Green ınvestment and financial efficiency as catalysts for SDG progress: Evidence from Bangladesh’s banking sector

Year 2026, Volume: 8 Issue: 1, 1 - 15

Tamal Chakrobortty , Mosa. Layla Arzuman Banu , Sabrina Alam , Dipika Rani Dobey

Abstract

This study examines the influence of green finance and key financial indicators on UN Sustainable Development Goals (SDGs) in Bangladesh’s banking sector. Analyzing panel data from 10 commercial banks (2011–2023), the study assess the relationship between five SDGs (3, 4, 5, 8, and 9) and seven financial variables: green expenses, ROE, ROA, market value of shares, leverage ratio, dividend payout ratio, and R&D expenditure. Using OLS regression (EViews), the study finds that green expenses, ROE, and R&D positively and significantly affect SDGs 3, 4, 5, and 9, underscoring the role of sustainability and innovation. Conversely, ROA negatively impacts SDGs 3–5 and 9, while leverage harms SDGs 3–4, and dividend payouts hinder SDGs 4, 5, and 9. Market value shows minimal influence. The results emphasize green finance’s importance while cautioning against excessive asset-driven profitability and debt reliance.

Keywords

Green Cost , Financial Indicators , SDG Goals , Sustainability , Regression Analysis.

Ethical Statement

The Author(s) have no competing interest.

