Purpose: This study investigated the impacts of the environment, social and governance (ESG) and its components on global bank profitability considering the COVID-19 outbreak.Design/methodology/approach: This study used a system generalized method of moments (GMM) proposed by Arellano and Bover (1995) to investigate the relationship between ESG and bank profitability using an unbalanced sample of 487 banks from 51 countries from 2006 to 2021.Findings: The findings generally found that ESG activities may reduce bank profitability, thus supporting the trade-off hypothesis that adopting ESG standards could increase bank costs while lowering profitability. In addition, there is a U-shaped relationship between ESG and bank profitability, suggesting that ESG activities can help improve bank performance in the long term. Such an effect is the first time observed in the global banking sector. This study’s results are robust across different models and settings (e.g., developed vs. developing countries, different levels of profitability, and samples with vs without US banks).Practical implications: This study provides empirical evidence to support many countries' sustainable development policies. It also provides empirical incentives for bank managers to be more ESG-oriented.Originality/value: This study provides a better understanding of the roles of ESG activity and its components in the global banking system, considering the recent crises.

Climate change impacts, risks and sustainability disclosures have attracted increasing attention from scholars in various streams of the economics and finance literature towards achieving the UN's Sustainable Development Goals (SDGs). Within the stream of climate finance, the global initiatives for corporate social responsibility (CSR) and environment, social and governance (ESG) practices have had important roles in leveraging firms to become more actively involved in environment‐related disclosure, in which climate risk reporting is central to evaluating whether and to what extent a firm and its operations are friendly to the environment. Along with the growth of the UN Principles for Responsible Investing in 2005, one of the most recent global initiatives that has been formed is the Taskforce on Climate‐Related Financial Disclosures (TCFD), which has considered the climate‐related financial disclosure recommendations of G20 finance ministers. Given that TCFD recommendations have recently been released for a broad domain of players (such as banks, investors, insurers and governments) in various countries (e.g., New Zealand, the United States and Japan), we surveyed the most recent studies on the TCFD by using a conceptual framework for climate‐related disclosures focusing on studies published worldwide. On the basis of a thorough review, we highlight the essential functions of financial markets and also provide the critical implications for different market players ranging from providers to supporters of the TCFD. Our study offers a timely conceptual review of the TCFD which is critical for stimulating sustainable investments, climate finance and enhanced corporate reporting.

The evolution of the COVID‐19 pandemic is highly unpredictable; however, its impacts are limited to neither a single sector nor a single country. This study evaluates the performance and efficiency of 49 Islamic banks across 10 countries during 2019–2020 to assess how those banks can preserve their performance and remain resilient in the aftermath of the COVID‐19 pandemic. Using the conventional inverse data envelopment analysis (InvDEA) approach, we show that because of reductions in their outputs, 31 out of the 49 banks studied would need to reduce their inputs so that their efficiency can remain unchanged. However, we show that only 10 banks need to make such adjustments to maintain their efficiency levels using our proposed InvDEA efficiency model. The adjustment for those 10 banks would help in reducing more inputs, suggesting more cost savings, and improving the overall efficiency of the examined banks, compared with the other 31 banks.

The expansion of fintech credit around the world is challenging the global banking system. This study investigates the interrelationships between the development of fintech credit and the efficiency of banking systems in 80 countries from 2013 to 2017. The findings indicate a two-way relationship between them. More specifically, a negative relationship between bank efficiency and fintech credit implies that fintech credit is more developed in countries with less efficient banking systems. Meanwhile, a positive impact of fintech credit on the efficiency of banking systems suggests that fintech credit may serve as a wake-up call to the banking system. Therefore, fintech credit should be encouraged by the authorities around the world.