Banking Practice and Credit Risk Indicators: A Systematic Literature Review of Green Banks

Abstract

Green banking extends the scope of traditional financial services by supporting the lending of money to eco-friendly sources, investment in clean technologies, and influencing the customers and businesses to become environmentally responsible. This study presents a systematic literature review of green banking and sustainable finance, covering research published between 2016 and 2025. The primary objective is to explore the evolution, thematic development, and methodological approaches within the green finance domain, focusing on the role of banking institutions in supporting environmental sustainability. Drawing exclusively from the Scopus database, 50 peer-reviewed journal articles were analysed using R Shiny-based bibliometric tools to uncover trends, gaps, and future research trajectories. The review identifies ten major research themes: green banking adoption, green economy and ecological finance systems, climate change mitigation through finance, environmental economics, financial inclusion and SDGs, ethical banking and CSR, green monetary policy frameworks, green finance in emerging markets, and sustainable FinTech innovations and stakeholder collaboration in green finance. The study reveals that Structural Equation Modelling (SEM) is the most employed methodology, reflecting the growing trend of quantitatively measuring stakeholder perceptions and behavioural drivers of green banking practices. Key sources include leading journals such as Environment, Development and Sustainability, Journal of Sustainable Finance & Investment, and Technological Forecasting and Social Change. The review also underscores regional disparities in research output, with a significant concentration of studies in South and Southeast Asia, while African and Latin American contexts remain underexplored. In addition, the study results point to non-existent interdisciplinary research and the absence of studies of more advanced technologies, including AI and blockchain, in green banking. The review is relevant to the body of research since it identifies the scope of research on green finance covering a decade and provides practical implications to policymakers, financial institutions, and researchers who want to contribute to the development of green finance practice in any part of the world.