Implementation of Green Banking and Determinant Factors: Testing the Mediation Effect of Green Financing
DOI:
https://doi.org/10.31098/ijmesh.v10i1.4001Keywords:
Green banking, Green Financing, Profitability, Institutional Ownership, Operational Efficiency, Bank size.Abstract
This study examines the effects of bank size, profitability, institutional ownership, and operational efficiency on green banking implementation, with green financing as a mediating variable, using data from nine Islamic commercial banks in Indonesia during 2020–2024. Employing a quantitative approach with path analysis and Sobel tests, the results show that bank size and profitability have a significant positive effect on green financing, while institutional ownership and operational efficiency do not. In the green banking model, bank size and green financing significantly enhance green banking disclosure, whereas profitability, institutional ownership, and operational efficiency exhibit no direct effect. Mediation analysis confirms that green financing significantly mediates the relationships between bank size, profitability, and institutional ownership and green banking, but fails to mediate the effect of operational efficiency. These findings indicate that green financing functions as a critical transmission mechanism linking internal bank characteristics to sustainability disclosure. The study contributes theoretically by extending stakeholder theory through the integration of green financing as a mediating mechanism in Islamic banking, and practically by highlighting that regulatory and managerial efforts should prioritize strengthening green financing capacity, particularly in large and profitable banks, to improve the effectiveness of green banking implementation in Indonesia.
References
Abdulrahman, Mohammed's Prayer. 2021. "The Role of Environmental Accounting in Sustainable Development to Conserve Natural Resources, Assistant Teacher: Doaa Mohammed Abdulrahman." Psychology and Education 58(2):11627–53.
Afifah, Mutia Dianti, and Mhd Hasymi. 2020. "The Effect of Profitability, Leverage, Company Size, Fixed Assets, and Facility Intensity on Tax Management with Effective Tax Rate Indicators." Journal of Accounting Science 4(1):29–42. doi: 10.21070/jas.v4i1.398.
Akhter, Ireen, Shakila Yasmin, and Nusrat Faria. 2021. "Green Banking Practice and Its Implication on Financial Performance of The Commercial Banks in Bangladesh." Journal of Business Administration 42(1):1–23.
Alzoubi, Tariq, and Muhanned Obeidat. 2020. "How Size Influences the Credit Risk in Islamic Banks." Cogent Business and Management 7(1). doi: 10.1080/23311975.2020.1811596.
Anggraini, Sindi, and Fasa Muhammad Iqbal. 2022. "Analysis of the Influence of Green Banking on the Profitability of Indonesian Sharia Commercial Banks." Journal of Business Management and Islamic Banking 1(1):73–88. doi: 10.14421/jbmib.2022.011-05.
Bose, Sudipta, Habib Zaman Khan, Afzalur Rashid, and Shajul Islam. 2018. "What Drives Green Banking Disclosure? An Institutional and Corporate Governance Perspective." Asia Pacific Journal of Management 35(2):501–27. doi: 10.1007/s10490-017-9528-x.
Chang, Victor, Nattareya Hahm, Qianwen Ariel Xu, P. Vijayakumar, and Ling Liu. 2024. "Towards Data and Analytics Driven B2B-Banking for Green Finance: A Cross-Selling Use Case Study." Technological Forecasting and Social Change 206(January):123542. doi: 10.1016/j.techfore.2024.123542.
Chowdhury, Tabassum, Rashed Al Karim, Md Karim Rabiul, Minhaz Ul Alam, and Dewan Niamul Karim. 2025. "Fostering Sustainable Environmental Performance Through Green Banking Practices: The Mediating Role of Employees' Green Motivation and Green Behavior." Sustainability (Switzerland) 17(8):1–18. doi: 10.3390/su17083750.
Dhar, Bablu Kumar, Sabrina Maria Sarkar, and Foster K. Ayittey. 2022. "Impact of Social Responsibility Disclosure between Implementation of Green Accounting and Sustainable Development: A Study on Heavily Polluting Companies in Bangladesh." Corporate Social Responsibility and Environmental Management 29(1):71–78. doi: 10.1002/csr.2174.
