FINANCING FOR SUSTAINABILITY AND ITS RELATIONSHIP WITH BANK PERFORMANCE AND ESG PERFORMANCE: CASE OF G-20 COUNTRIES
Unstable economic conditions and high uncertainty resulting from the COVID-19 pandemic and geopolitical tensions between Russia and Ukraine have made it difficult for global economic recovery. The G-20 as a forum for multilateral cooperation consisting of countries with major economies in the world...
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| Format: | Theses |
| Language: | Indonesia |
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| Online Access: | https://digilib.itb.ac.id/gdl/view/72752 |
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| Institution: | Institut Teknologi Bandung |
| Language: | Indonesia |
| Summary: | Unstable economic conditions and high uncertainty resulting from the COVID-19 pandemic and geopolitical tensions between Russia and Ukraine have made it difficult for global economic recovery. The G-20 as a forum for multilateral cooperation consisting of countries with major economies in the world and considered representatives of the global economy agreed to commit to creating a sustainable economy. Banks, which play an important role in the economy, are asked to support the implementation of a sustainable economy through the disbursement of sustainable financing. For the distribution of sustainable financing, the bank expects a positive impact on financial performance. It can attract investors because one of the main priorities of investors at this time is a sustainable business.
In this study, the authors wanted to assess the impact of the disbursement of sustainable financing on financial performance and ESG performance in the banking industry. The author uses 68 banks from G-20 member countries and several countries in ASEAN that are not included in the G-20 from 2019 to 2021 performance. In assessing the impact of the disbursement of sustainable financing on financial performance (using the ratio of nonperforming loans, net interest margin, and capital adequacy ratio as financial performance variables), the authors use panel data regression, while to assess the impact of sustainable financing distribution on ESG performance using binary logistic regression.
The results show that there is a significant positive impact from the distribution of sustainable financing on net interest margins and the capital adequacy ratio, and a significant negative impact on the non-performing loans ratio. In addition, this study's results also show a significant positive impact on improving ESG performance. This shows that by the disbursement of sustainable financing, banks will get a positive impact on financial performance and can attract investors.
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