Green Banking and Bank Performance in ASEAN: The Moderating Role of Bank Size

Abstract

This study investigates the impact of green banking disclosure and green credit on bank financial performance in the context of ASEAN countries. Using a sample of 31 listed banks from Indonesia, Malaysia, Singapore, Philippines, and Thailand during the period 2020-2022, the authors examine the effects of green banking disclosure and green credit on return on equity (ROE) and the moderating role of bank size. The green banking disclosure is measured using content analysis based on the Green Disclosure Index, while green credit is measured as the ratio of green credit to total credit. The results, based on OLS and moderated regression analyses, indicate that green banking disclosure has a significant positive impact on ROE, while green credit has no significant effect. However, in the presence of bank size, green credit shows a significant negative impact on ROE, and bank size positively moderates this relationship. The findings suggest that green banking disclosure enhances bank financial performance, while green credit may have a negative impact, particularly for larger banks. The study contributes to the literature by providing empirical evidence from the ASEAN region and considering both disclosure and credit aspects of green banking. The results have implications for bank management and regulators in promoting sustainable finance and improving bank performance.