Green Finance Development in Bangladesh: The Role of Private Commercial Banks (PCBs)

Guang-Wen Zheng, Abu Bakkar Siddik, Mohammad Masukujjaman, Nazneen Fatema and Syed Shah Alam
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Guang-Wen Zheng: School of Economics and Management, Shaanxi University of Science and Technology (SUST), Xi’an 710021, China
Mohammad Masukujjaman: Department of Business Administration, Northern University Bangladesh, Dhaka, Banani C/A, Dhaka 1213, Bangladesh
Nazneen Fatema: Department of Economics and Banking, International Islamic University Chittagong (IIUC) 154/a College Road, Chittagong 4203, Bangladesh
Syed Shah Alam: Faculty of Business, Finance and Information Technology, MAHSA University, Jenjarom 42610, Malaysia

Sustainability, 2021, vol. 13, issue 2, 1-17

Abstract: Green finance (GF) has been gaining significant attention in recent literature, owing to the rise in global actions against the climate change. It is conceptually ambiguous, with no conclusive agreement among researchers on its meaning. Therefore, the main purpose of the study is to identify the bankers’ perception of various dimensions of GF, and identify the major challenges affecting its implementation in Bangladesh. Besides, this study also reveals the status of GF in Bangladesh’s banks and non-bank financial institutions from 2014 to 2019. In order to define the key aspects of GF through the data obtained from 296 banking staffs of private commercial banks (PCBs) in Bangladesh, confirmatory factor analysis (CFA) was used. The study also used descriptive statistics to identify the major challenges hindering the development of GF in Bangladesh. The findings of this study show that, in comparison with other banks and non-bank financial institutions, the PCBs are the largest contributors to direct GF, accounting for 74.2% of the total GF in Bangladesh. The outcomes of the study also identify the “economic dimension” as the most significant dimension affecting the level of bankers’ perceptions of GF. Moreover, the bankers perceived the “social and environmental dimensions” as being the second and third most crucial factors influencing GF, followed by sources of green financing. The empirical findings indicate that bankers of PCBs deemed the level of awareness, beliefs and understanding of the major dimensions of GF and sources of green financing to be satisfactory for the implementation of GF in Bangladesh. In addition, the study also shows that high transaction costs, heavy default culture, operational self-insufficiency, improper appraisal of loan applications, and the absence of adequate accountability and transparency are the major barriers to the development of GF in Bangladesh. Therefore, major policy implications are further discussed.

Keywords: green finance; bankers’ perception; banks; CFA; Bangladesh (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (18)

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