THE ROLE OF GREEN BANKING AND FINANCIAL PERFORMANCE ON PROFITABILITY OF SHARIA COMMERCIAL BANK : CASE IN INDONESIA

Abstract

This research seeks to examine the impact of green banking on the profitability of Islamic Commercial Banks in Indonesia from 2019 to 2023. Environmental performance is measured using water, fuel oil, and electricity energy efficiency indicators while financial performance is assessed using BOPO and NPF indicators. The purpose of calculating Islamic commercial banks' ROA is to assess their profitability. The data used in this research are secondary data collected using purposive sampling approaches. A quantitative approach was utilised for data analysis, namely panel data, and the eviews 10 software was used for data processing. For the years 2019–2023, we culled data from eight Islamic commercial banks' annual reports and sustainability reports that were on file with the Financial Services Authority. The research found no significant relationship between ROA and environmental performance as evaluated by fuel oil, water, and electricity efficiency. When it comes to ROA, the BOPO component is significantly negative, whereas NPF hasn't made a dent.