Effect of green banking initiatives on financial performance of commercial banks in Kenya and the moderating role of gender diversity

Abstract

Businesses are increasingly being urged by stakeholders to address the environmental and social consequences of their activities, leading to a growing interest in understanding how green banking practices influence financial performance (FP). This research focused on investigating the effect of green banking initiatives on the financial performance of commercial banks in Kenya, while also exploring the moderating influence of gender diversity. The specific objectives of the study were to; establish the effect of green cost efficiency initiatives on financial performance of commercial banks in Kenya, investigate the effect of green revenue initiatives on financial performance of commercial banks in Kenya, determine the effect of green non-financial benefits initiatives on the financial performance of commercial banks in Kenya, and investigate the moderating effect of gender diversity on the relationship between green banking initiatives and financial performance of commercial banks in Kenya. The study adopted the Triple Bottom Line and stakeholder theories within a post-positivist research philosophy, employing both descriptive and causal research designs. Final sample of 20 commercial banks in Kenya were investigated using secondary data from annual, integrated, and sustainability reports spanning 2015 to 2023. Data analysis was conducted using EVIEWS Version 12, utilizing descriptive statistics and correlation analysis. Findings established positive but insignificant influence between green cost efficiency initiatives and the financial performance of commercial banks. The study’s findings also revealed a negative but insignificant effect between green revenue initiatives and financial performance. Further, the result established a significant negative relationship between green non-financial benefits and financial performance. Finally, the interaction between gender diversity and green non - financial benefits initiatives demonstrated significant positive relationship with the financial performance of commercial banks in Kenya. This research is novel as it represents the first investigation into this topic within the Kenyan context. It is limited since it focuses on relatively few green initiatives variables, focused on purely quantitative inquiry with limited commercial banks.