Disclosure, S. R. Green Banking. 2024. "Economics and Business Quarterly Reviews Green Banking Disclosure in Indonesia: Do Financial." 7:189– 8. doi: 10.31014/AIOR.1992.07.02.585.
Drempetic, Samuel, Christian Klein und Bernhard Zwergel. 2020. "The Influence of Firm Size on the ESG Score: Corporate Sustainability Ratings Under Review." Journal of Business Ethics 167(2):333–60. doi: 10.1007/s10551-019-04164-1.
Farida, Dessy Noor, and Agus Purwanto. 2021. "Do Board Characteristics Impact Green Banking Disclosure? Empirical Evidence from Indonesia." Indonesian Journal of Sustainability Accounting and Management 5(2):187–97. doi: 10.28992/ijsam.v5i2.333.
Firmansyah, Amrie, and Nafis Dwi Kartiko. 2024. "Exploring the Association of Green Banking Disclosure and Corporate Sustainable Growth: The Moderating Role of Firm Size and Firm Age." Cogent Business and Management 11(1). doi: 10.1080/23311975.2024.2312967.
Al Frijat, Yaser Saleh, Jebreel Mohammad Al-Msiedeen, and Ahmed A. Elamer. 2025. "How Green Credit Policies and Climate Change Practices Drive Banking Financial Performance." Business Strategy and Development 8(1). doi: 10.1002/bsd2.70090.
Guang-Wen, Zheng, and Abu Bakkar Siddik. 2023. "The Effect of Fintech Adoption on Green Finance and Environmental Performance of Banking Institutions during the COVID-19 Pandemic: The Role of Green Innovation." Environmental Science and Pollution Research 30(10):25959–71. doi: 10.1007/s11356-022-23956-z.
Gunawan, Juniati, Paulina Permatasari, and Umesh Sharma. 2022. Exploring Sustainability and Green Banking Disclosures: A Study of the Banking Sector. Vol. 24. Springer Netherlands.
Hold on, Lilik. 2019. "Corporate Governance and Green Banking Disclosure: A Study on Banks in Indonesia." Journal of Accounting and Business Dynamics 6(2):121–36. doi: 10.24815/jdab.v6i2.12243.
Hendrawan, Vincensius Farrell. 2021. "The Influence of Board of Commissioners, Independent Board of Commissioners, and Institutional Ownership on Green Banking Disclosures." THESIS.
Herawati, Jonah Apriliya. 2024. "The Effect of Corporate Value Analysis and Company Size on Environmental, Social, and Governance (ESG)." THESIS.
Courtesy of Siriu, Sirius, and Slamet Haryono. 2023. "Green Banking: Operating Costs on Operating Income, Capital Adequacy Ratio, Financial Slack, Sustainability Officer, and Sustainability Committee." Journal of Theoretical and Applied Sharia Economics 10(5):427–42. doi: 10.20473/vol10iss20235pp427-442.
Jain, Pooja, and Bhuvanesh Kumar Sharma. 2023. "Impact of Green Banking Practices on Sustainable Environmental Performance and Profitability of Private Sector Banks." International Journal of Social Ecology and Sustainable Development 14(1):1–19. doi: 10.4018/IJSESD.330135.
Khamilia, Nada, and Wahyudin Nor. 2022. "Factors in Increasing Green Banking Disclosures." Journal of Accounting Research (JUARA) 12(1):1–23. doi: 10.36733/juara.v12i1.3144.
Kontesa, Emelia, Zico Junius Fernando, and Sawitri Yuli Hartati. 2023. "A Mathematical Approach to Network Contagion Regarding Greening Banks' Policies." Environmental Law Development 8(1):1–22. doi: 10.1080/1331677X.2023.2180057.
Krissana, Theresia Nevi Oksa. 2023. "THE EFFECT OF THE SIZE OF THE BOARD OF COMMISSIONERS, GENDER DIVERSITY OF COMMISSIONERS AND INSTITUTIONAL OWNERSHIP ON GREEN BANKING DISCLOSURE (AN EMPIRICAL STUDY ON BANKING COMPANIES LISTED ON THE INDONESIA STOCK EXCHANGE IN 2020-2022)." THESIS.
