The impact of competition on environmental and social performance in the MENA banking sector

Abstract

The study analyzes the impact of competition on environmental and social performance. Based on data collected from 82 banks in the banking industry across nine emerging Middle Eastern and North African (MENA) countries from 2015 to 2021, the results indicate that heightened competitive pressure compels banks to enhance their efforts in environmental and social initiatives. Additionally, a positive correlation is observed between greater Board gender diversity (BGD) and improved environmental and social performance. Finally, the results indicate that the negative impact of market power on environmental and social performance is less pronounced in banks with higher BGD, those operating in countries with a better institutional environment, and in state-owned banks. In contrast, the negative impact is more pronounced in Islamic banks. Our research findings provide insights into the current discourse on strategic decision-making in the context of sustainability, shedding light on the benefits associated with competition and gender diversity.