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INTERNATIONAL JOURNAL OF SCIENTIFIC & TECHNOLOGY RESEARCH VOLUME 9, ISSUE 10, OCTOBER 2020 ISSN 2277-8616
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IJSTR©2020 www.ijstr.org
The Extent Of Awareness Regarding Green
Financing Among Jordanian Commercial Banks
From The Perspective Of Investment Department
Managers
Dr. Marwan Mohamed Abu Orabi
Chronicles
Abstract
Current study is an attempt to find out the awareness level of commercial banks in Jordan about the
concept of green financing and the extent of the commercial banks' use of this type of financing. The
current study relied on the quantitative methodology by distributing a questionnaire to (142) managers,
leaders and employees in commercial banks in Jordan - (49) commercial bank.
Results of the study proved that there is an acceptable level of awareness within the categories studied in
banks about the concept of green financing and that there is an actual application for this type of finance
within banks in Jordan.also, results indicated that the first and most important supporter of green financing
in banks are the government, legislations and laws must be framed and oriented towards supporting
foreign investment in environmental projects in addition to back up banks in its approaches to finance
green investments.
Keywords: Green Financing, Green Bonds, Green Economy, Green Banking, Sustainable, Sustainability, Development, Developing
————————————————————
1. INTRODUCTION
The past decade witnessed a significant transition of Arab
countries towards a green economy (Baker et al, 2018).
From almost zero in adopting green economy systems or a
sustainable strategy, more than seven countries have
developed such strategies or have included green economy
and sustainability components in their plans (Li et al, 2015).
Green strategies have been translated into a set of
regulatory measures and incentives introduced in these
countries to facilitate the transformation. This gave a strong
signal to the private sector to increase investments in the
green economy sectors, especially renewable energy, as
according to Olomola and Adesugba (2015) which is
evident in Morocco, Jordan and the UAE, where billions
have been invested in solar and wind farms, Morocco is
implementing a plan to generate more than half of its
electricity from renewable resources by 2030. Mundaca and
Richter (2015) argued that this shift has led to increased
awareness and recognition of the real economic, social and
environmental gains resulting from the transition to a green
and sustainable economy. This is reflected in the increase
in employment opportunities created by green investments,
efficient use of natural resources, competitiveness and
access to markets. While Falcone and Sica (2019) saw that
the economy can be diversified and revitalized by creating
new activities and opportunities such as: renewable energy,
new renewable water sources through wastewater
treatment and reuse of treated and desalinated water,
sustainable and organic agriculture, green industrial
products, sustainable societies, green buildings, a green
public transportation system, Ecotourism, along with
integrated solid waste management systems that can
generate energy, produce compost and reuse materials.
Based on above argument, current study seeks to examine
the extent of awareness regarding green financing among
commercial banks in Jordan from the perspective of
managers, leaders and employees within these banks.
Following figure (1) explained the relationship between
chosen variables and how hypotheses were developed:
Figure (1): Study Model (Falcone and Sica, 2019)
Independent Variable
Green Financing Policies
Legislative framework
Promote sustainable energy
investments
Contribute to environmental challenges
Avoid capital depletion
Investing in capacity building and
training
Attention to rural development and
poverty alleviation
Dependent Variable
Commercial Banks'
Awareness
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2. Main Hypothesis:
Commercial Banks in Jordan enjoy high level of green
financing awareness through its banking operations
Commercial banks in Jordan adopts a sound legislative
framework that supports green financingCommercial banks
in Jordan promote sustainable energy
investmentsCommercial banks in Jordan contribute to
environmental challengesCommercial banks in Jordan
avoid capital depletionCommercial banks in Jordan invest in
capacity building and trainingCommercial banks in Jordan
give attention to rural development and poverty alleviation
3. Hypotheses Development
Government legislation Influences Banks' Adoption of green
Marketing Falcone and Sica (2019) noted that while most
governments fail to fulfill their environmental obligations and
abandon their primary role in protecting their citizens from
pollution and climate change, some of the most influential
players in the global economy are leading the shift towards
a clean, green and emissions-free world. Financial giants in
Europe, China, Japan, the United States, Australia and
elsewhere can see the risks and rewards looming, and they
are not waiting for policymakers to indicate what to do
(Park, 2018). The role of the government is important when
looking at the idea from a different perspective.
Organizations within developing countries can't adopt their
own path in working, as well as they can't afford the
financial consequences of playing alone in the field. From
that point, it can be hypothesized that the legislative
framework in the country plays a role in defining
organizations'' awareness regarding green financing (Ng,
2018).
