Green Banking and Performance: The Role of Foreign and Public Ownership

Etikah Karyani, Vangi Vinanda Obrien

Abstract


This study aims at examining the effect of green banking practice on bank performance with foreign and public ownerships as moderating variables. Data were collected from 14 Indonesian banking or 98 bank-year observations. The sample banks were participated in the green banking pilot project and listed in investasi hijau (or green investment) index between 2012 and 2018. Using the ordinary least square (OLS) model, this study demonstrates that green banking practices have a negative impact on bank profitability, but a positive impact on bank value. Meanwhile, public ownership strengthens the negative effect of green banking practice on profitability. Foreign ownership weakens the positive impact of green banking practice on bank value. Thus, stakeholders can use green banking practices as a consideration in making financial decisions as it has influence for bank performance.

Keywords


Firm value; green banking; foreign bank; ownership; profitability

Full Text:

PDF

References


Aubhi, R. U. H. (2016). The Evaluation of Green Banking Practices in Bangladesh. Researh Journal of Finance and Accounting, 7(7), 93–125.

Bose, S., Podder, J., & Biswas, K. K. (2017). Philanthropic Giving, Market-Based Performance and Institutional Ownership: Evidence from An Emerging Economy. British Accounting Review. 49(4), 429-444.

Budiasih, I. G. A. N., & Sukoharsono, E. G. (2012). Accounting Practices and The Use of Money in The Reign of King Udayana in Bali : An Ethnoarcheological Approach. Simposium Nasional Akuntansi XV, Banjarmasin, (September), 20–23.

Carnevale, C. (2014). Sustainability Reporting and Varieties of Capitalism. Sustainable Development, 22.

Chen, K. H., & Metcalf, R. W. (1980). The Relationship Between Pollution Control Record and Financial Indicators Revisited. The Accounting Review, 55, 168–177.

Clark, L. A., & Watson, D. (1995). Constructing Validity: Basic Issues in Objective Scale Development. Psychological Assessment.

Danford, C. (2017). Impact of National Government Ownership on ESG Performance in The EU. Thesis. School of Business. https://aaltodoc.aalto.fi/bitstream.

Dialysa, F. (2015). Green Banking : One Effort To Achieve The Principle of GCG. First International Conference on Economics and Banking.

Doś, A. (2018). The Effect of Foreign Equity Ownership on Corporate Social Responsibility: Empirical Evidence from Poland. Financial Internet Quarterly, 13(3), 66-75.

Goldar, B., & Banga, R. (2007). Impact of Trade Liberalization on Foreign Direct Investment in Indian Industries. Asia-Pacific Research and Training Network on Trade (ARTNeT).

Green Banking Report. (2016). What Is Green Banking? http://greenbankreport.com/eco-friendly-banking/whatis-green-banking.

Gupta, R. K. (2003). Sustainability of Post‐Green Revolution Agriculture: The Rice–Wheat Cropping Systems of the Indo‐Gangetic Plains and China. ASA Special Publication.

Hackston, D., & Milne, M. (1996). Some Determinants of Social and Environmental Disclosure in New Zealand Companies. Accounting Auditing & Accountability Journal, 9, 77–108.

Hamilton, J. T. (1995). Testing For Environmental Racism: Prejudice, Profits, Political Power? Journal of Policy Analysis and Management, 14, 107–132.

Handajani, L., Rifai, A., & Husnan, L. H. (2019). Kajian Tentang Inisiasi Praktik Green Banking Pada Bank BUMN. Jurnal Economia, 15(1), 1–16.

Hart, S. L., & Ahuja, G. (1995). Does It Pay To Be Green? An Empirical Examination Of The Relationship Between Emission Reduction And Firm Perormance. Business Strategy and the Environment, 5(1), 30–37.

Hinson, R., Boateng, R., & Madichie, N. (2010). Corporate Social Responsibility Activity Reportage on Bank Websites in Ghana. The International Journal of Bank Marketing, 28, 498–518.

