Publication Details
Abstract
Green financing has become an integral part of the financial sector that is inspired by factors like climate change and sustainable development. Green credit, offered by commercial banks in Uzbekistan, is a reflection of trends in financing that favour environmental sustainability. Nonetheless, the influences of green credit on commercial banks' risk-taking decisions and profit have been little studied, especially in the case of developing countries. Little has been researched on the influence of green financing on financial stability of Uzbekistan’s banking sector, especially in terms of monetary policy and the role of corporate governance. The purpose of this study is to investigate green credit, monetary policy, and corporate governance influences on commercial banks risk taking behaviour and profitability in Uzbekistan. According to the results, green credit has a significant and negative impact on the Non-Performing Loan (NPL) ratio, suggesting a lower degree of risk exposure for banks as green credit is increased. In addition, the third-party moderating effect model results show that monetary policy (M2) and corporate governance could moderate this effect, and they further strengthen the risk reduction effect of green credit. This study offers an understanding of the significance of green financing in enhancing financial performance along with stability, specifically from the perspective of a developing market like Uzbekistan. The study recommends the amalgamation of supportive monetary policies for policymakers, while commercial banks should seek to strengthen corporate governance and adopt green financing practices in order to achieve greater stability and profitability.