Green Financing and the Financial Performance of Commercial Banks Listed on the Nairobi Securities Exchange: Empirical Evidence from Sustainable Financial Innovations
DOI:
https://doi.org/10.47604/ijfa.3578Keywords:
Green Financing, Sustainable Banking, Financial Performance, ESG Integration, Nairobi Securities Exchange, Corporate GovernanceAbstract
Purpose: This study examines the influence of green banking defined as green lending, green bonds, ESG-aligned lending standards, and sustainable finance adoption on the financial performance of commercial banks listed on the NSE.
Methodology: The study applies a positivist philosophy and correlational design using secondary data (2021–2023). Regression, diagnostic tests, and hypothesis testing were conducted using bank-level audited financial and sustainability reports.
Findings: Green banking shows a positive but statistically insignificant effect on ROE (β = 0.114; p = 0.103). Diagnostic tests reveal non-normality, weak linearity, and low R², indicating immature adoption and inconsistent ESG reporting.
Unique Contribution to Theory, Practice and Policy: Strengthen regulatory incentives, standardize ESG reporting, develop green-lending capacity, expand green bond markets, and embed climate-risk assessments into lending operations.
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Copyright (c) 2025 Duncan Owino Sino, Dr. Edwins Baraza, Dr. Fronica Monari
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Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution (CC-BY) 4.0 License that allows others to share the work with an acknowledgment of the work's authorship and initial publication in this journal.
