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Circular economy, banks and other financial institutions: what’s in it for them?

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  • Ozili, Peterson K

Abstract

In this paper, I highlight the benefit of the circular economy to banks and other financial institutions. The paper uses discourse analysis methodology to present an overview of the circular economy concept and the benefit of the circular economy to banks and other financial institutions. The findings show that some benefit of the circular economy to banks include: (i) greater loan diversification opportunities, (ii) promotes responsible and sustainable banking, (iii) increased lending to circular clients and the recycling sector which means more profit for banks, and (iv) correcting the bad perception about banks in society. Some benefit of the circular economy to other financial institutions include: (i) issuance of special insurance policies for reused products; (ii) greater sustainability-adjusted return on investment; (iii) greater funding to microfinance institutions; and (iv) more opportunities for collaborative funding to circular businesses. This study contributes to the scant literature that examine the role of the finance industry in the circular economy.

Suggested Citation

  • Ozili, Peterson K, 2021. "Circular economy, banks and other financial institutions: what’s in it for them?," MPRA Paper 107397, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:107397
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    Cited by:

    1. Biljana Petković & Yousef Zandi & Alireza Sadighi Agdas & Ivica Nikolić & Nebojša Denić & Nenad Kojić & Abdellatif Selmi & Alibek Issakhov & Slaviša Milošević & Afrasyab Khan, 2022. "Adaptive neuro fuzzy evaluation of energy and non‐energy material productivity impact on sustainable development based on circular economy and gross domestic product," Business Strategy and the Environment, Wiley Blackwell, vol. 31(1), pages 129-144, January.
    2. Peterson K. Ozili, 2022. "Circular Economy and Central Bank Digital Currency," Circular Economy and Sustainability, Springer, vol. 2(4), pages 1501-1516, December.
    3. Sarah Muhanna Naimi, 2022. "Economic Diversification Trends in the Gulf: the Case of Saudi Arabia," Circular Economy and Sustainability, Springer, vol. 2(1), pages 221-230, March.
    4. Van Hoof, Bart & De Miguel, Carlos J. & Núñez Reyes, Georgina, 2023. "Scaling up circular economy initiatives in Latin America and the Caribbean," Documentos de Proyectos 48835, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    5. Mohd Rizaimy Shaharudin & Dahlan Abdullah & Amir Imran Zainoddin & Rafeah Legino & Preecha Wararatchai, 2024. "The Evolution of Circular Economy: A Literature Review on Sustainability Transitions and Challenges," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 8(10), pages 102-115, October.

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    More about this item

    Keywords

    circular economy; linear economy; banks; financial institutions; criticism; sustainability; climate change; waste; insurance; sustainable finance; sustainable banking; hedge funds; microfinance institutions;
    All these keywords.

    JEL classification:

    • G02 - Financial Economics - - General - - - Behavioral Finance: Underlying Principles
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • G29 - Financial Economics - - Financial Institutions and Services - - - Other
    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development
    • Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General
    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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