Do Female Directors Enhance ESG Performance? The Moderating Role of FinTech in Indonesian Banking

Meiliana Suparman; Riska Hariyanti; Sheila Septiany

doi:10.58777/rag.v4i2.584

Authors

Meiliana Suparman Universitas Internasional Batam https://orcid.org/0000-0002-5918-7039
Riska Hariyanti Universitas Internasional Batam
Sheila Septiany Universitas Internasional Batam https://orcid.org/0009-0006-2258-6024

DOI:

https://doi.org/10.58777/rag.v4i2.584

Keywords:

Female Directors, Board Gender Diversity, Financial Technology, ESG Performance

Abstract

This study examines the effect of female representation on the board of directors on environmental, social, and governance (ESG) performance in the banking sector. The rapid growth of financial technology (FinTech) creates a governance phenomenon by potentially reshaping how board diversity influences sustainability outcomes. This study uses panel data from Indonesian listed banks and analyzes 230 firm-year observations from 2019 to 2023. This study applies moderated regression analysis (MRA) to test the proposed relationships. The findings show that female representation on the board of directors improves ESG performance. However, FinTech development weakens the positive effect of female directors on ESG performance, indicating that higher levels of digitalization reduce the effectiveness of board gender diversity in promoting sustainability. This study concludes that digital transformation alters the role of board governance mechanisms in achieving ESG objectives. This study provides managerial and regulatory implications by emphasizing the importance of aligning FinTech strategies with board governance practices to ensure that digitalization supports, rather than undermines, corporate ESG commitments and long-term sustainability.

References

Abdelkader, M. G., Gao, Y., & Elamer, A. A. (2024). Board gender diversity and ESG performance: The mediating role of temporal orientation in South Africa context. Journal of Cleaner Production, 440. https://doi.org/10.1016/j.jclepro.2024.140728

Agnese, P., Cerciello, M., Oriani, R., & Taddeo, S. (2024). ESG controversies and profitability in the European banking sector. Finance Research Letters, 61, 105042. https://doi.org/10.1016/J.FRL.2024.105042

Alkhawaja, A., Hu, F., Johl, S., & Nadarajah, S. (2023). Board gender diversity, quotas, and ESG disclosure: Global evidence. International Review of Financial Analysis, 90, 102823. https://doi.org/10.1016/J.IRFA.2023.102823

Alkhwaldi, A. F. (2024). Digital transformation in financial industry: antecedents of fintech adoption, financial literacy and quality of life. International Journal of Law and Management. https://doi.org/10.1108/IJLMA-11-2023-0249

Andrieș, A. M., & Sprincean, N. (2023). ESG performance and banks’ funding costs. Finance Research Letters, 54, 103811. https://doi.org/10.1016/J.FRL.2023.103811

Bank Indonesia. (2024, February 24). BI-Rate Held At 6,00%: Synergy Maintaining Stability and Reviving Growth.

Berg, F., Kölbel, J. F., & Rigobon, R. (2022). Aggregate Confusion: The Divergence of ESG Ratings*. Review of Finance, 26(6), 1315–1344. https://doi.org/10.1093/rof/rfac033

Birindelli, G., Chiappini, H., & Jalal, R. N. U. D. (2024). Greenwashing, bank financial performance and the moderating role of gender diversity. Research in International Business and Finance, 69, 102235. https://doi.org/10.1016/J.RIBAF.2024.102235

Bsoul, R., Atwa, R., Odat, M., Haddad, L., & Shakhatreh, M. (2022). Do CEOs’ demographic characteristics affect firms’ risk-taking? Evidence from Jordan. Cogent Business and Management, 9(1). https://doi.org/10.1080/23311975.2022.2152646

Chiaramonte, L., Dreassi, A., Girardone, C., & Piserà, S. (2022). Do ESG strategies enhance bank stability during financial turmoil? Evidence from Europe. European Journal of Finance, 28(12), 1173–1211. https://doi.org/10.1080/1351847X.2021.1964556

Cicchiello, A. F., Cotugno, M., & Foroni, C. (2023). Does competition affect ESG controversies? Evidence from the banking industry. Finance Research Letters, 55, 103972. https://doi.org/10.1016/J.FRL.2023.103972

Deloitte. (2024). 2024 Sustainability Action Report: Survey findings on ESG disclosure and preparedness. https://www.deloitte.com/content/dam/assets-zone3/us/en/docs/services/audit-assurance/2024/2024-sustainability-action-report.pdf

