Is Islamic Banking More Sustainable than Conventional Banking? An Empirical Study on Selected Banks of Bangladesh

By Mohammed Syedul Islam, Md. Rafiqul Islam Rafiq

Abstract

Bangladesh Bank adopted various green banking initiatives to respond with global warming and ecosystem changes; particularly it circulated the green banking guidelines to all commercial banks of Bangladesh in 2011. Based on green banking practices, this paper aims to compare the performance of Islamic banks over the conventional banks in Bangladesh for the period of 2011-2014. In addition to secondary data, this study uses primary data collected by a questionnaire survey which was conducting among green banking officials of sample banks. Different ratio such as green budget, environmentally safe finance, energy efficiency, climate risk reduction and employees’ awareness toward green banking have been done on the sample banks. This study reveals that Islamic banks are more sustainable than conventional counterpart except employees’ awareness on green banking. This paper finally recommends that the Bangladesh Bank should provide Shari’ah complaint re-finance scheme facilities to Islamic banks, Islamic banks may introduce some Shari’ah-based investment products to facilitate low cost green technology among the clients, and Islamic banks should follow uniform annual disclosure in publishing green banking practices and cover necessary information to avoid uncertainty (gharar) from the Islamic banking industry.