INVESTIGATING THE ROLE OF GREEN BANKING POLICY RELATED PRACTICES AND GREEN FINANCING ON SUSTAINABLE FINANCIAL PERFORMANCE OF BANKS: AN EMPIRICAL STUDY

Abstract

Although the concept of green banking has gained attention over the past decade, still the research on this topic remains limited in Pakistan. Although green policy-related practices are encouraged, but their implementation remains infrequent. Grounded in resource-based view theory, this study examines the influence of green policy-related banking practices on the operational and financial performance of banks in Pakistan. This study unveils the mediating role of green financing and operational performance between green banking practices and bank performance. A survey methodology was employed, gathering responses from 308 bank branches listed with the State Bank of Pakistan. Structural equation modeling was used to test the hypothesized relationships between the constructs using Smart PLS (version 4.0). The results indicate that banks' policy-related practices significantly affect financial performance, both directly and through the serial mediation of green financing and operational performance. These findings are valuable for individual and organizational investors, bank managers, and policymakers, as they highlight how adopting these practices can enhance operational performance, ultimately leading to improved financial performance.