Do Green Banking Activities Improve the Banks’ Environmental Performance? The Mediating Effect of Green Financing

Xin Zhang, Zhihui Wang, Xiaobing Zhong, Shouzhi Yang and Abu Bakkar Siddik
Additional contact information
Xin Zhang: School of Humanity & Social Science and Law, Harbin Institute of Technology, Harbin 150000, China
Zhihui Wang: School of Humanity & Social Science and Law, Harbin Institute of Technology, Harbin 150000, China
Xiaobing Zhong: School of Humanity & Social Science and Law, Harbin Institute of Technology, Harbin 150000, China
Shouzhi Yang: School of Economics and Management, Northeast Agricultural University, Harbin 150000, China

Sustainability, 2022, vol. 14, issue 2, 1-18

Abstract: The main purpose of this study is to identify the impact of green banking activities on green financing and banks’ environmental performance. It also identifies the mediating effect of green financing on the relationship between green banking activities and environmental performance of private commercial banks (PCBs) in Bangladesh. Besides, this study also examines the major challenges and benefits of green banking development in an emerging economy like Bangladesh. The convenience sampling technique was used to collect primary data from bankers of PCBs in Bangladesh, and a final sample size of 352 was recorded. To assess the relationship among the study variables, the Structural Equation Modelling (SEM) approach was employed. The empirical results revealed that green banking activities exhibit a significantly positive effect on banks’ environmental performance and sources of green financing, and that sources of green financing significantly influence banks’ environmental performance. Additionally, it was observed that green financing mediates the association between green banking activities and banks’ environmental performance. Furthermore, the study identified customers’ insufficient awareness towards green banking, high investment costs, technical obstacles, lack of capable and competent staff in appraising green credits/loans, and difficulties and complexity in assessing green projects as major challenges affecting the development of green banking in Bangladesh. Moreover, the study also discovered that increasing banks’ competitiveness, reducing long-term costs and expenses, providing online banking facilities, improving customers’ goodwill, and reducing carbon footprints are the key benefits of green banking development, as it helps in the achievement of the sustainable economic development of the country. Therefore, major theoretical and managerial policy implications are further discussed with study limitations and future research directions.

Keywords: green banking activities; green financing; banks’ environmental performance; SEM; Bangladesh (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

Downloads: (external link)
https://www.mdpi.com/2071-1050/14/2/989/pdf (application/pdf)
https://www.mdpi.com/2071-1050/14/2/989/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jsusta:v:14:y:2022:i:2:p:989-:d:726171

Access Statistics for this article

Sustainability is currently edited by Ms. Alexandra Wu

More articles in Sustainability from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().