Green Finance: A New Paradigm for Sustainable Banking
DOI:
https://doi.org/10.66635/fbn4np43Keywords:
Green Finance, Sustainable Banking, Sustainable Entrepreneurship, Small and Medium Enterprises (SME)s, Emerging EconomiesAbstract
Green finance has emerged as a critical instrument in transforming traditional banking practices toward sustainability in response to escalating environmental challenges and climate change risks. This paper examines the evolving concept of green finance and its role in advancing sustainable banking, with a focus on the Indian context within emerging Asian economies. It highlights how financial institutions are increasingly integrating environmental, social, and governance (ESG) considerations into lending and investment decisions, while also supporting environmentally responsible economic activities. Using a descriptive and exploratory research design, the study analyzes secondary data from policy reports, institutional publications, and academic literature to assess the current status and impact of green finance initiatives. The findings indicate that green finance enhances environmental performance, institutional credibility, and long-term financial resilience, while also facilitating access to capital for sustainable enterprises, including small and medium enterprises (SMEs). However, its implementation is constrained by challenges such as regulatory ambiguity, high transition costs, limited technical expertise, and low awareness, particularly among smaller firms. The study underscores the role of banking institutions as key enablers of sustainable development and emphasizes the need for policy support, capacity building, and innovative financial instruments. It concludes that strengthening green finance frameworks can significantly contribute to sustainable economic growth and responsible financial intermediation in emerging economies.
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