The Relationship Between Green Finance and Financial Distress
Empirical Research on Banking in Indonesia
Keywords:
Green, Distress, Banking, Fluctuation, Financial Contraction
Abstract
An increase in green finance will only occur because of the banking intermediary function which can control financial distress. This research aims to measure banking financial distress in order to improve green finance, especially when macroeconomic pressure occurs. This research found that there was a negative period due to financial distress, resulting in a strong decline in green finance. These findings use the Ed Waves Index Development Model based on Bank Indonesia's quarterly financial reports from 2019 to 2023. The findings are categorized into 2 parts, the first part consists of periods 1, 3 and 5 showing a negative relationship with financial distress pressure with minimal response to green finance, while the second part consisting of periods 2 and 4 shows a positive relationship indicating that financial distress pressures respond optimally to green finance. This research contributes to banking financial activities in managing intermediary fluctuations in order to improve green finance in Indonesia.
References
Baharudin, B. S., & Arifin, Z. (2023). The Effect of Green Finance on Bank Value: a Case from Indonesia. Journal of Social Research, 2(8), 2817–2825. https://doi.org/10.55324/josr.v2i8.1354
Basmar, E., Campbell III, C. M., & Basmar, E. (2022). The Climate Changes In Banking Credit To The Financial Cycle During The Covid-19 Pandemic In Indonesia. 9(1), 173–182.
Basmar, E., Campbell III, C. M., & Basmar, E. (2021). Bank Credit in Financial Cycle in Indonesia. International Journal of Education and Sosiotechnology (IJES), 00(00), 0–00. https://journal.kapin.org/index.php/IJES
Basmar, E., Campbell III, C. M., & Basmar, E. (2022). Bank Credit in Financial Cycle during Covid-19 Pandemic: Dilemma from Indonesia. Shirkah: Journal of Economics and Business, 7(3), 253–266. https://doi.org/10.22515/shirkah.v7i3.484
Basmar, E., III, C. M. C., & Basmar, E. (2021). Is An Indonesia The Right Investment Environment After Covid-19? IOP Conference Series: Earth and Environmental Science, 737(1). https://doi.org/10.1088/1755-1315/737/1/012021
Basmar, E., S, H., Campbell III, C. M., & Basmar, E. (2022). Perilaku Kredit Perbankan Dalam Gelombang Siklus Keuangan Selama Pandemi Covid-19 Di Indonesia. POINT: Jurnal Ekonomi Dan Manajemen, 4(1), 67–80. https://doi.org/10.46918/point.v4i1.1400
Basmar, E., Salim, Z., & Rahman, A. (2023). The Snowball Effect of Financial Activity Resilience and Growth In Indonesia. 1–31.
Basmar, E., Salim, Z., Widiastuti, T., & Basmar, E. (2023). Financial Public Turbulency After Covid-19 Pandemic Pressure (CPP 19 ) : Study Case in Indonesia. 1–14.
Basmar, E., Sutriana, S., Salim, Z., Basmar, E., & Campbell III, C. M. (2022). Analisis Pergeseran Tekanan Siklus Keuangan di Indonesia. POINT: Jurnal Ekonomi Dan Manajemen, 4(2), 30–45. https://doi.org/10.46918/point.v4i2.1605
Basmar, E., Takhim, M., Basmar, E., & III, C. M. C. (2023). Shadow Banking Sharia For Financial Cycle Resilience in Indonesia. AKSES: Jurnal Ekonomi Dan Bisnis, 18(1), 24–34. https://doi.org/10.31942/akses.v18i1.8594
Burian, M. (2006). The Clean Development Mechanism, Sustainable Development and Its Assessment. HWWA Report No. 264, 264, 119 S. http://www.policypointers.org/download_3588.html
Chen, C., Zhang, Y., Bai, Y., & Li, W. (2021). The Impact Of Green Credit On Economic Growth-The Mediating Effect Of Environment On Labor Supply. PLoS ONE, 16(9 September), 1–21. https://doi.org/10.1371/journal.pone.0257612
Datta, R., & Mohajan, H. K. (2013). Green Finance Is Essential For Economic Development And Sustainability International Journal Of Research In Commerce, Economics & Management. 3(3). http://ijrcm.org.in/http://ijrcm.org.in/ii
Dikau, S., Robins, N., & Täger, M. (2020). Building a Sustainable Financial System: The State Of Practice And Future Priorities. Financial Stability Review. Banco de España, 37, 77–98.
