Abstract

This study looks at the perspectives of Malaysian bank customers from several commercial
banks on green banking. Green banking is progressively gaining attention and approval from
depositors and investors who are looking for more than just a safe location to keep and invest
their money. As a result, the research will concentrate on the elements that influence consumer
intention to embrace Green Banking across commercial banks in Klang Valley, such as
performance expectancy, effort expectancy, social influence, and enabling conditions. This
research would involve 150 bank clients aged 18-55, allowing us to better understand the
potential benefits of green banking.
 CHAPTER 1: INTRODUCTION

1.1 Research background

Green Banking means encouraging environment friendly practices and reducing carbon foot
prints from banking operations (Herath, 2019). Intention to adopt green banking means that a
determination to act in a certain way to take up and practice the green banking (Hoque, 2019).

This research rotates around four variables of performance expectancy, effort expectancy, social
influence and facilitating condition (Bouteraa, 2020). Similar studies were conducted in
Bangladesh (Hoque, 2019) and Sri Lankan (Herath, 2019) to deepen overall understanding of
this subject from several angles. Green banking is gradually receiving attention and acceptance
from the depositors and investors who are not only searching for a place to save and invest their
money safely (Hoque, 2019).

Green banking adoption in commercial banks has been less investigated, hence this research
features customer intention to adopt Green Banking among commercial banks in Klang Valley. It
covers the social responsibility of banks towards environmental protection, illustrating that social
issues often intersect with environmental issues (Park, 2020). Thus, this research seeks the
reasons behind the failure of green banking adoption in Klang Valley.
1.2 Problem Statement

Without green banking, there would be no reduction of external carbon emission and internal
carbon footprint (Alshebami, 2021). Long term cost effectiveness would not be achieved
(Nedumaran, 2020). It is required to form a set of green products that ensure internal pollution
control which is created by the operation of the bank (Alshebami, 2021). Organizations face
reduction in consumer loyalty (Sun, 2020).

1.3 Research Objectives

The research’s objective is to identify the factors affecting customer intention to adopt Green
Banking among commercial banks in Klang Valley.

1. To investigate the relationship between performance expectancy and customer intention

to adopt Green Banking among commercial banks in Klang Valley.

2. To investigate the relationship between effort expectancy and customer intention to adopt
Green Banking among commercial banks in Klang Valley.

3. To investigate the relationship between social influence and customer intention to adopt
Green Banking among commercial banks in Klang Valley.

4. To investigate the relationship between facilitating condition and customer intention to

adopt Green Banking among commercial banks in Klang Valley.
1.4 Research questions

What are the factors influencing customer intention to adopt Green Banking among commercial
banks in Klang Valley?

1. What is the effect of performance expectancy on customer intention to adopt Green

Banking among commercial banks in Klang Valley?

2. What is the effect of effort expectancy on customer intention to adopt Green Banking
among commercial banks in Klang Valley?

3. What is the effect of the social influence on customer intention to adopt Green Banking
among commercial banks in Klang Valley?

4. What is the effect of facilitating condition on customer intention to adopt Green Banking
among commercial banks in Klang Valley?

1.5 Significance of study

This research aims to provide commercial banks customers’ intention an insight on adopting
Green Banking in Klang Valley. Green banking focuses on safety and social security through
changes in negative impacts in the community (Andania, 2020). Achieve internal process
effectiveness aligned with the balance score card Approach (Wang, 2021). On the funding side
always prioritize investments or loans by considering risk factors regarding environmental
conditions. (Andania, 2020). Continuous improvement of quality services (Wang, 2021).

1.6 Scope of the study

This research highlights bank customers from various commercial banks, focusing on customers
primarily resident in Klang Valley. Most targets are from main corporate states of Klang Valley
because there’s a lot of people. Most targets are employees from companies that pays importance
in sustainability and clean environment. The majority of the Generation Alpha is not included
because they are too young to have their own bank accounts without parents’ consent.

1.7 Proposed chapters

The proposal for the complete research is contained in this project. The objectives and problems
of the topic are outlined in Chapter 1, Introduction. The current literature and underlying ideas
pertaining to the problems of this research are explained in Chapter 2, Literature Reviews. The
methods for carrying out the research are described in Chapter 3, Research Methodology.
 CHAPTER 2: LITERATURE REVIEW

2.1 Introduction

This chapter provides an overview of the study topic's literature review, summing up and
analysing similar previous studies (Hoque, 2019). The independent and dependent variables
would be used to construct research framework.

2.2 Intention to adopt Green Banking

Green Banking means encouraging environment friendly practices and reducing carbon foot
prints from banking operations (Herath, 2019).

