Board Capital, CEO Green Efficacy and Adoption of Green Finance Among Firms in the Financial Services Sector in Kenya

Authors

  • Cornelius Kipkemei Kurere
    Lecturer, School of Business and Economics, Department of Accounting and Finance, Kisii University, Kenya

Abstract

Purpose: This study examined the effect of board human capital on the adoption of green finance among firms in Kenya’s financial services sector, with chief executive officer green efficacy as a moderator.


Material/methods: The study was guided by agency theory, the natural resource-based view, social capital theory and upper echelons theory, and adopted a positivist philosophy and an explanatory survey design. The sampling frame comprised 90 institutions, including 43 commercial banks, nine microfinance institutions and 38 deposit-taking savings and credit cooperative organizations (SACCOs). A census of the institutions was combined with purposive selection of the board chairperson, CEO and company secretary, targeting 270 respondents. Of the 211 questionnaires returned, 164 were usable, representing 60.74% of the questionnaires distributed. Data analysis involved descriptive statistics, Pearson correlation, multiple regression and hierarchical regression.


Findings: Board education, experience and functional diversity were positively associated with green finance adoption. In addition, board interlocks and prestige also had positive associations, while directors’ relationships with the CEO had a negative association. CEO green efficacy strengthened the education–adoption relationship and the interlocks–adoption relationship. Its interactions with board experience and functional diversity were not statistically significant.


Conclusion: The study concludes that board capabilities and external connections are relevant to green finance adoption, although their associations differ across dimensions. The findings establish survey associations and do not demonstrate causation.


Value: It recommends strengthening board competencies, selecting directors with useful professional networks, preserving independent oversight and developing CEOs’ confidence in implementing environmental initiatives.