Linking Green Finance with Customer Trust and Brand Loyalty in the Banking Sector
Main Article Content
Abstract
In this study a correlation is analyzed between eco-friendly finance programs, consumer trust, and brand loyalty in the banking sphere. The significance of sustainable development is on the rise, and green finance, among others, such products as green loans and sustainable investments, is the most essential step for the environmental responsibility cause. The research is focused on customer trust generated by the initiatives, which is the main driver of brand loyalty. Furthermore, the research outlines the role of customer awareness and perceived bank reputation as a moderating influence in these relations. To reach its conclusions, the study employs a quantitative research design and selects bank customers as the sample. Then structural equation modeling (SEM) is used to test the different hypotheses put forward. The research is aimed at corroborating practical examples of how banks can use green finance for creating trust and developing a long-term customer base, being in line with sustainability goals. The results of the empirical study provide valuable implications to policy makers, banks, and environmental stakeholders for the future green finance adoption.
Article Details
Section
How to Cite
References
1. Aaker, D. A., & Keller, K. L. (2023). *Building strong brands: The role of customer loyalty in sustainable markets*. Journal of Marketing, 87(2), 45–60.
a. Adhikari, G. M., Sapkota, N., Parajuli, D., & Bhattarai, G. (2025). Impact of Green Banking Practices in Enhancing Customer Loyalty: Insights from Banking Sector Customers. Financial Markets, Institutions and Risks, 9(1), 195–215. https://doi.org/10.61093/fmir.9(1).195-215
2. Alejandrino, K. C., & Palma Samson, K. (2023). How does brand trust enhance satisfaction and loyalty of commercial banking consumers? Journal of Applied Business and Economics, 3(1).
3. Ali, R., Danish, R. Q., & Asrar-ul-Haq, M. (2022). Corporate social responsibility, green banking practices and customer loyalty: Mediating role of trust and satisfaction. Journal of Cleaner Production, 337, 130462.
4. American Psychological Association. (2022). *Ethical principles of psychologists and code of conduct*. APA.
5. Baron, R. M., & Kenny, D. A. (1986). The moderator–mediator distinction in social psychological research. Journal of Personality and Social Psychology, 51(6), 1173–1182.
6. Baumann, C., Elliott, G., & Hamin, H. (2011). Modelling customer loyalty in financial services: A hybrid of formative and reflective constructs. International Journal of Bank Marketing, 29(3), 247–267.
7. Chaudhuri, A., & Holbrook, M. B. (2001). The chain of effects from brand trust and brand affect to brand performance: The role of brand loyalty. Journal of Marketing, 65(2), 81–93.
8. Chen, Y. S., & Chang, C. H. (2013). Greenwash and green trust: The mediation effects of green consumer confusion and green perceived risk. Journal of Business Ethics, 114(3), 489–500.
9. Chen, Y., & Wang, L. (2020). *Green finance and consumer behavior: The role of perceived sustainability*. Journal of Sustainable Finance & Investment, 10(4), 321–339.
10. Connelly, B. L., Certo, S. T., Ireland, R. D., & Reutzel, C. R. (2011). Signaling theory: A review and assessment. Journal of Management, 37(1), 39–67. https://doi.org/10.1177/0149206310388419
11. Delmas, M. A., & Burbano, V. C. (2011). The drivers of greenwashing. California Management Review, 54(1), 64–87. https://doi.org/10.1525/cmr.2011.54.1.64
12. Fombrun, C., & Shanley, M. (1990). What's in a name? Reputation building and corporate strategy. Academy of Management Journal, 33(2), 233–258.
13. Freeman, R. E. (1984). Strategic management: A stakeholder approach. Boston: Pitman.
14. G20 Sustainable Finance Working Group. (2021). G20 Sustainable Finance Report.
15. Ganesan, S. (1994). Determinants of long-term orientation in buyer-seller relationships. Journal of Marketing, 58(2), 1–19. https://doi.org/10.2307/1252265
16. Ghosh, S. (2022). Green finance in India: Progress and prospects. Economic & Political Weekly, 57(3), 45–51.
17. Gianfrate, G., & Peri, M. (2019). The green advantage: exploring the convenience of issuing green bonds. Journal of Cleaner Production, 219, 127–135.
18. Gilchrist, D., Yu, J., & Zhong, R. (2021). The limits of green finance: a survey of literature in the context of green bonds and green loans. Sustainability, 13(2), 478.
19. Gour, K., & Agarwal, M. (2025). The mediating role of customer perceived ethicality in green banking’s impact on trust and loyalty. International Journal of Ethics and Systems. https://doi.org/10.1108/IJOES-03 2025 0133
20. Government of India. (2021). India’s Updated Nationally Determined Contribution to UNFCCC. Ministry of Environment, Forest and Climate Change.
21. Gupta, S., & Sharma, N. (2021). Green banking in India: Challenges and strategies. International Journal of Management Studies, 8(1), 101–114.
22. Hair, J. F., Black, W. C., Babin, B. J., & Anderson, R. E. (2022). *Multivariate data analysis* (9th ed.). Cengage Learning.
