The Impact of Green Bond and Green Budget Tagging on Sustainable Development Moderated by Regulatory Quality: Evidence from Indonesia
-
Elmira Siska
*
Universitas Bina Sarana Informatika, Jakarta Pusat,
Indonesia
- Rini Larasati Irawan Universitas Bina Sarana Informatika, Jakarta Pusat, Indonesia
- Tri Lestari Universitas Bina Sarana Informatika, Jakarta Pusat, Indonesia
- Sri Rahayu Universitas Bina Sarana Informatika, Jakarta Pusat, Indonesia
- Alya Kanaya Alfita Universitas Bina Sarana Informatika, Jakarta Pusat, Indonesia (*) Corresponding Author
Abstract
The challenges of climate change, environmental decline, and growing pressure on natural resources are pushing both public and private financing systems to shift toward more sustainable and eco-friendly activities. The objective of this study is to examine whether Green Bond issuance, Green Budget Tagging, and Regulatory Quality significantly influence Sustainable Development and whether Regulatory Quality strengthens the relationship between Green Bond, Green Budget Tagging, and Sustainable Development. The research was conducted in Indonesia by using time series data covering period 2018-2023. Data were analyzed using multiple linear regression with moderation testing through SPSS 25. To ensure that the data used in the regression model meet the BLUE (Best Linear Unbiased Estimator) criteria, a series of classical assumption tests were conducted, including the normality test, multicollinearity test, heteroscedasticity test, and autocorrelation test. The results show that Green Bond has a significant positive effect on Sustainable Development (sig. 0.000<0.05), while Green Budget Tagging has not shown strong positive impact on Sustainable Development (sig.0.344>0.05). Regulatory Quality has a significant positive effect on Sustainable Development (sig. 0.000<0.05). Simultaneous testing reveals that both variables (Green Bond and Green Budget Tagging) together contribute significantly to Sustainable Development (sig. 0.000<0.05). Regulatory Quality significantly moderates the relationship between Green bond and Sustainable Development (sig. 0.000<0.05). It also significantly moderates the relationship Green Budget Tagging and Sustainable Development (sig. 0.023<0.05). Moreover, the inclusion of Regulatory Quality as a moderating variable increases the adjusted R² value from 0.847 to 0.865, indicating that regulatory quality strengthens the explanatory power of the model. These findings emphasize that the combination of green financing instruments and strong regulatory frameworks plays a crucial role in accelerating Indonesia’s sustainable development agenda.
Downloads
References
Ali, A., Khurran, M. H., & Ala, M. (2025). Green Finance and Sustainable Development Goals: Challenges and Opportunities in Developing Economies. Policy Journal of Social Science Review Online ISSN Print ISSN 3006-4635 3006-4627 Vol., 3(8), 364–382.
Awudu, S., Yuliawati, A. K., & MayaSari. (2024). Unveiling the Green Tapestry: Exploring the Influence of Green Budget Tagging on the Nexus of Fiscal Policy Sustainability and Green Budgeting Practices in Metropolitan Municipal and District Assemblies in Ghana (Issue Gcbme 2023). Atlantis Press International BV. https://doi.org/10.2991/978-94-6463-443-3_27
Bappenas. (2021). Indonesia’s SDGs Roadmap Towards 2030. Kementerian PPN/Bappenas, 35. https://sdgs.bappenas.go.id/website/wp-content/uploads/2021/02/Roadmap_Bahasa-Indonesia_File-Upload.pdf
Barokah, I. N., & Bandiyono, A. (2025). The Dynamics of Green Bond Effectiveness in Achieving Sustainable Development: A Comparative Study with a Scoping Review Approach. Jae (Jurnal Akuntansi Dan Ekonomi), 10(1), 110–123. https://doi.org/10.29407/jae.v10i1.24792
Bhutta, U. S., Tariq, A., Farrukh, M., Raza, A., & Iqbal, M. K. (2022). Green bonds for sustainable development: Review of literature on development and impact of green bonds. Technological Forecasting and Social Change, 175(February). https://doi.org/10.1016/j.techfore.2021.121378
Boyd, J. (2002). Financial responsibility for environmental obligations: Are bonding and assurance rules fulfilling their promise? Research in Law and Economics, 20, 417–485. https://doi.org/10.2139/ssrn.286914
Buttigieg, C. P., & Pulis, S. (2024). Strategic initiatives to address greenwashing. ERA Forum, 25(3), 327–337. https://doi.org/10.1007/s12027-024-00815-7
Damak, O. I., & Güngör, H. (2025). The effects of rule of law, regulatory quality, and R&D on Japan’s environmental sustainability. Sustainable Development, 33(2), 2278–2291. https://doi.org/10.1002/sd.3233
Desdiani, N. A., Afifi, F. A. R., Cesarina, A., Sabrina, S., Husna, M., Violeta, R. M., Adinegoro, A., & Halimatussadiah, A. (2021). Climate and Environmental Financing at Regional Level: Amplifying and Seizing the Opportunities. In LPEM Working Paper (Vol. 067, Issue December).