References

• Ahmed, S. P., Ahmed, S. U., Noor, M. F., Ahmed, Z., & Karmaker, U. (2019). The policy-led sustainability and financial performance linkage in the banking. Banks and Bank Systems, 89-103. doi:http://dx.doi.org/10.21511/bbs.14(4).2019.09
• Akhter, I., Yasmin, S., & Faria, N. (2021). Green banking practices and its implication on financial performance of the commercial banks in Bangladesh. Journal of Business Administration, 42(1), 1-23.
• Akomea-Frimpong, I., Adeabah, D., Ofosu, D., & Tenakwah, E. J. (2022). A review of studies on green finance of banks, research gaps and future directions. Journal of Sustainable Finance & Investment, 12(4), 1241-1264.
• Akter, N., & Mondal, M. S. A. (2023). Sustainable banking Practices and their development: A study on banks operating in Bangladesh. Journal of Business and Development Studies, 2(1), 67-87.
• Alhalwachi, L. F., & Mordi, C. (2021). Gender inequality barriers and solutions to senior management positions: perspectives on women in Bahraini banking sector. Journal of Sustainable Finance & Investment, 1-22.
• Azzahra, S. F., Syaifuddin, D. T., & Saleh, S. (2023). The Influence of Green Banking and Financial Performance, Retrieved from . Halu Oleo International Conference on Economic and Business, 97-106.
• Banu, M., Karmakar, A., Afrin, K., Chakrobortty, T., & Afrin, T. (2024). Banking Performance During the Global Financial Crisis: Empirical Evidence from Bangladesh. International Journal of Economics, Finance and Management Sciences, 12(3), 172–184. https://doi.org/10.11648/j.ijefm.20241203.14
• Barua, S. (2020). Principles of green banking: Managing environmental risk and sustainability. Walter de Gruyter GmbH & Co KG.
• Bei, J., & Wang, C. (2023). Renewable energy resources and sustainable development goals: Evidence based on green finance, clean energy and environmentally friendly investment. Resources Policy, 80, 103194.
• Boadu, M. A. (2024). Role of innovations and impact on economic development in MENA countries.
• Bose, S., Khan, H. Z., & Monem, R. M. (2021). Does green banking performance pay off? Evidence from a unique regulatory setting in Bangladesh. Corporate Governance: An International Review, 29(2), 162-187.
• Buckley, R. P., Arner, D. W., & Zetzsche, D. A. (2019). Driving Digital Financial Transformation in Support of the SDGs - A Strategy to Leverage Fin Tech for Financial Inclusion, Development, Stability and Integrity. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.3387359
• Bulmer, E., Riera, M., & de la Rosa, J. A. (2022). Analysing SDG 17, a critical approach. J. Legal Ethical & Regul. Isses, 25, 1.
• Carlsen, L., & Bruggemann, R. (2022). The 17 United Nations’ sustainable development goals: A status by 2020. International Journal of Sustainable Development & World Ecology, 29(3), 219-229.
• Chakrobortty, T. (2023). Determining Factors of Share Prices in Bangladesh: An Empirical Study on Cash Dividends and Retained Earnings. International Journal of Research Publication and Reviews, 04(02), 1400–1415. https://doi.org/10.55248/gengpi.2023.4230
• Chakrobortty, T., Karmakar, A., Rahman, A. K. M. A., & Dobey, D. R. (2025). Bank performance relation with green banking practices: A study on commercial bank in Bangladesh. Journal of Ekonomi, 14(December 2024), 107–118.
• Chakrobortty, T., & Sultana, M. (2023). Financial Inclusion for Rural Community in Bangladesh through Agent Banking. International Journal For Multidisciplinary Research, 5(3), 1–11. https://doi.org/10.36948/ijfmr.2023.v05i03.2747
• Chen, J., Siddik, A. B., Zheng, G. W., Masukujjaman, M., & Bekhzod, S. (2022). The effect of green banking practices on banks’ environmental performance and green financing: An empirical study. Energies, 15(4), 1292.
• Chien, F. (2023). The impact of green investment, eco-innovation, and financial inclusion on sustainable development: evidence from China. Engineering Economics, 34(1), 17-31.
• Chin, M. Y., Ong, S. L., Ooi, D. B. Y., & Puah, C. H. (2024). The impact of green finance on environmental degradation in BRI region. Environment, Development and Sustainability, 1.
• Chițimiea, A., Minciu, M., Manta, A. M., Ciocoiu, C. N., & Veith, C. (2021). The drivers of green investment: A bibliometric and systematic review. Sustainability, 13(6), 3507.
• Cho, H. J., Lehner, O. M., & Nilavongse, R. (2021). Combining financial and ecological sustainability in bank capital regulations. Journal of Applied Accounting Research, 22(3), 423-435.
• Chygryn, O., Pimonenko, T., & Lyulyov, O. (2022). Green Investment as An Economic Instrument to Achieve SDGs. In Reducing Inequalities Towards Sustainable Development Goals (pp. 69-90). River Publishers.
• Debrah, C., Darko, A., & Chan, A. P. C. (2023). A bibliometric-qualitative literature review of green finance gap and future research directions. Climate and Development, 15(5), 432-455.
• Duho, K. C. T., Onumah, J. M., Owodo, R. A., Asare, E. T., & Onumah, R. M. (2020). Bank risk, profit efficiency and profitability in a frontier market. Journal of Economic and Administrative Sciences, 36(4), 381-402.
• Ferrarini, G. (2021). Redefining corporate purpose: Sustainability as a game changer. In Sustainable finance in Europe: Corporate governance, financial stability and financial markets (pp. 85-150). Cham: Springer International Publishing.
