SUSTAINABLE FINANCING PRACTICES AND FIRM VALUE OF LISTED BANKS AT THE NAIROBI SECURITIES EXCHANGE, KENYA
Brenda Lusike Nalyanya - Postgraduate Student, Department of Accounting and Finance, School of Business Economics and Tourism, Kenyatta University, Kenya
Dr. Daniel Makori - Lecturer, Department of Accounting and Finance, School of Business Economics and Tourism, Kenyatta University, Kenya
Dr. Francis Gitagia (Ph.D, CPA) - Lecturer, Department of Accounting and Finance, School of Business Economics and Tourism, Kenyatta University, Kenya
ABSTRACT
This study examined the effect of sustainable financing practices on the firm value of commercial banks listed at the Nairobi Securities Exchange amid persistent fluctuations in market capitalization and Tobin’s Q between 2017 and 2024. The study focused on green financing, sustainable debt financing, socially responsible investment practices, and ethical lending practices, while assessing the moderating role of regulatory compliance. Guided by Stakeholder Theory, Signaling Theory, Agency Theory, and the Efficient Market Hypothesis, the study adopted a cross-sectional census design targeting all eleven listed commercial banks in Kenya and collected both primary and secondary data. Using Ordinary Least Squares regression analysis in Stata 18, the findings established that green financing, ethical lending, and sustainable debt financing practices positively and significantly influenced firm value, whereas socially responsible investment practices showed a modest negative effect. Regulatory compliance was found to strengthen the relationship between sustainable financing practices and firm value. The study concludes that sustainable and ethical financing strategies enhance shareholder value and market performance when supported by strong compliance frameworks, and recommends deeper adoption of green and ethical financing initiatives alongside strategic restructuring of socially responsible investment portfolios.