Intention to adopt green banking means that a determination to act in a certain way to
take up and practice the green banking (Hoque, 2019).

According to Thombre (2011), the environmental effect of a bank's external operation is

significant yet difficult to quantify. Thus, supporting environmentally friendly initiatives and
prudent financing should be one of the financial sector's obligations (Sahoo, 2007).
 Despite the fact government of Malaysia had been energetically supporting the efforts of
green business (Arumugam, 2018) by setting up funds and attract more banks to provide green
loans, however the efforts will be futile if the bank debtors are not made aware of these kinds of
loans (Pek, 2019). With Green banking there would be reduction of external carbon emission and
internal carbon footprint which is environment pollution.

2.3 Critical Literature Review of Variables

2.3.1 Performance Expectancy

Performance expectancy in terms of green banking (GB) efforts can be defined as the
degree to which a consumer views green banking efforts to be more beneficial than
standard banking channels (Herath, 2019).

The relationship between performance expectancy and customer intention to adopt

green banking is significant (Bouteraa, 2021). There is widespread consensus among
researchers concerning the limited amount of literature on GB. The literature does not
clearly describe the obstacles to the adoption of GB products and services, and more
research is needed (Sahoo, 2016).

Performance expectancy does affect customer’s intention to adopt green banking as

green banking can make an individual's financial activities more efficient and
convenient.
2.3.2 Effort Expectancy

The effort expectancy is the amount of easiness and usefulness that an individual
experience when utilising a particular information system (Attuquayefio, 2014).

Many empirical research show that effort expectancy is an essential component

for measuring individuals' intention and behaviour in the context of Green
Banking adoption (Iqbal, 2019). As a result, a consumer will be pleased with a
more convenient route. Traditional banking is less comfortable and time-
consuming (Agrawal, 2009).

Effort expectancy does affect customer’s intention to adopt green banking as

individuals may easily learn to utilise green banking because of the simplicity.
2.3.3 Social Influence

The social influence can be defined as the level to which the perspectives of other
important parties impact the behaviour of the individual towards the use of new
technology (Attuquayefio, 2014).

Social influence was found to be a strong predictor of people's intentions to

engage in a certain behaviour; multiple researches validated this association in a
variety of circumstances (Amin, 2011). However, it is difficult to find empirical
research that validates this association in the context of GB adoption.

Social influence does affect customer’s intention to adopt green banking as people
who are influential and knowledgeable about green banking should utilise it.

2.3.4 Facilitating Condition

As per Venkatesh (2003), facilitating conditions relate to the customer's

availability of the technical resources needed to enable the deployment of a
certain technology.

Moreover, the availability of resources like as user access to computers or the

Internet adds to a higher rate of adoption for technological advancements such as
GB (Iqbal, 2018). Facilitating condition was found to be a major predictor of
persons' willingness to do a specific behaviour; multiple researches validated this
association in a variety of settings (Dwivedi, 2019).

Facilitating condition does affect customer’s intention to adopt green banking as

green banking is appropriate for people's living environments, fits into their
working styles, and is consistent with their lives.
2.4 Underpinning Theories

2.4.1 Responsiveness

Responsiveness can be defined as the commitment to assist customers and deliver

quick services is referred to as responsiveness (Lau, 2013).

Green banking may be further defined by banks' capacity to comprehend their

clients' needs and deliver accurate financial services (Bedi, 2010). Munusamy
(2010) and Lau (2013) discovered a positive association between responsiveness
and customer satisfaction, which means that the more responsive the service, the
happier the consumer would be with that service.

Responsiveness does affect customer’s intention to adopt green banking overall in

Malaysia.

2.5 Proposed Framework

Independent Variables Dependent Variables

Performance expectancy

H1

Effort expectancy H2

Intention to
adopt Green
Banking
 H3
Social Influence

H4

Facilitating condition

Figure 1: Framework for Factors affecting Customer Intention to adopt Green Banking

(Source: Bouteraa, M., Hisham, R. R. I. R., & Zainol, Z. 2020).

The relationships between the independent and the dependent variables are shown above. The
independent variables are performance expectancy, effort expectancy, social influence and
facilitating condition. The dependent variable is Customer Intention to adopt Green Banking
among commercial banks in Wilayah Persekutuan.

2.6 Summary

The Chapter 2 explored theoretical reviews on the research issue, detailing past studies on
comparable themes, underpinning theories, and the conceptual framework's creation.

CHAPTER 3: RESEARCH METHADOLOGY

3.1 Introduction
The conceptual framework is explained in Chapter 3 by presenting the research hypothesis
and examining the operational definition. The research measurement and pilot study would
also be looked into.

