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The IUP Journal of Accounting Research and Audit Practices:
Enhancing Economic Sustainability: An Empirical Study in Banking and Finance Sector in Oman
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The present paper analyzes the relationships between economic sustainability and productivity, capitalization and profitability in banking and finance sector in the Sultanate of Oman. The data was collected from the annual reports of 35 banks and financial institutions listed on Muscat Securities Market for a period of five years from 2011 to 2015. The data was analyzed using panel data regression. The regression results show that there is a statistically significant effect of market capitalization and productivity on economic sustainability. Further, the R2 value supports the significance of the regression model as dependable. Also, profitability does not have an impact on economic sustainability at 1% level. This means that the banks and finance institutions in Oman prefer to capitalize their profit.

 
 
 

Private companies have different missions and objectives which are reflected in their strategies. Some of their major objectives are size, growth, profitability and recently sustainability/ economic sustainability. There is a long debate as to which factor size, growth or profitability becomes the major source of increase in economic sustainability. Several studies have been done to conclude this debate. Traditionally, as far as growth is concerned, it is a very critical factor for the success of the companies. Moreover, it is also the source of evolution and development of a country’s economy (Asimakopoulos et al., 2009). According to the modern debates, two factors have more importance as the source of evolution and development of a company, sector and a country’s economy. These two factors are productivity and capitalization. Of course, these two factors are not new, but the issue is the importance of these with regard to the economic sustainability of the banking and finance sector.

Economic sustainability and profitability has been a subject of long controversial debate among the researchers. According to the classical theories in economic, accounting and finance, the main objective of the firm is to achieve profit. Recently, firms and society have made a lot of effort to move towards sustainable development. Sustainable means that firms will develop corporate strategies that include goals that go beyond just maximizing shareholders’ interests and include social, environmental, educational in addition to economic goals. Attention is directed towards the demands of a wider group of stakeholders, since the firm’s success depends on stakeholder’s satisfaction (Lopez and Sheu, 2007).

 
 
 

Productivity and Economic Sustainability, Market Capitalization and Economic Sustainability, Profitability and Economic Sustainability , Model Specification,Regression Analysis .