Geopolitical Risk, Institutional Ownership, and Firm Size in Shaping Sustainable Financial Performance: Evidence from the Banking Sector Supporting Aquatic Resource Sustainability
DOI:
https://doi.org/10.35800/jip.v14i2.68254Keywords:
Geopolitical Risk, Institutional Ownership, Firm Size, Sustainable Financial Performance, Aquatic Resource Sustainability, Banking SectorAbstract
This study looks at how geopolitical risk, institutional ownership, and business size influence long-term financial performance in the banking sector, with consequences for aquatic resource sustainability and environmental development. Financial institutions play an important role in facilitating investment in areas such as fisheries, coastal management, and marine conservation, given the increasing global uncertainties and significance of sustainable finance. This study takes a quantitative approach, utilizing Structural Equation Modeling (SEM) to examine the direct and indirect links between geopolitical risk, institutional ownership, business size, and sustainable financial performance. The dataset includes of banking firms listed on the Indonesia Stock Exchange between 2020 and 2024. Institutional ownership and business size are modeled as mediating variables, relating geopolitical risk to sustainable financial performance. The findings suggest that geopolitical risk has a considerable impact on both institutional ownership and business size. Furthermore, institutional ownership and firm size significantly influence sustainable financial performance. The findings also reveal that geopolitical risk exerts a significant indirect effect on sustainable financial performance through both mediators. These results highlight the importance of governance structures and organizational capacity in mitigating external risks and enhancing long-term financial sustainability. This study adds to the literature integrating financial performance analysis with sustainability considerations in the context of aquatic resource management. It provides empirical evidence that financial stability and institutional governance within the banking sector are essential in supporting sustainable investment in marine and coastal sectors. The findings offer practical implications for policymakers, financial institutions, and investors in designing strategies that strengthen financial resilience while promoting environmentally sustainable development.
Keywords: Geopolitical Risk, Institutional Ownership, Firm Size, Sustainable Financial Performance, Aquatic Resource Sustainability, Banking Sector
References
Afum, E., Agyabeng-Mensah, Y., Baah, C., Acquah, I. S. K., & Osei, M. B. (2023). Empirical evidence of SMEs’ ecopreneurship posture, green competitiveness and community-based performance: the neglected missing linkages of green practices. International Journal of Emerging Markets. https://www.scopus.com/inward/record.uri?eid=2-s2.0-85146307187&doi=10.1108%2FIJOEM-10-2021-1577&partnerID=40&md5=a7a74d6760f122acb096916fe0cdf3ea
Al-Mawali, H., Al Sharif, A., Abu Rumman, G., & Kerzan, F. (2018). Environmental Strategy, Environmental Management Accounting and organizational performance: Evidence from the United Arab Emirates Market. Journal of Environmental Accounting and Management, 6(2), 105–114. https://doi.org/10.5890/jeam.2018.06.002
Alakkas, A. A., Shabir, S., Alhumoudi, H., Boukhris, M., Baig, A., & Khan, I. A. (2023). The Impact of Sustainability Accounting on Environmental Performance and Productivity: A Panel Data Analysis. International Journal of Sustainable Development and Planning, 18(8), 2431–2441. https://doi.org/10.18280/ijsdp.180814
Alim, M., & Destriana, U. (2019). The Influence of Institutional Ownership, Audit Committee and Company Size on Company Performance. JMB : Jurnal Manajemen Dan Bisnis, 5(1). https://doi.org/10.31000/jmb.v5i1.1990
Alnafrah, I. (2024). ESG practices mitigating geopolitical risks: Implications for sustainable environmental management. Journal of Environmental Management, 358, 120923. https://doi.org/https://doi.org/10.1016/j.jenvman.2024.120923
