IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/107397.html
   My bibliography  Save this paper

Circular economy, banks and other financial institutions: what’s in it for them?

Author

Listed:
  • Ozili, Peterson K

Abstract

In this paper, I highlight the benefit of the circular economy to banks and other financial institutions. The paper uses discourse analysis methodology to present an overview of the circular economy concept and the benefit of the circular economy to banks and other financial institutions. The findings show that some benefit of the circular economy to banks include: (i) greater loan diversification opportunities, (ii) promotes responsible and sustainable banking, (iii) increased lending to circular clients and the recycling sector which means more profit for banks, and (iv) correcting the bad perception about banks in society. Some benefit of the circular economy to other financial institutions include: (i) issuance of special insurance policies for reused products; (ii) greater sustainability-adjusted return on investment; (iii) greater funding to microfinance institutions; and (iv) more opportunities for collaborative funding to circular businesses. This study contributes to the scant literature that examine the role of the finance industry in the circular economy.

Suggested Citation

  • Ozili, Peterson K, 2021. "Circular economy, banks and other financial institutions: what’s in it for them?," MPRA Paper 107397, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:107397
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/107397/1/MPRA_paper_107397.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Kathleen Bolger & Andréanne Doyon, 2019. "Circular cities: exploring local government strategies to facilitate a circular economy," European Planning Studies, Taylor & Francis Journals, vol. 27(11), pages 2184-2205, November.
    2. Walter R. Stahel, 2016. "The circular economy," Nature, Nature, vol. 531(7595), pages 435-438, March.
    3. Anne P. M. Velenturf & Phil Purnell & Mike Tregent & John Ferguson & Alan Holmes, 2018. "Co-Producing a Vision and Approach for the Transition towards a Circular Economy: Perspectives from Government Partners," Sustainability, MDPI, vol. 10(5), pages 1-20, May.
    4. Ivashina, Victoria & Scharfstein, David, 2010. "Bank lending during the financial crisis of 2008," Journal of Financial Economics, Elsevier, vol. 97(3), pages 319-338, September.
    5. Alex Y. Lo & Xiang Yu, 2015. "Climate for Business: Opportunities for Financial Institutions and Sustainable Development in the Chinese Carbon Market," Sustainable Development, John Wiley & Sons, Ltd., vol. 23(6), pages 369-380, December.
    6. Patricia van Loon & Charles Delagarde & Luk N. Van Wassenhove, 2018. "The role of second-hand markets in circular business: a simple model for leasing versus selling consumer products," International Journal of Production Research, Taylor & Francis Journals, vol. 56(1-2), pages 960-973, January.
    7. Korhonen, Jouni & Honkasalo, Antero & Seppälä, Jyri, 2018. "Circular Economy: The Concept and its Limitations," Ecological Economics, Elsevier, vol. 143(C), pages 37-46.
    8. Paul Dewick & Magnus Bengtsson & Maurie J. Cohen & Joseph Sarkis & Patrick Schröder, 2020. "Circular economy finance: Clear winner or risky proposition?," Journal of Industrial Ecology, Yale University, vol. 24(6), pages 1192-1200, December.
    9. Olaf Weber, 2014. "The financial sector's impact on sustainable development," Journal of Sustainable Finance & Investment, Taylor & Francis Journals, vol. 4(1), pages 1-8, January.
    10. Toufic Mezher & Dima Jamali & Carine Zreik, 2002. "The role of financial institutions in the sustainable development of Lebanon," Sustainable Development, John Wiley & Sons, Ltd., vol. 10(2), pages 69-78.
    11. Brian Chi-ang Lin, 2020. "Sustainable Growth: A Circular Economy Perspective," Journal of Economic Issues, Taylor & Francis Journals, vol. 54(2), pages 465-471, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Biljana Petković & Yousef Zandi & Alireza Sadighi Agdas & Ivica Nikolić & Nebojša Denić & Nenad Kojić & Abdellatif Selmi & Alibek Issakhov & Slaviša Milošević & Afrasyab Khan, 2022. "Adaptive neuro fuzzy evaluation of energy and non‐energy material productivity impact on sustainable development based on circular economy and gross domestic product," Business Strategy and the Environment, Wiley Blackwell, vol. 31(1), pages 129-144, January.
    2. Peterson K. Ozili, 2022. "Circular Economy and Central Bank Digital Currency," Circular Economy and Sustainability,, Springer.
    3. Van Hoof, Bart & Núñez Reyes, Georgina & De Miguel, Carlos J., 2023. "Scaling up circular economy initiatives in Latin America and the Caribbean," Documentos de Proyectos 48835, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    4. Ozili, Peterson K, 2022. "Circular economy and central bank digital currency," MPRA Paper 113469, University Library of Munich, Germany.
    5. Sarah Muhanna Naimi, 2022. "Economic Diversification Trends in the Gulf: the Case of Saudi Arabia," Circular Economy and Sustainability,, Springer.

