Introduction

There are evidences to suggest that the general public in India is becoming increasingly
aware of environmental issues and the benefits of sustainable economic practices. According
to Nielsen’s 2011 Global Online Environment and Sustainability Survey, 90 percent of
Indians surveyed were concerned about air and water pollution and 80 percent thought that
climate change was an important environmental issue (Nielsen, 2011). These findings are
supported by a more recent survey of 1270 Indian consumers that reported 85 percent of
respondents are confident that green products are better for the environment (TNS Global,
2014). As a result, there is evidence to suggest that corporate stakeholders are expected to
take greater responsibility in sustainable business practices (Shrivastava, 1993). This
evolution of thinking has opened up debate regarding whether companies should be
responsible to company stakeholders (Maignan and Ferrell, 2001) or to society as a whole
(Brown and Dacin, 1997). For example, the leading 100 listed companies in India are
required by the Securities Exchange Board to report on corporate responsibility (CR)2
activities in their annual reporting, although admittedly the quality of CR reporting has been
under scrutiny (KPMG, 2013). This can partially be explained by the difficulties in
establishing credible global performance measures, as stressed by Ernult and Ashta (2008).
However, the motivation for companies to develop effective CR strategies can also be driven
by strategic rather than mandated motives. This has given rise to the phenomenon of green
marketing, which ‘allows the companies access to new markets, to increase their profitability,
and to enjoy more competitive advantages’ (Chen, 2010, p. 316). Numerous studies have
found a positive relationship between corporate social responsibility performance and
financial performance (Beurden and Gossling, 2008; Goll and Rasheed, 2004; Hart and
Ahuja, 1996; Heugens and Dentchev, 2007; Husted and Allen, 2000; Klassen and Curtis,
1996; Menguc and Ozanne, 2005; Russo and Fouts, 1997), cited as a source of competitive
advantage (Bakker et al., 2005; Heugens and Dentchev, 2007; McWilliams and Siegel, 2001;
Pujari et al., 2003; Westley and Vredenburg, 1996). Interestingly, similar results were also
reported within the sustainable banking sector. A benchmark study of European banks
concluded, ‘alternative banks can also be financially successful and have growth rates similar
to, or even better than, those of their conventional competitors’ (Weber, 2005, p. 86), whilst
GABV (2012) reported that sustainable banks achieved generally better or comparable
returns on assets and returns on equity over the time period 2007–2010. This is consistent
with Constantinou and Ashta (2011), who posit that the broader financial sector can benefit
from social banking practices. Moreover, research findings support the view that corporate
social responsibility (CSR) initiatives can positively influence the non‐financial returns of
banks, such as customer loyalty (Salmones de los et al., 2009), service quality perceptions,
trust, and affective attitudes (Poolthong and Mandhachitara, 2009). Given this background,
the global banking community have signaled their willingness to develop and implement an
increasingly coherent CR strategy. Critically, this has set the context for Indian public and
private banking to develop green banking as an increasingly important strategic instrument.
This research investigates relevant constructs, including attitudes, in order to predict intention
to use green banking services. The study also determines the degree of willingness to pay a
service premium in order to ensure green banking practices are in place.

Green banking practices in India

There is no universally accepted definition of ‘green banking,’ but it can be conceptualized