4. Promote sustainable energy investments
Investment is one of the most important elements of green
financing and is considered an important and effective vital
component for achieving the process of economic and
social development in countries that suffer
economicallyFlaherty et al (2017). Investment is mainly
related to the economy and is of great importance to
countries because it contributes to increasing production,
strengthening the economy, providing job opportunities and
improving the standard of living andincreases the local
national product. In another meaning, unless the investment
is oriented towards ecological and environmental causes it
won't be considered as green financing; it will appear as
traditional financing (Ng, 2018).
5. Contribute to environmental challenges
According to Ascensão et al (2018) green financing
emerged in response to multiple crises and aims to achieve
economic development through environmentally friendly
projects and the use of new technologies in the field of
renewable and clean energies, and calls for greening the
existing sectors and changing unsustainable consumption
patterns, which generates new job opportunities working to
reduce poverty, as well as reduce Energy intensity,
resource consumption and production. In this context,
countries seek to develop a vision to launch a green
economy and support green financing initiatives in financial
institutions in order to ensure a smooth transition towards
them, taking into account many basic axes such as the
energy crisis and high prices of fossil fuels whose stocks
have become threatened with depletion, the economic crisis
and investment Green as a means of economic recovery,
and policies to mitigate greenhouse gas emissions, which
led to the creation of a strong conviction for some countries
of the need to develop a new model for sustainable
development based on changing consumer behaviors and
marketing models which included the adoption of green
financing practices.
6. Avoid capital depletion
Green investments are often mixed with socially
responsible investment, which are mainly investment
activities focused on companies or projects committed to
conserving natural resources, producing and exploring
alternative energy sources, implementing fresh air and
water projects, and other environmentally conscious
business practices. In fact, finding alternative sources of
energy is one of the things that can achieve many goals,
such as rationalizing the consumption of fossil fuel energy
in addition to rationalizing capital consumption. According to
Kulsum and Huda (2018)When comparing the expenses of
consuming an environmentally friendly housing unit and a
traditional one, we find that the latter depends on waste,
expenses and costs that are higher than those based on
energy saving practices, which would deplete the capital, as
well as to banks and financial institutions, the financing of
projects Green is a successful way to help reduce the
physical burden in addition to supporting the pillars of
sustainable development.
7. Investing in capacity building and training
The attempts of countries to adopt green economy
practices and green financing were a fundamental
motivation for those countries to begin focusing on the
existing competencies they have, in addition to many
investments in the field of training and upgrading skills in
order to create a generation fully aware of the principles of
green financing, in addition to this, the involvement of
Young generations in the fields of environmentally friendly
projects that contribute to enhancing their expertise and
competencies in the field of green investment and
deepening the level of awareness of the concept of
greening not at the local level but at the global level, from
this point – as according to Owen et al (2018) – there
appeared many governments that have invested in the
fields of training, rehabilitation, innovation and scientific
research, in addition to being guided and benefiting from
Arab, regional and international experiences and pioneering
initiatives in adopting the green economy system in the
framework of sustainable development. Many governments
have also worked to activate the role of the private sector in
terms of effective community partnership in the governance
of the technical and vocational education and training
system to enhance the orientation towards a green
economy.
8. Attention to rural development and
poverty alleviation
As indicated previously, green financing is one of the
practices of a green economy through which a state of
sustainable development of resources and environment is
achieved that reduces the level of unemployment and
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poverty and this is done through two broad areas, the first
of which is to help new generations to understand the
principle of development Sustainable development and their
incorporation into environmentally friendly projects to
ensure the sustenance of their day. The second is that
access to sustainable development entails preserving the
environment and green areas for future generations to
exploit in agriculture, which reduces the level of poverty as
a result of the development of one of the main sectors in
the state and its Agriculture sector.Accordingly, it can be
said that building a green global economy and adopting the
foundations of green financing in the context of sustainable
development in order to eradicate poverty is a collective
endeavor. It concerns the international community, the
public and private sectors, civil society, local governments
and other actors (Dawson et al, 2016)
9. Literature Review
Green Economy
The United Nations program defines the concept of green
economy as the economy that results in improvement in
human welfare and social equality, while at the same time
working to reduce environmental risks and conserve
ecological resources. As for D'Amato et al (2017), green
economy is the situation in which efforts are mobilized to
reduce carbon emissions and high levels of resource
efficiency through rationalization, in addition to adopting
renewable energy foundations through public and private
investments. Loiseau et al (2016) indicates that the concept
of green economy is not considered a synonym for
sustainable development in any way, but rather it is one of
the methods through which sustainable development and
economic reform are carried out.
