The Green Economy, Islamic Investment, Stock Prices, and Shariah ESG Moderation in Indonesian Firms, 2023–2025
Keywords:
green economy transition, islamic capital market, shariah-based esg compliance, stock price dynamics
Abstract
The global imperative for sustainable development has positioned green economy transition as a critical factor reshaping capital markets, particularly in emerging economies with large Muslim populations such as Indonesia. This study examines the relationship between green economy transition indicators, Islamic capital market investment flows, and stock price dynamics in Indonesian listed companies over the period 2023–2025, with particular attention to the moderating role of Shariah-based Environmental, Social, and Governance (ESG) compliance. Employing a quantitative panel data approach, this research analyses data from 120 publicly listed companies on the Indonesia Stock Exchange (IDX) that are registered under the Jakarta Islamic Index (JII) and Indonesia Sharia Stock Index (ISSI). The data were retrieved from financial reports, IDX disclosures, and the Financial Services Authority (OJK) database, and were subsequently analysed using Generalized Method of Moments (GMM) panel regression to address endogeneity and heteroscedasticity concerns. The findings reveal that green economy transition positively and significantly influences stock price performance (β = 0.412, p < 0.01), while Islamic capital market investment demonstrates a consistent positive effect on equity valuation (β = 0.338, p < 0.05). Crucially, Shariah-based ESG compliance significantly moderates the relationship between these variables and stock price dynamics, amplifying the positive effects when ESG scores exceed threshold benchmarks established by OJK. The study concludes that Shariah-based ESG compliance serves as a strategic catalyst that reinforces the financial relevance of green economic activities within Islamic capital markets, offering actionable guidance for policymakers, institutional investors, and corporate governance practitioners in Indonesia.
References
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Haberly, D., & Wójcik, D. (2020). The end of the great inversion: offshore national banks and the global financial crisis. Journal of Economic Geography, 20(6), 1263–1292. https://doi.org/10.1093/jeg/lbaa016
Hadi, A., Yunani, A., Swandari, F., Hayat, A., & Maharani, D. (2025). Integrating ESG into Islamic Investment : A Scoping Review of Challenges and Opportunities. Asian Journal of Management Entrepreneurship and Social Science, 05(02), 879–905.
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Hu, L., & Basiglio, A. (2023). A multiple-case study on the adoption of customer relationship management and big data analytics in the automotive industry. TQM Journal, 36(9), 1–21. https://doi.org/10.1108/TQM-05-2023-0137
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Loang, O. K., & Candra, S. (2025). Religion And Green : The Dual Power Of Esg And Shariah-Compliant Stocks In Brand Values Of Malaysia , Indonesia , And Saudi Arabia. Journal of Islamic Monetary Economics and Finance, 11(2), 419–448.
Mahmood, H., & Furqan, M. (2025). Project management for sustainability in times of uncertainty: A systematic review of economic policy uncertainty and corporate strategic responses. Journal of Project Management, 10, 781–794. https://doi.org/10.5267/j.jpm.2025.7.001
Mahmood, S. K., Abdulla, S. M., Hassan, K. I., & Mahmood, A. B. (2024). Effect of Some Processing Methods on the Physiochmical Properties of Black Mullberry. Euphrates Journal of Agricultural Science, 16(1), 440–451.
Mariotti, S. (2024). “Open strategic autonomy” as an industrial policy compass for the EU competitiveness and growth: The good, the bad, or the ugly? Journal of Industrial and Business Economics, 0123456789. https://doi.org/10.1007/s40812-024-00327-y
Menne, F., Mardjuni, S., Yusuf, M., Ruslan, M., Arifuddin, A., & Iskandar, I. (2023). Sharia Economy , Islamic Financial Performance and Factors That Influence It — Evidence from Indonesia. MDPI, 11(111), 1–23. https://doi.org/https://www.mdpi.com/2227-7099/11/4/111
Metwally, A. B. M., & Diab, A. (2022). An institutional analysis of the risk management process during the COVID-19 pandemic: evidence from an emerging market. Journal of Accounting and Organizational Change. https://doi.org/10.1108/JAOC-03-2021-0043
Muslimin, A. P., & Retnaningdiah, D. (2025). Macroeconomic Factors on Islamic Stock Returns. Jurnal Ilmu Manajemen (Jim), 22(2), 146–160.
