Indonesian Journal of Economics and Management
Vol. 3, No. 3, July 2023, pp. 495 – 508https://doi.org/10.35313/ijem.v3i3.4886
Enhancing Financial Performance of Islamic Banks in
Indonesia: The Mediating Effect of Green Banking Disclosure on Corporate Governance Practices
Nabilah Febriyane1,*, Dian Imanina Burhany2, Sumiyati2, Neneng Dahtiah2
1Master of Applied Islamic Finance and Banking, Politeknik Negeri Bandung, Bandung, Indonesia
2Department of Accounting, Politeknik Negeri Bandung, Bandung, Indonesia
Research article
Received 23 May 2023; Accepted 05 July 2023
How to cite: Febriyane, N., Burhany, DI., Sumiyati., & Dahtiah, N. (2023). Enhancing Financial Performance of Islamic Banks in Indonesia: The Mediating Effect of Green Banking Disclosure on Corporate Governance Practices. Indonesian Journal of Economics and Management, 3(3), 495-508.
*Corresponding author: nabilahfebriyanep@gmail.com
Abstract: Increasing environmental pollution due to business activities was addressed by issuing POJK Number 51/POJK.03/2017. In the banking sector, green banking practices and disclosures are a form of responsibility towards environmental sustainability. However, disclosure of green banking in Islamic commercial banks is still relatively low, as is financial performance, which is not optimal. Thus, it is necessary to examine the factors that influence the disclosure of green banking and fraud to improve financial performance. This study uses governance factors, namely board size, an independent board of commissioners, and gender diversity, to influence financial performance mediated by green banking disclosures. The research sample is 12 Islamic banks in Indonesia for the 2017–2022 period. The results show that green banking disclosure is only influenced by the size of the board of commissioners and independent commissioners, while financial performance is influenced by the size of the board of commissioners, independent commissioners, and gender diversity. Furthermore, disclosure of green banking can mediate the correlation of the board of commissioners and independent commissioners on financial performance.
Keywords: financial performance; green banking disclosure; board size; board of commissioners independent; gender diversity.
1. Introduction
The World Economic Forum reveals the world's two main risks, namely the economy and the environment. The link between the two is that environmental damage caused by unsustainable governance will have a negative impact on the global economy. Currently, issues related to the environment are of global concern, so companies, including banks, must carry out transformations in their behavior and activities. The concept of green banking minimizes the negative impact on the environment caused by all bank policies or activities.
This concept is adopted by all banks in the world.
Banking activities do not directly damage the environment. However, banking plays an important role in environmental sustainability through green banking (Simanungkalit &
Mayangsari, 2020). Green banking is a banking practice that is environmentally friendly and reduces the carbon footprint of operational activities as well as the provision of environment- based financing to customers (Lugina Kurniawan, 2021). For Islamic banks, the practice of
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green banking shows consistency in carrying out sharia, namely protecting the natural environment, so that it deserves the status of an Islamic bank (Hanif et al., 2020).
The concept of green banking is not new to Indonesia because it was initiated in 1972 by Prof. Otto Sumarwoto as part of the green economy. However, until now Indonesia has been slow in implementing this concept, even though a special regulation has also been issued, namely OJK Regulation Number 51/POJK.03/2017 concerning the Implementation of Sustainable Finance, which aims to encourage financial service institutions, issuers, and public companies to create sustainable economic growth by aligning economic, social, and environmental interests and disclosing them in a sustainability report. This phenomenon also occurs in Islamic banking, as shown in Table 1.
Tabel 1. Percentage of Disclosure of Green Banking by Islamic Banks in 2017-2022
No Name of Islamic Bank Percentage
1. Bank Aceh Syariah 81%
2. BPD Nusa Tenggara Barat Syariah 79%
3. Bank Muamalat Indonesia 58%
4. Bank Victoria Syariah 28%
5. Bank Syariah Indonesia, Tbk 65%
6. Bank Jabar Banten Syariah 29%
7. Bank Mega Syariah 73%
8. Bank Panin Dubai Syariah, Tbk 53%
9. Bukopin Syariah 56%
10. BCA Syariah 65%
11. Bank Tabungan Pensiunan Nasional Syariah 93%
12. Bank Aladin Syariah 60%
Average 62%
Source: Annual Report of Islamic Bank (processed)
Table 1 shows the average percentage of green banking disclosures by Islamic commercial banks in 2017–2022, which is only 62%. Islamic banks still do not fully disclose and practice green banking. This fact is also in line with Indonesia's ranking, which is the 26th most polluted country in the world according to the Air Quality Index (IQAir) Report. On the other hand, the Islamic bank has not had optimal performance, as shown in Figure 1.
