Sustainability Reporting and Capital Adequacy of Listed DMBs in Ghana, Kenya and Nigeria

Abstract

Meeting capital requirements for adequate banking services has become a complex issue. Prior studies had advanced that effective sustainability reporting influences corporate performance and banks’ capital adequacy. Consequently, this study empirically examined how sustainability reporting affected capital adequacy. This study was inspired by the importance of sustainability reporting in improving corporate performance and deposit money banks' (DMBs') capital adequacy. The study used an expo facto research design and a sustainability reporting checklist of the Global Reporting Initiative for 12 years from 20 to 2021. Secondary data were extracted from the annual financial statements of the DMBs listed in Ghana, Kenya, and Nigeria. 95 DMBs made up the research population, and 35 banks were chosen for the study using a purposive sample strategy. 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 = 0.91, Wald-test (4, 367) = 3958.9, p < 0.05). The study recommended that the management of the banks should ensure the effective implementation of sustainability reporting regulations and compliance in order to increase corporate legitimacy and banks' capital adequacy.