Novia, Adrianto, F., & Ira, G. (2024). The Influence Of Environmental , Social , And Governance Performance Disclosure On Stock Performance. Journal Of World Science, 3(1), 69–78. https://doi.org/10.58344/jws.v3i1.529
OECD. (2024). OECD Economic Surveys INDONESIA (Issue November).
Paolone, F., Pozzoli, M., Chhabra, M., & Di Vaio, A. (2024). Cultural and gender diversity for ESG performance towards knowledge sharing: empirical evidence from European banks. Journal of Knowledge Management, 28(11), 106–131. https://doi.org/10.1108/JKM-05-2023-0445
Pradana, H. D. (2023). The Impact of Digital Media on Student Learning at University. Jurnal Ilmu Pendidikan (JIP) STKIP Kusuma Negara, 15(1), 1–8. https://doi.org/10.37640/jip.v15i1.1717
Pratama, S., & Hartono, U. (2023). Analisis Pengaruh Likuiditas Dan Profitabilitas Terhadap Kesulitan Keuangan Pada Perusahaan Sektor Industri Manufaktur Periode 2017 – 2019. Journal Of Management Small And Medium Enterprises (Sme’s), 16(2), 1–7.
Priyono, A., Darmawan, B., & Witjaksono, G. (2021). How to harnesses digital technologies for pursuing business model innovation: a longitudinal study in creative industries. Journal of Systems and Information Technology, 23(3–4), 266–289. https://doi.org/10.1108/JSIT-06-2020-0101
Roodman, D. (2009). How to do xtabond2: An introduction to difference and system GMM in Stata. Stata Journal, 9(1), 86–136. https://doi.org/10.1177/1536867x0900900106
Sastradinata, B. L. N., Pratiwi, I. N., & Sulastri, S. (2024). Increasing MSME Competitiveness through Creativity and Innovation in The Digital Era Study at Simping MSME Centers in Purwakarta (Issue Gcbme 2023). Atlantis Press International BV. https://doi.org/10.2991/978-94-6463-443-3_139
Sobiech, A. L., & Uchida, H. (2025). Characteristics of green loan users and the green policy mix. Energy Economics, 143(January), 108256. https://doi.org/10.1016/j.eneco.2025.108256
Spence. (1973). I shall argue that the paradigm case of the market with this type of informational structure is the job market and will therefore focus upon it . By the end I hope it will be clear ( although space limitations will not permit an extended argument ) that a. The Quarterly Journal of Economics, 87(3), 355–374.
Tran, T. T. T., Do, H. N., Vu, T. H., & Do, N. N. M. (2020). The factors affecting green investment for sustainable development. Decision Science Letters, 9(3), 365–386. https://doi.org/10.5267/j.dsl.2020.4.002
UNEP. (2016). Green Banking Guidelines: Integrating Sustainability into Financial Services. United Nations Environment Programme.
Wang, D., & Xia, X. (2024). The impact of digital transformation on firms’ value: examining the role of ESG performance and the effect of information interaction. Business Process Management Journal, 30(4), 1236–1265. https://doi.org/10.1108/BPMJ-06-2023-0469
Wang, Y., Yu, X., Yao, Q., Lu, Y., Che, W., Jiang, J., & Chen, S. C.-I. (2024). Assessing the Impact of Financial Technology Innovations on the Sustainable Profitability of Listed Commercial Banks in China. FinTech, 3(3), 337–348. https://doi.org/10.3390/fintech3030019
Yanto, S., & Sari, P. I. (2025). Analysis of the Influence of ESG Score and Digital Financial Literacy on Company Financial Performance with Corporate Risk-Taking as a Mediating Variable. Records Management System Journal, 03(02), 1–10. https://journal.austrodemika.org/index.php/jpn/article/view/92/54
Yanto, S., Sari, P. I., & Suryani, N. (2025). The Effect of Green Accounting , Digital Financial Literacy , and Carbon Emission Disclosure on Sustainable Financial Performance. Applied Business and Administration Journal (ABAJ), 04(02), 75–92.
