Impact of Green Banking Practices on Sustainable Environmental Performance and Profitability of Private Sector Banks

Abstract

Sustainable environmental performance linked with profitability has been one of the brimming concerns in the worldwide scenario. Therefore, the current study aimed to examine the impact of green banking practices on the firm's sustainable environmental performance. Further, the impact of sustainable environmental performance on firms' profitability was also measured. A survey-based research design was employed by collecting data from Private sector bank employees of India. The data analysis was performed on the selected private bank employees collected from August 2022 to November 2022 by employing the PLS-SEM method with the help of smartPLS software. The study found a significant positive relationship between bank environmental performance and profitability. Consequently, green banking policy significantly influences the day-to-day operation and funding or investment in green projects. Specifically, the study hypothesizes that green banking practices lead to improved operational efficiency, increased funding and investment in green projects, enhanced sustainable environmental performance, and improved profitability for private sector banks. The results of this study contributed to the existing literature on green banking practices and provided insights for policymakers, bank management, and other stakeholders interested in promoting sustainable banking practices.