3.2 Research Hypothesis

Below is the hypothesis recommended as per to factors affecting customer intention to adopt
green banking among commercial banks in Klang Valley:
 H1: There is a significant relationship between performance expectancy and customer
intention to adopt Green Banking among commercial banks in Klang Valley.

H2: There is a significant relationship between effort expectancy and customer intention to
adopt Green Banking among commercial banks in Klang Valley.

H3: There is a significant relationship between social influence and customer intention to
adopt Green Banking among commercial banks in Klang Valley.

H4: There is a significant relationship between facilitating condition and customer intention
to adopt Green Banking among commercial banks in Klang Valley.

3.3 Operational Definition

To aid the research investigation study, the definitions of dependent and independent
variables are described.

3.3.1 Customer Intention to Adopt Green Banking among Commercial Banks in

Klang Valley
 Green Banking means encouraging environment friendly practices and reducing
carbon foot prints from banking operations (Herath, 2019). Intention to adopt
green banking means that a determination to act in a certain way to take up and
practice the green banking

3.3.2 Performance Expectancy

Performance expectancy in terms of green banking (GB) efforts can be defined as
the degree to which a consumer views green banking efforts to be more beneficial
than standard banking channels (Herath, 2019).

3.3.3 Effort Expectancy

The effort expectancy is the amount of easiness and usefulness that an individual
experience when utilising a particular information system (Attuquayefio, 2014).

3.3.4 Social Influence

The social influence can be defined as the level to which the perspectives of other
important parties impact the behaviour of the individual towards the use of new
technology (Attuquayefio, 2014).

3.3.5 Facilitating Condition

As per Venkatesh (2003), facilitating conditions relate to the customer's
availability of the technical resources needed to enable the deployment of a
certain technology.

3.4 Research Measurement

These sample items were adapted from prior studies and tailored to this study's five Likert
scale - strongly disagree, disagree, neutral, agree, strongly agree.
 3.4.1 Dependent Variable

Variable Items Source

Intention To Adopt 1. I believe that the Sun (2020)
Green Banking (environmental) operations of
Among Commercial this bank give excellent value
Banks to me.
2. This bank appears to be
particularly serious about
environmental sustainability.
3. I believe this bank's
management is serious about
green banking projects and is
prepared to support green
projects.
4. I believe our bank's regular
operations are environmentally
safe.
Table 3.1: Measurement for Dependent Variable

3.4.2 Independent Variables

 Variable Items Source

Performance 1. I think green banking can Hu, H., (2022).

Expectancy reduce wastage from my lives.
2. I think that using green banking
would save me a lot of money.
3. I think that green banking can
help to prevent pollution.
4. I think that using green banking
is beneficial to my health and
safety.
5. I think that using green banking
would save me energy and
time.

Effort Expectancy 1. I think that green banking is Venkatesh, V., (2003)

beneficial.
2. I think green banking is simple
to implement.
3. I can quickly learn how to use
green banking.
4. I think it will be simple for me
to learn how to utilise green
banking over the internet.
5. I think it is simple to learn how
to utilise green banking from
knowledgeable individuals.
 Social Influence 1. My neighbours all advised me Xie, J., (2021)
to utilise green banking.
2. Family members also
encouraged me to use green
banking.
3. My close friends also assisted
me in using green banking.
4. Government officials also
encouraged me to adopt green
banking.
5. I want to adopt green banking
since other bank customers are
doing so.

Facilitating Condition 1. I have enough knowledge to Hu, H., (2022).

utilise green banking.
2. I have the resources required to
use green banking.
3. The bankers provided me with
enough understanding on green
banking.
4. If I have any problems utilising
green banking, someone or a
banker will help me.
5. I frequently learn about green
finance through mass media
such as TV, Internet, or radio.
Table 3.2: Measurement for Independent Variables

3.5 Pilot Study

A pilot study is carried out on a smaller size than the primary or comprehensive investigation. In
preparation for a larger study, it's utilized to evaluate research methodologies, data gathering
tools, and other research methods (In, J. 2017).

3.6 Data Collection

Below are the explanation of Target Population, Sampling Technique and Questionnaire
Administration:

3.6.1 Target Population

The target population is the group of people on whom the intervention will
perform research and develop findings (Gregory, 2017). As a result, the majority
of respondents to this survey come from the main corporate states of Klang
Valley, where there are a large number of individuals.

3.6.2 Sampling Technique

A sampling technique is the name or other designation for the particular
procedure used to choose the subjects for the sample (Taherdoost, 2016). The
most appropriate option is the non-probability approach, more precisely the
judgmental sampling, between probability sampling and non-probability sampling
(Mishra, 2017). Since this study solely focuses on Malaysian Klang Valley
people, it excludes foreigners, the majority of Generation Alpha and baby
boomers.

