Green banking policies and sustainable performance: unraveling the mediating role of GC and EP

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Abstract

Green banking and its sustainability are equally important in responsible banking, and are recognized as key drivers of operational success. It is considered extremely important that financial institutions develop a sustainable working space that can contribute to their operational performance (OP). In this context, we explored the complex relationship between Green Banking Policies (GBPs) and the OP of the banks in Pakistan, shedding light on the mediating roles played by Green Culture (GC) and Environmental Performance (EP). Employing Structural Equation Modeling (SEM) in AMOS SPSS 2022 and Binary Logistic Regression (BLR), we highlight the connected impact of green banking strategies, the integration of GC, and EP on operational outcomes. We conclude that the GBPs can indirectly impact the OP of the banks through only a mediating role of the GC and EP, thus providing insights into the causal relationships within this multifaceted framework. Its practical inferences resonate with financial institutions and policymakers, advocating for a comprehensive approach to green banking. In the ear of environmental consciousness being paramount, this research offers a timely and invaluable contribution to the ongoing dialogue on the role of green banking and sustainable finance. The research also extends its novelty in terms of addressing the debate on sustainable banking practices, especially in the case of developing countries, along with a quantitative methodological implication, thus enabling more capable and innovative research in the context.

Keywords

green banking / sustainability / GC / EP / SEM / binary logistic regression

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