Anwer, Z., Goodell, J. W., Migliavacca, M., & Paltrinieri, A. (2023). Does ESG impact systemic risk? Evidencing an inverted U-shape relationship for major energy firms. Journal of Economic Behavior & Organization, 216, 10–25. https://doi.org/https://doi.org/10.1016/j.jebo.2023.10.011
Bag, S., Rahman, M. S., Gupta, S., & Wood, L. C. (2023). Understanding and predicting the determinants of blockchain technology adoption and SMEs’ performance. International Journal of Logistics Management, 34(6), 1781–1807. https://doi.org/10.1108/IJLM-01-2022-0017
Bankole Ibrahim Ashiwaju, Israel Osejie Okoduwa, Jeremiah Olawumi Arowoogun, Kehinde Feranmi Awonuga, & Jane Osareme Ogugua. (2024). The Impact of COVID-19 on supply chain analytics: A global review. World Journal of Advanced Research and Reviews, 21(2), 013–021. https://doi.org/10.30574/wjarr.2024.21.2.0398
Borah, D., & Ellwood, P. (2022). The micro-foundations of conflicts in joint university-industry laboratories. Technological Forecasting and Social Change, 175. https://doi.org/10.1016/j.techfore.2021.121377
Buallay, A., El Khoury, R., & Hamdan, A. (2021). Sustainability reporting in smart cities: A multidimensional performance measures. Cities, 119, 103397. https://doi.org/10.1016/j.cities.2021.103397
Cahaya, A. (2015). Fishermen Community in the Coastal Area: A Note from Indonesian Poor Family. Procedia Economics and Finance, 26, 29–33. https://doi.org/10.1016/S2212-5671(15)00801-1
Cakir, E., & Ulukan, Z. (2020). A Fuzzy Linguistic Programming for Sustainable Ecotourism Activities. In C. S. & P. R. (Eds.), 2020 10th Annual Computing and Communication Workshop and Conference, CCWC 2020 (pp. 121–126). Institute of Electrical and Electronics Engineers Inc. https://doi.org/10.1109/CCWC47524.2020.9031187
Cerqueti, R., & Stefanelli, K. (2025). Spotlighting energy sector through green transition attention. Energy, 335, 137811. https://doi.org/https://doi.org/10.1016/j.energy.2025.137811
Correa-Garcia, J. A., Garcia-Benau, M. A., & Garcia-Meca, E. (2020). Corporate governance and its implications for sustainability reporting quality in Latin American business groups. Journal of Cleaner Production, 260. https://doi.org/10.1016/j.jclepro.2020.121142
Dadush, U. (2023). The policy response to global value chain disruption. Global Policy, 14(3), 548–557. https://doi.org/10.1111/1758-5899.13220
Desalegn, G., Tangl, A., & Fekete-Farkas, M. (2022). From Short-Term Risk to Long-Term Strategic Challenges: Reviewing the Consequences of Geopolitics and COVID-19 on Economic Performance. Sustainability, 14(21), 14455. https://doi.org/10.3390/su142114455
Do, T. T. T., & Tran, N. H. (2024). Influential Factors on Strategic Management Accounting Application and Its Influence on The Business: Empirical Evidence From a Developing Market. Corporate and Business Strategy Review, 5(1 Special Issue), 463–472. https://doi.org/10.22495/cbsrv5i1siart19
Dvouletý, O., Srhoj, S., & Pantea, S. (2021). Public SME grants and firm performance in European Union: A systematic review of empirical evidence. Small Business Economics, 57(1), 243–263. https://doi.org/10.1007/s11187-019-00306-x
Fiorillo, P., Meles, A., Pellegrino, L. R., & Verdoliva, V. (2024). Geopolitical risk and stock price crash risk: The mitigating role of ESG performance. International Review of Financial Analysis, 91, 102958. https://doi.org/10.1016/j.irfa.2023.102958
Gao, B., & Xu, Z. (2024). Adjustment of supply chain investment by transnational corporations in the Ukrainian crisis and geopolitical risks – Taking the three levels as the analytical framework. Transnational Corporations Review, 16(3), 200076. https://doi.org/https://doi.org/10.1016/j.tncr.2024.200076
Harahab, N., Riniwati, H., Utami, T. N., Abidin, Z., & Asmara Wati, L. (2021). Sustainability Analysis of Marine Ecotourism Management for Preserving Natural Resources and Coastal Ecosystem Functions. Environmental Research, Engineering and Management, 77(2), 71–86. https://doi.org/10.5755/j01.erem.77.2.28670
Hartungi, R. (2007). Understanding the success factors of micro-finance institution in a developing country. International Journal of Social Economics, 34(6), 388–401. https://doi.org/10.1108/03068290710751803
