Sustainability Disclosure, Bank Performance and the Moderating Role of Camel Rating System: Evidence from a Developing Nation

This study examined the correlation between sustainability disclosure and firm performance. We further investigated the moderating effect of the camel rating system on the relationship between sustainability disclosure and firm performance. We used data from annual reports of selected banks and the Central Bank of Bangladesh. The sample included 60 banks over a ten-year period (2011–2020) totaling to 600 observations. The Panel data were analyzed using the fixed effect method. Findings revealed that components of sustainability disclosure had a positive influence on Return on Equity (ROE). On the other hand, sustainability disclosure had negative influence of social disclosure on Return on Assets (ROA). Additionally, Camel rating system showed a significant moderating effect on the relationships between sustainability disclosure and firm operational performance. This paper expanded the literature on sustainability disclosure, particularly on developing nations’ perspective. In order to persuade and motivate businesses to become more environmentally friendly, which will have a good impact on society and the economy as a whole, this study advised relevant organizations to adopt the sustainability disclosure protocol recommended by the Central Bank of Bangladesh.