Exploring the Landscape of Sustainable Banking in Sub-Saharan Africa – Practices, Drivers and Outcomes

Abstract

The role of the banking sector in advancing sustainable development worldwide cannot be overstated. Despite growing academic interest, the banking sector's perspective in Sub-Saharan Africa (SSA) remains underexplored, even though it plays a key role in the region's economy and finance. This dissertation addresses this gap by exploring the sustainable banking landscape, evaluating practices, drivers, and banks’ involvement with the Sustainable Development Goals (SDGs), using a manuscript-based format comprising three studies presented as Papers 1, 2, and 3. Collectively, these papers provide a deeper understanding of the integration of sustainability within the banking sector in SSA. Paper 1 employed a 44-indicator sustainable banking framework to assess the level of sustainable banking performance and its association with financial performance using a sample of ninety-nine (99) banks across six countries and was grounded in good management theory. Paper 2 extended the investigation by adopting a quasi-experimental design using country-level institutional environments as proxies to examine their relationship with sustainable banking performance across a sample of seventy-four (74) banks in six (6) countries underpinned by institutional theory. Paper 3 is anchored in legitimacy and corporate sustainability theories and applies a mixed-methods approach to examine the extent of SDG involvement by banks across sixty-one (61) banks in six (6) countries, providing a more comprehensive perspective on the motivations and challenges in aligning with a global sustainability agenda. Findings from Paper 1 indicate that most banks are in the initial and growth stages of integrating sustainability. The positive relationship between sustainability and financial performance underscores sustainable banking as a value creation strategy that should be encouraged. Paper 2 demonstrated that coercive, normative, and mimetic pressures are significantly and positively associated with sustainable banking performance, with coercive pressure from central bank regulations showing the strongest association. The findings from Paper 3 reveal low depth of SDG involvement but relatively higher breadth of engagement among banks that prioritize SDGs, aligning with their core business (13,8,5) and societal needs (3 and 4). This dissertation contributes to the application of good management, institutional legitimacy, and corporate sustainability theories in the sustainable banking literature, offers new insights into sustainable banking in a developing-economy context, and provides practical and policy recommendations to realize the full potential of the banking sector as a sustainability actor in the region.