The Impact of Green Finance on The Relevance Value of Financial Data A Case from Iraq
Corresponding Author(s) : Hasan Hadi Khawo Radi
American Journal of Economics and Business Management,
Vol. 8 No. 5 (2025): May
Abstract
The research aims to study green financing according to its dimensions (size of green financing, environmental compliance standards, innovation in green products, banks’ participation in environmental initiatives, green financial facilities, transparency and disclosure) and indicators measuring the relevance value of financial data, (share price, earnings per share, book value per share, return on net worth, return on equity and financial leverage). The research chose the Bank of Baghdad as a community for application for the period “2022 to 2024”. The research problem was represented by a question "Does green financing have an influence on relevance value of financial data?" relevance value of financial data to achieve its objectives, the research used the analytical method to measure its variables and using the program. the most important conclusions the research reached: green financing had an impact on: return on net worth and return on equity, which means the bank can increase its profits by increasing green financing grants to different segments. The study recommended a number of recommendations, most notably: urging banks operating in the Iraqi environment to increase their green financing ratios, which impacts overall bank performance and enhances their reputation and market position in support of the country's sustainable development goals.
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- A. Khan, B. F. Khan, N. Uddin, G. I. A. Azim, and S. Islam, "The report commissioned by UKAid," Peer-reviewed by Dr Atiur Rahman, 2017.
- A. AlMenhali and H. Nobanee, "Green finance: Concept and applications," [Online]. Available: https://www.researchgate.net/publication/354371962.
- U. Bankole, "Value relevance of accounting information and share price in financial service industry," *Res. J. Finance Accounting*, vol. 11, no. 8, 2020.
- Z. Cao and L. Tao, "Green finance and economic resilience: Investigating the nexus with natural resources through econometric analysis," *Econ. Anal. Policy*, vol. 80, 2023.
- D. Gilchrist, J. Yu, and R. Zhong, "The limits of green finance: A survey of literature in the context of green bonds and green loans," *Sustainability*, vol. 13, no. 2, 2021. doi: 10.3390/SU13020478.
- N. Lindenberg, "Definition of green finance – Proposal for the BMZ," *German Development Institute*, 2014.
- L. Qin et al., "Empirical evidence of fintech and green environment: Using green finance as a mediating variable," *Int. Rev. Econ. Finance*, vol. 89, Jan. 2024. doi: 10.1016/j.iref.2023.07.056.
- H. Wu, "Evaluating the role of renewable energy investment resources and green finance on the economic performance: Evidence from OECD economies," *Resour. Policy*, vol. 80, Jan. 2023. doi: 10.1016/j.resourpol.2022.103149.
- I. Akomea-Frimpong, "A review of studies on green finance of banks: Research gaps and future directions," [Online]. Available: https://www.researchgate.net/publication/347941978.
- A. M. Hasan, "The impact of green financing in enhancing banking financial performance: An analytical study," *Nasq J.*, vol. 41, no. 7, 2024.
- L. He et al., "Can green financial development promote renewable energy investment efficiency? A consideration of bank credit," *Renew. Energy*, 2019. doi: 10.1016/j.renene.2019.05.059.
- N. Hohne, S. Khosla, H. Fekete, and A. Gilbert, "UMapp green finance delivered by IDFC members in 2012," [Online]. Available: https://www.ecofys.com.
- Z. J. H. Iskandar, "The role of green finance in achieving financial sustainability," *Kirkuk Univ. J. Admin., Financial and Econ. Sci.*, vol. 11, no. 1, 2021.
- State Bank of Pakistan and GIZ, "Green financing – Awareness session," Karachi, 2015.
- D. E. Kieso, J. J. Waygandt, and T. D. Warfield, *Intermediate Accounting*, 17th ed., Wiley, 2019.
- F. Knobloch and J.-F. Mercure, "The behavioural aspect of green technology investments: A general positive model in the context of heterogeneous agents," *Environ. Innov. Soc. Transit.*, vol. 21, 2016. doi: 10.1016/j.eist.2016.03.002.
- Z. Liu, "Assessing the role of green finance in enhancing rural economic resilience and environmental sustainability," *Front. Manage. Sci.*, vol. 3, 2024.
- M. Mohsin and U. M. Dilanchiev, "The impact of green climate fund portfolio structure on green finance: Empirical evidence from EU countries," *Ekonom*, vol. 102, no. 2, pp. 130–144, 2023. doi: 10.15388/Ekon.2023.102.2.7.
- D. Nassiry, "The role of fintech in unlocking green finance: Policy insights for developing countries," *ADBI Working Paper*, no. 883, 2018.
- N. Liu, C. Liu, Y. Xia, and Y. Ren, "Examining the coordination between green finance and green economy aiming for sustainable development: A case study of China," *Sustainability*, vol. 12, no. 9, 2020. doi: 10.3390/su12093717.
- H. Nilsson, "Essay on the value relevance of financial statement information," *Stud. Business Admin.*, Ser. B, no. 50, 2005.
