The impact of Green practices on Banks’ profitability

Abstract

The article empirically tests the relationship between “green banking” practices and banks’ profitability on the example of the five largest Kazakhstani banks. The authors built a multiple linear regression model with such independent variables as Time and Cashless payments as a proxy for green banking. The results found that pairwise correlations between Time and Return on Assets, and between Cashless Payments and Return on Assets, are high. However, the findings could not establish a strong positive relationship between “green banking” and profitability, since the coefficients were not statistically significant. This could be explained by model limitations and data unavailability. However, several studies (in the case of China, Bangladesh, and Kenya) could establish a positive correlation between green banking and financial performance. We believe further research could refine our model by including more observations or choosing other estimators for green banking