The Impact of Green Banking Activities on Environmental Performance: A Youth-Driven Perception Study in Indonesian Financial Institutions
Abstract
1. Introduction
2. Materials and Method
3. Results
3.1. Demographic Attributes of Participants and Descriptive Variable
3.2. Validity and Reliability Results
3.3. Hypothesis Testing
3.4. Major Challenges Affecting the Implementation of Green Banking
3.5. Major Benefits Affecting the Implementation of Green Banking
4. Discussion
5. Conclusions
Author Contributions
Funding
Institutional Review Board Statement
Informed Consent Statement
Data Availability Statement
Conflicts of Interest
References
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Country | Quantity of Samples | Sector | Methods | Focus | Dependent Variable | Independent Variable | Source |
---|---|---|---|---|---|---|---|
Bangladesh | 352 Bankers | Private Commercial Banking | Partial Least Squares-based Structural Equation Modelling (PLS-SEM) | Green financing is considered a mediator between green banking and environmental performance. | Bank’s Environmental Performance | Independent Variable: Green Banking Activities. Intervening/Mediating Variable: Source of Green Financing | (X. Zhang et al., 2022) |
Pakistan | 250 Bankers | Banking | Mixed Methods (Survey and In-depth Interviews), PLS-SEM | Examines how stakeholders mediate green banking practices and environmental performance. | Bank’s Performance | Independent Variable: Green Banking Practices, Intervening/Mediating Variable: Stakeholders’ Influence | (Jillani et al., 2024) |
Bangladesh | 14 Listed Banks | Banking from 2011 to 2020 | Two-stage least square (2SLS) regression analysis | The relationship between green banking and banks’ financial performance | Financial Performance: Return on Assets (ROA), Return on Equity (ROE), Market Value (MV) | Independent Variable: Green Banking Practice Variable: Green Cost (GCOS): Volume of Risk Management Committee (VRMC). Control Variable: Operating Cost Ratio (OCR), Bank Size (BSIZE) | (Hossain et al., 2020) |
Bangladesh | 322 Bankers | Private Commercial Banking | Structural Equation Model (SEM) | Examines how green banking affects banks’ environmental performance. | Banks’ Environmental Performance: Environmental sustainability metrics reported by banks | Independent Variable: green Banking Practices: Banks Employee Related Practices (BERP), Operation (BORP, Customer (BCRP), and Policy (BPRP) Intervening/Mediating Variable: Green Financing | (Chen et al., 2022) |
Indonesia | 5 Banks | Banking from 2010 to 2020 | Panel data (ESG data from Thomson Reuters), statistical correlations, and regression models | Assesses how sustainability actions affect bank finances. | Financial Performance: Measures like Return on Assets (ROA), Return on Equity (ROE), and other profitability metrics | Independent Variable: Sustainability Activities: environmental, social, and governance. Control Variable: Size and Leverage | (Gutiérrez-Ponce & Wibowo, 2023) |
India | 36 Bankers from 12 banks | Public and Private Banking | Qualitative Study (Interviews): Content Analysis | Examines how green product innovation, CSR, and internal processes affect brand image and confidence in green banking. | Environmental Performance: Improvement in environmental practices and reduction in carbon footprint | Green Banking Initiatives: Implementation of eco-friendly practices and policies | (Sharma & Choubey, 2022) |
Bangladesh | 302 Bankers | Banking | PLS-SEM | Examines how Fintech adoption affects green finance and environmental performance during COVID-19. | Environmental Performance: Metrics related to sustainability and green practices | Independent Variable: Fintech adoption and Green Finance Intervening/Mediating Variable: Green Innovation | (Guang-Wen & Siddik, 2023) |
