An integrated multi-level framework for sustainable banking and ESG performance: the critical role of digital transformation in emerging Asia

Green-finance practices are central to sustainable development across emerging Asian economies; however, their effectiveness varies widely due to limited understanding of how regulatory, organizational, and technological factors coexist and shape outcomes. This study develops and empirically examines an integrated, multi-level framework that links regulatory pressure, organizational capabilities, and digital transformation with banks' Environmental, Social, and Governance (ESG) performance. Drawing on Institutional Theory, the Resource-Based View, and Stakeholder Theory, it applies a fixed-effects regression model to secondary panel data from 10 commercial banks in Bangladesh, China, India, Indonesia, and Pakistan over 2015–2024. The analysis identifies a strong positive association between regulatory pressure and ESG performance and a significant relationship between organizational capabilities and ESG outcomes. More importantly, digital transformation shows a substantial moderating association, intensifying the influence of internal capabilities while exhibiting no independent direct effect on ESG results. These findings suggest that while regulation acts as a catalyst promoting sustainable-banking adoption, sustained ESG progress depends on the complementary alignment of digital infrastructure and organizational resource development. The study concludes with policy and managerial recommendations to strengthen such integrative pathways.

© 2026 Ullah, Ridwan, Ko, Falzon, Muhammad, KP, Leung and Ming.