JASF: Journal of Accounting and Strategic Finance

Assessing the Impact of Sustainable Finance Regulation on Bank Risk: Evidence from Indonesia using a Difference-in-Differences Approach

2025-12-02T03:08:55+00:00

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.

Fiscal Decentralization and Local Financial Autonomy: A Bibliometric Review of Global Research Trends

2025-11-21T23:02:39+00:00

Purpose: This paper examines the prominent themes of research, intellectual connections, gaps in scholarship on the subject of local government financial autonomy in the world literature through bibliometric tools.

Method: Bibliometric analysis of 626 publications in the Scopus index (2000-2025) with the VOSviewer software was performed to chart the occurrence of two or more keywords, thematic networks, citation network, and co-authorship network. The discussion follows the historical developments of the use of fiscal decentralization and local financial autonomy in terms of time, geography, and scientific fields.

Findings: Nine thematic clusters were chosen that are reflections of intellectual organization of the subject-area, encompassing such areas as fiscal decentralization, urbanization, intergovernmental transfers, environmental regulation and digital governance. The research output has increased considerably since 2005 where the focus has shifted in terms of fiscal efficiency discussions to sustainability and technology-based governance issues. The best collaboration networks are between China and Europe and low involvement of Africa and Latin Americans. The temporal analysis shows that the financial crisis globally and the COVID-19 outbreak has fueled the study of fiscal resilience and adaptive financial management research.

Implications: This study shows the need for developing countries to deploy digital tools and enhance their intergovernmental transfer design, as well as capacity-building strategies that are often used by developed nations to improve their fiscal transparency, revenue performance, and resilience. This will go a long way to strengthen local financial systems.

Novelty/Value: The study's nine research clusters and gaps—including the underrepresentation of African and Latin American studies and the development of digital and environmental fiscal themes—provide a clearer intellectual framework for the field than previous reviews.

Bridging Institutional Theory and Public Sector Digitalization: The Case of SIPD

2025-12-09T01:27:03+00:00

Purpose: With this research, we want to better understand the opportunities and threats that local governments face as they work to integrate the Regional Government Information System (Sistem Informasi Pemerintahan Daerah/SIPD) for Accounting and Reporting.

Method: Participants included members the provincial administration to the regencies of Banjar, Barito Kuala, Hulu Sungai Tengah, Hulu Sungai Selatan, Hulu Sungai Utara, Tabalong, Tapin, and Banjarmasin city, also the Financial and Development Supervisory Agency (BPKP) and the Audit Board of the Republic of Indonesia (BPK RI) participated in a qualitative case study that covered all of South Kalimantan Province. Data were collected through interviews and documentation.

Findings: The research revealed a number of factors that challenge SIPD implementation, including concerns with the quality provided by systems and services, government format compliance with financial reports being less than 100%, data inaccuracies in its Administrative Module using system at both state and local levels, as well as technical problems also in the Administrative Module in delivering data to the Accounting and Reporting Module. Institutional theory describes that local governments persist in using SIPD despite existing constraints.

Novelty/Value: This study offers new insights into accounting and reporting challenges under SIPD from the perspective of local governments and oversight institutions, emphasizing the need for system reliability, user adaptation, and regulatory alignment to support effective public financial management, based on findings reflected in BPK audit results.

Enhancing Council Accountability and Performance Through Internal Audit in The Gambia and Sub-Saharan Africa

2025-11-27T06:02:56+00:00

Purpose: This paper examines the role of internal audit in accountability and performance in local government councils in The Gambia where the reforms of a decentralisation has enlarged the mandates without corresponding governance capacity. It bridges the gap in the empirical and theoretical literature by examining the effectiveness of internal audit at the sub-national level and deriving comparative lessons of African countries.

Method: The qualitative research design was applied. They were semi-structured interviews with 26 officials, structured qualitative surveys and document analysis of audit reports and policy documents. The data were coded using open and axial and selective coding, cross-source triangulation to reveal institutional, political and operational forces which influence internal audit practices.

Findings: The internal audit units lack independence, capacity, and ability to impact on procurement, budgeting, and service delivery decisions due to limited independence, capacity, and political interference. The challenges in developing countries are similar, and the ones peculiar to Gambia are the CEOs-controlled reporting lines and the administrative culture of the hierarchies. Observations in other countries such as Kenya, Ghana and South Africa reveal that independent audit committees and performance audit practices as well as statutory enforcement mechanisms enhance the utilisation and accountability results of audit.

Implications: To improve internal audit, reforms that will improve the independence of auditors, institutionalise the follow up procedures, and the implementation of audit recommendations is necessary. All these are needed to reduce internal audit operations into concrete gains in accountability and council performance.

Novelty/Value: This research is among the earliest qualitative evaluations of internal audit systems in Gambian local councils. It combines institutional and principal-agency theory and African comparative experience to suggest situation-specific avenues of enhancing accountability in decentralised governance settings.

