From Linear to Circular: Barriers to Sustainable Transition in the Saudi Banking Sector

This study investigates the barriers in adopting the Circular Economy (CE) in Saudi Banking under Vision 2030 and using the Resource-Based View and stakeholder theory. This study examined how customer engagement, process innovation, and dynamic capabilities limit the implementation of CE. A quantitative, cross-sectional survey collected 418 responses from bank employees in Riyadh and was collected from January to March 2024. A 29-item Likert scale was analyzed with SmartPLS 4; measurement quality was strong, and confirmatory factor analysis confirmed construct validity. Results highlight the main barriers as customer resistance regulatory constraints and lack of adequate employee training. The construct is highly interconnected (r = 0.758), showing that improvements in customer engagement and process innovation strengthen dynamic capabilities. The study provides practical guidance for banks and policymakers on designing circular finance products, targeted training, and supportive regulations to accelerate the CE transition and achieve measurable sustainability outcomes in financial sectors, aligning with SDG 3, good health and well-being, and SDG 7, affordable and clean energy.