as a ‘form of banking taking into account the social and environmental impacts and its main
motive is to protect and preserve environment’ (IDRBT, 2013, p. 2). Ingham et al. (2013, p.
109) provide a similar explanation, ‘By integrating sustainability into a bank’s business
strategy and decision‐ making processes, institutions can support environmentally or socially
responsible projects, innovative technologies, and sustainable enterprises.’ It is within this
scope that green banking in India can be categorized according to Scholtens’ (2009) four
groups of indicators about a bank’s social responsibility. The first group consists of codes of
ethics, sustainability reporting, and management systems. For example, 80 financial
institutions that since 2013 includes IDFC (India) are committed to the Equator Principles
(EPs) agreement, which is a financial industry standard for assessing environmental and
social risk management in projects. The second group refers to environmental management,
‘Taking care of the environment also is reflected in the ways in which banks account for
environmental risks’ (Scholtens, 2009, p. 162). This refers broadly to banks acting as
‘environmental policemen’ (Thompson, 1998, p. 243) and considers the adoption of
environmentally sustainable processes through its lending and investment decisions. For
example, HDFC Bank uses a social and environmental risk management system (SEMS) to
assess loans for risks related to negative social or environmental impacts (HDFC Bank,
2014). Likewise, the social environmental management system plan (SEMSP) introduced by
Kotak Mahindra Bank evaluates the social and environmental risks as part of overall credit
risk assessment (Kotak Mahindra Bank, 2014). Furthermore, the introduction of contractual
conditions in loan agreements to limit negative environmental impact can be interpreted as
enforcing environmental safeguards. For example, Bank of Baroda obliges manufacturers
emitting toxic pollutants to install water‐treatment facilities in order to help process the
emissions of pollutants (Bank of Baroda, 2014). The third group refers to responsible
financial products. Banks have, for example, introduced policies to support the financing of
sustainable and renewable energy projects. Bank of Baroda gives green energy investments
such as solar and wind‐power projects priority while appraising the credit proposal (Bank of
Boroda, 2014). Likewise, the State Bank of India makes project loans available at
concessionary rates of interest to investments that lead to a reduction in greenhouse gases
through efficient manufacturing and production practices (State Bank of India, 2014). A
significant development has been the launch of so‐called green bonds in India. In March
2015, YES Bank raised approximately USD$150 million through India’s first green bond
issue, which will be used to provide debt financing to renewable energy projects (Mittal,
2015). The final group refers to social conduct (i.e., internal and external social commitment).
This can include an array of measures, including the promotion of paperless banking services
such as Internet and mobile banking services. The State Bank of India is currently the market
leader in providing mobile banking, with a market share of 57 percent in transaction volume
and 17 percent in value (State Bank of India, 2014). Other examples of internal energy‐
efficient measures to reduce carbon emissions include the deployment of solar ATMs, tree‐
planting initiatives, and sustainable building practices that meet Leadership in Energy and
Environmental Design (LEED) certification standards.

Intention to use green banking services

The theory of planned behavior (TPB) developed by Azjen (1985, 1991) provides a robust
model to investigate ‘an individual’s performance of certain behaviours … determined by his
or her intent to perform that behaviour’ (George, 2004, p. 199). According to the TPB,
attitude toward the behavior, subject norm, and perceived behavioral control are factors that
influence intention. Intention to use green banking services in India is becoming an important
indicator regarding banks’ CR priorities. Consumers are set to evolve with the increasing
sensitivity to environmental issues, and green banking could increasingly include an
assortment of possibilities, including Internet and mobile Internet banking, and the interest in
green financial product projects and investments. The TPB has been used as a conceptual
framework in numerous studies within the banking and financial sector (e.g., Amin et al.,
2013; Bryson and Atwal, 2013), and critically to predict pro‐environmental behavior (e.g.,
Kalafatis et al., 1999). Consequently, this research investigates several potential antecedents
that help to predict intention to use green banking, such as affective attitude. Other
antecedents, primarily related to environmental attitudes and behavior, are also included and
follow below. Additionally, this research focuses on the Indian context, which is a
particularly interesting emerging market economy. For example, Kalafatis et al. (1999) found
differences in the intention to buy environmentally friendly products between a UK and
Greek sample, which could be attributed to differences in the maturity of the two markets.
Thus, there is a strong reason to examine intention within this Indian context.

Attitude toward green banking

The study of attitudes is a significant part of modern psychology. A well-accepted definition

