Abstract
The South African banking sector is regarded as one of the strongest sectors on the African continent. Considering recent global concerns about climate change, it is crucial to understand the role banks play in combating this ongoing issue and how they are affected. As a result, several studies have been conducted in Western and Asian countries on the topic of green banking and its impact on financial performance. Still, limited studies have been conducted in Africa, particularly in South Africa. This study aims to determine whether a relationship exists between green banking and the financial performance of JSE-listed commercial banks. The sample consisted of five commercial banks listed on the JSE between 2018 and 2024. Green banking was measured through green asset ratio (GAR), which is comprised of green assets such as green bonds, loans, buildings, and green home loans, divided by total assets. GAR, which aligns with the EU Taxonomy, was adapted to the South African Green Finance Taxonomy to calculate green assets. Financial performance was proxied by return on assets (ROA) and Tobin's Q (TobinQ). This study included three control variables, namely, bank size (SIZE), capital adequacy ratio (CAR), and cost-to-income ratio (CIR). This study employed a quantitative method, where secondary data were analysed using panel data regression to achieve the aim. According to the study's findings, green banking (GAR) showed an insignificant relationship with financial performance (FP) of JSE-listed commercial banks. The insignificant relationship indicates that South Africa is still in its early stages of adopting green banking. Therefore, this study's result provides information that will encourage practitioners to pursue the green banking agenda at the levels of the board and top management. Furthermore, policymakers, legislators, regulators, and central banks should encourage practitioners to adopt green banking initiatives as a mainstream agenda.