Introduction:

Green banking, also known as sustainable banking or ethical banking, refers to the integration of
environmental and social considerations into banking practices. It involves promoting
environmentally friendly initiatives and offering financial products and services that support
sustainable development. The impact of green banking on consumer behavior, firm financial
performance, and the environment can be significant and beneficial. The ideology of human
welfare converted into a savage card just by considering many others environmental problems
now a days. As the population is increasing consumption of energy resources also increasing and
the economic situation becoming uncertain. This is the main reason that newly developing or
emerging countries will lead the world in future in many ways. Like if we talk about near future
travelling plans then we will consider these things for instance: If there is snow, we'll go skiing;
if there isn't, we'll go on vacation to Mexico; if there isn't a lockdown, we'll drive to Disney
World; and if it isn't 110 degrees, we'll play cricket. Hayward (2013) carried out research on
1000 CEOs worldwide, and his findings showed that 67% of respondents thought the global
economy will not be able to keep up with the needs of the rapidly expanding world population
and had not accurately addressed the issue of sustainability. Industrialization is thought to have
contributed to ecological inequality over the past few decades, and in recent years, business
organizations have come to be blamed for a growing number of environmental, social, and
economic problems and are seen as prospering at the expense of local communities (Porter and
Kramer 2014). It is discovered that man-made gases including hydrofluoric carbon, nitrous
oxide, carbon dioxide, and methane are liable for the distortion of the climate. Forestry,
biodiversity, water resources, agriculture, deserts, and human health have all suffered
significantly as a result. Environmental concerns are a major problem for the world's economies
today (Nath, Chaudhuri, and Birch 2014). Overall, green banking positively influences consumer
behavior by raising awareness, promoting sustainable choices, and building loyalty. It can also
enhance a bank's financial performance by tapping into new market opportunities, reducing
costs, and managing risks. Most importantly, green banking contributes to the protection of the
environment by financing sustainable projects, reducing emissions, and promoting transparency
and accountability in the banking sector.

Consumer Behavior:
Green banking initiatives can influence consumer behavior in several ways like: green banking
activities raise awareness among consumers about environmental issues and encourage them to
adopt sustainable practices. By providing information and promoting eco-friendly options, banks
can influence consumer choices and behavior. Green banking can drive consumer demand for
sustainable financial products and services, such as green loans, renewable energy financing, and
ethical investments. Consumers who prioritize environmental and social responsibility are more
likely to choose banks that align with their values. Consumers often perceive banks that engage
in green banking practices as socially responsible and trustworthy. This positive perception can
enhance customer loyalty and attract new environmentally conscious customers. Green Banking
refers to a form of banking that aims to provide environmental benefits by promoting eco-
friendly practices and reducing carbon footprints in banking operations (Lalon, 2015). Financial
institutions, as crucial contributors to a country's development, can enhance their service level
and social responsibility through the adoption of green financing practices (Islam, Yousuf,
Hossain, & Islam, 2014). Many modern banks, both locally and globally, are actively
implementing technology-driven, environmentally conscious initiatives as part of their day-to-
day activities (Silva, 2015), making green banking a prevalent concept in the banking industry.

Given the increasing focus on green banking, numerous scholars have conducted research from
various perspectives, such as green banking practices, the impact of green banking on sustainable
development, customer awareness and satisfaction with green banking, adoption of green
banking, customer attitudes and perceptions, and environmental management through green
banking. Consequently, there is a need for continual exploration of various aspects of green
banking to expand knowledge in this field.

Setting aside the concept of green banking momentarily, the notion of "customer satisfaction"
holds significant importance in the banking and financial service industries. Understanding the
factors that contribute to customer satisfaction is crucial for establishing stable, mutually
beneficial, and long-term relationships with customers (Ravald & Gronroos, 1996).
Dissatisfaction has been identified as a major reason for customers switching banks (Manrai &
Manrai, 2007). Numerous studies have highlighted the correlation between customer satisfaction,
customer retention, and success in the competitive banking industry. Therefore, exploring the
aspect of customer satisfaction within the context of green banking becomes vital, considering
the dynamic and significant nature of both concepts in the modern banking era.

Firm Financial Performance:

Green banking can have positive effects on a bank's financial performance. Green banking opens
up new market segments by catering to the growing demand for sustainable financial products
and services. By offering green loans or investments, banks can attract environmentally focused
customers who may not have considered traditional banking options. Adopting environmentally
friendly practices within banking operations can lead to cost savings. For example, implementing
energy-efficient technologies or reducing paper-based transactions can lower operational
expenses and improve overall efficiency. Incorporating environmental risk assessments into
lending practices can help banks avoid exposure to environmentally risky projects or industries.
This proactive risk management approach can protect the bank from potential financial losses
and reputational damage. Green accounting, also known as environmental accounting,
encompasses the assessment of expenses and impacts associated with environmental emissions.
It is closely linked to a company's financial aspect, with long-term implications for its economic
policies and the environment. The analysis of social cost benefits involves evaluating the
environmental goods and services generated by various projects and activities undertaken by
corporations (Jolly, 2014). Environmental accounting serves multiple objectives and
perspectives, not limited to safeguarding natural resources and assessing the well-being changes
resulting from environmental impacts (Malik & Mittal, 2015).

