Understanding the impact of sustainable finance on bank profitability

This research examines the impact of green credit, competition, and risk taking on bank profitability as a form of sustainable finance practices that can increase economic growth. This research applies balanced panel data regression analysis using commercial banks data from 2005 to 2021. The results show that increasing green credit allocation and the level of competition will increase bank profitability in Indonesia. The increased bank profitability resulting from green credit allocation and bank competition can boost economic growth. Furthermore, high risk-taking behavior will reduce bank profitability. This finding is in line with sustainable development goals (SDGs) eight and nine. The results emphasize the importance of strategy in green credit allocation, competitive banking strategies, and risk management in bank’s decision making to realize sustainable finance.