Empirical examination of ESG and fintech factors on financial sustainability: a comparative study of Islamic vs conventional banks in Islamic finance-oriented countries

Faizulayev A.
January 2026 Airlangga University

Asian Journal of Accounting Research
2026 #11 Issue 1 2 - 21 pp.

Purpose – The primary objective of this article is to empirically examine the impact of bank-specific and macroeconomic factors, particularly environmental, social, governance (ESG) and financial technolgy (fintech) factors, on the financial sustainability of Islamic banks (IBs) and conventional banks (CBs). Design/methodology/approach – Panel data are used on QISMUT plus three countries: Qatar, Indonesia, Saudi Arabia, Malaysia, United Arab Emirates, Turkey, Bahrain, Kuwait and Pakistan for the period from 2005 to 2022. A two-step system using the generalized method of moments (GMM) and panel-corrected standard error (PCSE) methods was employed. Findings – The findings reveal that CBs exhibit greater financial sustainability persistence, while IBs demonstrate superior management efficiency, liquidity and stability. This distinction is attributed to IB’s Shariah-compliant structures, which foster stability through profit-loss sharing accounts and equity-based risk-sharing mechanisms. The study also finds that IBs achieve financial resilience more rapidly as they grow, supported by higher capital adequacy and liquidity coefficients. Furthermore, ESG adherence plays a more significant role in IBs, reflecting their alignment with socially responsible initiatives. Practical implications – These findings have substantial implications for practitioners, policymakers, managers and academics, where they can capitalize on IB dominance by promoting and developing innovative Shariah-compliant financial products for both IBs and CBs. CBs should compete by providing Shariah-compliant financial products and opening Islamic Window-Financing. IBs’ risk management efficiency can help conventional bank managers incorporate equity financing and profit-loss sharing into their strategy. Originality/value – We believe this is the first empirical study of Islamic and conventional banks on the financial self-sufficiency (FSS) indicator proxied as financial sustainability.

ESG factors , Financial sustainability , Fintech , IBs and CBs , QBL and TBL paradigms

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Bang College of Business, KIMEP University, Almaty, Kazakhstan

Bang College of Business

10 лет помогаем публиковать статьи Международный издатель

Книга Публикация научной статьи Волощук 2026 Book Publication of a scientific article 2026