Dikau, S., & Volz, U. (2019). Central Banking, Climate Change, and Green Finance. Handbook of Green Finance, 867, 81–102. https://doi.org/10.1007/978-981-13-0227-5_17
Donaldson, T. (2005). The Stakeholder Theory of The Modern Corportation: Concepts, Evidence And Implications. Academy of Management Review, 20(8)(January), 65–91.
Edwin Basmar, & Erlin Basmar. (2021). Financial Intermediary Dan Siklus Keuangan Di Indonesia. Accounting, Accountability, and Organization System (AAOS) Journal, 3(1), 18–30. https://doi.org/10.47354/aaos.v3i1.310
Fareed, Z., Abbas, S., Madureira, L., & Wang, Z. (2022). Green Stocks, Crypto Asset, Crude Oil And Covid19 Pandemic: Application of Rolling Window Multiple Correlation. Resources Policy, 79 (December 2021), 102965. https://doi.org/10.1016/j.resourpol.2022.102965
Fathihani, Saputra, J., Haat, M. H. C., Yusliza, M. Y., Muhammad, Z., & Bon, A. T. (2021). A Review Of Sustainable Green Finance Literature: Mini-review Approach. Proceedings of the International Conference on Industrial Engineering and Operations Management, 3194–3207.
Ficci, & Unep. (2016). Designing a Sustainable Financial System for India. April.
Harun Ur Rashid, M., & Uddin, M. M. (2018). Green Financing For Sustainability: Analysing The Trends With Challenges And Prospects In The Context of Bangladesh. International Journal of Green Economics, 12(3–4), 192–208. https://doi.org/10.1504/IJGE.2018.097876
Ivanova, N. G., Katsyuba, I. A., & Firsova, E. A. (2021). Green Finance. IOP Conference Series: Earth and Environmental Science, 689(1). https://doi.org/10.1088/1755-1315/689/1/012003
Kamran, H. W., Haseeb, M., Lecturer, S., Nguyen, V. C., & Nguyen, T. T. (2020). Climate Change And Bank Stability : The Moderating Role Of Green Financing And Renewable Energy Consumption In ASEAN Hafiz Waqas Kamran, Assistant Professor, Faculty of Business Administration, Iqra Muhammad Haseeb, Senior Lecturer, Faculty of Busine. 12(2), 3738–3751. https://osf.io/preprints/v48fa/%0Ahttps://osf.io/v48fa/download
Mikael Backman, S. (2011). Financing A Green Future Yunwen Bai. June, 2.
Mohd, S., & Kaushal, V. K. (2018). Green Finance: A Step Towards Sustainable Development. MUDRA : Journal of Finance and Accounting, 5(01). https://doi.org/10.17492/mudra.v5i01.13036
Ngo, T. Q., Doan, P. N., Vo, L. T., Tran, H. T. T., & Nguyen, D. N. (2021). The Influence Of Green Finance On Economic Growth: A COVID-19 Pandemic Effects on Vietnam Economy. Cogent Business and Management, 8(1). https://doi.org/10.1080/23311975.2021.2003008
Orellana, M. (2013). Climate Change, Sustainable Development And The Clean Development Mechanism. Realizing the Right to Development, 321–340. https://www.ohchr.org/Documents/Issues/Development/RTDBook/PartIIIChapter23.pdf
Rapi, K., Maisarah, S., Ayu, S., Rambe, F., Chandra, W., & Rahmana, A. (2021). Green Finance for The Era of Post COVID-19: A Systematic Literature. Advances in Economics, Business and Management Research, 198, 191–195.