Figure 1. Financial Performance of Islamic Banking for the 2017-2021 period Source: Islamic Banking Statistics Report from OJK (data processed by the author)
Febriyane, N., Burhany, DI., Sumiyati., & Dahtiah, N.
Various studies have explored the factors that can affect green banking, one of which is corporate governance in the form of the board of commissioners. The board of commissioners has a role in overseeing bank management so as to improve green banking practices and disclosures. There are quite a number of studies that have proven the correlation of board size on green banking disclosure (Sihombing & Yuliandhari, 2022; Hendrawan, 2021; Sakti, 2020;
Handajani, 2019; Bose et al., 2018), but it is still very limited to Islamic banking (Munawaroh, 2021) and there are still different results (Tanuwijaya, 2022). Meanwhile, the independent board of commissioners has also proven to have an correlation on green banking disclosure in conventional banking (Sakti, 2020) and other industries in the form of environmental disclosure (Zaid et al., 2019), but this has not been found in Islamic banking. Gender diversity on the board of commissioners is increasingly attracting attention because of the belief that women have a higher level of sensitivity, so they can support environmentally friendly practices. However, empirical evidence regarding this has only been found in the non-bank industry (Ramon-Liorens et al., 2021; Khan et al., 2019; K. Rao & Tilt, 2021), while conventional banking has been found to have no correlation (Kusuma et al., 2018) and has not been found in Islamic banking. Other empirical evidence documents the correlation of board size and an independent board of commissioners on the financial performance of Islamic banks (Intia &
Azizah, 2021; Umam & Ginanjar, 2020; Rahmawati, 2017), but the correlation of gender diversity has only been found in conventional banks (Daniel-Vasconcelos et al., 2022) and non- banks (Brahma et al., 2021). So it is necessary to do research related to green banking disclosure in Islamic banks.
The purpose of this study is to examine the influence of corporate governance characteristics on green banking disclosure, including size of the board of commissioners, an independent board of commissioners, and gender diversity, as well as the function of disclosure. The impact of these three factors on financial performance is mediated by green banking. Given the dearth of references on green banking in Islamic banking that scholars and practitioners can use, this research is urgently required. Additionally, it is hoped that Indonesians would become more conscious of Islamic banking and start using green banking techniques to realize the 3P is profit, people, and planet.
2. Literature Review 2.1. Legitimacy Theory
Legitimacy theory is relevant in explaining environmental activities by companies. The core of this theory is that a business must always ensure that its operational activities adhere to the norms and standards of the society in which it operates to maintain its legitimacy to do so, including engaging in environmentally friendly activities.
2.2. Stakeholders Theory
Stakeholders are all parties who influence and are affected by the company. This theory explains that businesses operate not just for the profit of shareholders but also for a number of other stakeholders. Disclosure of green banking is a form of application of this theory because, through this disclosure, the bank shows concern for and responsibility for environmental sustainability for the benefit of stakeholders.
2.3. Financial Performance
The financial condition of a corporation over a given time period is described as its financial
Febriyane, N., Burhany, DI., Sumiyati., & Dahtiah, N.
performance. Return on assets (ROA), an indicator of financial performance, measures profitability. According to Word Bank (2011), banks that are green have combined four business principles: nature, well-being, economy, and society, which care about ecosystems and the quality of human life, so as to generate outputs in the form of operational cost efficiency, competitive advantage,corporate identity, and brand image, strong and balanced target achievement, and optimal performance.
2.4. Green banking Disclosure
Green banking is defined as banking that prioritizes managing the business to maximize profits while also being accountable for efforts to protect the environment, the universe (planet) and social welfare (people). According to the World Bank, green banking describes a financial institution that gives priority to environmental sustainability in its business practices (Anggraini et al., 2020). Green banking is similar to the concept of ethical banking, which involves the promotion of social and environmental responsibility but focuses more on environmental protection goals while still providing the best banking services (Bihari &
Pandey, 2015). Therefore,green banking is actually a part of sustainable banking, which includes social and environmental aspects in its operations (Dufays, 2012).
