Green banking adoption practices: improving environmental, financial, and operational performance

Abstract

Purpose The increased concerns for the environment have led organizations, businesses and nations to act environmentally friendly. This has also pressurized the banking sector to adopt green practices. However, there is a dearth of studies related to green banking (G-banking) adoption practices (GBAP) on banking performance. Hence, by considering the resource-based view theory, this study aims to examine the impact of GBAP on banking performance, i.e. financial, operational and environmental performance. Design/methodology/approach The data was acquired from banking personnel in Pakistan using a five-point Likert scale questionnaire and a non-probability purposive selection technique. In total, 400 responses were gathered, on which data screening was performed to detect and delete outliers. On a useful sample of 360, partial least square-structural equation modeling was used to validate the hypotheses. Findings The findings revealed that GBAP positively affects the environmental, operational and financial performance of the banks. The findings further revealed that GBAP largely affects environmental performance followed by operational performance and financial performance, respectively. Practical implications The study findings offer various insights to the policymakers and the banking sector to better implement G-banking practices in improving banking performance. Originality/value To the best of the authors’ knowledge, this is one of the first studies to look at the effect of GBAP on key performance outcomes, i.e. financial and operational performance. This study also verifies the use of resource-based perspective theory in the context of G-banking.

Systematic Review of Green Banking Adoption: Following PRISMA Protocols

“…Past studies on GR-banking have received immense attention, and many scholars have explored GR-banking (Aslam & Jawaid, 2022;Bryson et al, 2016;Kapoor et al, 2016;Prakash Pillai & Praveen Raj, 2019;Shelly, 2015;Zhelyazkova & Kitanov, 2015). The studies related to GR-banking have focused on various aspects such as conceptual (Zhelyazkova & Kitanov, 2015), consumers (Prakash Pillai & Praveen Raj, 2019) and bankers (Mehedi et al, 2017).…”

“…Control variables play a crucial role in driving or shaping behaviour (Arif et al, 2020). For example, young people are quick to adopt technology (Aslam et al, 2022) and similarly, they are more aware of environmental issues.…”

“…The greatest challenge for countries is to protect and save the environment and to reduce the hazardous impact of the emission of CO 2 in the climate (Purani et al, 2014; Sinha, 2012). As a result, academic studies on eco-friendly methods have proliferated, but surprisingly most previous research studies have focused on the manufacturing sector and largely ignored the service sector (Aykol & Leonidou, 2015; Ostrom et al, 2010) despite that service industry accounts for a major fraction of global GDP and sustainable service processes can potentially have a major impact on protecting the planet (Aslam & Jawaid, 2022).…”

“…Lately, GR-banking–related research has been conducted to decrease the harmful influence of banks on the environment (Aslam & Jawaid, 2022). However, to date, no study has specifically employed the Preferred Reporting Items for Systematic Reviews and Meta-analyses (PRISMA) structure for GR-banking adoption or intention, even though among all reporting structures, PRISMA protocols are widely used by authors and supported by research journals for the high reproducibility and transparency (Page et al, 2020).…”

Examining the demand side factors of green banking adoption – a study exploring the case of Oman

“…Implementing green banking practices will help banks to reduce the cost of rendering banking services, bringing greater operational efficiency and lowering the probability of manual errors and fraud (Biswas, 2011). Moreover, studies reveal that adopting green banking practices positively enhances bank’s environmental, operational and financial performances (Aslam and Jawaid, 2022; Siddik et al , 2023). However, existing literature on green banking reports that the adoption of most green banking practices is a reactive measure against the growing call from stakeholders to reduce the environmental impact of their operations (Khairunnessa et al , 2021; Rifat et al , 2016).…”