Pages: (78-91 )
Abstract
The complexity of meeting capital requirements for adequate banking services has increased over time. Previous studies have indicated a correlation between effective sustainability reporting and bank capital adequacy. This study investigated the effect of sustainability reporting on capital adequacy, motivated by the importance of sustainability reporting in enhancing the corporate performance and capital adequacy of deposit money banks (DMBs). The study used an ex post facto research design, analyzing secondary data from the annual financial statements of DMBs listed in Ghana, Kenya, and Nigeria. A sustainability reporting checklist aligned with the Global Reporting Initiative was employed over a 12-year period from 2010 to 2021. The study population comprised 95 DMBs, with a purposive sampling technique selecting 35 banks. The validity and reliability of the data were ensured through the statutory audit of the financial statements. Data analysis was conducted using descriptive and inferential (multiple regression) statistics. The result of the analysis demonstrated that sustainability reporting exerted a positive significant effect on the capital adequacy of the listed DMBs in Ghana, Kenya and Nigeria adequacy (Adj R2
0.05). Consequently, the study recommended that the management of the banks should ensure the effective implementation of sustainability reporting policies and compliance to enhance the banks' capital adequacy.
Keywords: Capital adequacy, Corporate performance, Environmental indicators, Governance indicators, Social indicators, Sustainability reporting.,