Journal of Commerce and Accounting Research

Open Access Open Access  Restricted Access Subscription Access
Open Access Open Access Open Access  Restricted Access Restricted Access Subscription Access

Can Green Banking Thrive in Developing Economies? A Contextual Study on Bangladesh


Affiliations
1 Ph.D. Researcher, University of Waikato, New Zealand
2 Ph.D. Researcher, The University of Nottingham Ningbo, China
     

   Subscribe/Renew Journal


Purpose – This paper aims to investigate the impact of climate risk funds (CRF), as a moderator variable, on the association between green banking investment (GBI) and financial performance. Design/Methodology/Approach – The research has used secondary data from banks’ audited annual reports. The data has been analysed using SPSS version 26 for validating the results. Findings – The findings generated from the data indicate that there is a significant relationship between GBI and financial performance. In addition to that, this relation becomes positively more assertive in the presence of CRF. Originality – This study is one of the first attempts to investigate the causality relationships and the moderating impact of CRF on the relationship between GBI and financial performance in the context of a developing country. Practical Implications – The findings indicate that the demand for green business has increased in developing countries, which facilitates the higher demand for GBI; this has an impact on EPS, which shows the shareholders’ concern towards environmentally friendly banking practices.

Keywords

Bangladesh, Climate Risk Fund, CSR, EPS, Financial Performance, Green Banking
Subscription Login to verify subscription
User
Notifications
Font Size


  • Alo, J. (2020). Banks’ CSR spending soars despite lower profits. The Daily Star. Retrieved from https://www.thedailystar.net/business/banking/news/banks-csr-spending-soars-despite-lower-profits-1705639.

  • Alshebami, A. (2021). Evaluating the relevance of green banking practices on Saudi Banks’ green image: The mediating effect of employees’ green behaviour. Journal of Banking Regulation, 22(4), 275-286.

  • Baldé, C. P., Forti, V., Gray, V., Kuehr, R., & Stegmann, P. (2017). The global e-waste monitor – 2017. United Nations University (UNU), International Telecommunication Union (ITU) & International Solid Waste Association (ISWA), Bonn/Geneva/Vienna.

  • Bangladesh Bank. (2017). Retrieved November 26, 2020, from https://www.bb.org.bd/aboutus/regulationguideline/esrm_guideline_feb2017.pdf

  • Bangladesh Bank. (2019), Retrieved November 26, 2020, from https://www.bb.org.bd/pub/quaterly/greenbanking/greenbanking_janmar2019.pdf

  • Barney, J. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17(1), 99-120. doi:10.1177/014920639101700108

  • Baron, R. M., & Kenny, D. A. (1986). The moderator-mediator variable distinction in social psychological research: Conceptual, strategic, and statistical considerations. Journal of Personality and Social Psychology, 51(6), 1173.

  • Bose, S., Khan, H. Z., Rashid, A., & Islam, S. (2018). What drives green banking disclosure? An institutional and corporate governance perspective. Asia Pacific Journal of Management, 35(2), 501-527.

  • Brammer, S., Millington, A., & Rayton, B. (2007). The contribution of corporate social responsibility to organizational commitment. The International Journal of Human Resource Management, 18(10), 1701-1719.

  • Bukhari, S., Hashim, F., & Amran, A. (2020). Green banking: A road map for adoption. International Journal of Ethics and Systems, 36(3), 371-385.

  • Chen, Z., Hossen, M. M., Muzafary, S. S., & Begum, M. (2018). Green banking for environmental sustainability-present status and future agenda: Experience from Bangladesh. Asian Economic and Financial Review, 8(5), 571.

  • Cifci, E., & Oliver, M. E. (2018). Reassessing the links between GHG emissions, economic growth, and the UNFCCC: A difference-in-differences approach. Sustainability, 10(2), 334.

  • Climate Works Foundation. (2018). Green banks around the globe: 2018 year in review.

  • Cohen, M., Fenn, S., & Konar, S. (2019). Environmental and financial performance: Are they related? Retrieved from http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.498.9820&rep=rep1&type=pdf

  • Cohen, W. M., & Levinthal, D. A. (1990). Absorptive capacity: A new perspective on learning and innovation. Administrative Science Quarterly, 128-152.

  • Deegan, C. (2006). Legitimacy theory. Methodological Issues in Accounting Research: Theories and Methods, Spiramus (pp. 161-181). London, U.K.

  • Deegan, C., & Samkin, G. (2009). New Zealand financial accounting. Sydney, Australia: McGraw-Hill.

  • Dörry, S., & Schulz, C. (2018). Green financing, interrupted. Potential directions for sustainable finance in Luxembourg. Local Environment, 23(7), 717-733.