Spinaci, S. (2021). BRIEFING: Green and Sustainable Finance. February.
Sun, Y., Bao, Q., & Taghizadeh-Hesary, F. (2023). Green Finance, Renewable Energy Development, And Climate Change: Evidence From Regions of China. Humanities and Social Sciences Communications, 10(1), 1–8. https://doi.org/10.1057/s41599-023-01595-0
Takhim, M., Sonjaya, A., Salim, Z., Rahman, A., Basmar, E., Abdullah, R., & Ali, M. (2023). The Synergy of Islamic Banks and Muslim-Friendly Tourism: Patterns of Halal Industry Development in Indonesia. International Journal of Sustainable Development and Planning, 18(9), 2723–2731. https://doi.org/10.18280/ijsdp.180911
Turner, B. (2014). Asian Development Bank Institute (Issue 457). https://doi.org/10.1007/978-1-349-67278-3_116
UNEP. (2016). The State of Sustainable Finance in the United States. February. www.unep.org/inquiry
Vercelli, A. (2019). Towards a Sustainable Financial System. Finance and Democracy, April 2015, 241–272. https://doi.org/10.1007/978-3-030-27912-7_8
Wang, Y., Liu, J., Yang, X., Shi, M., & Ran, R. (2023). The Mechanism Of Green Finance ’ S Impact On Enterprises ’ Sustainable Green Innovation. 5(July), 452–478. https://doi.org/10.3934/GF.2023018
Wang, Y., & Zhi, Q. (2016). The Role of Green Finance in Environmental Protection: Two Aspects of Market Mechanism and Policies. Energy Procedia, 104, 311–316. https://doi.org/10.1016/j.egypro.2016.12.053
Yanarella, E. J., Levine, R. S., & Lancaster, R. W. (2009). Green Versus Sustainability. Sustainability, 2(5), 296–302. https://doi.org/10.1089/SUS.2009.9838
Zhou, X., Tang, X., & Zhang, R. (2020). Impact of Green Finance On Economic Development And Environmental Quality: A Study Based On Provincial Panel Data From China. Environmental Science and Pollution Research, 27(16), 19915–19932. https://doi.org/10.1007/s11356-020-08383-2
Zioło, M., Bak, I., Cheba, K., Spoz, A., & Niedzielski, P. (2021). Sustainable Financial Systems Toward Sustainability In Finance. Institutional and Managerial Approach. Procedia Computer Science, 192, 4237–4248. https://doi.org/10.1016/j.procs.2021.09.200
Basmar, E., Campbell III, C. M., & Basmar, E. (2022). The Climate Changes In Banking Credit To The Financial Cycle During The Covid-19 Pandemic In Indonesia. 9(1), 173–182.
Basmar, E., Campbell III, C. M., & Basmar, E. (2021). Bank Credit in Financial Cycle in Indonesia. International Journal of Education and Sosiotechnology (IJES), 00(00), 0–00. https://journal.kapin.org/index.php/IJES
Basmar, E., Campbell III, C. M., & Basmar, E. (2022). Bank Credit in Financial Cycle during Covid-19 Pandemic: Dilemma from Indonesia. Shirkah: Journal of Economics and Business, 7(3), 253–266. https://doi.org/10.22515/shirkah.v7i3.484
Basmar, E., III, C. M. C., & Basmar, E. (2021). Is An Indonesia The Right Investment Environment After Covid-19? IOP Conference Series: Earth and Environmental Science, 737(1). https://doi.org/10.1088/1755-1315/737/1/012021
Basmar, E., S, H., Campbell III, C. M., & Basmar, E. (2022). Perilaku Kredit Perbankan Dalam Gelombang Siklus Keuangan Selama Pandemi Covid-19 Di Indonesia. POINT: Jurnal Ekonomi Dan Manajemen, 4(1), 67–80. https://doi.org/10.46918/point.v4i1.1400
Basmar, E., Salim, Z., & Rahman, A. (2023). The Snowball Effect of Financial Activity Resilience and Growth In Indonesia. 1–31.
