Antecedents of Intention to Use Green Banking Services in India

• Published date: 01 September 2016
• Author: Anindita Chaudhuri,Kartik Dave,Douglas Bryson,Glyn Atwal
• DOI: http://doi.org/10.1002/jsc.2080
• Date: 01 September 2016

RESEARCH ARTICLE

Strat. Change 25: 551–567 (2016)

Published online in Wiley Online Library

(wileyonlinelibrary.com) DOI: 10.1002/jsc.2080

Copyright © 2016 John Wiley & Sons, Ltd.

Strategic Change: Briengs in Entrepreneurial Finance

Strategic Change

DOI: 10.1002/jsc.2080

Antecedents of Intention to Use Green Banking

Services in India1

Douglas Bryson

ESC Rennes School of Business, France

Glyn Atwal

Univ. Bourgogne Franche‐Comté, ESC Dijon‐CEREN, France

Anindita Chaudhuri

Calcutta University, India

Kartik Dave

Ambedkar University, Delhi, India

Banks in India face opportunities to innovate to meet changing expectations

regarding green banking practices.

ere is evidence to suggest that the general public in India is becoming increas-

ingly aware of environmental issues and the benets of sustainable economic

practices. According to Nielsen’s 2011 Global Online Environment and Sustain-

ability Survey, 90 percent of Indians surveyed were concerned about air and water

pollution and 80 percent thought that climate change was an important environ-

mental issue (Nielsen, 2011). ese ndings are supported by a more recent survey

of 1270 Indian consumers that reported 85 percent of respondents are condent

that green products are better for the environment (TNS Global, 2014). As a

result, there is evidence to suggest that corporate stakeholders are expected to take

greater responsibility in sustainable business practices (Shrivastava, 1993).

is evolution of thinking has opened up debate regarding whether compa-

nies should be responsible to company stakeholders (Maignan and Ferrell, 2001)

or to society as a whole (Brown and Dacin, 1997). For example, the leading

100 listed companies in India are required by the Securities Exchange Board to

report on corporate responsibility (CR)2 activities in their annual reporting,

although admittedly the quality of CR reporting has been under scrutiny

(KPMG, 2013). iscan partially be explained by the diculties in establishing

1 JEL classication codes: G20, G21, M10, Q20, Q40, Q50.

2 In much management literature, corporate responsibility (CR) is often referred to as

corporate social responsibility (CSR), and includes both ecological and social issues and

activities. Here, these terms are from the cited source and the reader is requested to

understand them as synonymous.

Key factors are identied to

predict consumers’ intentions to

use green banking services in

India.

The key factors that predict 60%

of the variance in intention to use

green banking services are

perceived environmental integrity,

attitude toward green banking,

environmental concern, and

collectivism.

These results will help banks craft

successful marketing strategies

within the context of green

innovation in a developing

economy.

552 Douglas Bryson, Glyn Atwal, Anindita Chaudhuri, and Kartik Dave

Copyright © 2016 John Wiley & Sons, Ltd. Strategic Change

DOI: 10.1002/jsc

credible global performance measures, as stressed by

Ernult and Ashta (2008).

However, the motivation for companies to develop

eective CR strategies can also be driven by strategic

rather than mandated motives. is has given rise to the

phenomenon of green marketing, which ‘allows the com-

panies access to new markets, to increase their prot-

ability, and to enjoy more competitive advantages’ (Chen,

2010, p. 316). Numerous studies have found a positive

relationship between corporate social responsibility per-

formance and nancial performance (Beurden and Gos-

sling, 2008; Goll and Rasheed, 2004; Hart and Ahuja,

1996; Heugens and Dentchev, 2007; Husted and Allen,

2000; Klassen and Curtis, 1996; Menguc and Ozanne,

2005; Russo and Fouts, 1997), cited as a source of com-

petitive advantage (Bakker et al., 2005; Heugens and

Dentchev, 2007; McWilliams and Siegel, 2001; Pujari

et al., 2003; Westley and Vredenburg, 1996). Interest-

ingly, similar results were also reported within the sus-

tainable banking sector. A benchmark study of European

banks concluded, ‘alternative banks can also be nan-

cially successful and have growth rates similar to, or even

better than, those of their conventional competitors’

(Weber, 2005, p. 86), whilst GABV (2012) reported that

sustainable banks achieved generally better or compara-

ble returns on assets and returns on equity over the time

period 2007–2010. is is consistent with Constantinou

and Ashta (2011), who posit that the broader nancial

sector can benet from social banking practices. More-

over, research ndings support the view that corporate

social responsibility (CSR) initiatives can positively

inuence the non‐nancial returns of banks, such as

customer loyalty (Salmones de los et al., 2009), service

quality perceptions, trust, and aective attitudes

(Poolthong and Mandhachitara, 2009). Given this back-

ground, the global banking community have signaled

their willingness to develop and implement an increas-

ingly coherent CR strategy. Critically, this has set the

context for Indian public and private banking to develop

green banking as an increasingly important strategic

instrument. is research investigates relevant constructs,

including attitudes, in order to predict intention to use

green banking services. e study also determines the

degree of willingness to pay a service premium in order

to ensure green banking practices are in place.

Green banking practices in India

ere is no universally accepted denition of ‘green

banking,’ but it can be conceptualized as a ‘form of

banking taking into account the social and environmental

impacts and its main motive is to protect and preserve

environment’ (IDRBT, 2013, p. 2). Ingham et al. (2013,

p. 109) provide a similar explanation, ‘By integrating

sustainability into a bank’s business strategy and decision‐

making processes, institutions can support environmentally

or socially responsible projects, innovative technologies,

and sustainable enterprises.’

It is within this scope that green banking in India can

be categorized according to Scholtens’ (2009) four groups

of indicators about a bank’s social responsibility. e rst

group consists of codes of ethics, sustainability reporting,

and management systems. For example, 80 nancial insti-

tutions that since 2013 includes IDFC (India) are com-

mitted to the Equator Principles (EPs) agreement, which

is a nancial industry standard for assessing environmental

and social risk management in projects. e second group

refers to environmental management, ‘Taking care of the

environment also is reected in the ways in which banks

account for environmental risks’ (Scholtens, 2009, p.162).

is refers broadly to banks acting as ‘environmental

policemen’ (ompson, 1998, p. 243) and considers the

adoption of environmentally sustainable processes through

its lending and investment decisions. For example, HDFC

Bank uses a social and environmental risk management

system (SEMS) to assess loans for risks related to negative

social or environmental impacts (HDFC Bank, 2014).

Likewise, the social environmental management system

plan (SEMSP) introduced by Kotak Mahindra Bank eval-

uates the social and environmental risks as part of overall