dc.description.abstract | For a very long time banks have operated without considering how their operations affect
the environment. Recently there has been an emergence of a new concept in banking
called green banking which is basically promoting environmentally friendly practices and
reducing carbon footprints from banking activities. The implementation of green banking
has been a challenge to so many commercial banks as they fear that it will increase their
expenses and disrupt their normal operations. In this light the researcher has decided to
establish whether there is a relationship between green banking and financial
performance of commercial banks in Kenya. The researcher used secondary data from
Central Bank of Kenya, Communications Authority of Kenya and Kenya National
Bureau of Statistics. The target population was all the 43 commercial banks in Kenya,
making the study a census. Secondary data was used in the study relating to financial
performance and green banking initiatives of the commercial banks in Kenya for the
period between 1st January 2011 and 31st December 2013. The data was collected from
the annual reports of Central Bank of Kenya and also those of Communications Authority
of Kenya. The data/information collected was used to study the variables. The research
design used was descriptive. In order to establish whether there was a relationship
between green banking and financial performance, the researcher used two green banking
initiatives: mobile banking and online banking. Data was analyzed using regression
analysis. The researcher also assessed the capital adequacy and liquidity of all
commercial banks in Kenya to establish whether there was truly a relationship between
green banking and financial performance. The financial performance measure used in the
study was the aggregate profit before tax of all Kenyan commercial banks. Tables were
used to present the data, while SPSS computer software aided in the analysis. The
findings of the study were that there is a significant relationship between green banking
and financial performance of commercial banks in Kenya. The findings also show that
the two independent variables studied, explain 100% of the changes in the financial
performance of commercial banks in Kenya as represented by R2. The study found
significance level was 0.001 and therefore there is a very significant relationship between
green banking and financial performance of commercial banks in Kenya. Hence the
linear regression is very significant in predicting how green banking affects financial
performance of commercial banks in Kenya. The correlation coefficient of the study was
1; this means that there is a perfect positive relationship between financial performance
and green banking. This also means that an increase in mobile banking and internet
banking will lead to an increase in financial performance. The study makes the following
recommendations: banks should increase awareness and CSR activities to sensitize both
internal and external customers. CBK and other agencies should promote more publicity
on the relationship between the banks and the environmental concerns that are related to
financing policies. Finally the government could use this study to formulate friendly
policy on environment conservation which the banks should adopt. There is a need to
establish the effect of green banking in the economy, cost savings and risk management. | en_US |