Do Green Banking Practices Influence Indian Banks’ Operational Efficiency-A Two Stage Network DEA

This study aims to examine the association between green banking practices and the operational efficiency of banks. Green banking practices are measured through the green banking index, which is prepared by applying the content analysis technique. To measure the operational efficiency of banks, the two-stage network data envelopment analysis model is applied. Data are taken for 22 Indian banks for a period of 5 years ranging from 2021 to 2025. To achieve the objective of this study, panel data models and two-step system GMM are applied. The empirical findings of this study reveal that green banking practices positively influence banks’ operational efficiency. Green finance, green operations, green policy and green awareness are the subindices, and all these also positively affect the operational efficiency of banks. Based on the results, recommendations are provided to policymakers, bank managers and regulatory authorities. Green banking practices can facilitate sustainable development by ensuring the direction of funds towards eco-friendly projects.