How Green Finance Regulations Drive Sustainable Investment: Evidence from an Emerging Economy

Muhammed Zakir Hossain, Asif Al Saif and Fatema Tuj Johora
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Muhammed Zakir Hossain: Associate Professor, Department of Business Studies, State University of Bangladesh, Bangladesh
Asif Al Saif: Department of Finance, Jagannath University, Bangladesh
Fatema Tuj Johora: Lecturer, Department of Business Studies, State University of Bangladesh, Dhaka, Bangladesh

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Abstract: This study examines how green finance regulations influence sustainable investment in Bangladesh, a climate-vulnerable emerging economy that has introduced green banking guidelines, environmental risk management frameworks, sustainable finance policies, refinancing schemes, and mandatory sustainability reporting requirements. Focusing on three core determinants—Regulatory Enforcement Strength (RES), Financial Incentives and Green Instruments (FIGI), and Institutional Compliance Capacity (ICC)—the research adopts a quantitative approach using survey data from 227 professionals across banking, regulatory, development, and academic sectors. Reliability, correlation, and multiple regression analyses reveal that all three factors have significant positive effects on sustainable investment, with regulatory enforcement exerting the strongest influence, followed by financial incentives and institutional capacity. The regression model explains 52.4% of the variation in sustainable investment (R2 = 0.524), indicating substantial explanatory power. The findings suggest that while Bangladesh has established a meaningful green finance framework, effective enforcement, well-designed financial instruments, and strengthened institutional capacity must operate together to translate regulatory intent into scaled sustainable investment outcomes.

Keywords: ESG Policies; Green Banking; Environmental Regulations; Sustainable Investment; Green Finance (search for similar items in EconPapers)
Date: 2026-02-28
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Published in European Journal of Innovative Studies and Sustainability, 2026, 2 (2), pp.66-78. ⟨10.59324/ejiss.2026.2(2).05⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05707850

DOI: 10.59324/ejiss.2026.2(2).05

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