Green Finance as a Mediator Between Green Banking Practices and Sustainable Behavioural Outcomes

Abstract Despite the growing emphasis on green banking and sustainable finance, empirical evidence remains limited regarding how Green Finance functions as a mediating mechanism between Green Banking Practices and Sustainable Behavioural Outcomes in developing economies. This study investigates the mediating role of Green Finance in the relationship between Green Banking Practices and Sustainable Behavioural Outcomes, with a particular focus on the Indian banking context. As a mechanism for sustainable development, Green Finance channels investments into environmentally responsible activities and aligns financial systems with climate and sustainability goals. Specifically, the study examines how Economic Incentives, Government Regulations, Customer-Related Practices, Employee-Related Practices, and Corporate Social Responsibility (CSR) initiatives influence sustainability outcomes through the intermediation of Green Finance. A quantitative, cross-sectional research design was adopted, and data were collected from 387 banking professionals and Generation Z consumers across major Indian metropolitan cities using validated measurement instruments. The data were analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM) to test the hypothesized relationships and mediation effects. The results reveal that Employee-Related Practices, Government Regulations, and CSR initiatives significantly influence Sustainable Behavioural Outcomes, while Green Finance strengthens these relationships by facilitating sustainability transitions. The findings further suggest that awareness and regulation alone are insufficient unless they are supported by robust financial instruments and strong organizational commitment. From a practical perspective, it offers important insights for policymakers, financial institutions, and corporations seeking to strengthen sustainable banking frameworks and accelerate the adoption of green financial practices for long-term environmental and economic resilience.