FACTOR ANALYSIS: MEASUREMENT OF COMPANY GREEN FINANCE IN INDONESIA

Abstract

The aim of this study is to test the application of factor analysis to measure the implementation of green finance in Indonesia.This research employs exploratory factor analysis (EFA) to examine the dataset in order to uncover complex relationships between items and groups of items that constitute an integrated concept. The new Green Finance measurement in this study represents a transformative step towards a greener and more equitable future, involving Validity Test, Reliability Test, Measure Of Sampling Adequacy Test, Kaiser-Meyer-Olkin (KMO) Test, and Bartlett's Test of Sphericity. Conservation projects, sustainable investments, and renewable energy are the key factors extracted using the Rotated Component Matrix method to measure green finance implementation. Factor analysis used in measuring green finance requires a holistic evaluation that considers the relationship between environmental, social and economic factors. Green finance indicators are metrics of specific criteria used to assess the environmental and sustainable impact of financial management initiatives. The resulting indicators help evaluate how effectively funds are allocated to environmentally friendly projects, businesses and practices. This study's perspective presents a quantitative measurement model aimed at assessing the suitability of green financial practices in Indonesia.

Keywords : Factor Analysis,Green Finance, Sustainable Investments, Indonesia