The Impact of Green Banking Activities on Bank’s Sustainable Environmental Performance: A Green Finance Approach

Abstract

Environmental issues affect every area of the global economy and have an impact on how they do business daily. The concept of green banking has received a lot of attention in contemporary green finance (GF) literature, largely due to the growing threat posed by global climate change. Consequently, this study's primary goal was to determine how green banking activities (GBA) affected the bank's sustainable environmental performance (BSEP). The relationship between green banking activities and BSEP in Pakistan is also identified, as is the moderating role that green financing plays in this relationship. For this study, 300 bank employees who answered a questionnaire on a five-point Likert scale provided primary data for analysis. The structural equation modeling (SEM) method was used to evaluate the connection between the study variables. The empirical findings showed that GBA has a substantial positive impact on BSEP and that there is a significant positive correlation between green banking activities and green funding sources. The study also discovered a strong positive correlation between BSEP and the sources of their green financing. Furthermore, it was found that the relationship between GBA and BSEP is mediated by green financing. Additionally, the study found that the main advantages of green banking development are that it helps the nation achieve sustainable economic development by making banks more competitive, offering online banking services, cutting long-term costs and expenses, and lowering carbon footprints. The study's findings will help banks understand the most important factors to take into account when implementing, creating, and approving green financing.