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A Comparative Evaluation of Sustainable Finance Performance: Analyzing Target Achievement and Sectoral Disbursement Patterns of Banks and NBFIs in Bangladesh (2021-2025)

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  • Hosen, Abul
  • Showne, Md Shabbir Hossain

Abstract

The Bangladesh Sustainable Finance Policy introduced a compulsory benchmark for all banks and non-bank financial institutions to comply with a minimum threshold of 5% term loan to be allocated to green finance and 20% of total loan disbursement as sustainable finance. Although aggregate-level evidence indicates substantial growth in sustainable financing activities since the policy's implementation, existing literature has largely overlooked banks' sustainable finance performance relative to NBFIs in target achievement rates and sectoral disbursement patterns over the full policy implementation period. This study aims to bridge this gap by offering a systematic comparative analysis of sustainable finance performance across these two institutional categories. Drawing on a longitudinal secondary dataset analysis of Bangladesh Bank’s Sustainable Finance Department's quarterly reports, the timeline for 2021-2025 covers 6 scheduled banks and 4 finance companies, supplemented by content analysis of sustainability disclosures from the annual reports of 10 selected institutions. This study assesses institutional performance across green finance, MSME finance, and sustainable agriculture, integrating the analytical frameworks of legitimacy theory and stakeholder theory, extended with the principles of Maqasid al-Shariah, to capture the unique sustainable orientation of Islamic financial institutions. Findings demonstrate a significant enhancement in sustainable finance alongside noticeable differences across institution categories. Banks exceed NBFIs in absolute disbursements, while Islamic banks allocate more to MSMEs and agriculture. This study suggests that regulatory compliance alone does not fully satisfy the observed patterns. This research offers policy-driven insights and contributes to the advancement of growing literature on Maqasid-aligned sustainable finance.

Suggested Citation

  • Hosen, Abul & Showne, Md Shabbir Hossain, 2026. "A Comparative Evaluation of Sustainable Finance Performance: Analyzing Target Achievement and Sectoral Disbursement Patterns of Banks and NBFIs in Bangladesh (2021-2025)," EconStor Conference Papers 344645, ZBW - Leibniz Information Centre for Economics.
    • Handle: RePEc:zbw:esconf:344645
    DOI: 10.5281/zenodo.22934713
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