Green Finance and Bank Performance: Evidence from Bangladesh

Abstract

The severe repercussions of the global climate catastrophe are being felt all across the world. Each industrialized and developing country must take action in response to the consequences of global climate change that endanger life on our planet. This study looks into how green finance has affected Bangladeshi private commercial banks' financial performance. For eight years, from 2014 to 2021, all private commercial banks are surveyed quarterly for secondary data. The performance of the banks is evaluated using return on assets, return on equity, net interest margin, and net non-performing loan to total loan ratios, whereas green finance is used as an independent variable. The study uses linear regression and questionnaire analysis to deter- mine the impact of green finance on a bank’s financial performance. According to the study, at a 10% significance level, green finance has a negligible positive effect on return on assets but a significant positive impact on return on equity, net interest mar- gin, and net non-performing loans to total loan ratio. The questionnaire analysis also demonstrates green finance's significant impact on banks’ performance. This study can be used as a starting point for policy discussions with practitioners, governments, decision-makers, academics, and future researchers.

Bibliometric Foundations: Tracking the Footprint of Green Finance and Financial Institutions in Global Research

“…Secondly, there is a lack of incentives from governments and stakeholders to promote green investment, which poses a challenge for the implementation of sustainable finance (Bhalla, 2023). Additionally, the focus on traditional financial performance metrics may overshadow the importance of green finance in enhancing a bank's financial performance (Chowdhury, 2023). Furthermore, the complexity of integrating green finance practices into existing banking operations and products may deter researchers from exploring this area (Aulia et al, 2023).…”

“…One is to examine the impact of green finance on the financial performance of banks. Previous studies have shown that green finance has a positive effect on return on equity, net interest margin, and net non-performing loans to total loans ratio (Chowdhury, 2023). Another perspective includes customer perception and awareness of green banking.…”