There are two dimensions to green banking. The first is the use of technology and the internet in all banks operational activities so that they are more paperless. The second is the distribution of loans and funding to companies with little environmental impact (Ramila &
Gurusamy, 2015). It is these two dimensions that will enable banking to realize environmental protection.
In Indonesia, the implementation of sustainable finance for financial institutions, issuers, and public enterprises is managed by POJK Number 51/POJK.03/2017, which also sets the guidelines for green banking disclosure. POJK 51 stipulates that disclosure is made in the sustainability report. POJK 51 does not provide detailed related information about green banking that must be disclosed but provides an outline guide and minimal information that must be disclosed. Several studies have developed disclosure items for green banking, as shown in Table 2.
Tabel 2. Items Green Banking Disclosure
No Green Banking Disclosure Items
1. Bank's policy on environmental preservation and climate change
2. Financing of environmentally friendly projects and their monitoring activities 3. Reducing the use of paper (paperless) and waste management
4. Adoption of policies and technology to reduce environmental damage in the internal operations of electronic bank offices
5. The use of environmentally friendly materials 6. Energy conservation of business operations
7. Employee efforts to lessen the impact of climate change and emissions 8. Information about green product banks
9. Bank initiatives and participation in environmental network building
10. Competently evaluate the impact of the client's business before sanctioning a financing facility 11. Organizing activities to increase environmental awareness for the community
12. The Role as an environmentally friendly bank, contribution to environmental improvement, and excellence in environmental reporting practices
13. Award for environmental preservation initiatives
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No Green Banking Disclosure Items
14. Bank involvement in supporting facilities that are in line with environmental programs 15. Information on the establishment of a climate change fund
16. Setting green branches for operational efficiency purposes
17. Internalization of green marketing on internal communication media
18. Initiative and involvement of the bank to encourage and train its employees on green movement 19. Total budget allocated annually for green banking practices
20. Actual expenditure on various green banking programs
21. Use of a distinct page in the annual report for green banking reporting Source: (Lugina Kurniawan, 2021; Handajani et al., 2019)
Additionally, numerous research have demonstrated that green banking disclosure improves bank financial performance (Anggraini et al., 2020; Hanif et al., 2020; Sakti, 2020). Therefore, the following hypothesis is put forth:
H1: Disclosure of green banking has a positive correlation on financial performance.
2.5. Corporate Governance 2.5.1 The Board of Commissioiners
A part of corporate governance, the board of commissioners makes sure that all business operations are carried out while also supervising and advising the board of directors. The board will be better able to monitor corporate management with a larger number of commissioners, which will boost financial performance. Shareholders and other stakeholders will favorably respond to the large board of commissioners' size, which will strengthen their faith in the bank and improve the bank's financial performance (Azis, 2021). Previous research has discovered a positive correlation between board size and bank financial performance (Azis, 2021)(Mulianita et al., 2019). The board of commissioners' oversight will promote disclosures and green banking practices. The board of commissioners will be better served by prioritizing green banking operations and regularly reviewing how resources are allocated to carry out these efforts (Zaid et al., 2019; Handajani, 2019). Previous studies have found a positive correlation of the number of commissioners on green banking disclosures (Hendrawan, 2021; Munawaroh, 2021; Bose et al., 2018).
Therefore, the following hypothesis is formulated:
H2: The size of the board of commissioners has a positive correlation on financial performance H3: The size of the board of commissioners has a positive correlation on green banking disclosure.
H4: Green banking disclosures mediates the correlation of board size on financial performance.
2.5.2 Independent Board of Commissioners
Members of the board of commissioners who come from outside the company are known as independent commissioners. The independent board of commissioners oversees and protects minority shareholders during the management decision-making process because of its independence from the shareholders (Intia & Azizah, 2021). Companies with a higher percentage of independent commissioners will see less management fraud. The performance of the organization will improve under strict supervision. Therfore, independent commissioners and financial performance is positively correlated with both conventional banks and Islamic banks, according to earlier studies (Intia & Azizah, 2021; Umam & Ginanjar, 2020; Umam & Ginanjar, 2020).
