Green Banking Final

Arab Academy for Science, Technology
and Maritime Transport

Business research
BUSSINESS RESEARCH
AWARNESS OF GREEN BANKING, CHALLANBES AND

SUSTAINABIITY IN EGYPT
SUBMIITED : by
Group 5
Rania Tarek 20122195
Aya Hamdy 19121745
Aya Salem Towelaa 20220912
Kamel Hassan 20122076
Abdulrahman Yahia 20221563
Ahmed Gamal Khalil 20221797
Sohail Mohamed 20221666
Under the supervision of:
Prof. Mona Kadry

Dean Graduate School of Business
Mar 2023
1
BANKS AND GREEN TRANSITION IN EGYPT
Contents
I. Abstract......................................................................................3
II. Introduction……………...............................................................4-5
III. ResearchPROBLRM...................................................................5-6
IV. ResearchOBJECTIVe……...............................................................6
V. ThesisQuestion............................................................................7
VI. OVERVIEWOFGREENBANKING….……………………........................7-11
VII. LITERATUREREVIE………………………………………………………………..11-16
VIII. HYPOTHESESDEVELOPMENT……………………………………………………16
IX. RESEARCHMETHADOLOGY………………………………………17-21
X. RESULTSANDDISCUSSION……………………………………………21-25
XI. GLOBAL CASE STUDY ……………………………………………………………25-26
XII. THE CASE STUDY OF SPAIN AND BANCE SANTANDER …………26-30
XIII. THE CASE STUDY OF BANGLdesh and prime bank ………………31-33
XIV. The case study of Egypt ………………………………………………33-42
XV. Discussion of finding ……………………………………………………43-49
XVI. Conclusion …………………………………………………………………50-52
XVII. Reference …………………………………………………………………..52.54
2
Abstract :
This paper provides an overview of green banking and the role of banks in supporting
the transition to a green economy, shedding light on Egyptian banks' efforts to support
Egypt's plan to transition to a green economy. it also illustrates what banks should do
to support the green economy in Egypt in general and green banking in specific by
Investigating the impact of internet banking implementation as a green banking
practice on Egyptian bank profitability. Furthermore, the study is to distinguish
between the impact of basic and advanced transactional internet banking on bank
profitability. Over two time periods, 2009-2018 and 2014-2018, a total of 20 Egyptian
banks were sampled. Nonparametric and random effects generalized least squares
(GLS) regression analysis were used, with answering to the question "Are the support
mechanisms provided by Egyptian banks is sufficient to achieve Egypt's ambitious
vision towards green economy?", It also makes recommendations for banks to
increase the size of their climate change finance portfolios, by showing that advanced
transactional internet banking, as a green banking practice that contributes to Egypt's
SDS, has a significant impact on bank profitability after three or more years of
implementation.
The findings of this study are consistent with those of other comparable studies
conducted in developed markets.
3
1-Introduction
4
Online banking has become a standard service offered by the majority
of institutions globally. It may provide banks with a variety of options,
ranging from cost savings to enhanced access to a broad consumer base.
Furthermore, internet banking has been described as a concept that contributes to the reduction
of a bank's carbon footprint by decreasing waste from traditional the Egyptian sustainable
development strategy (SDS), an integral part of Egypt's 2030 vision representing a roadmap to
economic growth by developing sustainable practises by Roy, Sarker, and Parvez (2015), and
Lalon (2015). The Egyptian banking system may be changed to be more sustainable by
embracing online banking.
Internet banking was established in Egypt in 2014, at a period when transactional online banking
systems had limited applicability. Customers use modern online banking systems to accomplish
financial activities such as money transfers and bill payments. Egypt's revolutionary advances in
information and communications technology, as well as the continuing of Egyptian SDS
advancement, will drive the banking and financial industry to adopt online banking. The first
sustainable practise that most institutions will be obliged to embrace is transactional internet
banking.
Furthermore, health and safety concerns expressed as a result of the recent COVID-19 outbreak
are predicted to favourably impact the supply and use of online banking in Egypt.
Interestingly, no research has been conducted to date that has quantitatively investigated the
influence of online banking use on bank profitability in Egypt. As a result, bank managers and
authorities in this nation may be hesitant to deploy or improve internet banking in the near
future, because its impacts on bank profitability have yet to be quantified. As a result, the current
study quantifies the impact of internet banking deployment on bank profitability in Egypt and
makes suggestions to bank management and government authorities. This, we feel, is an
important step in assessing the future impact of online banking deployment on the banking
industry.
Past research has found that banks incur significant expenditures and have poor utilisation rates
during the first year of introducing transactional online banking systems. So, transactional online
banking initially has a negative impact on bank profitability but steadily improves over time
(Rega, 2017). As a result, the current study analyses the influence of internet banking
implementation time on bank profitability.
Furthermore, prior studies assessing the influence of internet banking on bank profitability in
developing areas, like those in developed markets, did not take into account the complexity of
internet banking services supplied. This might explain why internet banking has such a minor
influence on bank profitability in developing economies where transactional online banking is
limited. Banks in underdeveloped nations typically offer non-transactional online banking
services such as balance enquiries and bank statement downloads. Basic information-only bank
services do not provide the bank with direct interest revenue or non-interest income (fees and
commissions on online transactional services). As a result, the impact of introducing basic
online banking on bank profitability is likely to be indistinguishable.
As a result, research looking into the influence of internet banking on bank profitability in Egypt
should focus on transactional online banking, which is projected to improve bank procedures
and save energy from operating traditional branches.
2. research problem
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Rapid population growth has negative consequences for economic
growth, environmental services, and social welfare, and there has been
insufficient action to combat it; a new governance system must be implemented to
limit harmful economic and social development on the sustainability of the eco-system.
According to the United Nations Department of Economic and Social Affairs (UNDESA), the
global population is expected to reach 9.7 billion by 2050, with Africa accounting for more than
half of the growth (UNDESA Report, 2015). Egypt, as part of Africa, faces a growing
population that demands more than the country's resources can provide. The increase in
population causes an overabundance of demands on natural resources, economic development,
and production required to meet basic human needs. The increase in population causes an
overabundance of demands on natural resources, economic development, and production
required to meet people's basic needs (Caradonna, 2014; Ghanem, 2016). The increased level of
production, combined with a lack of environmental and sustainability awareness, has resulted in
the country ranking 31st globally in terms of Green House Gases (GHG) emissions and being
one of the top-level countries in terms of growth in Carbon Di-oxide (CO2) emissions. Although
Egypt's overall contribution to GHG emissions is small, the country is vulnerable to human-
caused climate change (Ghanem, 2016). As a result, Egypt is particularly vulnerable to negative
environmental consequences (Saber, 2009) and accelerated depletion of its natural capital
(Ramzy, 2013).
Climate change poses a major threat to the world and Egypt, with an average temperature
increase of 1 degree Celsius and a 0.5-meter rise in sea level. With a one-meter rise in sea level
flooding 11% of the Delta area and displacing 10.5% of the population, Port Said is one of the
most vulnerable cities. International platforms and local governments are addressing the issue's
urgency.
Egypt has begun to priorities the green economy as an important and critical component of the
country's overall development plans. This can be accomplished through the implementation of
numerous projects that are in line with the State's economic and environmental priorities;
where the sustainable development strategy, "Egypt's Vision 2030," Egypt’s 2030 vision
representing a roadmap to economic growth by developing sustainable practices. By adopting
internet banking, the Egyptian banking sector can be reshaped to be more sustainable.
Egypt is taking significant steps to accelerate the transition to a green economy, with the
Ministry of Finance issuing Egypt's and the MENA region's first sovereign green bonds. The
bonds provide an innovative funding vehicle for Egypt's environmentally friendly and green
projects such as clean transportation, renewable energy, energy efficiency, pollution reduction
and control, sustainable water and wastewater management, and climate change adaptation ,
Green economy projects account for 15% of the state's investment plan in fiscal year 2020-
2021, with the government aiming for 30% of green economy projects in fiscal year 2021-2022,
with the percentage reaching around 50% by 2024. (Daily news). After the Ministry of
Electricity and Renewable Energy updated Egypt's energy strategy to include green hydrogen,
Egypt began entering the green hydrogen production market for power generation, aiming to
be among the first countries in the world to rely on this type of energy, and it also plans to
export. Egypt's efforts alone will not be sufficient to meet the country's aspirations outlined in
this updated NDC to contribute to global climate change. GHG emission reduction targets .
Therefore Article 9 of the Paris Agreement, which states that developed parties shall provide
support to developing countries, should be enacted. The required finance could be disbursed
through international and regional development partners, funds, and investors in multiple
types of financial modalities and channels, such as blended finance, green bonds, and grants.
6
Green economy initiatives Banks play an important role in financing
major environmental policy shifts because of their unique position in
facilitating capital flows through lending, investment, and advisory roles, as well as the
financing of innovative technologies critical to development. They are capitalizing on their
unique market position because they have extensive market knowledge and experience in all
economic sectors.
Internet banking was introduced in Egypt in 2014, at a time when transactional internet
banking systems had limited applications. Customers use advanced internet banking systems to
conduct financial transactions such as money transfers and bill payments. Egypt's revolutionary
advances in information and communications technology, as well as the continuation of
Egyptian SDS progress, will drive the banking and financial industry to adopt internet banking.
The first sustainable practise that most banks will be required to implement is transactional
internet banking.
Furthermore, health and safety concerns raised by the recent COVID-19 pandemic are
expected to positively impact internet banking delivery and usage in Egypt.
Previous research has found that banks incur high costs and have low usage rates during the
first year of implementing transactional internet banking systems. Thus, transactional
internet banking initially has a negative impact on bank profitability but gradually improves
over time (Rega, 2017). As a result, the current study analyses the effect of internet banking
implementation time on bank profitability , This could explain why internet banking has such a
minor impact on bank profitability in developing markets where transactional internet banking
is limited. Banks in developing countries typically offer non-transactional internet banking
services such as balance inquiries and bank statement downloads. Basic information-only bank
services do not provide the bank with direct interest income or non-interest income (fees and
commissions on internet transactional services) , Thus, the impact of implementing the basic
internet banking service on bank profitability is likely to be indistinguishable. Consequently,
studies investigating the impact of internet banking on bank profitability in Egypt should resort
to transactional internet banking, which is expected to positively affect bank profitability.
3- Research Objective
The goal of this research is to give Egypt, the country under investigation, with an
alternative governance framework for enforcing sustainability and limiting negative
social and environmental repercussions through the banking industry. This is based on
a review of the literature on implementing social and environmental sustainability in
the banking sector on a global and Egyptian scale. In several nations throughout the
world, the case of social and environmental risk management in banks has shown to be
beneficial. As a result, this study examines the feasibility of replicating and
mainstreaming the technique across the industry in Egypt. The viability is dependent on
the good effects of incorporating sustainability into banking practices , As such, the
research seeks to test the hypothesis of using the Ecological Modernization theory, as
mentioned in the methodology chapter, and determining the outcomes from the
bank's perspective. As such, the primary goal is to estimate the advantages of adoption
in order to evaluate implementation options based on the following criteria:
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1.The financial benefits (the impact of internet banking on
bank profitability in Egypt, quantifying the impact of the
implementation period and considering previous findings.) of risk and performance
2. The non-financial advantages of using the system in the bank
3. An efficient technique of integrating the process throughout the sector
4. Egyptian banking sector can be more sustainable by adopting internet banking.
The financial advantages will be assessed using a cost-benefit analysis of system
deployment in banks and improved risk operations. Non-financial advantages will be
evaluated based on branding, reputation, and investor image. The policy component
will be based on the banks' views on Egypt mainstreaming the project, as well as the
necessary backing from the Egyptian government (GoE).
The research findings will provide a strong foundation for the case to mainstream sustainability
throughout the banking industry in order to support sustainable growth in other businesses.
This is because the banking sector has a significant impact on other economic sectors due to its
critical role in providing access to financing and liquidity. By doing so, the impact and reach
would be increased, especially considering that the economic function is a major contributor to
the deterioration of natural capital, given its increasing output to fulfil consumer demand.
Based on the research findings, a policy suggestion with a governance structure will be
developed.
4. Thesis Question
The latter leads to questions that this study aims to answer: RQ1: Does internet banking, basic
or advanced, have an impact on bank profitability in Egypt? RQ2: Does the time of
implementing internet banking, basic or advanced, have an impact on bank profitability in
Egypt? , RQ3: what banks should do to support the green economy in Egypt in general
and green banking in specific ? RQ4: "Are the support mechanisms provided by Egyptian
banks is sufficient to achieve Egypt's ambitious vision towards green economy?
5. OVERVIEW OF GREEN BANKING
There is no universally accepted definition of green banking, and it varies greatly
between countries, but some researchers and organizations have attempted to develop
their own.
To clarify the scope and definitions, UNEP1 provided a good comparison of respective
definitions of green vs. sustainable vs. socioenvironmental (UNEP, 2016), as shown in
Figure:
UN Environment
Programme, 2016.
• According to the
UNEP(The United
Nations Environment
Programmed is the
global authority that
8
sets the environmental agenda, promotes the coherent
implementation of the environmental dimension of sustainable
development within the UN system and serves as an authoritative advocate for the global
environment , sustainable finance includes environmental, social, governance, and
economic aspects.)
• Climate finance is a subset of environmental (green) finance, which includes climate
finance but excludes social and economic aspects.
As a result, sustainable finance is the broadest term, encompassing all financing
activities that contribute to long-term development.
The figure below provides a broad, non-exhaustive outline of key categories included most
commonly in lists of green sectors.
The investment required to address today's sustainability challenges is twofold: it should

