THE EFFECT OF ESG, ASSET QUALITY, AND BANK PERFORMANCE ON BANK LENDING POST COVID-19 (2020-2023) IN INDONESIA

Abstract

his study aims to analyze the effect of Environmental, Social, and Governance (ESG), asset quality, and bank performance on bank lending in Indonesia post the COVID-19 period (2020–2023). The study employs secondary data consisting of financial statements for the period 2020–2023 and sustainability indexes obtained from ESG rating agencies. The variables used include ESG, asset quality (measured by NPL), bank performance (measured by ROA), and bank lending (measured by LDR). The analysis was conducted using Panel Data Regression with the Fixed Effect Model (FEM). The findings reveal that ESG and asset quality each have a positive and significant influence on bank lending, while bank performance does not significantly affect bank lending. However, when tested simultaneously, ESG, asset quality, and bank performance together have a significant influence on bank lending in Indonesia.