23. Hohne, N., et al. (2012). Mapping of Green Finance Delivered by IDFC Members. Case Studies Journal, 9(6).
24. International Capital Market Association (ICMA). (2021). Green Bond Principles: Voluntary Process Guidelines for Issuing Green Bonds. https://www.icmagroup.org/sustainable-finance/
25. José, L., et al. (2024). Green finance in the banking industry: a systematic literature review. Climate Change Journal.
26. Kline, R. B. (2023). *Principles and practice of structural equation modeling* (5th ed.). Guilford Press.
27. Kumar, R., & Sharma, S. (2024). *Sustainable banking: Exploring customer perceptions of green financial products*. International Journal of Bank Marketing, 42(1), 89–107.
28. Kumar, V., Rahman, Z., & Kazmi, A. A. (2023). Analyzing green banking services adoption: The role of trust, environmental concern and customer innovativeness. Sustainable Development, 31(1), 87–100.
29. Lee, J., & Kim, H. (2021). *Green finance and trust: A study of customer perceptions in banking*. Sustainability, 13(5), 2678.
30. Mirza, N., Afzal, A., Umar, M., & Skare, M. (2023). The impact of green lending on banking performance: evidence from SME credit portfolios in the BRIC. Economic Analysis & Policy, 77, 843–850.
31. Morgan, R. M., & Hunt, S. D. (1994). The commitment-trust theory of relationship marketing. Journal of Marketing, 58(3), 20–38.
32. Morgan, R. M., & Hunt, S. D. (2022). *The commitment-trust theory of relationship marketing*. Journal of Marketing, 86(3), 20–38.
33. Nguyen, N., Nguyen, H. M., & Dang, V. C. (2021). Banking green to earn customers' trust: The role of green banking practices, green image and green satisfaction. International Journal of Bank Marketing, 39(6), 919–941.
34. Nguyen, T. H., Simkin, L., & Canhoto, A. (2021). The dark side of digital personalization: An agenda for research and practice. Journal of Business Research, 122, 864–874. https://doi.org/10.1016/j.jbusres.2020.06.045
35. Nunnally, J. C., & Bernstein, I. H. (2021). *Psychometric theory* (4th ed.). McGraw-Hill.
36. Oliver, R. L. (1999). Whence consumer loyalty? Journal of Marketing, 63(Special Issue), 33–44.
37. Pérez, A., & del Bosque, I. R. (2015). Corporate social responsibility and customer loyalty: Exploring the role of identification, satisfaction and type of company. Journal of Services Marketing, 29(1), 15–25. https://doi.org/10.1108/JSM-10-2013-0272
38. Preacher, K. J., & Hayes, A. F. (2021). *Asymptotic and resampling strategies for assessing and comparing indirect effects in multiple mediator models*. Behavior Research Methods, 53(2), 345–360.
39. Rahbar, E., & Wahid, N. A. (2011). Investigation of green marketing tools' effect on consumers' purchase behavior. Business Strategy Series, 12(2), 73–83. https://doi.org/10.1108/17515631111114877
40. Reserve Bank of India. (2022). Report on Climate Risk and Sustainable Finance. https://www.rbi.org.in
41. Saini, R., & Mukherjee, A. (2023). Trust in green banks: Evidence from the Indian financial sector. Asia-Pacific Journal of Business Administration, 15(2), 159–179.
42. Saunders, M., Lewis, P., & Thornhill, A. (2023). *Research methods for business students* (9th ed.). Pearson.
43. Sharma, M., & Choubey, A. (2021). Green banking initiatives: a qualitative study on Indian banking sector. Environment, Development and Sustainability, 24, 293–319.
44. Sharma, R., & Singh, G. (2021). Green finance and its influence on customer trust: A survey in Indian banking. Environment, Development and Sustainability, 23(8), 12420–12438.
45. Sirdeshmukh, D., Singh, J., & Sabol, B. (2002). Consumer trust, value, and loyalty in relational exchanges. Journal of Marketing, 66(1), 15–37.
46. Smith, T., & Johnson, L. (2023). *Green banking and customer loyalty: The mediating role of trust*. Journal of Business Research, 156, 113–125.
47. Spence, M. (1973). Job market signaling. Quarterly Journal of Economics, 87(3), 355–374.
48. Sustainability—Special Issue: ESG Investing. (2024). Sustainability, 16(7), 2878.
49. Task Force on Climate-related Financial Disclosures (TCFD). (2017). Final Report: Recommendations of the Task Force on Climate-related Financial Disclosures. https://www.fsb-tcfd.org
50. UNEP Finance Initiative. (2021). Rethinking Impact to Finance the SDGs.
51. UNEP. (2016). Definitions and Concepts: Green Finance. United Nations Environment Programme. https://www.unep.org
52. Weber, O. (2010). Social banking: Products and services. In J. Scholtens (Ed.), Finance for a Better World (pp. 225–236). Springer. https://doi.org/10.1007/978-3-642-02110-0_13
53. Wikipedia. (2021). Equator Principles. Retrieved from Wikipedia.
54. Yadav, R., & Pathak, G. S. (2017). Determinants of consumers’ green purchase behavior in a developing nation: Applying and extending the theory of planned behavior. Ecological Economics, 134, 114–122.
55. Zhang, B., & Wang, Z. (2022). Green finance, ESG investment, and low-carbon transition: A literature review. Journal of Cleaner Production, 354, 131632.