Pathways towards Green Banking adoption: moderating role of top management commitment

Abstract

Purpose The purpose of this study is to empirically examine the determinants and outcomes of Green Banking adoption and the moderating influence of top management commitment under the corporate environmental ethics ideology. External stakeholder pressures are analyzed as determinants of Green Banking adoption. Brand image and operational efficiency are examined as outcomes of this business ideology. Green Banking adoption is adapted as a second-order construct with four first-order reflective constructs to ensure in-depth conceptualization of the construct. Design/methodology/approach Green Banking adoption is studied at the bank branch level in a developing country, i.e. Pakistan. The data is collected from the branch managers of 212 bank branches from five major cities of Pakistan through mails. Self-administered survey was used for the data collection. The data was analyzed through the application of partial least square-structured equation modeling in SMART PLS 3.2.9. The measurement model and the structural model of the research framework were analyzed through the two-stage approach of the second-order analysis. Findings The results indicate a positive relationship between customer and competitor pressure and Green Banking adoption among bank branches in Pakistan depicting an influence of various environmental ethical pressures on bank’s adoption practices. Community pressure was shown to have no significant influence on Green Banking adoption at the branch level. The moderator of top management commitment caused a positive influence on the relationship between all the studied stakeholder pressures and Green Banking adoption. Branch managers reported branch image and operational efficiency to be enhanced due to Green Banking adoption. Originality/value This study attempts to fill in the significant gap in Green Banking adoption literature through an empirical analysis of Green Banking’s second-order construct. Currently, limited literature exists on the various aspects of Green Banking adoption, and an empirical study has not been conducted at the bank branch level. The study contributes significant practical, theoretical and methodological contributions to the area of Green Banking.

Climate Change Risk: The Need for Green Banking

“…It also creates awareness among businesses of their social and environmental responsibilities to enable them to conduct environmentally responsible business practices and maintain their ethical standard (Rai et al, 2019;Shaumya & Arulrajah, 2016). As green banking requires continuous innovations to invent products or services that parallel new technological advancements, it could increase the efficiency of banking operations and the productivity of banks' employees (Bukhari et al, 2021;Ahmad et al, 2013). Based on the abovementioned benefits of green banking, some developed and developing countries have adopted green banking while others are still struggling to venture into this business ideology (Bukhari et al, 2021).…”

“…As green banking requires continuous innovations to invent products or services that parallel new technological advancements, it could increase the efficiency of banking operations and the productivity of banks' employees (Bukhari et al, 2021;Ahmad et al, 2013). Based on the abovementioned benefits of green banking, some developed and developing countries have adopted green banking while others are still struggling to venture into this business ideology (Bukhari et al, 2021). International bodies like the International Finance Corporation (IFC) have teamed up with several regulatory bodies from different countries to ensure consistency, uniformity, and congruent green management principles in the banking sector.…”

Role of Environmental Sustainability, Psychological and Managerial Supports for Determining Bankers’ Green Banking Usage Behavior: An Integrated Framework

“…3,7,8 Finally, the top management is becoming aware of their business sustainability and provides support in the form of managerial guidance in planning, design, development, and implementation activities to sustain banking activities that follow the sustainability laws. 9,10 Subsequently, the top management enthusiastically accepts environmental commitment as a paramount business responsibility 3,11 in banking, manufacturing, technology, electronics, and IT industries. 1,12 To this end, a pivotal role in the sustainable development of a country is played by green banking, which refers to the investment solutions that protect the environment, guarantee social justice, and create economic success bringing precedence in the banking industry to shield banks and society against unexpected future economic issues, 13,14 such as global financial instability, climate change, social unrest, and corporate scandals.…”

“…The existing literature primarily concentrated on bank environmental performance, team effectiveness, corporate technological innovation, bankers' sustainability performance, and green development. 3,4,7,12,13,[17][18][19] These existing studies also focused on Green Bank Loyalty based on Socially Responsible Investment (SRI) and Social Identity Theory (SIT); 11,20 intention to practice green banking based on the theory of planned behavior (TPB) and SIT 10,21,22 green banking sustainability based on Sustainable Business model and TPB; [22][23][24][25] Perceived cognitive effort in using information system based applications; 5 top management supports and commitment in green banking usage; 10 management supports in artificial intelligence. 26,27 Moreover, the researchers from developed countries, such as Greece 28 and France, 29 as well as developing countries, such as Bangladesh, 30 India 31 and Indonesia, 29 have interested to explore the consequences of green banking practices.…”

“… 3 , 7 , 8 Finally, the top management is becoming aware of their business sustainability and provides support in the form of managerial guidance in planning, design, development, and implementation activities to sustain banking activities that follow the sustainability laws. 9 , 10 Subsequently, the top management enthusiastically accepts environmental commitment as a paramount business responsibility 3 , 11 in banking, manufacturing, technology, electronics, and IT industries. 1 , 12 …”