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How Do Green Banking Practices Impact Banks’ Profitability? A Meta-Analysis

Author

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  • Martin Kamau Muchiri

    (Doctoral School of Economics and Regional Sciences, Hungarian University of Agriculture and Life Sciences, Páter Károly u. 1., 2100 Gödöllo, Hungary)

  • Maria Fekete-Farkas

    (Institute of Agricultural and Food Economics, Hungarian University of Agriculture and Life Sciences, Páter Károly u. 1., 2100 Gödöllo, Hungary)

  • Szilvia Kesmarki Erdei-Gally

    (Institute of Technology, Hungarian University of Agriculture and Life Sciences, Páter Károly u. 1., 2100 Gödöllo, Hungary)

Abstract

In light of the growing global emphasis on sustainability, understanding the nexus between green banking practices and banks’ profitability is essential and timely. The main aim of this study was to conduct a meta-analysis examining the link between green banking practices and banks’ profitability. Based on 28 proxy relationships between green banking and green financing activities on banks profitability, a random-effects meta-analytic model was used to examine the corresponding effect sizes. An overall positive statistically insignificant effect size between green financing and green banking activities on banks profitability was established, implying that green banking activities do not consistently translate into financial benefits. However, this study established considerable heterogeneity of the results due to the application of different methodologies in diverse geographical contexts and varying green financing proxies. The study strongly recommends banks and policymakers adopt tailor-made, evidence-based green financing strategies to align their sustainability initiatives with market realities, regulatory frameworks, and institutional capacities. Such strategies promote the pursuit of both financial performance and environmental responsibility.

Suggested Citation

  • Martin Kamau Muchiri & Maria Fekete-Farkas & Szilvia Kesmarki Erdei-Gally, 2025. "How Do Green Banking Practices Impact Banks’ Profitability? A Meta-Analysis," JRFM, MDPI, vol. 18(6), pages 1-15, June.
    • Handle: RePEc:gam:jjrfmx:v:18:y:2025:i:6:p:320-:d:1676144
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    References listed on IDEAS

    as
    1. Jitender Kumar & Garima Rani & Manju Rani & Vinki Rani, 2024. "Do green banking practices improve the sustainability performance of banking institutions? The mediating role of green finance," Social Responsibility Journal, Emerald Group Publishing Limited, vol. 20(10), pages 1990-2007, July.
    2. DanielLitwin & Elsa Savourey, 2025. "Human Rights in EU Sustainable Finance," Journal of Financial Regulation, Oxford University Press, vol. 11(1), pages 41-72.
    3. Ayesha Afzal & Jamila Abaidi Hasnaoui & Saba Firdousi & Ramsha Noor, 2024. "Climate change and the European banking sector: the effect of green technology adaptation and human capital," Review of Accounting and Finance, Emerald Group Publishing Limited, vol. 23(3), pages 394-418, March.
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