- H. J. Noh, "Strategic approaches to develop green finance," *Korea Capital Market Institute*, 2010.
- P. Soundarrajan and N. Vivek, "Green finance for sustainable green economic growth in India," *Agric. Econ. – Czech*, vol. 62, no. 1, 2016. doi: 10.17221/174/2014-Agricecon.
- P. I. Putri, N. Rahayu, D. Rahmayani, and M. E. S. Siregar, "The effect of green banking and financial performance on banking," *Qual. Access Success*, vol. 23, no. 191.05, 2022. doi: 10.47750/QAS/23.191.05.
- S. Ansari and S. S. Prasad, "Green financing: Role of public sector banks," *SSRN*, 2015. [Online]. Available: http://ssrn.com/abstract=2680518.
- S. A. Rajab and S. M. Sabreen, "The role of green finance in developing clean investment projects – A study of the reality of green finance in Iraq," *J. Finance Accounting Sci.*, Special Issue, 2022.
- S. Rakić and P. Mitić, "Green banking: Green financial products with special emphasis on retail banking products," *2nd Int. Conf. Climate Change, Econ. Dev., Environ. People*, Educons Univ., 2012.
- V. M. Ribeiro, "Pioneering paradigms: Unraveling niche opportunities in green finance through bibliometric analysis of nation brands and brand culture," *Green Finance*, vol. 6, 2024. doi: 10.3934/GF.2024012.
- J. Shen, J. Yu, and W. M. Khoso, "Green finance as a driver for environmental and economic resilience post-COVID-19: A focus on China’s strategy," 2024.
- X. Song, X. Deng, and R. Wu, "Comparing the influence of green credit on commercial bank profitability in China and abroad: Empirical test based on a dynamic panel system using GMM," *Int. J. Fuzzy Syst.*, vol. 7, no. 4, 2019. doi: 10.3390/ijfs7040064.
- G. Sun, Y. Wang, and Q. Li, "The impact of green credit on credit risk of commercial banks," *Financ. Forum*, vol. 22, 2017.
- M. A. Urban and D. Wójcik, "Dirty banking: Probing the gap in sustainable finance," *Sustainability*, vol. 11, no. 6, 2019. doi: 10.3390/su11061745.
- S. Vieth and J. R. Werner, "Comparing value relevance across countries: Does the return window specification matter?," 2010.
- M. L. Wang, "Effects of the green finance policy on the green innovation efficiency of the manufacturing industry: A difference-in-difference model," *Technol. Forecast. Soc. Change*, vol. 189, 2023. doi: 10.1016/j.techfore.2023.
- W. Kenton, "Green tech. Sustainable investing. Socially responsible investing," *Investopedia*, 2018. [Online]. Available: https://www.investopedia.com/terms/g/green_tech.asp.
- Y. Eimamirat and E. Zarfawi, "The impact of disclosure according to international accounting standards on the quality of accounting information," *J. Business Res. Stud.*, vol. 4, Sept. 2018.
- L. Yang, "Analysis of developing commercial bank green finance programs," *Highlights in Business, Econ. Manage.*, vol. 24, 2024.
References
A. Khan, B. F. Khan, N. Uddin, G. I. A. Azim, and S. Islam, "The report commissioned by UKAid," Peer-reviewed by Dr Atiur Rahman, 2017.
A. AlMenhali and H. Nobanee, "Green finance: Concept and applications," [Online]. Available: https://www.researchgate.net/publication/354371962.
U. Bankole, "Value relevance of accounting information and share price in financial service industry," *Res. J. Finance Accounting*, vol. 11, no. 8, 2020.
Z. Cao and L. Tao, "Green finance and economic resilience: Investigating the nexus with natural resources through econometric analysis," *Econ. Anal. Policy*, vol. 80, 2023.
D. Gilchrist, J. Yu, and R. Zhong, "The limits of green finance: A survey of literature in the context of green bonds and green loans," *Sustainability*, vol. 13, no. 2, 2021. doi: 10.3390/SU13020478.
N. Lindenberg, "Definition of green finance – Proposal for the BMZ," *German Development Institute*, 2014.
L. Qin et al., "Empirical evidence of fintech and green environment: Using green finance as a mediating variable," *Int. Rev. Econ. Finance*, vol. 89, Jan. 2024. doi: 10.1016/j.iref.2023.07.056.
H. Wu, "Evaluating the role of renewable energy investment resources and green finance on the economic performance: Evidence from OECD economies," *Resour. Policy*, vol. 80, Jan. 2023. doi: 10.1016/j.resourpol.2022.103149.
I. Akomea-Frimpong, "A review of studies on green finance of banks: Research gaps and future directions," [Online]. Available: https://www.researchgate.net/publication/347941978.
A. M. Hasan, "The impact of green financing in enhancing banking financial performance: An analytical study," *Nasq J.*, vol. 41, no. 7, 2024.
L. He et al., "Can green financial development promote renewable energy investment efficiency? A consideration of bank credit," *Renew. Energy*, 2019. doi: 10.1016/j.renene.2019.05.059.
