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The Effect of Green Banking Practices on Banks’ Environmental Performance and Green Financing: An Empirical Study

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  • Jing Chen

    (School of Economics and Finance, Xi’an Jiaotong University, Xi’an 710061, China
    College of Economics and Management, Xi’an University of Posts and Telecommunications, Xi’an 710121, China
    These authors contributed equally to this work.)

  • Abu Bakkar Siddik

    (School of Economics and Management, Shaanxi University of Science and Technology (SUST), Weiyang District, Xi’an 710021, China
    These authors contributed equally to this work.)

  • Guang-Wen Zheng

    (School of Economics and Management, Shaanxi University of Science and Technology (SUST), Weiyang District, Xi’an 710021, China)

  • Mohammad Masukujjaman

    (Department of Business Administration, Northern University Bangladesh, Banani C/A, Dhaka 1213, Bangladesh)

  • Sodikov Bekhzod

    (School of Economics and Management, Shaanxi University of Science and Technology (SUST), Weiyang District, Xi’an 710021, China)

Abstract

Every sector of the global economy is faced with environmental problems and their resulting consequences to their day-to-day operations. Due to the rising threat of global climate change, the green banking (GB) concept has been given significant attention in recent green finance literature. Therefore, the main purpose of this study was to identify the impact of GB practices on banks’ environmental performance and sources of green financing of private commercial banks (PCBs) in Bangladesh. Using a survey method, the primary data were obtained from a cross-sectional sample of 322 banking employees of PCBs in Bangladesh. In order to identify the key relationships existing between the study variables, structural equation modelling (SEM) approach was employed. The empirical findings indicated that banks’ employees, daily-operations, and policy-related GB practices have significant positive effects on green financing, contrary to banks’ customer-related GB practice, which was not statistically significant. Additionally, banks’ green project financing exhibited a strong and positive influence on banks’ environmental performance. Moreover, banks’ daily operation and policy-related practices of GB were observed to have significant impacts on banks’ environmental performances, in contrast to banks’ employee and customer-related GB practices. Therefore, major policy implications and directions for future research in the concerned area are discussed.

Suggested Citation

  • Jing Chen & Abu Bakkar Siddik & Guang-Wen Zheng & Mohammad Masukujjaman & Sodikov Bekhzod, 2022. "The Effect of Green Banking Practices on Banks’ Environmental Performance and Green Financing: An Empirical Study," Energies, MDPI, vol. 15(4), pages 1-22, February.
    • Handle: RePEc:gam:jeners:v:15:y:2022:i:4:p:1292-:d:746405
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    References listed on IDEAS

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    1. Chen Zhixia & Md. Miraj Hossen & Sayed Sami Muzafary & Mareum Begum, 2018. "Green Banking for Environmental Sustainability-Present Status and Future Agenda: Experience from Bangladesh," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 8(5), pages 571-585, June.
    2. Mohammad Dulal Miah & Syed Mahbubur Rahman & Marjan Haque, 2018. "Factors affecting environmental performance: evidence from banking sector in Bangladesh," International Journal of Financial Services Management, Inderscience Enterprises Ltd, vol. 9(1), pages 22-38.
    3. Xin Zhang & Zhihui Wang & Xiaobing Zhong & Shouzhi Yang & Abu Bakkar Siddik, 2022. "Do Green Banking Activities Improve the Banks’ Environmental Performance? The Mediating Effect of Green Financing," Sustainability, MDPI, vol. 14(2), pages 1-18, January.
    4. Sudipta Bose & Habib Zaman Khan & Reza M. Monem, 2021. "Does green banking performance pay off? Evidence from a unique regulatory setting in Bangladesh," Corporate Governance: An International Review, Wiley Blackwell, vol. 29(2), pages 162-187, March.
    5. Chen Zhixia & Md. Miraj Hossen & Sayed Sami Muzafary & Mareum Begum, 2018. "Green Banking for Environmental Sustainability-Present Status and Future Agenda: Experience from Bangladesh," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 8(5), pages 571-585.
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    7. Zhang, Dayong & Zhang, Zhiwei & Managi, Shunsuke, 2019. "A bibliometric analysis on green finance: Current status, development, and future directions," Finance Research Letters, Elsevier, vol. 29(C), pages 425-430.
    8. Nazamul Hoque & Md. Masrurul Mowla & Mohammad Shahab Uddin & Abdullahil Mamun & Mohammad Rahim Uddin, 2019. "Green Banking Practices in Bangladesh: A Critical Investigation," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 11(3), pages 58-68, March.
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    5. Ya Cheng & Mohammad Masukujjaman & Farid Ahammad Sobhani & Muhammad Hamayun & Syed Shah Alam, 2023. "Green Logistics, Green Human Capital, and Circular Economy: The Mediating Role of Sustainable Production," Sustainability, MDPI, vol. 15(2), pages 1-22, January.
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    7. Wajeeha Aslam & Syed Tehseen Jawaid, 2023. "Systematic Review of Green Banking Adoption: Following PRISMA Protocols," IIM Kozhikode Society & Management Review, , vol. 12(2), pages 213-233, July.

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