IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v13y2021i2p795-d480809.html
   My bibliography  Save this article

Green Finance Development in Bangladesh: The Role of Private Commercial Banks (PCBs)

Author

Listed:
  • Guang-Wen Zheng

    (School of Economics and Management, Shaanxi University of Science and Technology (SUST), Xi’an 710021, China)

  • Abu Bakkar Siddik

    (School of Economics and Management, Shaanxi University of Science and Technology (SUST), Xi’an 710021, China)

  • Mohammad Masukujjaman

    (Department of Business Administration, Northern University Bangladesh, Dhaka, Banani C/A, Dhaka 1213, Bangladesh)

  • Nazneen Fatema

    (Department of Economics and Banking, International Islamic University Chittagong (IIUC) 154/a College Road, Chittagong 4203, Bangladesh)

  • Syed Shah Alam

    (Faculty of Business, Finance and Information Technology, MAHSA University, Jenjarom 42610, Malaysia
    Faculty of Management and Business, Jalan Universiti Off, KM 12, Jalan Muar, Kemajuan Tanah Jementah Batu Sebelas, Segamat 85000, Malaysia)

Abstract

Green finance (GF) has been gaining significant attention in recent literature, owing to the rise in global actions against the climate change. It is conceptually ambiguous, with no conclusive agreement among researchers on its meaning. Therefore, the main purpose of the study is to identify the bankers’ perception of various dimensions of GF, and identify the major challenges affecting its implementation in Bangladesh. Besides, this study also reveals the status of GF in Bangladesh’s banks and non-bank financial institutions from 2014 to 2019. In order to define the key aspects of GF through the data obtained from 296 banking staffs of private commercial banks (PCBs) in Bangladesh, confirmatory factor analysis (CFA) was used. The study also used descriptive statistics to identify the major challenges hindering the development of GF in Bangladesh. The findings of this study show that, in comparison with other banks and non-bank financial institutions, the PCBs are the largest contributors to direct GF, accounting for 74.2% of the total GF in Bangladesh. The outcomes of the study also identify the “economic dimension” as the most significant dimension affecting the level of bankers’ perceptions of GF. Moreover, the bankers perceived the “social and environmental dimensions” as being the second and third most crucial factors influencing GF, followed by sources of green financing. The empirical findings indicate that bankers of PCBs deemed the level of awareness, beliefs and understanding of the major dimensions of GF and sources of green financing to be satisfactory for the implementation of GF in Bangladesh. In addition, the study also shows that high transaction costs, heavy default culture, operational self-insufficiency, improper appraisal of loan applications, and the absence of adequate accountability and transparency are the major barriers to the development of GF in Bangladesh. Therefore, major policy implications are further discussed.

