Effects of Institutional Ownership, Independent Commissioners, and CSR Disclosure on ROA: the Moderating Role of Green Credit in Indonesian Conventional Banks
DOI:
https://doi.org/10.61194/ijjm.v7i4.2503Keywords:
institutional ownership, independent commissioners, corporate social responsibility, green credit, return on assets (roa), sustainable financeAbstract
Increasing commitment to sustainable finance has encouraged banks to strengthen corporate governance, improve the transparency of corporate social responsibility (CSR) disclosure, and expand environmentally responsible lending practices. Although previous studies have examined the associations of institutional ownership, independent commissioners, and CSR disclosure with financial performance, their findings remain mixed. Moreover, empirical evidence on the moderating role of green credit in these relationships remains limited, particularly among Indonesian conventional commercial banks. This study examines the associations of institutional ownership, independent commissioners, and CSR disclosure with bank financial performance and investigates the moderating role of green credit. Using a balanced panel dataset of 176 firm-year observations from 16 conventional commercial banks listed on the Indonesia Stock Exchange (IDX) during 2014–2024, the study employs the Fixed Effect Model (FEM) to examine the direct associations and Moderated Regression Analysis (MRA) to assess the moderating role of green credit. The findings show that institutional ownership (β = 0.028, p = 0.022), independent commissioners (β = 0.019, p = 0.037), and CSR disclosure (β = 0.022, p = 0.033) are positively and significantly associated with return on assets (ROA). Green credit also significantly moderates the associations of institutional ownership (β = 0.047, p = 0.019), independent commissioners (β = 0.039, p = 0.027), and CSR disclosure (β = 0.062, p = 0.008) with ROA. The inclusion of green credit and its interaction terms increases the model's explanatory power from R² = 0.45 to R² = 0.61. These findings provide empirical evidence that governance mechanisms, CSR disclosure, and green credit are associated with bank financial performance and extend the application of Agency Theory and Stakeholder Theory within the sustainable finance context. The findings also offer practical considerations for regulators, policymakers, and bank managers regarding governance quality, CSR disclosure, and the development of green financing practices.
Downloads
References
Abedin, S. H., Haque, H., Shahjahan, T., & Kabir, M. N. (2022). Institutional Ownership and Firm Performance: Evidence from an Emerging Economy. Journal of Risk and Financial Management, 15(12). https://doi.org/10.3390/jrfm15120567
Abid, A., Gull, A. A., Hussain, N., & Nguyen, D. K. (2021). Risk governance and bank risk-taking behavior: Evidence from Asian banks. Journal of International Financial Markets, Institutions and Money, 75(May), 101466. https://doi.org/10.1016/j.intfin.2021.101466
Adu, D. A., Abedin, M. Z., Saa, V. Y., & Boateng, F. (2024). Bank sustainability, climate change initiatives and financial performance: The role of corporate governance. International Review of Financial Analysis, 95(PB), 103438. https://doi.org/10.1016/j.irfa.2024.103438
Al frijat, Y. S., Al-Msiedeen, J. M., & Elamer, A. A. (2025). How Green Credit Policies and Climate Change Practices Drive Banking Financial Performance. Business Strategy and Development, 8(1). https://doi.org/10.1002/bsd2.70090
Allie, R., & Sudibijo, Y. A. (2024). Analysis of the Effect of Green Banking, Corporate Social Responsibility, Ultimate Ownership on Bank Performance with Good Corporate Governance as a Moderating Variable. Technium Sustainability, 5, 75–89. https://doi.org/10.47577/sustainability.v5i.10792
Bhatia, M., & Gulati, R. (2021). Board governance and bank performance: A meta- analysis. Research in International Business and Finance, 58(May), 101425. https://doi.org/10.1016/j.ribaf.2021.101425
Bofinger, Y., Heyden, K. J., & Rock, B. (2022). Corporate social responsibility and market efficiency: Evidence from ESG and misvaluation measures. Journal of Banking and Finance, 134, 106322. https://doi.org/10.1016/j.jbankfin.2021.106322
Buallay, A. (2019). Is sustainability reporting (ESG) associated with performance? Evidence from the European banking sector. Management of Environmental Quality: An International Journal, 30(1), 98–115. https://doi.org/10.1108/MEQ-12-2017-0149
Dos, E., Soares, S. M., Rini, I., & Pangestuti, D. (2024). Green Credit, Corporate Social Responsibility and Company Value: Evidence From Indonesia and China Banks. AFRE Accounting and Financial Review, 7(3), 290–300.
Ernawati, S., & Utami, C. B. (2024). The Effect of Green Banking Disclosure on The Financial Performance of Regional-Owned Islamic Banks. Jurnal Ilmiah Ekonomi Islam, 10(03), 3186–3196.
Fata, F. A., & Arifin, Z. (2024). The Impact of Green Credit Distribution on Bank Performance and Influencing Factors : a Aase Study of Indonesian banks. Research in Business & Social Science, 13(1), 323–332.
Freeman, R. E. (1984). Strategic Management: A Stakeholder Approach. Pitman.
