Ashik- Uz- Zaman

This study examines the relationship between environmental uncertainty and ESG performance, with a focus on the moderating roles of ESG controversies and gender diversity on the board. It utilizes an unbalanced panel dataset of 315 Chinese and US banks from 2011 to 2022. By employing a two‐step system GMM and 2SLS estimations, this study finds that environmental uncertainty adversely influences ESG performance. The findings also suggest a U‐shaped relationship between environmental uncertainty and ESG performance, indicating an adverse effect of environmental uncertainty on ESG performance, which is initially negative but weakens throughout environmental uncertainty and turns positive when the environment is highly uncertain. However, ESG controversies moderate these effects, as does the moderating role of gender board diversity, especially in US banks. Gender diversity helped mitigate the adverse impacts of uncertainty on ESG performance, though this effect is weaker in Chinese banks. The findings offer significant policy insights for bank managers, policymakers, and regulators aiming to improve ESG strategies in the face of crises and global uncertainties.

The subprime mortgage crisis has sharply traumatized the world financial system and subsequently put a question on the resilience. Even the commercial banks from a strong economy like the USA have experienced abrupt collapse. Such a scenario has induced deep concern among the stakeholders of the banking sector globally. Almost all the recent bank failure cases are centered on incapacitated risk governance mechanisms. Credit risk, liquidity risk and capital risks are the fundamental contributors of a risk management framework as per the recent empirical evidence and they are very much intertwined. We have explored the expert justification of the magnitude of these pivotal risks through an open-ended interview approach in order to formulate a sophisticated risk governance framework. We have also explored the determinants of these key risks using both the difference GMM and the System GMM approach on panel data from 2005 to 2020 of listed Bangladeshi banks. We have found that capital adequacy is significantly affected by asset turnover and cash in a positive manner, whereas management efficiency and non-performing loan (NPL) ratio negatively affect it. Asset turnover, experience and cost-to-income ratio negatively affect the credit risk, whereas NPL ratio and liquidity risk ratio influence it in a significant positive manner. Liquidity risk is significantly affected mostly by asset turnover, return on assets, cost-to-income ratio and credit risk. Following the empirical assessment, we have suggested a few policies for the regulatory authority with a view to making the banking practice more risk-resilient and sustainable.

Sustainability in the banking sector is considered as a metaphor for a well-built economy. Taking into account its several aspects, efficiency and financial performance always make a strong connection with the resilience and stability of this sector. In light of this notion, this paper finds out the core drivers of financial sustainability in a mixed-method framework. Employing both qualitative and quantitative methods, this paper reveals the key factors of efficiency and financial performance that reinforce the financial sustainability of banks. Rethinking the drivers of efficiency and performance that create a bridge with sustainability always provides an incentive to the regulatory authorities and policymakers to reconsider the paradigm of economic sustainability of the banking sector. This paper also contributes to the existing literature by illuminating the concept of financial sustainability and exploring how banks secure it through some strategic policies that ensure proper maneuvering of the factors responsible for efficiency and financial performance.