GREEN BANKING AS A MODERATOR OF ICT INVESTMENT AND FIRM SIZE ON BANK FINANCIAL PERFORMANCE

Abstract

Amid accelerating digital transformation and growing expectations for sustainable finance, banks face increasingly complex resource allocation decisions, particularly because substantial technological expenditure does not invariably generate corresponding improvements in profitability. Against this background, the present study investigates the moderating role of green banking disclosure in the relationships between Information and Communication Technology (ICT) investment, firm size and bank financial performance. The empirical analysis employs a balanced panel comprising 28 banks listed on the Indonesia Stock Exchange over the 2021–2024 period, yielding 112 bank-year observations. Moderated regression analysis is conducted within a fixed-effects panel framework, incorporating mean-centred variables and heteroskedasticity-robust standard errors. The findings demonstrate that, at the mean level of green banking disclosure, ICT investment exhibits no statistically significant association with Return on Assets (ROA), whereas firm size contributes positively and significantly to financial performance. Conversely, both interaction coefficients—ICT × green banking and firm size × green banking—are positive and statistically significant, indicating that higher green banking disclosure strengthens the relationships between these resources and bank profitability. Additional robustness assessments establish that the moderating influence on firm size remains comparatively stable across specifications, while the corresponding effect on ICT investment varies with the application of clustered standard errors and lagged specifications, warranting a cautious interpretation. Collectively, these findings provide empirical support for the Resource-Based View (RBV) by highlighting the complementary relationships between organisational resources and sustainability-related capabilities. The study further offers practical implications for banking executives and regulatory authorities seeking to integrate digital transformation strategies with broader sustainable finance objectives.