Building Greener Banks: Evidence on Green Banking Activities, Sustainable Green Finance, and Environmental Performance

Abstract

The research attempts to assess the role of Green Banking Activities (GBA) in enhancing Banks’ Environmental Performance (BEP) with an exploration into Sustainable Green Finance (SGF) as a possible mediating mechanism, specifically among conventional banks in Pakistan. Primary data were collected from employees working with five leading commercial banks through structured questionnaires based on positivist philosophy using deductive and quantitative approaches. Out of 400 distributed questionnaires, 350 valid responses have been analyzed by PLS-SEM. The results show GBAs to be significantly positively related directly toward BEP hence bank operational or strategic green initiatives improve environmental performance within banking institutions while also showing significant indirect effects where SGF partially transmits the influence from GBA toward BEP thus emphasizing financing environmentally friendly projects as key paths towards improved environmental performance that this path has strong explanatory power since it explains large variances both over SGF & BEPs. The study contributes by explaining the channel through which green banking leads to environmental outcomes and offers practical implications for bank managers and regulators to strengthen green financing and environmental performance in Pakistan’s banking industry.