Dicuonzo, G., Palmaccio, M., & Shini, M. (2024a). ESG, governance variables and Fintech: An empirical analysis. Research in International Business and Finance, 69. https://doi.org/10.1016/j.ribaf.2023.102205

Dicuonzo, G., Palmaccio, M., & Shini, M. (2024b). ESG, governance variables and Fintech: An empirical analysis. Research in International Business and Finance, 69, 102205. https://doi.org/10.1016/J.RIBAF.2023.102205

Disli, M., Yilmaz, M. K., & Mohamed, F. F. M. (2022). Board characteristics and sustainability performance: empirical evidence from emerging markets. Sustainability Accounting, Management and Policy Journal, 13(4), 929–952. https://doi.org/10.1108/SAMPJ-09-2020-0313

El Khoury, R., Nasrallah, N., Hussainey, K., & Assaf, R. (2023). Spillover analysis across FinTech, ESG, and renewable energy indices before and during the Russia–Ukraine war: International evidence. Journal of International Financial Management and Accounting, 34(2), 279–317. https://doi.org/10.1111/jifm.12179

Fan, Y., Li, S., & Yang, W. Q. (2024). The impact of the percentage of female directors on corporate ESG score. Finance Research Letters, 63, 105376. https://doi.org/10.1016/J.FRL.2024.105376

Fiorillo, P., Meles, A., Ricciardi, A., & Verdoliva, V. (2025). ESG performance and the cost of debt. Evidence from the corporate bond market. International Review of Financial Analysis, 102. https://doi.org/10.1016/j.irfa.2025.104097

Galletta, S., Mazzù, S., Naciti, V., & Vermiglio, C. (2022). Gender diversity and sustainability performance in the banking industry. Corporate Social Responsibility and Environmental Management, 29(1), 161–174. https://doi.org/10.1002/csr.2191

Guo, X., & Pang, W. (2025). The impact of digital transformation on corporate ESG performance. Finance Research Letters, 72, 106518. https://doi.org/10.1016/j.frl.2024.106518

Gurol, B., & Lagasio, V. (2022). Women board members’ impact on ESG disclosure with environment and social dimensions: evidence from the European banking sector. Social Responsibility Journal, 19(1), 211–228. https://doi.org/10.1108/SRJ-08-2020-0308

Hodula, M. (2024). Beyond innovation: Fintech credit and its ripple effects on traditional banking profitability. Finance Research Letters, 63, 105307. https://doi.org/10.1016/J.FRL.2024.105307

Huang, J., Liu, R., Wang, W., Wang, Z., Wang, C., & (Jimmy) Jin, Y. (2024). Unleashing Fintech’s potential: A catalyst for green bonds issuance. Journal of International Financial Markets, Institutions and Money, 93. https://doi.org/10.1016/j.intfin.2024.102009

Itan, I., Febriana, H., Chen, R., & Septiany, S. (2025). Company Performance and Corporate Social Responsibility: Assessing The Role Of Corporate Governance. Journal of Governance and Regulation, 14(2 Special Issue), 371–381. https://doi.org/10.22495/jgrv14i2siart16

Itan, I., Sylvia, S., Septiany, S., & Chen, R. (2025). The influence of environmental, social, and governance disclosure on market reaction: evidence from emerging markets. Discover Sustainability, 6(1). https://doi.org/10.1007/s43621-025-01085-0

Karkowska, R., Samaniego-Medina, R., Giráldez-Puig, P., & Korzeb, Z. (2025). Boards and ESG Performance: The Contingent Influence of Climate Vulnerability on Global Banks. Business Strategy and the Environment. https://doi.org/10.1002/bse.70314

Khalil, R. G., Damrah, S., Bajaher, M., & Shawtari, F. A. (2023). Unveiling the relationship of ESG, fintech, green finance, innovation and sustainability: case of Gulf countries. Environmental Science and Pollution Research International, 30(54), 116299–116312. https://doi.org/10.1007/s11356-023-30584-8

Khan, K. U., Ali, W., Atlas, F., & Khan, F. (2024). Driving change: the influence of female directors on ESG performance in the automotive industry. Discover Sustainability, 5(1). https://doi.org/10.1007/s43621-024-00743-z

Kharrat, H., Trichilli, Y., & Abbes, B. (2024). Relationship between FinTech index and bank’s performance: a comparative study between Islamic and conventional banks in the MENA region. Journal of Islamic Accounting and Business Research, 15(1), 172–195. https://doi.org/10.1108/JIABR-03-2022-0081

