Managerial Ability and Sustainable Financial Performance

Abstract

The banking industry plays a vital role in supporting sustainable economic development. Although indirectly, banks can stimulate the success of sustainable business processes, by adding requirements to environmentally friendly business processes in the financing approval. On the other hand, banks are also required to maintain their sustainable financial performance. This research aims to test the influence of managerial ability on the sustainability of financial performance. This research used listed commercial banks from four ASEAN countries. The data obtained from the website of the stock exchange of Indonesia, Malaysia, Thailand, and Singapore. Managerial ability is measured by using the Managerial Ability Score, which is generated by using Data Envelopment Analysis. The sustainability of financial performance proxied by sustainable growth rate. This research used a random effect model to test the hypotheses. The result shows that managerial ability does not affect sustainable financial performance. This finding indicates that high-interest rates dominate the overall bank performance so that it cannot explain the impact of resource management performance on sustainable financial performance. The findings of this research alone can be a reflection of the need to improve management capabilities in managing resources efficiently.