"finance the green," that is, invest in environmentally friendly solutions, as well as
"green the finance" by reorienting the financial system. According to the International
Energy Agency, an estimated USD 53 trillion should be invested in the global energy
sector by 2035 to prevent life-threatening climate change (ISO,2021).
As a result, it is critical to define what constitutes green, as a lack of common definitions
makes it difficult for businesses, investors, and banks to clearly understand the impact of
their decisions.
It is also critical to shed light on innovative financing instruments that can be used to
scale up sustainable finance and climate finance. A variety of funding mechanisms have
been used around the world to raise the necessary funds. Blended finance, green bonds,
debt for climate swaps, and results-based financing are examples of these.
 The use of public funds to catalyse or crowd in private investment in climate-related
activities is known as blended finance. Private investors in climate-related projects
perceive a lack of profitable opportunities, because responding to climate change
9
needs has long been perceived as a public good with no
market returns. When it comes to climate change-related
projects, there is a lack of awareness of the possibility of profitable PPP (UNDP 2018b).
 Green bonds are debt financing instruments that can be issued by public entities at the
national, regional, and multinational levels, as well as private corporations. Their
proceeds are specifically tied to financing green investment and socially focused
activities, in accordance with a clear set of rules that are part of the bond issuance.
Green bonds are typically issued for environmentally friendly projects, such as those
dealing with climate change mitigation and/or adaptation, such as energy, low-carbon
buildings, and transportation.
 Debt for Nature Swaps (DNSs) are debt-for-equity swaps in which the utilised funds are
used for local conservation efforts. The proceeds are then used to fund weather
patterns activities in the debtor countries.
 RBF is a less common financing tool in which payments are made upon delivery of a
pre-defined and verified output. RBF is appropriate for donor agencies that want to
provide financing support to public sector projects and plan to disburse concessional
finance based on the achievement of specific outcomes. RBF can be used with private
sector financing by linking investor returns to project performance, aligning profit
incentives with non-financial outcomes such as climate mitigation or adaptation goals.
RBF has been used successfully in Egypt by the World Bank to promote industrial
compliance with environmental legislation (ESCWA 2019)
- EGYPT’S NATIONAL POLICY FRAMEWORK AND SUSTAINABLE DEVELOPMENT
Egypt is paving the way forward by developing the national Sustainable Development Strategy:
Egypt's Vision 2030, based on the embodiment of the new constitutional spirit, with welfare
and prosperity as the major goals, achieved through sustainable development, social justice,
and balanced geographical and social growth. This strategy aims to meet the need for a unified,
long-term political, economic, social, and environmentally conscious sustainability vision, as
well as to serve as a foundation for short- and medium-term development plans at the
national, local, and sectoral levels, in order to meet Egyptian citizens' ambitions.
Egypt is forging ahead by developing the national Greener Growth Strategy: Egypt's Vision
2030, which is based on the embodiment of the new constitution was adopted spirit and aims
to achieve welfare and prosperity through sustainability, social justice, and balanced
geographical and social growth. In order to meet Egyptian citizens' ambitions, this strategy
aims to fulfill the need for a unified, deep protracted, economic, social, and environmentally
conscious build sustainable, as well as to serve as a foundation for short- and medium-term
expansion plans at the national, local, and essential part of the overall.
According to the Sustainable

Development Strategy:
Egypt Vision 2030, “By 2030,
the new Egypt will achieve a
competitive, balanced,
diversified and knowledge-
based economy,
characterized by justice,
social integration and
participation, with a
balanced and diversified
ecosystem, benefiting from 10
its strategic location and BANKS AND GREEN TRANSITION IN EGYPT
human capital to achieve
sustainable development for
The strategy also states that by 2030 Egypt will be among the top
thirty countries in terms of: (i) the size of the economy; (ii) Market
competitiveness; (iii) Human development; (iv) Quality of life; and (v) Anti-corruption.
F
i
g
u
r
e
2
il
l
u
s
t
r
a
t
es the SDS's ten pillars organized around the
three main aspects of sustainable
development. It should be noted that these
ten pillars are integrated and cross-cutting
rather than independent. Furthermore, the
overarching framework is foreign policy,
national defense, and government policy.
The "Sustainable Development Method:
.Egypt Vision 2030" has nine main pillars
11
It aims for inclusive, stable growth and incorporates the three dimensions of sustainable
:development
 Economic dimensions include economic development, energy, knowledge, technology, and

science and research, as well as government transparency and efficiency
 Social dimensions include social justice, health, education, and culture
 Dimension of the environment: urban development and the environment .
LITERATURE REVIEW .
Green Finance and Responsible Banking
Many institutions have provided various definitions to green finance throughout the years as
banks grew to accept the notion more readily. Sustainable Finance, as defined by the IFC, is the
supply of financial capital and risk management solutions to firms that support or do not impair
economic success, environmental protection, and social justice (Conley and Williams, 2011).
The UNEP, on the other hand, defines Green Economy, a model term, as "an economy that
improves human well-being and social fairness while considerably decreasing environmental
. hazards and ecological scarcity" (Ramzy, 2013)
The launch of the 'Statement by Banks on the Environment and Sustainable Development' as
the UNEP Finance Initiative in 1992 was a crucial step in embedding the notion of sustainability
with financial institutions (Bettignies Lépineux, 2009; Weber, 2005). This statement is a
declaration by its signatories of proactive collaboration to work on common environmental
goals and to urge financial institutions to offer services and products to enhance environmental
. conservation (Weber, 2005)
12
When the 'Dow Jones Sustainability Group Index' was created in
September 1999, there was a significant signal that sustainability had been
mainstreamed in the financial industry (Bettignies & Lépineux, 2009). The index's goal
was to create a platform for measuring the financial performance of the world's
greatest sustainability-driven enterprises (Anderson and Anderson, 2009). According to
the research, banks' attitudes on sustainability have shifted from resistance to
acceptance. Mengze and Wei describe how this transformation occurs through four
stages of maturation: defensive, preventative, offensive, and sustained (2015). During
the defensive phase, banks would consider sustainability to be a financial burden on
their operations. During the preventative phase, the bank is mainly concerned with
internal operations and performance. The attacking phase has begun.
Before sustainability became a popular idea, one facet of sustainability, Corporate
Social Responsibility (CSR), was a contentious debate addressing firms' demonstration
of good conduct (Carroll and Shabanna, 2010). CSR is described as a company's actions
that benefit the environment.
Promotion of social good beyond the firm's immediate interests, above and beyond
compliance with established social and environmental standards (Scholtens and Dam,
2007). One of the prominent economists who opposes the notion, Milton Friedman,
and other CSR opponents say that social responsibility dilutes the core goals of
business.
They explain that it distracts corporations from the only aim for which they are equipped which
is profit maximization and it causes them to be less competitive in the global market •Financial
ins5tu5ons (FIs) should finance posi5ve impact businesses that contribute to one or more of
the three pillars of sustainability (Social, Economic, or Environmental) mi5ga5ng risks and harm
13
in these aspects Principle 1 •FIs should develop adequate processes,
methodologies and tools to iden5fy and monitor posi5ve impact
ac5vi5es to be financed or invested in Principle 2 •FIs should provide transparency and
disclosure on ac5vi5es finances, the processes to determine eligibility, monitor, and verify
impacts Principle 3 •The assessment of the posi5ve impact finance delivered by en55es should
be based on the actual impact achieved Principle 4 Table 1 (“Principles for Positive Impact
Finance – United Nations Environment – Finance Initiative,” 2017) 19 (Friedman, 1970; Carroll
and Shabana, 2010). However, the modern literature shows that sustainability and finance are
shifting from the perception of sustainability as a constraint to profit generation, towards a
vision where financial markets can promote sustainability given its deep-rooted linkages with
the economy (Zeidan, Boechat and Fleury, 2014). It became distinct that sustainability in
general can co-exist with profit maximizing behavior in equilibrium. This is achieved when a
non-market value is created for certain stakeholders that are wiling to bear the costs of
sustainability adoption (Scholtens and Dam, 2007).
The effect of internet banking on banks performance in both developed and

emerging economies
The growing global acceptance of the Internet as a delivery channel for banking
products and services provides banks with new profit opportunities. Internet banking
can help banks actually realise economies of scale by increasing usage and lowering
costs. Furthermore, internet banking serves as a high-convenience delivery channel,
.which may entice some customers to pay a fee to use it
Furthermore, internet banking enables banks to personalise and diversify their product
offerings for their customers, increasing profit potential (DeYoung, Lang, & Nolle,
2007). Meanwhile, Marin (2013) proposed that standardising processes from
transactional internet banking can reduce costs and provide marketing benefits such as
increased access to clients over the Internet and the ability to conduct detailed market
. research using trends and online user data
A large number of studies have been conducted to investigate the impact of electronic
banking adoption on bank financial performance, particularly in developed markets.
The most recent studies on internet banking in developed markets focused on
countries in Europe. According to studies conducted in various European countries,
banks that use advanced internet banking experience gain benefits such as lower costs
(Cocco, Pinna, & Marchesi, 2017) and access to more users (Angelakopoulos & Mihiotis,
2011) .
Meanwhile, other studies on multiple European banks posited that the significant positive
impact of internet banking on bank profitability is evident after some time of implementation
(Rega, 2017).
Adoption of transaction processing internet banking necessitates a steady decrease in