Green Financing
As for green financing, D'Amato et al (2017) indicates, it is
one of the tools of the green economy, through which
financial institutions and banks support and finance projects
related to the environment and energy and rationalize
consumption or shift towards renewable energy. From
another perspective, green financing according to Ng
(2018) is the investments and loans that finance projects
aimed at protecting the environment and conserving natural
resources. In the context of growing environmental
concerns, the focus is on green financing. According to the
International Finance Corporation, loans earmarked for
project financing in sectors focusing on green activities
accounted for 15% of the total value of syndicated loans,
with a value of $ 1100 billion in 2014. Lalon (2015) stated
that green financing is new financial pattern for integrating
environmental protection with economic profits, with a focus
on "green" and "financing", which are two controversial
issues. Consequently, green financing is financing aimed at
achieving economic growth by relying on reducing pollution
and greenhouse gas emissions, in addition to reducing
Waste volume and access to alternative energy sources are
more environmentally friendly. Porfir’ev (2016) reported that
green financing has echoed in Qatar, where a number of
leading commercial banks have launched a housing loan
program called "Green Mortgage", which aims to reward
new real estate owners friendly to the environment at
concessional rates of interest while extending the
repayment period. In addition, Qatar Development Bank
was the first to finance small and medium-sized companies
operating in the agriculture, livestock and fisheries sector,
with the aim of enabling local institutions and achieving self-
sufficiency in the sector. Green Financing Requires Green
Banks
When talking about green financing, there appears the idea
of green banks which according to Volz et al (2015) refer to
financial institutions that use public financing to utilize it in
clean energy financing. They are public or semi-public
financing institutions that provide low-cost, long-term
financial support for low-carbon clean energy projects by
benefiting from public financing and by using different
financial mechanisms to attract private investment, so that
every dollar of public financing supports several dollars of
private investment.Dörry and Schulz (2016) argued that
with the difference from one country to another, the green
banks can adopt a variety of structures, take advantage of
the various public savings vessels, and create a variety of
financial products. Banks may use financial instruments
such as long-term loans and low-interest loans, revolving
loan funds, insurance products (such as loan guarantees or
loan loss reserves), low-cost public investments, or they
may design new financial products.
Cui and Huang (2018) stated that ultimately, all green
banks have several common characteristics among
them:
- Stimulating demand by covering 100% of the initial
costs through a mix of public and private financing.
Benefiting from public funds by attracting more
private investments towards clean energy markets
and energy efficiency.
- Recycling public capital to expand green
investment and not prejudice taxpayers ’money.
- Reducing market deficiencies.
- Expanding clean energy solutions as quickly as
possible, and maximizing clean electricity and
efficiency gains earned for every dollar a country
spends.
Among the benefits of green financing as according to
Spratt (2015) is:
- Investments in equipment, systems or processes
that lead to a significant improvement in energy
performance in commercial operations
- Investments that encourage energy use from
renewable sources
- Investments related to privately owned commercial
buildings or related investments.
Acheampong (2016) argued that Green banks seek to
achieve several goals, including increasing the use of clean
energy, increasing the efficiency of using public funds, and
directing mature private financial markets towards investing
in clean energy. These banks seek to promote cheaper,
cleaner and more reliable energy. However, Ilić et al (2018)
presented the idea of those green banks may take different
forms, there are generally three structures to consider: a) a
green bank can be self-contained as a semi-independent
entity, and this structure allows for the highest degree of
flexibility and independence., b) for the green bank to be
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located within an existing government body, and c) the
Green Bank can be merged with another large bank, as it
can be established as a separate subsidiary. In another
word, Lam and Law (2016) stated that Green Bank can
obtain initial financing from several public sources. In both
Connecticut and New York in the United States of America,
existing state funds (systems usage fees) have been re-
invested, and regional greenhouse gas initiative (RGGI)
funds have also been used to provide seed capital to the
green bank. Alternatively - as in Hawaii - the state can issue
bonds to private investors; while Meltzer (2016) saw that
Green banks can also obtain money from capital returns
and the proceeds of commercial auctions and from private
institutions, based on the state system and the legal system
applied when establishing the green bank. It is rarely
advised to use the new appropriations for the state’s
general budget, unless the feasibility of this in a particular
country becomes clear. According to DuPont et al (2015),
generally there are three phases for establishing a new
state green bank. In the first stage, a stakeholder coalition
(such as clean energy organizations, clean technology
trade unions, environmental groups, and state agencies)
forms the basis for supporting the green bank. This support
is extremely important to meet legal requirements or
achieve the organizational change required to establish a
green bank in a manner consistent with the law.In the
second phase, the Green Bank Foundation is established,
including staff recruitment, capacity building, goal setting,
market assessment and product development. In the final
stage, the Green Bank actually begins obtaining customers
and lending in partnerships with private investors,
employing recycling funds to recapitalize the bank.
