Citation

Arhinful, Richard and Mensah, Leviticus and Gyamfi, Bright Akwasi and Obeng, Hayford Asare (2025) The influence of non-performing loans on environmental innovation: an institutional theory perspective – insights from U.S banks. Cogent Business & Management, 12 (1). ISSN 2331-1975

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Abstract

With the global push for sustainability, banks are turning to environmental innovation to support green projects, offer eco-friendly loans, and align with environmental goals. However, banks burdened by high NPLs may lack the incentive to invest in such initiatives. This study used the institutional theory to probe into the influence of NPLs on environmental innovation. The selection of the banks listed on the New York Stock Exchange was based on inclusion and exclusion criteria, and employing purposive sampling enabled the identification of 70 potential banks without any gaps in the data between 2011 and 2023, and their data were obtained from the Thomson Reuters Eikon. Augmented Mean Group (AMG), Fixed effects with Driscoll-Kraay standard errors and Generalized Methods of Movement were the sophisticated estimation methods used to analyze the relationship between NPLs and environmental innovation. The study discovered a negative and significant relationship between NPLs and environmental innovation. It was further disclosed that the interaction relationship between NPLs and management quality had a negative and significant impact on environmental innovation. To foster environmental innovation, banks should adopt strategies that blend sustainability with long-term growth beyond short-term profits. One effective approach is establishing a dedicated fund solely for financing environmental projects.

Item Type:	Article
Uncontrolled Keywords:	Bank
Subjects:	H Social Sciences > HG Finance > HG1501-3550 Banking
Divisions:	Faculty of Management (FOM)
Depositing User:	Ms Rosnani Abd Wahab
Date Deposited:	27 Aug 2025 06:51
Last Modified:	04 Sep 2025 21:10
URII:	http://shdl.mmu.edu.my/id/eprint/14490

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