overhead costs (e.g., staff and marketing expenses). However, the impact of
transactional internet banking adoption on the bank's financial performance takes time
14
to emerge. As a result, during the first year of successful
execution, internet banking reduces bank profitability.
For example, Hernando and Nieto (2007) demonstrated, using a sample of 72
commercial banks operating in Spain from 1994 to 2002, that significant cost decline
translates into an increase in bank revenue growth after one and a half years in terms
of return on assets and three years in relation to the equity (ROE) .
These findings in European countries support DeYoung et al. (2007)'s argument that
traditional US banks using internet banking as a supplement to their services may incur
higher costs at first.
The primary reason is the significant increase in wages for skilled labour required to run
a more advanced and powerful delivery system. As a result, DeYoung et al. (2007)
demonstrated that the positive impact of internet banking adoption on the bank's
financial performance emerges gradually and becomes significant two to three years
after the first wave of US banks adopt transactional banking websites in the late 1990s.
Furthermore, Yang, Li, Ma, and Chen (2018) found that the relationship between e-
banking and bank profitability is positive in the Chinese context, supporting previous
findings in developed markets.
Alternatively, the results of studies that looked at the impact of online payment
integration on bank profitability in developing markets were mixed. Angelakopoulos
and Mihiotis (2011), for example, surveyed 17 Greek banks by sending a questionnaire
to bank employees and customers. Financial institutions stated that internet banking
has enabled their banks to attract more customers in previously inaccessible areas,
whereas users stated that internet banking was attractive because of its simplicity and
constant availability of services (Angelakopoulos & Mihiotis, 2011). Furthermore, Dinh,
Le, and Le (2015) found that internet banking has a low positive impact on bank
profitability, with a lag time of more than three years, using a sample of 20 Vietnamese
banks. They also showed how this lag could be caused.
Other studies of developing countries, such as India (Malhotra & Singh, 2009), Jordan
(Khrawish & Al-Sa'di, 2011), Turkey (Onay & Ozsoz, 2013), and other Asian countries
(Hosein, 2013), concluded that internet banking has no significant effect on financial
profitability. Furthermore, Gutu (2014) demonstrated in Romania that the impact of
electronic wealth management on bank profitability is negative. These findings can be
caused by low usage rates and customers' concerns about data security (Gutu, 2014;
Khrawish & Al-Sa'di, 2011).
Malhotra and Singh (2009), using Indian banks as their study sample, also stated that
trying to implement and maintaining internet banking resulted in high costs.
Furthermore, Dinh et al.
(2015) and Gutu (2014) argued that the positive impact of internet banking adoption on bank
profitability is clearer in developed countries than in developing ones due to the weaker source
of data, level of technology, and high internet infrastructure costs in developing countries.
15
This paper proposes another explanation for the minor positive
impact of internet banking implementation on bank profitability in
developing markets. This rationale is attributed to developing countries' low utilisation
of transactional versus basic internet banking.
With the continuous advancement of information and technology, internet banking
adoption in developed countries can be traced back to the late 1990s in the United
States (Furst, Lang, & Nolle, 2002). Meanwhile, developing economies have a low level
of technological information and communication infrastructure, a relatively late
development of electronic banking, and declining customer usage rates of transactional
web-based banking services (Dinh et al., 2015; Yadav, Chauhan, & Pathak, 2015), As a
result, banks in developed markets, particularly in Europe and the United States, have
adopted transactional internet banking in addition to traditional channels of
distribution to date. Furthermore, developed markets have internet-only banks that
provide their customers with transactional services solely via the internet. However,
most developing countries are still in the early stages of developing internet banking,
particularly transactional e-banking (Yadav et al., 2015). Banks in growing markets
provide their customers with information-only websites rather than transactional
internet banking services. As a result, transactional internet banking is not as widely
used in emerging markets as it is in developed markets.
Offering internet banking services that do not include transactional internet banking
features (such as balance transfers and deposit and loan control) is not expected to
improve bank profitability. Adopting transactional internet banking services, on the
other hand, enables banks to charge higher monthly service fees and cross-sell
additional transaction processing fee-based services via their website. According to
DeYoung et al. (2007), who studied the impact of transactional e-banking on the
profitability of 424 US banks, "the added convenience of transactional online banking
led some bank depositors to purchase additional fee-based services and to willingly pay
extra for the services they originally purchased at bank branches" (p. 1035). Thus,
providing transactional internet banking is the primary driver of the increase in bank
profitability.
As a result, this paper proposes that one of the main reasons for the contradictory
results of the impact of internet banking implementation on bank profitability could be
the methodology used in previous studies on growth markets. When examining the
impact of internet banking adoption on bank profitability in emerging markets, little
effort was made to make a distinction between transactional and basic internet
banking adoption.
Similarly, internet banking was first implemented in Egypt around 2014; thus, banks
operating in Egypt have not been permitted to great number internet banking
concurrently, as in developed nations. As a result, basic internet banking, rather than
advanced data processing e-banking, is the most widely used system in Egypt , When
examining the impact of internet banking implementation on bank profitability in
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developing markets such as Egypt, complexity (the impact of
basic vs. transactional e-banking) should be taken into account.
Furthermore, to the best of the researchers' knowledge, there are few empirical
studies that provide a quantitative analysis of the impact of internet banking adoption
on bank financial performance in Egypt. The use of a deductive methodology on this
topic is consistent with several previous related studies in other countries, and it allows
the time of implementing e-banking to be considered an independent variable. In
similar research conducted in both advanced and emerging economies, the time of
internet banking implementation had a significant impact on bank profitability (Dinh et
al., 2015).
The lack of quantitative research on this topic in Egypt, the failure to classify internet
banking by the complexity of features, and the failure to consider the time required for
implementing internet banking identify the gaps that this study fills.
previous studies (Gutu, 2014). Additionally, this period featured the most available financial
information for banks used in the sample.
The second sample period, which runs from 2014 to 2018, is also used. This sample
period is restricted to the years when online banking was introduced in Egypt, a
method utilised by Onay, Ozsoz, and Helvacolu (2008) and Khrawish and AlSa'di (2009).
(2011). Bank financial data is gathered from BankScope, Thomson Reuters, and each
bank's annual reports, which are available on the institutions' websites. Moreover,
macroeconomic statistics were gathered from the World Bank DataBank, and online
banking data was sourced from each company's website and annual reports.
4 . Hypotheses development
According to prior research on developing countries, basic internet banking is unlikely
to have a large influence on bank profitability in Egypt, given the country is anticipated
to suffer comparable economic and market conditions. This is consistent with findings
from previous research undertaken in developing countries such as India and Jordan
(Malhotra & Singh, 2009; Khrawish & Al-Sa'di, 2011).
Transactional online banking services, on the other hand, are projected to have an
influence on bank profitability since they provide banks with a direct source of revenue.
So, based on the above rationale, the first hypothesis was produced in this study:
H1: Superior transactional (vs. basic) online banking features have an influence on
Egyptian bank profitability. the timing of internet banking adoption is likely to have a
considerable influence on bank profitability. Due to changes in cost and utilization rates
in the early years of deployment, this is reflected in the research of Hernando and Nieto
(2007), Gutu (2014), and Rega (2017). As a result, the following hypothesis is
developed:
H2: The time it takes to adopt sophisticated transactional internet banking has an
influence on bank profitability in Egypt.
17
5. RESEARCH METHODOLOGY
The population of the research consists of the 38 Egyptian banks
(Central Bank of Egypt, n.d.).
The study's sample comprises 20 commercial banks, including state-owned and
international subsidiaries, as well as conventional and Islamic banks, as shown in Table
1. Banks were chosen for the sample based on the availability of financial data and
online banking information, hence convenience sampling was utilized.
The period of the study spans from 2009 to 2018. The 10-year sample period is chosen to
consider the bank’s performance before and after implementing internet banking as employed
in previous studies (Gutu, 2014). Additionally, this period featured the most available financial
information for banks used in the sample.
The second sample period, which runs from 2014 to 2018, is also used. This sample
period is restricted to the years when online banking was introduced in Egypt, a method
utilised by Onay, Ozsoz, and Helvacolu (2008) and Khrawish and AlSa'di (2009).
(2011).
Bank financial data is gathered from BankScope, Thomson Reuters, and each bank's
annual reports, which are available on the institutions' websites. Moreover,
macroeconomic statistics were gathered from the World Bank DataBank, and online
banking information was gathered from each bank's website and annual reports.
Identification and
measurement of the study
variables .
The research employs a few
independent and control
factors, as well as bank
profitability as a dependent
variable. The independent and
control variables are banking-
specific financial measures, one
macroeconomic indicator, and
a set of dummy variables.
I. Dependent variable:
Return on equity
ROE, which reflects investor

income, is the dependent variable used to quantify bank profitability. From another angle, it
18
demonstrates the bank's management's ability to use equity to
generate profits (Rose & Hudgen, 2008). In Egyptian studies, the ROE is
a typical indication of bank likelihood (Abobakr, 2018). Furthermore, worldwide
research (Al-Harbi, 2019) have looked at the factors that influence bank profitability. ROE is
another widely utilised dependent variable in online banking research (Gutu, 2014).
II. The independent variables
Table 2 highlights the control factors that have a substantial influence on bank profitability in
numerous research across diverse markets. Meanwhile, the bank-specific financial ratios,
internal measurements, and economic indicators are being investigated as independent variables.
Differences in determinants, according to Le and Ngo (2020), are caused by varying economic
and financial market situations.
The natural log of total assets (LnTA), loan loss provisions to total loans (LLP), operating
income to total assets (OIA), net non-interest income to total assets (NNIA), and the cost to
income ratio (CTI) were the bank-specific measurements and financial ratios employed in this
study (calculated by dividing operating income by operating expenses). According to El-Ansar
and Megahed (2016), Kassem and Sakr (2018), and Abobakr (2018), the selected bank-specific
indicators and financial ratios in this study have a substantial influence on bank profitability in
Egypt (2018). A macroeconomic variable, the growth rate of the gross domestic product
(GDPgr), was also employed; it has a substantial impact on the profitability of Egyptian banks
(Abobakr, 2018).
Previous studies have used dummy variables to account for internet banking features. For
example, Onay et al. (2008) distinguished banks offering internet features from those that do
not, by implementing a dummy variable taking the value of 1 if the bank offered internet
features, and 0 otherwise. Other studies implemented dummy variables that are based on the
year of implementation for internet banking to account for time (Gutu, 2014; Hernando &
Nieto, 2007; Onay et al., 2008).
In this study, a dummy variable for Internet characteristics (Internet) is also employed.
Furthermore, as described in paragraph 2.1, the timing of internet banking deployment is critical
since the consequences might vary depending on the period of implementation owing to possible
expenses and poor user acceptance rates. To account for this, the researchers devised a matrix of
three dummy variables based on the year of implementation (Int) (Hernando & Nieto, 2007;
Onay et al., 2008; Gutu, 2014).
Furthermore, a dummy variable for advanced transactional features (Adv) is introduced, which
is required because internet banking in Egypt is considered basic when compared to banks in
developed countries, where advanced internet features have a significant effect on bank
19
profitability, as demonstrated by Hernando and Nieto (2007), Gutu
(2014), and Rega (2015). (2017).
The Adv variable, like the Internet variable, is offered in a group of three dummy
variables to separate the timing of adding advanced online banking capabilities.
Based on prior research in Egypt and other markets, Table 3 displays the names, notations,
descriptions, and measures of bank-specific and macroeconomic indicators.
Table 4 presents the names, notations, and measurements of dummy control variables under
study.
Table 5 displays names, notations, descriptions, and measurements of internet banking-specific

dummy variables examined in this study, in addition to time-specific internet banking dummy
variables that were previously used in similar studies in foreign markets (Hernando & Nieto,
2007; Gutu, 2014; Rega, 2017).
20
III.Techniques for empirical modelling and data analysis
Prior research on the subject has employed regression models to investigate the influence of
internet banking deployment on bank profitability (Gutu, 2014; Khrawish & Al-Sa'di, 2011).
Others (Abaenewe, Ogbulu, & Ndugbu, 2013; Yang et al., 2018; Islam, Kabir, Dovash, Safa-E-
Nafee, & Saha, 2019) employed a conventional statistical approach to examine the significance
of the difference in means for a sample performance before and after e-banking adoption.
Both methodologies are used in this study to investigate the impact of online banking on bank
profitability and to test the hypotheses produced.
Panel regression analysis is conducted using the following estimating equation
where MACRO represents GDP growth

rate, CTRL represents Listed and Large
dummy variables.
X stands for bank-specific financial ratios.
The Internet reflects each bank's implementation of online banking services. Intj is the dummy
variable matrix that contains Int1, Int2, and Int3. Similarly, Advj denotes the dummy variable
matrix Adv1, Adv2, and Adv3 (the use of internet banking features by bank).
21
There are no concerns with multicollinearity in the data, and outliers
were winsorized at 95%, as is typical in comparable research (Bikker &
Verliet, 2018; Nisar, Peng, Wang, & Ashraf, 2018). Moreover, the data do not
conform to the assumptions of ordinary least squares (OLS) regression. Furthermore, the
generalised method of moments (GMM) regression was assumed to be used in this investigation
due to the existence of endogeneity in the dataset.
Yet, the large N (20) and small T (10) sample sizes utilised in this study were ruled to be
incorrect, in accordance with Roodman (2009), who indicated that small sample size may result
in an exaggerated estimator and unreasonably high p-values, reaching up to 1, for the Hansen
test. The Hansen statistic is used to assess instrument over-identification, and it is calculated
using the residuals of instrumental variables.
According to Roodman (2009), in GMM, correcting a Hansen test p-value of 1 encourages the
employment of too many instrumental factors, resulting in poor results. As a consequence, a
generalised least squares (GLS) regression appears to be better suited for this dataset, and
random effects are utilised based on Hausman's (1978) test results. Lastly, nonparametric Mann-
Whitney and Wilcoxon tests are performed in addition to random effects GLS regression.
I. RESULTS AND DISCUSSION
1.1 Descriptive analysis

