Volume 2 Issue 4 | 2025 | View PDF
Paper Id:IJMSM-V2I4P112
doi: 10.71141/30485037/V2I4P112

Integrating CSR and Corporate Governance through Green Banking to Drive Financial Performance: Empirical Study on Indonesian

Lala Nur Idayanti, Susi Susilawati

Citation:
Lala Nur Idayanti, Susi Susilawati, "Integrating CSR and Corporate Governance through Green Banking to Drive Financial Performance: Empirical Study on Indonesian" International Journal of Multidisciplinary on Science and Management, Vol. 2, No. 4, pp. 103-113, 2025.

Abstract:
Financial performance increasingly reflects not only profitability but also a company’s commitment to social and environmental responsibilities. This study investigates the mediating role of Green Banking in the relationship between Corporate Social Responsibility (CSR), Corporate Governance, and financial performance in Indonesia’s banking sector. This research adopts a quantitative approach and analyzes 23 purposively selected banks from 47 IDX-IC listed firms, employing panel data regression and the Sobel test to examine mediation effects. The results show that CSR significantly improves financial performance, emphasizing the economic value of social initiatives. However, CSR exerts a significant negative effect on Green Banking, indicating that current CSR programs tend to prioritize social aspects rather than environmentally oriented financing. CG does not exhibit a significant effect on either Green Banking or financial performance, and Green Banking fails to function as an effective mediator in these relationships. Theoretically, these findings imply that CSR activities may diverge from environmental financing practices, thereby challenging the assumption that CSR naturally drives sustainable banking. Practically, the study highlights the importance of banks realigning CSR initiatives to explicitly support Green Banking, creating an integrated strategy that advances both profitability and environmental objectives. Furthermore, the study provides useful insights for policymakers to design incentives that strengthen the link between CSR frameworks and sustainable banking practicesage.

Keywords: Corporate social responsibility, Corporate governance, Green banking, Financial performance.

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