    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. Peterson K. Ozili, 2021. "Circular Economy, Banks, and Other Financial Institutions: What’s in It for Them?," Circular Economy and Sustainability,, Springer.
    2. Luthra, Sunil & Kumar, Anil & Sharma, Manu & Arturo Garza-Reyes, Jose & Kumar, Vikas, 2022. "An analysis of operational behavioural factors and circular economy practices in SMEs: An emerging economy perspective," Journal of Business Research, Elsevier, vol. 141(C), pages 321-336.
    3. Ozili, Peterson K, 2022. "Circular economy and central bank digital currency," MPRA Paper 113469, University Library of Munich, Germany.
    4. Peterson K. Ozili, 2022. "Circular Economy and Central Bank Digital Currency," Circular Economy and Sustainability,, Springer.
    5. Millar, Neal & McLaughlin, Eoin & Börger, Tobias, 2019. "The Circular Economy: Swings and Roundabouts?," Ecological Economics, Elsevier, vol. 158(C), pages 11-19.
    6. Concepción Garcés-Ayerbe & Pilar Rivera-Torres & Inés Suárez-Perales & Dante I. Leyva-de la Hiz, 2019. "Is It Possible to Change from a Linear to a Circular Economy? An Overview of Opportunities and Barriers for European Small and Medium-Sized Enterprise Companies," IJERPH, MDPI, vol. 16(5), pages 1-15, March.
    7. Chembessi Chedrak & Gohoungodji Paulin & Juste Rajaonson, 2023. "“A fine wine, better with age”: Circular economy historical roots and influential publications: A bibliometric analysis using Reference Publication Year Spectroscopy (RPYS)," Journal of Industrial Ecology, Yale University, vol. 27(6), pages 1593-1612, December.
    8. Camila Kolling & José Luis Duarte Ribeiro & Donato Morea & Gianpaolo Iazzolino, 2023. "Corporate social responsibility and circular economy from the perspective of consumers: A cross‐cultural analysis in the cosmetic industry," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 30(3), pages 1226-1243, May.
    9. Gilbert Silvius & Aydan Ismayilova & Vicente Sales-Vivó & Micol Costi, 2021. "Exploring Barriers for Circularity in the EU Furniture Industry," Sustainability, MDPI, vol. 13(19), pages 1-25, October.
    10. Elena Aurelia Botezat & Anca Otilia Dodescu & Sebastian Văduva & Silvia Liana Fotea, 2018. "An Exploration of Circular Economy Practices and Performance Among Romanian Producers," Sustainability, MDPI, vol. 10(9), pages 1-17, September.
    11. Jawaher Binsuwadan & Ghadda Yousif & Hiyam Abdulrahim & Hind Alofaysan, 2023. "The Role of the Circular Economy in Fostering Sustainable Economic Growth in the GCC," Sustainability, MDPI, vol. 15(22), pages 1, November.
    12. Alejandro Padilla-Rivera & Sara Russo-Garrido & Nicolas Merveille, 2020. "Addressing the Social Aspects of a Circular Economy: A Systematic Literature Review," Sustainability, MDPI, vol. 12(19), pages 1-17, September.
    13. Elisa Chioatto & Paolo Sospiro, 2023. "Transition from waste management to circular economy: the European Union roadmap," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 25(1), pages 249-276, January.
    14. Albérico Travassos Rosário & Joana Carmo Dias, 2023. "The New Digital Economy and Sustainability: Challenges and Opportunities," Sustainability, MDPI, vol. 15(14), pages 1-23, July.
    15. Carlo Bellavite Pellegrini & Laura Pellegrini & Claudia Cannas, 2021. "Circular Economy Approach: The benefits of a new business model for European Firms," DISCE - Quaderni del Dipartimento di Politica Economica dipe0018, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE).
    16. José María Martín Martín & Sara Calvo Martínez & José Manuel Guaita Martínez & Domingo Enrique Ribeiro Soriano, 2022. "RETRACTED ARTICLE: Qualitative analysis on the driving force behind upcycling practices associated with mobile applications: Circular economy perspective," Operations Management Research, Springer, vol. 15(3), pages 647-661, December.
    17. Katherine Mansilla-Obando & Fabiola Jeldes-Delgado & Nataly Guiñez-Cabrera, 2022. "Circular Economy Strategies with Social Implications: Findings from a Case Study," Sustainability, MDPI, vol. 14(20), pages 1-16, October.
    18. Raphaëlle Stewart & Monia Niero, 2018. "Circular economy in corporate sustainability strategies: A review of corporate sustainability reports in the fast‐moving consumer goods sector," Business Strategy and the Environment, Wiley Blackwell, vol. 27(7), pages 1005-1022, November.
    19. Carina Pasqualotto & Daniela Callegaro-De-Menezes & Cornelius Stephanus Lodewyk Schutte, 2023. "An Overview and Categorization of the Drivers and Barriers to the Adoption of the Circular Economy: A Systematic Literature Review," Sustainability, MDPI, vol. 15(13), pages 1-24, July.
    20. Anne P. M. Velenturf, 2021. "A Framework and Baseline for the Integration of a Sustainable Circular Economy in Offshore Wind," Energies, MDPI, vol. 14(17), pages 1-41, September.

    More about this item

    Keywords

    circular economy; linear economy; banks; financial institutions; criticism; sustainability; climate change; waste; insurance; sustainable finance; sustainable banking; hedge funds; microfinance institutions;
    All these keywords.

    JEL classification:

    • G02 - Financial Economics - - General - - - Behavioral Finance: Underlying Principles
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • G29 - Financial Economics - - Financial Institutions and Services - - - Other
    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development
    • Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General
    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:pra:mprapa:107397. 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: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    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.