Fernandez, A., Tripathi, A., & Magazi, G. (2024). Developing a Framework for Climate Budget Tagging. Developing a Framework for Climate Budget Tagging, August.
Fitrah, R., & Soemitra, A. (2022). Green Sukuk For Sustainable Development Goals in Indonesia: A Literature Study. Jurnal Ilmiah Ekonomi Islam, 8(1), 231. https://doi.org/10.29040/jiei.v8i1.4591
Flammer, C., Aguilera, R., Christman, P., Giroud, X., Hawn, O., Ioannou, I., Irwin, K., Liang, H., Luo, J., Marquis, C., Mcdonnell, M.-H., & Musacchio, A. (2021). Corpotate Green Bonds. Journal of Fnancial Economics, 142(2), 499–516. https://ssrn.com/abstract=3125518
Fu, C., Lu, L., & Pirabi, M. (2023). Advancing green finance: a review of sustainable development. Digital Economy and Sustainable Development, 1(1), 1–19. https://doi.org/10.1007/s44265-023-00020-3
Halimatussadiah, A. (2020). Mainstreaming the Sustainable Development Goals into national planning , budgetary and financing processes : Indonesian experience. In Macroeconomic Policy and Financing for Development Division (Issue May).
Haqqi, M. M. (2022). Penerapan Konsep Pembangunan Berkelanjutan Dalam Sistem Perencanaan Pembangunan Nasional. Supremasi Hukum : Jurnal Penelitian Hukum, 31(1), 11–28. https://doi.org/10.33369/jsh.31.1.11-28
Hendrati, I. M., Perdana, P., Wahed, M., & Asmara, K. (2025). Indonesian Policy on SDGSs: What’s The Top Focus? OECONOMICUS Journal of Economics, 9(2), 82–92. https://doi.org/10.15642/oje.2025.9.2.82-92
Islam, S. (2025). a Systematic Review of Public Budgeting Strategies in Developing Economies: Tools for Transparent Fiscal Governance. American Journal of Advanced Technology and Engineering Solutions, 01(01), 602–635. https://doi.org/10.63125/wm547117
Khan, M., & Shah, F. (2025). Evidence Based Quality Improvement for Most Businesses Sustainability. National Journal of Quality, Innvation, and Business Excellent (NJQIBE), 2(1), 11–22.
Kolcava, D. (2023). Greenwashing and public demand for government regulation. Journal of Public Policy, 43(1), 179–198. https://doi.org/10.1017/S0143814X22000277
Kurniawan, B., Ma’ruf, M. F., Eprilianto, D. F., & Fanida, E. H. (2020). Green Budgeting Policy of Gresik Regency Government. Advances in Social Science, Education and Humanities Research, 473(Icss), 317–320. https://doi.org/10.2991/assehr.k.201014.068
Lee, J. W. (2020). Green finance and sustainable development goals: The case of China. Journal of Asian Finance, Economics and Business, 7(7), 577–586. https://doi.org/10.13106/jafeb.2020.vol7.no7.577
Maaloul, A., Zéghal, D., Ben Amar, W., & Mansour, S. (2023). The Effect of Environmental, Social, and Governance (ESG) Performance and Disclosure on Cost of Debt: The Mediating Effect of Corporate Reputation. In Corporate Reputation Review (Vol. 26, Issue 1). https://doi.org/10.1057/s41299-021-00130-8
Maulidiyah, S., & Akhmadi, M. H. (2024). Penerapan Climate Budget Tagging Menuju Penggunaan Anggaran yang Berkelanjutan. Sosio E-Kons, 16(2), 112. https://doi.org/10.30998/sosioekons.v16i2.23178
Ong, T. S., Soh, W. N., Tan, C. L., Teh, B. H., & Ong, T. C. (2022). Role of Country Governance for Improved Environmental Performance. Indonesian Journal of Sustainability Accounting and Management, 6(2). https://doi.org/10.28992/ijsam.v6i2.574
Opoku, E. E. O., Acheampong, A. O., Dzator, J., & Kufuor, N. K. (2022). Does environmental sustainability attract foreign investment? Evidence from developing countries. Business Strategy and the Environment, 31(7), 3542–3573. https://doi.org/10.1002/bse.3104
Palmieri, E., Polato, M., & Floreani, J. (2025). Green Bond Issuance and Environmental, Social and Governance Scores: Do They Impact Bank Performance? Corporate Social Responsibility and Environmental Management, 1–21. https://doi.org/10.1002/csr.70150
Park, J., & Brorson, T. (2005). Experiences of and views on third-party assurance of corporate environmental and sustainability reports. Journal of Cleaner Production, 13(10–11), 1095–1106. https://doi.org/10.1016/j.jclepro.2004.12.006
