Green Banking Disclosures and Financial Performance of Indonesian Listed Banks: A Comparative Study Across Bank Size Categories
- AIOR Admin
- 60 minutes ago
- 2 min read
Siti Rochmah Ika, Bambang Sutopo, Ari Kuncara Widagdo
Sebelas Maret University (Indonesia), Janabadra University (Indonesia)
Indonesian banking regulations divide commercial banks into BUKU 1, 2, 3, and 4 categories based on core capital, and through POJK 2017 regulate the obligation to implement sustainable finance and different deadlines for preparing Sustainability Reports (SR) for BUKU 3–4 and BUKU 1–2 banks. Further strengthening comes through SEOJK 2021, which regulates the form and content of annual reports and sustainability reports in more detail. Starting from this context, this study examines the extent of green banking disclosures (GBD) of Indonesian listed banks over the period 2019–2023. Specifically this study aims to : (1) examine the GBD trends of listed banks in Indonesia for the above period; (2) examine whether there are differences in GBD levels between BUKU 1, 2, 3, and 4 bank categories; (3) examine whether there are differences in GBD levels before and after the issuance of SEOJK 16/2021; and (4) testing whether there are differences in financial performance between BUKU 1, 2, 3, and 4 banks. GBD is measured using an index adapted from Bose (2018) through content analysis of annual reports and sustainability reports, while financial performance is proxied by ROA, CAR, NPL, and LDR. The results show that GBD exhibits a gradually increasing trend, with BUKU 4 banks consistently achieving the highest mean disclosure level each year. The extent of GBD improves significantly following the 2021 regulation, indicating a positive regulatory effect on disclosure practices. ANOVA tests confirm that GBD levels differ statistically across the four bank categories and follow a clear size-related pattern: BUKU 1 has the lowest disclosure, rising sequentially up to BUKU 4 as the highest. Similarly, significant differences are observed in ROA, CAR, NPL, and LDR across BUKU groups: BUKU 4 records the highest ROA and the lowest NPL, while BUKU 2 shows the highest CAR and LDR. Overall, the findings suggest that regulatory tightening and bank size jointly shape the landscape of GBD in Indonesian listed banks, reflecting the interaction between sustainability and prudential performance dimensions in the Indonesian banking landscape. This finding implies that regulation and resource capacity (bank size) jointly drive GBD levels. Therefore, the Financial Services Authority (OJK) needs to provide more targeted support and capacity building for small banks, while bank management needs to allocate adequate resources for green reporting systems to remain legitimate and competitive in the market.
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