• The Financial Express. (2025, July 29). Finance news: Latest financial news, finance news today in Bangladesh. The Financial Express. https://today.thefinancialexpress.com.bd/last-page/10-banks-three-instts-sustainable-in-bd-1720721178
• Galletta, S., Mazzù, S., Naciti, V., & Vermiglio, C. (2022). Gender diversity and sustainability performance in the banking industry. Corporate Social Responsibility and Environmental Management, 29(1), 161-174.
• Habib, S. M. A., Ahmed, M. N., Yesmin, R., Chakrabarty, A., & Khandkar, R. (2023). Impact of Sustainable Banking Policies and Products in Bangladesh. Bangladesh Institute of Bank Management (BIBM).
• Hasan, S. M., Islam, K. M., Tawfiq, T. T., & Saha, P. (2025). Triple pillars of sustainable finance: The role of green finance, CSR, and. Banks and Bank Systems, 38-50. doi:http://dx.doi.org/10.21511/bbs.20(1).2025.04
• Hasan, M. M., Al Amin, M., Moon, Z. K., & Afrin, F. (2022). Role of environmental sustainability, psychological and managerial supports for determining bankers’ green banking usage behavior: an integrated framework. Psychology research and behavior management, 3751-3773.
• Hasanudin, H. (2024). Strategy Analysis In Managing Company Finances Effectively And Efficiently. Jurnal Ekonomi, 13(02), 1013-1023.
• Hossain, M. A., Rahman, M. M., Hossain, M. S., & Karim, M. R. (2020). The effects of green banking practices on financial performance of listed banking companies in Bangladesh. Canadian Journal of Business and Information Studies, 2(6), 120-128.
• Islam, M. S., & Hasan, M. M. (2015). Reasons behind the Practices of Green Banking by Commercial . European Journal of Business and Management , 51-59.
• Islam, H., Soumia, L., Rana, M., Madavarapu, J. B., & Saha, S. (2024). Nexus between perception, purpose of use, technical challenges and satisfaction for mobile financial services: theory and empirical evidence from Bangladesh. Technological Sustainability, 3(2), 147-170.
• Jain, P., & Sharma, B. K. (2023). Impact of Green Banking Practices on . nternational Journal of Social Ecology and Sustainable Development, 1-19.
• Jannat, M. (2024, August 27). Greening Banking Practices. Retrieved from The Daily Star: https://www.thedailystar.net/supplements/sustainable-finance/news/greening-banking-practices-3687451
• Julia, T., & Kassim, S. (2020). Exploring green banking performance of Islamic banks vs conventional banks in Bangladesh based on Maqasid Shariah framework. Journal of Islamic Marketing, 11(3), 729-744.
• Julia, T., & Kassim, S. (2020). Exploring green banking performance of Islamic banks vs conventional banks in Bangladesh based on Maqasid Shariah framework. Journal of Islamic Marketing, 11(3), 729-744.
• Karim, R. (2020). Green Banking Practices in Bangladesh: Present Scenario and Future. Journal of Business Studies, 34-44.
• Khairunnessa, F., Vazquez-Brust, D. A., & Yakovleva, N. (2021). A review of the recent developments of green banking in Bangladesh. Sustainability, 13(4), 1904.
• Khatun, M. N., Sarker, M. N. I., & Mitra, S. (2021). Green banking and sustainable development in Bangladesh. Sustainability and climate change, 14(5), 262-271.
• Krisciukaityte, K., Balezentis, T., & Streimikiene, D. (2023). Linking financial performance and efficiency to sustainability in banking sector: A literature synthesis. Journal of Business Economics and Management, 24(3), 506-526.
• Kulińska-Sadłocha, E. (2024). The banking sector and the Sustainable Development Goals (SDGs). In The Role of Financial Markets in Achieving the Sustainable Development Goals (pp. 61-92). Edward Elgar Publishing.
• Kwilinski, A., Lyulyov, O., & Pimonenko, T. (2023). Greenfield investment as a catalyst of green economic growth. Energies, 16(5), 2372.
• Lång, L. (2022). Risk management of green corporate loans: A study of banks’ operational risk management relative to ESG rating and sustainability reporting as assessment tools.
• Lindsey, I. (2021). An overview of sustainable development goal 17. The Routledge handbook of sport and sustainable development, 429.
• Mamun, D. M. A. Al, & Rana, M. (2020). Green Banking Practices and Profitability of Commercial Banks in Bangladesh. IOSR Journal of Economics and Finance, 11(5), 10–14. https://doi.org/10.9790/5933-1105021014
• Martin, P., Elbeltagy, Z., Hasannudin, Z. A., & Abe, M. (2021). Factors affecting the environmental and social risk management of financial institutions in selected Asia-Pacific developing countries.
• Md. Hasanur Rahman, J. R. (2023). Green banking initiatives and sustainability: A comparative analysis. Elsevier Ltd, 1-12.
• Millat, K. M. (2013). Policy Guidelines for Green Banking. Dhaka: Bangladesh Bank.
• Millat, K. M., Chowdhury, R., & Singha, E. A. (2014). Green Banking in Bangladesh. Dhaka: Bangladesh Bank. Mosa. Layla Arzuman Banu, A. K. (2024). Banking Performance During the Global Financial Crisis:. International Journal of Economics, Finance and Management Sciences, 172-184.
• Moirangthem, N. S., & Nag, B. (2022). Measuring regional competitiveness on the basis of entrepreneurship, technological readiness and quality of institutions. Competitiveness Review: An International Business Journal, 32(1), 103-121.
• Nasir, N., & Ahmed, W. (2024). Green finance initiatives and their potential to drive sustainable development. In Climate change and finance: navigating the challenges and opportunities in capital markets (pp. 3-29). Cham: Springer Nature Switzerland.