Suggested Citation

  • Guang-Wen Zheng & Abu Bakkar Siddik & Mohammad Masukujjaman & Nazneen Fatema & Syed Shah Alam, 2021. "Green Finance Development in Bangladesh: The Role of Private Commercial Banks (PCBs)," Sustainability, MDPI, vol. 13(2), pages 1-17, January.
    • Handle: RePEc:gam:jsusta:v:13:y:2021:i:2:p:795-:d:480809
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/13/2/795/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/13/2/795/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Chen Zhixia & Md. Miraj Hossen & Sayed Sami Muzafary & Mareum Begum, 2018. "Green Banking for Environmental Sustainability-Present Status and Future Agenda: Experience from Bangladesh," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 8(5), pages 571-585.
    2. Clarence Tolliver & Hidemichi Fujii & Alexander Ryota Keeley & Shunsuke Managi, 2021. "Green Innovation and Finance in Asia," Asian Economic Policy Review, Japan Center for Economic Research, vol. 16(1), pages 67-87, January.
    3. Chen Zhixia & Md. Miraj Hossen & Sayed Sami Muzafary & Mareum Begum, 2018. "Green Banking for Environmental Sustainability-Present Status and Future Agenda: Experience from Bangladesh," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 8(5), pages 571-585, June.
    4. Zhang, Dayong & Zhang, Zhiwei & Managi, Shunsuke, 2019. "A bibliometric analysis on green finance: Current status, development, and future directions," Finance Research Letters, Elsevier, vol. 29(C), pages 425-430.
    5. Kai Wang & Sang-Bing Tsai & Xiaomin Du & Datian Bi, 2019. "Internet Finance, Green Finance, and Sustainability," Sustainability, MDPI, vol. 11(14), pages 1-6, July.
    6. Elena P. Fedorova, 2020. "Role of the State in the Resolution of Green Finance Development Issues," Finansovyj žhurnal — Financial Journal, Financial Research Institute, Moscow 125375, Russia, issue 4, pages 37-51, August.
    7. Nazamul Hoque & Md. Masrurul Mowla & Mohammad Shahab Uddin & Abdullahil Mamun & Mohammad Rahim Uddin, 2019. "Green Banking Practices in Bangladesh: A Critical Investigation," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 11(3), pages 58-68, March.
    8. Pasquale Marcello Falcone & Edgardo Sica, 2019. "Assessing the Opportunities and Challenges of Green Finance in Italy: An Analysis of the Biomass Production Sector," Sustainability, MDPI, vol. 11(2), pages 1-14, January.
    9. Nana Liu & Chuanzhe Liu & Yufei Xia & Yi Ren & Jinzhi Liang, 2020. "Examining the Coordination Between Green Finance and Green Economy Aiming for Sustainable Development: A Case Study of China," Sustainability, MDPI, vol. 12(9), pages 1-26, May.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Jianmu Ye & Efifania Dela, 2023. "The Effect of Green Investment and Green Financing on Sustainable Business Performance of Foreign Chemical Industries Operating in Indonesia: The Mediating Role of Corporate Social Responsibility," Sustainability, MDPI, vol. 15(14), pages 1-28, July.
    2. Qadri, Hussain Mohi ud Din & Ali, Hassnian & Abideen, Zain ul & Jafar, Ahmad, 2024. "Mapping the Evolution of Green Finance Research and Development in Emerging Green Economies," Resources Policy, Elsevier, vol. 91(C).
    3. Sharma, Gagan Deep & Sarker, Tapan & Rao, Amar & Talan, Gaurav & Jain, Mansi, 2022. "Revisiting conventional and green finance spillover in post-COVID world: Evidence from robust econometric models," Global Finance Journal, Elsevier, vol. 51(C).
    4. Love Kumar & Farah Nadeem & Maggie Sloan & Jonas Restle-Steinert & Matthew J. Deitch & Sohail Ali Naqvi & Avinash Kumar & Claudio Sassanelli, 2022. "Fostering Green Finance for Sustainable Development: A Focus on Textile and Leather Small Medium Enterprises in Pakistan," Sustainability, MDPI, vol. 14(19), pages 1-24, September.
    5. Ronaldo, Reza & Suryanto, Tulus, 2022. "Green finance and sustainability development goals in Indonesian Fund Village," Resources Policy, Elsevier, vol. 78(C).
