Financial Crises and Corporate Sustainability: A Comparative Analysis of Shariah-Compliant and Non-Shariah-Compliant Firms. Evidence from the Global Financial Crisis and COVID-19
Year: 2026
Type: article
Abstract: Purpose – This study examines the relationship between financial crises and corporate sustainability by comparing Shariah-compliant and non-Shariah-compliant firms. It focuses on two major crises, the 2008 Global Financial Crisis (GFC) and COVID-19, to evaluate how resilient these firms were in periods of crisis. Design/Methodology/Approach – The study uses a longitudinal dataset covering 2004–2023, drawn from the Thomson Reuters ESG database, and applies panel data regression models (OLS, fixed effects, random effects and feasible generalized least squares). Corporate sustainability is measured through environmental, social and governance (ESG) performance, and the effect of Shariah compliance on it is evaluated. Findings – Shariah-compliant firms show greater resilience during financial crises, which is linked to their ethical investment practices, risk-sharing mechanisms and stakeholder-oriented governance. Shariah-compliant firms performed relatively better during the GFC. During COVID-19, however, non-compliant firms adopted adaptive strategies and strengthened their ESG commitments. Originality/Value – The findings add to the literature on financial stability and sustainable finance by highlighting the role of ethical financial practices in promoting corporate sustainability. The study offers useful information to policy makers, investors and corporate leaders on integrating sustainable financial models to build resilience against future economic crises.
Source: Perspectives in Social Sciences
Institution: Islamia College University
Language: English
Subfield: Accounting
Domain: Social Sciences
Open Access status: diamond
OpenAlex ID: W7225681195
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