Sustainability Key Performance Indicators in Islamic Banking Sectors of Malaysia and Pakistan: A Scale Based Evidence

Abstract

The marvelous development in the Islamic banking necessitates sustainable practices in the emerging industry. This study intends to ascertain the most followed or usual sustainability key performance indicators (KPIs) in the Islamic banking industry of Malaysia and Pakistan. For developing the sustainability KPIs index, the study follows the systematic steps as highlighted by prior such studies. The index composed of 109 items in 7 main sections of sustainability reporting adapted to collect data through content analysis for 21 Islamic banks from both the countries for the year 2016. Despite significant heterogeneity among the Islamic banks of the two countries, it is found that they show good compliance with the sustainability indicators. Though the Islamic banking industry of Pakistan is small than that of Malaysia, but still it is good in reporting sustainable practices except for environment and product responsibility, where the latter has an edge over the former. The study contributes a theoretical deliverable i.e. sustainability KPIs index for the Islamic banking industry through testing it with data from 21 Islamic banks from Malaysia and Pakistan. The findings could be significant for practitioners, regulators, policymakers, and especially the Islamic banking industry of both countries.

Evaluating sustainability reporting on GRI standards in developing countries: a case of Pakistan

“…The classical school of thought assumed that the organization is responsible only for making a legitimate profit (Friedman, 1970). In contrast, the modern school of thought has been increasingly focused on the positive role of organizations toward society when the world faces new sustainability challenges (Rahman et al , 2020). This led the researchers to the consensus for rethinking sustainability and contends that organizations are not only concerned with improving profitability but also concerned with the information reporting of whether the organization performs sustainably and creates value for multiple stakeholders (Lourenço and Branco, 2013; Buallay and Al-Ajmi, 2019; Ismail et al , 2022).…”

The Role of Corporate Governance, Integrated Reporting and Financial Sustainability in Islamic Banking of Pakistan; A Conceptual Review

“…Over a combination of theoretical visions and empirical evidence, this paper activities to offer practical recommendations for attractive joined reporting practices, strengthening corporate governance frameworks, and promoting financial sustainability in Islamic banking institutions across Pakistan (Hamad et al, 2020;Yusuf et al, 2024). Eventually, by development transparency, accountability, and ethical manner, Islamic banks can not only succeed in the competitive financial landscape of Pakistan but also contribute to the broader goals of all-encompassing growth and sustainable development in the country (Jan et al, 2021;Mahajan et al, 2023;Rahman et al, 2020).…”