Hashfi, R. U. Al, Hanafi, M. M., & Setiyono, B. (2025). Too much doing good: An international evidence of ESG-risk nexus in banking industry. Sustainable Futures, 10, 101274. https://doi.org/https://doi.org/10.1016/j.sftr.2025.101274
Hermawan, A., & Rahayu, W. P. (2024). Bank Indonesia’s CSR: A Model For Social Entrepreneurship Transformation. Journal of Lifestyle and SDG’S Review, 4(4). https://doi.org/10.47172/2965-730X.SDGsReview.v4.n04.pe01925
Huda, M., Sari, R., & Rofiq, Z. (2022). ELF and multilingual justice in English language teaching practices: voices from Indonesian English lecturers. Asian Englishes, 24(3), 263–278. https://doi.org/10.1080/13488678.2021.1949779
Hummel, K., Laun, U., & Krauss, A. (2021). Management of environmental and social risks and topics in the banking sector - An empirical investigation. British Accounting Review, 53(1). https://doi.org/10.1016/j.bar.2020.100921
K. M., M., Aithal, P. S., & K. R. S., S. (2022). Impact of Sustainable Finance on MSMEs and other Companies to Promote Green Growth and Sustainable Development. International Journal of Applied Engineering and Management Letters, 60–76. https://doi.org/10.47992/IJAEML.2581.7000.0120
Kalkhouran, A. A. N., Rasid, S. Z. A., Sofian, S., & Nedaei, B. H. N. (2015). A Conceptual Framework for Assessing the Use of Strategic Management Accounting in Small and Medium Enterprises. Global Business and Organizational Excellence, 35(1), 45–54. https://doi.org/10.1002/joe.21644
Klimenko, T. I., Shinkevich, A. I., Kudryavtseva, S. S., Shinkevich, M. V., Barsegyan, N. V., Farrakhova, A. A., & Ishmuradova, I. I. (2018). Modeling factors of environmental tourism development in innovation economy. Ekoloji, 27(106), 263–269.
Kokotec, I. C. D. S. D. S., Orsag, S., & Aalopa, M. K. (2021). The Impact of Institutional Investors’ Ownership on Performance and Financial Position: Evidence from Firms in the Republic of Croatia. South East European Journal of Economics and Business, 16(1), 53–69. https://doi.org/10.2478/jeb-2021-0005
Kummitha, H. R. (2021). Can ecopreneurs contribute to ecotourism development: A comparative study of the pre- And post-establishment periods of kabani (Ecopreneur Organisation). Asia-Pacific Journal of Innovation in Hospitality and Tourism, 10(1), 1–21. https://www.scopus.com/inward/record.uri?eid=2-s2.0-85114036166&partnerID=40&md5=3b6c90e3798f696d3c9df669c923d798
Larbi-Siaw, O., Xuhua, H., Owusu, E., Owusu-Agyeman, A., Fulgence, B. E., & Frimpong, S. A. (2022). Eco-innovation, sustainable business performance and market turbulence moderation in emerging economies. Technology in Society, 68. https://doi.org/10.1016/j.techsoc.2022.101899
Lin, Z., Wang, P., Tang, L., Larosa, F., Zhu, Y., Ekins, P., & Chen, W.-Q. (2025). A knowledge graph approach to global nickel mining operations: Patterns and geopolitical insights. Sustainable Production and Consumption, 59, 203–217. https://doi.org/https://doi.org/10.1016/j.spc.2025.08.012
Liu, K. S., & Lin, M. H. (2021). Performance assessment on the application of artificial intelligence to sustainable supply chain management in the construction material industry. Sustainability (Switzerland), 13(22). https://doi.org/10.3390/su132212767
Londa, V. Y., & Pangemanan, F. N. (2021). Empowerment of Small-Scale Fishery Businesses in Coastal Communities in Tatapaan Minapolitan Area, South Minahasa Regency. Journal of Asian Multicultural Research for Social Sciences Study, 2(2), 6–14. https://doi.org/10.47616/jamrsss.v2i2.120
Martin, G. P., Wiseman, R. M., & Gomez-Mejia, L. R. (2019). The Interactive Effect of Monitoring and Incentive Alignment on Agency Costs. Journal of Management, 45(2), 701–727. https://doi.org/10.1177/0149206316678453
Mehrotra, A. (2023). FinTech driven financial inclusion – the hype and the reality of missed targets. International Journal of Public Sector Performance Management, 11(2), 165–176. https://doi.org/10.1504/IJPSPM.2023.129690
Menguc, B., Auh, S., & Ozanne, L. (2010). The interactive effect of internal and external factors on a proactive environmental strategy and its influence on a firm’s performance. Journal of Business Ethics, 94(2), 279–298. https://doi.org/10.1007/s10551-009-0264-0