Green Financing Practices
In order for banks and banking institutions to be more
inclined towards green growth, many global official financial
bodies have provided solutions for a bank or financial
institution to be considered as (green) by providing services
like banking services for individuals such as financing green
housing and providing facilities for green mortgages in
order to motivate individuals to adopt or buy renewable
energy sources such as solar systems or those housing
that enjoy energy and energy efficiency (Miroshnychenko et
al, 2017). Also, banks can provide financing to convert a
facility traditional residential to green house (SM Mahfuzur
and Barua, 2016).Green banks also provide soft financing
for green car loans that control pollution and green cards
associated with environmental sustainability activities and
provide credit discounts on them (Olomola and Adesugba,
2015). On the corporate level, he emphasized Meltzer
(2016) that the banks that adopt green financing provide
services to organizations and companies such as green
bonds, which are fixed income bonds that finance
investments with environmental or external environmental
benefits and are an integral part of green financing and aim
to help absorb External environmental factors and
controlling risk perceptions in order to increase
environmentally friendly investments (Wang et al,
2015).There is another type of green banking services that
are provided to organizations and companies, which is
green securitization bonds, that is, financial investment in a
group of distinguished and emerging environmental
securitization technologies such as purpose bonds and
wildlife and aquatic securitization bonds. As for Wang et al
(2015),mentioned other services that include green
investment capital, private equity, green indices, and credit
and carbon commodities.
Reality of Green Financing among Commercial Banks
in Jordan
Jordanian and international banks are moving towards
sustainable development and green financing in order to
preserve the environment and the rights of future
generations to a decent life. Roz (2019) stated on the
importance of the shift towards green financing and the
establishment of an independent department for
sustainable development in each bank and the
development of a training plan to spread awareness among
workers about green financing and sound environmentally
friendly practices with a view to encouraging them to
implement those practices.In addition to that, banks in
Jordan adopted a mechanism to develop and launch green
products within the bank’s current product package, and
focus on supporting small and medium green projects and
considering them among the bank’s target groups. It also
indicates that the growing desertification phenomenon is
one of the most important drivers of adopting green
financing, as the Arab region is losing vast areas of arable
land, which negatively affects the reality of food security,
especially with the increase in the rate of environmental
pollution and climate change. Roz (2019) believes that
green finance finds a growing interest in Jordan and
Jordanian banks, especially through attention to
environmental sustainability issues and the importance of
mitigating the negative effects of climate change,
preserving resources and using banking services in green
financing, as it encourages the adoption of environmentally
friendly practices and contributes to Reducing the negative
effects of climate change in a way that rebalances global
growth and enhances the role of sustainability as a future
concept that carries growth opportunities for society, the
environment and the entire business sector. In the United
States, the government permits the creation of a green
bank in the form of a company, where it can be a subsidiary
of some government agency, or be created by renaming an
existing body. They form the bank’s capital by raising funds
(Oyegunle and Weber, 2015). They assign him the task of
providing financing - loans, guarantees, or debt purchase in
advance - for clean energy projects. The goal is to provide
financing at low interest rates and long recovery times.
These conditions allow the installation of solar cells or
energy efficiency measures in buildings where the owner
does not pay any money in advance. The payoff comes
from savings in the owner's energy costs over time
(Andreeva et al, 2018).
Methods
Achieving main aim of current study was reached through
depending on quantitative approach. Researcher utilized a
questionnaire which was distributed on managers, leaders
and officers of financial departments within commercial
banks in Jordan (Jordanian and foreign). Study adopted a
convenient sample of (220) individuals from all banks, after
application process; researcher was able to retrieved total
of (142) properly filled questionnaires referring to a
response rate of 64.5% as statistically accepted.Through
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Cronbach's alpha; the reliability test resulted in a value of
(0.946) for all the items within the study, the alpha however
resulted greater than 0.60 which indicated the tool
consistency that enhanced its use in the study.
Results and Discussion
Following section presented demographic results of sample
characteristics according to their answers. Demographic
variables of current study included (gender, age, education
and experience).
Demographic Results
Table (1): Gender
Frequency
Percent
Valid Percent
Cumulative Percent
Valid
Male
95
66.9
66.9
66.9
Female
47
33.1
33.1
100.0
Total
142
100.0
100.0
When going through sample characteristics according to
gender, it was found out as in table (1) that majority of
sample was males forming 66.9% of total sample compared
to females who formed 33.1% of total sample with
frequency of 47 female.
Table (2): Age
Frequency
Percent
Valid Percent
Cumulative Percent
Valid
25 – 30
25
17.6
17.6
17.6
31-36
66
46.5
46.5
64.1
37-42
33
23.2
23.2
87.3
+43
18
12.7
12.7
100.0
Total
142
100.0
100.0
In table (2), study analysis indicated that 46.5% of sample
was individuals within age range of 31.36 years old,
compared to the least age range of 112.7% which was
formed by individuals within age range of +43 years old.
