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This study aims to explore the impact of environmental, social, and governance (ESG) factors on the performance of Malaysian Banks, specifically focusing on how financial technology moderates. Malaysia is one of the countries that emphasizes the adoption of FinTech in the banking industry to enhance its economy, and it is still rapidly growing. This study argues that the adoption and integration of FinTech adoption to explain the relationship between ESG and banks’ financial performance in past literature, particularly in emerging markets like Malaysia, remains scant. Utilizing a comprehensive panel data analysis of 36 Malaysian banks from 2018 to 2022, the methodology employs the panel corrected standard errors (PCSE) to examine the relationship between ESG and bank performance moderated by fintech adoption. The findings reveal that ESG increases bank performance indicators such as return on asset (ROA), return on equity (ROE) and Tobin’s q (TQ) while notably reducing non-performing loans (NPLs), underscoring the stabilizing effect of sustainable investments. In moderating analysis, FinTech adoption amplified the positive and negative relationships, suggesting FinTech’s integration can further leverage sustainable practices to strengthen overall bank performance. These findings provide a potential interactive relationship between ESG and FinTech in driving more sustainable, resilient and competitive bank operations. Findings suggest to policymakers the importance of a supportive framework aligning the ESG and FinTech adoption for sustainable performance.

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Impact of ESG on the Performance of Malaysian Banks: The Interacting Effect of FinTech Adoption

  • 章节

  • 发表日期：

    2026年

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  • Siti Sarah Alyasa-Gan,
  • Muhammad Ahmad Dost Muhammad,
  • Rabia Bashir,
  • Norliza Che-Yahya,
  • Nur Hafizah Roslan

摘要

This study aims to explore the impact of environmental, social, and governance (ESG) factors on the performance of Malaysian Banks, specifically focusing on how financial technology moderates. Malaysia is one of the countries that emphasizes the adoption of FinTech in the banking industry to enhance its economy, and it is still rapidly growing. This study argues that the adoption and integration of FinTech adoption to explain the relationship between ESG and banks’ financial performance in past literature, particularly in emerging markets like Malaysia, remains scant. Utilizing a comprehensive panel data analysis of 36 Malaysian banks from 2018 to 2022, the methodology employs the panel corrected standard errors (PCSE) to examine the relationship between ESG and bank performance moderated by fintech adoption. The findings reveal that ESG increases bank performance indicators such as return on asset (ROA), return on equity (ROE) and Tobin’s q (TQ) while notably reducing non-performing loans (NPLs), underscoring the stabilizing effect of sustainable investments. In moderating analysis, FinTech adoption amplified the positive and negative relationships, suggesting FinTech’s integration can further leverage sustainable practices to strengthen overall bank performance. These findings provide a potential interactive relationship between ESG and FinTech in driving more sustainable, resilient and competitive bank operations. Findings suggest to policymakers the importance of a supportive framework aligning the ESG and FinTech adoption for sustainable performance.