Yanto, S., Sari, P. I., & Yandes, J. (2026). Capital Expenditure Disclosure Index, Corporate Governance, and Firm Value: The Mediating Role of Financial Sustainability. Strategic : Journal of Management Sciences, 6(1). https://doi.org/https://doi.org/10.37403/strategic.v6i1.487
Yeboah, S. D., Gatsi, J. G., Appiah, M. O., & Fumey, M. P. (2024). Research in Globalization Examining the drivers of inclusive growth : A study of economic performance , environmental sustainability , and life expectancy in BRICS economies. Research in Globalization, 9(December), 100267. https://doi.org/10.1016/j.resglo.2024.100267
Zahwa, M. F. (2024). Efficiency of Shariah Invesment in the Maqshid Sharia Implementation. Original, 41475, 2601–2617.
Zhu, Z. (2022). The Influence of Digital Technology in the Digital Marketing. Proceedings of the 2021 3rd International Conference on Economic Management and Cultural Industry (ICEMCI 2021), 203(Icemci), 1514–1519. https://doi.org/10.2991/assehr.k.211209.246
Chen, J., Song, W., & Goergen, M. (2019). Passing the dividend baton: The impact of dividend policy on new CEOs’ initial compensation. Journal of Corporate Finance, 56, 458–481. https://doi.org/10.1016/j.jcorpfin.2019.04.004
Creswell, J. W., & Creswell, J. D. (2023). Research design: Qualitative, quantitative, and mixed methods approaches (6th ed.). SAGE Publications.
Demir, E., & Danisman, G. O. (2021). The impact of economic uncertainty and geopolitical risks on bank credit. North American Journal of Economics and Finance, 57(November 2020), 101444. https://doi.org/10.1016/j.najef.2021.101444
Drago, C., Costantiello, A., Arnone, M., & Leogrande, A. (2025). Bridging Sustainability and Inclusion : Financial Access in the Environmental , Social , and Governance Landscape. Journal of Risk and Financial Management, 18(7), 1–71.
Friede, G., Busch, T., & Bassen, A. (2015). ESG and financial performance: aggregated evidence from more than 2000 empirical studies. Journal of Sustainable Finance and Investment, 5(4), 210–233. https://doi.org/10.1080/20430795.2015.1118917
Haberly, D., & Wójcik, D. (2020). The end of the great inversion: offshore national banks and the global financial crisis. Journal of Economic Geography, 20(6), 1263–1292. https://doi.org/10.1093/jeg/lbaa016
Hadi, A., Yunani, A., Swandari, F., Hayat, A., & Maharani, D. (2025). Integrating ESG into Islamic Investment : A Scoping Review of Challenges and Opportunities. Asian Journal of Management Entrepreneurship and Social Science, 05(02), 879–905.
Hidthiir, M. H. bin, Ahmad, Z., Junoh, M. Z. M., & Yusof, M. F. Bin. (2024). Dynamics of economic growth in ASEAN-5 countries: a panel ARDL approach. Discover Sustainability, 5(1). https://doi.org/10.1007/s43621-024-00351-x
Hu, L., & Basiglio, A. (2023). A multiple-case study on the adoption of customer relationship management and big data analytics in the automotive industry. TQM Journal, 36(9), 1–21. https://doi.org/10.1108/TQM-05-2023-0137
Huda, E., Engku, M., Ashari, H., Affendy, A., Zahidi, A., Balqis, P. N., Mazlan, M., Pitchay, A. A., & Usman, M. (2022). Review of Accounting , Finance and Governance The Effect Of Monetary Policy On Islamic Financial Institution : A Perspective Of Liquidity Management. Review of Accounting, Finance and Governance, 2(2), 22–29.
Indarta, A., & Setiawan, A. (2025). Comparative Analysis Of Sharia And Conventional Stock Resilience To Global Uncertainty: Evidence From Issi And Ihsg During 2019–2025. Among Makarti, 18(2), 223–239.