Environmental accounting is a broad field within accounting that encompasses different

strategies. Internally, it involves environmental management accounting, which assists
management in determining costs, price control, capital budgeting, and reporting. Externally, it
involves disclosing environmental information to the public and financial communities. This
approach enables informed decision-making regarding the adoption of more environmentally
sustainable technologies (such as green industries) and the redesign of systems and products,
leading to significant reductions in individual environmental costs. It emphasizes the importance
of incorporating environmental considerations into the design and development process (Wan et
al., 2015).
Green banking intersects with financial performance as contemporary stakeholders are
increasingly concerned about both profitability and environmental financial performance
(Ahmad et al., 2018). Financial performance is a subjective measure of how effectively a firm
utilizes its resources in its core business operations to generate income. It is also used as a
general indicator of a firm's overall financial health over a specific period. Hoque et al. (2019)
conducted an analysis of Bangladeshi non-conventional and commercial banks, examining
financial success and consumer demand. They concluded that the financial aspect was more
robust compared to other dimensions. Bangladeshi banking services play a significant role in the
development and advancement of the nation, contributing to the socio-economic sector (Ibrahim
et al., 2014). Particularly in a developing country like Bangladesh, the banking sector plays a
crucial role in promoting economic growth (Islam, 2016).

Green accounting focuses on improving financial performance by optimizing green costs, which
are an essential component of businesses or companies. Enhancing financial efficiency is
primarily dependent on improving green expenses and increasing the involvement of risk
management committees. This results in improved financial performance. Calculating green
GDP can raise awareness of sustainability issues among national governments and politicians
who prioritize rapid economic growth in their countries (Rounaghi, 2019).

The study utilizes the dependent variables of return on assets (ROA), return on equity (ROE),
and market value (MV) to measure financial performance. The independent variables considered
are green costs and the volume of the risk management committee. To derive the results, the
study employs a Two Stage Least Squares (2SLS) regression analysis, which is a mathematical
technique used to analyze structural equations in the research (two-phase least squares process).

The technique used in this study is an extension of the Ordinary Least Squares (OLS) system. It
incorporates the error terms of the dependent variable into separate variables. Recent analyses of
the annual reports of pharmaceutical and chemical companies listed in Bangladesh have focused
on the voluntary disclosure of corporate environmental information. These industries are
increasingly committed to environmental sustainability and eco-friendly practices. Previous
reports indicate that some organizations provide only qualitative information, highlighting a lack
of comprehensive environmental monitoring studies in Bangladesh. To address this research gap,
the study examines the findings of coded banks regarding green banking activities in Bangladesh
(Ullah, 2020; Saha et al., 2020).

This study contributes in several ways. Firstly, while green banking practices are widely adopted
by banks in developed economies, their implementation in developing nations like Bangladesh
needs attention. Therefore, this study serves as a guideline for bank regulators to make informed
decisions in this regard. Additionally, by promoting energy savings and paperless documentation
in official activities, green banking practices make a valuable social contribution. This
contribution aligns with the current needs without compromising the needs of future generations.
Lastly, the study highlights the economic contribution of green banking practices to the nation. It
establishes a connection between these practices and financial performance, suggesting that
profitable organizations can positively impact a country's economy.

This study extends the OLS system and focuses on the voluntary disclosure of environmental
information by pharmaceutical and chemical companies in Bangladesh. It addresses the lack of
comprehensive environmental monitoring studies in the country and provides insights for
regulators. The study emphasizes the social and economic contributions of green banking
practices, highlighting their importance in promoting sustainability and financial performance.

Moreover, green accounting or environmental accounting examines the costs and impacts
associated with environmental emissions, and it is linked to a company's financial component. It
involves assessing social cost benefits and disclosing environmental information. Green banking
aligns financial efficiency with environmental concerns, and financial performance is a measure
of a firm's effective resource utilization and overall financial health.

