ESG, Intellectual Capital, and Banking Performance: The Moderating Role of CEO Overconfidence

Muhammad Alif Naufal Ilham, Bima Cinintya Pratama, Ani Kusbandiyah, Rezky Pramurindra

Abstract


The banking sector faces increasing pressure to adopt Environmental, Social, and Governance (ESG) practices, while evidence regarding their effects on banking performance remains inconsistent. Previous studies have generally examined ESG, intellectual capital, and CEO characteristics separately, leaving limited evidence on their integrated effects, particularly in emerging markets. This study examines the effects of ESG and intellectual capital on banking performance, with CEO overconfidence as a moderating variable. Using panel data regression, this study analyzes 29 banks in Indonesia and Malaysia during 2018–2024. The results show that ESG has a significant negative effect on banking performance, while intellectual capital has a positive effect, primarily through structural and physical capital. Human capital has no significant effect. Furthermore, CEO overconfidence strengthens the negative effect of ESG on banking performance. These findings highlight the trade-off between ESG and short-term profitability and the importance of intellectual capital and CEO characteristics in banking performance.


Keywords


Banking Performance; CEO Overconfidence; Environmental, Social, and Governance; Intellectual Capital.

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References


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