Green Banking Practices and Financial Performance of Commercial Banks in Bangladesh

Abstract

The concept of green banking has gained significant attention in recent years as financial institutions increasingly recognize their responsibility toward environmental sustainability and sustainable economic development. This study aims to examine the relationship between green banking practices and the financial performance of commercial banks in Bangladesh, with a specific focus on City Bank PLC, Eastern Bank PLC, and Islami Bank Bangladesh PLC. The primary objective of this research is to evaluate how the adoption of environmentally sustainable banking practices influences key financial performance indicators. Green banking practices considered in this study include online banking services, paperless transactions, green financing, investment in environmentally friendly projects, energy-efficient operations, and the promotion of sustainable business policies. These initiatives are expected to reduce environmental impact while simultaneously enhancing operational efficiency and profitability. To achieve the objectives of the study, a mixed-method research approach has been employed, combining both qualitative and quantitative data. Primary data were collected through structured questionnaires distributed among bank employees and customers, along with informal interviews to gain deeper insights into green banking implementation. Secondary data were gathered from annual reports, sustainability reports, Bangladesh Bank guidelines, and other relevant publications related to the selected banks. The analysis of the collected data reveals that green banking practices have a positive and significant impact on the financial performance of commercial banks. The findings indicate that banks adopting green initiatives experience improved cost efficiency, enhanced corporate image, increased customer satisfaction, and better risk management. Additionally, green financing and environmentally responsible investments contribute to long-term profitability and sustainable growth. The study concludes that green banking practices not only contribute to environmental protection but also play a vital role in improving the financial performance and competitive advantage of banks. Based on the findings, it is recommended that commercial banks strengthen their green initiatives, invest in advanced technologies, and increase awareness among stakeholders. Policymakers and regulatory authorities should also take necessary steps to promote and enforce green banking policies more effectively.