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ESG performance and bank stability: the moderating role of board characteristics
(1) Universitas Widya Dharma Pontianak
(2) Universitas Widya Dharma Pontianak
(*) Corresponding Author
Abstract
The study examines the effect of ESG performance on bank stability and tests whether the relationship is moderated by board independence and board gender diversity. This study uses a quantitative method with panel data on a sample of 39 commercial banks listed on the Indonesia Stock Exchange in the period 2020-2024 with 195 observations of firms and years. Data were collected from annual reports and sustainability reports. The hypotheses were tested by panel regression analysis with board characteristics as moderating variables. The results reveal that ESG performance has a positive and significant impact on bank stability. Board independence has a positive direct effect on bank stability while board gender diversity has no significant direct effect. Nevertheless, both board independence and board gender diversity significantly strengthen the positive relationship between ESG performance and bank stability. The findings indicate that effective board governance plays a crucial role in enhancing the impact of ESG practices on bank stability. Additionally, this study adds to the literature on sustainable banking and corporate governance by demonstrating how board characteristics can strengthen the effectiveness of ESG implementation in enhancing bank stability.
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DOI: https://doi.org/10.24123/mabis.v25i3.1274
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This work is licensed under a Creative Commons Attribution 4.0 International License. ISSN: 1412-3789. e-ISSN: 2477-1783.
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