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Does a green economy mentality exist? An experimental study in emerging country

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Abstract

Investor behavior is worth investigating as industries and institutions are concerned about spelling out environmental and social sustainability issues. The stream of research in environmental and social sustainabilities is from the points of view of institutions and policy. Nonetheless, environmental and social sustainability issues are based on individual levels, especially investors and their value. This study investigates whether moral attentiveness plays a role in financing orientation and investment propensity relationships. This research used an experimental method with a between-subject 2 × 2 factorial design. The financing orientation variable was manipulated into two, i.e., green financing orientation with a marginal interest rate and red financing orientation with a high interest rate. The moral attentiveness variable was classified into two, i.e., high and low levels. The results showed that investors in the emerging country showed a propensity to invest more in a red financing orientation condition with a high interest rate compared to that in a green financing orientation with a marginal interest rate. It was on pace with the interdisciplinary perspective of the hierarchy of needs that in emerging countries, one of the forceful elements underlying investment decisions was the monetary element to cater to primary (physiological) conditions. Meanwhile, from a utilitarian perspective, green financing with a marginal interest rate was more ethical than red financing with a high interest rate. It was because green financing gave more benefits to the environment and society. Moral attentiveness could filter the adverse impacts of financing orientation on investment propensity. This research will help policymakers and stakeholders drive investors’ awareness about the industry’s benefits to sustainability and promote the green revolution to a competitive market structure.

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Data Availability

The data that support the findings of this study are available on request from the corresponding author. The data are not publicly available due to privacy or ethical restrictions.

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  1. Accounting Department, Universitas Trunojoyo Madura, PO BOX 2, Kamal, Bangkalan, Indonesia

    Frida Fanani Rohma

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Appendix

Appendix

The first treatment, the green financing manipulation with a marginal interest rate: Participants are given the information that Santoso Banking is committed to providing added value to the development of small and medium enterprises (SMEs) that support the economic income of the broader community by disburse credit financing. Participants are given the information that Santoso Banking participates in sustainable development through financing activities to disburse credit financing to green industries to support the green economy and reduce carbon emissions and environmental pollution to improve Indonesians’ quality of life. Participants are given the financial information indicated by an increase in Santoso Banking earnings: return on assets and equity. Favorable financial information contains information about the company’s performance improvement from the previous years. Return on assets (ROA) increased to 5.5% compared to the last year’s 4.8%. Return on equity (ROE) increased to 20%, compared to the previous year’s 18%. Participants were given information about of the marginal interest rate, which was the current market interest rate of 3.5%. The intermediary institutions targeted would give an interest rate of 3.65% if investors invested in them.

In the second treatment, the red financing credit disbursement manipulation with a high interest rate: Participants are given the information that Santoso Banking is committed to providing added value to the development of small and medium enterprises (SMEs) that support the economic income of the broader community by disburse credit financing. Santoso Banking is one of the intermediary institutions whose job is to distribute financing with an orientation on optimizing returns without being concerned about the potential of the industries defacing the environment. Participants are given the financial information indicated by an increase in Santoso Banking earnings: return on assets and equity. Favorable financial information contains information about the company’s performance improvement from the previous years. Return on assets (ROA) increased to 5.5% compared to the last year’s 4.8%. Return on equity (ROE) increased to 20%, compared to the previous year’s 18%. Participants were also provided information about a high-interest rate, namely, the current market interest rate of 3.5%. Meanwhile, intermediary institutions targeted were willing to provide an interest rate of 4.0% if investors invested in them.

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Rohma, F.F. Does a green economy mentality exist? An experimental study in emerging country. Asian J Bus Ethics 12, 285–304 (2023). https://doi.org/10.1007/s13520-023-00174-5

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