Basmar, E., Salim, Z., Widiastuti, T., & Basmar, E. (2023). Financial Public Turbulency After Covid-19 Pandemic Pressure (CPP 19 ) : Study Case in Indonesia. 1–14.
Basmar, E., Sutriana, S., Salim, Z., Basmar, E., & Campbell III, C. M. (2022). Analisis Pergeseran Tekanan Siklus Keuangan di Indonesia. POINT: Jurnal Ekonomi Dan Manajemen, 4(2), 30–45. https://doi.org/10.46918/point.v4i2.1605
Basmar, E., Takhim, M., Basmar, E., & III, C. M. C. (2023). Shadow Banking Sharia For Financial Cycle Resilience in Indonesia. AKSES: Jurnal Ekonomi Dan Bisnis, 18(1), 24–34. https://doi.org/10.31942/akses.v18i1.8594
Burian, M. (2006). The Clean Development Mechanism, Sustainable Development and Its Assessment. HWWA Report No. 264, 264, 119 S. http://www.policypointers.org/download_3588.html
Chen, C., Zhang, Y., Bai, Y., & Li, W. (2021). The Impact Of Green Credit On Economic Growth-The Mediating Effect Of Environment On Labor Supply. PLoS ONE, 16(9 September), 1–21. https://doi.org/10.1371/journal.pone.0257612
Datta, R., & Mohajan, H. K. (2013). Green Finance Is Essential For Economic Development And Sustainability International Journal Of Research In Commerce, Economics & Management. 3(3). http://ijrcm.org.in/http://ijrcm.org.in/ii
Dikau, S., Robins, N., & Täger, M. (2020). Building a Sustainable Financial System: The State Of Practice And Future Priorities. Financial Stability Review. Banco de España, 37, 77–98.
Dikau, S., & Volz, U. (2019). Central Banking, Climate Change, and Green Finance. Handbook of Green Finance, 867, 81–102. https://doi.org/10.1007/978-981-13-0227-5_17
Donaldson, T. (2005). The Stakeholder Theory of The Modern Corportation: Concepts, Evidence And Implications. Academy of Management Review, 20(8)(January), 65–91.
Edwin Basmar, & Erlin Basmar. (2021). Financial Intermediary Dan Siklus Keuangan Di Indonesia. Accounting, Accountability, and Organization System (AAOS) Journal, 3(1), 18–30. https://doi.org/10.47354/aaos.v3i1.310
Fareed, Z., Abbas, S., Madureira, L., & Wang, Z. (2022). Green Stocks, Crypto Asset, Crude Oil And Covid19 Pandemic: Application of Rolling Window Multiple Correlation. Resources Policy, 79 (December 2021), 102965. https://doi.org/10.1016/j.resourpol.2022.102965
Fathihani, Saputra, J., Haat, M. H. C., Yusliza, M. Y., Muhammad, Z., & Bon, A. T. (2021). A Review Of Sustainable Green Finance Literature: Mini-review Approach. Proceedings of the International Conference on Industrial Engineering and Operations Management, 3194–3207.
Ficci, & Unep. (2016). Designing a Sustainable Financial System for India. April.
Harun Ur Rashid, M., & Uddin, M. M. (2018). Green Financing For Sustainability: Analysing The Trends With Challenges And Prospects In The Context of Bangladesh. International Journal of Green Economics, 12(3–4), 192–208. https://doi.org/10.1504/IJGE.2018.097876
Ivanova, N. G., Katsyuba, I. A., & Firsova, E. A. (2021). Green Finance. IOP Conference Series: Earth and Environmental Science, 689(1). https://doi.org/10.1088/1755-1315/689/1/012003
Kamran, H. W., Haseeb, M., Lecturer, S., Nguyen, V. C., & Nguyen, T. T. (2020). Climate Change And Bank Stability : The Moderating Role Of Green Financing And Renewable Energy Consumption In ASEAN Hafiz Waqas Kamran, Assistant Professor, Faculty of Business Administration, Iqra Muhammad Haseeb, Senior Lecturer, Faculty of Busine. 12(2), 3738–3751. https://osf.io/preprints/v48fa/%0Ahttps://osf.io/v48fa/download
Mikael Backman, S. (2011). Financing A Green Future Yunwen Bai. June, 2.
