Green Banking and Perceived Financial Performance of Nepalese Commercial Banks

Abstract

The objective of this study is to analyze the relationship between green banking and the perceived financial performance of commercial banks in Nepal. There are four organizational aspects of green banking: green products and services, green investments, green business strategies, and green human resource management. Financial performance is evaluated by efficiency, effectiveness and economy (not just profitability), thus going beyond merely a single measure of financial performance. An explanatory survey was conducted in a cross sectional manner with the respondents consisting of 373 middle level staff of five prominent commercial banks of Nepal. A five-point Likert scale structured questionnaire was used to collect data, and descriptive statistics, Pearson correlations, multiple regression, and variance inflation factors were used to analyse the data. Green products and services received the highest mean rating (M = 4.23, SD = 0.72), followed by green business strategies (M = 4.12, SD = 0.68), green investments (M = 3.89, SD = 0.84), and green human resource management (M = 3.45, SD = 0.91). The four dimensions of green banking explained 54.2% of the variance in the efficiency, 51.1% in effectiveness, and 47.8% in economy. In all three models, green business strategies is the strongest predictor, followed by green products/services. Green human resource management was positively correlated with efficiency and marginally correlated with effectiveness and was not correlated with economy. The results provided a strategic perspective on green banking: on the one hand, systems that involve people could take some time before visible economic effects are produced, while on the other hand, systems that focus on the environment and are implemented by the banks can strengthen bank performance through digital delivery, resource efficiency, and disciplined environmental investment. The study uses cross sectional perceptual data and the results do not imply cause and effect. It offers context-specific evidence from a developing banking system and offers some implications for bank executives, regulators, and researchers aiming to move towards a balance of environmental responsibility with operational resilience and financial discipline.