  • Edwards, J. R., & Parry, M. E. (1993). On the use of polynomial regression equations as an alternative to difference scores in organizational research. Academy of Management Journal, 36(6), 1577-1613.

  • Ellahi, A., Jillani, H., & Zahid, H. (2021). Customer awareness on Green banking practices. Journal of Sustainable Finance & Investment, 1-17.

  • Freeman, R. E. (1984). Strategic management: A stakeholder approach. Cambridge University Press.

  • Gray, R., Owen, D., & Adams, C. (2009). Some theories for social accounting?: A review essay and a tentative pedagogic categorization of theorizations around social accounting. Sustainability, Environmental Performance and Disclosures. Emerald Group Publishing Limited.

  • Gupta, A. K., & Govindarajan, V. (2000). Knowledge flows within multinational corporations. Strategic Management Journal, 21(4), 473-496.

  • Guthrie, J., Petty, R., & Ricceri, F. (2006). The voluntary reporting of intellectual capital: Comparing evidence from Hong Kong and Australia. Journal of Intellectual Capital, 7(2), 254-271.

  • Hair, J. F., Black, W. C., Babin, B. J., Anderson, R. E., & Tatham, R. L. (1998). Multivariate data analysis (vol. 5, no. 3, pp. 207-219). Upper Saddle River, NJ: Prentice Hall.

  • Halkos, G., & Skouloudis, A. (2016). Exploring the current status and key determinants of corporate disclosure on climate change: Evidence from the Greek business sector. Environmental Science & Policy, 56, 22-31. doi:10.1016/j.envsci.2015.10.011

  • Hasan, M. (2020). Banks’ CSR spending soars 47.22% in July-December. Retrieved from https://www.dhakatribune.com/business/2020/03/12/banks-csr-spending-soars-47-22-in-july-december.

  • Hossain, D. M., Bir, A., Sadiq, A. T., Tarique, K. M., & Momen, A. (2016). Disclosure of green banking issues in the annual reports: A study on Bangladeshi banks. Middle East Journal of Business, 55(3034), 1-12.

  • Hössjer, O. (2008). On the coefficient of determination for mixed regression models. Journal of Statistical Planning and Inference, 138(10), 3022-3038.

  • Ibe-Enwo, G., Igbudu, N., Garanti, Z., & Popoola, T. (2019). Assessing the relevance of green banking practice on bank loyalty: The mediating effect of green image and bank trust. Sustainability, 11(17), 4651.

  • Islam, T., (2019). Assessing factors influencing investors’ preference towards municipal bond in Bangladesh. European Journal of Business and Management, 11(27), 120-125.

  • Judge, W., & Douglas, T. (1998). Performance implications of incorporating natural environmental issues into the strategic planning process: An empirical assessment. Journal of Management Studies, 35(2), 241-262.

  • Julia, T., Rahman, M. P., & Kassim, S. (2016). Shariah compliance of green banking policy in Bangladesh. Humanomics, 32(4), 390-404.

  • Kapoor, N., Jaitly, M., & Gupta, R. (2016). Green banking: A step towards sustainable development. International Journal of Research in Management, Economics and Commerce, 7, 69-72.

  • Kassinis, G., & Vafeas, N. (2006). Stakeholder pressures and environmental performance. Academy of Management Journal, 49(1), 145-159.

  • Kasturi, R. (2018). Performance analysis of Oman’s banking sector using select financial indicators. Journal of Commerce & Accounting Research, 7(4), 31-39.

  • Kaur, M., & Kaur, M. (2021). Relationship between bank-specific attributes and web-based disclosures - The case of India. Journal of Commerce & Accounting Research, 10(2), 53-63.

  • Kennan, H. (2014). Banks for clean energy. Working Paper, Energy Innovation.

  • Khairunnessa, F., Vazquez-Brust, D., & Yakovleva, N. (2021). A review of the recent developments of green banking in Bangladesh. Sustainability, 13(4), 1-21.

  • Klein, G., Jiang, J. J., & Cheney, P. (2009). Resolving difference score issues in information systems research. MIS Quarterly, 811-826.

  • Lalon, R. M. (2015). Green banking: Going green. International Journal of Economics, Finance and Management Sciences, 3(1), 34-42.

  • Lee, K., & Ball, R. (2003). Achieving sustainable corporate competitiveness: Strategic link between top management’s (green) commitment and corporate environmental strategy. GMI, 44, 89-104.

  • Lindenberg, N., & Volz, U. (2016). Green banking regulation: Setting out a framework. Report for the Practitioners’ Dialogue on Climate Investments (PDCI). Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH.