Mohd, S., & Kaushal, V. K. (2018). Green Finance: A Step Towards Sustainable Development. MUDRA : Journal of Finance and Accounting, 5(01). https://doi.org/10.17492/mudra.v5i01.13036
Ngo, T. Q., Doan, P. N., Vo, L. T., Tran, H. T. T., & Nguyen, D. N. (2021). The Influence Of Green Finance On Economic Growth: A COVID-19 Pandemic Effects on Vietnam Economy. Cogent Business and Management, 8(1). https://doi.org/10.1080/23311975.2021.2003008
Orellana, M. (2013). Climate Change, Sustainable Development And The Clean Development Mechanism. Realizing the Right to Development, 321–340. https://www.ohchr.org/Documents/Issues/Development/RTDBook/PartIIIChapter23.pdf
Rapi, K., Maisarah, S., Ayu, S., Rambe, F., Chandra, W., & Rahmana, A. (2021). Green Finance for The Era of Post COVID-19: A Systematic Literature. Advances in Economics, Business and Management Research, 198, 191–195.
Spinaci, S. (2021). BRIEFING: Green and Sustainable Finance. February.
Sun, Y., Bao, Q., & Taghizadeh-Hesary, F. (2023). Green Finance, Renewable Energy Development, And Climate Change: Evidence From Regions of China. Humanities and Social Sciences Communications, 10(1), 1–8. https://doi.org/10.1057/s41599-023-01595-0
Takhim, M., Sonjaya, A., Salim, Z., Rahman, A., Basmar, E., Abdullah, R., & Ali, M. (2023). The Synergy of Islamic Banks and Muslim-Friendly Tourism: Patterns of Halal Industry Development in Indonesia. International Journal of Sustainable Development and Planning, 18(9), 2723–2731. https://doi.org/10.18280/ijsdp.180911
Turner, B. (2014). Asian Development Bank Institute (Issue 457). https://doi.org/10.1007/978-1-349-67278-3_116
UNEP. (2016). The State of Sustainable Finance in the United States. February. www.unep.org/inquiry
Vercelli, A. (2019). Towards a Sustainable Financial System. Finance and Democracy, April 2015, 241–272. https://doi.org/10.1007/978-3-030-27912-7_8
Wang, Y., Liu, J., Yang, X., Shi, M., & Ran, R. (2023). The Mechanism Of Green Finance ’ S Impact On Enterprises ’ Sustainable Green Innovation. 5(July), 452–478. https://doi.org/10.3934/GF.2023018
Wang, Y., & Zhi, Q. (2016). The Role of Green Finance in Environmental Protection: Two Aspects of Market Mechanism and Policies. Energy Procedia, 104, 311–316. https://doi.org/10.1016/j.egypro.2016.12.053
Yanarella, E. J., Levine, R. S., & Lancaster, R. W. (2009). Green Versus Sustainability. Sustainability, 2(5), 296–302. https://doi.org/10.1089/SUS.2009.9838
Zhou, X., Tang, X., & Zhang, R. (2020). Impact of Green Finance On Economic Development And Environmental Quality: A Study Based On Provincial Panel Data From China. Environmental Science and Pollution Research, 27(16), 19915–19932. https://doi.org/10.1007/s11356-020-08383-2
Zioło, M., Bak, I., Cheba, K., Spoz, A., & Niedzielski, P. (2021). Sustainable Financial Systems Toward Sustainability In Finance. Institutional and Managerial Approach. Procedia Computer Science, 192, 4237–4248. https://doi.org/10.1016/j.procs.2021.09.200
