Green Financing and Firm Performance in Pakistan: The Role of Corporate Social Responsibility and the Effect of Firm Size

Abstract

Sustainable business practices have gained greater significance as companies aim to improve performance, and respond to the needs of the environment and social requirement. In this study, we explore how green financing affects the performance of firms in Pakistan and the mediating role of corporate social responsibility (CSR) and the moderating effect of firm size. A quantitative explanatory research design was used that gathered primary data through the use of corporate employees and financial professional across banking, manufacturing and service industries in Karachi, Pakistan. The survey of 350 respondents was conducted with a stratified random sample, and a structured questionnaire based on proven literature, in which all the constructs were measured on a 5-point Likert scale. An analysis was conducted on data with descriptive statistics, Pearson correlation and Structural Equation Modeling (SEM) statistics through SmartPLS to test direct, mediating and moderating effects. All constructs were found to be reliable as indicated by Cronbachs Alpha values (≥ 0.70). This evidence suggests that green financing has a substantial positive impact on the performance of the firm, and this impact is partially mediated by CSR. Moreover, firm size enhances the impact of green financing on performance, indicating that small firms cannot take advantage of sustainable financial practices. The current research paper will add to the body of research by offering research based evidence in industrial experience in Pakistan, and giving practical implications to managers seeking to combine the concept of sustainable finance and strategic CSR practices.