Chapter 7: Impact of Green Banking Practices on The Environmental Performance of Banks: The Mediating Role of Green Financing in Sri Lanka

Purpose: This chapter examines the effect of green banking practices (GBPs) on environmental performance (EP), specifically focussing on the Sri Lankan banking industry. Additionally, the study explores the mediating impact of green finance in the association between GBPs and the EP of banks listed in the Colombo Stock Exchange in Sri Lanka.

Methodology: The survey included 233 banking employees from Sri Lanka, and data for this study were collected via questionnaires. The formulated hypotheses were tested employing a regression analysis.

Findings: GBPs such as employee, customer, operation, and policy-related practices significantly predicted the banks’ EP. Furthermore, the study highlights that green finance partially mediates the relationship between GBPs and banks’ EP in Sri Lanka.

Implications of the study: The study’s results indicate that banks should prioritise integrating GBPs in their organisations to enhance environmental and overall performance. Moreover, strategically utilising green financing techniques might be a substantial channel for banks to further strengthen their ecological dedication and influence.

Originality: This is the first study to investigate the impact of GBPs on banks’ EP with the mediating effect of green finance in the Sri Lankan context.