Abstract
This study is applied in the region of Malaysia with a prime objective to investigate whether environmental performance indicators are impacting on banking sector performance during the period 2014-2018. For this purpose, this study has considered a sample of 6 Malaysian banking firms working under the regulator of Bank Nagara Malaysia. considering the both dimension of time series and cross section, three panel models known as simple regression, fixed and random effect are statistically applied. However, correlation matrix between the variables is also presented for the better understanding. Findings through panel model shows that Eco. System vitality is adversely affecting the EBIT, in all three models, whereas environmental health is a negative indicator of EBIT. for EAT, eco system vitality is again providing the evidence for adverse influence during the study period. In addition, black carbon emission intensity is causing a decline in EAT in both simple regression and fixed effect estimator. For ZROE, environmental health, eco system vitality are negative while carbon emission intensity is positive sign. For the last indicator of banking sector performance, it is found that eco. System vitality is a negative sign causing a decline in ZROA during 2014-2018. it is suggested that there is a strong need to control the adverse impact of some of the environmental factors on the banking industry of Malaysia, where different public sector departments are held responsible. For the future studies, this study suggest considering all the banking firms, long data period and other regional economies.
Highlights
The concern about environmental sustainability and climate change is increasing day by day because of their present and future impact on the economies and the business sector (Bosello et al, 2006; 2007; Fussey and South, 2012; Mendelsohn and Neumann, 2004; Tanner and Allouche, 2011; White, 2012)
The study findings reveal various number of the banking’s are providing some voluntary information regarding the climate change and its positive influence on the bank size, bank profit and age factors. in terms of practical implication their study is highly suggested to various banking firms for the crucial impact from the climate change
Overall bank performance is categorized into four major measures, while environmental performance is reflected with six measures as presented in the first column of each of the Table 1 each of the table (Hussain et al, 2019)
Summary
The concern about environmental sustainability and climate change is increasing day by day because of their present and future impact on the economies and the business sector (Bosello et al, 2006; 2007; Fussey and South, 2012; Mendelsohn and Neumann, 2004; Tanner and Allouche, 2011; White, 2012). It is widely suggested that there must a significant focus on implications those policies which can sustain the environment from harmful results (Sartorius and Zundel, 2005; Stern et al, 1996). To ensure the environment of the earth, it is assumed that coming generation will not face excessive temperature, extreme weather events, and water shortages For this reason there is a significant need for the structural reforms along with policy implications are required which can secure the environment from deteriorative condition. Economic growth is well-matched with an improving environment situation where both society and nature will get some good results. In an efficient economy and a healthy financial system, banks must be carefully evaluated and analyzed To determine their contribution to business development, it is necessary to measure banks individual performance. Section four is covering the conclusion of the study
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