GREEN FINANCE AND SUSTAINABILITY AS MEDIATED BY THE INNOVATION CAPABILITY OF FINANCIAL INSTITUTIONS
This research investigates the influence of green finance on sustainability and examines the mediating role of innovation capability among financial institutions in Nigeria. Grounded in the dynamic capabilities theory, the study adopts a quantitative cross-sectional design. Data were obtained from 70 senior management personnel across 14 commercial banks in Nigeria, selected through purposive sampling. Data were analysed using descriptive statistics and multiple regression analysis, and the hypotheses were tested with Hayes' PROCESS (Macro 3.5) to examine both direct and indirect effects. The findings reveal that green finance has a significant positive impact on sustainability and promotes innovation capability. Furthermore, the findings indicate that innovation capability positively influences sustainability and partially mediates the relationship between green finance and sustainability. The study concludes that green finance contributes to sustainability, especially when supported by strong innovation capabilities. Consistent with the dynamic capabilities theory, the findings underscore the need for supportive innovative capabilities in banks and for adopting flexible strategies and implementing supportive policies to maximize the benefits of green finance. These insights are valuable for policymakers, bank executives, and environmental experts, emphasizing the role of green finance and innovation in promoting sustainable development in developing economies.
Keywords: Green Finance, Innovation Capability, Sustainability, Financial Institutions.