Environment:

The environmental impact of green banking is significant. Banks that support renewable energy
projects and sustainable initiatives contribute to the transition to a low-carbon economy. By
providing financing and investment opportunities in green technologies, banks play a crucial role
in reducing greenhouse gas emissions and promoting sustainable development.Green banking
initiatives, such as encouraging digital transactions, reducing paper usage, and promoting
energy-efficie nt practices, can help reduce the carbon footprint of banking operations. Green
banking often involves measuring and reporting environmental impacts. By integrating
sustainability reporting into their operations, banks can monitor their own environmental
performance, set targets, and be accountable for their actions. United Nations Environmental
Programme UNEP (2014) explained the green economy as financial operations that reduce
environmental dangers and ecological scarcities while also improving human well-being and
social fairness. Simply, it is stated that a green economy is one that is socially inclusive, low on
carbon, and resource efficient. Global industrialization has sparked the pursuit of the population's
ever-growing needs and demands, and it has come to represent prosperity and the growth of an
economy. However, on the other side, it ultimately contributed to the exploitation of the
environment, which has disturbed the ecological balance. The disruption of the ecological
balance has had a negative effect on people and their surroundings. Uneven industrialization was
either directly or indirectly related to the recent industrial disasters and the recent natural
disasters that occurred in the last thirty years. The disruption of ecological balance has had
negative effects on both humans and their surrounding environment. Many recent industrial and
natural disasters can be directly or indirectly attributed to uneven industrialization. The
recognition of environmental issues as global problems has put pressure on various industries,
including the financial services sector, particularly banks, to embrace environmentally friendly
practices known as green banking. This presents both obligations and opportunities for banks.
Although the operational activities of traditional banks are not inherently environmentally
focused, adopting an environmentally friendly approach can have a significant external impact
on the overall environment. It is worth noting that the banking sector is a major consumer of
resources such as paper and electricity due to its extensive network of branches and ATMs.
However, leveraging digital banking technologies and implementing in-house greenhouse
projects can contribute greatly to minimizing the adverse environmental impact. Therefore, there
is a pressing need to adopt green banking practices in day-to-day operations, financing strategies,
investment policies, and the promotion of corporate social responsibility (CSR) practices,
particularly in developing economies (M Ikram et al., 2019). As stated by S. C. Bihari and S.
Pradhan (2011), green banking practices play a crucial role in creating a green environment by
reducing CO2 emissions and encouraging companies to embrace clean energy technologies.
Since the banking sector serves as a significant source of financing for numerous industries and
businesses, it carries a substantial responsibility and accountability. Embracing green banking
practices not only yields corporate, environmental, and social benefits but can also provide a
competitive advantage in terms of customer retention. Green banking practices create a
mechanism for shifting clients' interests and intentions by promoting a more environmentally
conscious approach, breaking away from conventional mindsets. As major economic agents,
banks have significant influence on the industrial sector through lending and project financing.
However, with society's increased concern and awareness about environmental issues, banks
need to adopt green strategies in their operations to gain a competitive advantage (Nath et al.,
2014).

Banks play a crucial influential role in the economy (Nizam et al., 2019). According to Thombre
(2011), it is the prime responsibility of banks to encourage environmentally accountable
investments and lending. Financing industries and businesses that harm the environment
contributes to environmental degradation and associated health concerns (Nizam et al., 2019).
Conversely, banks should proactively encourage industries to invest in environmentally friendly
technologies and management systems (Md Masukujjaman and Akter, 2013). Failure to do so
can lead to unethical practices by banks by providing loans to organizations with environmental
concerns (Goyal and Joshi, 2012; Muhamat and Jaafar Thombre, 2011).

In developing economies, the banking sector plays a vital role in facilitating and promoting
environmentally friendly business practices, recognizing their significance at corporate, social,
and environmental levels (Mohammad Masukujjaman et al., 2017). Adopting green banking
practices contributes to customer retention and helps create an ideal environment (Iqbal, Nisha,
Rifat, and Panda, 2018). Green banking policy instruments encompass micro-prudential policy,
macro-prudential policy, credit allocation policy, and market-making policy (Dikau and Volz,
2018). However, the effectiveness of these policies is still being studied, and there is a lack of
current data and methodologies for performance comparison between developed and developing
countries. Some studies have analyzed China's green credit policy, but the results are limited and
show mixed outcomes, particularly regarding policy implementation and goal achievements
(Aizawa, Yang, and Development, 2010; Jin and Mengqi, 2011; Ren et al., 2016). In light of
these studies, we have developed a conceptual model that explores the contribution of policy,
operations, and investment to the paradox of green banking.

Problem statement
Despite the growing interest in green banking, there is a lack of empirical research on the impact
of green banking on consumer behavior, firm financial performance, and the environment.
Existing studies have mainly focused on the adoption of green banking practices by banks, rather
than their impact on consumer behavior and firm financial performance. Moreover, there is a
lack of consensus on the potential benefits and challenges of green banking and the factors that
influence the adoption of green banking practices.

Therefore, this thesis aims to address the research gap by investigating the impact of green
banking on consumer behavior, firm financial performance, and the environment.

