STRATEGIC GREEN BANKING AND BANK SUSTAINABILITY: THE MODERATING INFLUENCE OF CAPACITY DEVELOPMENT

Abstract

Purpose: This study investigates the relationship between green banking practices and banks’ environmental performance, with a particular focus on the moderating role of green capacity development.

Design/Methodology/Approach: A quantitative research design was employed. Data were collected via a structured questionnaire administered to employees of banking institutions to assess the extent of their green practices and their impact on ecological performance. SmartPLS was used for statistical analysis to examine the relationships between green banking practices and environmental outcomes.

Findings: The results indicate a positive association between green banking practices and environmental performance. Operational practices, such as paperless transactions and energy-efficient infrastructure, significantly reduce banks’ carbon footprint and enhance ecological sustainability. Furthermore, the interaction between operational practices and green capacity development significantly improves environmental performance. While policy-related practices alone did not have a direct effect, their interaction with green capacity development positively influenced ecological outcomes.

Practical Implications: The findings highlight the critical role of green capacity development in amplifying banks’ environmental performance. Policy initiatives alone are insufficient without complementary capacity-building measures.

Originality/Value: This study contributes to the literature on sustainable banking by providing empirical evidence on the effect of green banking practices on ecological performance and demonstrating the moderating influence of green capacity development.