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

Author

Listed:
  • 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 both essential and timely. The main aim of this study was to conduct a meta-analysis examining this link. Based on 28 proxy relationships between green banking and green financing in terms of bank profitability, a random-effects meta-analytic model was used to synthesize the corresponding effect sizes. An overall positive effect size was established, but it was statistically insignificant, implying that green banking activities do not consistently translate into financial benefits. However, this study established the considerable heterogeneity of the results due to the application of diverse methodologies, the diverse geographical contexts, and the different green financing proxies used. It is strongly recommended that 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 a strategy will 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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