Article Sidebar

Download
Full text PDF
Statistic
Read Counter : 113 Download : 94

Downloads

Download data is not yet available.

Main Article Content

Abstract

This study examines the moderating effect of sustainable competitive advantage on the relationship between sustainable finance and bank profitability of Indonesian conventional commercial banks from 2019 to 2022. The study has found that sustainable finance has a positive impact on bank profitability (ROA and ROE). However, the impact of sustainable competitive advantage on bank profitability was only positive with ROA, suggesting that ROA is a more effective indicator of bank profitability for this study. Furthermore, the study indicates that the impact of sustainable finance on bank profitability (both ROA and ROE) is diminished by the delay in the implementation of sustainability reporting during the COVID-19 reporting period. The results of this study are likely to encourage banks to increase their sustainable finance and focus on improving the quality of sustainability reporting in order to gain a competitive advantage in the current banking industry landscape in Indonesia.

Keywords

sustainable competitive advantage profitability sustainable report KBMI sustainable financing

Article Details

License

Copyright (c) 2024 Riyan Harbi Valdiansyah

Creative Commons License

This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Authors who publish with this journal agree to the following terms:

  1. Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution License that allows others to share the work with an acknowledgment of the work's authorship and initial publication in this journal.
  2. Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the journal's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgment of its initial publication in this journal.
  3. Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work (See The Effect of Open Access). 
How to Cite
Valdiansyah, R. H., Juanita Agustina R, & Iswahyudi, A. (2024). The Role of Sustainable Competitive Advantage on Sustainable Finance and Bank Profitability. Journal of Contemporary Accounting, 6(2), 83–96. https://doi.org/10.20885/jca.vol6.iss2.art2
Download Citation
Endnote/Zotero/Mendeley (RIS)
BibTeX

