Abstract
Despite the increasing popularity of green finance and sustainable investment in the field of Sustainable Development Goals (SDGs), very few studies have investigated the effect of green finance dimensions on the sustainable performance of banks. Therefore, this study attempts to examine the dimensions of green finance and their effects on the sustainability performance of financial institutions in developing economies such as Bangladesh. The study also depicts the level of green financing adoption among the banks and non-bank financial institutions in the country between 2015 and 2020. Considering the nature of the dataset, the structural equation modeling technique was employed in this study to fulfil the research objectives. Amongst banks and non-bank financial institutions, the study highlighted private commercial banks as being the highest contributor to green financing, accounting for 78.12% of the total green financing in Bangladesh. In addition, the empirical findings revealed that the dimensions of green finance are related to the economic, social, and environmental aspects of the SDGs. Furthermore, empirical findings indicated that the dimensions of green finance—social, economic, and environmental—have a strong positive effect on the sustainability performance of banks. The study also discovered that approximately 95% of bankers identify green financing as an essential element in the short- and long-term development of banking strategies in Bangladesh. Consequently, this study adds to the body of knowledge on green finance development and the sustainability performance of banks and financial institutions in emerging economies such as Bangladesh. Therefore, major managerial policy implications are discussed.
Highlights
In recent years, most countries, in the developing world, are focusing on economic expansion, while downplaying ecological improvement
In achieving the aforementioned goals, this study aims to answer the following two questions: (1) “what is the present state of banks and nonbank financial institutions (NBFIs)’ green financing of eco-friendly projects in Bangladesh?” and (2) “What are the impacts of the Green finance (GF) dimensions on the sustainability performance of banks in Bangladesh based on the knowledge of bankers?”
The findings of the study revealed that the total green projects financing by the banks and NBFIs in Bangladesh stood at BDT
Summary
Most countries, in the developing world, are focusing on economic expansion, while downplaying ecological improvement. Different environmental problems such as air pollution, climate change, land loss, biodiversity loss, deforestation, environmental damage, etc., have emerged [1,2]. The international agreement on environmental preservation, action against climate change awareness, and the United Nations’ advocacy for SDGs by the year 2030 [3] have collectively heightened the interest in green finance [4,5]. The implementation of an effective green economy through green finance is a significant outlet for economic growth and sustainability in underdeveloped nations [6,7]. To ensure sustainable and uniform development, the consciousness of environmental issues should be invoked among academics, bankers, investors, administrations, legislators, advocacy groups, corporations, and communities [8].
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