Measuring the Role of Female Auditor Behavior: Evidence in Indonesia

2025-11-25T03:02:43+00:00

Purpose: This research aims to further examine the factors that cause the underrepresentation of female auditors in Indonesian public accounting firms in their professional behavior.

Method: The data were collected through the implementation of experimental methods in between subjects with 2x2x2 factorial design, which involved a total of 104 participants, including partners, managers, senior staff, and junior staff, whose data were collected directly at the IAPI training in Semarang City. Data processing was then carried out using ANOVA and regression approaches.

Findings: The results show that female and male auditors exhibit equivalent levels of professional skepticism. This indicates that the professionalization and standardization of auditing create convergence in professional competencies, regardless of gender differences. However, female auditors exhibit slightly higher levels of audit communication behavior than male auditors. This is manifested in a more comprehensive disclosure of audit information and a preference for participatory communication. Female auditors exhibit higher levels of organizational culture behavior, as evidenced by a stronger awareness of the importance of organizational ethical values and a supportive work environment.

Implications: These findings suggest that public accounting firms should eliminate gender-based biases in professional recruitment and promotion, as the convergence of professional skepticism indicates that core auditing competencies are gender-neutral. Firms are encouraged to implement gender-diversity policies that move beyond representation, focusing instead on integrating the unique behavioral strengths into specialized auditor training and leadership development programs.

Novelty/Value: This study employs experimental design to integrate moral sensitivity theory and explain complex gender differences in auditing, providing practical implications for gender diversity policies and auditor training.

Interactions of Digitalisation and Sustainable Finance in Shaping Profitability of Indonesian State Banks

2025-11-21T22:02:57+00:00

Purpose: This study examines the determinants of financial performance in Indonesian state-owned and regionally owned banks by integrating prudential indicators with developmental, sustainability, and digital transformation variables. It evaluates how digital capability and green lending moderate the effects of credit risk, earning power, and developmental credit on profitability.

Method: The analysis uses balanced panel data from six banks over two thousand nineteen to two thousand twenty-three. A fixed effect panel regression model with interaction terms captures both direct determinants and moderating influences. Key predictors include nonperforming loans, net interest margin, developmental credit, and cooperative or village enterprise lending, while moderating variables comprise digital capability and green lending.

Findings: Nonperforming loans exert the strongest negative effect on profitability, whereas net interest margin remains the primary driver of return on assets. Developmental credit and lending to local enterprises enhance financial performance. Green lending and environmental, social, and governance performance are positively associated with profitability. Digital capability weakens the adverse influence of credit risk and strengthens the gains from earning power. Green lending amplifies the positive effect of developmental credit.

Implications: Profitability in state-aligned banks reflects the combined influence of prudential fundamentals, developmental mandates, sustainable finance initiatives, and digital transformation. Strengthening credit risk management, improving developmental programme mechanisms, expanding green finance, and deepening digital capability are essential for enhancing performance and informing regulatory incentive design.

Novelty/Value: This study offers integrated empirical evidence on prudential, developmental, sustainability, and digital determinants of profitability in Indonesian state banking. It demonstrates that digital capability and green lending not only improve financial outcomes but also reinforce the effectiveness of developmental credit, thereby advancing research on development-oriented and sustainable finance models.

Capital Structure Effects: The Role of Sales Growth in Shaping Firm Performance Across Southeast Asia

2025-11-25T02:41:10+00:00

Purpose: This study aims to explore the relationship between capital structure and firm performance among listed firms in Southeast Asia and examines whether sales growth changes that relationship, a topic in response to the lack of studies focused on this region.

Method: This study uses an unbalanced panel dataset of 4,229 listed firms in Southeast Asia, including Indonesia, Malaysia, the Philippines, Thailand, Singapore, and Vietnam from 2019 to 2023. The study employed panel data regression analysis with Stata 19.

Findings: The findings show important patterns in capital structure and performance. Leverage to equity consistently shows a negative relationship with ROA, ROE, and Tobin’s Q, indicating its detrimental effect on performance. Leverage to assets produces mixed results, while market value leverage is mostly positive. Sales growth plays a moderating role by strengthening the positive and significant impact of market value leverage on performance and reshapes other relationships. These results highlight the complexity of capital structure decisions and the influence of sales growth on capital structure and firm performance relationship in Southeast Asia

Implications: This research extends the trade-off theory by empirically showing that the optimal capital structure is a quantifiable result influenced by various leverage mechanisms. Sales growth becomes as a critical moderator, strengthening a firm’s ability to manage financial risk and shift the trade-off point toward more favorable leverage. This implies that capital structure does not remain fixed; it moves with growth expectations. Practically, firms with higher sales growth likely to adjust leverage when conditions change, which in turn reduces the likelihood of financial risks.

