ESG Disclosures and Kuwait Banking Industry Performance
Keywords:ESG Disclosures, Environmental, Social, Governance, Banking Performance, Kuwaiti Banking Industry
This research has developed a comprehensive literature review for the regarding the research topic. This literature review contained theoretical framework that included the underpinning theories and the related theories, as well as conceptual framework. This research has proposed a model to be tested in the study, the model contained one independent variables (ESG disclosures) and one dependent variable (Kuwait banking industry performance). One hypothesis was developed to analyse the proposed model.
The descriptive analytical approach was used in this study; it is one of the most used methods in the study of social and human phenomena, and because it fits the phenomenon under study. The data for this study was obtained from the annual reports of Kuwaiti banks, which are publicly available. The ESG disclosures can be extracted from the sustainability reports or other sections of the annual reports. The financial data can be obtained from the income statement, balance sheet, and cash flow statement of the banks..
SPSS has been used to conduct statistical analysis from the secondary data. Several tests have been conducted for the collected data. The main results found that there is a positive and significant relationship between ESG disclosures and Kuwait banking industry performance..
Ultimately, the relationship between ESG disclosures and Kuwait's banking industry performance may depend on a variety of factors, including the specific disclosures made by individual banks, the regulatory environment in Kuwait, and broader trends in the global financial industry. Therefore, further research and analysis would be needed to draw any definitive conclusions about this relationship.
Akdogan, N., Selimoglu, S.K. and Turkcan, M. (2020), “Sustainability accounting and corporate social responsibility in Turkey and in its region”, Journal of Accounting and Management Information Systems, Vol. 19 No. 1, pp. 5-32, doi: 10.24818/jamis.2020.01001.
Albertini, E. (2013), “Does environmental management improve financial performance? A meta-analytical review”, Organization & Environment, Vol. 26 No. 4, pp. 431-457, doi: 10.1177/1086026613510301.
Athanasoglou, P. P., Brissimis, S. N., and Delis, M. D. (2008). Bank specific, industry-specific and macroeconomic determinants of bank profitability. Journal of international financial Markets, Institutions and Money, 18(2), 121-136.
Bătae, O.M.V.D., Dragomir, V.D. and Feleagă, L. (2021), “The relationship between environmental, social, and financial performance in the banking sector: a European study”, Journal of Cleaner Production, Vol. 290, p. 125791.
Bourke, P. (1989). Concentration and other determinants of bank profitability in Europe, North America and Australia. Journal of Banking & Finance, 13(1), 65-79.
Branco, M.C. and Rodrigues, L.L. (2008), “Social responsibility disclosure: a study of proxies for the public visibility of Portuguese banks”, The British Accounting Review, Vol. 40 No. 2, pp. 161-181, doi: 10.1016/j.bar.2008.02.004.
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: An International Business Journal, Vol. 31 No. 4, pp. 747-770, doi: 10.1108/CR-04-2019-0040.
Buallay, A., Hamdan, A. and Zureigat, Q. (2017), “Corporate governance and firm performance: evidence from Saudi Arabia”, Australasian Accounting, Business and Finance Journal, Vol. 11 No. 1, pp. 78-98, doi: 10.14453/aabfj.v11i1.6.
Chang, Q. and Devine, A. (2019), “Environmentally-certified space and retail revenues: a study of US bank branches”, Journal of Cleaner Production, Vol. 211, pp. 1586-1599, doi: 10.1016/j.jclepro.2018.11.266.
Ching, H.Y., Gerab, F. and Toste, T.H. (2017), “The quality of sustainability reports and corporate financial performance: evidence from Brazilian listed companies”, SAGE Open, Vol. 7 No. 2, pp. 1-9, doi: 10.1177/2158244017712027.
Chouaibi, S. and Affes, H. (2021), “The effect of social and ethical practices on environmental disclosure: evidence from an international ESG data”, Corporate Governance: The International Journal of Business in Society, Vol. 21 No. 7, pp. 1293-1317, doi: 10.1108/CG-03-2020-0087.
Cornett, M.M., Erhemjamts, O. and Tehranian, H. (2016), “Greed or good deeds: an examination of the relation between corporate social responsibility and the financial performance of US commercial banks around the financial crisis”, Journal of Banking & Finance, Vol. 70, pp. 137-159, doi: 10.1016/j.jbankfin.2016.04.024.
De Andres, P., and Vallelado, E. (2008). Corporate governance in banking: The role of the board of directors. Journal of Banking & Finance, 32(12), 2570-2580.
El Khoury, R., Nasrallah, N. and Alareeni, B. (2021), “ESG and financial performance of banks in the MENAT region: concavity–convexity patterns”, Journal of Sustainable Finance & Investment, doi: 10.1080/20430795.2021.1929807.
Finger, M., Gavious, I. and Manos, R. (2018), “Environmental risk management and financial performance in the banking industry: a cross-country comparison”, Journal of International Financial Markets, Institutions and Money, Vol. 52, pp. 240-261, doi: 10.1016/j.intfin.2017.09.019.
Friedman, M. (2007), “The social responsibility of business is to increase its profit”, in Zimmerli, W.C., Holzinger, M. and Richter, K. (Eds), Corporate Ethics and Corporate Governance, Springer, New York, NY, pp. 173-178.
Galant, A. and Cadez, S. (2017), “Corporate social responsibility and financial performance relationship: a review of measurement approaches”, Economic Research-Ekonomska Istraživanja, Vol. 30 No. 1, pp. 676-693, doi: 10.1080/1331677X.2017.1313122.
Gallego-Álvarez, P.I. and Ortas, P.E. (2017), “Corporate environmental sustainability reporting in the context of national cultures: a quantile regression approach”, International Business Review, Vol. 26 No. 2, pp. 337-353, doi: 10.1016/j.ibusrev.2016.09.003.
