This study examines the impact of a set of firm-specific determinants —namely, environmental performance (ENV), governance (GVN), social capital (SCL), firm size (SIZE), and debt (EBDT), —on financial performance measured by return on equity (ROE) using a balanced panel dataset of GCC banking sector during the period from 2015 to 2023. The study employed a fixed-effects model to assess the influence of aforesaid firm specific factors. The findings demonstrated a high explanatory power for the model, with a coefficient of determination (R²) of approximately 62%, reflecting the significant contribution of these variables to explaining the variance in bank’s financial performance. Empirical results reveal a statistically significant positive impact of both the social component and debt on ROE, highlighting the importance of adopting social responsibility practices and effectively utilizing capital structure to enhance profitability. Conversely, the results showed a negative relationship between firm size and ROE, suggesting a potential decline in efficiency with increasing size. Environmental and economic components also contributed to explaining the performance variance, although their statistical significance was not constant. In general, the study confirms that company-specific factors are key determinants of financial performance, and highlights the importance of integrated strategic management of social and financial dimensions in achieving a sustainable competitive advantage and enhancing long-term profitability.
Bilal et al. (Wed,) studied this question.