Do Green Banking Practices Contribute to Financial Performance? A Study of Indian Banks

ABSTRACT

This study aims to examine the association between green banking practices (GBP) and financial performance (FP) in Indian banks. The moderating effect of NPAs (non‐performing assets) on GBI‐FP relationship is also examined on the basis of the sample of 20 banks for the period 2019–2024. The green banking index consists of four subindices and is prepared by using the content analysis technique. Ordinary least squares is applied to attain the objective. However, to deal with the endogeneity issue, the system GMM is also applied to analyse the GBI‐FP relationship. The findings indicate that GBI positively affects banks' financial performance. Subindices are also positively associated with financial performance. However, NPAs negatively moderate the relationship between GBI and FP. These findings will set a basis for policymakers and regulators in integrating environmental sustainability principles into banking operations and policy.