Sustainability Investments and Financial Performance of Commercial Banks in Kenya
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Date
2025-09
Journal Title
Journal ISSN
Volume Title
Publisher
International Academic Journal of Economics and Finance
Abstract
Over recent decades, sustainability
investments and corporate social
responsibility (CSR) have gained
prominence, yet their financial implications
for Kenyan commercial banks remain
underexplored. This study examined the
relationship between four CSR initiatives
Education, Health Programs, Economic
Empowerment, and Environmental
Investments and Return on Equity (ROE).
Using an exploratory design and secondary
data from annual reports, correlations and
regressions were conducted in SPSS at a
95% confidence level. Findings revealed
that education-related investments had a
strong, statistically significant positive
effect on ROE (r = 0.561, p < 0.001),
aligning with evidence that education
enhances human capital, community wellbeing, and brand reputation. Environmental
investments also showed significant
positive associations with ROE,
underscoring their cost-reduction and
market-positioning benefits. Conversely,
health program investments exhibited a
weak, statistically insignificant relationship
with ROE, potentially reflecting the longterm nature of healthcare returns. Economic
empowerment initiatives similarly showed
positive but insignificant effects,
suggesting delayed financial impact despite
strong social value in Kenya’s highunemployment context. Policy
recommendations emphasize prioritizing
education to address skills gaps, supported
by collaboration between banks,
businesses, and educational institutions, as
well as tax incentives for CSR.
Environmental sustainability should be
advanced through regulations and
incentives promoting energy efficiency and
waste management. While health and
economic empowerment programs may not
yield immediate financial gains, their
broader societal benefits enhanced
productivity, poverty reduction, and
community stability justify continued
investment. This study contributes
empirical evidence from a developingeconomy perspective, highlighting
education and environmental sustainability
as strategic levers for both financial
performance and societal progress in
Kenya’s banking sector.
Description
Research Article
Keywords
Citation
Gakinya, C. N., Gatauwa, J. (2025). Sustainability investments and financial performance of commercial banks in Kenya. International Academic Journal of Economics and Finance (IAJEF) | ISSN 2518-2366, 5(1), 311-335.