Sustainability Disclosure, Bank Performance and the Moderating Role of Camel Rating System: Evidence from a Developing Nation

Fahmida Ahmed; Mohammad Hasmat Ali; Abul Hassan; Abdulltif Abdulrhman Almulhem; Abdullah Al Mamun; Syed Ali Fazal

doi:10.63332/joph.v5i6.2036

Authors

Fahmida Ahmed Faculty of Business Administration, University of Science and Technology Chittagong, Foy’s Lake, Chattogram 4202, Bangladesh
Mohammad Hasmat Ali Department of Finance, Faculty of Business Administration, University of Chittagong 4331, Bangladesh
Abul Hassan School of Business, King Faisal University, Hofuf, 31982, Saudi Arabia
Abdulltif Abdulrhman Almulhem Graduate School of Business, Universiti Kebangsaan Malaysia, Bangi 43600, Selangor Darul Ehsan, Malaysia
Abdullah Al Mamun BRAC Business School, BRAC University, Kha 224 Pragati Sarani, Merul Badda, Dhaka 1212, Bangladesh
Syed Ali Fazal BRAC Business School, BRAC University, Kha 224 Pragati Sarani, Merul Badda, Dhaka 1212, Bangladesh

DOI:

https://doi.org/10.63332/joph.v5i6.2036

Keywords:

Sustainability Disclosure; Financial Performance, Operational Performance, Camel Rating System, Bangladesh

Abstract

This study examined the correlation between sustainability disclosure and firm performance. We further investigated the moderating effect of the camel rating system on the relationship between sustainability disclosure and firm performance. We used data from annual reports of selected banks and the Central Bank of Bangladesh. The sample included 60 banks over a ten-year period (2011–2020) totaling to 600 observations. The Panel data were analyzed using the fixed effect method. Findings revealed that components of sustainability disclosure had a positive influence on Return on Equity (ROE). On the other hand, sustainability disclosure had negative influence of social disclosure on Return on Assets (ROA). Additionally, Camel rating system showed a significant moderating effect on the relationships between sustainability disclosure and firm operational performance. This paper expanded the literature on sustainability disclosure, particularly on developing nations’ perspective. In order to persuade and motivate businesses to become more environmentally friendly, which will have a good impact on society and the economy as a whole, this study advised relevant organizations to adopt the sustainability disclosure protocol recommended by the Central Bank of Bangladesh.