Research questions:

1. What is the impact of green banking on consumer behavior?

2. What is the impact of green banking on firm financial performance?

3. What is the impact of green banking on the environment?

4. what is the relationship between green banking and consumer behavior?

Research objectives

The primary objective of this thesis is to explore the impact of green banking on consumer
behavior, firm financial performance, and the environment. The specific research objectives are:

1. To evaluate the impact of green banking on consumer behavior, including the willingness of
consumers to adopt green banking products and services.

2. To evaluate the impact of green banking on firm financial performance, including the financial
benefits and costs associated with green banking practices.

3. To assess the impact of green banking on the environment, including the environmental
benefits and costs associated with green banking practices.

4. To asses the relationship between green banking and consumer behavior.

Significance of the study

The significance of this thesis lies in its examination of the impact of green banking on consumer
behavior, firm financial performance, and the environment. By investigating the relationship
between these key dimensions, this study aims to contribute to both academic and practical
understanding of sustainable banking practices. The findings of this research hold several
important implications:

This study contributes to the academic literature by providing a comprehensive analysis of the
impact of green banking. By exploring the relationships between green banking, consumer
behavior, firm financial performance, and the environment, it adds to the existing body of
knowledge on sustainable banking practices. The findings will offer valuable insights and
empirical evidence to researchers, enabling further exploration and refinement of sustainable
finance theories.

Policymakers and regulators play a critical role in shaping the direction of the banking industry.
The findings of this thesis can inform policymakers in formulating effective policies and
regulations that encourage and support green banking initiatives. Understanding the impact of
green banking on consumer behavior, firm financial performance, and the environment can assist
policymakers in designing incentives and frameworks that promote sustainable practices in the
financial sector.

Financial institutions are increasingly recognizing the importance of integrating sustainability

into their operations. This research provides valuable insights to banks and financial institutions
on the impact of green banking practices. By understanding the relationship between green
banking and consumer behavior, financial performance, and environmental outcomes, financial
institutions can develop strategies that align with consumer preferences, enhance financial
performance, and contribute to environmental conservation.

Consumer behavior plays a crucial role in driving the adoption of green banking practices. The
findings of this thesis can contribute to consumer education and awareness campaigns, enabling
individuals to make informed decisions about their banking choices. By understanding the
drivers and barriers to consumer adoption of green banking, financial institutions can design
effective communication strategies and products that appeal to environmentally conscious
consumers.

Green banking has the potential to contribute significantly to sustainable development goals,
including environmental conservation, resource efficiency, and climate change mitigation. This
thesis sheds light on the environmental outcomes of green banking practices, providing insights
into areas where improvements can be made. By promoting sustainable development through
responsible lending and investment practices, financial institutions can contribute to a more
sustainable and resilient economy.

In summary, the significance of this study lies in its holistic examination of the impact of green
banking on consumer behavior, firm financial performance, and the environment. The findings
of this research have implications for academia, policymakers, financial institutions, and
consumers, providing insights that can drive the adoption of sustainable banking practices,
inform policy decisions, and contribute to the broader goals of environmental sustainability and
economic well-being.

Literature review:
Green Banking and Environment: -

The economic and social problems are directly or indirectly influenced by the financial sector of
the economy. Especially after the crisis of 2008, the banking and financial sector are strongly
held responsible for the social problems. In recent years banks have adopted sustainable practices
along with CSR management not only to increase their operational efficiency, and better firm
performance but in a way to contribute in a healthy environment. This has helped the banks with
the increased consumer behavior towards environment friendly products as consumers are
getting educated and learning the environmental impact of organizations and trying to adopt such
product and services that are more eco-friendly. In this manner, banks have adopted two
manners, one is to introduce new products and services that are environment friendly such as
green loans, or loans fir energy saving purposes. The second approach is of management
practices that are adopted by bank’s management to promote this cause.

Green Banking and Environment: -

Environmental change is the most pressing concern for the developing as well as developed
countries. (Ngwenya and Simatele, 2020) this increased pressure from the world have also
pressed the under developed and developing countries like Pakistan to focus on lowering the
disastrous effects on the climate. That’s why many countries have introduced different awards
and recognition for the organization developing and introducing fgreen finance and technologies.
Among those is the “Global Green Economy Index” to rank the countries on their green
performance (Chen et al., 2022). In this regard mainly the manufacturing sector have played the
role and be the center of attention though the services sector is the biggest contributor in the
economy of the countries. Therefore, it is of concern that service process can become the design
in such manner that become eco-friendly. In such manner financial sector, be the biggest
contributor become one key sector to bring their process to change to adopt the sustainability and
green practices.