Table 6 displays the descriptive statistics for the full sample .
The descriptive statistics for the 151 observations in this study reflect the average
financial ratios for all banks in the complete sample. From 2009 to 2018, the banks
averaged 20.9% ROE, 2.6% operational income to total assets, and 0.8% net non-
interest income to total assets.
Most ratios have substantial standard deviations, which can be attributable to the
sample's variety, which includes banks of various sizes, listed and unregistered banks,
state-owned banks, and foreign subsidised banks.
II. Regression analysis
Table 7 displays the regression results for the sample spanning 2009–2018, using the equation
(1) .
Table 7. Regression analysis results for Internet (2009–2018)
22
The Internet variable is positive but not significant, showing that introducing internet
banking has no substantial influence on bank profitability.
The same model was applied to the same banks again, but this time for a shorter sample
period ranging from 2014 to 2018. This solely covers the time when transactional
internet features were commonly available from Egyptian banks. Table 8 displays the
regression findings.
Table 8. Regression analysis results for Internet (2014–2018)
When installing internet features for one year, the results show a negligible negative
relationship and an insignificant positive relationship for two years and three years or
more. Table 10 displays the results of the same test for the 2014-2018 sample.
Table 10. Regression analysis results for Int (2014–2018)
23
This study found the same results in terms of direction when utilising the 2014-2018
sample; the results remain negligible for online banking implementation factors.
For the sample integrating advanced transactional features from 2014 to 2018, a
regression analysis was performed. The model is substantially unchanged, with the
exception of eliminating the dummy variable for banks with the natural log of assets in
the fourth quartile (big banks; Large) (since all banks in this sample meet this condition)
and substituting Int dummy variables with Adv dummy variables (equation) (3).
The findings are shown in Table 11.
Table 11 shows the results of regression analysis.
The results show that introducing sophisticated online banking features has an
insignificant negative influence on bank profitability for one year, an insignificant
positive relationship for two years, and a substantial positive relationship for three years
or more at a 1% significance level. Only advanced transactional internet banking shows
a significant association for a kind of online banking.
24
II.1 Non-parametric analysis
Nonparametric tests were performed on the data in addition to the
regression analysis. In a comparable research, Abaenewe et al(2013) .'s study on
Nigerian banks before and after embracing online banking, Yang et al(2018) .'s study on
China, and Islam et al(2019) .'s study in India, a parametric t-test for the difference in
means was utilised. Yet, the same test cannot be employed since the samples utilised in
this study do not meet the t-test assumptions. The information utilised is not generally
distributed. Furthermore, the sample size of 151 observations falls short of the 200
observations indicated by Fagerland (2012) as the minimal sample size to avoid
employing the t-test even if the data is not regularly distributed.
Nonparametric tests are distribution-free tests that look at median differences rather than
mean differences.
Macdonald (1999) investigated the power and error rates of the parametric Student's t-
test and the nonparametric Wilcoxon sign test on a variety of population distributions
and sample size combinations. When the populations were not normally distributed, the
Wilcoxon rank-sum test consistently outperformed the parametric Student's t-test in
statistical power, fewer accurate null hypothesis rejections for the incorrect reasons (type
III errors), and proportionately less erroneous hypothesis rejections (Macdonald, 1999).
Nonparametric tests examine median differences rather than mean differences since they
are distribution-free.
Using a number of population distributions and sample size combinations, Macdonald
(1999) evaluated the power and error rates of the parametric Student's t-test and the
nonparametric Wilcoxon sign test. When the populations were not normally distributed,
the Wilcoxon rank-sum test regularly beat the parametric Student's t-test in terms of
statistical power, less inaccurate null hypothesis rejections (type III errors), and
proportionately fewer erroneous hypothesis rejections (Macdonald, 1999).
Nonparametric tests are di As a result, one of the non-parametric tests utilised in this
study is the Wilcoxon (1945) sign rank test, which examines the significance of the
difference in medians of paired (dependent) samples (pre- and posttranslational internet
banking adoption).
Another nonparametric test, the Mann-Whitney (1947) test, is used to determine the
significance of the difference in medians of independent samples (banks employing
transactional online banking against those using basic internet banking).
Table 12 displays the summary of the nonparametric test results.
25
A Mann-Whitney rank-sum test result suggests a significant difference in ROE medians
between banks that employ advanced feature online banking and those that do not at z =
3.474, p = 0.0005.
The Wilcoxon sign test 2 is then used to examine the significance of the difference in medians
for bank profitability before and after advanced online banking is implemented. At z = 2.841, p
= 0.0045, the test shows that the median ROE after using advanced online banking was
statistically substantially greater than the ROE before using advanced internet banking. Finally,
Wilcoxon sign test 3 reveals a significant difference in the median of ROE after applying basic
online banking for banks before and after using internet banking at z = 4.679, p = 0.000.
III.Global Case Studies

This research adopts a qualitative approach using a hybrid of theoretical and
quantitative approaches to answer the research question of sustainability risk
management and banking performance.
This part presents two parts: global case studies from developed and developing
countries, and the case of Egypt. The global case studies will analyze the Spanish and
Bangladeshi experience in terms of green finance in order to support the findings of the
literature. The case studies will be used as reference to compare realities and view the
best practices on green banking with Egypt, due to the research limitation and scar city
of information related to green banking in Egypt.
The case studies will be used to compare reality and best practises in green banking with
Egypt. This is owing to the fact that the concept is relatively new, and there is a lack of
knowledge about green banking in Egypt. In this scenario, Spain was chosen. seeks to
demonstrate the experience of green finance in a developed nation that emerged from a
troubled economy while including sustainable development into its strategy; comparable
to the situation of Egypt, where the government is looking for new options to boost
economic growth , Furthermore, Spain's introduction to sustainability and corporate
social responsibility in the banking industry occurred in 2003 (Cuesta-González, Muoz-
Torres, and Fernández-Izquiedro, 2006), which is comparable to the United States.
26
On the other hand, the Bangladeshi experience is utilised to add
to our understanding of developing-country experience and if
sustainability contributes to higher profitability and risk performance in locations with a
reduced emphasis on sustainable development (Weber et al., 2015). The realities of
Egypt and Bangladesh in these areas are strikingly similar, since both nations are
sensitive to the effects of climate change, have low levels of knowledge of the issue, and
have only lately begun to include it into their financial systems. In the instance of Egypt,
the inquiry was carried out through observation at one of the banks; CIB, an online
analysis of publications, and in-depth interviews with the four banks that are including
sustainability into their loan decision processes.
The chapter's structure will begin with the findings from global case studies to highlight the
advantages and constraints to sustainability from various global viewpoints; offering insights on
the global adoption experience. The second section will present the findings in Egypt, as well as
the analysis based on information gathered from worldwide case studies and fieldwork. In
Egypt, the findings will be provided in two parts: financial and non-financial advantages. The
financial advantages are aimed at the two primary parts of the study topic, performance and
risk management , The non-financial benefits discovered will be addressed later to offer a fair
picture of how the adoption of sustainability helps banks. The last section will discuss the
potential that might arise from adoption as well as the constraints on a national level. This
establishes the groundwork for Egypt's policy recommendations based on the market demands
indicated in the chapter.
The Case of Spain and Banco Santander

The Spanish banking industry recently proved its resilience in the aftermath of the 2007
double-dip financial crisis. This was reflected in World Bank estimates on Spain as one
of the fastest growing economies in the Eurozone in 2015, when it had a GDP (PPP) of
$1.62 trillion (World Bank Report, 2017). This development's concept incorporated
sustainability as an interconnected feature. Sustainable development in terms of social
and environmental responsibility was regarded a new field in the Spanish banking sector
in the early 2000s, with the exception of huge banks such as Banco Santander, who were
the first to adopt the idea. A rising number of banks are beginning to see the significance
of adopting sustainability and recognise that it extends beyond charitable community
development programmes. This meant that banks had to include it into their strategic
plans and banking processes while keeping their stakeholders' interests and expectations
in mind (Cuesta-González et al., 2006).
In recent years, there has been a potential growth in demand for items that fall within the
boundaries of social and environmental responsibility in Spain. This increase is likely to
be a reaction to the increase in funds and financial indexes focusing on sustainable
elements. In general, businesses and investors realise that "spending in line with
sustainability principles may produce long-term value and improve the firm's
performance" (Escrig-Olmedo et al., 2013).
III.1.1. Green Finance in Banco Santander
Banco Santander was founded in Spain 150 years ago and is one of the world's ten
largest banks.
27
The bank grew from a second-tier participant in Spain - a
country with little relevance in the banking industry - to a vital
player globally (Guillén and Tschoegl, 2008). Bank Santander made substantial progress
towards its leadership position in 2016, with earnings of EUR 6,204 million and a
market value of EUR 72.314 million. This was accomplished with non-monetary
achievements such as an enlarged network of 675 branches worldwide and over 10,000
workers (Banco Santander Official Website).
The bank's goal is primarily focused on delivering the greatest environment and service
for its workers, customers, shareholders, and community members. This gives light on
the efforts of Bank Santander in the realm of sustainable development. Bank Santander
assures its commitment to sustainability by maintaining a strong and ongoing interaction
with the following five groups: 1) customers, 2) shareholders, 3) workers, 4) suppliers,
and 5) society (Xifra and Ordeix, 2009). The bank takes a comprehensive approach to
sustainability (Zeidan et al 2014), following the literature's emphasis on both the
external and internal levels of adoption.
The first level involves taking steps to help the community or acting in an ecologically
responsible manner. The latter refers to the bank's attempts to integrate sustainability
into fundamental banking practises. Hence, analysing the social and environmental
repercussions of consumers and the bank's financing activities is required
(CuestaGonzález et al, 2009).
In 2007, the bank sought to broaden its sustainability outreach and optimise its effect by
investing in educational development and funding renewable energy projects via the
development of products that support sustainability (Xifra and Ordeix, 2009). It is worth
noting that the bank's sustainability initiatives are integrated with its policies, with the
following declaration included in the General Sustainability Policy:
“[The bank is] convinced that a socially responsible management approach contributes to long-
term sustainable business, Banco Santander has voluntarily taken on certain ethical, social and
environmental commitments that go beyond its legal obligations towards stakeholders.”
(Banco Santander General Sustainability Policy)
The General Sustainability Policy is supplemented by group policies such as climate

change policy, human rights policy, volunteering policy, and sensitive sector risk
management.
As a result, the bank's achievements in the field earned it titles such as "World's Greatest
Bank" by Bloomberg and "Sustainable Global Bank of the Year - Transactions" by
Financial Times in 2013, as well as inclusion in the Dow Jones Sustainability Index
(DJSI) and FTSE4 Good Sustainability Index (Banco Santander Official Website).
3.1.2Social and Environmental Risk Management in Banco Santander
Banco Santander's profile is primarily based on retail operations, with Santander Global
Corporate Banking (SGCB) accounting for 16% of its credit risk distribution, and Spain
accounting for 35% of its activities (Banco Santander 2015 Annual Report). Since 2009,
Banco Santander has been a signatory to the Equator Principles (EPs) (Banco Santander
28
2015 EPs Report; EPs Signatories List), exhibiting a significant
commitment to social and environmental considerations in its
banking operations.
"Social and environmental problems are an important aspect of risk analysis and
decision-making processes in the bank's financing operations," according to the bank
(Banco Santander 2015 Annual Report) .
The bank employs the procedures at various phases of its financing activities, such as
credit transaction detection, analysis, and evaluation. These actions are carried out in
accordance with the Santander Group's policy and policies based on the EPs criteria.
Bank Santander is committed to offering enough periodic training to its risk division
employees in order to enhance their skills. The trainings promote a consistent grasp of
the importance of social and environmental duties, as well as a stronger understanding of
how to operate in accordance with them (Banco Santander 2015 Annual Report).
Bank Santander applies the EPs processes to all financial products that are subject to its
terms and conditions, and it has altered its management and structure to meet the new
operational realities. Products subject to EPs are those that match the following list from
the Bank's released 2015 EPs report:
1. Project Finance Advisory Services with a total capital cost of $10,000,000 or more
2. Project Finance for projects with total capital costs of $10 million or more
3. Project-related business loans that satisfy all four of the following criteria:
a. The majority of the loan is for a single project over which the customer has direct or
indirect operational control.
c. The entire loan amount is US$100 million.
c. The EPFI has made a commitment of at least $50 million.
c. The loan term is at least two years long.
4. Bridging loans with a term of less than two years that are expected to be refinanced by
Project Financing or a Project-related Corporate Loan that meets the appropriate
conditions (Banco Santander 2015 EPs Report).
The modified organisation necessitated the creation of three units: Projects, Business,
and Risk. These divisions are responsible for analysing social and environmental
hazards in accordance with both the bank's and the EPs' rules. The departments were
included into a Social and Environmental Task Force overseen by the bank's Chief
Compliance Officer.
The task force collaborates with the bank's yearly auditing, which is undertaken by an
internal auditor as well as a qualified external auditor appointed by the bank, to analyse
the bank's social and environmental performance (Banco Santander 2015 EPs Report).
Bank Santander was founded in 2015.
29
55 EPs projects totaling about EUR 30 million were funded. Just
one portfolio was implemented in Spain as a medium risk, while the remaining two were
Project-related Corporate Loans (Bank Santander 2015 EPs Report; Banco Santander
2015 Sustainability Report).
Bank Santander's EPs project process comprises steps for analysis and mitigation. It is
implemented at each of the bank's locations in accordance with the EPs standard
protocols. The procedures begin with customer classification based on the EPs
questionnaire, which decides whether the project fits into category A, B, or C. (High,
medium or low risk). They follow the same procedure as Sholtens, Dam, and Shepers;
categories A and B (high and medium risk) are urged to be audited in terms of
sustainability performance and to produce an environmental management plan to meet
the auditors' suggestions (Schepers, 2011; Scholtens and Dam, 2007).
Together with the thorough sector-specific questionnaire provided through the EPs
procedures (Banco Santander 2015 EPs Report), this is a supplement to the EPs
processes. Banco Santander has identified fourteen critical sectors, including gas and oil
extraction and exploration, mining, forestry, power generation and distribution, general
industry, agriculture, fisheries and livestock farming, construction, hospitals and
transportation, and others (Santander 2012 Annual Report). These are among the
sensitive areas that the bank assesses with caution throughout the assessment process,
since they are more likely to be classified as A or B.
3.1.3 Benefits for Banco Santander
The advantages of implementing sustainable risk management have created new
channels of opportunity for the bank, which are not necessarily tied to affecting direct
financial profit as much as it has on risk procedures. On a broad level, the bank's
performance has improved noticeably. This is thought to be a function of Spain's
improved economic condition rather than the sustainability of risk operations (Santander
2015 Annual Report).
Apart for improved bankruptcy rates, there has been no discernible direct performance
impact from sustainability adoption in loan operations on Banco Santander, either good
30
or negative (Cuesta-González et al, 2009). Yet, the majority of
the gains were non-monetary in nature, such as improved reputation
and branding. The findings demonstrated that social and environmental risk assessments
protect Banco Santander from the negative consequences of companies' unintended
consequences. Bank Santander published a policy notice in early 2015 regarding its
decision not to give further finance to one of its business clients for pulp and paper
manufacturing in Indonesia; APRIL .
This decision was contingent on APRIL's answer to the bank's requested audit exercise
done by internal and external consultants into their social and environmental
performance (Banco Santander Social and Environmental Policy Announcement, 2015).
The bank also mentioned the impact of APRIL's activities on its reputation, emphasising
its long-standing international recognition of its work in the sector of sustainability.
Santander branch in Brazil went a step farther in sustainability risk adoption, assessing
all credit operations for around two thousand corporate clients since the introduction in
2015. (Banco Santander 2015 Sustainability Report).
In terms of risk management, the incorporation of social and environmental factors into
risk operations enabled the bank to generate more accurate interest rate pricing and
better resource allocation (CuestaGonzález et al, 2009). This allows the bank to profit
from increased interest rates on 43 Categories A and B (high and medium risk), as well
as incentivize corporations to pursue and maintain a lower risk standing by
implementing the necessary mitigations and action-steps to reduce potential negative
sustainability impacts.
This is in addition to Banco Santander's improved decision-making process on who is
more deserving of financing; a bank would allocate funds to a project that imposes less
risk with higher chances of success than to a project that may provide the same profile,
except for dormant risks that are now identified through social and environmental
assessments.
3.1.4 Opportunities for the Banking Sector in Spain
The findings at the institutional level at Spain's Bank Santander showed a growth
potential that the Spanish banking sector should focus on for profit maximisation. There
is an increasing demand for Socially Responsible Investing (SRIs) in Spain and
throughout the European Union, where the first SRI fund was founded in 1997. (Escrig-
Olmedo et al., 2013). The expanding presence of funds and worldwide indexes has
influenced business understanding of the need of sustainability, resulting in a pool of
demand that must be supplied. The banking industry may seize this opportunity by
acting as a trusted mediator between clients and international finance organisations such
as the World Bank and IFC, among others, to supply the market. This will aid in the
banks’ market share and profitability resulting from the discounted interest rates
received.
The SRI market in the European Union has been rapidly expanding, growing from 2.7
billion euros in 2007 to 51 trillion euros in 2009, an 87% rise; this was at a period when
social and environmental integration in banking operations was gaining worldwide
traction (Escrig-Olmedo et al., 2013). BBVA, one of Spain's leading and largest
31
financial firms with a presence in over 35 countries, has
reported on the dramatically expanding demand for green bonds,
which increased from $42 billion in 2015 to $87 billion in 2016. The organisation also
states that Spain was their best performing country in 2016. (BBVA Official Website).
Notwithstanding its economic woes, Spain rated 33rd out of 189 countries in terms of
ease of doing business in the World Bank's 2016 'Doing Business' report (World Bank
Doing Business 2016 Report). According to the OECD economic assessment report on
Spain, the country is still seen as more difficult to do business in than other OECD
economies due to legal framework issues (OECD 2014 Spain Economic Survey Report).
This suggests that while there may be no direct financial advantage to the banking
sector, the chances it creates will allow banks to optimise their financial earnings in
addition to nonfinancial rewards. These advantages include enhancing the bank's
operations as a kind of self-defense against reputational risks caused by social and
environmental scandals. It also strengthens the bank's reputation and 44 improves brand
image among shareholders, customers, and staff as a corporate citizen and responsible
institution, resulting in a rise in bank customers and stock prices.
The case of Bangladesh and Prime Bank
Bangladesh is a developing country with immense significance in terms of exporting for

