Banks Financing the Green Economy: A Review of Current Research

Abstract

Achieving the goals of sustainable development and the transition to a green economy requires significant financial resources. Banks are active participants in the financing of projects and industries with a positive environmental and social impact. In this regard, the emerging responsible banking and its regulation are of scientific and practical interest, which ensures the relevance of the study. The aim of the study is to generalize and systematize the results of scientific research on the participation of banks in financing the green economy. In the context of the historical approach, the authors apply the methods of critical analysis, logical generalization, systematization, and grouping. The research is based on scientific publications by Russian and foreign authors. As a result, the authors substantiated the correlation of the concepts “green”,“sustainable”,“responsible” bank, and identified that such green financial instruments as green bonds, in some countries — green loans, green deposits, green leasing, and green insurance are being introduced into banking practices. Responsible banking is regulated using monetary and macroprudential policy instruments; in some countries, incentive-based regulation of responsible banking is mandatory. The authors concluded that responsible banking is moving towards the transformation of classic products and services into environmentally and socially oriented ones, accompanied by the transformation of business processes, management culture, and the content of banking policy. Responsible banking contributes to ensuring financial stability, but the regulator needs to use macroprudential tools to timely identify a green credit bubble, including through climate and environmental stress testing. Prospects for further research are aimed at assessing the impact of green financial instruments on the bank’s performance, the role of responsible banking in achieving sustainable development goals, at finding the most effective monetary and macroprudential tools to stimulate responsible banking and ensure financial stability.

Banking Sector Profitability: Does Household Income Matter?

“…The resulting conclusion about the direct and negative impact of oil prices on the profitability of the banking sector is consistent with the conclusions [43] for Turkey. When conducting stress testing of the banking sector, the state regulator should take into account the impact of global economic and geopolitical events on world oil prices [44], and provide options for an adequate macroprudential response to possible risks in order to prevent threats to banking stability [68], which, in turn, is a necessary condition for the profitability of responsible banking [10], which ensures the achievement of the Sustainable Development Goals through a balance between economic development and the interests of society.…”

“…Thus, the stable development of the banking sector is a necessary, though not the only, condition in achieving a balance between economic growth, social and environmental development. The stable development of the banking sector forms the financial conditions for the transformation of banking policy in accordance with the concept of sustainable development [8], the development of banking products and services of environmental and social orientation [9], financing of green projects [10], charitable programs for environmental conservation, staff development, and improvement of environmental culture in society. This balance is achieved through mechanisms that should ensure the simultaneous growth of household incomes, the reduction in household inequality, and the stable development of the banking sector, which generally contributes positively to economic growth.…”

Konsep Turunan Green economy dan Penerapannya: Sebuah Analisis Literatur

“…Telah banyak studi terkait Green economy, antara lain: Green economy terkait kredit dan keuangan perbankan (Lei et al, 2021;Miroshnichenko & Brand, 2021), Green economy dan dimensi sosial (Stukalo & Simakhova, 2019), Green economy dan pariwisata (Law et al, 2016), Green economy dan pertumbuhan (Georgeson et al, 2017), Green economy dan tenaga kerja pedesaan (Unay-Gailhard & Bojnec, 2019a), Green economy dan sustainability (Mikhno et al, 2021a), Green economy dan keamanan pangan (Kinda, 2021) dan Green economy terhadap investasi (Tarkhanova et al, 2020). Hasil studi sebelumnya menunjukan Green economy tidak saja berkaitan dengan ekonomi berkelanjutan atau ekonomi berbasis lingkungan namun terdapat beberapa turunan konsep yang merupakan bagian dari Green economy.…”

Impact of Green Banking Implementation, Financial Performance, and Covid-19 Crisis on Islamic Bank Profitability in Indonesia

“…Hence, sustainable development goals (SDGs) are a government commitment to achieve the global agenda by 2030. SDGs can lead to the rational and environmentally friendly use of natural resources so that development goals can meet current and future generations (Miroshnichenko & Brand, 2021). There are six essential elements: planet, people, dignity, prosperity, justice, and partnership (Ermelena, 2017 in Risanti et al, 2020).…”