Social Responsibility Towards the Environment: Green Banking and a Comparison of its Application in Domestic and Foreign Banks

Abstract

In light of growing global concerns regarding climate change and environmental degradation, banking, as a vital artery of the economy, plays a significant role in guiding sustainable policies. This study aims to investigate the current status of green banking in Iran, particularly in the National Bank of Iran, and to compare it with global standards. In the first phase, a comparative-analytical approach was employed to examine the experiences of domestic banks (Agricultural, Quds, and Commercial) and international banks (the Reserve Banks of India, Bangladesh, and Pakistan). The findings revealed that international banks have more experience in the field of green banking and offer a greater variety of financial tools to support green projects. In the next phase, time-series econometric methods, particularly the Autoregressive Distributed Lag (ARDL) model, were used to analyze the impact of foreign bank investments in clean energy, bank loans in this sector, green Gross Domestic Product (GDP), and air pollution emissions on the level of environmental degradation. After confirming the cointegration of variables at levels I(0) and I(1) using the Augmented Dickey-Fuller (ADF) and Phillips-Perron (PP) tests, the Engle-Granger cointegration test and the Bounds test were applied to identify long-term relationships. The results showed that there is a stable long-term relationship among the studied variables, and the model is capable of explaining both statistically significant short-term and long-term relationships between them. Ultimately, these findings can serve as a foundation for economic, banking, and environmental policy-making to promote green banking in Iran