Jayanthi, R., & Dinaseviani, A. (2022). Kesenjangan Digital dan Solusi yang Diterapkan di Indonesia Selama Pandemi COVID-19. JURNAL IPTEKKOM Jurnal Ilmu Pengetahuan & Teknologi Informasi, 24(2), 187–200. https://doi.org/10.17933/iptekkom.24.2.2022.187-200
Kayani, U. N., Sadiq, M., Rabbani, M. R., & Aysan, A. F. (2023). Examining the Relationship between Economic Growth , Financial Development , and Carbon Emissions : A Review of the Literature and Scientometric Analysis. International Journal of Energy Economics and Policy, 13(2), 489–499.
Khan, S., Ullah, A., Pinglu, C., & Kashif, M. (2024). Impact of financial technology innovation on sustainable transition finance: the moderating role of globalization in BRI, advanced and emerging economies. Clean Technologies and Environmental Policy, 0123456789. https://doi.org/10.1007/s10098-024-02898-9
Khouangvichit, & Samambet. (2025). Economics and Business Quarterly Reviews Impact of Digital Financial Literacy on Small and Medium-. Economics and Business Quarterly Reviews, 8(3), 285–298. https://doi.org/10.31014/aior.1992.08.03.680
Loang, O. K., & Candra, S. (2025). Religion And Green : The Dual Power Of Esg And Shariah-Compliant Stocks In Brand Values Of Malaysia , Indonesia , And Saudi Arabia. Journal of Islamic Monetary Economics and Finance, 11(2), 419–448.
Mahmood, H., & Furqan, M. (2025). Project management for sustainability in times of uncertainty: A systematic review of economic policy uncertainty and corporate strategic responses. Journal of Project Management, 10, 781–794. https://doi.org/10.5267/j.jpm.2025.7.001
Mahmood, S. K., Abdulla, S. M., Hassan, K. I., & Mahmood, A. B. (2024). Effect of Some Processing Methods on the Physiochmical Properties of Black Mullberry. Euphrates Journal of Agricultural Science, 16(1), 440–451.
Mariotti, S. (2024). “Open strategic autonomy” as an industrial policy compass for the EU competitiveness and growth: The good, the bad, or the ugly? Journal of Industrial and Business Economics, 0123456789. https://doi.org/10.1007/s40812-024-00327-y
Menne, F., Mardjuni, S., Yusuf, M., Ruslan, M., Arifuddin, A., & Iskandar, I. (2023). Sharia Economy , Islamic Financial Performance and Factors That Influence It — Evidence from Indonesia. MDPI, 11(111), 1–23. https://doi.org/https://www.mdpi.com/2227-7099/11/4/111
Metwally, A. B. M., & Diab, A. (2022). An institutional analysis of the risk management process during the COVID-19 pandemic: evidence from an emerging market. Journal of Accounting and Organizational Change. https://doi.org/10.1108/JAOC-03-2021-0043
Muslimin, A. P., & Retnaningdiah, D. (2025). Macroeconomic Factors on Islamic Stock Returns. Jurnal Ilmu Manajemen (Jim), 22(2), 146–160.
Novia, Adrianto, F., & Ira, G. (2024). The Influence Of Environmental , Social , And Governance Performance Disclosure On Stock Performance. Journal Of World Science, 3(1), 69–78. https://doi.org/10.58344/jws.v3i1.529
OECD. (2024). OECD Economic Surveys INDONESIA (Issue November).
Paolone, F., Pozzoli, M., Chhabra, M., & Di Vaio, A. (2024). Cultural and gender diversity for ESG performance towards knowledge sharing: empirical evidence from European banks. Journal of Knowledge Management, 28(11), 106–131. https://doi.org/10.1108/JKM-05-2023-0445
Pradana, H. D. (2023). The Impact of Digital Media on Student Learning at University. Jurnal Ilmu Pendidikan (JIP) STKIP Kusuma Negara, 15(1), 1–8. https://doi.org/10.37640/jip.v15i1.1717
Pratama, S., & Hartono, U. (2023). Analisis Pengaruh Likuiditas Dan Profitabilitas Terhadap Kesulitan Keuangan Pada Perusahaan Sektor Industri Manufaktur Periode 2017 – 2019. Journal Of Management Small And Medium Enterprises (Sme’s), 16(2), 1–7.