This can indicated that majority of commercial banks
employees in Jordan were within the young age who are
aware of new trends in financing.
Table (3): Education
Frequency
Percent
Valid Percent
Cumulative Percent
Valid
BA
96
67.6
67.6
67.6
MA
44
31.0
31.0
98.6
PhD
2
1.4
1.4
100.0
Total
142
100.0
100.0
On the same track, it was found out – as in table (3) – that
majority of sample responded to questionnaire were
individuals holding BA degree forming 67.6% of total
sample compared to least percentage of individuals holding
a PhD degree of 1.4% of total sample.
Table (4): Experience
Frequency
Percent
Valid Percent
Cumulative Percent
Valid
2-4
37
26.1
26.1
26.1
5-7
54
38.0
38.0
64.1
8-10
42
29.6
29.6
93.7
+11
9
6.3
6.3
100.0
Total
142
100.0
100.0
The final demographic item appeared in table (4) which
indicated that majority of sample had an experience of 5-7
years forming 38% of total sample, compared to least
percentage of experience forming 6.3% of total sample
which appeared to for individuals who had and experience
of more than 11 years.
Questionnaire Statements Results
Following section presented analysis of questionnaire
statements' analysis according to study sample responses.
Questionnaire consisted of independent variable (Green
Financing Policies) which included sub-variables of
(Legislative framework, Contribute to environmental
challenges, Promote sustainable energy investments, Avoid
capital depletion, investing in capacity building and training,
and Attentionto rural development and poverty alleviation)
and the independent variable of Awareness of green
financing.
Table (5): Descriptive Statistics
N
Minimum
Maximum
Mean
Std. Deviation
Green Financing Policies
Legislative framework
There are important government legislation to stimulate
shifts in consumption and investment patterns
142
1
5
3.56
1.257
Changes are being made in business practices with the
participation of the public and private sectors
142
1
5
3.44
1.217
There is a lot of legislation driving green economic activity
142
1
5
3.43
1.132
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More legislation is needed to remove barriers to green
investment
142
1
5
3.35
1.156
Promote sustainable energy investments
The bank promotes sustainable investments
142
1
5
3.35
1.045
One of the bank's goals is sustainability in the field of
renewable energy
142
1
5
3.18
1.113
The bank is working on adopting measures to raise the
efficiency of renewable energy
142
1
5
3.25
1.046
The bank is developing low carbon strategies to produce
more environmentally friendly
142
1
5
3.20
1.026
Contribute to environmental challenges
The bank finances projects that adopt environmental
standards in construction
142
1
5
3.27
.945
The bank tackles the problem of solid waste
142
1
5
3.23
1.036
There are a lot of projects that invest in waste in an
environmentally friendly manner
142
1
5
3.20
1.053
The bank finances green technology projects and
facilitates their dissemination and acquisition
142
1
5
3.42
1.047
Avoid capital depletion
The bank is developing new financing mechanisms to
accelerate the spread of green technology
142
1
5
3.37
1.035
The bank supports efficient goods
142
1
5
3.51
1.195
The bank encourages non-waste and wasteful exchange
and consumption
142
1
5
3.37
1.145
The Bank works to ensure that renewable resources and
ecosystems are not degraded
142
1
5
3.64
1.074
Investing in capacity building and training
There is a good seizure of green economic opportunities
142
1
5
3.57
1.027
The bank adopts flexible policies in dealing with energies
142
1
5
3.63
1.015
Young energies and entrepreneurship are among the
bank's priorities
142
1
5
3.46
1.015
There is a comprehensive and good awareness of the
concept of green financing among the bank's working
personnel
142
1
5
3.76
.982
Attention to rural development and poverty alleviation
Attention to rural development will contribute to poverty
alleviation
142
1
5
3.45
1.022
Contributing to the countryside is a way to get involved in
social responsibility
142
1
5
3.65
1.004
Attention to rural areas may help rationalize water
consumption
142
1
5
3.66
1.003
The involvement of banks in the countryside as one of the
green financing tools contributes to preventing pollution
and preserving green spaces
142
1
5
3.49
1.077
Awareness of green financing
I think green financing is an alternative to the
disappointment of the global economic system
142
1
5
3.63
1.264
Green financing can provide solutions to multiple financial
crises
142
1
5
3.49
1.236
Green financing may be seen as a way to avoid market
collapses
142
1
5
3.51
1.159
The shift to green finance is an opportunity to confront the
challenges posed by climate change
142
1
5
3.42
1.199
Green financing means moving to a low carbon economy,
which will have a positive impact on the environment
142
1
5
3.43
1.113
Valid N (listwise)
142
Table (5) presented mean and standard deviation of
questionnaire statements as according to respondents'
answers; it was seen through analysis that all respondents
had a positive attitude towards statements of questionnaire
considering that all statements scored higher than mean of
scale 3.00 and was seen to be statistically positive.