References

  1. Ahmadzai, A. N., Ahmad, F., Imran, M., & Zamani, M. (2023). Impact of Corporate Social Responsibility on Firm Reputation and Financial Performance: The Moderating Role of Servant Leadership. Kardan Journal of Economics and Manangement Sciences. https://doi.org/10.31841/kjems.2023.146
  2. Alalie, H. M., Harada, Y., & Noor, I. M. (2018). The Challenges of Creating Sustainable Competitive Advantage in the Banking Industry in Iraq. World Journal of Business and Management, 4(2), 1. https://doi.org/10.5296/wjbm.v4i2.13871
  3. Andaiyani, S., Muthia, F., & Novriansa, A. (2023). Green credit and bank performance in Indonesia. Diponegoro International Journal of Business, 6(1), 50-56. https://doi.org/10.14710/dijb.6.1.2023.50-56
  4. Andrieș, A. M., & Sprincean, N. (2023). ESG performance and banks’ funding costs. Finance Research Letters, 54, 103811. https://doi.org/10.1016/j.frl.2023.103811
  5. Aristei, D., & Gallo, M. (2019). Loan loss provisioning by Italian banks: Managerial discretion, relationship banking, functional distance, and bank risk. International Review of Economics & Finance, 60, 238–256. https://doi.org/10.1016/j.iref.2018.10.022
  6. Bassett, W. F., & Brady, T. F. (2001). The Economic Performance of Small Banks, 1985-2000. Federal Reserve Bulletin, 87(11), 0. https://doi.org/10.17016/bulletin.2001.87-11
  7. Basuki, A. T. (2016). Analisis Regresi dalam Penelitian Ekonomi and Bisnis: Dilengkapi Aplikasi SPSS and Eviews. Rajawali Pers.
  8. Belal, A. R. (2016). Corporate Social Responsibility Reporting in Developing Countries. Routledge. https://doi.org/10.4324/9781315574332
  9. Belasri, S., Gomes, M., & Pijourlet, G. (2020). Corporate social responsibility and bank efficiency. Journal of Multinational Financial Management, 54, 100612. https://doi.org/10.1016/j.mulfin.2020.100612
  10. Bommel, Z. van. (2023). Sustainable Finance in Financial Institutions: A Literature Review of The Integration of ESG Factors and Balancing Profitability Goals. University of Twente.
  11. Broadstock, D. C., Matousek, R., Meyer, M., & Tzeremes, N. G. (2020). Does corporate social responsibility impact firms’ innovation capacity? The indirect link between environmental & social governance implementation and innovation performance. Journal of Business Research, 119, 99–110. https://doi.org/10.1016/j.jbusres.2019.07.014
  12. Buallay, A.M. (2022). Relevant Theories to Sustainability Reporting. International Perspectives on Sustainability Reporting, 61-76. https://doi.org/10.1108/978-1-80117-856-320221005
  13. Buallay, A., Saudagaran, S., Fadel, S. M., & Alajmi, J. (2020). Sustainability reporting and bank performance after financial crisis. Competitiveness Review, 31(4), 747–770. https://doi.org/10.1108/cr-04-2019-0040
  14. Buallay, A., Fadel, S. M., Al-Ajmi, J. Y., & Saudagaran, S. (2020). Sustainability reporting and performance of MENA banks: is there a trade-off? Measuring Business Excellence, 24(2), 197–221. https://doi.org/10.1108/MBE-09-2018-0078
  15. Carroll, A. B. (1999). Corporate Social Responsibility. Business & Society, 38(3), 268–295. https://doi.org/10.1177/000765039903800303
  16. Crossley, Richard & Elmagrhi, Mohamed & Ntim, Collins. (2021). Sustainability and legitimacy theory: The case of sustainable social and environmental practices of SMEs. Business Strategy and the Environment. https://doi.org/30. 10.1002/bse.2837
  17. Cui, J., Jo, H., & Na, H. (2018). Does Corporate Social Responsibility Affect Information Asymmetry? Journal of Business Ethics, 148(3), 549–572. https://doi.org/10.1007/s10551-015-3003-8
  18. Dhaliwal, D., Li, O. Z., Tsang, A., & Yang, Y. G. (2014). Corporate social responsibility disclosure and the cost of equity capital: The roles of stakeholder orientation and financial transparency. Journal of Accounting and Public Policy, 33(4), 328–355. https://doi.org/10.1016/j.jaccpubpol.2014.04.006
  19. Digar, B. (2023). Does ESG Improve Firm Performance? Evidence from Indian Companies. International Journal of Scientific Research in Engineering and Management, 07(08). https://doi.org/10.55041/ijsrem25224
  20. El Khoury, R., Nasrallah, N., & Alareeni, B. (2023). ESG and financial performance of banks in the MENAT region: concavity–convexity patterns. Journal of Sustainable Finance & Investment, 13(1), 406–430. https://doi.org/10.1080/20430795.2021.1929807
  21. Elalfy, A., & Weber, O. (2019). Corporate sustainability reporting. The case of the banking industry. In CIGI Papers No. 21 (CIGI Papers Series).
  22. Ferdinand, A. T. (2013). Company Specific Advantage and Sustainable Competitive Advantage. SSRN. https://doi.org/10.2139/ssrn.2340249
  23. Freeman, R. E. E., & McVea, J. (2001). A Stakeholder Approach to Strategic Management. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.263511
  24. Freeman, R. E., Wicks, A. C., & Parmar, B. (2004). Stakeholder Theory and “The Corporate Objective Revisited.” Organization Science, 15(3), 364–369. https://doi.org/10.1287/orsc.1040.0066
  25. Galant, A., & Cadez, S. (2017). Corporate social responsibility and financial performance relationship: a review of measurement approaches. Economic Research-Ekonomska Istraživanja, 30(1), 676–693. https://doi.org/10.1080/1331677X.2017.1313122
  26. Gutiérrez-Ponce, H., & Wibowo, S. A. (2023). Do Sustainability Activities Affect the Financial Performance of Banks? The Case of Indonesian Banks. Sustainability, 15(8), 6892. https://doi.org/10.3390/su15086892
  27. Healy, P., Serafeim, G., Srinivasan, S., & Yu, G. (2014). Market competition, earnings management, and persistence in accounting profitability around the world. Review of Accounting Studies, 19(4), 1281–1308. https://doi.org/10.1007/s11142-014-9277-8