Leony, Egasa, Afni Rizkiyanti, and Lia Uzliawati. 2024. "The Influence of Environmental, Socie tal and Governance Disclosure on the Profitability of Food and Beverage Sector Companies in Indonesia." Scientific Journal of Management, Economics, & Accounting (MEA) 8(1):196–209. doi: 10.31955/mea.v8i1.3655.
Mirza, Nawazish, Muhammad Umar, Ayesha Afzal, and Saba Fazal Firdousi. 2023. "The Role of Fintech in Promoting Green Finance, and Profitability: Evidence from the Banking Sector in the Euro Zone." Economic Analysis and Policy 78 33–40. doi: 10.1016/j.eap.2023.02.001.
Nasution, Barran Hamzah, and Rosa Agustina. 2023. "DOCTRINE: Journal of Law." 6(April):73–81.
Nurmalia, Gustika. 2021. "Green Banking and Capital Adequacy Ratio Affect the Profit Growth of Islamic Commercial Banks in Indonesia." Fiduciary: Journal of Finance and Banking 4(2):173–87. doi: 10.24127/jf.v4i2.690.
Rachmawati, Windasari, Abdul Karim, and Abdul Manan. 2023a. "Green Banking Disclosure Analysis: A Perspective on Indonesian Banking." Journal of RAK (Financial Accounting Research) 8(2):160–69.
Rachmawati, Windasari, Abdul Karim, and Abdul Manan. 2023b. "The Analysis of Green Banking Disclosure: A Perspective on the Banking Sector in Indonesia Article Information Abstract." Journal of Financial Accounting Research 8(2):160–69.
Ramadhan, Ahmad. 2024. "The Influence of BOPO Capital Adequacy Ratio Financial Smelt Sustainability Officer on Green Banking." 1–100.
Sari, Wahyu Indah, Abdi Sugiarto, Lia Nazliana Nasution, and Resti Triana Ningsih. 2024. Green Finance Theory and Sustainable Finance. Medan: Publisher of Throne Media Group.
Sehen Issa, Jabbar, Mohammad Reza Abbaszadeh, and Mahdi Salehi. 2022. "The Impact of Islamic Banking Corporate Governance on Green Banking." Administrative Sciences 12(4). doi: 10.3390/admsci12040190.
Shehadeh, Maha, Anas Ahmad Bani Atta, Thamir Al Barrak, Abdalwali Lutfi, and Mahmaod Alrawad. 2024. "Digital Transformation: An Empirical Analysis of Operational Efficiency, Customer Experience, and Competitive Advantage in Jordanian Islamic Banks." Uncertain Supply Chain Management 12(2):695–708. doi: 10.5267/j.uscm.2024.1.015.
Righteous, Righteous, Righteous, and Righteous. 2023. "Islamic Business Ethics: Implementation in the Hospitality Business in Banten." Journal of Sharia Economic Law 7(02):145–57. doi: 10.26618/j-hes.v7i02.12675.
Susanto, Joshua Gilbert. 2024. "The Effect of Company Size on Green Banking in Banking Companies in Indonesia." THESIS.
Sutrisno, Sutrisno, Agus Widarjono, and Abdul Hakim. 2024. "The Role of Green Credit in Bank Profitability and Stability: A Case Study on Green Banking in Indonesia." Risks 12(12):1–15. doi: 10.3390/risks12120198.
Tambunan, Ronia, and Suci Wahyuliza. 2024. "The Influence of Institutional Ownership, Managerial Ownership, and Foreign Ownership on ESG Disclosure (Empirical Study on Manufacturing Companies Listed on the IDX in 2009-2011)." Journal of Accounting and Finance 13(2):74–81.
Ulfah, Atika, Dwi Hajriani Denta, Accounting Study Program, Management Study Program, University Satu, and Nusa Lampung. 2025. "Corporate Governance and Ownership Structure for Green Banking Disclosure (Study on Banking in Indonesia in 2021-2023)." Balance: Accounting and Financial Information Media 17(1):37–44.
Wang, Qiulin, and Lei Fu. 2025. "FinTech, Risk Management and Banking Green Credit." Finance Research Letters 83(April):107686. doi: 10.1016/j.frl.2025.107686.
