The nexus of sustainability practices and financial performance: From the perspective of Islamic banking

By Amin Jan, Maran Marimuthu. Journal of Cleaner Production, 2019

134 citations recorded by the source corpus.

Abstract This paper evaluated the nexus between sustainability practices and financial performance from the Islamic banking perspective. For the purpose, this study proposed a sustainability measurement framework for Islamic banking. A decade of sustainability data 2008–2017 was collected from the annual reports using a weighted content analysis technique. Results of the Generalized Method of Moments GMM statistical method showed that sustainability practices have a significant positive association with the financial performance indicators of the Islamic banks indicating management and the shareholders' perspective. The impact of sustainability practices on the financial performance of the Islamic banks measured from the market perspective was found insignificant. In-depth analysis revealed that the market is not interested in banks spending for its environmental and social sustainability except for their economic sustainability practices. Based on the Islamic financial index created of management, shareholders and the market financial performance indicators, the results showed that sustainability practices have a significant positive association with the Islamic financial index as well. The finding generally implies that improvement in sustainability practices will add financial values to the management, shareholder and the market financial performance indicators of the Islamic banking industry across the world. Results of this study are also providing insights to the policymakers of the Islamic banking industry around the world regarding efficient sustainability management, achieving higher sustainability ratings, and improving the subsequent financial performance through efficient sustainability practices.

Subfields: Accounting, Marketing, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/c3c946ad6a4a6f1c317979c735a8eb1d8fb1235b

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1. A. Bashar
2. N. Nawaz
3. Sitara Karim
4. Md. Shabbir Alam
5. H. Rahiman
6. M. Ali
7. M. Rabbani

Citations in the corpus

• Exploring the Role of Islamic Fintech in Combating the Aftershocks of COVID-19: The Open Social Innovation of the Islamic Financial System (2021, background): “Islamic Fintech has gained momentum in the past few years and COVID-19 has provided another impetus to extend its reach further to the millions of affected Muslims and non-Muslim customers [86,87].”