The Effect Of Interest Rate, Allowance for Impairment Losses, And Credit Risk On Green Finance Interest Income In the Banking Sector 2019-2024 Period

Abstract

This study aims to analyze the impact of the Interest Rate (BI-Rate), the Allowance for Impairment Losses, and credit risk on finance interest income in the Indonesian banking sector for the period 2019-2024. This study employs a quantitative approach using panel data regression. The sample was selected via purposive sampling, comprising a total of 94 observations from banks listed on the Indonesia Stock Exchange (IDX). The data were analyzed using Eviews software with the Random Effects Model (REM) as the optimal model. The results of this study indicate that the Interets Rate and credit risk do not have a significant effect on green finance interest income. Meanwhile, the Allowance for Loan Losses has a significant effect on green finance interest income. These findings suggest that the management of loan loss reserves plays a crucial role in maintaining the stability of green finance interest income. These findings suggest that the management of loan loss reserves plays a crucial role in maintaining the stability of green finance funding within the banking sector. Meanwhile, credit risk proxied by NPL, does not have a significant effect on green finance interest income. Furthermore, the Allowance for Loan Losses has a significant effect on green finance interest income. The results of this study indicate that the management of loan loss reserve plays a crucial role in maintaining the stability of green finance funding in the banking sector. Furthermore, credit risk has no significant impact on green finance interest income. The results of this study indicate that the management of credit loss reserves plays a crucial role in maintaining the stability of green finance in the banking sector.