Gao, X., & Guo, Y. (2022). The Green Credit Policy Impact on the Financial Performance of Commercial Banks: A Quasi-Natural Experiment from China. Mathematical Problems in Engineering, 2022. https://doi.org/10.1155/2022/9087498
Gutiérrez-Ponce, H., & Wibowo, S. A. (2024). Do sustainability practices contribute to the financial performance of banks? An analysis of banks in Southeast Asia. Corporate Social Responsibility and Environmental Management, 31(2), 1418–1432. https://doi.org/10.1002/csr.2641
Jensen, M. C., & Meckling, W. H. (1976). Theory of the Firm: Managerial. Journal of Financial Economics, 3, 305–360. https://doi.org/http://dx.doi.org/10.1016/0304-405X(76)90026-X
Jeris, S. S. (2021). Factors influencing bank profitability in a developing economy: Panel evidence from Bangladesh. International Journal of Asian Business and Information Management, 12(3), 333–346. https://doi.org/10.4018/IJABIM.20210701.oa20
Kafidipe, A., Uwalomwa, U., Dahunsi, O., & Okeme, F. O. (2021). Corporate governance, risk management and financial performance of listed deposit money bank in Nigeria. Cogent Business and Management, 8(1). https://doi.org/10.1080/23311975.2021.1888679
Kartiko, N. D., & Firmansyah, A. (2024). The Impact of Bank Ownership Structure on Sustainable Banking Practices in Indonesia: The Moderating Role of Corporate Governance. The International Journal of Financial Systems, 2(1), 113–146. https://doi.org/10.61459/ijfs.v2i1.43
Le Gallo, J., & Sénégas, M. A. (2023). On the Proper Computation of the Hausman Test Statistic in Standard Linear Panel Data Models: Some Clarifications and New Results. Econometrics, 11(4). https://doi.org/10.3390/econometrics11040025
Mansour, N. (2025). The effect of green credit on the performance of commercial banks. Journal of Infrastructure Policy and Development, 9(2), 10116. https://doi.org/10.24294/jipd10116
Marfuah, M., Sakti, B. A., Kusuma, H., & Abdullah, W. R. W. (2025). Green Banking Practices in Indonesia: What is the Role of Corporate Governance? Review of Integrative Business and Economics Research, 14(1), 408–422.
Nguyen Kim, Q. T. (2024). Corporate governance, corporate social responsibility and bank performance in Vietnam with mediators. Cogent Business and Management, 11(1). https://doi.org/10.1080/23311975.2024.2336654
Persakis, A., & Al-Jallad, R. T. (2024). The influence of corporate social responsibility and social values on bank performance: A global study. Borsa Istanbul Review, 24(4), 674–697. https://doi.org/10.1016/j.bir.2024.03.012
Postiglione, M., Carini, C., & Falini, A. (2024). ESG and firm value: A hybrid literature review on cost of capital implications from Scopus database. Corporate Social Responsibility and Environmental Management, 31(6), 6457–6480. https://doi.org/10.1002/csr.2940
Rahmamita, D., & Kahar, M. R. (2024). Green Banking Disclosure and Financial Performance: Role of Corporate Governance as Moderating Variable. Journal of Management and Administration Provision, 4(3), 392–401. https://doi.org/10.55885/jmap.v4i3.443
Sindhu, M. I., Windijarto, Wong, W. K., & Maswadi, L. (2024). Implications of corporate social responsibility on the financial and non-financial performance of the banking sector: A moderated and mediated mechanism. Heliyon, 10(9), e30557. https://doi.org/10.1016/j.heliyon.2024.e30557
Soberon, A., Mazzanti, M., Musolesi, A., & Rodriguez-Poo, J. M. (2025). Efficient estimation of a partially linear panel data model with cross-sectional dependence. Journal of Multivariate Analysis, 206(April 2024), 105393. https://doi.org/10.1016/j.jmva.2024.105393
Sutrisno, S., Widarjono, A., & Hakim, A. (2024). The Role of Green Credit in Bank Profitability and Stability: A Case Study on Green Banking in Indonesia. Risks, 12(12), 1–15. https://doi.org/10.3390/risks12120198
Weber, O., & Chowdury, R. K. (2020). Corporate sustainability in bangladeshi banks: Proactive or reactive ethical behavior? Sustainability (Switzerland), 12(19), 1–18. https://doi.org/10.3390/su12197999
Yafie, R. I. M., Zuhroh, I., & Anindyntha, F. A. (2024). the Impact of Green Finance on Banking Performance in Indonesia. Jurnal Aplikasi Akuntansi, 9(1), 288–301. https://doi.org/10.29303/jaa.v9i1.464
Zhou, G., Sun, Y., Luo, S., & Liao, J. (2021a). Corporate social responsibility and bank financial performance in China: The moderating role of green credit. Energy Economics, 97, 105190. https://doi.org/10.1016/j.eneco.2021.105190
Zhou, G., Sun, Y., Luo, S., & Liao, J. (2021b). Corporate social responsibility and bank financial performance in China: The moderating role of green credit. Energy Economics, 97, 105190. https://doi.org/10.1016/j.eneco.2021.105190
Published
How to Cite
Issue
Section
License
Copyright (c) 2026 Lia Oktavia, Chairil Afandy, Ridwan Nurazi, Intan Zoraya
This work is licensed under a Creative Commons Attribution 4.0 International License.
This work is licensed under a Creative Commons Attribution 4.0 International License.