Laskar, N. (2024). Assessing the Drivers of Corporate Sustainability Performance Disclosures Using the Global Reporting Initiative (GRI) G4 Framework. Journal of Risk and Financial Management, 17(11). https://doi.org/10.3390/jrfm17110513

Li, W., & Pang, W. (2023). The impact of digital inclusive finance on corporate ESG performance: based on the perspective of corporate green technology innovation. Environmental Science and Pollution Research, 30(24), 65314–65327. https://doi.org/10.1007/s11356-023-27057-3

Liu, Z., & Li, X. (2024). The impact of bank fintech on ESG greenwashing. Finance Research Letters, 62. https://doi.org/10.1016/j.frl.2024.105199

Menicucci, E., & Paolucci, G. (2023). ESG dimensions and bank performance: an empirical investigation in Italy. Corporate Governance (Bingley), 23(3), 563–586. https://doi.org/10.1108/CG-03-2022-0094

Odriozola, M. D., Blanco-González, A., & Baraibar-Diez, E. (2024). The link of ESG performance and board gender diversity in European firms. Corporate Social Responsibility and Environmental Management, 31(6), 5656–5669. https://doi.org/10.1002/csr.2881

OJK. (2021). ROADMAP KEUANGAN BERKELANJUTAN TAHAP II (2021 – 2025). https://ojk.go.id/id/berita-dan-kegiatan/publikasi/Pages/Roadmap-Keuangan-Berkelanjutan-Tahap-II-(2021-2025).aspx

OJK. (2025). TAKSONOMI UNTUK KEUANGAN BERKELANJUTAN INDONESIA VERSI 2. https://ojk.go.id/id/Publikasi/Roadmap-dan-Pedoman/Sektor-Jasa-Keuangan/Keuangan-Berkelanjutan/Pages/Buku-Taksonomi-untuk-Keuangan-Berkelanjutan-Indonesia-(TKBI)-Versi-2.aspx

Peng, H., & Chandarasupsang, T. (2023). The Effect of Female Directors on ESG Practice: Evidence from China. International Journal of Financial Studies, 11(2). https://doi.org/10.3390/ijfs11020066

R. Edward Freeman, & John Mcvea. (2001). A Stakeholder Approach to Strategic Management. http://papers.ssrn.com/paper.taf?abstract_id=263511

Suhardjo, I., Tan, N., & Andreas, K. (2024). IS FINTECH A SUSTAINABLE BUSINESS MODEL FOR THE FUTURE? EMPIRICAL STUDY IN INDONESIA. Jurnal Studi Akuntansi Dan Keuangan, 7(1), 2024–2067. https://doi.org/10.29303/akurasi.v7i1.480

Suparman, M., Suhardjo, I., Crystina, C., Agustin, I. N., & Christian, Y. (2025). Digital transformation and sustainability performance: an empirical study from Indonesia. Asian Journal of Accounting Research, 1–20. https://doi.org/10.1108/AJAR-02-2025-0049

Supriyanto, S., Ramadana, M., & Istiqomah, N. (2025). The role of green investment in enhancing environmental disclosure in Indonesia. Asian Review of Accounting, 33(5), 840–859. https://doi.org/10.1108/ARA-09-2024-0274

Trotta, A., Rania, F., & Strano, E. (2024). Exploring the linkages between FinTech and ESG: A bibliometric perspective. Research in International Business and Finance, 69. https://doi.org/10.1016/j.ribaf.2023.102200

Tsang, A., Frost, T., & Cao, H. (2023). Environmental, Social, and Governance (ESG) disclosure: A literature review. The British Accounting Review, 55(1), 101149. https://doi.org/10.1016/J.BAR.2022.101149

Wan, S., Lee, Y. H., & Sarma, V. J. (2023). Is Fintech good for green finance? Empirical evidence from listed banks in China. Economic Analysis and Policy, 80, 1273–1291. https://doi.org/10.1016/j.eap.2023.10.019

Wanyan, R., & Zhao, T. (2025). The dual path of fintech in alleviating ESG decoupling: A dynamic balance between short-term and long-term effects. Finance Research Letters, 86, 108443. https://doi.org/10.1016/J.FRL.2025.108443

Wu, Z., Pathan, S., & Zheng, C. (2024). FinTech adoption in banks and their liquidity creation. British Accounting Review. https://doi.org/10.1016/j.bar.2024.101322

Zhou, J., Sharpe, W. H., Halabi, A. K., Song, H., & Colombage, S. (2025). Unlock Your Firm Value with ESG Performance? Evidence from ASX-Listed Companies. Journal of Risk and Financial Management, 18(5). https://doi.org/10.3390/jrfm18050247