N. Hohne, S. Khosla, H. Fekete, and A. Gilbert, "UMapp green finance delivered by IDFC members in 2012," [Online]. Available: https://www.ecofys.com.
Z. J. H. Iskandar, "The role of green finance in achieving financial sustainability," *Kirkuk Univ. J. Admin., Financial and Econ. Sci.*, vol. 11, no. 1, 2021.
State Bank of Pakistan and GIZ, "Green financing – Awareness session," Karachi, 2015.
D. E. Kieso, J. J. Waygandt, and T. D. Warfield, *Intermediate Accounting*, 17th ed., Wiley, 2019.
F. Knobloch and J.-F. Mercure, "The behavioural aspect of green technology investments: A general positive model in the context of heterogeneous agents," *Environ. Innov. Soc. Transit.*, vol. 21, 2016. doi: 10.1016/j.eist.2016.03.002.
Z. Liu, "Assessing the role of green finance in enhancing rural economic resilience and environmental sustainability," *Front. Manage. Sci.*, vol. 3, 2024.
M. Mohsin and U. M. Dilanchiev, "The impact of green climate fund portfolio structure on green finance: Empirical evidence from EU countries," *Ekonom*, vol. 102, no. 2, pp. 130–144, 2023. doi: 10.15388/Ekon.2023.102.2.7.
D. Nassiry, "The role of fintech in unlocking green finance: Policy insights for developing countries," *ADBI Working Paper*, no. 883, 2018.
N. Liu, C. Liu, Y. Xia, and Y. Ren, "Examining the coordination between green finance and green economy aiming for sustainable development: A case study of China," *Sustainability*, vol. 12, no. 9, 2020. doi: 10.3390/su12093717.
H. Nilsson, "Essay on the value relevance of financial statement information," *Stud. Business Admin.*, Ser. B, no. 50, 2005.
H. J. Noh, "Strategic approaches to develop green finance," *Korea Capital Market Institute*, 2010.
P. Soundarrajan and N. Vivek, "Green finance for sustainable green economic growth in India," *Agric. Econ. – Czech*, vol. 62, no. 1, 2016. doi: 10.17221/174/2014-Agricecon.
P. I. Putri, N. Rahayu, D. Rahmayani, and M. E. S. Siregar, "The effect of green banking and financial performance on banking," *Qual. Access Success*, vol. 23, no. 191.05, 2022. doi: 10.47750/QAS/23.191.05.
S. Ansari and S. S. Prasad, "Green financing: Role of public sector banks," *SSRN*, 2015. [Online]. Available: http://ssrn.com/abstract=2680518.
S. A. Rajab and S. M. Sabreen, "The role of green finance in developing clean investment projects – A study of the reality of green finance in Iraq," *J. Finance Accounting Sci.*, Special Issue, 2022.
S. Rakić and P. Mitić, "Green banking: Green financial products with special emphasis on retail banking products," *2nd Int. Conf. Climate Change, Econ. Dev., Environ. People*, Educons Univ., 2012.
V. M. Ribeiro, "Pioneering paradigms: Unraveling niche opportunities in green finance through bibliometric analysis of nation brands and brand culture," *Green Finance*, vol. 6, 2024. doi: 10.3934/GF.2024012.
J. Shen, J. Yu, and W. M. Khoso, "Green finance as a driver for environmental and economic resilience post-COVID-19: A focus on China’s strategy," 2024.
X. Song, X. Deng, and R. Wu, "Comparing the influence of green credit on commercial bank profitability in China and abroad: Empirical test based on a dynamic panel system using GMM," *Int. J. Fuzzy Syst.*, vol. 7, no. 4, 2019. doi: 10.3390/ijfs7040064.
G. Sun, Y. Wang, and Q. Li, "The impact of green credit on credit risk of commercial banks," *Financ. Forum*, vol. 22, 2017.
M. A. Urban and D. Wójcik, "Dirty banking: Probing the gap in sustainable finance," *Sustainability*, vol. 11, no. 6, 2019. doi: 10.3390/su11061745.
S. Vieth and J. R. Werner, "Comparing value relevance across countries: Does the return window specification matter?," 2010.
M. L. Wang, "Effects of the green finance policy on the green innovation efficiency of the manufacturing industry: A difference-in-difference model," *Technol. Forecast. Soc. Change*, vol. 189, 2023. doi: 10.1016/j.techfore.2023.
W. Kenton, "Green tech. Sustainable investing. Socially responsible investing," *Investopedia*, 2018. [Online]. Available: https://www.investopedia.com/terms/g/green_tech.asp.
Y. Eimamirat and E. Zarfawi, "The impact of disclosure according to international accounting standards on the quality of accounting information," *J. Business Res. Stud.*, vol. 4, Sept. 2018.
L. Yang, "Analysis of developing commercial bank green finance programs," *Highlights in Business, Econ. Manage.*, vol. 24, 2024.