The Impact of Green Credit, Green CSR, and Digital Financial Inclusion on Profitability in ASEAN Banks

Abstract

Aims: This study aims to (1) examine the positive effect of green credit on bank performance; (2) examine the positive effect of green corporate social responsibility (green CSR) on bank performance; (3) examine the negative effect of digital financial inclusion on bank performance. Study Design:  This is a quantitative study analyzed using EViews software. Place and Duration of Study: The study uses panel data covering the period from 2019 to 2022 in the ASEAN 5 region Methodology: The data used are secondary data obtained from sustainability financial reports. The sampling technique employed is purposive random sampling, with a total sample of 24 banks. Results: The findings of this study indicate that (1) Green credit has a significant positive effect on profitability; (2) Green CSR does not have a significant positive effect on profitability; (3) Digital financial inclusion (DFI) does not have a significant negative effect on profitability. Conclusion: The findings indicate that green credit has a positive effect on bank performance, suggesting that green credit has the potential to enhance profitability when strategically implemented to support sustainable business practices. In contrast, green CSR does not show a significant effect on bank performance, indicating that environmentally oriented corporate social responsibility initiatives have not been fully integrated into banking business strategies or have yet to generate measurable financial value in the short term. Meanwhile, digital financial inclusion does not have a negative effect as initially assumed, but instead shows a positive impact on profitability, suggesting that leveraging digital technology to expand access to financial services can be a new source of growth for the banking sector amid digital transformation and efforts to promote financial inclusion.