Fitting a Sustainable Financial Development Model for Banks with Emphasis on Artificial Intelligence and Green Financing
Keywords:
Sustainable financial development, green banking, artificial intelligence, financial innovation, risk management, sustainable financing, reporting transparencyAbstract
Objective: This study aims to design, fit, and validate a structural model explaining banks’ sustainable financial development with emphasis on artificial intelligence and green financing.
Methodology: This applied study adopts a descriptive–analytical survey design. In the first phase, Interpretive Structural Modeling (ISM) was conducted using expert judgments from 19 banking professionals to identify and hierarchically structure key dimensions. In the second phase, the extracted model was empirically tested through Partial Least Squares Structural Equation Modeling (PLS-SEM) based on data collected from 317 banking experts. Reliability was assessed using Cronbach’s alpha and composite reliability, while convergent and discriminant validity were evaluated through AVE criteria.
Findings: Results indicated that all factor loadings exceeded 0.70, with Cronbach’s alpha and composite reliability values above 0.80 across constructs. AVE values were greater than 0.50, confirming convergent validity. Multicollinearity diagnostics showed VIF values ranging from 1.21 to 2.87, indicating no collinearity issues. Structural path analysis revealed significant relationships, including artificial intelligence → intelligent risk management (β≈0.41, t>6.00), green financing → sustainable green investment (β≈0.46, t>7.00), and intelligent risk management → sustainable financial development (β≈0.38, t>5.50), all significant at p<0.001. The coefficient of determination (R²) for sustainable financial development reached approximately 0.62, demonstrating moderate-to-strong explanatory power.
Conclusion: The findings confirm that integrating artificial intelligence and green financing substantially enhances banks’ sustainable financial development by strengthening risk management, transparency, and efficient resource allocation, supporting the empirical validity of the proposed model.
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Copyright (c) 2025 Seyed Mehdi Rezaeizad, Roya Darabi, Ali Baghani (Author)
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