Therefore, the independent board of commissioners plays a crucial role in green banking
Febriyane, N., Burhany, DI., Sumiyati., & Dahtiah, N.
practices and disclosures. The independent board of commissioners' role is essential in evaluating and supervising external disclosures and company accomplishments so that they are in line with social and environmental guidelines for sustainability (Khan et al., 2019).
Previous studies that discovered a favorable association between independent commissioners and green banking disclosures confirm this (Sakti, 2020) and environmental disclosures in the non-bank industry (Zaid et al., 2019).
Therefore, the following hypothesis is formulated:
H5: The independent board of commissioners has a positive correlation on financial performance.
H6: The board of independent commissioners has a positive correlation on green banking disclosures H7: Green banking disclosures mediate the correlation of independent commissioners on financial
performance.
2.5.3 Gender Diversity on The Board of Commissioners
Women's participation can increase the diversity of viewpoints, information, views, and methods for problem-solving. Gender diversity benefits board oversight procedures and improves the standard of supervision and decision-making (Mazzotta & Ferraro, 2020). Banks that have both female and male board members bring skills, knowledge, and different experiences so that creativity and business innovation get better (Kusuma et al., 2018).
Previous studies have proven that gender diversity has a positive correlation on bank financial performance (Shafique et al., 2014; Gurol & Lagasio, 2022). Women are more knowledgeable about and understand economic processes, so there is a greater demand for women to serve on boards of commissioners (Raharjanti, 2019). In the non-bank industry, it has been proven that gender diversity has a positive correlation on environmental disclosure (Ramon-Llorens et al., 2021; Khan et al., 2019; K. Rao & Tilt, 2016) and it is likely that the same thing applies to banking.
Therefore, the following hypothesis is formulated:
H8 : Gender diversity has a positive correlation on financial performance.
H9 : Gender diversity has a positive correlation on green banking disclosures.
H10 : Green banking disclosures mediate the correlation of gender diversity on financial performance.
Figure 2. Research Model 3. Research Methods
The size of the board of commissioners, the independence of the board of commissioners, and
Febriyane, N., Burhany, DI., Sumiyati., & Dahtiah, N.
gender diversity are the independent variables in this quantitative study, and the disclosure of green banking and financial performance are the dependent variables. Green banking disclosure also functions as a mediating factor. It will be examined whether the independent variables have any direct or indirect effects on mediating variables. The measurement variables are as follows:
1) Size of the board of commissioners: the total number of members of the board of commissioners
2) Board of commissioners independent: the number of independent commissioners divided by the total number of members of the board of commissioners.
𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑖𝑛𝑑𝑒𝑝𝑒𝑛𝑑𝑒𝑛𝑡 𝑐𝑜𝑚𝑚𝑖𝑠𝑠𝑖𝑜𝑛𝑒𝑟𝑠
𝑇ℎ𝑒 𝑡𝑜𝑡𝑎𝑙 𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑚𝑒𝑚𝑏𝑒𝑟𝑠 𝑜𝑓 𝑡ℎ𝑒 𝑏𝑜𝑎𝑟𝑑 𝑜𝑓 𝑐𝑜𝑚𝑚𝑖𝑠𝑠𝑖𝑜𝑛𝑒𝑟𝑠
3) Gender diversity: the number of women on the board of commissioners divided by the total number of members of the board of commissioners
𝑇ℎ𝑒 𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑤𝑜𝑚𝑒𝑛 𝑜𝑛 𝑡ℎ𝑒 𝑏𝑜𝑎𝑟𝑑 𝑜𝑓 𝑐𝑜𝑚𝑚𝑖𝑠𝑠𝑖𝑜𝑛𝑒𝑟𝑠 𝑇ℎ𝑒 𝑡𝑜𝑡𝑎𝑙 𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑚𝑒𝑚𝑏𝑒𝑟𝑠 𝑜𝑓 𝑡ℎ𝑒 𝑏𝑜𝑎𝑟𝑑 𝑜𝑓 𝑐𝑜𝑚𝑚𝑖𝑠𝑠𝑖𝑜𝑛𝑒𝑟𝑠
4) Green banking disclosure: number of items of green banking disclosed divided by the number of items of green banking that should be disclosed
𝑇ℎ𝑒 𝑡𝑜𝑡𝑎𝑙 𝑖𝑡𝑒𝑚 𝑜𝑓 𝑔𝑟𝑒𝑒𝑛 𝑏𝑎𝑛𝑘𝑖𝑛𝑔 𝑑𝑖𝑠𝑐𝑙𝑜𝑠𝑢𝑟𝑒
𝑇ℎ𝑒 𝑡𝑜𝑡𝑎𝑙 𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑖𝑡𝑒𝑚 𝑔𝑟𝑒𝑒𝑛 𝑏𝑎𝑛𝑘𝑖𝑛𝑔 𝑡ℎ𝑎𝑡 𝑠ℎ𝑜𝑢𝑙𝑑 𝑏𝑒 𝑑𝑖𝑠𝑐𝑙𝑜𝑠𝑢𝑟𝑒𝑑
5) Financial performance: Return on Assets (ROA) namely net profit divided by total assets.