3.6.3 Questionnaire Administration

Questionnaire is a technique of data collecting that is completed in writing by the
responder (Marshall, G. 2005). The most appropriate method for collecting data
for this study is via social media and would sent out using a survey link to 150
potential respondents.
3.7 Data Analysis
Data analysis is the act of cleansing, converting, and modelling data in order to identify
information that may be used to make business choices (Johnson, 2019).

3.7.1 Data Screening

Data screening is applied for make sure that data are trustable but also can be used
when testing statistical analysis (O'brien, 2007). Data screening required in
advance statistics procedure.

3.7.1.1 Missing Data

Missing data occurs when the person have not saved data for a particular
variable or participant (Bhandari, 2022). In quantitative research, missing
values are displayed as empty cells in the spreadsheet.

3.7.1.2 Response Bias

Response bias is a general term for situations where people do not answer
questions honestly for one reason or another (Bhandari, 2022). To
eliminate response bias, the chi-square test might be employed, as its
purpose is to determine if an observed distribution is due to chance
(Ling,2019).

3.7.1.3 Outliers Identification

Outlier identification is the process of finding data points that are far from
the mean. Researchers might utilise the Mahalanobis distance, which is
 based on the robust mean and covariance matrix estimation approach, to
find outliers (Yan,2018).

3.7.2 Data Testing

Data testing is a technique that looks at data using statistics (Bevans, 2019).

3.7.2.1 Normality
Assumption of normality is that data has normal distribution (Ghasemi,
2012). If the data fits the assumptions, the histogram displays a bell curve
(Das, 2016).

3.7.2.2 Linearity
This test being utilize for establish if there is relationship between
dependent and independent variables are linear or not (SPSS, 2018). If the
variables are linear, scatterplots are used to represent a straight line
(Verial, 2022).

3.7.2.3 Homoscedasticity
Homoscedasticity refers to scenario where error term is identical in every
independent variable value (Husin, 2020). Levene's test usually utilized
for assess if variances of k samples are equivalent or not. (Nordstokke,
2007).

3.7.2.4 Multicollinearity
 Whenever independent variables together in regression analysis are
significantly associated with one another, multicollinearity arises (Wu,
2020). Variance Inflation Factor (VIF) generally utilized for determine the
degree of correlation between independent variables. VIFs ranging from 1
to 5 suggest a moderate correlation; 1 indicates no correlation, while more
than 5 indicates a considerable degree of multicollinearity (Bhandari,
2020).

3.7.3 Goodness of Measure

Goodness of measurements make sure which tool measures significant variables
but also take measurement accurately (Pringle, 2002).

3.7.3.1 Reliability
Degree to which any measurement tool controls for random error is analysed
in terms of reliability (Mohajan,2017). Cronbach's alpha might be employed,
and excellent internal consistency would be assessed to be ≥ 80 (Bajpai,
2014).

3.7.3.2 Validity
Validity is a test that determines how effectively a produced instrument
measures the specific notion that it is designed to measure (Mohajan,2017).
Degree to which a measure "covers" the construct of interest is known as
content validity, and it is determined by comparing the measuring measures to
the conceptual description of the construct (Bajpai, 2014).

3.7.4 Descriptive Statistics

 Sample and measurements are summarised by descriptive statistics, which also
describes the basic properties of the data in research (P. Bhandari, 2020). Having
a centre number for the set is a measure of central tendency (Narkhede,2018). For
instances include the median, which splits the data into two equal portions, and
the mean, which is the average utilize for determine value of whole data set
(Narkhede,2018)

3.7.5 Demographic Information

Demographic information displays data from research respondents to verify if
they're a representative sample of the study's target respondents (Connelly, 2013).

3.7.6 Multiple Regression Analysis

Multiple regression analysis lets researchers to analyse strength of connection
between an outcome and numerous predictor factors (Petchko, 2018). ANOVA
determines whether model is great at forecasting results than using the mean as a
predictor (Field,2009). The regression coefficient describes how the independent
and dependent variables work together (Salkind,2010).

3.8 Research Equation

RFP=C+ β 1 FL+ β 2 NPS + β 3 A+ β 4 I + E

Where
IGB = Intention to adopt Green Banking
C = Constant
PE= Performance Expectancy
EE = Effort Expectancy
SI = Social Influence
FC = Facilitating Condition
E = Errors
3.9 Conclusion

In Chapter 3, the research equation, data collecting, and analysis are highlighted.

References