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All Journal JASF (Journal of Accounting and Strategic Finance) Jurnal REP (Riset Ekonomi Pembangunan)
Ahmad Sutanto
IPB University
Economics, Econometrics & Finance Education Environmental Science Social Sciences Other

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DIGITAL TRANSFORMATION AND STATE-OWNED BANK'S PERFORMANCE: THE MODERATING EFFECT OF RISK PREFERENCE Ahmad Sutanto; Wivan Febriansyah; Wita Juwita Ermawati
Jurnal REP (Riset Ekonomi Pembangunan) Vol. 9 No. 1 (2024): April 2024
Publisher : Universitas Tidar

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.31002/rep.v9i1.1556

Abstract

This study examines the impact of digital transformation on the financial performance of Indonesian state-owned banks, using risk preference as a moderating variable. The study utilizes data from the annual financial reports of Indonesian state-owned banks from 2019 to 2023. Digital transformation is measured through text mining of annual reports, bank performance is primarily indicated by Net Interest Margin (NIM), and risk preference is assessed using the Z-score. Given the presence of autocorrelation in the fixed effects model, the Generalized Method of Moments (GMM) is employed. The results reveal that digital transformation does not directly affect bank performance. However, this relationship is significantly moderated by the banks' risk preferences. Banks with higher risk preference tend to leverage digital transformation more effectively, resulting in increased profitability and higher risks. Conversely, banks with lower risk preferences adopt digital technologies more cautiously, achieving steadier but potentially lower gains. These findings offer valuable insights for policymakers and bank managers in the Indonesian banking sector, emphasizing balancing technological advancements with risk management to maintain financial stability. This study highlights the crucial role of digital transformation in enhancing bank performance when aligned with risk management strategies and contributes to the understanding of the complex relationship between digital transformation, risk preference, and bank performance in emerging economies, particularly in the context of state-owned banks.
Assessing the Impact of Sustainable Finance Regulation on Bank Risk: Evidence from Indonesia using a Difference-in-Differences Approach Ahmad Sutanto; Wita Juwita Ermawati; Lukytawati Anggraeni
JASF: Journal of Accounting and Strategic Finance Vol. 8 No. 2 (2025): JASF (Journal of Accounting and Strategic Finance) - December 2025
Publisher : Accounting Department, Faculty of Economics and Business, Universitas Pembangunan Nasional Veteran Jawa Timur

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.33005/jasf.v8i2.657

Abstract

Purpose: The purpose of this study is to examine the impact of the Financial Services Authority Regulation POJK 51/2017 about Sustainable Finance implementation on bank risk in Indonesia. The regulation mandates all commercial banks to integrate environmental, social, and governance principles into their strategic and operational frameworks. However, empirical evidence regarding how this policy affects financial stability remains limited. This research addresses that gap by analysing both the direct and indirect effects of the regulation on bank risk. Method: This study employs a quantitative method with a difference-in-differences approach to analyse the causal impact of implementing POJK 51/2017 on bank risk. The data used is a panel of 22 banks for the period from 2015 to 2024. In addition, a mechanism test is conducted to explore transmission channels through green credit and cost efficiency, as well as a heterogeneity test to measure differences in impact across bank size and ownership type. Findings: The research found that the implementation of POJK 51/2017 increased banking risk. Furthermore, a mechanism analysis showed that the green credit ratio serves as a transmission channel through which regulations influence risk, while the operational efficiency ratio does not. Furthermore, the impact is greater for small banks and state-owned banks. Implications: Banks must adopt risk-based green lending, especially for MSME-oriented projects that have higher information risks, while the Financial Services Authority should strengthen risk-based supervision by assessing the risk profile of green exposures rather than solely focusing on green credit volume. Novelty/Value: This study offers new empirical evidence by applying a difference-in-differences design to capture the causal impact of POJK 51/2017 on bank risk. It also identifies the green credit ratio as a main transmission channel and reveals differential risk effects across bank size and ownership, providing new insights into how institutional capacity shapes sustainable finance regulatory outcomes in Indonesia.
Co-Authors Lukytawati Anggraeni Wivan Febriansyah