𝑁𝑒𝑡 𝑝𝑟𝑜𝑓𝑖𝑡 𝑇𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡𝑠
The 12 Indonesian Islamic banks that registered with the OJK between 2018 and 2021 made up the research population, and the complete population was included in the research sample. The panel data used in the study was gathered through documentation methods from secondary sources, such as annual reports and/or sustainability reports. The report is available on the official Islamic bank’s website for access and download. Path analysis with the Structural Equation Model-Partial Least Square (SEM-PLS) via the WrapPLS 8.0
application is the data analysis method used.
4. Results and Discussion 4.1. Research Result
4.1.1. Model Measuremenet (Overall Model Fit or Goodness of Fit)
The results of model measurements are used to determine whether the model formed is in accordance with the provisions or not and to determine the strength of the model that has been designed.
Table 3. Overall Model Fit and Goodness of Fit
Quality Indices Hasil P-values Status
Average Path Coefficient 0.288 0.002 Fit
Average R-Square 0.546 P < 0.001 Fit
Average Adjusted R-Square 0.523 P < 0.001 Fit
Febriyane, N., Burhany, DI., Sumiyati., & Dahtiah, N.
Quality Indices Hasil P-values Status
Average Block VIF 1.376 - Ideally
Average Full Collinearity VIF 1.642 - Ideally
Tenenhaus Gof 0.739 - Fit (Large)
Sympson’s Paradox-Ratio 1.000 - Ideally
R-Square Contribution Ratio 1.000 - Ideally
Statistical Suppression Ratio 1.000 - Acceptable Non-Linear Bivaiate Causality Direction
Ratio 0.929 - Acceptable
Source: WrapPLS 8.0 output, data processed, 2023
Based on table 3, it shows that the research model has strong predictive power because it meets all the goodness of fit criteria.
4.1.2. Coefficient of Determination (r-square)
The r-square value reflects how much variation of the independent variables can be explained by the dependent variable.
Table 4. R-square coefficients
ITEMGB KINKEU
R-square 0.430 0.370
Source: Output WrapPLS 8.0, data processed, 2023
Based on Table 4, the ITEMGB variable's r-square value is 0.430, or 43%, indicating the board of commissioners and the independent board of commissioners have a 43% influence on disclosure of green banking. Other variables not included in the model have an impact on the remaining 37%. While the KINKEU variable's connection of green banking disclosures with financial performance had an r-square value of 0.370, or 37%, the remaining 63% were influenced by other factors outside the model.
4.1.3.Sturctural Model and Hypothesis Testing
The structural model test was conducted to see the direct and indirect (mediation) correlations of a research model that had been made by the researcher.
Figure 3. Stuctural Models
Based on Figure 3, which was designed by the researcher, it can be made more concise in the form of a table as follows:
Febriyane, N., Burhany, DI., Sumiyati., & Dahtiah, N.
