   My bibliography  Save this article

Influence of key ESG factors on Islamic banks’ financial performance: Evidence from GCC countries

Author

Listed:
  • Alghafes, Rsha
  • Karim, Sitara
  • Aliani, Khaoula
  • Qureishi, Naila
  • Alkayed, Lama

Abstract

With the global emphasis on sustainability, this research highlights the crucial role Islamic banks can play in sustainable development. The study evaluates how Environmental, Social, and Governance (ESG) practices impact the performance of Islamic banks in GCC countries from 2010 to 2021 using the generalized method of moments (GMM) approach to address potential endogeneity in panel data. Our findings show that while the overall ESG score does not significantly impact bank performance, individual ESG components do. The social component positively affects several performance indicators, governance impacts Return on Equity (ROE), and the environmental factor correlates positively with Tobin's Q. Despite the growing focus on ESG principles, their integration in Islamic banking is limited. By improving ESG performance and offering niche market services, Islamic banks can significantly contribute to sustainability. The study advises bank executives, investors, and policymakers to integrate ESG considerations into business and regulatory strategies to enhance the sector's role in achieving sustainability goals.

Suggested Citation

  • Alghafes, Rsha & Karim, Sitara & Aliani, Khaoula & Qureishi, Naila & Alkayed, Lama, 2024. "Influence of key ESG factors on Islamic banks’ financial performance: Evidence from GCC countries," International Review of Economics & Finance, Elsevier, vol. 96(PA).
    • Handle: RePEc:eee:reveco:v:96:y:2024:i:pa:s105905602400621x
    DOI: 10.1016/j.iref.2024.103629
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S105905602400621X
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.iref.2024.103629?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:reveco:v:96:y:2024:i:pa:s105905602400621x. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/620165 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.