“Unraveling the synergy of green finance and financial mechanism: based on sustainability of banking development in Bangladesh”

Abstract

This study extends the Marshaling demand framework to investigate the effects of GDP, Green finance, FinT, Sustainable development on banking sector in Bangladesh by using an ARDL (autoregressive distributed lag) bounds-testing approach for the sample period of 1990 to 2023. This comprehensive theoretical framework predicts that TI, an exogenous element in the banking function, increases efficiency and, correspondingly, reduces at a given level of economic output. The F-bound cointegration test is applied in this study to determine cointegration among the variables. Then, to explore the short-run and long-run elasticity of the explanatory variable, theARDL method is employed. Additionally, a pairwise Granger causality test was incorporated todetermine the direction of causation between the variables. Finally, this research used different diagnostic tests. This study confirms both short-run and long-run theoretical predictions. However, increasing GDP per capita, FinT, SUS increase banking development use.