Green Finance, Corporate Governance, and Financial Performance: Examining Their Impact on Company Value and Profitability in Banks Listed on the Pakistan Stock Exchange

Abstract

The present study aimed to analyse the impact of green finance and corporate governance on the financial performance, company value, and profitability of banks listed on the Pakistan Stock Exchange (PSX). The quantitative explanatory research design was used, and secondary panel data were analysed using 20 annual reports of 20 commercial banks (120 firm-years). Green finance and corporate governance were selected as independent variables, and financial performance, company value, and profitability were selected as dependent variables. The data were analysed using descriptive statistics, Pearson correlation analysis, and panel regression analysis in Stata. Descriptive results showed mean values of 3.68, 3.81, 1.76, 13.94, and 1.42 for green finance, corporate governance, return on assets, return on equity, and Tobin's Q, respectively. All variables showed significant positive correlations with each other, ranging from 0.521 to 0.741 (p < 0.01). The results of the panel regression analysis show that green finance (β = 0.298, p = 0.000; β = 0.316, p = 0.000; β = 0.271, p = 0.000, respectively) has a significant effect on improvements in financial performance, profitability, and company value. Corporate governance also exerted significant positive effects on financial performance (β = 0.347, p = 0.000), profitability (β = 0.281, p = 0.000), and company value (β = 0.391, p = 0.000). The results indicate that sustainable financial practices, combined with good corporate governance, enhance the long-term financial performance and value of organisations in Pakistan's banking sector.

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