ANALYSIS OF FINANCIAL PERFORMANCE ON GREEN CREDIT AND PROFITABILITY OF SHARIA BANKS IN INDONESIA

Abstract

Green finance aims to integrate environmental aspects into economic decisions, adjust risk perceptions to encourage environmentally friendly investments, and minimize negative impacts on nature. One form of green finance in the banking sector is green credit, which is successfully implemented in several countries such as China. This study provides insight into the development of green credit in the banking sector, especially Islamic banking in Indonesia. The study used secondary data from the financial statements of Islamic banks from Sharia Commercial Bank (BUS) for the period 2019-2023, with the independent variables Capital Adequacy Ratio (CAR), Operating Costs to Operating Income (BOPO), Financing to Deposit Ratio (FDR), and Non-Performing Financing (NPF). The results showed that financial performance factors do not affect profitability through green credit in Islamic banks. This finding suggests that although green credit is a positive effort in achieving sustainability, its effectiveness in increasing the profitability of Islamic banks in Indonesia is still limited.