Abstract
This paper aims to bridge the knowledge gap on what factors enable to help banks to reduce waste and develop a circular economy lending environment. The circular economy innovative lending solutions has been given minimal levels of consideration in the academic literature to date and is a question of importance for several reasons. Firstly, within the current context of circular economy (CE) adoption in banking, CE strategies with innovative financial instruments and measurements are needed to engage with this more fully and to effectively address the associated issues that relate to climate change and environmental sustainability. Also, the implementation of circular economy practice in lending models in financial institutions varies significantly for different products and markets across countries. Therefore, it is difficult to provide individualized or sectoral general guidelines for each product or market. Moreover, financial institutions will require a change in government regulations to encourage them to fund circular businesses on a large scale. It is expected that in carrying out this study a deeper understanding of the factors that enable to help banks to reduce waste and contribute to a circular economy and other related issues perceived to create barriers to the banking industry through the implementation of innovative financial instruments to support circular economy principles will be gained. This will inform the development of an innovative CE framework that will provide clarity and direction for banking/financial institutions, policymakers, and professionals in emerging and developed economies.