Factors influencing the adoption of green finance: among the listed commercial banks in Kenya

Abstract

Green Finance is a fairly new development in the finance discipline in Kenya. It involves financing of environmentally responsible investments that aim to promote conservation of natural resources and promote clean energy. Despite climate change effects, Commercial banks in Kenya have been seen to be slow in adopting green financing. Integrating green initiatives and responsible banking strategies is fundamental in enhancing banks’ net results and progressing the pace of transformation to a green financial system which is vital for their survival in the coming days considering that most transactions are going digital and paperless. The main objective of this study is to examine the factors influencing the adoption of green finance in listed commercial banks in Kenya. This was guided by the following specific objectives; the first one was to analyze the outcome of government regulations on the adoption of green finance among the listed commercial banks in Kenya. The second specific objective analyzed the consequences of green innovative strategies on adoption of green finance among the listed commercial banks in Kenya. The third specific objective was to examine the effect of perceived customer green attitude and value on the adoption of green finance among the listed commercial banks in Kenya. The study targeted all the 11 listed commercial banks by the Nairobi Securities Exchange (NSE) while the unit of observation was 748 employees drawn from 187 branch managers and 561 staff members. The study through Krejci Morgan calculator sampled 379 employees proportionately distributed to each bank branch covered by the study. The study used Descriptive Cross sectional research design and used convenience sampling method to get key respondents. Structured questionnaires were applied to obtain primary data. To establish the degree of agreement on various responses, descriptive statistics was utilized. Multiple Linear Regression model was also used with the help of SPSS (Statistical Package for the Social Sciences) software to analyze quantitative data. The study established a positive relationship between government environmental regulations, green innovative strategies and customer perception and attitude and the adoption of green finance among the listed commercial banks in Kenya. The study recommended promotion of green finance through changes in the country’s regulatory frameworks, harmonizing commercial bank financial incentives, and increasing green finance in the banking sector. Additionally, there is also a need for increased incentives for banks that actively engage in sustainable practices. Finally, there is a need to change customer perceptions on the value of green products and services offered by listed commercial banks, which has contributed to the bank developing more green products.