within the literature comes from Eagly and Chaiken (1993, p. 1), who defined attitudes as ‘a
psychological tendency that is expressed by evaluating a particular entity with some degree
of favour or disfavour.’ Dimensions of attitude are often seen as affective, behavioral, and
cognitive. According to the TPB elaborated by Azjen (1985, 1991), the sum of perceived
positive and negative consequences determines the global attitude toward a behavioral option
and thus, the intention to perform that behavior. In a study to predict attitude and behavioral
intentions in retail banking, Baumann et al. (2007) concluded that affective attitude is
associated with customers’ future behavioral intentions in terms of willingness to recommend
and willingness to remain a customer. Interestingly, researchers have provided evidence to
support the fact that CSR has an indirect effect, with affective variables such as satisfaction,
image, and reputation (Bloemer et al., 1998; Salmones de los et al., 2005). This also relates
indirectly to the notion of green brand image defined by Chen (2010, p. 312) as, ‘a set of
perceptions of a brand in a consumer’s mind that is linked to environmental commitments
and environmental concerns.’ This is related to the concept of brand affect that is defined as
‘a brand’s potential to elicit a positive emotional response in the average consumer as a result
of its use’ (Chaudhuri and Holbrook, 2001, p. 82), which as a result can be associated with
brand awareness (Zajonc, 1980), brand commitment (Gundlach et al., 1995), brand loyalty
(Dick and Basu, 1994; Singh et al., 2012), and brand sincerity (Sung and Kim, 2010).
Critically, a qualitative research study with a Greek sample highlighted that green marketing
results in a favorable bank image (Lymperopoulos et al., 2012). This is in essence a reflection
of the consumer’s overall favorable or unfavorable evaluation of the brand (Bhat and Reddy,
2001), which, according to Chaudhuri and Holbrook (2002, p. 54), ‘depends on emotional
brand‐choice risk (as well as on the balance of hedonic to utilitarian value).’ This favorable
attitude should thus be positively related to behavioral intention

Collectivism

Hofstede’s (1980) framework of national culture was originally comprised of four

dimensions and has been applied in a wide and diverse range of consumer marketing and
strategic marketing contexts. Although a number of researchers have criticized the validity of
Hofstede’s cultural instrument (e.g., Blodgett et al., 2008; Brewer and Venaik, 2012;
McSweeney, 2002; Shenkar, 2001; Smith et al., 2002), the framework is widely recognized
as one of the most important applications of national culture types. The individualism vs.
collectivism orientation, from societal to individual level, has been a central theme of
research in a wide‐ranging body of environmental research. Collectivism denotes co‐
operation, interdependence, and in‐group harmony (Hofstede, 1980; Triandis et al., 1995), as
interpreted by Cheah and Phau (2011, p. 457), ‘A collectivist is likely to forgo individual
motivations for the good of the group.’ Soyez (2012) confirms, in a five‐country cross‐
cultural study, that pro‐environmental value orientations (ecocentric vs. anthropocentric)
differ as a result of national cultural values. The general consensus supports the view that
collective cultures are more likely to adopt environmentally friendly attitudes. McCarty and
Shrum (1994) found a positive impact of collectivism on recycling attitudes and behavior, as
explained by Kaufmann et al. (2012, p. 56), ‘because they tend to be more co‐operative,
willing to help others, and emphasize group goals over personal ones.’ Similar findings were
reported by Leonidou et al. (2010) and Kim (2011), who identified collectivism as a predictor
of green purchase intention. Kim and Choi (2005, p. 596) reported that collectivistic
individuals have a tendency to buy green products, ‘but only through their positive beliefs
about self‐efficacy.’ Interestingly, the researchers note, however, that ‘Collectivistic people
are more likely to pursue the goals of their in‐groups than those of out‐groups or the public at
large when these goals are in conflict’ (Kim and Choi, 2005, p. 597). This resonates with a
study of 501 respondents in New Delhi, Bangalore, Udaipur, Chennai, Chandigarh, and
Kolkata, in which social influences and norms were identified as being an important factor
influencing consumer green attitudes (Khare, 2014).

