Fostering Green Banking and sustainability in a Developing Economy: An Empirical Assessment
Sohnia Salman and Sumaira Hamid
Lahore School of Economics, Pakistan

Abstract: Aligning economic development with an ecological financial sector is a universal challenge. Placing the Asian Financial Sector onto a green transformation pathway requires unprecedented shift to innovative and cost effective financial practices that are resource and energy efficient. Nevertheless, the goal of green transformation in the sector is not feasible without banks’ commitment to adopt and promote green practices. The climatic catastrophe and dearth of energy in the country has compelled State Bank of Pakistan (SBP) to enact an environment friendly course of action to promote and initiate sustainable banking. Thus in light of the above, the main focus of this research is to measure employees’ perception of their bank’s commitment to adopt green practices which predominantly considers commitment to adopt energy efficient resources; provide paperless banking through electronic correspondence; design policies for green products; harness employees’ knowledge on green practices through training and other measures; and develop consumer awareness on benefits of green banking. In addition, this study also investigates the impact of perceived commitment of banks to adopt green practices on the extent of green transformation from conventional banking system. The findings of the Multiple Regression Analysis confirm significance of aforementioned factors on the extent of green transformation. However, in order to achieve the goal of overall transition, the role of stakeholder’s engagement and operational costs related to green transformation must be clearly outlined to identify bottlenecks which may otherwise impede development of a sustainable financial sector.

Keywords: Green Banking Practices, Customer awareness, Employee knowledge and training, Sustainable Financial Sector