How Does Green Credit Affect To Financial Performance Of Commercial Bank? Evidence From Bank In Indonesia

Badi’atul Ulwiyah, Muhammad Haidar Fikri K, Laelatul Maulida, Mahirun Mahirun

Abstract


As a key component of the environmentally friendly financial system, the Indonesian government enthusiastically encourages commercial banks to emit environmentally friendly credit. This research is used to find out how green credit influences the financial performance of commercial banks. The evidence from banks in Indonesia using variables such as (Green Credit, CAR, NPL, LDR, NIM), as internal bank factors on Return on Assets (ROA) in Bank Indonesia. The current problem is whether this financing will also benefit banks if it is seen from financial performance reports or even vice versa. The population which is used is state-owned enterprises (BUMN) and the private banks which the financial reports and the sustainibility reports have been published to Bank Indonesia and the Financial Services Authority (OJK) in 2018-2022. For the sampling using the screening method, while the data used was secondary data obtained from the website each bank, OJK, and Bank Indonesia. The analytical method used in this research is panel data regression analysis. The research results show that the green credit and Loan to Deposit Ratio (LDR) variables do not have a significant effect on Return On Assets (ROA). Capital Adequacy Ratio (CAR), Non Performing Loans (NPL) have a significant negative effect on Return on Assets (ROA), Net Interest Margin (NIM) have a significant positive effect on Return on Assets (ROA). Even though green credit has no effect on Return on Assets (ROA), but the bank needs to pay attention to the criteria of companies that will apply for credit. If the bank is not selective, it will have an impact on the bank's bad credit, which will affect the bank's ability to manage profits and financial performance


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