industrial sectors. It has been undergoing financial system reform for the past two
decades, which has contributed to economic growth. The country has become a hub for
the migration of industries from Europe and other areas, such as leather goods,
pharmaceuticals, fertilizers, cements, ceramics and others. These industries contribute
significantly to the economy, but also strain environmental health and impose adverse
impacts on society, leading to Bangladesh's identification as one of the countries with
high vulnerability to climate change impacts.
In the 1990s, the Government of Bangladesh (GoB) began aggressively addressing the
socioeconomic and environmental implications of climate change. In 1997, the
Bangladesh Bank (BB) directed all commercial banks to take the required steps to
resolve the problem and put the principles of the Environmental Conservation Act into
effect (ECA). This legislation enables banks to prevent environmental pollution by
ensuring that their business clients comply with the environmental policies and
regulations of the country.
According to the historical data on Bangladesh's policy structures provided in the next
chapter, the notion of green finance is relatively new in Bangladesh. Significant efforts
are being made in the area of external sustainability concerned with community
development: banks prefer to target their charity operations towards a variety of areas
such as education, health, empowerment, and others. Unfortunately, internal banking
procedures, such as social and environmental credit risk management, have yet to
materialise in a suitable and effective manner (Weber et al., 2015).
. Green Finance in Prime Bank
Prime Bank is a fully regulated commercial bank created in 1995, with corporate
accounts accounting for about 78% of its portfolio. The bank's sustainability activities
span from offering charity to underserved areas to community development programmes
32
and addressing the country's most serious sustainability
challenges. Among the economic activities are agricultural funds to
boost agricultural performance in Bangladesh, the development of a fund for women's
entrepreneurial empowerment, and the establishment of green funds for energy
efficiency and renewable energies. The bank's efforts to decrease its carbon footprint by
building digital channels for consumers, lowering paper and energy use, and managing
water resources wisely demonstrate environmental responsibility.
In terms of social responsibility, the bank promotes education and established the Prime
Bank English Medium School to provide cheap education to impoverished or physically
impaired Bangladeshi kids.
In addition, the bank supports communities' health by giving eye exams in underserved
regions. This highlights Prime Bank's use of external sustainability components to
benefit their community, brand image, and reputation.
Benefits for Bangladesh Banking Sector
Integrating sustainability standards into the Bangladeshi banking system has

demonstrated that its implementation in developing nations provides benefits such as
higher business value and decreased loss ratios. This has resulted in a stronger portfolio
with higher profitability and an increase in projects eligible for environmental due
diligence. Furthermore, including social and environmental variables into loan decision-
making procedures has enabled banks to forecast credit losses caused by unsustainable
conduct. Adopting sustainable risk management at Prime Bank provided a chance for
the bank to revisit its policies, procedures, and programmes in order to improve
performance and bank position.
Opportunities for the Banking Sector in Bangladesh
In Bangladesh, the notion still needs to be improved in terms of giving clear quantitative
recommendations for implementation into bank lending choices. It is critical to
overcome the policy-application gap in order to establish an effective and uniform
system across the Bangladeshi banking industry (Ahmed and Rahman, 2014). Yet,
according to the World Bank's 2016 'Doing Business' report, Bangladesh ranks 174th
out of 189 nations in terms of ease of doing business (World Bank Doing Business 2016
Report). As a result, Bangladesh must carefully analyse its implementation process to
ensure that it does not negatively impact business at a time when it is most needed.
BB's efforts in ensuring sustainable development in the banking industry through social
and environmental risk assessment establish a solid platform for successful enforcement.
There is substantial momentum in the industry, with banks embracing efforts such as the
Green Banking Policy Guidelines for green operations, which were developed
collaboratively in 2012 by 47 commercial banks using a bottom-up approach (Shakil et
al., 2014).
This was a response to the BB's emphasis that it is not forcing banks to adopt
sustainability against their will, but rather creating a platform to guide banks that wish to
develop a sound business case for sustainable development and incentivize those who do
("Designing a Sustainable Financial System in Bangladesh: Summary Briefing," 2015).
33
4.1 The Case Study of the Egyptian Banking Sector
The Egyptian banking industry is one of the Middle East's most important economic
foundations (Poshakwale and Qian, 2012; Ramzy, 2013). Despite the fact that Egypt is
regarded a newcomer in the field of CSR and sustainable development (Darrag and
Crowther, 2017), the literature section suggests that social and environmental activities
are underway in enterprises such as the banking industry. This is demonstrated by the
publicised efforts of banks in this field, notably the Egyptian Banking Institute (EBI),
which is linked with the CBE.
EBI is exhibiting social responsibility by implementing a programme for capacity-
building training courses given to personnel in the banking sector. Through the initiative
'Shaping the Future,' the Institute also promotes community development by
disseminating financial knowledge in order to maximise financial inclusion, This
initiative is aimed at the young sector in order to generate knowledge about the benefits
of the banking business and to create a pool of future clients from the participants (EBI
Official Website).
In Egypt, eight banks have implemented social and environmental risk management
systems, with seven of them being EPs Signatories: Ahli United Bank, Arab African
International Bank (AAIB), Barclays Bank, Citibank, Crédit Agricole Bank, HSBC
Bank, and National Bank of Abu Dhabi (EPs Association Members and Reporting List).
In this research, four banks from the implementers of social and environmental risk
management systems in Egypt were selected and had agreed to be interviewed. The
interviewed banks in this research include one local private bank: the Commercial International
Bank (CIB), and three other international banks. The three international banks have requested
to remain anonymous in the research and hence will be referred to as Bank A, Bank B and Bank
C.
4.2 Banks in Egypt Adopt Social and Environmental Risk Management Systems
and Structures
According to the interviews, there is a diverse approach to the adoption of social and
environmental risk measures in Egyptian banks. Yet, it appears that there is agreed to
use the EPs in the formulation of risk assessment criteria; they were the common
denominator for the four banks' social and environmental risk management systems.
According to Bank A, all worldwide standards and guidelines for social and
environmental evaluations, whether EPs, IFC Standards, or others, have the same goal of
safeguarding the environment and managing risks (Bank A, personal communication,
April 9, 2017).
The adoption procedure was carried out progressively in risk departments over a set time
period in order to limit costs and eventually incorporate it. For example, CIB began
discussions about, and implementations of, a social and environmental risk management
system in 2014, but the unit was added to their Department of Risk structure in the 2016
annual report (CIB, personal communication, April 10, 2017; CIB 2016 Annual Report;
34
CIB 2015 Annual Report; CIB 2014 Annual Report), Trainings
on social and environmental risk management were provided to all
staff members at three banks through a Training of Trainers (ToT) programme, which
was thereafter administered to all personnel in risk areas. This training was the initial
stage of gradual integration, with staff members receiving awareness workshops (Bank
A, personal communication, April 9, 2017; Bank B, personal communication, April12,
2017; CIB, personal communication, April 10, 2017). Bank C was the only bank in
Egypt that did not provide training to its employees due to their unique structure system,
which allocates just one focal point in each country's branch, as explained in the next
section. Nonetheless, they have established an online training course for all staff
employees across the bank's global network (Bank C, personal communication, April 11,
2017), In terms of evaluation procedures and documents, the in-depth interviews revealed that
both the traditional and sustainable methods need a large number of papers and reports to
examine the client's credit score system. Sustainability risk assessment is mostly based on the
same data that was created for customers in order to start their business projects; the same
papers that were required prior to the sustainability integration. The additional information on
sustainability that the bank may need, such as the Environmental Registry, is quite small in
relation to the number of papers that customers often submit, Clients are expected to present
a social and environmental assessment report with mitigations to any risks discovered in very
rare circumstances (high and medium social and environmental hazards). In terms of efficiency,
this document is not regarded a burden on the customers because it is normally prepared for
them by a competent EPs-certified consultant. In terms of financial burden, the majority of high
and medium risk organisations that are required to take further measures in analysing their
implications are well-established portfolios, either international corporations or significant local
enterprises. This indicates that it is within their financial ability to pay for a professional
consultant to write their reports; hence, it is not a hardship in comparison to their budgets and
was not an impediment experienced by any of the participants, Nevertheless, the system's
implementation structure varies from bank to bank. For example, the credit risk processes at
CIB and Bank B are extremely similar in terms of the units and departments participating in the
assessment phases. Bank A follows a similar procedure, but they do not have as many units
involved in social and environmental credit risk. Bank C, on the other hand, solely executes the
social and environmental evaluation procedure through its abroad branch. Nevertheless, the
flow of the social and environmental process differs from that of most banks, as seen below:
The CIB Implementation Procedure :
The recommendations of the EPs were employed as the cornerstone of the chosen system,
according to CIB, and the bank formed its policies and guidelines around them. This allowed
the bank to expand its reach beyond the EP level and reach a larger pool of consumers (CIB,
personal communication, April 10, 2017). Yet, CIB is the only bank that has not signed the EPs,
owing to their belief that the EPs are incompatible with the Egyptian market. The bank is
combining all credit portfolios, taking into account that the economic slump and volatility of
the Egyptian Pound's value against the US Dollar have had a significant influence on the EPs'
threshold. As a result, it was a more obvious move for them to include the in all credit
approvals rather tha apply only the EPs guidelines , Due to the novelty of the issue on a public
scale, CIB found that the Egyptian market was not adequately aware of the idea of sustainable
development or the climate change threats to which the country is vulnerable. As a result, the
EPs were implemented to evaluate the market's acceptance of the concept and the practicality
35
of its execution. Hence, the bank applies the\sassessment to all
credit applications, including but not limited to clients inside the EPs’
threshold. The Chief Risk Officer of CIB outlined the reason for the bank’s decision of a mix
between the EPs standards, IFC Standards and the existing credit structure. "[They] normally
don't pursue one road, CIB selects the best of everything and works on it," explains the reason ,
Also, [they] check what fits the Egyptian environment and customers to not be over-demanding
with requirements that will not happen” (CIB, personal communication, April 10, 2017).
Additionally, by reengineering its credit procedures to include a simplified version of the EPs'
fundamental standards, CIB included the social and environmental components. For example,
only high and medium risk clients are needed to complete a modified form of the EPs
Questionnaire, which generally states the social and environmental components that are most
significant to Egypt's economic function. This simplified method provides light on the
downsides and issues that might come from including sustainability into loan decision-making if
the EPs were implemented prior to this market-testing exercise.
The CIB policy and guidelines drafting process took place between 2014 and 2015, with actual
effective implementation occurring in 2016. The sustainability contained in CIB risk realised in
2016, under the administration of the "Credit & Investment Exposure Management"
department. There are three primary evaluation criteria. 1) Portfolio concentration in high
social and environmental risk enterprises, 2) Loan percentage in social and environmental
exclusions list industries, and 3) breach of social and environmental covenants. These three
metrics are governed by the internal social and environmental credit risk policy (CIB 2016
Annual Report) as well as the Key Risk Indicators (KRIs) produced by the bank (CIB, personal
communication, April 10, 2017) to verify that customers are in compliance with the regulations.
Bank A’s Implementation Process
Bank A's approach begins by determining if the customer fits inside the EPs: over $10 million
(EPs Guidelines). When a customer meets this condition, they are asked to submit their EPs
assessment report for classification and assessment. Following that, the bank accepts the
report as is and only does a second layer of inspection if the data appears incongruous or
suspicious , As a result, the bank depends on the investigation conducted by the external
auditor engaged by the credit customer during credit review to determine whether there are
any red flags.
The bank conducts investigations and monitoring if the consultant recommends particular
action plans to be implemented as risk reduction. In such cases, the bank incorporates the
plans and investigative preparations into the credit disbursement contract. In the opposite
circumstance, no visits to the customer's project are made unless there is a threat or a breach
of maintaining a communication.
Bank B’s Implementation Process
Bank B's working reality is similar to that of CIB's in that both banks undertake social
and environmental risk assessments to all credit applications, not only those that meet
the EPs level. But, Bank B went over and above by applying the evaluation to all of its
clients, even if their required services did not require money. This illustrates their
comprehensive acceptance of strong sustainability, as they apply it rigorously both
36
internally and externally, and they try to prevent and mitigate
harm.
Bank B's commitment to sustainability has long been ingrained in their policies as part
of their compliance with the environmental regulations of the countries in which they
operate. Nonetheless, the original policy was released in its branches throughout the
world in 2007, asking for a re-engineering of operations to segregate social and
environmental concerns as a dedicated autonomous sector.
According to their published worldwide policy, the credit approval procedure has been
separated into two aspects: a social and environmental rating, and compliance with
sustainability rules such as forestry, mining, and so on. The compliance policy evaluates
not only the borrowing customer, but also the procurement supply chain to guarantee
that the client is not connected with a supplier that has negative environmental
repercussions. As a result, a customer may be classified category C (low risk) yet still be
denied credit owing to noncompliance with the bank's set criteria by his firm, suppliers,
or subsidiaries. There is a separate section for credit research on client projects, which
examines visually 51 various elements such as inventories.
Nevertheless, there is a specialist risk champion that re-assesses the evaluated output of
the business unit in order to corroborate the suggested rating and ensure that there are no
additional problems; this is the same procedure as CIB. The method is depicted in the
diagram below:
d) The Implementation Procedure of Bank C Of the four institutions examined, Bank

