Impact of Green Credit on the Profitability of Nepalese Commercial Banks

Abstract

This study examines the impact of green credit on the profitability of Nepalese commercial banks. Profitability is the dependable variable. The independent variables are green credit volume, green credit policy, loan portfolio diversification, corporate social responsibility expenditure and green project performance. The primary source of data is used to assess the opinions of the respondents regarding the impact of green credit on the profitability of Nepalese commercial banks. The study is based on primary data of 136 respondents. To achieve the purpose of the study, structured questionnaire is prepared. The correlation coefficients and regression models are estimated to test the different factors affecting profitability of Nepalese commercial banks. The result shows that green credit volume has a positive impact on profitability. It means that higher the level of green credit volume, higher would be the profitability. Similarly, green credit policy has a positive impact on profitability. It indicates that better the green credit policy, higher would be the profitability. Likewise, loan portfolio diversification has a positive impact on profitability. It shows that higher loan portfolio diversification leads to an increase in the profitability. Further, corporate social responsibility expenditure has a positive impact on profitability. It reveals that higher the corporate social responsibility expenditure, higher would be profitability. Moreover, green project performance has a positive impact on profitability. It shows that better green project performance leads to the increase in the profitability