This research evaluates the influence of ESG performance and Loan to Asset Ratio on the profitability of banks in ASEAN-5 from 2019 to 2023. The sample consists of 22 banks selected using purposive sampling based on consistent financial report publication and the availability of ESG data from Refinitiv. Profitability calculated through Return on Assets is represented as the dependent variable, whereas the independent variables include its individual pillar (Environmental, Social, Governance), and the Loan to Asset Ratio, with panel data regression being employed. The outcome reveals that the Loan to Asset Ratio presents a significant positive correlation with bank profitability in ASEAN-5. In contrast, Environmental, Social, Governance performances do not exhibit a significant impact on profitability. These findings offer insights for stakeholders on key factors influencing banking profitability. They also serve as a reference for regulators and bank management in shaping asset management and sustainability policies, while stronger ESG integration may enhance the banking sector's competitiveness and resilience in ASEAN-5.

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Sustainable Finance and Profitability: Unraveling the ESG Performance and Loan to Asset Ratio Nexus in ASEAN-5 Banking (2019–2023)

  • Cynthia Nadhir Farsya,
  • Vaya Juliana Dillak

摘要

This research evaluates the influence of ESG performance and Loan to Asset Ratio on the profitability of banks in ASEAN-5 from 2019 to 2023. The sample consists of 22 banks selected using purposive sampling based on consistent financial report publication and the availability of ESG data from Refinitiv. Profitability calculated through Return on Assets is represented as the dependent variable, whereas the independent variables include its individual pillar (Environmental, Social, Governance), and the Loan to Asset Ratio, with panel data regression being employed. The outcome reveals that the Loan to Asset Ratio presents a significant positive correlation with bank profitability in ASEAN-5. In contrast, Environmental, Social, Governance performances do not exhibit a significant impact on profitability. These findings offer insights for stakeholders on key factors influencing banking profitability. They also serve as a reference for regulators and bank management in shaping asset management and sustainability policies, while stronger ESG integration may enhance the banking sector's competitiveness and resilience in ASEAN-5.