Islam, S., & Das, P. C. (2013). Green Banking Practices in Bangladesh. IOSR Journal of Business and Management, 8(3), 39–44. https://doi.org/10.9790/487x-0833944

Khanna, T., & Palepu, K. (2000). The Right Way to Restructure Conglomerates in Emerging Markets. Business Research for Business Leaders.

Khan, A., Muttakin, M. B., & Siddiqui, J. 2012. Corporate Governance and Corporate Social Responsibility Disclosures: Evidence from An Emerging economy. Journal of Business Ethics, 114(2), 207–223

Kim, W. S, Park, K, & Lee, S. H. (2018). Corporate Social Responsibility, Ownership Structure, and Firm Value: Evidence from Korea. Sustainability, 10, 1-20.

Klassen, R. D., & Mclaughlin, C. (1996). The Impact of Environmental Management on Firm Performance. Management Science, 42.

Korzeb, Z. & Samaniego-Medina, R. (2019). Sustainability Performance: A Comparative Analysis in the Polish Banking Sector. Sustainability, 11, 653. doi:10.3390/su11030653

Kuada, J. & Hinson, R. (2012). Corporate Social Responsibility (CSR) Practices of Foreign and Local Companies in Ghana. Thunderbird International Business Review, 54:521‑536. https://doi.org/10.1002/tie.21481

Lako, A. L. (2014). Green economy, Jakarta, Erlangga

Meng, X. H., Zeng, S. X., Xie, X. M., & Qi, G. Y. (2016). The Impact of Product Market Competition on Corporate Environmental Responsibility. Asia Pacific Journal of Management, 33(1): 267–291.

Miles, M. P., & Covin, J. . (2000). Environmental Marketing: A Source of Reputational, Competitive, and Financial Advantage. Journal of Business Ethics, 23, 299–311.

Mili, M., Sahut, J. M., Trimeche, H., & Teulon, F. (2017). Determinants of The Capital Adequacy Ratio of Foreign Banks’ Subsidiaries: The Role of Interbank Market and Regulation. Research in International Business and Finance, 42, 442–453. https://doi.org/10.1016/j.ribaf.2016.02.002

Mitic, P., & Rakic, S. (2017). Social Finance and Social Banking - A Path Towards a More Sustainabile Future. The International Institute for Development Studies, 108–119.

Nanda, S., & Bihari, S. C. (2012). Profitability in Banks of India: An Impact Study of Implementation of Green Banking. International Journal of Green Economics, 6(3), 217–225. https://doi.org/10.1504/IJGE.2012.050969

Nyarku, K. M. & Hinson, R. E. (2018). Corporate Social Responsibility Reporting of Banks Operating in Ghana. African Journal of Business Ethics, 11(2), 19‑36.

Oh, W. Y., Chang, Y. K., & Martynov, A. (2011). The effect of Ownership Structure on Corporate Social Responsibility: Empirical Evidence from Korea. Journal of Business Ethics, 104, 283–297. https://doi.org/10.1007/s10551-011-0912-z

Oliveira, J., Rodrigues, L. L., & Craig, R. (2011). Technical Note: Company Risk-related Disclosures in a Code Law Country: A Synopsis. Australasian Accounting Business and Finance Journal and Authors, 7.

Peraturan Bank Indonesia (PBI). (2012). PBI Nomor 14/ 15 /PBI/2012: Penilaian Kualitas Aset Bank Umum. https://www.bi.go.id/id/peraturan/perbankan.

Peraturan Otoritas Jasa Keuangan (POJK). (2017). POJK Nomor 51/POJK.03/2017: Penerapan Keuangan Berkelanjutan bagi Lembaga Jasa Keuangan, Emiten, dan Perusahaan Publik. https://ojk.go.id/id/kanal/perbankan/regulasi/peraturan-ojk.

Porter, M.E. (1990). The Competitive Advantage of Nations. New York: Free Press, MacMillan.

Porter, M. E., & Linde, C. van der. (1995). Toward a New Conception of the Environment-Competitiveness Relationship. The Journal of Economic Perspectives, 9, 97–118.

