article · Boletim da Sociedade Paranaense de Matemática
An empirical evaluation of Moroccan commercial banks across the 2013 to 2023 period examines the combined influence of social performance, business indicators, and operational risk capital on profitability. Operational risk was modelled using the Basel III Standardised Approach, accounting for the Business Indicator, its scaled component, and the Internal Loss Multiplier. Analysis of profitability measures, including return on assets, return on equity, and return on tangible equity, indicates that social performance exerts a positive and economically significant effect on returns. Furthermore, business indicator metrics display strong explanatory power and positively track performance. However, operational risk has a non-linear, regulatory-mediated influence: although operational efficiency supports profitability, the higher capital requirements driven by business indicator components increase regulatory burdens and moderate marginal gains.
Understanding how social commitments and banking regulations intersect helps institutions balance profitability against compliance. Demonstrating that social performance directly improves returns gives financial institutions a clear operational incentive to invest in social initiatives. Simultaneously, showing how Basel III operational risk calibrations moderate financial gains provides essential guidance for banking regulators and executives designing long-term capital allocation strategies.
The insights could be applied by bank risk officers, regulatory authorities, and financial analysts to refine capital adequacy planning and corporate social responsibility reporting models under Basel III guidelines. As an empirical econometric study of historical data, the work serves as an analytical reference rather than a commercial software tool, placing direct practical deployment at an early, applied research stage.
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This study investigates the joint relationship between Social performance (SP), Business and Financial performance (FB), and operational risk capital within the Moroccan banking sector over the period 2013-2023 (77 bank-year observations). Operational risk is modeled under the Basel III Standardized Approach (SA), where capital requirements are determined by the Business Indicator (BI), its scaled Business Indicator Component (BIC), and, where applicable, the Internal Loss Multiplier (ILM). This framework allows us to examine how income-based regulatory capital proxies interact with profitability outcomes. Using panel fixed-effects regressions with bank-level controls (size, macroeconomic conditions), we estimate the impact of SP, FB components (ILDC, FC, BI, BIC), and operational risk exposure (operational RWA to total RWA) on ROA, ROE, and ROTE. Results indicate that SP exerts a positive and economically significant effect on profitability. Business indicator variables display strong explanatory power, with BI and BIC significantly associated with higher returns. Operational risk exhibits a non-linear and regulatory-mediated effect: while improved operational efficiency enhances profitability, higher BI- and BIC-driven capital requirements increase regulatory burden, moderating marginal returns. These findings highlight a capital-channel transmission mechanism whereby Basel III operational risk calibration influences bank performance.
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DOI: 10.5269/bspm.81776
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