Muta’Ali, A. (2018). Israel and Palestine Conflict from Linguistics and Fiqh Siyasah Perspective. Ahkam: Jurnal Ilmu Syariah, 18(1), 201–218. https://doi.org/10.15408/ajis.v18i1.7487
Nugraheni, P., & Risman, A. (2025). Determinants of Firm Value: Commodity Prices, Exchange Rates, Inflation, and Business Risk as Intervening Variable. International Journal of Indonesian Business Review, 4(1), 76–87. https://doi.org/10.54099/ijibr.v4i1.1134
Oyerogba, E. O., Oladele, F., Kolawole, P. E., & Adeyemo, M. A. (2024). Corporate governance practices and sustainability reporting quality: evidence from the Nigerian listed financial institution. Cogent Business and Management, 11(1). https://doi.org/10.1080/23311975.2024.2325111
Oyewo, B., Tawiah, V., & Alta’any, M. (2024). Determinants and impact of strategy-driven manufacturing accounting techniques on organisational competitiveness: a structural equation modelling approach. Journal of Accounting and Organizational Change. https://doi.org/10.1108/JAOC-10-2022-0165
Panigrahi, A. K., & Vachhani, K. (2021). Financial analysis by return on equity (ROE) and return on asset (ROA)-A comparative study of HUL and ITC. Journal of Management Research and Analysis, 8(3), 131–138. https://doi.org/10.18231/j.jmra.2021.027
Petera, P., & Šoljaková, L. (2020). Use of strategic management accounting techniques by companies in the Czech Republic. Economic Research-Ekonomska Istrazivanja , 33(1), 46–67. https://doi.org/10.1080/1331677X.2019.1697719
Pham, M. H., Tran, V. M. P., Le, T. H., Mai, T. T., Nguyen, K. N., & Dang, H. L. (2024). Transition to the circular economy under the pressure of the COVID-19 pandemic and stakeholders: application in international firms toward sustainable development goals. Cogent Economics and Finance, 12(1). https://doi.org/10.1080/23322039.2023.2293221
Purnomo, M., & Raharja, S. J. (2020). Visualisation of development of ecopreneurship in tourism. World Review of Entrepreneurship, Management and Sustainable Development. https://www.scopus.com/inward/record.uri?eid=2-s2.0-85092378865&doi=10.1504%2FWREMSD.2020.109981&partnerID=40&md5=826978deb70050353902f30ce0491211
Razak, F. N. A., Ramli, A., & Rasit, Z. A. (2020). Organisation isomorphism as determinants of environmental management accounting practices in Malaysian public listed companies. Humanities and Social Sciences Letters, 8(1), 110–122. https://doi.org/10.18488/journal.73.2020.81.110.122
Reyad, H. M., Ayesha, M., Iqbal, M. M., & Zariyawati, M. A. (2024). The role of ESG in enhancing firm resilience to geopolitical risks: An eastern European perspective. Business Strategy & Development, 7(4). https://doi.org/10.1002/bsd2.70027
Rizkhyana, B., Kartasari, S. F., & Malinda, S. (2022). Determinants of Firm Value. IJEBD (International Journal of Entrepreneurship and Business Development), 5(2), 332–338. https://doi.org/10.29138/ijebd.v5i2.1776
Robinson, S., Douma, A., Poore, T., & Singh, K. (2023). The role of colonial pasts in shaping climate futures: Adaptive capacity in Georgetown, Guyana. Habitat International, 139, 102902. https://doi.org/https://doi.org/10.1016/j.habitatint.2023.102902
Rochwulaningsih, Y., Sulistiyono, S. T., Masruroh, N. N., & Maulany, N. N. (2019). Marine policy basis of Indonesia as a maritime state: The importance of integrated economy. Marine Policy, 108(June), 103602. https://doi.org/10.1016/j.marpol.2019.103602
Salim, K., Disli, M., Ng, A., Dewandaru, G., & Nkoba, M. A. (2023). The impact of sustainable banking practices on bank stability. Renewable and Sustainable Energy Reviews, 178(March), 113249. https://doi.org/10.1016/j.rser.2023.113249
Sambo, E. M., Sufiati, S., & Pura, R. (2023). Determinants of Company Value: Study on Pharmaceutical Companies on the Indonesia Stock Exchange. Economics, Business, Accounting & Society Review, 2(3), 193–202. https://doi.org/10.55980/ebasr.v2i3.94
Sarstedt, M., Hair, J. F., Ringle, C. M., Thiele, K. O., & Gudergan, S. P. (2016). Estimation issues with PLS and CBSEM: Where the bias lies! Journal of Business Research, 69(10), 3998–4010. https://doi.org/10.1016/j.jbusres.2016.06.007
