Sustainable Banking and Shareholder Value: A Comparative Study of Green vs Conventional Banks in India.

Abstract

Examining the financial landscape of emerging economies, sustainable banking is the new reality, driven by tighter regulations, ESG disclosure requirements, and investors seeking banks that can weather economic downturns. Coming into this space in a hurry, “green banks” or “sustainable banks” are still being studied to see if they offer higher returns than traditional banks, and they are being referred to as the way of the future. The study examined the stock performances of 38 listed banks from 2020 to 2024 and compared the day-to-day performances of green and conventional banks. The returns of both types of banks were roughly the same, but the green banks showed consistently lower volatility and bounced back more quickly from economic slumps. A closer examination of the study also revealed that a bank’s profitability and level of debt were the primary determinants of its shareholder returns, but that sustainability was not a significant factor in forecasting returns. Additionally, the green banks had a soothing effect in calming the market, but it was not enough to transform the investment.