The studies in early 2000, revealed that banks were putting less concern in environment as out of
ten studies, seven revealed that firms put least priority to the environment among all their CSR
activities. It is also found in the study of Hamid (2004) that Malaysian Banking and Finance
companies were keeping the environment their last priority. Similarly, the level of environmental
concern in the banks of UAE in the years 2003-2013 is equivalent to zero (Nobancee and Ellili,
2016). While the case of developed countries is different as they are more concerned about
environmental changes and the impact of organizations on it. The research conducted in
Germany by Menassa and Brodhacker in 2017 by using 169 German banks as their sample
revealed the findings that 45% of banks are conscious about their environmental activities and
concerned for this. Jain et al., in 2015 analyzed the data of Australian Banks and highlights that
those are very specific in reporting the GHG emissions caused by their funded operations.
Similarly, the study conducted in United States Banks in 2014 by Jizi et al. the findings of
research proffers that 12% of the banks only revealed their projects related to environment and
green banking.

According to the studies of Zhang et al., conducted in 2022 on Green Banking and how they
improve environmental performance with mediating effect of green financing. The study was
conducted in Bangladesh, by using convenience sampling technique to collect primary data from
bankers with sample size of 352 observations. The results of study revealed that green banking
have positive effects on green environmental practices. The study also revealed the costs of
green banking and consumer unawareness towards it. Abu Bakkar et al., in 2022 conducted the
research on effect of green banking practices on bank’s environmental performance and green
financing. The study was conducted in Bangladesh by using the survey methodology the primary
vdata was collected from the sample of 322 banking employees of PCBs in country. The results
indicates that bank’s employees, daily operations, and policy related green banking practice have
significant positive effects on green environment, and banks’ environmental practices. Rehman
et al., in 2020 worked on the adaptation of green banking practices and environmental
performance in Pakistan with demonstration of structural equation modeling. The study was
conducted in Pakistan’s three districts with sample size ranging from 150-400. The data was
collected from bank employees with primary data techniques. The results showed that impact of
green banking to promote green environment is much greater and influential specially in policy
making and green projects. This also revealed the factors which can promote and justify the
green banking practices in the country.

By time the countries have realized that companies conceal the fact they are working for
betterment of environment in the form of CSR, but this is highly inadequate. They have set the
regulatory environment for this. In this context of this, Meng el al., in 2019 conducted their study
on Chinese firms and found out that due to regulatory requirements it is necessary that
organizations reveal their corporate environmental information. after the China have initiated
their green credit policy which is thus not fully exploited, it plays an important role for Chinese
banks to become environmentally aware and active in the environmental risk management
(Zhang et al., 2011). While in United Kingdom in 2004 a study is conducted by Thompson and
Cowton that have found that most of UK’s banks incorporate environmental considerations in
their formal corporate lending policies in order to mitigate the environmental hazards and
manage the environmental risks and have compliance with regulatory framework. While
Douglas in 2014 with his research concludes that Irish banks lack their environmental
information due to lack of environmental regulations.

Rishal and Joshi in 2018 conducted research in Nepal on impact of Green Banking practices on
bank’s environmental performance in Nepal. The study conducted in 5 commercial banks in
Nepal with responses from 189 bankers using the convenience sampling method. The results
proffers that the role of banks and government in encouraging sustainable technologies increases
the bank’s reputation and awareness among customers.
Green Banking and Firm Performance: -

Firm Performance is always a key objective for not only management but also for the board. It
has always been a concern in board meetings too to develop strategies and implement those plans
which in results drive higher firm performance. Different researchers have taken the firm
performance measures differently such as market value performance, customer satisfaction,
growth measures, but it’s been there in their studies. As Zhang and Yang in 2016 in their study
emphasis that concept of firm performance accelerated in past years. Al Surmi et al., in 2020
proffers that managers always face it as challenge to improve the firm performance. While the
literature has categorized the firm performance broadly into environmental, operational and
financial performance (Zhang and Yang, 2016).

Research conducted in 2008 by Laguir et al., in French Banking Sector to check the reversing the
business rationale for environmental commitment in banking. The sample consists of 191
observations and findings revealed that corporate environmental performance is directly linked
with corporate firm performance. High green measures increase the overall firm performance,
that also helps in achieving in sustainable development goals by United Nations. Ryszko in 2016
studies the proactive environmental strategy with technological Eco-Innovation and Firm
Performance. The study was conducted in Poland with sample tested on 292 firms using the
structural equation modeling using partial least square. The findings revealed that firm
performance improves by adopting the green activities. Environmental impact contributes to the
increase and positive firm performance.

