Green Banking in Bangladesh: A Comprehensive Analytical Framework for Sustainable Finance

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🔬研究者:Provides a comprehensive dataset on green banking in a leading developing economy, useful for comparative sustainable finance research.

🏢実務担当者:Highlights mandatory green finance targets and implementation challenges, offering lessons for banks in emerging markets to design green lending programs.

🏛政策担当者:Demonstrates the impact of mandatory green finance quotas and refinancing schemes, informing regulatory design for transition finance in developing countries.

In this paper, a complete analytical assessment on green banking practices in Bangladesh is compiled based on the development of relevant regulatory frameworks with two milestones the inaugural Green Banking Policy Guidelines 2011 and most recent Sustainable Finance Policy onward from 2020. Bangladesh is one of the most climate vulnerable countries around the world, and it encounters huge environmental impact challenges that require unique responses in the financial sector. Using evidence from Bangladesh Bank quarterly reports, bank-level financial statements, and empirical studies on the effectiveness of green banking policies to promote sustainable financial practices, this study synthesizes information across several data sources. The study finds that Bangladesh has one of the most extensive green banking systems across the developing world, with a mandatory minimum target on green finance at 5% of total term loan disbursement and sustainable finance targets set at 20% of total loan disbursement. It is observed from quarterly data available for the period 2023-2024, that green finance disbursement registered tremendous growth at BDT 86.46 billion in Q4 2024, up 27.2% quarter-on-quarter (QoQ). Nevertheless, there still exist significant differences in green finance ratio between private commercial banks (green finance ratio=20.78%) and state-owned commercial banks (green finance ratio = 4.69%), indicating the asymmetry of implementation effect. Among high pressing challenges, it spotlights a lack of strong enforcement around regulations (4.3/5 severity score); limited demand for green projects (4.2/5); capital markets that are still developing (4.1/5) as well as constraints to capacity when it comes to assessment of risks related to the environment (4.0/5). The study finds that the effects of green finance policies on net interest margins are positive via concessional refinancing schemes through Bangladesh Bank while it has a polarised effect on return on assets mainly due to compliance costs associated with environmental risks which makes as with profitable in the short run. Our research builds on and integrates separate streams of the sustainable finance literature by documenting the development, drivers, adoption and performance impacts in one of the leading developing economy contexts to date. The results provide practical recommendations for policymakers, banking regulators, and financial institutions that aim to facilitate the transition toward greener banking in emerging markets.

• semanticscholar https://ballisticsjournal.com/index.php/journal/article/download/495/341first seen 2026-07-04 05:33:23