IDEAS home Printed from https://ideas.repec.org/a/bcp/journl/v9y2025i15p306-321.html
   My bibliography  Save this article

Exploring the Economic Impact of Green Financing: A Case Study of Bangladesh’s Loan Disbursement Initiatives

Author

Listed:
  • Tanjida Nur Mostafa

    (Faculty of Business Administration, Jahangirnagar University, Dhaka, Bangladesh)

Abstract

Bangladesh has increasingly adopted green financing initiatives, yet their impact on economic growth remains unclear. Despite regulatory efforts, the effectiveness of green financing in influencing GDP growth requires further exploration. This study investigates the relationship between green finance loan disbursement and economic performance by analyzing secondary data from 2019 to 2023. The study focuses on loan disbursements from four types of financial institutions: state-owned commercial banks, specialized banks, private commercial banks, and financial institutions. GDP data is sourced from the Bangladesh Bureau of Statistics. The research employs panel data analysis using the random effect model to determine the relationship between green financing and GDP growth. Various statistical tests, including the Breusch-Pagan/Cook-Weisberg test for heteroskedasticity and the Breusch-Godfrey LM test for autocorrelation, were conducted to validate the findings. The results indicate that green financing initiatives, in general, have an insignificant impact on economic growth. However, among the financing initiatives, green agriculture exhibits a significant positive impact on GDP, whereas other sectors, such as renewable energy and CMSME, show either weak or negative relationships. The findings highlight the complexity of linking green financing to economic growth and emphasize the need for targeted interventions to enhance its effectiveness. The study recommends increasing investment in green agriculture, reassessing financing strategies for ineffective sectors, and adopting an integrated approach that combines different green financing initiatives to maximize economic benefits. Future research should address multicollinearity among independent variables, incorporate long-term trend analysis, and expand the scope beyond financial institutions to capture the full impact of green financing on economic development.

Suggested Citation

  • Tanjida Nur Mostafa, 2025. "Exploring the Economic Impact of Green Financing: A Case Study of Bangladesh’s Loan Disbursement Initiatives," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 9(15), pages 306-321, February.
    • Handle: RePEc:bcp:journl:v:9:y:2025:i:15:p:306-321
    as

