Business performance and political stability as drivers of green banking and environmental accounting: Evidence from the DOLS panel

Wahyuni, Nanik ORCID: https://orcid.org/0000-0002-1123-5433 and Triatmanto, Boge (2025) Business performance and political stability as drivers of green banking and environmental accounting: Evidence from the DOLS panel. Social Sciences & Humanities Open, 12 (1). pp. 1-12. ISSN :2590-2911

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Abstract

This study investigates the factors influencing banks’ commitment to implementing green banking and environmental accounting, using CO2 emissions as a measurable indicator. Specifically, it examines both external factors—Foreign Direct Investment (FDI) and Geopolitical Risk—and internal factors—Profitability and Sales
Growth—in shaping banks’ environmental initiatives. Focusing on Indonesia, Malaysia, and the Philippines, nations with significant forested areas serving as global ecological assets, this study utilizes secondary data from sources including World Bank, Matteo Iacoviello, and Global Financial Development, covering the period
1995–2022. To address endogeneity in cointegrated independent variables, Panel Dynamic Ordinary Least Squares (DOLS) is employed as the primary methodological approach. The findings reveal a sustained environmental commitment among banks, evidenced by the strong, positive influence of past CO2 emissions on future levels. While FDI contributes positively to green banking efforts, its impact fluctuates due to the trade-off between financial performance and sustainability. Geopolitical Risk emerges as the most significant factor, highlighting the role of political stability in enhancing environmental responsibility. Profitability and Sales Growth also support environmental commitment, albeit with a weaker influence compared to Geopolitical Risk. By providing empirical insights into the interconnectedness of financial and political variables with environmental sustainability, this study reinforces the importance of stable governance and strategic economic policies
in driving banks toward greener operations.

Item Type:	Journal Article
Keywords:	Green banking, Environmental accounting, CO2 emissionss, Geopolitical risk
Subjects:	15 COMMERCE, MANAGEMENT, TOURISM AND SERVICES > 1501 Accounting, Auditing and Accountability > 150105 Management Accounting
Divisions:	Faculty of Economics > Department of Accounting
Depositing User:	Nanik Wahyuni
Date Deposited:	15 Jan 2026 14:42

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