  28. POJK No. 51/POJK.03/2017 concerning the Implementation of Sustainable Finance for Financial Services Institutions, Issuers and Public Companies, Pub. L. No. 51/POJK.03/2017 (2017). https://ojk.go.id/id/regulasi/Documents/Pages/Penerapan-Keuangan-Berkelanjutan-bagi-Lembaga-Jasa-Keuangan,-Emiten,-dan-Perusahaan-Publik/SALPOJK 51 - keuangan berkelanjutan.pdf
  29. POJK No. 12/POJK.03/2021 concerning Commercial Banks, Pub. L. No. 12/POJK.03/2021 (2021). https://ojk.go.id/id/regulasi/Documents/Pages/Bank-Umum/POJK 12 - 03 -2021.pdf
  30. Indonesia Finance Services Authority. (2021, January 15). Sustainable Finance Roadmap Phase II (2021-2025).
  31. Kamande, E., Evusa, Z., & Ariemba, J. (2019). The Effect of Bank Specific Factors on Financial Performance of Commercial Banks in Kenya. Research Journal of Finance and Accounting, 10(20). https://doi.org/10.7176/rjfa/10-20-14
  32. Maama, H. (2021). Achieving Financial Sustainability in Ghana’s Banking Sector: Is Environmental, Social and Governance Reporting Contributive? Global Business Review, 097215092110443. https://doi.org/10.1177/09721509211044300
  33. Malini, H. (2021). Islamic Bank Sustainability in Indonesia: Value and Financial Performances based on Social Responsibility and Green Finance. Cepalo, 5(2), 93–106. https://doi.org/10.25041/cepalo.v5no2.2360
  34. Marliza, M. (2024). Morning Sustainalytics: Environmental, Social, Governance and Financial Leverage Risk Ratings on the Financial Performance of Mining Companies in Indonesia. International Journal of Engineering Business and Social Science, 2(04), 1164–1175. https://doi.org/10.58451/ijebss.v2i04.149
  35. McWilliams, A., & Siegel, D. (2001). Corporate Social Responsibility: A Theory of the Firm Perspective. The Academy of Management Review, 26(1), 117. https://doi.org/10.2307/259398
  36. Mirovic, V., Kalas, B., Djakovic, M., Milicevic, N., Djokic, I., & Djokic, N. (2023). Green Loans in Bank Portfolio: Financial and Marketing Implications. Sustainability, 15(7), 5914. https://doi.org/10.3390/su15075914
  37. Mnjala, D. M. (2014). The Challenges of Creating Sustainable Competitive Advantage in the Banking Industry in Kenya. IOSR Journal of Business and Management, 16(4), 82–87. https://doi.org/10.9790/487x-16418287
  38. Nizam, E., Ng, A., Dewandaru, G., Nagayev, R., & Nkoba, M. A. (2019). The impact of social and environmental sustainability on financial performance: A global analysis of the banking sector. Journal of Multinational Financial Management, 49, 35–53. https://doi.org/10.1016/j.mulfin.2019.01.002
  39. Nugrahaeni, R., & Muharam, H. (2023). The Effect of Green Credit and Other Determinants of Credit Risk Commercial Bank in Indonesia. Journal of Business Social and Technology, 4(2), 135–147. https://doi.org/10.59261/jbt.v4i2.148
  40. OECD. (2020). Sustainable and Resilient Finance: OECD Business and Finance Outlook 2020.
  41. Ospina-Patiño, C., Marín-Rodríguez, N. J., & González-Ruiz, J. D. (2023). Sustainable Practices and Financial Performance in Latin America: An Analysis of Environmental Scores. Revista CEA, 9(21), e2792. https://doi.org/10.22430/24223182.2792
  42. Pertseva, S. Y. (2022). Socially Responsible Investing in the Context of a Green Economy. In Industry 4.0 (pp. 91–103). Springer International Publishing. https://doi.org/10.1007/978-3-030-79496-5_8
  43. PricewaterhouseCooper. (2023). Trends and Directions of Indonesia’s Sustainability Report in the Future. https://www.pwc.com/id/en/media-centre/press-release/2023/indonesian/tren-dan-arah-sustainability-report-indonesia-di-masa-mendatang.html
  44. Rendtorff, J. D., & Bonnafous-Boucher, M. (2016). Stakeholder Theory: A Model for Strategic Management (Springer B). Springer Science+Business Media.
  45. Rifai, A., Akram, A., & Handajani, L. (2021). Sustainable Banking and Bank Performance. Jurnal Ilmiah Akuntansi Dan Bisnis, 16(1), 169. https://doi.org/10.24843/jiab.2021.v16.i01.p12
  46. Saeed, M. M. (2023). Financial management practices, competitive advantage and loan performance of selected microfinance institutions (MFIs) in Ghana. Business Strategy & Development, 6(4), 1018–1036. https://doi.org/10.1002/bsd2.295
  47. Setiawan, S. (2021, December 29). Sustainable Financing for Climate Change. Detiknews.
  48. Shobhwani, K., & Lodha, S. (2023). Impact of ESG Risk Scores on Firm Performance: An Empirical Analysis of NSE-100 Companies. Asia-Pacific Journal of Management Research and Innovation, 19(1), 7–18. https://doi.org/10.1177/2319510x231170910
  49. Simamora, N. (2023). Banking Efforts to Enlarge Credit Portfolio to the Green Sector. https://keuangan.kontan.co.id/news/upaya-perbankan-perbesar-portofolio-kredit-ke-sektor-hijau
  50. Supriyadi, A., Np, M. G. W. E., & Saifi, M. (2024). The Effect of Financial Literacy on Loan Repayment Performance of MSMEs: A Literature Review. KnE Social Sciences. https://doi.org/10.18502/kss.v9i11.15779
  51. Thi Thu Loan, B., Thi Lan Anh, T., & Hoang, T. (2024). ESG disclosure and financial performance: Empirical study of Vietnamese commercial banks. Banks and Bank Systems, 19(1), 208–220. https://doi.org/10.21511/bbs.19(1).2024.18
  52. Veeravel, V., Murugesan, V. P., & Narayanamurthy, V. (2024). Does ESG disclosure really influence the firm performance? Evidence from India. The Quarterly Review of Economics and Finance, 95, 193–202. https://doi.org/10.1016/j.qref.2024.03.008
  53. Von Wallis, M., & Klein, C. (2015). Ethical requirement and financial interest: a literature review on socially responsible investing. Business Research, 8(1), 61–98. https://doi.org/10.1007/s40685-014-0015-7
  54. Walzer, M., Firmansyah, A., & Tamimi, A. H. A. (2024). Are Banking Financial Performances and Green Banking Disclosure Associated with Bank Profitability? Accounting Student Research Journal, 3(1), 55–71. https://doi.org/10.62108/asrj.v3i1.7645
  55. Zielińska-Lont, K. (2020). Sustainable finance initiatives and their impact on financial stability. Financial Law Review, 20(4), 118–133. https://doi.org/10.4467/22996834FLR.20.024.13096