How sustainable development goals (SDGs) affect bank's profitability in Malaysia

Lee, Derran Wei Jie and Liew, Gibson Wei Liang and Low, Tze Yuan and Ng, Jing Hng and Soh, Jing Ming (2026) How sustainable development goals (SDGs) affect bank's profitability in Malaysia. Final Year Project, UTAR.

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Abstract

This study investigates the effect of Sustainable Development Goals (SDGs) on banks’ profitability in Malaysia. The study examines the relationship between green financing, corporate social responsibility (CSR), board independence, GDP, inflation, and bank profitability measured by return on assets (ROA). A quantitative research design was embraced, and the secondary data gathered comprised of seven Malaysian commercial banks between the years 2011 and 2025. The analysis adopted panel data analysis and the Fixed Effect Model (FEM) was adopted to analyse the relationship between the variables. The results show that there is a positive significant relationship between GDP and ROA, and a negative significant relationship between inflation and board independence and ROA. Green financing and CSR were detected to be in positive but weakly significant correlation with profitability. These findings imply that sustainability-related and macroeconomic aspects determine the profitability of the banks in Malaysia. The present research is important in the context of the literature on sustainable finance as it leads to the empirical evidence of the Malaysian banking sector. The results can be used as a valuable guide by banks, policymakers, and future researchers in assessing the efficacy of SDG-related practices in enhancing financial results.

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