Another study conducted in Pakistan in 2022 on Green Banking on performance by Wajeeha et

al. the data was acquired by using five-point Likert scale questionnaire and non-purposive
selection technique. In total 400, responses were gathered and findings were developed on it that
proffered that green banking adoption practices positively affect the performance of firm. It also
helps in mitigating the operational hinderances and helps in improving it. A study in China in
2020, in China’s financial sector concluded that the adoption of green financing has significantly
contributed in increased financial performance in the firm. The study uses the 308 firm-year
observations on disclosures for 2007-2016. It also highlights the role of sustainability
development by adopting the green financing and its positive outcomes showed in financial
statements. Moreover, another researcher Soana (2011) finds the link of green banking and firm
financial performance as negative and interpret that there is no impact of sustainability on firm
performance.

It is also believed that the extent to which CSR effects the performance is different from the way
green practices impacts it. Mostly academies have proffer it in different ways. In nutshell, the
study of Bually in 2019 conducted in the Europe by using the 10 years of data of 235 banks
listed discloses that firm CSR practices negatively impacts the firm’s financial and operational
performance, meanwhile the green practices impact positively on return on equity and Tobin’s
Q. Aragon-Correa researched on resourced base view of proactive corporate environmental
strategy in 200 and their results proffered that corporate environmental strategy is adynamic
capability that will allow the board of directors to align the firm strategy with changing, complex
and uncertain business environment.

CHAPTER # 3 (METHODOLOGY)

3.1Theoretical Framework

3.1.1 Planned Behavior Theory

A psychological theory called the Theory of Planned Behaviour (TPB) describes how people
behave in terms of their goals, attitudes, subjective norms, and perceived behavioral control. It is
frequently used to comprehend and forecast consumer behaviour in respect to a variety of
variables, such as environmental concerns. The TPB can assist in the analysis of how customers'
attitudes, intentions, and perceived control influence their decision-making and behaviour in the
context of the effects of green banking on customer behaviour, business profitability, and the
environment.

Subjective Norms: The perceived societal pressure or impact on a person's behaviour is referred
to as a subjective norm. Subjective norms in the context of green banking could include the sway
of close relatives, close friends, or society at large. Customers' intentions to engage in green
banking activities may be strengthened if they believe that those around them support or promote
it.

Attitudes: The TPB contends that customer views about green banking are a significant factor in
influencing their behaviour. Positive customer behaviour, such as selecting green banking
products and services, is likely to result from positive attitudes about green banking, such as the
perception that it is good for the environment and society.

Perceived Behavioral Control: Perceived behavioral control refers to how people believe they
are able to carry out a specific behaviour. It considers elements including information, expertise,
resources, and outside constraints. Customers are more inclined to act in an environmentally
conscious manner if they feel in control of their choices and have the tools needed to engage in
green banking.
Intentions: According to the TPB, intentions are a major factor in determining behaviour. Green
banking behaviour is likely to be the result of sincere intentions. Attitudes, subjective norms, and
the perception of behavioral control all have an impact on intentions. Customers are more likely
to have firm intents if they have favorable attitudes about green banking, see social support for it,
and feel sure that they can engage in green banking.

3.1.2 Diffusion Innovation theory

Understanding the effects of green banking on consumer behaviour, business financial

performance, and the environment can be done by using the Diffusion of Innovation Theory.
Everett Rogers' thesis describes how ideas spread and is eventually embraced by people and
organizations. Let's examine how it relates to the context of green banking's effects:

Innovation: Green banking, which refers to the incorporation of environmental and

sustainability factors into banking practices, is the innovation in this situation. This can entail
providing ecologically friendly goods, encouraging energy conservation, aiding renewable
energy initiatives, or establishing sustainable lending standards.

Adoption curve: According to how willing they are to accept an innovation, several kinds of
adopters are identified by the adoption curve in the Diffusion of Innovation Theory. Innovators,
early adopters, the early majority, the late majority, and laggards are some of these categories.
When it comes to green banking, innovators are those who implement sustainable practices first
among banks or financial organizations, while early adopters are those who do the same.

Communication channel: Effective communication channels are critical for disseminating

knowledge about the breakthrough, according to the hypothesis. Media, social networks,
professional opinions, and marketing initiatives by banks and financial institutions are all
examples of communication channels. These platforms are essential for raising awareness,
shaping attitudes, and promoting adoption.

3.1.3 Stakeholder Theory

A framework known as "stakeholder theory" acknowledges the significance of numerous
stakeholders in an organization's decision-making process and takes into account their interests
and worries. Stakeholder Theory can offer important insights when used to investigate how green
banking affects consumer behaviour, business financial performance, and the environment.

The stakeholders in this study can be the shareholders, employees, regulators, local communities,
and the environment itself. Here's how the concept of stakeholders may apply to each of these:

Consumer Behaviour: A major stakeholder for a bank, according to the stakeholder theory, is
the consumer. According to the notion, banks can positively affect consumer behaviour by
implementing green banking practices, such as providing ecologically friendly goods and
services. Green banking initiatives, such as issuing eco-friendly loans or offering incentives for
sustainable investments, can draw environmentally aware customers that place a high priority on
sustainability when making financial decisions.

