Green Loans and Bank Profitability: Evidence from the Macedonian Banking Sector

Abstract

The paper aims to empirically confirm the interrelationship of green loans with bank profitability in the Macedonian banking system. Profitability is measured by the return on average assets indicator. The research used descriptive statistics, correlation, and regression analysis, separately by bank groups and for the entire banking system. Banks in the Republic of North Macedonia play a significant role in supporting green financing, providing favorable conditions for green loans. The results of the research show that green loans have a significant impact on the profitability of the group of large and medium-sized banks, while the impact of green loans on the profitability of the group of small banks cannot be confirmed. In the future, growth in green loans is expected, as awareness of environmental challenges and the economic advantages of sustainable investments increases. The policymakers are also expected to introduce additional incentives and regulations to support these initiatives.