Effect of Green Finance on Stock Returns of Commercial Banks Listed at the Nairobi Securities Exchange Kenya

Abstract

The study sought to determine the effect of green finance on the stock returns of commercial banks listed at the Nairobi Securities Exchange, Kenya. The study found that Green Finance had a positive and significant influence on stock returns (β=0.364; P-value <0.05). This indicates that increased investment in green finance initiatives contributed to improved stock performance. The F- test was significant (P-value <0.05) indicating that the regression model was reliable.  Adjusted R-square value of 0.851., depicting that a large proportion of the variation in stock returns is attributed to green finance and the control variables (dividend policy, bank size and capital adequacy). The study concludes that banks that prioritize green finance initiatives tend to experience significant improvements in their stock returns, aligning with global sustainability trends and investor expectations. The study recommends that commercial banks should prioritize green finance initiatives to improve their financial performance. 

Keywords:       Green finance, Stock returns, Portfolio theory.