Yanti, Rizki Puspa, and Muhammad Iqbal Fasa. 2025. "Digital Transformation and Operational Efficiency: A Qualitative Study of Paper Reduction in Sustainable Banking." JIIC: Journal of Intellectuals and Scholars 2(4):7076–85.
Zhang, Xin, Zhihui Wang, Xiaobing Zhong, Shouzhi Yang, and Abu Bakkar Siddik. 2022. "Do Green Banking Activities Improve the Banks' Environmental Performance? The Mediating Effect of Green Financing." Sustainability (Switzerland) 14(2):1–18. doi: 10.3390/su14020989.
Downloads
Published
Citation Check
How to Cite
Issue
Section
License
Copyright (c) 2026 Lelly Kartika Sari, Sri Wahyuni, Naelati Tubastuvi, Amir Amir
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
Copyright Notice: 1. License
International Journal of Management, Entrepreneurship, Social Science and Humanities has CC-BY NC or an equivalent license as the optimal license for the publication, distribution, use, and reuse of scholarly work for non-commercial purpose. The non-commercial use of the article will be governed by the Creative Commons Attribution license as currently displayed on Creative Commons Attribution-NonCommercial 4.0 International License
Creative Commons License
2. Author’s Warranties
The author warrants that the article is original, written by stated author(s), has not been published before, contains no unlawful statements, does not infringe the rights of others, is subject to copyright that is vested exclusively in the author and free of any third party rights, and that any necessary written permissions to quote from other sources have been obtained by the author(s).
3. User Rights
International Journal of Management, Entrepreneurship, Social Science and Humanities objective is to disseminate articles published are as free as possible. Under the Creative Commons license, this journal permits users to copy, distribute, display, and perform the work for non-commercial purposes only. Users will also need to attribute authors and this journal on distributing works in the journal.
4. Rights of Authors
Authors retain the following rights:
Copyright, and proprietary rights relating to the article, such as patent rights,
The right to use the substance of the article in future own works, including lectures and books,
The right to reproduce the article for own purposes,
The right to self-archive the article,
the right to enter into separate, additional contractual arrangements for the non-exclusive distribution of the article's published version (e.g., post it to an institutional repository or publish it in a book), with an acknowledgement of its initial publication in this journal (International Journal of Management, Entrepreneurship, Social Science and Humanities).
The author has a non-exclusive publishing contract with a publisher and the work is published with a more restrictive license, the author retains all the rights to publish the work elsewhere, including commercially, because she/he is not subject to the conditions of her / his own license, regardless of the type of CC license chosen.
5. Co-Authorship
If the article was jointly prepared by other authors, the signatory of this form warrants that he/she has been authorized by all co-authors to sign this agreement on their behalf, and agrees to inform his/her co-authors of the terms of this agreement.
6. Termination
This agreement can be terminated by the author or International Journal of Management, Entrepreneurship, Social Science and Humanities upon two months’ notice where the other party has materially breached this agreement and failed to remedy such breach within a month of being given the terminating party’s notice requesting such breach to be remedied. No breach or violation of this agreement will cause this agreement or any license granted in it to terminate automatically or affect the definition of International Journal of Management, Entrepreneurship, Social Science and Humanities.
7. Royalties
This agreement entitles the author to no royalties or other fees. To such extent as legally permissible, the author waives his or her right to collect royalties relative to the article in respect of any use of the article by This agreement can be terminated by the International Journal of Management, Entrepreneurship, Social Science and Humanities upon two months’ notice where the other party has materially breached this agreement and failed to remedy such breach within a month of being given the terminating party’s notice requesting such breach to be remedied. No breach or violation of this agreement will cause this agreement or any license granted in it to terminate automatically or affect the definition of International Journal of Management, Entrepreneurship, Social Science and Humanities or its sublicensee.
8. Miscellaneous
International Journal of Management, Entrepreneurship, Social Science and Humanities will publish the article (or have it published) in the journal if the article’s editorial process is successfully completed and International Journal of Management, Entrepreneurship, Social Science and Humanities or its sublicensee has become obligated to have the article International Journal of Management, Entrepreneurship, Social Science and Humanities may conform the article to a style of punctuation, spelling, capitalization, referencing and usage that it deems appropriate. The author acknowledges that the article may be published so that it will be publicly accessible and such access will be free of charge for the readers.
