ESG and Banks’ Performance: Could Cyber Risk Be an Influence?

Document Type : Original Article

Author

Faculty of Management Modern University for Technology and Information, Cairo, Egypt

10.21608/acj.2025.450972

Abstract

To understand ESG practice impacts on bank profitability, the study analyses cyber risk as a moderating factor within the Egyptian banking industry. The analysis involved quantitative data examination from 16 Egyptian banks between 2017 and 2023. The research analysed ESG's direct effects on ROA and GPM performance measures through regression analysis and used moderation analysis to understand how cyber risk affected this relationship. The study confirms that Environmental Social Governance implementations positively influence both Return on Assets (H1a) and Gross Profit Margin (H1b) results in bank profitability, thus validating the primary hypothesis (H1). The study shows that banking cyber risk creates a negative influence on the relationship between ESG initiatives and bank profitability (H2). Negative moderation of cyber risk affects the relationships between ESG initiatives and bank financial performance as measured by ROA (H2a) and GPM (H2b). Data from an emerging market adds new knowledge about ESG-profitability relations in banking through this research. New research insights become possible because this study introduces cyber risk as a moderating factor in ESG initiatives toward financial performance (ROA or GPM).

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