Gangi, F., Meles, A., D’Angelo, E. and Daniele, L.M. (2019), “Sustainable development and corporate governance in the financial system: are environmentally friendly banks less risky?”, Corporate Social Responsibility and Environmental Management, Vol. 26 No. 3, pp. 529-547, doi: 10.1002/csr.1699.
Hussain, N., Rigoni, U. and Orij, R.P. (2018), “Corporate governance and sustainability performance: analysis of triple bottom line performance”, Journal of Business Ethics, Vol. 149 No. 2, pp. 411-432, doi: 10.1007/s10551-016-3099-5.
Jacobs, B.W., Singhal, V.R. and Subramanian, R. (2010), “An empirical investigation of environmental performance and the market value of the firm”, Journal of Operations Management, Vol. 28 No. 5, pp. 430-441, doi: 10.1016/j.jom.2010.01.001.
Khlif, H., Hussainey, K. and Achek, I. (2015), “The effect of national culture on the association between profitability and corporate social and environmental disclosure: a meta-analysis”, Meditari Accountancy Research, Vol. 23 No. 3, pp. 296-321, doi: 10.1108/MEDAR-12-2014-0064.
Kusi, B.A., Gyeke-Dako, A., Agbloyor, E.K. and Darku, A.B. (2018), “Does corporate governance structures promote shareholders or stakeholders value maximization? Evidence from African banks”, Corporate Governance: The International Journal of Business in Society, Vol. 18 No. 2, pp. 270-288, doi: 10.1108/CG-09-2016-0177.
Laguir, I., Marais, M., El Baz, J. and Stekelorum, R. (2018), “Reversing the business rationale for environmental commitment in banking: does financial performance lead to higher environmental performance?”, Management Decision, Vol. 56 No. 2, pp. 358-375, doi: 10.1108/MD-12-2016-0890.
Liang, Q., Xu, P., and Jiraporn, P. (2013). Board characteristics and Chinese bank performance. Journal of Banking & Finance, 37(8), 2953-2968.
Matuszak, Ł. and Różańska, E. (2017), “CSR disclosure in polish-listed companies in the light of directive 2014/95/EU requirements: empirical evidence”, Sustainability, Vol. 9 No. 12, p. 2304, doi: 10.3390/su9122304.
Miralles-Quirós, M.M., Miralles-Quirós, J.L. and Redondo-Hernández, J. (2019), “The impact of environmental, social, and governance performance on stock prices: evidence from the banking industry”, Corporate Social Responsibility and Environmental Management, Vol. 26 No. 6, pp. 1446-1456, doi: 10.1002/csr.1759.
Molyneux, P., and Thornton, J. (1992). Determinants of European bank profitability: A note. Journal of Banking & Finance, 16(6), 1173-1178.
Nizam, E., Ng, A., Dewandaru, G., Nagayev, R. and Nkoba, M.A. (2019), “The impact of social and environmental sustainability on financial performance: a global analysis of the banking sector”, Journal of Multinational Financial Management, Vol. 49, pp. 35-53, doi: 10.1016/j.mulfin.2019.01.002.
Oino, I. (2019), “Do disclosure and transparency affect bank’s financial performance?”, Corporate Governance: The International Journal of Business in Society, Vol. 19 No. 6, pp. 1344-1361, doi: 10.1108/CG-12-2018-0378.
Pasiouras, F., and Kosmidou, K. (2007). Factors influencing the profitability of domestic and foreign commercial banks in the European Union. Research in International Business and Finance, 21(2), 222-237.
Scholtens, B. (2009), “Corporate social responsibility in the international banking industry”, Journal of Business Ethics, Vol. 86 No. 2, pp. 159-175, doi: 10.1007/s10551-008-9841-x.
Shad, M.K., Lai, F.W., Fatt, C.L., Klemeš, J.J. and Bokhari, A. (2019), “Integrating sustainability reporting into enterprise risk management and its relationship with business performance: a conceptual framework”, Journal of Cleaner Production, Vol. 208, pp. 415-425, doi: 10.1016/j.jclepro.2018.10.120.
Shen, C.H., Wu, M.W., Chen, T.H. and Fang, H. (2016), “To engage or not to engage in corporate social responsibility: empirical evidence from global banking sector”, Economic Modelling, Vol. 55, pp. 207-225, doi: 10.1016/j.econmod.2016.02.007.
Soana, M.G. (2011), “The relationship between corporate social performance and corporate financial performance in the banking sector”, Journal of Business Ethics, Vol. 104 No. 1, pp. 133-148, doi: 10.1007/s10551-011-0894-x.
Staikouras, P. K., Staikouras, C. K., and Agoraki, M.-E. K. (2007). The effect of board size and composition on European bank performance. European Journal of Law and Economics, 23(1), 1-27.
Trujillo-Ponce, A. (2013). What determines the profitability of banks? Evidence from Spain. Accounting & Finance, 53(2), 561-586.
Wu, M.-W. and Shen, C. (2017), “Application of multi-level matching between financial performance and corporate social responsibility in the banking industry”, Review of Quantitative Finance and Accounting, Vol. 49 No. 1, pp. 29-63.
Wu, M.-W. and Shen, C.-H. (2013), “Corporate social responsibility in the banking industry: motives and financial performance”, Journal of Banking & Finance, Vol. 37 No. 9, pp. 3529-3547, doi: 10.1016/j.jbankfin.2013.04.023.
How to Cite
Copyright (c) 2023 Journal of Reproducible Research
This work is licensed under a Creative Commons Attribution 4.0 International License.
Copyright of the article belongs to Journal of Reproducible Research (JRR) once the paper is ACCEPTED for publication. Author(s) agrees to this terms, during submission.