Tabel 5. Structural Model Test Result
Hypotesis TRACK Path Coefficient P-values Decision
1 ITEMGB -> KINKEU 0.260 0.026 H1 is accepted
2 DEWKOM -> KINKEU 0.041 0.021 H2 is accepted
3 DEWKOM -> ITEMGB 0.315 0.033 H3 is accepted
4 DEWKOM -> ITEMGB -> KINKEU 0.082 0.014 H4 is accepted
5 DEWINDP -> KINKEU 0.241 0.018 H5 is accepted
6 DEWINDP -> ITEMGB 0.355 0.044 H6 is accepted
7 DEWINDP -> KINKEU -> ITEM GB 0.092 0.050 H7 is accepted
8 GENDIV -> KINKEU 0.007 0.320 H8 is accepted
9 GENDIV -> ITEMGB 0.005 0.046 H9 is rejected
10 GENDIV-> ITEMGB -> KINKEU 0.001 0.048 H10 is rejected Source: WrapPLS 8.0 output, data processed, 2023
Based on Table 5, it is known that of the 10 hypotheses, there are eight hypotheses that obtain a p-value <0.005, meaning that the hypothesis is accepted. Meanwhile, there are two hypotheses that obtain a p-value > 0.005, which means the hypothesis has been rejected.
4.1.4.Discussion
The Correlation of Green Banking Disclosure on The Financial Performance of Islamic Bank
Green banking has a positive and significant influence on financial performance meaning that there are practices and disclosures that green banking can improve financial performance.
Islamic banks tend to carry out environmentally friendly operational activities such as retrenchment water, electricity, fuel, using paper (paperless), reducing plastic waste and taking advantage of technological advances to facilitate customer transactions, etc. As for other policies, namely in terms of financing distribution where Islamic banks are committed to providing financing to companies that are environmentally friendly, and there are AMDAL requirements for each financing application.
The Correlation Board Size of Commissioners on The Financial Performance of Islamic Bank
According to the study's findings, the board of commissioners significantly and favorably affects financial performance. As the highest level of internal control in Islamic banks, the board of commissioners is accountable for monitoring the board of directors' performance and contributing to good governance so that business objectives can be met. This is consistent with the stakeholder hypothesis, which holds that organizations must perform well financially in order to keep the trust of their stakeholders. According to the stakeholder theory, a business must consider its stakeholders' interests in addition to its own when operating.
The Correlation Board Size of Commissioners on Green Banking Disclousure of Islamic Bank
Green banking disclosures are positively correlated with the board of independent commissioners. In order to oversee the policies of Islamic banks, the board of commissioners plays a crucial role. A board of commissioners' existence can guarantee and oversee Islamic
Febriyane, N., Burhany, DI., Sumiyati., & Dahtiah, N.
banks to ensure that they implement green banking in a way that complies with POJK number 51/POJK.03/2017's regulations on sustainable finance. More green banking will be properly implemented as there are more commissioners. The legitimacy argument, which contends that disclosure of an organization's environmental and social impact is a means of legitimizing its continued existence and operation in society, is thus supported by the fact that the board of commissioners exists. A suitable and pertinent method of communicating or conveying is through the disclosure of green banking.
Green Banking Disclosures Mediate the Correlation of Board Size on Financial Performance of Islamic Bank
Disclosure of green banking is able to mediate the correlation of board size on financial performance with a positive influence. The existence of a board of commissioners in an Islamic bank will make sure the proper implementation of green banking disclosures so that efficiency occurs in various factors, especially in daily operational activities, and can minimize the negative impact on the environment. Islamic banks must consider the optimal composition of the board of commissioners, namely, not too few and not too many. If the size of the board of commissioners is too large will be incorrelationive, while if the amount is too large it will not be efficient.
The Correlation Independent Board of Commissioners on The Financial Performance of Islamic Bank
The board of independent commissioners has a positive correlation on financial performance, meaning that more and more boards of commissioners will improve the financial performance of Islamic banks. The composition of the independent board of commissioners is regulated in POJK number 5/POJK.03/2016 concerning the implementation of governance for commercial banks, and in accordance with the provisions of the Company's Articles of Association, the number of independent commissioners must be at least 30% of the board of commissioners.
The independent board of commissioners has the same role as other commissioners, except they come from outside Islamic banks. The existence of an independent board of commissioners can increase investor confidence because information disclosure by Islamic banks will be guaranteed. With strict supervision, the company's performance will automatically be better and healthier.
The Correlation Independent Board of Commissioners on Green Banking Disclosure of Islamic Bank
Based on the research results, it is known that there is a positive correlation between the independent board of commissioners and green banking disclosure, meaning that the existence of an independent board of commissioners plays a more intensive role in encouraging the proper implementation of green banking and monitoring environmentally friendly initiatives by monitoring whether current company practices are in line with social guidelines and the environment. The independent board of commissioners also has a role in carrying out the oversight function of activities and reporting related to environmental aspects in order to achieve overall and balanced business development success.