Bangladesh | 540 Bankers from 30 Banks | Private Commercial Banking | PLS-SEM | Examines Bangladesh’s financial performance and green banking. | Environmental Performance and Social Performance | Independent Variable: Stakeholders’ Pressure: Customer, Competitors, Employee, Government, Senior Managers Intervening/Mediating Variable: Green Practice Innovation | (Islam et al., 2023) |
Pakistan | 390 Bankers | Islamic Banking | PLS-SEM | Examines how workers’ environmental knowledge affects Pakistani Islamic banks’ green banking operations and reputation. | Bank Reputation | Independent Variable: Employees, Daily operations, Customers, and Bank Policy Moderating Variable: Environmental Awareness | (Khan et al., 2024) |
Indonesia | 238 foreign chemical companies | Chemical Industry | PLS-SEM | Examines how green funds and investment affect CSR and sustainable enterprise performance. | Sustainable Business Performance | Independent Variable: Green Investment and Green Financing Intervening/Mediating Variable: Corporate Social Responsibility | (Ye & Dela, 2023) |
Vietnam | 35 observations over the period from 1986 to 2020 | Sustainable Economic Development | Regression Analysis | Examines how financial inclusion, green investment, and green loans affect Vietnam’s SED. | Sustainable Economic Development | Assess to Outstanding Deposits, Assess to Outstanding Loans, Green Investment, Green Credit, Foreign Direct Investment | (Van Hoa et al., 2022) |
China | 1.699 listed industrial firms | Industrial | Quantitative (Survey) | Examines how funding restrictions affect green innovation. | Sustainability Performance: Overall sustainability metrics | Financial Inclusion: Access to financial services; Green Investment: Investment in sustainable projects; Green Credit: Loans for eco-friendly projects | (Yu et al., 2021) |
Bangladesh | 302 bankers | Financial | PLS-SEM | In underdeveloped economies like Bangladesh, examine how green finance affects the sustainability of financial institutions. | Sustainability Performance: Environmental and social performance metrics | Factors: Green finance, regulatory policies, stakeholder engagement | (Zheng et al., 2021) |
China | 141 listed renewable energy enterprises | Renewable Energy | Quantitative Analysis (Panel Data Regression) | Examines whether green finance boosts renewable energy investment efficiency. | Investment Efficiency: Metrics related to renewable energy investment returns | Green Financial Development: Financial policies and products promoting green investments | (He et al., 2019a) |
Japan | case studies and examples of solutions for green financing | Renewable Energy | Qualitative Analysis | Examines green financial alternatives and their environmental impact. | Environmental Sustainability: Impact metrics related to sustainability practices | Green Financing Solutions: Policies and practices promoting green finance | (Taghizadeh-Hesary & Yoshino, 2020) |
G7 and E7 countries | 14 countries | Economic and Environmental | Structural Equation Modeling (SEM) | Estimates how a cleaner environment will boost E7 and G7 GDP over time. | Climate Change Mitigation: Reduction in greenhouse gas emissions | Green Financing: Investments in green projects and technologies | (Wu et al., 2021) |
China | 19.630 firm-year observations from listed companies | Banking and Corporate Finance | Quantitative Analysis (Regression) | Examines China’s green credit policy’s impact on green management and bank lending. | Bank Loans | Independent Variable: Green Management Moderating Variable: Disclosure Choice & Quality, Government Pressure A & B Control Variable: State-Owned Enterprise, Age, Ownership Concentration, etc. | (Xing et al., 2020) |
China | 30 provinces | Green Finance and Innovation | Quantitative Analysis (Regression Analysis) | Explores the geographical and non-linear effects of green funding on green innovation. | Green Innovation: Number of green patents and eco-friendly technologies developed | Green Finance: Availability and amount of green financial products | (Huang et al., 2022) |
