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<p>This study aims to deepen our comprehension of the effect of Environmental, Social, and Governance (ESG) performance on Gulf Cooperation Countries bank performance, examining the roles of FinTech development and corporate governance. Analyzing data from 48 commercial banks in the Gulf region from 2013 to 2022, our results reveal a significant, negative correlation between ESG performance and bank performance, evident across both conventional and Islamic banks. Mechanism analysis reveals the mediating role of FinTech development, as higher ESG practices drive increased investments in FinTech initiatives, subsequently enhancing bank performance. Interestingly, this positive impact is particularly evident in Islamic banks. Furthermore, corporate governance emerges as a positive moderator, amplifying the association between ESG performance and bank performance. Noteworthy variations exist for different bank types, indicating that a reduction in ESG practices may enhance profitability for conventional banks, while higher levels of ESG, specifically in the environmental and social pillars, correlate with improved financial performance for Islamic banks. Robustness tests employing the partial least squares structural equation modeling approach validate our main findings, affirming the nuanced influence of FinTech development and corporate governance on the impact of ESG on bank performance.</p>

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How does ESG performance affect bank performance? A comparative analysis of conventional and Islamic banks in GCC countries

  • 期刊论文

  • 发表日期：

    2025年9月21日

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  • Samir Srairi

摘要

This study aims to deepen our comprehension of the effect of Environmental, Social, and Governance (ESG) performance on Gulf Cooperation Countries bank performance, examining the roles of FinTech development and corporate governance. Analyzing data from 48 commercial banks in the Gulf region from 2013 to 2022, our results reveal a significant, negative correlation between ESG performance and bank performance, evident across both conventional and Islamic banks. Mechanism analysis reveals the mediating role of FinTech development, as higher ESG practices drive increased investments in FinTech initiatives, subsequently enhancing bank performance. Interestingly, this positive impact is particularly evident in Islamic banks. Furthermore, corporate governance emerges as a positive moderator, amplifying the association between ESG performance and bank performance. Noteworthy variations exist for different bank types, indicating that a reduction in ESG practices may enhance profitability for conventional banks, while higher levels of ESG, specifically in the environmental and social pillars, correlate with improved financial performance for Islamic banks. Robustness tests employing the partial least squares structural equation modeling approach validate our main findings, affirming the nuanced influence of FinTech development and corporate governance on the impact of ESG on bank performance.