Green Banking Disclosures Mediate the Correlation of Independen Board of Commissioner on Financial Performance of Islamic Bank
Disclosure of green banking is able to mediate the influence of independent commissioners on
Febriyane, N., Burhany, DI., Sumiyati., & Dahtiah, N.
financial performance in a positive way. The number of independent commissioners, which is almost the same as the number of commissioners, results in very strict supervision of the performance of management and directors, one of which is related to the requirement for Islamic banks to properly disclose green banking in accordance with applicable regulations.
The existence of an independent board of commissioners will also avoid the occurrence of asymmetry or opportunistic information between internal and external parties. So that disclosure and good green banking practices will result in good financial performance as well.
The Correlation Gender Diversity on The Financial Performance of Islamic Bank
The correlation of gender diversity on financial performance indicates that the presence of women on the board of commissioners can affect financial performance. With the presence of women on the board of commissioners who have a conscientious personality, are organized and disciplined, and think about the pros and cons of everything, they complement the more ideal composition of the board of commissioners. Even though it is not dominant, the existence of this heterogeneous composition can produce high-quality and innovative leads to the company's strategy to achieve the goal of improving financial performance.
The Correlation Gender Diversity on Green Banking Disclosure of Islamic Bank
Gender diversity has no correlation on green banking disclosures, meaning that the presence or absence of women on the board of commissioners will not affect the bank's sharia practice or disclosure of green banking. So that green banking will continue to be carried out even if there are no women on the board of commissioners. Practices related to climate change and emissions have not become the main focus for women, so disclosure is still lacking. Currently, the average Islamic bank is still trying to carry out operational activities and distribute environmentally friendly financing. So that evaluation and improvement are still needed on green banking items that have not been disclosed.
Green Banking Disclosures Mediate the Correlation of Gender Diversity on Financial Performance of Islamic Bank
Significantly, disclosure of green banking does not mediate the correlation of gender diversity on financial performance. The existence of women does not affect the practice and disclosure of green banking in Islamic banks. Disclosure that has not been maximized has resulted in no increase in financial performance.
4.2. Implication
This study provides theoretical implications for expanding Islamic banking theory with the discovery that the relationship between the size of the board of commissioners and the independen board of commissioners on financial performance can be mediated by green banking disclosure. Meanwhile, managerial implications can provide information for management to consider the membership of the board of commissioners and independent board of commissioners may have an impact on the adoption of green banking disclosures to enhance Islamic banks' financial performance.
5. Conclusion 5.1. Conclusion
According to the results of tests conducted by researcher, it has been said that:
Febriyane, N., Burhany, DI., Sumiyati., & Dahtiah, N.
1) Green banking disclosure has a positive correlation on the financial performance of Islamic banks in Indonesia.
2) The size of the board of commissioners has a positive correlation on the financial performance of Islamic banks in Indonesia.
3) The size of the board of commissioners has a positive correlation on green banking disclosure in Islamic banks in Indonesia.
4) Green banking disclosure can mediate the correlation of the size of the board of commissioners on the financial performance of Islamic banks in Indonesia.
5) The independent board of commissioners has positive correlation on the financial performance of Islamic banks in Indonesia.
6) The board of independent commissioners has a positive correlation on green banking disclosure in Islamic banks in Indonesia.
7) Green banking disclosure can mediate the correlation of the independent board of commissioners on the financial performance of Islamic banks in Indonesia.
8) Gender diversity has a positive correlation on the financial performance of Islamic banks in Indonesia.
9) Gender diversity has no correlation on green banking disclosure in Islamic banks in Indonesia.
10)Green banking disclosure cannot mediate the correlation of gender diversity on the financial performance of Islamic banks in Indonesia.
5.2. Research Limitations and Suggestions
This research still has limitations, so further research is needed. First, since the board of commissioners was the only variable employed in this study, future research is expected to include additional variables such as the board of directors, the Shariah supervisory board, the audit committee, etc. that may have an impact on green banking disclosure. Second, the scope of the research is expected to be expanded, not only in Indonesia.
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