Green Credit and Lending: Driving Environmental Responsibility in the Banking Sector

Abstract

Green banking has emerged as a key financial strategy for fostering environmental sustainability by integrating eco-friendly practices into banking operations. This study examines the role of green credit, sustainable financing, and ESG compliance in promoting environmental responsibility within the banking sector. It explores the opportunities and challenges faced by banks in adopting green lending policies and assesses consumer perceptions regarding green credit products. Using a combination of factor analysis and hypothesis testing, the study evaluates the relationship between green finance adoption, ESG performance, and bank reputation. The findings highlight the significance of regulatory incentives, consumer awareness, and financial inclusion in enhancing green banking practices. The study provides strategic recommendations for financial institutions and policymakers to accelerate the transition toward sustainable banking through policy improvements, financial incentives, and increased customer engagement.