The Effect of Green Finance and Digital Transformation on Financial Performance with the Sustainability Disclosure Index as a Mediating in KBMI 3 and 4 Banks
Abstract
This research aims to analyze the effect of green finance and digital transformation on the financial performance of KBMI 3 and KBMI 4 banks during the 2019–2025 period, with the Sustainability Disclosure Index (SDI) as a mediating variable. The population of this study consists of all KBMI 3 and KBMI 4 banks, totaling 18 banks. After purposive sampling was conducted, the research sample obtained amounted to 13 banks. The research was analyzed using panel data regression. The results show that green finance has a significant positive effect on financial performance. Digital transformation has a significant negative effect on financial performance. SDI has a significant positive effect on financial performance. Green finance has a significant positive effect on SDI. Digital transformation has a significant positive effect on SDI. The mediation test shows that SDI does not mediate the effect of green finance on financial performance. SDI mediates the effect of digital transformation on financial performance.
Keywords
References
Ariefianto, M. D., French, J. J., & Gurdgiev, C. (2025). Green regulation, market power, and geopolitical risk: the case of Indonesian banks. Finance Research Letters, 85(PE), 108243. https://doi.org/10.1016/j.frl.2025.108243
Cao, C., & Chen, Q. (2024). Corporate greenwashing unexpectedly caused by the green credit policy: A comparison between environmental sustainability information disclosure and actual environmental protection investment from China's listed companies.
Cardillo, M. A. dos R., & Basso, L. F. C. (2025). The ESG disclosure–performance paradox in BRICS: Evidence from shareholder returns and firm value. Sustainable Futures, 10, 101510. https://doi.org/10.1016/j.sftr.2025.101510
Chen, J. (2025). Impact of green credit on the performance of commercial banks: Evidence from 42 Chinese listed banks.
Garg, M., & Kumar, P. (2024). Harnessing digital technologies for triple bottom line sustainability in the banking industry: a bibliometric review. Future Business Journal, 10(1), 1–23. https://doi.org/10.1186/s43093-024-00336-2
Global Reporting Initiative. (2021). GRI 1: Foundation 2021. https://www.globalreporting.org
Gutierrez-Ponce, H., & Wibowo, S. A. (2023). Do sustainability activities affect the financial performance of banks? The case of Indonesian banks.
Hasan, S. M., Islam, K. A., Tawfiq, T. T., & Saha, P. (2025). Triple pillars of sustainable finance: The role of green finance, CSR, and digitalization on bank performance in Bangladesh. https://doi.org/10.21511/bbs.20(1).2025.04
Mavlutova, I., Spilbergs, A., Verdenhofs, A., Natrins, A., & Arefjevs, I. (2023). Digital transformation as a driver of the financial sector sustainable development: An impact on financial inclusion and operational efficiency.
Meraj, M., Afzal, M., Chauhan, J., & Kaur, M. (2026). Exploring the role of CSR, FinTech, and green finance in achieving SDGs in terms of sustainable performance of banks.
Morea, D., Iazzolino, G., Giglio, C., & Bruni, M. E. (2025). The role of digitalization and ESG on financial performance: An empirical analysis on the Energy and Utilities sectors. https://doi.org/10.1371/journal.pone.0314078
Nguyen-Thi-Huong, L., Nguyen-Viet, H., Nguyen-Phuong, A., & Van, D. (2023). How does digital transformation impact bank performance? Cogent Economics & Finance, 11(1). https://doi.org/10.1080/23322039.2023.2217582
Riyanti, R. S., Wulandari, P., & Prijadi, R. (2025). Green loans: Navigating the path to sustainable profitability in banking. Economic Analysis and Policy, 85, 1613–1624. https://doi.org/10.1016/j.eap.2025.01.028
Sebastiao, A. M., Tavares, M. C., & Azevedo, G. (2024). Evolution and challenges of sustainability reporting in the banking sector: A systematic literature review.
Siswanti, I., Alden, H., Ferry, Y., Embun, C., Baligh, P., & Hasan, A. (2024a). Unlocking sustainability: exploring the nexus of green banking, digital transformation, and financial performance with foreign ownership moderation. Discover Sustainability. https://doi.org/10.1007/s43621-024-00597-5
Siswanti, I., Riyadh, H. A., Nawangsari, L. C., Yusoff, Y. M., & Wibowo, M. W. (2024b). The impact of digital transformation for sustainable business: the mediating role of corporate governance and financial performance. Cogent Business & Management, 11(1). https://doi.org/10.1080/23311975.2024.2316954
Ulfa, R., Isnurhadi, & Yuliani. (2025). Green banking and financial inclusion as strategic drivers of financial performance in the Indonesian banking sector, 4, 282–293.
Zhang, S. (2026). The influence of digital transformation on Chinese bank profitability performance. https://doi.org/10.1371/journal.pone.0340249
Zulkarnaini, Utami, N. K. C. D., Pranogyo, A. B., & Andini, N. W. L. (2025). The influence of sustainability reports on financial performance in banking companies listed on the Indonesia Stock Exchange (IDX) for the 2016-2023 period, 1, 1–14.
DOI: https://doi.org/10.17509/seict.v7i1.105751
Refbacks
- There are currently no refbacks.
Copyright (c) 2026 Journal of Software Engineering, Information and Communication Technology (SEICT)
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
Journal of Software Engineering, Information and Communicaton Technology (SEICT),
(e-ISSN:2774-1699 | p-ISSN:2744-1656) published by Program Studi Rekayasa Perangkat Lunak, Kampus UPI di Cibiru.
Indexed by.
