Green banking practices, bank reputation, and environmental awareness: evidence from Islamic banks in a developing economy

Abstract

Fulfilling the international considerations of environment, societal, and governance challenges, the financial industry, especially banks, has initiated “Go Green” practices to help sustain the environment and enhance “banking” across the globe. Amidst the green and climate-friendly drives, there is scarce literature highlighting the banks’ green practices, environmental awareness, and their effects on bank reputation, especially the reputation of Islamic banks. This study aims to investigate the green banking practices of Islamic banks in a developing Islamic country. Focusing on the greening ambitions of banks, this study argues that the reputation of Islamic banks can be better enhanced through adopting green banking initiatives that will beget better climatic outcomes in Muslim societies. Therefore, the study illumes green banking practices and their impact on the reputation of Islamic banks in Pakistan. Moreover, this study checks the moderation effect of employees’ environmental awareness on banks' reputation. The study used deductive rationale and quantified the employees' data to unravel their go-green perceptions and bank green activities. In this regard, the 390 response data, collected through a survey from the employees of Islamic banks, were analyzed through Smart-PLS, using structural equation modeling technique. The study finds that banks’ employees-related practices (ERPs), daily operations-related practices (DORPs), customers-related practices (CRPs), and banks’ policy-related practices (PRPs) have a significant positive influence on bank reputation. The authors also find that there is a significant moderating impact of environmental awareness between the relationships of ERPs, DORPs, CRPs, PRPs, and bank reputation. The study might increase understating and enlighten regulators and bank management to sustainably transform their operations to green banking practices, particularly adding to the environmental sustainability in Pakistan.

Green Banking and Perceived Financial Performance of Nepalese Commercial Banks

“…Based on secondary data sources, the study emphasized the importance of raising awareness among clients and customers, highlighting the core values that green banks contribute to foster an environmentally responsible image. Khan et al (2023) investigated green banking practices in Islamic banks in Pakistan and their impact on bank reputation and positive climatic outcomes in Muslim societies. Data from 390 employees were analyzed using Smart-PLS and structural equation modeling.…”

Assessing the evolution of banking reputation literature: a bibliometric analysis

“…Recent papers in the field of bank marketing have delved into two key areas: firstly, exploring the influence of media reputation on banks' financial performance (Doan et al, 2020;Nguyen et al, 2022), and secondly, examining the role of reputation in customers' inclination to switch banks (Zasuwa and Wesołowski, 2023;Zhao et al, 2023). Simultaneously, there has been an increased focus on the banking sector's dedication to embracing more sustainable practices (Khan et al, 2023;Siddik et al, 2023). In these veins, for example, Forcadell et al (2020) argue that corporate sustainability can be considered an important source of reputation that is able to build stakeholder confidence.…”

The Impact of Green Finance on the Sustainability Performance of the Banking Sector in Palestine: The Moderating Role of Female Presence

“…A wealth of studies substantiates this notion. Moreover, a comprehensive exploration of the available literature reveals that green finance can bolster banks' sustainability endeavors by incentivizing investment in environmentally friendly projects and sustainable development (Endrikat et al 2021;Fashli et al 2019;Khan et al 2023Khan et al , 2022Nechaev et al 2017;Oyegunle and Weber 2015;Pasupuleti and Ayyagari 2023;Qi 2021;Rahman et al 2022;Ringel and Mjekic 2023;Chen et al 2018).…”

“…Moreover, Rahman et al (2022) call for a comprehensive analysis of green finance's role in fostering sustainable economic growth across both developed and developing nations. Furthermore, advocating for upcoming studies to scrutinize how employee demographics like age, sustainable education, and gender moderate perceptions of green financing is recommended (Khan et al 2023). Finally, Galletta et al (2022), which assesses female leadership's influence on banking sustainability in their study, call for future investigations to examine gender diversity's impact within countries adhering to Agenda 2030 for sustainable development.…”

“…Banks can contribute to sustainable development and the achievement of SDGs by investing in environmentally friendly projects like renewable energy, clean energy, green industry development, and waste management (World Bank 2022;Chen et al 2018). Despite the abundant amount of existing literature that focuses on green finance and suitability, the necessity remains for additional contributions to fill critical research gaps (Zheng and Siddik 2022;Khan et al 2023Khan et al , 2022Rahman et al 2022), especially on Palestinian bankers' perspectives and their impact on PCBs' sustainability performance as an emerging economy. Therefore, this paper endeavors to bridge this gap by conducting a survey of the perceptions and attitudes of b key employees of banks, aiming to shed light on the impact of green finance on sustainable development in Palestine.…”