Rakatama, A., Maharani, D. A., Syafrian, D., & Yuniarti, F. R. (2023). Green financing for climate resilience and low-carbon development in Indonesia: viewpoints for the road ahead. Development in Practice, 34(28), 1048-1057. https://doi.org/10.1080/09614524.2023.2295790
Raman, R., Ray, S., Das, D., & Nedungadi, P. (2024). Innovations and barriers in sustainable and green finance for advancing sustainable development goals. Frontiers in Environmental Science, 12(January). https://doi.org/10.3389/fenvs.2024.1513204
Rivera, B. (2022). Green Bonds: Reforming ESG Regulation in the United States To Meet the Requisite Funding Demand for a Decarbonized Economy. Hastings Environmental Law Journal, 28(2), 191–212. https://perma.cc/A7PH-
Salahudin, S., Syahri, M., Cahyani, T. D., & Firdaus, M. (2025). Green Budgeting Review at Local Government: Case Study of Batu Government, Indonesia. Journal of Government and Civil Society, 9(1).
Scanlan, S. J., Smith, P., Smith, T., Aronczyk, M., Hill, S., Lewis, S. L., Montgomery, A. W., Tubiello, F. N., & Stabinsky, D. (2022). An Integrated Framework to Assess Greenwashing. Sustainability (Switzerland), 14(4431), 1–13.
Shawoo, Z., Maltais, A., Dzebo, A., & Pickering, J. (2023). Political drivers of policy coherence for sustainable development: An analytical framework. Environmental Policy and Governance, 33(4), 339–350. https://doi.org/10.1002/eet.2039
Tan, C. (2022). Private Investments, Public Goods: Regulating Markets for Sustainable Development. In European Business Organization Law Review (Vol. 23, Issue 1). Springer International Publishing. https://doi.org/10.1007/s40804-021-00236-w
Tavares, F. B. R., Collaço, F. M. de A., & ... (2024). … Instruments and the Sustainable Development Goals Achievement in Developing Countries: a Systematic Literature Review. … de Conjuntura (BOCA …, 17. https://revista.ioles.com.br/boca/index.php/revista/article/view/3468%0Ahttps://revista.ioles.com.br/boca/index.php/revista/article/download/3468/1053
Ullah, M., Sajjad, R., Hamraz, A. J., & Gul, R. (2025). The Future of Islamic Finance: Global Trends, Structural Challenges, and Theoretical Perspectives. ACADEMIA Internatonal Journal for Social Sciences, 4(2), 475–494. https://doi.org/10.63056/ACAD.004.03.0754
Wardhana, D. A. H., & Prawira, M. R. (2024). The Analysis of Indonesia’s Climate Change Policies in Response to the 2021 Intergovernmental Panel on Climate Change (IPCC) Assessment Report/AR6 Group 1 (2021-2023). Proceeding IROFONIC 2023, 1(1), 46. https://proirofonic.upnjatim.ac.id/index.php/proirofonic/article/view/8
Zhao, Z., Huang, R., Zhang, Y., Shiga, Y., & Shaw, R. (2024). Assessing the Role of Climate Transition Bonds in Advancing Green Transformations in Japan. Climate, 12(12). https://doi.org/10.3390/cli12120201
Zhu, L., Zhang, Y., Li, H., Liang, X., Guan, D., Wang, L., Jiang, M., & Cooke, S. (2020). Scopes for Establishing a Climate Investment and Finance Standards System in China: Interim Report for Consultation.
Bila bermanfaat silahkan share artikel ini
Berikan Komentar Anda terhadap artikel The Impact of Green Bond and Green Budget Tagging on Sustainable Development Moderated by Regulatory Quality: Evidence from Indonesia
Pages: 492-502
Copyright (c) 2025 Elmira Siska, Rini Larasati Irawan, Tri Lestari, Sri Rahayu, Alya Kanaya Alfita
This work is licensed under a Creative Commons Attribution 4.0 International License.
Authors who publish with this journal agree to the following terms:
- Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under Creative Commons Attribution 4.0 International License that allows others to share the work with an acknowledgment of the work's authorship and initial publication in this journal.
- Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the journal's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgment of its initial publication in this journal.
- Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work (Refer to The Effect of Open Access).