C's approach is the most convoluted and time consuming.
Back in 2004, the bank established a worldwide social and environmental policy that
was not country-specific. An external consultant is required to provide an EPs
assessment report to examine the social and environmental elements of a customer's
project only when the threshold is satisfied - the same as Bank A. Nevertheless, in
37
Egypt, the entire procedure is overseen by a credit officer, who
also examines the risk factor and requires offshore clearance from
the bank's headquarters based on the evaluation findings of social and environmental
hazards.
This approach differs from the bank's typical credit processes for other loan instances,
and it is deemed time-consuming for the bank. Furthermore, due to the country's degree
of knowledge and economic status, the bank does not employ stringent sustainability
processes. As a result, Bank C does not profit from social and environmental risk
adoption in Egypt; it is applied as a result of the franchise name's global adoption.
Implementation Challenges and Cost of Adoption
There were no clear limitations to incorporating sustainability into the systems of the
interviewed institutions or in the literature. Indeed, as discussed in earlier parts, there
were advantages to it. Yet, the banks encountered impediments that hampered the
efficacy of the sustainability risk management system.
According to conversations with Bank B, the major difficulty clients experience is a lack
of understanding about why they need to be environmentally responsible. Most
organisations see becoming accredited as a green entity and obtaining ISO certificates,
for example, as a need. Nevertheless, many are unaware of how this benefits the
environment, which in turn benefits their own enterprises (Personal communication,
April 12, 2017). Similarly, CIB encounters situations in which clients lack current
environmental documentation that would help in the social and environmental grading
process of firms.
This is due to companies' lack of awareness of why they must act responsibly. As a
result, after a company is certified, it does not continue its environmental evaluations or
update its paperwork to reflect on performance in that area.
As a result, while the majority of clients first found the notion strange, the extra layer of
risk management was not viewed as an undue burden on corporate clients or alienated
them from sustainability-adopting banks since the sustainability standards are not
stringent. Banks in Egypt cannot now demand updated documentation as a condition for
credit disbursement since doing so puts the bank at danger of losing clients to a rival
who does not apply the same severe conditions. For example, CIB would mark the
inaccessible document as'missing' in order to proceed with the classification based on
the documents that were available.
This is a significant signal that the market is not yet mature in this regard, and the
absence of uniformity in execution throughout the industry allows for unhealthy and
harmful competition. Furthermore, given the present economic downturn, banks are
attempting to continue expansion while avoiding unfavourable competition and
jeopardising client retention and attractiveness.
Furthermore, there was agreement among the four banks interviewed that the costs of
adoption were not measurable; yet, it was not a burden on the bank, and the advantages
that followed surpassed it. CIB and Bank A highlighted that the trainings provided to
their workers were not an expensive procedure because the ToT technique used lowered
38
the expense of training thousands of people to a small number
of trainers providing it to the bank. As a result, the cost-benefit
analysis favoured the banks. Furthermore, the EPs processes and evaluations are often
handled by the credit client, putting no financial strain on any of the four banks.
Financial Benefits
The financial benefits are the findings that answered the research question exploring impacts
on Performance and Risk Management. The Performance assessed the profitability and market
share showing no improvement. However, Risk Management showed improvement that was
unquantifiable.
Impact on Performance
According to the research findings based on case studies and interviews with Egyptian
banks, there are no direct performance gains in terms of profit and market share from
implementing social and environmental risk assessments. In contrast, according to their
most recent annual reports, all of the banks examined showed large increases in their
loan portfolios.
For example, Bank A's loan portfolio increased by 12.3% in Egypt (Bank A 2015
Annual Report), Bank B's loan portfolio increased by 3.22% in Egypt, Bank C's global
loan portfolio increased by 4% with a 15% increase in net revenues in the Middle East
and Africa (Bank C 2016 Annual Report), and CIB's loan portfolio increased by 56%
(CIB 2016 Annual Report). Yet, according to the interviewees, this growth was not
always related to these banks' sustainable implementation of risk policies. This might be
owing to the difficulties in determining the causation link between the incorporation of
sustainability measures into the bank's risk assessment system and the generating of
profits.
Nevertheless, external sustainability adoption is easier to quantify since it is possible to
assess the cost of energy efficiency and resource consumption, whereas internal
sustainability adoption is mostly an indirect profitability factor (CIB, personal
communication, April 10, 2017).
Yet, the study discovers various chances for banks to leverage on in order to indirectly
enhance their earnings. Investors are now interested in learning about the institution's
sustainability adoption practises. It is in the bank's best interests to focus their efforts on
assessing social and environmental risks in order to attract a larger pool of investors and
expand their market share. Another area that CIB is researching is the development of
green goods that would benefit both credit clients and stockholders (CIB, personal
communication, April 10, 2017).
The items would be offered as a service to credit consumers, allowing them to reduce
their social and environmental risks and begin the due diligence process.
For example, a client that relies heavily on nonrenewable energy sources for energy
generation may be interested in a Green Loan with lower interest rates. This loan will
allow the client to install an energy-saving system or increase dependence on renewable
energy sources such as solar panels. As a result, the bank keeps their clients in more than
39
one way, allowing them to optimise their income while also
assuring social and environmental compliance.
Impact on Risk Management
There is widespread agreement that banks that incorporate social and environmental risk
assessment into their lending operations enhance their risk management. All four banks
interviewed agreed that, while risk management cannot be assessed, they took into
consideration the enhancement of risk operations that permitted the discovery of hazards
that are not examined using typical credit evaluations (Weber et. al, 2008). The
additional layer of screening results in a better portfolio of loans and reduces the chance
of defaults or non-performing loans. The adoption also boosted personnel capacity,
resulting in a distinct class of risk specialists and increased sustainability awareness
among staff members , Employees, clients, and investors all had more trust in the bank's
lending choices as a consequence.
The research shows that one of the beneficial effects on Risk Management is loan
performance, provided that more severe loan evaluations take place to reduce losses. In
contrast, as a result of the economic downturn and the depreciation of the Egyptian
Pound (EGP), several banks' NonPerforming Loans (NPL) percentages have grown.
According to the banks in this study's annual reports, CIB's non-performing loans
climbed from 3.98% in 2015 to 6.76% in 2016 (CIB 2016).
Non-performing loans at Bank A climbed from 3% in 2014 to 4% in 2015 (Bank A 2015
Annual Report), with a further increase expected in the 2016 report due to the currency
depreciation that happened that year. Bank B's non-performing loan percentage, on the
other hand, decreased from 3.76% in 2014 to 3.11% in 2015 as a result of its reliance on
internationally aligned clients and limiting exposure to local companies; additionally,
international branches compensate for the loss (Bank B 2015 Annual Report). This made
determining the influence of adoption on loan performance more difficult to examine.
As a result, contrary to previous studies, NPL percentages were not indicative of the
consequences of social and environmental risk management systems in Egypt.
Furthermore, in terms of risk-based pricing, not all of the banks surveyed have adopted a
unique interest rate depending on a client's social and environmental assessment and
assigned category.
The financial industry will be unable to implement risk-based pricing until the notion is
widely adopted.
Otherwise, banks risk losing consumers to another bank with less stringent procedures
that offers a considerably lower interest rate. Meanwhile, CIB is considering ways to use
this component as an incentive for its corporate clients to adopt ethical business
practises.
Non-financial Benefits
The non-financial advantages supplement the research findings, contributing to the
possibility of mainstreaming sustainability in the industry. Although they do not
generate profits, they indirectly contribute to the profitability of banks and give
40
prospects for expansion. Non-monetary benefits include: brand
positioning and reputational image, as well as social and
environmental benefits to tackle climate change threats in Egypt.
Brand Positioning and Reputational Image
According to the case studies given, the major benefits of sustainability adoption are
non-financial societal benefits rather than direct economic gains. Bangladesh Bank
outlined seven benefits to implementing a Green Banking strategy across Bangladesh,
most of which focused on raising awareness, reducing environmental harm, being
efficient and productive, and increasing goodwill and improving brand image (Islam and
Hasan, 2015). The implementation of social and environmental risk management
systems validates the bank's status as a "ethical bank" that behaves responsibly.
This notion aids with entity brand positioning and is sometimes used as a low-key
marketing tactic for banks by establishing a favourable reputation. Bank A, for example,
instead of allocating the same money for billboards that would have no good influence
on its brand image, decides to proactively engage in activities that will eventually reflect
favourably on its brand image (Bank A, personal communication, April 9, 2017). The
image of an ethical bank has a favourable influence on client attractiveness, staff pride
in the business, as well as accommodating shareholders and attracting investors; hence,
it moulds the bank's reputation.
Environmental risk management systems help to validate the bank's status as a "ethical
bank" that operates ethically.
The Exon Valdez oil leak in Alaska and the Rajawali Conglomerate in Malysia are two
examples of severe reputational effects for banks as a result of reckless social and
environmental activities by bank clients. Both businesses have a solid profit outlook and
are significant leaders in their areas, making this a difficult portfolio for banks to
manage if they do not consider social and environmental issues. Both firms had a
terrible collapse that harmed their reputations and exposed the banks that sponsored their
endeavours as participants to the disaster.
After attempting to avoid the claims and compensation requests, the corporation ended
up losing billions of dollars as a result of the environmental and economic disaster
(Warner, 2010). The other disaster occurred in Malysia, where the local conglomerate
Rajawali contributed to increase deforestation rather than addressing it (Jufri, 2016). The
necessary environmental cleanup had an impact on the company's income, not to
mention the steep drop in Exon Valdes' stock price. The issue here is that public opinion
influenced client attractiveness and, as a result, the reputation of the institutions
involved.
As a result, the method protects banks from reputational problems while also reflecting a
favorable image to the public; a double reputational advantage.
The improved brand image had a similar impact on investors in all four banks, with
international investors benefiting more than Egyptians (Bank A, personal
communication, April 9, 2017; Bank B, personal communication, April 12, 2017; Bank
C, personal communication, April 11, 2017).
41
The notion of sustainability and social and environmental
responsibility, in particular, is still in its infancy in Egypt.
According to the Daily News, an Egyptian Stock Exchange (EGX) sustainability
knowledge survey revealed that 87.5% of Egyptian investors were ignorant of the
sustainability indexes that separate firms on the stock market. This is because the
majority of investors do not understand the connection between a company's
profitability and sustainable practices.
any company's success and long-term operations.
As a result, they do not seek information and expertise about sustainability ratings and
rankings. Foreign investors, on the other hand, are becoming increasingly interested in
the problem. CIB has not assessed their investors' interest in sustainability since it is
impossible to determine if a bank's stock price movements are purely due to
sustainability factors or not. Yet, there has been a noteworthy growth and change in
investors' interest in the bank's social and environmental performance as a requirement
for their investment (CIB, personal communication, April 10, 2017). Nonetheless, all of
the banks interviewed agreed that it all boils down to the investor's degree of expertise
and awareness; whether a local or a foreign investment.
Social and Environmental Benefits
Using social and environmental risk management is a significant step forward in
addressing Egypt's environmental concerns. As previously said, Egypt is one of the most
vulnerable countries that might be affected by climate change as a result of rising
consumption and production to fulfil the demands of a growing population. Climatic
change has an influence on economic development in addition to resources and land.
Population relocation in Egypt owing to environmental threats strains the economic
network and area growth as a consequence of increased traffic, consumption of food,
water, and energy sources, and greater job market needs (Abdel Wahaab, 2003). This
not only threatens future generations, but also current ones; it has gone beyond the
notion of sustainable development to a more serious level. As a result, implementing
social and environmental responsibility through the financial system has a broader reach
to lessen and actively address the concerns posed by climate change.
The banking system is crucial to economic growth since it indirectly creates the
groundwork for how other sectors should operate, as any industry relies heavily on
money transfers and liquidity from banks (Guillén and Tschoegl, 2008), notably in
Egypt. The bank's efforts to promote sustainable development across several sectors
support the bank's success by sustaining the other industries. If an industry behaves
irresponsibly, it will eventually deplete its own essential resources and go out of
business. This has a negative impact on the bank's client retention.
The banks studied are embracing the notion by establishing lines of defence dedicated to
social and environmental concerns. The first stage is to examine the high or medium risk
situations given in order to determine if modest changes or a full action plan are required
to address the issues. As previously stated, high and medium risks must offer an action
plan with mitigations. These mitigations are then included in the contract that approves
the credit request. As a result, banks examine progress in that area during their quarterly
42
evaluations of client performance. As a result, it strengthens the
benefits of sustainable development in Egypt across several sectors
while also protecting environmental health. This can be used as a kind of punishment.
Opportunities for Green Finance in Egypt
In Egypt's instance, the potential lies in aligning social and environmental risk
assessments and mitigations with the country's strategy and national orientation. Egypt
wants to strengthen its economic position by recruiting foreign investors, thus it has
requested for a loan from the International Monetary Fund (IMF) to boost Foreign
Direct Investment (IMF Press Release No. 16/501). The GoE is also working to
strengthen its economic position in a sustainable way, and as seen by the Sustainable
Development Strategy Egypt 2030 Vision, it has implemented the guidelines provided
by the UN Sustainable Development Goals (SDGs) (El-Magharbel, 2015). Adopting
sustainability in financing operations would be a step closer to establishing
environmental standards and compliance by Egyptian firms.
(Personal message from Bank A, April 9, 2017). This can enhance the range of banking
products while also increasing bank market share. It is a chance to support emerging
entrepreneurial ventures aimed at cleaner manufacturing and ecologically responsible
climate change solutions.
Limitations and Challenges for Green Finance in Egypt
According to the in-depth interviews, the biggest institutional difficulty is local
consumers' lack of knowledge of the need of updating their data. This is mostly due to
the EEAA's absence of a robust monitoring and assessment mechanism. Although Egypt
has environmental regulations in existence, the enforcement system remains a hindrance
to their efficacy. As a result, the economic system does not always comply with the
published laws if a chance to do so arises.
All of the institutions interviewed stated that there were no loan defaults due to social or
environmental issues. Yet, this is owing to banks' incapacity to terminate a customer's
financing for noncompliance with social and environmental standards, because the idea
of social and environmental risk assessment is not shared throughout the industry.
As stated under the issues faced by the institutions questioned, this eventually leads to
the concern of losing clients to more forgiving banks that do not enforce the same
standards. Another issue is that Egypt's environmental rules are not adequately
implemented, hence there are situations where negative affects go unpunished.
However, even if they are punished, the legal process is lengthy, which may exceed the
time required to repay the credit loan or save the environment (Bank A, personal
communication, April 9, 2017; Bank B, personal communication, April 12, 2017; Bank
C, personal communication, April 11, 2017; CIB, personal communication, April 10,
2017).
Social and environmental risk management systems will be deemed useless unless the
Egyptian economy transforms and awareness levels in terms of social and environmental
concerns rise.
43
Discussion of findings
The findings of the Internet variable regression analysis demonstrate a negligible
positive connection for Egyptian banks implementing basic online banking across the
2009-2018 sample period. In emerging markets, this is consistent with the findings of
Malhotra and Singh (2009), Khrawish and Al-Sa'di (2011), and Onay et al. (2008).
Because Egypt is similarly a developing market, the findings of this study were expected
to be comparable. The findings are duplicated when the 2014-2018 sample is
examined, which is confined to the time period when online banking was widely used
in the banks under review.
This suggests that online banking has no major influence on bank performance before
and after implementation. Moreover, nonparametric test results show a significant
difference in median ROE for banks after implementing online banking; however,
regression analysis does not confirm this conclusion.
When implementation time is taken into account, regression findings reveal an
insignificant negative association between banks that adopt online banking for one year
and an insignificant positive link between banks that use internet banking for two years
and three or more years. This is consistent with findings from Malhotra and Singh
(2009) in India, Onay et al. (2008) in Turkey, and Khrawish and AlSa'di (2011) in
Jordan.
The same findings are obtained when testing with the 2014-2018 sample. Previous
research has found that online banking has little influence on bank profitability,
particularly in developing countries such as Turkey (Onay et al., 2008), India (Malhotra
& Singh, 2009), and Jordan (Khrawish & Al-Sa'di, 2011).
The negligible associations reported in Egypt between basic internet banking and bank
profitability in both longer (2008-2019) and shorter (2014-2018) samples might be
attributed to a number of reasons. While the introduction of online banking in all
Egyptian banks began in 2014, the influence of internet banking may not have appeared
over this brief period. The majority of research that found favourable, significant
connections were conducted on banks in developed economies (Hernando & Nieto,
2007), when online banking was first adopted in 1997.
Moreover, Khrawish and Al-Sa'di (2011), who investigated the Jordanian environment,
proposed that low utilisation rates among bank clients are a reason for the
inconsequential association between internet banking deployment and bank profitability.
Similarly, past research in Egypt have found that the Egyptian market suffers from low
online banking utilisation rates.
Hussein and Saad (2016), for example, did a study on Egyptian bank clients and
discovered that the perceived utility of online banking had a negative influence on the
low utilisation rate, with the outcome being substantial. Moreover, Abd El. Aziz,
ElBadrawy, and Hussein (2014) did a similar study and discovered that the degree of
44
education and previous experience with digital banking services
influenced the low rate of online banking usage in Egypt.
As a result, these findings may be especially relevant to the current study's findings, as
online banking was just recently embraced in Egypt, resulting in a lack of user
experience and low utilisation rates of internet banking services. As a result, online
banking has a negligible impact on bank profits.
Another probable explanation is that most online banking capabilities in Egypt are
rudimentary and are not used in transactions that generate direct income for the bank, as
detailed in paragraph 2.1. Furthermore, most Egyptian banks provide online banking
with no fees or commissions imposed to customers who use it.
Furthermore, most banks' basic internet banking capabilities cannot replace services
provided by physical offices. As a result, introducing basic online banking does not
result in cost savings, as evidenced by research undertaken in various markets.
As a result, the minor impacts of basic online banking on bank profitability in Egypt
may be justified.
As a result, the regression analysis for advanced transactional characteristics yields
disparate findings. There is a little negative association.
For the first year of implementation, there was an insignificant positive connection,
followed by a substantial positive relationship in the second year, and a major positive
relationship in the third year. Similarly, non-parametric test findings show that banks
employing advanced feature online banking have a higher median ROE than banks that
do not utilise advanced features.
Additionally, when comparing the banks' ROE before and after implementing advanced
online banking features, this study discovers a substantial difference in ROE medians
after implementing advanced features. The nonparametric findings are comparable with
those of Abaenewe et al. (2013) in Nigeria.
The combined regression and nonparametric test findings support H1; that is, advanced
transactional internet banking, as opposed to basic internet banking, is expected to have
a large and beneficial influence on bank profitability.
In this study, advanced online banking features include those that allow customers to
control deposit facilities, loan facilities, inter-bank transfers, and money market
operations. The aforementioned features all have one thing in common: they all provide
a direct income stream for the bank. Deposits and loans naturally allow the bank to earn
a spread, and inter-bank transfers and money market transactions typically include a
charge or commission that the bank earns. Hence, theoretically, enhanced online
banking services are more likely to have a major influence on bank profitability.
Hernando and Nieto (2007) demonstrated this in their analysis of banks offering online
brokerage services, indicating that the large association between online brokerage and
bank profitability might be attributable to the collection of service fees.
45
In light of the significance of assessing the duration of
implementation, the regression findings of this study confirm H2,
demonstrating that the implementation period of advanced online banking affects bank
profitability in Egypt.
After a few years of adoption, advanced transactional online banking has a substantial
influence on bank profitability. This conclusion is consistent with previous research and
supports the theory that banks incur large expenses and have poor utilisation rates during
the first year of installing sophisticated online banking systems (Hernando & Nieto,
2007)
This section's structure will begin with the second section after the analysis, which will
offer the New Governance theory on which the policy suggestion is based. The second
section shows good case practises from Bangladesh, a worldwide developing country
with similar market circumstances to those shown in the Analysis Chapter. In order to
address the obstacles and limits identified in the Analysis, the next part will analyse the
policy approach advocated for Egypt based on in-depth interviews. The last segment
will conclude with a policy suggestion aimed at mainstreaming social and environmental
risk assessment across the sector and capitalising on the advantages of its
implementation.
The New Governance Theory
The New Governance Theory marked the start of the transition from government to
governance, proposing a more self-regulating approach for enterprises (Conley and
Williams, 2011). Ruggie defines governance as "the collection of rules and mechanisms
with which any given body - at whatever level - conforms" (2014). There is a global
transition from government to governance that was formed on the basis that no single
state can satisfy the requirements for properly managing the negative effects of the
economy on society and the environment.
There is a need for regulatory change in order to develop a system that includes a
combination of public regulation, government-supervised regulation, and business self-
regulation (Eisner, 2004; Ruggie, 2014). This concept gave rise to Responsive
Regulation (RR) and Regulatory Reforms. RR encourages governance systems like as
public-private partnerships (PPP), informal collaboration, multi-stakeholder procedures,
and so on. These structures use capabilities to foster long-term growth (Abbott and
Snidal, 2013). According to Conley and Williams, academics and professionals saw the
transition from government to governance as a reaction to the "weakening of top-down
governmental controls" (2011).
The United Nations, with the help of other international organisations, is always
working to promote global environmental governance through multinational enterprises.
This is because there are no global governments, just global governance to control
concerns on a worldwide scale (Ruggie, 2014). In order to multiply impacts and attain
sustainability, international organisations begin to promote standards and sustainability
principles through firms with a strong influence on surrounding industries.
Reality of Social and Environmental Management in Egypt
46
Egypt was ranked 15th in terms of economic power in PwC's
assessment on the global economic order shift by 2050, with a
forecasted GDP (PPP) of $4.333 trillion (PwC, 2017). As a result, Egypt has enormous
economic growth potential, and the notion of sustainability has a strong potential to be
mainstreamed across all industries. As previously said, sustainable development is one
of the characteristics that attract international cooperation funding, increasing Egypt's
possibilities of developing a larger pool of investors. Furthermore, the notion of social
and environmental management systems is gaining traction on a worldwide scale with
accelerated growth; consequently, including sustainability into management systems
boosts Egypt's economy's prospects of reaching progress.
In response, the government is gradually adopting the notion of sustainability by
enforcing and supporting it. This was demonstrated by the CBE and EBI's few talks and
roundtables on the theme of sustainability, as well as the establishment of the Vision
2030 Sustainable Development Strategy.
Moreover, the financial industry has been working to promote sustainable development.
Unfortunately, the bank lacks the authority to efficiently supervise its appropriate
execution; so, government cooperation is essential to optimise the impacts and
advantages of sustainable development. For example, the banks examined noted their
difficulties in gathering the necessary paperwork to adequately analyse their clients from
a social and environmental standpoint.
The banks make every effort to provide the required papers; nevertheless, it is more
probable that clients will not always have their updated and examined documents,
limiting the banks' capabilities; old records do not represent the development or any
possible changing conditions. The customers' major argument is that the relevant
documents are not required by the government and hence they are eligible for credit
loans.
This is a crucial evidence that the banking industry requires government help to properly
implement the system and take the required actions to counteract and mitigate negative
environmental consequences (CIB, personal communication, April 10, 2017).
The interviews with Egyptian banks offered a good insight into the most appropriate
strategy, which is based on their firsthand expertise with the topic and experience with
clients. The study demonstrated that, while assessing the performance of green financing
for banks is challenging, there are nonfinancial advantages including improved risk
management. This suggests that the advantages were more directly related with banks
that have a high level of exposure to overseas investors; the adoption scenario is
therefore more socially and ecologically advantageous on a macroeconomic level and to
major economic participants in the banking industry.
The research findings in terms of policy formation imply that policy implementation and
development should use a top-down approach. Furthermore, according to the
Bangladesh case study, the adoption of sustainability in the banking sector must be
incorporated into the larger national sustainability policy. As a result, the GoE should
use its national plan to create a greater momentum that will aid both the CBE and EEAA
in establishing an infrastructure for adoption. This method will also provide a more
47
effective awareness ripple effect, accelerating the efficacy of
adoption in terms of seeing good effects.
. It is believed that adoption will impede processes at first since it is foreign to
established economic habits. As a result, two phases of slow adoption are required until
the market becomes used to the changes. The First Phase focuses on incentive
mechanisms for banks that may not recognise the added benefit in adoption; it serves as
a stepping stone to encourage banks. The second method is to impose strict laws and
regulations, particularly in light of the present economic downturn, in order to enforce
compliance and prioritise the issue.
The First Phase of Implementation in Egypt:
This phase will lay the groundwork for adoption by emphasising culture development
and encouraging banks to recognise the advantages of embracing sustainability through
soft governance measures.
The phase should include banking staff training as well as incentives to encourage bank
buy-in. To compensate for the lack of direct cash advantages in Performance, four
possible incentive approaches are presented below:
1.Giving Green Business Funds to Banks: This fund is not limited to firms affiliated
with green fields, but also to businesses that demonstrate social and environmental
responsibility as part of their operations by addressing and reducing social and
environmental hazards. The CBE may allot specific money to banks that have
sustainability risk management systems to disburse to enterprises that meet social and
environmental norms.
This capital should be made available at a reduced interest rate to the designated banks,
so increasing their profitability. In such cases, banks will be motivated by profit to
implement sustainability measures. Companies, on the other hand, will be interested in a
lower interest rate lending facility, and so the fund will serve as an incentive mechanism
for firms.
2) Offer a Reduced Rate for Bank Reserve Requirement: As part of the Egyptian
banking sector's requirements, banks deposit 12.25% of their total deposits in the CBE
to operate as a reserve cushion to address risks such as operational, market, credit, or
cyber-security threats (CBE Website). As noted in the preceding paragraph, the bank can
give an incentive by lowering the percentage deposit conditional on taking social and
environmental risks, or by granting reduced interest rate credits to Green Companies.
3) Facilitating Branch Opening Procedures: Any bank that wishes to expand its branch
network must first obtain clearance from the CBE. The central bank might offer a
specific service to banks that implement social and environmental risk management
systems in order to streamline or expedite the procedures. This will increase the number
of banks urged to implement the sustainability plan.
4) Establishing a Bank Rating for Foreign Investors: This would increase banks'
exposure to overseas investors as well as their prospects of participating in large-scale
projects.
48
The Second Phase of Implementation
Although the incentives in the first phase encourage banks to adopt

