ESG Reporting, Liquidity, and Profitability in the Banking sector of Bangladesh: A Partial Least Squared Structural Equation Model (PLS-SEM) approach

Utilizing a Partial Least Squares Structural Equation Modeling (PLS-SEM) with Gaussian copula (GC) technique to resolve endogeneity issues, this study is one of the few studies that explores the mediation role of bank liquidity on the connection between ESG reporting and bank profitability within the emerging market setting. The study employed a casual research design utilizing data from the Dhaka Stock Exchange (DSE) listed banks in Bangladesh for the period 2015–2024. The findings reveal that liquidity serves as a significant mediating factor between ESG reporting and bank profitability performance. The study also shows that augmented ESG performance of the listed banks enhances bank liquidity and profitability. Furthermore, the outcome suggests that bank-specific factors proxied by (bank size, operating efficiency, equity to asset ratio, and asset quality) significantly enhance the profitability performance of DSE listed banks in Bangladesh positively. The study outcomes provide important insights for the bank managers, policymaker, regulators and investors.