As in table (6) below, it was also seen that respondents'
attitude towards variables of study appeared to be also
positive given that all variables chosen in current study
scored higher than mean of scale 3.00 which is statistically
a positive result.
Table (6): Descriptive Statistics of Variables
N
Minimum
Maximum
Mean
Std. Deviation
Legislative Framework
142
1.00
5.00
3.4454
1.01326
Promote sustainable energy investments
142
1.25
5.00
3.2412
.88847
Contribute to environmental challenges
142
1.25
5.00
3.2799
.83501
Avoid capital depletion
142
1.00
5.00
3.4701
.90089
Investing in capacity building and training
142
1.00
5.00
3.6039
.86205
Attention to rural development and poverty alleviation
142
1.00
5.00
3.5651
.79486
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Awareness of green financing
142
1.00
5.00
3.4944
.99807
Valid N (listwise)
142
Hypothesis testing:
Study hypotheses were tested depending on ANOVA and
coefficients tests, following are results of hypotheses testing
as according to SPSS results.
H: Commercial Banks in Jordan enjoy high level of green
financing awareness through its banking operations
Table (7): Model Summary
Model
R
R Square
Adjusted R Square
Std. Error of the Estimate
1
.933a
.870
.865
.36718
Table (8): ANOVAa
Model
Sum of Squares
df
Mean Square
F
Sig.
1
Regression
122.254
6
20.376
151.127
.000b
Residual
18.201
135
.135
Total
140.455
141
Table (9): Coefficientsa
Model
Unstandardized Coefficients
Standardized
Coefficients
t
Sig.
B
Std. Error
Beta
1
(Constant)
.363
.165
2.206
.029
Legislative
.868
.040
.881
21.887
.000
energy
.157
.053
.140
2.953
.004
environmental
-.007
.056
-.006
-.123
.902
depletion
-.077
.053
-.070
-1.466
.145
capacity
.020
.054
.018
.373
.710
rural
-.042
.055
-.034
-.773
.441
Above hypothesis was tested using Multiple regression
analysis which scored an R value of 0.933 and an F value
of 151.127 as the value of t at 0.05 significant at (0.05).
This confirmed that independent variable and dependent
variables are correlated and that means commercial Banks
in Jordan enjoy high level of green financing awareness
through its banking operations.
H1: Commercial banks in Jordan adopts a sound legislative framework that supports green financing
Table (10): Model Summary
Model
R
R Square
Adjusted R Square
Std. Error of the Estimate
1
.927a
.859
.858
.37572
Table (11): ANOVAa
Model
Sum of Squares
df
Mean Square
F
Sig.
1
Regression
120.692
1
120.692
854.949
.000b
Residual
19.764
140
.141
Total
140.455
141
Table (12): Coefficientsa
Model
Unstandardized Coefficients
Standardized
Coefficients
t
Sig.
B
Std. Error
Beta
1
(Constant)
.348
.112
3.108
.002
Legislative
.913
.031
.927
29.240
.000
Above hypothesis was tested using linear regression
analysis which scored an R value of 0.927 and an F value
of 854.949 as the value of t at 0.05 significant at (0.05).
This confirmed that independent variable and dependent
variables are correlated and that means Commercial banks
in Jordan adopts a sound legislative framework that
supports green financing.
H2: Commercial banks in Jordan promote sustainable energy investments
Table (13): Model Summary
Model
R
R Square
Adjusted R Square
Std. Error of the Estimate
1
.626a
.391
.387
.78142
Table (14): ANOVAa
Model
Sum of Squares
df
Mean Square
F
Sig.
1
Regression
54.968
1
54.968
90.020
.000b
Residual
85.487
140
.611
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Total
140.455
141
Table (15): Coefficientsa
Model
Unstandardized Coefficients
Standardized
Coefficients
t
Sig.
B
Std. Error
Beta
1
(Constant)
1.217
.249
4.889
.000
energy
.703
.074
.626
9.488
.000
Above hypothesis was tested using linear regression
analysis which scored an R value of 0.626 and an F value
of 90.02 as the value of t at 0.05 significant at (0.05). This
confirmed that independent variable and dependent
variables are correlated and that means commercial banks
in Jordan promote sustainable energy investments.
H3: Commercial banks in Jordan contribute to environmental challenges
Table (16): Model Summary
Model
R
R Square
Adjusted R Square
Std. Error of the Estimate
1
.402a
.161
.155
.91728
Table (17): ANOVAa
Model
Sum of Squares
df
Mean Square
F
Sig.
