ESG performance in banking post-covid pandemic : does islamic banking perform better?

Mestrado Bolonha em FinançasThe fascinating and - for many - distant Islamic way of conducting corporate and public finance has multiple distinctive features from the one it is seen as conventional within western countries. In times where sustainability is dominating agendas everywhere across the globe following an impactful pandemic period, it seemed interesting to study how this very distinct doctrine financial institutions behaved compared to the conventional European banks within the environmental, social and governance fields. Along the below-presented work, it is possible to find several empirical approaches to the studied hypothesis, with three different regression methods being applied in order to infer whether Islamic banks overperformed non shariah-compliant ones within the COVID period in sustainability matters and also if that performance was linear throughout the several ESG score levels. The results were inconclusive on the relationship between the Islamic factor and the post-pandemic ESG aggregate scores obtained by the financial institutions across Europe and Middle East, being the conclusions robust even through instrumental variables. But although these linear models having shown non-significant results regarding shariahcompliance, when assuming a non-linear approach through the utilization of a quantile regression it is possible to observe a very significant positive relationship between the Islamic factor and sustainability scores within the higher and lower quantiles.