sustainability, the CBE will need to take additional steps to verify the efficacy of the
implemented sustainability risk management systems.
The first stage in the Second Phase is to confirm that the system's enabling components
are working properly, such as the environmental documentation required by banks to
assess a client's social and environmental performance. The CBE must work with the
EEAA to help customers prepare Environmental Registers (ER) and Environmental
Impact Assessments (EIA) (EIA). The EEAA, in partnership with the CBE, must adopt
legislation and enforcement tools to ensure the frequent updating of these papers in
order for the bank to have a legal posture when asking them from the government.
The transition in operations necessitates the involvement of the private sector, especially
given the growing demands that may exceed the EEAA's capability. The increasing
number of reviews that will be put on the EEAA may result in an overburdened agency.
As a result, the GoE should investigate implementation tools to assist the process, such
as employing external qualified experts to outsource reviews and environmental audits.
As a result, this study gave banks' perspectives on the effects of including social and
environmental evaluation into loan operations. Although there are no direct financial
implications on the bank's performance, it has been demonstrated that there is a
compelling case to mainstream sustainability in the banking industry in Egypt based on
the non-financial advantages that can indirectly enhance it and better risk management.
Furthermore, the literature and worldwide case practises, as well as a review of the
Egyptian market, give insights into the banking sector's significant role in promulgating
behaviours of its borrowing sectors.
As such, if embraced as part of their internal banking practises, the banking sector may
serve as a vital enforcement tool for laws and regulations. This need the cooperation and
support of regulatory agencies such as the CBE. The implementation of sustainability in
Egypt will be in line with the national policy for sustainability and foreign investment,
particularly in terms of capitalising on possibilities such as demand for green finance
products. Adoption of sustainability is a necessary step in Egypt's recovery from its
economic downturn and the threat of climate change to its stability.
The implementation of sustainability in Egypt will be in line with the national policy for
sustainability and foreign investment, particularly in terms of capitalising on
possibilities such as demand for green finance products. Adoption of sustainability is a
necessary step in Egypt's recovery from its economic downturn and the threat of climate
change to its stability. Doing sustainably is no longer a luxury for the affluent firm;
rather, it is a need for the existence and stability of the environment. It is essential to
shift the global perspective towards the importance of sustainability while also seizing
the benefits it provides.
49
CONCLUSION
This paper's conclusions make significant theoretical and empirical
advances to the finance literature. It is the first study of its type to look at the impact of
basic and advanced e-banking on bank profitability in Egypt.
Moreover, in foreign markets, distinguishing between basic and advanced transactional
characteristics in regression analysis was not used, particularly in developing nations
where sophisticated transactional internet banking is not extensively deployed.
According to the empirical findings of this study, sophisticated transactional e-banking
has a considerable influence on bank profitability in Egypt after three or more years of
deployment.
Therefore, regardless of when it was implemented, basic e-banking had no substantial
impact. As a result, the findings demonstrate that distinguishing between basic and
advanced e-banking is critical when studying a developing market, such as Egypt, where
sophisticated e-banking is uncommon.
Furthermore, the findings of this research give recommendations for both bank
managers and legislators on how to deploy advanced transactional online banking and
seek upgrades to internet banking technology to incorporate more capabilities. As a
result, the study's conclusions provide significant practical contributions to the Egyptian
market.
To begin, this study suggests that bank management use sophisticated online banking in
order to gain from a potential rise in earnings. Second, Egyptian officials are driven to
advocate for standardised transactional internet banking across all banks since it is
crucial to green banking and, eventually, Egypt's SDS.
Furthermore, after the COVID-19 pandemic health and safety issues, Egypt needs to
expand the distribution and use of transactional online banking. As a result,
sophisticated transactional online banking is anticipated to benefit bank clients, banks,
the Egyptian government, and the Egyptian economy.
The study's sample size might be considered a restriction; yet, this sample comprises
almost half of the Egyptian banking industry, including all of the biggest public, private,
and Islamic banks. Moreover, the sample remains constant during the analysis time,
resulting in a meaningful outcome. Furthermore, the number of banks operating in
developing markets is often smaller than in industrialised nations, particularly when it
comes to banks that use online banking.
Previous research on this issue has been conducted in 18 Turkish banks, 17 Greek banks,
and 15 Jordanian banks (Dinh et al., 2015; Abaenwe et al., 2013; Onay & Ozsoz, 2013;
Angelakopoulos & Mihiotis, 2011; Khrawish & Al-Sa'di, 2011).
Also, the minimal number of banks using transactional In research done in developed
markets, innovative online banking services in Egypt are much more widespread.
when investigating internet-only banks. DeYoung (2001), DeYoung (2005), and
Delgado, Hernando, and Nieto (2007), for example, performed studies on six US banks,
12 US banks, and 15 EU banks, respectively.
50
The current COVID-19 health and safety issues are likely to
dramatically improve the supply and usage of online banking in
Egypt in the next years. As a result, further research on the issue is advised to solve prior
restrictions and incorporate future years in the study.
WHAT BANKS SHOULD DO TO SUPPORT THE GREEN ECONOMY IN EGYPT IN GENERAL AND
GREEN BANKING IN PARTICULAR ?
At policy level
• Incorporating sustainable finance practises into the bank's loan and investment
programmes.
• Joining UNEP FI and signing the Principles for Responsible Banking to benefit from
global best practises and standards.
• Forming alliances with international stakeholders.
• Have a clear description of what constitutes green.
At organization level
• Creating a specialist sector for sustainable finance that incorporates credit and risk
knowledge at the organisational level.
• Developing and expanding the competencies of all Bank personnel, as well as creating
training plans that contribute to their understanding of sustainable finance.
• Using the concept of sustainable financing and working to integrate environmental and
social elements, as well as governance rules, into the bank's financing activities, as well
as setting a vision for how to manage environmental and social risks and take them into
account when calculating the bank's risks.
At operational level
• While compiling the credit study to decide whether to finance or renew credit facilities,
use technology methods to assess environmental and social hazards.
• Creating novel standardised loan products that fund specialised green technologies
such as solar PV stations, as well as streamlining the application procedure to ensure a
quick and efficient financing process.
• Collaborate with institutions to provide technical help to bank clients in order for them
to become more sustainable and resilient.
51
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Interview Handbook for Senior and Middle Management of
Banks Embracing Sustainability, Appendix 1
Questionnaire:
1-strongly 2-disagree 3-neutral 4-Agree 5-Strongly
disagree agree
Masr Bank
statement 1 2 3 4 5
My bank has initiatives to reduce paper usage
and other wastage of materials
My bank has introduced energy efficient
equipments system solution and practices
My bank uses uses e-waste management
practices.
My bank has environmental friendly banking
practices.
Cairo Bank
Statement 1 2 3 4 5
My bank regularly arrange seminars workshop
to promote environmental practices daily
operations
My bank encourage customers to use
environmental friendly banking practices.
My bank provides loans to environmental
protection and energy saving related projects.
My bank implements certain independent and
unique green initiatives,projects and etc
Credit Agricole bank
Statement 1 2 3 4 5
My bank promotes and facilitates
environmental management system or any
mechanism to evaluate all projects proposals
My bank promotes and facilitates
environmental enterprises through special
sachems, loans and guidance.
56
My bank promotes and
facilitates environmental
oriented guidance to promote green projects
My bank promote and facilitate credit line to
green projects.
Al-Ahli Bank
statement 1 2 3 4 5
My bank involves in setting up green branches
My bank has an environmental green policy
My bank has environmental related agreements
with relevant parties stakeholders
My bank promote an environmental friendly
policy at corporate level.
57