• Nasrullah, A. M. (2021). Achieving sustainable development goals (SDGs): Challenges and preparation in Bangladesh. In Climate Resilience and Environmental Sustainability Approaches: Global Lessons and Local Challenges (pp. 379-403). Singapore: Springer Singapore.
• Paul, P. (2024, June 5). Retrieved from The Daily Star: https://www.thedailystar.net/supplements/world-environment-day-2024/news/the-impact-green-finance-bangladesh-charting-greener-future-3626916
• Putri, P. I., Rahayu K, N., Rahmayani, D., & Siregar, M. E. S. (2022). The Effect of Green Banking and Financial Performance on Banking Profitability. Quality - Access to Success, 23(191), 38–45. https://doi.org/10.47750/QAS/23.191.05
• Rahman, M. H., Rahman, J., Tanchangya, T., & Esquivias, M. A. (2023). Green banking initiatives and sustainability: A comparative analysis between Bangladesh and India. Research in Globalization, 7, 100184.
• Rajput, D. N., Arora, M. S., & Khanna, M. A. (2013). An Empirical Study of Impact of Environmental Performance on. International Journal of Business and Management Invention, 19-24.
• Rajuroy, A., & Emmanuel, M. (2025). The Role of Sustainable and Green Banking in Promoting Economic and Environmental Development in Bangladesh.
• Rana, M., Mamun, M. A. A., Islam, H., & Hossain, M. K. (2024). Exploring the impact of ESG practices on sustainable development goals achievement in South Asia. Review of Economics, 75(3), 249-274.
• Rana, M., Islam, H., Al Mamun, M. A., & Rekha, R. S. (2025). Impacts of bank loan performance, stability and risk factors on sustainable development goals: insights from South and Southeast Asia. Asia-Pacific Journal of Regional Science, 9(2), 449-478.
• Rizzello, A. (2022). Green Finance and SDGs: Emerging Trends in the Design of Green Investment Portfolios. Green Investing: Changing Paradigms and Future Directions, 85-105.
• Saleem, H., Khan, M. B., & Mahdavian, S. M. (2022). The role of green growth, green financing, and eco-friendly technology in achieving environmental quality: evidence from selected Asian economies. Environmental Science and Pollution Research, 29(38), 57720-57739.
• Stanberry, J., & Bragan Balda, J. (2024). A conceptual review of Sustainable Development Goal 17: Picturing politics, proximity and progress. Journal of Tropical Futures, 1(1), 110-139.
• Sarfraz, M., Ozturk, I., Yoo, S., Raza, M. A., & Han, H. (2023). Toward a new understanding of environmental and financial performance through corporate social responsibility, green innovation, and sustainable development. Humanities and Social Sciences Communications, 10(1), 1-17.
• Setyarini, A., Hamdi, Z., & Syahrin, M. (2025). Evaluation Of Risk Management Strategies In Profit Optimization In The Banking Sector. INTERNATIONAL JOURNAL OF FINANCIAL ECONOMICS, 2(5), 380-394.
• Ullah, M. A. (2020). Green banking in the way of sustainable development: an overview of practice and progress in Bangladesh. Can. J. Bus. Inf. Stud, 2(5), 105-119.
• Utama, J. N., Nirmala, T., Andrian, T., Herlina, N., & Ciptawaty, U. (2024). Analysis of the Effect of Green Banking and Financial Performance on. International Journal of Social Science, Education, Communication and Economics, 2(6), 1771-1776.
• Vangeri, A. K., Bathrinath, S., Anand, M. C. J., Shanmugathai, M., Meenatchi, N., & Boopathi, S. (2024). Green Supply Chain Management in Eco-Friendly Sustainable Manufacturing Industries. In Environmental Applications of Carbon-Based Materials (pp. 253-287). IGI Global.
• Vikas, N., Venegas, P., & Aiyer, S. (2022). Role of banks and other financial institutions in enhancing green digital finance. In Green digital finance and sustainable development goals (pp. 329-352). Singapore: Springer Nature Singapore.
• Wang, H. (2025). Green finance and foreign investment: catalysts for sustainable prosperity in emerging economies. Frontiers in Environmental Science, 13, 1561838.
• Walzer, M., Tamimi, A. H. A., & Firmansyah, A. (2024). Are Banking Financial Performances and Green Banking Disclosure Associated with Bank Profitability?. Accounting Student Research Journal, 3(1), 55-71.
• Xiao, Y., Lin, M., & Wang, L. (2024). Impact of green digital finance on sustainable development: evidence from China’s pilot zones. Financial Innovation, 10(1), 1-32.
• Xie, Y. (2024). Digital inclusive finance drives green innovation: Pathways and mechanisms for sustainable development. Journal of the Knowledge Economy, 1-40.
• Yan, C., Mao, Z., & Ho, K. C. (2022). Effect of green financial reform and innovation pilot zones on corporate investment efficiency. Energy Economics, 113, 106185.
• Zhang, X., Wang, Z., Zhong, X., Yang, S., & Siddik, A. B. (2022). Do green banking activities improve the banks’ environmental performance? The mediating effect of green financing. Sustainability, 14(2), 989.
• Zheng, G. W., Siddik, A. B., Masukujjaman, M., & Fatema, N. (2021). Factors affecting the sustainability performance of financial institutions in Bangladesh: the role of green finance. Sustainability, 13(18), 10165.
• Zhu, R., Islam, H., Rana, M., Rahman, K., Karim, R., Chakrobortty, T., & Rahman, M. M. (2025). Towards sustainable development: how resource depletion, emissions, and renewable energy shape progress in OECD nations. Air Quality, Atmosphere & Health, 1-22.
• The Business Standard. (2025, July 29). 10 banks, 3 NBFIs make it to latest BB sustainability rating list. The Business Standard. https://www.tbsnews.net/economy/banking/sustainability-rating-2023-brac-bank-city-bank-top-list-896206