Green Banking Practices, Social, Health and Environmental Disclosures and Bank Financial Performance: The Role of Innovations and Corporate Governance

ABSTRACT Regulators in the banking industry in the Sub‐Saharan Africa (SSA) region are progressively concentrating on corporate innovation and bank social, health and environmental disclosures (BSHED) as crucial corporate governance (CG) structures to improve bank financial performance (BFP). Nonetheless, it is unclear whether corporate innovation and BSHED can lead to an improvement in BFP. Understanding these crucial relationships can help regulators and banking practitioners to design and implement sustainable strategies that can enhance BFP. This paper seeks to bridge this gap by investigating the effects of corporate innovation and BSHED on BFP and examining whether CG mechanisms moderate these relationships. Through the lens of multi‐theoretical perspectives, the study conducts fixed effects and dynamic two‐step system generalised method of moments models over a dataset of 2785 observations (220 banks) from 16 SSA countries between 2007 and 2022. The findings show that corporate innovation has a positive effect on BSHED and BFP. The study detects that corporate innovation has a positive association with BFP. We find that BSHED is positively related to BFP. The study identifies and tests possible moderators of these associations. We observe that CG mechanisms positively moderate these relationships. Finally, we establish that the predicted associations vary across different operating periods. The findings help stakeholders including corporate boards, executives and regulators to understand how innovation investments and internal governance structures such as CG mechanisms are associated with BSHED and BFP.