    Download full text from publisher

    File URL: https://www.rsisinternational.org/journals/ijriss/Digital-Library/volume-9-issue-15/306-321.pdf
    Download Restriction: no
    File URL: https://rsisinternational.org/journals/ijriss/articles/exploring-the-economic-impact-of-green-financing-a-case-study-of-bangladeshs-loan-disbursement-initiatives/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Hyoungkun Park & Jong Dae Kim, 2020. "Transition towards green banking: role of financial regulators and financial institutions," Asian Journal of Sustainability and Social Responsibility, Springer, vol. 5(1), pages 1-25, December.
    2. 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.
    3. Fatema Khairunnessa & Diego A. Vazquez-Brust & Natalia Yakovleva, 2021. "A Review of the Recent Developments of Green Banking in Bangladesh," Sustainability, MDPI, vol. 13(4), pages 1-21, February.
    4. Aliyu Baba Usman & Noor Afza Binti Amran, 2015. "Corporate social responsibility practice and corporate financial performance: evidence from Nigeria companies," Social Responsibility Journal, Emerald Group Publishing Limited, vol. 11(4), pages 749-763, October.
    5. Aliyu Baba Usman & Noor Afza Binti Amran, 2015. "Corporate social responsibility practice and corporate financial performance: evidence from Nigeria companies," Social Responsibility Journal, Emerald Group Publishing Limited, vol. 11(4), pages 749-763, October.
    6. Grace Ibe-enwo & Nicholas Igbudu & Zanete Garanti & Temitope Popoola, 2019. "Assessing the Relevance of Green Banking Practice on Bank Loyalty: The Mediating Effect of Green Image and Bank Trust," Sustainability, MDPI, vol. 11(17), pages 1-16, August.
    7. Ajaz Akbar Mir & Aijaz Ahmad Bhat, 2022. "Green banking and sustainability – a review," Arab Gulf Journal of Scientific Research, Emerald Group Publishing Limited, vol. 40(3), pages 247-263, September.
    8. repec:eme:agjsr0:agjsr-04-2022-0017 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Serhat Yüksel & Hasan Dinçer & Duygu Yavuz, 2023. "Determination of Priority Factors for the Development of Green Banking Practices in Turkey with the Fuzzy DEMATEL Method," Journal of Sustainable Development Issues (JOSDI), SDIjournals, vol. 1(1), pages 23-41, December.
    2. Monday Nweke Igwe & Saleh F. A. Khatib & Ayman Hassan Bazhair, 2023. "Sustainability reporting in Africa: A systematic review and agenda for future research," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 30(5), pages 2081-2100, September.
    3. Tabassum Chowdhury & Rashed Al Karim & Md Karim Rabiul & Minhaz Ul Alam & Dewan Niamul Karim, 2025. "Fostering Sustainable Environmental Performance Through Green Banking Practices: The Mediating Role of Employees’ Green Motivation and Green Behavior," Sustainability, MDPI, vol. 17(8), pages 1-18, April.
    4. Hassan, Aminu & Ibrahim, Masud Usman & Bala, Ahmed Jinjiri, 2024. "Vulnerability of a developing stock market to openness: One-way return and volatility transmissions," International Review of Financial Analysis, Elsevier, vol. 93(C).
    5. Wajeeha Aslam & Syed Tehseen Jawaid, 2025. "Green banking adoption practices: the pathway of meeting sustainable goals," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 27(1), pages 1015-1040, January.
    6. Ikram Ullah Khan & Zahid Hameed & Safeer Ullah Khan & Manzoor Ahmad Khan, 2024. "Green banking practices, bank reputation, and environmental awareness: evidence from Islamic banks in a developing economy," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 26(6), pages 16073-16093, June.
    7. Nikola Milicevic & Nenad Djokic & Vera Mirovic & Ines Djokic & Branimir Kalas, 2022. "Banking Support for Energy Security: The Customer Aspect," Sustainability, MDPI, vol. 15(1), pages 1-15, December.
    8. 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.
    9. Vera Mirovic & Branimir Kalas & Ines Djokic & Nikola Milicevic & Nenad Djokic & Milos Djakovic, 2023. "Green Loans in Bank Portfolio: Financial and Marketing Implications," Sustainability, MDPI, vol. 15(7), pages 1-14, March.
    10. repec:rfh:jprjor:v:9:y:2023:i:2:p:182-199 is not listed on IDEAS
    11. Fatema Khairunnessa & Diego A. Vazquez-Brust & Natalia Yakovleva, 2021. "A Review of the Recent Developments of Green Banking in Bangladesh," Sustainability, MDPI, vol. 13(4), pages 1-21, February.
    12. Sharif Mohammad Aqabna & Mehmet Aga & Huthayfa Nabeel Jabari, 2023. "Firm Performance, Corporate Social Responsibility and the Impact of Earnings Management during COVID-19: Evidence from MENA Region," Sustainability, MDPI, vol. 15(2), pages 1-20, January.
    13. Simona Galletta & Sebastiano Mazzù & Valeria Naciti & Carlo Vermiglio, 2021. "Sustainable development and financial institutions: Do banks' environmental policies influence customer deposits?," Business Strategy and the Environment, Wiley Blackwell, vol. 30(1), pages 643-656, January.
    14. Olga Miroshnichenko & Elena Iakovleva & Natalia Voronova, 2022. "Banking Sector Profitability: Does Household Income Matter?," Sustainability, MDPI, vol. 14(6), pages 1-19, March.
    15. Ali Saleh Alshebami, 2021. "Evaluating the relevance of green banking practices on Saudi Banks’ green image: The mediating effect of employees’ green behaviour," Journal of Banking Regulation, Palgrave Macmillan, vol. 22(4), pages 275-286, December.
    16. Mohammed Bashir Abdi & James Nzili & Michael Kiama, 2024. "Influence of Strategic Leadership on Organizational Performance in Charitable NGOs in Nairobi County," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 8(5), pages 1155-1162, May.
    17. Andreea-Daniela Moraru & Margareta Ilie, 2021. "Towards Sustainability in Banking Services Development. Customer Satisfaction with Banking Services – Influences and Perspectives," Ovidius University Annals, Economic Sciences Series, Ovidius University of Constantza, Faculty of Economic Sciences, vol. 0(2), pages 842-848, December.
    18. Rosa Lombardi & Simone Manfredi & Benedetta Cuozzo & Matteo Palmaccio, 2020. "The profitable relationship among corporate social responsibility and human resource management: A new sustainable key factor," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 27(6), pages 2657-2667, November.
    19. Neha Chhabra Roy, 2024. "Sustainable lending strategies: a framework for enhancing climate resilience in industrial loan portfolios," Asia Europe Journal, Springer, vol. 22(4), pages 423-462, December.
    20. Mohammad Abul Kalam Azad & Md. Aminul Islam & Farid Ahammad Sobhani & Md. Sharif Hassan & Mohammad Masukujjaman, 2022. "Revisiting the Current Status of Green Finance and Sustainable Finance Disbursement: A Policy Insights," Sustainability, MDPI, vol. 14(14), pages 1-14, July.
    21. BAICU Claudia Gabriela, 2021. "Towards Better Involvement In Green Banking Practices: Evidence From Romania," Management of Sustainable Development, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 13(1), pages 9-13, June.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bcp:journl:v:9:y:2025:i:15:p:306-321. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Dr. Pawan Verma (email available below). General contact details of provider: https://rsisinternational.org/journals/ijriss/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.