Building Sustainable Futures: Quantifying the Impact of Sustainable Banking Practices, Green Finance, and Innovation on Sustainability Performance

Abstract

Purpose - The evaluation of sustainable banking practices (SBP) on the sustainability performance (SP) of banks receives limited empirical research scrutiny, especially for developing economic sectors like India. The study fills this research gap by examining the serial mediation effect of green finance (GF) and financial innovation (FI) in the relationship between SPs and banks' sustainability performance. Design/methodology/approach - The paper utilizes resource-based view theory (RBV) to show how GF works in sequence with FI to affect SBPs toward improved SP. The researchers collected primary data by distributing structured questionnaires to bank professionals chosen by purposive sampling. The relationships between variables were tested using Partial Least Squares-Structural Equation Modeling (PLS-SEM) with SmartPLS 4.0 software. Findings - The research shows that SBP directly influences all measured aspects, including GF, FI, and banks’ sustainability performance (SP). The data shows that GF positively influences FI as well as SP, and FI plays a direct role in enhancing SP. The results confirm how GF and FI are serial mediators between SBPs and SP measurement outcomes. Participating banks in sustainable banking operations develop GF and FI in parallel setups to boost environmental sustainability. Originality/value– The study makes progress in sustainable banking and environmental sustainability research by analyzing how SBPs relate to FI and GF to help improve SP. Additionally, the current research operates as the initial study to investigate GF and FI acting as serial mediators between SBPs and SP within India's banking sector while providing empirical support for RBV theory. The research delivers practical conclusions that managers, policymakers, and researchers can use to develop sustainability by implementing SBPs and GF together with FI adoption.