Green Loan Disclosures and Bank Market Valuation: Unveiling the Catalyst Role of Sustainable Governance

The present study investigates the impact of green loan disclosure (GLD) on the market value (MV) of commercial banks, with a focus on the moderating role of sustainable governance (SUSTG). The study adopts content analysis approach to construct GLD and SUSTG index using the annual reports of over a period 13 years (2012–2024). Drawing on the results of panel regression models, the research concludes that the market value of banks improves with an increased amount of GLD. Further, the study confirms the positive moderating effect of SUSTG on this relationship as GLD of sustainability-governed banks provides assurance to the voluntary disclosed green loan information. The findings of the study are validated for potential endogeneity issues using system GMM approach. The current research contributes to the extant research by emphasizing the value relevance of sustainability practices in the financial services sector and pronounces implications for transparency, governance, and societal goals.