Factors Affecting the Sustainability Performance of Financial Institutions in Afghanistan: The Role of Green Finance

Abstract

The concept of sustainable development has gained priority in the financial systems of the global world, especially among the weak economies that are faced by environmental degradation, social vulnerability and economic instability as significant challenges. Green finance practices are expected to encourage sustainable development by financial institutions through environmental, social, and economic goals, which are integrated in green finance. This paper discusses the impacts of economic and environmental aspect of green finance on the sustainability performance of financial institutions in Afghanistan with the social aspect as a mediating factor. Data was collected using quantitative research design where 200 employees in the Afghan banking industry were been used by having a structured questionnaire based on validated measures used in previous studies. Data analysis was done in SPSS whereby reliability analysis, correlation analysis, regression analysis and mediation analysis were carried out. The findings show that the economic dimension and the environmental dimension of green finance have a positive and significant impact on the sustainability performance. Besides, these relationships are mediated by the social dimension to some extent. The results also add to the literature on green finance because it offers empirical evidence of a weak economy and has practical implications to policymakers and banking managers interested in enhancing sustainable finance practices in Afghanistan.