China | 945 listed companies and 30 provinces | Environmental and Financial | Mixed Methods | GCP may promote sustainability. Little research exists on its policy effects on “two high” (high energy consumption and pollution) enterprises’ micro and macro investment and financing and environmental quality. | Sustainable Development: Metrics related to environmental, social, and economic sustainability | Green Finance: Investments, policies, and financial products supporting sustainability | (S. Zhang et al., 2021) |
China | 150 listed renewable energy companies | Renewable Energy | Quantitative Analysis | Develop a threshold effect model to examine the non-linear relationship between renewable energy investment and the green economy development index from a green credit perspective. | Green Economy: Growth in the green sector | Green Credit: Loans and credits supporting green projects; Renewable Energy Investment: Amount invested in renewable energy projects | (He et al., 2019b) |
Latent Variable | Indicators | Definition | Items |
---|---|---|---|
Green banking activities (GBA) | Independent Variable | An emerging concept that has a crucial impact on the fields of climatic phenomena, financial market activities, and the sustainable economic progress of a nation |
|
The bank’s Environmental performance (BEP) | Dependent Variable | The impact of a company’s activities on the ecological system |
|
Source of Green Financing (SGF) | Intervening Variable | This phrase has many interpretations in both academic and business contexts |
|
Variable and Indicators | Mean | S.D. | |
---|---|---|---|
Green Banking Activities | |||
1. | Introducing energy-efficient systems, solutions, and practices (GBA1) | 4.07 | 0.695 |
2. | Introducing online banking facilities (GBA2) | 4.03 | 0.734 |
3. | Providing loans for eco-friendly projects (GBA3) | 4.21 | 0.757 |
4. | Convening seminars and conferences to advocate for environmentally sustainable behavior (GBA4) | 3.94 | 0.776 |
5. | Establishment of more green branches (GBA5) | 3.91 | 0.843 |
6. | Reduction in paper consumption (GBA6) | 4.23 | 0.899 |
7. | Promoting customers’ engagement in environmentally sustainable banking practices, including bill payment via the Internet, online deposit, and e-statements (GBA7) | 4.39 | 0.743 |
Average Green Banking Activities | 4.11 | 0.535 |
Variable and Indicators | Mean | S.D. | |
---|---|---|---|
Source of Green Financing | |||
1. | Financial institutions have invested more on renewable energy sectors (SGF1) | 3.42 | 0.969 |
2. | Financial institutions have invested more on energy efficiency projects (SGF2) | 3.46 | 0.922 |
3. | Financial institutions have made more investments in recycling and items that can be recycled (SGF3) | 3.53 | 0.876 |
4. | Financial institutions have allocated additional resources for waste collection and other environmentally sustainable initiatives (SGF4) | 3.47 | 0.922 |
Average Source of Green Financing | 3.47 | 0.828 |
Variable and Indicators | Mean | S.D. | |
---|---|---|---|
Bank’s Environmental Performance | |||
1. | Reducing energy consumption (BEP1) | 4.02 | 0.823 |
2. | Reducing carbon emissions (BEP2) | 3.82 | 0.916 |
3. | Delivering environmental education to employees on energy and paper conservation (BEP3) | 3.99 | 0.883 |
Average Bank’s Environmental Performance | 3.94 | 0.752 |
Variables | Item | CA | KMO | FL | Result |
---|---|---|---|---|---|
Green banking activities (GBA) | GBA1 | 0.813 | 0.801 | 0.844 | Valid and Reliable |
GBA2 | 0.813 | ||||
GBA3 | 0.784 | ||||
GBA4 | 0.825 | ||||
GBA5 | 0.824 | ||||
GBA6 | 0.733 | ||||
GBA7 | 0.781 | ||||
Source of Green Financing (SGF) | SGF1 | 0.919 | 0.799 | 0.805 | Valid and Reliable |
SGF2 | 0.797 | ||||
SGF3 | 0.794 | ||||
SGF4 | 0.802 | ||||
Bank’s Environmental Performance | BEP1 | 0.823 | 0.704 | 0.695 | Valid and Reliable |
