The Nexus of Sustainability Practices and Financial Performance: A Perspective of Asian Islamic Banks

This research aims to investigate the relationship between sustainability practices and financial performance in Asian Islamic banks. A sample of 23 Islamic banks from six Muslim countries in Asia was selected for the study, and data were collected from their annual reports from 2009 to 2018 using the weighted content analysis method. However, endogeneity problems were identified in the data, requiring the use of the Generalized Method of Moment (GMM) for empirical testing. The findings of this study indicate a positive and significant relationship between sustainability practices and financial performance in Asian Islamic banks, as measured from the perspectives of management, shareholders, and the market. These results imply that institutions that invest more in sustainability practices can expect to achieve a higher return on their investment. The study also provides guidance for the efficient management of sustainability practices from an Islamic perspective, which can contribute to the improvement of financial performance in Islamic banks. Overall, this research offers important insights into the relationship between sustainability practices and financial performance in Asian Islamic banks, which can inform decision-making and encourage greater investment in sustainability practices in these institutions.