    6. Xin Zhang & Zhihui Wang & Xiaobing Zhong & Shouzhi Yang & Abu Bakkar Siddik, 2022. "Do Green Banking Activities Improve the Banks’ Environmental Performance? The Mediating Effect of Green Financing," Sustainability, MDPI, vol. 14(2), pages 1-18, January.
    7. Lei Wang & Amin Ur Rehman & Zhaocheng Xu & Fiza Amjad & Shams Ur Rehman, 2023. "Green Corporate Governance, Green Finance, and Sustainable Performance Nexus in Chinese SMES: A Mediation Moderation Model," Sustainability, MDPI, vol. 15(13), pages 1-17, June.
    8. Chen, Yang & Cheng, Liang & Lee, Chien-Chiang & Wang, Chang-song, 2021. "The impact of regional banks on environmental pollution: Evidence from China's city commercial banks," Energy Economics, Elsevier, vol. 102(C).
    9. Ya Cheng & Mohammad Masukujjaman & Farid Ahammad Sobhani & Muhammad Hamayun & Syed Shah Alam, 2023. "Green Logistics, Green Human Capital, and Circular Economy: The Mediating Role of Sustainable Production," Sustainability, MDPI, vol. 15(2), pages 1-22, January.
    10. Guang-Wen Zheng & Abu Bakkar Siddik & Mohammad Masukujjaman & Nazneen Fatema, 2021. "Factors Affecting the Sustainability Performance of Financial Institutions in Bangladesh: The Role of Green Finance," Sustainability, MDPI, vol. 13(18), pages 1-27, September.
    11. Kang Tan & Abu Bakkar Siddik & Farid Ahammad Sobhani & Muhammad Hamayun & Mohammad Masukujjaman, 2022. "Do Environmental Strategy and Awareness Improve Firms’ Environmental and Financial Performance? The Role of Competitive Advantage," Sustainability, MDPI, vol. 14(17), pages 1-24, August.
    12. Muhammad Akram Shahzad & Madiha Riaz, 2022. "Assessing the Impact of Green Finance on Environmental Sustainability," Journal of Policy Research (JPR), Research Foundation for Humanity (RFH), vol. 8(3), pages 196-220, September.
    13. Zhai, Wei, 2023. "Risk assessment of China's foreign direct investment in "One Belt, One Road": Taking the green finance as a research perspective," Socio-Economic Planning Sciences, Elsevier, vol. 87(PB).
    14. Ulaş Ünlü & Neşe Yalçın & Nuri Avşarlıgil, 2022. "Analysis of Efficiency and Productivity of Commercial Banks in Turkey Pre- and during COVID-19 with an Integrated MCDM Approach," Mathematics, MDPI, vol. 10(13), pages 1-22, July.
    15. Xiaofei Dai & Abu Bakkar Siddik & Huawei Tian, 2022. "Corporate Social Responsibility, Green Finance and Environmental Performance: Does Green Innovation Matter?," Sustainability, MDPI, vol. 14(20), pages 1-17, October.
    16. Mohammad Abul Kalam Azad & Md. Aminul Islam & Farid Ahammad Sobhani & Md. Sharif Hassan & Mohammad Masukujjaman, 2022. "Revisiting the Current Status of Green Finance and Sustainable Finance Disbursement: A Policy Insights," Sustainability, MDPI, vol. 14(14), pages 1-14, July.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Guang-Wen Zheng & Abu Bakkar Siddik & Mohammad Masukujjaman & Nazneen Fatema, 2021. "Factors Affecting the Sustainability Performance of Financial Institutions in Bangladesh: The Role of Green Finance," Sustainability, MDPI, vol. 13(18), pages 1-27, September.
    2. Jing Chen & Abu Bakkar Siddik & Guang-Wen Zheng & Mohammad Masukujjaman & Sodikov Bekhzod, 2022. "The Effect of Green Banking Practices on Banks’ Environmental Performance and Green Financing: An Empirical Study," Energies, MDPI, vol. 15(4), pages 1-22, February.
    3. Bhatnagar, S. & Sharma, D., 2022. "Evolution of green finance and its enablers: A bibliometric analysis," Renewable and Sustainable Energy Reviews, Elsevier, vol. 162(C).
    4. Grace Ibe-enwo & Nicholas Igbudu & Zanete Garanti & Temitope Popoola, 2019. "Assessing the Relevance of Green Banking Practice on Bank Loyalty: The Mediating Effect of Green Image and Bank Trust," Sustainability, MDPI, vol. 11(17), pages 1-16, August.
    5. Xiuping Li & Ye Yang, 2022. "Does Green Finance Contribute to Corporate Technological Innovation? The Moderating Role of Corporate Social Responsibility," Sustainability, MDPI, vol. 14(9), pages 1-17, May.
