BUSINESS AND FINANCE JOURNAL

GREEN LENDING AND RETURN ON ASSETS OF LISTED DEPOSIT MONEY BANKS IN NIGERIAN

MARY OLUWABUKOLA OLUWAFISOYE, MOFOLUWASO IYABODE OJEDELE (PhD), SAMUEL ADEBISI ADEWOYIN, FELICIA OLUFUNKE FANIRAN

June 24, 2026

Citation

BUSINESS AND FINANCE JOURNAL , Vol. 17 (3) (2026) , pp. 1-17

Details

ISSN: 988-47876
Published: June 24, 2026
Status: Published

Abstract

In recent years, the importance of green lending has risen in the context of sustainable financing, where banks are becoming more focused on linking the granting of credit to environmental and climate targets. But, the financial impact in emerging economies has not yet been well documented or verified. The study looked at the effect of green lending on the financial performance of listed Deposit Money Banks in Nigeria, which has yet to be established in empirical studies. For this study, a secondary data was used, which was gathered from eight selected banks in Nigeria over the period 2020–2025, and an ex-post facto research design with a panel data approach was used. Diagnostic tests were performed and data analysed with the Pooled Ordinary Least Squares, Fixed Effects and Robust Least Squares regression techniques. The findings showed that the Return on Assets (ROA) was positively and statistically significantly influenced by Green Finance Ratio (GFR) (t = 3.41, p = 0.001). This indicated that an increase in green financing would lead to an improvement in the profitability of the banks. The study found that green lending is associated with improved financial performance, which aligns with the observation that sustainability and financial performance are mutually reinforcing in the banking sector in Nigeria. Banks were urged to further build their green loan portfolios and improve the integration of ESG (environmental, social and governance) principles; regulators to create more comprehensive green finance frameworks to ensure consistency and transparency. The study adds to the sustainable finance literature by adding a new empirical contribution in an emerging economy context.

Download Full PDF

This article is available as a PDF download