How Green Is Green Banking? An Analysis of Slack and Green Practices in the Banking Industry

Abstract

This research analyzes the green activities implemented by banks in Indonesia following a new regulation on sustainable finance and the role of slack resources to fund the initiatives. Green practices of 35 banks in 2020–2021 were evaluated through the disclosure using green banking disclosure index (GBDI). The results show that the green practices have been disclosed adequately; however, no significant association was found for the role of financial and potential slack resources. This reflects the facts that the green activities might not have been adequately implemented and the organization’s resources might not have been allocated to support the green practices. The research periods that were still overloaded with COVID-19 issue might hinder the banks from the adequate and appropriate allocation of resources toward green practices. This research recommends a prioritization approach for the implementation of the sustainable finance regulation by banks and authorities through the increased implementation of substantive green practices, not only the increased disclosures.

Citation

Salsabila, M. and Adhariani, D. (2023), "How Green Is Green Banking? An Analysis of Slack and Green Practices in the Banking Industry", Biswas, R. and Michaelides, M. (Ed.) Contemporary Issues in Financial Economics: Evidence from Emerging Economies (Research in Finance, Vol. 37), Emerald Publishing Limited, Leeds, pp. 63-79. https://doi.org/10.1108/S0196-382120230000037004