Firm financial performance: Stakeholder Theory contends that a company's financial

performance is impacted by the support and happiness of its stakeholders. In the case of green
banking, the bank may be able to improve its financial performance if it properly answers the
needs and concerns of its stakeholders, including customers, shareholders, and regulators. For
instance, luring clients who care about the environment might improve market share and income.
Additionally, implementing sustainable practices can assist cut expenses over time, such as
through operational improvements or energy efficiency measures, which can have a favorable
effect on the company's financial performance.

Environment: According to the stakeholder theory, the environment is a crucial stakeholder.

Financial organizations can support environmental sustainability by implementing green banking
practices. This can entail putting in place ecologically friendly laws, encouraging investments in
renewable energy, fostering the development of clean technology, and reducing adverse effects
on ecosystems. The beneficial environmental benefits attained by green banking projects can
support the ecosystem's general health and address public worries about resource depletion and
climate change.

3.2 Conceptual Framework

 Consumer Behavior

Green Banking Firm Financial

Performance

Environment

3.3 Data Variables:

3.3.1 Dependent variables:

Consumer behavior

Firm financial performance

Environment

3.3.2 Independent variables:

Green banking
3.4 Empirical Framework:

An empirical framework refers to a set of methods and procedures used to collect, analyze, and
interpret data in a systematic and objective manner to answer research questions or test
hypotheses. According to Jankowicz empirical research is based on observation,
experimentation, and the collection of data. In an empirical framework, researchers formulate
hypotheses and use various methods, such as surveys, experiments, and observations, to test
these hypotheses. The empirical framework involves the use of statistical tools and techniques to
analyze and interpret data, including descriptive statistics, inferential statistics, and regression
analysis. The framework also includes the formulation of research questions, hypotheses, and the
design of experiments to collect data that can be used to test these hypotheses. Overall, the
empirical framework is a rigorous and systematic approach to conducting and analyzing data that
aims to provide objective and reliable findings.

3.4.1 Research method:

For this thesis our target market is the Banking sector that is working in the Pakistan. We
acquired a secondary data of the firms that are listed in the stock exchange of Pakistan. We
gather annual data to access the impact of green banking on the firm financial performance,
consumer behavior and the Environment in the firms of banking sector.

3.4.2 Population research:

The population of study is all banks that are working on a green banking perspective located in
Pakistan, whereas the sample includes the financial reports of top 10 green banks listed in
Pakistan Stock Exchange (PSX).

3.4.3 Research sample:

According to Kumar in 2005 "the method of selecting a small number from a larger group to
serve as the basis for evaluating and estimating of an unknown component of the information,
condition, or outcome connected to the larger group" is known as sampling. The research utilized
the five-year secondary data gathered from the annual reports of companies written below.

NAME OF BANKS ABBREVIATION

 1. National Bank Limited NBL

2. Bank Alfalah Limited BAL

3. Allied Bank Limited ABL

4. Muslim Commercial Bank Limited MCB

5. Soneri Bank Limited SBL

6. Bank Al-Habib Limited HBL

3.4.4 Data analysis:

3.5 Statistical tools:

3.5.1 Descriptive analysis:

Key elements of the impact of green banking on consumer behaviour, business financial
performance, and the environment can be summed up and presented using descriptive statistics.
Here are some examples of how to use descriptive statistics in this situation:

Consumer Behaviour: Different facets of consumer behaviour in relation to green banking can
be described using descriptive statistics. For instance, the willingness of the typical consumer to
adopt green banking practices, their degree of awareness, or their preferences for
environmentally friendly financial services may all be described using measurements like mean,
median, and mode. Consumer responses to survey questions or Liker scale assessments
pertaining to green banking can be displayed using frequency distributions.

Financial Performance of the Firm: Descriptive statistics can give a general picture of how
well banks that use green banking are doing financially. Measures like mean, median, standard
deviation, and range can be used to summarize important financial variables including revenue,
profit, return on assets (ROA), return on equity (ROE), and cost-to-income ratio. These statistics
can provide light on how green banks fare financially when compared to non-green banks.

Environment: Environmental results related to Green Banking activities can be compiled using
descriptive statistics. For instance, statistics such as means, percentages, or proportions can be
used to summarize actions such as lowering greenhouse gas emissions, increasing energy
efficiency, or implementing renewable energy sources. These figures can aid in giving a
numerical grasp of the environmental benefit attained by green banking practices.

