The Effects of Sustainability Disclosure and Islamic Social Reporting on Financial Performance: The Mediating Role of Green Financing in Indonesian Islamic Commercial Banks

Wildan Hilmawan, Lina Yulianti, Neneng Wahyuni

Abstract


This study examines the mediating role of Green Financing in the relationship between Green Banking Disclosure (GBD), Islamic Social Reporting (ISR), and financial performance (Return on Assets/ROA) of Islamic Commercial Banks (Bank Umum Syariah/BUS) in Indonesia. Using a quantitative explanatory approach with panel data regression (Fixed Effect Model and Common Effect Model) and Baron & Kenny mediation procedure confirmed by Sobel Test, this study analyzes seven BUS over the 2021–2025 period (35 panel observations). Results indicate: (1) GBD negatively and significantly affects Green Financing (? = ?37.002, p = 0.027); (2) ISR has no significant effect on Green Financing (p = 0.538); (3) GBD has no direct effect on ROA (p = 0.121); (4) ISR has no significant effect on ROA (p = 0.279); (5) Green Financing positively and significantly affects ROA (? = 0.070, p = 0.000); (6) Green Financing mediates the effect of GBD on ROA (Z-Sobel = ?2.193, significant); and (7) Green Financing does not mediate the ISR-ROA relationship. These findings suggest that the transmission mechanism of GBD to BUS profitability operates indirectly through green financing realization, with important implications for Bank Indonesia's Green Macroprudential Liquidity Incentive (KLM Hijau) policy and OJK sustainability reporting regulation.

Keywords


Green Banking Disclosure; Islamic Social Reporting; Green Financing; Return on Assets; Islamic Commercial Banks; Mediation; Fixed Effect Model.

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DOI: https://doi.org/10.56114/al-sharf.v7i3.13894

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