  • Masud, M., Kaium, A., Bae, S. M., & Kim, J. D. (2017). Analysis of environmental accounting and reporting practices of listed banking companies in Bangladesh. Sustainability, 9(10), 1717.

  • Masukujjaman, M., & Aktar, S. (2013). Green banking in Bangladesh: A commitment towards the global initiatives. Journal of Business and Technology (Dhaka), 8(1-2), 17-40.

  • McGuinness, B. (2011). Friedrich Waismann: Causality and logical positivism. Dordrecht, New York: Springer.

  • Mullineux, A. (2014). Banking for the public good. International Review of Financial Analysis, 36, 87-94.

  • Nisha, N., Iqbal, M., & Rifat, A. (2020). Green banking adoption: An examination of state-owned banks of Bangladesh. International Journal of Technology and Human Interaction (IJTHI), 16(2), 69-89.

  • Rahman, S. M. M., & Barua, S. (2016). The design and adoption of green banking framework for environment protection: Lessons from Bangladesh. Australian Journal of Sustainable Business and Society, 2(1), 1-19.

  • Ramesh, K. (2019). Determinants of bank performance: Evidence from the Indian commercial banks. Journal of Commerce & Accounting Research, 8(2), 66-71.

  • Sarkar, A., Qian, L., & Peau, A. K. (2020). Overview of green business practices within the Bangladeshi RMG industry: Competitiveness and sustainable development perspective. Environmental Science and Pollution Research, 1-14.

  • Sarma, P., & Roy, A. (2020). A scientometric analysis of literature on green banking (1995-March 2019). Journal of Sustainable Finance & Investment, 1-20. doi:10.1080/20430795.2020.1711500

  • Schalatek, L., Nakhooda, S., & Watson, C. (2012). The green climate fund. Overseas Development Institute and Heinrich Böll Stiftung North America.

  • Sharma, M., & Choubey, A. (2021). Green banking initiatives: A qualitative study on Indian banking sector. Environment, Development and Sustainability.

  • Tietenberg, T. (1990). Economic instruments for environmental regulation. Oxford Review of Economic Policy, 6(1), 17-33.

  • Van, D. V., & Andrew, H. (2007). Engaged scholarship [electronic resource]: A guide for organizational

  • and social research. New York: Oxford University Press.

  • Volz, U. (2018). Fostering green finance for sustainable development in Asia. ADBI Working Paper 814. Tokyo: Asian Development Bank Institute. Retrieved from https://www.adb.org/publications/fostering-green-finance-sustainable-development-asia

  • World Bank Group. (2019). Retrieved from http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2015/09/18/090224b0830eb27f/1_0/Rendere d/PDF/The0FASTER0pri0n0initial0experience

  • World Energy Outlook 2018 – Analysis – IEA. (2020). Retrieved November 26, 2020, from https://www.iea.org/reports/world-energy-outlook-2018

  • World Health Organization. (2019). Data and statistics. Retrieved from https://www.who.int/quantifying_ehimpact s/en/

  • Zaman, M. H., Nazmul, A. K., Roy, S., & Sarma, S. (2021). A comparative study of intention to use agent banking vis-a-vis traditional bank branches in Bangladesh. Journal of Commerce & Accounting Research, 10(1), 33-40.


Abstract Views: 229

PDF Views: 0




  • Can Green Banking Thrive in Developing Economies? A Contextual Study on Bangladesh

Abstract Views: 229  |  PDF Views: 0

Authors

Tiasha Islam
Ph.D. Researcher, University of Waikato, New Zealand
Murtaza Faruquee
Ph.D. Researcher, The University of Nottingham Ningbo, China

Abstract


Purpose – This paper aims to investigate the impact of climate risk funds (CRF), as a moderator variable, on the association between green banking investment (GBI) and financial performance. Design/Methodology/Approach – The research has used secondary data from banks’ audited annual reports. The data has been analysed using SPSS version 26 for validating the results. Findings – The findings generated from the data indicate that there is a significant relationship between GBI and financial performance. In addition to that, this relation becomes positively more assertive in the presence of CRF. Originality – This study is one of the first attempts to investigate the causality relationships and the moderating impact of CRF on the relationship between GBI and financial performance in the context of a developing country. Practical Implications – The findings indicate that the demand for green business has increased in developing countries, which facilitates the higher demand for GBI; this has an impact on EPS, which shows the shareholders’ concern towards environmentally friendly banking practices.

Keywords


Bangladesh, Climate Risk Fund, CSR, EPS, Financial Performance, Green Banking

References