Priyono, A., Darmawan, B., & Witjaksono, G. (2021). How to harnesses digital technologies for pursuing business model innovation: a longitudinal study in creative industries. Journal of Systems and Information Technology, 23(3–4), 266–289. https://doi.org/10.1108/JSIT-06-2020-0101
Roodman, D. (2009). How to do xtabond2: An introduction to difference and system GMM in Stata. Stata Journal, 9(1), 86–136. https://doi.org/10.1177/1536867x0900900106
Sastradinata, B. L. N., Pratiwi, I. N., & Sulastri, S. (2024). Increasing MSME Competitiveness through Creativity and Innovation in The Digital Era Study at Simping MSME Centers in Purwakarta (Issue Gcbme 2023). Atlantis Press International BV. https://doi.org/10.2991/978-94-6463-443-3_139
Sobiech, A. L., & Uchida, H. (2025). Characteristics of green loan users and the green policy mix. Energy Economics, 143(January), 108256. https://doi.org/10.1016/j.eneco.2025.108256
Spence. (1973). I shall argue that the paradigm case of the market with this type of informational structure is the job market and will therefore focus upon it . By the end I hope it will be clear ( although space limitations will not permit an extended argument ) that a. The Quarterly Journal of Economics, 87(3), 355–374.
Tran, T. T. T., Do, H. N., Vu, T. H., & Do, N. N. M. (2020). The factors affecting green investment for sustainable development. Decision Science Letters, 9(3), 365–386. https://doi.org/10.5267/j.dsl.2020.4.002
UNEP. (2016). Green Banking Guidelines: Integrating Sustainability into Financial Services. United Nations Environment Programme.
Wang, D., & Xia, X. (2024). The impact of digital transformation on firms’ value: examining the role of ESG performance and the effect of information interaction. Business Process Management Journal, 30(4), 1236–1265. https://doi.org/10.1108/BPMJ-06-2023-0469
Wang, Y., Yu, X., Yao, Q., Lu, Y., Che, W., Jiang, J., & Chen, S. C.-I. (2024). Assessing the Impact of Financial Technology Innovations on the Sustainable Profitability of Listed Commercial Banks in China. FinTech, 3(3), 337–348. https://doi.org/10.3390/fintech3030019
Yanto, S., & Sari, P. I. (2025). Analysis of the Influence of ESG Score and Digital Financial Literacy on Company Financial Performance with Corporate Risk-Taking as a Mediating Variable. Records Management System Journal, 03(02), 1–10. https://journal.austrodemika.org/index.php/jpn/article/view/92/54
Yanto, S., Sari, P. I., & Suryani, N. (2025). The Effect of Green Accounting , Digital Financial Literacy , and Carbon Emission Disclosure on Sustainable Financial Performance. Applied Business and Administration Journal (ABAJ), 04(02), 75–92.
Yanto, S., Sari, P. I., & Yandes, J. (2026). Capital Expenditure Disclosure Index, Corporate Governance, and Firm Value: The Mediating Role of Financial Sustainability. Strategic : Journal of Management Sciences, 6(1). https://doi.org/https://doi.org/10.37403/strategic.v6i1.487
Yeboah, S. D., Gatsi, J. G., Appiah, M. O., & Fumey, M. P. (2024). Research in Globalization Examining the drivers of inclusive growth : A study of economic performance , environmental sustainability , and life expectancy in BRICS economies. Research in Globalization, 9(December), 100267. https://doi.org/10.1016/j.resglo.2024.100267
Zahwa, M. F. (2024). Efficiency of Shariah Invesment in the Maqshid Sharia Implementation. Original, 41475, 2601–2617.
Zhu, Z. (2022). The Influence of Digital Technology in the Digital Marketing. Proceedings of the 2021 3rd International Conference on Economic Management and Cultural Industry (ICEMCI 2021), 203(Icemci), 1514–1519. https://doi.org/10.2991/assehr.k.211209.246
Published
2026-05-07
How to Cite
Supri Yanto, Putri Irmala Sari, Nelly Suryani, & Jufri Yandes. (2026). The Green Economy, Islamic Investment, Stock Prices, and Shariah ESG Moderation in Indonesian Firms, 2023–2025. International Journal of Economics, Business and Innovation Research, 5(03), 1507-1526. https://doi.org/10.63922/ijebir.v5i03.3430
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