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

Jan, Amin and Marimuthu, Maran and Pisol, Muhammad and Isa, Mat,(2019), The nexus of sustainability practices and financial performance: From the perspective of Islamic banking. , Journal of Cleaner Production 228 (2019) 703e717, UNSPECIFIED

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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 2008e2017 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
Keywords : Sustainability practices Financial performance Islamic banking Endogeneity, UNSPECIFIED
Journal or Publication Title: Journal of Cleaner Production 228 (2019) 703e717
Volume: 228
Number: UNSPECIFIED
Item Type: Article
Subjects: Ekonomi Islam
Depositing User: Nila Nurjanah
Date Deposited: 20 Dec 2019 04:10
Last Modified: 20 Dec 2019 04:10
URI: https://repofeb.undip.ac.id/id/eprint/543

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