Macroeconomic Determinants of Sustainable Business Financing in Central Kalimantan

Abstract

Sustainable business financing is a critical channel for translating green economic commitments into bankable investment, particularly in resource-based regions. This study evaluates how interest rates, inflation, and economic growth are associated with sustainable business financing in Central Kalimantan, Indonesia. Quarterly secondary data from 2011Q1 to 2025Q4 provide 60 initial observations obtained from Bank Indonesia, Statistics Indonesia for Central Kalimantan, and the Financial Services Authority. The analysis applies an autoregressive distributed lag framework with unit-root testing, Akaike-based lag selection, bounds cointegration testing, an error correction representation, and residual diagnostics. The selected ARDL(4,4,0,1) model shows that the current interest rate has a negative coefficient of -0.00648 but is not significant at the 5% level. Inflation is insignificant in the level equation, although its first and second short-run lags are positive and significant. Current economic growth is the strongest partial driver, with a coefficient of 0.01111 and a probability below 0.001. The regressors are jointly significant, the bounds statistic confirms cointegration, and the error correction coefficient of -0.01590 indicates a slow quarterly adjustment toward long-run equilibrium. The short-run model explains 75.88% of financing variation and passes normality, autocorrelation, heteroskedasticity, and specification tests. However, CUSUM of squares instability suggests that sustainable financing policy should be reviewed when economic regimes change.