The Impact of Green Banking Activities on Environmental Performance: A Youth-Driven Perception Study in Indonesian Financial Institutions

Green banking is a significant financial strategy for balancing environmental sustainability with economic progress. Banks can help address Indonesia’s environmental concerns by promoting sustainable behavior, financing green projects, and implementing environmentally friendly regulations. This study investigates how green banking practices affect perceived environmental performance and financial sustainability, with a particular emphasis on the involvement of young Indonesian bankers. A structured questionnaire was issued to 314 young bankers from various parts of Indonesia, using Likert-scale measures of three domains: banks’ perceived environmental performance, green banking activities, and sources of green finance. The findings show high perceived links between green banking operations and banks’ environmental performance, with green financing serving as a crucial mediator. Specific methods, such as paper reduction, internet banking, and supporting sustainable initiatives, were thought to improve bank performance. The findings underline the importance of younger generations in supporting and carrying out green activities, emphasizing their role in encouraging long-term change. Using Structural Equation Modelling (SEM), the study demonstrates that green finance improves perceived environmental performance and promotes sustainable banking practices. These findings emphasize the importance of incorporating green principles into banking strategy in order to achieve both financial and environmental sustainability in developing countries.