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Arab Academy for Science, Technology

and Maritime Transport

AWARNESS OF GREEN BANKING, CHALLANBES AND

Prof. Mona Kadry

The investment required to address today's sustainability challenges is twofold: it should

According to the Sustainable

 Economic dimensions include economic development, energy, knowledge, technology, and

The effect of internet banking on banks performance in both developed and

Adoption of transaction processing internet banking necessitates a steady decrease in

ROE, which reflects investor

II. The independent variables

Table 5 displays names, notations, descriptions, and measurements of internet banking-specific

Panel regression analysis is conducted using the following estimating equation

where MACRO represents GDP growth

X stands for bank-specific financial ratios.

I. RESULTS AND DISCUSSION

1.1 Descriptive analysis

Table 7. Regression analysis results for Internet (2009–2018)

III.Global Case Studies

The Case of Spain and Banco Santander

The General Sustainability Policy is supplemented by group policies such as climate

Bangladesh is a developing country with immense significance in terms of exporting for

Integrating sustainability standards into the Bangladeshi banking system has

The CIB Implementation Procedure :

Bank A’s Implementation Process

Bank B’s Implementation Process

d) The Implementation Procedure of Bank C Of the four institutions examined, Bank

Although the incentives in the first phase encourage banks to adopt

Credit Agricole bank

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