Environmental concern
The definition of environmental concern is a subject of discussion and debate. Bamberg
(2003) notes that the concept is often used in a very broad context, and Schultz et al. (2005, p.
458) observe that researchers do not always ‘differentiate between environmental concern,
environmental beliefs, attitudes, and worldviews.’ We adopt the definition provided by
Dunlap and Jones (2002, p. 485) as ‘the degree to which people are aware of problems
regarding the environment and support efforts to solve them and/or willingness to contribute
personally to their solution.’ This definition also implies the degree of emotional involvement
in environmental issues as discussed by Aman et al. (2012), Lee (2008), and Yeung (2005).
The literature presents the case that individuals who are more concerned about the
environment are also more likely to adopt environmentally friendly behaviors (Czap and
Czap, 2010; Roberts and Bacon, 1997; Van Liere and Dunlap, 1981). Sinnappan and Rahman
(2011) identified environmental concern as a strong predictor of green purchasing behavior.
Bamberg (2003), however, stresses that there is a weak direct relationship between
environmental concern and specific environmentally related behavior. This is attributed to the
argument that environmental concern is a general attitude and is therefore an indirect
determinant of specific behavior. Moreover, environmental concern needs to be considered
within a cross‐cultural context as motive concerns can vary across cultural groups (Marquart‐
Pyatt, 2008; Schultz et al., 2005).

Perceived consumer effectiveness

Berger and Corbin (1992, pp. 80–81) defined perceived consumer effectiveness (PCE) as
‘the evaluation of the self in the context of the issue.’ PCE therefore refers to the individual’s
perception of the extent to which his or her actions can make a difference in solving
environmental problems or improving the environment (Berger and Corbin, 1992; Ellen et
al., 1991). A similar concept to PCE identified within the literature is self‐efficacy, which
comprises ‘beliefs in one’s capabilities to organize and execute courses of action required to
produce given attainments’ (Bandura, 1997, p. 3). According to De Pelsmacker et al. (2006,
p. 129), it is these beliefs that will have an impact on consumer behavior, ‘When people
believe they have the power to act and that such actions can have positive results, they are
more inclined to take said action.’ This also appears to be coherent with the notion of
environmental locus of control, which measures consumers’ perception of their ability to
influence pro‐environmental outcomes, ‘the extent to which people believe that they have the
ability to affect outcomes through their own actions’ (McCarty and Shrum, 2001, p. 94).
There is strong evidence to suggest that PCE has a direct effect on environmentally conscious
consumer behavior (Balderjahn, 1998; Berger and Corbin, 1992; Ellen et al., 1991; Roberts,
1996; Roberts and Bacon, 1997; Straughan and Roberts, 1999). Studies have confirmed PCE
as a predictor of green consumer behavior, including recycling behavior (Guagnano et al.,
1995), support for energy policies (Steg et al., 2005), willingness to pay (Aktar, 2013),
purchase intention of sustainable products (Antonetti and Maklan, 2014; Vermeir and
Verbeke, 2008), and private investment in socially responsible investments (Nilsson, 2009).
However, Lee and Holden (1999) found that PCE was a significant predictor of high‐cost
environmental behavior but was not related to low‐cost behavior, which implies that PCE has
varying impacts on specific types of environmental behavior. Pertinently, research studies
(Gleim and Lawson, 2014; Nilsson, 2009) have reported different levels of PCE for the
identified consumer segments. It can also be assumed that cultural factors such as
collectivism can influence environmental purchase behaviors through PCE (Kim and Choi,
2005). This is also supported by Wesley et al. (2012), who found within a collectivist cultural
context, based on a South Korean sample, that PCE had a stronger impact on social positive‐
motivated attitudes than personal positive‐motivated attitudes. We suggest further
examination of this construct is warranted.

Perceived environmental integrity

In this study, the perceived environmental integrity refers to trust in banks, specifically the
degree of trust that consumers have regarding their bank’s integrity and competence to
execute green banking practices. This can be considered a facet of trust analogous to the
relationship between brand affect and brand trust. Brand trust is defined as ‘the willingness of
the average consumer to rely on the ability of the brand to perform its stated function’
(Chaudhuri and Holbrook, 2002, p. 33), and according to Sung and Kim (2010) is related to
expertise. This has strong associations with Chen’s (2010, p. 312) definition of green trust, ‘a
willingness to depend on a product, service, or brand based on the belief or expectation
resulting from its credibility, benevolence, and ability about its environmental performance.’
A study of trustworthiness in the Indian retail banking sector identified integrity and honesty
as a first‐order factor (Roy and Shekhar, 2010). This also implies the importance of brand
trust as an emotional phenomenon (Barbalet, 1996; Schoorman et al., 2007).