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

Ahmad Sutanto — 2025-12-19

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

Edem Lekettey — 2025-12-27

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

Rizqi Annisa — 2025-12-29

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.