Environmental, Social And Governance Practices And Financial Performance Of Selected Banks Quoted In African Securities Exchanges
| dc.contributor.author | Njuguna, Isaac Muchiri | |
| dc.date.accessioned | 2025-09-02T08:18:06Z | |
| dc.date.available | 2025-09-02T08:18:06Z | |
| dc.date.issued | 2025-06 | |
| dc.description | A Thesis Submitted To The School Of Business, Economics And Tourism In Partial Fulfillment Of The Requirements For The Award Of Degree Of Doctor Of Philosophy In Business Administration (Finance Option) Of Kenyatta University. Supervisors: 1.Lucy Wamugo Mwangi 2.Fredrick Warui Waweru | |
| dc.description.abstract | The financial performance of banks in both developed and developing economies has been a matter of significant concern since the global financial crisis of 2008. A longitudinal analysis of the global banking industry over the past two decades reveals a recurring pattern of cyclical volatility and uneven performance. In particular, profitability within Africa’s five largest banking markets—namely Egypt, Kenya, Morocco, Nigeria and South Africa—has exhibited a marked decline since 2016. A key global force shaping the operations and performance of banks today is the increasing requirement for institutions, including banks, to adopt and integrate environmental, social and governance (ESG) practices into their core operations. The objectives of this study were to evaluate the effects of environmental, social and governance practices on financial performance of selected banks quoted in African securities exchanges. In addition, the study sought to establish the moderating effect of bank size on the relationship between environmental, social and governance (ESG) practices and the financial performance of the banks. The study was guided by the shareholders value theory, stakeholders theory, legitimacy theory, slack resources theory, signaling theory and agency theory. A positivist research philosophy was adopted. The study further employed an explanatory non-experimental approach. The study utilized purposive sampling to select 15 banks from a population of 145 banks quoted in African securities exchanges. The 15 banks are the ones which had consistently provided data on ESG and financial performance from 2013 to 2022, which is the period of study. The study relied on secondary data on ESG scores and financial performance which was obtained from the London Stock Exchange Group database. Data analysis included descriptive and inferential statistics, with panel multiple regressions to account for time and cross-sectional dimensions. The regression results established that environmental practices had a statistically significant positive effect on financial performance as measured by Return on Assets (ROA). In contrast, environmental practices had a negative but statistically insignificant effect on financial performance as measured by Tobin’s Q. Further, social practices had a positive but statistically insignificant effect on ROA, and a negative but statistically insignificant effect on Tobin’s Q. Moreover, while governance practices exhibited a significant positive effect on ROA, they did, in contrast, exhibit a significant negative effect on Tobin’s Q. The study also conducted the moderating effect analysis of bank size on the relationship between ESG practices and financial performance of the selected banks. The findings established that bank size moderated the relationship between governance practices and financial performance as measured by ROA. In contrast, bank size did not moderate the relationship between environmental and social practices and financial performance as measured by ROA, and on all the three ESG practices on financial performance as measured by Tobin’s Q. Based on these findings, the study concludes that governance practices have a significant effect on ROA and Tobin’s Q, while environmental practices have a significant effect on ROA. Further, both environmental and social practices have no significant effect on Tobin’s Q. Although bank size moderates the relationship between governance practices and ROA, it does not significantly affect the interaction between social and environmental practices on ROA, nor any ESG factors on Tobin’s Q. Consequently, the study recommends strengthening environmental and governance frameworks to enhance financial performance. Further research is suggested to investigate the effect of ESG practices on other financial institutions, including credit unions and microfinance institutions. | |
| dc.description.sponsorship | Kenyatta University | |
| dc.identifier.uri | https://ir-library.ku.ac.ke/handle/123456789/31358 | |
| dc.language.iso | en | |
| dc.publisher | Kenyatta University | |
| dc.title | Environmental, Social And Governance Practices And Financial Performance Of Selected Banks Quoted In African Securities Exchanges | |
| dc.type | Thesis |