    6. Sharma, Gagan Deep & Verma, Mahesh & Shahbaz, Muhammad & Gupta, Mansi & Chopra, Ritika, 2022. "Transitioning green finance from theory to practice for renewable energy development," Renewable Energy, Elsevier, vol. 195(C), pages 554-565.
    7. Ronaldo, Reza & Suryanto, Tulus, 2022. "Green finance and sustainability development goals in Indonesian Fund Village," Resources Policy, Elsevier, vol. 78(C).
    8. Lee, Chien-Chiang & Wang, Fuhao & Lou, Runchi & Wang, Keying, 2023. "How does green finance drive the decarbonization of the economy? Empirical evidence from China," Renewable Energy, Elsevier, vol. 204(C), pages 671-684.
    9. Mira Susanti Amirrudin & Mazni Abdullah & Nooraslinda Abdul Aris & Nor Farizal Mohammed, 2019. "Are SMEs Ready for Integrated Reporting? The Malaysian Experience of Accountability," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 11(5), pages 301-312, August.
    10. Xin Zhang & Zhihui Wang & Xiaobing Zhong & Shouzhi Yang & Abu Bakkar Siddik, 2022. "Do Green Banking Activities Improve the Banks’ Environmental Performance? The Mediating Effect of Green Financing," Sustainability, MDPI, vol. 14(2), pages 1-18, January.
    11. Ahmed Nahar Al-Hussaini, 2019. "The Role of Financial Management in Testing Environmental Kuznets Curve in Kuwait: Evidence from ARDL Bound Testing Approach," International Journal of Energy Economics and Policy, Econjournals, vol. 9(3), pages 353-359.
    12. Nkechi Vivian Adubor & Anthonia Adenike Adeniji & Odunayo Paul Salau & Oluwapelumi John Olajugba & Grace Oluwabukola Onibudo, 2022. "Exploring Green Human Resource Adoption and Corporate Sustainability in Nigerian Manufacturing Industry," Sustainability, MDPI, vol. 14(19), pages 1-15, October.
    13. Abdul Gafoor, C.P. & Perumbalath, Shamshadali & Daimari, Phungkha & Naheem, K.T., 2024. "Trends and patterns in green finance research: A bibliometric study," Innovation and Green Development, Elsevier, vol. 3(2).
    14. Wang Bing & K M Safiqul Islam & Md. Miraj Hossen, 2019. "Economic development through the implementation of environment policies:An empirical study from the South-West coastal areas of Bangladesh," International Journal of Research in Business and Social Science (2147-4478), Center for the Strategic Studies in Business and Finance, vol. 8(6), pages 292-300, October.
    15. Meenakshi Sharma & Akanksha Choubey, 2022. "Green banking initiatives: a qualitative study on Indian banking sector," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 24(1), pages 293-319, January.
    16. Hemant Bapu Jagdale, 2024. "Sustainability in startups/small and medium-sized enterprises: The influential role of entrepreneurial leadership and innovative behavior," Indian Journal of Commerce and Management Studies, Educational Research Multimedia & Publications,India, vol. 15(2), pages 18-31, May.
    17. Goshu Desalegn & Anita Tangl, 2022. "Developing Countries in the Lead: A Bibliometric Approach to Green Finance," Energies, MDPI, vol. 15(12), pages 1-19, June.
    18. Muhammad Haseeb & Sebastian Kot & Hafezali Iqbal Hussain & Kittisak Jermsittiparsert, 2019. "Impact of Economic Growth, Environmental Pollution, and Energy Consumption on Health Expenditure and R&D Expenditure of ASEAN Countries," Energies, MDPI, vol. 12(19), pages 1, September.
    19. Mohammad Abul Kalam Azad & Md. Aminul Islam & Farid Ahammad Sobhani & Md. Sharif Hassan & Mohammad Masukujjaman, 2022. "Revisiting the Current Status of Green Finance and Sustainable Finance Disbursement: A Policy Insights," Sustainability, MDPI, vol. 14(14), pages 1-14, July.
    20. Azhar Susanto & Meiryani Meiryani, 2019. "The impact of Environmental Accounting Information System Alignment on Firm Performance and Environmental Performance: A case of Small and Medium Enterprises s of Indonesia," International Journal of Energy Economics and Policy, Econjournals, vol. 9(2), pages 229-236.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jsusta:v:13:y:2021:i:2:p:795-:d:480809. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.