What drives green banking operations in Bangladesh? Findings from PLS-SEM and BSEM

Purpose - Environmental threats are becoming severe in developing and undeveloped countries. It urges to know how green banking operations can foster sustainable development in these regions. This study aims to provide empirical evidence of the determinants of green banking operations in Bangladesh. Design/methodology/approach - Based on the socially responsible investing (SRI) theory, this study examined the hypothesized relationships using a partial least square structural equation modeling (PLS-SEM) approach. The Bayesian SEM (BSEM) through a Markov Chain Monte Carlo (MCMC) approach was also used to validate the study's first-order model. Findings - The findings show that sustainable innovativeness, green investment and green banking policy substantially and positively change green banking operations. Notably, green investment is the most influential predictor of green banking operations, driving banks to establish sustainable economic systems within the country. Practical implications - The findings offer valuable guidance for scholars, financial institutions, policymakers and bank managers to develop and implement effective strategies for green banking operations. These strategies may significantly contribute to achieving the sustainable development goals (SDGs) in Bangladesh. Originality/value - This study is ground-breaking in associating sustainable innovativeness and green banking operations from a developing country. It enriches our understanding of green banking, aligning with existing literature. Additionally, PLS-SEM and BSEM provide strong validation of the proposed theoretical model.