The impact of climate change and green financing on bank stability in Malaysia

Authors

  • Mohd Razuan Abd Hishamuddin Universiti Teknologi MARA Sabah
  • Imbarine Bujang Universiti Teknologi MARA Sabah
  • Flicia Rimin Universiti Teknologi MARA Sabah
  • Jamaliah Said Accounting Research Institute, Universiti Teknologi MARA, Shah Alam, Malaysia
  • Dwi Astuti Rosmianingrum Nainggolan Accounting Research Institute, Universiti Teknologi MARA, Shah Alam, Malaysia

DOI:

https://doi.org/10.24191/jeeir.v11i3.25208

Keywords:

Climate change, Green financing, Bank stability, Z-score

Abstract

Banking stability is paramount for economic growth. A sound financial intermediation process leads to the creation of loans from
depositors to borrowers, guaranteeing the nation's development. However, banking businesses through credit facilities could severely cause environmental degradation and economic development. The non-green financing facilities have influenced climate change to rise and be uncontrollable, leading to inconclusive and unclear findings among scholars. The aim of this paper is to examine the impact of climate change and green financing on bank stability in Malaysia. The sample consists of eight commercial banks in Malaysia, using data stretching from 2012 until 2021 and tested using Panel Autoregressive Distributed Lag (ARDL). The general findings suggest that a commercial bank remains stable in the long run with an injection of green financing. The implications of this paper recommend that green finance can be classified as a source of alternative financing tools to mitigate the destabilising impacts of climate change on the bank's operating business and contribute to the stability of the bank.

Author Biographies

Mohd Razuan Abd Hishamuddin, Universiti Teknologi MARA Sabah

Mohd Razuan Abd Hishamuddin is a Ph.D. candidate at the Faculty of Business and Management, Universiti Teknologi MARA, Kota Kinabalu.

Imbarine Bujang, Universiti Teknologi MARA Sabah

Imbarine Bujang is a Professor in the Faculty of Business and Management, Universiti Technology MARA Sabah Branch, Kota Kinabalu Campus. He has also been the Chairman of the Audit, Compliance, and Risk Management Committee for Saham Sabah Berhad since 2021. He was awarded the Honorary Fellowship from the Centre of Business and Economic Research in the United Kingdom in 2019. He has vast experience in research with many publications majoring in finance. His research areas include financial economics and behavioral finance in Malaysia and beyond.

Flicia Rimin, Universiti Teknologi MARA Sabah

Flicia Rimin, Ph.D., is a senior lecturer in the Faculty of Business Management of Universiti Teknologi MARA, Malaysia. She obtained her Doctorate in Business Administration from the Arshad Ayub Graduate Business School (AAGBS), Universiti Teknologi MARA, Malaysia. Her research interests concentrate on financial management and corporate governance.

Jamaliah Said, Accounting Research Institute, Universiti Teknologi MARA, Shah Alam, Malaysia

Jamaliah Said is a professor and currently serves as Director of the Accounting Research Institute, UiTM Shah Alam. She has vast experience in research with many publications majoring in financial accounting and reporting. Her research areas include strategic management, governance, accountability, integrity, and performance.

Dwi Astuti Rosmianingrum Nainggolan, Accounting Research Institute, Universiti Teknologi MARA, Shah Alam, Malaysia

Dwi Astuti Rosmianingrum Nainggolan is a Ph.D. candidate at the Accounting Research Institute, UiTM
Shah Alam. She is a senior lecturer at the Department of Accounting, Faculty of Economics and Business,
University of Indonesia. She has more than fifteen years of working experience in the capital market sector in Indonesia in the field of investment banking and fund management. She also has exposure to assisting the Indonesian Financial Accounting Standards Board in the continuation of implementing IFRS Standards in Indonesia. Her research interests include capital markets, accounting standards, and corporate governance.

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Published

2024-09-30

How to Cite

Abd Hishamuddin, M. R., Bujang, I., Rimin, F., Said, J., & Nainggolan, D. A. R. . (2024). The impact of climate change and green financing on bank stability in Malaysia. Journal of Emerging Economies and Islamic Research, 11(3), 109–122. https://doi.org/10.24191/jeeir.v11i3.25208

Issue

Vol. 11 No. 3 (2023): September 2023 Issue

Section

Articles

License

Copyright (c) 2024 Mohd Razuan Abd Hishamuddin, Imbarine Bujang, Flicia Rimin, Jamaliah Said, Dwi Astuti Rosmianingrum Nainggolan

Creative Commons License

This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.