Setyanti, S. W. L. H., Yulisetiarini, D., & Paramu, H. (2021). Community based tourism and strengthening of ecopreneurship for the development of ecotourism in jember. Journal of Environmental Management and Tourism. https://www.scopus.com/inward/record.uri?eid=2-s2.0-85107393937&doi=10.14505%2Fjemt.v12.3%2851%29.17&partnerID=40&md5=1017ad586f14b7e0d2b765ad073ee406
Suharno, Pambudi, N. A., & Harjanto, B. (2020). Vocational education in Indonesia: History, development, opportunities, and challenges. Children and Youth Services Review, 115(May), 105092. https://doi.org/10.1016/j.childyouth.2020.105092
Téoule, F. (2025). Governance models and the socio-ecological role of community gardens in post-socialist Krakow. Regional Science Policy & Practice, 17(10), 100243. https://doi.org/https://doi.org/10.1016/j.rspp.2025.100243
Wahyuningrum, I. F. S., Ihlashul’amal, M., Utami, S., Djajadikerta, H. G., & Sriningsih, S. (2024). Determinants of carbon emission disclosure and the moderating role of environmental performance. Cogent Business and Management, 11(1). https://doi.org/10.1080/23311975.2023.2300518
Wang, K., Wang, Z., Liu, H., & Li, X. (2023). Economic policy uncertainty and geopolitical risk: evidence from China and Southeast Asia. Asian-Pacific Economic Literature, 37(2), 96–118. https://doi.org/10.1111/apel.12388
Wang, X., Javaid, M. U., Bano, S., Younas, H., Jan, A., & A. Salameh, A. (2022). Interplay among institutional actors for sustainable economic development—Role of green policies, ecoprenuership, and green technological innovation. Frontiers in Environmental Science. https://www.scopus.com/inward/record.uri?eid=2-s2.0-85138511906&doi=10.3389%2Ffenvs.2022.956824&partnerID=40&md5=eb8ec4a51ecd059ee984016a88f7a33c
Weerarathna, R. S., Lokeshwara, A. A., Sandali, W. A. P. L., Chandula, G. W. K. N., & Nirman, M. A. C. (2021). Sustainability Reporting on Financial Performance of Sri Lankan Listed Companies: How Strong is the Impact? Indonesian Journal of Sustainability Accounting and Management, 5(1). https://doi.org/10.28992/ijsam.v5i1.404
Widjanarko, H., Suratna, S., Utomo, H. S., & Wibawa, T. (2021). How to Implement SME Empowerment during the Covid-19 Pandemic? RSF Conference Series: Business, Management and Social Sciences, 1(3), 428–433. https://doi.org/10.31098/bmss.v1i3.372
Yang, L., Sultan, M. S., Ibrahim, M. I., Xakimov, Z., & Zhang, C. (2025). Unraveling the economic and environmental impacts of emerging financial risks: A strategic perspective. Ecotoxicology and Environmental Safety, 303, 118786. https://doi.org/https://doi.org/10.1016/j.ecoenv.2025.118786
Zhang, J., & Sun, T. (2024). The Impact of Digital Finance on the Green Utilization Efficiency of Urban Land: Evidence from 281 Cities in China. Sustainability, 16(5), 2003. https://doi.org/10.3390/su16052003
Zhen, T., & Rahman, M. M. (2024). Greening Emerging Economies: Enhancing Environmental, Social, and Governance Performance through Environmental Management Accounting and Green Financing. Sustainability, 16(11), 4753. https://doi.org/10.3390/su16114753
Downloads
Published
How to Cite
License
Copyright (c) 2026 Johan Reineer Tumiwa, OctaviaDiana Monica Tuegeh, Franda Benedicta Paat
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
COPYRIGHT
Authors who publish with this journal agree to the following terms:
Authors hold their copyright and grant this journal the privilege of first publication, with the work simultaneously licensed under a Creative Commons Attribution License that permits others to impart the work with an acknowledgment of the work's origin and initial publication by this journal.
Authors can enter into separate or additional contractual arrangements for the non-exclusive distribution of the journal's published version of the work (for example, post it to an institutional repository or publish it in a book), with an acknowledgment of its underlying publication in this journal.
Authors are permitted and encouraged to post their work online (for example, in institutional repositories or on their website) as it can lead to productive exchanges, as well as earlier and greater citation of the published work (See The Effect of Open Access).
