Page Reader AI | Do green banking practices improve the sustainability performance of banking institutions? The mediating role of green finance

Do green banking practices improve the sustainability performance of banking institutions? The mediating role of green finance | Emerald Insight

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Key Findings

This research explores the relationship between green banking practices, green finance, and the sustainability performance of banks in developing economies, specifically focusing on India. The study utilized partial least squares structural equation modeling (PLS-SEM) with data from 414 bank employees in India's National Capital Region.

Employee, top-management, operational, and policy-related green banking practices significantly influenced both green finance and banks' sustainability performance. However, customer-related practices showed no significant impact on sustainability performance. Green finance itself was found to significantly improve the sustainability performance of banking institutions.

Practical Implications

The findings offer insights for achieving goals like India's "Clean India Mission." Policymakers and bank managers are encouraged to actively involve employees and customers in environmentally friendly practices to enhance sustainability.

Theoretical Contribution

The research is considered groundbreaking, offering a novel theoretical framework to understand the interplay between green banking, green finance, and sustainability. It also expands the scope of corporate social responsibility literature within finance and banking by applying the resource-based view theory.

Abstract Purpose This study aims to examine the mediating role of green finance in the relationship between green banking practices and the sustainability performance of banking institutions in developing economies. Design/methodology/approach The authors performed an empirical investigation by applying the “partial least squares structural equation modeling (PLS-SEM)” based on a representative sample of 414 bank employees working in the National Capital Region, India. Findings The study’s outcome confirms that employee, top-management, operation and policy related practices substantially influence green finance and banks’ sustainability performance. On the contrary, customer related practices insignificantly influence banks’ sustainability performance. Further, green finance substantially influences the sustainability performance of banking institutions. Practical implications This study shed light on green banking practices that can assist in achieving the vision of the “Clean India Mission” of the Indian government. In addition, it encourages policymakers and bank managers to fulfill their social responsibility by engaging employees and customers in cleaner operations to promote banks’ sustainability performance. Originality/value This is ground-breaking research that enriches the understanding of green banking practices and green finance by providing a novel theoretical framework concerning the sustainability performance of banking institutions. Theoretically, this paper also broadens the scope of corporate social responsibility literature by applying the resource-based view theory in finance and banking. Keywords Acknowledgements Declaration of competing interest: The authors declare that they have no known competing financial interests or personal relationships that could have appeared to influence the work reported in this paper. Citation Kumar, J., Rani, G., Rani, M. and Rani, V. (2024), "Do green banking practices improve the sustainability performance of banking institutions? The mediating role of green finance", Social Responsibility Journal, Vol. 20 No. 10, pp. 1990-2007. https://doi.org/10.1108/SRJ-02-2024-0096 Publisher: Emerald Publishing Limited