The Influence of Liquidity, Good Corporate Governance, and Capital Quality on Sustainability Business Mediated by Credit Quality
Year: 2025
Type: article
Abstract: Between 2014 and 2023, the number of Bank Perkreditan Rakyat in Indonesia declined by 14%, accompanied by a drop in financial performance, marked by declining ROA, ROE, and rising NPLs. Additionally, rural banks are mandated to implement Sustainable Finance Principles under POJK No. 51/2017. This study examines the influence of liquidity, Good Corporate Governance (GCG), and capital quality on sustainable business, with credit quality as a mediating variable. Using a sample of 18 BPRs with assets above IDR 1 trillion and published governance reports, the study employs descriptive statistics, panel data regression, and the Sobel test. The results reveal that liquidity has no effect on sustainability business practices; GCG has a significant positive impact on sustainability business practices; capital quality does not influence sustainability business practices; credit quality has a significant negative effect on sustainability business practices; liquidity does not affect credit quality; GCG does not influence credit quality; capital quality has a significant negative impact on credit quality; credit quality does not mediate the effect of liquidity on sustainability business practices; credit quality does not mediate the effect of GCG on sustainability business practices; and credit quality mediates the impact of capital quality on sustainability business practices.
Authors: Rena Dwi Noviana, Indra Siswanti
Institution: Mercu Buana University
Language: English
Subfield: Finance
Domain: Social Sciences
Open Access status: diamond
OpenAlex ID: W4409072062