1
Regression
22.660
1
22.660
26.932
.000b
Residual
117.795
140
.841
Total
140.455
141
Table (18): Coefficientsa
Model
Unstandardized Coefficients
Standardized
Coefficients
t
Sig.
B
Std. Error
Beta
1
(Constant)
1.920
.313
6.132
.000
environmental
.480
.093
.402
5.190
.000
Above hypothesis was tested using linear regression
analysis which scored an R value of 0.402 and an F value
of 26.932 as the value of t at 0.05 significant at (0.05).
This confirmed that independent variable and dependent
variables are correlated and that means commercial
banks in Jordan contribute to environmental challenges.
H4: Commercial banks in Jordan avoid capital depletion
Table (19): Model Summary
Model
R
R Square
Adjusted R Square
Std. Error of the Estimate
1
.345a
.119
.113
.93995
Table (20): ANOVAa
Model
Sum of Squares
df
Mean Square
F
Sig.
1
Regression
16.765
1
16.765
18.976
.000b
Residual
123.690
140
.884
Total
140.455
141
Table (21): Coefficientsa
Model
Unstandardized Coefficients
Standardized
Coefficients
t
Sig.
B
Std. Error
Beta
1
(Constant)
2.166
.315
6.878
.000
depletion
.383
.088
.345
4.356
.000
Above hypothesis was tested using linear regression
analysis which scored an R value of 0.345 and an F value
of 18.976 as the value of t at 0.05 significant at (0.05). This
confirmed that independent variable and dependent
variables are correlated and that means commercial banks
in Jordan avoid capital depletion.
H5: Commercial banks in Jordan invest in capacity building and training
Table (22): Model Summary
Model
R
R Square
Adjusted R Square
Std. Error of the Estimate
1
.354a
.125
.119
.93688
Table (23): ANOVAa
Model
Sum of Squares
df
Mean Square
F
Sig.
1
Regression
17.571
1
17.571
20.018
.000b
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Residual
122.884
140
.878
Total
140.455
141
Table (24): Coefficientsa
Model
Unstandardized Coefficients
Standardized
Coefficients
t
Sig.
B
Std. Error
Beta
1
(Constant)
2.019
.339
5.953
.000
capacity
.410
.092
.354
4.474
.000
Above hypothesis was tested using linear regression
analysis which scored an R value of 0.354 and an F value
of 20.018 as the value of t at 0.05 significant at (0.05). This
confirmed that independent variable and dependent
variables are correlated and that means commercial banks
in Jordan invest in capacity building and training.
H6: Commercial banks in Jordan give attention to rural development and poverty alleviation
Table (25): Model Summary
Model
R
R Square
Adjusted R Square
Std. Error of the Estimate
1
.408a
.167
.161
.91431
Table (26): ANOVAa
Model
Sum of Squares
df
Mean Square
F
Sig.
1
Regression
23.420
1
23.420
28.016
.000b
Residual
117.035
140
.836
Total
140.455
141
Table (27): Coefficientsa
Model
Unstandardized Coefficients
Standardized
Coefficients
t
Sig.
B
Std. Error
Beta
1
(Constant)
1.666
.354
4.710
.000
rural
.513
.097
.408
5.293
.000
Above hypothesis was tested using linear regression
analysis which scored an R value of 0.408 and an F value
of 28.016 as the value of t at 0.05 significant at (0.05). This
confirmed that independent variable and dependent
variables are correlated and that means commercial banks
in Jordan give attention to rural development and poverty
alleviation Taking a look at results of current study; it can be
seen that all previously hypothesized ideas were accepted
and it was confirmed hat commercial banks in Jordan do
have a high level of awareness regarding green financing.