Rahaman, M. M., Hoque, M. S., & Roy, M. (2018). Green Financing and Its Impact on Profitability of the Banks : An Empirical Study on Banking Sector of Bangladesh. Metropolitan Univesity Journal, 6.

Rajput, N., Arora, M. S., & Khanna, M. A. (2013). An Empirical Study of Impact of Environmental Performance on Financial Performance in Indian Banking Sector. International Journal of Business and Management Invention, 2(9), 19–24.

Ramila, M., & Gurusamy, S. (2016). Impact of Green Banking Initiatives Adopted by Foreign Banks on Profitability. The Journal of Indian Management & Strategy, 21.

Ratnasari, T. (2018). Model Integrasi untuk Mengukur Dampak dari Green Banking dan Kinerja Keuangan terhadap Profitabilitas Bank, 1–15.

Regehr, K. & Sengupta, R. (2016). Has the Relationship between Bank Size and Profitability Changed? Economic Review, Federal Reserve Bank of Kansas City, issue Q II, 49-72.

Responsi Bank Indonesia. (2014). Mengawal Green Banking Indonesia dalam Kerangka Pembangunan Berkelanjutan. Perkumpulan Prakarsa.

Revelli, C. & Viviani, J.L. (2015). Financial Performance of Socially Responsible Investing (SRI): What Have We Learned? A Meta-Analysis. Business Ethics Europe Review, 24, 158–185.

Rosdwianti, M. K., & Dzulkirom AR, M. (2016). Pengaruh Corporate Social Responsibility (CSR) Terhadap Profitabilitas Perusahaan. Jurnal Administrasi Bisnis S1 Universitas Brawijaya, 38(2), 16–22.

Shaumya, & Arulrajah, A. (2017). The Impact of Green Banking Practices on Bank’s Environmental Performance: Evidence from Sri Lanka. Journal of Finance and Bank Management, 5(1), 77–90. https://doi.org/10.15640/jfbm.v5n1a7

Simpson, W. G., & Kohers, T. (2002). The Link Between Corporate Social and Financial Performance: Evidence from the Banking Industry. Journal of Business Ethics, 35, 97–109.

Thevanes, & Arulrajah, A. (2016). The Relationships Among Environmental Training, Environmental Attitude of Employee and Environmental Orientation of Organization. Proceedings of 3rd Jaffna University International Research Conference (JUICE), 61–67.

Turner, J. D., & Arun, T. G. (2004). Corporate Governance of Banks in Developing Economies: Concepts and Issues. Corporate Governance An International Review, 12, 371–377.

Uwuigbe, U., Uwuigbe, O. R., Teddy, O., & Emmanuel, O. (2018). Sustainability Reporting and Firm Performance: A bi-Directional Approach. Academy of Strategic Management Journal, 17, 1–16.

Velnampy. (2013). Corporate Governance and Firm Performance: A Study of Sri Lankan Manufacturing Companies. Journal of Economics and Sustainable Development, 4(3), 228–236.

Weber, O. (2016). the Impact of Green Banking Guidelines on the Sustainability Performance of Banks. Cigi, (79), 8.

Zu, Liangrong. (2019). Purpose-Driven Leadership for Sustainable Business: From the Perspective of Taoism. International Journal of Corporate Social Responsibility, 4(1). 1-31.




DOI: https://doi.org/10.24815/jdab.v7i2.17150

Refbacks

  • There are currently no refbacks.


Published by:

Accounting Department supported by IAI KAPd Wilayah Aceh
Faculty of Business and Economics
Syiah Kuala University
Kopelma Darussalam, Banda Aceh, Indonesia - 23111
ISSN: 2355-9462, E-ISSN: 2528-1143

 

Creative Commons License
Jurnal Dinamika Akuntansi dan Bisnis by Prodi Akuntansi Universitas Syiah Kuala is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
Based on a work at http://www.jurnal.unsyiah.ac.id/JDAB/index.