Researchers and practitioners can better comprehend central tendencies, variation, and
distributions of data by using descriptive statistics to analyze the effects of green banking on
consumer behaviour, business financial performance, and the environment. They offer a succinct
and numerical overview of the facts, making comparisons and understanding simple. It is crucial
to remember that descriptive statistics may not be sufficient to shed light on the importance of
observed differences or the causal connections between variables. To get more reliable results in
such circumstances, inferential statistics or other analytical techniques may be required.

3.5.2 Reliability:

Researchers can use a variety of statistical approaches to determine the validity of the data they
have gathered to examine the effects of green banking on consumer behaviour, business financial
performance, and the environment. Cronbach's alpha is a commonly used indicator of internal
consistency and reliability. It evaluates the degree to which components of a scale or survey are
measuring the same underlying construct. Researchers may create survey instruments to monitor
customer behaviour, financial performance, and environmental results in the context of
researching the effects of green banking. By evaluating the consistency or reliability of responses
across the items in each construct, Cronbach's alpha can be used to analyze the dependability of
these measures.

After assessing the internal consistency of each measure, you would also need to assess test-
retest reliability to determine the stability of the measures over time. This involves administering
the measures to the same group of participants at two different points in time and calculating the
correlation between the two sets of scores. Once you have assessed the reliability of the
measures, you can then use them in your study to examine the relationships between the
variables of interest, including the moderating role of diversification of investment. Overall,
conducting reliability analysis is important to ensure that the measures used in your study are
reliable and consistent, and can produce valid and accurate results.

3.5.3 Correlation:

A statistical method for determining the link between two or more variables is correlation
analysis. The strength and direction of links between these variables can be ascertained using
correlation analysis when examining the effects of green banking on consumer behaviour,
business financial performance, and the environment. Here are some applications for correlation
analysis:

Consumer Behaviour: Correlation analysis can be used to investigate the link between
consumer behaviour and green banking activities. For instance, researchers can look at whether
customer satisfaction with the bank's services and the uptake of green banking practices by
consumers are positively correlated. The intensity and direction of this link can be quantitatively
measured using correlation coefficients, such as Pearson's correlation coefficient.

Firm Financial Performance: Correlation analysis can be used to determine how Green
Banking and certain firm financial performance metrics relate to one another. Researchers can
look into whether a bank's dedication to environmentally friendly practices (such as investments
in renewable energy) and its financial performance measurements, like return on assets or
profitability, are correlated. If there is a positive, negative, or no significant link between these
variables, correlation analysis can assist reveal it.

Environment: The correlation between Green Banking practices and environmental results can
also be examined using correlation analysis. Researchers might examine the relationship between
a bank's adoption of sustainable lending practices and the suppression of carbon emissions or the
support of renewable energy initiatives. The strength of the relationship between these variables
can be ascertained using correlation analysis.

Researchers can measure the degree and direction of correlations between Green Banking,
consumer behaviour, business financial performance, and the environment by utilizing
correlation analysis. The range of correlation coefficients is from -1 to 1, with values closer to -1
or 1 denoting a greater correlation and values closer to 0 denoting a weaker or nonexistent
association. It is crucial to remember that correlation analysis only establishes the relationship
between variables, not their causality.

3.5.4 Regression:

A statistical approach called regression analysis can be used to investigate how Green Banking
affects consumer behaviour, business financial performance, and the environment. It enables
researchers to investigate the connections between variables and comprehend how modifications
to one variable impact another. Regression analysis can be applied in this situation as shown
below:

Consumer Behaviour: Regression analysis can be used to determine how consumer behaviour
and green banking activities are related. The dependent variable could be consumer behaviour
indicators like willingness to use green banking services, frequency of eco-friendly transactions,
or consumer satisfaction with green banking offerings, while the independent variable could be
the extent of green banking practices adopted by a bank. Regression analysis can determine the
relationship between these variables and the influence of green banking on customer behaviour.

Firm Financial Performance: To investigate the connection between Green Banking and firm
financial performance, regression analysis can be used. The dependent variables could be
financial performance measures like profitability, return on assets (ROA), return on equity
(ROE), or cost efficiency, whereas the independent variable could be the extent of green banking
practices adopted by a bank. If there is a statistically significant association between green
banking practices and financial performance measurements, regression analysis can assist
identify it.

Environment: Regression analysis can be used to assess how Green Banking would affect
environmental results. The dependent variables could be environmental indicators like
greenhouse gas emissions, energy use, or waste generation, whereas the independent variable
could be the extent of green banking activities implemented by a bank. Regression analysis can
shed light on the connection between environmentally friendly banking practices and their
effects.

Regression analysis can use a variety of regression models, based on the variables' characteristics
and the goals of the study. Ordinary least squares (OLS) regression, multiple regression, logistic
regression (for binary outcomes), and hierarchical regression (to examine the influence of
numerous predictors in a stepwise fashion) are common regression approaches.