Tze Kiat Lui, Mohd Haniff Zainuldin, Ahmad Nazri Wahidudin and Chuan Chew Foo
The purpose of this study aims to empirically examine the corporate social responsibility disclosure (CSRD) levels of conventional and Islamic banks in Malaysia. Additionally, as…
Abstract
Purpose
The purpose of this study aims to empirically examine the corporate social responsibility disclosure (CSRD) levels of conventional and Islamic banks in Malaysia. Additionally, as Malaysian banks have different shareholding patterns that are more highly concentrated than those in the developed economies, this study also investigates the impact of ownership concentration on CSRD in both types of banks.
Design/methodology/approach
This study employs hand-collected corporate social responsibility (CSR) data from the annual and sustainability reports of 21 conventional banks and 16 Islamic banks in Malaysia during 2010–2017. The data are then run using the pooled ordinary least square (OLS) with robust standard errors and robust regressions models together with all possible factors determining CSRD in the banking sector.
Findings
This study discovers that Islamic banks disclose a higher level of total CSRD than their conventional counterparts after controlling a number of important determinants of CSRD. These results remain consistent for four different dimensions of CSRD, i.e. employees, communities, environment and products and services. In relation to the impact of ownership concentration on CSRD level, the results show that high ownership concentration reduces the level of CSRD by Malaysian banks. However, in an additional interaction test, the result exhibits a complementary relationship between Islamic banks and ownership concentration in influencing CSRD level.
Research limitations/implications
This study finds that the principle of Islamic accountability has been internalised by Islamic banks, and shaped them to put equal emphasis on the disclosure of CSR practices and the financial information disclosure.
Practical implications
It is recommended for all banks to ensure the integration of a more comprehensive ethical system, such as theological ethical values in every aspect of their business activities. The findings from this study also highlight the necessity for the central bank to increase their monitoring role, especially towards banks with a more concentrated ownership structure by limiting the size of shareholdings by any particular types of owners.
Originality/value
Only a few studies have compared CSR practices between these two types of banks, and most of them are descriptive and qualitative in nature. This study is the first that uses a robust model with a high R-squared value, which control for all possible factors determining CSRD in the banking sector.
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Tze Kiat Lui and Mohd Haniff Zainuldin
Strengthening ESG strategies in Malaysian banks is necessary as they continue to face difficulties integrating ESG into their strategies and disclosure despite existing government…
Abstract
Purpose
Strengthening ESG strategies in Malaysian banks is necessary as they continue to face difficulties integrating ESG into their strategies and disclosure despite existing government frameworks. This study aims to use stakeholder-resource-based view (RBV) concept to explore how board characteristics and ownership concentration influence ESG disclosure practices in Malaysian banks.
Design/methodology/approach
The study analysed annual, environmental, social and governance (ESG) and integrated reports of Malaysian banks from 2010 to 2022 to examine the effects of board characteristics on ESG disclosures. Using content analysis and 481 balanced data sets, ordinary least squares (OLS) and robust regressions were applied, with interaction terms testing the moderating effects of ownership concentration.
Findings
Board independence negatively impacts ESG disclosure in Malaysian banks, suggesting that independent directors may not prioritise sustainability. Board size, diversity and sustainability committees positively influence ESG practices. Ownership concentration interactions reinforce these findings, but board independence remains negatively significant.
Research limitations/implications
Future research should expand the sample to other emerging markets, explore a wider range of bank board attributes and use advanced econometric methods to increase the generalisability of the results.
Practical implications
The study impacts theory, financial institutions and policy, redefining ESG practices in Malaysian banking. It highlights the role of board characteristics and the importance of ownership concentration. Several practical recommendations are provided.
Social implications
The study impacts theory, financial institutions and policy by redefining ESG practices within Malaysian banking. It highlights the significance of board characteristics and ownership concentration, offering several practical recommendations.
Originality/value
The study fills gaps in the literature by examining the impact of board characteristics on ESG disclosures through content and statistical analyses. It integrates stakeholder theory with RBV to provide novel insights into ESG reporting in Malaysian banks, highlighting the role of high ownership concentration in emerging markets.
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Mohd Haniff Zainuldin and Tze Kiat Lui
This study bibliometrically describes and depicts the intellectual structure and knowledge progress of CSR studies in the banking industry.
Abstract
Purpose
This study bibliometrically describes and depicts the intellectual structure and knowledge progress of CSR studies in the banking industry.
Design/methodology/approach
Bibliometric analysis is used to quantitatively examine the bibliographic data that gathered from Scopus database. The evaluative and relational techniques are employed to produce the findings and mappings for research themes, impact and directions, as well as collaboration trends. A topical classification is also included to review the results of different types of analysis.
Findings
This study discusses how the CSR literature in the banking industry has evolved between 2009 and 2019. The publications increase significantly from 2015 to 2019 and the top journals, authors, affiliations and countries are identified. Stakeholder, disclosure, financial performance, Islamic banks, corporate governance and international banks are among the popular research and collaboration trends found in the extant literature. Reflecting on the arguments in the previous literature, several key research gaps and further suggestions are acknowledged for future studies.
Research limitations/implications
The bibliographic data used in this study bounds to Scopus database and the methodology itself suffers a few limitations, which integration of other methodologies will be worthwhile to unearth the field beyond the current discovery.
Practical implications
This study is beneficial to potential researchers, scientific journal editors, and bankers to understand the current research progression and evolution within CSR field in the banking sector.
Originality/value
Compared to the existing bibliometric literature, this study is among the pioneer wide-ranging bibliometrics study covering co-word, citation, bibliographic coupling, co-authorship and co-citation for CSR research in the banking sector.
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Mohd Haniff Zainuldin, Tze Kiat Lui and Kwang Jing Yii
This paper aims to discuss and explore the unique agency issues in Islamic banks which give rise to different agency conflicts exist in Islamic banks as compared to conventional…
Abstract
Purpose
This paper aims to discuss and explore the unique agency issues in Islamic banks which give rise to different agency conflicts exist in Islamic banks as compared to conventional banks. In addition, this paper critically examines agency theory in Islamic banking perspective by incorporating Islamic ethical considerations in the principal–agent setting.
Design/methodology/approach
This is a conceptual paper, and the discussions revolve around the review of literature of which important sources have been cited in a way that demonstrates a reasonable understanding of the topic. It attempts to create a discourse around the inclusion of Islamic ethical system in understanding the governance structure of Islamic banks.
Findings
This paper concludes that Islamic ethical system embedded in the Islamic banks business activities shapes Islamic banks into organisations that place higher ethical considerations than conventional banks. Therefore, Islamic banks are likely to have less severe agency problems relative to their conventional counterparts.
Research limitations/implications
Because of the chosen research approach, the research results may lack generalisability. Therefore, researchers are encouraged to test the proposed propositions further.
Practical implications
As the discourse generated by the paper, it can ultimately enhance the understanding of Islamic governance structure in the perspective of agency issues.
Social implications
As the discourse generated by the paper, it can ultimately enhance the understanding of Islamic governance structure in the perspective of agency issues.
Originality/value
The paper attempts to bring to attention the important aspect of principal–agent relationship within the Islamic banking structures and explain the role of incorporating Islamic ethical system in enhancing the understanding of the principal–agent relationship.