Results of study appeared to be as follows:
- Commercial Banks in Jordan enjoy high level of
green financing awareness through its banking
operations this appeared through an R value of
0.933
- Commercial banks in Jordan in an environment of
good legislative framework that supports green
financing scoring an R value of .927
- Commercial banks in Jordan promote sustainable
energy investments with an R value of 0.626 for
the variable
- Commercial banks in Jordan contribute to
environmental challenges with a moderately low R
value of 0.402
- Commercial banks in Jordan avoid capital
depletion scoring an R value of 0.345
- Commercial banks in Jordan invest in capacity
building and training with an R value of 0.354
- Commercial banks in Jordan give attention to rural
development and poverty alleviation scoring an R
value of 0.408
Taking a look at analysis tables and SPSS results which
indicated descriptive statistics of variables and hypotheses;
it can be seen that the legislative framework appeared to be
one of the most influential aspects that plays a role in
defining bank's awareness of green financing. Here, the
legislative framework must be updated to ensure that
obstacles to investment are overcome and completed in the
shortest possible time, especially in the case of green
financing policies that facilitate procedures for obtaining
licenses for the beginning of investment activity in addition
to reducing levels of taxes so as not to affect the income of
companies and their profits and decrease the value of their
investments. Results of study indicated, according to the
responses that the Arab region faces four main
environmental challenges resulting from climate change
which are a) energy security, b) food security, c) water
security and d) desertification and degradation of
agricultural land quality, Consequently, the greatest
achievement of the concept of sustainable development
was achieved in the success of the United Nations Summit
for Sustainable Development held in September 2015 in
New York in adopting a new ambitious plan for sustainable
development during which 193 world leaders announced
their commitment to 17 goals in order to achieve 3
exceptional achievements in the next 15 years represented
In: eliminating a thousand Act and combat inequality and
cooperation to mitigate the negative impacts of climate
change. It was also prevailed from the results of study that
there is a trend among commercial banks in Jordan towards
supporting renewable energy projects and environmentally
friendly technology, especially from rural areas, in addition,
those banks have worked to change lighting systems in all
its branches to energy-efficient lighting systems and
support the spread Solar cells systems and encouraging
institutions and individuals by providing the necessary
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financing and continuing the continuous efforts in the field
of green financing from its part as banking sectors because
of its vital role in achieving sustainability and green banking
and work to integrate goals and policies between banks and
relevant authorities What contributes to the achievement of
sustainable development goals until 2030. It has also been
proven through analysis of the study data that commercial
banks in Jordan are highly aware of the principles of green
financing derived from the green economy and sustainable
development, and this has been proven through
commercial banks in Jordan seeking to implement
sustainable development goals as defined by the United
Nations in its plan in addition to identifying problems and
propose sustainable solutions that would support green
financing projects, resources and mechanisms to obtain
financing through cooperation with financial experts and
researchers in addition to universities and specialized
international bodies including the World Bank, the United
Nations Environment Program and the OECD, the
European Bank for Reconstruction and Development and
the OPEC Fund for International Development.
Conclusion and Recommendations
Current study aimed at examining the level of awareness
regarding green financing within commercial banks in
Jordan. Results of study indicated a good level of
awareness and understanding regarding green financing
which appeared through responses and indicated the
adoption of green financing for green projects within banks.
These results appeared based on high response rate of
items referring to high level of awareness regarding green
financing among bank personnel scoring a mean of 3.76
and the fact that most banks assured that they are adopting
flexible policies in dealing with energies scoring a mean of
3.63 which is higher than mean of scale 3.00. In addition to
that, it was seen through results that most banks in Jordan
support projects and finance investments that gives
attention to rural development and poverty alleviation as an
approach to adopting green financing practices. In
conclusion, and by referring to the results of the above
study, the shift to green financing is no longer an option for
the Jordanian banking sector, but rather the only solution to
ensure the continuation of sustainable development, and if
this shift imposes restrictions and involves risks, it also
opens new opportunities. It is also worth noting that the
most important obstacles that slow down the transition to
green financing in Jordan are usually climate change and
energy in addition to the different standards of the green
economy with the aging of years, except for increased
consumption and difficulty in sustaining food security. Study
also highlighted the main and most important deriver of
green financing within Jordanian environment which is the
governmental legislations. In that sense, banks are
restricted to laws and regulations issued by the
government, in order to proper in the field of green
financing; there is a need to review and redesign
government policies to stimulate shifts in production,
consumption and investment patterns.For example, the
government should adopt a long-term energy plan and set a
goal that is to meet 20% of the electrical needs, for
example, from renewable energy sources and support for
environmentally friendly foreign investments in addition to
providing the facilities required for banks to finance massive
environmental and development projects.
Current study recommended the following:
- It is necessary for various countries to establish
and operate green banks to finance clean energy
as they shift away from coal towards achieving
their standards for renewable energy. Green banks
can double financing resources dozens of times,
and they can also help create jobs in the
renewable energy sector.
- The necessity of developing the extent of
awareness of individuals and institutions in the
concept of green economy in order to increase
awareness of the concept of green financing, in
addition to recommending a re-examination of
government policies related to water management,
energy efficiency and a green economy, which
would modify price support mechanisms to
contribute to rationalization of consumption and
thus Reaching a state of total green financing.
- The need to compel banks, through the Central
Bank of Jordan, to take into account sustainable
development goals and green financing through
the practice of various banking activities with a
specific timetable for the stages of application in
accordance with best practices and international
standards.
- Forming a working group whose members will be
responsible for green financing and sustainable
development, to meet periodically to discuss what
has been achieved in the field of green financing
and sustainable development, identify challenges
and exchange experiences and prepare future
strategies and goals.
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