Novelty/Value: This research introduces a new perspective by examining sales growth as a moderating factor in the relationship between capital structure and firm performance. Additionally, by using multiple measures of performance (ROA, ROE, Tobin’S Q) and capital structure (LE, LA, MVL) in the context of emerging markets, the research offers insights that are both new and practical.

Unveiling The Impact of Collaboration-Oriented Culture on the Sustainability Report Quality: The Role of Stakeholder Pressure

2025-11-18T01:25:22+00:00

Purpose: This research attempts to reveal how a team-centric culture impacts the quality of sustainability reports and how stakeholder pressure influences those linkages.

Method: This study employs a quantitative methodology. The research sample comprised 64 energy industry companies from 2020 to 2024. Based on the purposive sampling employed, this research consists of 56 energy companies (260 observations). Secondary data from annual reports and corporate sustainability reports were utilised. The data were processed using STATA software.

Findings: The findings show that energy companies that prioritise human capital development do not impact on the quality of sustainability reports, according to the fixed effect estimate model. Furthermore, pressure from institutional shareholders does not persuade companies to generate better sustainability reports. This finding aligns with other types of stakeholder pressure, both from creditors and employees. Other findings suggest that only company age can be an indicator of companies producing better-quality sustainability reports. Furthermore, several estimation models found that company size and profitability (return on assets) play a role in encouraging better-quality sustainability reports.

Implications: The research findings indicate that all energy companies in Indonesia have not yet used assurance services to verify the information included in their sustainability reports. The findings provide practical implications for regulatory bodies, including the Indonesian Financial Accounting Standards Board-Institute of Indonesia Chartered Accountants (IAI) and the Financial Services Authority (OJK), regarding sustainability report verification regulations to minimise negative narcissism practices.

Novelty/Value: This study focuses on the quality of the sustainability report related to the company's culture. Based on the theoretical perspective, this study uses institutional theory and stakeholder theory. Additionally, this study took into account the moderating effect of stakeholder pressure, which might have an impact on managerial choices.

Green Investment Policy as Moderator of ESG and Profitability on Value Relevance in Indonesian Coal Firm

2025-11-18T01:31:24+00:00

Purpose: This study investigates whether ESG disclosure and profitability affect the value relevance of accounting information proxied by Tobin’s Q in coal firms, analyse the Green Investment Policy (GIP) moderation role. It aims to show the ESG efforts and “green” capital allocation uncertainty into higher market valuation in an emission-intensive sector.

Method: Archival coal companies analysis listed on the Indonesia Stock Exchange (IDX) for 2019–2024. Data collected from annual and sustainability reports. The empirical with panel data regression and moderated regression analysis (MRA) using interaction terms (ESG × GIP; Profitability × GIP), also robust standard errors in ensuring the inference in heteroskedasticity.

Findings: ESG disclosure not statistically significant in influencing firm value, either directly or through interaction with Green Investment Policy (GIP). Meanwhile, the interaction between Profitability and GIP is positive and significant, indicating that profits connected to credible green investments are more favourable valued by the market. This suggest that investors prioritize the quality of profit deployment within a sustainable and verifiable framework, rather than merely the total amount of profits. In accounting terms, integrating profitability with credible green investment produces stronger value signals, reflected in higher Tobin’s Q.

Novelty/Value: The study redefines value relevance by emphasizing the profits distribution for verifiable green investment than ESG disclosure alone. The study underlining mixed evidence on ESG with the financial performance grows to be value-relevant in relation with credible GIP. The results provide managers, investors, and policymakers to align financial and sustainability objectives in emission-intensive industries.

The Role of Overconfidence on Online Overdebt Behaviour

2025-09-03T00:13:37+00:00

Purpose: The study aimed to examine the relationship between overconfidence bias and online overdebt behavior across four countries: Indonesia, Hungary, Poland, and Romania.

Method: A total of 900 participants were surveyed, with 210–230 participants from each country, ensuring a diverse and heterogeneous sample in terms of age, gender, education level, and income. Data is processed using AMOS 24 software.

Findings: The results from the SEM analysis supported all four hypotheses. Overconfidence bias is positively associated with online overdebt behavior, financial literacy moderates the relationship between overconfidence bias and online overdebt behavior, the ease of access to credit via online platforms amplifies the effect of overconfidence on online overdebt behavior, and overconfidence bias is associated with an underestimation of future financial risk in online borrowing.

Implications: The significant role of digital credit access suggests that regulators must implement stricter controls on the 'ease-of-borrowing' features in fintech apps to prevent structural factors from amplifying cognitive biases in risky financial decision-making.

Novelty/Value: The study’s novelty lies in its cross-continental analysis—spanning Indonesia, Hungary, Poland, and Romania—providing a rare look at relationships online debt behavior. Recent studies have shown that overconfidence can influence consumer decisions in debt markets, such as credit card usage and loans, potentially leading to dangerous overleveraging behaviors. The gap research is the limited study examining the specific mechanisms through which overconfidence influences online overdebt behavior.