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Business Model and Strategy for Sustainable Lending of State-Owned Banks in Indonesia

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Listed:
  • Kepas Antoni Adrianus Manurung

    (School of Business, IPB University, Bogor 16151, Indonesia)

  • Hermanto Siregar

    (Department of Economics, Faculty of Economics and Management, IPB University, Bogor 16680, Indonesia)

  • Dedi Budiman Hakim

    (Department of Economics, Faculty of Economics and Management, IPB University, Bogor 16680, Indonesia
    International Center for Applied Finance and Economics (InterCAFE), IPB University, Bogor 16129, Indonesia)

  • Idqan Fahmi

    (School of Business, IPB University, Bogor 16151, Indonesia)

  • Tanti Novianti

    (School of Business, IPB University, Bogor 16151, Indonesia)

Abstract

Currently, banks are facing challenges in fulfilling the interests of stakeholders, not only from an economic point of view, but also in terms of environmental, social, and governance (ESG) aspects. This is due to the increasing concern for sustainability issues, including lending activities. Lending activities constitute the largest portion of bank assets and are the largest contributor to bank revenues. Thus, banks need certain business models and strategies to encourage sustainable lending growth; otherwise, it will be difficult for banks to fulfill stakeholder’s interests and support sustainable development goals. This study aimed to build a sustainable business model and select sustainable lending strategies in state-owned banks in Indonesia using a value chain approach. The development of a sustainable business model utilizing a triple-layer business model canvas (TLBMC) is based on the results of previous research and sustainability report data of the three state-owned banks. The formulation of strategy selection as the key driver of sustainable lending utilized the analytical hierarchy process (AHP) based on expert respondent data collected through questionnaires. This research showed that the lending distribution business model at state-owned banks in Indonesia, which was built using the TLBMC framework, can realize sustainability goals in the form of a sustainable lending business model. Furthermore, this sustainable business model can be used as a basis for selecting sustainable strategies. In addition, the AHP results yielded alternative strategies in the form of the market development and penetration of green loans and micro, small, and medium enterprises (MSMEs) as the key drivers of sustainable lending growth.

Suggested Citation

  • Kepas Antoni Adrianus Manurung & Hermanto Siregar & Dedi Budiman Hakim & Idqan Fahmi & Tanti Novianti, 2024. "Business Model and Strategy for Sustainable Lending of State-Owned Banks in Indonesia," JRFM, MDPI, vol. 17(9), pages 1-31, September.
    • Handle: RePEc:gam:jjrfmx:v:17:y:2024:i:9:p:386-:d:1469059
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    References listed on IDEAS

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    1. Adriana Kocornik-Mina & Ramon Bastida-Vialcanet & Marcos Eguiguren Huerta, 2021. "Social Impact of Value-Based Banking: Best Practises and a Continuity Framework," Sustainability, MDPI, vol. 13(14), pages 1-40, July.
    2. Michael Hergert & Deigan Morris, 1989. "Accounting data for value chain analysis," Strategic Management Journal, Wiley Blackwell, vol. 10(2), pages 175-188, March.
    3. Bruna Miranda & Catarina Delgado & Manuel Castelo Branco, 2023. "Board Characteristics, Social Trust and ESG Performance in the European Banking Sector," JRFM, MDPI, vol. 16(4), pages 1-17, April.
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    Cited by:

    1. Mololuwa Akinyemi & Ekene Cynthia Onukwulu, 2025. "Conceptual Framework for Sustainability in Action: Resource Management and Green Practices in Hospitality and Logistics," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 9(1), pages 736-744, January.

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