The impacts of green credit policy and competition on bank profitability in Indonesia

Rahmat Siauwijaya, To Jaya Yusanto and Genoveva Cindy Grania

Global Business and Economics Review, 2025, vol. 32, issue 2, 134-159

Abstract: We are exploring the impacts of green credit policy, bank competition, and bank-specific variables on bank profitability in Indonesia. We found that the green credit policy did not hinder the bank from distributing credit. Instead, it can help banks distribute high-quality credit, improving their profitability and decreasing non-performing loans. We also found that competition can improve bank profitability. Bank-specific variables such as bank size, capitalisation, and cost efficiency correlate to increased bank profitability. Meanwhile, an increase in non-performing loans can reduce bank profitability, and bank profitability is unaffected by liquidity, diversification, and labour productivity.

Keywords: banking competition; green banking; market power; bank profitability; Indonesia. (search for similar items in EconPapers)
Date: 2025
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