BEP2 | 0.664 | ||||
BEP3 | 0.774 |
Hypothesis | Path | Estimate | t-Stat | p-Value | Result |
---|---|---|---|---|---|
H1 | GBA → BEP | 0.600 | 10.795 | 0.000 | Ha1 accepted |
H2 | GBA → SGF | 0.578 | 13.515 | 0.000 | Ha2 accepted |
H3 | SGF → BEP | 0.208 | 3.813 | 0.000 | Ha3 accepted |
H4 | GBA → SGF → BEP | 0.120 | 3.562 | 0.000 | Ha4 accepted |
No. | Challenges | Freq. | Percent |
---|---|---|---|
1 | Lack of awareness regarding green financing | 74 | 23.6 |
2 | High investment costs | 55 | 17.5 |
3 | Low demand for Green Financing | 42 | 13.4 |
4 | Difficulties and complexities in assessing green projects | 36 | 11.5 |
5 | Technical barriers (knowledge, personally driven) | 34 | 10.8 |
6 | Diversification issues (diversity of types of credit and green projects) | 23 | 7.3 |
7 | Credit Risk in Green Financing | 22 | 7 |
8 | Operational inadequacy | 13 | 4.1 |
9 | Lack of competent and trained staff in assessing green financing | 10 | 3.2 |
10 | Reduction in bank competitiveness in the short-term | 5 | 1.6 |
Total | 314 | 100.0 |
No. | Benefits | Freq. | Percent |
---|---|---|---|
1 | Contribution to the achievement of sustainable national economic development | 76 | 24.2 |
2 | Provision of environmental benefits | 74 | 23.6 |
3 | Long-term cost and expense reduction | 39 | 12.4 |
4 | Carbon footprint reduction | 32 | 10.2 |
5 | Providing environmentally friendly products | 24 | 7.6 |
6 | Increasing Bank competitiveness | 17 | 5.4 |
7 | Reputation promotion | 16 | 5.1 |
8 | Energy conservation | 11 | 3.5 |
9 | Higher profits for Banks in the long term | 9 | 2.9 |
10 | Provision of online banking facilities | 8 | 2.5 |
11 | Savings in paper consumption | 5 | 1.6 |
12 | Tax benefits | 1 | 0.3 |
13 | Contribution to the achievement of sustainable national economic development | 1 | 0.3 |
14 | Increased customer goodwill | 1 | 0.3 |
Total | 314 | 100.0 |
Study | Independent Variable | Mediator Variable | Dependent Variable | Significant Variables |
---|---|---|---|---|
Current Study | Green Banking Activities | Green Financing | Environmental Performance | All variables significant |
X. Zhang et al. (2022) | Green Banking Activities | Green Financing | Environmental Performance | All variables significant |
Jillani et al. (2024) | Green Banking Practices | Stakeholders’ Influence | Bank’s Performance | Green banking practices significant |
Chen et al. (2022) | Green Banking Policies | Green Financing | Environmental Sustainability | All variables significant |
Gutiérrez-Ponce and Wibowo (2023) | Sustainability Activities | None | Financial Performance (ROA, ROE) | Sustainability activities significant |
Sharma and Choubey (2022) | Green Banking Initiatives | None | Environmental Practices | Green CSR significant |
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Setyorini, M.; Hakam, D.F. The Impact of Green Banking Activities on Environmental Performance: A Youth-Driven Perception Study in Indonesian Financial Institutions. J. Risk Financial Manag. 2025, 18, 558. https://doi.org/10.3390/jrfm18100558
Setyorini M, Hakam DF. The Impact of Green Banking Activities on Environmental Performance: A Youth-Driven Perception Study in Indonesian Financial Institutions. Journal of Risk and Financial Management. 2025; 18(10):558. https://doi.org/10.3390/jrfm18100558
Chicago/Turabian StyleSetyorini, Maharestu, and Dzikri Firmansyah Hakam. 2025. "The Impact of Green Banking Activities on Environmental Performance: A Youth-Driven Perception Study in Indonesian Financial Institutions" Journal of Risk and Financial Management 18, no. 10: 558. https://doi.org/10.3390/jrfm18100558
APA StyleSetyorini, M., & Hakam, D. F. (2025). The Impact of Green Banking Activities on Environmental Performance: A Youth-Driven Perception Study in Indonesian Financial Institutions. Journal of Risk and Financial Management, 18(10), 558. https://doi.org/10.3390/jrfm18100558